CIM Commercial Trust Corporation (NASDAQ & TASE: CMCT)
(“we”, “our”, “CMCT”, or “CIM Commercial Trust”), a real estate
investment trust (“REIT”) that primarily acquires, owns, and
operates Class A and creative office assets in vibrant and
improving urban communities throughout the United States, today
reported operating results for the three months ended
March 31, 2018.
First Quarter 2018 Highlights
- Same-store(1) office segment and cash
net operating income (“NOI”) increased 7.2% and 6.5%, respectively,
from the corresponding period in 2017.
- Executed 61,460 square feet of leases
with terms longer than 12 months, including 47,581 square feet of
recurring leases; of which, 29,715 square feet were recurring
leases executed at our same-store office portfolio, representing
same-store cash rent growth per square foot of 17.4%.
- On a same-store basis, the office
portfolio was 93.9% leased.
- Acquired 9460 Wilshire Boulevard in
Beverly Hills, California for $132,000,000(2) in
January 2018.
- Funds from operations (“FFO”) available
to common stockholders of $10,122,000, or $0.23 per diluted
share.
- Net loss available to common
stockholders of $3,026,000, or $0.07 per diluted share.
Management Commentary
Charles E. Garner II, CEO of CMCT, stated, “Our class A and
creative office assets are concentrated in high barrier to entry
gateway markets as evidenced by our premium rents, high leased
percentage and strong re-leasing spreads. We are targeting 4% to 6%
annualized same-store NOI growth through 2022 driven by contractual
rent increases and below market in-place leases rolling to
market.
We are focused on growing our net asset value and cash flow per
share and providing liquidity to shareholders at prices that
reflect our strong prospects. We continue to optimize our portfolio
to drive returns for our shareholders.”
In January 2018, CMCT acquired a 100% fee-simple interest
in 9460 Wilshire Boulevard located in Beverly Hills, California.
The nine-story, Class A office building was built in 1959, was
last renovated in 2008, and has approximately 68,866 square feet of
office space and 22,884 square feet of retail space. The property
is located at the prominent corner of Wilshire Boulevard and
Beverly Drive, adjacent to the Beverly Wilshire, Beverly Hills (A
Four Seasons Hotel), which is a prime location one block from the
future Metro Purple Line Wilshire/Rodeo Station.
“9460 Wilshire, situated in the prominent Golden Triangle and
surrounded by first-class retailers, restaurants, hotels, and
services, is in a highly-desirable and high barrier to entry office
market. It is a strong addition to CIM Commercial Trust’s portfolio
and we believe it will contribute to our goals of increasing net
asset value and cash flow per share” stated Mr. Garner.
Financial Highlights
As of March 31, 2018, our real estate portfolio consists of
21 assets, all of which are fee-simple properties. The portfolio
includes 19 office properties (including one parking garage and two
development sites, one of which is being used as a parking lot),
totaling approximately 3.4 million rentable square feet and one
hotel, with an ancillary parking garage, which has 503 rooms. We
also operate a lending business.
___________________________
(1) Please see the Reconciliation of Net Operating Income on
page 9 for our definition of “Same-store.” (2) Excludes
$48,000 of transaction costs that were capitalized in connection
with the acquisition of this property.
Net loss available to common stockholders was $3,026,000, or
$0.07 per diluted share of common stock, for the three months ended
March 31, 2018, compared to net income available to common
stockholders of $193,899,000, or $2.31 per diluted share of common
stock, for the three months ended March 31, 2017. The decrease
is primarily attributable to a decrease in the gain on sale of real
estate of $187,734,000, a decrease of $13,890,000 in Segment NOI,
$3,152,000 in redeemable preferred stock dividends accumulated, and
an increase of $1,217,000 in corporate general and administrative
expenses, partially offset by a decrease of $4,083,000 in
depreciation and amortization expense, a decrease of $3,182,000 in
interest expense, and a decrease of $2,246,000 in asset management
and other fees to related parties.
FFO available to common stockholders was $10,122,000, or $0.23
per diluted share of common stock, for the three months ended
March 31, 2018, compared to $23,396,000, or $0.28 per diluted
share of common stock, for the three months ended March 31,
2017. The decrease in FFO available to common stockholders was
primarily attributable to a decrease of $13,890,000 in Segment NOI,
$3,152,000 in redeemable preferred stock dividends accumulated, and
an increase of $1,217,000 in corporate general and administrative
expenses, partially offset by a decrease of $3,182,000 in interest
expense and a decrease of $2,246,000 in asset management and other
fees to related parties.
Segment Information
Our reportable segments during the three months ended
March 31, 2018 consist of two types of commercial real estate
properties, namely, office and hotel, as well as a segment for our
lending business. Our reportable segments during the three months
ended March 31, 2017 consist of three types of commercial real
estate properties, namely, office, hotel and multifamily, as well
as a segment for our lending business. Segment NOI was $28,225,000
for the three months ended March 31, 2018, compared to
$42,115,000 in the corresponding prior period.
Office
Same-Store
Same-store office segment NOI increased 7.2% on a GAAP basis and
6.5% on a cash basis. The increase in same-store segment net
operating income is primarily due to an increase in revenue at
certain of our California and Washington D.C. properties due to
increases in both occupancy and rental rates, a decrease in real
estate taxes at certain California properties due to real estate
tax refunds related to prior years recorded during the three months
ended March 31, 2018, partially offset by a decrease in
expense reimbursements revenue at certain of our California
properties due to reimbursements owed to tenants, an increase in
general and administrative expenses due to property tax consultant
fees associated with the tax refunds, and a decrease in lease
termination income at one of our California properties.
At March 31, 2018, the Company’s office portfolio was 93.7%
occupied, up 90 basis points year-over-year on a same-store basis
and 93.9% leased, down 80 basis points year-over-year on a same
store basis. The annualized rent per occupied square foot on a same
store basis was $42.30 at March 31, 2018 compared to $39.88 at
March 31, 2017. For the three months ended March 31,
2018, the Company executed 29,715 square feet of recurring leases
at our same-store office portfolio, representing same-store cash
rent growth per square foot of 17.4%.
Total
Office segment NOI decreased to $22,548,000 for the three months
ended March 31, 2018, from $35,052,000 for the three months
ended March 31, 2017. Such decrease was primarily attributable
to the sale of six office properties and a parking garage in 2017,
a decrease in expense reimbursements revenue at certain of our
California properties due to reimbursements owed to tenants, a
decrease due to the transfer of the right to collect supplemental
real estate tax reimbursements which reduced real estate taxes at
our office properly in San Francisco, California sold in March
2017, and a decrease in lease termination income at one of our
California properties, partially offset by an increase due to the
acquisition of two office properties in December 2017 and
January 2018, an increase in revenue at certain of our
California and Washington D.C. properties due to increases in both
occupancy and rental rates, and a decrease in real estate taxes at
certain California properties due to real estate tax refunds
related to prior years recorded during the three months ended
March 31, 2018.
Hotel
Hotel segment NOI was $3,940,000 for the three months ended
March 31, 2018, consistent with $4,075,000 for the three
months ended March 31, 2018.
Multifamily
At March 31, 2017, we owned five multifamily properties,
which were all sold during the last nine months of 2017.
Multifamily segment NOI was $2,006,000 for the three months ended
March 31, 2017.
Lending
Our lending segment primarily consists of our SBA
7(a) lending platform, which is a national lender that
primarily originates loans to small businesses in the hospitality
industry. Lending segment NOI was $1,737,000 for the three months
ended March 31, 2018, compared to $982,000 for the three
months ended March 31, 2017. The increase is primarily due to
higher revenue as a result of the recognition of accretion for
discounts related to increased prepayments on our loans, an
increase in premium income from the sale of the guaranteed portion
of our SBA 7(a) loans, and a decrease in payroll related
expenses, partially offset by a decrease in revenue related to a
break-up fee received during the three months ended March 31,
2017.
Dividends
On March 6, 2018, CIM Commercial Trust’s Board of Directors
approved, and we declared, a quarterly cash dividend of $0.125 per
common share. The dividend was paid on March 29, 2018 to
stockholders of record on March 16, 2018.
In addition, the Board of Directors approved, and we declared, a
quarterly cash dividend of $0.34375 per share of CMCT’s
Series A Preferred Stock. For shares issued during the first
quarter of 2018, the dividend was prorated from the time of
issuance. The dividend was paid on April 16, 2018 to
stockholders of record on April 5, 2018.
About CMCT
CIM Commercial Trust is a real estate investment trust that
primarily acquires, owns, and operates Class A and creative
office assets in vibrant and improving urban communities throughout
the United States. Its properties are primarily located in Los
Angeles, the San Francisco Bay Area and Washington, D.C. CIM
Commercial Trust is operated by affiliates of CIM Group, L.P., a
vertically-integrated owner and operator of real assets with
multi-disciplinary expertise and in-house research, acquisition,
credit analysis, development, finance, leasing, and asset
management capabilities (www.cimcommercial.com).
FORWARD-LOOKING STATEMENTS
The information set forth herein contains “forward-looking
statements.” You can identify these statements by the fact that
they do not relate strictly to historical or current facts or
discuss the business and affairs of CIM Commercial Trust on a
prospective basis. Further, statements that include words such as
“may,” “will,” “project,” “might,” “expect,” “target,” “believe,”
“anticipate,” “intend,” “could,” “would,” “estimate,” “continue,”
“pursue,” or “should” or the negative or other words or expressions
of similar meaning, may identify forward-looking statements.
CIM Commercial Trust bases these forward-looking statements on
particular assumptions that it 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.
These forward-looking statements are necessarily estimates
reflecting the judgment of CIM Commercial Trust 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 forward-looking statements are subject to risks,
uncertainties and other factors, including those set forth in CIM
Commercial Trust’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2017 and the Registration Statement on
Form S-11 (Reg. No. 333-210880) relating to the
Series A Preferred Stock.
As you read and consider the information herein, you are
cautioned to not place undue reliance on these forward-looking
statements. These statements are not guarantees of performance or
results and speak only as of the date hereof. These forward-looking
statements involve risks, uncertainties and assumptions. In light
of these risks and uncertainties, there can be no assurance that
the results and events contemplated by the forward-looking
statements contained herein will in fact transpire. New factors
emerge from time to time, and it is not possible for CIM Commercial
Trust to predict all of them. Nor can CIM Commercial Trust assess
the impact of each such factor or the extent to which any factor,
or combination of factors may cause results to differ materially
from those contained in any forward-looking statement. CIM
Commercial Trust undertakes no obligation to publicly update or
release any revisions to these forward-looking statements to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events, except as required by
law.
CIM COMMERCIAL TRUST CORPORATION AND
SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited and in thousands, except
share and per share data)
March 31, 2018
December 31, 2017 ASSETS Investments in real estate,
net $ 1,085,165 $ 957,725 Cash and cash equivalents 39,883 129,310
Restricted cash 30,311 27,008 Loans receivable, net 70,691 81,056
Accounts receivable, net 10,689 13,627 Deferred rent receivable and
charges, net 86,001 84,748 Other intangible assets, net 12,569
6,381 Other assets 22,675 36,533 TOTAL ASSETS $ 1,357,984 $
1,336,388
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND
EQUITY LIABILITIES: Debt, net $ 641,257 $ 630,852 Accounts
payable and accrued expenses 28,715 26,394 Intangible liabilities,
net 4,349 1,070 Due to related parties 9,640 8,814 Other
liabilities 14,610 14,629 Total liabilities 698,571 681,759
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK: Series A,
$0.001 par value; 36,000,000shares authorized; 1,533,088 and
1,531,408 shares issued and outstanding,respectively, at March 31,
2018 and 1,225,734 and 1,224,712 shares issued andoutstanding,
respectively, at December 31, 2017; liquidation preference of$25.00
per share, subject to adjustment
34,928 27,924 EQUITY:
Series A cumulative redeemable preferred
stock, $0.001 par value; 36,000,000shares authorized; 144,698 and
143,433 shares issued and outstanding,respectively, at March 31,
2018 and 61,435 and 60,592 shares issued andoutstanding,
respectively, at December 31, 2017; liquidation preference of$25.00
per share, subject to adjustment
3,568 1,508
Series L cumulative redeemable preferred
stock, $0.001 par value; 9,000,000shares authorized; 8,080,740
shares issued and outstanding at March 31,2018 and December 31,
2017; liquidation preference of $28.37 per share,subject to
adjustment
229,251 229,251
Common stock, $0.001 par value;
900,000,000 shares authorized; 43,784,939shares issued and
outstanding at March 31, 2018 and December 31, 2017
44 44 Additional paid-in capital 792,512 792,631 Accumulated other
comprehensive income 2,814 1,631 Distributions in excess of
earnings (404,598
)
(399,250 ) Total stockholders' equity 623,591 625,815
Noncontrolling interests 894 890 Total equity 624,485 626,705 TOTAL
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY $ 1,357,984 $
1,336,388
CIM COMMERCIAL TRUST CORPORATION AND
SUBSIDIARIES
Consolidated Statements of
Operations
(Unaudited and in thousands, except per
share data)
Three Months Ended March 31,
2018 2017 REVENUES: Rental and other
property income $ 33,797 $ 51,059 Hotel income 9,689 9,750 Expense
reimbursements 1,609 3,030 Interest and other income 3,303 3,110
48,398 66,949 EXPENSES: Rental and other property operating 18,020
22,960 Asset management and other fees to related parties 6,211
8,700 Interest 6,633 9,773 General and administrative 3,376 1,679
Transaction costs — 13 Depreciation and amortization 13,148 17,231
47,388 60,356 Gain on sale of real estate — 187,734 INCOME BEFORE
PROVISION FOR INCOME TAXES 1,010 194,327 Provision for income taxes
388 392 NET INCOME 622 193,935 Net income attributable to
noncontrolling interests (4 ) (5 ) NET INCOME ATTRIBUTABLE TO THE
COMPANY 618 193,930 Redeemable preferred stock dividends
accumulated (3,152 ) — Redeemable preferred stock dividends
declared (493 ) (31 ) Redeemable preferred stock redemptions 1 —
NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS $ (3,026 ) $
193,899 NET (LOSS) INCOME AVAILABLE TO COMMON STOCKHOLDERS PER
SHARE: Basic $ (0.07 ) $ 2.31 Diluted $ (0.07 ) $ 2.31 WEIGHTED
AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 43,785 84,048
Diluted 43,785 84,048
CIM COMMERCIAL TRUST CORPORATION AND
SUBSIDIARIESFunds from Operations(Unaudited and in
thousands, except per share data)
We believe that FFO is a widely recognized and appropriate
measure of the performance of a REIT and that it is frequently used
by securities analysts, investors and other interested parties in
the evaluation of REITs, many of which present FFO when reporting
their results. FFO represents net income (loss) available to common
stockholders, computed in accordance with generally accepted
accounting principals (“GAAP”), which reflects the deduction of
redeemable preferred stock dividends accumulated, excluding gains
(or losses) from sales of real estate, impairment of real estate,
and real estate depreciation and amortization. We calculate FFO in
accordance with the standards established by the National
Association of Real Estate Investment Trusts (“NAREIT”).
Like any metric, FFO should not be used as the only measure of
our performance because it excludes depreciation and amortization
and captures neither the changes in the value of our real estate
properties that result from use or market conditions nor the level
of capital expenditures and leasing commissions necessary to
maintain the operating performance of our properties, all of which
have real economic effect and could materially impact our operating
results. Other REITs may not calculate FFO in accordance with the
standards established by the NAREIT; accordingly, our FFO may not
be comparable to the FFOs of other REITs. Therefore, FFO should be
considered only as a supplement to net income (loss) as a measure
of our performance and should not be used as a supplement to or
substitute measure for cash flows from operating activities
computed in accordance with GAAP. FFO should not be used as a
measure of our liquidity, nor is it indicative of funds available
to fund our cash needs, including our ability to pay dividends.
The following table sets forth a reconciliation of net (loss)
income available to common stockholders to FFO available to common
stockholders:
Three Months Ended March 31,
2018 2017 Net (loss) income available
to common stockholders $ (3,026 ) $ 193,899 Depreciation and
amortization 13,148 17,231 Gain on sale of depreciable assets —
(187,734 ) FFO available to common stockholders $ 10,122 $ 23,396
FFO available to common stockholders per diluted share $ 0.23 $
0.28
CIM COMMERCIAL TRUST CORPORATION AND
SUBSIDIARIESEarnings Per Share(Unaudited and in
thousands, except per share data)
Earnings per share (“EPS”) for the year-to-date period may
differ from the sum of quarterly EPS amounts due to the required
method for computing EPS in the respective periods. In addition,
EPS is calculated independently for each component and may not be
additive due to rounding.
The following table reconciles the numerator and denominator
used in computing our basic and diluted per-share amounts for net
(loss) income available to common stockholders:
Three Months Ended March 31,
2018 2017 Numerator: Net (loss)
income available to common stockholders $ (3,026 ) $ 193,899
Redeemable preferred stock dividends declared on dilutive shares —
— Numerator for dilutive net (loss) income available to common
stockholders $ (3,026 ) $ 193,899
Denominator: Basic
weighted average shares of Common Stock outstanding 43,785 84,048
Effect of dilutive securities—contingently issuable shares — —
Diluted weighted average shares and common stock equivalents
outstanding 43,785 84,048
Net (loss) income available to common
stockholders per share: Basic $ (0.07 ) $ 2.31 Diluted $ (0.07
) $ 2.31
CIM COMMERCIAL TRUST CORPORATION AND
SUBSIDIARIESReconciliation of Net Operating
Income(Unaudited and in thousands)
We internally evaluate the operating performance and financial
results of our real estate segments based on segment net operating
income, which is defined as rental and other property income and
expense reimbursements less property related expenses and excludes
non-property income and expenses, interest expense, depreciation
and amortization, corporate related general and administrative
expenses, gain (loss) on sale of real estate, impairment of real
estate, transaction costs, and provision for income taxes. For the
lending segment, we define net operating income as interest income,
net of interest expense and general overhead expenses. We also
evaluate the operating performance and financial results of our
operating segments using cash basis net operating income. We define
cash NOI as segment NOI adjusted to exclude the effect of the
straight lining of rents, acquired above/below market lease
amortization and other adjustments required by GAAP.
Segment NOI and cash NOI are not measures of operating results
or cash flows from operating activities as measured by GAAP and
should not be considered alternatives to income from continuing
operations, or to cash flows as a measure of liquidity, or as an
indication of our performance or of our ability to pay dividends.
Companies may not calculate segment NOI or cash NOI in the same
manner. We consider segment NOI and cash NOI to be useful
performance measures to investors and management because, when
compared across periods, they reflect the revenues and expenses
directly associated with owning and operating our properties and
the impact to operations from trends in occupancy rates, rental
rates and operating costs, providing a perspective not immediately
apparent from income from continuing operations. Additionally, we
believe that cash NOI is helpful to investors because it eliminates
straight line rent and other non-cash adjustments to revenue and
expenses.
To facilitate a comparison of our segments and portfolio between
reporting periods, we calculate comparable amounts for a subset of
our segments and portfolio referred to as our “same-store
properties.” Our same-store properties are ones which we have owned
and operated in a consistent manner and reported in our
consolidated results during the entire span of the periods being
reported. We excluded from our same-store property set this quarter
any properties (i) acquired on or after January 1, 2017;
(ii) sold or otherwise removed from our consolidated financial
statements before March 31, 2018; or (iii) that underwent
a major repositioning project we believed significantly affected
its results at any point during the period commencing on
January 1, 2017 and ending on March 31, 2018.
Below is a reconciliation of cash NOI to segment NOI and net
income for the three months ended March 31, 2018 and 2017.
Three Months Ended March 31, 2018
Non-
Same- Same- Store Store
Total Multi- Office Office
Office Hotel family Lending
Total Cash net operating income $ 20,234 $ 928 $
21,162 $ 3,938 $ — $ 1,726 $ 26,826
Deferred rent and amortization
ofintangible assets, liabilities, andlease inducements
657 729 1,386 2 — — 1,388
Straight line rent, below-marketground
lease and amortization ofintangible assets
— — — — — 11 11 Segment net operating income $ 20,891 $ 1,657 $
22,548 $ 3,940 $ — $ 1,737 $ 28,225
Asset management and other fees torelated
parties
(5,610 ) Interest expense (6,449 ) General and administrative
(2,008 ) Depreciation and amortization (13,148 ) Income before
provision for income taxes 1,010 Provision for income taxes (388 )
Net income 622
Net income attributable tononcontrolling
interests
(4 )
Net income attributable to theCompany
$ 618
Three Months Ended March 31, 2017 Non-
Same- Same- Store Store Total
Multi- Office Office Office
Hotel family Lending Total Cash
net operating income $ 18,994 $ 13,646 $ 32,640 $ 4,071 $ 2,137 $
973 $ 39,821
Deferred rent and amortization
ofintangible assets, liabilities, andlease inducements
141 2,227 2,368 4 7 — 2,379
Straight line rent, below-marketground
lease and amortization ofintangible assets
— (312 ) (312 ) — (138 ) 9 (441 ) Lease termination income 356 —
356 — — — 356 Segment net operating income $ 19,491 $ 15,561 $
35,052 $ 4,075 $ 2,006 $ 982 $ 42,115
Asset management and other fees torelated
parties
(7,856 ) Interest expense (9,631 ) General and administrative (791
) Transaction costs (13 ) Depreciation and amortization (17,231 )
Gain on sale of real estate 187,734
Income before provision for
incometaxes
194,327
Provision for income taxes
(392 ) Net income 193,935
Net income attributable tononcontrolling
interests
(5 )
Net income attributable to theCompany
$ 193,930
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180510006379/en/
For CIM Commercial Trust CorporationMedia Relations:Bill Mendel,
212-397-1030bill@mendelcommunications.comorShareholder
Relations:Steve Altebrando,
646-652-8473shareholders@cimcommercial.com
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