CIM Commercial Trust Corporation (NASDAQ: CMCT and TASE: CMCT-L)
("we", "our", “CMCT”, “CIM Commercial”, or the "Company"), a real
estate investment trust ("REIT") that primarily acquires, owns, and
operates Class A and creative office assets in vibrant and
improving metropolitan communities throughout the United States,
today reported operating results for the three and nine months
ended September 30, 2019.
On September 3, 2019, the previously announced one-for-three
reverse stock split of our common stock became effective. All of
the share and per share amounts in this release reflect the effect
of such reverse stock split.
Third Quarter 2019 Highlights
- Annualized rent per occupied square foot1 on a same-store2
basis increased 10.2% to $47.96 as of September 30, 2019 compared
to $43.52 as of September 30, 2018.
- Our same-store2 office portfolio was 87.8% leased as of
September 30, 2019 compared to 95.9% as of September 30, 2018. The
decrease is primarily due to the repositioning of an office
property in Los Angeles, California.
- During the third quarter of 2019, we executed 43,308 square
feet of leases with terms longer than 12 months, of which 25,626
square feet were recurring leases executed at our same-store2
office portfolio, representing same-store2 cash rent growth per
square foot of 8.2%.
- Net loss attributable to common stockholders was $1,622,000, or
$0.11 per diluted share, for the third quarter of 2019 compared to
$4,448,000, or $0.30 per diluted share, for the third quarter of
2018.
- Same-store2 office segment net operating income3 ("NOI")
increased 0.8%, while same-store2 office cash NOI3 decreased 6.5%,
for the third quarter of 2019 as compared to the corresponding
period in 2018. The decrease in same-store2 office cash NOI3 is
primarily due to the repositioning of an office property in Los
Angeles, California.
- Funds from operations (“FFO”) attributable to common
stockholders4 was $3,256,000, or $0.22 per diluted share, for the
third quarter of 2019 compared to $8,862,000, or $0.61 per diluted
share, for the third quarter of 2018.
1 Annualized rent per occupied square foot represents gross
monthly base rent under leases commenced as of the specified
periods, multiplied by twelve. 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.
2 Please see our definition of "same-store properties" on page
12.
3 Please see our reconciliations of office, hotel, lending, and
total segment NOI to net income attributable to the Company
starting on page 13.
4 Please see page 11 for a reconciliation of net income (loss)
attributable to common stockholders to FFO attributable to common
stockholders and a discussion of the benefits and limitations of
FFO as a supplemental measure of operating performance.
Completion of the Program to Unlock Embedded Value in Our
Portfolio and Improve Trading Liquidity of Our Common Stock
We completed the previously announced program to unlock embedded
value in our portfolio, enhance growth prospects and improve the
trading liquidity of our common stock (the "Program to Unlock
Embedded Value in Our Portfolio and Improve Trading Liquidity of
Our Common Stock"):
- Sale of Assets. During 2019, we
sold ten properties in connection with the Program to Unlock
Embedded Value in Our Portfolio and Improve Trading Liquidity of
Our Common Stock and a review of our portfolio. These sales
generated an aggregate gross sales price to the Company of
$990,996,000. No further property sales will be made under the
Program to Unlock Embedded Value in Our Portfolio and Improve
Trading Liquidity of Our Common Stock.
- Repayment of Certain Indebtedness.
We used a portion of the net proceeds from the asset sales to repay
certain of our indebtedness.
- Return of Capital to Holders of Common
Stock. On August 30, 2019, we paid a special cash dividend
of $42.00 per share of common stock ($14.00 per share of common
stock prior to the one-for-three reverse stock split of our common
stock), or $613,294,000 in the aggregate.
- CIM REIT Liquidation. We have been
informed by CIM Group that the liquidation of CIM Urban REIT, LLC
(“CIM Urban REIT”), a CIM-operated vehicle that was our principal
stockholder, has been substantially completed. In connection with
such liquidation, CIM Urban REIT (i) distributed approximately
10,624,000 shares of our common stock, representing approximately
72.8% of the outstanding shares of our common stock as of November
7, 2019, to a diverse group of institutional investors that were
former members of CIM Urban REIT and (ii) sold approximately
2,468,000 shares of our common stock in October 2019, representing
approximately 16.9% of the outstanding shares of our common stock
as of November 7, 2019, for $19.1685 per share to an affiliate of
CIM Group in a private transaction. As of November 7, 2019, CIM
Group, its affiliates, and directors and officers of CIM Commercial
have an aggregate economic interest in approximately 19.2% of the
outstanding shares of our common stock.
On October 22, 2019, we commenced a cash tender offer to
purchase up to one-third of our outstanding shares of Series L
preferred stock at a purchase price of $29.12 per share (of which
$1.39 reflects the amount of dividends on the Series L preferred
stock that will be accrued as of November 20, 2019, the expiration
date of the tender offer), as converted to and to be paid in new
Israeli shekels ("ILS").
Management Commentary
“I am pleased to report that our previously announced plan to
unlock embedded value in our portfolio has been successfully
completed. We sold nearly $1 billion of assets at 98.5% of
appraised value and paid a special dividend of approximately $613.3
million to our common stockholders,” said David Thompson, CIM
Commercial’s Chief Executive Officer.
"The recent purchase of approximately $47.3 million of our
common stock by an affiliate of CIM Group (at approximately $19.17
per share) from the former principal stockholder of the Company
demonstrates CIM Group's belief in the strength and potential of
CIM Commercial's underlying portfolio of properties. It further
aligns the interests of the stockholders of CIM Commercial with CIM
Group, the operator of CIM Commercial.”
“Going forward, we are focused on growing CIM Commercial through
three value-add projects already underway, contractual rent
increases, increasing below market in-place leases to market rates
in our high-quality metropolitan portfolio and accretive
acquisitions. We will also continue to actively manage our
portfolio through ongoing hold/sell analysis to ensure each asset
fits our overall strategy.”
Guidance
We reaffirm our previously announced guidance for 2019 NOI and
net income (loss) attributable to common stockholders as
follows:
2019 Outlook
Low
High
(Unaudited, estimated and in
millions)
Cash NOI from retained properties and
lending activities
$
47.1
$
48.1
Non-cash adjustments from retained
properties and lending activities
4.1
4.1
Segment NOI from retained properties and
lending activities
51.2
52.2
Segment NOI from sold properties
16.0
16.0
Total Segment NOI
67.2
68.2
Asset management and other fees to related
parties and G&A
(21.0
)
(20.5
)
Depreciation and amortization, interest
expense, non-segment interest and other income, provision for
income taxes, redeemable preferred stock dividends declared or
accumulated, and net income attributable to noncontrolling
interests
(52.2
)
(52.2
)
Gain on sale of real estate, impairment of
real estate, loss on early extinguishment of debt, and transaction
costs
333.6
333.6
Net income attributable to common
stockholders
$
327.6
$
329.1
Key 2019 Assumptions
- No acquisitions or additional dispositions after the sale of
two office properties and one development site, all in Washington,
D.C., on July 30, 2019, will occur during the remainder of
2019.
- No future transaction costs, offerings or share repurchases
(including the tender offer in respect of the Series L preferred
stock) have been assumed, except for continued monthly issuances of
Series A preferred units.
Financial Highlights
As of September 30, 2019, our real estate portfolio consisted of
11 assets, all of which are fee-simple properties. The portfolio
included 9 office properties (including one development site, which
is being used as a parking lot), totaling approximately 1.3 million
rentable square feet, and one hotel, with an ancillary parking
garage, which has 503 rooms. We also own and operate a lending
business.
Third Quarter 2019
Net loss attributable to common stockholders was $1,622,000, or
$0.11 per diluted share of common stock, for the three months ended
September 30, 2019, compared to $4,448,000, or $0.30 per diluted
share of common stock, for the three months ended September 30,
2018, primarily due to asset sales. The decrease was primarily
attributable to a decrease of $8,130,000 in depreciation and
amortization, a decrease of $4,294,000 in interest expense not
allocated to our operating segments, a decrease of $2,052,000 in
asset management and other fees to related parties not allocated to
our operating segments, an increase of $1,408,000 in interest and
other income not allocated to our operating segments, and the gain
on sale of real estate of $302,000, partially offset by a decrease
of $12,405,000 in segment NOI5, an increase of $549,000 in
redeemable preferred stock dividends declared or accumulated, an
increase of $325,000 in transaction costs, and an increase of
$99,000 in general and administrative expense not allocated to our
operating segments.
FFO attributable to common stockholders6 was $3,256,000, or
$0.22 per diluted share of common stock, for the three months ended
September 30, 2019, compared to $8,862,000, or $0.61 per diluted
share of common stock, for the three months ended September 30,
2018, primarily due to asset sales. The decrease in FFO
attributable to common stockholders6 was primarily attributable to
a decrease of $12,405,000 in segment NOI5, an increase of $549,000
in redeemable preferred stock dividends declared or accumulated, an
increase of $325,000 in transaction costs, and an increase of
$99,000 in general and administrative expense not allocated to our
operating segments, partially offset by a decrease of $4,294,000 in
interest expense not allocated to our operating segments, a
decrease of $2,052,000 in asset management and other fees to
related parties not allocated to our operating segments, and an
increase of $1,408,000 in interest and other income not allocated
to our operating segments.
Year to Date 2019
Net income attributable to common stockholders was $334,269,000,
or $21.24 per diluted share of common stock, for the nine months
ended September 30, 2019, compared to net loss attributable to
common stockholders of $(9,350,000), or $(0.64) per diluted share
of common stock, for the nine months ended September 30, 2018.
FFO attributable to common stockholders6 was $(7,840,000), or
$(0.54) per diluted share of common stock, for the nine months
ended September 30, 2019, compared to $30,433,000, or $2.09 per
diluted share of common stock, for the nine months ended September
30, 2018. FFO attributable to common stockholders6 for the nine
months ended September 30, 2019 includes $29,982,000, or $2.05 per
diluted share of common stock in loss on early extinguishment of
debt incurred in connection with the sale of certain assets in 2019
primarily related to the legal defeasance and prepayment of
mortgage loans collateralized by such properties.
5 Please see our reconciliations of office, hotel, lending, and
total segment NOI to net income attributable to the Company
starting on page 13.
6 Please see page 11 for a reconciliation of net income (loss)
attributable to common stockholders to FFO attributable to common
stockholders and a discussion of the benefits and limitations of
FFO as a supplemental measure of operating performance.
Segment Information
Our reportable segments during the three months ended September
30, 2019 and 2018 consisted of two types of commercial real estate
properties, namely, office and hotel, as well as a segment for our
lending business. Net loss attributable to common stockholders was
$1,622,000, or $0.11 per diluted share of common stock, for the
three months ended September 30, 2019, compared to $4,448,000, or
$0.30 per diluted share of common stock, for the three months ended
September 30, 2018, which represents a decrease of $2,826,000, or
$0.19 per diluted share of common stock. Total segment NOI7 was
$12,927,000 for the three months ended September 30, 2019, compared
to $25,332,000 for the three months ended September 30, 2018.
Office
Same-Store8
Same-store8 office segment NOI7 increased 0.8% on a GAAP basis
and decreased 6.5% on a cash basis for the three months ended
September 30, 2019 compared to the three months ended September 30,
2018. The increase in same-store8 office segment NOI7 is primarily
due to an increase in rental revenue at certain of our properties
due to increases in rental rates as a result of leasing activity
and an increase in expense reimbursements at one of our properties,
partially offset by lower revenues and higher expenses at an office
property in Los Angeles, California that is being repositioned into
vibrant, collaborative office space after the expiration in April
2019 of a lease agreement for 100% of such property, which space
has been partially occupied by a related party since May 2019.
At September 30, 2019, the Company’s same-store8 office
portfolio was 87.2% occupied, a decrease of 710 basis points
year-over-year on a same-store8 basis, and 87.8% leased, a decrease
of 810 basis points year-over-year on a same-store8 basis. The
annualized rent per occupied square foot9 on a same-store basis was
$47.96 at September 30, 2019 compared to $43.52 at September 30,
2018. During the three months ended September 30, 2019, the Company
executed 25,626 square feet of recurring leases at our same-store8
office portfolio, representing same-store8 cash rent growth per
square foot of 8.2%.
Total
Office segment NOI7 decreased to $9,639,000 for the three months
ended September 30, 2019, from $21,898,000 for the three months
ended September 30, 2018. The decrease is primarily attributable to
the sale of three office properties and a parking garage in
Oakland, California, the sale of an office property in Washington,
D.C., and the sale of an office property in San Francisco,
California, all of which were consummated in March 2019, the sale
of an office property in Oakland, California, which was consummated
in May 2019, the sale of two office properties in Washington, D.C.,
which was consummated in July 2019, and lower revenues and higher
expenses at an office property in Los Angeles, California that is
being repositioned into vibrant, collaborative office space after
the expiration in April 2019 of a lease agreement for 100% of such
property, which space has been partially occupied by a related
party since May 2019, partially offset by increases in rental
revenue at certain of our properties due to increases in rental
rates as a result of leasing activity and an increase in expense
reimbursements at one of our properties.
7 Please see our reconciliations of office, hotel, lending, and
total segment NOI to net income attributable to the Company
starting on page 13.
8 Please see our definition of "same-store properties" on page
12.
9 Annualized rent per occupied square foot represents gross
monthly base rent under leases commenced as of the specified
periods, multiplied by twelve. 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.
Hotel
Hotel segment NOI10 was $2,399,000 for the three months ended
September 30, 2019, compared to $2,596,000 for the three months
ended September 30, 2018.
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 NOI10 was $889,000 for the three months ended September 30,
2019, compared to $838,000 for the three months ended September 30,
2018. The increase is primarily attributable to a decrease in
interest expense as a result of a reduction in the balance
outstanding on our SBA 7(a) loan-backed notes and secured
borrowings and an increase in servicing asset income, partially
offset by a decrease in premium income from the sale of the
guaranteed portion of our SBA 7(a) loans.
Debt and Equity
During the three months ended September 30, 2019, we issued
490,374 Series A preferred units, with each Series A preferred unit
consisting of one share of Series A preferred stock and one warrant
to purchase 0.25 shares of our common stock, resulting in net
proceeds of approximately $11,179,000. Net proceeds represent gross
proceeds offset by costs specifically identifiable to the offering
of the Series A preferred units, such as commissions, dealer
manager fees, and other offering fees and expenses.
On September 3, 2019, we effectuated a one-for-three reverse
stock split of our common stock (the "Reverse Stock Split").
On October 22, 2019, we commenced a cash tender offer to
purchase up to one-third of our outstanding shares of Series L
preferred stock at a purchase price of $29.12 per share (of which
$1.39 reflects the amount of dividends on the Series L preferred
stock that will be accrued as of November 20, 2019, the expiration
date of the tender offer), as converted to and to be paid in new
Israeli shekels ("ILS").
Dispositions
On July 30, 2019, we sold 100% fee-simple interests in two
office properties and one development site, all in Washington,
D.C., to an unrelated third-party for an aggregate gross sales
price of $181,000,000.
10 Please see our reconciliations of office, hotel, lending, and
total segment NOI to net income attributable to the Company
starting on page 13.
Dividends
On August 8, 2019, we declared a quarterly cash dividend of
$0.0750 per share of our common stock ($0.0250 per share of our
common stock prior to the Reverse Stock Split), which was paid on
September 18, 2019 to stockholders of record at the close of
business on September 6, 2019.
On August 8, 2019, in connection with the Program to Unlock
Embedded Value in Our Portfolio and Improve Trading Liquidity of
Our Common Stock, we declared a special cash dividend of $42.00 per
share of our common stock ($14.00 per share of common stock prior
to the Reverse Stock Split), or $613,294,000 in the aggregate, that
was paid on August 30, 2019 to stockholders of record at the close
of business on August 19, 2019. The Special Dividend was funded
primarily by the net proceeds (after the repayment of debt)
received from the sale of ten properties during 2019 and borrowings
on our revolving credit facility.
Further, we declared a quarterly cash dividend of $0.34375 per
share of our Series A preferred stock, or portion thereof for
issuances during the period from July 1, 2019 to September 30,
2019, which was paid on October 15, 2019 to stockholders of record
at the close of business on October 7, 2019.
About CIM Commercial
CIM Commercial is a real estate investment trust that primarily
acquires, owns, and operates Class A and creative office assets in
vibrant and improving metropolitan communities throughout the
United States. Its properties are primarily located in Los Angeles
and the San Francisco Bay Area. CIM Commercial 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 onsite property management capabilities
(www.cimcommercial.com).
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, including, among others, statements about CIM Commercial's
outlook for net income (loss), NOI and derivations thereof. Such
forward-looking statements are based on particular assumptions that
management of CIM Commercial 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 CIM Commercial 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 CIM Commercial's development
activities, (ii) the ability of CIM Commercial to raise in place
rents to existing market rents, and (iii) general economic, market
and other conditions. For a further list and description of the
risks and uncertainties inherent in forward-looking statements, see
CIM Commercial's Annual Report on Form 10-K for the fiscal year
ended December 31, 2018 and the Registration Statement on Form S-11
(No. 333-210880) relating to the Series A preferred stock.
Forward-looking statements are not guarantees of performance or
results and speak only as of the date such statements are made. CIM
Commercial undertakes no obligation to publicly update or release
any revisions to its forward-looking statements, whether to reflect
new information, future events, changes in assumptions or
circumstances or otherwise, except as required by law.
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES
Consolidated Balance
Sheets
(Unaudited and in thousands,
except share and per share amounts)
September 30, 2019
December 31, 2018
ASSETS
Investments in real estate, net
$
505,966
$
1,040,937
Cash and cash equivalents
14,600
54,931
Restricted cash
11,507
22,512
Loans receivable, net
71,576
83,248
Accounts receivable, net
5,121
6,640
Deferred rent receivable and charges,
net
34,316
84,230
Other intangible assets, net
7,740
9,531
Other assets
9,026
18,197
Assets held for sale, net
—
22,175
TOTAL ASSETS
$
659,852
$
1,342,401
LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND EQUITY
LIABILITIES:
Debt, net
$
227,727
$
588,671
Accounts payable and accrued expenses
16,960
41,598
Intangible liabilities, net
1,562
2,872
Due to related parties
6,740
10,951
Other liabilities
9,046
16,535
Liabilities associated with assets held
for sale, net
—
28,766
Total liabilities
262,035
689,393
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK: Series A,
$0.001 par value; 36,000,000 shares authorized; 1,642,763 and
1,641,563 shares issued and outstanding, respectively, at September
30, 2019 and 1,566,386 and 1,565,346 shares issued and outstanding,
respectively, at December 31, 2018; liquidation preference of
$25.00 per share, subject to adjustment
37,216
35,733
EQUITY:
Series A cumulative redeemable preferred
stock, $0.001 par value; 36,000,000 shares authorized; 2,462,104
and 2,450,417 shares issued and outstanding, respectively, at
September 30, 2019 and 1,287,169 and 1,281,804 shares issued and
outstanding, respectively, at December 31, 2018; liquidation
preference of $25.00 per share, subject to adjustment
60,987
31,866
Series L cumulative redeemable preferred
stock, $0.001 par value; 9,000,000 shares authorized; 8,080,740
shares issued and outstanding at September 30, 2019 and December
31, 2018; liquidation preference of $28.37 per share, subject to
adjustment
229,251
229,251
Common stock, $0.001 and $0.003 par value;
900,000,000 shares authorized; 14,602,149 and 14,598,357 shares
issued and outstanding at September 30, 2019 and December 31, 2018,
respectively 11
15
44
Additional paid-in capital
788,342
790,354
Accumulated other comprehensive income
—
1,806
Distributions in excess of earnings
(718,493
)
(436,883
)
Total stockholders' equity
360,102
616,438
Noncontrolling interests
499
837
Total equity
360,601
617,275
TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND EQUITY
$
659,852
$
1,342,401
11 All share and per share amounts have been adjusted to give
retroactive effect to the one-for-three reverse stock split of our
common stock effected on September 3, 2019.
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES
Consolidated Statements of
Operations
(Unaudited and in thousands,
except per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
REVENUES:
Rental and other property income
$
17,306
$
36,606
$
73,306
$
109,575
Hotel income
7,734
7,715
27,087
27,564
Interest and other income
4,175
3,286
12,955
10,306
29,215
47,607
113,348
147,445
EXPENSES:
Rental and other property operating
13,286
20,405
49,197
59,086
Asset management and other fees to related
parties
3,981
6,121
14,155
18,475
Interest
2,403
6,965
8,998
20,409
General and administrative
1,384
1,205
4,793
6,496
Transaction costs
340
15
600
359
Depreciation and amortization
5,180
13,310
21,995
39,783
Loss on early extinguishment of debt
—
—
29,982
—
Impairment of real estate
—
—
69,000
—
26,574
48,021
198,720
144,608
Gain on sale of real estate
302
—
433,104
—
INCOME (LOSS) BEFORE PROVISION FOR INCOME
TAXES
2,943
(414
)
347,732
2,837
Provision for income taxes
87
115
686
795
NET INCOME (LOSS)
2,856
(529
)
347,046
2,042
Net (income) loss attributable to
noncontrolling interests
(8
)
1
165
(15
)
NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY
2,848
(528
)
347,211
2,027
Redeemable preferred stock dividends
declared or accumulated
(4,470
)
(3,921
)
(12,934
)
(11,380
)
Redeemable preferred stock redemptions
—
1
(8
)
3
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS
$
(1,622
)
$
(4,448
)
$
334,269
$
(9,350
)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS PER SHARE12:
Basic
$
(0.11
)
$
(0.30
)
$
22.90
$
(0.64
)
Diluted
$
(0.11
)
$
(0.30
)
$
21.24
$
(0.64
)
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING12:
Basic
14,598
14,598
14,598
14,597
Diluted
14,599
14,598
15,825
14,597
12 All share and per share amounts have been adjusted to give
retroactive effect to the one-for-three reverse stock split of our
common stock effected on September 3, 2019.
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES
Earnings Per Share
(Unaudited and in thousands,
except per share amounts)
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 for 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 income
(loss) attributable to common stockholders for the three and nine
months ended September 30, 2019 and 2018:
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Numerator:
Net (loss) income attributable to common
stockholders
$
(1,622
)
$
(4,448
)
$
334,269
$
(9,350
)
Redeemable preferred stock dividends
declared on dilutive shares13
—
—
1,917
—
Diluted net (loss) income attributable to
common stockholders
$
(1,622
)
$
(4,448
)
$
336,186
$
(9,350
)
Denominator14:
Basic weighted average shares of Common
Stock outstanding
14,598
14,598
14,598
14,597
Effect of dilutive securities—contingently
issuable shares13
1
—
1,227
—
Diluted weighted average shares and common
stock equivalents outstanding
14,599
14,598
15,825
14,597
Net (loss) income attributable to
common stockholders per share14:
Basic
$
(0.11
)
$
(0.30
)
$
22.90
$
(0.64
)
Diluted
$
(0.11
)
$
(0.30
)
$
21.24
$
(0.64
)
13 For the three months ended September 30, 2019 and the three
and nine months ended September 30, 2018, the effect of certain
shares of redeemable preferred stock were excluded from the
computation of diluted net income (loss) attributable to common
stockholders and the diluted weighted average shares and common
stock equivalents outstanding as such inclusion would be
anti-dilutive.
14 All share and per share amounts have been adjusted to give
retroactive effect to the one-for-three reverse stock split of our
common stock effected on September 3, 2019.
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES
Funds from Operations
(Unaudited and in thousands,
except per share amounts)
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) attributable to common stockholders, computed in accordance
with generally accepted accounting principles ("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 (the "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 income (loss) attributable to common
stockholders to FFO attributable to common stockholders for the
three and nine months ended September 30, 2019 and 2018:
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Numerator:
Net (loss) income attributable to common
stockholders
$
(1,622
)
$
(4,448
)
$
334,269
$
(9,350
)
Depreciation and amortization
5,180
13,310
21,995
39,783
Impairment of real estate
—
—
69,000
—
Gain on sale of depreciable assets15
(302
)
—
(433,104
)
—
FFO attributable to common
stockholders
$
3,256
$
8,862
$
(7,840
)
$
30,433
Redeemable preferred stock dividends
declared on dilutive shares16
—
—
(1
)
264
Diluted FFO attributable to common
stockholders
$
3,256
$
8,862
$
(7,841
)
$
30,697
Denominator17:
Basic weighted average shares of Common
Stock outstanding
14,598
14,598
14,598
14,597
Effect of dilutive securities—contingently
issuable shares16
1
—
1
120
Diluted weighted average shares and common
stock equivalents outstanding
14,599
14,598
14,599
14,717
FFO attributable to common stockholders
per share17:
Basic
$
0.22
$
0.61
$
(0.54
)
$
2.08
Diluted
$
0.22
$
0.61
$
(0.54
)
$
2.09
15 In connection with the sale of certain properties during the
three and nine months ended September 30, 2019, we recognized $0
and $29,982,000, respectively, or $0.00 and $2.05 per diluted share
of common stock, respectively, in loss on early extinguishment of
debt incurred in connection with the sale of certain assets in 2019
primarily related to the legal defeasance and prepayment of
mortgage loans collateralized by such properties. Such loss on
early extinguishment of debt is not included in the adjustment for
the gain on sale of depreciable assets presented in the table
above.
16 For the three months ended September 30, 2019 and 2018 and
the nine months ended September 30, 2019, the effect of certain
shares of redeemable preferred stock were excluded from the
computation of diluted FFO attributable to common stockholders and
the diluted weighted average shares and common stock equivalents
outstanding as such inclusion would be anti-dilutive.
17 All share and per share amounts have been adjusted to give
retroactive effect to the one-for-three reverse stock split of our
common stock effected on September 3, 2019.
CIM COMMERCIAL TRUST CORPORATION AND
SUBSIDIARIES Reconciliation 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 NOI, 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, gain (loss) on early
extinguishment of debt, impairment of real estate, transaction
costs, and provision for income taxes. For our lending segment, we
define segment NOI 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 NOI, or "cash NOI". 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 July 1, 2018; (ii) sold or
otherwise removed from our consolidated financial statements on or
before September 30, 2019; or (iii) that underwent a major
repositioning project we believed significantly affected its
results at any point during the period commencing on July 1, 2018
and ending on September 30, 2019.
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES
Reconciliation of Net
Operating Income (Continued)
(Unaudited and in
thousands)
Below is a reconciliation of cash NOI to
segment NOI and net income (loss) attributable to the Company for
the three months ended September 30, 2019 and 2018.
Three Months Ended September
30, 2019
Same-Store
Office
Non-Same-
Store Office
Total Office
Hotel
Lending
Total
Cash net operating income excluding lease
termination
income
$
7,399
$
1,221
$
8,620
$
2,398
$
889
$
11,907
Cash lease termination income
—
—
—
—
—
—
Cash net operating income
7,399
1,221
8,620
2,398
889
11,907
Deferred rent and amortization of
intangible assets,
liabilities, and lease inducements
1,197
(178
)
1,019
1
—
1,020
Straight line lease termination income
—
—
—
—
—
—
Segment net operating income
8,596
1,043
9,639
2,399
889
12,927
Interest and other income
1,408
Asset management and other fees to related
parties
(3,329
)
Interest expense
(2,038
)
General and administrative
(807
)
Transaction costs
(340
)
Depreciation and amortization
(5,180
)
Gain on sale of real estate
302
Income before provision for income
taxes
2,943
Provision for income taxes
(87
)
Net income
2,856
Net income attributable to noncontrolling
interests
(8
)
Net income attributable to the Company
$
2,848
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES
Reconciliation of Net
Operating Income (Continued)
(Unaudited and in
thousands)
Three Months Ended September
30, 2018
Same-Store
Office
Non-Same- Store Office
Total Office
Hotel
Lending
Total
Cash net operating income excluding lease
termination
income
$
7,859
$
13,549
$
21,408
$
2,590
$
838
$
24,836
Cash lease termination income
57
—
57
—
—
57
Cash net operating income
7,916
13,549
21,465
2,590
838
24,893
Deferred rent and amortization of
intangible assets, liabilities, and lease inducements
608
(175
)
433
6
—
439
Straight line lease termination income
—
—
—
—
—
—
Segment net operating income
8,524
13,374
21,898
2,596
838
25,332
Asset management and other fees to related
parties
(5,381
)
Interest expense
(6,332
)
General and administrative
(708
)
Transaction costs
(15
)
Depreciation and amortization
(13,310
)
Loss before provision for income taxes
(414
)
Provision for income taxes
(115
)
Net loss
(529
)
Net loss attributable to noncontrolling
interests
1
Net loss attributable to the Company
$
(528
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191108005226/en/
For CIM Commercial Trust Corporation Media Relations: Bill
Mendel, 212-397-1030 bill@mendelcommunications.com or Shareholder
Relations: Steve Altebrando, 646-652-8473 shareholders@cimcommercial.com
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