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 months and year
ended December 31, 2019.
Fourth Quarter 2019 Highlights
- Annualized rent per occupied square foot(1) on a same-store(2)
basis increased 9.7% to $48.18 as of December 31, 2019 compared to
$43.91 as of December 31, 2018.
- Our same-store(2) office portfolio was 87.0% leased as of
December 31, 2019 compared to 96.7% as of December 31, 2018. The
decrease is primarily due to the repositioning of an office
property in Los Angeles, California.
- During the fourth quarter of 2019, we executed 27,956 square
feet of leases with terms longer than 12 months, which were all
recurring leases executed at our same-store(2) office portfolio,
representing same-store(2) cash rent growth per square foot of
7.1%.
- Net loss attributable to common stockholders was $11,573,000,
or $0.79 per diluted share, for the fourth quarter of 2019 compared
to $4,948,000, or $0.34 per diluted share, for the fourth quarter
of 2018.
- Same-store(2) office segment net operating income(3) ("NOI")
decreased 12.4%, while same-store(2) office cash NOI(4) decreased
15.2%, for the fourth quarter of 2019 as compared to the
corresponding period in 2018. The decrease in same-store(2) office
cash NOI(4) is primarily due to the repositioning of an office
property in Los Angeles, California.
- Funds from operations (“FFO”) attributable to common
stockholders(5) was $(6,194,000), or $(0.42) per diluted share, for
the fourth quarter of 2019 compared to $8,497,000, or $0.58 per
diluted share, for the fourth quarter of 2018.
- Core FFO attributable to common stockholders(6) was $(346,000),
or $(0.02) per diluted share, for the fourth quarter of 2019
compared to $9,625,000, or $0.66 per diluted share, for the fourth
quarter of 2018.
Management Commentary
"2019 was a transformational year for CIM Commercial as we took
aggressive steps to deliver to shareholders the value created in
our real estate portfolio and significantly increased both the
public float of our common stock and the economic interests of
insiders in our common stock,” said David Thompson, CMCT’s Chief
Executive Officer.
“Our immediate focus is on executing three expected high return,
value-add projects that will begin contributing to the Company's
cash flow in 2021. We also expect to benefit from contractual rent
increases and from increasing below-market in-place leases to
market rates.
Our high-quality portfolio is well located in high barrier to
entry markets that are demonstrating strong office fundamentals and
rent growth. We will continue to actively manage our portfolio
through ongoing hold/sell analysis to ensure each asset fits our
overall strategy and we seek to improve our tenant
diversification.”
2019 Program to Unlock Embedded Value in Our Portfolio and
Improve Trading Liquidity of Our Common Stock
During 2019, we sold ten properties at an aggregate gross sales
of approximately $991.0 million and paid a special cash dividend of
approximately $613.3 million ($42.00 per share of common stock). In
addition, during the third quarter of 2019, the former indirect
principal stockholder of CIM Commercial, a private fund,
distributed 10.6 million shares of CMCT common stock (representing
72.8% of the outstanding shares at the time) to 19 of its
institutional investors.
Following this transaction, an affiliate of CIM Group, L.P., an
affiliate of CIM Commercial, acquired 2,468,390 shares of common
stock of CIM Commercial for $19.1685 per share from a related party
in a private transaction. As of March 12, 2020, CIM Group, its
affiliates, and officers and directors of CIM Commercial have an
aggregate economic interest in approximately 19.6% of the
outstanding shares of CIM Commercial common stock.
Guidance
The Company anticipates announcing financial guidance once there
is greater certainty as to the magnitude of the adverse impact from
the COVID-19 outbreak.
Financial Highlights
As of December 31, 2019, our real estate portfolio consisted of
11 assets, all of which were 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.
Fourth Quarter 2019
Net loss attributable to common stockholders was $11,573,000, or
$0.79 per diluted share of common stock, for the three months ended
December 31, 2019, compared to $4,948,000, or $0.34 per diluted
share of common stock, for the three months ended December 31,
2018. The increase is primarily attributable to a decrease of
$15,051,000 in segment NOI(3), an increase of $5,875,000 in
redeemable preferred stock redemptions primarily related to the
Series L preferred stock tender offer and an increase of $339,000
in general and administrative expenses not allocated to our
operating segments, partially offset by a decrease of $8,066,000 in
depreciation and amortization, a decrease of $3,344,000 in interest
expense not allocated to our operating segments, a decrease of
$1,905,000 in asset management and other fees to related parties
not allocated to our operating segments, a decrease of $808,000 in
loss on early extinguishment of debt and a decrease of $605,000 in
transaction costs.
FFO attributable to common stockholders(5) was $(6,194,000), or
$(0.42) per diluted share of common stock, for the three months
ended December 31, 2019, compared to $8,497,000, or $0.58 per
diluted share of common stock, for the three months ended December
31, 2018. The decrease in FFO attributable to common
stockholders(5) is primarily attributable to a decrease of
$15,051,000 in segment NOI(3), an increase of $5,875,000 in
redeemable preferred stock redemptions primarily related to the
Series L preferred stock tender offer and an increase of $339,000
in general and administrative expenses not allocated to our
operating segments, partially offset by a decrease of $3,344,000 in
interest expense not allocated to our operating segments, a
decrease of $1,905,000 in asset management and other fees to
related parties not allocated to our operating segments, a decrease
of $808,000 in loss on early extinguishment of debt and a decrease
of $605,000 in transaction costs.
Core FFO attributable to common stockholders(6) was $(346,000),
or $(0.02) per diluted share of common stock, for the three months
ended December 31, 2019, compared to $9,625,000, or $0.66 per
diluted share of common stock, for the three months ended December
31, 2018. The decrease in core FFO attributable to common
stockholders(6) is primarily attributable to a decrease of
$15,051,000 in segment NOI(3) and an increase of $339,000 in
general and administrative expenses not allocated to our operating
segments, partially offset by a decrease of $3,344,000 in interest
expense not allocated to our operating segments and a decrease of
$1,905,000 in asset management and other fees to related parties
not allocated to our operating segments.
Year Ended 2019
Net income attributable to common stockholders was $322,696,000,
or $19.74 per diluted share of common stock, for the year ended
December 31, 2019, compared to net loss attributable to common
stockholders of $(14,298,000), or $(0.98) per diluted share of
common stock, for the year ended December 31, 2018.
FFO attributable to common stockholders(5) was $(14,034,000), or
$(0.96) per diluted share of common stock, for the year ended
December 31, 2019, compared to $38,930,000, or $2.67 per diluted
share of common stock, for the year ended December 31, 2018.
Core FFO attributable to common stockholders(6) was $20,918,000,
or $1.44 per diluted share of common stock, for the year ended
December 31, 2019, compared to $40,164,000, or $2.75 per diluted
share of common stock, for the year ended December 31, 2018.
Segment Information
Our reportable segments during the three months ended December
31, 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
$11,573,000, or $0.79 per diluted share of common stock, for the
three months ended December 31, 2019, compared to $4,948,000, or
$0.34 per diluted share of common stock, for the three months ended
December 31, 2018. Total segment NOI(3) was $11,497,000 for the
three months ended December 31, 2019, compared to $26,548,000 for
the three months ended December 31, 2018.
Office
Same-Store
Same-store(2) office segment NOI(3) decreased 12.4% on a GAAP
basis and decreased 15.2% on a cash basis for the three months
ended December 31, 2019 compared to the three months ended December
31, 2018. The decrease in same-store(2) office segment NOI(3) is
primarily due to an increase in payroll costs at most of our
properties and lower revenues and higher expenses at an office
property in Los Angeles, California, partially offset by increases
in rental revenue at certain of our properties due to increases in
rental rates as a result of leasing activity. The office property
in Los Angeles, California 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 an affiliate of the Company since May
2019.
At December 31, 2019, the Company’s same-store(2) office
portfolio was 86.7% occupied, a decrease of 810 basis points
year-over-year on a same-store(2) basis, and 87.0% leased, a
decrease of 970 basis points year-over-year on a same-store(2)
basis. The annualized rent per occupied square foot(1) on a
same-store(2) basis was $48.18 at December 31, 2019 compared to
$43.91 at December 31, 2018. During the three months ended December
31, 2019, the Company executed 27,956 square feet of recurring
leases at our same-store(2) office portfolio, representing
same-store(2) cash rent growth per square foot of 7.1%.
Total
Office segment NOI(3) decreased to $7,483,000 for the three
months ended December 31, 2019, from $22,498,000 for the three
months ended December 31, 2018. The decrease is primarily due 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, an increase in payroll costs at
most of our properties and lower revenues and higher expenses at an
office property in Los Angeles, California, partially offset by
increases in rental revenue at certain of our properties due to
increases in rental rates as a result of leasing activity. The
office property in Los Angeles, California 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 an affiliate of the Company
since May 2019.
Hotel
Hotel segment NOI(3) decreased to $2,522,000 for the three
months ended December 31, 2019, from $2,848,000 for the three
months ended December 31, 2018, primarily due to increases in
operating and payroll costs, partially offset by an increase in
revenues.
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(3) was $1,492,000 for the three months ended December
31, 2019, compared to $1,202,000 for the three months ended
December 31, 2018. The increase is primarily due to a decrease in
the provision for loan losses and an increase in interest
income.
Debt and Equity
During the three months ended December 31, 2019, we issued
379,509 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 $8,654,000. 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.
In November 2019, the Company repurchased in a tender offer
2,693,580 shares of Series L preferred stock, $0.001 par value per
share and $28.37 stated value per share, representing one-third of
the then-outstanding shares of Series L preferred stock, at a
purchase price of $29.12 per share (of which $1.39, or $3,744,000
in the aggregate, reflected the amount of dividends on the Series L
preferred stock accrued as of November 20, 2019), as converted to
and paid in Israeli New Shekels. The tender offer was primarily
funded from borrowings under our revolving credit facility. We
recognized $5,873,000 of redeemable preferred stock redemptions in
our consolidated statement of operations for the year ended
December 31, 2019 in connection with the tender offer.
Dividends
On December 3, 2019, we declared a quarterly cash dividend of
$0.0750 per share of our common stock, which was paid on December
27, 2019 to stockholders of record at the close of business on
December 13, 2019.
In addition, we declared an annual cash dividend of $1.56035 per
share of our Series L preferred stock, which was paid on January
16, 2020 to stockholders of record at the close of business on
December 31, 2019.
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 October 1, 2019 to December 31,
2019, which was paid on January 15, 2020 to stockholders of record
at the close of business on January 5, 2020.
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).
Definitions
- 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.
- Same-store properties are
properties that 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
October 1, 2018; (ii) sold or otherwise removed from our
consolidated financial statements on or before December 31, 2019;
or (iii) that underwent a major repositioning project we believed
significantly affected its results at any point during the period
commencing on October 1, 2018 and ending on December 31, 2019. When
determining our same-store properties as of December 31, 2019, no
properties were excluded pursuant to (i) and (iii) above and ten
properties were excluded pursuant to (ii) above.
- Segment net operating income ("segment
NOI"): for our real estate segments represents 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, segment NOI represents interest income net of
interest expense and general overhead expenses. Please see our
reconciliations of office, hotel, lending, and total cash NOI to
segment NOI and net income (loss) attributable to common
stockholders starting on page 12.
- Cash net operating income ("cash
NOI"): for our real estate segments represents 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. For our lending segment, there is no
distinction between cash NOI and segment NOI. Please see our
reconciliations of office, hotel, lending, and total cash NOI to
segment NOI and net income (loss) attributable to common
stockholders starting on page 12.
- Funds from operations attributable to
common stockholders ("FFO attributable to common
stockholders") 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"). Please
see our reconciliations of net income (loss) attributable to common
stockholders to FFO attributable to common stockholders starting on
page 10, and the discussion of the benefits and limitations of FFO
as a supplemental measure of operating performance.
- Core FFO attributable to common
stockholders ("core FFO") represents FFO attributable to
common stockholders (computed as described above), excluding gain
(loss) on early extinguishment of debt, redeemable preferred stock
redemptions, gain (loss) on termination of interest rate swaps, and
transaction costs. Please see our reconciliations of net income
(loss) attributable to common stockholders to core FFO attributable
to common stockholders starting on page 11, and the discussion of
the benefits and limitations of core FFO as a supplemental measure
of operating performance.
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, 2019.
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)
December 31,
2019
2018
ASSETS
Investments in real estate, net
$
508,707
$
1,040,937
Cash and cash equivalents
23,801
54,659
Restricted cash
12,146
22,512
Loans receivable, net
68,079
83,248
Accounts receivable, net
3,520
6,640
Deferred rent receivable and charges,
net
34,857
84,230
Other intangible assets, net
7,260
9,531
Other assets
9,222
18,469
Assets held for sale, net
—
22,175
TOTAL ASSETS
$
667,592
$
1,342,401
LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND EQUITY
LIABILITIES:
Debt, net
$
307,421
$
588,671
Accounts payable and accrued expenses
24,309
41,598
Intangible liabilities, net
1,282
2,872
Due to related parties
9,431
10,951
Other liabilities
10,113
16,535
Liabilities associated with assets held
for sale, net
—
28,766
Total liabilities
352,556
689,393
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK: Series A,
$0.001 par value; 36,000,000 shares authorized; 1,630,821 and
1,630,421 shares issued and outstanding, respectively, at December
31, 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
36,841
35,733
EQUITY:
Series A cumulative redeemable preferred
stock, $0.001 par value; 36,000,000 shares authorized; 2,853,555
and 2,837,094 shares issued and outstanding, respectively, at
December 31, 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
70,633
31,866
Series L cumulative redeemable preferred
stock, $0.001 par value; 9,000,000 shares authorized; 8,080,740 and
5,387,160 shares issued and outstanding, respectively, at December
31, 2019 and 8,080,740 shares issued and outstanding at December
31, 2018; liquidation preference of $28.37 per share, subject to
adjustment
152,834
229,251
Common stock, $0.001 and $0.003 par value
at December 31, 2019 and 2018, respectively; 900,000,000 shares
authorized; 14,602,149 and 14,598,357 shares issued and outstanding
at December 31, 2019 and 2018, respectively (a)
15
44
Additional paid-in capital
794,825
790,354
Accumulated other comprehensive income
—
1,806
Distributions in excess of earnings
(740,617
)
(436,883
)
Total stockholders' equity
277,690
616,438
Noncontrolling interests
505
837
Total equity
278,195
617,275
TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND EQUITY
$
667,592
$
1,342,401
- 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
Year Ended
December 31,
December 31,
2019
2018
2019
2018
REVENUES:
Rental and other property income
$
15,025
$
37,520
$
88,331
$
147,095
Hotel income
8,546
8,108
35,633
35,672
Interest and other income
3,070
4,397
16,025
14,703
26,641
50,025
139,989
197,470
EXPENSES:
Rental and other property operating
13,731
20,831
62,928
79,917
Asset management and other fees to related
parties
4,148
5,976
18,303
24,451
Interest
3,177
6,485
12,175
26,894
General and administrative
1,561
2,671
6,354
9,167
Transaction costs
(26
)
579
574
938
Depreciation and amortization
5,379
13,445
27,374
53,228
Loss on early extinguishment of debt
—
808
29,982
808
Impairment of real estate
—
—
69,000
—
27,970
50,795
226,690
195,403
Gain on sale of real estate
—
—
433,104
—
(LOSS) INCOME BEFORE PROVISION FOR INCOME
TAXES
(1,329
)
(770
)
346,403
2,067
Provision for income taxes
196
130
882
925
NET (LOSS) INCOME
(1,525
)
(900
)
345,521
1,142
Net (income) loss attributable to
noncontrolling interests
(13
)
(6
)
152
(21
)
NET (LOSS) INCOME ATTRIBUTABLE TO THE
COMPANY
(1,538
)
(906
)
345,673
1,121
Redeemable preferred stock dividends
declared or accumulated
(4,161
)
(4,043
)
(17,095
)
(15,423
)
Redeemable preferred stock redemptions
(5,874
)
1
(5,882
)
4
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS
$
(11,573
)
$
(4,948
)
$
322,696
$
(14,298
)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS PER SHARE: (a)
Basic
$
(0.79
)
$
(0.34
)
$
22.11
$
(0.98
)
Diluted
$
(0.79
)
$
(0.34
)
$
19.74
$
(0.98
)
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING: (a)
Basic
14,598
14,598
14,598
14,597
Diluted
14,599
14,598
16,493
14,597
- 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 months and
the years ended December 31, 2019 and 2018:
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
Numerator:
Net (loss) income attributable to common
stockholders
$
(11,573
)
$
(4,948
)
$
322,696
$
(14,298
)
Redeemable preferred stock dividends
declared on dilutive shares (a)
(2
)
—
2,804
—
Diluted net (loss) income attributable to
common stockholders
$
(11,575
)
$
(4,948
)
$
325,500
$
(14,298
)
Denominator: (b)
Basic weighted average shares of common
stock outstanding
14,598
14,598
14,598
14,597
Effect of dilutive securities—contingently
issuable shares (a)
1
—
1,895
—
Diluted weighted average shares and common
stock equivalents outstanding
14,599
14,598
16,493
14,597
Net (loss) income attributable to
common stockholders per share: (b)
Basic
$
(0.79
)
$
(0.34
)
$
22.11
$
(0.98
)
Diluted
$
(0.79
)
$
(0.34
)
$
19.74
$
(0.98
)
- For the three months ended December 31, 2019 and the three
months and year ended December 31, 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.
-
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 months and the years ended December 31, 2019 and 2018:
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
Numerator:
Net (loss) income attributable to common
stockholders
$
(11,573
)
$
(4,948
)
$
322,696
$
(14,298
)
Depreciation and amortization
5,379
13,445
27,374
53,228
Impairment of real estate
—
—
69,000
—
Gain on sale of depreciable assets
—
—
(433,104
)
—
FFO attributable to common stockholders
(a)
$
(6,194
)
$
8,497
$
(14,034
)
$
38,930
Redeemable preferred stock dividends
declared on dilutive shares (b)
(2
)
(1
)
(3
)
(2
)
Dilutive FFO attributable to common
stockholders
$
(6,196
)
$
8,496
$
(14,037
)
$
38,928
Denominator (c):
Basic weighted average shares of common
stock outstanding
14,598
14,598
14,598
14,597
Effect of dilutive securities-contingently
issuable shares (b)
1
—
1
—
Diluted weighted average shares and common
stock equivalents outstanding
14,599
14,598
14,599
14,597
FFO attributable to common stockholders
per share (c):
Basic
$
(0.42
)
$
0.58
$
(0.96
)
$
2.67
Diluted
$
(0.42
)
$
0.58
$
(0.96
)
$
2.67
- FFO attributable to common stockholders for the year ended
December 31, 2019 includes $29,982,000, or $2.05 per diluted share
of common stock, in loss on early extinguishment of debt, which was
primarily incurred in connection with the sale of certain assets
and related to the legal defeasance and prepayment of mortgage
loans collateralized by such properties. Additionally, FFO
attributable to common stockholders for the three months and year
ended December 31, 2019 includes $5,874,000, or $0.40 per diluted
share of common stock, and $5,882,000, or $0.40 per diluted share
of common stock, respectively, in redeemable preferred stock
redemptions, which is primarily related to the repurchase of
2,693,580 shares of our Series L preferred stock on November 20,
2019. Finally, FFO attributable to common stockholders for the
three months and year ended December 31, 2018 includes $808,000, or
$0.06 per diluted share of common stock, in loss on early
extinguishment of debt.
-
For the three months and the years ended December 31, 2019 and
2018, 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.
-
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
Core Funds from
Operations
(Unaudited and in thousands,
except per share amounts)
In addition to calculating FFO in
accordance with the standards established by NAREIT, we also
calculate a supplemental FFO metric we call core FFO attributable
to common stockholders. Core FFO attributable to common
stockholders represents FFO attributable to common stockholders,
computed in accordance with NAREIT's standards, excluding losses
(or gains) on early extinguishment of debt, redeemable preferred
stock redemptions, gains (or losses) on termination of interest
rate swaps, and transaction costs. We believe that core FFO is a
useful metric for securities analysts, investors and other
interested parties in the evaluation of our Company as it excludes
from FFO the effect of certain amounts that we believe are
non-recurring, are non-operating in nature as they relate to the
manner in which we finance our operations, or transactions outside
of the ordinary course of business.
Like any metric, core FFO should not be
used as the only measure of our performance because, in addition to
excluding those items prescribed by NAREIT when calculating FFO, it
excludes amounts incurred in connection with non-recurring special
projects, prepaying or defeasing our debt and repurchasing our
preferred stock, all of which have real economic effect and could
materially impact our operating results. Other REITs may not
calculate core FFO in the same manner as we do, or at all;
accordingly, our core FFO may not be comparable to the core FFOs of
other REITs who calculate such a metric. Therefore, core 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. Core 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 core FFO attributable to
common stockholders for the three months and the years ended
December 31, 2019 and 2018:
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
Numerator:
Net (loss) income attributable to common
stockholders
$
(11,573
)
$
(4,948
)
$
322,696
$
(14,298
)
Depreciation and amortization
5,379
13,445
27,374
53,228
Impairment of real estate
—
—
69,000
—
Gain on sale of depreciable assets
—
—
(433,104
)
—
FFO attributable to common
stockholders
$
(6,194
)
$
8,497
$
(14,034
)
$
38,930
Loss on early extinguishment of debt
—
808
29,982
808
Redeemable preferred stock redemptions
5,874
(1
)
5,882
(4
)
(Gain) loss on termination of interest
rate swaps
—
(258
)
(1,486
)
(508
)
Transaction costs
(26
)
579
574
938
Core FFO attributable to common
stockholders
$
(346
)
$
9,625
$
20,918
$
40,164
Redeemable preferred stock dividends
declared on dilutive shares (a)
(2
)
(1
)
2,803
(2
)
Dilutive Core FFO attributable to common
stockholders
$
(348
)
$
9,624
$
23,721
$
40,162
Denominator (b):
Basic weighted average shares of common
stock outstanding
14,598
14,598
14,598
14,597
Effect of dilutive securities-contingently
issuable shares (a)
1
—
1,894
—
Diluted weighted average shares and common
stock equivalents outstanding
14,599
14,598
16,492
14,597
Core FFO attributable to common
stockholders per share (b):
Basic
$
(0.02
)
$
0.66
$
1.43
$
2.75
Diluted
$
(0.02
)
$
0.66
$
1.44
$
2.75
- For the three months and the years ended December 31, 2019 and
2018, 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.
-
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". For our real estate
segments, 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.
Below is a reconciliation of cash NOI to
segment NOI and net income (loss) attributable to the Company for
the three months ended December 31, 2019 and 2018:
Three Months Ended December
31, 2019
Same-Store Office
Non-Same-Store Office
Total Office
Hotel
Lending
Total
Cash net operating income (loss) excluding
lease termination income
$
6,995
$
(220
)
$
6,775
$
2,522
$
1,492
$
10,789
Cash lease termination income
—
—
—
—
—
—
Cash net operating income (loss)
6,995
(220
)
6,775
2,522
1,492
10,789
Deferred rent and amortization of
intangible assets, liabilities, and lease inducements
708
—
708
—
—
708
Straight line lease termination income
—
—
—
—
—
—
Segment net operating income (loss)
7,703
(220
)
7,483
2,522
1,492
11,497
Interest and other income
103
Asset management and other fees to related
parties
(3,606
)
Interest expense
(2,846
)
General and administrative
(1,124
)
Transaction costs
26
Depreciation and amortization
(5,379
)
Loss before provision for income taxes
(1,329
)
Provision for income taxes
(196
)
Net loss
(1,525
)
Net income attributable to noncontrolling
interests
(13
)
Net loss attributable to the Company
$
(1,538
)
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES
Reconciliation of Net
Operating Income (Continued)
(Unaudited and in
thousands)
Three Months Ended December
31, 2018
Same-Store Office
Non-Same-Store Office
Total Office
Hotel
Lending
Total
Cash net operating income excluding lease
termination income
$
8,252
$
13,850
$
22,102
$
2,848
$
1,202
$
26,152
Cash lease termination income
—
6
6
—
—
6
Cash net operating income
8,252
13,856
22,108
2,848
1,202
26,158
Deferred rent and amortization of
intangible assets, liabilities, and lease inducements
542
(152
)
390
—
—
390
Straight line lease termination income
—
—
—
—
—
—
Segment net operating income
8,794
13,704
22,498
2,848
1,202
26,548
Asset management and other fees to related
parties
(5,511
)
Interest expense
(6,190
)
General and administrative
(785
)
Transaction costs
(579
)
Depreciation and amortization
(13,445
)
Loss on early extinguishment of debt
(808
)
Loss before provision for income taxes
(770
)
Provision for income taxes
(130
)
Net loss
(900
)
Net income attributable to noncontrolling
interests
(6
)
Net loss attributable to the Company
$
(906
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200316005351/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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