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
(including improving and developing such assets), today reported
operating results for the three and six months ended June 30,
2020.
Second Quarter 2020 Highlights
- Annualized rent per occupied square foot(1) on a same-store(2)
basis increased 5.6% to $50.29 as of June 30, 2020 compared to
$47.62 as of June 30, 2019.
- Our same-store(2) office portfolio was 81.0% leased as of June
30, 2020 compared to 88.3% as of June 30, 2019. The decrease is
primarily due to the completion of the development of a former
surface parking lot at 3601 S Congress Avenue into approximately
44,000 square feet of additional office space during the second
quarter of 2020.
- During the second quarter of 2020, we executed 26,245 square
feet of leases with terms longer than 12 months, of which 23,503
square feet were recurring leases executed at our same-store(2)
office portfolio, representing same-store(2) cash rent growth per
square foot of 27.8% as compared to the prior lease.
- Net loss attributable to common stockholders was $8,141,000, or
$0.55 per diluted share, for the second quarter of 2020 compared to
net income attributable to common stockholders of $48,260,000, or
$3.20 per diluted share, for the second quarter of 2019.
- Same-store(2) office segment net operating income(3) ("NOI")
decreased 4.0%, while same-store(2) office cash NOI(4) increased
5.1%, for the second quarter of 2020 as compared to the
corresponding period in 2019.
- Funds from operations (“FFO”) attributable to common
stockholders(5) was $(2,944,000), or $(0.20) per diluted share, for
the second quarter of 2020 compared to $3,024,000, or $0.21 per
diluted share, for the second quarter of 2019.
- Core FFO attributable to common stockholders(6) was
$(2,836,000), or $(0.19) per diluted share, for the second quarter
of 2020 compared to $8,155,000, or $0.53 per diluted share, for the
second quarter of 2019.
Management Commentary
"We are focused on maximizing collections, reducing costs and
bolstering liquidity," said David Thompson, Chief Executive Officer
of CIM Commercial. "To date, we collected approximately 96% of
second quarter rents (excluding parking) and are continuing to work
with tenants to maximize our collections. We have taken steps to
reduce costs at both the property and corporate levels, including
through the elimination of the base service fee that we announced
last quarter. We believe we are well-positioned to navigate through
this challenging time given our high quality assets, with
significant opportunity to increase same-store net operating income
over the next several years, combined with access to flexible
sources of capital.”
Steps Taken to Mitigate the Impact of COVID-19
We have taken steps to adapt to the difficult business
environment in which we operate and to strengthen our business to
position our business to thrive post COVID-19. These steps include
(i) reducing our corporate overhead expenses by realigning certain
support functions and reducing employee compensation at CIM Group,
(ii) not appointing a replacement for our retiring President, (iii)
focusing on appropriate cost-reduction measures at our properties,
(iv) temporarily suspending the vast majority of activities related
to the repositioning of our office building at 4750 Wilshire
Boulevard in Los Angeles, California, and renovations at the
Sheraton Grand Hotel in Sacramento, California, (v) increasing
liquidity by entering into a new unsecured revolving credit
facility in May, accessing the Federal Reserve Paycheck Protection
Program Liquidity Facility in June and negotiating an amendment to
our existing revolving credit facility, and (vi) amending our
Master Services Agreement to eliminate the base service fee as
described below.
Elimination of Base Service Fee
On May 11, 2020, we amended our Master Services Agreement to
replace the base service fee, which was $1,128,000 per year,
subject to adjustment for inflation, with an incentive fee pursuant
to which we pay, on a quarterly basis, 15.00% of CIM Commercial’s
quarterly core funds from operations in excess of a quarterly
threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of
CIM Commercial’s average adjusted common stockholders’ equity
(i.e., common stockholders’ equity plus accumulated depreciation
and amortization) for such quarter. The amendment was effective as
of April 1, 2020. No incentive fee is payable with respect to the
second quarter of 2020 because CIM Commercial's core funds from
operations did not exceed the applicable $0.22 per share threshold
for such quarter. Based on the expected performance of CIM
Commercial for the remainder of 2020, we do not anticipate paying
any incentive fee in respect of any period in 2020.
Financial Highlights
As of June 30, 2020, 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 503-room hotel with an ancillary
parking garage. We also own and operate a lending business.
Second Quarter 2020
Net loss attributable to common stockholders was $8,141,000, or
$0.55 per diluted share of common stock, for the three months ended
June 30, 2020, compared to net income attributable to common
stockholders of $48,260,000, or $3.20 per diluted share of common
stock, for the three months ended June 30, 2019. The decrease is
primarily attributable to a decrease of $55,221,000 in gain on sale
of real estate, a decrease of $10,981,000 in segment NOI(3), a
decrease of $1,464,000 in interest and other income not allocated
to our operating segments, and an increase of $693,000 in interest
expense not allocated to our operating segments, partially offset
by a decrease of $4,911,000 in loss on early extinguishment of
debt, a decrease of $2,800,000 in impairment of real estate, a
decrease of $1,988,000 in depreciation and amortization, a decrease
of $972,000 in provision for income taxes, and a decrease of
$819,000 in asset management and other fees to related parties not
allocated to our operating segments.
FFO attributable to common stockholders(5) was $(2,944,000), or
$(0.20) per diluted share of common stock, for the three months
ended June 30, 2020, compared to $3,024,000, or $0.21 per diluted
share of common stock, for the three months ended June 30, 2019.
The decrease in FFO attributable to common stockholders(5) is
primarily attributable to a decrease of $10,981,000 in segment
NOI(3), a decrease of $1,464,000 in interest and other income not
allocated to our operating segments, and an increase of $693,000 in
interest expense not allocated to our operating segments, partially
offset by a decrease of $4,911,000 in loss on early extinguishment
of debt, a decrease of $972,000 in provision for income taxes, a
decrease of $819,000 in asset management and other fees to related
parties not allocated to our operating segments, and a decrease of
$312,000 in redeemable preferred stock dividends declared or
accumulated.
Core FFO attributable to common stockholders(6) was
$(2,836,000), or $(0.19) per diluted share of common stock, for the
three months ended June 30, 2020, compared to $8,155,000, or $0.53
per diluted share of common stock, for the three months ended June
30, 2019. The decrease in core FFO attributable to common
stockholders(6) is primarily attributable to a decrease of
$10,981,000 in segment NOI(3), a decrease of $1,464,000 in interest
and other income not allocated to our operating segments, and an
increase of $693,000 in interest expense not allocated to our
operating segments, partially offset by a decrease of $972,000 in
provision for income taxes, a decrease of $819,000 in asset
management and other fees to related parties not allocated to our
operating segments, and a decrease of $312,000 in redeemable
preferred stock dividends declared or accumulated.
Year to Date 2020
Net loss attributable to common stockholders was $14,928,000, or
$1.02 per diluted share of common stock, for the six months ended
June 30, 2020, compared to net income attributable to common
stockholders of $335,891,000, or $22.08 per diluted share of common
stock, for the six months ended June 30, 2019.
FFO attributable to common stockholders was $(4,473,000), or
$(0.30) per diluted share of common stock, for the six months ended
June 30, 2020, compared to $(11,096,000), or $(0.76) per diluted
share of common stock, for the six months ended June 30, 2019.
Core FFO attributable to common stockholders was $(4,194,000),
or $(0.29) per diluted share of common stock, for the six months
ended June 30, 2020, compared to $17,668,000, or $1.14 per diluted
share of common stock, for the six months ended June 30, 2019.
Segment Information
Our reportable segments during the three months ended June 30,
2020 and 2019 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
$8,141,000, or $0.55 per diluted share of common stock, for the
three months ended June 30, 2020, compared to net income
attributable to common stockholders of $48,260,000, or $3.20 per
diluted share of common stock, for the three months ended June 30,
2019, which represents a decrease of $56,401,000, or $3.75 per
diluted share of common stock. Total segment NOI(3) was $7,031,000
for the three months ended June 30, 2020, compared to $18,012,000
for the three months ended June 30, 2019.
Office
Same-Store
Same-store(2) office segment NOI(3) decreased 4.0%, while
same-store(2) office cash NOI(4) increased 5.1% for the three
months ended June 30, 2020 compared to the three months ended June
30, 2019. The decrease in same-store(2) office segment NOI(3) is
primarily due to lower revenues at an office property in Beverly
Hills, California, due to a decrease in occupancy as compared to
the second quarter of 2019, partially offset by a decrease in
payroll costs at one of our office properties.
The annualized rent per occupied square foot(1) on a
same-store(2) basis was $50.29 at June 30, 2020 compared to $47.62
at June 30, 2019. During the three months ended June 30, 2020, the
Company executed 23,503 square feet of recurring leases at our
same-store(2) office portfolio, representing same-store(2) cash
rent growth per square foot of 27.8% as compared to the prior
lease. At June 30, 2020, the Company’s same-store(2) office
portfolio was 80.6% occupied, a decrease of 750 basis points
year-over-year on a same-store(2) basis, and 81.0% leased, a
decrease of 730 basis points year-over-year on a same-store(2)
basis. During the three months ended June 30, 2020, we completed
the development of a former surface parking lot at 3601 S Congress
Avenue into approximately 44,000 square feet of additional office
space, which was 0% leased as of June 30, 2020 and is included in
the aforementioned percent occupied and leased percentages.
Total
Office segment NOI(3) decreased to $8,259,000 for the three
months ended June 30, 2020, from $12,935,000 for the three months
ended June 30, 2019. The decrease is primarily due to 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 at an office
property in Beverly Hills, California, due to a decrease in
occupancy as compared to the second quarter of 2019, partially
offset by a decrease in payroll costs at one of our office
properties.
Hotel
Hotel segment NOI(3) decreased to $(1,118,000) for the three
months ended June 30, 2020, from $3,522,000 for the three months
ended June 30, 2019, due to a decrease in occupancy, average daily
rate, and food, beverage, and other sundry hotel services as a
result of the outbreak of COVID-19.
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 $(110,000) for the three months ended June 30,
2020, compared to $1,555,000 for the three months ended June 30,
2019. The decrease is primarily due to a decrease in premium income
from the sale of the guaranteed portion of our SBA 7(a) loans, a
decrease in interest income resulting from a decrease in the prime
rate, and an increase in expense reimbursements to related parties
due to an increase in allocated expenses related to the origination
of the Paycheck Protection Program SBA 7(a) loans, partially offset
by a decrease in interest expense as a result of a reduction in the
outstanding balances of our SBA 7(a) loan-backed notes and secured
borrowings.
Debt and Equity
During the three months ended June 30, 2020, we issued 557,587
shares of Series A preferred stock and 920 shares of Series D
preferred stock for aggregate net proceeds of $12,525,000. Net
proceeds represent gross proceeds offset by costs specifically
identifiable to the offering of Series A preferred stock and Series
D preferred stock, such as commissions, dealer manager fees, and
other offering fees and expenses.
Dividends
On March 2, 2020, 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 April 1, 2020 to June
30, 2020. The dividend was paid as follows: $0.114583 per share on
May 15, 2020 to stockholders of record at the close of business on
May 5, 2020, $0.114583 per share on June 15, 2020 to stockholders
of record at the close of business on June 5, 2020, and $0.114583
per share on July 15, 2020 to stockholders of record at the close
of business on July 5, 2020.
On March 2, 2020, we declared a quarterly cash dividend of
$0.353125 per share of our Series D preferred stock, or portion
thereof for issuances during the period from April 1, 2020 to June
30, 2020. The dividend was paid as follows: $0.117708 per share on
May 15, 2020 to stockholders of record at the close of business on
May 5, 2020, $0.117708 per share on June 15, 2020 to stockholders
of record at the close of business on June 5, 2020, and $0.117708
per share on July 15, 2020 to stockholders of record at the close
of business on July 5, 2020.
On June 3, 2020, we declared a quarterly cash dividend of $0.075
per share of our common stock, which was paid on June 29, 2020 to
stockholders of record at the close of business on June 15,
2020.
On June 3, 2020, 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, 2020 to
September 30, 2020. The dividend is payable as follows: $0.114583
per share on August 17, 2020 to stockholders of record at the close
of business on August 5, 2020, $0.114583 per share on September 15,
2020 to stockholders of record at the close of business on
September 5, 2020, and $0.114583 per share on October 15, 2020 to
stockholders of record at the close of business on October 5,
2020.
On June 3, 2020, we declared a quarterly cash dividend of
$0.353125 per share of our Series D Preferred Stock, or portion
thereof for issuances during the period from July 1, 2020 to
September 30, 2020. The dividend is payable as follows: $0.117708
per share on August 17, 2020 to stockholders of record at the close
of business on August 5, 2020, $0.117708 per share on September 15,
2020 to stockholders of record at the close of business on
September 5, 2020, and $0.117708 per share on October 15, 2020 to
stockholders of record at the close of business on October 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 (including improving and developing such assets). 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
(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)
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 April 1, 2019; (ii) sold or otherwise removed
from our consolidated financial statements on or before June 30,
2020; or (iii) that underwent a major repositioning project we
believed significantly affected its results at any point during the
period commencing on April 1, 2019 and ending on June 30, 2020.
When determining our same-store properties as of June 30, 2020, no
properties were excluded pursuant to (i) and (iii) above and ten
properties were excluded from the 2019 period pursuant to (ii)
above.
(3)
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.
(4)
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 generally accepted
accounting principles ("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.
(5)
Funds from
operations attributable to common stockholders ("FFO attributable
to common stockholders"): represents net income (loss)
attributable to common stockholders, computed in accordance with
GAAP, which reflects the deduction of redeemable preferred stock
dividends declared or accumulated, redeemable preferred stock
deemed dividends, and redeemable preferred stock redemptions,
excluding gain (or loss) 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 on page 10, and the discussion of the benefits and
limitations of FFO as a supplemental measure of operating
performance.
(6)
Core funds from
operations attributable to common stockholders ("core FFO
attributable to common stockholders"): represents FFO
attributable to common stockholders (computed as described above),
excluding gain (loss) on early extinguishment of debt, redeemable
preferred stock deemed dividends, 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 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 certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act"), which are intended to be covered by the safe harbors created
thereby. Such forward-looking statements can be identified by the
use of forward-looking terminology such as "may," "will,"
"project," "target," "expect," "intend," "might," "believe,"
"anticipate," "estimate," "could," "would," "continue," "pursue,"
"potential," "forecast," "seek," "plan," or "should" or the
negative thereof or other variations or similar words or phrases.
Such forward-looking statements include, among others, statements
about CMCT's plans and objectives relating to future growth and
availability of funds, and the trading liquidity of CMCT's common
stock. Such forward-looking statements are based on particular
assumptions that management of CMCT 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 CMCT's management 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 scope, severity and duration of the current pandemic
of COVID-19, and actions taken to contain the pandemic or mitigate
its impact, (ii) the adverse effect of COVID-19 on the financial
condition, results of operations, cash flows and performance of
CMCT and its tenants and business partners, the real estate market
and the global economy and financial markets, among others, (iii)
the timing, form, and operational effects of CMCT's development
activities, (iv) the ability of CMCT to raise in place rents to
existing market rents and to maintain or increase occupancy levels,
(v) fluctuations in market rents, including as a result of
COVID-19, and (vi) general economic, market and other conditions.
Additional important factors that could cause CMCT's actual results
to differ materially from CMCT's expectations are discussed under
the section "Risk Factors" in CMCT's Annual Report on Form 10-K for
the year ended December 31, 2019, Quarterly Report on Form 10-Q for
the quarter ended March 31, 2020, and elsewhere in CMCT's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2020. The
forward-looking statements included herein are based on current
expectations and there can be no assurance that these expectations
will be attained. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions,
all of which are difficult or impossible to predict accurately and
many of which are beyond CMCT's control. Although we believe that
the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking
statements included herein will prove to be accurate. In light of
the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information
should not be regarded as a representation by CMCT or any other
person that CMCT's objectives and plans will be achieved. Readers
are cautioned not to place undue reliance on forward-looking
statements. Forward-looking statements speak only as of the date
they are made. CMCT does not undertake to update them to reflect
changes that occur after the date they are made.
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets
(Unaudited and in thousands, except share and per share
amounts)
June 30, 2020
December 31, 2019
ASSETS
Investments in real estate, net
$
507,756
$
508,707
Cash and cash equivalents
75,192
23,801
Restricted cash
10,960
12,146
Loans receivable, net
77,155
68,079
Accounts receivable, net
2,591
3,520
Deferred rent receivable and charges,
net
36,140
34,857
Other intangible assets, net
6,509
7,260
Other assets
9,922
9,222
TOTAL ASSETS
$
726,225
$
667,592
LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND EQUITY
LIABILITIES:
Debt, net
$
371,666
$
307,421
Accounts payable and accrued expenses
13,063
24,309
Intangible liabilities, net
880
1,282
Due to related parties
8,014
9,431
Other liabilities
8,453
10,113
Total liabilities
402,076
352,556
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK: Series A
cumulative redeemable preferred stock, $0.001 par value; 36,000,000
shares authorized; 1,794,461 and 1,763,661 shares issued and
outstanding, respectively, at June 30, 2020 and 1,630,821 and
1,630,421 shares issued and outstanding, respectively, at December
31, 2019; liquidation preference of $25.00 per share, subject to
adjustment
39,756
36,841
EQUITY:
Series A cumulative redeemable preferred
stock, $0.001 par value; 36,000,000 shares authorized; 3,614,493
and 3,560,448 shares issued and outstanding, respectively, at June
30, 2020 and 2,853,555 and 2,837,094 shares issued and outstanding,
respectively, at December 31, 2019; liquidation preference of
$25.00 per share, subject to adjustment
88,660
70,633
Series D cumulative redeemable preferred
stock, $0.001 par value; 32,000,000 shares authorized; 6,900 shares
issued and outstanding at June 30, 2020 and no shares issued and
outstanding at December 31, 2019; liquidation preference of $25.00
per share, subject to adjustment
173
—
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 June 30,
2020 and December 31, 2019; liquidation preference of $28.37 per
share, subject to adjustment
152,834
152,834
Common stock, $0.001 par value;
900,000,000 shares authorized; 14,827,410 shares issued and
outstanding at June 30, 2020 and 14,602,149 shares issued and
outstanding at December 31, 2019, respectively
15
15
Additional paid-in capital
795,795
794,825
Distributions in excess of earnings
(753,550
)
(740,617
)
Total stockholders' equity
283,927
277,690
Noncontrolling interests
466
505
Total equity
284,393
278,195
TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND EQUITY
$
726,225
$
667,592
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES Consolidated Statements of
Operations (Unaudited and in thousands, except per share
amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
REVENUES:
Rental and other property income
$
13,700
$
22,419
$
28,519
$
56,000
Hotel income
869
9,549
8,628
19,353
Interest and other income
1,941
4,888
4,898
8,780
16,510
36,856
42,045
84,133
EXPENSES:
Rental and other property operating
7,492
15,658
20,007
35,911
Asset management and other fees to related
parties
2,376
3,195
5,021
7,797
Expense reimbursements to related
parties—corporate
615
542
1,427
1,189
Expense reimbursements to related
parties—lending segment
998
551
1,680
1,188
Interest
2,896
2,550
6,063
6,595
General and administrative
1,668
1,621
3,402
3,409
Transaction costs
—
216
—
260
Depreciation and amortization
5,197
7,185
10,455
16,815
Loss on early extinguishment of debt
—
4,911
—
29,982
Impairment of real estate
—
2,800
—
69,000
21,242
39,229
48,055
172,146
Gain on sale of real estate
—
55,221
—
432,802
(LOSS) INCOME BEFORE PROVISION FOR INCOME
TAXES
(4,732
)
52,848
(6,010
)
344,789
Provision for income taxes
(691
)
281
(713
)
599
NET (LOSS) INCOME
(4,041
)
52,567
(5,297
)
344,190
Net (income) loss attributable to
noncontrolling interests
(2
)
(1
)
(6
)
173
NET (LOSS) INCOME ATTRIBUTABLE TO THE
COMPANY
(4,043
)
52,566
(5,303
)
344,363
Redeemable preferred stock dividends
declared or accumulated
(3,990
)
(4,302
)
(9,346
)
(8,464
)
Redeemable preferred stock deemed
dividends
(52
)
—
(213
)
—
Redeemable preferred stock redemptions
(56
)
(4
)
(66
)
(8
)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS
$
(8,141
)
$
48,260
$
(14,928
)
$
335,891
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS PER SHARE:
Basic
$
(0.55
)
$
3.31
$
(1.02
)
$
23.01
Diluted
$
(0.55
)
$
3.20
$
(1.02
)
$
22.08
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic
14,782
14,597
14,690
14,598
Diluted
14,782
15,284
14,690
15,268
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 six months ended June 30, 2020 and
2019:
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Numerator:
Net (loss) income attributable to common
stockholders
$
(8,141
)
$
48,260
$
(14,928
)
$
335,891
Redeemable preferred stock dividends
declared on dilutive shares (a)
—
659
(1
)
1,151
Diluted net (loss) income attributable to
common stockholders
$
(8,141
)
$
48,919
$
(14,929
)
$
337,042
Denominator:
Basic weighted average shares of Common
Stock outstanding
14,782
14,597
14,690
14,598
Effect of dilutive securities—contingently
issuable shares (a)
—
687
—
670
Diluted weighted average shares and common
stock equivalents outstanding
14,782
15,284
14,690
15,268
Net (loss) income attributable to
common stockholders per share:
Basic
$
(0.55
)
$
3.31
$
(1.02
)
$
23.01
Diluted
$
(0.55
)
$
3.20
$
(1.02
)
$
22.08
(a)
For the three and six months ended June
30, 2020 and 2019, 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.
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 GAAP, which
reflects the deduction of redeemable preferred stock dividends
declared or accumulated, redeemable preferred stock deemed
dividends, and redeemable preferred stock redemptions, excluding
gain (or loss) 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 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. FFO
per share for the year-to-date period may differ from the sum of
quarterly FFO per share amounts due to the required method for
computing per share amounts for the respective periods. In
addition, FFO per share is calculated independently for each
component and may not be additive due to rounding. 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 six months ended June 30, 2020 and 2019:
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Numerator:
Net (loss) income attributable to common
stockholders (a)
$
(8,141
)
$
48,260
$
(14,928
)
$
335,891
Depreciation and amortization
5,197
7,185
10,455
16,815
Impairment of real estate
—
2,800
—
69,000
Gain on sale of depreciable assets
—
(55,221
)
—
(432,802
)
FFO attributable to common stockholders
(a)
$
(2,944
)
$
3,024
$
(4,473
)
$
(11,096
)
Redeemable preferred stock dividends
declared on dilutive shares (b)
—
—
(1
)
(1
)
Diluted FFO attributable to common
stockholders
$
(2,944
)
$
3,024
$
(4,474
)
$
(11,097
)
Denominator:
Basic weighted average shares of Common
Stock outstanding
14,782
14,597
14,690
14,598
Effect of dilutive securities—contingently
issuable shares (b)
1
3
—
1
Diluted weighted average shares and common
stock equivalents outstanding
14,783
14,600
14,690
14,599
FFO attributable to common stockholders
per share:
Basic
$
(0.20
)
$
0.21
$
(0.30
)
$
(0.76
)
Diluted
$
(0.20
)
$
0.21
$
(0.30
)
$
(0.76
)
(a)
In connection with the sale of certain
properties during the three and six months ended June 30, 2019, we
recognized losses on early extinguishment of debt of $4,911,000, or
$0.34 per diluted share of common stock, and $29,982,000, or $2.05
per diluted share of common stock, respectively, primarily related
to the legal defeasance and prepayment of mortgage loans
collateralized by such properties. Such losses on early
extinguishment of debt are included in, and have the effect of
reducing, net income attributable to common stockholders and FFO
attributable to common stockholders, because loss on early
extinguishment of debt is not an adjustment prescribed by
NAREIT.
(b)
For the three and six months ended June
30, 2020 and 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.
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 loss (or gain) on early extinguishment of
debt, redeemable preferred stock deemed dividends, redeemable
preferred stock redemptions, gain (or loss) 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, repurchasing our preferred stock,
and adjusting the carrying value of our preferred stock classified
in temporary equity to its redemption value, 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. 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. Core FFO per
share for the year-to-date period may differ from the sum of
quarterly core FFO per share amounts due to the required method for
computing per share amounts for the respective periods. In
addition, core FFO per share is calculated independently for each
component and may not be additive due to rounding. 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 and six months ended June 30, 2020 and
2019:
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Numerator:
Net (loss) income attributable to common
stockholders
$
(8,141
)
$
48,260
$
(14,928
)
$
335,891
Depreciation and amortization
5,197
7,185
10,455
16,815
Impairment of real estate
—
2,800
—
69,000
Gain on sale of depreciable assets
—
(55,221
)
—
(432,802
)
FFO attributable to common
stockholders
$
(2,944
)
$
3,024
$
(4,473
)
$
(11,096
)
Loss on early extinguishment of debt
—
4,911
—
29,982
Redeemable preferred stock redemptions
56
4
66
8
Redeemable preferred stock deemed
dividends
52
—
213
—
(Gain) loss on termination of interest
rate swaps
—
—
—
(1,486
)
Transaction costs
—
216
—
260
Core FFO attributable to common
stockholders
$
(2,836
)
$
8,155
$
(4,194
)
$
17,668
Redeemable preferred stock dividends
declared on dilutive shares (a)
—
659
(1
)
1,150
Dilutive Core FFO attributable to common
stockholders
$
(2,836
)
$
8,814
$
(4,195
)
$
18,818
Denominator:
Basic weighted average shares of common
stock outstanding
14,782
14,597
14,690
14,598
Effect of dilutive securities-contingently
issuable shares (a)
1
2,054
—
1,875
Diluted weighted average shares and common
stock equivalents outstanding
14,783
16,651
14,690
16,473
Core FFO attributable to common
stockholders per share:
Basic
$
(0.19
)
$
0.56
$
(0.29
)
$
1.21
Diluted
$
(0.19
)
$
0.53
$
(0.29
)
$
1.14
(a)
For the three and six months ended June
30, 2020 and 2019, the effect of certain shares of redeemable
preferred stock were excluded from the computation of diluted core
FFO attributable to common stockholders and the diluted weighted
average shares and common stock equivalents outstanding as such
inclusion would be anti-dilutive.
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. For our
lending segment, there is no distinction between cash NOI and
segment NOI.
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 June 30, 2020 and 2019.
Three Months Ended June 30,
2020
Same-Store
Office
Non-Same- Store Office
Total Office
Hotel
Lending
Total
Cash net operating income (loss) excluding
lease termination income
$
7,881
$
(148
)
$
7,733
$
(1,117
)
$
(110
)
$
6,506
Cash lease termination income
—
—
—
—
—
—
Cash net operating income (loss)
7,881
(148
)
7,733
(1,117
)
(110
)
6,506
Deferred rent and amortization of
intangible assets, liabilities, and lease inducements
526
—
526
(1
)
—
525
Straight line lease termination income
—
—
—
—
—
—
Segment net operating income (loss)
8,407
(148
)
8,259
(1,118
)
(110
)
7,031
Interest and other income
35
Asset management and other fees to related
parties
(2,376
)
Expense reimbursements to related
parties—corporate
(615
)
Interest expense
(2,707
)
General and administrative
(903
)
Depreciation and amortization
(5,197
)
Loss before provision for income taxes
(4,732
)
Provision for income taxes
691
Net loss
(4,041
)
Net income attributable to noncontrolling
interests
(2
)
Net loss attributable to the Company
$
(4,043
)
CIM COMMERCIAL TRUST
CORPORATION AND SUBSIDIARIES Reconciliation of Net Operating
Income (Continued) (Unaudited and in thousands)
Three Months Ended June 30,
2019
Same-Store
Office
Non-Same- Store Office
Total Office
Hotel
Lending
Total
Cash net operating income excluding lease
termination income
$
7,501
$
4,634
$
12,135
$
3,516
$
1,555
$
17,206
Cash lease termination income
—
—
—
—
—
—
Cash net operating income
7,501
4,634
12,135
3,516
1,555
17,206
Deferred rent and amortization of
intangible assets, liabilities, and lease inducements
1,256
(456
)
800
6
—
806
Straight line lease termination income
—
—
—
—
—
—
Segment net operating income
8,757
4,178
12,935
3,522
1,555
18,012
Interest and other income
1,499
Asset management and other fees to related
parties
(3,195
)
Expense reimbursements to related
parties—corporate
(542
)
Interest expense
(2,014
)
General and administrative
(1,021
)
Transaction costs
(216
)
Depreciation and amortization
(7,185
)
Loss on early extinguishment of debt
(4,911
)
Impairment of real estate
(2,800
)
Gain on sale of real estate
55,221
Income before provision for income
taxes
52,848
Provision for income taxes
(281
)
Net income
52,567
Net income attributable to noncontrolling
interests
(1
)
Net income attributable to the Company
$
52,566
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200810005689/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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