Financial Data and Key Metrics Changes - The company reported a net loss attributable to common stockholders of $8.9 million in Q4 2022, compared to a loss of $4.3 million in Q4 2021, primarily due to preferred stock redemption costs of $7.9 million [19] - Core FFO was reported at $0.11, with an increase in office NOI from the prior quarter [27] - The company reduced corporate overhead by 28% in 2022, driven by a permanent reduction in the management team [30] Business Segment Data and Key Metrics Changes - The Office segment NOI increased to $6.9 million from $6.6 million in the prior year, driven by a decrease in real estate tax expenses [17] - The Lending division NOI decreased to $1.8 million in Q4 2022, down from $3.6 million in Q4 2021 due to the end of government support for SBA loans [18] - The Hotel segment NOI increased to $3.1 million from $1.8 million, with improved occupancy rising to 72% from 70% [39][61] Market Data and Key Metrics Changes - The company noted that the Oakland submarket saw significant supply growth from 2018 to 2022, but future development pipelines are expected to be below average for top U.S. markets [33] - The company has a significant pipeline of multifamily development opportunities on land already owned, with plans to develop over 1,500 multifamily units [13] Company Strategy and Development Direction - The company is focused on growing the multifamily side of its portfolio to achieve a balance between creative office and multifamily assets [7] - The company plans to co-invest in value-add and development assets to increase diversification and supplement returns [8] - The company aims to target a 6% return on cost for its multifamily acquisitions, with expectations of low teens returns for specific deals [82] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of improving liquidity and balance sheet in a capital-scarce environment [9] - The company expects to renew over 70% of its leases, with only one tenant expiration over 10,000 square feet in 2023 [38] - Management expressed optimism about the multifamily acquisitions, indicating that they are targeting attractive returns even without co-investors [82] Other Important Information - The company closed on a construction loan for the conversion of an office building to luxury multifamily apartments, expected to take about 18 months [37] - The company has approximately $15 million in cash available, plus $28 million on its credit line for future borrowings [54] Q&A Session Summary Question: Can you provide some color on the cap rate on these acquisitions? - The Echo Park deal is stabilized, but rents are significantly below market, targeting a 6% return on cost in the medium term [44] Question: Can you give us some color on the coupons for the assumed debt? - The Channel House mortgage is SOFR plus 336, and Clay is SOFR plus 350, with maturities running through mid-2025 [47] Question: Can you elaborate on your liquidity position as of March 31? - The company has around $15 million in cash and $28 million available on its line [54] Question: Have you run into any rezoning issues with the 1450 Wilshire transition? - No significant issues were encountered; the community was supportive of the transition from office to multifamily [56]

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) CMCT is a REIT focused on acquiring and operating premier multifamily and Class A/creative office properties, alongside a hotel and an SBA 7(a) lending platform Portfolio Overview as of December 31, 2022 | Asset Type | Details | | :--- | :--- | | **Office Properties** | 13 properties totaling approx. 1.3 million rentable sq. ft. | | **Office Occupancy** | 81.7% | | **Hotel** | 1 property with 503 rooms | | **Hotel RevPAR (FY 2022)** | $126.19 | | **Development Sites** | 4 sites | Segment Revenue Contribution (FY 2022) | Segment | Revenue Contribution (%) | | :--- | :--- | | Office | 54.8% | | Hotel | 34.6% | | Lending | 10.6% | - The company's core strategy is to acquire, develop, and operate premier multifamily and creative office assets in vibrant, high-barrier-to-entry metropolitan communities identified by CIM Group[11](index=11&type=chunk)[34](index=34&type=chunk) - The lending segment primarily originates SBA 7(a) loans to small businesses, with a historical focus on the limited service and mid-scale hospitality industry[66](index=66&type=chunk)[67](index=67&type=chunk)[93](index=93&type=chunk) Management Fee Structure (Effective Jan 1, 2022) | Fee Type | Description | | :--- | :--- | | **Base Fee** | 1% annually of Net Asset Value Attributable to Common Stockholders, paid quarterly to the Operator | | **Incentive Fee** | Payable to the Administrator based on quarterly core FFO exceeding a 7.0% annualized threshold on Adjusted Common Equity | | **Capital Gains Fee** | 15% of cumulative aggregate realized capital gains minus cumulative losses and previously paid capital gains fees | - The company has significant tenant concentration, with Kaiser Foundation Health Plan, Inc. accounting for **29.8%** of annualized rental income for the year ended December 31, 2022[126](index=126&type=chunk) [Item 1A. Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including reliance on external management, conflicts of interest, anti-takeover provisions, real estate market vulnerabilities, significant debt, and the complexities of maintaining REIT status [Risks Related to Our Business](index=15&type=section&id=Risks%20Related%20to%20Our%20Business) - The company's success is highly dependent on the performance and key personnel of the Administrator and Operator, both affiliates of CIM Group. The departure of key individuals could have a material adverse effect[112](index=112&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - The company faces risks from uninsured losses or losses exceeding insurance coverage, particularly for events like earthquakes in California, for which coverage may not be sufficient[114](index=114&type=chunk)[115](index=115&type=chunk)[141](index=141&type=chunk) - Cybersecurity incidents targeting the Operator or Administrator could disrupt operations, compromise confidential data, and negatively impact financial results[117](index=117&type=chunk)[143](index=143&type=chunk)[175](index=175&type=chunk) - The COVID-19 pandemic has led to long-term changes in workplace practices, such as increased remote work, which has resulted in decreased demand for office space and could negatively impact occupancy and rental rates[121](index=121&type=chunk)[146](index=146&type=chunk) [Risks Related to Conflicts of Interest](index=17&type=section&id=Risks%20Related%20to%20Conflicts%20of%20Interest) - The Master Services Agreement and Investment Management Agreement are not easily terminable by the company, even for poor performance, creating a dependency on the Administrator and Operator[147](index=147&type=chunk)[181](index=181&type=chunk) - The Administrator and Operator are entitled to fees regardless of performance, which may reduce their incentive to devote maximum effort to the company's portfolio[124](index=124&type=chunk)[182](index=182&type=chunk) - The Operator, Administrator, and their affiliates engage in other real estate activities that may overlap and compete with the company for opportunities, creating potential conflicts in allocation[155](index=155&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Several directors and executive officers hold positions with CIM Group and its affiliates, creating potential conflicts of interest and fiduciary duties that may not align with the best interests of the company's stockholders[71](index=71&type=chunk)[156](index=156&type=chunk)[188](index=188&type=chunk) [Risks Related to Our Organizational Structure](index=20&type=section&id=Risks%20Related%20to%20Our%20Organizational%20Structure) - Provisions in the company's charter, bylaws, and Maryland General Corporation Law (MGCL) may deter takeovers, potentially limiting stockholders' ability to sell shares at a premium. These include the Maryland Business Combination Act and Control Share Acquisition Act, though the company has currently opted out of these[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - To maintain REIT status, the charter prohibits any person from owning more than **6.25%** of the company's stock (in value or number of shares), which can restrict transferability and inhibit changes of control[166](index=166&type=chunk)[509](index=509&type=chunk) - The liability of the Administrator and Operator is limited under their respective agreements, and the company has agreed to indemnify them against certain liabilities, potentially leaving the company to bear losses from poor performance[171](index=171&type=chunk)[203](index=203&type=chunk)[221](index=221&type=chunk) [Risks Related to Real Estate Assets](index=23&type=section&id=Risks%20Related%20to%20Real%20Estate%20Assets) - A significant portion of the company's properties are located in California, exposing the portfolio to greater risks from adverse economic, regulatory, or natural disaster events in that state[174](index=174&type=chunk)[207](index=207&type=chunk)[225](index=225&type=chunk) - The company has significant tenant concentration risk, with Kaiser accounting for **29.8%** of annualized rental income in 2022. A bankruptcy or default by this tenant would materially impact financial results[211](index=211&type=chunk)[228](index=228&type=chunk) - The hotel segment's performance is subject to the cyclical nature of the lodging industry, seasonality, and risks from pandemics or other events that reduce travel[300](index=300&type=chunk)[301](index=301&type=chunk)[327](index=327&type=chunk) - The office portfolio faces risks from changing work trends, such as telecommuting and flexible schedules, which could erode demand for office space and pressure rental rates[215](index=215&type=chunk)[233](index=233&type=chunk) - Inflation may adversely affect operations by increasing construction, maintenance, operating, and interest expenses, which could negatively impact profitability[366](index=366&type=chunk)[397](index=397&type=chunk) [Risks Related to Debt Financing](index=34&type=section&id=Risks%20Related%20to%20Debt%20Financing) - The company has incurred significant indebtedness, which could make it more vulnerable to economic downturns, leave insufficient cash for operations or distributions, and potentially lead to defaults or foreclosures[402](index=402&type=chunk)[434](index=434&type=chunk) - The company relies on external capital for future needs. Difficulty in obtaining financing due to market volatility could prevent it from meeting maturing obligations or making new acquisitions[404](index=404&type=chunk)[436](index=436&type=chunk) - Increases in interest rates could significantly raise debt service payments on variable-rate debt, reducing cash flow available for distributions. As of December 31, 2022, the company had **$83.3 million** in variable-rate debt[407](index=407&type=chunk)[439](index=439&type=chunk) [Risks Related to Our Lending Operations](index=38&type=section&id=Risks%20Related%20to%20Our%20Lending%20Operations) - The lending operations have a high industry concentration, with **99.9%** of loans subject to credit risk as of December 31, 2022, being in the hospitality industry, making the portfolio vulnerable to downturns in that sector[451](index=451&type=chunk)[483](index=483&type=chunk) - The company's ability to originate and sell government-guaranteed loans is dependent on the continuation of the SBA 7(a) Program, which could be curtailed or altered by the federal government[456](index=456&type=chunk)[488](index=488&type=chunk) - Failure to comply with SBA regulations in originating or servicing loans could result in the SBA refusing to honor its guaranty, transferring the liability back to the company and potentially causing significant losses[458](index=458&type=chunk)[490](index=490&type=chunk) [U.S. Federal Income and Other Tax Risks](index=41&type=section&id=U.S.%20Federal%20Income%20and%20Other%20Tax%20Risks) - Failure to qualify and maintain REIT status would result in significant adverse tax consequences, including being subject to federal income tax at regular corporate rates, which would substantially reduce funds available for distributions[461](index=461&type=chunk)[462](index=462&type=chunk)[494](index=494&type=chunk) - To maintain REIT status, the company must distribute at least **90%** of its REIT taxable income annually. This requirement may force the company to borrow funds or sell assets at unfavorable times to make necessary distributions[472](index=472&type=chunk)[503](index=503&type=chunk) - The value of the company's assets consisting of stock or securities of one or more Taxable REIT Subsidiaries (TRSs) cannot exceed **20%** of its total assets. Failure to comply with this limit would jeopardize its REIT status[464](index=464&type=chunk)[497](index=497&type=chunk) [Risks Related to Our Common Stock and Preferred Stock](index=45&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock%20and%20Preferred%20Stock) - There is no public market for the company's Preferred Stock, and one is not expected to develop, limiting liquidity for these securities[479](index=479&type=chunk)[510](index=510&type=chunk) - The rights of common stockholders to receive dividends and distributions upon liquidation are junior to the rights of preferred stockholders[515](index=515&type=chunk)[521](index=521&type=chunk)[546](index=546&type=chunk) - The company has the option to pay the redemption price for its Preferred Stock in either cash or shares of Common Stock, which could result in dilution to existing common stockholders[520](index=520&type=chunk)[549](index=549&type=chunk) - The dual-listing of the Common Stock on Nasdaq and the TASE may result in price variations and unexpected volatility due to different currencies, trading hours, and other factors[563](index=563&type=chunk)[589](index=589&type=chunk) [Item 1B. Unresolved Staff Comments](index=50&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - None[597](index=597&type=chunk) [Item 2. Properties](index=51&type=section&id=Item%202.%20Properties) As of December 31, 2022, the company's real estate portfolio consisted of 19 assets, including 13 office properties totaling approximately 1.3 million rentable square feet with 81.7% occupancy, one 503-room hotel, and four development sites Office Portfolio Summary (December 31, 2022) | Portfolio Type | Rentable Square Feet | % Occupied | % Leased | Annualized Rent (in thousands) | | :--- | :--- | :--- | :--- | :--- | | **Consolidated** | 1,219,146 | 82.2% | 84.9% | $55,615 | | **Unconsolidated (44% owned)** | 100,506 | 74.8% | 80.4% | $3,403 | | **Total Office Portfolio** | **1,319,652** | **81.7%** | **84.5%** | **$59,018** | Hotel Portfolio Summary (December 31, 2022) | Property | Rooms | % Occupied (TTM) | RevPAR (TTM) | | :--- | :--- | :--- | :--- | | Sheraton Grand Hotel | 503 | 73.0% | $126.19 | Top 5 Tenants by Annualized Rental Revenue (December 31, 2022) | Tenant | Annualized Rent (in thousands) | % of Total Annualized Rent | | :--- | :--- | :--- | | Kaiser Foundation Health Plan, Inc. | $17,610 | 29.8% | | MUFG Union Bank, N.A. | $3,927 | 6.7% | | F45 Training Holdings, Inc. | $2,427 | 4.1% | | 3 Arts Entertainment, Inc. | $2,396 | 4.1% | | Westwood One, Inc. | $1,979 | 3.4% | | **Total Top 5** | **$28,339** | **48.1%** | Office Lease Expiration Schedule | Year of Expiration | Square Feet Expiring | % of Square Feet Expiring | | :--- | :--- | :--- | | 2023 | 120,565 | 11.2% | | 2024 | 98,306 | 9.1% | | 2025 | 440,772 | 40.9% | | 2026 | 97,285 | 9.0% | | Thereafter | 219,042 | 28.8% | [Item 3. Legal Proceedings](index=54&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material pending or threatened legal proceedings beyond routine litigation in the ordinary course of business - The company is not involved in any material legal proceedings outside of routine litigation incidental to its business[579](index=579&type=chunk)[998](index=998&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[605](index=605&type=chunk) PART II [Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=55&type=section&id=Item%205.%20Market%20For%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock is dual-listed on Nasdaq and the Tel Aviv Stock Exchange, with 357 holders of record and a closing price of $4.30 as of March 22, 2023 - The company's common stock trades on both the Nasdaq (CMCT) and the Tel Aviv Stock Exchange (CMCT-L)[607](index=607&type=chunk) - On December 20, 2022, the company issued 36,663 shares of Series A1 Preferred Stock to the Operator as payment for **$916,575** in asset management fees for Q3 2022[583](index=583&type=chunk) [Item 6. Reserved](index=55&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - Item 6 is reserved[634](index=634&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income increased to $5.9 million in 2022, driven by hotel recovery and reduced management fees, despite a decline in lending segment income, with liquidity enhanced by a new credit facility and preferred stock offerings [Results of Operations](index=58&type=section&id=Results%20of%20Operations) Financial Performance Comparison (in thousands) | Metric | FY 2022 | FY 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $101,906 | $90,926 | $10,980 | 12.1% | | **Total Expenses** | $94,994 | $88,785 | $6,209 | 7.0% | | **Net Income (Loss)** | $5,945 | $(851) | $6,796 | N/A | FFO Attributable to Common Stockholders (in thousands) | Metric | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(25,785) | $(19,979) | | Depreciation and amortization | 20,348 | 20,112 | | **FFO attributable to common stockholders** | **$(5,437)** | **$133** | - Hotel revenue increased by **97.3%** to **$35.2 million** in 2022, driven by a significant recovery in occupancy and average daily rate post-COVID-19[680](index=680&type=chunk) - Lending revenue decreased by **45.6%** to **$10.8 million** in 2022, primarily due to lower premium income from reduced loan sale volume compared to 2021, when the SBA had temporarily increased guaranteed percentages[651](index=651&type=chunk) - Asset management and other fees to related parties decreased by **60.5%** to **$3.6 million** in 2022, mainly as a result of a new Fee Waiver agreement effective January 1, 2022[654](index=654&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) - In December 2022, the company refinanced its credit facility, replacing it with a new facility that includes a **$56.2 million** term loan and a **$150.0 million** revolver, maturing in December 2025[690](index=690&type=chunk)[694](index=694&type=chunk) - The company redeemed all outstanding Series L Preferred Stock, completing a **$70.1 million** repurchase in September 2022 and redeeming the remaining shares for **$83.8 million** in January 2023[672](index=672&type=chunk)[700](index=700&type=chunk) - The company is conducting a continuous public offering of its Series A1 Preferred Stock. As of December 31, 2022, aggregate net proceeds from its various preferred stock offerings totaled **$318.2 million**[697](index=697&type=chunk) - In March 2023, the lending division completed a securitization of SBA 7(a) loans, issuing **$54.1 million** of loan-backed notes with net proceeds of approximately **$43.3 million**[287](index=287&type=chunk)[667](index=667&type=chunk) [Cash Flow Analysis](index=62&type=section&id=Cash%20Flow%20Analysis) - Net cash provided by operating activities decreased by **$13.9 million** in 2022 compared to 2021, primarily due to a **$10.8 million** decrease in net proceeds from the sale of guaranteed loans[659](index=659&type=chunk) - Net cash used in investing activities increased by **$9.6 million**, mainly due to a **$12.4 million** net investment in an unconsolidated joint venture and a **$4.8 million** increase in capital expenditures[689](index=689&type=chunk) - Net cash from financing activities increased by **$57.3 million**, driven by a **$112.4 million** increase in net proceeds from preferred stock issuance and a **$106.0 million** increase in net proceeds from debt[660](index=660&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate changes, with **47.9%** of its debt being floating rate, leading to an estimated **$446,000** annual earnings impact from a 50 basis point rate change Debt Composition by Interest Rate Type (as of Dec 31, 2022) | Rate Type | Amount (in millions) | Percentage of Total Debt | | :--- | :--- | :--- | | Fixed Rate | $97.1 | 52.1% | | Floating Rate | $89.3 | 47.9% | - Based on floating rate debt levels at year-end 2022, a **50 basis point** change in LIBOR and SOFR would result in an approximate annual earnings impact of **$446,000**[710](index=710&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item incorporates by reference the company's audited consolidated financial statements, related notes, and the independent auditors' report, beginning on page F-1 - The required financial statements and supplementary data are incorporated by reference to the information beginning on page F-1[711](index=711&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=67&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on accounting and financial disclosure - None[712](index=712&type=chunk) [Item 9A. Controls and Procedures](index=67&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes reported - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[739](index=739&type=chunk) - Management's assessment concluded that internal control over financial reporting was effective as of December 31, 2022. This was audited by Deloitte & Touche, LLP, which concurred[716](index=716&type=chunk)[740](index=740&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, internal controls[722](index=722&type=chunk) [Item 9B. Other Information](index=70&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[771](index=771&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=70&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - Not applicable[723](index=723&type=chunk) PART III [Items 10, 11, 12, 13, and 14](index=71&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for these items, covering Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, Related Transactions, and Accountant Fees, is incorporated by reference from the 2023 Proxy Statement - Information for Items 10 through 14 is incorporated by reference from the company's 2023 Proxy Statement[772](index=772&type=chunk)[773](index=773&type=chunk)[774](index=774&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=72&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, detailed on pages F-1 and 72-74 - This item provides a list of all financial statements, schedules, and exhibits filed with or incorporated by reference into the Form 10-K[775](index=775&type=chunk)[776](index=776&type=chunk) [Item 16. Form 10-K Summary](index=74&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary was provided - None[754](index=754&type=chunk) Financial Statements and Notes [Notes to Consolidated Financial Statements](index=85&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed financial information including real estate acquisitions, unconsolidated joint ventures, lending portfolio concentration, debt refinancing, preferred stock activity, related-party transactions, segment performance, and subsequent events [Note 3. Investments in Real Estate](index=94&type=section&id=Note%203.%20Investments%20in%20Real%20Estate) Purchase Price Allocation for Acquisitions (in thousands) | Asset Component | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Land | $10,491 | $1,839 | | Buildings and improvements | $164 | $1,061 | | Other | $132 | $33 | | **Net assets acquired** | **$10,787** | **$2,933** | [Note 4. Investment in Unconsolidated Entity](index=96&type=section&id=Note%204.%20Investment%20in%20Unconsolidated%20Entity) - In February 2022, the company invested approximately **$22.4 million** to acquire a **44%** interest in an unconsolidated joint venture that purchased an office property in Los Angeles for a gross price of **$51.0 million**[241](index=241&type=chunk)[242](index=242&type=chunk) [Note 5. Loans Receivable](index=97&type=section&id=Note%205.%20Loans%20Receivable) Loans Receivable, Net (in thousands) | Category | Dec 31, 2022 ($) | Dec 31, 2021 ($) | | :--- | :--- | :--- | | SBA 7(a) loans receivable, subject to credit risk | $56,116 | $42,103 | | SBA 7(a) loans receivable, subject to loan-backed notes | $0 | $18,050 | | Other loans receivable | $6,244 | $13,107 | | **Total Loans Receivable, Net** | **$62,547** | **$73,543** | - As of December 31, 2022, **99.9%** of the company's loans subject to credit risk were concentrated in the hospitality industry[252](index=252&type=chunk) [Note 7. Debt](index=99&type=section&id=Note%207.%20Debt) Total Debt, Net (in thousands) | Category | Dec 31, 2022 ($) | Dec 31, 2021 ($) | | :--- | :--- | :--- | | Mortgage Payable | $97,006 | $96,980 | | Secured Borrowings | $6,237 | $6,976 | | Other Debt | $81,024 | $97,189 | | **Total Debt, Net** | **$184,267** | **$201,145** | - In December 2022, the company refinanced its 2018 credit facility with a new 2022 credit facility, which includes a **$56.2 million** term loan and a **$150.0 million** revolver, maturing in December 2025[262](index=262&type=chunk) [Note 10. Redeemable Preferred Stock](index=103&type=section&id=Note%2010.%20Redeemable%20Preferred%20Stock) - In September 2022, the company repurchased **2,435,284** shares of its Series L Preferred Stock for **$70.1 million**[943](index=943&type=chunk) - On December 23, 2022, the company announced it would redeem all remaining outstanding shares of Series L Preferred Stock for **$83.8 million**, which was completed on January 25, 2023[609](index=609&type=chunk)[948](index=948&type=chunk) [Note 13. Related-Party Transactions](index=109&type=section&id=Note%2013.%20Related-Party%20Transactions) Fees and Reimbursements to Related Parties (in thousands) | Fee/Expense Type | FY 2022 ($) | FY 2021 ($) | | :--- | :--- | :--- | | Asset management fees | $3,570 | $9,030 | | Property management fees & reimbursements | $5,777 | $4,716 | | Expense reimbursements - corporate | $1,925 | $2,050 | | Expense reimbursements - lending segment | $1,929 | $1,921 | | Offering-related fees | $2,685 | $796 | [Note 17. Segment Disclosure](index=116&type=section&id=Note%2017.%20Segment%20Disclosure) Segment Net Operating Income (in thousands) | Segment | FY 2022 ($) | FY 2021 ($) | | :--- | :--- | :--- | | Office | $29,330 | $29,511 | | Hotel | $11,114 | $1,880 | | Lending | $6,380 | $15,670 | | **Total Segment NOI** | **$46,824** | **$47,061** | Segment Assets (in thousands) | Segment | Dec 31, 2022 ($) | Dec 31, 2021 ($) | | :--- | :--- | :--- | | Office | $471,677 | $449,843 | | Hotel | $99,082 | $101,308 | | Lending | $76,148 | $96,729 | [Note 18. Subsequent Events](index=119&type=section&id=Note%2018.%20Subsequent%20Events) - In January and March 2023, the company acquired significant interests in two large multifamily properties in Oakland, California for a combined purchase price of over **$260 million**, including assumed debt[286](index=286&type=chunk)[318](index=318&type=chunk) - In February 2023, the company closed a co-investment transaction for its 4750 Wilshire property, selling an **80%** interest to three international co-investors for approximately **$34.4 million** to fund its conversion to multifamily units[317](index=317&type=chunk) - On March 9, 2023, the lending division completed a securitization of SBA 7(a) loans, issuing **$54.1 million** of loan-backed notes[287](index=287&type=chunk)

Financial Data and Key Metrics Changes - The core FFO per share was negative $0.07 in Q3 2022, a decrease from positive $0.08 in the prior year period, primarily due to a reduction in segment NOI and increased preferred stock distributions [6][23]. - Segment operations NOI decreased to $10.1 million from $13.3 million year-over-year, with a notable reduction in the lending segment NOI by $3.7 million [23][24]. Business Line Data and Key Metrics Changes - The lending division NOI decreased to $1.2 million in Q3 2022 from $4.9 million in the prior year, attributed to the end of government support for SBA loans [24]. - The office segment NOI decreased to $6.5 million from $7.5 million, with a loss from a joint venture investment contributing to the decline [25]. - The hotel segment NOI increased to $2.4 million from approximately $900,000, driven by improved occupancy rates and average daily rates [26]. Market Data and Key Metrics Changes - The stabilized portfolio was 86.5% leased at the end of Q3 2022, with approximately 59,000 square feet leased during the quarter [18]. - Cash lease spreads for recurring leases decreased slightly to negative 1.2% through the first nine months of 2022 [18]. Company Strategy and Development Direction - The company is focused on balancing its portfolio between creative office and multifamily assets, with a significant pipeline of multifamily development opportunities [8][31]. - The strategy includes co-investing in value-add and development assets to enhance diversification and generate fee income [8][34]. - The company aims to maintain financial flexibility and reduce costs, including a reduction in management fees [33][34]. Management's Comments on Operating Environment and Future Outlook - Management noted strong leasing activity and a positive outlook for 2023, particularly in the hotel segment due to increased group bookings [5][6]. - The company anticipates challenges in development due to rising borrowing costs and reduced credit availability, but expects development costs may decrease [16][31]. Other Important Information - The company repurchased approximately $4.7 million of common stock and $67 million of Series L preferred stock at a discount, which is seen as accretive for common shareholders [20][27]. - The company raised approximately $57 million from preferred stock issued in Q3 2022, enhancing financial flexibility [29]. Q&A Session Summary Question: Development pipeline and capital expansion for multifamily - Management indicated that while cap rates have increased, continued rent growth and potential decreases in development costs could still yield meaningful value [38][39]. Question: Uses of cash generated from preferred stock raise - The cash will be used to pay down outstanding amounts under the revolving credit facility and potentially redeem Series L preferred stock [40][41]. Question: Multifamily development in Oakland - The land in Oakland is being converted to multifamily due to a saturated office market, with entitlement expected to be completed in 18 to 24 months [42][43].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One): ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-13610 CREATIVE MEDIA & COMMUNITY TRUST CORPORATION (Exact name of registrant as specified in its charter) M ...

Creative Media & Community Trust Corporation (NASDAQ:CMCT) Q2 2022 Results Conference Call August 9, 2022 12:00 PM ET Company Participants Steve Altebrando - Shareholder Relations David Thompson - Chief Executive Officer Shaul Kuba - Co-Founder, CIM Group Nate DeBacker - Chief Financial Officer Conference Call Participants Craig Kucera - B. Riley Securities John Moran - Robotti& Company Operator Good day, and welcome to Creative Media & Community Trust Second Quarter 2022 Earnings Call. All participants wil ...

PART I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, equity statements, cash flow statements, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show the company's financial position, with total assets increasing by **$16.879 million** | ASSETS | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | |:--------------------------------------|------------------------------|----------------------------------| | Investments in real estate, net | $502,607 | $497,984 | | Investment in unconsolidated entity | $22,788 | — | | Cash and cash equivalents | $16,480 | $22,311 | | Restricted cash | $11,208 | $11,340 | | Loans receivable, net | $68,540 | $73,543 | | Accounts receivable, net | $3,353 | $3,396 | | Deferred rent receivable and charges, net | $36,474 | $36,095 | | Other intangible assets, net | $4,812 | $5,251 | | Other assets | $11,483 | $10,946 | | **TOTAL ASSETS** | **$677,745** | **$660,866** | | LIABILITIES: | | | | Debt, net | $207,816 | $201,145 | | Accounts payable and accrued expenses | $19,195 | $26,751 | | Intangible liabilities, net | $108 | $237 | | Due to related parties | $7,013 | $4,541 | | Other liabilities | $20,471 | $16,861 | | Total liabilities | $254,603 | $249,535 | | REDEEMABLE PREFERRED STOCK | $36,136 | $37,782 | | EQUITY: | | | | Total stockholders' equity | $386,645 | $373,204 | | Noncontrolling interests | $361 | $345 | | Total equity | $387,006 | $373,549 | | **TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY** | **$677,745** | **$660,866** | - Total Assets increased by **$16.879 million (2.55%)** from December 31, 2021, to June 30, 2022, primarily due to increased investments in real estate and an unconsolidated entity[8](index=8&type=chunk) - Total Liabilities increased by **$5.068 million (2.03%)** from December 31, 2021, to June 30, 2022, mainly driven by an increase in Debt, net, and Due to related parties[8](index=8&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Net income significantly improved for the three and six months ended June 30, 2022, driven by increased revenues | REVENUES (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:---------------------------------------|----------------------------------|----------------------------------|--------------------------------|--------------------------------| | Rental and other property income | $14,194 | $13,309 | $28,290 | $26,658 | | Hotel income | $9,107 | $3,130 | $16,511 | $4,862 | | Interest and other income | $3,102 | $6,234 | $6,384 | $10,032 | | **Total Revenues** | **$26,403** | **$22,673** | **$51,185** | **$41,552** | | EXPENSES (in thousands) | | | | | | Rental and other property operating | $12,731 | $9,115 | $24,223 | $17,405 | | Asset management and other fees to related parties | $920 | $2,260 | $1,841 | $4,519 | | Interest | $2,403 | $2,673 | $4,573 | $5,305 | | General and administrative | $1,253 | $1,146 | $3,068 | $3,768 | | Depreciation and amortization | $4,974 | $5,069 | $9,978 | $10,106 | | **Total Expenses** | **$23,411** | **$21,150** | **$45,704** | **$43,326** | | Income from unconsolidated entity | $260 | — | $380 | — | | **NET INCOME (LOSS)** | **$2,931** | **$527** | **$5,233** | **($3,144)** | | NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | **($2,349)** | **($4,210)** | **($5,160)** | **($12,416)** | | Basic EPS | ($0.10) | ($0.28) | ($0.22) | ($0.83) | - Net Income (Loss) significantly improved, moving from a loss of **$3.144 million** in H1 2021 to a profit of **$5.233 million** in H1 2022, an increase of **$8.377 million**[11](index=11&type=chunk) - Total Revenues increased by **23.2%** for the six months ended June 30, 2022, compared to the same period in 2021, primarily driven by a substantial increase in Hotel income (**224.4% YoY**)[11](index=11&type=chunk) - Net Loss Attributable to Common Stockholders decreased significantly from **($12.416) million** in H1 2021 to **($5.160) million** in H1 2022, leading to an improved Basic EPS from **($0.83)** to **($0.22)**[11](index=11&type=chunk) [Consolidated Statements of Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Equity) This statement details changes in stockholders' equity, including stock-based compensation, dividends, and net income/loss | Equity Component (in thousands) | Balances, December 31, 2021 | Balances, June 30, 2022 | |:--------------------------------|-----------------------------|-------------------------| | Common Stock Par Value | $24 | $24 | | Preferred Stock Par Value | $310,661 | $331,176 | | Additional Paid-in Capital | $866,746 | $864,602 | | Distributions in Excess of Earnings | ($804,227) | ($809,157) | | Total Stockholders' Equity | $373,204 | $386,645 | | Noncontrolling Interests | $345 | $361 | | **Total Equity** | **$373,549** | **$387,006** | - Total Equity increased by **$13.457 million (3.6%)** from December 31, 2021, to June 30, 2022, primarily due to net income and reclassification of Series A Preferred Stock to permanent equity, partially offset by dividends and stock repurchases[13](index=13&type=chunk) - Preferred Stock Par Value increased by **$20.515 million**, reflecting new issuances, including Series A1 Preferred Stock[13](index=13&type=chunk) - Distributions in Excess of Earnings increased negatively by **$4.930 million**, indicating higher dividend payments and preferred stock accretion[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased, while investing activities used more cash, and financing activities provided less cash | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:----------------------------------|--------------------------------|--------------------------------| | Net cash provided by operating activities | $25,288 | $17,840 | | Net cash used in investing activities | ($35,746) | ($4,822) | | Net cash provided by financing activities | $4,495 | $12,867 | | **NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH** | **($5,963)** | **$25,885** | | Cash and cash equivalents (End of period) | $16,480 | $59,730 | | Restricted cash (End of period) | $11,208 | $9,804 | | Total cash and cash equivalents and restricted cash (End of period) | $27,688 | $69,534 | - Net cash provided by operating activities increased by **$7.448 million (41.75%)** for the six months ended June 30, 2022, compared to the same period in 2021, primarily due to increased net income[19](index=19&type=chunk)[272](index=272&type=chunk) - Net cash used in investing activities significantly increased by **$30.924 million (641.3%)** for the six months ended June 30, 2022, mainly due to acquisitions of real estate (**$8.115 million**) and investment in an unconsolidated entity (**$22.408 million**)[19](index=19&type=chunk)[273](index=273&type=chunk) - Net cash provided by financing activities decreased by **$8.372 million (65.07%)** for the six months ended June 30, 2022, largely due to lower net proceeds from common stock issuance (including repurchases) compared to the prior year's rights offering[19](index=19&type=chunk)[274](index=274&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on accounting policies, financial instruments, and operational segments, offering crucial context [1. ORGANIZATION AND OPERATIONS](index=9&type=section&id=1.%20ORGANIZATION%20AND%20OPERATIONS) Creative Media & Community Trust Corporation is a Maryland REIT focused on real assets, a hotel, and an SBA 7(a) lending platform - The Company is a Maryland REIT, primarily owning and operating Class A and creative office real assets, one hotel, and an SBA 7(a) loan program lending platform[23](index=23&type=chunk) - The Company's strategy is to acquire, operate, and develop premier multifamily and creative office assets in vibrant, emerging communities, particularly those catering to technology, media, and entertainment industries[23](index=23&type=chunk) - Common Stock (CMCT) and Series L Preferred Stock (CMCTP) are traded on Nasdaq and the Tel Aviv Stock Exchange (TASE)[24](index=24&type=chunk) [2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=2.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the GAAP basis for interim financial statements and summarizes key accounting policies for various revenue streams - Interim consolidated financial statements are prepared in accordance with GAAP, with certain information condensed or excluded per SEC rules[28](index=28&type=chunk) - The Company consolidates entities where it has controlling interests, including variable interest entities (VIEs) where it is the primary beneficiary, such as the trust for SBA 7(a) loans[29](index=29&type=chunk)[30](index=30&type=chunk) - Revenue recognition policies are detailed for leasing activities (straight-line minimum rents, variable payments), lending activities (interest income on loans), and hotel activities (cancellable/noncancelable room revenues, ancillary services)[37](index=37&type=chunk)[40](index=40&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - The Company expects to adopt ASU 2016-13, Financial Instruments-Credit Losses, beginning January 1, 2023, which will require more timely recognition of credit losses based on expected losses[66](index=66&type=chunk) [3. INVESTMENTS IN REAL ESTATE](index=16&type=section&id=3.%20INVESTMENTS%20IN%20REAL%20ESTATE) Net investments in real estate increased to **$502.6 million**, with two multifamily properties acquired for **$7.91 million** | Investments in Real Estate (in thousands) | June 30, 2022 | December 31, 2021 | |:------------------------------------------|:--------------|:------------------| | Land | $149,144 | $141,236 | | Buildings and improvements | $454,845 | $454,431 | | Work in progress | $13,446 | $10,260 | | Investments in real estate | $655,260 | $642,702 | | Accumulated depreciation | ($152,653) | ($144,718) | | **Net investments in real estate** | **$502,607** | **$497,984** | - Net investments in real estate increased by **$4.623 million (0.93%)** from December 31, 2021, to June 30, 2022[69](index=69&type=chunk) - During the six months ended June 30, 2022, the Company acquired two multifamily properties in Los Angeles, CA, for a total purchase price of **$7.91 million**, with plans to develop residential units starting in 2023 and 2024[69](index=69&type=chunk)[70](index=70&type=chunk)[75](index=75&type=chunk) - Depreciation expense for the six months ended June 30, 2022, was **$8.4 million**, consistent with **$8.5 million** in the prior year period[69](index=69&type=chunk) [4. INVESTMENT IN UNCONSOLIDATED ENTITY](index=17&type=section&id=4.%20INVESTMENT%20IN%20UNCONSOLIDATED%20ENTITY) The Company invested **$22.4 million** for a **44%** equity method interest in an unconsolidated joint venture, recognizing **$380,000** income - In February 2022, the Company invested approximately **$22.4 million** for a **44%** ownership interest in an unconsolidated joint venture to purchase an office property in Los Angeles, CA[34](index=34&type=chunk)[76](index=76&type=chunk) - The investment is accounted for under the equity method, and the Company recognized income of **$380,000** from this entity for the six months ended June 30, 2022[36](index=36&type=chunk)[76](index=76&type=chunk) - The Unconsolidated Joint Venture plans a capital improvement program to renovate the office building into creative office space and a limited number of multifamily units[76](index=76&type=chunk) [5. LOANS RECEIVABLE](index=17&type=section&id=5.%20LOANS%20RECEIVABLE) Loans receivable, net, decreased to **$68.54 million**, primarily due to the substantial satisfaction of PPP loans | Loans Receivable (in thousands) | June 30, 2022 | December 31, 2021 | |:------------------------------------------------------|:--------------|:------------------| | SBA 7(a) loans receivable, subject to credit risk | $44,582 | $42,103 | | SBA 7(a) loans receivable, subject to loan-backed notes | $15,960 | $18,050 | | SBA 7(a) loans receivable, Paycheck Protection Program | $205 | $5,050 | | SBA 7(a) loans receivable, subject to secured borrowings | $6,387 | $6,857 | | SBA 7(a) loans receivable, held for sale | $958 | $1,200 | | Loans receivable | $68,092 | $73,260 | | Deferred capitalized costs, net | $1,402 | $1,226 | | Loan loss reserves | ($954) | ($943) | | **Loans receivable, net** | **$68,540** | **$73,543** | - Loans receivable, net, decreased by **$5.003 million (6.8%)** from December 31, 2021, to June 30, 2022[77](index=77&type=chunk) - SBA 7(a) Paycheck Protection Program loans decreased significantly from **$5.050 million** to **$205,000**, as substantially all PPP loans have been satisfied[77](index=77&type=chunk)[79](index=79&type=chunk) - As of June 30, 2022, **99.9%** of loans subject to credit risk were concentrated in the hospitality industry, and **100%** of these loans were current[83](index=83&type=chunk) [6. OTHER INTANGIBLE ASSETS AND LIABILITIES](index=18&type=section&id=6.%20OTHER%20INTANGIBLE%20ASSETS%20AND%20LIABILITIES) Net intangible assets decreased to **$4.812 million** due to amortization of acquired in-place and above-market leases | Intangible Assets and Liabilities (in thousands) | June 30, 2022 | December 31, 2021 | |:-------------------------------------------------|:--------------|:------------------| | Acquired in-place leases, net | $1,833 | $2,266 | | Acquired above-market leases, net | $22 | $28 | | Trade name and license | $2,957 | $2,957 | | **Total intangible lease assets, net** | **$4,812** | **$5,251** | | Acquired below-market leases, net | $108 | $237 | - Total intangible lease assets, net, decreased by **$439,000 (8.36%)** from December 31, 2021, to June 30, 2022[84](index=84&type=chunk) Amortization (in thousands) | Amortization (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:-----------------------------------------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | Acquired above-market lease amortization | $3 | $3 | $6 | $6 | | Acquired in-place lease amortization | $195 | $257 | $433 | $553 | | Acquired below-market lease amortization | $60 | $84 | $129 | $199 | [7. DEBT](index=20&type=section&id=7.%20DEBT) Total debt, net, increased to **$207.816 million**, driven by increased borrowings under the 2018 Revolving Credit Facility | Debt Type (in thousands) | Balances as of Dec 31, 2021 | Debt Issuances & Assumptions | Repayments | Accretion & (Amortization) | Balances as of Jun 30, 2022 | |:---------------------------------------------|:----------------------------|:-----------------------------|:-----------|:---------------------------|:----------------------------| | Mortgage Payable | $96,980 | — | — | $13 | $96,993 | | Secured Borrowings — Government Guaranteed Loans | $6,976 | — | ($441) | ($34) | $6,501 | | 2018 revolving credit facility | $60,000 | $40,000 | ($25,000) | — | $75,000 | | Junior subordinated notes | $27,070 | — | — | — | $27,070 | | SBA 7(a) loan-backed notes | $7,670 | — | ($3,656) | — | $4,014 | | Borrowed funds from the Federal Reserve (PPPLF) | $5,050 | — | ($4,845) | — | $205 | | **Total Debt, Net** | **$201,145** | **$40,000** | **($33,922)** | **$593** | **$207,816** | - Total Debt, Net, increased by **$6.671 million (3.32%)** from December 31, 2021, to June 30, 2022[88](index=88&type=chunk) - The 2018 Revolving Credit Facility balance increased by **$15.0 million** to **$75.0 million**, with the Company planning to extend its maturity to October 2023 or refinance it[88](index=88&type=chunk)[92](index=92&type=chunk) - SBA 7(a) loan-backed notes decreased by **$3.656 million**, and PPPLF borrowings decreased by **$4.845 million**, with substantially all PPPLF obligations satisfied by June 30, 2022[88](index=88&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [8. STOCK-BASED COMPENSATION PLANS](index=22&type=section&id=8.%20STOCK-BASED%20COMPENSATION%20PLANS) The 2015 Equity Incentive Plan grants restricted shares to board members, with **$92,000** expense for H1 2022 - The Company's 2015 Equity Incentive Plan grants restricted shares of Common Stock to independent Board members, generally vesting over one year of continuous service[101](index=101&type=chunk) Stock-based compensation expense (in thousands) | Period | Stock-based compensation expense (in thousands) | |:-------------------------------------|:------------------------------------------------| | Three months ended June 30, 2022 | $37 | | Three months ended June 30, 2021 | $50 | | Six months ended June 30, 2022 | $92 | | Six months ended June 30, 2021 | $110 | - As of June 30, 2022, **$202,000** of total unrecognized compensation expense related to restricted shares of Common Stock will be recognized ratably over the remaining vesting period[102](index=102&type=chunk) [9. EARNINGS PER SHARE ("EPS")](index=23&type=section&id=9.%20EARNINGS%20PER%20SHARE%20(%22EPS%22)) The Company reported improved basic and diluted EPS of **($0.10)** and **($0.22)** for the three and six months ended June 30, 2022 | EPS Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:-----------------------------------------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | Net loss attributable to common stockholders (in thousands) | ($2,349) | ($4,210) | ($5,160) | ($12,416) | | Basic EPS | ($0.10) | ($0.28) | ($0.22) | ($0.83) | | Diluted EPS | ($0.10) | ($0.28) | ($0.22) | ($0.83) | | Basic Weighted Average Shares Outstanding (in thousands) | 23,353 | 15,102 | 23,351 | 14,956 | - Basic and Diluted EPS improved significantly for both the three-month and six-month periods ended June 30, 2022, compared to 2021, reflecting a reduced net loss attributable to common stockholders[106](index=106&type=chunk) - Weighted average shares of Common Stock outstanding increased substantially year-over-year, impacting per-share calculations[106](index=106&type=chunk) [10. REDEEMABLE PREFERRED STOCK](index=24&type=section&id=10.%20REDEEMABLE%20PREFERRED%20STOCK) Total preferred stock increased to **$331.176 million**, with new Series A1 issuances and concluded offerings for Series A and D | Preferred Stock Type (in thousands) | Balances, Dec 31, 2021 | Issuance/Reclassification | Redemption | Balances, Jun 30, 2022 | |:------------------------------------|:-----------------------|:--------------------------|:-----------|:-----------------------| | Series A1 Preferred Stock | — | $4,770 | — | $4,770 | | Series A Preferred Stock | $156,431 | $8,304 + $10,857 | ($1,228) + ($2,188) | $172,176 | | Series D Preferred Stock | $1,396 | — | — | $1,396 | | Series L Preferred Stock | $152,834 | — | — | $152,834 | | **Total Preferred Stock Amount** | **$310,661** | **$23,931** | **($3,416)** | **$331,176** | - Total redeemable preferred stock increased by **$20.515 million (6.6%)** from December 31, 2021, to June 30, 2022[108](index=108&type=chunk) - The Company began a continuous public offering of Series A1 Preferred Stock in June 2022 and concluded offerings for Series A and Series D Preferred Stock in the same month[111](index=111&type=chunk)[113](index=113&type=chunk)[116](index=116&type=chunk) - Preferred stock dividends declared or accumulated for the six months ended June 30, 2022, totaled **($10,179) thousand**, compared to **($9,087) thousand** in the prior year[11](index=11&type=chunk) - Holders of Series L Preferred Stock will have the right to require redemption from November 2022, with the Company having the option to pay in cash or Common Stock[275](index=275&type=chunk) [11. STOCKHOLDERS' EQUITY](index=27&type=section&id=11.%20STOCKHOLDERS'%20EQUITY) Common stock dividends were **$0.085** per share, and a **$10.0 million** share repurchase program was initiated | Common Stock Dividends Per Share | Declaration Date | Payment Date | Dividend Per Share | |:---------------------------------|:-----------------|:-------------|:-------------------| | Regular Quarterly | June 10, 2022 | July 5, 2022 | $0.085 | | Regular Quarterly | March 8, 2022 | April 1, 2022 | $0.085 | | Regular Quarterly | June 7, 2021 | June 30, 2021 | $0.075 | | Regular Quarterly | March 5, 2021 | March 30, 2021 | $0.075 | - The Company's Board of Directors approved a **$10.0 million** share repurchase program (SRP) in May 2022[135](index=135&type=chunk) Share Repurchase Program (SRP) | Share Repurchase Program (SRP) | Shares Repurchased | Average Price Paid Per Share | Cumulative Amount Repurchased (in thousands) | |:-------------------------------|:-------------------|:-----------------------------|:---------------------------------------------| | Three months ended June 30, 2022 | 41,374 | $7.32 | $303 | | **Total** | **41,374** | **$7.32** | **$303** | - As of June 30, 2022, there were **4,294,512 Series A Preferred Warrants** outstanding, exercisable to purchase **1,113,569 shares** of Common Stock[134](index=134&type=chunk) [12. FAIR VALUE OF FINANCIAL INSTRUMENTS](index=28&type=section&id=12.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Fair value estimates for financial instruments primarily use Level 3 inputs, including debt and loans receivable - The Company primarily uses Level 3 inputs (unobservable inputs) for estimating the fair value of its financial instruments, including debt and loans receivable, due to limited reliable market information[140](index=140&type=chunk) - Fair value of mortgage notes payable and junior subordinated notes is determined using discounted cash flow analyses with appropriate market discount rates (e.g., **5.23%** for mortgages and **6.54%** for junior subordinated notes as of June 30, 2022)[143](index=143&type=chunk) Loans Receivable Fair Value Inputs (June 30, 2022) | Loans Receivable Fair Value Inputs (June 30, 2022) | Discount Rate | Prepayment Rate | |:---------------------------------------------------|:-------------------|:-------------------| | SBA 7(a) loans receivable, subject to credit risk | 8.00% - 10.00% | 4.33% - 17.50% | | SBA 7(a) loans receivable, subject to loan-backed notes | 7.50% - 9.50% | 5.00% - 17.50% | | SBA 7(a) loans receivable, paycheck protection program | 1.00% | N/A | | SBA 7(a) loans receivable, subject to secured borrowings | 8.75% - 9.50% | 5.00% - 17.50% | Financial Instruments (in thousands) | Financial Instruments (in thousands) | June 30, 2022 Carrying Amount | June 30, 2022 Estimated Fair Value | Dec 31, 2021 Carrying Amount | Dec 31, 2021 Estimated Fair Value | |:-------------------------------------|:--------------------------------|:-----------------------------------|:-----------------------------|:----------------------------------| | Mortgages payable | $97,100 | $93,287 | $97,100 | $100,838 | | Junior subordinated notes | $27,070 | $24,732 | $27,070 | $24,378 | [13. RELATED-PARTY TRANSACTIONS](index=30&type=section&id=13.%20RELATED-PARTY%20TRANSACTIONS) The Company engages in various related-party transactions, with a Fee Waiver reducing asset management fees - The Company has a Fee Waiver, effective January 1, 2022, with the Operator and Administrator, which reduced asset management fees. The Base Fee is now **1%** annually of the average Net Asset Value Attributable to Common Stockholders[149](index=149&type=chunk)[152](index=152&type=chunk) - The Company issued Series A1 Preferred Stock in July 2022 to pay the quarterly Base Fee for Q1 2022 and expects to continue this for the remainder of 2022[153](index=153&type=chunk)[157](index=157&type=chunk) Related-Party Fees (in thousands) | Related-Party Fees (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:----------------------------------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | Asset management fees | $920 | $2,260 | $1,841 | $4,519 | | Property management fees | $413 | $404 | $851 | $807 | | Expense reimbursements - corporate | $526 | $454 | $948 | $1,059 | | Expense reimbursements - lending segment | $604 | $433 | $1,073 | $1,164 | | Upfront dealer manager and trailing dealer manager fees | $152 | $272 | $274 | $422 | Due to Related Parties (in thousands) | Due to Related Parties (in thousands) | June 30, 2022 | December 31, 2021 | |:--------------------------------------|:--------------|:------------------| | Asset management fees | $4,083 | $2,244 | | Property management fees and reimbursements | $865 | $320 | | Expense reimbursements - corporate | $883 | $692 | | Expense reimbursements - lending segment | $360 | $341 | | Upfront dealer manager and trailing dealer manager fees | $555 | $638 | | Non-issuance specific offering costs | $198 | $143 | | Other amounts due | $69 | $163 | | **Total due to related parties** | **$7,013** | **$4,541** | [14. COMMITMENTS AND CONTINGENCIES](index=34&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES) The Company has **$7.1 million** in loan commitments and **$6.0 million** in future construction obligations, with no material litigation expected - Outstanding commitments to fund loans were **$7.1 million** as of June 30, 2022, mostly for prime-based SBA 7(a) loans, with the government-guaranteed portion intended for sale[176](index=176&type=chunk) - The Company has **$6.0 million** in future obligations for tenant improvement allowances and other construction as of June 30, 2022, with **$2.5 million** funded to reserve accounts[177](index=177&type=chunk) - Management believes current legal proceedings, including a lawsuit related to a previously owned property, will not have a material adverse effect on the Company's financial condition or operations[180](index=180&type=chunk)[181](index=181&type=chunk) - The Company services **$265.5 million** of guaranteed SBA 7(a) loans and could face recovery claims for technical deficiencies, but based on historical experience, this contingency is not expected to be probable[182](index=182&type=chunk) [15. LEASES](index=35&type=section&id=15.%20LEASES) Future minimum rental revenue under long-term operating leases is projected to be **$189.993 million** as of June 30, 2022 | Years Ending December 31, | Future Minimum Rental Revenue (in thousands) | |:--------------------------|:---------------------------------------------| | 2022 (Six months ending Dec 31, 2022) | $22,785 | | 2023 | $43,637 | | 2024 | $42,198 | | 2025 | $26,095 | | 2026 | $18,641 | | Thereafter | $36,637 | | **Total** | **$189,993** | [16. SEGMENT DISCLOSURE](index=36&type=section&id=16.%20SEGMENT%20DISCLOSURE) Total segment net operating income increased to **$24.992 million**, driven by significant growth in the hotel segment | Segment Net Operating Income (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:--------------------------------------------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | Office | $7,900 | $7,586 | $15,914 | $15,373 | | Hotel | $3,247 | ($2) | $5,641 | ($809) | | Lending | $1,689 | $5,047 | $3,437 | $7,153 | | **Total segment net operating income** | **$12,836** | **$12,631** | **$24,992** | **$21,717** | - Total segment net operating income increased by **$3.275 million (15.08%)** for the six months ended June 30, 2022, compared to the same period in 2021[188](index=188&type=chunk) - The Hotel segment showed a significant turnaround, moving from a net operating loss of **($809) thousand** in H1 2021 to a profit of **$5.641 million** in H1 2022[188](index=188&type=chunk) Condensed Assets (in thousands) | Condensed Assets (in thousands) | June 30, 2022 | December 31, 2021 | |:--------------------------------|:--------------|:------------------| | Office | $470,779 | $449,843 | | Hotel | $99,211 | $101,308 | | Lending | $83,033 | $96,729 | | Non-segment assets | $24,722 | $12,986 | | **Total assets** | **$677,745** | **$660,866** | [17. SUBSEQUENT EVENTS](index=37&type=section&id=17.%20SUBSEQUENT%20EVENTS) On July 1, 2022, the Company acquired an office property in Austin, Texas, for **$1.9 million** for future development - On July 1, 2022, the Company acquired a 1,352 square foot office property in Austin, Texas, for **$1.9 million**, with intentions for further development on the land[191](index=191&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, highlighting improved net income and FFO, hotel recovery, and liquidity [Executive Summary](index=39&type=section&id=Executive%20Summary) The Company is a Maryland REIT focused on office, hotel, and lending, aiming to develop multifamily and creative office assets - The Company's real estate portfolio as of June 30, 2022, consisted of **17 assets**, including **12 office properties** (**1.4 million rentable square feet**, **78.1% occupied**), **one hotel** (**503 rooms**, RevPAR **$127.98** for H1 2022), and **three development sites**[204](index=204&type=chunk) - The Company's strategy is to acquire, operate, and develop premier multifamily and creative office assets in rapidly growing industries and vibrant communities, applying CIM Group's expertise[205](index=205&type=chunk) - The Company intends to dispose of assets that do not fit its strategy opportunistically and reinvest proceeds into strategic assets[209](index=209&type=chunk) - The COVID-19 pandemic continues to impact operations, and its future effects remain uncertain, potentially affecting business, financial condition, and liquidity[203](index=203&type=chunk) [Rental Rate Trends](index=41&type=section&id=Rental%20Rate%20Trends) Office occupancy was **78.1%** with **$54.13** annualized rent, while hotel occupancy significantly improved to **73.3%** with RevPAR at **$127.98** Office Statistics | Office Statistics | June 30, 2022 | June 30, 2021 | |:----------------------------------|:--------------|:--------------| | Occupancy | 78.1% | 78.0% | | Annualized rent per occupied square foot | $54.13 | $52.32 | - Office occupancy remained stable, while annualized rent per occupied square foot increased by **3.46%** year-over-year[215](index=215&type=chunk) Hotel Statistics (Six Months Ended June 30,) | Hotel Statistics (Six Months Ended June 30,) | 2022 | 2021 | |:---------------------------------------------|:--------|:--------| | Occupancy | 73.3% | 38.8% | | ADR | $174.48 | $119.99 | | RevPAR | $127.98 | $46.52 | - Hotel occupancy more than doubled, ADR increased by **45.41%**, and RevPAR surged by **175.10%** for the six months ended June 30, 2022, compared to 2021, indicating a strong recovery in the hospitality industry[220](index=220&type=chunk) [Lending Segment](index=42&type=section&id=Lending%20Segment) The lending segment originates SBA 7(a) loans, with PPP loans largely concluded, and plans to diversify beyond hospitality - The lending segment is a national lender primarily originating SBA 7(a) loans to small businesses, with most loans having variable interest rates and maturities of approximately **25 years**[222](index=222&type=chunk)[223](index=223&type=chunk) - As of June 30, 2022, only **$205,000** in PPP loans remained outstanding, with substantially all loans originated under the program having been repaid[222](index=222&type=chunk)[224](index=224&type=chunk) - The Company intends to expand its loan origination efforts beyond the hospitality industry to include other real estate-collateralized loans in sectors like convenience stores, RV parks, and owner-occupied industrial operations[225](index=225&type=chunk) [2022 Results of Operations](index=43&type=section&id=2022%20Results%20of%20Operations) Net income increased by **$2.4 million** for the quarter and **$8.4 million** for six months, with FFO also significantly improving Financial Metric (in thousands) | Financial Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | |:--------------------------------|:---------------------------------|:---------------------------------|:-----------|:-----------| | Total revenues | $26,403 | $22,673 | $3,730 | 16.5% | | Total expenses | $23,411 | $21,150 | $2,261 | 10.7% | | Net income | $2,931 | $527 | $2,404 | 456.2% | Financial Metric (in thousands) | Financial Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change ($) | Change (%) | |:--------------------------------|:-------------------------------|:-------------------------------|:-----------|:-----------| | Total revenues | $51,185 | $41,552 | $9,633 | 23.2% | | Total expenses | $45,704 | $43,326 | $2,378 | 5.5% | | Net income (loss) | $5,233 | ($3,144) | $8,377 | (266.4)% | FFO (in thousands) | FFO (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:--------------------------------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | FFO attributable to common stockholders | $2,625 | $859 | $4,818 | ($2,310) | - The increase in FFO is primarily due to a **$3.2 million** increase in hotel segment net operating income (Q2 2022 vs Q2 2021) and a **$1.3 million** decrease in asset management fees (Q2 2022 vs Q2 2021), partially offset by a **$3.4 million** decrease in lending segment net operating income (Q2 2022 vs Q2 2021)[233](index=233&type=chunk) [Cash Flow Analysis](index=48&type=section&id=Cash%20Flow%20Analysis) Operating cash flow increased by **$7.4 million**, while investing activities used **$30.9 million** more cash, and financing activities decreased - Net cash provided by operating activities increased by **$7.4 million** for the six months ended June 30, 2022, compared to 2021, mainly due to increased net income adjusted for non-cash items[272](index=272&type=chunk) - Net cash used in investing activities increased by **$30.9 million** for the six months ended June 30, 2022, primarily due to **$8.1 million** in real estate acquisitions and a **$22.4 million** investment in an unconsolidated joint venture[273](index=273&type=chunk) - Net cash provided by financing activities decreased by **$8.4 million** for the six months ended June 30, 2022, largely due to the absence of common stock issuance proceeds (compared to **$78.5 million** from a rights offering in 2021) and **$303,000** in common stock repurchases[274](index=274&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The Company faces short-term liquidity needs for acquisitions and debt service, with plans to refinance its credit facility and address preferred stock redemptions - The Company's principal short-term demands for funds include asset acquisitions, property development/repositioning, capital expenditures, debt service, SBA 7(a) loan originations, and distributions/redemptions of preferred and common stock[275](index=275&type=chunk) - The Company is working to refinance its 2018 Revolving Credit Facility, with **$50.0 million** outstanding as of August 3, 2022, and has submitted an extension notice to extend its maturity to October 2023[275](index=275&type=chunk)[281](index=281&type=chunk) - Holders of Series L Preferred Stock will have the right to require redemption in November 2022, and the Company also has the option to redeem, with payment in cash or Common Stock at its discretion[275](index=275&type=chunk) - Future financing methods may include offerings of equity/debt securities, credit facilities, asset sales, and cash flows from operations, but the ability to obtain sufficient long-term funding is uncertain and subject to various risks[275](index=275&type=chunk)[279](index=279&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to interest rate risk, with **53.6%** of its debt being floating rate, impacting earnings - The fair value of the Company's mortgage payable is sensitive to interest rate fluctuations; its book value was **$97.1 million** and fair value **$93.3 million** as of June 30, 2022[299](index=299&type=chunk) - As of June 30, 2022, **53.6%** (**$112.3 million**) of the Company's debt was floating rate, exposing it to interest rate risk[300](index=300&type=chunk) - A **50 basis point** change in LIBOR would result in an annual impact of approximately **$562,000** to the Company's earnings[300](index=300&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control - As of June 30, 2022, the Company's disclosure controls and procedures were deemed effective by management, including the Principal Executive Officer and Principal Financial Officer[302](index=302&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2022[304](index=304&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not involved in any material legal proceedings, and existing actions are not expected to have a material adverse effect - The Company is not currently involved in any material pending or threatened legal proceedings, other than routine litigation in the ordinary course of business[307](index=307&type=chunk) - Management does not expect the resolution of current legal actions to have a material adverse effect on the Company's business, financial condition, results of operations, cash flow, or ability to satisfy debt service or maintain distributions[307](index=307&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's 2021 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2021 Form 10-K have occurred[308](index=308&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board approved a **$10.0 million** share repurchase program, under which **41,374** shares were repurchased for **$303,000** - The Company's Board of Directors approved a share repurchase program (SRP) in May 2022, authorizing up to **$10.0 million** for Common Stock repurchases[309](index=309&type=chunk) Share Repurchase Program (SRP) | Period | Shares Repurchased | Average Price Paid Per Share | Cumulative Amount Repurchased (in thousands) | |:------------|:-------------------|:-----------------------------|:---------------------------------------------| | June 2022 | 41,374 | $7.32 | $303 | | **Total** | **41,374** | **$7.32** | **$303** | [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[311](index=311&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This item is not applicable[311](index=311&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - No other information to report[312](index=312&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Dealer Manager Agreement and officer certifications - Key exhibits include the Third Amended and Restated Dealer Manager Agreement (Exhibit 10.1), Section 302 and 906 Officer Certifications (Exhibits 31.1, 31.2, 32.1, 32.2), and various XBRL taxonomy documents[314](index=314&type=chunk)

Creative Media & Community Trust Corporation (NASDAQ:CMCT) Q1 2022 Earnings Conference Call May 11, 2022 11:00 AM ET Company Participants Steve Altebrando - Shareholder Relations David Thompson - Chief Executive Officer Shaul Kuba - Co-Founder, CIM Group Nathan DeBacker - Chief Financial Officer Conference Call Participants Craig Kucera - B. Riley Securities Operator Good day and welcome to the Creative Media & Community Trust Corporation First Quarter 20212 Earnings Call. All participants will be in listen ...

Creative Media & Community Trust Corporation (NASDAQ:CMCT) Q4 2021 Earnings Conference Call March 16, 2022 1:00 PM ET Company Participants Steve Altebrando - Shareholder Relations Nathan DeBacker - CFO David Thompson - CEO Shaul Kuba - Co-Founder, CIM Group Conference Call Participants Craig Kucera - B. Riley Securities John Moran - Robotti & Company Operator Good day and welcome to the Creative Media & Community Trust Corporation Fourth Quarter 2021 Earnings Call. All participants will be in listen-only mo ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-13610 CREATIVE MEDIA & COMMUNITY TRUST CORPORATION (Exact Name of Registrant as Specified in Its Charter) | --- | --- | --- | |----------------------------------- ...

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