CMCT(US:CMCT)2022-11-15 21:38Financial 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].