CMCT(US:CMCT)2023-05-03 01:10Financial Data and Key Metrics Changes - The company reported a core FFO of negative $0.06 per share compared to positive $0.10 in the prior-year period, primarily due to higher interest expenses related to acquisitions [22][37] - The segment net operating income (NOI) increased to $13 million from $12.2 million in the prior-year period, driven by a $1.8 million increase in the hotel segment NOI and $675,000 from the multifamily segment, partially offset by a $1.2 million decrease in the office segment NOI [32][33] Business Line Data and Key Metrics Changes - The hotel segment NOI increased to $4.1 million from $2.4 million, with occupancy rising to 81% from 69% and average daily rate (ADR) increasing to $202 from $173 [46] - The office segment NOI decreased to $6.8 million from $8 million, primarily due to decreased occupancy in properties in Los Angeles and San Francisco [45] - The multifamily segment generated $675,000 in NOI for the first quarter, with an occupancy rate of 80.7% [47][29] Market Data and Key Metrics Changes - The multifamily properties in Oakland and Los Angeles were acquired at attractive prices, with Channel House at approximately $415,000 per door and 1150 Clay at $535,000 per door, reflecting a substantial discount to current replacement costs [15][22] - The company noted that the Oakland market has seen significant supply growth but expects absorption to take time, with limited new supply anticipated in the near future [27][66] Company Strategy and Development Direction - The company aims to balance its portfolio by expanding the multifamily segment, having acquired three properties that fit this strategy [12][24] - The development pipeline includes over 1,500 multifamily units on land already owned in various markets, indicating a focus on growth in this area [42][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the hotel segment's recovery, noting strong trends in group bookings and occupancy rates [51] - The company anticipates that the multifamily assets will stabilize within the next 12 months, with potential for rate growth thereafter [66] Other Important Information - The company completed a securitization of its loan portfolio, generating net proceeds of approximately $43.3 million, and raised $23.6 million from a preferred stock offering [13][54] - Non-segment expenses increased significantly due to higher depreciation and amortization expenses related to new acquisitions [33] Q&A Session Summary Question: Why isn't this the right time to monetize the hotel asset? - Management indicated that they decided to hold the asset based on previous market values and are currently evaluating next steps, including potential renovations before marketing [51] Question: What are the capital allocation plans if the hotel is monetized? - The focus is on growing the multifamily portfolio and balancing share repurchases with internal investments [60] Question: When do you expect the multifamily assets to stabilize? - Stabilization is expected within the next 12 months, with ongoing opportunities for rate growth beyond that [66]