CMCT outlines 55% leasing activity increase and targets NOI growth in 2026 through property upgrades

Earnings Call Insights: Creative Media & Community Trust Corporation (CMCT) Q2 2025

MANAGEMENT VIEW

* CEO David A. Thompson highlighted a significant increase in leasing activity, stating that "In 2025, we executed approximately 140,000 square feet of leases through the end of July. This represents an over 55% increase from the prior year period." The activity is primarily driven by properties in Los Angeles and Austin.
* Thompson reported that the company has "successfully secured property level financing on 7 of our assets," which enabled CMCT to "fully replay and retire our recourse credit facility, which carried a balance of approximately $169 million at the end of the third quarter of 2024."
* The company has made progress on addressing near-term debt maturities by extending the maturity on multifamily properties in the Bay Area to summer 2026 and January 2027, respectively. A $20 million revolving credit facility was closed in June to support lending originations.
* Thompson outlined focus areas as "improving our balance sheet and liquidity, improving property level performance and evaluating asset sales as part of our broader strategic plan."
* The delivery of the 1915 Park multifamily asset in Los Angeles remains on track for the current quarter, with expectations for improved NOI in this segment.
* CFO Barry Neil Berlin reported, “Our core FFO was negative $7.2 million, and our overall net operating income decreased to $9.8 million from $11.8 million in the prior quarter.” Berlin added, "Our Office Segment NOI for Q2 2025 was $5.5 million versus $8.9 million during Q2 2024."

OUTLOOK

* Thompson stated, “We believe there is a meaningful opportunity to grow NOI in 2026. This outlook is supported by several key drivers. The continued improvement in office leasing activity, the full completion of renovations at our hotel asset, steady gains in the multifamily performance through higher rental rates, improved occupancy and the delivery of new units as well as the potential benefit of a declining interest rate environment.”
* No explicit numerical guidance or updated EPS/revenue targets were provided for upcoming quarters.

FINANCIAL RESULTS

* Berlin broke down segment NOI for Q2 2025 as $9.8 million, a decrease from $16.2 million in Q2 2024, citing decreases across office, multifamily, hotel, and lending segments.
* Office segment NOI declined to $5.5 million, attributed to decreased rental revenue in Oakland and lower income from unconsolidated office entities.
* Multifamily segment NOI was $189,000, with a decline driven by unrealized losses and reduced revenues from Oakland properties.
* Hotel segment NOI was $4.2 million, down slightly from the previous year due to lower food and beverage sales.
* Lending division NOI was a loss of $47,000, reflecting lower interest income and increased credit losses.
* Core FFO was negative $7.2 million or negative $9.53 per diluted share compared to negative $2.1 million or negative $21.93 per diluted share in the prior year period.

Q&A

* Operator indicated, “I'm seeing no questions. This concludes the question-and-answer session and today's conference call.” No analyst questions or management responses were recorded.

SENTIMENT ANALYSIS

* The absence of analyst questions suggests a neutral or disengaged analyst sentiment for the quarter, with no explicit skepticism or optimism recorded.
* Management’s tone was measured and focused on operational progress, using phrases like “we are pleased,” “we believe,” and “we continue to make significant progress.”
* Compared to the previous quarter, management’s tone remained consistent, emphasizing stabilization and execution on strategic priorities while not expressing overt confidence or defensiveness.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter saw a continued focus on liquidity improvement, debt maturity extensions, and property-level upgrades, with explicit mention of a $20 million revolving credit facility and completed renovations at the Sacramento hotel.
* Leasing activity saw a noted increase, with 140,000 square feet executed year-to-date, up from the 30,000 square feet reported in Q1 2025.
* NOI and core FFO declined compared to Q1 2025, with a sharper drop in office and multifamily segment performance.
* Both quarters highlighted the strategic importance of multifamily growth and asset sales, with the addition of property-specific updates and delivery timelines.
* Analysts did not participate in Q&A in either quarter, maintaining a neutral tone across periods.

RISKS AND CONCERNS

* Thompson acknowledged “uneven demand at our 3 Oakland assets,” and stated that the company is “working hard to drive occupancy and contain costs.”
* The hotel segment is experiencing near-term NOI impact due to ongoing renovations, but management expects a positive positioning in 2026.
* Lending income declined due to higher reserves and loan payoffs, presenting a potential risk for sustained income in that segment.

FINAL TAKEAWAY

CMCT’s second quarter was marked by a notable increase in leasing activity and continued execution on strategic initiatives to improve liquidity and balance sheet flexibility. While NOI and core FFO were down year-over-year and sequentially, management underscored opportunities for growth in 2026, supported by property upgrades, debt maturity extensions, and ongoing asset sales evaluations. Operational progress was highlighted, though challenges remain in the Oakland multifamily and lending segments.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cmct/earnings/transcripts]

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