CIM Commercial Trust Corporation Reports 2018 Second Quarter Results
Second Quarter 2018 Highlights
- Same-store1 office segment and cash net operating income (“NOI”) increased 8.6% and 4.8%, respectively, for the second quarter of 2018 from the corresponding period in 2017.
-
Annualized rent per occupied square foot on a same-store basis
increased 7.4% to
$42.99 as of June 30, 2018 compared to June 30, 2017; annualized rent per occupied square foot across all properties was$44.54 as of June 30, 2018. - On a same-store basis, the office portfolio was 94.1% leased as of June 30, 2018.
- During the second quarter of 2018, we executed 25,898 square feet of leases with terms longer than 12 months, including 19,442 square feet of recurring leases; all of which were executed at our same-store office portfolio, representing same-store cash rent growth per square foot of 17.0%.
-
Net loss attributable to common stockholders was
$1,876,000 , or$0.04 per diluted share, for the second quarter of 2018. -
Funds from operations (“FFO”) attributable to common stockholders was
$11,449,000 , or$0.26 per diluted share, for the second quarter of 2018.
Management Commentary
In addition, our same-store cash rent growth on recurring leases signed during the second quarter of 2018 was 17.0%. We expect this increase to benefit NOI and FFO in the future as these new leases commence.
Our premium rents, NOI growth, high leased percentage, and strong re-leasing spreads reflect the strength of our platform and Class A and creative office portfolio, which is concentrated in high barrier to entry gateway markets. We continue to target 4% to 6% annualized same-store NOI growth through 2022 driven by contractual rent increases and below market in-place leases rolling to market. We also have additional growth potential from already owned development sites.
We are focused on growing our net asset value ("NAV") and cash flow per share and providing liquidity to shareholders at prices that reflect our strong prospects. As we have done since our 2014 merger, we will continue to actively manage our portfolio to drive returns for our shareholders, while further progressing toward a prudent capital structure that we anticipate will consist of approximately 45% common equity, based on fair values.
Since the beginning of 2014, we have provided
Financial Highlights
As of June 30, 2018, our real estate portfolio consists of 21 assets, all of which are fee-simple properties. The portfolio includes 19 office properties (including one parking garage and two development sites, one of which is being used as a parking lot), totaling approximately 3.4 million rentable square feet and one hotel, which has 503 rooms and an ancillary parking garage. We also operate a lending business.
Second Quarter 2018
Net loss attributable to common stockholders was
FFO attributable to common stockholders was
Year to Date 2018
Net loss attributable to common stockholders was
FFO attributable to common stockholders was
___________________________
1 Please see Reconciliation of Net Operating Income on page 10 for our definition of "same-store."
2 CMCT is the product of a merger (the “Merger”) between
3 The per share equivalent in proceeds from the tender offer
is
4 The total return is calculated based on (i) NAV growth
which represents the change in NAV from
Segment Information
Our reportable segments during the three months ended June 30, 2018
consist of two types of commercial real estate properties, namely,
office and hotel, as well as a segment for our lending business. Our
reportable segments during the three months ended June 30, 2017 consist
of three types of commercial real estate properties, namely, office,
hotel and multifamily, as well as a segment for our lending business.
Aggregate segment NOI was
Office
Same-Store
Same-store office segment NOI increased 8.6% on a GAAP basis and 4.8% on
a cash basis. The increase in same-store segment NOI is primarily due to
an increase in revenue at certain of our
At June 30, 2018, the Company’s office portfolio was 94.0% occupied, an
increase of 80 basis points year-over-year on a same-store basis and
94.1% leased, a decrease of 10 basis points year-over-year on a same
store basis. The annualized rent per occupied square foot on a same
store basis was
Total
Office segment NOI decreased to
Hotel
Hotel segment NOI was
Multifamily
During the three months ended June 30, 2017, we sold three of our five
multifamily properties and sold the remaining two multifamily properties
during the last six months of 2017. Multifamily segment NOI was
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 was
Debt and Equity
On May 30, 2018, we completed a securitization of the unguaranteed
portion of certain of our SBA 7(a) loans receivable with the issuance of
During the three months ended June 30, 2018, we issued 476,462 Series A preferred units, with each Series A preferred unit consisting of one share of Series A preferred stock and one warrant to purchase 0.25 shares of our common stock, resulting in net proceeds of approximately $10,971,000. Net proceeds represent gross proceeds offset by costs specifically identifiable to the offering of the Series A preferred units, such as commissions, dealer manager fees, and other offering fees and expenses.
Dividends
On June 4, 2018, CIM Commercial Trust’s Board of Directors approved, and
we declared, a quarterly cash dividend of
In addition, the Board of Directors approved, and we declared, a
quarterly cash dividend of
About CMCT
FORWARD-LOOKING STATEMENTS
The information set forth herein contains "forward-looking statements."
You can identify these statements by the fact that they do not relate
strictly to historical or current facts or discuss the business and
affairs of
As you read and consider the information herein, you are cautioned to
not place undue reliance on these forward-looking statements. These
statements are not guarantees of performance or results and speak only
as of the date hereof. These forward-looking statements involve risks,
uncertainties and assumptions. In light of these risks and
uncertainties, there can be no assurance that the results and events
contemplated by the forward-looking statements contained herein will in
fact transpire. New factors emerge from time to time, and it is not
possible for
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited and in thousands, except share and per share amounts) |
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June 30, 2018 | December 31, 2017 | |||||||||
ASSETS | ||||||||||
Investments in real estate, net | $ | 1,075,931 | $ | 957,725 | ||||||
Cash and cash equivalents | 91,192 | 129,310 | ||||||||
Restricted cash | 22,800 | 27,008 | ||||||||
Loans receivable, net | 71,606 | 81,056 | ||||||||
Accounts receivable, net | 9,169 | 13,627 | ||||||||
Deferred rent receivable and charges, net | 86,162 | 84,748 | ||||||||
Other intangible assets, net | 11,625 | 6,381 | ||||||||
Other assets | 19,876 | 36,533 | ||||||||
TOTAL ASSETS | $ | 1,388,361 | $ | 1,336,388 | ||||||
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY | ||||||||||
LIABILITIES: | ||||||||||
Debt, net | $ | 666,932 | $ | 630,852 | ||||||
Accounts payable and accrued expenses | 27,391 | 26,394 | ||||||||
Intangible liabilities, net | 3,829 | 1,070 | ||||||||
Due to related parties | 9,203 | 8,814 | ||||||||
Other liabilities | 14,529 | 14,629 | ||||||||
Total liabilities | 721,884 | 681,759 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
REDEEMABLE PREFERRED STOCK: Series A, $0.001 par value; 36,000,000 shares authorized; 1,845,473 and 1,842,353 shares issued and outstanding, respectively, at June 30, 2018 and 1,225,734 and 1,224,712 shares issued and outstanding, respectively, at December 31, 2017; liquidation preference of $25.00 per share, subject to adjustment | 42,037 | 27,924 | ||||||||
EQUITY: | ||||||||||
Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 308,775 and 307,510 shares issued and outstanding, respectively, at June 30, 2018 and 61,435 and 60,592 shares issued and outstanding, respectively, at December 31, 2017; liquidation preference of $25.00 per share, subject to adjustment | 7,637 | 1,508 | ||||||||
Series L cumulative redeemable preferred stock, $0.001 par value; 9,000,000 shares authorized; 8,080,740 shares issued and outstanding at June 30, 2018 and December 31, 2017; liquidation preference of $28.37 per share, subject to adjustment | 229,251 | 229,251 | ||||||||
Common stock, $0.001 par value; 900,000,000 shares authorized; 43,795,073 and 43,784,939 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 44 | 44 | ||||||||
Additional paid-in capital | 792,245 | 792,631 | ||||||||
Accumulated other comprehensive income | 3,221 | 1,631 | ||||||||
Distributions in excess of earnings | (408,797 | ) | (399,250 | ) | ||||||
Total stockholders' equity | 623,601 | 625,815 | ||||||||
Noncontrolling interests | 839 | 890 | ||||||||
Total equity | 624,440 | 626,705 | ||||||||
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY | $ | 1,388,361 | $ | 1,336,388 | ||||||
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited and in thousands, except per share amounts) |
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Three Months Ended |
Six Months Ended June 30, |
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2018 | 2017 | 2018 | 2017 | |||||||||||||||
REVENUES: | ||||||||||||||||||
Rental and other property income | $ | 34,900 | $ | 46,124 | $ | 68,697 | $ | 97,183 | ||||||||||
Hotel income | 10,160 | 9,832 | 19,849 | 19,582 | ||||||||||||||
Expense reimbursements | 3,351 | 2,526 | 4,960 | 5,556 | ||||||||||||||
Interest and other income | 3,148 | 2,817 | 6,451 | 5,927 | ||||||||||||||
51,559 | 61,299 | 99,957 | 128,248 | |||||||||||||||
EXPENSES: | ||||||||||||||||||
Rental and other property operating | 20,780 | 27,249 | 38,800 | 50,209 | ||||||||||||||
Asset management and other fees to related parties | 6,143 | 7,863 | 12,354 | 16,563 | ||||||||||||||
Interest | 6,811 | 9,513 | 13,444 | 19,286 | ||||||||||||||
General and administrative | 1,915 | 1,647 | 5,291 | 3,326 | ||||||||||||||
Transaction costs | 344 | 11,615 | 344 | 11,628 | ||||||||||||||
Depreciation and amortization | 13,325 | 14,761 | 26,473 | 31,992 | ||||||||||||||
Impairment of real estate | — | 13,100 | — | 13,100 | ||||||||||||||
49,318 | 85,748 | 96,706 | 146,104 | |||||||||||||||
Gain on sale of real estate | — | 116,283 | — | 304,017 | ||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 2,241 | 91,834 | 3,251 | 286,161 | ||||||||||||||
Provision for income taxes | 292 | 462 | 680 | 854 | ||||||||||||||
NET INCOME | 1,949 | 91,372 | 2,571 | 285,307 | ||||||||||||||
Net income attributable to noncontrolling interests | (12 | ) | (9 | ) | (16 | ) | (14 | ) | ||||||||||
NET INCOME ATTRIBUTABLE TO THE COMPANY | 1,937 | 91,363 | 2,555 | 285,293 | ||||||||||||||
Redeemable preferred stock dividends accumulated | (3,152 | ) | — | (6,304 | ) | — | ||||||||||||
Redeemable preferred stock dividends declared | (662 | ) | (72 | ) | (1,155 | ) | (103 | ) | ||||||||||
Redeemable preferred stock redemptions | 1 | — | 2 | — | ||||||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (1,876 | ) | $ | 91,291 | $ | (4,902 | ) | $ | 285,190 | ||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE: | ||||||||||||||||||
Basic | $ | (0.04 | ) | $ | 1.16 | $ | (0.11 | ) | $ | 3.50 | ||||||||
Diluted | $ | (0.04 | ) | $ | 1.16 | $ | (0.11 | ) | $ | 3.50 | ||||||||
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: | ||||||||||||||||||
Basic | 43,791 | 78,871 | 43,788 | 81,445 | ||||||||||||||
Diluted | 43,791 | 78,871 | 43,788 | 81,445 | ||||||||||||||
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 generally accepted accounting principles
("GAAP"), which reflects the deduction of redeemable preferred stock
dividends accumulated, excluding gains (or losses) 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
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.
The following table sets forth a reconciliation of net (loss) income attributable to common stockholders to FFO attributable to common stockholders:
Three Months Ended |
Six Months Ended June 30, |
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2018 | 2017 | 2018 | 2017 | |||||||||||||||
Net (loss) income attributable to common stockholders | $ | (1,876 | ) | $ | 91,291 | $ | (4,902 | ) | $ | 285,190 | ||||||||
Depreciation and amortization | 13,325 | 14,761 | 26,473 | 31,992 | ||||||||||||||
Impairment of real estate | — | 13,100 | — | 13,100 | ||||||||||||||
Gain on sale of depreciable assets | — | (116,283 | ) | — | (304,017 | ) | ||||||||||||
FFO attributable to common stockholders | $ | 11,449 | $ | 2,869 | $ | 21,571 | $ | 26,265 | ||||||||||
FFO attributable to common stockholders per diluted share | $ | 0.26 | $ | 0.04 | $ | 0.49 | $ | 0.32 | ||||||||||
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 in 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 months ended June 30, 2018 and 2017:
Three Months Ended |
Six Months Ended June 30, |
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2018 | 2017 | 2018 | 2017 | ||||||||||||||
Numerator: | |||||||||||||||||
Net (loss) income attributable to common stockholders | $ | (1,876 | ) | $ | 91,291 | $ | (4,902 | ) | $ | 285,190 | |||||||
Redeemable preferred stock dividends declared on dilutive shares | — | — | — | — | |||||||||||||
Numerator for dilutive net (loss) income attributable to common stockholders | $ | (1,876 | ) | $ | 91,291 | $ | (4,902 | ) | $ | 285,190 | |||||||
Denominator: | |||||||||||||||||
Basic weighted average shares of Common Stock outstanding | 43,791 | 78,871 | 43,788 | 81,445 | |||||||||||||
Effect of dilutive securities—contingently issuable shares | — | — | — | — | |||||||||||||
Diluted weighted average shares and common stock equivalents outstanding | 43,791 | 78,871 | 43,788 | 81,445 | |||||||||||||
Net (loss) income attributable to common stockholders per share: | |||||||||||||||||
Basic | $ | (0.04 | ) | $ | 1.16 | $ | (0.11 | ) | $ | 3.50 | |||||||
Diluted | $ | (0.04 | ) | $ | 1.16 | $ | (0.11 | ) | $ | 3.50 | |||||||
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, impairment of real estate, transaction costs, and provision for income taxes. For our lending segment, we define 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. 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.
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.
To facilitate a comparison of our segments and portfolio between
reporting periods, we calculate comparable amounts for a subset of our
segments and portfolio referred to as our “same-store properties.” Our
same-store properties are ones which 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
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Reconciliation of Net Operating Income (Continued) (Unaudited and in thousands) |
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Below is a reconciliation of cash NOI to segment NOI and net income for the three months ended June 30, 2018 and 2017. |
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Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||
Same- |
Non- |
Total |
Hotel |
Multi- |
Lending | Total | ||||||||||||||||||||||||
Cash net operating income | $ | 20,888 | $ | 1,553 | $ | 22,441 | $ | 4,113 | $ | — | $ | 1,372 | $ | 27,926 | ||||||||||||||||
Deferred rent and amortization of intangible assets, liabilities, and lease inducements | 467 | 955 | 1,422 | (3 | ) | — | — | 1,419 | ||||||||||||||||||||||
Straight line rent, below-market ground lease and amortization of intangible assets | — | — | — | — | — | 7 | 7 | |||||||||||||||||||||||
Segment net operating income | $ | 21,355 | $ | 2,508 | $ | 23,863 | $ | 4,110 | $ | — | $ | 1,379 | $ | 29,352 | ||||||||||||||||
Asset management and other fees to related parties | (5,504 | ) | ||||||||||||||||||||||||||||
Interest expense | (6,511 | ) | ||||||||||||||||||||||||||||
General and administrative | (1,427 | ) | ||||||||||||||||||||||||||||
Transaction costs | (344 | ) | ||||||||||||||||||||||||||||
Depreciation and amortization | (13,325 | ) | ||||||||||||||||||||||||||||
Income before provision for income taxes | 2,241 | |||||||||||||||||||||||||||||
Provision for income taxes | (292 | ) | ||||||||||||||||||||||||||||
Net income | 1,949 | |||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | (12 | ) | ||||||||||||||||||||||||||||
Net income attributable to the Company | $ | 1,937 | ||||||||||||||||||||||||||||
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Reconciliation of Net Operating Income (Continued) (Unaudited and in thousands) |
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Three Months Ended June 30, 2017 | ||||||||||||||||||||||||||||||
Same- Office |
Non- |
Total |
Hotel |
Multi- |
Lending | Total | ||||||||||||||||||||||||
Cash net operating income | $ | 19,927 | $ | 6,272 | $ | 26,199 | $ | 3,983 | $ | 1,900 | $ | 1,018 | $ | 33,100 | ||||||||||||||||
Deferred rent and amortization of intangible assets, liabilities, and lease inducements | 212 | 91 | 303 | — | (20 | ) | — | 283 | ||||||||||||||||||||||
Straight line rent, below-market ground lease and amortization of intangible assets | — | (312 | ) | (312 | ) | — | (138 | ) | 10 | (440 | ) | |||||||||||||||||||
Lease termination income | (474 | ) | — | (474 | ) | — | — | — | (474 | ) | ||||||||||||||||||||
Segment net operating income | $ | 19,665 | $ | 6,051 | $ | 25,716 | $ | 3,983 | $ | 1,742 | $ | 1,028 | $ | 32,469 | ||||||||||||||||
Asset management and other fees to related parties | (7,079 | ) | ||||||||||||||||||||||||||||
Interest expense | (9,568 | ) | ||||||||||||||||||||||||||||
General and administrative | (795 | ) | ||||||||||||||||||||||||||||
Transaction costs | (11,615 | ) | ||||||||||||||||||||||||||||
Depreciation and amortization | (14,761 | ) | ||||||||||||||||||||||||||||
Impairment of real estate | (13,100 | ) | ||||||||||||||||||||||||||||
Gain on sale of real estate | 116,283 | |||||||||||||||||||||||||||||
Income before provision for income taxes | 91,834 | |||||||||||||||||||||||||||||
Provision for income taxes | (462 | ) | ||||||||||||||||||||||||||||
Net income | 91,372 | |||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | (9 | ) | ||||||||||||||||||||||||||||
Net income attributable to the Company | $ | 91,363 | ||||||||||||||||||||||||||||
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Net
Asset Value
(Unaudited and in thousands)
As of
The estimated NAV per share of
The
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For CIM Commercial Trust Corporation
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Relations:
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