Creative Media & Community Trust Corp (NASDAQ:CMCT), a real estate investment trust, announced today that it has entered into a Fifth Amended and Restated Dealer Manager Agreement with CIM Service Provider, LLC and CCO Capital, LLC. The agreement, effective as of Thursday, June 20, 2024, outlines the continued exclusive partnership for the offering of the company's Series A1 Preferred Stock, with a maximum aggregate offering amount of $400 million.
Under the new terms, the dealer manager fee has been reduced from 3.00% to 2.00%, while selling commissions remain up to 7.00% of the aggregate selling price of the Series A1 Preferred Stock sold in the offering. The Dealer Manager, an affiliate and registered broker-dealer under common control with CIM Capital, LLC, is obligated to use its reasonable best efforts to sell the shares and may reallow portions of the dealer manager fee to other authorized broker-dealers.
This agreement follows the effective registration statement on Form S-11 filed by the company, which was declared effective by the SEC on June 7, 2024. The Dealer Manager is also connected to CIM Management, LLC, which provides various management services to the company and its subsidiaries.
In other recent news, Creative Media and Community Trust Corporation (CMCT) reported an upward trend in its first-quarter results for 2024, with a 9% year-over-year increase in same-store office net operating income. This growth was primarily fueled by the improved performance of its Beverly Hills property. Despite facing cash flow constraints due to high short-term interest rates, CMCT disclosed plans to consider asset sales and debt reduction strategies. The company's segment net operating income saw an approximate increase of $600,000, thanks to the office and multifamily segments.
CMCT's multifamily segment reported higher occupancy, although certain locations fell short of expected rental rates. The company's funds from operations (FFO) and core FFO were in the negative, mainly due to rising interest expenses and increased preferred stock dividends. To enhance cash flow and reduce credit obligations, CMCT is planning to sell assets, particularly in the office portfolio. The company is also aiming for a 75-100 basis point spread in return on cost versus the market cap rate for its development projects.
Despite some multifamily properties underperforming in rental rate growth, the company demonstrated improved occupancy rates and strong operating fundamentals in the Los Angeles market. These recent developments suggest CMCT's commitment to improving its financial stability and market position.
InvestingPro Insights
Creative Media & Community Trust Corp (CMCT) has recently made strategic moves to enhance their capital raising efforts, which is particularly significant in light of the company's current financial landscape. According to InvestingPro data, CMCT has a market capitalization of $61.52M and a notable dividend yield of 12.59%, underscoring their commitment to returning value to shareholders. Despite a challenging profitability outlook, with analysts not expecting the company to be profitable this year, CMCT's liquid assets surpassing short-term obligations suggest a degree of financial flexibility.
InvestingPro Tips highlight that CMCT is trading near its 52-week low and has experienced a significant price decline over the last three months. This could represent a potential entry point for investors who believe in the company's long-term prospects, especially considering the recent reduction in dealer manager fees for their Series A1 Preferred Stock offering. Additionally, the company's revenue growth over the last twelve months was 14.95%, indicating some positive momentum in their operations.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available, which can provide deeper insights into CMCT's financial health and stock performance. By using the coupon code PRONEWS24, readers can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable tips.
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