Q1 2022 Creative Media & Community Trust Corporation Earnings Call
Good day and welcome to the creative media and community trusts first quarter 2022 earnings call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May press.
Good day and welcome to the Creative Media and Community Trust first quarter 2022 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
To ask a question, you may press star then one on your touch tone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Steve Altebrando, Portfolio Oversight. Please go ahead, sir.
Star then one on your Touchtone phone and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Steve Alto Brando portfolio oversight. Please go ahead Sir.
Good morning, everyone and thank you for joining US my name is feed off the brand out of the portfolio oversight for CMC T. Also on the call today is David <unk>, Our Chief Executive Officer Shao Kouba co founder of CIM group at CMC T Board member and make the Barker, our Chief Financial Officer.
Good morning everyone and thank you for joining us. My name is Steve Altebrando, the Portfolio Oversight for CMCT. Also on the call today is David Thompson, our Chief Executive Officer, Shaul Kuba, Co-Founder of CIM Group and CMCT Board Member, and Nate DeBacher, our Chief Financial Officer.
This call is being webcast and will be temporarily archived on the Investor Relations section of our website, where you can also find our earnings release and latest investor presentation.
This call is being webcast and will be temporarily archived on the investor relations section of our website where you can also find our earnings release and latest investor presentation. Our earnings release includes reconciliations of non-GAAP financial measures discussed during today's call.
Our earnings release includes reconciliations of non-GAAP financial measures discussed during today's call.
During the course of this call we will make forward looking statements. These forward looking statements are based on our beliefs assumptions made by and information currently available to us our actual results will be affected by known and unknown risks trends uncertainties and factors that are beyond our control or ability to predict.
During the course of this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control and our ability to predict.
Although we believe that our assumptions are reasonable they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual results can be expected to differ from our expectations and those differences maybe material for a more detailed description of potential risks. Please refer to our SEC filings, which can be found in the investor Relations section.
Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual results can be expected to differ from our expectations and those differences may be material. For more detailed description of potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website. With that, I'll turn the call over to David.
Our website with that I'll turn the call over to David.
Thanks, Steve and thank you for joining our call today. This morning, we announced our first quarter 2022 earnings our core <unk> per share up 10 cents in the first quarter compared to a loss of 21 cents in the prior year period.
Thanks, Steve, and thank you for joining our call today. This morning, we announced our first quarter 2022 earnings. Our core FFO per share of $0.10 in the first quarter compared to a loss of $0.21 in the prior year period. This significant improvement was primarily driven by improving results at our hotel asset, as well as a significant reduction in our cost structure.
The significant improvement was primarily driven by improving results at our hotel asset as well as a significant reduction in our cost structure.
Our total segment net operating income increased by approximately 34% from the prior year. This was despite disruption early in the quarter from the AMA crop areas, particularly impacted our hotel.
Our total segment net operating income increased by approximately 34% from the prior year. This was despite disruption early in the quarter from the Omicron variant that particularly impacted our hotel.
Occupancy at that hotel was 57% in January which increased 67% in February and then 83% in March.
Occupancy at that hotel was 57% in January , which increases 67% in February and then 83% in March. Occupancy remained strong and stable into April at 82% last month.
Occupancy remained strong and stable into April at 82% last month.
On the cost side, our corporate overhead, which includes asset management, Gs G&A and expense reimbursements declined by 49% from the prior year period.
On the cost side, our corporate overhead, which includes asset management fees, G&A, and expense reimbursements, declined by 49% from the prior year period. This was partly driven by the reduction in the management fees that we announced earlier this year.
This was partly driven by the reduction in the management fees that we announced earlier this year.
We believe that there is an opportunity to continue to grow our <unk> per share.
We believe that there is an opportunity to continue to grow our FFO per share.
We continue to see an increase in leasing activity and encouraging hotel trends and we're making progress on our value add assets and.
We continue to see an increase in leasing activity and encouraging hotel trends, and we're making progress on our value-add assets. In addition, we have a very attractive...
In addition, we have a very attractive growth pipeline.
We increased our dividend by 13% in the first quarter as we noted when we announced the reduction in our management fee management has recommended to the board that CMC G. Overtime, you substantially all of the cost savings achieved by the lower management fee to reward common stockholders through dividend increases.
We increased our dividend by 13% in the first quarter. As we noted when we announced the reduction in our management fee, management has recommended to the board that CMCT over time use substantially all of the cost savings achieved by the lower management fee to reward common stockholders through dividend increase.
I would now like to turn the call over to shallow Cuba to provide more detail on our strategy and growth opportunities.
I would now like to turn the call over to Shaul Kuba to provide more detail on our strategy and growth opportunities.
Thanks, David.
Thanks, David. I'd like to take a few moments to reiterate our strategy. CMCP is primarily focused on two things. First, being a leader in investing and developing creative office assets in hybrid market catering to a fast-growing industries like technology, media and entertainment.
To take a few moment to reiterate our strategy C. M suitcase, primarily focus on two things first being a leader in investing and developing creative office asset and dry bread market catering to a fast growing industries like technology media and.
Entertainment.
We are committed to creative office market. So two reason.
We are committed to creative office market for two reasons.
One tenants are demanding and your style of office space that is comfortable and modern.
One, tenet are demanding a new style of office space that is comfortable and modern. Their second bright, open, thoughtfully designed spaces that encourage creativity, flexibility, and collaboration.
They're seeking bright opened thoughtfully design spaces that encourage creativity flexibility and collaboration.
To the creative office market is less competitive than traditional office.
Two, the creative office market is less competitive and traditional office and less capitalistic.
And less capital intensive.
If you have a great product and a great market. There is a very strong tenant demand.
If you have a great product in a great market, there is a very strong tenant demand.
Next we are focused on investing and developing multifamily in those same markets.
Next, we are focused on investing and developing multi-family in those STEM markets.
<unk> are attracting fast growing industries and.
which are attracting fast growing industries and where there is an influx of employees working in those creative office locations.
Where there is an influx of employees working in those creative office locations.
Since professionals in general are spending more time working from home. There is also a greater demand for premium amenity as well as proximity to entertainment dining and culture.
Since professionals in general are spending more time working from home, there is also a greater demand for premium amenity as well as proximity to entertainment, dining and culture.
This new real estate dynamic in place, we have been working hard to assemble.
With this new real estate dynamic in place, we have been working hard to assemble an attractive pipeline that includes core assets, value add and development opportunities.
And attractive pipeline that includes core assets value add and development opportunities.
For search and development and value add opportunities, we will look to joint venture, bringing co investors and then the asset level.
For certain development and value-add opportunities, we will look to join Venture or bring in core investors at an asset level.
On straight joint venture C. M C. G gets the benefit.
On straight joint venture, CMCT gets the benefit of the value creation as well as diversification.
The value creation as well as diversification.
An instance, where we bring in our core investors CMC team may supplement its return to either fee income.
an instance where we bring in a coin investor, CMCT may supplement its return through either fee income or promote in
In some cases we've.
We believe this is a very compelling business model for CMC teeth.
We believe this is a very compelling business model for CMCT, a model where CIM group distribution and development capability provide a significant competitive advantage.
A model with C. I am good distribution and development capability provide a significant competitive advantage.
Yeah, Yeah has more than 180 global institutional investors.
CIM has more than 180 global institutional investors.
It has developed over $11 billion asset across United States and has 100 plus professionals in our development group with experience in urban planning construction design architecture Engineering and project management.
It has developed over $11 billion over acid across the United States.
and has 100 plus professionals in our development group with experience in urban planning, construction, design, architecture, engineering, and project management.
I want to highlight a few of our development opportunities.
I want to highlight a few of our development opportunities.
On our last call I described the closing all the development site in Jefferson Park Submarket of Los Angeles, We have a second site under contract.
On our last call, I described the closing of a development site in Jefferson Park, sub-market of Los Angeles. We have a second site under contract there that is expected to close later this month. We intend to develop a total of about 150 units.
That is expected to close later this month, we intend to develop it totals about 150 units.
Across both sites.
The Jefferson Park area is strategically located in the path of growth.
The Jefferson Park area is strategically located in the path of growth as Los Angeles expands south of the 10 freeway, it is also near several new Culver City developments.
Los Angeles expense out of the 10 freeway is also near several new Culver City development.
And just wanted a half mile from the University of Southern California, Our land bases in this development is very attractive.
and just one and a half miles from the University of Southern California. Our land basis on this development is very attractive at less than $55,000 per door. We expect to break ground on the first site in 2023.
That's less than $55000 per door we.
We expect to break ground on the first site in.
2023.
I also described the closing of 1910 West Sunset Boulevard, which was completed.
I also described the closing of 1910 West Sunset Boulevard, which was completed in
In the first quarter.
D M city partner with an institutional investor to acquire it at 99000 square feet office property in that ballpark.
CMCT partner with an institutional investor to acquire the 99,000 square feet office property in Echo Park neighborhood in Los Angeles, an emerging trendy sub market in a walkable area that also has dozen of dining and entertainment options.
Neighborhood in Los Angeles, and emerging trendy Submarket and a walkable area that also has doesn't have dining and entertainment options.
The in place rent were $30.28 per square foot at the end.
The in-place rent were $30.28 per square foot at the end of the quarter. We believe there is an opportunity to significantly grow rent as we reposition the property into a creative office.
<unk> of the quarter. We believe there is an opportunity to significantly grow ranch as we reposition the property into a creative office space.
space that will appeal to tenant in a fashion entertainment sector already in the area. Additionally, we are pursuing entitlement to develop approximately 36,000 people.
We'll appeal to tenants in the fashion entertainment sector.
Already in the area.
Additionally, we are pursuing entitlement to develop approximately 36 multifamily unit on the surface parking lot in the back of the property.
multi-family unit on the surface parking lot in the back of the property. We also expect to bear ground on this in 2023.
We also expect to break ground.
This is not in 'twenty two 'twenty three.
In addition, we are.
In addition, we are exploring opportunity to develop assets that today are fully leased. There is a significant opportunity to create value in our own existing portfolio. In Culver City,
Exploring opportunities to develop assets that today are fully leased there is a significant opportunity to create value in our own.
Existing portfolio.
In Culver City.
Our asset on Lindbergh in Washington.
Our assets on Lindblad in Washington are centrally located in the market where there is.
Centrally located in the market where there is.
A very strong demand for technology and Entertainment company.
a very strong demand for technology and entertainment company. Nevering tenants include HBO, Sony, Amazon, Apple, and Microsoft. We are exploring alternatives to redevelop those assets.
Tenets include H, B O, Sony Amazon, Apple and Microsoft we are exploring alternatives to redevelop those assets, which currently have about 32000 square feet of rentable space.
which currently have about 32,000 square feet of rentable space.
We are just starting them to market the project as a build to suit.
We are just starting them to market the project as a big pursuit.
In the East Austin, Texas week control, a very attractive creative office development located under one of the C. D men steroids for we believe the corridor is among the most desirable location in Austin.
In East Austin, Texas, we control a very attractive creative office development located on one of the CDMEN sterile firm. We believe the corridor is among the most desirable location in Austin.
In its numerous dining option in proximity to the CBD.
given its numerous dining option and proximity to the CBT.
We will share more detail on those projects as we get closer to construction. We also have additional deals in the pipeline.
We will share more detail on those projects as we get closer to construction. We also have additional deals in the pipeline that we look forward to discussing once they are closer to fruition.
We look forward to discussing once they are closer to fruition.
For an update or a stabilized portfolio and value add opportunity I'll turn the call to Steve. Thanks.
for an update or a stabilized portfolio and value add opportunity. I'll turn the call to Steve. Thanks, Shaul. We leased approximately 21,000 square feet in the first quarter, and our stabilized portfolio was 88% less than the first quarter.
Thanks Joel.
We leased approximately 21000 square feet in the first quarter and our stabilized portfolio was 88% leased.
As we noted last quarter, our Penfield Creative office campus in Austin, We signed an approximately 20000 square foot lease with Google fiber in late 2021.
As we noted last quarter, at our Penfield Creative Office campus in Austin, we signed an approximately 20,000 square foot lease with Google Fiber in late 2021.
During the second quarter, Google fiber exercised an option to take another 5000 square feet, pushing our lease percentage up to 99% today at Anfield.
During the second quarter, Google Fiber exercised an option to take another 5,000 square feet, pushing our release percentage up to 99% today at Penfield. We expect to start recognizing your
We expect to start recognizing revenue in the second quarter we.
We also continue to make progress on our value added portfolio.
We also continue to make progress on our value-add portfolio. At 4750 Wilshire in Los Angeles, we're planning to convert the unleased portion of the building to luxury floor-rent multifamily.
At $47 50, Wilshire in Los Angeles, we're planning to convert the <unk> portion of the building to luxury for rent multifamily.
The return profile on that conversion has been improving as multifamily market rents increase in L. A.
The return profile on the conversion has been improving as multi-family market rents increase in LA.
We noted on our call a few weeks ago that we receive design review approval in February which was the most significant step required for approval.
We noted on our call a few weeks ago that we received design review approval in February , which was the most significant step required for approval.
We are now working on obtaining all necessary permits and expect to be able to start the conversion later this year.
We are now working on obtaining all necessary permits and expect to be able to start the conversion later this year. We anticipate a construction timeline of about 18 months and we will provide more information on the budget, capitalization and timeline of the conversion as we get closer to starting.
We anticipate a construction timeline of about 18 months and we will provide more information on the budget capitalization and timeline of the conversion as we get closer to starting.
At 90, 460, Wilshire Boulevard in Beverly Hills, our lease percentage increased to approximately 73% at the end of the quarter from 65% a year ago. The.
At 9460 Wilshire Boulevard in Beverly Hills, our lease percentage increased to approximately 73% at the end of the quarter from 65% a year ago.
The remaining vacancy is primarily the retail.
The remaining vacancy is primarily the retail. We continue to actively market this space for each.
We continue to actively market this space for lease.
Building is located in the prestigious Golden Triangle of Beverly Hills immediately next to the four seasons Beverly well sure and just one block from Rodeo drive it.
The building is located in the prestigious Golden Triangle of Beverly Hills, immediately next to the Four Seasons Beverly Wilshire, and just one block from Rodeo Drive. It is one of the most prominent retail locations in all of Los Angeles.
It is one of the most prominent retail locations in all of Los Angeles.
With that I'll turn the call over to Nate.
Thank you Steve first quarter core <unk> was 10 cents per diluted share compared to a loss of 21 cents in the prior year period.
Thank you, Steve. First quarter core FFO was $0.10 per diluted share compared to a loss of $0.21 in the prior year period.
Our total segment net operating income increased to $12 $2 million from $9 $1 million in the prior year period.
Our total segment net operating income increased to $12.2 million from $9.1 million in the prior year period. The increase was primarily driven by an increase in the hotel segment. Hotel segment NOI increased to $2.4 million from a loss of $807,000. Occupancy improved to 69.2% in the quarter, up from 29.8%, while the ADR improved to $173.14 from $116.21.
The increase was primarily driven by an increase in the hotel segment Hotel segment NOI increased to $2 $4 million from a loss of $807000 occupancy improved to 69, 2% in the quarter.
From 29, 8%, while the ADR improved to $173 and 14th.
From $116.21.
Our lending division segment, NOI decreased to $1 $7 million from $2 $1 million.
A lending division segment NOI decreased to $1.7 million from $2.1 million.
During 2021 the lending segment benefited from a temporary increase in the maximum SBA guarantee support on loans from 75% to 90% prolonged.
During 2021, the lending segment benefited from a temporary increase in the maximum SBA guarantee support on loans from 75% to 90% per loan. The guaranteed portion has now reverted back to 75%, which has led to a decrease in premium income due to lower loan origination and sale volume as compared to the first quarter of 2021.
A guaranteed portion has now reverted back to 75%, which has led to a decrease in premium income due to lower loan origination and sale volume as compared to the first quarter of 2021.
Our office segment NOI increased by $200000 to $8 million.
Our office segment in Hawaii increased by $200,000 to $8 million.
The increase was primarily due to incremental income from our new office property in Echo Park purchased in February 2022 through a joint venture in which we have an approximately 44% ownership interest.
The increase was primarily due to incremental income from our new office property in Echo Park purchased in February 2022 through a joint venture in which we have an approximately 44% ownership interest.
Our asset management fee and corporate expense reimbursements for $1.3 million in the first quarter of 2022 compared to $2 9 million in the first quarter of 2021.
Our asset management fee and corporate expense reimbursements for $1.3 million in the first quarter of 2022 compared to $2.9 million in the first quarter of 2021.
The decrease was primarily due to a 1.3 million dollar reduction in asset management fees as a result of the fee waiver agreement.
The decrease was primarily due to a $1.3 million reduction in asset management fees as a result of the fee waiver agreement effective January 1st, 2022, which changed the asset management fee calculation to a quarterly fee of 0.25% of net asset value.
Active January one 2022, which changed the asset management fee calculation to a quarterly fee.
0.25% of net asset value.
Turning to our liquidity, we had $90 million drawn on our revolver at the end of the quarter. We estimate we have approximately $106 million of availability as of March 31 2022.
Turning to our liquidity, we had $90 million drawn in our revolver at the end of the quarter. We estimate we have approximately $106 million of availability as of March 31, 2022. Our revolver matures later this year, but as a reminder, we have a one-year extension option which would extend that maturity to October 31, 2023.
Our revolver matures later this year, but as a reminder, we have a one year extension option, which would extend that maturity to October 31 2023.
With that I will now turn the call over to David for some closing remarks.
With that, I will now turn the call over to David for some closing remarks.
Thanks Nate.
We continue to focus on a few strategic goals that we first described on recall in mid March 1st we will continue to evaluate divesting noncore assets overtime.
We continue to focus on a few strategic goals that we first described on our call in mid-March. First, we will continue to evaluate the besting non-core assets over time, assets that are not premier multi-family or creative office.
Assets that are not premier multifamily or creative office.
And to redeploy the proceeds into the types of creative office and multifamily assets strong high growth markets. We described earlier in the call.
We plan to redeploy the proceeds into the types of creative office and multi-family assets and strong high growth markets we described earlier in the call.
We will be very prudent in this approach and look to sell only at values that we believe are attractive or C. M. C. G shareholders.
We'll be very prudent in this approach and look to sell only at values that we believe are attractive for CMCT shareholders. For instance, while we don't view our hotel as a core asset, profitability at the asset is rapidly improving. Our number one priority is maximizing value for CMCT and that's what will drive the timing.
For instance, while we don't view our hotel as a core asset profitability at the asset is rapidly improving our number one priority is maximizing value for CMC Chi and that's what will drive the timing.
Second we are working to create greater financial flexibility.
Second, we're working to create greater financial flexibility. As Nate mentioned, our credit facility matures in late 2023 when accounting for our extension option. We intend to refinance the facility on a long-term basis.
Dave mentioned, our credit facility matures in late 2023, when accounting for our extension option, we intend to refinance the facility on a long term basis.
Third we continue to focus on reducing our cost structure.
Third, we continue to focus on reducing our cost structure. Earlier this year, CIM Group agreed to a reduction in our management fee that amounts to approximately 21 cents per share in annual cost savings, which we started to see the benefits of in the first quarter of 2022. We believe that there is an opportunity to further reduce G&A costs.
Earlier this year see I am group agreed to a reduction in our management fee that amounts to approximately 21 per share annual cost savings, which we started to see the benefits in the first quarter of 2022.
We believe that there is an opportunity to further reduce G&A costs.
And fourth we continue to make progress on our value add assets and growing our development pipeline.
And fourth, we continue to make progress on our value-add assets and growing our development pipeline. To wrap up, we're excited about the opportunity ahead of us as we continue to sharpen our focus on creative office and multi-family. We have great assets and highly desirable sub-markets such as Beverly Hills, Culver City, Hollywood, and Austin. We're encouraged by the pick up.
Wrap up we're excited about the opportunity ahead of us as we continue to sharpen our focus on creative office and multifamily we have great assets in highly desirable submarkets, such as Beverly Hills Culver City Hollywood in Austin.
We're encouraged by the pickup in leasing activity.
We have a very attractive growth pipeline and we look forward to sharing more details on future calls.
We have a very attractive growth pipeline and we look forward to sharing more details on future calls.
For value add and development assets, we will at times looked at co invest to increase our diversification and supplement our returns by generating fee income.
For value-add and development assets, we will at times look to co-invest to increase our diversification and supplement our returns by generating fee income. And finally, we have significantly reduced our cost structure.
And finally, we have significantly reduced our cost structure.
Operator, you May now open the call to questions.
Thank you we will now begin the question and answer session.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. And to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster.
To ask a question you May press Star then one on your touch tone phone if.
If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Okay.
And the first question will come from Craig <unk> with B Riley Securities. Please go ahead.
And the first question will come from Craig Cousera with B. Riley Securities. Please go ahead.
Okay.
Yeah, Hey, good morning, guys.
Talk about your office leasing good morning, you know it looks like there was a bit of a pullback as far as what was executed quarter to quarter, but I'd be curious to get your your thoughts on sort of leasing traffic in the first quarter, maybe any trends in April and didn't give us a sense maybe of your outlook.
We'll talk about your office leasing. Good morning. It looks like there was a bit of a pullback as far as what was executed quarter to quarter, but I'd be curious to get your thoughts on sort of leasing traffic in the first quarter, maybe any trends in April , and give us a sense maybe of your outlook.
Okay.
Yes.
Sure. So this is Steve I think basically what we're seeing is pretty steady consistent improvement in traffic a lot of it is I would say market dependent.
Sure, so this is Steve. I think basically what we're seeing is a pretty steady but consistent improvement in traffic. A lot of it is, you know, I would say market dependent. If you look at, say, our office, our Austin assets and our properties,
You look at say our office, our Austin assets and our property there is about 99% leased and with the vacancies coming up or we're seeing activity tobacco space even prior to.
But 99% least, and with the vacancies coming up, you know, we're seeing activity to backfill the space even prior to the vacate. So, you know, you're seeing very robust activity. And that asset specifically is a creative office campus that, you know, the type of assets we're looking to gravitate towards. And we don't think it's a coincidence that that type of asset is drawing that type of attention.
<unk>, so you're seeing very robust activity in that asset specifically is it a creative office campus that.
The type of assets, we're looking to gravitate towards and we don't think it's a coincidence that.
That type of asset is drawn and that type of attention and I would say the bay area is a little little bit soft there still we don't have we would have not had a tremendous amount of available space. We only have one small asset at San Francisco.
In, I would say the Bay Area is a little bit softer still. You know, we don't have, we have not had a tremendous amount of available space in, you know, we only have one small asset in San Francisco, but the Bay Area, generally speaking, has been a little bit slower, and LA is generally steadily improving, I would say, across the board, whether it's Beverly Hills or some of our Brentwood assets, what you're going to do.
The Bay area generally speaking has been a little bit slower.
And L. A is generally steadily improving I would say across the board, whether it's Beverly Hills.
Some of our Brentwood assets, what we are.
CSA improvement.
Leasing activity or traffic.
Great and can you comment on any trends youre seeing in regard to our physical occupancy you've been you've been hearing this earning season about certainly somewhat of a recovery is still not a prepayment to them to pre pandemic levels, but any thoughts there would be appreciated.
Great. And can you comment on any trends you're seeing in regard to physical occupancy? You've been hearing this earnings season of certainly somewhat of a recovery, still not to pre-pandemic levels, but any thoughts that I'd be appreciated.
I'd say, it's kind of interesting it tracks pretty closely with the answer I just gave.
I'd say it's kind of interesting it tracks pretty closely with the answer I just gave. You know, because Austin has been a market where we've seen tenants back for quite some time. Bay Area has been a little bit slower on that front. And, you know, we have definitely seen a pick up in LA. We have a couple of our office buildings, our medical focus buildings. So, obviously, that, you know, is a good thing.
Austin has been a market, where we've seen tenants back for quite some time.
The area has been a little bit slower on that front.
And we have definitely seen a pickup in L. A we have a couple of our office buildings are kind of medical focused building. So obviously that you know those have been back for quite some time, but generally speaking in L. A we are seeing it's difficult for us to track precisely but.
have been back for quite some time, but generally speaking in LA we are
It's difficult for us to track precisely, but from anecdotally seeing more folks coming
Anecdotally seeing more folks coming back.
Okay, Great. David you you kind of touched on this in your closing comments regarding you know potentially selling some noncore assets, but you know with the hotel NOI kind of getting back to where it was prior to the pandemic.
Okay, great. David, you kind of touched on this in your closing comments regarding, you know, potentially selling some non-core assets, but, you know, with the Hotel NOI kind of getting back to, you know, where it was prior to the pandemic, you know, are you currently marketing that or is that still TBD?
How are you.
Marketing that or is that still TBD.
Yeah, I mean, as we've said I think we will continue to look to exit noncore assets Opportunistically and look to reinvest that in the premier multifamily and creative office and certainly the hotel fits that bucket.
Yeah, I mean, as we said, I think we will continue to look to exit noncore assets opportunistically and look to reinvest that in the premier multi-family and creative office, and certainly the hotel fits that bucket.
You know I would say to your point you know our number one priority is maximizing the value for the shareholders and as you noted performance is improving.
You know, I would say to your point, you know, our number one priority is maximizing the value for the shareholders and as you noted, performance is improving.
We believe that the outlook is very strong for the asset and will likely continue to improve throughout the year. So I mean, it's a great property extremely well located.
And we believe that the outlook is very strong for the asset and will likely continue to improve throughout the year. So I mean, it's a great property, extremely well located.
Cross the street from the newly renovated Convention Center, just a few blocks from the capital. So you know, it's something that we will continue to monitor.
across the street from the newly renovated convention center just a few blocks from the capitol. So, you know, it's something that we will continue to monitor.
Given the improving performance it would really take the right price for us to sell that.
given the improving performance it would really take the right price for us to sell that and you know we'll continue to monitor that and
And it will continue to monitor that and.
See where it goes I think certainly probably more so than we were when we spoke last or three months ago, given the improved performance.
see where it goes. I think certainly probably more so than we were when we spoke last or three months ago, given the improved performance.
Uh huh.
Again were probably more inclined to hang on to that in the near term and make sure that we're achieving the right value for shareholders and we eventually exit.
Again, we're probably more inclined to hang on to that in the near term and make sure that we're achieving the right value for shareholders when we eventually act.
Got it.
Got it. And you did comment again this quarter on maybe being able to reduce GNA a little bit further. Can you elaborate a little bit more on that front?
And you did comment again this quarter on.
Maybe being able to reduce G&A a little bit further can you elaborate a little bit more on that front.
Yeah, obviously the biggest piece is.
Yeah, obviously the biggest piece is relating to the management fee reduction and the fee waiver that was put in place in the first quarter, and it's just something we continue to keep our eye on and look at for every opportunity to reduce the cost and to be more efficient.
Relating to the management fee reduction and the fee waiver that was put in place in the first quarter and it's just something we continue to to keep our eye on and looking for every opportunity to reduce the costs and to be more efficient.
You know probably the largest part of our cost structure is.
You know, probably the largest part of our cost structure is, is, you know, allocated payroll and costs. And so we're looking to do things where we can more efficiently, really across the board, both internally and where we're working with external service providers. So really just kind of taking a look at everything and trying to see where we can continue to reduce those costs to help improve margins as the as the revenue side of the business.
Allocated payroll and cost and so we're looking to do things, where we can more efficiently really across the board.
Both internally and where were.
Working with external.
Service providers. So it really just kind of taking a look at everything and trying to see where we can continue to reduce those cost to help improve margins as the as the revenue side of the business improves.
Yeah.
Okay, and just one more for me.
Okay, and just one more for me. You know, I know you've pivoted into developing through joint ventures, but are you currently evaluating any acquisitions you would wholly own?
No you've pivoted into developing through two joint ventures, but are you currently evaluating any acquisitions you would you would wholly owned.
Okay.
We are I think I've mentioned in the script that we have a pretty active.
We are, I think that Joel mentioned in the script that we have a pretty active pipeline and we would expect to be able to share more details on future calls, but yes, we do have deals.
Active pipeline anyway.
And we would expect to be able to share more details on future calls, but yes, we do.
Have deals that are in the pipeline.
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Okay. Thanks, I think that yes, we would.
Okay. Thanks. I think I would just add the JV structure is still going to continue to be something that's attractive to us given our limited capital and allows us to do more diversification of the portfolio and, again, certain instances where we'll give us the opportunity to generate fee income as well.
I'll just add the JV structure is still going to continue to be something that's attractive to us given our limited capital and allows us to do more and diversification of the portfolio.
And again in certain instances, where will it gives us the opportunity to generate fee income as well.
So that's going to be something that we continue to look at.
Yes.
This concludes our question and answer session as well as our conference call for today.
This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.
Thank you for attending today's presentation you may now disconnect.
Thank you everyone.
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The the.
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