Q4 2025 Creative Media & Community Trust Corp Earnings Call
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Speaker #2: I would now like to turn the conference over to Stephen Altebrando, Portfolio Oversight. Please go ahead. Hello, everyone, and thank you for joining us.
Steve Altebrando: Hello, everyone, thank you for joining us. My name is Steve Altebrando, the Portfolio Oversight for CMCT. Also on the call today are David Thompson, our Chief Executive Officer, and Brandon Hill, 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. Our earnings release includes a reconciliation of non-GAAP financial measures discussed during today's call. During 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 other factors that are beyond our control or 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.
Steve Altebrando: Hello, everyone, thank you for joining us. My name is Steve Altebrando, the Portfolio Oversight for CMCT. Also on the call today are David Thompson, our Chief Executive Officer, and Brandon Hill, 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. Our earnings release includes a reconciliation of Non-GAAP financial measures discussed during today's call. During 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 other factors that are beyond our control or 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.
Speaker #2: My name is Steve Altebrando, the Portfolio Oversight for CMCT. Also on the call today are David Thompson, our Chief Executive Officer, and Brandon Hill, our Chief Financial Officer.
Speaker #2: 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.
Speaker #2: Our earnings release includes a reconciliation of non-GAAP financial measures discussed during today's call. During 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.
Speaker #2: Our actual results will be affected by known and unknown risks, trends, uncertainties, and other factors that are beyond our control or ability to predict.
Speaker #2: 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 future results can be expected to differ from our expectations, and those differences may be material.
Steve Altebrando: Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a 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 Thompson.
Steve Altebrando: Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a 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 Thompson.
Speaker #2: For a more detailed description of potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website.
Speaker #2: With that, I'll turn the call over to David Thompson.
Speaker #3: Thanks, Steve. Good afternoon, and thanks, everyone, for joining us today. We continue to execute on the strategic plan we have discussed on previous calls.
David Thompson: Thanks, Steve. Good afternoon, thanks everyone for joining us today. We continue to execute on the strategic plan we have discussed on previous calls. We are making significant progress in accelerating our focus towards premier multifamily assets, strengthening our balance sheet, and improving liquidity. At the same time, operating trends within the portfolio are moving in the right direction across our multifamily portfolio, our Los Angeles and Austin office assets, and the company's hotel asset in Sacramento. Since announcing our strategic plan in September 2024, we've taken actions to significantly improve our balance sheet. We completed financing on nine assets since September 2024 and fully retired our recourse credit facility in April 2025.
David Thompson: Thanks, Steve. Good afternoon, thanks everyone for joining us today. We continue to execute on the strategic plan we have discussed on previous calls. We are making significant progress in accelerating our focus towards premier multifamily assets, strengthening our balance sheet, and improving liquidity. At the same time, operating trends within the portfolio are moving in the right direction across our multifamily portfolio, our Los Angeles and Austin office assets, and the company's hotel asset in Sacramento. Since announcing our strategic plan in September 2024, we've taken actions to significantly improve our balance sheet. We completed financing on nine assets since September 2024 and fully retired our recourse credit facility in April 2025.
Speaker #3: We are making significant progress in accelerating our focus towards premier multifamily assets, strengthening our balance sheet, and improving liquidity. At the same time, operating trends within the portfolio are moving in the right direction across our multifamily portfolio, our Los Angeles and Austin office assets, and the company's hotel asset in Sacramento.
Speaker #3: Since announcing our strategic plan in September 2024, we've taken actions to significantly improve our balance sheet. We completed financing on nine assets since September 2024 and fully retired our recourse credit facility in April 2025.
Speaker #3: We completed the sale of our lending division in January 2026, and we redeemed approximately $153.3 million of preferred stock into common stock since September of 2024.
David Thompson: We completed the sale of our lending division in January 2026, and we redeemed approximately $153.3 million of preferred stock into common stock since September 2024. Building on that progress, the company announced today that it is redeeming approximately 2 million shares of Series A Preferred Stock, approximately 7.8 million shares of Series A1 Preferred Stock, and approximately 22,000 shares of the Series D Preferred Stock, with the redemption price to be paid in shares of common stock.
David Thompson: We completed the sale of our lending division in January 2026, and we redeemed approximately $153.3 million of preferred stock into common stock since September 2024. Building on that progress, the company announced today that it is redeeming approximately 2 million shares of Series A Preferred Stock, approximately 7.8 million shares of Series A1 Preferred Stock, and approximately 22,000 shares of the Series D Preferred Stock, with the redemption price to be paid in shares of common stock.
Speaker #3: Building on that progress, the company announced today that it is redeeming approximately $2 million of Series A preferred stock, approximately $7.8 million of Series A1 preferred stock, and approximately $22,000 of Series D preferred stock, with the redemption price to be paid in shares of common stock.
Speaker #3: This redemption is expected to improve CMCT's annual funds from operations by approximately $16 million per year and returns the company's capital structure back to our long-term target, approximately 38% common equity, 7% preferred equity, and 55% debt on a fair value basis, adjusted for the redemption.
David Thompson: This redemption is expected to improve CMCT's annual funds from operations by approximately $16 million per year and returns the company's capital structure back to our long-term target, approximately 38% common equity, 7% preferred equity, and 55% debt on a fair value basis adjusted for the redemption. Importantly, given the company's significantly improved financial position, we do not currently intend to initiate at our election additional preferred stock redemptions into common stock. We will continue to evaluate redemption requests submitted by holders of our preferred stock as error received, and may elect to redeem those shares in common stock or cash at the company's discretion.
David Thompson: This redemption is expected to improve CMCT's annual funds from operations by approximately $16 million per year and returns the company's capital structure back to our long-term target, approximately 38% common equity, 7% preferred equity, and 55% debt on a fair value basis adjusted for the redemption. Importantly, given the company's significantly improved financial position, we do not currently intend to initiate at our election additional preferred stock redemptions into common stock. We will continue to evaluate redemption requests submitted by holders of our preferred stock as error received, and may elect to redeem those shares in common stock or cash at the company's discretion.
Speaker #3: Importantly, given the company's significantly improved financial position, we do not currently intend to initiate at our election additional preferred stock redemptions into common stock.
Speaker #3: However, we will continue to evaluate redemption requests submitted by holders of our preferred stock as they are received, and may elect to redeem those shares in common stock or cash at the company's discretion.
Speaker #3: With respect to asset sales, as we mentioned, we completed the sale of our lending division in January for a purchase price of approximately $44.9 million, net of the outstanding debt related to the 2023 securitization of certain loan receivables and subject to customary post-closing adjustments.
David Thompson: With respect to asset sales, as we mentioned, we completed the sale of our lending division in January for a purchase price of approximately $44.9 million, net of the outstanding debt related to the 2023 securitization of certain loan receivables and subject to customary post-closing adjustments. After giving effect to the repayment of other debt, transaction expenses, and related items, the transaction generated approximately $31.2 million of net cash proceeds to the company. We continue to actively evaluate additional asset sales as part of our broader effort to enhance liquidity and optimize our balance sheet. In terms of operating trends, looking ahead, we see opportunities to improve cash flow in 2026, supported by several key drivers across the portfolio. First, net operating income continues to improve across all segments.
David Thompson: With respect to asset sales, as we mentioned, we completed the sale of our lending division in January for a purchase price of approximately $44.9 million, net of the outstanding debt related to the 2023 securitization of certain loan receivables and subject to customary post-closing adjustments. After giving effect to the repayment of other debt, transaction expenses, and related items, the transaction generated approximately $31.2 million of net cash proceeds to the company. We continue to actively evaluate additional asset sales as part of our broader effort to enhance liquidity and optimize our balance sheet. In terms of operating trends, looking ahead, we see opportunities to improve cash flow in 2026, supported by several key drivers across the portfolio. First, net operating income continues to improve across all segments.
Speaker #3: After giving effect to the repayment of other debt transaction expenses and related items, the transaction generated approximately $31.2 million of net cash proceeds to the company.
Speaker #3: We continue to actively evaluate additional asset sales as part of our broader effort to enhance liquidity and optimize our balance sheet. In terms of operating trends, looking ahead, we see opportunities to improve cash flow in 2026, supported by several key drivers across the portfolio.
Speaker #3: First, net operating income continues to improve across all segments. In our office portfolio, leased occupancy reached 88.5% at the end of 2025, excluding our Oakland asset, representing a 190 basis point increase from the third quarter of 2025 and a 680 basis point improvement over year-end 2024.
David Thompson: In our office portfolio, lease occupancy reached 88.5% at the end of 2025, excluding our Oakland asset, representing a 190 basis point increase from Q3 2025 and a 680 basis point improvement over year-end 2024. In multifamily, excluding our building in Echo Park in Los Angeles, which just began lease-up during Q4, our occupancy increased to 88.5% at the end of 2025, up 320 basis points from Q3 2025 and then 680 basis points year-over-year. At our hotel property, we substantially completed the upgrades to the public spaces in Q1 2026, following the renovation to all 505 guest rooms a year ago.
David Thompson: In our office portfolio, lease occupancy reached 88.5% at the end of 2025, excluding our Oakland asset, representing a 190 basis point increase from Q3 2025 and a 680 basis point improvement over year-end 2024. In multifamily, excluding our building in Echo Park in Los Angeles, which just began lease-up during Q4, our occupancy increased to 88.5% at the end of 2025, up 320 basis points from Q3 2025 and then 680 basis points year-over-year. At our hotel property, we substantially completed the upgrades to the public spaces in Q1 2026, following the renovation to all 505 guest rooms a year ago.
Speaker #3: In multifamily, excluding our building and Echo Park in Los Angeles, which just began lease-up during Q4, our occupancy increased to 88.5% at the end of 2025, up 320 basis points from the third quarter of 2025 and then 680 basis points year over year.
Speaker #3: At our hotel property, we substantially completed the upgrades to the public spaces in the first quarter of 2026, following the renovation to all 505 guest rooms a year ago.
Speaker #3: With these improvements largely complete, the property's well-positioned to drive strong performance in 2026 and beyond. We also anticipate lower interest expense, supported by a potentially more favorable rate environment, and the opportunity to refinance the hotel following the completion of its renovation.
David Thompson: With these improvements largely complete, the property is well positioned to drive strong performance in 2026 and beyond. We also anticipate lower interest expense supported by a potentially more favorable rate environment and the opportunity to refinance the hotel following the completion of its renovation. Finally, as mentioned earlier, the conversion of preferred equity into common stock is expected to improve annual FFO by approximately $16 million. Turning to our Q4 results, our Core FFO was negative $5.9 million. Our overall net operating income was $10.9 million compared to $7 million in the prior quarter. Within our office segment, NOI increased by approximately $1.4 million from the Q3, largely due to higher appraised value of one of our JVs. NOI also modestly increased at our wholly owned properties.
David Thompson: With these improvements largely complete, the property is well positioned to drive strong performance in 2026 and beyond. We also anticipate lower interest expense supported by a potentially more favorable rate environment and the opportunity to refinance the hotel following the completion of its renovation. Finally, as mentioned earlier, the conversion of preferred equity into common stock is expected to improve annual FFO by approximately $16 million. Turning to our Q4 results, our Core FFO was negative $5.9 million. Our overall net operating income was $10.9 million compared to $7 million in the prior quarter. Within our office segment, NOI increased by approximately $1.4 million from the Q3, largely due to higher appraised value of one of our JVs. NOI also modestly increased at our wholly owned properties.
Speaker #3: Finally, as mentioned earlier, the conversion of preferred equity into common stock is expected to improve annual FFO by approximately $16 million. Turning to our fourth quarter results, our core FFO was -$5.9 million.
Speaker #3: Our overall net operating income was $10.9 million, compared to $7.0 million in the prior quarter. Within our office segment, NOI increased by approximately $1.4 million from the third quarter, largely due to the higher appraised value of one of our JVs.
Speaker #3: NOI also modestly increased at our wholly owned properties. Hotel NOI was 2.1 million in the quarter, compared to $850,000 in the third quarter, primarily reflecting a greater disruption from our renovation of the public space in the prior quarter.
David Thompson: Hotel NOI was $2.1 million in the quarter compared to $850,000 in Q3, primarily reflecting a greater disruption from our renovation of the public space in the prior quarter. Our multifamily NOI decreased by approximately $1.7 million from the prior quarter. The decrease was primarily due to a lower appraisal at 2 of our JVs in the current quarter. With that, I'll turn the call over to Steve to give more color on our refinancing activities and property level performance.
David Thompson: Hotel NOI was $2.1 million in the quarter compared to $850,000 in Q3, primarily reflecting a greater disruption from our renovation of the public space in the prior quarter. Our multifamily NOI decreased by approximately $1.7 million from the prior quarter. The decrease was primarily due to a lower appraisal at 2 of our JVs in the current quarter. With that, I'll turn the call over to Steve to give more color on our refinancing activities and property level performance.
Speaker #3: Our multifamily NOI decreased by approximately $1.7 million from the prior quarter. The decrease was primarily due to a lower appraisal at two of our JVs in the current quarter.
Speaker #3: With that, I'll turn the call over to Steve to give more color on our refinancing activities and property-level performance.
Steve Altebrando: Thanks, David. As David mentioned, we continue to make progress on improving our balance sheet and liquidity while also investing in key growth initiatives across the portfolio. Since we announced this plan, we have completed 9 refinancings, fully retired our $169 million recourse credit facility, and retired our lending warehouse facility upon sale of that business. We are currently working on the extension of 2 more assets that we expect to complete in Q2 2026. We are also planning to refinance our Sheraton Grand Sacramento Hotel now that we've substantially completed its renovation. These steps have been critical to the company as they have provided proceeds to, first, significantly reduce our recourse debt through the retirement of our credit facility. Second, fund important growth initiatives, including lease-up activity in our multifamily and office portfolios, as well as the renovation of our hotel.
Steve Altebrando: Thanks, David. As David mentioned, we continue to make progress on improving our balance sheet and liquidity while also investing in key growth initiatives across the portfolio. Since we announced this plan, we have completed 9 refinancings, fully retired our $169 million recourse credit facility, and retired our lending warehouse facility upon sale of that business. We are currently working on the extension of 2 more assets that we expect to complete in Q2 2026. We are also planning to refinance our Sheraton Grand Sacramento Hotel now that we've substantially completed its renovation. These steps have been critical to the company as they have provided proceeds to, first, significantly reduce our recourse debt through the retirement of our credit facility. Second, fund important growth initiatives, including lease-up activity in our multifamily and office portfolios, as well as the renovation of our hotel.
Speaker #2: Thanks, David. As David mentioned, we continue to make progress on improving our balance sheet and liquidity. While also investing in key growth initiatives across the portfolio.
Speaker #2: Since we announced this plan, we have completed nine refinancings, fully retired our $169 million recourse credit facility, and retired our lending warehouse facility upon sale of that business.
Speaker #2: We are currently working on the extension of two more assets that we expect to complete in the second quarter of 2026. We are also planning to refinance our Sheraton Grand Hotel now that we have substantially completed its renovation.
Speaker #2: These steps have been critical to the company, as they have provided proceeds to, first, significantly reduce our recourse debt through the retirement of our credit facility; second, fund important growth initiatives—including lease-up activity in our multifamily and office portfolios, as well as the renovation of our hotel; third, continue to fund loan originations within our lending business, allowing us to maximize the value of that business prior to its sale; and fourth, continue to meet our preferred dividend obligations.
Steve Altebrando: Third, continue to fund loan originations within our lending business, allowing us to maximize the value of that business prior to its sale. Fourth, continue to meet our preferred dividend obligations. Turning to our operations, we remain focused on improving property-level performance across all segments and growing our premier newer vintage multifamily portfolio. Including our joint ventures, we now have five operating multifamily assets: 1150 Clay and Channel House in the Bay Area, and 701 South Hudson, 1902 Park Avenue, and 1915 Park Avenue in Los Angeles. Starting in Los Angeles, we are making progress on the lease-up of 701 South Hudson. The residential portion of our partial office to residential conversion completed late last year.
Steve Altebrando: Third, continue to fund loan originations within our lending business, allowing us to maximize the value of that business prior to its sale. Fourth, continue to meet our preferred dividend obligations. Turning to our operations, we remain focused on improving property-level performance across all segments and growing our premier newer vintage multifamily portfolio. Including our joint ventures, we now have five operating multifamily assets: 1150 Clay and Channel House in the Bay Area, and 701 South Hudson, 1902 Park Avenue, and 1915 Park Avenue in Los Angeles. Starting in Los Angeles, we are making progress on the lease-up of 701 South Hudson. The residential portion of our partial office to residential conversion completed late last year.
Speaker #2: Turning to our operations, we remain focused on improving property-level performance across all segments and growing our premier, newer-vintage multifamily portfolio. Including our joint ventures, we now have five operating multifamily assets: 1150 Clay and Channel House in the Bay Area, and 701 South Hudson, 1902 Park Avenue, and 1915 Park Avenue in Los Angeles.
Speaker #2: Starting in Los Angeles, we are making progress on the lease-up of 701 South Hudson, the residential portion of our partial office-to-residential conversion completed late last year.
Speaker #2: Multifamily occupancy at the property was approximately 83.8% at the end of the fourth quarter, up from 80.9% at the end of the third quarter.
Steve Altebrando: Multifamily occupancy at the property was approximately 83.8% at the end of Q4, up from 80.9% at the end of Q3. As a reminder, the top two floors of the building were converted into 68 high-end residential units, while the ground floor creative office component, known as Forty-seven Fifty Wilshire, remains 100% leased. We mentioned on prior calls that we believe there's an opportunity to develop additional units on the back surface lot of the property given recent zoning changes. We are pleased that we received entitlements in Q1 2026 to build an additional 50 units on this space. We are currently working on pre-development and anticipate having the option to start the project later this year. Also in LA, we completed 1915 Park in Q4.
Steve Altebrando: Multifamily occupancy at the property was approximately 83.8% at the end of Q4, up from 80.9% at the end of Q3. As a reminder, the top two floors of the building were converted into 68 high-end residential units, while the ground floor creative office component, known as Forty-seven Fifty Wilshire, remains 100% leased. We mentioned on prior calls that we believe there's an opportunity to develop additional units on the back surface lot of the property given recent zoning changes. We are pleased that we received entitlements in Q1 2026 to build an additional 50 units on this space. We are currently working on pre-development and anticipate having the option to start the project later this year. Also in LA, we completed 1915 Park in Q4.
Speaker #2: As a reminder, the top two floors of the building were converted into 68 high-end residential units, while the ground floor creative office component known as 4750 Wilshire remains 100% leased.
Speaker #2: We mentioned on prior calls that we believe there's an opportunity to develop additional units on the back surface lot of the property, given recent zoning changes.
Speaker #2: We are pleased that we received entitlements in the first quarter of 2026 to build an additional 50 units on the space. We are currently working on pre-development and anticipate having the option to start the project later this year.
Speaker #3: Also in LA, we completed 1915 Park in the fourth quarter. This 36-unit ground-up multifamily development is a joint venture with an international pension fund and is located adjacent to our office building at 1910 West Sunset in Echo Park, a highly desirable, walkable submarket with attractive dining and entertainment options.
Steve Altebrando: This 36-unit ground-up multifamily development is a joint venture with an international pension fund and is located adjacent to our office building at 1910 West Sunset in Echo Park, a highly desirable walkable submarket with attractive dining and entertainment options. It's off to a very strong start. The building was 52% leased at the end of February 2026. In Oakland, we saw another pickup in occupancy during the quarter. The market appears to be starting to recover. In adjacent downtown San Francisco, multi-families had a significant rebound. In 2025, rent growth was 7.6%, which was the highest growth rate in over 25 years, while the vacancy rate has declined to its lowest levels in 15 years.
Steve Altebrando: This 36-unit ground-up multifamily development is a joint venture with an international pension fund and is located adjacent to our office building at 1910 West Sunset in Echo Park, a highly desirable walkable submarket with attractive dining and entertainment options. It's off to a very strong start. The building was 52% leased at the end of February 2026. In Oakland, we saw another pickup in occupancy during the quarter. The market appears to be starting to recover. In adjacent downtown San Francisco, multi-families had a significant rebound. In 2025, rent growth was 7.6%, which was the highest growth rate in over 25 years, while the vacancy rate has declined to its lowest levels in 15 years.
Speaker #3: The building was 52% leased at the end of February 2026, so it's off to a very strong start.
Speaker #2: In Oakland, we saw another pickup in occupancy during the quarter, and the market appears to be starting to recover. In adjacent downtown San Francisco, multifamilies had a significant rebound.
Speaker #2: In 2025, rent growth was 7.6%, which was the highest growth rate in over 25 years, while the vacancy rate has declined to its lowest levels in 15 years.
Speaker #2: Oakland's vacancy rate has declined to 8% from a high of 18% in 2001, and rent growth has turned positive in 2025 after three straight years of declines.
Steve Altebrando: Oakland's vacancy rate has declined to 8% from a high of 18% in 2001, and rent growth has turned positive in 2025 after three straight years of declines. CMCT owns 621 units in Oakland across its two assets, 1150 Clay and Channel House. Occupancy improved to 88.4% at year-end 2025, a 370 basis point increase from the end of Q3. Turning to the office segment, we executed approximately 182,000 sq ft of leases during 2025.
Steve Altebrando: Oakland's vacancy rate has declined to 8% from a high of 18% in 2001, and rent growth has turned positive in 2025 after three straight years of declines. CMCT owns 621 units in Oakland across its two assets, 1150 Clay and Channel House. Occupancy improved to 88.4% at year-end 2025, a 370 basis point increase from the end of Q3. Turning to the office segment, we executed approximately 182,000 sq ft of leases during 2025.
Speaker #2: CMCT owns 621 units in Oakland across its two assets, 1150 Clay and Channel House. Occupancy improved to 88.4% at the year-end 2025, of 370 base point at 370 basis point increase from the end of the third quarter.
Speaker #2: Turning to the office segment, we executed approximately 182,000 square feet of leases during 2025. Excluding the company's one Oakland office building, the lease percentage was 88.5% at the end of 2025, which is a 190-basis-point improvement from the third quarter and a 680-basis-point improvement from the prior year period.
Steve Altebrando: Excluding the company's one Oakland office building, the lease percentage was 88.5% at the end of 2025, which is a 190 basis point improvement from Q3 and a 680 basis point improvement from the prior year period. At 1130 Howard, occupancy increased to 100% during Q4 from 38.9% in Q3 of 2025. At 11600 Wilshire Boulevard, we recently commenced the renovation program on several small office suites, which we anticipate fueling leasing activity. At our one office asset in Oakland, we continue to see soft demand. The mortgage of the asset matures in Q3 of 2026, the company is currently seeking an extension of the maturity but cannot guarantee we'll reach an agreement with the lender.
Steve Altebrando: Excluding the company's one Oakland office building, the lease percentage was 88.5% at the end of 2025, which is a 190 basis point improvement from Q3 and a 680 basis point improvement from the prior year period. At 1130 Howard, occupancy increased to 100% during Q4 from 38.9% in Q3 of 2025. At 11600 Wilshire Boulevard, we recently commenced the renovation program on several small office suites, which we anticipate fueling leasing activity. At our one office asset in Oakland, we continue to see soft demand. The mortgage of the asset matures in Q3 of 2026, the company is currently seeking an extension of the maturity but cannot guarantee we'll reach an agreement with the lender.
Speaker #2: At 11:30, Howard, occupancy increased to 100% during the fourth quarter from 38.9% in the third quarter of 2025. And at 11600 Wilshire Boulevard, we recently commenced the renovation program on several small office suites, which we anticipate fueling leasing activity.
Speaker #2: At our one office asset in Oakland, we continue to see soft demand. The mortgage of the asset matures in the third quarter of 2026, and the company is currently seeking an extension of the maturity, but cannot guarantee we’ll reach an agreement with the lender.
Speaker #2: In the fourth quarter of 2025, the Oakland asset generated approximately half a million dollars of cash flow after debt service. And finally, hotel—as David mentioned—we substantially completed our $11 million renovation of the public space at the Sheraton Grand Sacramento in the first quarter.
Steve Altebrando: In Q4 2025, the Oakland asset generated approximately half a million dollars of cash flow after debt service. Finally, hotel. As David mentioned, we substantially completed our $11 million renovation of the public space at the Sheraton Grand Sacramento Hotel in Q1. This project includes upgrades to the ballroom, banquet space, public space, and food and beverage areas. This follows the renovation of all 505 guest rooms from last year, which we believe together sets the property up well for 2026 and beyond. The renovation was the first large-scale renovation of the property since we acquired it in 2008, we anticipate a big impact on profitability. With that, I'll turn the call over to Brandon, who will provide an update on our financial results.
Steve Altebrando: In Q4 2025, the Oakland asset generated approximately half a million dollars of cash flow after debt service. Finally, hotel. As David mentioned, we substantially completed our $11 million renovation of the public space at the Sheraton Grand Sacramento Hotel in Q1. This project includes upgrades to the ballroom, banquet space, public space, and food and beverage areas. This follows the renovation of all 505 guest rooms from last year, which we believe together sets the property up well for 2026 and beyond. The renovation was the first large-scale renovation of the property since we acquired it in 2008, we anticipate a big impact on profitability. With that, I'll turn the call over to Brandon, who will provide an update on our financial results.
Speaker #2: This project includes upgrades to the space, and food and beverage areas. And this follows the renovation of all 505 guest rooms from last year, which we believe together sets the property up well for 2026 and beyond.
Speaker #2: The renovation was the first large-scale renovation of the property since we acquired it in 2008, so we anticipate a big impact on profitability. With that, I'll turn the call over to Brandon, who will provide an update on our financial results.
Speaker #4: Thank you, Steve. Good afternoon. I'm going to spend a few minutes going over the comparative financial highlights for the fourth quarter of 2025 versus the fourth quarter of 2024, starting with our segment NOI, which was $10.9 million in the fourth quarter of 2025 compared to $9.2 million in the prior year comparable period.
Brandon Hill: Thank you, Steve. Good afternoon. I'm going to spend a few minutes going over the comparative financial highlights for Q4 2025 versus Q4 2024, starting with our segment NOI, which was $10.9 million in Q4 2025, compared to $9.2 million in the prior year comparable period. Broken down by segment, the increase of $1.7 million was driven by increases of $2.3 million from our lending business and $1.2 million for our office properties, offset by a decrease of $1.7 million from our multifamily properties. Our office segment NOI for Q4 2025 was $6.4 million versus $5.2 million during Q4 2024.
Brandon Hill: Thank you, Steve. Good afternoon. I'm going to spend a few minutes going over the comparative financial highlights for Q4 2025 versus Q4 2024, starting with our segment NOI, which was $10.9 million in Q4 2025, compared to $9.2 million in the prior year comparable period. Broken down by segment, the increase of $1.7 million was driven by increases of $2.3 million from our lending business and $1.2 million for our office properties, offset by a decrease of $1.7 million from our multifamily properties. Our office segment NOI for Q4 2025 was $6.4 million versus $5.2 million during Q4 2024.
Speaker #4: Broken down by segment, the increase of $1.7 million was driven by increases of $2.3 million from our lending business and $1.2 million for our office properties, offset from our multifamily properties.
Speaker #4: Our office segment NOI for Q4 2025 was $6.4 million versus $5.2 million during Q4 2024. The increase was primarily driven by an increase in NOI at an office property in Austin, Texas, due to an increase in occupancy, and at an office property in Beverly Hills, California, attributable to an increase in occupancy and rental rates.
Brandon Hill: The increase was primarily driven by an increase in NOI at an office property in Austin, Texas, due to an increase in occupancy and at an office property in Beverly Hills, California, attributable to an increase in occupancy and rental rates, as well as a decrease in property taxes. These were partially offset by a decrease in rental revenues at an office property in Los Angeles, California, due to a decrease in occupancy and at an office property in San Francisco, California, due to a decrease in rental rates. Our lending division NOI increased to $3.3 million compared to NOI of $980,000 in the prior year comparable period, primarily due to the reversal of CECL in connection with the reclassification of the assets and liabilities of First Western to held for sale.
Brandon Hill: The increase was primarily driven by an increase in NOI at an office property in Austin, Texas, due to an increase in occupancy and at an office property in Beverly Hills, California, attributable to an increase in occupancy and rental rates, as well as a decrease in property taxes. These were partially offset by a decrease in rental revenues at an office property in Los Angeles, California, due to a decrease in occupancy and at an office property in San Francisco, California, due to a decrease in rental rates. Our lending division NOI increased to $3.3 million compared to NOI of $980,000 in the prior year comparable period, primarily due to the reversal of CECL in connection with the reclassification of the assets and liabilities of First Western to held for sale.
Speaker #4: As well as a decrease in property taxes. These were partially offset by a decrease in rental revenues at an office property in Los Angeles, California, due to a decrease in occupancy, and at an office property in San Francisco, California, due to a decrease in rental rates.
Speaker #4: Our lending division NOI increased to $3.3 million, compared to NOI of $980,000 in the prior year comparable period. This was primarily due to the reversal of CECL in connection with the reclassification of the assets and liabilities of First Western to held for sale.
Speaker #4: This was partially offset by a decrease in interest income as a result of loan payoffs and lower interest rates. Our lending segment was sold in January 2026.
Brandon Hill: This was partially offset by a decrease in interest income as a result of loan payoffs and lower interest rates. Our lending segment was sold in January 2026. Our hotel segment NOI for Q4 2025 was $2.1 million, which was consistent with the prior year comparable period. Our multifamily segment NOI decreased to a loss of $870,000 during Q4 2025 compared to income of $855,000 from the prior year comparable period. The decrease was primarily driven by an increase in the unrealized loss on investments in real estate at our unconsolidated joint ventures.
Brandon Hill: This was partially offset by a decrease in interest income as a result of loan payoffs and lower interest rates. Our lending segment was sold in January 2026. Our hotel segment NOI for Q4 2025 was $2.1 million, which was consistent with the prior year comparable period. Our multifamily segment NOI decreased to a loss of $870,000 during Q4 2025 compared to income of $855,000 from the prior year comparable period. The decrease was primarily driven by an increase in the unrealized loss on investments in real estate at our unconsolidated joint ventures.
Speaker #4: Our hotel segment NOI for Q4 2025 was $2.1 million, which was consistent with the prior year comparable period. Our multifamily segment NOI decreased to a loss of $870,000 during Q4 2025, compared to income of $855,000 from the prior year comparable period.
Speaker #4: The decrease was primarily driven by an increase in the unrealized loss on investments in real estate at our unconsolidated joint ventures. Below the segment NOI line, we had an increase in impairment of real estate of $3.5 million due to an impairment charge on a multifamily development site in Oakland, California, and an increase in interest expense of $941,000, driven by higher aggregate debt outstanding.
Brandon Hill: Below the segment NOI line, we had an increase in impairment of real estate of $3.5 million due to an impairment charge on a multifamily development site in Oakland, California, and an increase in interest expense of $941,000 driven by higher aggregate debt outstanding. These were partially offset by an increase in segment net operating income of $1.7 million and a decrease in loss on early extinguishment of debt of $1.4 million, which was incurred in connection with the partial payoff of our revolving credit facility during Q4 2024. Our FFO was -$7.1 million, or -$4.49 per diluted share, compared to -$8.7 million or -$23.21 per diluted share in the prior year comparable period.
Brandon Hill: Below the segment NOI line, we had an increase in impairment of real estate of $3.5 million due to an impairment charge on a multifamily development site in Oakland, California, and an increase in interest expense of $941,000 driven by higher aggregate debt outstanding. These were partially offset by an increase in segment net operating income of $1.7 million and a decrease in loss on early extinguishment of debt of $1.4 million, which was incurred in connection with the partial payoff of our revolving credit facility during Q4 2024. Our FFO was -$7.1 million, or -$4.49 per diluted share, compared to -$8.7 million or -$23.21 per diluted share in the prior year comparable period.
Speaker #4: These were partially offset by an increase in segment net operating income of $1.7 million and a decrease in loss on early extinguishment of debt of $1.4 million.
Speaker #4: Which was incurred in connection with the partial payoff of our revolving credit facility during the fourth quarter of 2024. Our FFO was negative $7.1 million, or negative $4.49 per diluted share, compared to negative $8.7 million, or negative $23.21 per diluted share, in the prior year comparable period.
Speaker #4: The increase in our FFO was primarily driven by an increase of $1.7 million in total segment NOI, a decrease in loss on early extinguishment of debt of $1.4 million, and a decrease of $923,000 in redeemable preferred stock dividends.
Brandon Hill: The increase in our FFO was primarily driven by an increase of $1.7 million in total segment NOI, a decrease in loss on early extinguishment of debt of $1.4 million, and a decrease of $923,000 in redeemable preferred stock dividends. These were partially offset by an increase in interest expense not allocated to our operating segments of $941,000, an increase in preferred stock redemptions of $883,000, and an increase in general and administrative expenses of $617,000. Our Core FFO was -$5.9 million, or -$3.74 per diluted share, compared to -$7 million or -$18.64 per diluted share in the prior year comparable period.
Brandon Hill: The increase in our FFO was primarily driven by an increase of $1.7 million in total segment NOI, a decrease in loss on early extinguishment of debt of $1.4 million, and a decrease of $923,000 in redeemable preferred stock dividends. These were partially offset by an increase in interest expense not allocated to our operating segments of $941,000, an increase in preferred stock redemptions of $883,000, and an increase in general and administrative expenses of $617,000. Our Core FFO was -$5.9 million, or -$3.74 per diluted share, compared to -$7 million or -$18.64 per diluted share in the prior year comparable period.
Speaker #4: These were partially offset by an increase in interest expense not allocated to our operating segments of $941,000, an increase in preferred stock redemptions of $883,000, and an increase in general administrative expenses of $617,000.
Speaker #4: Our core FFO was negative $5.9 million, or negative $3.74 per diluted share, compared to negative $7 million, or negative $18.64 per diluted share, in the prior year comparable period.
Speaker #4: This increase in core FFO is attributable to the previously discussed changes in FFO, while not impacted by the decrease in loss on early extinguishment of debt or the increase in redeemable preferred stock redemptions.
Brandon Hill: This increase in Core FFO is attributable to the previously discussed changes in FFO while not impacted by the decrease in loss on early extinguishment of debt or the increase in redeemable preferred stock redemptions, as these are excluded from our Core FFO calculation. With that, we can open the line for questions.
Brandon Hill: This increase in Core FFO is attributable to the previously discussed changes in FFO while not impacted by the decrease in loss on early extinguishment of debt or the increase in redeemable preferred stock redemptions, as these are excluded from our Core FFO calculation. With that, we can open the line for questions.
Speaker #4: As these are excluded from our core FFO calculation. With that, we can open the line for questions.
Speaker #5: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Showing no questions, this concludes our question and answer session. Thank you for attending today's presentation. You may now disconnect.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Showing no questions, this concludes our question and answer session. Thank you for attending today's presentation. You may now disconnect.
Speaker #5: To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Showing no questions, this concludes our question-and-answer session.