CMCT.NASDAQCreative Media & Community Trust CORP

S-11/A: Creative Media & Community Trust Seeks to Raise $400 Million Through Series A1 Preferred Stock Offering

Sentiment:

S-11/A Filing 6 June 2024 4:01 PM

📋All filings for Creative Media & Community Trust CORP

Creative Media & Community Trust Corporation aims to raise up to $400 million by offering Series A1 Preferred Stock to fund general corporate purposes and strategic investments.

Capital raiseCreative Media & Community Trust Corporation (CMCT) is offering a maximum of $400,000,000, on an aggregate basis, of Series A1 Preferred Stock through CCO Capital, the dealer-manager for this offering, on a reasonable best efforts basis.The company intends to use the net proceeds from this offering for general corporate purposes, acquisitions of shares of our Common Stock and Preferred Stock, whether through one or more tender offers, share repurchases, Preferred Stock redemptions or otherwise, acquisitions and/or additional investments consistent with our investment strategies.

Summary

Creative Media & Community Trust Corporation (CMCT), a publicly traded REIT, is offering up to $400 million of Series A1 Preferred Stock at $25 per share.
The offering aims to raise capital for general corporate purposes, including acquisitions, investments, and stock repurchases.
The Series A1 Preferred Stock pays cumulative cash dividends at a quarterly rate that is the greater of 6.00% annually or the Federal Funds (Effective) Rate plus 2.50%, up to a maximum of 2.50% per quarter.
The annual rate of dividend of the Series A1 Preferred Stock during the first quarter of 2024 was 7.83%.
Holders can request redemption of their shares at a price ranging from 91% to 100% of the stated value ($25), depending on the holding period.
CMCT has the option to redeem the shares after 24 months at 100% of the stated value, payable in cash or Common Stock.
The offering is managed by CCO Capital, LLC, an affiliate of CMCT, and is set to expire by June 5, 2026, but may be extended to June 5, 2027.
Net proceeds to CMCT are estimated at $364 million after deducting selling commissions and dealer manager fees.

Sentiment

Score: 6

Explanation: The document presents a balanced view of the offering, highlighting both the potential benefits and risks. The sentiment is neutral, focusing on factual information rather than overly positive or negative language.

Positives

The Series A1 Preferred Stock offers a cumulative dividend, providing a steady income stream.
Holders have the option to redeem their shares, offering potential liquidity.
The funds raised will be used for general corporate purposes, including acquisitions and investments, which could drive future growth.

Negatives

There is no established public trading market for the Series A1 Preferred Stock.
Holders of Series A1 Preferred Stock have no voting rights.
The company has the option to redeem shares of Series A1 Preferred Stock under certain circumstances without the consent of their holders.
The cash distributions you receive in respect of Series A1 Preferred Stock and Common Stock may be less frequent or lower in amount than you expect.

Risks

There is no public market for the Series A1 Preferred Stock, which may limit liquidity.
The company has significant indebtedness and may incur significant additional indebtedness on a consolidated basis.
The company is dependent on the California real estate market and economy, and are therefore susceptible to risks of events in the California market that could adversely affect our business, such as adverse market conditions, changes in local laws or regulations and natural disasters.
The company faces risks associated with development, redevelopment, repositioning or construction of real estate projects.
The company's lending operations expose it to a high degree of risk associated with real estate.

Future Outlook

CMCT intends to use the net proceeds from this offering for general corporate purposes, acquisitions of shares of our Common Stock and Preferred Stock, whether through one or more tender offers, share repurchases, Preferred Stock redemptions or otherwise, acquisitions and/or additional investments consistent with our investment strategies.

Industry Context

CMCT operates in the REIT sector, focusing on multifamily and creative office properties. The success of this offering and the subsequent deployment of capital will be crucial for CMCT to maintain its competitive position and deliver returns to its investors.

Comparison to Industry Standards

CMCT's strategy of focusing on vibrant communities aligns with industry trends favoring mixed-use developments and urban revitalization.
Compared to larger, more diversified REITs like Simon Property Group (SPG) or Prologis (PLD), CMCT's smaller size and concentrated portfolio may present both opportunities and challenges.
CMCT's focus on creative office spaces is similar to that of companies like Boston Properties (BXP), but CMCT's smaller scale may limit its ability to compete for larger tenants.
The company's lending operations, particularly its SBA 7(a) loan program, differentiate it from many traditional REITs, adding a layer of complexity and risk.
CMCT's reliance on CIM Group for management and operations is a common structure in the REIT industry, but it also creates potential conflicts of interest.

Related Party Transactions

The dealer manager of this offering is CCO Capital, LLC, which we refer to as CCO Capital, a registered broker-dealer and an affiliate of the Company that is under common control with CIM Capital, LLC and CIM Service Provider, LLC, our Operator and Administrator, respectively.

Stakeholder Impact

Shareholders: Potential for increased returns through strategic investments, but also face risks associated with the company's operations and debt.
Employees: No direct impact mentioned, but company performance affects job security and potential for growth.
Customers/Tenants: No direct impact mentioned, but company's ability to maintain and improve properties affects tenant satisfaction.
Suppliers/Creditors: Company's financial health affects its ability to meet obligations to suppliers and creditors.

Next Steps

CMCT will continue to offer Series A1 Preferred Stock through CCO Capital on a reasonable best efforts basis.
The company plans to use the net proceeds for general corporate purposes, acquisitions, and investments.
CMCT will monitor market conditions and may adjust its strategy as needed.

Key Dates

Date	Description
1933	Reference to Securities Act of 1933.
1934	Reference to Securities and Exchange Act of 1934.
1980	Reference to Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).
1986	Reference to Internal Revenue Code of 1986.
1990	Reference to Americans with Disabilities Act of 1990 (ADA).
1994	CIM Group was founded.
March 11, 2014	Date of Master Services Agreement.
May 19, 2014	Merger of CCPT I with VEREIT completed.
January 1, 2015	Date of Staffing and Reimbursement Agreement between CIM SBA and PMC Commercial Lending, LLC.
January 29, 2015	CCIT merged with and into SC Merger Sub LLC.
June 28, 2016	Date of Warrant Agreement between CIM Commercial Trust Corporation and American Stock Transfer & Trust Company, LLC.
October 27, 2016	Articles Supplementary designating the Series A Preferred Stock.
January 18, 2018	The Company acquired a 100% fee-simple interest in 9460 Wilshire Boulevard.
May 2, 2018	The Company purchased the Sheraton Grand Hotel.
May 31, 2019	CCO Capital became the exclusive dealer manager for the Companys public offering of the Series A Preferred Stock.
September 6, 2019	Articles of Amendment (Reverse Stock Split).
January 31, 2020	Articles Supplementary designating the Series D Preferred Stock.
April 1, 2020	Amendment to Master Services Agreement replacing Base Service Fee with Prior Incentive Fee.
March 1, 2021	CCIT II completed the transactions contemplated by an Agreement and Plan of Merger.
December 16, 2021	CIM Income NAV completed a merger with CMFT.
January 5, 2022	The Company and certain of its subsidiaries entered into a Fee Waiver with the Operator and the Administrator.
March 10, 2022	Articles of Amendment (Name Change).
June 2022	The Company commenced its reasonable best efforts public offering of a maximum of up to $692,312,129, on an aggregate basis, of Series A1 Preferred Stock.
September 15, 2022	We repurchased 2,435,284 shares of our Series L Preferred Stock in a privately negotiated transaction.
December 20, 2022	We issued to the Operator an aggregate of 36,663 shares of our Series A1 Preferred Stock as payment, in lieu of cash, for $916,575 of asset management fees owed to the Operator under the Investment Management Agreement for the third quarter of 2022.
January 2023	We completed such previously-announced redemption of all outstanding shares of our Series L Preferred Stock in cash at its stated value of $28.37 per share (plus accrued and unpaid dividend of $1.56 per share, or $4.6 million in the aggregate).
January 31, 2023	The Company purchased a 89.42% interest in Channel House.
March 28, 2023	The Company purchased a 98.05% interest in 1150 Clay Street.
March 31, 2024	As of this date, our real estate portfolio consisted of 27 assets, our 13 office properties were 83.4% occupied, our one hotel had RevPAR of $166.84, and our three multifamily properties were 86.2% occupied.
April 4, 2024	As of this date, we have issued 11,327,248 shares of Series A1 Preferred Stock as part of the offering of Shares pursuant to the Prior Registration Statement.
May 14, 2024	Lenders under the credit facility and the Company entered into an agreement (the Modification Agreement) pursuant to which the lenders waived such event of default with respect to the test period ending March 31, 2024.
May 16, 2024	As of this date, there were 22,786,741 shares of our Common Stock, 6,839,668 shares of our Series A Preferred Stock, 48,447 shares of our Series D Preferred Stock and 11,183,289 shares of our Series A1 Preferred Stock outstanding.
June 5, 2026	Scheduled expiration date of the offering, which may be extended to June 5, 2027.
June 6, 2024	Date of this prospectus.

Keywords

Series A1 Preferred Stock, REIT, Real Estate, Dividends, Redemption, Offering, CMCT, CCO Capital, Preferred Stock

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