CMCT Bets on Multifamily Pivot Amid Q4 Losses and Major Restructuring

LOS ANGELES, CA – March 09, 2026 – Creative Media & Community Trust Corporation (NASDAQ: CMCT) is navigating a period of profound transformation, reporting a significant net loss for the fourth quarter of 2025 while simultaneously executing an aggressive strategic overhaul designed to reshape its financial future. The real estate investment trust posted a net loss attributable to common stockholders of $(17.7) million, or $(11.20) per share, yet management points to substantial progress in its plan to shed non-core assets and double down on the multifamily housing sector.

The company's Q4 results underscore the urgency of its strategic pivot. While Funds from Operations (FFO), a key metric for REITs, improved to $(7.1) million from $(8.7) million in the prior-year period, the figures remain in negative territory. The results reflect a company in transition, grappling with legacy portfolio challenges while laying the groundwork for a more focused, and hopefully more profitable, future. Central to this effort are a series of decisive balance sheet maneuvers, including a major asset sale and a large-scale conversion of preferred stock, aimed at improving liquidity and long-term financial health.

A High-Stakes Financial Overhaul

CMCT has moved aggressively to strengthen its balance sheet, a strategy highlighted by the January 2026 sale of its lending business, First Western. The transaction, valued at approximately $44.9 million, yielded net cash proceeds of about $31.2 million for the company. This infusion of cash is a critical component of its plan to improve liquidity and retire more expensive debt, including the full retirement of its recourse credit facility.

Even more significant is the company's restructuring of its equity. Since September 2024, CMCT has redeemed approximately $153.3 million of its preferred stock, converting it into common stock. A further large-scale redemption is planned for March 2026. Management projects this move will bolster the company's annual FFO by an estimated $16.0 million by eliminating substantial preferred dividend payments. However, this financial engineering comes at the cost of significant dilution for existing common stockholders, as the number of outstanding common shares has increased substantially. During Q4 2025 alone, the redemption of various preferred series resulted in the issuance of over 1.9 million new shares of common stock.

The goal, according to the company, is to realign its capital structure toward a long-term target of approximately 38% common equity, 7% preferred equity, and 55% debt. This shift signals a clear intent to move towards a more traditional REIT financial model and reduce the burden of its preferred stock obligations. While management has indicated it does not currently plan further company-elected redemptions into common stock, it will continue to evaluate requests from preferred holders, retaining the discretion to redeem shares for cash or common stock.

A Tale of Two Real Estate Markets

CMCT’s operational results paint a divergent picture that mirrors broader trends in the commercial real estate sector, telling a story of struggling offices and resilient residential properties. The company’s strategic pivot is directly supported by the strong performance of its multifamily portfolio.

Excluding a new building still in its initial lease-up phase, CMCT’s multifamily occupancy climbed to 88.5% as of year-end 2025, a substantial 680 basis point improvement from the 81.7% occupancy reported at the end of 2024. This positive momentum is particularly evident at its new 36-unit premier apartment building in the Echo Park neighborhood of Los Angeles. Completed in the fourth quarter, the property was already approximately 52% leased by the end of February 2026, demonstrating robust demand in the market. The company also noted improving demand at its Bay Area multifamily buildings, where occupancy rose to 88.4%.

In stark contrast, the office segment remains a significant headwind. Overall office portfolio occupancy fell to 74.8% at the end of 2025. This figure is heavily dragged down by one particular asset: the Oakland Office Building. Excluding this property, the company's office portfolio would be 88.5% leased. Management described demand in the Oakland market as persistently “challenging.” This property represents a critical risk for CMCT, as its mortgage is set to mature in the third quarter of 2026. The company is actively seeking an extension, but states in its report that it “cannot guarantee it will reach an agreement with the lender.” The failure to refinance or extend this loan could have serious financial repercussions. Despite the soft demand, the building did generate approximately $0.5 million in cash flow after debt service in the fourth quarter.

Elsewhere, the company's one hotel has seen substantial investment, with a complete renovation of all 505 rooms followed by an overhaul of its public spaces in early 2026. This positions the asset to better capitalize on recovering travel and hospitality demand.

Navigating Toward Future Growth

While the headline net loss is stark, underlying metrics suggest some of the company’s efforts are beginning to bear fruit. Total segment Net Operating Income (NOI) rose to $10.9 million in the fourth quarter, up from $9.2 million in the same period of 2024. Same-store office cash NOI also saw an increase, rising to $7.0 million from $6.2 million year-over-year, driven by leasing activity in Austin and Beverly Hills.

These improvements, however, were not enough to lift CMCT into profitability. The company’s significant negative net profit margin stands in sharp contrast to the broader U.S. REIT industry, which is forecast to be solidly profitable. This performance gap highlights the pressure on management to successfully execute its turnaround.

The company also experienced a leadership transition, with CFO Barry Berlin resigning to join the firm that acquired the lending division, and Brandon Hill stepping into the role. Management remains publicly committed to its plan, stating that operating trends are improving across its core assets in Los Angeles and Austin. With the sale of its lending arm complete and its capital structure undergoing a radical shift, CMCT is now a more focused, if still embattled, entity. The coming year will be a crucial test of whether its high-stakes bet on multifamily assets can steer the company out of its persistent losses and onto a sustainable path to growth.