CMCT Closes $92.2 Million Loan for Sheraton Grand Sacramento Hotel

Rhea-AI Summary

Creative Media & Community Trust (NASDAQ: CMCT) has secured a $92.2 million loan for its Sheraton Grand Sacramento Hotel. The floating rate, interest-only loan matures in December 2026, with three one-year extension options. The loan comprises an $84.3 million initial advance and up to $7.9 million in future funding.

The initial advance was used to reduce the company's corporate credit facility debt from $169.3 million to $97.3 million and fund the ongoing renovation of the hotel's 505 guest rooms and suites, expected to complete by end-2024. Additional improvements planned for 2025 include modernizing the hotel's ballroom, meeting space, and common areas, funded through a Marriott International management agreement extension.

Positive

• Secured $92.2 million non-recourse loan for Sheraton Grand Sacramento Hotel
• Reduced corporate credit facility debt by $72 million
• Comprehensive renovation program funded through loan and management agreement
• Strategic shift towards premier multifamily properties

Negative

• Significant remaining corporate-level debt of $97.3 million
• Extended renovation period through 2025 may impact hotel operations

Insights

Financial Analyst

This $92.2 million loan restructuring represents a significant financial move for CMCT. The deal effectively reduces the company's corporate-level credit facility debt by $72 million, bringing it down to $97.3 million from $169.3 million. The non-recourse nature of the new loan limits the company's liability to just the hotel asset. The floating rate structure with interest-only payments provides flexibility, while the three one-year extension options offer additional security. The loan includes $7.9 million for future renovations, demonstrating a strategic approach to asset improvement. This refinancing, combined with planned additional asset refinancing, signals a major balance sheet restructuring that should improve CMCT's financial flexibility and support its strategic pivot toward multifamily properties.

Real Estate Analyst

The comprehensive renovation plan for the Sheraton Grand Sacramento Hotel represents a strategic asset enhancement initiative. Upgrading all 505 guest rooms by 2024, followed by modernization of common areas in 2025, should significantly boost the property's competitive position and potential revenue generation. The secured funding through both the new mortgage loan and Marriott International's management agreement extension demonstrates strong institutional support for the project. The company's stated intention to pivot away from traditional office properties toward premier multifamily assets reflects a timely strategic shift, given current market dynamics and the ongoing challenges in the office sector.

Financing is Part of Previously Announced Program to Strengthen Balance Sheet and Liquidity

DALLAS--(BUSINESS WIRE)-- Creative Media & Community Trust Corporation (NASDAQ: CMCT and TASE: CMCT) (the “Company”) announced today it has closed a secured, non-recourse loan of up to $92.2 million (the “Sheraton Mortgage Loan”) on its Sheraton Grand Sacramento Hotel and parking garage located at 1230 J Street in downtown Sacramento, California. The Sheraton Mortgage Loan is a floating rate, interest-only loan which matures in December 2026, with three one-year extension options that are subject to customary extension conditions.

The Sheraton Mortgage Loan consists of (a) an $84.3 million closing day advance that was used by the Company to paydown existing debt on its corporate-level credit facility (the balance outstanding on the corporate facility was reduced to approximately $97.3 million from $169.3 million), pay certain of the fees and expenses incurred in connection with the closing of the Sheraton Mortgage Loan, and to fund amounts related to a comprehensive renovation of the Sheraton Grand Sacramento Hotel’s 505 guest rooms and suites (the “Room Renovations”) and (b) a future advance component of up to $7.9 million to fund additional amounts related to the Room Renovations. The Room Renovations were initiated earlier this year and the Company anticipates they will be completed by 2024 year-end.

In 2025, the Company plans to improve and modernize the hotel’s ballroom and meeting space, food and beverage outlets and common areas. These upgrades will primarily be funded from proceeds to be received as part of a recently executed, long-term extension of the Sheraton Grand’s management agreement with Marriott International.

The Company is in the advanced stages of refinancing several additional assets and intends to use part of the proceeds from these property-level refinancings to fully repay and retire its recourse corporate-level credit facility. The Company intends to invest remaining proceeds, along with proceeds from any future potential asset sales, principally in premier multifamily properties as part of its ongoing shift away from traditional office.

ABOUT CMCT

Creative Media & Community Trust Corporation (“CMCT”) is a real estate investment trust that owns, operates and develops premier multifamily and creative office assets in vibrant communities throughout the United States. CMCT is a leader in creative office, acquiring and developing properties catering to rapidly growing industries such as technology, media and entertainment. CMCT applies the expertise of CIM to the acquisition, development, and operation of top-tier multifamily properties situated in dynamic markets with similar business and employment characteristics to its creative office investments. CMCT also owns one hotel in Northern California and a lending platform that originates loans under the Small Business Administration (“SBA”)’s 7(a) loan program. CMCT is operated by affiliates of CIM Group, L.P., a vertically integrated owner and operator of real assets with multi-disciplinary expertise and in-house research, acquisition, credit analysis, development, finance, leasing, and onsite property management capabilities. (www.creativemediacommunity.com).

Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans relating to the refinancing of additional assets and the intention to repay and retire CMCT’s recourse corporate-level credit facility. Such forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “project,” “target,” “expect,” “intend,” “might,” “believe,” “anticipate,” “estimate,” “could,” “would,” “continue,” “pursue,” “potential,” “forecast,” “seek,” “plan,” or “should,” or “goal” or the negative thereof or other variations or similar words or phrases. Such forward-looking statements also include, among others, statements about CMCT’s plans and objectives relating to the refinancing of additional assets and the intention to repay and retire CMCT’s recourse corporate-level credit facility. Such forward-looking statements are based on particular assumptions that management of CMCT has made in light of its experience, as well as its perception of expected future developments and other factors that it believes are appropriate under the circumstances. Forward-looking statements are necessarily estimates reflecting the judgment of CMCT’s management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include those associated with (i) whether CMCT can complete the refinancing of additional assets and repayment of its recourse corporate-level credit facility on terms favorable to CMCT, or at all, (ii) the timing, form, and operational effects of CMCT’s development activities, (iii) the ability of CMCT to raise in place rents to existing market rents and to maintain or increase occupancy levels, (iv) fluctuations in market rents, (v) the effects of inflation and continuing higher interest rates on the operations and profitability of CMCT and (vi) general economic, market and other conditions. Additional important factors that could cause CMCT’s actual results to differ materially from CMCT’s expectations are discussed in “Item 1A—Risk Factors” in CMCT’s Annual Report on Form 10-K for the year ended December 31, 2023 and in Part II, Item 1A of CMCT’s Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission from time to time. The forward-looking statements included herein are based on current expectations and there can be no assurance that these expectations will be attained. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond CMCT’s control. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements expressed or implied will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements expressed or implied herein, the inclusion of such information should not be regarded as a representation by CMCT or any other person that CMCT’s objectives and plans will be achieved. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made. CMCT does not undertake to update them to reflect changes that occur after the date they are made, except as may be required by applicable laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241209312867/en/

Karen Diehl

Diehl Communications

310-741-9097

karen@diehlcommunications.com

Shareholder Relations

CIM Group

646-652-8473

shareholderrelations@cimgroup.com

Source: Creative Media & Community Trust Corporation

FAQ

What is the value and type of loan CMCT secured for Sheraton Grand Sacramento Hotel?

CMCT secured a $92.2 million secured, non-recourse, floating rate, interest-only loan that matures in December 2026, with three one-year extension options.

How did CMCT use the initial loan advance of $84.3 million?

The initial advance was used to reduce corporate credit facility debt from $169.3 million to $97.3 million and fund the renovation of 505 guest rooms and suites.

When will CMCT complete the Sheraton Grand Sacramento Hotel renovations?

The guest room renovations are expected to complete by end-2024, with additional improvements to ballroom, meeting space, and common areas planned for 2025.