Earnings call transcript: CMCT beats Q2 2026 EPS forecast as shares fall

CMCT disclosed a smaller-than-anticipated loss for the second quarter of 2026, with adjusted earnings per share (EPS) at negative $4.03, significantly better than the forecasted negative $166.66. Revenue for the quarter amounted to $29.68 million. Despite this, the stock experienced a 4.62% drop, trading at $4.855 in premarket trading, indicating investor concern over ongoing losses, valuation issues, and financing challenges.

The company reported a mixed performance, with stronger property-level operations countered by valuation losses from unconsolidated entities. Segment Net Operating Income (NOI) was $9.3 million, slightly down from the previous year's $9.8 million. However, NOI excluding losses from unconsolidated entities rose to $12.5 million from $10.3 million.

The multifamily portfolio stood out, with same-store occupancy reaching 95.3% at the end of June, a 1,190 basis points increase from the prior year. Total multifamily occupancy rose to 96.1%, and multifamily NOI increased by 238% year over year, driven by stronger leasing and reduced real estate taxes. Office performance was uneven, with leasing activity improving and 16,000 square feet leased in the quarter.

However, office NOI fell due to fair value adjustments at unconsolidated office entities. Hotel NOI improved by 11% after renovations at the Sheraton Grand Sacramento were completed.

Despite the large EPS beat, the company still reported a loss. Investors may view this as improvement rather than a full recovery. Management highlighted improved operating performance across various portfolio segments, explaining the smaller-than-expected loss. The stock, trading at $4.855, remains below its 52-week high of $1,441, signaling long-term pressure and possible corporate actions that have affected share price.

CMCT remains focused on enhancing funds from operations in 2026 and 2027 through operating leverage and balance sheet optimization. They are also exploring the sale of one or more assets to strengthen their balance sheet and reduce the discrepancy between the share price and the portfolio's intrinsic value.