Copper Property CTL Pass Through Trust (CPPTL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Copper Property CTL Pass Through Trust Conference Call. [Operator Instructions] Please note that today's conference call is being recorded with an online replay available 1 hour after the conclusion of this call. Additional information can be found on the Investors section of the company's website at ctltrust.net. [Operator Instructions] I'll now turn the conference over to the Trust's Investor Relations representative, Jessica Cummins.

Thank you, operator. Good morning, everyone. Welcome to the Copper Properties CTL Pass Through Trust conference call. Over the past few days, the Trust filed with the SEC an 8-K containing its October 2024 monthly reporting package and its quarterly report on Form 10-Q for the period ended September 30, 2024, each of which are available online at ctltrust.net. On the call today, Neil Aaronson, the Trust's Principal Executive Officer; and Larry Finger, its Principal Financial Officer, will discuss these filings as well as other Trust activities. In addition, a representative from GLAS, our trustee will be available to answer questions. Please note that during this conference call, some of the comments will be forward-looking statements. All statements other than statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking terminologies such as anticipate, believe, continue, could, estimate, expect, intend, may, might, our vision, plan, potential, preliminary, predict, should, will, or would or the negative thereof or other variations thereof or comparable terminology and include, but are not limited to, the Trust's expectations or beliefs concerning future events and stock price performance. The Trust has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Trust believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These factors, including those discussed in the Trust registration statement on Form 10 filed with the Securities and Exchange Commission, the SEC, may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a further list and description of such risks and uncertainties, please refer to the Trust's filings with the SEC that are available at www.sec.gov and on our website. As such, it is important to note that management's comments include time-sensitive information that may only be accurate as of today's date, Tuesday, November 12, 2024. [Operator Instructions] I will now turn the call over to our Principal Executive Officer, Neil Aaronson.

Thank you, Jessica, and welcome, everybody, to the Copper Properties Q3 investor call. With the recent interest rate reductions, we've seen a noticeable increase in activity and interest in our properties. We've been patient, and we've been preparing for this improved sales environment and are moving to aggressively marketing sales of our properties individually, in groups or as a portfolio going forward. In addition, we are working with Deutsche Bank to offer rated CMBS financing to a possible portfolio buyer to potentially improve the cap rate we could otherwise achieve. In the third quarter, we sold a property in Miami, Florida for $12.2 million at a 7.5% cap rate. In October, we sold 2 properties, Cherry Hill, New Jersey for $4.8 million and Lynnwood, Washington for $12.9 million, representing cap rates of 7.7% and 7.6%, respectively. Since the Trust formation, we've sold the 6 distribution centers and 37 retail properties for a total of $1.054 billion and a net gain on sale of $137 million. The distribution centers were sold at a cap rate of 6.3%, and the retail properties have been sold at an average cap rate of 5% or 6.2% excluding the San Bruno sale. We've sold 21 of the original 29 option properties and 16 CTL properties. We remain confident that the combination of the quality of the real estate portfolio and the advantages of the master lease will allow us to achieve maximum value for our certificate holders. With that, I'll turn the call over to Larry.

Thanks, Neil, and welcome, everyone. For your planning, I want to make you aware that effective December 7, JCPenny rent will increase by 2% in accordance with the CPI provisions of the master lease, including the distribution we made today. To date, we distributed $1.36 billion. Of that $1.03 billion were sales distributions and $328 million has been rental income distributions. In terms of guidance, subject to the impact of sales, monthly distributions from operations are expected to be between $7.25 million and $7.75 million or $0.097 and $0.103 per certificate, supplemented by net sales proceeds as sales occurred. And as a reminder, our annual insurance costs are due in January, which will result in a lower February 2025 distribution. With that, we'll open the call to questions.

[Operator Instructions] Our first question comes from the line of Alex Arnold with Odeon Capital.

This will be the easiest one I've ever asked you guys. Can you just repeat the line from the script about CMBS -- was it UBS and your -- and there -- can you just repeat what you said?

Deutsche Bank, rated CMBS. That would be financing offered to the buyer, would not be financing that we would take on.

[Operator Instructions] It seems there are no other questions at this time. I'll turn the floor back to Mr. Aaronson for any final comments.

Thank you, and thank you to everybody for once again joining our call and for your continued interest in Copper Property. We look forward to updating you on our next quarterly call.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.