Copper Property CTL Pass Through Trust

OTC:CPPTL

Earnings Call Transcript

[Operator]

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 will now turn the conference over to Trust's Investor Relations representative, Jessica Cummins.

[Jessica Cummins]

Thank you, operator. Good morning, everyone. Welcome to the Copper Property CTL Pass Through Trust quarterly conference call.

Over the past few days, the Trust filed with the SEC an 8-K containing its July 2023 monthly reporting package and its quarterly report on Form 10-Q for the quarter ended June 30, 2023, 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 facts 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 terminology 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's registration statement on Form 10 filed with the Securities and Exchange Commission, 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, August 15, 2023. [Operator Instructions]

I will now turn the call over to our Principal Executive Officer, Neil Aaronson.

[Neil Aaronson, executive]

Thank you, Jessica. Good morning, everyone. Welcome to our Q2 quarterly update call.

As expected, given our confidence in the long-term value of our properties, the current softened market has impacted our recent pace of sales. While no properties were sold during Q2, last week, we closed on the sale of our properties in Katy, Texas for $11.3 million. This represented roughly a 7.9% cap rate and a gain on sale of approximately $3 million.

Since the Trust's formation, we've sold six distribution centers and 29 retail properties, for a total of $990 million and a gain on sale of $135 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 4.6%, or 5.9% if you exclude the San Bruno sale. We've now sold 21 of the original 29 option properties and eight CTL properties. As we continue to monitor the softened market conditions, we expect our sales pace to remain slow over the near term.

With that, I'll turn the call over to Larry.

[Larry Finger, executive]

Thank you, Neil, and welcome, everyone.

As Neil mentioned, we closed on the sale of our property in Katy, Texas for $11.3 million last week. This sale will be reflected on our August monthly report, and the proceeds will be distributed on our regular schedule in September. To date, we've distributed just over $1.1 billion, $213 million of that has been rental income distributions and $957 million have been sales distributions, and those sales distributions do not include the sale of Katy, Texas.

In terms of guidance, subject to the impact of sales, monthly distributions from operations are expected to continue between $7.5 million and $8.5 million per month or between $0.10 and $0.11 per certificate. This will, of course, be supplemented by net sales proceeds as sales occur.

With that, we'll open the call to questions.

[Operator]

[Operator Instructions] Our first question comes from Patrick Robb with Brigade.

[Patrick Robb, analyst]

Sorry, I was just trying to catch all the details you said for the asset sale in August. Could you just run back through sales proceeds, like cap rate, things like that? I just didn't catch everything as you went through it.

[Larry Finger, executive]

So the cap rate was 7.9%. And while we don't have the final gain calculated yet because we haven't run it through all the GAAP traps, the gain was around $3 million. The price of sale was $11.3 million.

[Patrick Robb, analyst]

Okay. And what was the store location, pardon me?

[Larry Finger, executive]

Katy, Texas.

[Patrick Robb, analyst]

Katy.

[Larry Finger, executive]

K-A-T-Y.

[Operator]

There are no additional request for questions at this time. I'll hand the floor back to management for closing remarks.

[Neil Aaronson, executive]

Thank you. Once again, we remain confident in the long-term value of our properties. Our expectations are in the short term. The pace of sales will be a little bit slow. But due to our confidence, we remain steadfast in our strategy and look forward to our next quarterly conference call in 3 months. Thank you for your continued interest in Copper Property Trust.

[Operator]

Thank you. With that, we conclude today's call. All parties may disconnect. Have a good day.