C
Copper Property CTL Pass Through Trust
OTC:CPPTL
Copper Property CTL Pass Through Trust
OTC:CPPTL
Price:
10.6
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Market Cap:
$795m
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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 like to turn the conference call over to the Trust's Investor Relations representative, Mary Jensen.
Thank you. Good morning, everyone. Welcome to the Copper Property CTL Pass Through Trust Conference Call. Earlier this week, the Trust filed with the SEC an 8-K containing its February 2022 monthly reporting package and its quarterly report on Form 10-Q for the year ended September 30, 2022, 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 as well.
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 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 our -- its control.
These factors, including those discussed on the Trust 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 on sec.gov. 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, Monday, November 14, 2022. [Operator Instructions] I will now turn the call over to our Principal Executive Officer, Neil Aaronson. Neil?
Thank you, Mary, and thank you to all those listening in on the call and taking interest in Copper Property Trust. During the third quarter and just after we sold a total of 10 properties for $110 million at an average implied cap rate of 5.4%. 7 of those properties were option properties, 3 were CTLs. The properties generated a total gain on sale of $13.1 million. We have now sold in total, 19 of the original 29 option properties and 5 CTL properties. We anticipate closing a few more option properties by the end of the year. However, while we continue to market properties, unquestionably, we have seen a softening in the market, and we do expect our sales pace to slow over the very near term. With that, I'll turn the call over to Larry to go over more details of our financial performance.
Thank you, Neil, and welcome, everyone. As a reminder, further details regarding this quarter's sales and all prior sales are available in the sales tab on the property data spreadsheet downloadable on our website. In addition, in case you didn't see it, on September 14, we published JCPenney's second quarter financial statements and other required reporting. Their balance sheet continues to reflect only $500 million of debt and their operating performance has been strong. On the other hand, they, of course, will not be immune to the pressures retailers are facing in this current environment. We've now distributed just under $1.1 billion for the certificate holders that includes $144 million of rental income distributions and $921 million of sales distributions. In terms of guidance, subject to the impact of sales, distributions from operations, we anticipate to continue to be $7.5 million to $8.5 million or between $0.10 and $0.11 per share plus net proceeds as sales occur. Please note that the February distribution will be materially lower than the $7.5 million to $8.5 million as that month includes the majority of our annual insurance expense. As you know, we've satisfied the NASDAQ requirement that we have 300 unrestricted round lot certificate holders, but we have not yet satisfied all remaining requirements of the application process. With that, we'll open the call to questions.
[Operator Instructions] Our first question comes from Oren Shaked with BTIG.
So I just had my first question on the market itself. Neil, you talked about a softening in the market. You talked about that on the second quarter call as well. Can you maybe provide a little bit more detail? What are you actually seeing? How far have cap rates moved up? Maybe just some more commentary on the market itself.
Yes, and a great question. It is hard to give a specific answer in terms of how much cap rates have risen specifically with our portfolio because the sales we're executing on, we're achieving what we think are attractive cap rates and in fact, in some cases, meaningfully more attractive than what we thought we would have achieved even prior to the softening in the market. So there's no one sort of catchall for where the -- where cap rates are going. That being said, obviously, as the Fed has continued to increase interest rates that -- we are not immune to those rises. And many of our buyers do require financing, especially those with some of the larger purchases. And so as their cost of capital has gone up, so that will impact us, what I would say, in a moderated way but proportionately. So I -- we can't say there's a direct one-to-one correlation, but you can expect offers coming in a few -- 100 or somewhere between 100 and 200 basis points higher than they had been coming in prior, but that's just very general terms. There are still properties that we are closing on, including closing expectations we have for the balance of this year that are at very, very attractive cap rates.
That's super helpful. And you talked about that impacting the pace of sales in the near term. Any thought to potentially accelerating the pace of sales, perhaps as it relates to the CTLs in particular? Would you potentially look at larger transactions that get you out of more stores, even if it comes at somewhat of a discount? Any thoughts on that front?
Yes. Let me comment on that because really my thoughts on that kind of tad relate to just the first question. This isn't just a matter of we're seeing higher cap rates on offers. We're seeing fewer offers because people are -- they can't get the financing that they find attractive and so they're not making an offer that they might have made, say, 3 months ago. So to pinpoint where we think cap rates have moved is more difficult because we're not -- we don't know what's in their heads when they're -- when people are choosing not to make an offer. And that's what Neil was referring to in terms of the deceleration of sales. So putting -- getting more aggressive in terms of putting product on the market is really not going to achieve an awful lot if the market is not interested in buying because of their cost of capital today.
Got it. And then lastly, just can you maybe help us with what the remaining requirements are for the NASDAQ listing?
They're administrative. We are comfortable that we will be able to achieve them, although you can ask me how long I think it will take, but I don't have an answer. So -- because everything so far has taken longer than we would have expected. But we don't believe we have material requirements that we won't be able to achieve.
[Operator Instructions] There appears to be no additional request for questions at this time. I'll turn the floor back to management for closing remarks.
Thank you. Thanks for the questions. And again, I would like to say thank you for the continued interest in Copper Property Trust, and we look forward to updating you on our next quarterly call and speaking to you at that time.
Thank you. This concludes today's conference. All parties may disconnect. Have a great day.