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.

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 call over to the Trust's Investor Relations Representative, Jessica Cummins. Please proceed.

[Jessica Cummins, executive]

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

Over the past few days, the trust filed with the SEC a 10-K/A containing JCPenney's year-end 2022 financial statements, an 8-K containing its April 2023 monthly reporting package and its quarterly report on Form 10-Q for the quarter ended March 31, 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 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 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, 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.

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, Wednesday, May 10, 2023.

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

[Neil Aaronson, executive]

Thank you, Jessica, and welcome, everyone, to our first quarterly call for 2023. We continue to appreciate your interest in Copper Properties Trust.

As expected, the softer market has impacted the pace of our sales. During the quarter, we sold 1 retail property for $6 million at a 7.3% cap rate and recognized a net gain on sale of $800,000. Since the trust's formation, we've sold 6 distribution centers and 28 retail properties for a total of $979 million and a gain on sale of $132 million. We've now sold 21 of the original 29 option properties and 7 CTL properties.

While we continue to list the option properties and at continuing conversations and negotiations are ongoing with buyers, due to 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]

Thanks, Neil, and welcome, everyone.

Further details regarding all of our sales are available in the sales tab on the property data spreadsheet, which is downloadable on our website.

As Jessica mentioned, on May 2, we filed an amended 10-K to add an exhibit containing JCPenney's year-end 2022 financial statements. We did this also last year because JCPenney's year-end is January 31, so their financial statements aren't yet available when our 10-K is required to be filed.

From the financial statements, let me share a few highlights. Their sales were down 3.4%, which in our view, is a very good number considering how inflation has a very strong impact on their natural customer. Their net income for the year was $221 million. Their debt remains at only $500 million compared to $4.5 billion before with the reorganization. The current ratio is 2.6x, and their net worth is $1.7 billion. To date, we distributed just over $1.1 billion, which reflects rental income distributions of $189 million and sales distributions of $957 million.

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

With that, we will open the call to questions.

[Operator]

We will now be conducting a question-and-answer session. [Operator Instructions] There are no questions at this time. I would like to turn the floor over to Neil Aaronson for closing comments.

[Neil Aaronson, executive]

Thank you. And once again, thank you for your interest in Copper Properties Trust. We look forward to speaking to you at the conclusion of the second quarter and on our second quarterly conference call. Thanks again, everyone.

[Operator]

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