Creative Media & Community Trust Corporation (NASDAQ:CMCT) Q2 2023 Earnings Call Transcript

So on average, it’s about a 6-month life that you have in these leases that are in place, and so they just get written off relatively quickly. I mean, I think the good news is it’s a noncash item. It’s going to clear itself off the balance sheet and through our P&L. And primarily through the end of the third quarter, I think it would be a very small piece less than the fourth quarter. But as we noted in the release and you’ll see in our documents that we file, it was about $9.4 million of that intangible remaining relating to those Oakland assets that will burn off in the third quarter, primarily in the third quarter and a little bit into the fourth quarter. But really just kind of an accounting oddity, if you will.

Craig Kucera: Right. So just so I understand, so when you acquired those assets, they were carried on your book sort of between what they determined fair market value to be as sort of your investment in it, and then sort of the excess that was paid was carried as an intangible that you’re writing off now?

David Thompson: It’s a little more defined than that. They actually are required to look at those intangible assets and ascribe value to them. So that’s just part of their process of like they would value the assets, the fixed assets themselves, they specifically look at the leases in place and say, look, you’ve got to ascribe some value to this. So it’s really not — I mean, you could say it’s above and beyond the fixed assets, but they really view it as part of what you were paying for from an accounting perspective.

Craig Kucera: Right. I guess I just haven’t seen them written off so quickly on the acquisition of multifamily in the past, but appreciate the color.

David Thompson: Yes. And again, I think it’s an oddity you’ll have in multifamily. If you had an office and you had a 10-year lease, then you would see it written off on a much longer period of time. But given the short-term nature of the leases in multifamily, it does hit you a lot more quickly.

Operator: This concludes our question-and-answer session and concludes the conference call. Thank you for attending today’s presentation. You may now disconnect.