8-K: Creative Media & Community Trust Corp. Amends Dealer Manager Agreement for $400 Million Preferred Stock Offering

Creative Media & Community Trust Corporation has amended its dealer manager agreement to continue its offering of up to $400 million in Series A1 Preferred Stock, reducing the dealer manager fee from 3% to 2%.

Summary

• Creative Media & Community Trust Corporation (CMCT) has entered into a Fifth Amended and Restated Dealer Manager Agreement with CIM Service Provider, LLC and CCO Capital, LLC.
• The agreement pertains to the ongoing offering of up to $400 million of Series A1 Preferred Stock.
• The key change in this amendment is a reduction in the dealer manager fee from 3.00% to 2.00%.
• The other terms of the agreement remain consistent with the previous Fourth Amended and Restated Dealer Manager Agreement.
• The Dealer Manager is required to use its reasonable best efforts to sell the Series A1 Preferred Stock.
• The company will pay the Dealer Manager a fee of up to 2.00% of the aggregate selling price of the stock sold.
• Selling commissions of up to 7.00% of the aggregate selling price will also be paid.
• The Dealer Manager may reallow a portion of the dealer manager fee to other broker-dealers.
• The Dealer Manager is an affiliate of the Company and is under common control with CIM Capital, LLC.

Sentiment

Score: 7

Explanation: The document is generally positive as it secures the continuation of a capital raise, but the reduction in fees and the affiliated nature of the dealer manager are neutral to slightly negative factors.

Positives

• The reduction in the dealer manager fee from 3% to 2% could result in lower costs for the company.
• The agreement ensures the continuation of the offering of Series A1 Preferred Stock.
• The Dealer Manager is incentivized to sell the shares through commissions and fees.

Risks

• The Dealer Manager is an affiliate of the company, which could present a conflict of interest.
• The success of the offering depends on the Dealer Manager's ability to sell the shares.

Future Outlook

The company intends to continue the offering of Series A1 Preferred Stock under the new registration statement.

Industry Context

This type of agreement is common in the real estate investment trust (REIT) industry for raising capital through the sale of preferred stock.

Comparison to Industry Standards

• The dealer manager fee of 2% is within the typical range for similar offerings in the REIT sector, although some offerings may have higher or lower fees depending on the complexity and risk.
• Selling commissions of up to 7% are also standard for preferred stock offerings, with variations based on the distribution network and the type of investors targeted.
• Companies like Arbor Realty Trust (ABR) and AGNC Investment Corp. (AGNC) also use dealer manager agreements for their preferred stock offerings, with similar fee structures.
• The use of affiliated dealer managers is also common in the industry, but it requires careful management of potential conflicts of interest.

Related Party Transactions

• The Dealer Manager is an affiliate of the Company, which is a related party transaction.

Stakeholder Impact

• Shareholders may benefit from the capital raised through the offering.
• The company's financial position may be strengthened by the capital raise.
• The Dealer Manager and other broker-dealers will earn fees and commissions from the offering.

Next Steps

• The Dealer Manager will continue to solicit subscriptions for the Series A1 Preferred Stock.
• The company will continue to monitor the progress of the offering and make necessary filings with the SEC.

Key Dates

Keywords

Preferred Stock, Dealer Manager Agreement, Series A1 Preferred Stock, Capital Raise, Securities Offering, Broker-Dealer, CIM Service Provider, CCO Capital, CMCT