UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2023



¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-54939

~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

(Exact name of registrant as specified in its charter)

Maryland

27-3148022

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

~~2325~~2398 East Camelback Road, ~~Suite 1100~~

~~Phoenix, Arizona 85016~~4th Floor

~~(602) 778-8700~~

Phoenix,

Arizona

85016

(Address of principal executive ~~offices; zip~~offices)

(Zip code)

(602)

778-8700

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨☐

Accelerated filer

¨☐

Non-accelerated filer

~~(Do not check if a smaller reporting company)~~

x☒

Smaller reporting company

¨☐

Emerging growth company

¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒

As of ~~November 9, 2017,~~May 5, 2023, there were approximately ~~310.8~~436.9 million shares of common stock, par value $0.01 per share, of ~~Cole Credit Property~~CIM Real Estate Finance Trust, ~~IV,~~ Inc. outstanding.

Table of Contents

~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

INDEX




PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~20 2 2			3

Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 202 3 and ~~2016~~20 2 2			4

Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~20 2 2			5

Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity for the ~~nine~~ three months ended ~~September 30, 2017~~March 31, 2023 and 20 2 2			6

Condensed Consolidated Statements of Cash Flows for the ~~nine~~ three months ended ~~September 30, 2017~~March 31, 202 3 and ~~2016~~20 2 2			7

Notes to Condensed Consolidated Financial Statements			89

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2940

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4053

Item 4. Controls and Procedures			4054

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			4255

Item 1A. Risk Factors			4255

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4255

Item 3. Defaults Upon Senior Securities			4355

Item 4. Mine Safety Disclosures			4355

Item 5. Other Information			4355

Item 6. Exhibits			4456

Signature			4557

Table of Contents

PART I — FINANCIAL INFORMATION


~~Item 1.~~	Item 1. Financial Statements

~~COLE CREDIT PROPERTY~~

CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts) (Unaudited)


	September 30, 2017			December 31, 2016				March 31, 2023		December 31, 2022
ASSETS							ASSETS
Investment in real estate assets:
Real estate assets:							Real estate assets:
Land	$	1,193,043		$	1,156,417		Land	$	338,087	$	578,970
Buildings, fixtures and improvements	3,364,812			3,214,212			Buildings, fixtures and improvements	864,447		1,462,726
Intangible lease assets	587,189			553,149			Intangible lease assets	164,136		276,684
Total real estate investments, at cost	5,145,044			4,923,778
Condominium developments							Condominium developments	131,633		130,494
Total real estate assets, at cost							Total real estate assets, at cost	1,498,303		2,448,874
Less: accumulated depreciation and amortization	(490,178		)	(389,768		)	Less: accumulated depreciation and amortization	(154,235)		(270,946)
Total real estate investments, net	4,654,866			4,534,010
Total real estate assets, net							Total real estate assets, net	1,344,068		2,177,928
Investment in unconsolidated entities							Investment in unconsolidated entities	97,384		100,604
Real estate-related securities ($520,639 and $576,391 held at fair value as of March 31, 2023 and December 31, 2022, respectively)							Real estate-related securities ($520,639 and $576,391 held at fair value as of March 31, 2023 and December 31, 2022, respectively)	520,639		576,391
Loans held-for-investment and related receivables, net							Loans held-for-investment and related receivables, net	3,976,316		4,043,898
Less: Current expected credit losses							Less: Current expected credit losses	(43,779)		(42,344)
Total loans held-for-investment and related receivables, net							Total loans held-for-investment and related receivables, net	3,932,537		4,001,554
Cash and cash equivalents	4,231			9,754			Cash and cash equivalents	555,245		118,978
Restricted cash	11,002			8,040			Restricted cash	58,390		57,616
Rents and tenant receivables, net	68,916			65,446			Rents and tenant receivables, net	20,977		33,968
Due from affiliates	4			58
Prepaid expenses, derivative assets, revenue bonds and other assets	9,638			5,513

Derivative assets, prepaid expenses and other assets							Derivative assets, prepaid expenses and other assets	10,711		26,243
Deferred costs, net	3,270			1,514			Deferred costs, net	17,152		16,429
Accrued interest receivable							Accrued interest receivable	23,412		22,343
Assets held for sale	1,594			—			Assets held for sale	65,011		—
Total assets	$	4,753,521		$	4,624,335		Total assets	$	6,645,526	$	7,132,054
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Notes payable and credit facility, net	$	2,454,282		$	2,246,259
Accounts payable and accrued expenses	32,989			25,310
Repurchase facilities, notes payable and credit facilities, net							Repurchase facilities, notes payable and credit facilities, net	$	3,961,213	$	4,422,833
Accrued expenses and accounts payable							Accrued expenses and accounts payable	26,357		25,666

Due to affiliates	3,784			5,333			Due to affiliates	13,816		16,086
Intangible lease liabilities, net	47,607			49,075			Intangible lease liabilities, net	14,269		19,054
Distributions payable	16,001			16,498			Distributions payable	15,310		14,828
Deferred rental income, derivative liabilities and other liabilities	14,890			15,091
Deferred rental income and other liabilities							Deferred rental income and other liabilities	5,960		7,274
Total liabilities	2,569,553			2,357,566			Total liabilities	4,036,925		4,505,741
Commitments and contingencies
Redeemable common stock and noncontrolling interest	187,056			188,938
Commitments and contingencies (Note 11)							Commitments and contingencies (Note 11)
Redeemable common stock							Redeemable common stock	170,451		170,238
STOCKHOLDERS’ EQUITY							STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding	—			—			Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding	—		—
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 311,637,622 and 311,817,004 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	3,116			3,118
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 437,429,808 and 437,397,414 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively							Common stock, $0.01 par value per share; 490,000,000 shares authorized, 437,429,808 and 437,397,414 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	4,374		4,373
Capital in excess of par value	2,607,301			2,607,304			Capital in excess of par value	3,529,644		3,529,523
Accumulated distributions in excess of earnings	(613,163		)	(531,567		)	Accumulated distributions in excess of earnings	(1,021,032)		(1,029,287)
Accumulated other comprehensive loss	(342		)	(1,024		)	Accumulated other comprehensive loss	(74,836)		(48,526)
Total stockholders’ equity	1,996,912			2,077,831			Total stockholders’ equity	2,438,150		2,456,083
Total liabilities, redeemable common stock, noncontrolling interest and stockholders’ equity	$	4,753,521		$	4,624,335
Non-controlling interests							Non-controlling interests	—		(8)
Total equity							Total equity	2,438,150		2,456,075
Total liabilities, redeemable common stock, non-controlling interests and stockholders’ equity							Total liabilities, redeemable common stock, non-controlling interests and stockholders’ equity	$	6,645,526	$	7,132,054

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts) (Unaudited)


														Three Months Ended March 31,
														2023		2022
Revenues:													Revenues:
Rental and other property income													Rental and other property income	$	38,781	$	73,736
Interest income													Interest income	108,083		31,463
Total revenues													Total revenues	146,864		105,199
Expenses:													Expenses:
General and administrative													General and administrative	3,298		3,475
Interest expense, net													Interest expense, net	66,234		29,996
Property operating													Property operating	2,576		7,727
Real estate tax													Real estate tax	817		6,713
Expense reimbursements to related parties													Expense reimbursements to related parties	3,568		3,694
Management fees													Management fees	12,579		13,347
Transaction-related													Transaction-related	13		7
Depreciation and amortization													Depreciation and amortization	15,110		19,141
Real estate impairment													Real estate impairment	4,814		3,291
Increase in provision for credit losses													Increase in provision for credit losses	1,453		4,709
Total expenses													Total expenses	110,462		92,100

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Rental income	$	94,103		$	89,370		$	278,354		$	265,341
Tenant reimbursement income	12,921			12,426			37,954			37,599
Total revenues	107,024			101,796			316,308			302,940
Operating expenses:
General and administrative	3,270			3,246			10,301			9,735
Property operating	7,345			5,738			20,881			16,603
Real estate tax	9,276			8,612			27,646			25,939
Advisory fees and expenses	11,149			10,587			32,863			31,100
Acquisition-related	110			1,417			1,520			3,592
Depreciation and amortization	36,461			33,452			106,145			100,399
Impairment	1,658			1,430			1,658			1,430
Total operating expenses	69,269			64,482			201,014			188,798
Operating income	37,755			37,314			115,294			114,142
Other income (expense):													Other income (expense):
Interest expense and other, net	(23,335		)	(20,473		)	(67,968		)	(58,416		)
Loss recognized on equity interest re-measured to fair value	—			(652		)	—			(652		)
Income before real estate dispositions	14,420			16,189			47,326			55,074
Gain on dispositions of real estate, net	15,349			1,939			16,801			2,053
Gain on disposition of real estate and condominium developments, net													Gain on disposition of real estate and condominium developments, net	19,623		32,574
(Loss) gain on investment in unconsolidated entities													(Loss) gain on investment in unconsolidated entities	(770)		5,340
Unrealized gain (loss) on equity security													Unrealized gain (loss) on equity security	2,258		(2,346)
Other income, net													Other income, net	324		1,305
Loss on extinguishment of debt													Loss on extinguishment of debt	(3,645)		(10,871)
Total other income (expense)													Total other income (expense)	17,790		26,002
Net income	29,769			18,128			64,127			57,127			Net income	$	54,192	$	39,101
Net income allocated to noncontrolling interest	33			32			99			99			Net income allocated to noncontrolling interest	8		9
Net income attributable to the Company	$	29,736		$	18,096		$	64,028		$	57,028		Net income attributable to the Company	$	54,184	$	39,092
Weighted average number of common shares outstanding:													Weighted average number of common shares outstanding:
Basic and diluted	311,649,032			311,558,083			311,698,622			311,871,727			Basic and diluted	437,433,853		437,374,008
Net income per common share:													Net income per common share:
Basic and diluted	$	0.10		$	0.06		$	0.21		$	0.18		Basic and diluted	$	0.12	$	0.09
Distributions declared per common share	$	0.16		$	0.16		$	0.47		$	0.47

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income $ 29,769
$ 18,128
$ 64,127
$ 57,127
Other comprehensive income (loss)
Unrealized gain (loss) on interest rate swaps 99
3,751
(2,175 ) (13,535 )
Amount of loss reclassified from other comprehensive income into income as interest expense 447
2,181
2,857
6,768
Total other comprehensive income (loss) 546
5,932
682
(6,767 )

Comprehensive income 30,315
24,060
64,809
50,360
Comprehensive income allocated to noncontrolling interest 33
32
99
99
Comprehensive income attributable to the Company $ 30,282
$ 24,028
$ 64,710
$ 50,261


	Three Months Ended March 31,
	2023		2022
Net income	$	54,192	$	39,101
Other comprehensive loss
Unrealized loss on real estate-related securities	(26,310)		(4,878)

Unrealized gain on interest rate swaps	—		1,488
Amount of gain reclassified from other comprehensive loss into income as interest expense, net	—		(7)
Total other comprehensive loss	(26,310)		(3,397)

Comprehensive income	27,882		35,704
Comprehensive income attributable to noncontrolling interest	8		9
Comprehensive income attributable to the Company	$	27,874	$	35,695

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts) (Unaudited)


	Common Stock			Capital in Excess of Par Value		Accumulated Distributions in Excess of Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Non-Controlling Interests		Total Equity
	Number of Shares	Par Value
Balance as of January 1, 2023	437,397,414	$	4,373	$	3,529,523	$	(1,029,287)	$	(48,526)	$	2,456,083	$	(8)	$	2,456,075
Issuance of common stock	1,637,923	17		10,746		—		—		10,763		—		10,763
Equity-based compensation	—	—		120		—		—		120		—		120
Distributions declared on common stock — $0.11 per common share	—	—		—		(45,929)		—		(45,929)		—		(45,929)
Redemptions of common stock	(1,605,529)	(16)		(10,532)		—		—		(10,548)		—		(10,548)
Changes in redeemable common stock	—	—		(213)		—		—		(213)		—		(213)

Comprehensive income (loss)	—	—		—		54,184		(26,310)		27,874		8		27,882
Balance as of March 31, 2023	437,429,808	$	4,374	$	3,529,644	$	(1,021,032)	$	(74,836)	$	2,438,150	$	—	$	2,438,150

Common Stock
Capital in Excess
of Par Value

Accumulated
Distributions in Excess of Earnings
Accumulated
Other Comprehensive Income (Loss)
Total
Stockholders’
Equity

Number of
Shares
Par Value
Balance, January 1, 2017 311,817,004
$ 3,118
$ 2,607,304
$ (531,567 ) $ (1,024 ) $ 2,077,831
Issuance of common stock 7,665,673
76
76,775
—
—
76,851
Distributions to investors —
—
—
(145,624 ) —
(145,624 )
Redemptions of common stock (7,845,055 ) (78 ) (78,545 ) —
—
(78,623 )
Changes in redeemable common stock —
—
1,767
—
—
1,767
Comprehensive income —
—
—
64,028
682
64,710
Balance, September 30, 2017 311,637,622
$ 3,116
$ 2,607,301
$ (613,163 ) $ (342 ) $ 1,996,912


	Common Stock			Capital in Excess of Par Value		Accumulated Distributions in Excess of Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Non-Controlling Interests		Total Equity
	Number of Shares	Par Value
Balance as of January 1, 2022	437,373,981	$	4,374	$	3,529,126	$	(1,008,561)	$	2,949	$	2,527,888	$	1,073	$	2,528,961

Issuance of common stock	1,329,825	13		9,561		—		—		9,574		—		9,574
Equity-based compensation	—	—		37		—		—		37		—		37
Distributions declared on common stock — $0.09 per common share	—	—		—		(40,018)		—		(40,018)		—		(40,018)
Redemptions of common stock	(1,345,814)	(13)		(9,676)		—		—		(9,689)		—		(9,689)
Changes in redeemable common stock	—	—		115		—		—		115		—		115
Distributions to non-controlling interests	—	—		—		—		—		—		(14)		(14)
Comprehensive income (loss)	—	—		—		39,092		(3,397)		35,695		9		35,704
Balance as of March 31, 2022	437,357,992	$	4,374	$	3,529,163	$	(1,009,487)	$	(448)	$	2,523,602	$	1,068	$	2,524,670

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income	$	54,192	$	39,101
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization, net	15,125		19,108
Amortization of deferred financing costs	3,190		3,381

Amortization and accretion on deferred loan fees	(3,324)		(2,441)
Amortization of premiums and discounts on credit investments	(8,481)		(591)
Capitalized interest income on real estate-related securities	(284)		(272)
Equity-based compensation	120		37
Straight-line rental income	(1,120)		(1,721)
Write-offs for uncollectible lease-related receivables	338		187
Gain on disposition of real estate assets and condominium developments, net	(19,623)		(32,574)
Loss (gain) on sale of credit investments, net	64		(65)
Loss (gain) on investment in unconsolidated entities	770		(5,340)
Gain on sale of marketable security	—		(22)
Unrealized (gain) loss on equity security	(2,258)		2,368
Amortization of fair value adjustment and gain on interest rate swaps	—		92
Loss (gain) on interest rate caps	1,960		(1,176)
Impairment of real estate assets	4,814		3,291
Increase in provision for credit losses	1,453		4,709
Write-off of deferred financing costs	2,354		7,068
Return on investment in unconsolidated entities	—		531
Changes in assets and liabilities:
Rents and tenant receivables, net	4,901		33,078
Prepaid expenses and other assets	13,572		(20,530)
Accrued interest receivable	(1,069)		(2,792)
Accrued expenses and accounts payable	2,008		(7,648)
Deferred rental income and other liabilities	(1,314)		(9,167)
Due to affiliates	(2,270)		1,457
Net cash provided by operating activities	65,118		30,069
Cash flows from investing activities:
Investment in unconsolidated entities	—		(24,750)
Return of investment in unconsolidated entities	2,450		—
Investment in real estate-related securities	(9,401)		(155,618)
Investment in liquid corporate senior loans	(26,804)		(61,030)
Investment in real estate assets and capital expenditures	(2,495)		(9,533)
Investment in corporate senior loans	(16,763)		(10,000)
Investment in first mortgage loans	(17,007)		(784,129)
Origination and exit fees received on loans held-for-investment	—		9,540
Principal payments received on loans held-for-investment	123,996		102,475
Principal payments received on real estate-related securities	48,975		—
Net proceeds from sale of real estate-related securities	—		132
Net proceeds from disposition of real estate assets and condominium developments	775,144		923,400
Net proceeds from sale of liquid corporate senior loans	8,311		23,834


Redemption of investment in unconsolidated entities	—		48,500

Net cash provided by investing activities	$	886,406	$	62,821

Table of Contents

Nine Months Ended September 30,
2017 2016
Cash flows from operating activities:
Net income $ 64,127
$ 57,127
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, net 104,220
99,555
Amortization of deferred financing costs 3,958
4,190
Amortization of fair value adjustment of mortgage notes payable assumed (64 ) (63 )
Straight-line rental income (7,651 ) (8,888 )
Bad debt expense 1,637
(1 )
Equity in income of unconsolidated joint venture —
(615 )
Return on investment from unconsolidated joint venture —
615
Impairment of real estate assets 1,658
1,430
Fair value adjustment to contingent consideration (337 ) (2,672 )
Ineffectiveness of interest rate swaps (80 ) —
Write-off of deferred financing costs 896
—
Gain on disposition of real estate assets, net (16,801 ) (2,053 )
Loss recognized on equity interest re-measured to fair value —
652
Changes in assets and liabilities:
Rents and tenant receivables 1,667
139
Prepaid expenses and other assets (1,443 ) (618 )
Accounts payable and accrued expenses 7,819
8,237
Deferred rental income and other liabilities 47
(1,404 )
Due from affiliates 54
47
Due to affiliates (1,549 ) (161 )
Net cash provided by operating activities 158,158
155,517
Cash flows from investing activities:
Investment in real estate assets and capital expenditures (309,412 ) (197,038 )
Investment in revenue bonds (2,081 ) —
Return of investment in unconsolidated joint venture —
1,033
Acquisition of unconsolidated joint venture partner's interest —
(1,626 )
Proceeds from disposition of real estate assets 97,154
25,947
Payment of property escrow deposits (11,416 ) (5,404 )
Refund of property escrow deposits 11,666
6,404
Change in restricted cash (2,962 ) (1,714 )
Net cash used in investing activities (217,051 ) (172,398 )
Cash flows from financing activities:
Redemptions of common stock (78,623 ) (83,517 )
Offering costs related to DRIP Offerings —
(66 )
Distributions to investors (69,270 ) (64,068 )
Proceeds from notes payable and credit facility 1,514,706
441,420
Repayments of credit facility and notes payable (1,300,001 ) (279,315 )
Payment of loan deposits (1,064 ) (3,378 )
Refund of loan deposits 1,064
3,378
Deferred financing costs paid (13,228 ) (3,341 )
Distributions to noncontrolling interest (214 ) (199 )
Earnout liability paid —
(1,866 )
Net cash provided by financing activities 53,370
9,048
Net decrease in cash and cash equivalents (5,523 ) (7,833 )
Cash and cash equivalents, beginning of period 9,754
26,316
Cash and cash equivalents, end of period $ 4,231
$ 18,483
CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited) — Continued


	Three Months Ended March 31,
	2023		2022
Cash flows from financing activities:
Redemptions of common stock	$	(10,548)	$	(9,689)
Distributions to stockholders	(34,684)		(30,357)
Proceeds from borrowings	53,275		903,060
Repayments of borrowings, and prepayment penalties	(519,069)		(857,815)
Termination of interest rate swaps	—		(101)


Distributions to non-controlling interests	—		(14)
Deferred financing costs paid	(3,457)		(4,550)
Net cash (used in) provided by financing activities	(514,483)		534
Net increase in cash and cash equivalents and restricted cash	437,041		93,424
Cash and cash equivalents and restricted cash, beginning of period	176,594		144,173
Cash and cash equivalents and restricted cash, end of period	$	613,635	$	237,597
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	555,245	$	165,111
Restricted cash	58,390		72,486
Total cash and cash equivalents and restricted cash	$	613,635	$	237,597
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Distributions declared and unpaid	$	15,310	$	13,339
Accrued capital expenditures	$	468	$	1,315
Construction reserve allocation	$	(190)	$	—
Accrued deferred financing costs	$	174	$	157



Mortgage notes payable assumed by buyer in connection with disposition of real estate assets	$	—	$	(19,250)


Common stock issued through distribution reinvestment plan	$	10,763	$	9,574
Change in fair value of derivative instruments	$	—	$	1,389
Change in fair value of real estate-related securities	$	(26,309)	$	(7,246)

Supplemental Cash Flow Disclosures:
Interest paid	$	63,543	$	28,622
Cash paid for taxes	$	39	$	47

The accompanying notes are an integral part of these condensed consolidated financial statements.

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~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 (Unaudited)

NOTE 1 — ORGANIZATION AND BUSINESS

~~Cole Credit Property~~CIM Real Estate Finance Trust, ~~IV,~~ Inc. (the “Company”) is a non-exchange traded real estate investment trust (“REIT”) formed as a Maryland corporation ~~incorporated~~ on July 27, 2010, that elected to be taxed, and ~~currently qualifies,~~operates its business to qualify, as a ~~real estate investment trust (“REIT”)~~REIT for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2012. The Company seeks to attain attractive risk-adjusted returns and create long term value for its investors by investing in a diversified portfolio of senior secured mortgage loans, creditworthy long-term net-leased property investments and other senior loan and liquid credit investments. As of March 31, 2023, the Company owned 228 properties, comprising approximately 6.9 million rentable square feet of commercial space located in 37 states. As of March 31, 2023, the rentable square feet at these properties was 98.9% leased, including month-to-month agreements, if any. As of March 31, 2023, the Company’s loan portfolio consisted of 349 loans with a net book value of $3.9 billion, and investments in real estate-related securities of $520.6 million. As of March 31, 2023, the Company owned condominium developments with a net book value of $131.6 million.

A majority of the Company’s business is conducted through CIM Real Estate Finance Operating Partnership, LP, a Delaware limited partnership, of which the Company is the sole general partner ~~of,~~ and owns, directly or indirectly, 100% of the partnership ~~interests in Cole Operating Partnership IV, LP, a Delaware limited partnership.~~ interests.

The Company is externally managed by ~~Cole REIT Advisors IV,~~CIM Real Estate Finance Management, LLC, ~~(“CR IV Advisors”),~~ a Delaware limited liability company ~~and~~(“CMFT Management”), which is an affiliate of CIM Group, LLC (“CIM Group”). CIM Group is a community-focused real estate and infrastructure owner, operator, lender and developer. CIM Group is headquartered in Los Angeles, CA, with offices in Atlanta, GA, Chicago, IL, Dallas, TX, New York, NY, Orlando, FL, Phoenix, AZ and Tokyo, Japan. CIM Group also maintains additional offices across the United States, as well as in Korea, Hong Kong and the United Kingdom to support its platform.

The Company relies upon CIM Capital IC Management, LLC, the Company’s investment advisor (the “Investment Advisor”), to provide substantially all of the Company’s day-to-day management with respect to investments in securities and certain other investments. Collectively, CMFT Management, the Company’s manager, and the Investment Advisor, together with certain other affiliates of CIM Group, serve as the Company’s sponsor, ~~Cole Capital~~^®, which is ~~a trade name used~~referred to refer to a group of affiliated entities directly or indirectly controlled by VEREIT, Inc. (“VEREIT”), a widely-held public company whose shares of common stock are listed on the New York Stock Exchange (NYSE: VER). VEREIT indirectly owns and/or controlsas the Company’s external advisor, CR IV Advisors, the Company’s dealer manager for the Offering (as defined below), Cole Capital Corporation (“CCC”), the Company’s property manager, CREI Advisors, LLC (“CREI Advisors”), and the Company’s sponsor, Cole Capital. “sponsor” or “CIM”.

On January 26, 2012,~~, pursuant to a Registration Statement on Form S-11 (Registration No. 333-169533) (the “Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”),~~ the Company commenced its initial public offering on a “best efforts” basis of up to a maximum of $2.975 billion in shares of common stock (the ~~“Offering”~~“Initial Offering”). On November 25, 2013, the Company reallocated $400.0 million in shares from the distribution reinvestment plan (the “DRIP”) portion of the Offering to the primary portion of the Offering, and on February 18, 2014, the Company reallocated an additional $23.0 million in shares from the DRIP portion of the Offering to the primary portion of the Offering. As a result of these reallocations, the Offering offered up to a maximum of approximately ~~292.3 million~~ ~~shares of common stock at a price of~~ ~~$10.00~~ ~~per share in the primary portion of the Offering and up to approximately~~ ~~5.5 million~~ additional shares pursuant to the DRIP portion of the Offering under which the Company’s stockholders could have elected to have distributions reinvested in additional shares of common stock at a price of ~~$9.50~~ ~~per share.~~

The Company ceased issuing shares in the Initial Offering on April 4, 2014. At the completion of the Initial Offering, a total of approximately 297.4 million shares of common stock had been issued, including approximately 292.3 million shares of common stock sold to the public pursuant to the primary portion of the Initial Offering and approximately 5.1 million shares of common stock issued pursuant to the ~~DRIP~~distribution reinvestment plan (“DRIP”) portion of the Initial Offering. The remaining approximately 404,000 unsold shares from the Initial Offering were deregistered.

The Company registered $247.0 million of shares of common stock under the DRIP (the “Initial DRIP Offering”) pursuant to a Registration Statement ~~filed~~ on Form S-3 (Registration No. 333-192958) ~~(the “Initial DRIP Offering”)~~, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 19, 2013 and automatically became effective with the SEC upon filing. The Company ceased issuing shares under the Initial DRIP Offering effective as of June 30, 2016. At the completion of the Initial DRIP Offering, a total of approximately $241.7 million of shares of common stock had been issued. The remaining $5.3 million of unsold shares from the Initial DRIP Offering were deregistered.

The Company registered an additional $600.0 million of shares of common stock under the DRIP ~~pursuant to a Registration Statement filed on Form S-3 (Registration No. 333-212832)~~ (the “Secondary DRIP Offering,” and together with the Initial DRIP Offering, the “DRIP Offerings,” and the DRIP Offerings collectively with the Initial Offering, the “Offerings”) pursuant to a Registration Statement on Form S-3 (Registration No. 333-212832), which was filed with the SEC on August 2, 2016 and automatically became effective with the SEC upon filing. The Company began to issue shares under the Secondary DRIP Offering on August 2, 2016 and ~~will continue~~continues to issue shares under the Secondary DRIP Offering.

~~On September 27, 2015, the Company announced that its~~The Company’s board of directors (the “Board”) had established an estimated value of the Company’s common stock, as of August 31, 2015, of $9.70 per share for purposes of assisting broker-dealers that participated in the Offering in meeting their customer account statement reporting obligations under National Association of Securities Dealers Conduct Rule 2340. On November 10, 2016, the Board establishedestablishes an updated estimated per share net asset value (“NAV”) of the Company’s common stock on at least an annual basis for purposes of assisting broker-dealers that participated in the Initial Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Distributions are reinvested in shares of the Company’s common stock for participants in the DRIP at the estimated per share NAV as ~~of September 30, 2016, of $9.92~~determined by the Board. Additionally, the estimated per ~~share. On March 24, 2017,~~share NAV as determined by the Board ~~established an updated~~serves as the per share NAV for purposes of the share redemption program. As of March 31, 2023, the estimated per share NAV of the Company’s common stock aswas $6.57, which was established by the Board on December 19, 2022 using a valuation date of ~~December 31, 2016, of $10.08 per share. In determining the estimated per share NAVs as of August 31, 2015,~~ September 30, ~~2016 and~~2022. Commencing on December ~~31, 2016,~~21, 2022, $6.57 served as the ~~Board considered information and analysis, including valuation materials that were provided by a third-party valuation expert, information provided by CR IV Advisors, and the estimated~~ per share NAV, ~~recommendation made by~~including for shares issued pursuant to the ~~valuation committee of the Board, which committee is comprised entirely of independent directors.~~DRIP. The Company’s estimated per share NAVs are not audited or reviewed by its independent registered public accounting firm.

~~Table of Contents~~

~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

Prior to October 1, 2015, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.50 per share. From October 1, 2015 to November 13, 2016, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.70 per share, the estimated value per share as of August 31, 2015, as determined by the Board. From November 14, 2016 to March 27, 2017, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.92 per share, the estimated per share NAV as of September 30, 2016, as determined by the Board. Commencing on March 28, 2017, distributions are reinvested in shares of the Company’s common stock under the DRIP at a price of $10.08 per share, the estimated per share NAV as of December 31, 2016, as determined by the Board.

~~As of~~ ~~September 30, 2017~~, the Company had issued approximately 336.8 million shares of its common stock in the Offerings, including 38.5 million shares issued in the DRIP Offerings, for gross offering proceeds of $3.3 billion before organization and offering costs, selling commissions and dealer manager fees of $306.0 million. As of ~~September 30, 2017~~, the Company owned 908 properties, which includes nine properties owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”), comprising 26.8 million rentable square feet of commercial space located in 45 states. As of ~~September 30, 2017, the rentable square feet at these properties was 97.5% leased, including month-to-month agreements, if any.~~

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”), in all material respects, and have been consistently applied in preparing the accompanying condensed consolidated financial statements.

Principles of Consolidation and Basis of Presentation

The condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of full year results.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, ~~2016~~,2022, and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2022. The condensed consolidated financial statements should also be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned ~~subsidiaries and the Consolidated Joint Venture in which the Company has a controlling financial interest.~~subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The Company evaluates its relationships and investments to determine if it has variable interests. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. IfIn determining whether the Company ~~determines that it~~ has ~~a variable interest~~controlling interests in an entity ~~it evaluates~~and is required to consolidate the accounts in that entity, the Company analyzes its credit and real estate investments in accordance with standards set forth in GAAP to determine whether ~~such interest is in a~~the entities are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary. The Company’s judgment with respect to its level of influence or control over an entity ~~(“VIE”). VIEs are entities where investors lack sufficient equity at risk for~~and whether the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company ~~consolidates any VIEs when it~~ is ~~determined to be~~ the primary beneficiary of a VIE involves consideration of various factors, including the ~~VIE’s operations.~~form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions. The Company’s ability to correctly assess its influence or control over an entity affects the presentation of these credit and real estate investments on the Company’s condensed consolidated financial statements.

Reclassifications

~~For legal entities~~Certain amounts in the Company’s prior period condensed consolidated financial statements have been reclassified to conform to the current period presentation. The Company has chosen to break out the details of $30.0 million of interest expense, net from other income, net into expenses in the Company’s condensed consolidated statement of operations for the three months ended March 31, 2022, driven by the Company’s current investment portfolio composition being ~~evaluated for consolidation,~~predominantly comprised of credit investments. This reclassification of interest expense, net did not have an impact on net income or cash flow from operating activities. In addition, the Company ~~must first determine whether~~has chosen to break out the ~~interests that it holds and fees it receives qualify as variable interests~~details of $2.3 million of unrealized loss on equity security from other income, net in the ~~entity. A variable~~Company’s condensed consolidated statement of operations for the three months ended March 31, 2022. The Company has also chosen to break out the details of $7.2 million of accrued interest ~~is an investment~~receivable from derivative assets, prepaid expenses and other assets in the Company’s condensed consolidated balance sheet for the three months ended March 31, 2022, which resulted in a corresponding breakout of $2.8 million from derivative assets, prepaid expenses and other assets to accrued interest receivable in the Company’s condensed consolidated statement of cash flows from the three months ended March 31, 2022. The reclassifications had no effect on previously reported totals or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a VIE.subtotals.

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~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 (Unaudited) – (Continued)

A VIE must be consolidated by its primary beneficiary, which is generally defined as the party who has a controlling financial interest in the VIE. The Company qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates any VIEs when the Company is determined to be the primary beneficiary of the VIE, and the difference between consolidating the VIE and accounting for it using the equity method could be material to the Company’s consolidated financial statements. The Company continually evaluates the need to consolidate any VIEs based on standards set forth in GAAP as described above.

~~As of September 30, 2017 and December 31, 2016, the Company determined that it had a controlling interest in the Consolidated Joint Venture and therefore met the GAAP requirements for consolidation.~~

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Real Estate ~~Investments~~Assets

Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the costs of acquisition, including acquisition-related fees and certain acquisition-related expenses, construction and any tenant improvements, major improvements and betterments that extend the useful life of the real estate assets and leasing costs. All repairs and maintenance costs are expensed as incurred. In April 2017, the Company early adopted Accounting Standards Update (“ASU”) No. 2017-01, ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~ (“ASU 2017-01”), which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company’s acquisitions qualify as asset acquisitions, and as such, acquisition-related fees and certain acquisition-related expenses related to these asset acquisitions are capitalized. Prior to the adoption of ASU 2017-01, all acquisition-related fees and expenses were expensed as incurred, and all of the Company’s acquisitions were accounted for as business combinations.

The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows:



Buildings			40 years
Site improvements			15 years
Tenant improvements			Lesser of useful life or lease term
Intangible lease assets			Lease term

Recoverability of Real Estate Assets

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Impairment indicators that the Company considers include, but are not limited ~~to,~~to: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, ~~rental~~lease concessions and other ~~factors,~~factors; a significant decrease in a property’s revenues due to lease ~~terminations, vacancies,~~terminations; vacancies; co-tenancy ~~clauses,~~clauses; reduced lease ~~rates or other circumstances.~~rates; changes in anticipated holding periods; significant increases to budgeted costs for units under development; and a reduction in prevailing market values for assets being considered for disposition. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value is determined using a discounted cash flow analysis and recent comparable sales transactions. AsDuring the three months ended March 31, 2023, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of ~~$1.7~~$4.8 million related to one property, due to the sales price being less than its respective carrying value. The Company’s impairment assessment as aof March 31, 2023 was based on the most current information available to the Company, including expected holding periods. If the Company’s expected holding periods for assets change, subsequent tests for impairment could result ~~of delinquent rental payments~~in additional impairment charges in the future. The Company cannot provide any assurance that additional material impairment charges with respect to the Company’s real estate assets will not occur during 2023 or in future periods. During the ~~nine~~three months ended ~~September 30, 2017. As part of the Company’s quarterly impairment review procedures,~~March 31, 2022, the Company recorded impairment charges of ~~$1.4~~$3.3 million related to ~~one property leased~~seven properties, all of which was due to ~~a tenant~~sales prices that ~~filed for bankruptcy during the nine months ended September 30, 2016.~~were less than their respective carrying values. The assumptions and uncertainties utilized in the evaluation of the impairment of real estate

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~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

assets are discussed in detail in Note 3 — Fair Value Measurements. See also Note 4 — Real Estate ~~Investments~~Assets for further discussion regarding real estate investment activity.

Assets Held for Sale

When a real estate asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the assets related to the property and estimate ~~the~~its fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount ~~would be~~is then recorded to reflect the estimated fair value of the property, net of selling costs. ~~During~~As of March 31, 2023, in connection with the ~~nine months ended September 30, 2017,~~Realty Income Purchase and Sale Agreement (as defined in Note 4 — Real Estate Assets), the Company identified ~~one property~~27 properties with a fair value of $65.0 million as held for ~~sale, which was sold~~sale. The Company disposed of these properties subsequent to ~~September 30, 2017,~~March 31, 2023, as further discussed in Note 1417 — Subsequent Events. ~~There~~

Dispositions of Real Estate Assets

Gains and losses from dispositions are recognized once the various criteria relating to the terms of sale and any subsequent involvement by the Company with the asset sold are met. A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect on an entity’s financial results. Given the Company’s current asset portfolio and strategy, the Company’s dispositions during the three months ended March 31, 2023 and

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

2022 did not qualify for discontinued operations presentation and thus, the results of the properties and condominiums that were ~~no assets identified as held~~sold will remain in operating income, and any associated gains or losses from the dispositions are included in gain on disposition of real estate and condominium developments, net. See Note 4 — Real Estate Assets for ~~sale as~~a discussion of ~~December~~the disposition of individual properties and condominiums during the three months ended March 31, ~~2016.~~2023.

Allocation of Purchase Price of Real Estate Assets

Upon the acquisition of real properties, the Company allocates the purchase price ~~including acquisition-related fees and certain acquisition-related expenses after the adoption of ASU 2017-01,~~ to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases and other intangibles, based in each case on their ~~respective~~relative fair values. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information.

The determination of the fair values of the real estate assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations.

Certain acquisition-related expenses related to asset acquisitions are capitalized and allocated to tangible and intangible assets and liabilities, as described above. Acquisition-related manager expense reimbursements are expensed as incurred and are included in expense reimbursements to related parties in the accompanying condensed consolidated statements of operations. Other acquisition-related expenses continue to be expensed as incurred and are included in transaction-related expenses in the accompanying condensed consolidated statements of operations.

Investment in ~~Held-to-Maturity Securities~~Unconsolidated Entities

CMFT MT JV Holdings, LLC, an indirect wholly-owned subsidiary of the Company, is engaged in an unconsolidated joint venture arrangement through CIM NP JV Holdings, LLC (“NP JV Holdings”) (the “Unconsolidated Joint Venture”), of which it owns 50% of the outstanding equity. Through the Unconsolidated Joint Venture, which holds approximately 90% of the membership interest in NewPoint JV, LLC (the “NewPoint JV”) pursuant to the terms of the Operating Agreement entered into between the Unconsolidated Joint Venture and NewPoint Bridge Lending, LLC, the Company indirectly owns approximately 45% of the outstanding equity of the NewPoint JV on a fully diluted basis. The Company ~~has investments classified~~accounts for its investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and is subsequently adjusted for the Company’s share of equity in NP JV Holdings’ earnings and distributions, including unrealized gains and losses as ~~held-to-maturity securities,~~a result of changes in fair value of the NewPoint JV. The Company records its share of NP JV Holdings’ profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations. The Company recorded a loss totaling $770,000, which ~~consist~~represented its share of ~~revenue bonds acquired~~NP JV Holdings’ loss, during the three months ended March 31, 2023 in ~~connection with~~ the ~~purchase~~condensed consolidated statements of ~~an anchored shopping center. The bonds have a 9.0% interest rate and mature on November 1, 2044.~~operations. As of ~~September 30, 2017,~~March 31, 2023, the ~~Company classified these investments as held-to-maturity as the Company has the intent and ability to hold the securities to maturity. These investments are initially recognized~~Company’s aggregate investment in ~~prepaid expenses, derivative assets, revenue bonds and other assets~~NP JV Holdings of $97.4 million is included in investment in unconsolidated entities on the condensed consolidated balance ~~sheets~~sheets. For more information, refer to Note 6 — Investment in Unconsolidated Entities.

On March 31, 2022, the Company fully redeemed its $60.7 million investment in CIM UII Onshore, L.P. (“CIM UII Onshore”). Prior to redemption, the Company had less than 5% ownership of CIM UII Onshore and ~~are subsequently measured using amortized cost.~~

accounted for its investment under the equity method. The ~~Company’s investments in revenue bonds are reviewed for impairment, including the evaluation~~equity method of ~~changes in events or circumstances that may indicate that the carrying amount of~~accounting requires the investment ~~may not~~to be ~~recoverable. Realization is dependent~~initially recorded at cost, including transaction costs incurred to finalize the investment, and subsequently adjusted for the Company’s share of equity in CIM UII Onshore’s earnings and distributions. Prior to redemption, the Company recorded its share of CIM UII Onshore’s profits or losses on a ~~number of factors, including investment performance, market conditions and payment structure. The Company will record~~quarterly basis as an ~~impairment charge if it is determined that a decline in~~adjustment to the carrying value of the investment ~~below its carrying amount~~on the Company’s consolidated balance sheet and such share is ~~other than temporary, recovery~~recognized as a profit or loss on the consolidated statements of ~~its cost basis is uncertain, and/or it is uncertain if~~operations. During the investment will be held to maturity. The analysis of determining whether the impairment of a security is deemed to be other-than-temporary requires significant judgments and assumptions. The use of alternative judgments and assumptions could result in a different conclusion.

~~Redeemable Noncontrolling Interest in Consolidated Joint Venture~~

~~On June 27, 2014,~~three months ended March 31, 2022, the Company ~~completed the formation~~recorded its share of the Consolidated Joint Venture. Pursuant to the joint venture agreement, the joint venture partner has a right to exercise an option (the “Option”), which became effective on June 27, 2016, whereby the Company will be required to purchase the ownership interest of the joint venture partner at fair market value. As of September 30, 2017, the Option has not been exercised.CIM UII Onshore’s gain totaling $5.2 million. The Company ~~determined it had a controlling interest in the Consolidated Joint Venture and, therefore, met the GAAP requirements for consolidation. The Company recorded net income of $99,000 and paid~~received distributions of ~~$214,000~~$531,000 related to ~~the noncontrolling interest during the nine months ended September 30, 2017. The Company recorded the noncontrolling interest~~its investment in CIM UII Onshore, all of ~~$2.4 million~~which was recognized as ~~temporary equity in the mezzanine section of the condensed consolidated balance sheets, due to the ability to exercise the Option being outside the control of the Company.~~

a return on investment.

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~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 (Unaudited) – (Continued)

Restricted Cash

The Company had ~~$11.0~~$58.4 million and ~~$8.0~~$57.6 million in restricted cash as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, respectively. Included in restricted cash was ~~$3.9~~$16.8 million and ~~$4.0~~$15.4 million held by lenders in lockbox accounts, as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~,2022, respectively. As part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company. Also included in restricted cash was ~~$7.1~~$22.0 million and ~~$4.0~~$22.6 million of construction reserves, amounts held by lenders in escrow accounts for real estate taxes and other lender reserves for certain properties, in accordance with the associated lender’s loan agreement as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~,2022, respectively. In addition, the Company had a $19.6 million deposit held as cash collateral included in restricted cash as of March 31, 2023 and December 31, 2022 to be applied by Barclays Bank PLC (“Barclays”) as repayment of certain eligible assets transferred under the master repurchase agreement with Barclays.

~~Revenue Recognition~~Real Estate-Related Securities

~~Certain properties have leases where minimum rental payments increase~~Real estate-related securities consists primarily of the Company’s investments in commercial mortgage-backed securities (“CMBS”) and equity securities. The Company determines the appropriate classification for real estate-related securities at the time of purchase and reevaluates such designation as of each balance sheet date.

As of March 31, 2023, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities; however, the Company may sell them prior to their maturity. These investments are carried at their estimated fair value with unrealized gains and losses reported in other comprehensive loss. During the three months ended March 31, 2023, the Company invested $9.4 million in CMBS. As of March 31, 2023, the Company had investments in 18 CMBS with an estimated aggregate fair value of $480.1 million.

In addition, the Company had an investment in an equity security with an estimated aggregate fair value of $40.5 million as of March 31, 2023, which is comprised of RTL Common Stock received as consideration in connection with the RTL Purchase and Sale Agreement (both of which are defined in Note 4 — Real Estate Assets). This investment is carried at its estimated fair value with unrealized gains and losses reported on the condensed consolidated statements of operations. During the three months ended March 31, 2023, the Company recorded $1.4 million of dividend income on RTL Common Stock, which is included in other income, net on the condensed consolidated statements of operations. The Company also recorded $2.3 million of unrealized gain and $2.4 million of unrealized loss on RTL Common Stock during the ~~term~~three months ended March 31, 2023 and 2022, respectively, which is included in unrealized gain (loss) on equity security in the condensed consolidated statements of operations.

The Company monitors its available-for-sale securities for changes in fair value. A loss is recognized when the ~~lease.~~Company determines that a decline in the estimated fair value of a security below its amortized cost has resulted from a credit loss or other factors. The Company records ~~rental~~impairments related to credit losses through current expected credit losses. However, the allowance is limited by the amount that the fair value is less than the amortized cost basis. For additional information regarding the Company’s process for estimating current expected credit losses for its real estate-related securities, see the Current Expected Credit Losses section below.

The amortized cost of real estate-related securities is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method and is recorded in the accompanying condensed consolidated statements of operations in interest income. Upon the sale of a security, the realized net gain or loss is computed on the specific identification method.

Interest earned is either received in cash or capitalized to real estate-related securities in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each security agreement. During the three months ended March 31, 2023 and 2022, the Company capitalized $284,000 and $272,000, respectively, of interest income to real estate-related securities.

Loans Held-for-Investment

The Company’s loans held-for-investment include loans related to real estate assets, as well as credit investments, including commercial mortgage loans and other loans and securities related to commercial real estate assets, as well as corporate loan opportunities that are consistent with the Company’s investment strategy and objectives. The Company intends to hold the loans held-for-investment for the ~~full term~~foreseeable future or until maturity. Loans held-for-investment are carried on the Company’s condensed consolidated balance sheets at amortized cost, net of ~~each lease~~any current expected credit losses. Discounts or

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premiums, origination fees and exit fees are amortized as a component of interest income using the effective interest method over the life of the respective loans, or on a straight-line basis when it approximates the effective interest method. Upon the sale of a loan, the realized net gain or loss is computed on the specific identification method.

Interest earned is either received in cash or capitalized to loans held-for-investment and ~~collectability~~related receivables, net in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each loan agreement.

Accrual of interest income is suspended on nonaccrual loans. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status. Interest collected is recognized on a cash basis by crediting income when received. Loans may be restored to accrual status when all principal and interest are current and full repayment of the remaining contractual principal and interest are reasonably assured. As of March 31, 2023, one of the Company’s liquid corporate senior loan investments was on a nonaccrual status with a carrying value of $2.9 million, which represented less than 1% of the carrying value of the Company’s liquid corporate senior loans portfolio.

Current Expected Credit Losses

The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), on January 1, 2020. Current expected credit losses (“CECL”) required under ASU 2016-13 reflects the Company’s current estimate of potential credit losses related to the Company’s loans held-for-investment included in the condensed consolidated balance sheets. Changes to current expected credit losses are recognized through net income on the Company’s condensed consolidated statements of operations. While ASU 2016-13 does not require any particular method for determining current expected credit losses, it does specify current expected credit losses should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan. In addition, other than a few narrow exceptions, ASU 2016-13 requires that all financial instruments subject to the credit loss model have some amount of loss reserve to reflect the GAAP principal underlying the credit loss model that all loans, debt securities, and similar assets have some inherent risk of loss, regardless of credit quality, subordinate capital, or other mitigating factors.

The Company estimates the current expected credit loss for its first mortgage loans primarily using the Weighted Average Remaining Maturity method, which has been identified as an acceptable method for estimating CECL reserves in the Financial Accounting Standards Board (“FASB”) Staff Q&A Topic 326, No. 1. This method requires the Company to reference historic loan loss data across a comparable data set and apply such loss rate to each loan investment over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral less costs to sell and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that the Company determines foreclosure is not probable, the Company applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. For the Company’s liquid corporate senior loans and corporate senior loans, the Company uses a probability of default and loss given default method using a comparable data set. The Company may use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data.

Quarterly, the Company evaluates the risk of all loans and assigns a risk rating based on a variety of factors, grouped as follows: (i) loan and credit structure, including the as-is loan-to-value (“LTV”) ratio and structural features; (ii) quality and stability of real estate value and operating cash flow, including debt yield, dynamics of the geography, property type and local market, physical condition, stability of cash flow, leasing velocity and quality and diversity of tenancy; (iii) performance against underwritten business plan; and (iv) quality, experience and financial condition of sponsor, borrower and guarantor(s).

Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows:

1-Outperform — Most satisfactory asset quality and liquidity, good leverage capacity. A “1” rating maintains predictable and strong cash flows from operations. The trends and outlook for the credit's operations, balance sheet, and industry are neutral to favorable. Collateral, if appropriate, exceeds performance metrics;

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2-Meets or Exceeds Expectations — Acceptable asset quality, moderate excess liquidity, modest leverage capacity. A “2” rating could have some financial/non-financial weaknesses which are offset by strengths; however, the credit demonstrates an ample current cash flow from operations. The trends and outlook for the credit's operations, balance sheet, and industry are generally positive or neutral. Collateral performance, if appropriate, meets or exceeds substantially all performance metrics included in original or current underwriting / business plan;

3-Satisfactory — Acceptable asset quality, somewhat strained liquidity, minimal leverage capacity. A “3” rating is at times characterized by acceptable cash flows from operations. The trends and conditions of the credit's operations and balance sheet are neutral. Collateral performance, if appropriate, meets or is on track to meet underwriting; business plan can reasonably be achieved;

4-Underperformance — The debt investment possesses credit deficiencies or potential weaknesses which deserve management’s close and continued attention. The portfolio company’s operations and/or balance sheet have demonstrated an adverse trend or deterioration which, while serious, has not reached the point where the liquidation of debt is jeopardized. These weaknesses are generally considered correctable by the borrower in the normal course of business but may weaken the asset or inadequately protect the Company’s credit position if not checked or corrected. Collateral performance, if appropriate, falls short of original underwriting, material differences exist from business plan, or both; technical milestones have been missed; defaults may exist, or may soon occur absent material improvement; and

5-Default/Possibility of Loss — The debt investment is protected inadequately by the current enterprise value or paying capacity of the obligor or of the collateral, if any. The underlying company’s operations have well-defined weaknesses based upon objective evidence, such as recurring or significant decreases in revenues and cash flows. Major variance from business plan; loan covenants or technical milestones have been breached; timely exit from loan via sale or refinancing is questionable; risk of principal loss. Collateral performance, if appropriate, is significantly worse than underwriting.

The Company generally assigns a risk rating of “3” to all newly originated or acquired loans held-for-investment during a most recent quarter, except in the case of specific circumstances warranting an exception.

In estimating credit losses related to real estate-related securities, management considers a variety of factors, including, but not limited to, the extent to which the fair value is less than the amortized cost basis, recent events specific to the security, industry or geographic area, the payment structure of the security, the failure of the issuer of the security to make scheduled interest or principal payments, and external credit ratings and recent changes in such ratings.

Leases

The Company has lease agreements with lease and non-lease components. The Company has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as rental and other property income. Non-lease components included in rental and other property income include certain tenant reimbursements for maintenance services (including common-area maintenance services or “CAM”), real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. As a lessor, the Company has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. The Company is not a party to any material leases where it is the lessee.

Significant judgments and assumptions are inherent in not only determining if a contract contains a lease, but also the lease classification, terms, payments, and, if needed, discount rates. Judgments include the nature of any options, including if they will be exercised, evaluation of implicit discount rates and the assessment and consideration of “fixed” payments for straight-line rent revenue calculations.

Lease costs represent the initial direct costs incurred in the origination, negotiation and processing of a lease agreement. Such costs include outside broker commissions and other independent third-party costs and are amortized over the life of the lease on a straight-line basis. Costs related to salaries and benefits, supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are expensed as incurred. Upon successful lease execution, leasing commissions are capitalized.

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Development Activities

Project costs and expenses, including interest incurred, associated with the development, construction and lease-up of a real estate project are capitalized as construction in progress. During the three months ended March 31, 2023 and 2022, the Company capitalized $2.7 million and $3.1 million, respectively, of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets. Included in the amounts capitalized during the three months ended March 31, 2023 and 2022 was $458,000 and $387,000, respectively, of capitalized interest expense.

Revenue Recognition

Revenue from leasing activities

Rental and other property income is primarily derived from fixed contractual payments from operating leases, and therefore, is generally recognized on a straight-line basis over the term of the lease, which typically begins the date the tenant takes control of the space. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. Variable rental and other property income consists primarily of tenant reimbursements for recoverable real estate taxes and operating expenses which are included in rental and other property income in the period when such costs are incurred, with offsetting expenses in real estate taxes and property operating expenses, respectively, within the condensed consolidated statements of operations. The Company defers the recognition of ~~contingent~~variable rental and other property income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. ~~Expected reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursement income in the period when such costs are incurred.~~

The Company continually reviews whether collection of lease-related receivables, ~~related to rent,~~ including any straight-line rent, and current and future operating expense reimbursements from tenants ~~and determines~~are probable. The determination of whether collectability ~~by taking~~is probable takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. InUpon the ~~event~~determination that the collectability of a receivable is ~~uncertain,~~not probable, the Company will record ~~an increase~~a reduction to rental and other property income for amounts previously recorded and a decrease in the ~~allowance~~outstanding receivable. Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of lease-related receivables is based on the best information available at the time of estimate. The Company does not use a general reserve approach and lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable.

Revenue from lending activities

Interest income from the Company’s loans held-for-investment and real estate-related securities is comprised of interest earned on loans and the accretion and amortization of net loan origination fees and discounts. Interest income on loans is accrued as earned, with the accrual of interest suspended when the related loan becomes a nonaccrual loan. Interest income on the Company’s liquid corporate senior loans is accrued as earned beginning on the settlement date.

Reportable Segments

The Company’s segment information reflects how the chief operating decision makers review information for ~~uncollectible accounts. As of September 30, 2017~~operational decision-making purposes. The Company has two reportable segments:

Credit — engages primarily in acquiring and ~~December 31, 2016, the Company had an allowance~~originating primarily floating rate first and second lien mortgage loans, either directly or through co-investments in joint ventures, related to real estate assets. This segment also includes investments in real estate-related securities, liquid corporate senior loans and corporate senior loans.

Real estate — engages primarily in acquiring and managing geographically diversified income-producing retail, industrial and office properties that are primarily single-tenant properties, which are leased to creditworthy tenants under long-term net leases.

See Note 16 — Segment Reporting for ~~uncollectible accounts of $1.4 million and $221,000, respectively.~~a further discussion regarding these segments.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect

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that certain ~~of these~~ new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial ~~statements:~~statements.

~~In May 2014,~~On March 31, 2022, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2022-02, Troubled Debt Restructurings and Vintage Disclosures (Topic ~~606)~~326) (“ASU ~~2014-09”~~2022-02”)~~, which supersedes~~. ASU 2022-02 eliminates the ~~revenue~~ recognition ~~requirements in Revenue Recognition, Accounting Standards Codification~~and measurement guidance for troubled debt restructurings (“~~ASC”~~TDRs”) ~~(Topic 605)~~ and, ~~will require~~instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The ASU also enhances existing disclosure requirements and introduces new requirements related to ~~recognize revenue in a way that depicts~~certain modifications of receivables made to borrowers experiencing financial difficulty. The ASU became effective for the ~~transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects~~Company beginning January 1, 2023 and is generally to be ~~entitled in exchange for those goods or services. For public business entities, the guidance should be~~ applied to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Companies may use either a full retrospective or a modified retrospective approach to adoptprospectively. ASU 2014-09. The Company plans to use the modified retrospective approach to adopt ASU 2014-09. In accordance with the Company’s plan for the adoption of ASU 2014-09, the Company’s implementation team has identified the Company’s revenue streams, performed2022-02 did not have an ~~in-depth review of the Company’s revenue contracts and identified the related performance obligations and is evaluating the~~ impact on the Company’s condensed consolidated financial statements ~~and internal accounting processes and controls. Once ASU No. 2016-02,~~ ~~Leases~~ ~~(Topic 842) (“ASU 2016-02”), which, as discussed below, sets forth principles~~ for the ~~recognition, measurement, presentation and disclosure of leases, goes into effect, ASU 2014-09 may apply to non-lease components in the lease agreements.~~three months ended March 31, 2023.

In ~~February 2016,~~June 2022, the FASB issued ASU ~~2016-02, which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term~~No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of more than 12 months, with the result being the recognition of a right of use asset and a lease liability and the disclosure of key information about the entity’s leasing arrangements. The lessor accounting model under ASU 2016-02 is similarEquity Securities Subject to ~~current guidance; however it limits the capitalization of initial direct leasing costs, such as internally generated costs. ASU 2016-02 retains a distinction between finance leases (i.e.,~~ capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP.Contractual Sale Restrictions. The amendments in ~~ASU 2016-02~~this update clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new disclosure requirements related to such equity securities. The amendments are effective for fiscal years beginning after December 15, ~~2018, including interim periods within those fiscal years, with early adoption permitted. A modified retrospective approach is required for existing~~

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leases that have not expired upon adoption and provides for certain practical expedients. The Company’s implementation team has developed an inventory of all leases and is identifying any non-lease components in the lease agreements and is evaluating the impact to the Company, both as lessor and lessee, and its consolidated financial statements. Upon the adoption of ASU 2016-02, the Company will record certain expenses paid directly by a tenant that protect the Company’s interests in its properties, such as insurance and real estate taxes, and the related operating expense reimbursement revenue, with no impact on net income. Based upon a preliminary analysis, the Company does not expect the accounting for leases pursuant to which the Company is the lessor to materially change as a result of the adoption of ASU 2016-02. The Company does not expect the accounting for one ground lease pursuant to which the Company is the lessee to have a material impact on its consolidated financial statements.

~~ASU No. 2016-01,~~ ~~Financial Instruments (Subtopic 825-10)~~ — The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income (loss) the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the consolidated balance sheets or the accompanying notes to the consolidated financial statements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments – Credit Losses~~ (Topic 326) (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows(Topic 230): Classification of Certain Cash Receipts and Cash Payments~~ (“ASU 2016-15”), which is intended to address diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively as of the earliest date practicable. The Company plans to adopt ASU 2016-15 during the fourth quarter of fiscal year 2017 and has determined that this standard is relevant to its presentation of debt prepayment and debt extinguishment costs and contingent consideration payments made after a business combination.

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ (“ASU 2016-18”), which provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. In accordance with ASU 2016-18, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of ASU 2016-18 are effective for reporting periods beginning after December 15, 2017,2023, with early adoption permitted. The Company ~~plans to adopt ASU 2016-18 during~~is currently evaluating the ~~fourth quarter~~impact of ~~2017 and apply the standard retrospectively for all periods presented. The Company does not expect it will have a material impact~~this guidance on its condensed consolidated financial statements.

~~In February 2017, the FASB issued ASU No. 2017-05,~~ Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), which clarifies the following: (1) nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty; (2) an entity should allocate consideration to each distinct asset by applying the guidance in Topic 606 on allocating the transaction price to performance obligations; and (3) entities are required to derecognize a distinct nonfinancial asset or distinct in substance nonfinancial asset in a partial sale transaction when it (a) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with Subtopic 810 and (b) transfers control of the asset in accordance with Topic 606. The adoption of this standard may result in higher gains on the sale of partial real estate interests, including contributions of

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nonfinancial assets to a joint venture or other noncontrolling investee, due to recognizing the full gain when the derecognition criteria are met and recording the retained noncontrolling interest at its fair value. ASU 2017-05 is effective for annual periods, and interim periods therein, beginning after December 15, 2017. Early adoption is permitted.

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~ (“ASU 2017-12”). The targeted amendments in this ASU help simplify certain aspects of hedge accounting and result in a more accurate portrayal of the economics of an entity’s risk management activities in its financial statements. This ASU applies to the Company’s interest rate swaps designated as cash flow hedges. Upon adoption of this ASU, all changes in the fair value of highly effective cash flow hedges will be recorded in accumulated other comprehensive income rather than recognized directly in earnings. Under current U.S. GAAP, the ineffective portion of the change in fair value of cash flow hedges is recognized directly in earnings. This eliminates the requirement to separately measure and disclose ineffectiveness for qualifying cash flow hedges. ASU 2017-12 is effective for public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The ASU is required to be adopted using a modified retrospective approach with early adoption permitted. The Company plans to adopt ASU 2017-12 during the first quarter of fiscal year 2018 and does not expect that it will have a material impact on its consolidated financial statements.

NOTE 3 — FAIR VALUE MEASUREMENTS

GAAP defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows:

Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs).

Level 3 — Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability.

The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities:

~~Notes~~Real estate-related securities — The Company generally determines the fair value of its real estate-related securities by utilizing broker-dealer quotations, reported trades or valuation estimates from pricing models to determine the reported price. Pricing models for real estate-related securities are generally discounted cash flow models that usually consider the attributes applicable to a particular class of security (e.g., credit rating, seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available. Depending upon the significance of the fair value inputs used in determining these fair values, these securities are valued using Level 1, Level 2 or Level 3 inputs. As of March 31, 2023, the Company concluded that $307.5 million of its CMBS fell under Level 2 and $172.6 million of its CMBS fell under Level 3.

The Company’s equity security investment is valued using Level 1 inputs. The estimated fair value of the Company’s equity security is based on quoted market prices that are readily and regularly available in an active market.

Credit facilities and notes payable ~~and credit facility~~ — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying

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and fair values exclude net deferred financing costs. These financial instruments are valued using Level 2 inputs. As of ~~September 30, 2017,~~March 31, 2023, the estimated fair value of the Company’s debt was ~~$2.48~~$3.86 billion, compared to ~~the~~a carrying value of ~~$2.47~~$3.98 billion. The estimated fair value of the Company’s debt as of December 31, ~~2016~~2022 was ~~$2.25~~$4.32 billion, compared to ~~the~~a carrying value of ~~$2.26~~$4.44 billion.

Derivative instruments — The Company’s derivative instruments are comprised of interest rate ~~swaps.~~caps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not

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~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

~~Contingent consideration arrangements~~Loans held-for-investment — The ~~contingent consideration arrangements~~Company’s loans held-for-investment are ~~carried~~recorded at ~~fair value~~cost upon origination and ~~are valued using Level 3 inputs.~~adjusted by net loan origination fees and discounts. The Company estimates the fair value of ~~additional~~its loans held-for-investment by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration ~~paid in connection with~~ the acquisition of properties subject to contingent consideration arrangements is determined based on key assumptions, including, but not limited to, rental rates, discount rates and the estimated timing and probability of successfully leasing vacant space subsequent to the Company’s acquisition of certain properties.

~~Revenue bonds~~ —credit risk. The fair value estimates of the Company’s revenue bonds are based on assumptions that management believes market participants would use in pricing, using widely accepted valuation techniques including discounted cash flow analysis. This analysis reflects the contractual terms of the bonds, including the period to maturity, and uses unobservable market-based inputs, including discount rates ranging from 7.75% to 9.0%. As a result, the Company has determined that its ~~revenue bonds~~commercial real estate (“CRE”) loans held-for-investment and corporate senior loans are classified in Level 3 of the fair value hierarchy. The Company’s liquid corporate senior loans are classified as Level 2 or Level 3 depending on the number of market quotations or indicative prices from pricing services that are available, and whether the depth of the market is sufficient to transact at those prices in amounts approximating the Company’s investment position at the measurement date. As of ~~September 30, 2017,~~March 31, 2023, $542.2 million and $129.5 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of December 31, 2022, $494.4 million and $168.0 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of March 31, 2023, the estimated fair value of the Company’s ~~revenue bonds~~loans held-for-investment and related receivables, net was ~~$2.1 million.~~$3.91 billion, compared to its carrying value of $3.93 billion. As of December 31, 2022, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $3.98 billion, compared to its carrying value of $4.00 billion.

Other financial instruments—The Company considers the carrying values of its cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses, other liabilities, due to affiliates and distributions payable ~~in order~~ to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments.

Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liable for, upon disposition of the financial assets and liabilities. AsThe Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. The Company does not expect that changes in classifications between levels will be frequent.

Table of ~~September 30, 2017 and December~~Contents

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2016, there have been no transfers of financial assets or liabilities between fair value hierarchy levels.~~2023 (Unaudited) – (Continued)

Items Measured at Fair Value on a Recurring Basis

In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets ~~and liabilities~~ that are required to be measured at fair value on a recurring basis as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~2022 (in thousands):

Balance as of
September 30, 2017
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Financial assets:
Interest rate swaps $ 3,178
$ —
$ 3,178
$ —
Total financial assets $ 3,178
$ —
$ 3,178
$ —
Financial liabilities:
Interest rate swaps $ (3,440 ) $ —
$ (3,440 ) $ —
Total financial liabilities $ (3,440 ) $ —
$ (3,440 ) $ —

Balance as of
December 31, 2016
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Financial assets:
Interest rate swaps $ 2,327
$ —
$ 2,327
$ —
Total financial assets $ 2,327
$ —
$ 2,327
$ —
Financial liabilities:
Interest rate swaps $ (3,351 ) $ —
$ (3,351 ) $ —
Contingent consideration (337 ) —
—
(337 )
Total financial liabilities $ (3,688 ) $ —
$ (3,351 ) $ (337 )


	Balance as of March 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
CMBS	$	480,133	$	—	$	307,507	$	172,626
Equity security	40,506		40,506		—		—
Interest rate caps	3,080		—		3,080		—

Total financial assets	$	523,719	$	40,506	$	310,587	$	172,626

~~Table of Contents~~

~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~


	Balance as of December 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
CMBS	$	538,142	$	—	$	348,241	$	189,901

Equity security	38,249		38,249		—		—
Interest rate caps	5,040		—		5,040		—
Total financial assets	$	581,431	$	38,249	$	353,281	$	189,901

The following are reconciliations of the changes in financial assets ~~and liabilities~~ with Level 3 inputs in the fair value hierarchy for the ~~nine~~three months ended ~~September 30, 2017 and 2016~~March 31, 2023 (in thousands):

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning Balance, December 31, 2016 $ (337 )
Purchases and fair value adjustments:
Purchases 2,081
Fair value adjustments 337
Ending Balance, September 30, 2017 $ 2,081

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning Balance, December 31, 2015 $ (4,538 )
Purchases and fair value adjustments:
Purchases (332 )
Fair value adjustments 2,672
Payments made 1,866
Ending Balance, September 30, 2016 $ (332 )


	Level 3
Beginning Balance, January 1, 2023	$	189,901
Total gains and losses:
Unrealized loss included in other comprehensive loss, net	(21,911)
Purchases and payments received:


Discounts, net	4,352
Capitalized interest income	284


Ending Balance, March 31, 2023	$	172,626

Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges)

Certain financial and nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The Company’s process for identifying and recording impairment related to real estate assets and intangible assets is discussed in Note 2 — Summary of Significant Accounting Policies.

As discussed in Note 4 — Real Estate ~~Investments,~~Assets, during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, real estate assets related to one property ~~totaling approximately 5,000 square feet were~~was deemed to be impaired and its carrying value was reduced to an estimated fair value of ~~$1.0~~$4.8 million, resulting in impairment charges of ~~$1.7~~$4.8 million. During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2022, real estate assets related to ~~one property totaling approximately 7,000 square feet~~seven properties were deemed to be impaired and ~~its~~their carrying ~~value was~~values were reduced to an estimated fair value of ~~$1.4~~$29.1 million, resulting in impairment charges of ~~$1.4~~$3.3 million. The Company estimates fair values using Level 3 inputs and ~~using~~ a combined income and market approach, specifically using discounted cash flow analysis and recent comparable sales transactions. The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgment and to make certain key assumptions, including, but not limited to, the following: (1) terminal ~~capitalization;~~capitalization rates; (2) discount rates; (3) the number of years the property will be held; (4) property operating expenses; and (5) re-leasing assumptions, including the number of months to re-lease, market rental income and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and the future performance and sustainability of the Company’s tenants. The Company determined that the selling prices used to determine the fair values were Level 2 inputs.

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The following summarizes the ranges of discount rates and terminal capitalization rates used for the Company’s impairment test for the real estate assets during the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

2023

2022

Discount Rate

Terminal Capitalization Rate

Discount Rate

Terminal Capitalization Rate

9.7%

7.5% – 9.2%

8.0% – 9.7%

7.5% – 9.2%

The following table presents the impairment charges by asset class recorded during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (in thousands):


	Three Months Ended March 31,
	2023		2022
Asset class impaired:
Land	$	1,144	$	964
Buildings, fixtures and improvements	3,652		1,974
Intangible lease assets	18		354

Intangible lease liabilities	—		(1)

Total impairment loss	$	4,814	$	3,291

Nine Months Ended September 30,
2017 2016
Asset class impaired:
Land 375
$ 502
Buildings, fixtures and improvements 887
713
Intangible lease assets 396
215
Total impairment loss $ 1,658
$ 1,430

~~Table of Contents~~

~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

NOTE 4 — REAL ESTATE ~~INVESTMENTS~~ASSETS

~~2017~~ Property Acquisitions

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023 and 2022, the Company ~~acquired~~ 40 ~~commercial properties for an aggregate purchase price of $300.5 million (the “2017 Acquisitions”), of which~~ 36 ~~were determined to be asset acquisitions and~~ ~~four~~ ~~were accounted for as business combinations as they were acquired prior to~~did not acquire any properties.

Condominium Development Project

During the ~~adoption of ASU 2017-01 in April 2017. The Company funded the~~ ~~2017~~ ~~Acquisitions with net cash provided by operations and available borrowings.~~

~~The following table summarizes the consideration transferred for the properties purchased during the nine~~three months ended ~~September 30, 2017 (in thousands):~~

2017 Acquisitions
Investments in real estate:
Purchase price of asset acquisitions $ 245,138
Purchase price of business combinations 55,386
Total purchase price of real estate investments acquired ⁽¹⁾
$ 300,524

~~______________________~~


~~(1)~~	The weighted average amortization period for the 2017 Acquisitions is 16.6 years for acquired in-place leases and other intangibles, 13.6 years for acquired above-market leases and 8.5 years for acquired intangible lease liabilities.

~~During the nine months ended September 30, 2017,~~March 31, 2023 and 2022, the Company capitalized $2.7 million and $3.1 million, respectively, of expenses associated with the development of condominiums acquired ~~a 100% interest in~~ 36 ~~commercial properties for an aggregate purchase price of~~ ~~$245.1 million~~, which were accounted for as asset acquisitions (the “2017 Asset Acquisitions”). The aggregate purchase price includes $5.9 million of external acquisition-related expenses that were capitalized in accordance with ASU 2017-01. Prior to the adoption of ASU 2017-01, costs related to property acquisitions were expensed as incurred. The following table summarizes the purchase price allocation for the 2017 Asset Acquisitions purchased during the nine months ended September 30, 2017 (in thousands):

2017 Asset Acquisitions
Land $ 32,583
Buildings, fixtures and improvements 173,681
Acquired in-place leases and other intangibles 36,733
Acquired above-market leases 3,624
Revenue bonds 2,081
Intangible lease liabilities (3,564 )
Total purchase price $ 245,138

~~During the nine months ended September 30, 2017, the Company acquired a 100% interest in four commercial properties for an aggregate purchase price of~~ ~~$55.4 million~~, which were accounted for as business combinations (the “2017 Business Combination Acquisitions”). The purchase price allocation for each of the Company’s 2017 Business Combination Acquisitions is preliminary and subject to change as the Company finalizes the allocations, which the Company expects will be prior to the end of the current fiscal year. The Company preliminarily allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the preliminary purchase price allocations for the 2017 Business Combination Acquisitions purchased during the nine months ended September 30, 2017 (in thousands):

2017 Business Combination Acquisitions
Land $ 9,873
Buildings, fixtures and improvements 41,186
Acquired in-place leases and other intangibles 5,974
Acquired above-market leases 988
Intangible lease liabilities (2,635 )
Total purchase price $ 55,386

~~Table of Contents~~

~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

~~The Company recorded revenue for the three and nine months ended September 30, 2017 of~~ ~~$1.3 million~~ ~~and~~ ~~$3.6 million, respectively, and~~ ~~net income~~ of ~~$491,000~~ ~~and~~ ~~$163,000~~ for the three and nine months ended September 30, 2017, respectively, related to the 2017 Business Combination Acquisitions. In addition, the Company recorded $1.3 million of acquisition-related expenses for the nine months ended September 30, 2017,via foreclosure, which is included in ~~acquisition-related expenses~~condominium developments in the accompanying condensed consolidated balance sheets.

Condominium Dispositions

During the three months ended March 31, 2023, the Company disposed of one condominium unit for a sales price of $1.6 million, resulting in proceeds of $1.5 million after closing costs and a gain of $60,000. During the three months ended March 31, 2022, the Company disposed of condominium units for an aggregate sales price of $21.1 million, resulting in proceeds of $19.4 million after closing costs and a gain of $3.3 million. The Company has no continuing involvement that would preclude sale treatment with these condominium units. The gain on sale of condominium units is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

~~The following information summarizes selected financial information~~2023 Property Dispositions and Real Estate Assets Held for Sale

On December 29, 2022, certain subsidiaries of the Company ~~as if all~~entered into an Agreement of ~~the 2017 Business Combination Acquisitions were completed on January 1, 2016~~Purchase and Sale (the “Realty Income Purchase and Sale Agreement”) with certain subsidiaries of Realty Income Corporation (NYSE: O) (“Realty Income”), to sell to Realty Income 185 single-tenant net lease properties encompassing approximately 4.6 million gross rentable square feet of commercial space across 34 states for ~~each period presented below.~~total consideration of $894.0 million. The ~~table below presents the Company’s estimated revenue and net income, on a pro forma basis, for the three and nine months ended September 30, 2017 and 2016, respectively (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Pro forma basis:
Revenue $ 107,024
$ 103,140
$ 316,619
$ 306,864
Net income $ 29,736
$ 18,374
$ 65,114
$ 56,740

~~The pro forma information for the nine months ended September 30, 2017 was adjusted~~consideration is to ~~exclude~~ ~~$1.3 million~~ ~~of acquisition-related fees and expenses recorded during such periods related to the 2017 Business Combination Acquisitions. Accordingly, these expenses were instead recognized~~be paid in ~~the pro forma information for the nine months ended September 30, 2016.~~

The pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of 2016, nor does it purport to represent the results of future operations.

~~2017 Property Dispositions~~cash.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, the Company disposed of 14152 properties, including 150 retail properties and two industrial properties, for an aggregate gross sales price of ~~$98.6~~$781.2 million, resulting in proceeds of ~~$64.1~~$773.7 million after closing costs and a gain of $19.6 million. The sale of 151 of these properties closed pursuant to the ~~repayment~~Realty Income Purchase and Sale Agreement for total consideration of ~~the $33.0~~$779.0 million, ~~variable rate debt secured by one~~resulting in proceeds of ~~the disposed properties~~$771.5 million after closing costs and a gain of ~~$16.8~~$19.5 million. ~~No disposition fees were paid to CR IV Advisors or its affiliates in connection with the sale of the properties and the~~The Company has no continuing involvement that would preclude sale treatment with these properties. The gain on sale of real estate is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

~~2017 Impairment~~

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

As of March 31, 2023, the Company identified 27 properties with a fair value of $65.0 million as held for sale, all of which are in connection with the Realty Income Purchase and Sale Agreement. The Company disposed of these properties subsequent to March 31, 2023, as further discussed in Note 17 — Subsequent Events.

2022 Property Dispositions and Real Estate Assets Held for Sale

On December 20, 2021, certain subsidiaries of the Company entered into an Agreement of Purchase and Sale, as amended (the “RTL Purchase and Sale Agreement”), with American Finance Trust, Inc. (now known as The Necessity Retail REIT, Inc.) (NASDAQ: RTL) (“RTL”), American Finance Operating Partnership, L.P. (now known as The Necessity Retail REIT Operating Partnership, L.P.) (“RTL OP”), and certain of their subsidiaries (collectively, the “Purchaser”) to sell to the Purchaser 79 shopping centers and two single-tenant properties encompassing approximately 9.5 million gross rentable square feet of commercial space across 27 states for total consideration of $1.32 billion (the “Purchase Price”). The Purchase Price includes the Purchaser’s option to seek the assumption of certain existing debt, and Purchaser’s issuance of up to $53.4 million in value of RTL’s Class A common stock, par value $0.01 per share (“RTL Common Stock”), or Class A units in RTL OP (“RTL OP Units”), subject to certain limits described more fully in the RTL Purchase and Sale Agreement.

During the three months ended March 31, 2022, the Company disposed of 69 properties, including 32 retail properties and 37 anchored shopping centers, for an aggregate gross sales price of $925.3 million, resulting in proceeds of $923.2 million after closing costs and a gain of $29.2 million. The sale of 56 of these properties closed pursuant to the RTL Purchase and Sale Agreement for total consideration of $811.8 million, which consisted of $758.4 million in cash proceeds and $53.4 million of RTL Common Stock, which shares are subject to certain registration rights as described in the RTL Purchase and Sale Agreement. During the three months ended March 31, 2022, the Company recognized earnout income of $31.5 million related to the disposition of these properties pursuant to the RTL Purchase and Sale Agreement, and recorded a related receivable of $21.3 million in prepaid expenses and other assets in the condensed consolidated balance sheets. The Company has no continuing involvement with these properties. The gain on sale of real estate, including the earnout income, is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

As of March 31, 2022, the Company identified 26 properties with a carrying value of $487.5 million as held for sale, 25 of which are in connection with the RTL Purchase and Sale Agreement. The Company disposed of these properties in phases subsequent to March 31, 2022.

Impairment

The Company performs quarterly impairment review procedures, primarily through continuous monitoring of events and changes in circumstances that could indicate that the carrying value of certain of its real estate assets may not be recoverable. See Note 2 — Summary of Significant Accounting Policies for a discussion of the Company’s accounting policies regarding impairment of real estate assets.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, one property totaling approximately 45,000 square feet with a carrying value of ~~$2.7~~$9.6 million was deemed to be impaired and its carrying value was reduced to an estimated fair value of ~~$1.0~~$4.8 million, resulting in impairment charges of ~~$1.7~~$4.8 million, which were recorded in the condensed consolidated statements of operations.

During the three months ended March 31, 2022, seven properties totaling approximately 215,000 square feet with a carrying value of $32.4 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $29.1 million, resulting in impairment charges of $3.3 million, which were recorded in the condensed consolidated statements of operations.

See Note 3 — Fair Value Measurements for a further discussion regarding these impairment charges.

Table of Contents

~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 (Unaudited) – (Continued)

~~2016 Property Acquisitions~~

~~During the nine months ended September 30, 2016, the Company acquired 14 commercial properties for an aggregate purchase price of $197.0 million (the “2016~~ Acquisitions”). The 2016 Acquisitions were accounted for as business combinations. The Company funded the 2016 Acquisitions with net proceeds from the Initial DRIP Offering, net cash provided by operations and available borrowings. The Company allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the purchase price allocations for the 2016 Acquisitions (in thousands):

2016 Acquisitions
Land $ 45,741
Buildings, fixtures and improvements 134,375
Acquired in-place leases and other intangibles ⁽¹⁾
16,807
Acquired above-market leases ⁽²⁾
3,398
Intangible lease liabilities ⁽³⁾
(3,295 )
Total purchase price $ 197,026


~~(1)~~	~~The weighted average amortization period for acquired in-place leases and other intangibles was 7.2 years for the 2016 Acquisitions.~~


~~(2)~~	~~The weighted average amortization period for acquired above-market leases was 5.2 years for the 2016 Acquisitions.~~


~~(3)~~	~~The weighted average amortization period for acquired intangible lease liabilities was 6.1 years for the 2016 Acquisitions.~~

The Company recorded revenue for the three and nine months ended September 30, 2016 of $3.4 million and $5.3 million, respectively, and a net loss for the three and nine months ended September 30, 2016 of $313,000 and $2.1 million, respectively, related to the ~~2016~~ ~~Acquisitions.~~

The following information summarizes selected financial information of the Company as if all of the 2016 Acquisitions were completed on January 1, 2015 for each period presented below. The table below presents the Company’s estimated revenue and net income, on a pro forma basis, for the three and nine months ended September 30, 2016 and 2015, respectively (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Pro forma basis:
Revenue $ 103,315
$ 98,982
$ 311,312
$ 284,660
Net income $ 17,973
$ 18,728
$ 58,777
$ 51,839

The pro forma information for the three and nine months ended September 30, 2016 was adjusted to exclude $1.4 million and $3.6 million, respectively, of acquisition-related fees and expenses recorded during the three and nine months ended September 30, 2016. Accordingly, these costs were instead recognized in the pro forma information for the three and nine months ended September 30, 2015.

The pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of 2015, nor does it purport to represent the results of future operations.

~~2016 Property Dispositions~~

During the nine months ended September 30, 2016, the Company disposed of three retail properties and one anchored shopping center for an aggregate gross sales price of $26.6 million, resulting in proceeds of $25.9 million after closing costs and a gain of $2.1 million. No disposition fees were paid to CR IV Advisors or its affiliates in connection with the sale of the properties and the Company has no continuing involvement with these properties. The gain on sale of real estate is included in gain on disposition of real estate, net in the consolidated statements of operations.

~~Table of Contents~~

~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

~~2016 Impairment of a Property~~

During the nine months ended September 30, 2016, one property with a carrying value of $2.8 million was deemed to be impaired and its carrying value was reduced to an estimated fair value of $1.4 million, resulting in impairment charges of $1.4 million, which were recorded in the condensed consolidated statements of operations.

~~2016 Unconsolidated Joint Venture~~

During the nine months ended September 30, 2016, the Company acquired the partner’s (the “Unconsolidated Joint Venture Partner”) approximately 10% interest in a multi-tenant property comprising 176,000 rentable square feet of commercial space (the “Unconsolidated Joint Venture”). The Company has determined that this transaction qualified as a business combination to be accounted for under the acquisition method. Accordingly, the assets and liabilities of this transaction were recorded in the Company’s condensed consolidated balance sheets at their estimated fair value as of the acquisition date. The fair value of the assets acquired, liabilities assumed and equity interests were estimated using significant assumptions consistent with the Company’s policy concerning the allocation of the purchase price of real estate assets, including current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The results of this transaction are included in the Company’s condensed consolidated statements of operations beginning September 22, 2016.

The following table summarizes the transaction related to the business combination, including the preliminary amounts recognized for assets acquired and liabilities assumed, as indicated (in thousands):

September 22, 2016
Carrying value of the Company’s equity interest before business combination ⁽¹⁾
$ 18,952
Fair value of amounts recognized for assets acquired and liabilities assumed:
Land 4,685
Buildings, fixtures and improvements 11,615
Acquired in-place leases and other intangibles 1,340
Acquired above-market leases 1,168
Intangible lease liabilities (618 )
Other assets and liabilities 110
Total net assets 18,300
Loss recognized on equity interest re-measured to fair value $ (652 )

~~(1) Includes $1.6 million of cash paid to the Unconsolidated Joint Venture Partner.~~

~~Consolidated Joint Venture~~

As of September 30, 2017, the Company had an interest in a Consolidated Joint Venture that owns and manages nine properties, with total assets of $52.7 million, which included $52.1 million of real estate assets, net of accumulated depreciation and amortization of $4.8 million, and total liabilities of $769,000. The Consolidated Joint Venture ~~does not have any~~ debt outstanding as of September 30, 2017. The Company has the ability to control operating and financial policies of the Consolidated Joint Venture. There are restrictions on the use of these assets as the Company would generally be required to obtain the partner’s (the “Consolidated Joint Venture Partner”) approval in accordance with the joint venture agreement for any major transactions. The Company and the Consolidated Joint Venture Partner are subject to the provisions of the joint venture agreement, which includes provisions for when additional contributions may be required to fund certain cash shortfalls.

~~Table of Contents~~

~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES

Intangible lease assets and liabilities consisted of the following as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~2022 (in thousands, except weighted average life remaining):

September 30, 2017 December 31, 2016
In-place leases and other intangibles, net of accumulated amortization of $155,772 and $125,620, respectively (with a weighted average life remaining of 10.6 and 10.7 years, respectively)
$ 363,977
$ 364,038
Acquired above-market leases, net of accumulated amortization of $23,888 and $18,723, respectively
(with a weighted average life remaining of 8.8 and 8.9 years, respectively) 43,552
44,768
$ 407,529
$ 408,806


	March 31, 2023		December 31, 2022
Intangible lease assets:
In-place leases and other intangibles, net of accumulated amortization of $46,214 and $86,881, respectively (with a weighted average life remaining of 11.7 years and 11.1 years, respectively)
	$	110,887	$	174,954
Acquired above-market leases, net of accumulated amortization of $2,773 and $4,210, respectively (with a weighted average life remaining of 11.7 years and 12.9 years, respectively)
	4,262		10,639
Total intangible lease assets, net	$	115,149	$	185,593
Intangible lease liabilities:
Acquired below-market leases, net of accumulated amortization of $4,221 and $5,575, respectively (with a weighted average life remaining of 12.8 years and 12.4 years, respectively)
	$	14,269	$	19,054

Amortization of the above-market leases is recorded as a reduction to rental ~~revenue,~~and other property income, and amortization expense for the in-place leases and other intangibles is included in depreciation and amortization in the accompanying condensed consolidated statements of operations. Amortization of below-market leases is recorded as an increase to rental and other property income in the accompanying condensed consolidated statements of operations.

The following table summarizes the amortization ~~expense~~ related to the intangible lease assets and liabilities for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~September 30, 2016~~2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
	2017		2016		2017		2016			2023		2022
In-place lease and other intangible amortization	$	12,567	$	11,055	$	35,402	$	34,486	In-place lease and other intangible amortization	$	5,082	$	6,786
Above-market lease amortization	$	1,877	$	1,705	$	5,498	$	4,901	Above-market lease amortization	$	234	$	316
Below-market lease amortization									Below-market lease amortization	$	433	$	579

As of ~~September 30, 2017,~~March 31, 2023, the estimated amortization ~~expense~~ relating to the intangible lease assets ~~for each of the five succeeding fiscal years~~and liabilities is as follows (in thousands):


	Amortization
	In-Place Leases and Other Intangibles		Above-Market Leases		Below-Market Leases
Remainder of 2023	$	9,139	$	348	$	915
2024	11,694		424		1,126
2025	11,300		424		1,120
2026	10,092		379		1,120
2027	9,292		356		1,120
Thereafter	59,370		2,331		8,868
Total	$	110,887	$	4,262	$	14,269

Amortization Expense

In-Place Leases and
Other Intangibles
Above-Market Leases
Remainder of 2017 $ 10,923
$ 1,774
2018 $ 42,289
$ 6,397
2019 $ 38,454
$ 5,299
2020 $ 36,120
$ 4,724
2021 $ 32,685
$ 4,100

NOTE 6 — INVESTMENT IN UNCONSOLIDATED ENTITIES

During the year ended December 31, 2021, the Company entered into the Unconsolidated Joint Venture, of which the Company owns 50% of the outstanding equity. The Unconsolidated Joint Venture holds approximately 90% of the membership interest in the NewPoint JV. Through the Unconsolidated Joint Venture, the Company has an approximate 45% interest in the NewPoint JV and accounts for its investment under the equity method. The primary purpose of the NewPoint JV is to source, underwrite, close and service on an ongoing basis multifamily bridge loans, participation interests, and other debt instruments such as loans. As of March 31, 2023, the carrying value of the Company’s investment in NP JV Holdings was $97.4 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

sheets. The Company received $2.4 million in distributions related to its investment in NP JV Holdings during the three months ended March 31, 2023, all of which was recognized as a return of investment and reduced the invested capital and the carrying amount. As of March 31, 2023, the Company had $112.6 million of unfunded commitments related to NewPoint JV. These commitments are not reflected in the accompanying condensed consolidated balance sheets.

The Company provided a limited guaranty to NewPoint JV, under which the Company agreed to guarantee the Unconsolidated Joint Venture’s cross indemnity and its share of capital contribution obligations under the agreement with NewPoint JV.

On March 31, 2022, the Company fully redeemed its $60.7 million investment in CIM UII Onshore, which represented less than 5% ownership of CIM UII Onshore and approximated fair value. During the three months ended March 31, 2022, the Company recognized an equity method net gain of $5.2 million related to its investment in CIM UII Onshore. The Company recognized distributions of $531,000 related to its investment in CIM UII Onshore during the three months ended March 31, 2022, all of which was recognized as a return on investment.

NOTE 7 — REAL ESTATE-RELATED SECURITIES

As of March 31, 2023, the Company had real estate-related securities with an aggregate estimated fair value of $520.6 million, which included 18 CMBS investments and an investment in a publicly-traded equity security. The CMBS mature on various dates from July 2023 through June 2058 and have interest rates ranging from 6.2% to 12.2% as of March 31, 2023, with one CMBS earning a zero coupon rate. The following is a summary of the Company’s real estate-related securities as of March 31, 2023 (in thousands):


	Real Estate-Related Securities
	Amortized Cost Basis		Unrealized Loss		Fair Value
CMBS	$	554,950	$	(74,817)	$	480,133
Equity security	53,388		(12,882)		40,506

Total real estate-related securities	$	608,338	$	(87,699)	$	520,639

The following table provides the activity for the real estate-related securities during the three months ended March 31, 2023 (in thousands):


	Amortized Cost Basis		Unrealized Loss		Fair Value
Real estate-related securities as of January 1, 2023	$	640,037	$	(63,646)	$	576,391
Face value of real estate-related securities acquired	9,738		—		9,738

Premiums and discounts on purchase of real estate-related securities, net of acquisition costs	(336)		—		(336)
Amortization of discount on real estate-related securities	7,590		—		7,590

Capitalized interest income on real estate-related securities	284		—		284
Principal payments received on real estate-related securities (1)	(48,975)		—		(48,975)
Unrealized loss on real estate-related securities	—		(24,053)		(24,053)
Real estate-related securities as of March 31, 2023	$	608,338	$	(87,699)	$	520,639

(1) Includes the repayment of the Company’s position in two different tranches of a CMBS instrument prior to their stated maturity dates.

During the three months ended March 31, 2023, the Company invested $9.4 million in CMBS. Unrealized gains and losses on CMBS are recorded in other comprehensive loss, with a portion of the amount subsequently reclassified into other income, net in the accompanying condensed consolidated statements of operations as securities are sold and gains and losses are recognized. Unrealized gains and losses on the equity security are reported on the condensed consolidated statements of operations. During the three months ended March 31, 2023, the Company recorded $26.3 million of unrealized loss on its CMBS, which is included in other comprehensive loss in the accompanying condensed consolidated statements of comprehensive income, and recorded $2.3 million of unrealized gain on the Company’s equity security, which is included in unrealized gain (loss) on equity security in the accompanying condensed consolidated statements of operations.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The scheduled maturities of the Company’s CMBS as of March 31, 2023 are as follows (in thousands):


	CMBS
	Amortized Cost		Estimated Fair Value
Due within one year	$	364,798	$	312,595
Due after one year through five years	148,125		136,452
Due after five years through ten years	—		—
Due after ten years	42,027		31,086
Total	$	554,950	$	480,133

Actual maturities of real estate-related securities can differ from contractual maturities because borrowers on certain corporate credit securities may have the right to prepay their respective debt obligations at any time. In addition, factors such as prepayments and interest rates may affect the yields on such securities.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

NOTE 8 — LOANS HELD-FOR-INVESTMENT

The Company’s loans held-for-investment consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):


	As of March 31,		As of December 31,
	2023		2022

First mortgage loans (1)	$	3,198,651	$	3,285,193
Total CRE loans held-for-investment and related receivables, net	3,198,651		3,285,193
Liquid corporate senior loans	703,866		701,540
Corporate senior loans	73,799		57,165
Loans held-for-investment and related receivables, net	$	3,976,316	$	4,043,898

Less: Current expected credit losses	$	(43,779)	$	(42,344)
Total loans held-for-investment and related receivable, net	$	3,932,537	$	4,001,554

(1) As of March 31, 2023, first mortgage loans included $20.1 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan.

The following table details overall statistics for the Company’s loans held-for-investment as of March 31, 2023 and December 31, 2022 (dollar amounts in thousands):


	CRE Loans (1) (2)						Liquid Corporate Senior Loans						Corporate Senior Loans
	March 31, 2023			December 31, 2022			March 31, 2023			December 31, 2022			March 31, 2023			December 31, 2022
Number of loans	28			29			315			317			6			4
Principal balance	$	3,216,545		$	3,306,411		$	710,334		$	708,254		$	74,917		$	57,918
Net book value	$	3,176,350		$	3,264,841		$	683,585		$	680,345		$	72,602		$	56,368
Weighted-average interest rate	8.0		%	7.6		%	8.5		%	8.0		%	11.3		%	10.5		%

Weighted-average maximum years to maturity	3.4			3.6			4.6			4.7			4.4			4.6
Unfunded loan commitments (3)	$	287,515		$	304,649		$	1,425		$	1,425		$	3,794		$	4,324

(1)As of March 31, 2023, 100% of the Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to SOFR and U.S. dollar LIBOR.

(2)Maximum maturity date assumes all extension options are exercised by the borrowers; however, the Company’s CRE loans may be repaid prior to such date.

(3)Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying condensed consolidated balance sheets. This balance does not include unsettled liquid corporate senior loan purchases of $18.0 million that are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Activity relating to the Company’s loans held-for-investment portfolio was as follows (in thousands):


	CRE Loans		Liquid Corporate Senior Loans		Corporate Senior Loans		Total Loan Portfolio
Balance, January 1, 2023	$	3,264,841	$	680,345	$	56,368	$	4,001,554
Loan originations and acquisitions	17,007		27,521		17,182		61,710
Sale of loans	—		(8,311)		—		(8,311)
Principal repayments received (1)	(106,873)		(16,940)		(183)		(123,996)

Deferred fees and other items (2)	—		(780)		(420)		(1,200)
Accretion and amortization of fees and other items	3,324		836		55		4,215
Current expected credit losses (3)	(1,949)		914		(400)		(1,435)
Balance, March 31, 2023	$	3,176,350	$	683,585	$	72,602	$	3,932,537

(1)Includes the repayment of a $105.0 million first mortgage loan prior to the maturity date.

(2)Other items primarily consist of purchase discounts or premiums and deferred origination expenses.

(3)Does not include current expected losses for unfunded or unsettled loan commitments. Such amounts are included in accrued expenses and accounts payable on the accompanying condensed consolidated balance sheets.

Current Expected Credit Losses

Current expected credit losses reflect the Company’s current estimate of potential credit losses related to loans held-for-investment included in the Company’s condensed consolidated balance sheets. Refer to Note 2 — Summary of Significant Accounting Policies for further discussion of the Company’s current expected credit losses.

The following table presents the activity in the Company’s current expected credit losses related to loans held-for-investment by loan type for the three months ended March 31, 2023 (in thousands):


	First Mortgage Loans		Unfunded First Mortgage Loans (1)		Liquid Corporate Senior Loans		Unfunded or Unsettled Liquid Corporate Senior Loans (1)		Corporate Senior Loans		Unfunded Corporate Senior Loans (1)		Total
Current expected credit losses as of January 1, 2023	$	20,352	$	1,890	$	21,195	$	377	$	797	$	66	$	44,677

Provision for (reversal of) credit losses	1,949		138		(914)		(121)		400		1		1,453
Current expected credit losses as of March 31, 2023	$	22,301	$	2,028	$	20,281	$	256	$	1,197	$	67	$	46,130

(1)Current expected losses for unfunded or unsettled loan commitments are included in accrued expenses and accounts payable on the condensed consolidated balance sheets.

Changes to current expected credit losses are recognized through net income on the Company’s condensed consolidated statements of operations.

Risk Ratings

As further described in Note 2 — Summary of Significant Accounting Policies, the Company evaluates its loans held-for-investment portfolio on a quarterly basis. Each quarter, the Company assesses the risk factors of each loan, and assigns a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, loan and credit structure, current LTV ratio, debt yield, collateral performance, and the quality and condition of the sponsor, borrower, and guarantor(s). Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 — Summary of Significant Accounting Policies.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The Company’s primary credit quality indicator is its risk ratings, which are further discussed above. The following table presents the net book value of the Company’s loans held-for-investment portfolio as of March 31, 2023 by year of origination, loan type, and risk rating (dollar amounts in thousands):


			Amortized Cost of Loans Held-For-Investment by Year of Origination (1)
			As of March 31, 2023
	Number of Loans		2023		2022		2021		2020		2019		Total
First mortgage loans by internal risk rating:
1	—		$	—	$	—	$	—	$	—	$	—	$	—
2	1		—		—		—		87,702		—		87,702
3	24		—		1,167,412		1,509,502		72,804		49,509		2,799,227
4	3		—		80,467		231,255		—		—		311,722
5	—		—		—		—		—		—		—
Total first mortgage loans	28		—		1,247,879		1,740,757		160,506		49,509		3,198,651
Liquid corporate senior loans by internal risk rating:
1	—		—		—		—		—		—		—
2	2		—		—		—		5,285		—		5,285
3	303		17,033		127,230		371,650		159,915		2,317		678,145
4	9		—		3,248		6,240		8,029		—		17,517
5	1	(2)	—		2,919		—		—		—		2,919
Total liquid corporate senior loans	315		17,033		133,397		377,890		173,229		2,317		703,866
Corporate senior loans by internal risk rating:
1	—		—		—		—		—		—		—
2	—		—		—		—		—		—		—
3	6		16,248		57,551		—		—		—		73,799
4	—		—		—		—		—		—		—
5	—		—		—		—		—		—		—
Total corporate senior loans	6		16,248		57,551		—		—		—		73,799
Less: Current expected credit losses													(43,779)
Total loans held-for-investment and related receivables, net	349												$	3,932,537
Weighted Average Risk Rating (3)													3.1

(1) Date loan was originated or acquired by the Company. Origination dates are subsequently updated to reflect material loan modifications.

(2) As of March 31, 2023, one of the Company’s liquid corporate senior loan investments was on nonaccrual status with a carrying value of $2.9 million, which represented less than 1% of the carrying value of the Company’s liquid corporate senior loans portfolio.

(3) Weighted average risk rating calculated based on carrying value at period end.

NOTE 9 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, the Company uses certain types of derivative instruments for the purpose of managing or hedging its interest rate risk. As of ~~September 30, 2017,~~March 31, 2023, the Company had ~~12 executed~~two non-designated interest rate ~~swap~~cap agreements.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The following table summarizes the terms of the Company’s 11 interest rate ~~swap~~cap agreements ~~designated as hedging instruments effective~~ as of ~~September 30, 2017~~ ~~and~~ ~~December~~March 31, ~~2016~~ ~~(dollar amounts in thousands):~~

Outstanding Notional

Fair Value of Assets and (Liabilities)

Balance Sheet
Amount as of
Interest
Effective
Maturity
September 30,
December 31,

Location
September 30, 2017
Rates ⁽¹⁾

Dates
Dates
2017
2016
Interest Rate Swaps Prepaid expenses, derivative assets, revenue bonds and other assets
$ 690,066

2.55% to 3.91%
6/30/2015 to 9/1/2016
8/15/2018 to 7/1/2021
$ 3,178

$ 2,327
Interest Rate Swaps Deferred rental income, derivative liabilities and other liabilities
$ 338,737

3.46% to 4.75%
6/24/2013 to 8/23/2013
6/24/2018 to 8/24/2020
$ (923 )
$ (3,351 )


~~(1)~~	~~The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of September 30, 2017.~~

~~Table of Contents~~

~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

During the nine months ended September 30, 2017, the Company entered into one interest rate swap agreement associated with a $811.7 million notional amount, effective on August 15, 2018. The following table summarizes the terms of this interest rate swap agreement designated as a hedging instrument as of September 30, 20172023 and December 31, ~~2016~~2022 (dollar amounts in thousands):

Outstanding Notional Fair Value of Liability
Balance Sheet Amount as of Interest Effective Maturity September 30, December 31,
Location September 30, 2017
Rate ⁽¹⁾
Date Date 2017 2016
Interest Rate Swap Deferred rental income, derivative liabilities and other liabilities $ 811,666
3.77 % 8/15/2018 3/15/2021 $ (2,517 ) $ —

Outstanding Notional

Fair Value of Assets as of

Balance Sheet

Amount as of

Strike

Effective

Maturity

March 31,

December 31,

Location

March 31, 2023

Rates

Dates

2023

2022

Interest Rate Caps

Derivative assets, prepaid expenses and other assets

712,000

3.50% (1) to

4.00% (2)

7/15/2021 to 9/13/2022

7/15/2023 to 10/9/2023

3,080

5,040


~~(1)~~	~~The interest rate consists of the underlying index swapped to a fixed rate and the applicable interest rate spread as of September 30, 2017.~~

(1)The index used for this derivative instrument is 1-Month LIBOR.

(2)The index used for this derivative instrument is 1-Month Term SOFR.

Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 3 — Fair Value Measurements. The notional amount under the ~~interest rate swap agreements~~derivative instruments is an indication of the extent of the Company’s involvement in each instrument, but does not represent exposure to credit, interest rate or market risks.

Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company ~~designated the~~has interest rate caps that are used to manage exposure to interest rate movements, but do not meet the requirements to be designated as hedging instruments. The change in fair value of the derivative instruments that are not designated as hedges is recorded directly to earnings in other income, net on the accompanying condensed consolidated statements of operations. Interest rate swaps are designated as cash flow hedges in order to hedge the variability of the anticipated cash flows on ~~its~~the Company’s variable rate debt. The change in fair value of the ~~effective portion of the~~ derivative instruments ~~that are~~ designated as hedges is recorded in other comprehensive ~~income (loss),~~loss, with a portion of the amount subsequently reclassified to interest expense as interest payments are made on the Company’s variable rate debt. During the year ended December 31, 2022, two of the Company’s interest rate swap agreements matured and three interest rate swap agreements were terminated prior to the maturity dates. For the three months ended ~~September 30, 2017 and 2016, the~~March 31, 2023, no amounts ~~reclassified~~ were $447,000 and $2.2 million, respectively, and for the nine months ended September 30, 2017 and 2016, the amounts reclassified were $2.9 million and $6.8 million, respectively. During the next 12 months, the Company estimates that an additional $180,000 will be reclassified from other comprehensive ~~income (loss)~~loss as ~~an increase~~a change to interest expense.

~~Any ineffective portion of~~ For the ~~change in fair value of the derivative instruments is recorded in interest expense. During the nine~~three months ended ~~September 30, 2017, $79,000~~March 31, 2022, the amount of ~~the change in the fair value of the~~gain reclassified from other comprehensive loss as a decrease to interest expense was $7,000. The total unrealized gain on interest rate swaps ~~was considered ineffective. There were no portions~~ of ~~the change~~$1.6 million as of March 31, 2022 is included in accumulated other comprehensive loss in the ~~fair value~~accompanying condensed consolidated statements of ~~the~~stockholders’ equity. No such unrealized amounts on interest rate swaps ~~that~~ were ~~considered ineffective during~~remaining in other comprehensive loss as of March 31, 2023. The Company includes cash flows from interest rate swap agreements in net cash flows provided by operating activities on its condensed consolidated statements of cash flows, as the ~~nine months ended September 30, 2016.~~Company’s accounting policy is to present cash flows from hedging instruments in the same category in its condensed consolidated statements of cash flows as the category for cash flows from the hedged items.

The Company has agreements with each of its derivative counterparties that contain provisions whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value, inclusive of interest payments ~~of $3.7 million at~~ ~~September 30, 2017~~.and accrued interest. In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. The Company records credit risk valuation adjustments on its ~~interest rate swaps~~derivative instruments based on the credit quality of the Company and the respective counterparty. There were no ~~termination events or~~ events of default related to the ~~interest rate swaps~~derivative instruments as of ~~September 30, 2017.~~March 31, 2023.

NOTE 710 — REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT ~~FACILITY~~FACILITIES

As of ~~September 30, 2017~~,March 31, 2023, the Company had ~~$2.5~~$4.0 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of ~~4.5~~3.5 years and a weighted average interest rate of ~~3.5%~~5.9%. The weighted average years to maturity is computed using the scheduled repayment date as specified in each loan agreement where applicable. The weighted average interest rate is computed using the interest rate in effect until the scheduled repayment date. ~~Should a loan not be repaid by its scheduled repayment date, the applicable interest rate will increase as specified in the respective loan agreement.~~

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The following table summarizes the debt balances as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, and the debt activity for the ~~nine~~three months ended~~September 30, 2017~~ March 31, 2023 (in thousands):


			During the Three Months Ended March 31, 2023
	Balance as of December 31, 2022		Debt Issuances & Assumptions (1)		Repayments & Modifications (2)			Amortization		Balance as of March 31, 2023
Notes payable – fixed rate debt	$	36,538	$	—	$	(36,538)		$	—	$	—
Notes payable – variable rate debt	465,517		1,112		(5,569)			—		461,060
First lien mortgage loan	121,940		—		(121,940)			—		—
ABS mortgage notes	763,035		—		(1,935)			—		761,100
Credit facilities	738,500		35,000		(240,000)			—		533,500
Repurchase facilities	2,318,381		17,163		(111,796)			—		2,223,748
Total debt	4,443,911		53,275		(517,778)			—		3,979,408

Deferred costs – credit facility (3)	(740)		—		679		(4)	61		—
Deferred costs – fixed rate debt and first lien mortgage loan	(1,109)		—		702		(4)	407		—
Deferred costs – variable rate debt	(5,261)		(40)		602		(4)	488		(4,211)
Deferred costs – ABS mortgage notes	(13,968)		(493)		—			477		(13,984)
Total debt, net	$	4,422,833	$	52,742	$	(515,795)		$	1,433	$	3,961,213

(1)Includes deferred financing costs incurred during the period.

(2)In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility, the Company recognized a loss on extinguishment of debt of $3.6 million during the three months ended March 31, 2023, which included $1.3 million in prepayment penalties.

(3)Deferred costs related to the term portion of the CMFT Credit Facility (defined below).

(4)In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility, the Company wrote off approximately $2.0 million of unamortized deferred loan costs.

Notes Payable

During the three months ended March 31, 2023, the Company legally defeased a mortgage loan with an outstanding balance of $23.7 million, resulting in a $205,000 loss on extinguishment of debt in the Company’s condensed consolidated statement of operations during the three months ended March 31, 2023, and repaid the remaining $12.8 million of fixed rate debt outstanding, both in connection with the disposition of the underlying properties securing the fixed rate debt.

As of March 31, 2023, the Company had $461.1 million of variable rate debt outstanding, which included $423.5 million of borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”). In addition, upon completing foreclosure proceedings to take control of the assets which previously secured the Company’s mezzanine loans in January 2021, the Company assumed $102.6 million in variable rate debt related to the underlying properties (the “Assumed Variable Rate Debt”), which the Company subsequently refinanced and paid down the outstanding balance during the year ended December 31, 2022. The amended borrowing agreement related to the refinanced Assumed Variable Rate Debt provides for borrowings up to $62.0 million. As of March 31, 2023, the amount outstanding on the refinanced Assumed Variable Rate Debt totaled $37.6 million. The Company’s outstanding variable rate debt had a weighted average interest rate of 7.2% as of March 31, 2023, and matures on various dates from October 2024 to January 2028.

First Lien Mortgage Loan

On July 15, 2021, JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan Chase”), and DBR Investments Co. Limited originated a $650.0 million first lien mortgage loan (the “Mortgage Loan”) to 114 single purpose entities, each of which is an affiliate of the Company and is managed on a day-to-day basis by affiliates of CIM. During the three months ended March 31, 2023, the Company paid down the $121.9 million outstanding balance on the Mortgage Loan, $105.8 million of which was in connection with the sale of properties pursuant to the Realty Income Purchase and Sale Agreement. Refer to Note 4 — Real Estate Assets for additional information regarding the sale.

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~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 (Unaudited) – (Continued)

ABS Mortgage Notes

On July 28, 2021, the Company issued $774.0 million aggregate principal amount of asset backed securities (“ABS”) mortgage notes, Series 2021-1 (the “Class A Notes”) in six classes, as shown below:

During the Nine Months Ended September 30, 2017
Balance as of December 31, 2016
Debt Issuances & Assumptions ⁽¹⁾
Repayments and Modifications Accretion and (Amortization) Balance as of
September 30, 2017
Fixed rate debt $ 1,164,622
$ 53,206
$ (335 ) $ —
$ 1,217,493
Variable rate debt 53,500
—
(33,000 ) —
20,500
Credit facility 1,039,666
1,461,500
(1,266,666 ) —
1,234,500
Total debt 2,257,788
1,514,706
(1,300,001 ) —
2,472,493
Net premiums ⁽²⁾
506
—
—
(65 ) 441
Deferred costs ⁽³⁾
(12,035 ) (10,078 ) 717
(4 ) 2,744
(18,652 )
Total debt, net $ 2,246,259
$ 1,504,628
$ (1,299,284 ) $ 2,679
$ 2,454,282

Class of Notes

Initial Principal Balance

Note Rate

Anticipated Repayment Date

Rated Final Payment Date

Credit Rating (1)

A-1 (AAA)

146,400,000

2.09%

July 2028

July 2051

AAA (sf)

A-2 (AAA)

219,600,000

2.57%

July 2031

July 2051

AAA (sf)

A-3 (AA)

39,200,000

2.51%

July 2028

July 2051

AA (sf)

A-4 (AA)

58,800,000

3.04%

July 2031

July 2051

AA (sf)

A-5 (A)

124,000,000

2.91%

July 2028

July 2051

A (sf)

A-6 (A)

186,000,000

3.44%

July 2031

July 2051

A (sf)

____________________________________


~~(1)~~	~~Includes deferred financing costs incurred during the period.~~


~~(2)~~	Net premiums on mortgage notes payable were recorded upon the assumption of the respective debt instruments. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective debt instruments using the effective-interest method.


~~(3)~~	~~Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility (as defined below).~~


~~(4)~~	Includes $503,000 of deferred financing costs of the term portion of the Credit Facility written off during the period resulting from the Second Amended and Restated Credit Agreement, as defined below.

As(1)Reflects credit rating from Standard & Poor’s Financial Services LLC (“Standard & Poor’s”).

The collateral pool for the Class A Notes is comprised of ~~September 30, 2017~~, the fixed rate debt outstanding of $1.2 billion included $217.1 million of variable rate debt that is fixed through interest rate swap agreements, which has the effect of fixing the variable interest rates per annum through the maturity date175 of the ~~variable rate debt. The fixed rate debt has interest rates ranging from 2.6% to 5.0% per annum. The fixed rate debt outstanding matures on various dates from June 2018 through October 2025.~~Company’s double- and triple-net leased single tenant properties, together with the related leases and certain other rights and interests. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the ~~fixed rate debt outstanding~~Class A Notes was ~~$2.2 billion as of September 30, 2017. Each of the mortgage notes payable, comprising the fixed rate debt, is secured by the respective properties on which the debt was placed.~~$963.8 million. As of ~~September 30, 2017,~~March 31, 2023, amounts outstanding on the ~~variable rate debt outstanding of $20.5~~Class A Notes totaled $761.1 million ~~had~~with a weighted average interest rate of ~~4.5%~~2.8%. The ~~variable rate debt outstanding matures~~Company may prepay the Class A Notes in full on ~~February 26, 2020. With respect to~~or after the ~~Company’s $24.2 million of debt maturing within~~payment date beginning in July 2026 for the ~~next year,~~Class A-1 (AAA) Notes, the ~~Company expects to use borrowings available under~~Class A-3 (AA) Notes and the Class A-5 (A) Notes, and on or after the payment date in July 2028 for the Class A-2 (AAA) Notes, the Class A-4 (AA) Notes and the Class A-6 (A) Notes.

Credit Facility or enter into new financing arrangements in order to meet its debt obligations. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the variable rate debt outstanding was $40.8 million as of September 30, 2017.Facilities

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, CMFT CL Lending Sub AB, LLC (the “Borrower”), an indirect wholly owned subsidiary of the Company, entered into a ~~second amended~~revolving loan and ~~restated unsecured credit~~security agreement (the ~~“Second Amended~~“Loan and ~~Restated Credit~~Security Agreement”) with ~~JPMorgan Chase~~each of the lenders from time to time party thereto (the “Lenders”), Ally Bank ~~N.A.~~ as administrative agent and arranger (“~~JPMorgan Chase”~~Ally Bank”), U.S. Bank Trust Company, National Association, as the collateral custodian, and U.S. Bank National Association as the ~~other lenders party thereto that~~document custodian, which provides for borrowings ofin an aggregate principal amount up to ~~$1.40 billion,~~$300.0 million (the “Loan Facility”), which ~~includes a $1.05 billion unsecured term loan (the “Term Loan”) and~~may be increased during the revolving period (as defined below) to an aggregate principal amount up to ~~$350.0~~$500.0 million ~~in unsecured~~as agreed to by the Borrower, any applicable Lender and Ally Bank.

Borrowings under the Loan and Security Agreement will bear interest equal to SOFR for the relevant interest period, plus an applicable rate. The applicable rate is 2.875% per annum (and an additional 2.00% per annum following an event of default under the Loan and Security Agreement). The revolving ~~loans (the “Revolving Loans”~~period begins on February 10, 2023 and ~~collectively,~~concludes on the day preceding the earlier to occur of (i) the scheduled revolving period end date of February 10, 2026, (ii) the date of the declaration of the revolving period end date upon the occurrence and continuation of an event of default, and (iii) the termination date. The termination date is the earlier to occur of (i) February 10, 2028 (two years after the revolving period end date) and (ii) the date of the declaration of the termination date or the date of the automatic occurrence of the termination date upon the occurrence and continuation of an event of default. As of March 31, 2023, no amounts were borrowed and outstanding under the Loan Facility.

The Company had a credit agreement with the ~~Term Loan,~~lenders from time to time parties thereto, JPMorgan Chase, as administrative agent, letter of credit issuer and syndication agent, and PNC Bank, N.A., as syndication agent, that provided for borrowings in the ~~“Credit~~initial amount of $300.0 million (the “CMFT Credit Facility”). The ~~Term Loan matures on March 15, 2022 and the Revolving Loans~~CMFT Credit Facility was set to mature on July 15, 2025. During the three months ended March ~~15, 2021; however,~~31, 2023, the Company paid down the $240.0 million outstanding balance under the CMFT Credit Facility and terminated the CMFT Credit Facility.

CMFT Corporate Credit Securities, LLC, an indirect wholly-owned, bankruptcy-remote subsidiary of the Company, has a revolving credit and security agreement (the “Third Amended Credit and Security Agreement”) with the ~~right~~lenders from time to ~~extend the maturity date~~time parties thereto, Citibank, N.A. (“Citibank”), as administrative agent, CMFT Securities Investments, LLC, a wholly-owned subsidiary of the ~~Revolving Loans~~Company (“CMFT Securities”), as equityholder and as collateral manager, Citibank (acting through its Agency & Trust division), as both a collateral agent and as a collateral custodian, and Virtus Group, LP, as collateral administrator. The Third Amended Credit and Security Agreement provides for available borrowings under the revolving credit

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

facility to an aggregate principal amount up to $550.0 million (the “Credit Securities Revolver”). The Credit Securities Revolver may be increased from time to time pursuant to the Third Amended Credit and Security Agreement. As of March ~~15, 2022.~~

~~Depending upon~~31, 2023, the ~~type of loan specified~~amounts borrowed and ~~overall leverage ratio,~~outstanding under the Credit Facility bears interest at (i) the one-month, two-month, three-month or six-month London Interbank Offered Rate (“LIBOR”) multiplied by the statutory reserve rate (the “Eurodollar Rate”) plus an interest rate spread ranging from 1.65% to 2.25% or (ii) a base rate, ranging from 0.65% to 1.25%, plus the greater of: (a) JPMorgan Chase’s Prime Rate; (b) the Federal Funds Effective Rate (as defined in the Second Amended and Restated Credit Agreement) plus 0.50%; or (c) the one-month LIBOR multiplied by the statutory reserve rate plus 1.00%. As of September 30, 2017, the Revolving Loans outstandingSecurities Revolver totaled ~~$184.5~~$533.5 million at a weighted average interest rate of ~~3.0%~~7.0%. As of September 30, 2017, the Term Loan outstanding totaled $1.05 billion, $811.7 million of which is subject to interest rate swap agreements (the “Swapped Term Loan”). The interest rate swap agreements had the effect of fixing the Eurodollar Rate per annum of the Swapped Term Loan. As of September 30, 2017, the weighted average all-in rate for the Swapped Term Loan was 3.2%. As of September 30, 2017, the Company had $1.23 billion outstanding

Borrowings under the Third Amended Credit ~~Facility at a weighted average~~and Security Agreement will bear interest ~~rate of 3.1% and $164.9 million in unused capacity, subject to borrowing availability.~~

The Second Amended and Restated Credit Agreement contains provisions with respect to covenants, events of default and remedies customary for facilities of this nature. In particular, the Second Amended and Restated Credit Agreement requires the Company to maintain a minimum consolidated net worth greater than or equal to the ~~sum~~one-month Term SOFR (as defined in the Third Amended Credit and Security Agreement) for the relevant interest period, plus an applicable rate. The applicable rate is dependent on the type of loan being financed, which includes broadly syndicated, private and middle market loans meeting certain criteria as set forth in the Third Amended Credit and Security Agreement and ranges from 1.90% to 2.75% per annum during the first two years of the reinvestment period and 2.00% to 2.85% during the last year of the reinvestment period and 2.10% to 2.95% per annum during the amortization period (and, in each case, an additional 2.00% per annum following an event of default under the Third Amended Credit and Security Agreement). The reinvestment period began on December 31, 2019 and concludes on the earlier of (i) ~~$2.0 billion plus~~the date that is three years after June 23, 2022, the date the third amendment became effective, (ii) ~~75%~~the final maturity date and (iii) the date on which the total assets under management of the ~~equity issued minus (iii)~~Company and its wholly-owned subsidiaries is less than $1.25 billion (the “Reinvestment Period”). The final maturity date is the ~~aggregate amount of any redemptions or similar transaction from~~earliest to occur of: (i) the date that the Credit Securities Revolver is paid down and (ii) the second anniversary after the Reinvestment Period concludes. Borrowings under the Third Amended Credit and Security Agreement are secured by substantially all of the ~~Second~~assets held by CMFT Corporate Credit Securities, LLC, which shall primarily consist of liquid corporate senior secured loans subject to certain eligibility criteria under the Third Amended Credit and Security Agreement.

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~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

and Restated Credit Agreement, a leverage ratio less than or equal to 60%, a fixed charge coverage ratio greater than 1.50, an unsecured debt to unencumbered asset value ratio equal to or less than 60%, an unsecured debt service coverage ratio greater than 1.75, a secured debt ratio equal to or less than 40% and the amount of secured debt that is recourse debt at no greater than 15% of total asset value. The Company believes it was in compliance with ~~the financial covenants under the Second Amended and Restated Credit Agreement, as well as~~ the financial covenants under the Company’s various fixed and variable rate debt agreements, as of ~~September 30, 2017.~~March 31, 2023.

Repurchase Facilities

As of March 31, 2023, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays, Wells Fargo Bank, N.A. (“Wells Fargo”), Deutsche Bank AG (“Deutsche Bank”), and J.P. Morgan Securities LLC (“J.P. Morgan”) (collectively, the “Repurchase Agreements”) to provide financing primarily through each bank’s purchase of the Company’s CRE mortgage loans and CMBS and future funding advances (the “Repurchase Facilities”).

The following table is a summary of the Repurchase Facilities as of March 31, 2023 (dollar amounts in thousands):


Repurchase Facility	Date of Agreement	Maturity Date(1)		Maximum Facility Size			Weighted Average Interest Rate		Loans Financed under Repurchase Facility (2)		Amount Financed
Citibank	6/4/2020	8/17/2024		$	400,000		6.5%	(3)	$	468,204	$	336,035
Barclays	9/21/2020	9/22/2025		1,250,000			6.6%	(3)	1,097,301		806,317
Wells Fargo	5/20/2021	8/30/2025		750,000			6.4%	(3)	898,108		696,712
Deutsche Bank	10/8/2021	10/8/2023		300,000			7.1%	(3)	196,194		148,863
J.P. Morgan	6/1/2022	4/3/2023	(4)	—		(4)	5.9%	(5)	416,242		235,821
Total				$	2,700,000				$	3,076,049	$	2,223,748

(1)As of March 31, 2023, the repurchase facility with Citibank and Wells Fargo each have two one-year extension options remaining, the repurchase facility with Barclays has one one-year extension option remaining and the repurchase facility with Deutsche Bank has four one-year extension options remaining. All repurchase facilities are subject to certain conditions set forth in their respective Repurchase Agreements.

(2)CRE mortgage loan balances financed under the Repurchase Facilities with Citibank, Barclays, Wells Fargo and Deutsche Bank reflect the aggregate outstanding principal balance while the CMBS balance financed under the J.P. Morgan Repurchase Facility reflects fair value.

(3)Advances under the Repurchase Agreements accrue interest at per annum rates based on the one-month LIBOR, Term SOFR (as such term is defined in the applicable Repurchase Agreement) or the daily compounded SOFR plus a spread ranging from 1.30% to 2.85% to be determined on a case-by-case basis between Citibank, Barclays,Wells Fargo or Deutsche Bank and the CMFT Lending Subs.

(4)Facilities under the repurchase facility with J.P. Morgan (“J.P. Morgan Repurchase Facility”) carry a rolling term which is reset monthly. Such facilities carry no maximum facility size.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

(5)Under the Master Repurchase Agreement with J.P. Morgan, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by J.P. Morgan, which as of March 31, 2023, ranges from 0.95% to 1.35%.

The Repurchase Agreements provide for simultaneous agreements by Citibank, Barclays, Wells Fargo, Deutsche Bank and J.P. Morgan to re-sell such purchased CRE mortgage loans and CMBS back to CMFT Lending Subs at a certain future date or upon demand.

In connection with certain of the Repurchase Agreements, the Company (as the guarantor) entered into guaranties with Citibank, Barclays, Wells Fargo, and Deutsche Bank (the “Guaranties”), under which the Company agreed to guarantee up to 25% of the CMFT Lending Subs’ obligations under certain Repurchase Agreements.

The Repurchase Agreements and the Guaranties contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guaranties contain financial covenants that require the Company to maintain: (i) minimum liquidity of not less than the lower of (a) $50.0 million and (b) the greater of (A) $10.0 million and (B) 5% of the Company’s recourse indebtedness, as defined in the Guaranties; (ii) minimum consolidated net worth greater than or equal to $1.0 billion plus (a) 75% of the equity issued by the Company following the respective closing dates of the Repurchase Agreements (the “Repurchase Closing Dates”) minus (b) the aggregate amount of any redemptions or similar transaction by the Company from the Repurchase Closing Dates; (iii) maximum leverage ratio of total indebtedness to total equity less than or equal to 80%; and (iv) minimum interest coverage ratio of EBITDA (as defined in the Guaranties) to interest expense equal to or greater than 1.40. The Company believes it was in compliance with the financial covenants under the Repurchase Agreements as of March 31, 2023.

Maturities

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to ~~September 30, 2017 for each of the five succeeding fiscal years and the period thereafter~~March 31, 2023 (in thousands):


	Principal Repayments
Remainder of 2023	$	387,264
2024	373,576
2025	1,503,029
2026	—
2027	911,179
Thereafter	804,360
Total	$	3,979,408

Principal Repayments
Remainder of 2017 $ 116
2018 24,211
2019 49,799
2020 333,215
2021 285,102
Thereafter 1,780,050
Total $ 2,472,493

NOTE ~~8 — INTANGIBLE LEASE LIABILITIES~~

~~Intangible lease liabilities of the Company consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands, except weighted average life):~~

September 30, 2017 December 31, 2016
Acquired below-market liabilities, net of accumulated amortization of $29,396 and $23,241, respectively (with a weighted average life remaining of 7.6 and 7.8 years, respectively)

$ 47,607
$ 49,075

Amortization of below-market leases is recorded as an increase to rental revenue in the accompanying condensed consolidated statements of operations. The following table summarizes the amortization of intangible lease liabilities for the three and nine months ended September 30, 2017 and September 30, 2016 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Amortization of below-market leases $ 2,898
$ 2,012
$ 7,469
$ 5,788

~~As of September 30, 2017, the estimated amortization of the intangible lease liabilities for each of the five succeeding fiscal years is as follows (in thousands):~~

Amortization of Below-Market Leases
Remainder of 2017 $ 2,329
2018 $ 8,372
2019 $ 7,508
2020 $ 6,703
2021 $ 4,573

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~~COLE CREDIT PROPERTY TRUST IV, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2017 (Unaudited) – (Continued)~~

~~NOTE 9 — SUPPLEMENTAL CASH FLOW DISCLOSURES~~

~~Supplemental cash flow disclosures for the~~ ~~nine months endedSeptember 30, 2017~~ ~~and~~ ~~2016~~ ~~are as follows (in thousands):~~

Nine Months Ended September 30,
2017 2016
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Distributions declared and unpaid $ 16,001
$ 15,969
Accrued capital expenditures $ 535
$ 1,115
Accrued deferred financing costs $ —
$ 4
Common stock issued through distribution reinvestment plan $ 76,851
$ 82,383
Change in fair value of interest rate swaps $ 682
$ (6,767 )
Contingent consideration recorded upon property acquisitions $ —
$ 332
Consolidation of real estate joint venture $ —
$ 18,300
Supplemental Cash Flow Disclosures:
Interest paid $ 63,045
$ 54,401

~~NOTE 10~~11 — COMMITMENTS AND CONTINGENCIES

Litigation

In the ordinary course of business, the Company may become subject to litigation and claims. The Company is not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or of which the Company’s properties are the subject.

Unfunded Commitments

As of March 31, 2023, the Company had $292.7 million of unfunded loan commitments related to its existing CRE loans held-for-investment, corporate senior loans, and liquid corporate senior loans, and $112.6 million of unfunded commitments related to NewPoint JV. These commitments are not reflected in the accompanying condensed consolidated balance sheet.

As of March 31, 2023, the Company had $18.0 million of unsettled liquid corporate senior loan acquisitions, $13.0 million of which settled subsequent to March 31, 2023. Unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. In addition, the Company may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify the Company against future remediation costs. The Company also carries environmental liability insurance on its properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which the Company may be liable. The Company is not aware of any environmental matters which it believes are reasonably likely to have a material effect on its results of operations, financial condition or liquidity.

NOTE 1112 — RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS

The Company has incurred ~~commissions,~~ fees and expenses payable to ~~CR IV Advisors~~CMFT Management and certain of its affiliates in connection with the ~~Offerings and the~~ acquisition, management and disposition of its assets. On March 24, 2023, the Company and CMFT Management entered into the second amended and restated management agreement (the “Management Agreement”), which amended and restated the amended and restated management agreement between the parties dated August 20, 2019.

~~Acquisition~~Management and investment advisory fees ~~and expenses~~

The Company pays ~~CR IV Advisors or~~CMFT Management a management fee, payable quarterly in arrears, equal to the greater of (a) $250,000 per annum ($62,500 per quarter) and (b) 1.50% per annum (0.375% per quarter) of the Company’s Equity (as defined in the Management Agreement).

CMFT Securities has an investment advisory and management agreement dated December 6, 2019 (the “Investment Advisory and Management Agreement”) with the Investment Advisor. CMFT Securities was formed for the purpose of holding any securities investments and certain other investments made by the Company. The Investment Advisor, a wholly-owned subsidiary of CIM Group, is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Pursuant to the Investment Advisory and Management Agreement, the Investment Advisor manages the day-to-day business affairs of CMFT Securities and its ~~affiliates acquisition~~investments in corporate credit and real estate-related securities (collectively, the “Managed Assets”), subject to the supervision of the Board. In connection with the services provided by the Investment Advisor, CMFT Securities pays the Investment Advisor an investment advisory fee (the “Investment Advisory Fee”), payable quarterly in arrears, equal to 1.50% per annum (0.375% per quarter) of CMFT Securities’ Equity (as defined in the Investment Advisory and Management Agreement). Because the Managed Assets are excluded from the calculation of management fees ~~of up to 2.0% of: (1) the contract purchase price of each property or asset~~payable by the Company ~~acquires; (2)~~to CMFT Management pursuant to the ~~amount paid in respect~~Management Agreement, the total management and advisory fees payable by the Company to its external advisors are not increased as a result of the ~~development, construction or improvement of each asset the Company acquires; (3) the purchase price of any loan the Company acquires;~~Investment Advisory and ~~(4) the principal amount of any loan the Company originates.~~ Management Agreement.

In addition, the ~~Company reimburses CR IV Advisors or~~Investment Advisor has a sub-advisory agreement dated December 6, 2019 (the “Sub-Advisory Agreement”) with OFS Capital Management, LLC (the “Sub-Advisor”) to act as an investment sub-advisor to CMFT Securities. The Sub-Advisor is registered as an investment adviser under the Advisers Act and is an affiliate of the Investment Advisor. The Sub-Advisor principally provides investment management services with respect to the corporate credit-related securities held by CMFT Securities and its subsidiaries. The Sub-Advisor may allocate a portion of these corporate credit-related securities to its other clients, including affiliates of CIM Group. On a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee and incentive compensation attributable to the assets for ~~acquisition-related expenses incurred~~which the Sub-Advisor has provided investment management services payable to the Investment Advisor as sub-advisory fees.

Incentive compensation

CMFT Management is entitled to receive incentive compensation, payable with respect to each quarter, which is generally equal to the excess of (a) the product of (i) 20% and (ii) the excess of (A) Core Earnings (as defined in the ~~process~~Management Agreement) of ~~acquiring properties, so long as~~ the ~~total acquisition fees~~Company for the previous 12-month period, over (B) the product of (1) the Company’s Consolidated Equity (as defined in the Management Agreement) in the previous 12-month period, and ~~expenses relating~~(2) 7% per annum, over (b) the sum of any incentive compensation paid to CMFT Management with respect to the transaction do not exceed 6.0% of the contract purchase price, unless otherwise approved by a majority of the Board, including a majority of the Company’s independent directors, as commercially competitive, fair and reasonable to the Company.

~~Advisory fees and expenses~~

~~The Company pays CR IV Advisors a monthly advisory fee based upon the Company’s monthly average invested assets, which, effective January 1, 2017, is based on the estimated market value~~first three calendar quarters of such ~~assets used to determine~~previous 12-month period (or such lesser number of completed calendar quarters preceding the ~~Company’s estimated per share NAV as of December~~applicable period, if applicable). During the three months ended March 31, ~~2016, as discussed in Note 1 — Organization~~2023 and ~~Business, and for those assets~~

2022, no incentive compensation fees were incurred.

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~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 (Unaudited) – (Continued)

~~acquired subsequent~~In addition, the Investment Advisor is eligible to ~~December 31, 2016, is based on~~receive a portion of the ~~purchase price. The monthly advisory fee is equal~~incentive compensation payable to CMFT Management pursuant to the ~~following amounts: (1) an annualized rate~~Management Agreement. In the event that the incentive compensation is earned and payable with respect to any quarter, CMFT Management calculates the portion of ~~0.75% paid on~~ the ~~Company’s average invested assets~~incentive compensation that ~~are between $0~~was attributable to the Managed Assets and ~~$2.0 billion; (2) an annualized rate of 0.70% paid on~~payable to the ~~Company’s average invested assets that are between $2.0 billion and $4.0 billion; and (3) an annualized rate of 0.65% paid on the Company’s average invested assets that are over $4.0 billion.~~Investment Advisor.

~~Operating expenses~~Expense reimbursements to related parties

The Company reimburses ~~CR IV Advisors~~CMFT Management, the Investment Advisor or ~~its~~their affiliates for certain expenses ~~CR IV Advisors or its affiliates~~ paid or incurred in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse CR IV Advisors or its affiliates for any amount by which the operating expenses (including the advisory fee) at the end of the four preceding fiscal quarters exceed the greater of: (1) 2.0% of average invested assets, or (2) 25.0% of net income excluding any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of assets for that period.Company. The Company will ~~not~~ reimburse ~~CR IV Advisors~~CMFT Management, the Investment Advisor, or ~~its~~their affiliates for ~~the~~ salaries and benefits paid to personnel ~~in connection with the~~who provide services ~~for which CR IV Advisors receives acquisition fees, and~~to the Company, ~~will not reimburse CR IV Advisors for salaries and benefits paid to~~excluding the Company’s executive ~~officers.~~

~~Disposition fees~~

~~If CR IV Advisors~~officers and any portfolio management, acquisitions or its affiliates provide a substantial amount of services (as determined by a majority of the Company’s independent directors) in connection with the sale of one or more properties (or the Company’s entire portfolio), the Company will pay CR IV Advisors or its affiliates a disposition fee in an amount equal to up to one-half of the real estate or brokerage commission paid by the Company to third parties on the sale of such property, not to exceed 1.0% of the contract price of the property sold; provided, however, in no event may the total disposition fees paid to CR IV Advisors, its affiliates and unaffiliated third parties exceed the lesser of the customary competitive real estate commission or an amount equal to 6.0% of the contract sales price. During the three and nine months ended September 30, 2017 and 2016, no disposition fees were incurred for any such services provided by CR IV Advisors or its affiliates.

~~Subordinated performance fees~~

If the Company is sold or its assets are liquidated, CR IV Advisors will be entitled to receive a subordinated performance fee equal to 15.0% of the net sale proceeds remaining after investors have received, from regular distributions plus special distributions paid from proceeds of such sale, a return of their net capital invested and an 8.0% annual cumulative, non-compounded return. Alternatively, if the Company’s shares are listed on a national securities exchange, CR IV Advisors will be entitled to a subordinated performance fee equal to 15.0% of the amount by which the market value of the Company’s outstanding stock plus all distributions paid by the Company prior to listing, exceeds the sum of the total amount of capital raised from investors and the amount of distributions necessary to generate an 8.0% annual cumulative, non-compounded return to investors. As an additional alternative, upon termination of the advisory agreement, CR IV Advisors may be entitled to a subordinated performance fee similar to the fee to which CR IV Advisors would have been entitled had the portfolio been liquidated (based on an independent appraised value of the portfolio) on the date of termination. During the three and nine months ended September 30, 2017 and 2016, no subordinated performance fees were incurred related to any such events.investment professionals.

The Company recorded fees and expense reimbursements as shown in the table below for services provided by ~~CR IV Advisors~~CMFT Management or its affiliates related to the services described above during the periods indicated (in thousands):


	Three Months Ended March 31,
	2023		2022
Management fees	$	12,579	$	13,347



Expense reimbursements to related parties	$	3,568	$	3,694

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

Acquisition fees and expenses $ 2,338
$ 2,087
$ 6,336
$ 4,442
Advisory fees and expenses $ 11,149
$ 10,587
$ 32,863
$ 31,100
Operating expenses $ 1,072
$ 1,121
$ 3,495
$ 3,135
Due to Affiliates

Of the amounts shown above, ~~$3.8~~$13.8 million and ~~$5.5~~$16.1 million had been incurred, but not yet paid, for services provided by ~~CR IV Advisors~~CMFT Management or its affiliates in connection with the ~~acquisition~~management and ~~operations~~operating activities during the ~~nine~~three months ended ~~September 30, 2017~~ March 31, 2023 and ~~2016,~~2022, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

Development Management Agreements

On January 7, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its mezzanine loans, including 75 condominium units and 21 rental units across four buildings in New York. Upon foreclosure, and with the approval of the Board’s former valuation, compensation and affiliate transactions committee, CIM NY Management, LLC, an affiliate of the Company’s manager, CMFT Management, entered into a Development Management Agreement with the indirect wholly owned subsidiaries of the Company that own each of the four buildings (the “Building Owners”), wherein CIM NY Management, LLC will act as project manager in overseeing the development and construction of property improvements in accordance with each respective Development Management Agreement (the “Development Services”). In consideration for the Development Services, CIM NY Management, LLC will receive a development management fee from the Building Owners equal to 4% of the aggregate gross project costs expended during the term of the Development Management Agreement, subject to the conditions in each respective Development Management Agreement. During the three months ended March 31, 2023 and 2022, the Company recorded $76,000 and $130,000, respectively, in development management fees. Additionally, CIM NY Management, LLC is reimbursed by the Building Owners for expenses incurred in connection with the Development Services, including services provided that are incidental to but not part of the Development Services. The Development Management Agreement shall remain in effect until the project completion date, and is terminable by either party with fifteen days prior notice to the other party, with or without cause.

Affiliated Investments

In September 2021, the Company co-invested $68.4 million in preferred units and $138.8 million in a first mortgage loan to a third-party for the purchase of a multi-family, office and retail building in Fort Lauderdale, Florida with CIM Real Assets & Credit Fund, a fund that is advised by affiliates of CMFT Management (“CIM RACR”). The Company redeemed its investment in the preferred units during the year ended December 31, 2022 in exchange for an investment in a first mortgage loan. As of March 31, 2023, $203.6 million of the first mortgage loan was outstanding.

In October 2021, the Company invested in a $130.0 million first mortgage loan, with an initial advance of $119.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management. As of March 31, 2023, $123.0 million of the first mortgage loan was outstanding.

In November 2021, the Company entered into the Unconsolidated Joint Venture (the “MT-FT JV”) with CMMT Holdings, LLC, a fund that is advised by an affiliate of CMFT Management (“CMMT”), for the purposes of investing in the NewPoint JV. The Company owns 50% of the equity interests of the MT-FT JV and has committed to fund capital to the MT-FT JV up to

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~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 (Unaudited) – (Continued)

$212.5 million, of which $99.9 million has been funded, net of $39.9 million returned as a return of capital that can be called back by NewPoint JV through NP JV Holdings as a capital call on a future date. For more information on the NewPoint JV, see Note 2 — Summary of Significant Accounting Policies.

~~Due to/~~In December 2021, the Company invested in a $155.0 million first mortgage loan, with an initial advance of $154.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from ~~Affiliates~~

a fund that is advised by an affiliate of CMFT Management. As of ~~September 30, 2017 and~~March 31, 2023, $154.0 million of the first mortgage loan was outstanding.

In April 2022, the Company invested in a $147.0 million first mortgage loan, with an initial advance of $143.0 million, to a third-party, which was previously funded by a fund that is advised by an affiliate of CMFT Management. As of March 31, 2023, $145.5 million of the first mortgage loan was outstanding.

During the year ended December 31, ~~2016, $3.8~~2022, the Company and CIM RACR co-invested $75.9 million and ~~$5.3~~$14.7 million, respectively, ~~had been incurred primarily for advisory~~in five corporate senior loans to a third-party. During the three months ended March 31, 2023, the Company and ~~operating expenses~~CIM RACR co-invested $15.5 million and $3.1 million, respectively, in two corporate senior loans to a third-party. In addition, the Company and CIM RACR upsized a co-invested corporate senior loan to a third-party by ~~CR IV Advisors or its affiliates, but had not yet been reimbursed by~~$1.7 million and $348,000, respectively, during the ~~Company. These amounts were included in due to affiliates in the condensed consolidated balance sheets for such periods.~~

three months ended March 31, 2023. As of ~~September 30, 2017 and December~~March 31, ~~2016, $4,000 and $58,000, respectively, were due from CR IV Advisors or its affiliates~~2023, $74.9 million of the corporate senior loans was outstanding. The Sub-Advisor provided investment management services related to ~~amounts received by affiliates of the advisor which were due~~these corporate senior loans pursuant to the ~~Company.~~Sub-Advisory Agreement.

Subsequent to March 31, 2023, the Company and CIM RACR co-invested $34.1 million and $6.0 million, respectively, in two corporate senior loans to a third-party. The Sub-Advisor provided investment management services related to these corporate senior loans pursuant to the Sub-Advisory Agreement.

NOTE 1213 — ECONOMIC DEPENDENCY

Under various agreements, the Company has engaged and may in the future engage ~~CR IV Advisors~~CMFT Management or its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and ~~investor~~stockholder relations. As a result of these relationships, the Company is dependent upon ~~CR IV Advisors~~CMFT Management or its affiliates. In the event that these companies are unable to provide the Company with these services, the Company would be required to find alternative providers of these services.

NOTE 1314 — ~~OPERATING~~STOCKHOLDERS’ EQUITY

Equity-Based Compensation

On August 10, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “2018 Plan”), under which 400,000 of the Company’s shares of common stock were reserved for issuance. On April 27, 2022, the Board and the compensation committee of the Board approved the Amended and Restated CIM Real Estate Finance Trust, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Plan was approved by the Company’s stockholders at the Company’s 2022 Annual Meeting of Stockholders held on July 12, 2022. The 2022 Plan superseded and replaced the 2018 Plan. Awards that are granted on or after the effective date of the 2022 Plan are subject to the terms and provisions of the 2022 Plan. The total number of shares of Company common stock reserved and available for issuance under the 2022 Plan at any time during the term of the 2022 Plan are 250,000 shares, which is a reduction from 400,000 shares authorized for issuance under the 2018 Plan, and awards of approximately 183,000 shares of common stock are available for future grant at March 31, 2023. Under the 2022 Plan, the Board or the compensation committee of the Board has the authority to grant certain awards to employees, non-employee directors, and consultants or advisors of the Company, including stock option awards, restricted stock awards or deferred stock awards, which awards will further align such persons’ interests with the interests of the Company’s stockholders. The Board or the compensation committee of the Board also has the authority to determine the terms of any award granted pursuant to the 2022 Plan, including vesting schedules, restrictions and acceleration of any restrictions. The 2022 Plan may be amended or terminated by the Board or the compensation committee of the Board at any time, subject to the right of the Company’s stockholders to approve certain amendments.

As of March 31, 2023, the Company has granted awards of approximately 116,000 restricted shares in the aggregate to the independent members of the Board under the 2018 Plan and approximately 67,000 restricted shares in the aggregate to the independent members of the Board under the 2022 Plan. As of March 31, 2023, 116,000 of the restricted shares had vested based on one year of continuous service. The remaining 67,000 restricted shares issued had not vested or been forfeited as of

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

March 31, 2023. The fair value of the Company’s share awards is determined using the Company’s per share NAV on the date of grant. Compensation expense related to the restricted shares is recognized over the vesting period. The Company recorded compensation expense of $120,000 and $37,000 for the three months ended March 31, 2023 and 2022, respectively, related to the restricted shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. As of March 31, 2023, there was $240,000 of total unrecognized compensation expense related to these restricted shares, which will be recognized ratably over the remaining period of service prior to October 2023.

NOTE 15 — LEASES

The Company’s real estate assets are leased to tenants under operating leases for which the terms, expirations and ~~expirations~~extension options vary. The Company’s operating leases do not convey to the lessee the right to purchase the underlying asset upon expiration of the lease period. To determine whether a contract contains a lease, the Company reviews contracts to determine if the agreement conveys the right to control the use of an asset. The Company accounts for lease and non-lease components as a single, combined operating lease component. Non-lease components primarily consist of maintenance services, including CAM, real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. Non-lease components are considered to be variable rental and other property income and are recognized in the period incurred.

As of ~~September 30, 2017,~~March 31, 2023, the Company’s leases had a weighted-average remaining term of ~~9.8~~11.3 years. Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of ~~September 30, 2017,~~March 31, 2023, the future minimum rental income from the Company’s ~~investment in~~ real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands):


	Future Minimum Rental Income
Remainder of 2023	$	68,750
2024	90,135
2025	89,882
2026	87,107
2027	84,717
Thereafter	645,156
Total	$	1,065,747

A certain amount of the Company’s rental and other property income is from tenants with leases which are subject to contingent rent provisions. These contingent rents are subject to the tenant achieving periodic revenues in excess of specified levels. For the three months ended March 31, 2023 and 2022, the amount of the contingent rent earned by the Company was not significant.

Rental and other property income during the three months ended March 31, 2023 and 2022 consisted of the following (in thousands):


	Three Months Ended March 31,
	2023		2022
Fixed rental and other property income (1)	$	37,357	$	64,706
Variable rental and other property income (2)	1,424		9,030
Total rental and other property income	$	38,781	$	73,736

(1)Consists primarily of fixed contractual payments from operating leases with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above- and below-market leases, and is net of uncollectible lease-related receivables.

(2)Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses, and percentage rent.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Future Minimum Rental Income
Remainder of 2017 $ 92,490
2018 358,539
2019 343,351
2020 330,829
2021 314,676
Thereafter 2,242,089
Total $ 3,681,974
The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 10.4 years, with a lease liability (in deferred rental income, derivative liabilities and other liabilities) and a related right-of-use (“ROU”) asset (in prepaid expenses, derivative assets and other assets) of $2.1 million in the condensed consolidated balance sheets. The lease liability and ROU asset were initially measured at the present value of the future minimum lease payments using a discount rate of 4.3%. This reflects the Company’s incremental borrowing rate, which was calculated based on the interest rate the Company would incur to borrow on a fully collateralized basis over a term similar to the lease.

The Company recognized $63,000 of ground lease expense during the three months ended March 31, 2023, of which $61,000 was paid in cash during the period it was recognized. As of March 31, 2023, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $187,000 for the remainder of 2023, $250,000 annually for 2024 through 2028, and $1.2 million thereafter through the maturity date of the lease in August 2033.

NOTE 1416 — SEGMENT REPORTING

The Company has two reportable segments: Credit and Real Estate. Corporate/other represents all corporate level and unallocated items and includes the Company’s other asset management activities and expenses. There were no changes in the structure of the Company’s internal organization that prompted the change in reportable segments. Prior period amounts have been revised to conform to the current year presentation shown below.

The following tables present segment reporting for the three months ended March 31, 2023 and 2022(in thousands):


	Real Estate		Credit		Corporate/Other (1)		Company Total
Three Months Ended March 31, 2023
Rental and other property income	$	38,715	$	—	$	66	$	38,781
Interest income	—		108,083		—		108,083
Total revenues	38,715		108,083		66		146,864

General and administrative	74		372		2,852		3,298
Interest expense, net	8,151		54,016		4,067		66,234
Property operating	1,684		—		892		2,576
Real estate tax	425		—		392		817
Expense reimbursements to related parties	—		—		3,568		3,568
Management fees	3,250		9,329		—		12,579
Transaction-related	13		—		—		13
Depreciation and amortization	15,110		—		—		15,110
Real estate impairment	4,814		—		—		4,814
Increase in provision for credit losses	—		1,453		—		1,453
Total expenses	33,521		65,170		11,771		110,462


Other income (expense):
Gain on disposition of real estate and condominium developments, net	19,563		—		60		19,623
Loss on investment in unconsolidated entities	—		(770)		—		(770)
Unrealized gain on equity security	—		2,258		—		2,258
Other (expense) income, net	(1,842)		1,843		323		324
Loss on extinguishment of debt	(1,172)		—		(2,473)		(3,645)
Segment net income (loss)	$	21,743	$	46,244	$	(13,795)	$	54,192
Net income allocated to noncontrolling interest	8		—		—		8
Segment net income (loss) attributable to the Company	$	21,735	$	46,244	$	(13,795)	$	54,184
Total assets as of March 31, 2023	$	1,315,426	$	4,725,168	$	604,932	$	6,645,526

__________________________________

(1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)


	Real Estate		Credit		Corporate/Other (1) (2)		Company Total
Three Months Ended March 31, 2022
Rental and other property income	$	73,639	$	—	$	97	$	73,736
Interest income	—		31,463		—		31,463
Total revenues	73,639		31,463		97		105,199

General and administrative	149		230		3,096		3,475
Interest expense, net	15,078		11,612		3,306		29,996
Property operating	7,136		—		591		7,727
Real estate tax	6,350		—		363		6,713
Expense reimbursements to related parties	—		—		3,694		3,694
Management fees	7,131		6,216		—		13,347
Transaction-related	7		—		—		7
Depreciation and amortization	19,141		—		—		19,141
Real estate impairment	3,291		—		—		3,291
Increase in provision for credit losses	—		4,709		—		4,709
Total expenses	58,283		22,767		11,050		92,100



Other income (expense):
Gain on disposition of real estate and condominium developments, net	29,265		—		3,309		32,574
Gain on investment in unconsolidated entities	—		168		5,172		5,340
Unrealized (loss) gain on equity security	—		(2,368)		22		(2,346)
Other income, net	1,239		66		—		1,305
Loss on extinguishment of debt	(10,737)		—		(134)		(10,871)
Segment net income (loss)	$	35,123	$	6,562	$	(2,584)	$	39,101
Net income allocated to noncontrolling interest	9		—		—		9
Segment net income (loss) attributable to the Company	$	35,114	$	6,562	$	(2,584)	$	39,092
Total assets as of March 31, 2022	$	2,919,412	$	3,767,306	$	281,702	$	6,968,420

(1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.

(2)Includes the Company’s investment in CIM UII Onshore, L.P. (“CIM UII Onshore”).

NOTE 17 — SUBSEQUENT EVENTS

~~The following events occurred subsequent to September 30, 2017:~~

~~Redemption~~Redemptions of Shares of Common Stock

Subsequent to ~~September 30, 2017,~~March 31, 2023, the Company redeemed approximately ~~2.5~~1.6 million shares ~~pursuant to the Company’s share redemption program~~ for ~~$25.0~~$10.8 million (at ~~an average~~a redemption price of $6.57 per ~~share of $10.08)~~share). ~~Management, in its discretion, limited the amount of shares redeemed for~~The remaining redemption requests received during the three months ended ~~September 30, 2017 to shares issued in the DRIP Offerings during the respective period. The remaining redemption requests~~March 31, 2023 totaling approximately ~~9.8~~23.9 million shares went unfulfilled.

Investment ~~in Real Estate Assets~~and Disposition Activity

Subsequent to ~~September 30, 2017,~~March 31, 2023, the ~~Company acquired one commercial real estate property~~Company’s investment and disposition activity included the following:

•Sold 27 of the properties under contract for sale pursuant to the Realty Income Purchase and Sale Agreement for total consideration of $82.1 million and a ~~purchase price~~gain of ~~$3.2~~approximately $12.8 million. The Company has not completed its initial purchase price allocation with respect to this property and therefore cannot provide similar disclosures to those included in Note 4 — Real Estate Investments in these condensed consolidated financial statements for this property.

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~~COLE CREDIT PROPERTY~~CIM REAL ESTATE FINANCE TRUST, ~~IV,~~ INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2023 (Unaudited) – (Continued)

~~Property Disposition~~

As•In addition to the properties disposed of ~~September 30, 2017, one property was classified as held for sale, as discussed in Note 2 — Summary of Significant Accounting Policies. Subsequent~~pursuant to ~~September 30, 2017,~~the Realty Income Purchase and Sale Agreement, the Company disposed of ~~this property~~two properties and condominium units for aan aggregate gross sales price of ~~$1.9~~$25.4 million, resulting in net proceeds of ~~$1.9~~$23.9 million after closing costs and a net gain of ~~$242,000. No disposition fees~~approximately $7.6 million.

•Purchased $63.5 million in CMBS.

•Settled $13.0 million of liquid senior loan purchases, all of which were ~~paid~~traded as of March 31, 2023, and sold $5.8 million of liquid senior loans.

•Invested $44.1 million in three corporate senior loans to ~~CR IV Advisors or its affiliates in connection with the sale~~a third-party.

•Funded an aggregate amount of ~~the property and the Company has no continuing involvement with this property.~~

~~Sale of Cole Capital~~

~~On November 13, 2017 the parent~~$4.9 million to six of the Company’s ~~sponsor entered into a purchase and sale agreement~~first mortgage loans.

Financing Activity

Subsequent to ~~sell its ownership interest in~~March 31, 2023, the Company’s ~~sponsor. The completion~~financing activity included the following:

•Financed CMBS under the J.P. Morgan Repurchase Facility for $36.2 million and repaid $551,000 of ~~this sale is subject to~~borrowings under the ~~receipt~~J.P. Morgan Repurchase Facility.

•Repaid $88.0 million of ~~regulatory approvals and other customary closing conditions and is expected to occur at~~borrowings under the ~~end~~Credit Securities Revolver.

•Repaid $5.0 million of borrowings under the ~~fourth quarter of 2017 or during the first quarter of 2018.~~Deutsche Bank Repurchase Facility.

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~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. Certain risks may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a complete discussion of such risk factors, see Item 1A — Risk Factors of this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in “Part I — Financial Information” of this Quarterly Report on Form 10-Q, including the notes to the condensed consolidated financial statements contained therein, and the terms “we,” “us,” “our” and the “Company” refer to ~~Cole Credit Property~~CIM Real Estate Finance Trust, ~~IV,~~ Inc.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect our expectations and projections about our future results, performance, prospects and opportunities. We have attempted to identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” or similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, those discussed below. In addition, these risks and uncertainties include those associated with general economic, market and other conditions. We intend for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or new information, future events or otherwise, except as may be required to satisfy our obligations under federal securities law. The forward-looking statements should be read in light of the risk factors identified in Item 1A — Risk Factors of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from those presented in our forward-looking statements:

•We are subject to risks associated with bankruptcies or insolvencies of our borrowers and tenants and from borrower or tenant defaults generally.

•Our credit and real estate investments subject us to the domestic and international political, economic, capital markets and other conditions, including with respect to the effects of the COVID-19 pandemic and other events.

•We are subject to fluctuations in interest rates which could reduce our ability to generate income on our credit investments.

•We are subject to an increase in inflation that could increase our credit and real estate portfolio related costs at a higher rate than our rental income and other revenue and adversely impact demand for rental space and future extensions of our tenants’ leases.

•We are subject to competition from entities engaged in lending which may impact the availability of origination and acquisition opportunities acceptable to us.

•We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.

•We are subject to risks associated with tenant, geographic and industry concentrations with respect to our investments and properties.

•Our properties, intangible assets and other assets, as well as the property securing our loans or other investments, may be subject to impairment charges.

•We could be subject to unexpected costs or unexpected liabilities that may arise from ~~potential dispositions of properties.~~dispositions.

•We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties and we may suffer delays or be unable to acquire, dispose of, or lease properties on advantageous terms.

~~We could be subject to risks associated with bankruptcies or insolvencies of tenants or from tenant defaults generally.~~

•We have substantial indebtedness, which may affect our ability to pay distributions and expose us to interest rate fluctuation risk and the risk of default under our debt obligations.

•We ~~may be affected by~~are subject to risks associated with the incurrence of additional secured or unsecured debt.

•We may not be able to maintain profitability.

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•We may not generate cash flows sufficient to pay our distributions to stockholders or meet our debt service obligations.

•Our continued compliance with debt covenants depends on many factors and could be impacted by current or future economic conditions, including those associated with the COVID-19 pandemic.

•We may be affected by risks resulting from losses in excess of insured limits.

•We may fail to remain qualified as a REIT for U.S. federal income tax purposes.

~~Our advisor has~~•We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability or reduce our operating flexibility.

•We may be unable to list our shares on a national securities exchange in the ~~right to terminate the advisory agreement upon 60 days’ written notice without cause~~timeframe we expect or ~~penalty.~~

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at all.

Definitions

We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings:

The phrase “annualized rental income” refers to the straight-line rental revenue under our leases on operating properties owned as of the respective reporting date, which includes the effect of rent escalations and any tenant concessions, such as free rent, and excludes any ~~bad debt allowances and any~~ contingent rent, such as percentage rent. Management uses annualized rental income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized rental income is not indicative of future performance.

Under a “net lease,” the tenant occupying the leased property (usually as a single tenant) does so in much the same manner as if the tenant were the owner of the property. ~~There are various forms of net leases, most typically classified as triple-net or double-net. Triple-net leases typically require the~~The tenant ~~to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs). Double-net leases typically require that the tenant pay all operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance), but excludes some or all major repairs (e.g.~~, roof, structure and parking lot). Accordingly, the owner receives the rent “net” of these expenses, rendering the cash flow associated with the lease predictable for the term of the lease. Under a net lease, the tenant generally ~~agrees to lease the property for a significant term and~~ agrees that it will either have no ability or only limited ability to terminate the lease or abate rent prior to the expiration of the term of the lease as a result of real estate driven events such as casualty, condemnation or failure by the landlord to fulfill its obligations under the lease. There are various forms of net leases, most typically classified as either triple-net or double-net. Triple-net leases typically require the tenant to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs, including roof, structure and parking lot). Double-net leases typically hold the landlord responsible for the capital expenditures for the roof and structure, while the tenant is responsible for all lease payments and remaining operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance).

Overview

We are a non-traded REIT that seeks to attain attractive risk-adjusted returns and create long term value for its investors by investing in a diversified portfolio of senior secured mortgage loans, creditworthy long-term net-leased property investments and other senior loan and liquid credit investments. Our investment strategy allows us to adapt over time in order to respond to evolving market conditions and to capitalize on investment opportunities that may arise at different points in the economic and real estate investment cycle. Subject to market conditions, we expect to pursue a listing of our common stock on a national securities exchange at such time as our Board determines that such a listing would be in the best interests of our stockholders, though we can provide no assurance that a listing will happen in a particular timeframe or at all.

We were formed on July 27, 2010, and we elected to be taxed, and ~~currently~~conduct our operations to qualify, as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2012. We commenced our principal operations on April 13, 2012, when we satisfied the conditions of our escrow agreement regarding the minimum offering and issued approximately 308,000 shares of our common stock.purposes. We have no paid employees and are externally ~~advised and~~ managed by ~~CR IV Advisors. VEREIT indirectly owns and/or controls our external advisor, CR IV Advisors, the dealer manager for the Offering, CCC, our property manager, CREI Advisors,~~CMFT Management and, ~~our sponsor, Cole Capital.~~

~~We ceased issuing shares~~with respect to investments in ~~our Offering on April 4, 2014~~securities and ~~in the Initial DRIP Offering effective as of June 30, 2016, but will continue to issue shares of common stock under the Secondary DRIP Offering until a liquidity event occurs, such as the listing~~certain other of our ~~shares on~~investments, our Investment Advisor, each of which is an affiliate of CIM Group, a ~~national~~community-focused real estate and infrastructure owner, operator, lender and developer.

As of March 31, 2023, our loan portfolio consisted of 349 loans with a net book value of $3.9 billion, and investments in real estate-related securities ~~exchange or~~of $520.6 million.

As of March 31, 2023, we owned 228 properties, which consisted of 213 retail properties, nine office properties, and six industrial properties, representing 19 industry sectors and comprising approximately 6.9 million rentable square feet of commercial space located in 37 states, with a net book value of $1.3 billion. As of March 31, 2023, we owned condominium developments with a net book value of $131.6 million.

In furtherance of our strategy, during the three months ended March 31, 2023, we disposed of 152 properties encompassing approximately 4.0 million gross rentable square feet. On December 29, 2022, certain subsidiaries of the Company entered into the Realty Income Purchase and Sale Agreement to sell 185 single-tenant net lease properties for total consideration of $894.0 million. During the three months ended March 31, 2023, the sale of ~~our company, or~~151 properties closed under the ~~Secondary DRIP Offering is otherwise terminated by~~Realty Income Purchase and Sale Agreement for total consideration of $779.0 million, as further discussed in Note 4 — Real Estate Assets to the ~~Board. We expect that property acquisitions~~condensed consolidated financial statements in ~~2017~~this Quarterly Report on Form 10-Q. Subsequent to March 31, 2023, the remaining 27 properties closed pursuant to the Realty Income Purchase and ~~future periods will be funded by proceeds from financing~~Sale Agreement, as further

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discussed in Note 17 — Subsequent Events to the ~~acquired properties, cash flows from operations and the strategic sale of properties and other investments.~~

~~On September 27, 2015, the Board established an estimated value of our common stock, as of August 31, 2015, of $9.70 per share for purposes of assisting broker-dealers that participated~~condensed consolidated financial statements in the Offering in meeting their customer account statement reporting obligations under National Association of Securities Dealers Conduct Rule 2340. On November 10, 2016, the Board established an updated estimated per share NAV of our common stock, as of September 30, 2016, of $9.92 per share. On March 24, 2017, the Board established an updated estimated per share NAV of our common stock, as of December 31, 2016, of $10.08 per share.this Quarterly Report on Form 10-Q.

Our operating results and cash flows are primarily influenced by interest income from our credit investments, rental and other property income from our commercial properties, interest expense on our indebtedness and ~~acquisition~~credit investments and ~~operating~~ expenses. ~~Rental and other property~~In general, our business model is such that rising interest rates will correlate to increases in our net income, ~~accounted for 88%~~while declining interest rates will correlate to decreases in our net income. As of March 31, 2023, 99.3% of our ~~total revenue for both~~CMBS and loans held-for-investment by carrying value earned a floating rate of interest, primarily indexed to SOFR and U.S. dollar LIBOR, and were financed with liabilities that pay interest at floating rates, which resulted in an amount of net equity that is positively correlated to rising interest rates, subject to the ~~three~~impact of interest rate floors on certain of our floating rate loans. CMFT Management reviews our investment portfolio and ~~nine months ended September 30, 2017~~is in regular contact with our borrowers, monitoring performance of the collateral and ~~2016. As 97.5%~~enforcing our rights as necessary. In addition, as 98.9% of our rentable square feet was under lease, including any month-to-month agreements, as of ~~September 30, 2017~~March 31, 2023, with a weighted average remaining lease term of ~~9.8~~11.3 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors. ~~CR IV Advisors~~Our manager regularly monitors the creditworthiness of our tenants by reviewing each tenant’s financial results, any available credit rating agency reports ~~when available,~~ on the tenant or guarantor, the operating history of the property with such tenant, the tenant’s market share and track record within its industry segment, the general health and outlook of the tenant’s industry segment and other information for changes and possible trends. If ~~CR IV Advisors~~our manager identifies significant changes or trends that may adversely affect the creditworthiness of a tenant, it will gather a more in-depth knowledge of the tenant’s financial condition and, if necessary, attempt to mitigate the tenant credit risk by evaluating the possible sale of the property or identifying a possible replacement tenant should the current tenant fail to perform on the lease.

Macroeconomic Environment

The three months endedMarch 31, 2023 have been characterized by continued volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth and geopolitical uncertainty. Multiple bank failures have contributed to instability in the banking sector and have also contributed to diminished liquidity and credit availability in the market broadly. The ongoing war between Russia and Ukraine is also contributing to economic and geopolitical uncertainty.

Continued inflation has caused the Federal Reserve to continue raising interest rates, which has created further uncertainty for the economy and for our borrowers and tenants. Although the majority of our business model is such that rising interest rates will, all else being equal, correlate to increases in our net income, increases in interest rates may adversely affect our existing borrowers, tenants and owned property values. Additionally, rising rates and increasing costs may dampen consumer spending and slow corporate profit growth, which may negatively impact the collateral underlying certain of our loans and the ability of our tenants to pay rent. While there is debate among economists as to whether such factors indicate that the U.S. has entered, or in the near term will enter, a recession, it remains difficult to predict the full impact of recent changes and any future changes in interest rates or inflation.

For a complete discussion of risk factors related to the economy that could impact our lending and our business, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

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Operating Highlights and Key Performance Indicators

~~2017~~ Activity from January 1, 2023 through March 31, 2023

~~Acquired 40 commercial properties~~Operating Results:

•Net income attributable to the Company of $54.2 million, or $0.12 per share.

•Declared aggregate distributions of $0.11 per share.

Credit Portfolio Activity:

•Invested $17.0 million in first mortgage loans and received principal repayments on loans held-for-investment of $124.0 million.

•Invested $26.8 million in liquid corporate senior loans and sold liquid corporate senior loans for an aggregate ~~purchase~~gross sales price of ~~$300.5~~$8.5 million.

•Invested $9.4 million in CMBS and received repayments on CMBS of $49.0 million.

•Invested $16.8 million in corporate senior loans.

Real Estate Portfolio Activity:

•Disposed of ~~14 retail~~152 properties for an aggregate sales price of ~~$98.6~~$781.2 million.

•Disposed of a condominium unit for a sales price of $1.6 million.

Financing Activity:

•Decreased total debt by $464.5 million.

•Entered into a new financing facility that provides up to $300.0 million in financing, which may be increased to an aggregate principal amount up to $500.0 million, pursuant to the ~~Second Amended~~Loan and ~~Restated~~Security Agreement.

•Paid down the $240.0 million outstanding balance under the CMFT Credit ~~Agreement that increased~~Facility and terminated the ~~allowable borrowings~~CMFT Credit Facility.

•Paid down the $121.9 million outstanding balance on the Mortgage Loan.

Portfolio Information

The following table shows the carrying value of our portfolio by investment type as of March 31, 2023 and ~~extended~~2022 (dollar amounts in thousands):


	As of March 31,
	2023					2022
	Asset Count	Carrying Value				Asset Count	Carrying Value
Loan Held-For-Investment

First mortgage loans	28	$	3,198,651	54.6	%	25	$	2,664,702	40.8	%
Liquid corporate senior loans	315	703,866		12.0	%	306	671,569		10.3	%
Corporate senior loans	6	73,799		1.3	%	1	9,927		0.2	%
Less: Current expected credit losses		(43,779)		(0.7)	%		(19,150)		(0.3)	%
Total loans held-for-investment and related receivable, net	349	3,932,537		67.2	%	332	3,327,048		51.0	%
Real Estate-Related Securities
CMBS and equity security	19	520,639		8.9	%	8	186,070		2.9	%
Preferred units	—	—		—	%	1	68,243		1.0	%
Real Estate
Total real estate assets and intangible lease liabilities, net	228	1,394,810		23.9	%	445	2,944,298		45.1	%
Total Investment Portfolio	596	$	5,847,986	100.0	%	786	$	6,525,659	100.0	%

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Credit Portfolio Information

The following table details overall statistics for our credit portfolio as of March 31, 2023 (dollar amounts in thousands):


	CRE Loans (1)(2)			Liquid Corporate Senior Loans			CMBS and Equity Security			Corporate Senior Loans
Number of investments (3)	28			315			19			6
Principal balance	$	3,216,545		$	710,334		$	644,375		$	74,917
Net book value	$	3,176,350		$	683,585		$	520,639		$	72,602
Unfunded loan commitments	$	287,515		$	1,425		$	—		$	3,794
Weighted-average interest rate	8.0		%	8.5		%	8.9		%	11.3		%
Weighted-average maximum years to maturity	3.4			4.6			2.6			4.4

(1)As of March 31, 2023, 100% of our loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR and SOFR.

(2)Maximum maturity date assumes all extension options are exercised by the ~~maturity dates associated with~~borrower; however, our CRE loans may be repaid prior to such date.

(3)Table does not include our investment in the ~~original amended and restated unsecured credit facility.~~Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q), which had a carrying value of $97.4 million as of March 31, 2023.

~~Total debt increased by $214.7 million, from $2.26 billion to $2.47 billion.~~

Real Estate Portfolio Information

As of ~~September 30, 2017,~~March 31, 2023, we owned ~~908~~228 properties located in 4537 states, the gross rentable square feet of which was ~~97.5%~~98.9% leased, including any month-to-month agreements, with a weighted average lease term remaining of ~~9.8~~11.3 years. ~~During the nine months ended September 30, 2017, we disposed of 14 properties for an aggregate sales price of $98.6 million.~~ As of ~~September 30, 2017,~~March 31, 2023, no single tenant accounted for greater than 10% of our ~~2017~~2023 annualized rental income. As of ~~September 30, 2017,~~March 31, 2023, we had certain geographic and industry concentrations in our property holdings. In particular, ~~as of September 30, 2017, 77 of our~~we had properties ~~were~~ located in ~~California,~~Ohio, which accounted for ~~10%~~17% of our ~~2017~~2023 annualized rental income. In addition, we had tenants in the ~~discount store~~health and ~~pharmacy~~personal care stores and manufacturing industries, which accounted for 14% and ~~10%~~11%, respectively, of our ~~2017~~2023 annualized rental income. During the three months ended March 31, 2023, we disposed of 152 properties for an aggregate gross sales price of $781.2 million. Additionally, during the three months ended March 31, 2023, we sold one condominium unit for a gross sales price of $1.6 million.

The following table shows the property statistics of our real estate assets ~~which exclude uncompleted development projects and any properties owned through unconsolidated joint ventures,~~ as of ~~September 30, 2017~~March 31, 2023 and ~~2016~~:2022:

September 30,
2017 2016
Number of commercial properties 908
882
Rentable square feet (in thousands) ⁽¹⁾
26,837
26,454
Percentage of rentable square feet leased 97.5 % 98.5 %
Percentage of investment-grade tenants ⁽²⁾
34.0 % 36.2 %

(1) Includes square feet of the buildings on land parcels subject to ground leases.
(2) Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC (“Standard & Poor’s”) or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”). The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable.

~~The following table summarizes our real estate investment activity during the three and nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Commercial properties acquired ⁽¹⁾
13
6
40
14
Purchase price of acquired properties (in thousands) $ 113,857
$ 97,086
$ 300,524
$ 197,026
Rentable square feet (in thousands) ⁽²⁾
516
592
1,352
1,175


	As of March 31,
	2023		2022
Number of commercial properties	228		445
Rentable square feet (in thousands) (1)	6,892		15,357
Percentage of rentable square feet leased	98.9	%	97.2	%
Percentage of investment-grade tenants (2)	37.0	%	38.8	%

(1) ~~Excludes a property owned through the Unconsolidated Joint Venture that was consolidated during the nine months ended September 30, 2016.~~

~~(2)~~ Includes square feet of buildings on land parcels subject to ground leases.

(2) Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”). The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable. The weighted average credit rating is weighted based on annualized rental income and is for only those tenants rated by Standard & Poor’s.

During the three months ended March 31, 2023 and 2022, the Company did not acquire any properties.

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Results of Operations

Overview

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such as inflation and rising interest rates, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties and credit investments other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022 and this Quarterly Report on Form 10-Q.

Our operating segments include Credit and Real Estate. Refer to Note 16 — Segment Reporting to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of our operating segments.

The following table ~~provides summary information about~~compares our summarized results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016 (in~~2022 by operating segment (amounts in thousands):


	For the Three Months Ended
	March 31, 2023		March 31, 2022		Change
Revenues:
Credit Segment	$	108,083	$	31,463	$	76,620
Real Estate Segment	38,715		73,639		(34,924)
Corporate	66		97		(31)
	146,864		105,199		41,665
Expenses:
Credit Segment	65,170		22,767		42,403
Real Estate Segment	33,521		58,283		(24,762)
Corporate	11,771		11,050		721
	110,462		92,100		18,362
Other income (expense):
Credit Segment	3,331		(2,134)		5,465
Real Estate Segment	16,549		19,767		(3,218)
Corporate	(2,090)		8,369		(10,459)
	17,790		26,002		(8,212)
Net income	54,192		39,101		15,091
Net income allocated to non-controlling interest	8		9		(1)
Net income attributable to the Company	$	54,184	$	39,092	$	15,092

Three Months Ended September 30, 2017 vs. 2016 Increase (Decrease) Nine Months Ended September 30, 2017 vs. 2016 Increase (Decrease)
2017 2016 2017 2016
Total revenues $ 107,024
$ 101,796
$ 5,228
$ 316,308
$ 302,940
$ 13,368
General and administrative expenses $ 3,270
$ 3,246
$ 24
$ 10,301
$ 9,735
$ 566
Property operating expenses $ 7,345
$ 5,738
$ 1,607
$ 20,881
$ 16,603
$ 4,278
Real estate tax expenses $ 9,276
$ 8,612
$ 664
$ 27,646
$ 25,939
$ 1,707
Advisory fees and expenses $ 11,149
$ 10,587
$ 562
$ 32,863
$ 31,100
$ 1,763
Acquisition-related expenses $ 110
$ 1,417
$ (1,307 ) $ 1,520
$ 3,592
$ (2,072 )
Depreciation and amortization $ 36,461
$ 33,452
$ 3,009
$ 106,145
$ 100,399
$ 5,746
Operating income $ 37,755
$ 37,314
$ 441
$ 115,294
$ 114,142
$ 1,152
Interest expense and other, net $ 23,335
$ 20,473
$ 2,862
$ 67,968
$ 58,416
$ 9,552
Net income attributable to the Company $ 29,736
$ 18,096
$ 11,640
$ 64,028
$ 57,028
$ 7,000
Credit Segment

~~Revenue~~

Our revenues consist primarily of rental and other property income from net leased commercial properties. We also incur certain operating expenses that are subject to reimbursement by our tenants, which results in tenant reimbursement income.

~~The increase in revenue of $5.2 million and $13.4 million during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in~~ ~~2016~~, was primarily due to the acquisition of 41 rental income-producing properties subsequent to September 30, 2016. Rental income from net leased commercial properties accounted for 88% of our total revenue for both the three and nine months ended September 30, 2017 and 2016. We also incurred certain operating expenses subject to reimbursement by our tenants, which resulted in $12.9 million and $38.0 million of tenant reimbursement income during the three and nine months ended September 30, 2017, respectively, compared to ~~$12.4 million~~ ~~and $37.6 million, respectively, during the same periods in 2016.~~

~~General and Administrative Expenses~~

The primary general and administrative expense items are operating expense reimbursements to our advisor, escrow and trustee fees, state franchise and income taxes, office expenses and accounting fees.Revenues

The increase in ~~general and administrative expenses~~our Credit segment revenues of $24,000 and $566,000 during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016, was primarily due to increases in operating expense reimbursements to our advisor during the three and nine months ended September 30, 2017, primarily as a result of the acquisition of 41 additional rental income-producing properties subsequent to September 30, 2016.

~~Property Operating Expenses~~

~~Property operating expenses such as property repairs, maintenance and property-related insurance include both reimbursable and non-reimbursable property expenses. We are reimbursed by tenants~~$76.6 million for ~~certain property operating expenses in accordance with the respective lease agreements.~~

The increase in property operating expenses of $1.6 million and $4.3 million during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016, was primarily due to the acquisition and management of 41 additional rental income-producing properties subsequent to ~~September 30, 2016, as well as recognizing a full period of property operating expenses on six and 14 properties acquired during the three and nine months ended September 30, 2016, respectively.~~

~~Table of Contents~~

~~Real Estate Tax Expenses~~

The increase in real estate tax expenses of $664,000 and $1.7 million during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016, was primarily due to the acquisition of 41 additional rental income-producing properties subsequent to September 30, 2016, as well as recognizing a full period of real estate tax expenses on six and 14 properties acquired during the three and nine months ended September 30, 2016, respectively.

~~Advisory Fees and Expenses~~

Pursuant to the advisory agreement with CR IV Advisors and based upon the amount of our current invested assets, we are required to pay to CR IV Advisors a monthly advisory fee equal to one-twelfth of 0.75% of the average invested assets up to $2.0 billion, one-twelfth of 0.70% of the average invested assets over $2.0 billion up to $4.0 billion and one-twelfth of 0.65% of assets over $4.0 billion. Additionally, we may be required to reimburse certain expenses incurred by CR IV Advisors in providing such advisory services, subject to limitations as set forth in the advisory agreement.

~~The increase in advisory fees and expenses of $562,000 during~~ the three months ended ~~September 30, 2017,~~March 31, 2023, as compared to the same period in ~~2016,~~2022, was primarily due to increased average index rates during 2022 and 2023, as well as an increase in the overall size of our ~~average invested assets~~investment portfolio. As of March 31, 2023, we held $4.5 billion in credit investments compared to ~~$5.6~~$3.6 billion ~~over~~in credit investments as of March 31, 2022.

Expenses

Expenses for our Credit segment consists primarily of interest expense, management fees, increases (decreases) to our provision for credit losses, and general and administrative expenses. The increase in our Credit segment expenses of $42.4 million for the three months ended ~~September 30, 2017, compared to $5.2 billion over the three months ended September 30, 2016.~~

~~The increase in advisory fees and expenses of $1.8 million during the nine months ended September 30, 2017,~~March 31, 2023, as compared to the same period in ~~2016,~~2022, was primarily due to anincreased interest expenses due to higher average index rates during 2022 and 2023 and increased outstanding borrowings used to fund credit investments. As of March 31, 2023, we held $4.5 billion in credit investments compared to $3.6 billion in credit investments as of March 31, 2022. The increase was offset by a $3.3 million decrease in the increase in ~~our average invested assets to $5.5 billion over the nine months ended September 30, 2017, compared to $5.2 billion over the nine months ended September 30, 2016.~~

~~Acquisition-Related Expenses~~

~~We reimburse CR IV Advisors or its affiliates~~provision for acquisition-related expenses incurred in the process of acquiring a property or the origination or acquisition of a loan, so long as the total acquisition fees and expenses relating to the transaction do not exceed 6.0% of the contract purchase price, unless otherwise approvedcredit losses primarily driven by a majority of our board of directors, including a majority of our independent directors, as commercially competitive, fair and reasonable to us. In April 2017, we early adopted ASU 2017-01, which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Beginning in April 2017, our acquisitions qualify as asset acquisitions, and as such, acquisition-related fees and certain acquisition-related expenses related to these asset acquisitions are capitalized. Prior to the adoption of ASU 2017-01 in April 2017, costs related to property acquisitions, including acquisition fees described below, were expensed as incurred, and all of our acquisitions were accounted for as business combinations. Prior to April 2017, acquisition-related expenses primarily consisted of legal, deed transfer and other costs related to real estate purchase transactions, including costs incurred for deals that were not consummated. We also pay CR IV Advisors or its affiliates acquisition fees of up to 2.0% of: (1) the contract purchase price of each property or asset we acquire; (2) the amount paid in respect of the development, construction or improvement of each asset we acquire; (3) the purchase price of any loan we acquire; and (4) the principalreduced amount of ~~any loan we originate.~~

~~The decrease in acquisition-related expenses of $1.3 million~~credit investments entered into during the three months ended ~~September 30, 2017,~~March 31, 2023, as compared to the same period in ~~2016, was primarily due to the early adoption~~2022.

Table of ~~ASU 2017-01, and as such, acquisition costs related to asset acquisitions were capitalized~~Contents

Other Income (Expense)

Other income (expense) for our Credit segment consists of (loss) gain on investment in unconsolidated entities, unrealized gain (loss) on equity security, along with dividend income from our equity security. The increase in our Credit segment other income (expense) of $5.5 million during ~~the~~ ~~three months ended~~ ~~September 30, 2017. During~~ the three months ended ~~September 30, 2016, acquisition-related costs related to future property acquisitions were expensed as incurred.~~

~~The decrease in acquisition-related expenses of $2.1 million during the nine months ended September 30, 2017,~~March 31, 2023, as compared to the same period in ~~2016,~~2022, was primarily due to ~~the acquisition of four commercial properties prior to the adoption of ASU 2017-01, for an aggregate purchase price of $55.4~~recognizing a $2.3 million during the nine months ended September 30, 2017, compared to the acquisition of fourteen commercial properties for an aggregate purchase price of $197.0 million during the nine months ended September 30, 2016. During the nine months ended September 30, 2016, acquisition-related costs related to property acquisitions were expensed as incurred.

~~Depreciation and Amortization~~

~~The increase in depreciation and amortization expenses of $3.0 million and $5.7 million~~unrealized gain on equity security during the three ~~and nine~~ months ended ~~September 30, 2017, respectively, as~~March 31, 2023 compared to ~~the same periods in 2016, was primarily due to the acquisition of 41 additional rental income-producing properties subsequent to September 30, 2016, as well as recognizing~~ a ~~full period of depreciation and amortization expenses~~$2.4 million unrealized loss on ~~six and 14 properties acquired~~equity security during the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~

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~~Interest Expense and Other, Net~~

~~Interest expense and other, net also includes amortization of deferred financing costs.~~

March 31, 2022. The increase ~~in interest expense and other, net~~was further driven by a full quarter of ~~$2.9 million~~dividend income from our equity security during the three months ended~~September 30, 2017~~, March 31, 2023, offset by a loss on the Unconsolidated Joint Venture of $770,000 during the three months ended March 31, 2023, compared to a gain of $168,000 recognized during the same period in 2022.

Real Estate Segment

Revenues

The decrease in our Real Estate segment revenues of $34.9 million for the three months ended March 31, 2023, as compared to the same period in ~~2016,~~2022, was primarily due to ~~an increase~~the disposition of 217 properties subsequent to March 31, 2022. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Expenses

The decrease in ~~the average aggregate amount~~our Real Estate segment expenses of ~~debt outstanding to $2.5 billion during~~$24.8 million for the three months ended ~~September 30, 2017 from $2.2 billion during the three months ended September 30, 2016.~~

~~The increase in interest expense and other, net of $9.6 million during the nine months ended September 30, 2017,~~March 31, 2023, as compared to the same period in ~~2016,~~2022, was primarily due to the disposition of 217 properties subsequent to March 31, 2022. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”. The decrease was partially offset by an increase in impairment charges of $1.5 million for the ~~average aggregate amount~~three months ended March 31, 2023, as compared to the same period in 2022, due to one property that was deemed to be impaired, resulting in impairment charges of $4.8 million during the three months ended as March 31, 2023, compared to seven properties that were deemed to be impaired, resulting in impairment charges of $3.3 million during the three months ended March 31, 2022.

Other Income (Expense)

Other income (expense) for our Real Estate segment primarily consists of gain on disposition of real estate and condominium developments, net, loss on extinguishment of debt ~~outstanding~~and other income, net. The decrease in our Real Estate segment other income of $3.2 million for the three months ended March 31, 2023, as compared to ~~$2.4 billion~~the same period in 2022, was primarily due to the disposition of 152 properties for a gain of $19.6 million during the ~~nine~~three months ended ~~September 30, 2017 from $2.2 billion~~March 31, 2023, compared to the disposition of 69 properties for a gain of $29.2 million during the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2022. Other income was further reduced due to a $2.0 million decrease in the fair value of our interest rate caps during the three months ended March 31, 2023, as compared to a $1.2 million increase in the fair value of our interest rate caps during the three months ended March 31, 2022. The decrease was partially offset by a $9.6 million decrease in loss on extinguishment of debt, driven by increased termination of certain mortgage notes in connection with the disposition of the underlying properties during the three months ended March 31, 2022, as compared to the three months ended March 31, 2023.

Net Income Allocated to Non-Controlling Interest

Net income allocated to non-controlling interest remained relatively consistent for the three months ended March 31, 2023, as compared to the same period in 2022.

Same Store ~~Properties~~Analysis

Our results of operations are influenced by the timing of acquisitions and the operating performance of our real estate assets. We review our stabilized operating results, measured by ~~contract rental revenue,~~net operating income, from properties that we owned for the entirety of both the current and prior year reporting periods, referred to as “same store” ~~properties. Contract rental revenue~~properties, and we believe that the presentation of operating results for same store properties provides useful information to stockholders. Net operating income is a supplemental non-GAAP financial measure of a real estate ~~companies’~~company’s operating performance. ~~Contract rental revenue~~Net operating income is considered by management to be a helpful supplemental performance measure, as it enables management to evaluate the impact of occupancy, rents, leasing activity and other controllable property operating results at our real estate properties, and it provides a consistent method for the comparison of our properties. We define net operating income as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and other non-property related revenue and expense items such as (a) general and administrative expenses, (b) expense reimbursements to related parties, (c) management fees, (d) transaction-related expenses, (e) real estate impairment, (f) increase in provision for credit losses, (g) gain on disposition of real estate and condominium developments, net, (h) merger-related expenses, net and (i) interest income. Our calculation of net operating income may not be comparable to that of other REITs and should not be considered to be more

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relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income. In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment.

~~“Non-same~~Comparison of the Three Months Ended March 31, 2023 and 2022

The following table reconciles our Real Estate segment net income, calculated in accordance with GAAP, to net operating income (dollar amounts in thousands):


	For the Three Months Ended March 31,
	2023		2022		Change
Net income	$	21,743	$	35,123	$	(13,380)
Loss on extinguishment of debt	1,172		10,737		(9,565)
Other income (expense), net	1,842		(1,239)		3,081






Gain on disposition of real estate and condominium developments, net	(19,563)		(29,265)		9,702

Real estate impairment	4,814		3,291		1,523
Depreciation and amortization	15,110		19,141		(4,031)
Transaction-related expenses	13		7		6
Management fees	3,250		7,131		(3,881)

General and administrative expenses	74		149		(75)
Interest expense, net	8,151		15,078		(6,927)

Net operating income	$	36,606	$	60,153	$	(23,547)

A total of 228 properties were acquired before January 1, 2022 and represent our “same store” properties ~~as reflected in~~during the three months ended March 31, 2023 and 2022. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after ~~July~~January 1, 2016 and any properties under development or redevelopment. As shown in the table below, contract rental revenue on the 860 same store properties for the three months ended September 30, 2017 decreased $686,000 to $83.0 million, compared to $83.7 million for the three months ended September 30, 2017. The same store properties were 97.4% occupied as of September 30, 2017 and 98.5% occupied as of September 30, 2016. 2022.

The following table ~~shows~~details the ~~contract rental revenue from~~components of our Real Estate segment net operating income broken out between same store and non-same store properties ~~owned for both of the entire three months ended September 30, 2017 and 2016, along with a reconciliation to rental income, calculated in accordance with GAAP~~ (dollar amounts in thousands):


	Total						Same Store						Non-Same Store
	For the Three Months Ended March 31,						For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2023		2022		Change		2023		2022		Change		2023		2022		Change


Rental and other property income	$	38,715	$	73,639	$	(34,924)	$	27,078	$	26,787	$	291	$	11,637	$	46,852	$	(35,215)

Property operating expenses	1,684		7,136		(5,452)		1,174		1,036		138		510		6,100		(5,590)
Real estate tax expenses	425		6,350		(5,925)		1,082		1,032		50		(657)		5,318		(5,975)
Total property operating expenses	2,109		13,486		(11,377)		2,256		2,068		188		(147)		11,418		(11,565)

Net operating income	$	36,606	$	60,153	$	(23,547)	$	24,822	$	24,719	$	103	$	11,784	$	35,434	$	(23,650)

Net Operating Income

Same store property net operating income remained relatively consistent during the three months ended March 31, 2023, as compared to the same period in 2022.

Non-same store property net operating income decreased $23.7 million during the three months ended March 31, 2023, as compared to the same period in 2022. The decrease was primarily due to the the disposition of 217 properties subsequent to March 31, 2022.

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Number of Properties Three Months Ended September 30, Increase (Decrease)
2017 2016 $ Change % Change
Rental income – as reported $ 94,103
$ 89,370
$ 4,733
5 %
Less: Amortization ⁽¹⁾
1,008
289
719
249 %
Less: Straight-line rental income 2,912
2,984
(72 ) (2 )%
Total contract rental revenue 90,183
86,097
4,086
5 %

Less: “Non-same store” properties 48 6,231
837
5,394
644 %
Less: Disposed properties ⁽²⁾
19 959
1,581
(622 ) (39 )%
“Same store” properties 860 $ 82,993
$ 83,679
$ (686 ) (0.8 )%
Corporate Segment

~~(1) Includes amortization~~Revenues

Our Corporate segment revenues, which consist primarily of ~~above-~~rental income from our condominium and ~~below-market lease intangibles~~rental units acquired via foreclosure, remained relatively consistent during the three months ended March 31, 2023 as compared to the same period in 2022.

Expenses

Expenses for our Corporate segment consists primarily of general and ~~deferred lease incentives.~~administrative expenses, expense reimbursements to related parties, and interest expense related to our credit facilities. The increase in Corporate segment expenses of $721,000 during the three months ended March 31, 2023 as compared to the same period in 2022, was primarily driven by the change in interest expense due to increased average index rates during 2022 and 2023.

~~(2) We~~Other Income (Expense)

The decrease in Corporate segment other income (expense) of $10.5 million during the three months ended March 31, 2023, as compared to the same period in 2022, was primarily driven by the $5.2 million net gain during the three months ended March 31, 2022 related to our investment in CIM UII Onshore, which was subsequently redeemed during 2022. The change was further driven by the increase in loss on extinguishment of debt of $2.3 million, primarily in connection with the termination of the CMFT Credit Facility, and a decrease in gain on disposition of real estate and condominium developments, net, driven by a reduced amount of condominium units disposed of ~~five properties~~during the three months ended March 31, 2023 as compared to the same period in 2022.

Distributions

Our Board declares distributions on a quarterly basis, which are paid out on a monthly basis.

Our Board authorized the following monthly distribution amounts per share, payable to stockholders as of the record date for the applicable month, during the year ended December 31, ~~2016~~2022 and ~~14 properties during~~ the ~~nine~~three months ended ~~September 30, 2017.~~

“Non-same store” properties, as reflected in the table below, includes properties acquired on or after January 1, 2016 and any properties under development or redevelopment. As shown in the table below, contract rental revenue on the 851 same store propertiesMarch 31, 2023 for the nine months ended September 30, 2017 decreased $1.4 million to $244.0 million, compared to $245.4 million for the nine months ended September 30, 2016. The same store properties were 97.4% occupied asperiods indicated below:

Period Commencing

Period Ending

Monthly Distribution Amount

January 2022

September 2022

$0.0305

October 2022

December 2022

$0.0339

January 2023

September 2023

$0.0350

As of ~~September 30, 2017 and 98.6% occupied as~~March 31, 2023, we had distributions payable of ~~September 30, 2016.~~ $15.3 million.

The following table ~~shows~~presents distributions and source of distributions for the ~~contract rental revenue from properties owned for both of the entire nine months ended September 30, 2017 and 2016, along with a reconciliation to rental income, calculated in accordance with GAAP~~periods indicated below (dollar amounts in thousands):


	Three Months Ended March 31,
	2023				2022
	Amount		Percent		Amount		Percent
Distributions paid in cash	$	34,684	76	%	$	30,357	76	%
Distributions reinvested	10,763		24	%	9,574		24	%
Total distributions	$	45,447	100	%	$	39,931	100	%
Source of distributions:
Net cash provided by operating activities (1)(2)	$	45,447	100	%	$	39,931	100	%


Total sources	$	45,447	100	%	$	39,931	100	%

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Number of Properties Nine Months Ended September 30, Increase (Decrease)
2017 2016 $ Change % Change
Rental income – as reported $ 278,354
$ 265,341
$ 13,013
5 %
Less: Amortization ⁽¹⁾
1,926
844
1,082
128 %
Less: Straight-line rental income 7,651
8,888
(1,237 ) (14 )%
Total contract rental revenue 268,777
255,609
13,168
5 %

Less: “Non-same store” properties 57 21,172
4,798
16,374
341 %
Less: Disposed properties ⁽²⁾
19 3,588
5,380
(1,792 ) (33 )%
“Same store” properties 851 $ 244,017
$ 245,431
$ (1,414 ) (0.6 )%

(1) ~~Includes amortization of above- and below-market lease intangibles and deferred lease incentives.~~

~~(2) We disposed of five properties during the year ended December 31, 2016 and 14 properties during the nine months ended September 30, 2017.~~

~~Distributions~~

The Board authorized a daily distribution, based on 365 days in the calendar year, of $0.001711452 per share for stockholders of record as of the close of business on each day of the period commencing on January 1, 2017 and ending on March 31, 2018. As of September 30, 2017, we had distributions payable of $16.0 million.

~~During the~~ ~~nine months endedSeptember 30, 2017~~ ~~and~~ ~~2016, we paid distributions of $146.1 million and~~ ~~$146.5 million, respectively, including $76.9 million and~~ ~~$82.4 million, respectively, through the issuance of shares pursuant to the DRIP Offerings.~~ Net cash provided by operating activities for the ~~nine~~three months ended~~September 30, 2017~~ March 31, 2023 and 2022 was ~~$158.2~~$65.1 million and ~~reflected a reduction~~$30.1 million, respectively.

(2)Our distributions covered by cash flows from operating activities for ~~real-estate acquisition-related expenses incurred of $1.5 million in accordance with GAAP. For~~ the ~~nine~~three months ended ~~September 30, 2016, net~~March 31, 2022 include cash ~~provided by~~flows from operating activities ~~was $155.5 million and reflected a reduction for real estate acquisition-related expenses incurred~~in excess of ~~$3.6 million in accordance with GAAP. Our~~ distributions ~~paid during the~~ ~~nine months ended~~ ~~September 30, 2017 and~~ ~~2016, including shares issued pursuant to the DRIP Offerings, were fully funded by net cash provided by operating activities.~~from prior periods of $9.9 million.

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Share Redemptions

Our share redemption program permits our stockholders to sell their shares of common stock back to us, subject to certain conditions and limitations. We will limit the number of shares redeemed pursuant to our share redemption program as follows: (1) we will not redeem in excess of ~~5.0%~~5% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being ~~paid. Funding~~paid; and (2) funding for the redemption of shares will be limited, among other things, to the ~~cumulative~~ net proceeds we receive from the sale of shares under ~~the Secondary~~our DRIP, ~~Offering,~~ net of shares redeemed to date. In ~~addition,~~an effort to accommodate redemption requests throughout the calendar year, we will generally limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we receive from the sale of shares in the respective quarter under the Secondary DRIP Offering. Any of the foregoing limits might prevent us from accommodating all redemption requests made in any fiscal quarter or in any 12-month period. We ~~received~~will determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable payment date. If we cannot purchase all shares presented for redemption ~~requests of approximately 9.8 million shares for $98.7 million~~ in ~~excess of the net proceeds we received~~any fiscal quarter, based upon insufficient cash available from the ~~issuance~~sale of shares under our DRIP and/or the ~~Secondary~~limit on the number of shares we may redeem during any quarter or year, we will give priority to the redemption of deceased stockholders’ shares and stockholders with exigent circumstances, as determined in our sole discretion and accompanied by such evidentiary documentation as we may request. While the shares of deceased stockholders and stockholders determined to have exigent circumstances will be included in calculating the maximum number of shares that may be redeemed in any annual or quarterly period, they will not be subject to the annual or quarterly percentage caps; therefore, if the volume of requests to redeem deceased stockholders’ shares and stockholders determined to have exigent circumstances in a particular quarter were large enough to cause the annual or quarterly percentage caps to be exceeded, even if no other redemption requests were processed, the redemptions of deceased stockholders’ shares and stockholders determined to have exigent circumstances would be completed in full, assuming sufficient proceeds from the sale of shares under our DRIP, ~~Offering during~~net of shares redeemed to date, were available. If sufficient proceeds from the sale of shares under our DRIP, net of shares redeemed to date, were not available to pay all such redemptions in full, the requests to redeem deceased stockholders’ shares and shareholders determined to have exigent circumstances would be honored on a pro rata basis. We next will give priority to requests for full redemption of accounts with a balance of 250 shares or less at the time we receive the request, in order to reduce the expense of maintaining small accounts. Thereafter, we will honor the remaining redemption requests on a pro rata basis. Following such quarterly redemption period, if a stockholder would like to resubmit the unsatisfied portion of the prior request for redemption, such stockholder must submit a new request for redemption of such shares prior to the last day of the new quarter. Unfulfilled requests for redemption will not be carried over automatically to subsequent redemption periods. In addition, our management reserves the right, in its sole discretion at any time, and from time to time, to reject any request for redemption for any reason. Our Board may choose to amend the terms of, suspend or terminate our share redemption program at any time in its sole discretion if it believes that such action is in the best interest of us and our stockholders. Any material modifications or suspension of the share redemption program will be disclosed to our stockholders as promptly as practicable in our reports filed with the SEC and via our website. During the three months ended September 30, 2017. Management, in its discretion, limited the amount of shares redeemed for the three months ended September 30, 2017 to shares issued pursuant to the Secondary DRIP Offering during the respective period. During the nine months ended September 30, 2017,March 31, 2023, we received valid redemption requests under our share redemption program totaling approximately ~~30.7~~25.5 million shares, of which we redeemed approximately ~~5.1 million shares as of September 30, 2017 for $51.5 million (at an average redemption price of $10.08 per share) and approximately 2.5~~1.6 million shares subsequent to ~~September 30, 2017~~March 31, 2023 for ~~$25.0~~$10.8 million ~~at an average~~(at a redemption price of ~~$10.08~~$6.57 per ~~share.~~share). The remaining redemption requests relating to approximately ~~23.1~~23.9 million shares went unfulfilled. A valid redemption request is one that complies with the applicable requirements and guidelines of ~~our current~~the share redemption ~~program.~~program then in effect. The share redemptions were funded with proceeds from the Secondary DRIP Offering.

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Liquidity and Capital Resources

General

We expect to utilize ~~funds~~proceeds from real estate dispositions, sales proceeds and principal payments received on credit investments, cash ~~flow~~flows from operations and future proceeds from secured or unsecured financing to complete future ~~property~~ acquisitions and loan originations, repayment of certain indebtedness and for general corporate uses. The sources of our operating cash flows will primarily be provided by interest income from our portfolio of credit investments and the rental and other property income received from current and future leased properties.

Sources of Liquidity

Our ~~Credit Facility provides for borrowings~~primary sources of up to $1.40 billion, which includes a $1.05 billion unsecured Term Loan and up to $350.0 million in unsecured Revolving Loans. As of September 30, 2017, we had $164.9 million in unused capacity under the Credit Facility, subject to borrowing availability. As of September 30, 2017, we also hadliquidity include cash and cash equivalents and available borrowings under our debt facilities, which are set forth in the following table (in thousands):

Table of ~~$4.2 million.~~Contents

~~Short-term Liquidity~~


	March 31, 2023		December 31, 2022
Cash and cash equivalents	$	555,245	$	118,978
Unused borrowing capacity (1)	817,211		513,121
	$	1,372,456	$	632,099

(1)Subject to borrowing availability.

See Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional details regarding our repurchase facilities, notes payable and credit facilities. The following table details our outstanding financing arrangements and borrowing capacity as of March 31, 2023 (in thousands):


	Portfolio Financing Outstanding Principal Balance		Maximum Capacity (1)

Notes payable – variable rate debt	$	461,060	$	485,519

ABS mortgage notes	761,100		761,100
Credit facilities	533,500		850,000
Repurchase facilities	2,223,748		2,700,000		(2)
Total portfolio financing	$	3,979,408	$	4,796,619

(1)Subject to borrowing availability.

(2)Facilities under the J.P. Morgan Repurchase Facility carry no maximum facility size.

Capital Resources

~~On a short-term basis, our~~Our principal demands for funds will be for the acquisition or origination of credit investments and real estate, ~~and real estate-related investments~~ and the payment of tenant improvements, acquisition-related ~~fees and~~ expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of ~~$24.2~~$387.3 million within the next 12 ~~months. We~~months, $235.8 million of which has a rolling term that resets monthly, as further discussed in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Generally, we expect to meet our ~~short-term~~ liquidity requirements through net cash provided by operations, cash proceeds from real estate asset dispositions, cash proceeds from the sale of credit investments, principal payments received on credit investments, and proceeds from the Secondary DRIP Offering, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions. Operating cash flows are expected to increase as additional properties are added to our portfolio. With respect to our debt maturing within the next year, we expect to use borrowings available under the Credit Facility or to enter into new financing arrangements in order to meet our debt obligations. We believe that the resources stated above will be sufficient to satisfy our operating requirements for the foreseeable future,acquisitions and ~~we do not anticipate a need to raise funds from sources other than those described above within the next 12 months.~~

~~Long-term Liquidity and Capital Resources~~

On a long-term basis, our principal demands for funds will be for the acquisition of real estate and real estate-related investments and the payment of tenant improvements, acquisition-related fees and expenses, operating expenses, distributions and redemptions to stockholders and interest and principal on any current and future indebtedness. Generally, we expect to meet our long-term liquidity requirements through proceeds from cash flow from operations, borrowings on the Credit Facility, proceeds from secured or unsecured borrowings from banks and other lenders, and proceeds raised pursuant to the Secondary DRIP Offering.

loan originations. We expect that substantially all net cash flows from operations will be used to pay distributions to our stockholders after certain capital expenditures, including tenant improvements and leasing commissions, are paid; however, we have used, and may continue to use, other sources to fund distributions, as necessary, including borrowings on ~~the Credit Facility and/or future borrowings on~~ our unencumbered assets. To the extent that cash flows from operations are lower, ~~due to fewer properties being acquired or lower than expected returns on the properties,~~ distributions paid to our stockholders may be lower. Operating cash flows are expected to increase as we complete future acquisitions. We expect that substantially all net cash flows from the ~~Offerings~~Secondary DRIP Offering or debt financings will be used to fund acquisitions, loan originations, certain capital expenditures, repayments of outstanding debt or distributions and redemptions to our stockholders.

~~Table~~ We believe that the resources stated above will be sufficient to satisfy our operating requirements for the foreseeable future, and we do not anticipate a need to raise funds from sources other than those described above within the next 12 months. Management intends to use the proceeds from the disposition of ~~Contents~~

properties to, among other things, acquire additional high-quality net-lease properties and credit investments in furtherance of our investment objectives and for other general corporate purposes.

Contractual Obligations

As of ~~September 30, 2017,~~March 31, 2023, we had ~~$2.5 billion of~~ debt outstanding with a carrying value of $4.0 billion and a weighted average interest rate of ~~3.5%~~5.9%. See Note 710 — Repurchase Facilities, Notes Payable and Credit ~~Facility~~Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for certain terms of our debt outstanding.

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Our contractual obligations as of ~~September 30, 2017~~March 31, 2023 were as follows (in thousands):

Payments due by period ⁽¹⁾

Total
Less Than 1
Year
1-3 Years 3-5 Years
More Than
5 Years
Principal payments — fixed rate debt ⁽²⁾
$ 1,217,493
$ 24,205
$ 311,935
$ 192,398
$ 688,955
Interest payments — fixed rate debt ⁽³⁾
228,085
47,646
88,178
61,891
30,370
Principal payments — variable rate debt 20,500
—
20,500
—
—
Interest payments — variable rate debt ⁽⁴⁾
2,220
923
1,297
—
—
Principal payments — credit facility 1,234,500
—
—
1,234,500
—
Interest payments — credit facility ⁽⁵⁾
166,680
38,658
77,423
50,599
—
Total $ 2,869,478
$ 111,432
$ 499,333
$ 1,539,388
$ 719,325


	Payments due by period (1)
	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years

Principal payments — variable rate debt	$	461,060	$	—	$	37,541	$	423,519	$	—

Principal payments — ABS mortgage notes	761,100		2,580		—		—		758,520
Principal payments — credit facilities	533,500		—		—		533,500		—
Principal payments — repurchase facilities	2,223,748		384,684		1,839,064		—		—
Interest payments (2)	726,128		216,863		328,963		133,136		47,166
Total	$	4,705,536	$	604,127	$	2,205,568	$	1,090,155	$	805,686


~~(1)~~	~~The table does not include amounts due to CR IV Advisors or its affiliates pursuant to our advisory agreement because such amounts are not fixed and determinable.~~


~~(2)~~	Principal payment amounts reflect actual payments based on the face amount of notes payable secured by our wholly-owned properties, which excludes the fair value adjustment, net of amortization, of mortgage notes assumed of $441,000 as of September 30, 2017.


~~(3)~~	As of September 30, 2017, we had $217.1 million of variable rate debt effectively fixed through the use of interest rate swap agreements. We used the effective interest rates fixed under our interest rate swap agreements to calculate the debt payment obligations in future periods.


~~(4)~~	As of September 30, 2017, we had variable rate debt outstanding of $20.5 million with a weighted average interest rate of 4.5%. We used the weighted average interest rate to calculate the debt payment obligations in future periods.


~~(5)~~	As of September 30, 2017, the Term Loan outstanding totaled $1.05 billion, $811.7 million of which is subject to interest rate swap agreements. As of September 30, 2017 the weighted average all-in interest rate for the Swapped Term Loan was 3.2%. The remaining $422.8 million outstanding under the Credit Facility had a weighted average interest rate of 3.0% as of September 30, 2017.

(1)The table does not include amounts due to CMFT Management or its affiliates pursuant to our Management Agreement because such amounts are not fixed and determinable. The table also does not include $292.7 million of unfunded commitments related to our existing CRE loans held-for-investment, corporate senior loans held-for-investment and liquid corporate senior loans and $112.6 million of unfunded commitments related to the NewPoint JV, which are subject to the satisfaction of borrower milestones. In addition, the table does not include $18.0 million of unsettled liquid corporate senior loan acquisitions, which is included in cash and cash equivalents on the accompanying condensed consolidated balance sheet.

(2)Interest payments on the variable rate debt, credit facilities and repurchase facilities have been calculated based on outstanding balances as of March 31, 2023 through their respective maturity dates. This is only an estimate as actual amounts borrowed and interest rates could vary over time.

We expect to incur additional borrowings in the future to acquire additional properties and ~~make other real estate-related~~credit investments. There is no limitation on the amount we may borrow against any single improved property. Our borrowings will not exceed 75% of the cost of our gross assets (or 300% of net assets) as of the date of any borrowing, which is the maximum level of indebtedness permitted under the North American Securities Administrators Association Statement of Policy Regarding Real Estate Investment Trusts; however, we may exceed that limit if approved by a majority of our independent directors and disclosed to our stockholders in the next quarterly report along with justification for such excess borrowing. The Board has adopted a policy to further limit our borrowings to 60% of the greater of cost (before deducting depreciation or other non-cash reserves) or fair market value of our gross assets, unless excess borrowing is approved by a majority of our independent directors and disclosed to our stockholders in the next quarterly report along with the justification for such excess borrowing. Our advisor has set a target leverage ratio of 40% to 50% of the greater of cost (before deducting depreciation or other non-cash reserves) or fair market value of our gross assets. Fair market value is based on the estimated market value of our real estate assets as of December 31, 2016 that were used to determine our estimated per share NAV, and for those assets acquired from January 1, 2017 through September 30, 2017 is based on the purchase price. As of ~~September 30, 2017,~~March 31, 2023, our ratio of debt to ~~the cost (before deducting depreciation or other non-cash reserves) of our gross assets was 48.8% and our ratio of debt to the fair market value of our gross assets was 44.1%.~~

Our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage, and we therefore believe that the presentation of net debt provides useful information to investors. Net debt is a non-GAAP measure used to show our outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums or discounts, financing and issuance costs, and related accumulated amortization, less all cash and cash equivalents. As of September 30, 2017, our net debt leverage ratio, which is the ratio of net debt to total gross ~~real estate~~ assets net of gross intangible lease liabilities was ~~48.7%~~65.4%. The following table provides a reconciliation of the notes payable and credit facility, net balance, as reported on our condensed consolidated balance sheet, to net debt as of September 30, 2017 (dollar amounts in thousands):

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Balance as of
September 30, 2017
Notes payable and credit facility, net $ 2,454,282
Deferred costs and net premiums ⁽¹⁾
18,211
Less: Cash and cash equivalents (4,231 )
Net debt $ 2,468,262

Gross real estate assets, net ⁽²⁾
$ 5,069,802
Net debt leverage ratio 48.7 %

~~______________________~~

~~(1) Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility.~~

~~(2) Net of gross intangible lease liabilities.~~

Cash Flow Analysis

Operating Activities. ~~During the~~ ~~nine months ended~~ ~~September 30, 2017, net~~ Net cash provided by operating activities increased ~~$2.7~~by $35.0 million ~~to $158.2 million,~~for the three months ended March 31, 2023, as compared to ~~$155.5 million~~ ~~of net cash provided by operating activities for~~ the ~~nine months endedSeptember 30, 2016~~.same period in 2022. The ~~change~~increase was primarily due to net increases in credit investments of $896.4 million coupled with an increase in interest rates driving higher interest income, partially offset by the ~~acquisition~~disposition of ~~41 additional rental income-producing~~217 properties subsequent to September 30, 2016, resulting in an increase in net income after non-cash adjustments for depreciation and amortization, net, of $11.7 million. Additionally, net cash provided by operating activities increased due to an increase in a contingent consideration fair value adjustment of $2.3 million, an increase in bad debt expense of $1.6 million, a decrease in straight-line rental income of $1.2 million and a net increase in working capital accounts of $355,000, offset by an increase in gain on dispositions of real estate assets, net, of $14.7 million.March 31, 2022. See “— Results of Operations” for a more complete discussion of the factors impacting our operating performance.

Investing Activities. Net cash provided by investing activities increased by $823.6 million for the three months ended March 31, 2023, as compared to the same period in 2022. The change was primarily due to a decrease in the net investment in loans held-for-investment of $791.0 million and a decrease in the net investment of real estate-related securities of $195.1 million, offset by a decrease in proceeds from disposition of real estate assets of $148.3 million and a decrease in net proceeds in relation to our investment in unconsolidated entities of $21.3 million.

Financing Activities. Net cash used in ~~investing~~financing activities increased ~~$44.7 million to $217.1~~$515.0 million for the ~~nine~~three months ended~~September 30, 2017, compared to $172.4 million for the~~ ~~nine months endedSeptember 30, 2016. The increase was primarily due to the acquisition of~~ 40 ~~commercial properties for an aggregate purchase price of $300.5 million during the nine months ended September 30, 2017,~~ March 31, 2023, as compared to the ~~acquisition of 14 commercial properties for an aggregate purchase price of $197.0 million during the nine months ended September 30, 2016, as well as a decrease~~same period in ~~the change in restricted cash of $1.2 million, offset by the disposal of 14 properties for an aggregate gross sales price of $98.6 million during the~~ ~~nine months ended~~ ~~September 30, 2017 compared to the disposal of four properties for an aggregate gross sales price of $26.6 million during the nine months ended September 30, 2016.~~

~~Financing Activities.~~ ~~During the~~ ~~nine months ended~~ ~~September 30, 2017, net cash provided by financing activities was $53.4 million, compared to net cash provided by financing activities of $9.0 million for the~~ ~~nine months endedSeptember 30, 2016~~.2022. The change was primarily due to an increase in net ~~borrowings~~repayments on the repurchase facilities, notes payable and ~~the Credit Facility~~credit facilities of ~~$52.6~~$511.0 million, ~~offset by an increase in deferred financing costs paid of $9.9 million and~~coupled with an increase in distributions to ~~investors~~stockholders of ~~$5.2~~$4.3 million.

Election as a REIT

We elected to be taxed, and ~~currently~~operate our business to qualify, as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2012. To maintain our qualification as a REIT, we must continue to meet certain requirements relating to our organization, sources of income, nature of assets, distributions of income to our stockholders and recordkeeping. As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders so long as we distribute at least 90% of our annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains).

If we fail to maintain our qualification as a REIT for any reason in a taxable year and applicable relief provisions do not apply, we will be subject to tax ~~including any applicable alternative minimum tax,~~ on our taxable income at regular corporate rates. We will not be able to deduct distributions paid to our stockholders in any year in which we fail to maintain our qualification as a REIT. We also will be disqualified for the

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four taxable years following the year during which qualification was lost, unless we are entitled to relief under specific statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we are organized and operate in such a manner as to maintain our qualification as a REIT for federal income tax purposes. No provision for federal income taxes has been made in our accompanying condensed consolidated financial statements. We are subject to certain state and local

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taxes related to the operations of properties in certain locations, which have been provided for in our accompanying condensed consolidated financial statements.

Critical Accounting Policies and Significant Accounting Estimates

Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. We believe the following critical accounting policies govern the significant judgments and estimates used in the preparation of our financial statements, which should be read in conjunction with the more complete discussion of our accounting policies and procedures included in Note 2 — Summary of Significant Accounting Policies to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022. We consider our critical accounting policies to be the following:

•Recoverability of Real Estate Assets; ~~and~~

•Allocation of Purchase Price of Real Estate ~~Assets.~~Assets; and

•Current Expected Credit Losses.

A complete description of such policies and our considerations is contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements as of and for the ~~period~~year ended December 31, ~~2016~~2022 and related notes thereto.

Related-Party Transactions and Agreements

We have entered into agreements with ~~CR IV Advisors or its affiliates~~CMFT Management and our Investment Advisor whereby we agree to pay certain fees to, or reimburse certain expenses of, ~~CR IV Advisors~~CMFT Management, the Investment Advisor or ~~its affiliates such as~~their affiliates. In addition, we have invested in, and may continue to invest in, certain co-investments with funds that are advised by an affiliate of CMFT Management. We may also originate loans to third parties that use the proceeds to finance the acquisition ~~and advisory fees and expenses, organization and offering costs, leasing fees and reimbursement~~ of ~~certain operating costs.~~real estate from funds that are advised by an affiliate of CMFT Management. See Note 1112 — Related-Party Transactions and Arrangementsto our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the various related-party transactions, agreements and fees.

Conflicts of Interest

~~Affiliates~~Richard S. Ressler, the chairman of ~~CR IV Advisors act as~~our Board, chief executive officer and president, who is also a founder and principal of CIM Group and is an ~~advisor to,~~officer/director of certain of its affiliates, is the vice president of our manager. One of our directors, Avraham Shemesh, who is also a founder and principal of CIM Group and is an officer/director of certain of its affiliates, is the president and treasurer of our manager. Additionally, two of our directors, Jason Schreiber and Emily Vande Krol, are employees of CIM Group. Nathan D. DeBacker, our chief financial officer, principal accounting officer and ~~one~~treasurer, is a vice president of our ~~directors act as executive officers and/or a director~~manager and is an officer of Cole Credit Property Trust V, Inc., Cole Office & Industrial REIT (CCIT II), Inc., Cole Real Estate Income Strategy (Daily NAV), Inc., Cole Office & Industrial REIT (CCIT III), Inc., and/or other real estate offerings in registration, allcertain of ~~which are or intend to be public, non-listed REITs offered, distributed and/or managed by affiliates of CR IV Advisors.~~its affiliates. As such, there ~~are~~may be conflicts of interest where ~~CR IV Advisors~~CMFT Management or its affiliates, while serving in the capacity as sponsor, general partner, officer, director, key personnel and/or advisor for ~~VEREIT~~CIM Group or another ~~real estate~~ program sponsored or operated by ~~Cole Capital, including other real estate offerings in registration,~~affiliates of our manager, may be in conflict with us in connection with providing services to other real estate-related programs related to property acquisitions, property dispositions, and property management, among others. The compensation arrangements between affiliates of ~~CR IV Advisors and VEREIT~~CMFT Management and these other real estate programs sponsored or operated by ~~Cole Capital~~affiliates of our manager could influence the advice provided to us. See Part I, Item 1. Business — Conflicts of Interest in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

~~Off-Balance Sheet Arrangements~~

~~As of~~ ~~September 30, 2017~~ and December 31, 2016, we had no material off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity or capital resources.

2022.

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~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Market Risk

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to ~~variable-rate~~variable rate borrowings. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not intend to hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.

Interest Rate Risk

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our investments and the related financing obligations. In general, we seek to match the interest rate characteristics of our investments with the interest rate characteristics of any related financing obligations such as repurchase agreements, bank credit facilities, term loans, revolving facilities and securitizations.

As of ~~September 30, 2017,~~March 31, 2023, we had an aggregate of $3.2 billion of variable rate debt, ~~of $443.3 million,~~ excluding any debt subject to interest rate swap agreements and interest rate cap agreements, and therefore, we are exposed to interest rate changes in ~~LIBOR.~~LIBOR and SOFR. As of ~~September 30, 2017,~~March 31, 2023, an increase or decrease of 50 basis points in interest rates would result in an increase or decrease in interest expense of ~~$2.2~~$15.9 million per year.

As of ~~September 30, 2017,~~March 31, 2023, we had 12two interest rate ~~swap~~cap agreements outstanding, which ~~mature on various~~had maturity dates ranging from ~~June 2018~~July 2023 through ~~July 2021,~~October 2023, with an aggregate notional amount of ~~$1.0 billion~~$712.0 million and an aggregate fair value of the net derivative ~~liability~~asset of ~~$262,000.~~$3.1 million. The fair value of these interest rate ~~swap~~cap agreements is dependent upon existing market interest rates and ~~swap~~ spreads. As of ~~September 30, 2017,~~March 31, 2023, an increase of 50 basis points in interest rates would result in a change of ~~$15.7 million~~$944,000 to the fair value of the net derivative ~~liability,~~asset, resulting in a net derivative asset of ~~$15.4~~$4.0 million. A decrease of 50 basis points in interest rates would result in a ~~$16.0 million~~$914,000 change to the fair value of the net derivative ~~liability,~~asset, resulting in a net derivative ~~liability~~asset of ~~$16.2~~$2.2 million.

As the information presented above includes only those exposures that existed as of ~~September 30, 2017,~~March 31, 2023, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs and assume no other changes in our capital structure.

In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified SOFR as its preferred alternative to U.S. dollar LIBOR in derivatives and other financial contracts. On December 31, 2021, the FCA ceased publishing one week and two-month LIBOR, and the FCA intends to cease publishing all remaining LIBOR after June 30, 2023. This announcement has several implications, including setting the spread that may be used to automatically convert contracts from LIBOR to SOFR. The Company anticipates that LIBOR will continue to be available at least until June 30, 2023. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

We have an interest rate cap agreement maturing in July 2023, as further discussed above, that is indexed to LIBOR. As such, we are monitoring and evaluating the related risks, which include interest on loans or amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative reference rate may be challenging, especially if we cannot agree with the respective counterparty about how to make the transition. In addition, we

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have certain note on note financing and repurchase facilities as of March 31, 2023 that are in the process of being transitioned from LIBOR to SOFR.

If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.

While we expect LIBOR to be available in substantially its current form until at least the end of June 30, 2023, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Alternative rates and other market changes related to the replacement of LIBOR, including the introduction of financial products and changes in market practices, may lead to risk modeling and valuation challenges, such as adjusting interest rate accrual calculations and building a term structure for an alternative rate.

The introduction of an alternative rate also may create additional basis risk and increased volatility as alternative rates are phased in and utilized in parallel with LIBOR.

Credit Risk

Concentrations of credit risk arise when a number of tenants are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to us, to be similarly affected by changes in economic conditions. We are subject to tenant, geographic and industry concentrations. Any downturn of the economic conditions in one or more of these tenants, states or industries could result in a material reduction of our cash flows or material losses to us.

The factors considered in determining the credit risk of our tenants include, but are not limited to: payment history; credit status and change in status, including the impact of the COVID-19 pandemic (credit ratings for public companies are used as a primary metric); change in tenant space needs (i.e., expansion/downsize); tenant financial performance; economic conditions in a specific geographic region; and industry specific credit considerations. We believe that the credit risk of our portfolio is reduced by the high quality of our existing tenant base, reviews of prospective tenants’ risk profiles prior to lease execution and consistent monitoring of our portfolio to identify potential problem tenants and mitigation options.

Our loans and investments are also subject to credit risk. The performance and value of our loans and investments depend upon the owners’ ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our manager reviews our investment portfolios and in certain instances is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.


~~Item 4.~~	~~Controls and Procedures~~

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives.

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As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of ~~September 30, 2017~~March 31, 2023 was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of ~~September 30, 2017,~~March 31, 2023, were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

No change occurred in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended~~September 30, 2017~~ March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings~~

Item 1.Legal Proceedings

In the ordinary course of business, we may become subject to litigation or claims. We are not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or our subsidiaries are a party or to which our properties are the subject.


~~Item 1A.~~	~~Risk Factors~~

~~Except as set forth below, there~~Item 1A.Risk Factors

There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

We have paid, and may continue to pay, some of our distributions from sources other than cash flows from operations, including borrowings and proceeds from asset sales or the sale of our securities in the Offerings or future offerings, which may reduce the amount of capital we ultimately invest in real estate and may negatively impact the value of our stockholders’ investment in our common stock.

To the extent that cash flow from operations has been or is insufficient to fully cover our distributions to our stockholders, we have paid, and may continue to pay, some of our distributions from sources other than cash flow from operations. Such sources may include borrowings, proceeds from asset sales or the sale of our securities in the Offerings or future offerings. We have no limits on the amounts we may pay from sources other than cash flow from operations. ~~The payment of distributions from sources other than cash provided by operating activities may~~reduce the amount of proceeds available for investment and operations or cause us to incur additional interest expense as a result of borrowed funds, and may cause investors to experience dilution. This may negatively impact the value of our stockholders’ investment in our common stock.

During the nine months ended September 30, 2017, we paid distributions of $146.1 million, including $76.9 million through the issuance of shares pursuant to the Secondary DRIP Offering. Net cash provided by operating activities for the nine months ended September 30, 2017 was $158.2 million and reflected a reduction for real-estate acquisition-related expenses incurred of $1.5 million in accordance with GAAP. Our distributions for the nine months ended September 30, 2017, including shares issued pursuant to the Secondary DRIP Offering, were fully funded by net cash provided by operating activities.

During the year ended December 31, 2016, we paid distributions of $194.9 million, including $109.2 million through the issuance of shares pursuant to the DRIP Offerings. Net cash provided by operating activities for the year ended December 31, 2016 was $193.7 million and reflected a reduction for real estate acquisition-related fees and expenses incurred of $4.2 million, in accordance with GAAP. The distributions paid during the year ended December 31, 2016 were covered by cash flows from operations of $193.7 million, or 99%, and proceeds from the issuance of notes payable of $1.2 million, or 1%.


~~Item 2.~~	Item 2.Unregistered Sales ~~of Equity Securities and Use of Proceeds~~

~~We registered $247.0 million~~ of ~~shares~~Equity Securities and Use of common stock under the Initial DRIP Offering, which was filed with the SEC on December 19, 2013 and automatically became effective with the SEC upon filing. We ceased issuing shares under the Initial DRIP Offering effective as of June 30, 2016.Proceeds

In addition, we registered $600.0 million of shares of common stock under the Secondary DRIP Offering, which was filed with the SEC on August 2, 2016 and automatically became effective with the SEC upon filing. We will continue to issue shares of common stock in the Secondary DRIP Offering.

As of September 30, 2017, we had issued approximately 336.8 million shares of our common stock in the Offerings for gross proceeds of $3.3 billion, out of which we paid $256.5 million in selling commissions and dealer manager fees and $49.5 million in organization and offering costs to CR IV Advisors or its affiliates. With the net offering proceeds and indebtedness, we have acquired $5.2 billion in real estate and related assets and incurred acquisition costs of $141.6 million, including $108.5 million in acquisition fees and expense reimbursements to CR IV Advisors.

Our share redemption program permits our stockholders to sell their shares of common stock back to us, subject to ~~significant~~certain conditions and limitations. ~~Under~~We will limit the number of shares redeemed pursuant to our share redemption program as follows: (1) we will not redeem in excess of ~~5.0%~~5% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being ~~paid. Funding~~paid; and (2) funding for the redemption of shares will be limited, among other things, to the ~~cumulative~~ net proceeds we receive from the sale of shares under ~~the Secondary~~our DRIP, ~~Offering,~~ net of shares redeemed to date. In ~~addition, generally~~an effort to accommodate redemption requests throughout the calendar year, we will generally limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we receive from the sale of shares in the respective quarter under the Secondary DRIP Offering. Any of the foregoing limits might prevent us from ~~accommodating~~accommodating all redemption requests made in any fiscal quarter or in any 12-month period. ~~We received~~

~~Table~~ As of ~~Contents~~

~~redemption requests of approximately 9.8 million shares for $98.7 million in excess of~~March 31, 2023, the net proceeds we received from the issuance of shares under the Secondary DRIP Offering during the three months ended September 30, 2017. Management, in its discretion, limited the amount of shares redeemed for the three months ended September 30, 2017 to shares received from the Secondary DRIP Offering during the period. The estimated per share NAV ~~of $10.08~~was $6.57, which was determined by the Board ason December 19, 2022 using a valuation date of December 31, 2016 serves as the most recent estimated value for purposes of the share redemption program, effective March 28, 2017, until such time as the Board determines a new estimated per share NAV.September 30, 2022.

In general, we redeem shares on a quarterly basis. Shares are redeemed with a trade date no later than the end of the month following the end of each fiscal quarter. Any redemption capacity that is not used as a result of the withdrawal or rejection of redemption requests may be used to satisfy the redemption requests of other stockholders received for that fiscal quarter, and such redemption payments may be made at a later time than when that quarter’s redemption payments are made. During the three months ended ~~September 30, 2017,~~March 31, 2023, we redeemed shares, including those redeemable due to death, as follows:

Period
Total Number
of Shares
Redeemed

Average Price
Paid per Share

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs

Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
July 1, 2017 - July 31, 2017 2,489
$ 10.08
2,489
(1)
August 1, 2017 - August 31, 2017 2,539,426
$ 10.08
2,539,426
(1)
September 1, 2017 - September 30, 2017 2,874
$ 10.08
2,874
(1)
Total 2,544,789
2,544,789
(1)


Period (1)	Total Number of Shares Redeemed	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2023 - January 31, 2023	—	$	—	—	(2)
February 1, 2023 - February 28, 2023	1,594,901	$	6.57	1,594,901	(2)
March 1, 2023 - March 31, 2023	10,628	$	6.57	10,628	(2)
Total	1,605,529			1,605,529	(2)


~~(1)~~	~~A description of the maximum number of shares that may be purchased under our share redemption program is included in the narrative preceding this table.~~

(1)Redemptions are included in the month of payment, which is made one business day following the trade date.

(2)A description of the maximum number of shares that may be purchased under our share redemption program is included in the narrative preceding this table.

Unregistered Sales of Equity Securities

None.


~~Item 3.~~	~~Defaults Upon Senior Securities~~

Item 3.Defaults Upon Senior Securities

None.


~~Item 4.~~	~~Mine Safety Disclosures~~

Item 4.Mine Safety Disclosures

Not applicable.


~~Item 5.~~	~~Other Information~~

Item 5.Other Information

None.

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~~Item 6.~~	~~Exhibits~~

Item 6.Exhibits

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2017~~March 31, 2023 (and are numbered in accordance with Item 601 of Regulation S-K).

Incorporated by Reference

Exhibit No.

Description

Form

File No.

Exhibit

Filing Date

3.1

Articles of Amendment and Restatement of CIM Real Estate Finance Trust, Inc.

8-K

000-54939

3.1

8/20/2019

3.2

Second Amended and Restated Bylaws of CIM Real Estate Finance Trust, Inc.

10-K

000-54939

3.2

3/28/2023

4.1

Second Amended and Restated Distribution Reinvestment Plan.

8-K

000-54939

4.1

5/1/2020

4.2

Master Indenture, dated as of July 28, 2021, by and among CMFT Net Lease Master Issuer, LLC, as issuer, and Citibank N.A., as indenture trustee.

8-K

000-54939

4.1

8/3/2021

4.3

Series 2021-1 Indenture Supplement, dated as of July 28, 2021, by and among CMFT Net Lease Master Issuer, LLC, as issuer, and Citibank N.A., as indenture trustee.

8-K

000-54939

4.2

8/3/2021

10.1

Second Amended and Restated Management Agreement by and between CIM Real Estate Finance Trust, Inc. and CIM Real Estate Finance Management, LLC, dated March 22, 2023.

10-K

000-54939

10.1

3/28/2023

10.2

Loan and Security Agreement, dated February 10, 2023, by and between CMFT CL Lending Sub AB, LLC, as borrower, each of the lenders from time to time party hereto, Ally Bank, as administrative agent and arranger, U.S. Bank Trust Company, National Association, as collateral custodian, and U.S. Bank National Association, as document custodian.

8-K

000-54939

10.1

2/16/2023

31.1*

Certifications of the Principal Executive Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certifications of the Principal Financial Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

Certifications of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*

XBRL Instance Document.

101.SCH*

XBRL Taxonomy Extension Schema Document.

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document.

104*

Cover Page Interactive Data File (formatted as InLine XBRL and contained in Exhibit 101).



~~Exhibit No.~~	~~Description~~
~~3.1~~	First Articles of Amendment and Restatement of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.4 to the Company’s Pre-Effective Amendment No. 5 to Form S-11 (File No. 333-169533), filed January 24, 2012).
~~3.2~~	Certificate of Correction to the First Articles of Amendment and Restatement of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.6 to the Company’s Pre-Effective Amendment No. 5 to Form S-11 (File No. 333-169533), filed January 24, 2012).
~~3.3~~	Articles of Amendment to First Articles of Amendment and Restatement of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 333-169533), filed February 27, 2012).
~~3.4~~	Certificate of Correction to First Articles of Amendment and Restatement, dated January 25, 2013 (Incorporated by reference to Exhibit 3.6 to the Company’s Annual Report on Form 10-K (File No. 333-169533), filed effective as of March 29, 2013).
~~3.5~~	Second Articles of Amendment to First Articles of Amendment and Restatement of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed June 2, 2014).
~~3.6~~	~~Bylaws of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.5 to the Company’s Pre-Effective Amendment No. 5 to Form S-11 (File No. 333-169533), filed January 24, 2012).~~
~~3.7~~	First Amendment to the Bylaws of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 333-169533), filed June 27, 2012).
~~4.1~~	~~Distribution Reinvestment Plan (Incorporated by reference to Exhibit 4.9 to the Company’s Registration Statement on Form S-3 (File No. 333-212832), filed August 2, 2016).~~
31.1*	~~Certifications of the Principal Executive Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
31.2*	~~Certifications of the Principal Financial Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
32.1**	Certifications of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	~~XBRL Instance Document.~~
101.SCH*	~~XBRL Taxonomy Extension Schema Document.~~
101.CAL*	~~XBRL Taxonomy Extension Calculation Linkbase Document.~~
101.DEF*	~~XBRL Taxonomy Extension Definition Linkbase Document.~~
101.LAB*	~~XBRL Taxonomy Extension Label Linkbase Document.~~
101.PRE*	~~XBRL Taxonomy Extension Presentation Linkbase Document.~~



*			Filed herewith.
**			In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	~~Cole Credit Property~~CIM Real Estate Finance Trust, ~~IV,~~ Inc. (Registrant)

By:		/s/ Nathan D. DeBacker
Name:		Nathan D. DeBacker
Title:		Chief Financial Officer, Principal Accounting Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

Date: ~~November 13, 2017~~May 12, 2023



	Balance as of September 30, 2017			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial assets:
Interest rate swaps	$	3,178		$	—	$	3,178		$	—
Total financial assets	$	3,178		$	—	$	3,178		$	—
Financial liabilities:
Interest rate swaps	$	(3,440	)	$	—	$	(3,440	)	$	—
Total financial liabilities	$	(3,440	)	$	—	$	(3,440	)	$	—

	Balance as of December 31, 2016			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial assets:
Interest rate swaps	$	2,327		$	—	$	2,327		$	—
Total financial assets	$	2,327		$	—	$	2,327		$	—
Financial liabilities:
Interest rate swaps	$	(3,351	)	$	—	$	(3,351	)	$	—
Contingent consideration	(337		)	—		—			(337		)
Total financial liabilities	$	(3,688	)	$	—	$	(3,351	)	$	(337	)



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning Balance, December 31, 2016	$	(337	)
Purchases and fair value adjustments:
Purchases	2,081
Fair value adjustments	337
Ending Balance, September 30, 2017	$	2,081



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning Balance, December 31, 2015	$	(4,538	)
Purchases and fair value adjustments:
Purchases	(332		)
Fair value adjustments	2,672
Payments made	1,866
Ending Balance, September 30, 2016	$	(332	)



	2017 Acquisitions
Investments in real estate:
Purchase price of asset acquisitions	$	245,138
Purchase price of business combinations	55,386
Total purchase price of real estate investments acquired ⁽¹⁾	$	300,524



	2017 Asset Acquisitions
Land	$	32,583
Buildings, fixtures and improvements	173,681
Acquired in-place leases and other intangibles	36,733
Acquired above-market leases	3,624
Revenue bonds	2,081
Intangible lease liabilities	(3,564		)
Total purchase price	$	245,138



	2017 Business Combination Acquisitions
Land	$	9,873
Buildings, fixtures and improvements	41,186
Acquired in-place leases and other intangibles	5,974
Acquired above-market leases	988
Intangible lease liabilities	(2,635		)
Total purchase price	$	55,386



	2016 Acquisitions
Land	$	45,741
Buildings, fixtures and improvements	134,375
Acquired in-place leases and other intangibles ⁽¹⁾	16,807
Acquired above-market leases ⁽²⁾	3,398
Intangible lease liabilities ⁽³⁾	(3,295		)
Total purchase price	$	197,026



	September 22, 2016
Carrying value of the Company’s equity interest before business combination ⁽¹⁾	$	18,952
Fair value of amounts recognized for assets acquired and liabilities assumed:
Land	4,685
Buildings, fixtures and improvements	11,615
Acquired in-place leases and other intangibles	1,340
Acquired above-market leases	1,168
Intangible lease liabilities	(618		)
Other assets and liabilities	110
Total net assets	18,300
Loss recognized on equity interest re-measured to fair value	$	(652	)



	Amortization Expense
	In-Place Leases and Other Intangibles		Above-Market Leases
Remainder of 2017	$	10,923	$	1,774
2018	$	42,289	$	6,397
2019	$	38,454	$	5,299
2020	$	36,120	$	4,724
2021	$	32,685	$	4,100



		Outstanding Notional					Fair Value of Assets and (Liabilities)
	Balance Sheet	Amount as of		Interest	Effective	Maturity	September 30,			December 31,
	Location	September 30, 2017		Rates ⁽¹⁾	Dates	Dates	2017			2016
Interest Rate Swaps	Prepaid expenses, derivative assets, revenue bonds and other assets	$	690,066	2.55% to 3.91%	6/30/2015 to 9/1/2016	8/15/2018 to 7/1/2021	$	3,178		$	2,327
Interest Rate Swaps	Deferred rental income, derivative liabilities and other liabilities	$	338,737	3.46% to 4.75%	6/24/2013 to 8/23/2013	6/24/2018 to 8/24/2020	$	(923	)	$	(3,351	)



				During the Nine Months Ended September 30, 2017
	Balance as of December 31, 2016			Debt Issuances & Assumptions ⁽¹⁾			Repayments and Modifications					Accretion and (Amortization)			Balance as of September 30, 2017
Fixed rate debt	$	1,164,622		$	53,206		$	(335	)			$	—		$	1,217,493
Variable rate debt	53,500			—			(33,000		)			—			20,500
Credit facility	1,039,666			1,461,500			(1,266,666		)			—			1,234,500
Total debt	2,257,788			1,514,706			(1,300,001		)			—			2,472,493
Net premiums ⁽²⁾	506			—			—					(65		)	441
Deferred costs ⁽³⁾	(12,035		)	(10,078		)	717			(4	)	2,744			(18,652		)
Total debt, net	$	2,246,259		$	1,504,628		$	(1,299,284	)			$	2,679		$	2,454,282



	September 30, 2017		December 31, 2016
Acquired below-market liabilities, net of accumulated amortization of $29,396 and $23,241, respectively (with a weighted average life remaining of 7.6 and 7.8 years, respectively)
	$	47,607	$	49,075



	Amortization of Below-Market Leases
Remainder of 2017	$	2,329
2018	$	8,372
2019	$	7,508
2020	$	6,703
2021	$	4,573



	Future Minimum Rental Income
Remainder of 2017	$	92,490
2018	358,539
2019	343,351
2020	330,829
2021	314,676
Thereafter	2,242,089
Total	$	3,681,974



	Three Months Ended September 30,				2017 vs. 2016 Increase (Decrease)			Nine Months Ended September 30,				2017 vs. 2016 Increase (Decrease)
	2017		2016		2017 vs. 2016 Increase (Decrease)			2017		2016		2017 vs. 2016 Increase (Decrease)
Total revenues	$	107,024	$	101,796	$	5,228		$	316,308	$	302,940	$	13,368
General and administrative expenses	$	3,270	$	3,246	$	24		$	10,301	$	9,735	$	566
Property operating expenses	$	7,345	$	5,738	$	1,607		$	20,881	$	16,603	$	4,278
Real estate tax expenses	$	9,276	$	8,612	$	664		$	27,646	$	25,939	$	1,707
Advisory fees and expenses	$	11,149	$	10,587	$	562		$	32,863	$	31,100	$	1,763
Acquisition-related expenses	$	110	$	1,417	$	(1,307	)	$	1,520	$	3,592	$	(2,072	)
Depreciation and amortization	$	36,461	$	33,452	$	3,009		$	106,145	$	100,399	$	5,746
Operating income	$	37,755	$	37,314	$	441		$	115,294	$	114,142	$	1,152
Interest expense and other, net	$	23,335	$	20,473	$	2,862		$	67,968	$	58,416	$	9,552
Net income attributable to the Company	$	29,736	$	18,096	$	11,640		$	64,028	$	57,028	$	7,000



	Number of Properties	Three Months Ended September 30,				Increase (Decrease)
	Number of Properties	2017		2016		$ Change			% Change
Rental income – as reported		$	94,103	$	89,370	$	4,733		5	%
Less: Amortization ⁽¹⁾		1,008		289		719			249	%
Less: Straight-line rental income		2,912		2,984		(72		)	(2	)%
Total contract rental revenue		90,183		86,097		4,086			5	%

Less: “Non-same store” properties	48	6,231		837		5,394			644	%
Less: Disposed properties ⁽²⁾	19	959		1,581		(622		)	(39	)%
“Same store” properties	860	$	82,993	$	83,679	$	(686	)	(0.8	)%



	Payments due by period ⁽¹⁾
	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Principal payments — fixed rate debt ⁽²⁾	$	1,217,493	$	24,205	$	311,935	$	192,398	$	688,955
Interest payments — fixed rate debt ⁽³⁾	228,085		47,646		88,178		61,891		30,370
Principal payments — variable rate debt	20,500		—		20,500		—		—
Interest payments — variable rate debt ⁽⁴⁾	2,220		923		1,297		—		—
Principal payments — credit facility	1,234,500		—		—		1,234,500		—
Interest payments — credit facility ⁽⁵⁾	166,680		38,658		77,423		50,599		—
Total	$	2,869,478	$	111,432	$	499,333	$	1,539,388	$	719,325



Period	Total Number of Shares Redeemed	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2017 - July 31, 2017	2,489	$	10.08	2,489	(1)
August 1, 2017 - August 31, 2017	2,539,426	$	10.08	2,539,426	(1)
September 1, 2017 - September 30, 2017	2,874	$	10.08	2,874	(1)
Total	2,544,789			2,544,789	(1)