UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

For the quarterly period ended ~~March 31,~~June 30, 2021


☐			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

CIM REAL ESTATE FINANCE TRUST, 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)

2398 East Camelback Road, 4th Floor

Phoenix,

Arizona

85016

(Address of principal executive 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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

☒

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 ☒

As of ~~May 10,~~August 9, 2021, there were approximately ~~362.5~~362.1 million shares of common stock, par value $0.01 per share, of CIM Real Estate Finance Trust, Inc. outstanding.

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

INDEX



PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2021 and December 31, 2020			3

Condensed Consolidated Statements of Operations for the three and six months ended ~~March 31,~~June 30, 2021 and 2020			4

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended ~~March 31,~~June 30, 2021 and 2020			5

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended ~~March 31,~~June 30, 2021 and 2020			6

Condensed Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020			7

Notes to Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			3941

Item 3. Quantitative and Qualitative Disclosures About Market Risk			5258

Item 4. Controls and Procedures			5459

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			5560

Item 1A. Risk Factors			5560

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5661

Item 3. Defaults Upon Senior Securities			5661

Item 4. Mine Safety Disclosures			5661

Item 5. Other Information			5661

Item 6. Exhibits			5762

Signature			5863

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Real estate assets:	Real estate assets:					Real estate assets:
Land	Land	$	874,610	$	881,896	Land	$	843,192	$	881,896
Buildings, fixtures and improvements	Buildings, fixtures and improvements	2,463,130		2,490,030		Buildings, fixtures and improvements	2,267,204		2,490,030
Intangible lease assets	Intangible lease assets	389,004		389,564		Intangible lease assets	367,622		389,564
Condominium developments	Condominium developments	201,031		0		Condominium developments	197,080		0
Total real estate assets, at cost	Total real estate assets, at cost	3,927,775		3,761,490		Total real estate assets, at cost	3,675,098		3,761,490
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(477,865)		(453,385)		Less: accumulated depreciation and amortization	(472,399)		(453,385)
Total real estate assets, net	Total real estate assets, net	3,449,910		3,308,105		Total real estate assets, net	3,202,699		3,308,105
Real estate-related securities	Real estate-related securities	67,222		38,194		Real estate-related securities	42,071		38,194

Loans held-for-investment and related receivables, net	Loans held-for-investment and related receivables, net	1,022,279		962,624		Loans held-for-investment and related receivables, net	1,356,247		962,624
Less: Allowance for credit losses	Less: Allowance for credit losses	(12,888)		(70,358)		Less: Allowance for credit losses	(13,011)		(70,358)
Total loans held-for-investment and related receivables, net	Total loans held-for-investment and related receivables, net	1,009,391		892,266		Total loans held-for-investment and related receivables, net	1,343,236		892,266
Cash and cash equivalents	Cash and cash equivalents	57,550		121,385		Cash and cash equivalents	141,299		121,385
Restricted cash	Restricted cash	20,372		7,023		Restricted cash	32,918		7,023
Rents and tenant receivables, net	Rents and tenant receivables, net	67,208		74,419		Rents and tenant receivables, net	57,945		74,419

Prepaid expenses and other assets	Prepaid expenses and other assets	14,516		10,406		Prepaid expenses and other assets	17,028		10,406
Deferred costs, net	Deferred costs, net	4,444		4,293		Deferred costs, net	5,842		4,293
Assets held for sale	Assets held for sale	31,241		3,518		Assets held for sale	6,124		3,518
Total assets	Total assets	$	4,721,854	$	4,459,609	Total assets	$	4,849,162	$	4,459,609
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Credit facilities, notes payable and repurchase facilities, net	Credit facilities, notes payable and repurchase facilities, net	$	2,445,246	$	2,144,993	Credit facilities, notes payable and repurchase facilities, net	$	2,540,809	$	2,144,993
Accrued expenses and accounts payable	Accrued expenses and accounts payable	31,653		30,419		Accrued expenses and accounts payable	35,102		30,419

Due to affiliates	Due to affiliates	15,376		14,723		Due to affiliates	15,957		14,723
Intangible lease liabilities, net	Intangible lease liabilities, net	31,075		32,718		Intangible lease liabilities, net	27,578		32,718
Distributions payable	Distributions payable	10,969		10,969		Distributions payable	10,997		10,969
Deferred rental income, derivative liabilities and other liabilities	Deferred rental income, derivative liabilities and other liabilities	21,351		27,361		Deferred rental income, derivative liabilities and other liabilities	19,686		27,361
Total liabilities	Total liabilities	2,555,670		2,261,183		Total liabilities	2,650,129		2,261,183
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
Redeemable common stock	Redeemable common stock	0		0		Redeemable common stock	173,628		0
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, NaN issued and outstanding	Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, NaN issued and outstanding	0		0		Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, NaN issued and outstanding	0		0
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 362,001,968 shares issued and outstanding as of both March 31, 2021 and December 31, 2020		3,620		3,620
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 362,923,841 and 362,001,968 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively						Common stock, $0.01 par value per share; 490,000,000 shares authorized, 362,923,841 and 362,001,968 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	3,629		3,620
Capital in excess of par value	Capital in excess of par value	3,157,899		3,157,859		Capital in excess of par value	2,990,971		3,157,859
Accumulated distributions in excess of earnings	Accumulated distributions in excess of earnings	(996,665)		(961,006)		Accumulated distributions in excess of earnings	(971,826)		(961,006)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	1,330		(2,047)		Accumulated other comprehensive income (loss)	2,631		(2,047)
Total stockholders’ equity	Total stockholders’ equity	2,166,184		2,198,426		Total stockholders’ equity	2,025,405		2,198,426
Total liabilities, redeemable common stock and stockholders’ equity	Total liabilities, redeemable common stock and stockholders’ equity	$	4,721,854	$	4,459,609	Total liabilities, redeemable common stock and stockholders’ equity	$	4,849,162	$	4,459,609

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

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020				2021		2020		2021		2020
Revenues:	Revenues:						Revenues:
Rental and other property income	Rental and other property income	$	76,930	$	68,436		Rental and other property income	$	75,302	$	60,103	$	152,232	$	128,539
Interest income	Interest income	11,953		5,571			Interest income	16,460		7,193		28,413		12,764
Total revenues	Total revenues	88,883		74,007			Total revenues	91,762		67,296		180,645		141,303
Operating expenses:	Operating expenses:						Operating expenses:
General and administrative	General and administrative	5,471		3,682			General and administrative	3,605		3,020		8,033		5,902
Property operating	Property operating	10,119		6,865			Property operating	11,356		4,811		21,475		11,676
Real estate tax	Real estate tax	12,219		6,978			Real estate tax	7,706		6,748		19,925		13,726
Management and advisory fees and expenses		13,014		11,090
Expense reimbursements to related parties							Expense reimbursements to related parties	3,210		3,057		5,871		5,235
Management fees							Management fees	11,755		9,750		23,332		19,600
Transaction-related	Transaction-related	185		252			Transaction-related	27		125		31		250
Depreciation and amortization	Depreciation and amortization	25,738		20,823			Depreciation and amortization	24,647		19,696		50,385		40,519
Real estate impairment	Real estate impairment	4,300		11,676			Real estate impairment	77		3,831		4,377		15,507
Provision for credit losses	Provision for credit losses	568		17,777			Provision for credit losses	123		7,905		691		25,682
Total operating expenses	Total operating expenses	71,614		79,143			Total operating expenses	62,506		58,943		134,120		138,097
Gain on disposition of real estate, net		0		13,110
Gain on disposition of real estate and condominium developments, net							Gain on disposition of real estate and condominium developments, net	46,469		3,791		46,469		16,901

Operating income	Operating income	17,269		7,974			Operating income	75,725		12,144		92,994		20,107
Other expense:	Other expense:						Other expense:
Interest expense and other, net	Interest expense and other, net	(20,022)		(15,767)			Interest expense and other, net	(16,460)		(15,520)		(36,482)		(31,276)
Loss on extinguishment of debt	Loss on extinguishment of debt	0		(4,382)			Loss on extinguishment of debt	(1,478)		(370)		(1,478)		(4,752)
Total other expense	Total other expense	(20,022)		(20,149)			Total other expense	(17,938)		(15,890)		(37,960)		(36,028)
Net loss		$	(2,753)	$	(12,175)
Net income (loss)							Net income (loss)	$	57,787	$	(3,746)	$	55,034	$	(15,921)

Weighted average number of common shares outstanding:	Weighted average number of common shares outstanding:						Weighted average number of common shares outstanding:
Basic and diluted	Basic and diluted	362,001,968		311,248,421			Basic and diluted	362,448,778		310,558,499		362,226,607		310,903,460
Net loss per common share:
Net income (loss) per common share:							Net income (loss) per common share:
Basic and diluted	Basic and diluted	$	(0.01)	$	(0.04)		Basic and diluted	$	0.16	$	(0.01)	$	0.15	$	(0.05)

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

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands) (Unaudited)


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020				2021		2020		2021		2020
Net loss		$	(2,753)	$	(12,175)
Net income (loss)							Net income (loss)	$	57,787	$	(3,746)	$	55,034	$	(15,921)
Other comprehensive income (loss)	Other comprehensive income (loss)						Other comprehensive income (loss)
Unrealized gain on real estate-related securities	Unrealized gain on real estate-related securities	122		0			Unrealized gain on real estate-related securities	1,930		20		2,052		20

Unrealized gain (loss) on interest rate swaps		123		(10,805)
Amount of loss reclassified from other comprehensive income (loss) into income as interest expense and other, net		3,132		977
Reclassification adjustment for realized gain included in income as other income							Reclassification adjustment for realized gain included in income as other income	(648)		0		(648)		0
Unrealized (loss) gain on interest rate swaps							Unrealized (loss) gain on interest rate swaps	(52)		(805)		71		(11,610)
Amount of loss reclassified from other comprehensive income (loss) into income (loss) as interest expense and other, net							Amount of loss reclassified from other comprehensive income (loss) into income (loss) as interest expense and other, net	71		3,343		3,203		4,320
Total other comprehensive income (loss)	Total other comprehensive income (loss)	3,377		(9,828)			Total other comprehensive income (loss)	1,301		2,558		4,678		(7,270)
Comprehensive income (loss)	Comprehensive income (loss)	$	624	$	(22,003)		Comprehensive income (loss)	$	59,088	$	(1,188)	59,712		(23,191)

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

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED 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) Income		Total Stockholders’ Equity			Common Stock			Capital in Excess of Par Value		Accumulated Distributions in Excess of Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
		Number of Shares	Par Value											Number of Shares	Par Value
Balance as of January 1, 2021	Balance as of January 1, 2021	362,001,968	$	3,620	$	3,157,859	$	(961,006)	$	(2,047)	$	2,198,426	Balance as of January 1, 2021	362,001,968	$	3,620	$	3,157,859	$	(961,006)	$	(2,047)	$	2,198,426

Equity-based compensation													Equity-based compensation	—	—		40		—		—		40
Distributions declared on common stock — $0.09 per common share													Distributions declared on common stock — $0.09 per common share	—	—		—		(32,906)		—		(32,906)
Comprehensive (loss) income													Comprehensive (loss) income	—	—		—		(2,753)		3,377		624
Balance as of March 31, 2021													Balance as of March 31, 2021	362,001,968	$	3,620	$	3,157,899	$	(996,665)	$	1,330	$	2,166,184
Issuance of common stock													Issuance of common stock	917,769	9		6,651		—		—		6,660
Equity-based compensation	Equity-based compensation	—	—		40		—		—		40		Equity-based compensation	4,104	—		49		—		—		49
Distributions declared on common stock — $0.09 per common share	Distributions declared on common stock — $0.09 per common share	—	—		—		(32,906)		—		(32,906)		Distributions declared on common stock — $0.09 per common share	—	—		—		(32,948)		—		(32,948)

Comprehensive (loss) income		—	—		—		(2,753)		3,377		624
Balance as of March 31, 2021		362,001,968	$	3,620	$	3,157,899	$	(996,665)	$	1,330	$	2,166,184
Changes in redeemable common stock													Changes in redeemable common stock	—	—		(173,628)		—		—		(173,628)
Comprehensive income													Comprehensive income	—	—		—		57,787		1,301		59,088
Balance as of June 30, 2021													Balance as of June 30, 2021	362,923,841	$	3,629	$	2,990,971	$	(971,826)	$	2,631	$	2,025,405


		Common Stock			Capital in Excess of Par Value		Accumulated Distributions in Excess of Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity			Common Stock			Capital in Excess of Par Value		Accumulated Distributions in Excess of Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
		Number of Shares	Par Value											Number of Shares	Par Value
Balance as of January 1, 2020	Balance as of January 1, 2020	311,207,725	$	3,112	$	2,606,925	$	(816,181)	$	(3,908)	$	1,789,948	Balance as of January 1, 2020	311,207,725	$	3,112	$	2,606,925	$	(816,181)	$	(3,908)	$	1,789,948
Cumulative effect of accounting changes	Cumulative effect of accounting changes	—	—		—		(2,002)		—		(2,002)		Cumulative effect of accounting changes	—	—		—		(2,002)		—		(2,002)
Issuance of common stock	Issuance of common stock	2,223,298	22		19,209		—		—		19,231		Issuance of common stock	2,223,298	22		19,209		—		—		19,231
Equity-based compensation	Equity-based compensation	—	—		40		—		—		40		Equity-based compensation	—	—		40		—		—		40
Distributions declared on common stock — $0.15 per common share	Distributions declared on common stock — $0.15 per common share	—	—		—		(48,332)		—		(48,332)		Distributions declared on common stock — $0.15 per common share	—	—		—		(48,332)		—		(48,332)
Redemptions of common stock	Redemptions of common stock	(2,256,037)	(22)		(19,492)		—		—		(19,514)		Redemptions of common stock	(2,256,037)	(22)		(19,492)		—		—		(19,514)
Changes in redeemable common stock	Changes in redeemable common stock	—	—		283		—		—		283		Changes in redeemable common stock	—	—		283		—		—		283
Comprehensive loss	Comprehensive loss	—	—		—		(12,175)		(9,828)		(22,003)		Comprehensive loss	—	—		—		(12,175)		(9,828)		(22,003)
Balance as of March 31, 2020	Balance as of March 31, 2020	311,174,986	$	3,112	$	2,606,965	$	(878,690)	$	(13,736)	$	1,717,651	Balance as of March 31, 2020	311,174,986	$	3,112	$	2,606,965	$	(878,690)	$	(13,736)	$	1,717,651
Issuance of common stock													Issuance of common stock	1,242,475	12		9,531		—		—		9,543
Equity-based compensation													Equity-based compensation	—	—		40		—		—		40
Distributions declared on common stock — $0.04 per common share													Distributions declared on common stock — $0.04 per common share	—	—		—		(13,072)		—		(13,072)
Redemptions of common stock													Redemptions of common stock	(2,468,754)	(25)		(19,166)		—		—		(19,191)
Changes in redeemable common stock													Changes in redeemable common stock	—	—		9,643		—		—		9,643
Comprehensive (loss) income													Comprehensive (loss) income	—	—		—		(3,746)		2,558		(1,188)
Balance as of June 30, 2020													Balance as of June 30, 2020	309,948,707	$	3,099	$	2,607,013	$	(895,508)	$	(11,178)	$	1,703,426

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

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)


		Three Months Ended March 31,					Six Months Ended June 30,
		2021		2020			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss		$	(2,753)	$	(12,175)
Net income (loss)						Net income (loss)	$	55,034	$	(15,921)
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization, net	Depreciation and amortization, net	25,118		20,530		Depreciation and amortization, net	49,184		39,886
Amortization of deferred financing costs	Amortization of deferred financing costs	1,871		1,042		Amortization of deferred financing costs	3,782		2,034
Amortization of fair value adjustment of mortgage notes payable assumed	Amortization of fair value adjustment of mortgage notes payable assumed	(23)		(23)		Amortization of fair value adjustment of mortgage notes payable assumed	(149)		(45)
Amortization and accretion on deferred loan fees	Amortization and accretion on deferred loan fees	(376)		(560)		Amortization and accretion on deferred loan fees	(817)		(1,425)
Amortization of premiums and discounts on credit investments	Amortization of premiums and discounts on credit investments	(442)		(21)		Amortization of premiums and discounts on credit investments	(3,767)		(194)
Capitalized interest income on real estate-related securities	Capitalized interest income on real estate-related securities	(173)		(539)		Capitalized interest income on real estate-related securities	(435)		(539)
Equity-based compensation	Equity-based compensation	40		40		Equity-based compensation	89		80
Straight-line rental income	Straight-line rental income	(1,706)		(375)		Straight-line rental income	(2,756)		(2,083)
Write-offs for uncollectible lease-related receivables	Write-offs for uncollectible lease-related receivables	1,773		636		Write-offs for uncollectible lease-related receivables	591		5,870
Gain on disposition of real estate assets, net		0		(13,110)
Loss on sale of credit investments, net		111		0
Gain on disposition of real estate assets and condominium developments, net						Gain on disposition of real estate assets and condominium developments, net	(46,469)		(16,901)

Gain on sale of credit investments, net						Gain on sale of credit investments, net	(813)		(223)
Amortization of fair value adjustment and gain on interest rate swaps	Amortization of fair value adjustment and gain on interest rate swaps	(1,431)		(5)		Amortization of fair value adjustment and gain on interest rate swaps	(2,757)		(10)
Impairment of real estate assets	Impairment of real estate assets	4,300		11,676		Impairment of real estate assets	4,377		15,507

Provision for credit losses	Provision for credit losses	568		17,777		Provision for credit losses	691		25,682
Write-off of deferred financing costs	Write-off of deferred financing costs	0		177		Write-off of deferred financing costs	45		544
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Rents and tenant receivables, net	Rents and tenant receivables, net	7,151		(238)		Rents and tenant receivables, net	15,315		(12,958)
Prepaid expenses and other assets	Prepaid expenses and other assets	(4,175)		(484)		Prepaid expenses and other assets	(6,083)		2,045
Accrued expenses and accounts payable	Accrued expenses and accounts payable	(435)		1,918		Accrued expenses and accounts payable	707		1,427
Deferred rental income and other liabilities	Deferred rental income and other liabilities	(1,324)		(7,271)		Deferred rental income and other liabilities	(1,656)		(4,885)
Due to affiliates	Due to affiliates	653		(1,849)		Due to affiliates	1,234		(662)
Net cash provided by operating activities	Net cash provided by operating activities	28,747		17,146		Net cash provided by operating activities	65,347		37,229
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Investment in real estate-related securities	Investment in real estate-related securities	(28,509)		0		Investment in real estate-related securities	(28,509)		(16,450)
Investment in broadly syndicated loans	Investment in broadly syndicated loans	(82,144)		(330,678)		Investment in broadly syndicated loans	(142,324)		(404,896)
Investment in real estate assets and capital expenditures	Investment in real estate assets and capital expenditures	(10,864)		(1,534)		Investment in real estate assets and capital expenditures	(14,543)		(7,171)
Origination and acquisition of loans held-for-investment, net	Origination and acquisition of loans held-for-investment, net	(185,652)		(866)		Origination and acquisition of loans held-for-investment, net	(533,222)		(1,165)
Origination and exit fees received on loans held-for-investment	Origination and exit fees received on loans held-for-investment	2,043		61		Origination and exit fees received on loans held-for-investment	4,694		571
Principal payments received on loans held-for-investment	Principal payments received on loans held-for-investment	51,650		6,853		Principal payments received on loans held-for-investment	97,459		63,592
Principal payments received on real estate-related securities	Principal payments received on real estate-related securities	10		0		Principal payments received on real estate-related securities	20		355

Net proceeds from disposition of real estate assets		3,511		126,645
Net proceeds from sale of real estate-related securities						Net proceeds from sale of real estate-related securities	27,624		0
Net proceeds from disposition of real estate assets and condominium developments						Net proceeds from disposition of real estate assets and condominium developments	304,370		157,198
Net proceeds from sale of broadly syndicated loans	Net proceeds from sale of broadly syndicated loans	7,445		0		Net proceeds from sale of broadly syndicated loans	36,518		19,842

Payment of property escrow deposits						Payment of property escrow deposits	0		(250)
Refund of property escrow deposits						Refund of property escrow deposits	0		250
Proceeds from the settlement of insurance claims						Proceeds from the settlement of insurance claims	58		0
Net cash used in investing activities	Net cash used in investing activities	(242,510)		(199,519)		Net cash used in investing activities	(247,855)		(188,124)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Redemptions of common stock	Redemptions of common stock	0		(19,514)		Redemptions of common stock	0		(38,705)
Distributions to stockholders	Distributions to stockholders	(32,906)		(29,148)		Distributions to stockholders	(59,166)		(44,150)
Proceeds from credit facility and repurchase facilities		282,323		100,000
Repayments of credit facility and notes payable		(85,298)		(97,129)

Proceeds from credit facilities and repurchase facilities						Proceeds from credit facilities and repurchase facilities	590,182		320,992
Repayments of credit facilities and notes payable						Repayments of credit facilities and notes payable	(298,021)		(218,814)
Payment of loan deposits						Payment of loan deposits	(650)		0
Refund of loan deposits	Refund of loan deposits	65		0		Refund of loan deposits	65		0
Deferred financing costs paid	Deferred financing costs paid	(907)		(115)		Deferred financing costs paid	(4,093)		(844)
Net cash provided by (used in) financing activities		163,277		(45,906)
Net decrease in cash and cash equivalents and restricted cash		(50,486)		(228,279)
Net cash provided by financing activities						Net cash provided by financing activities	228,317		18,479
Net increase (decrease) in cash and cash equivalents and restricted cash						Net increase (decrease) in cash and cash equivalents and restricted cash	45,809		(132,416)
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	128,408		473,355		Cash and cash equivalents and restricted cash, beginning of period	128,408		473,355
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	77,922	$	245,076	Cash and cash equivalents and restricted cash, end of period	$	174,217	$	340,939
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:	Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:					Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	Cash and cash equivalents	$	57,550	$	240,872	Cash and cash equivalents	$	141,299	$	336,142
Restricted cash	Restricted cash	20,372		4,204		Restricted cash	32,918		4,797
Total cash and cash equivalents and restricted cash	Total cash and cash equivalents and restricted cash	$	77,922	$	245,076	Total cash and cash equivalents and restricted cash	$	174,217	$	340,939

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

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2021 (Unaudited)

NOTE 1 — ORGANIZATION AND BUSINESS

CIM Real Estate Finance Trust, Inc. (the “Company”) is a non-exchange traded real estate investment trust (“REIT”) formed as a Maryland corporation on July 27, 2010, that elected to be taxed, and currently qualifies, as a REIT for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2012. The Company operates a diversified portfolio of core commercial real estate assets primarily consisting of net leased properties located throughout the United States. The Company continues to pursue a more diversified investment strategy across the capital structure by balancing the Company’s existing core of commercial real estate assets leased to creditworthy tenants under long-term net leases with a portfolio of commercial mortgage loans and other credit investments in which the Company’s sponsor and its affiliates have expertise. As of ~~March 31,~~June 30, 2021, the Company owned ~~515~~469 properties, comprising ~~21.3~~18.6 million rentable square feet of commercial space located in 4541 states. As of ~~March 31,~~June 30, 2021, the rentable square feet at these properties was ~~93.7%~~93.1% leased, including month-to-month agreements, if any. As of ~~March 31,~~June 30, 2021, the Company’s loan portfolio consisted of ~~227~~247 loans with a net book value of ~~$1.0~~$1.3 billion, and investments in 3 real estate-related securities with a net book value of ~~$67.2~~$42.1 million. ~~During the three months ended March 31,~~On January 7, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its 8 mezzanine loans, including 75 condominium units and 21 rental units across 4 buildings. As of June 30, 2021, the Company owned $197.1 million of condominium developments.

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 and owns, directly or indirectly, 100% of the partnership interests.

The Company is externally managed by CIM Real Estate Finance Management, LLC, a Delaware limited liability company (“CMFT Management”), which is an affiliate of CIM Group, LLC (“CIM”). CIM is a community-focused real estate and infrastructure owner, operator, lender and developer. Headquartered in Los Angeles, California, CIM has offices across the United States and in Tokyo, Japan.

CCO Group, LLC owns and controls CMFT Management, the Company’s manager, and is the indirect owner of CCO Capital, LLC (“CCO Capital”), the Company’s dealer manager, and CREI Advisors, LLC (“CREI Advisors”), the Company’s property manager. CCO Group, LLC and its subsidiaries (collectively, “CCO Group”) serve as the Company’s sponsor and as a sponsor to CIM Income NAV, Inc. (“CIM Income NAV”). 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.

On January 26, 2012, 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”). The Company ceased issuing shares in the Offering on April 4, 2014. At the completion of the 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 Offering and approximately 5.1 million shares of common stock issued pursuant to the distribution reinvestment plan (“DRIP”) portion of the Offering. The remaining approximately 404,000 unsold shares from the 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 on Form S-3 (Registration No. 333-192958), 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 (the “Secondary DRIP Offering,” and together with the Initial DRIP Offering, the “DRIP Offerings,” and the DRIP Offerings collectively with the 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 continued to issue shares under the Secondary DRIP Offering until, on August 30, 2020, the Company’s board of directors (the “Board”) suspended the Secondary DRIP Offering in connection with the entry of the Company into the merger agreements with Cole Office & Industrial REIT (CCIT III), Inc.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2021 (Unaudited) – (Continued)

(“CCIT III”) and Cole Credit Property Trust V, Inc. (“CCPT V”) (the “Mergers”). On March 25, 2021, the Board reinstated the Secondary DRIP Offering, effective April 1, 2021.

The Board establishes 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 Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231. Distributions are reinvested in shares of the Company’s common stock under the DRIP at the estimated per share NAV as determined by the Board. Additionally, the estimated per share NAV as determined by the Board serves as the per share NAV for purposes of the share redemption program. As of ~~March 31,~~June 30, 2021, the estimated per share NAV of the Company’s common stock was ~~$7.31,~~$7.20, which was established by the Board on ~~August 11, 2020~~May 25, 2021 using a valuation date of ~~June 30, 2020.~~March 31, 2021. Commencing on ~~August 14, 2020, $7.31~~May 26, 2021, $7.20 served as the per share NAV under the DRIP. The Board previously established a per share NAV as of August 31, 2015, September 30, 2016, December 31, 2016, December 31, 2017, December 31, 2018, December 31, 2019, ~~and~~ March 31, 2020 and June 30, 2020. The Company’s estimated per share NAVs are not audited or reviewed by its independent registered public accounting firm.

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, 2020, and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. 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. All intercompany balances and transactions have been eliminated in consolidation.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

Reclassifications

Certain amounts in the Company’s prior period condensed consolidated financial statements have been reclassified to conform to the current period ~~presentation.These reclassifications~~presentation. This reclassification had no effect on previously reported totals or subtotals.

The Company is separately presenting the write-offs for uncollectible lease-related receivables of $636,000 for the three months ended March 31, 2020, which was previously included in straight-line rental income, net inreclassifications have been made to the condensed consolidated statements of ~~cash flows.~~operations for the three and six months ended June 30, 2020 as follows (in thousands):


	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	As previously reported		Reclassification		As Revised		As previously reported		Reclassification		As Revised
Condensed Consolidated Statements of Operations
General and administrative	$	4,235	$	(1,215)	$	3,020	$	7,917	$	(2,015)	$	5,902
Management fees	$	11,398	$	(1,648)	$	9,750	$	22,488	$	(2,888)	$	19,600
Transaction-related	$	330	$	(205)	$	125	$	582	$	(332)	$	250
Expense reimbursements to related parties	$	0	$	3,057	$	3,057	$	0	$	5,235	$	5,235


Interest expense and other, net	$	15,509	$	11	$	15,520	$	31,276	$	0	$	31,276

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.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

Real Estate Assets

Real estate assets are stated at cost, less accumulated depreciation and amortization. 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: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, lease concessions and other factors; a significant decrease in a property’s revenues due to lease terminations; vacancies; co-tenancy clauses; reduced lease rates; and changes in anticipated holding periods. 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. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of ~~$4.3~~$4.4 million related to 5 properties, of which impairment at 3 properties was due to sales prices that were less than their respective carrying values and impairment at 2 properties was due to vacancy. The Company’s impairment assessment as of ~~March 31,~~June 30, 2021 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 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 2021 or in future periods. During the ~~three~~six months ended ~~March 31,~~June 30, 2020, the Company recorded impairment charges of ~~$11.7~~$15.5 million related to 69 properties due to revised cash flow estimates as a result of market

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

conditions and 1 property due to a tenant bankruptcy. The assumptions and uncertainties utilized in the evaluation of the impairment of real estate assets are discussed in detail in Note 3 — Fair Value Measurements. See also Note 4 — Real Estate 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 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 is then recorded to reflect the estimated fair value of the property, net of selling costs. As of ~~March 31,~~June 30, 2021, the Company identified 2 properties with a fair value of ~~$31.2~~$6.1 million as held for sale, which were sold subsequent to ~~March 31,~~June 30, 2021 at a gain of $824,000. As of March 31, 2021, the Company had mortgage notes payable of $21.9 million related to 1 of the held for sale properties, which was repaid subsequent to March 31, 2021 in connection with the disposition of the underlying held for sale property.$779,000. As of December 31, 2020, the Company identified 1 property with a fair value of $3.5 million as held for sale, which was sold during the ~~three~~six months ended ~~March 31,~~June 30, 2021. NaN gain or loss was recognized on this disposition.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

Disposition 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. The Company’s ~~property~~ dispositions during the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 did not qualify for discontinued operations presentation and thus, the results of the properties and condominiums that were sold will remain in operating income, and any associated gains or losses from the disposition are included in gain on disposition of real estate and condominium developments, net. See Note 4 — Real Estate Assets for a discussion of the disposition of individual properties and condominiums during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

Allocation of Purchase Price of Real Estate Assets

Upon the acquisition of real properties, the Company allocates the purchase price 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 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 ~~such as manager expense reimbursements,~~ continue to be expensed as incurred and are included in transaction-related expenses in the accompanying condensed consolidated statements of ~~operations~~.operations.

Restricted Cash

The Company had ~~$20.4~~$32.9 million and $7.0 million in restricted cash as of ~~March 31,~~June 30, 2021 and December 31, 2020, respectively. Included in restricted cash was ~~$4.0~~$4.1 million and $3.6 million held by lenders in lockbox accounts, as of ~~March 31,~~June 30, 2021 and December 31, 2020, 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 ~~$16.4~~$28.8 million and $3.4 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 ~~March 31,~~June 30, 2021 and December 31, 2020, respectively.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

Real Estate-Related Securities

Real estate-related securities consists primarily of the Company’s investment in commercial mortgage-backed securities (“CMBS”). 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,~~June 30, 2021, the Company classified its investments 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 income (loss). During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company invested $28.5 million in CMBS. During the same period, the Company sold CMBS with a carrying value of $27.0 million resulting in net proceeds of $27.6 million and a gain of $648,000. As of ~~March 31,~~June 30, 2021, the Company had investments in 53 CMBS with an estimated aggregate fair value of ~~$67.2~~$42.1 million.

The Company monitors its available-for-sale securities for changes in fair value. An allowance for credit losses is recorded when the Company acquires CMBS, and any subsequent impairment is recognized when the 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 impairments related to credit losses through the allowance for credit losses. However, the allowance is limited by the amount that the fair value is less than the amortized cost basis. The Company considers many factors in determining whether a credit loss exists, 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,

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

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. The analysis of determining whether a credit loss exists requires significant judgments and assumptions. The use of alternative judgments and assumptions could result in a different conclusion.

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 ~~and other expense, net.~~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 and six months ended ~~March 31,~~June 30, 2021, the Company ~~recorded $12.0 million in~~capitalized $435,000 of interest income ~~on its credit investments, $173,000 of which was capitalized~~ to real estate-related securities. NaN such amounts were capitalized during the three and six months ended ~~March 31, 2020 as the Company began investing in real estate-related securities in~~ June 30, 2020.

Loans Held-for-Investment

The Company has acquired, and may continue to acquire, loans related to real estate assets. Additionally, the Company may acquire and originate credit investments, including commercial mortgage loans, mezzanine loans, preferred equity, 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 foreseeable future or until maturity. Loans held-for-investment are carried on the Company’s condensed consolidated balance sheets at amortized cost, net of any allowance for credit losses. Discounts or 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 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. During the three and six months ended ~~March 31,~~June 30, 2020, the Company recorded ~~$5.6~~$7.2 million and $12.8 million, respectively, in interest income on its credit investments, $539,000 of which was capitalized ~~to loans held-for-investment and related receivables, net.~~during the six months ended June 30, 2020. NaN such amounts were capitalized during the three months ended June 30, 2020.

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,~~June 30, 2021, the Company did 0t have nonaccrual loans.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

Allowance for 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. The allowance for credit losses 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. The initial allowance for credit losses recorded on January 1, 2020 is reflected as a direct charge to retained earnings on the Company’s condensed consolidated statements of stockholders’ equity; however, subsequent changes to the allowance for 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 the allowance for credit losses, it does specify the allowance 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 has elected to use a discounted cash flow model to estimate the allowance for credit losses. This model requires the Company to develop cash flows which project estimated credit losses over the life of the loan and discount these cash flows at the asset’s effective interest rate. The Company then records an allowance for credit losses equal to the difference between the amortized cost basis of the asset and the present value of the expected cash flows. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

(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 broadly syndicated loans, the Company uses a probability of default and loss given default method using an underlying third-party CMBS/Commercial Real Estate (“CRE”) loan database with historical loan losses from 1998 to 2019. 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.

The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost. Prior to adoption, the Company had 0 allowance for credit losses on its condensed consolidated balance sheets. The Company recorded a cumulative-effective adjustment to the opening retained earnings in its condensed consolidated statement of stockholders’ equity as of January 1, 2020 of $2.0 million.

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;

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

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June 30, 2021 (Unaudited) – (Continued)

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.

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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.

The Company has an investment in a real estate property that is subject to a ground lease, for which a lease liability and right of use (“ROU”) asset of $2.4 million was recorded as of both ~~March 31,~~June 30, 2021 and December 31, 2020. See Note 15 — Leases for a further discussion regarding this ground lease.

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.

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~~six months ended ~~March 31,~~June 30, 2021, the Company capitalized ~~$514,000~~$1.8 million of interest expense associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets. There were 0 development projects during the ~~three~~six months ended ~~March 31,~~June 30, 2020.

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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 variable rental and other property income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved.

The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants are probable. The determination of whether collectability 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. Upon the determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income for amounts previously recorded and a decrease in the 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.

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During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company identified certain tenants where collection was no longer considered probable. For these tenants, the Company made the determination to record revenue on a cash basis and wrote off total outstanding receivables of ~~$1.8 million~~$591,000 for the ~~three~~six months ended ~~March 31,~~June 30, 2021, which included ~~$29,000~~$525,000 of straight-line rental ~~income and $1.1 million related to certain tenant reimbursements.~~income. These write-offs reduced rental and other property income during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

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 broadly syndicated loans is accrued as earned beginning on the settlement date.

Reportable Segments

During the year ended December 31, 2020, the Company updated its reportable segment information to reflect how the chief operating decision makers regularly review and manage the business and determined that it has 2 reportable segments:

Credit — engages primarily in acquiring and originating loans related to real estate assets. The Company may acquire first and second lien mortgage loans, mezzanine loans, bridge loans, wraparound mortgage loans, construction mortgage loans on real property and loans on leasehold interest mortgages. This segment also includes investments in CMBS and broadly syndicated loans.

Real estate — engages primarily in acquiring and managing income-producing retail properties that are primarily single-tenant properties or anchored shopping centers, which are leased to creditworthy tenants under long-term net leases. The commercial properties are geographically diversified throughout the United States and have similar economic characteristics.

See Note 16 — Segment Reporting for 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 that certain new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements.

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In April 2020, the FASB issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the current novel coronavirus (“COVID-19”) pandemic. Due to the business disruptions and challenges severely affecting the global economy caused by the COVID-19 pandemic, many lessors may be required to provide rent deferrals and other lease concessions to lessees. While the lease modification guidance in ASU No. 2016-02, Leases (Topic 842) (“ASC ~~842~~842”) addresses routine changes to lease terms resulting from negotiations between the lessee and the lessor, this guidance did not contemplate concessions being so rapidly executed to address the sudden liquidity constraints of some lessees arising from COVID-19 related impacts. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances.

The Company has elected to apply this guidance to avoid performing a lease by lease analysis for the lease concessions that (1) were granted as relief due to COVID-19 related impacts and (2) result in the cash flows remaining substantially the same or less than the original contract and will account for these lease concessions as if no changes were made to the leases. During the three and six months ended ~~March 31,~~June 30, 2021, the ~~Company provided~~majority of the lease concessions ~~either~~provided by the Company were in the form of rental ~~deferrals or~~ abatements, to certain tenants in response to the impact of the COVID-19 pandemic on those tenants. During the three months ended March 31, 2021, the Company had granted rent deferrals of $427,000. The deferral of rental payments affects the timing, but not the amount, of the lease payments and resulted in an increase of $427,000 to the Company’s lease-related receivables balance as of March 31, 2021. Additionally, during the three months ended March 31, 2021, the Company had granted rental abatements of $13,000.

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~~In addition, the Company entered into lease amendments during the~~ ~~three months ended March 31, 2021~~ that provided for lease concessions, through rent abatements or rent deferrals, that represented substantive changes to the consideration in the original lease. These lease amendments extended the lease periods ranging from 12 months to 63 months. For these leases, the Company applied the lease modification accounting framework pursuant to ASC 842. During the three months ended ~~March 31, 2021, these lease amendments resulted in rent abatements of~~ ~~$235,000~~ ~~and deferred rental income of $5,000.~~

As of ~~May 6,~~August 9, 2021, the Company has collected approximately ~~98%~~99% of rental payments billed to tenants during the three months ended ~~March 31,~~June 30, 2021,. and as of August 9, 2021, the Company collected $4.1 million of deferred rent, representing approximately 99% of amounts due through June 30, 2021.

In January 2021, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in ASU 2021-01 clarify that certain optional expedients and exceptions for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of the discontinuation of the use of the London Interbank Offered Rate (“LIBOR”) as a benchmark interest rate due to reference rate reform. ASU 2021-01 is effective immediately for all entities with the option to apply retrospectively as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, and can be applied prospectively to any new contract modifications made on or after January 7, 2021. The Company currently uses LIBOR as its benchmark interest rate for its derivative instruments, and has not entered into any new contracts on or after the effective date of ASU 2021-01. The Company has evaluated the impact of this ASU’s adoption, and does not believe this ASU will have a material impact on its condensed 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.

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June 30, 2021 (Unaudited) – (Continued)

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

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 either Level 2 or Level 3 inputs. As of ~~March 31,~~June 30, 2021, the Company concluded that ~~$27.4 million~~all of ~~real estate-related securities fell under Level 2 and $39.8 million of~~its real estate-related securities fell under Level 3.

Credit facilities and notes payable — 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 and fair values exclude net deferred financing costs. These financial instruments are valued using Level 2 inputs. As of ~~March 31,~~June 30, 2021, the estimated fair value of the Company’s debt was ~~$2.45~~$2.54 billion, which approximated its carrying value. The

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estimated fair value of the Company’s debt as of December 31, 2020 was $2.14 billion, compared to a carrying value of $2.15 billion.

Derivative instruments — The Company’s derivative instruments are comprised of interest rate ~~swaps.~~swaps and interest rate 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 ~~March 31,~~June 30, 2021 and December 31, 2020, 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 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.

Loans held-for-investment — The Company’s loans held-for-investment are recorded at cost upon origination and adjusted by net loan origination fees and discounts. The Company estimates the fair value of 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 the credit risk. The Company has determined that its CRE loans held-for-investment are classified in Level 3 of the fair value hierarchy. The Company’s broadly syndicated 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 ~~March 31,~~June 30, 2021, ~~$389.7~~$407.6 million and ~~$107.6~~$76.2 million of the Company’s broadly syndicated loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of December 31, 2020, $359.6 million and $114.1 million of the Company’s broadly syndicated loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of ~~March 31,~~June 30, 2021, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was ~~$1.03~~$1.36 billion, compared to its carrying value of ~~$1.01~~$1.34 billion. As of December 31, 2020, the estimated fair value of the Company’s loans held-for-investment was $907.8 million, compared to its carrying value of $892.3 million.

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 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. As of ~~March 31,~~June 30, 2021 and December 31, 2020, there have been no transfers of financial assets or liabilities between fair value hierarchy levels.

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~~March 31,~~June 30, 2021 (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 ~~March 31,~~June 30, 2021 and December 31, 2020 (in thousands):


		Balance as of March 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Balance as of June 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:	Financial assets:									Financial assets:
CMBS	CMBS	$	67,222	$	0	$	27,441	$	39,781	CMBS	$	42,071	$	0	$	0	$	42,071
Interest rate caps										Interest rate caps	0		0		0		0
Total financial assets	Total financial assets	$	67,222	$	0	$	27,441	$	39,781	Total financial assets	$	42,071	$	0	$	0	$	42,071
Financial liabilities:	Financial liabilities:									Financial liabilities:
Interest rate swaps	Interest rate swaps	$	(7,622)	$	0	$	(7,622)	$	0	Interest rate swaps	$	(6,289)	$	0	$	(6,289)	$	0
Total financial liabilities	Total financial liabilities	$	(7,622)	$	0	$	(7,622)	$	0	Total financial liabilities	$	(6,289)	$	0	$	(6,289)	$	0


	Balance as of December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
CMBS	$	38,194	$	0	$	27,461	$	10,733
Total financial assets	$	38,194	$	0	$	27,461	$	10,733
Financial liabilities:
Interest rate swaps	$	(12,308)	$	0	$	(12,308)	$	0
Total financial liabilities	$	(12,308)	$	0	$	(12,308)	$	0

The following are reconciliations of the changes in financial assets with Level 3 inputs in the fair value hierarchy for the ~~three~~six months ended ~~March 31,~~June 30, 2021 (in thousands):


	CMBS
Beginning Balance, January 1, 2021	$	10,733
Total gains and losses:
Unrealized loss included in other comprehensive income (loss), net	701,804
Purchases and payments received:
Purchases	34,491
Discounts, net	~~(5,676)~~(5,372)
Capitalized interest income	~~173~~435
Principal payments received	~~(10)~~(20)
Ending Balance, ~~March 31,~~June 30, 2021	$	~~39,781~~42,071

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.

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As discussed in Note 4 — Real Estate Assets, during the ~~three~~six months ended ~~March 31,~~June 30, 2021, real estate assets related to 5 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of ~~$31.3~~$31.2 million, resulting in impairment charges of ~~$4.3~~$4.4 million. During the ~~three~~six months ended ~~March 31,~~June 30, 2020, real estate assets related to 710 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of ~~$52.6~~$70.2 million, resulting in impairment charges of ~~$11.7~~$15.5 million. The Company estimates fair values using Level 3 inputs and 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 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.

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~~six months ended ~~March 31,~~June 30, 2021:


~~Three~~Six Months Ended ~~March 31,~~June 30, 2021
Discount Rate						Terminal Capitalization Rate
7.9% - 9.7%						7.4% - 9.2%

The following table presents the impairment charges by asset class recorded during the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 (in thousands):


		Three Months Ended March 31,				Six Months Ended June 30,
		2021		2020				2021		2020
Asset class impaired:	Asset class impaired:						Asset class impaired:
Land	Land	$	768	$	2,925		Land	$	781	$	3,541
Buildings, fixtures and improvements	Buildings, fixtures and improvements	3,434		8,264			Buildings, fixtures and improvements	3,496		11,315
Intangible lease assets	Intangible lease assets	225		497			Intangible lease assets	230		696

Intangible lease liabilities	Intangible lease liabilities	(127)		(10)			Intangible lease liabilities	(130)		(45)
Total impairment loss	Total impairment loss	$	4,300	$	11,676		Total impairment loss	$	4,377	$	15,507

NOTE 4 — REAL ESTATE ASSETS

2021 Property Acquisitions

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, ~~and 2020,~~ the Company did 0t acquire any properties.

Assets Acquired Via Foreclosure

~~During the three months ended March 31,~~On January 7, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its 8 mezzanine loans, including 75 condominium units and 21 rental units across 4 buildings. NaN land was acquired in connection with the foreclosure.

~~The following table summarizes the purchase price allocation for the real estate acquired via foreclosure (in thousands):~~

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~~March 31,~~June 30, 2021 (Unaudited) – (Continued)

The following table summarizes the purchase price allocation for the real estate acquired via foreclosure (in thousands):


	As of ~~March 31,~~June 30, 2021

Buildings, fixtures and improvements	192,182
Acquired in-place leases and other intangibles	134

Intangible lease liabilities	(326)
Total purchase price	$	191,990

In connection with the foreclosure, the Company assumed $102.6 million of mortgage notes payable related to the assets, as further discussed in Note 9 — Credit Facilities, Notes Payable and Repurchase Facilities.

2021 Condominium Development Project

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company capitalized ~~$1.5~~$4.5 million of expenses as construction in progress associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

2021 Condominium Dispositions

During the six months ended June 30, 2021, the Company disposed of condominium units for an aggregate sales price of $8.8 million, resulting in proceeds of $8.5 million after closing costs and a gain of $1.5 million. The Company has no continuing involvement 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.

2021 Property ~~Disposition~~Dispositions and Real Estate Assets Held for Sale

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company disposed of 147 retail ~~property~~properties for an aggregate gross sales price of ~~$3.7~~$304.0 million, resulting in proceeds of ~~$3.5~~$296.0 million after closing ~~costs.~~costs and a gain of $46.5 million. The Company has no continuing involvement with ~~this property.~~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.

As of ~~March 31,~~June 30, 2021, there were 2 properties classified as held for sale with a carrying value of ~~$31.2~~$6.1 million included in assets held for sale in the accompanying condensed consolidated balance sheets. Subsequent to ~~March 31,~~June 30, 2021, the Company disposed of these properties, as further discussed in Note 17 — Subsequent Events.

2021 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 ~~three~~six months ended ~~March 31,~~June 30, 2021, 5 properties totaling approximately 165,000 square feet with a carrying value of ~~$35.6~~$35.5 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of ~~$31.3~~$31.2 million, resulting in impairment charges of ~~$4.3~~$4.4 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.

2020 Property Acquisition

During the six months ended June 30, 2020, the Company acquired 1 commercial property for an aggregate purchase price of $4.7 million (the “2020 Property Acquisition”), which includes $42,000 of external acquisition-related expenses that were capitalized. The Company funded the 2020 Property Acquisition with proceeds from real estate dispositions and available borrowings.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

The following table summarizes the purchase price allocation for the 2020 Property Acquisition (in thousands):


	2020 Property Acquisition
Land	$	1,417
Buildings, fixtures and improvements	2,800
Acquired in-place leases and other intangibles (1)	442



Total purchase price	$	4,659

______________________

(1) The amortization period for acquired in-place leases and other intangibles is 14.8 years.

2020 Property Dispositions

During the ~~three~~six months ended ~~March 31,~~June 30, 2020, the Company disposed of 1216 properties, consisting of 910 retail properties and 36 anchored shopping centers, for an aggregate gross sales price of ~~$129.0~~$160.8 million, resulting in proceeds of ~~$126.6~~$157.2 million after closing costs and disposition fees due to CMFT Management or its affiliates, and a gain of ~~$13.1~~$16.9 million. 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 and condominium developments, net in the condensed consolidated statements of operations.

2020 Impairment

During the ~~three~~six months ended ~~March 31,~~June 30, 2020, 710 properties totaling approximately ~~414,000~~673,000 square feet with a carrying value of ~~$64.3~~$85.7 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of ~~$52.6~~$70.2 million, resulting in impairment charges of ~~$11.7~~$15.5 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.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES

Intangible lease assets and liabilities consisted of the following as of ~~March 31,~~June 30, 2021 and December 31, 2020 (in thousands, except weighted average life remaining):


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Intangible lease assets:	Intangible lease assets:					Intangible lease assets:
In-place leases and other intangibles, net of accumulated amortization of td40,462 and td32,967, respectively (with a weighted average life remaining of 9.6 years and 9.7 years, respectively)
		$	209,676	$	217,431
Acquired above-market leases, net of accumulated amortization of td2,607 and td2,054, respectively (with a weighted average life remaining of 7.7 years and 7.6 years, respectively)
		16,398		17,112
In-place leases and other intangibles, net of accumulated amortization of td41,487 and td32,967, respectively (with a weighted average life remaining of 9.2 years and 9.7 years, respectively)						In-place leases and other intangibles, net of accumulated amortization of td41,487 and td32,967, respectively (with a weighted average life remaining of 9.2 years and 9.7 years, respectively)
							$	187,922	$	217,431
Acquired above-market leases, net of accumulated amortization of td2,746 and td2,054, respectively (with a weighted average life remaining of 7.5 years and 7.6 years, respectively)						Acquired above-market leases, net of accumulated amortization of td2,746 and td2,054, respectively (with a weighted average life remaining of 7.5 years and 7.6 years, respectively)
							15,467		17,112
Total intangible lease assets, net	Total intangible lease assets, net	$	226,074	$	234,543	Total intangible lease assets, net	$	203,389	$	234,543
Intangible lease liabilities:	Intangible lease liabilities:					Intangible lease liabilities:
Acquired below-market leases, net of accumulated amortization of $33,341 and $31,933, respectively (both with a weighted average life remaining of 7.5 years)
		$	31,414	$	32,718
Acquired below-market leases, net of accumulated amortization of $34,297 and $31,933, respectively (with a weighted average life remaining of 7.4 years and 7.5 years, respectively)						Acquired below-market leases, net of accumulated amortization of $34,297 and $31,933, respectively (with a weighted average life remaining of 7.4 years and 7.5 years, respectively)
							$	27,917	$	32,718

Amortization of the above-market leases is recorded as a reduction to rental 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 related to the intangible lease assets and liabilities for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 (in thousands):

Three Months Ended March 31,
2021 2020
In-place lease and other intangible amortization $ 7,773 $ 5,940
Above-market lease amortization $ 650 $ 908
Below-market lease amortization $ 1,466 $ 1,399

~~As of March 31, 2021, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):~~

Amortization
In-Place Leases and
Other Intangibles Above-Market Leases Below-Market Leases
Remainder of 2021 $ 22,301 $ 1,813 $ 4,012
2022 27,702 2,323 4,752
2023 24,509 2,070 4,088
2024 21,314 1,575 3,128
2025 17,534 1,334 2,760
Thereafter 96,316 7,283 12,674
Total $ 209,676 $ 16,398 $ 31,414

~~NOTE 6 — REAL ESTATE-RELATED SECURITIES~~

As of March 31, 2021, the Company had CMBS investment securities with an aggregate estimated fair value of $67.2 million. The CMBS mature on various dates from January 2024 through June 2058 and have interest rates ranging from 4.0% to 13.0%. The following is a summary of the Company’s real estate-related securities as of March 31, 2021 (in thousands):

Real Estate-Related Securities
Amortized Cost Basis Unrealized Gain Fair Value
CMBS $ 65,953 $ 1,269 $ 67,222
Total real estate-related securities $ 65,953 $ 1,269 $ 67,222


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
In-place lease and other intangible amortization	$	7,428	$	5,615	$	15,201	$	11,555
Above-market lease amortization	$	599	$	729	$	1,249	$	1,637
Below-market lease amortization	$	1,377	$	1,267	$	2,843	$	2,666

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2021 (Unaudited) – (Continued)

As of June 30, 2021, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):


	Amortization
	In-Place Leases and Other Intangibles		Above-Market Leases		Below-Market Leases
Remainder of 2021	$	14,027	$	1,188	$	2,541
2022	26,209		2,281		4,496
2023	23,027		2,028		3,832
2024	19,849		1,533		2,872
2025	16,071		1,292		2,503
Thereafter	88,739		7,145		11,673
Total	$	187,922	$	15,467	$	27,917

NOTE 6 — REAL ESTATE-RELATED SECURITIES

As of June 30, 2021, the Company had CMBS investment securities with an aggregate estimated fair value of $42.1 million. The CMBS mature on various dates from November 2033 through June 2058 and have interest rates ranging from 2.7% to 13.0%, with 1 CMBS earning a 0 coupon rate. The following is a summary of the Company’s real estate-related securities as of June 30, 2021 (in thousands):


	Real Estate-Related Securities
	Amortized Cost Basis		Unrealized Gain		Fair Value
CMBS	$	39,520	$	2,551	$	42,071
Total real estate-related securities	$	39,520	$	2,551	$	42,071

The following table provides the activity for the real estate-related securities during the ~~three~~six months ended ~~March 31,~~June 30, 2021 (in thousands):


		Amortized Cost Basis		Unrealized Gain		Fair Value			Amortized Cost Basis		Unrealized Gain		Fair Value
Real estate-related securities as of January 1, 2021	Real estate-related securities as of January 1, 2021	$	37,047	$	1,147	$	38,194	Real estate-related securities as of January 1, 2021	$	37,047	$	1,147	$	38,194
Face value of real estate-related securities acquired	Face value of real estate-related securities acquired	34,491		—		34,491		Face value of real estate-related securities acquired	34,491		—		34,491
Premiums and discounts on purchase of real estate-related securities, net of acquisition costs	Premiums and discounts on purchase of real estate-related securities, net of acquisition costs	(5,982)		—		(5,982)		Premiums and discounts on purchase of real estate-related securities, net of acquisition costs	(5,982)		—		(5,982)
Amortization of discount on real estate-related securities	Amortization of discount on real estate-related securities	234		—		234		Amortization of discount on real estate-related securities	525		—		525
Sale of real estate-related securities								Sale of real estate-related securities	(26,976)		(648)		(27,624)
Capitalized interest income on real estate-related securities	Capitalized interest income on real estate-related securities	173		—		173		Capitalized interest income on real estate-related securities	435		—		435
Principal payments received on real estate-related securities	Principal payments received on real estate-related securities	(10)		—		(10)		Principal payments received on real estate-related securities	(20)		—		(20)
Unrealized gain on real estate-related securities	Unrealized gain on real estate-related securities	—		122		122		Unrealized gain on real estate-related securities	—		2,052		2,052
Real estate-related securities as of March 31, 2021		$	65,953	$	1,269	$	67,222
Real estate-related securities as of June 30, 2021								Real estate-related securities as of June 30, 2021	$	39,520	$	2,551	$	42,071

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company invested $28.5 million in CMBS. During the same period, the Company sold CMBS with a carrying value of $27.0 million resulting in net proceeds of $27.6 million and a gain of $648,000. Unrealized gains and losses on real estate-related securities are recorded in other comprehensive income (loss), with a portion of the amount subsequently reclassified into interest expense and other, net in the accompanying condensed consolidated statements of operations as securities are sold and gains and losses are recognized. During the three and six months ended ~~March 31,~~June 30, 2021, the Company recorded ~~$122,000~~$1.9 million and $2.1 million, respectively, of unrealized gains on its real estate-related securities included in ~~accumulated~~ other comprehensive income (loss) ~~income~~ in the accompanying condensed consolidated ~~statement~~statements of ~~stockholders’ equity.~~comprehensive income (loss).

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

The scheduled maturities of the Company’s real estate-related securities as of ~~March 31,~~June 30, 2021 are as follows (in thousands):


		Available-for-sale securities					Available-for-sale securities
		Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
Due within one year	Due within one year	$	0	$	0	Due within one year	$	0	$	0
Due after one year through five years	Due after one year through five years	26,989		27,441		Due after one year through five years	0		0
Due after five years through ten years	Due after five years through ten years	0		0		Due after five years through ten years	0		0
Due after ten years	Due after ten years	38,964		39,781		Due after ten years	39,520		42,071
Total	Total	$	65,953	$	67,222	Total	$	39,520	$	42,071

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.

In estimating credit losses related to real estate-related securities, management considers a variety of factors, including (1) whether the Company has the intent to sell the impaired security before the recovery of its amortized cost basis, (2) whether the Company expects to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value, and (3) whether the Company expects to recover the entire amortized cost basis of the security. As of ~~March 31,~~June 30, 2021, the Company had 0 credit losses related to real estate-related securities.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

NOTE 7 — LOANS HELD-FOR-INVESTMENT

The Company’s loans held-for-investment consisted of the following as of ~~March 31,~~June 30, 2021 and December 31, 2020 (dollar amounts in thousands):

As of March 31, As of December 31,
2021 2020
Mezzanine loans $ 0 $ 147,475
Senior loans 525,447 341,546
Total CRE loans held-for-investment and related receivables, net 525,447 489,021
Broadly syndicated loans 496,832 473,603
Loans held-for-investment and related receivables, net $ 1,022,279 $ 962,624
Less: Allowance for credit losses $ (12,888) $ (70,358)
Total loans held-for-investment and related receivable, net $ 1,009,391 $ 892,266


	As of June 30,		As of December 31,
	2021		2020
Mezzanine loans	$	0	$	147,475
Senior loans	872,188		341,546
Total CRE loans held-for-investment and related receivables, net	872,188		489,021
Broadly syndicated loans	484,059		473,603
Loans held-for-investment and related receivables, net	$	1,356,247	$	962,624

Less: Allowance for credit losses	$	(13,011)	$	(70,358)
Total loans held-for-investment and related receivable, net	$	1,343,236	$	892,266

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company invested ~~$82.1~~$142.3 million in broadly syndicated loans. During the same period, the Company received ~~$51.6~~$97.3 million of principal payments on broadly syndicated loans and sold ~~$7.6~~$36.7 million of broadly syndicated loans, resulting in proceeds of ~~$7.4~~$36.5 million after closing costs and a ~~loss~~gain of ~~$111,000.~~$165,000. The ~~loss~~gain was recorded as ~~an increase~~a decrease to interest expense and other, net in the condensed consolidated statements of operations. As of ~~March 31,~~June 30, 2021, the Company had ~~$34.5~~$43.2 million of unsettled broadly syndicated loan purchases included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

As of ~~March 31,~~June 30, 2021, the Company had ~~$64.4~~$108.3 million of unfunded commitments related to CRE loans held-for-investment, the funding of which is subject to the satisfaction of borrower milestones. These commitments are not reflected in the accompanying condensed consolidated balance sheet.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

The following table details overall statistics for the Company’s loans held-for-investment as of ~~March 31,~~June 30, 2021 and December 31, 2020 (dollar amounts in thousands):


		CRE Loans (1) (2)						Broadly Syndicated Loans							CRE Loans (1) (2)						Broadly Syndicated Loans
		March 31, 2021			December 31, 2020			March 31, 2021			December 31, 2020				June 30, 2021			December 31, 2020			June 30, 2021			December 31, 2020
Number of loans	Number of loans	6			12			221			194			Number of loans	10			12			237			194
Principal balance	Principal balance	$	530,301		$	481,438		$	501,095		$	477,777		Principal balance	$	882,505		$	481,438		$	487,121		$	477,777
Net book value	Net book value	$	521,562		$	428,393		$	487,829		$	463,873		Net book value	$	865,722		$	428,393		$	477,514		$	463,873
Weighted-average interest rate	Weighted-average interest rate	4.9		%	7.5		%	3.6		%	3.8		%	Weighted-average interest rate	4.2		%	7.5		%	3.6		%	3.8		%

Weighted-average maximum years to maturity	Weighted-average maximum years to maturity	2.6			2.2			5.0			4.9			Weighted-average maximum years to maturity	2.6			2.2			5.0			4.9

(1) As of ~~March 31,~~June 30, 2021, 100% of the Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR.

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

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

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


		Principal Balance		Deferred Fees / Other Items (1)		Loan Fees Receivable		Net Book Value			Principal Balance		Deferred Fees / Other Items (1)		Loan Fees Receivable		Net Book Value
Balance, December 31, 2020	Balance, December 31, 2020	$	959,215	$	(74,116)	$	7,167	$	892,266	Balance, December 31, 2020	$	959,215	$	(74,116)	$	7,167	$	892,266
Loan originations and acquisitions	Loan originations and acquisitions	268,214		—		—		268,214		Loan originations and acquisitions	681,580		—		—		681,580
Cure payments receivable (2)	Cure payments receivable (2)	—		(7,351)		—		(7,351)		Cure payments receivable (2)	—		(7,351)		—		(7,351)
Sale of loans	Sale of loans	(7,594)		38		—		(7,556)		Sale of loans	(36,664)		311		—		(36,353)
Principal repayments received	Principal repayments received	(51,650)		—		—		(51,650)		Principal repayments received	(97,716)		257		—		(97,459)
Capitalized interest (2)	Capitalized interest (2)	(9,469)		—		—		(9,469)		Capitalized interest (2)	(9,469)		—		—		(9,469)
Deferred fees and other items	Deferred fees and other items	—		(2,461)		—		(2,461)		Deferred fees and other items	—		(5,886)		—		(5,886)
Accretion and amortization of fees and other items	Accretion and amortization of fees and other items	—		584		—		584		Accretion and amortization of fees and other items	—		(783)		—		(783)
Foreclosure of assets (2)	Foreclosure of assets (2)	(127,320)		3,831		(7,167)		(130,656)		Foreclosure of assets (2)	(127,320)		3,831		(7,167)		(130,656)
Allowance for credit losses (3)	Allowance for credit losses (3)	—		57,470		—		57,470		Allowance for credit losses (3)	—		57,347		—		57,347
Balance, March 31, 2021		$	1,031,396	$	(22,005)	$	0	$	1,009,391
Balance, June 30, 2021										Balance, June 30, 2021	$	1,369,626	$	(26,390)	$	0	$	1,343,236

(1) Other items primarily consist of allowance for credit losses (as discussed below), purchase discounts or premiums, accretion of exit fees and deferred origination expenses.

(2) During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company completed foreclosure of the assets which previously secured its 8 mezzanine loans.

(3) Includes the reversal of the allowance for credit losses related to the mezzanine loans upon foreclosure of the assets which previously secured the loans, as further discussed below in “Allowance for Credit Losses,” partially offset by the increase in allowance for credit losses related to the Company’s loans held-for-investment during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

Allowance for Credit Losses

The allowance for credit losses reflects the Company’s current estimate of potential credit losses related to the 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 allowance for credit losses.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2021 (Unaudited) – (Continued)

The following table presents the activity in the Company’s allowance for credit losses by loan type for the ~~three~~six months ended ~~March 31,~~June 30, 2021 (dollar amounts in thousands):


		Mezzanine Loans		Senior Loans		Broadly Syndicated Loans		Total			Mezzanine Loans		Senior Loans		Broadly Syndicated Loans		Total
Allowance for credit losses as of December 31, 2020	Allowance for credit losses as of December 31, 2020	$	58,038	$	2,590	$	9,730	$	70,358	Allowance for credit losses as of December 31, 2020	$	58,038	$	2,590	$	9,730	$	70,358
Foreclosure of assets (1)	Foreclosure of assets (1)	(58,038)		0		0		(58,038)		Foreclosure of assets (1)	(58,038)		0		0		(58,038)
Provision for credit losses	Provision for credit losses	0		1,295		(727)		568		Provision for credit losses	0		1,295		(727)		568
Allowance for credit losses as of March 31, 2021	Allowance for credit losses as of March 31, 2021	$	0	$	3,885	$	9,003	$	12,888	Allowance for credit losses as of March 31, 2021	$	0	$	3,885	$	9,003	$	12,888
Provision for (reversal of) credit losses										Provision for (reversal of) credit losses	0		2,581		(2,458)		123
Allowance for credit losses as of June 30, 2021										Allowance for credit losses as of June 30, 2021	$	0	$	6,466	$	6,545	$	13,011

(1) During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company completed foreclosure of the assets which previously secured its 8 mezzanine loans.

Changes to the allowance for credit losses are recognized through net ~~loss~~income (loss) on the Company’s condensed consolidated statements of operations.

Troubled Debt Restructuring

An individual financial instrument is classified as a troubled debt restructuring when there is a reasonable expectation that the financial instrument’s contractual terms will be modified in a manner that grants concessions to the borrower who is experiencing financial difficulties. Concessions could include term extensions, payment deferrals, interest rate reductions, principal forgiveness, forbearance, or other actions designed to maximize the Company’s collection on the financial instrument. The allowance for credit losses for financial instruments that are trouble debt restructurings are determined individually.

The Company also classifies a financial instrument as a troubled debt restructuring when receivables from third parties, real estate, or other assets are transferred from the debtor to the creditor in order to fully or partially satisfy a debt, such as in the event of a foreclosure or repossession. During the year ended December 31, 2019, the borrower on the Company’s 8 mezzanine loans became delinquent on certain required reserve payments. Throughout 2020, the borrower remained delinquent on the required reserve payments and became delinquent on principal and interest. As a result, the Company classified the loans as a troubled debt restructuring and commenced foreclosure proceedings during the year ended December 31, 2020. Upon completing foreclosure in January 2021, the Company took control of the assets which previously secured the loans, including 75 condominium units and 21 rental units across 4 buildings. As a result of the foreclosure, the Company recorded a $58.0 million decrease to its provision for credit losses related to its mezzanine loans during the three months ended March 31, 2021. During the ~~same period,~~six months ended June 30, 2021, the Company recorded a ~~$568,000~~$691,000 net increase to the provision for credit losses related to its senior loans and broadly syndicated loans to reflect the estimated fair value of such loans, bringing the total allowance for credit losses to ~~$12.9~~$13.0 million as of ~~March 31,~~June 30, 2021. The Company recorded a decrease in the provision for credit losses related to its broadly syndicated loans during the three months ended June 30, 2021 due to the ongoing market recovery from COVID-19 and the resulting improvement in the performance of the collateral assets underlying the portfolio.

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, 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,~~June 30, 2021 (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,~~June 30, 2021 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)							Amortized Cost of Loans Held-For-Investment by Year of Origination (1)
			As of March 31, 2021							As of June 30, 2021
		Number of Loans	2021	2020	2019	Total			Number of Loans	2021		2020		2019		Total
Senior loans by internal risk rating:	Senior loans by internal risk rating:							Senior loans by internal risk rating:
1	1	0	0	0	0	0		1	0	$	0	$	0	$	0	$	0
2	2	0	0	0	0	0		2	0	0		0		0		0
3	3	6	176,908	232,573	115,966	525,447		3	10	521,699		234,248		116,241		872,188
4	4	0	0	0	0	0		4	0	0		0		0		0
5	5	0	0	0	0	0		5	0	0		0		0		0
Total senior loans	Total senior loans	6	176,908	232,573	115,966	525,447		Total senior loans	10	521,699		234,248		116,241		872,188
Broadly syndicated loans by internal risk rating:	Broadly syndicated loans by internal risk rating:							Broadly syndicated loans by internal risk rating:
1	1	0	0	0	0	0		1	0	0		0		0		0
2	2	3	0	6,906	0	6,906		2	3	0		6,889		0		6,889
3	3	216	64,986	415,232	3,057	483,275		3	233	120,536		349,670		3,050		473,256
4	4	2	0	6,651	0	6,651		4	1	0		3,914		0		3,914
5	5	0	0	0	0	0		5	0	0		0		0		0
Total broadly syndicated loans	Total broadly syndicated loans	221	64,986	428,789	3,057	496,832		Total broadly syndicated loans	237	120,536		360,473		3,050		484,059
Less: Allowance for credit losses	Less: Allowance for credit losses					(12,888)		Less: Allowance for credit losses								(13,011)
Total loans held-for-investment and related receivables, net	Total loans held-for-investment and related receivables, net	227				$	1,009,391	Total loans held-for-investment and related receivables, net	247							$	1,343,236
Weighted Average Risk Rating (2)	Weighted Average Risk Rating (2)					3.0		Weighted Average Risk Rating (2)								3.0

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

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

NOTE 8 — 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. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, 12 of the Company’s interest rate swap agreements matured. Additionally, the Company entered into 4 interest rate cap agreements during the six months ended June 30, 2021. As of ~~March 31,~~June 30, 2021, the Company had 43 interest rate swap agreements designated as hedging ~~instruments.~~instruments and 4 non-designated interest rate cap agreements.

The following table summarizes the terms of the Company’s interest rate swap agreements ~~designated as hedging instruments~~and interest rate cap agreements as of ~~March 31,~~June 30, 2021 and December 31, 2020 (dollar amounts in thousands):

Outstanding Notional Fair Value of Liabilities as of
Balance Sheet Amount as of Interest Effective Maturity March 31, December 31,
Location March 31, 2021
Rates (1)
Dates Dates 2021 2020
Interest Rate Swaps Deferred rental income, derivative liabilities and other liabilities $ 273,600 2.55% to 4.50% 6/29/2016 to 5/27/2020

4/5/2021 to 3/27/2023 $ (7,622) $ (12,308)


		Outstanding Notional						Fair Value of Assets (Liabilities) as of
	Balance Sheet	Amount as of		Interest		Effective	Maturity	June 30,		December 31,
	Location	June 30, 2021		Rates		Dates	Dates	2021		2020
Interest Rate Caps	Prepaid expenses and other assets	$	102,553	5.45%	(1)	5/7/2021	5/9/2022	$	—	$	—
Interest Rate Swaps	Deferred rental income, derivative liabilities and other liabilities	$	241,500	2.55% to 4.50%	(2)	6/29/2016 to 4/25/2019	7/1/2021 to 3/27/2023	$	(6,289)	$	(12,308)

(1)The interest ~~rates consist~~rate consists of the underlying index ~~swapped~~capped to a fixed rate ~~and the applicable interest rate spread~~ as of ~~March 31,~~June 30, 2021.

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~~March 31,~~June 30, 2021 (Unaudited) – (Continued)

(2)The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of June 30, 2021.

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 interest expense and other, net on the accompanying condensed consolidated statements of operations. The Company has interest rate swaps that are designated as cash flow hedges in order to hedge the variability of the anticipated cash flows on its variable rate debt. The change in fair value of the derivative instruments that are designated as hedges is recorded in other comprehensive income (loss), with a portion of the amount subsequently reclassified to interest expense as interest payments are made on the Company’s variable rate debt. For the three and six months ended ~~March 31,~~June 30, 2021, the amount of losses reclassified from other comprehensive income (loss) as an increase to interest expense was $71,000 and $3.2 million, respectively. For the three and six months ended June 30, 2020, the amount of losses reclassified from other comprehensive income (loss) as an increase to interest expense was ~~$3.1~~$3.3 million and ~~$977,000,~~$4.3 million, respectively. The total unrealized gain on interest rate swaps was ~~$61,000~~$80,000 as of ~~March 31,~~June 30, 2021, and the total unrealized loss on interest rate swaps was $3.2 million as of December 31, 2020, which are included in accumulated other comprehensive (loss) income ~~(loss)~~ in the accompanying condensed consolidated statement of stockholders’ equity. During the next 12 months, the Company estimates that ~~$82,000~~$59,000 will be reclassified from other comprehensive income (loss) as an increase to interest expense. 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 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 and accrued interest, of ~~$7.7~~$6.3 million as of ~~March 31,~~June 30, 2021. 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 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 as of ~~March 31,~~June 30, 2021.

NOTE 9 — CREDIT FACILITIES, NOTES PAYABLE AND REPURCHASE FACILITIES

As of ~~March 31,~~June 30, 2021, the Company had ~~$2.4~~$2.5 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of 1.6 years and a weighted average interest rate of 2.8%. 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.

~~The following table summarizes the debt balances as of March 31, 2021 and December 31, 2020, and the debt activity for the three months ended March 31, 2021 (in thousands):~~

During the Three Months Ended March 31, 2021
Balance as of December 31, 2020
Debt Issuances & Assumptions (1)
Repayments & Modifications Accretion and (Amortization) Balance as of
March 31, 2021
Notes payable – fixed rate debt $ 578,096 $ 0 $ (243) $ — $ 577,853
Notes payable – variable rate debt 0 102,553 0 — 102,553
Credit facilities 1,336,500 160,000 (85,000) — 1,411,500
Repurchase facilities 235,380 122,323 (55) — 357,648
Total debt 2,149,976 384,876 (85,298) — 2,449,554
Net premiums (2)
149 — — (23) 126
Deferred costs – credit facility (3)
(3,543) 0 0 733 (2,810)
Deferred costs – fixed rate debt (1,589) — 0 586 (1,003)
Deferred costs – variable rate debt 0 (621) 0 0 (621)
Total debt, net $ 2,144,993 $ 384,255 $ (85,298) $ 1,296 $ 2,445,246

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

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~~March 31,~~June 30, 2021 (Unaudited) – (Continued)

The following table summarizes the debt balances as of June 30, 2021 and December 31, 2020, and the debt activity for the six months ended June 30, 2021 (in thousands):


			During the Six Months Ended June 30, 2021
	Balance as of December 31, 2020		Debt Issuances & Assumptions (1)		Repayments & Modifications (2)		Accretion and (Amortization)		Balance as of June 30, 2021
Notes payable – fixed rate debt	$	578,096	$	0	$	(54,534)	$	—	$	523,562
Notes payable – variable rate debt	0		102,553		(8,351)		—		94,202
Credit facilities	1,336,500		320,000		(235,000)		—		1,421,500
Repurchase facilities	235,380		270,182		(136)		—		505,426
Total debt	2,149,976		692,735		(298,021)		—		2,544,690
Net premiums (3)	149		—		—		(149)		0
Deferred costs – credit facility (4)	(3,543)		0		0		1,466		(2,077)
Deferred costs – fixed rate debt	(1,589)		—		45		374		(1,170)
Deferred costs – variable rate debt	0		(1,346)		0		712		(634)
Total debt, net	$	2,144,993	$	691,389	$	(297,976)	$	2,403	$	2,540,809

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

(2)In connection with the repayment of certain mortgage notes, the Company recognized a loss on extinguishment of debt of $1.5 million during the six months ended June 30, 2021.

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

Notes Payable

As of ~~March 31,~~June 30, 2021, the fixed rate debt outstanding of ~~$577.9~~$523.6 million included ~~$53.6~~$21.5 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 date of the variable rate debt. The fixed rate debt has interest rates ranging from 2.6% to ~~5.0%~~4.6% per annum. The fixed rate debt outstanding matures on various dates from ~~April~~July 2021 to December 2024. Should a loan not be repaid by its scheduled repayment date, the applicable interest rate may increase as specified in the respective loan agreement. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt outstanding was ~~$984.4~~$904.5 million as of ~~March 31,~~June 30, 2021. Each of the mortgage notes payable comprising the fixed rate debt is secured by the respective properties on which the debt was placed.

Upon completing foreclosure 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. As of ~~March 31,~~June 30, 2021, the variable rate debt outstanding of $94.2 million had a weighted average interest rate of 5.5%.The variable rate debt outstanding ~~is set to mature~~matures on May 9, ~~2021; however, the Company may elect to extend the maturity date for 1 12-month period to May 9, 2022, which was elected subsequent to March 31, 2021.~~2022.

Credit Facilities

The Company has a second amended and restated unsecured credit agreement (the “CMFT Second Amended and Restated Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent (“JPMorgan Chase”), and the other lenders party thereto that provides for borrowings of up to $1.24 billion as of ~~March 31,~~June 30, 2021, which includes an $885.0 million unsecured term loan (the “CMFT Term Loan”) and up to $350.0 million in unsecured revolving loans (the “CMFT Revolving Loans” and, collectively with the CMFT Term Loan, the “CMFT Credit Facility”). The CMFT Credit Facility matures on March 15, 2022.

Depending upon the type of loan specified and overall leverage ratio, the CMFT Credit Facility bears interest at (i) the one-month, two-month, three-month or six-month 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 CMFT Second Amended and Restated Credit Agreement) plus 0.50%; or (c) the one-month LIBOR multiplied by the statutory reserve rate plus 1.00%.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

On December 21, 2020, as a result of CCPT V’s merger with the Company, a subsidiary of the Company assumed CCPT V’s obligations pursuant to the credit agreement by and among Cole Operating Partnership V, LP, the operating partnership of CCPT V (“CCPT V OP”), JPMorgan Chase, as administrative agent, and the lender parties thereto (the “CCPT V Credit Agreement”), including as guarantor under a guaranty provided by CCPT V, and as modified by a modification agreement dated as of May 31, 2018 and subsequently modified following the consummation of CCPT V’s merger with the Company by a second modification agreement on December 21, 2020. The CCPT V Credit Agreement allows for borrowings of up to $350.0 million (the “CCPT V Credit Facility”). The CCPT V Credit Facility includes $220.0 million in term loans outstanding (the “CCPT V Term Loans”) and up to $130.0 million in revolving loans (the “CCPT V Revolving Loans,” and, collectively with the CMFT Revolving Loans, the “Revolving Loans”). The CCPT V Credit Facility matures on March 15, 2022.

Depending upon the type of loan specified and overall leverage ratio, the CCPT V Credit Facility bears interest at (i) the one-month, two-month, three-month or six-month LIBOR multiplied by the statutory reserve rate (the “Adjusted LIBO Rate”) for the interest period plus an applicable rate ranging from 1.30% to 1.70%; or (ii) a base rate ranging from 0.30% to 0.70%, plus the greater of: (a) JPMorgan Chase’s Prime Rate (as defined in the CCPT V Credit Agreement); (b) the NYFRB Rate (as defined in the CCPT V Credit Agreement) plus 0.50%; or (c) the Adjusted LIBO Rate for a period of one month plus 1.0%.

As of ~~March 31,~~June 30, 2021, there ~~was $50.0 million outstanding under the CMFT Revolving Loans at a weighted average interest rate of 1.9%, and there~~ were no0 amounts outstanding under the ~~CCPT V~~ Revolving ~~Loans (collectively, the “Revolving Loans”).~~Loans. As of ~~March 31,~~June 30, 2021, the CMFT Term Loan and CCPT V Term Loans (collectively the “Term Loans”) outstanding totaled $1.11 billion, $220.0 million of which is subject to interest rate swap agreements (the “Swapped Term Loans”). The interest rate swap agreements had the effect of fixing the Eurodollar Rate per annum of the Swapped Term Loans at an all-in rate of 4.2%. As of ~~March 31,~~June 30, 2021, the Company had ~~$1.16~~$1.11 billion outstanding under the CMFT Credit Facility and CCPT V

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

Credit Facility (collectively the “Credit Facilities”) at a weighted average interest rate of ~~2.3%~~2.5% and ~~$430.0~~$480.0 million in unused capacity, subject to borrowing availability. The Company had available borrowings of ~~$44.2~~$12.2 million as of ~~March 31,~~June 30, 2021.

The CMFT Second Amended and Restated Credit Agreement and the CCPT V Credit Agreement (collectively, the “Credit Agreements”) contain provisions with respect to covenants, events of default and remedies customary for facilities of this nature. In particular, the CMFT Second Amended and Restated Credit Agreement requires the Company to maintain a minimum consolidated net worth greater than or equal to the sum of $1.75 billion under the CMFT Second Amended and Restated Credit Agreement, and a leverage ratio less than or equal to 60%. The CCPT V Credit Agreement requires a minimum consolidated net worth not less than $225.0 million plus 75% of the equity issued and a net leverage ratio less than or equal to 60%. Each of the Credit Agreements require 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 CMFT Second Amended and Restated Credit Agreement and the CCPT V Credit Agreement, as well as the financial covenants under the Company’s various fixed and variable rate debt agreements, as of ~~March 31,~~June 30, 2021.

On December 31, 2019 (the “Closing Date”), CMFT Corporate Credit Securities, LLC, an indirect wholly-owned, bankruptcy-remote subsidiary of the Company, entered into a revolving credit and security agreement (the “Credit and Security Agreement”) with the lenders from time to time parties thereto, Citibank, N.A. (“Citibank”), as administrative agent, CMFT Securities Investments, LLC, a wholly-owned subsidiary of the 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 Credit and Security Agreement provides for borrowings in an aggregate principal amount up to $500.0 million (the “Credit Securities Revolver”), which may be increased from time to time pursuant to the Credit and Security Agreement. As of ~~March 31,~~June 30, 2021, the amounts borrowed and outstanding under the Credit Securities Revolver totaled ~~$256.5~~$316.5 million at a weighted average interest rate of ~~1.9%~~1.8%. Subsequent to June 30, 2021, the Company received borrowings in an aggregate principal amount of $50.0 million under the Credit and Security Agreement, as discussed in Note 17 — Subsequent Events.

Borrowings under the Credit and Security Agreement will bear interest equal to the three-month LIBOR for the relevant interest period, plus an applicable rate. The applicable rate is 1.70% per annum during the reinvestment period and 2.00% per annum during the amortization period (and, in each case, an additional 2.00% per annum following an event of default under the Credit and Security Agreement). The reinvestment period begins on the Closing Date and concludes on the earlier of (i) the date that is three years after the Closing Date, (ii) the final maturity date and (iii) the date on which the total assets under management of the Company and its wholly-owned subsidiaries is less than $1.25 billion (the “Reinvestment Period”). The final maturity date is the 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 Credit and Security Agreement are secured by

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

substantially all of the assets held by CMFT Corporate Credit Securities, LLC, which shall primarily consist of broadly-syndicated senior secured loans subject to certain eligibility criteria under the Credit and Security Agreement.

Repurchase Facilities

On June 4, 2020, CMFT RE Lending RF Sub CB, LLC, an indirect wholly-owned subsidiary of the Company, entered into a Master Repurchase Agreement with Citibank (the “Citibank Repurchase Agreement”), which provides up to $300.0 million of financing primarily through Citibank’s purchase of the Company’s CRE mortgage loans and future funding advances (the “Citibank Repurchase Facility”). ~~Additionally, on~~On September 21, 2020, CMFT RE Lending RF Sub BB, LLC, an indirect wholly-owned subsidiary of the Company, entered into a second Master Repurchase Agreement with Barclays Bank PLC (“Barclays”) (the “Barclays Repurchase Agreement”), which provides up to $500.0 million of financing primarily through Barclays’ purchase of the Company’s CRE mortgage loans and future funding advances (the “Barclays Repurchase Facility”). Additionally, on May 20, 2021, CMFT RE Lending RF Sub WF, LLC, an indirect wholly-owned subsidiary of the Company, entered into a third Master Repurchase Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) (the “Wells Fargo Repurchase Agreement”), which provides up to $250.0 million of financing primarily through Wells Fargo’s purchase of the Company’s CRE mortgage notes and future funding advances (the “Wells Fargo Repurchase Facility,” and, collectively with the Citibank Repurchase Facility and Barclays Repurchase Facility, the “Repurchase Facilities”).

The Citibank Repurchase Agreement, the Barclays Repurchase Agreement, and the ~~Barclays~~Wells Fargo Repurchase Agreement (collectively, the “Repurchase Agreements”) provide for simultaneous agreements by Citibank, Barclays and ~~Barclays~~Wells Fargo to re-sell such purchased CRE mortgage loans back to CMFT RE Lending RF Sub CB, LLC, CMFT RE Lending RF Sub BB, LLC and CMFT RE Lending RF Sub ~~BB,~~WF, LLC (collectively, the “CMFT Lending Subs”) at a certain future date or upon demand. Advances under the Repurchase Agreements accrue interest at per annum rates based on the one-month LIBOR, plus a spread ranging from ~~2.00%~~2.10% to ~~2.40%~~4.60% to be determined on a case-by-case basis between Citibank, Barclays or ~~Barclays~~Wells Fargo and the CMFT Lending Subs. The Repurchase Facilities mature on various dates between June 2023 and ~~September 2023,~~May 2024, with 2 one-year extension options, subject to certain conditions set forth in the Repurchase Agreements. Subsequent to June 30, 2021, the Company amended the Barclays Repurchase Agreement to extend the maturity date to September 21, 2024, as further discussed in Note 17 — Subsequent Events.

In connection with the Repurchase Agreements, the Company (as the guarantor) entered into guaranties with Citibank, Barclays and ~~Barclays~~Wells Fargo (the “Guaranties”), under which the Company agreed to guarantee up to 25% of the CMFT Lending Subs’ obligations under the Repurchase Agreements. As of ~~March 31,~~June 30, 2021, the Company had 69 senior loans with an aggregate carrying value

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

~~of $525.4~~$727.4 million financed with ~~$357.6~~$505.4 million under the Repurchase Facilities, ~~$170.2~~$250.0 million of which was financed under the Barclays Repurchase Facility at a weighted average interest rate of ~~2.7%~~2.5%, ~~and $187.4~~$188.0 million of which was financed under the Citibank Repurchase Facility at a weighted average interest rate of 2.2%, and $67.4 million of which was financed under the Wells Fargo Repurchase Facility at a weighted average interest rate of 1.8%.

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,~~June 30, 2021.

Maturities

Liquidity and Financial Condition — As of ~~March 31,~~June 30, 2021, the Company had ~~$1.4~~$1.3 billion of debt maturing within the next 12 months following the date these financial statements are issued. ~~The~~Subsequent to June 30, 2021, the Company repaid $104.1 million of fixed rate debt, including $21.5 million of variable rate debt fixed through interest rate swap agreements, and paid down the $1.11 billion outstanding under the Credit Facilities, as further discussed in Note 17 — Subsequent Events. With respect to the remaining $99.3 million maturing within the next 12 months, the Company expects to enter into new financing arrangements or refinance existing arrangements to meet its obligations as they become due, which management believes is probable based on the current loan-to-value ratios, the occupancy of the Company’s properties and assessment of the current lending environment. The Company believes cash on hand, proceeds from real estate asset dispositions, net cash provided by

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

operations, borrowings available under the credit facilities or the entry into new financing arrangements will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these financial statements are issued.

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to ~~March 31,~~June 30, 2021 (in thousands):


		Principal Repayments			Principal Repayments
Remainder of 2021	Remainder of 2021	$	240,520	Remainder of 2021	$	105,171
2022	2022	1,184,391		2022	1,207,098
2023	2023	677,051		2023	757,442
2024	2024	347,592		2024	474,979
2025	2025	0		2025	0
Thereafter	Thereafter	0		Thereafter	0
Total	Total	$	2,449,554	Total	$	2,544,690

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

NOTE 10 — SUPPLEMENTAL CASH FLOW DISCLOSURES

Supplemental cash flow disclosures for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 are as follows (in thousands):


		Three Months Ended March 31,					Six Months Ended June 30,
		2021		2020			2021		2020
Supplemental Disclosures of Non-Cash Investing and Financing Activities:	Supplemental Disclosures of Non-Cash Investing and Financing Activities:					Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Distributions declared and unpaid	Distributions declared and unpaid	$	10,969	$	16,463	Distributions declared and unpaid	$	10,997	$	4,990
Accrued capital expenditures	Accrued capital expenditures	$	1,412	$	87	Accrued capital expenditures	$	4,104	$	139
Accrued deferred financing costs	Accrued deferred financing costs	$	417	$	8	Accrued deferred financing costs	$	32	$	0
Real estate acquired via foreclosure	Real estate acquired via foreclosure	$	191,990	$	0	Real estate acquired via foreclosure	$	191,990	$	0
Foreclosure of assets securing the mezzanine loans	Foreclosure of assets securing the mezzanine loans	$	(79,968)	$	0	Foreclosure of assets securing the mezzanine loans	$	(79,968)	$	0
Mortgage notes payable assumed in connection with foreclosure of assets securing the mezzanine loans	Mortgage notes payable assumed in connection with foreclosure of assets securing the mezzanine loans	$	102,553	$	0	Mortgage notes payable assumed in connection with foreclosure of assets securing the mezzanine loans	$	102,553	$	0
Change in interest income capitalized to loans held-for-investment	Change in interest income capitalized to loans held-for-investment	$	(9,469)	$	539	Change in interest income capitalized to loans held-for-investment	$	(9,469)	$	539
Common stock issued through distribution reinvestment plan	Common stock issued through distribution reinvestment plan	$	0	$	19,231	Common stock issued through distribution reinvestment plan	$	6,660	$	28,774
Change in fair value of interest rate swaps		$	4,686	$	(9,823)
Change in fair value of derivative instruments						Change in fair value of derivative instruments	$	6,031	$	(7,280)
Change in fair value of real estate-related securities	Change in fair value of real estate-related securities	$	122	$	0	Change in fair value of real estate-related securities	$	1,404	$	0
Supplemental Cash Flow Disclosures:	Supplemental Cash Flow Disclosures:					Supplemental Cash Flow Disclosures:
Interest paid	Interest paid	$	18,493	$	15,665	Interest paid	$	34,183	$	30,686
Cash paid for taxes	Cash paid for taxes	$	739	$	138	Cash paid for taxes	$	1,412	$	466

NOTE 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,~~June 30, 2021, the Company had ~~$64.4~~$108.3 million of unfunded commitments related to its existing CRE loans held-for-investment. These commitments are not reflected in the accompanying condensed consolidated balance sheet.

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Unsettled Broadly Syndicated Loans

As of ~~March 31,~~June 30, 2021, the Company had ~~$34.5~~$43.2 million of unsettled broadly syndicated loan acquisitions, ~~$711,000~~$35.1 million of which settled subsequent to ~~March 31,~~June 30, 2021. Additionally, the Company had ~~$4.3~~$10.4 million of unsettled broadly syndicated loan sales, ~~$1.2~~$6.6 million of which settled subsequent to ~~March 31,~~June 30, 2021. Unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

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.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

NOTE 12 — RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS

The Company has incurred fees and expenses payable to CMFT Management and certain of its affiliates in connection with the acquisition, management and disposition of its assets. On August 20, 2019, the Company and CMFT Management entered into an Amended and Restated Management Agreement (the “Management Agreement”), which amended and restated that certain Advisory Agreement between the parties dated January 24, 2012, as amended (the “Prior Advisory Agreement”).

Management and investment advisory fees

The Company pays 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 made by the Company. The Investment Advisor, a wholly-owned subsidiary of CIM, 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 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 payable by the Company to CMFT Management pursuant to the Management Agreement, the total management and advisory fees payable by the Company to its external advisors are not increased as a result of the Investment Advisory and Management Agreement.

In addition, the 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 is responsible for providing investment management services with respect to the corporate credit-related securities held by CMFT Securities. On a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee and incentive compensation 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 Management Agreement) of the 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 (2) 7% per annum, over (b) the sum of any incentive compensation paid to CMFT Management with respect to the first three calendar quarters of such previous 12-month

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period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable). During the three and six months ended ~~March 31,~~June 30, 2021 and 2020, 0 incentive compensation fees were incurred.

In addition, the Investment Advisor is eligible to receive a portion of the incentive compensation payable to CMFT Management pursuant to the Management Agreement. In the event that the incentive compensation is earned and payable with respect to any quarter, CMFT Management calculates the portion of the incentive compensation that was attributable to the Managed Assets and payable to the Investment Advisor. Pursuant to the Investment Advisory and Management Agreement, CMFT Securities reimburses the Investment Advisor for costs and expenses incurred by the Investment Advisor on its behalf.

~~Operating expenses~~Expense reimbursements to related parties

The Company reimburses CMFT Management or its affiliates for certain expenses CMFT Management or its affiliates paid or incurred in connection with the services provided to the Company. The Company will reimburse CMFT Management or its affiliates for salaries and benefits paid to personnel who provide services to the Company including the Company’s executive officers and any portfolio management, acquisitions or investment professionals.

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~~March 31, 2021 (Unaudited) – (Continued)~~

Disposition fees

IfPursuant to the Prior Advisory Agreement, through August 20, 2019, if CMFT Management or its affiliates provided 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 paid CMFT Management 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 would the total disposition fees paid to CMFT Management, 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. For the Company’s properties under contract to be sold or specifically identified in a broker agreement as being marketed for sale as of August 20, 2019, CMFT Management was entitled to receive a disposition fee in accordance with the terms of the Prior Advisory Agreement.

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

Three Months Ended March 31,
2021 2020
Management fees and expenses $ 13,014 $ 11,090
Acquisition fees and expenses $ 181 $ 127
Disposition fees $ 0 $ 341
Operating expenses $ 1,043 $ 810


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Management fees	$	11,755	$	9,750	$	23,332	$	19,600

Disposition fees	$	0	$	0	$	0	$	341

Expense reimbursements to related parties	$	3,210	$	3,057	$	5,871	$	5,235

Of the amounts shown above, ~~$15.4~~$16.0 million and ~~$12.6~~$13.8 million had been incurred, but not yet paid, for services provided by CMFT Management or its affiliates in connection with management and operating activities during the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

Due to Affiliates

As of ~~March 31,~~June 30, 2021 and December 31, 2020, ~~$15.4~~$16.0 million and $14.7 million, respectively, had been incurred primarily for management fees and operating expenses by CMFT Management or its affiliates, but had not yet been reimbursed by the Company. These amounts were included in due to affiliates in the condensed consolidated balance sheets for such periods.

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 4 buildings in New York. Upon foreclosure, and with the approval of the valuation, compensation and affiliate transactions committee of the Board, 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 4 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

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June 30, 2021 (Unaudited) – (Continued)

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. 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 thereof 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.

NOTE 13 — ECONOMIC DEPENDENCY

Under various agreements, the Company has engaged and may in the future engage 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 stockholder relations. As a result of these relationships, the Company is dependent upon 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.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

NOTE 14 — STOCKHOLDERS’ EQUITY

Equity-Based Compensation

On August 10, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “Plan”), under which 400,000 of the Company’s shares of common stock were reserved for issuance and awards of approximately ~~345,000~~341,000 shares of common stock are available for future grant at ~~March 31,~~June 30, 2021. Under the Plan, the Board or a committee designated by the Board has the authority to grant restricted stock awards or deferred stock awards to non-employee directors of the Company, which will further align such directors’ interests with the interests of the Company’s stockholders. The Board or a committee designated by the Board also has the authority to determine the terms of any award granted pursuant to the Plan, including vesting schedules, restrictions and acceleration of any restrictions. The Plan may be amended or terminated by the Board at any time. The Plan expires on August 9, 2028.

As of ~~March 31,~~June 30, 2021, the Company has granted awards of approximately ~~11,000~~58,700 restricted shares to ~~each of~~ the independent members of the Board ~~(approximately 54,500 restricted shares in aggregate)~~ under the Plan. As of ~~March 31,~~June 30, 2021, 32,500 of the restricted shares had vested based on one year of continuous service. The remaining ~~22,000~~26,200 restricted shares issued had not vested or been forfeited as of ~~March 31,~~June 30, 2021. 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 ~~$40,000~~$49,000 and $89,000 for ~~each of~~ the three and six months ended ~~March 31,~~June 30, 2021, respectively, and $40,000 and $80,000 for the three and six months ended June 30, 2020, 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,~~June 30, 2021, there was ~~$80,000~~$57,000 of total unrecognized compensation expense related to these restricted shares, which will be recognized ratably over the applicable remaining period of ~~service prior to October 2021.~~service.

NOTE 15 — LEASES

The Company’s real estate assets are leased to tenants under operating leases for which the terms, expirations and 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 ~~March 31,~~June 30, 2021, the Company’s leases had a weighted-average remaining term of ~~8.7~~8.3 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.

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June 30, 2021 (Unaudited) – (Continued)

As of ~~March 31,~~June 30, 2021, the future minimum rental income from the Company’s 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			Future Minimum Rental Income
Remainder of 2021	Remainder of 2021	$	191,931	Remainder of 2021	$	118,547
2022	2022	248,096		2022	234,443
2023	2023	231,349		2023	218,823
2024	2024	212,216		2024	200,270
2025	2025	193,595		2025	181,734
Thereafter	Thereafter	1,245,868		Thereafter	1,125,513
Total	Total	$	2,323,055	Total	$	2,079,330

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 and six months ended ~~March 31,~~June 30, 2021 and 2020, the amount of the contingent rent earned by the Company was not significant.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

Rental and other property income during the three and six months ended ~~March 31,~~June 30, 2021 and 2020 consisted of the following (in thousands):


		Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020				2021		2020		2021		2020
Fixed rental and other property income (1)	Fixed rental and other property income (1)	$	66,541	$	56,673		Fixed rental and other property income (1)	$	64,060	$	51,423	$	130,601	$	108,096
Variable rental and other property income (2)	Variable rental and other property income (2)	10,389		11,763			Variable rental and other property income (2)	11,242		8,680		21,631		20,443
Total rental and other property income	Total rental and other property income	$	76,930	$	68,436		Total rental and other property income	$	75,302	$	60,103	$	152,232	$	128,539

(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.

The Company has 1 property subject to a non-cancelable operating ground lease with a remaining term of ~~12.4~~12.2 years, with a lease liability (in deferred rental income, derivative liabilities and other ~~liabilities)~~liabilities) and a related ROU asset (in prepaid expenses and other ~~assets)~~assets) of $2.4 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 and $125,000 of ground lease expense during the three and six months ended ~~March 31,~~June 30, 2021, respectively, of which $61,000 and $121,000 was paid in cash during the period it was recognized. As of ~~March 31,~~June 30, 2021, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately ~~$188,000~~$125,000 for the remainder of 2021, $250,000 annually for 2022 through 2026, and ~~$1.6~~$1.7 million thereafter through the maturity date of the lease in August 2033.

NOTE 16 — SEGMENT REPORTING

The Company has 2 reportable segments: real estate and credit. Corporate/other represents all corporate level and unallocated items and includes the Company’s other asset management activities and operating 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.

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~~March 31,~~June 30, 2021 (Unaudited) – (Continued)

The following tables present segment reporting for the three and ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 (in thousands):


		Real Estate		Credit		Corporate/Other (1)		Company Total			Real Estate		Credit		Corporate/Other (1)		Company Total
Three Months Ended March 31, 2021
Three Months Ended June 30, 2021										Three Months Ended June 30, 2021
Rental and other property income	Rental and other property income	$	76,794	$	0	$	136	$	76,930	Rental and other property income	$	75,203	$	0	$	99	$	75,302
Interest income	Interest income	0		11,953		0		11,953		Interest income	0		16,460		0		16,460
Total revenues	Total revenues	76,794		11,953		136		88,883		Total revenues	75,203		16,460		99		91,762

General and administrative	General and administrative	64		376		5,031		5,471		General and administrative	55		331		3,219		3,605
Property operating	Property operating	8,523		0		1,596		10,119		Property operating	7,613		0		3,743		11,356
Real estate tax	Real estate tax	7,869		0		4,350		12,219		Real estate tax	7,196		0		510		7,706
Management and advisory fees and expenses		9,331		2,246		1,437		13,014
Expense reimbursements to related parties										Expense reimbursements to related parties	0		0		3,210		3,210
Management fees										Management fees	8,533		3,222		0		11,755
Transaction-related	Transaction-related	4		0		181		185		Transaction-related	27		0		0		27
Depreciation and amortization	Depreciation and amortization	25,738		0		0		25,738		Depreciation and amortization	24,647		0		0		24,647
Real estate impairment	Real estate impairment	4,300		0		0		4,300		Real estate impairment	77		0		0		77
Provision for credit losses	Provision for credit losses	0		568		0		568		Provision for credit losses	0		123		0		123
Total operating expenses	Total operating expenses	55,829		3,190		12,595		71,614		Total operating expenses	48,148		3,676		10,682		62,506

Gain on disposition of real estate and condominium developments, net										Gain on disposition of real estate and condominium developments, net	44,976		0		1,493		46,469

Operating income (loss)	Operating income (loss)	20,965		8,763		(12,459)		17,269		Operating income (loss)	72,031		12,784		(9,090)		75,725
Other expense:	Other expense:									Other expense:
Interest expense and other, net	Interest expense and other, net	(4,116)		(3,547)		(12,359)		(20,022)		Interest expense and other, net	(3,713)		(3,341)		(9,406)		(16,460)

Loss on extinguishment of debt										Loss on extinguishment of debt	(1,372)		0		(106)		(1,478)
Segment net income (loss)	Segment net income (loss)	$	16,849	$	5,216	$	(24,818)	$	(2,753)	Segment net income (loss)	$	66,946	$	9,443	$	(18,602)	$	57,787

Total assets as of March 31, 2021		$	3,371,496	$	1,155,640	$	194,718	$	4,721,854
Total assets as of June 30, 2021										Total assets as of June 30, 2021	$	3,089,744	$	1,479,061	$	280,357	$	4,849,162

__________________________________

(1)Includes 75 condominium ~~units~~ and 21 rental units acquired via foreclosure during the ~~three~~six months ended ~~March~~June 30, 2021. During the year ended December 31, 2019, the borrower on the Company’s 8 mezzanine loans became delinquent on certain required reserve payments. Throughout 2020, the borrower remained delinquent on the required reserve payments and became delinquent on principal and interest. As a result, the Company classified the loans as a troubled debt restructuring and commenced foreclosure proceedings. Upon completing foreclosure in January 2021, the Company took control of the assets which previously secured its mezzanine loans.

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June 30, 2021 (Unaudited) – (Continued)


	Real Estate		Credit		Corporate/Other (1)		Company Total
Six Months Ended June 30, 2021
Rental and other property income	$	151,998	$	0	$	234	$	152,232
Interest income	0		28,413		0		28,413
Total revenues	151,998		28,413		234		180,645

General and administrative	119		713		7,201		8,033
Property operating	14,742		0		6,733		21,475
Real estate tax	15,065		0		4,860		19,925
Expense reimbursements to related parties	0		0		5,871		5,871
Management fees	17,864		5,468		0		23,332
Transaction-related	31		0		0		31
Depreciation and amortization	50,385		0		0		50,385
Real estate impairment	4,377		0		0		4,377
Provision for credit losses	0		691		0		691
Total operating expenses	102,583		6,872		24,665		134,120
Gain on disposition of real estate and condominium developments, net	44,976		0		1,493		46,469

Operating income (loss)	94,391		21,541		(22,938)		92,994
Other expense:
Interest expense and other, net	(7,829)		(6,888)		(21,765)		(36,482)
Loss on extinguishment of debt	(1,372)		0		(106)		(1,478)
Segment net income (loss)	$	85,190	$	14,653	$	(44,809)	$	55,034

Total assets as of June 30, 2021	$	3,089,744	$	1,479,061	$	280,357	$	4,849,162

__________________________________

(1)Includes condominium and rental units acquired via foreclosure during the six months ended June 30, 2021. During the year ended December 31, 2019, the borrower on the Company’s 8 mezzanine loans became delinquent on certain required reserve payments. Throughout 2020, the borrower remained delinquent on the required reserve payments and became delinquent on principal and interest. As a result, the Company classified the loans as a troubled debt restructuring and commenced foreclosure proceedings. Upon completing foreclosure in January 2021, The Company took control of the assets which previously secured its mezzanine loans.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2021 (Unaudited) – (Continued)~~

Real Estate Credit Corporate/Other Company Total
Three Months Ended March 31, 2020
Rental and other property income $ 68,436 $ 0 $ 0 $ 68,436
Interest income 0 5,571 0 5,571
Total revenues 68,436 5,571 0 74,007
General and administrative 62 12 3,608 3,682
Property operating 6,865 0 0 6,865
Real estate tax 6,978 0 0 6,978
Management and advisory fees and expenses 7,981 1,869 1,240 11,090
Transaction-related 125 0 127 252
Depreciation and amortization 20,823 0 0 20,823
Real estate impairment 11,676 0 0 11,676
Provision for credit losses 0 17,777 0 17,777
Total operating expenses 54,510 19,658 4,975 79,143
Gain on disposition of real estate, net 13,110 0 0 13,110
Operating income (loss) 27,036 (14,087) (4,975) 7,974
Other expense:
Interest expense and other, net (6,335) 200 (9,632) (15,767)
Loss on extinguishment of debt (4,382) 0 0 (4,382)
Segment net income (loss) $ 16,319 $ (13,887) $ (14,607) $ (12,175)
Total assets as of March 31, 2020 $ 2,749,026 $ 627,479 $ 224,187 $ 3,600,692

~~NOTE 17 — SUBSEQUENT EVENTS~~

~~The following events occurred subsequent to March 31, 2021:~~

~~Broadly Syndicated Loans~~

Subsequent to March 31, 2021, the Company settled $8.7 million of broadly syndicated loan acquisitions, $711,000 of which were traded as of March 31, 2021. Additionally, subsequent to March 31, 2021, the Company settled $8.6 million of broadly syndicated loan sales, $1.2 million of which were traded as of March 31, 2021.

~~CMBS Sales~~

~~Subsequent to March 31, 2021, the Company sold $24.4 million of CMBS, resulting in proceeds of $27.6 million and a gain of $660,000.~~

~~CRE Loans~~

Subsequent to March 31, 2021, the Company acquired 2 senior loans with an aggregate principal balance of $92.6 million and unfunded commitments of $12.4 million, the funding of which is subject to the satisfaction of borrower milestones. The senior loans have a weighted average interest rate of 2.1% and an initial maturity date of November 2021, with 3 one-year extension options for a final maturity date of November 2024.

~~Property Dispositions~~

Subsequent to March 31, 2021, the Company disposed of 5 properties for an aggregate gross sales price of $41.5 million. The property dispositions resulted in proceeds of $38.8 million after closing costs and a gain of approximately $2.0 million. In connection with 1 of the property dispositions, the Company legally defeased a mortgage loan with an outstanding balance of $21.9 million. The Company has no continuing involvement with these properties.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~June 30, 2021 (Unaudited) – (Continued)


	Real Estate		Credit		Corporate/Other		Company Total
Three Months Ended June 30, 2020
Rental and other property income	$	60,103	$	0	$	0	$	60,103
Interest income	0		7,193		0		7,193
Total revenues	60,103		7,193		0		67,296

General and administrative	55		512		2,453		3,020
Property operating	4,811		0		0		4,811
Real estate tax	6,748		0		0		6,748
Expense reimbursements to related parties	0		0		3,057		3,057
Management fees	8,042		1,708		0		9,750
Transaction-related	120		5		0		125
Depreciation and amortization	19,696		0		0		19,696
Real estate impairment	3,831		0		0		3,831
Provision for credit losses	0		7,905		0		7,905
Total operating expenses	43,303		10,130		5,510		58,943
Gain on disposition of real estate, net	3,791		0		0		3,791
Merger-related expenses, net	0		0		0		0
Merger termination fee income	0		0		0		0
Operating income (loss)	20,591		(2,937)		(5,510)		12,144
Other expense:
Interest expense and other, net	(5,560)		(762)		(9,198)		(15,520)
Loss on extinguishment of debt	(12)		0		(358)		(370)
Segment net income (loss)	$	15,019	$	(3,699)	$	(15,066)	$	(3,746)

Total assets as of June 30, 2020	$	2,712,707	$	708,084	$	243,544	$	3,664,335

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)


	Real Estate		Credit		Corporate/Other		Company Total
Six Months Ended June 30, 2020
Rental and other property income	$	128,539	$	0	$	0	$	128,539
Interest income	0		12,764		0		12,764
Total revenues	128,539		12,764		0		141,303

General and administrative	117		524		5,261		5,902
Property operating	11,676		0		0		11,676
Real estate tax	13,726		0		0		13,726
Expense reimbursements to related parties	0		0		5,235		5,235
Management fees	17,523		2,077		0		19,600
Transaction-related	245		5		0		250
Depreciation and amortization	40,519		0		0		40,519
Real estate impairment	15,507		0		0		15,507
Provision for credit losses	0		25,682		0		25,682
Total operating expenses	99,313		28,288		10,496		138,097
Gain on disposition of real estate, net	16,901		0		0		16,901


Operating income (loss)	46,127		(15,524)		(10,496)		20,107
Other expense:
Interest expense and other, net	(11,895)		(562)		(18,819)		(31,276)
Loss on extinguishment of debt	(4,394)		0		(358)		(4,752)
Segment net income (loss)	$	29,838	$	(16,086)	$	(29,673)	$	(15,921)

Total assets as of June 30, 2020	$	2,712,707	$	708,084	$	243,544	$	3,664,335

NOTE 17 — SUBSEQUENT EVENTS

The following events occurred subsequent to June 30, 2021:

Redemptions of Shares of Common Stock

Subsequent to June 30, 2021, the Company redeemed approximately 1.7 million shares for $12.0 million (at a redemption price of $7.20 per share). The remaining redemption requests relating to approximately 31.1 million shares went unfulfilled.

Property Dispositions

Subsequent to June 30, 2021, the Company disposed of 61 properties for an aggregate gross sales price of $118.8 million, resulting in net proceeds of $115.5 million after closing costs and a net gain of approximately $27.0 million. The Company has no continuing involvement with these properties.

Broadly Syndicated Loans

Subsequent to June 30, 2021, the Company settled $62.3 million of broadly syndicated loan transactions, $28.5 million of which were traded as of June 30, 2021.

CRE Loans

Subsequent to June 30, 2021, the Company received a principal repayment of $99.6 million in connection with the partial release and modification of one CRE senior loan financed under the Barclays Repurchase Facility. The Company used the proceeds to repay amounts on the Barclays Repurchase Facility, as discussed below under Repurchase Facilities.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

Derivative Instruments and Notes Payable

Subsequent to ~~March 31,~~June 30, 2021, 1 of the Company’s interest rate swap agreements matured and the Company repaid in full ~~$32.1~~$21.5 million of the underlying mortgage notes payable. Additionally, in connection with the origination of the Mortgage Loan (as defined below), the Company terminated 2 interest rate swap agreements and paid down the $220.0 million outstanding balance under the CCPT V Credit Facility.

Credit and Security Agreement

Subsequent to June 30, 2021, the Company received borrowings in an aggregate principal amount of $50.0 million under the Credit and Security Agreement.

Repurchase Facilities

Subsequent to ~~March 31,~~June 30, 2021, the Company ~~borrowed $60.0~~entered into an amendment to the Barclay’s Repurchase Agreement, pursuant to which the maturity date of the Barclays Repurchase Facility was extended to September 21, 2024. Additionally, the Company repaid $66.4 million of the Barclays Repurchase Facility.

First Lien Mortgage Loan

Subsequent to June 30, 2021, 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 a wholly-owned subsidiary of the Company and are managed on a day-to-day basis by affiliates of CIM. The proceeds from the Mortgage Loan were primarily used by the Company to paydown existing debt.

Net-Lease Mortgage Notes

Subsequent to June 30, 2021, the Company issued $774.0 million aggregate principal amount of Net-Lease Mortgage Notes, Series 2021-1 (the “Class A Notes”). The Company used the net proceeds from the sale of the Class A Notes to refinance or repay certain indebtedness and pay fees and expenses related to the issuance.

Credit Facilities and Notes Payable

Subsequent to June 30, 2021, and with the proceeds from the Mortgage Loan and the sale of the Class A Notes, the Company repaid fixed-rate debt of $104.1 million, paid down the $1.11 billion outstanding balance under the Credit ~~Securities Revolver. The~~Facilities and terminated the CCPT V Credit ~~Securities Revolver bears interest equal to the three-month LIBOR for the relevant interest period, plus an applicable rate of 1.70% per annum during the reinvestment period~~Facility and ~~2.00% per annum during the amortization period, as discussed in Note 9 — Credit Facilities, Notes Payable and Repurchase Facilities.~~

~~Subsequent to March 31, 2021, the Company repaid $60.0 million on~~ the CMFT Credit Facility.

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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, 2020. 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 CIM Real Estate Finance Trust, 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 (i) the scope, severity and duration of the current pandemic of COVID-19 and actions taken to contain the pandemic or mitigate its impact, (ii) the potential adverse effect of the COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets, among others, and (iii) 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, 2020.

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 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 properties.

•Our properties, intangible assets and other assets may be subject to impairment charges.

•We could be subject to unexpected costs or unexpected liabilities that may arise from 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 are 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 are subject to risks associated with the incurrence of additional secured or unsecured debt.

•We may not be able to maintain profitability.

•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 associated with the ~~current novel coronavirus (“COVID-19”)~~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.

•We may be unable to successfully reposition our portfolio or list our shares on a national securities exchange in the timeframe we expect or at all.

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•We may be unable to achieve the cost synergies anticipated to result from the Mergers.

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 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. The tenant generally 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 were formed on July 27, 2010, and we elected to be taxed, and currently 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. We have no paid employees and are externally managed by CMFT Management and, with respect to investments in securities, our Investment Advisor. CIM indirectly owns and/or controls CMFT Management; our dealer manager, CCO Capital; our property manager, CREI Advisors; and CCO Group.

We ceased issuing shares in our Offering on April 4, 2014 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 certain liquidity events occur, such as the listing of our shares, on a national securities exchange or the sale of our company, or the Secondary DRIP Offering is otherwise terminated by our Board. We suspended issuing shares of common stock under our Secondary DRIP Offering on August 30, 2020 in connection with our entry into the merger agreements with CCIT III and CCPT V. On March 25, 2021, the Board approved reinstating the DRIP effective April 1, 2021. We expect that property acquisitions in 2021 and future periods will be funded by proceeds from financing of the acquired properties, cash flows from operations and the strategic sale of properties and other asset acquisitions.

Our operating results and cash flows are primarily influenced by rental and other property income from our commercial properties, interest expense on our indebtedness and acquisition and operating expenses. As ~~93.7%~~93.1% of our rentable square feet was under lease, including any month-to-month agreements, as of ~~March 31,~~June 30, 2021, with a weighted average remaining lease term of ~~8.7~~8.3 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. Our manager regularly monitors the creditworthiness of our tenants by reviewing each tenant’s financial results, any available credit rating agency reports 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 CMFT Management 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.

We have primarily acquired core commercial real estate assets principally consisting of retail properties located throughout the United States. As of ~~March 31,~~June 30, 2021, we owned ~~515~~469 properties, comprising ~~21.3~~18.6 million rentable square feet of commercial space located in 4541 states. In addition, during the ~~three~~six months ended ~~March 31,~~June 30, 2021, we completed foreclosure proceedings and took control of the assets which previously secured our mezzanine ~~loans, including 75~~loans. As of June 30, 2021, we owned $197.1 million of condominium ~~units and 21 rental units across four buildings.~~developments.

We intend to continue to pursue a more diversified investment strategy across the capital structure by balancing our existing portfolio of core commercial real estate assets with our future investments in a portfolio of commercial mortgage loans

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and other real estate-related credit investments in which our sponsor and its affiliates have expertise, that we would originate, acquire, finance and manage. Assuming the successful repositioning of our portfolio, we then intend to pursue a listing of our common stock on a national securities exchange. We cannot make assurances that we will successfully reposition our portfolio or list our common stock on a national securities exchange within a particular timeframe or at all.

As of ~~March 31,~~June 30, 2021, our loan portfolio consisted of ~~227~~247 loans with a net book value of ~~$1.0~~$1.3 billion. As of ~~March 31,~~June 30, 2021, we had ~~$34.5~~$43.2 million of unsettled broadly syndicated loan purchases included in cash and cash equivalents, and investments in real estate-related securities of ~~$67.2~~$42.1 million.

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, we disposed of ~~one property, encompassing approximately 15,000 gross rentable square feet.~~47 properties for an aggregate sales price of $304.0 million. The dispositions resulted in proceeds of $296.0 million after closing costs and we recorded a gain of $46.5 million which is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations. As of ~~March 31,~~June 30, 2021, our real estate portfolio consisted of ~~454~~411 retail properties, 5654 anchored shopping centers, ~~four~~three industrial properties and one office property representing 3531 industry sectors. In addition, we acquired 75 condominium units and 21 rental units via foreclosure during the ~~three~~six months ended ~~March 31,~~June 30, 2021. See Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the disposition of individual properties during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

COVID-19

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. Since then, COVID-19 has spread worldwide, causing significant disruptions to the U.S. and world economies. and has triggered a period of significant global economic slowdown. In the first half of 2021, the U.S. and world economy have begun to show signs of recovery from the impact of COVID-19 as vaccination rates increased, virus caseloads declined and businesses, schools and public services have begun the reopening process. However, the emergence of variant strains of COVID-19 has threatened to slow or reverse these trends in the third quarter of 2021 and beyond. As a result, there continues to be uncertainty around impact of COVID-19 on the U.S. economy and world economies.

We are closely monitoring the negative impacts that the COVID-19 pandemic and the efforts to mitigate its spread are having on the economy, our tenants and our business. The extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the distribution and acceptance of vaccines, the spread of new variants of COVID-19, the extent to which federal, state and local governments provide relief or assistance to those affected by COVID-19 and the impact that these developments will have on the timing and ~~pace of reopening efforts, and the direct and indirect economic effects~~speed of the ~~pandemic~~recovery of the U.S. and ~~containment measures, among others.~~world economy.

During the three and six months ended ~~March 31,~~June 30, 2021, ~~we provided~~the majority of lease concessions ~~either~~provided were in the form of ~~rental deferrals or~~rent abatements to certain tenants in response to the impact of the COVID-19 ~~pandemic. During the three months ended March 31, 2021, we granted total rent deferrals with an aggregate deferral amount of $431,000. Additionally, during the three months ended March 31, 2021, we granted rent abatements to tenants with an abatement amount of~~ ~~$248,000~~.pandemic on those tenants.

As of ~~May 6,~~August 9, 2021, we have collected approximately ~~98%~~99% of rental payments billed to tenants during the three months ended ~~March 31,~~June 30, 2021, and as of August 9, 2021, we collected $4.1 million of deferred rent, representing approximately 99% of amounts due through June 30, 2021. ~~Additionally, as of May 6, 2021, we have collected 97% of April rental payments billed to tenants.~~

Operating Highlights and Key Performance Indicators

Activity through June 30, 2021 ~~Activity~~

•Invested $142.3 million in broadly syndicated loans and sold broadly syndicated loans for an aggregate gross sales price of $36.7 million.

•Invested $28.5 million in CMBS and sold CMBS for an aggregate gross sales price of $27.0 million.

•Disposed of 47 retail properties for an aggregate sales price of $304.0 million.

•Completed foreclosure to take control of the assets which previously secured our mezzanine loans, including 75 condominium units and 21 rental units across four buildings.

•~~Invested $82.1 million in broadly syndicated loans and sold broadly syndicated loans for an aggregate gross sales price of $7.6 million.~~

•~~Invested $28.5 million in CMBS.~~

•~~Disposed of one retail property for an aggregate sales price of $3.7 million.~~

•Increased total debt by ~~$299.6~~$394.7 million, from $2.1 billion to ~~$2.4~~$2.5 billion.

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Portfolio Information

The following table shows the carrying value of our portfolio by investment type as of ~~March 31,~~June 30, 2021 and 2020 (dollar amounts in thousands):


		As of March 31,											As of June 30,
		2021					2020						2021					2020
		Asset Count	Carrying Value				Asset Count	Carrying Value					Asset Count	Carrying Value				Asset Count	Carrying Value
Loan Held-For-Investment	Loan Held-For-Investment											Loan Held-For-Investment
Mezzanine loans	Mezzanine loans	—	$	—	—	%	8	$	140,061	4.3	%	Mezzanine loans	—	$	—	—	%	8	$	140,086	4.3	%
Senior loans	Senior loans	6	525,447		11.6	%	3	153,870		4.7	%	Senior loans	10	872,188		19.1	%	2	113,682		3.5	%
Broadly syndicated loans	Broadly syndicated loans	221	496,832		11.0	%	113	333,449		10.2	%	Broadly syndicated loans	237	484,059		10.6	%	133	372,311		11.5	%
Less: Allowance for credit losses	Less: Allowance for credit losses		(12,888)		(0.3)	%		(19,779)		(0.6)	%	Less: Allowance for credit losses		(13,011)		(0.3)	%		(27,684)		(0.9)	%
Total loans held-for-investment and related receivable, net	Total loans held-for-investment and related receivable, net	227	1,009,391		22.3	%	124	607,601		18.6	%	Total loans held-for-investment and related receivable, net	247	1,343,236		29.4	%	143	598,395		18.6	%
Real Estate-Related Securities	Real Estate-Related Securities											Real Estate-Related Securities
CMBS	CMBS	5	67,222		1.5	%	—	—		—	%	CMBS	3	42,071		0.9	%	2	16,103		0.5	%
Real Estate	Real Estate											Real Estate
Total real estate assets and intangible lease liabilities, net	Total real estate assets and intangible lease liabilities, net	515	3,450,076		76.2	%	384	2,655,882		81.4	%	Total real estate assets and intangible lease liabilities, net	469	3,181,245		69.7	%	381	2,611,151		80.9	%
Total Investment Portfolio	Total Investment Portfolio	747	$	4,526,689	100.0	%	508	$	3,263,483	100.0	%	Total Investment Portfolio	719	$	4,566,552	100.0	%	526	$	3,225,649	100.0	%

The following table details overall statistics of our credit portfolio as of ~~March 31,~~June 30, 2021 (dollar amounts in thousands):


		Senior Loans (1) (2)			Broadly Syndicated Loans			CMBS				Senior Loans (1) (2)			Broadly Syndicated Loans			CMBS
Number of loans	Number of loans	6			221			5			Number of loans	10			237			3
Net book value	Net book value	$	521,562		$	487,829		$	67,222		Net book value	$	865,722		$	477,514		$	42,071
Weighted-average interest rate	Weighted-average interest rate	4.9		%	3.6		%	6.8		%	Weighted-average interest rate	4.2		%	3.6		%	8.0		%
Weighted-average maximum years to maturity	Weighted-average maximum years to maturity	2.6			5.0			19.5			Weighted-average maximum years to maturity	2.6			5.0			26.2

(1)As of ~~March 31,~~June 30, 2021, 100% of our loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR.

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

Real Estate Portfolio Information

As of ~~March 31,~~June 30, 2021, we owned ~~515~~469 properties located in 4541 states, the gross rentable square feet of which was ~~93.7%~~93.1% leased, including any month-to-month agreements, with a weighted average lease term remaining of ~~8.7~~8.3 years. As of ~~March 31,~~June 30, 2021, no single tenant accounted for greater than 10% of our 2021 annualized rental income. As of ~~March 31,~~June 30, 2021, we had certain geographic and industry concentrations in our property holdings. In particular, 61 of our properties were located in California, which accounted for 11% of our 2021 annualized rental income. In addition, we had tenants in the sporting goods, ~~home~~hobby and ~~garden~~musical instruments stores; health and personal care stores; and general merchandise ~~store~~stores industries, which accounted for 12%, 11% and 10%, respectively, of our 2021 annualized rental income.

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The following table shows the property statistics of our real estate assets as of ~~March 31,~~June 30, 2021 and 2020:


		As of March 31,					As of June 30,
		2021		2020			2021		2020
Number of commercial properties	Number of commercial properties	515		384		Number of commercial properties	469		381
Rentable square feet (in thousands) (1)	Rentable square feet (in thousands) (1)	21,293		18,381		Rentable square feet (in thousands) (1)	18,564		18,120
Percentage of rentable square feet leased	Percentage of rentable square feet leased	93.7	%	94.6	%	Percentage of rentable square feet leased	93.1	%	94.6	%
Percentage of investment-grade tenants (2)	Percentage of investment-grade tenants (2)	38.6	%	38.6	%	Percentage of investment-grade tenants (2)	38.8	%	37.4	%

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

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(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 weighted average credit rating is weighted based on annualized rental income and is for only those tenants rated by Standard & Poor’s.

~~During~~The following table summarizes our real estate acquisition activity during the ~~three~~six months ended ~~March 31,~~June 30, 2021 and ~~2020, the Company did not acquire any properties.~~2020:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Commercial properties acquired	—		1		—		1
Purchase price of acquired properties (in thousands)	$	—	$	4,659	$	—	$	4,659
Rentable square feet (in thousands) (1)	—		18,635		—		18,635

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

Results of Operations

Overview

We are not aware of any material trends or uncertainties, other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2020 and this Quarterly Report on Form 10-Q, the effects of the COVID-19 pandemic, and national economic conditions affecting real estate in general that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties. Currently, we are unable to predict the impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows in future periods due to numerous uncertainties.

Same Store 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 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, 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 company’s operating performance. 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 ~~and advisory~~ fees, ~~and expenses, (c)~~(d) transaction-related expenses, ~~(d)~~(e) real estate impairment, ~~(e)~~(f) provision for credit losses, ~~(f)~~(g) gain on disposition of real estate and condominium developments, net, ~~(g) merger-related items~~ and (h) interest income. Our net operating income may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income (loss). 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.

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Comparison of the Three Months Ended ~~March 31,~~June 30, 2021 and 2020

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


		For the Three Months Ended March 31,							For the Three Months Ended June 30,
		2021		2020		Change			2021		2020		Change
Net loss		$	(2,753)	$	(12,175)	$	9,422
Net income (loss)								Net income (loss)	$	57,787	$	(3,746)	$	61,533
Loss on extinguishment of debt	Loss on extinguishment of debt	—		4,382		(4,382)		Loss on extinguishment of debt	1,478		370		1,108
Interest expense and other, net	Interest expense and other, net	20,022		15,767		4,255		Interest expense and other, net	16,460		15,520		940
Operating income	Operating income	17,269		7,974		9,295		Operating income	75,725		12,144		63,581

Gain on disposition of real estate, net		—		(13,110)		13,110
Gain on disposition of real estate and condominium developments, net								Gain on disposition of real estate and condominium developments, net	(46,469)		(3,791)		(42,678)
Provision for credit losses	Provision for credit losses	568		17,777		(17,209)		Provision for credit losses	123		7,905		(7,782)
Real estate impairment	Real estate impairment	4,300		11,676		(7,376)		Real estate impairment	77		3,831		(3,754)
Depreciation and amortization	Depreciation and amortization	25,738		20,823		4,915		Depreciation and amortization	24,647		19,696		4,951
Transaction-related expenses	Transaction-related expenses	185		252		(67)		Transaction-related expenses	27		125		(98)
Management and advisory fees and expenses		13,014		11,090		1,924
Management fees								Management fees	11,755		9,750		2,005
Expense reimbursements to related parties								Expense reimbursements to related parties	3,210		3,057		153
General and administrative expenses	General and administrative expenses	5,471		3,682		1,789		General and administrative expenses	3,605		3,020		585
Interest income	Interest income	(11,953)		(5,571)		(6,382)		Interest income	(16,460)		(7,193)		(9,267)
Net operating income	Net operating income	$	54,592	$	54,593	$	(1)	Net operating income	$	56,240	$	48,544	$	7,696

Our operating segments include credit and real estate. Refer to Note 16 — Segment Reporting for further discussion of our operating segments.

~~Credit Segment~~

~~Interest Income~~

The increase in interest income of $6.4 million for the three months ended March 31, 2021, compared to the same period in 2020, was due to an increase in credit investments. As of March 31, 2021, we held investments in 221 broadly syndicated loans, six CRE loans held-for-investment and five CMBS. As of March 31, 2020, we held investments in 113 broadly syndicated loans and 11 CRE loans held-for-investment.

~~Provision for Credit Losses~~

The decrease in provision for credit losses of $17.2 million during the three months ended March 31, 2021, as compared to the same period in 2020 was primarily due to the foreclosure of the assets securing the Company’s mezzanine loans. During the three months ended March 31, 2020, the borrower on the Company’s eight mezzanine loans remained delinquent on the required reserve payments and became delinquent on principal and interest, resulting in the Company recording $13.0 million in credit losses related to the mezzanine loans. Upon completing foreclosure proceedings in January 2021, the Company took control of the assets which previously secured the loans, and as such, a provision for credit losses related to the mezzanine loans was not recorded for the three months ended March 31, 2021.

Real Estate Segment

A total of ~~368~~343 properties were acquired before ~~January~~April 1, 2020 and represent our “same store” properties during the three months ended ~~March 31,~~June 30, 2021 and 2020. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after ~~January~~April 1, 2020.

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The following table details the components of net operating income broken out between same store and non-same store properties (dollar amounts in thousands):


		Total						Same Store						Non-Same Store							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,							For the Three Months Ended June 30,						For the Three Months Ended June 30,						For the Three Months Ended June 30,
		2021		2020		Change		2021		2020		Change		2021		2020		Change			2021		2020		Change		2021		2020		Change		2021		2020		Change

Rental and other property income	Rental and other property income	$	76,930	$	68,436	$	8,494	$	61,680	$	64,162	$	(2,482)	$	15,250	$	4,274	$	10,976	Rental and other property income	$	75,302	$	60,103	$	15,199	$	57,207	$	52,830	$	4,377	$	18,095	$	7,273	$	10,822

Property operating expenses	Property operating expenses	10,119		6,865		3,254		6,217		6,319		(102)		3,902		546		3,356		Property operating expenses	11,356		4,811		6,545		6,412		4,363		2,049		4,944		448		4,496
Real estate tax expenses	Real estate tax expenses	12,219		6,978		5,241		6,659		6,542		117		5,560		436		5,124		Real estate tax expenses	7,706		6,748		958		6,322		6,282		40		1,384		466		918
Total property operating expenses	Total property operating expenses	22,338		13,843		8,495		12,876		12,861		15		9,462		982		8,480		Total property operating expenses	19,062		11,559		7,503		12,734		10,645		2,089		6,328		914		5,414

Net operating income	Net operating income	$	54,592	$	54,593	$	(1)	$	48,804	$	51,301	$	(2,497)	$	5,788	$	3,292	$	2,496	Net operating income	$	56,240	$	48,544	$	7,696	$	44,473	$	42,185	$	2,288	$	11,767	$	6,359	$	5,408

Loss on Extinguishment of Debt

~~Loss~~The increase in loss on extinguishment of debt ~~decreased $4.4~~of $1.1 million for the three months ended ~~March 31,~~June 30, 2021, as compared to the same period in ~~2020. During the three months ended March 31,~~ 2020, ~~we recorded losses on~~was primarily due to the extinguishment of one mortgage ~~loans~~loan with an aggregate carrying value of ~~$97.0~~$22.0 million. ~~No such losses were recorded during the three months ended March 31, 2021.~~

Interest Expense and Other, Net

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

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The increase in interest expense and other, net, of ~~$4.3 million~~$940,000 for the three months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020, was primarily due to an increase in the average aggregate amount of debt outstanding from ~~$1.56~~$1.6 billion as of ~~March 31,~~June 30, 2020 to ~~$2.46~~$2.4 billion as of ~~March 31,~~June 30, 2021 as a result of entering into additional repurchase agreements and assuming the CCPT V Credit Facility as part of the Mergers subsequent to June 30, 2020. This increase was partially offset by a decrease in the weighted average interest rate from ~~3.8%~~3.3% as of ~~March 31,~~June 30, 2020 to 2.8% as of ~~March 31,~~June 30, 2021.

Gain on Disposition of Real Estate and Condominium Developments, Net

The ~~decrease~~increase in gain on disposition of real estate and condominium developments, net, of ~~$13.1~~$42.7 million during the three months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020, was primarily due to the disposition of ~~one property with no~~46 properties for a gain ~~or loss recognized~~of $45.0 million during the three months ended ~~March 31,~~June 30, 2021 compared to the disposition of 12four properties for a gain of ~~$13.1~~$3.8 million during the three months ended ~~March 31,~~June 30, 2020.

Real Estate Impairment

The decrease in real estate impairments of ~~$7.4~~$3.8 million during the three months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020, was due to ~~five~~one property that was deemed to be impaired, resulting in impairment charges of $77,000 during the three months ended June 30, 2021, compared to three properties that were deemed to be impaired, resulting in impairment charges of ~~$4.3~~$3.8 million during the three months ended ~~March 31, 2021, compared to seven properties that were deemed to be impaired, resulting in impairment charges of $11.7 million during the three months ended March 31,~~June 30, 2020.

Depreciation and Amortization

The increase in depreciation and amortization of ~~$4.9~~$5.0 million during the three months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020, was primarily due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by the disposition of 1961 properties subsequent to ~~March 31,~~June 30, 2020.

Transaction-Related Expenses

Transaction-related expenses include ~~manager reimbursements~~abandoned deal costs for acquisition and disposition ~~activities.~~activity.

Transaction-related expenses remained generally consistent during the three months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020.

Management ~~and Advisory~~ Fees ~~and Expenses~~

We pay CMFT Management a management fee pursuant to the Management Agreement, 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

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Company’s Equity (as defined in the Management Agreement). Additionally, we may be required to reimburse certain expenses incurred by CMFT Management in providing management services, subject to limitations as set forth in the Management Agreement (as discussed in Note 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q). Furthermore, as discussed in Note 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, pursuant to the Investment Advisory and Management Agreement, for management of investments in the Managed Assets (as defined in the Investment Advisory and Management Agreement), CMFT Securities pays the Investment Advisor 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). ~~Pursuant to the Investment Advisory and Management Agreement, CMFT Securities reimburses the Investment Advisor for costs and expenses incurred by the Investment Advisor on its behalf.~~ Because the Managed Assets are excluded from the calculation of management fees payable by the Company to CMFT Management pursuant to the Management Agreement, the total management and advisory fees payable by the Company to its external advisors are not increased as a result of the Investment Advisory and Management Agreement. In addition, pursuant to the Sub-Advisory Agreement, in connection with providing investment management services with respect to the corporate credit-related securities held by CMFT Securities, on a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee payable to the Investment Advisor as sub-advisory fees.

The increase in management ~~and advisory~~ fees ~~and expenses~~ of ~~$1.9~~$2.0 million during the three months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020 was primarily due to the issuance of common stock in connection with the Mergers that closed in December 2020.

Expense Reimbursements to Related Parties

Pursuant to the Investment Advisory and Management Agreement, CMFT Securities reimburses the Investment Advisor for costs and expenses incurred by the Investment Advisor on its behalf. Additionally, we may be required to reimburse certain expenses incurred by CMFT Management in providing management services, subject to limitations as set forth in the Management Agreement (as discussed in Note 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q).

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The increase in expense reimbursements to related parties of $153,000 during the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to operating expense reimbursements due to CMFT Management as a result of acquiring 146 properties as part of the Mergers that closed in December 2020.

General and Administrative Expenses

The primary general and administrative expense items are banking fees and transfer agency costs.

The increase in general and administrative expenses of $585,000 for the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to increased expenses related to the Mergers completed in December 2020 and the foreclosure completed in January 2021 to take control of the assets which previously secured the Company’s mezzanine loans, as discussed in Note 7 — Loans Held-For-Investment to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Net Operating Income

Same store property net operating income increased $2.3 million during the three months ended June 30, 2021, as compared to the same period in 2020. The change was primarily due to an increase in rental income, as a result of the impact of COVID-19 leading to a temporary reduction in rental income during the three months ended June 30, 2020 for certain tenants, partially offset by increases in property operating expenses.

Non-same store property net operating income increased $5.4 million during the three months ended June 30, 2021, as compared to the same period in 2020. The increase was primarily due to the acquisition of 146 properties in connection with the Mergers that closed December 2020, offset by the disposition of 61 properties subsequent to June 30, 2020.

Credit Segment

Provision for Credit Losses

The decrease in provision for credit losses of $7.8 million during the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the Company’s foreclosure of the assets which previously secured the Company’s mezzanine loans. During the three months ended June 30, 2020, the borrower on the Company’s eight mezzanine loans remained delinquent on the required reserve payments and became delinquent on principal and interest, resulting in the Company recording $6.7 million in credit losses related to the mezzanine loans. Upon completing foreclosure in January 2021, the Company took control of the assets which previously secured the loans, and as such, a provision for credit losses related to the mezzanine loans was not recorded for the three months ended June 30, 2021.

Interest Income

The increase in interest income of $9.3 million for the three months ended June 30, 2021, compared to the same period in 2020, was due to an increase in credit investments. As of June 30, 2021, we held investments in broadly syndicated loans of $484.1 million, CRE loans held-for-investment of $872.2 million, and CMBS of $42.1 million. As of June 30, 2020, we held investments in broadly syndicated loans of $372.3 million, CRE loans held-for-investment of $253.8 million, and CMBS of $16.1 million.

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Comparison of the Six Months Ended June 30, 2021 and 2020

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


	For the Six Months Ended June 30,
	2021		2020		Change
Net income (loss)	$	55,034	$	(15,921)	$	70,955
Loss on extinguishment of debt	1,478		4,752		(3,274)
Interest expense and other, net	36,482		31,276		5,206
Operating income	92,994		20,107		72,887


Gain on disposition of real estate and condominium developments, net	(46,469)		(16,901)		(29,568)
Provision for credit losses	691		25,682		(24,991)
Real estate impairment	4,377		15,507		(11,130)
Depreciation and amortization	50,385		40,519		9,866
Transaction-related expenses	31		250		(219)

Management fees	23,332		19,600		3,732
Expense reimbursements to related parties	5,871		5,235		636
General and administrative expenses	8,033		5,902		2,131
Interest income	(28,413)		(12,764)		(15,649)
Net operating income	$	110,832	$	103,137	$	7,695

Real Estate Segment

A total of 343 properties were acquired before January 1, 2020 and represent our “same store” properties during the six months ended June 30, 2021 and 2020. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, 2020.

The following table details the components of net operating income broken out between same store and non-same store properties (dollar amounts in thousands):


	Total						Same Store						Non-Same Store
	For the Six Months Ended June 30,						For the Six Months Ended June 30,						For the Six Months Ended June 30,
	2021		2020		Change		2021		2020		Change		2021		2020		Change


Rental and other property income	$	152,232	$	128,539	$	23,693	$	114,317	$	112,312	$	2,005	$	37,915	$	16,227	$	21,688

Property operating expenses	21,475		11,676		9,799		12,321		10,378		1,943		9,154		1,298		7,856
Real estate tax expenses	19,925		13,726		6,199		12,731		12,569		162		7,194		1,157		6,037
Total property operating expenses	41,400		25,402		15,998		25,052		22,947		2,105		16,348		2,455		13,893

Net operating income	$	110,832	$	103,137	$	7,695	$	89,265	$	89,365	$	(100)	$	21,567	$	13,772	$	7,795

Loss on Extinguishment of Debt

The decrease in loss on extinguishment of debt of $3.3 million for the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the extinguishment of one mortgage note with an aggregate carrying value of $22.0 million, as compared the extinguishment of mortgage notes with an aggregate carrying value of $97.0 million during the six months ended June 30, 2020.

Interest Expense and Other, Net

The increase in interest expense and other, net, of $5.2 million for the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to an increase in ~~manager expense reimbursements. Additionally, we incurred management fees~~the average aggregate amount of ~~$11.6 million during the three months ended March 31,~~debt outstanding from $1.6 billion as of June 30, 2020 to $2.4 billion as of June 30, 2021 as ~~compared~~a result of entering into additional repurchase agreements and assuming

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the CCPT V Credit Facility as part of the Mergers subsequent to ~~$11.1 million~~June 30, 2020. This increase was partially offset by a decrease in ~~management fees during~~ the ~~same period 2020.~~weighted average interest rate from 3.3% as of June 30, 2020 to 2.8% as of June 30, 2021.

~~General~~Gain on Disposition of Real Estate and ~~Administrative Expenses~~

~~The primary general and administrative expense items are certain expense reimbursements to our manager, banking fees and transfer agency costs.~~Condominium Developments, Net

The increase in ~~general~~gain on disposition of real estate and ~~administrative expenses~~condominium developments, net, of ~~$1.8~~$29.6 million ~~for~~during the ~~three~~six months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020, was primarily due to anthe disposition of 47 properties for a gain of $45.0 million during the six months ended June 30, 2021, compared to the disposition of 16 properties for a gain of $16.9 million during the six months ended June 30, 2021.

Real Estate Impairment

The decrease in impairments of $11.1 million during the six months ended June 30, 2021, as compared to the same period in 2020, was due to five properties that were deemed to be impaired, resulting in impairment charges of $4.4 million during the six months ended June 30, 2021, compared to 10 properties that were deemed to be impaired, resulting in impairment charges of $15.5 million during the six months ended June 30, 2020.

Depreciation and Amortization

The increase in ~~legal~~depreciation and amortization of $9.9 million during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by the disposition of 61 properties subsequent to June 30, 2020.

Transaction-Related Expenses

The decrease in transaction-related expenses of $219,000 during the six months ended June 30, 2021, as compared to the same period in 2020, was due to a decrease in abandoned deal costs for the six months ended June 30, 2021.

Management Fees

The increase in management fees of $3.7 million during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the issuance of common stock in connection with the Mergers that closed in December 2020.

Expense Reimbursements to Related Parties

The increase in expense reimbursements to related parties of $636,000 during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to increased operating expense reimbursements due to CMFT Management as a result of acquiring 146 properties as part of the Mergers that closed in December 2020.

General and Administrative Expenses

The increase in general and administrative expenses of $2.1 million for the six months ended June 30, 2021, compared to the same period in 2020, was primarily due to increased expenses resulting from board members added to our board and the acquisition of 146 properties in connection with the Mergers that closed in December 2020. The increase was also due to increases in insurance costs, banking fees and appraisal fees related to the foreclosure completed in January 2021 to take control of the assets ~~securing~~which previously secured the Company’s mezzanine loans, as discussed in Note 7 — Loans Held-For-Investment to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Net Operating Income

Same store property net operating income decreased ~~$2.5 million~~$100,000 during the ~~three~~six months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020. The ~~change~~decrease was primarily due to ~~a reduction~~increases in ~~same store occupancy to 92.8% as of March 31, 2021, compared to 94.9% as of March 31, 2020, resulting in a $1.5 million decrease in net~~property operating ~~income. Additionally, the bankruptcy of one tenant resulted in a decrease~~expenses, partially offset by an increase in rental income as a result of ~~$805,000.~~the impact of COVID-19 leading to a temporary reduction in rental income during the three months ended June 30, 2020 for certain tenants.

Non-same store property net operating income increased ~~$2.5~~$7.8 million during the ~~three~~six months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020. The increase ~~was primarily~~is due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, ~~and~~partially offset by the disposition of 1961 properties subsequent to ~~March 31,~~June 30, 2020.

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Credit Segment

Provision for Credit Losses

The decrease in provision for credit losses of $25.0 million during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the Company recording $19.8 million in credit losses related to the mezzanine loans. The mezzanine loans and underlying assets were foreclosed on in January 2021 ,and as such a provision for credit losses was not recorded during the six months ended June 30, 2021 related to these loans.

Interest Income

The increase in interest income of $15.6 million for the six months ended June 30, 2021, as compared to the same period in 2020, was due to an increase in credit investments. As of June 30, 2021, we held investments in broadly syndicated loans of $484.1 million, CRE loans held-for-investment of $872.2 million, and CMBS of $42.1 million. As of June 30, 2020, we held investments in broadly syndicated loans of $372.3 million, CRE loans held-for-investment of $253.8 million, and CMBS of $16.1 million.

Distributions

Prior to April 1, 2020, on a quarterly basis, our Board authorized a daily distribution for the succeeding quarter. Our Board authorized the following daily distribution amounts per share for the periods indicated below:

Period Commencing

Period Ending

Daily Distribution Amount

April 14, 2012

December 31, 2012

$0.001707848

January 1, 2013

December 31, 2015

$0.001712523

January 1, 2016

December 31, 2016

$0.001706776

January 1, 2017

December 31, 2019

$0.001711452

January 1, 2020

March 31, 2020

$0.001706776

On April 20, 2020, our Board decided to make a determination as to the amount and timing of distributions on a monthly, instead of a quarterly, basis until such time that we had greater visibility into the impact that the COVID-19 pandemic would have on our tenants’ ability to continue to pay rent on their leases on a timely basis or at all, the degree to which federal, state or local governmental authorities grant rent relief or other relief or amnesty programs applicable to our tenants, our ability to access the capital markets, and on the United States and worldwide financial markets and economy. On March 25, 2021, the Board resumed declaring distributions on a quarterly basis.

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~~Board resumed declaring distributions on a quarterly basis by declaring a monthly per share distribution for the months of March, April, May and June of 2021.~~ Since April of 2020, our Board authorized the following monthly distribution amounts per share for the periods indicated below:


Record Date						Distribution Amount
April 30, 2020						$0.0130
May 31, 2020						$0.0130
June 30, 2020						$0.0161
July 30, 2020						$0.0304
August 28, 2020						$0.0303
September 29, 2020						$0.0303
October 29, 2020						$0.0303
November 27, 2020						$0.0303
December 30, 2020						$0.0303
January 28, 2021						$0.0303
February 25, 2021						$0.0303
March 29, 2021						$0.0303
April 29, 2021						$0.0303
May 28, 2021						$0.0303
June 29, 2021						$0.0303
July 29, 2021						$0.0303
August 30, 2021						$0.0303
September 29, 2021						$0.0303
October 28, 2021						$0.0303
November 29, 2021						$0.0303
December 30, 2021						$0.0303

As of ~~March 31,~~June 30, 2021, we had distributions payable of $11.0 million.

The following table presents distributions and sources of distributions for the periods indicated below (dollar amounts in thousands):


		Three Months Ended March 31,										Six Months Ended June 30,
		2021				2020						2021				2020
		Amount		Percent		Amount			Percent			Amount		Percent		Amount			Percent
Distributions paid in cash	Distributions paid in cash	$	32,906	100	%	$	29,148		60	%	Distributions paid in cash	$	59,166	90	%	$	44,150		61	%
Distributions reinvested	Distributions reinvested	—		—	%	19,231			40	%	Distributions reinvested	6,660		10	%	28,774			39	%
Total distributions	Total distributions	$	32,906	100	%	$	48,379		100	%	Total distributions	$	65,826	100	%	$	72,924		100	%
Sources of distributions:	Sources of distributions:										Sources of distributions:
Net cash provided by operating activities (1)	Net cash provided by operating activities (1)	$	28,747	87	%	$	26,770	(2)	55	%	Net cash provided by operating activities (1)	$	65,347	99	%	$	46,853	(2)	64	%
Proceeds from the issuance of debt (3)	Proceeds from the issuance of debt (3)	4,159		13	%	13,301			28	%	Proceeds from the issuance of debt (3)	479		1	%	17,763			25	%
Proceeds from the issuance of common stock	Proceeds from the issuance of common stock	—		—	%	8,308		(4)	17	%	Proceeds from the issuance of common stock	—		—	%	8,308		(4)	11	%
Total sources	Total sources	$	32,906	100	%	$	48,379		100	%	Total sources	$	65,826	100	%	$	72,924		100	%

(1)Net cash provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 was ~~$28.7~~$65.3 million and ~~$17.1~~$37.2 million, respectively.

(2)Our distributions covered by cash flows from operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 include cash flows from operating activities in excess of distributions from prior periods of $9.6 million.

(3)Net proceeds on the credit facilities and notes payable for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 were ~~$197.0~~$292.2 million and ~~$2.9~~$102.2 million, respectively.

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(4)In accordance with GAAP, certain real estate acquisition-related fees and expenses, such as expenses and fees incurred in connection with property acquisitions accounted for as business combinations, are expensed, and therefore reduce net cash flows from operating activities. Therefore, for consistency, proceeds from the issuance of common stock used as a source of distributions for the ~~three~~six months ended ~~March 31,~~June 30, 2020 include the amount by which real estate acquisition-related fees and expenses have reduced net cash flows from operating activities in those prior periods.

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Share Redemptions

Our amended and restated share redemption program (the “Amended Share Redemption Program”) permits our stockholders to sell their shares of common stock back to us, subject to certain conditions and limitations. Funding for the redemption of shares will be limited to the cumulative net proceeds we receive from the sale of shares under the Secondary DRIP Offering, net of shares redeemed to date. In addition, 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. In addition, our Board may choose to amend the terms of, suspend or terminate our Amended 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 Amended Share Redemption Program will be disclosed to our stockholders as promptly as practicable in our reports filed with the SEC and via our website. In connection with the Mergers, our Board suspended our Amended Share Redemption Program on August 30, 2020, and therefore, no shares were redeemed from our stockholders after that ~~date. On~~date until March 25, 2021, when our Board reinstated the Amended Share Redemption Program, effective April 1, 2021. During the six months ended June 30, 2021, we received valid redemption requests under our share redemption program totaling approximately 32.8 million shares, of which we redeemed approximately 1.7 million shares subsequent to June 30, 2021 for $12.0 million (at a redemption price of $7.20 per share). The remaining redemption requests relating to approximately 31.1 million shares went unfulfilled. A valid redemption request is one that complies with the applicable requirements and guidelines of our share redemption program then in effect. The share redemptions were funded with proceeds from the Secondary DRIP Offering and available borrowings.

Liquidity and Capital Resources

General

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

As of ~~March 31,~~June 30, 2021, the CMFT Credit Facility provided for borrowings of up to $1.24 billion, which includes the $885.0 million CMFT Term Loan and up to $350.0 million on the CMFT Revolving Loans. The CCPT V Credit Facility provides for borrowings of $220.0 million under the CCPT V Term Loans and up to $130.0 million under the CCPT V Revolving Loans. As of ~~March 31,~~June 30, 2021, we had ~~$430.0~~$480.0 million in unused capacity under the Credit Facilities, subject to borrowing availability. We had available borrowings of ~~$44.2~~$12.2 million as of ~~March 31,~~June 30, 2021. As of ~~March 31,~~June 30, 2021, we also had cash and cash equivalents of ~~$57.6~~$141.3 million, which included ~~$34.5~~$43.2 million of unsettled broadly syndicated loan purchases. Subsequent to June 30, 2021, and with the proceeds from the Mortgage Loan and the sale of the Class A Notes, the Company repaid fixed rate debt of $104.1 million, paid down the $1.11 billion outstanding balance under the Credit Facilities and terminated the CCPT V Credit Facility and the CMFT Credit Facility, as further discussed in Note 17 — Subsequent Events.

As of ~~March 31,~~June 30, 2021, the Credit and Security Agreement provided for borrowings in an aggregate principal amount up to $500.0 million under the Credit Securities Revolver, which may be increased from time to time pursuant to the Credit and Security Agreement. Borrowings under the Credit and Security Agreement are secured by substantially all of the assets held by CMFT Corporate Credit Securities, LLC, which shall primarily consist of broadly-syndicated senior secured loans subject to certain eligibility criteria under the Credit and Security Agreement. As of ~~March 31,~~June 30, 2021, the amounts borrowed and outstanding under the Credit Securities Revolver totaled ~~$256.5~~$316.5 million. Subsequent to June 30, 2021, the Company received borrowings in an aggregate principal amount of $50.0 million under the Credit and Security Agreement, as further discussed in Note 17 — Subsequent Events.

As of ~~March 31,~~June 30, 2021, the ~~Citibank~~ Repurchase ~~Agreement~~Agreements provided up to ~~$300.0 million~~an aggregate of $1.1 billion of financing under the ~~Citibank~~ Repurchase ~~Facility. Additionally, as of March 31, 2021, the Barclays~~Facilities. The Repurchase ~~Agreement provided up to $500.0 million of financing primarily through the Barclays Repurchase Facility. The Citibank Repurchase Agreement and the Barclays Repurchase Agreement~~Agreements provide for simultaneous agreements by ~~Citibank and Barclays~~the banks to re-sell purchased CRE mortgage loans back to the CMFT RE Lending ~~RF Sub CB, LLC and CMFT RE Lending RF Sub BB, LLC~~Subs at a certain future date or upon demand. As of ~~March 31,~~June 30, 2021, we had ~~six~~nine senior loans with an aggregate carrying value of ~~$525.4~~$727.4 million financed with ~~$357.6~~$505.4 million under the Repurchase Facilities, ~~$170.2~~

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$250.0 million of which was financed under the Barclays Repurchase Facility, ~~and $187.4~~$188.0 million of which was financed under the Citibank Repurchase Facility and $67.4 million of which was financed under the Wells Fargo Repurchase Facility. Additionally, subsequent to June 30, 2021, the Company amended the Barclays Repurchase Agreement to extend the maturity date to September 21, 2024. See further discussion of these repayments in Note 17 — Subsequent Events.

As of ~~March 31,~~June 30, 2021, we believe that we were in compliance with the financial covenants of the CMFT Second Amended and Restated Credit Agreement, the CCPT V Credit Agreement, the Citibank Repurchase Agreement, the Barclays Repurchase Agreement and the ~~Barclays~~Wells Fargo Repurchase Agreement, as well as the financial covenants under our various fixed and variable rate debt agreements, as further discussed in Note 9 — Credit Facilities, Notes Payable and Repurchase Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Short-term Liquidity and Capital Resources

On a short-term basis, our principal demands for funds will be for the acquisition of real estate-related securities, real estate and real estate-related assets and the payment of acquisition-related fees and expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of ~~$1.4~~$1.3 billion

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within the next 12 ~~months.~~ months, $1.2 billion of which was paid down subsequent to June 30, 2021 with proceeds from the Mortgage Loan and the sale of the Class A Notes, as further discussed in Note 17 — Subsequent Events.

We expect to meet our short-term liquidity requirements through cash proceeds from real estate asset dispositions, net cash provided by operations and proceeds from the Secondary DRIP Offering, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions and loan originations. Operating cash flows are expected to increase as we complete future acquisitions. 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 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.

Long-term Liquidity and Capital Resources

On a long-term basis, our principal demands for funds will be for the acquisition of real estate-related securities, real estate and real estate-related credit 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 flows from operations, ~~borrowings on the Credit Facilities,~~ proceeds from secured or unsecured borrowings from banks and other lenders, and proceeds raised pursuant to the Secondary DRIP Offering.

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 Facilities 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. We expect that substantially all net cash flows from the Offerings 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.

Contractual Obligations

As of ~~March 31,~~June 30, 2021, we had debt outstanding with a carrying value of ~~$2.4~~$2.5 billion and a weighted average interest rate of 2.8%. See Note 9 — Credit Facilities, Notes Payable and Repurchase 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 ~~March 31,~~June 30, 2021 were as follows (in thousands):


		Payments due by period (1)											Payments due by period (1)
		Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years			Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Principal payments — fixed rate debt (2)	Principal payments — fixed rate debt (2)	$	577,853	$	138,794	$	373,083	$	65,976	$	—	Principal payments — fixed rate debt (2)	$	523,562	$	111,680	$	388,785	$	23,097	$	—
Interest payments — fixed rate debt (3)	Interest payments — fixed rate debt (3)	42,498		19,134		22,467		897		—		Interest payments — fixed rate debt (3)	35,998		17,090		18,459		449		—
Principal payments — variable rate debt	Principal payments — variable rate debt	102,553		102,553		—		—		—		Principal payments — variable rate debt	94,202		94,202		—		—		—
Interest payments — variable rate debt (4)	Interest payments — variable rate debt (4)	587		587		—		—		—		Interest payments — variable rate debt (4)	4,443		4,443		—		—		—
Principal payments — credit facilities (5)	Principal payments — credit facilities (5)	1,411,500		1,155,000		—		256,500		—		Principal payments — credit facilities (5)	1,421,500		1,105,000		—		316,500		—
Interest payments — credit facilities (5)	Interest payments — credit facilities (5)	44,039		30,607		9,760		3,672		—		Interest payments — credit facilities (5)	39,647		25,365		11,410		2,872		—
Principal payments — repurchase facilities (6)	Principal payments — repurchase facilities (6)	357,648		—		357,648		—		—		Principal payments — repurchase facilities (6)	505,426		—		505,426		—		—
Interest payments — repurchase facilities (6)	Interest payments — repurchase facilities (6)	20,232		8,696		11,536		—		—		Interest payments — repurchase facilities (6)	24,550		11,600		12,950		—		—
Total	Total	$	2,556,910	$	1,455,371	$	774,494	$	327,045	$	—	Total	$	2,649,328	$	1,369,380	$	937,030	$	342,918	$	—

(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.

(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 $126,000 as of March 31, 2021.~~assumed.

(3)As of ~~March 31,~~June 30, 2021, we had ~~$53.6~~$21.5 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 ~~March 31,~~June 30, 2021, we had variable rate debt outstanding of ~~$102.6~~$94.2 million with a weighted average interest rate of 5.5%. We used the weighted average interest rate to calculate the debt payment obligations in future periods.

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(5)As of ~~March 31,~~June 30, 2021, the Term Loans outstanding totaled $1.1 billion, $220.0 million of which is subject to interest rate swap agreements. As of ~~March 31,~~June 30, 2021, the weighted average all-in interest rate for the Swapped Term Loans was 4.2%. The remaining ~~$935.0~~$885.0 million outstanding under the Credit Facilities had a weighted average interest rate of ~~1.9%~~2.1% as of ~~March 31,~~June 30, 2021. As of ~~March 31,~~June 30, 2021, the amounts outstanding under the Credit Securities Revolver totaled ~~$256.5~~$316.5 million and had a weighted average interest rate of ~~1.9%~~1.8%.

(6)As of ~~March 31,~~June 30, 2021, the amount outstanding under the Citibank Repurchase Facility was ~~$187.4~~$188.0 million at a weighted average interest rate of 2.2%, ~~and~~ the amount outstanding under the Barclays Repurchase Facility was ~~$170.2~~$250.0 million at a weighted average interest rate of ~~2.7%~~2.5%, and the amount outstanding under the Wells Fargo Repurchase Facility was $67.4 million at a weighted average interest rate of 1.8%.

We expect to incur additional borrowings in the future to acquire additional properties and ~~other real estate-related assets.~~credit investments. There is no limitation on the amount we may borrow against any single improved property. As of ~~March 31,~~June 30, 2021, our ratio of debt to total gross assets net of gross intangible lease liabilities was ~~49.0%~~50.5% and our ratio of debt to the fair market value of our gross assets net of gross intangible lease liabilities was ~~49.5%~~50.9%. Fair market value is based on the estimated market value of our real estate assets as of June 30, 2020 that were used to determine our estimated per share NAV, and for those assets acquired from July 1, 2020 through ~~March 31,~~June 30, 2021 is based on the purchase price.

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 stockholders. 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 ~~March 31,~~June 30, 2021, our net debt leverage ratio, which is the ratio of net debt to total gross real estate and related assets net of gross intangible lease liabilities, was ~~47.8%~~47.7%.

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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 ~~March 31,~~June 30, 2021 (dollar amounts in thousands):


	Balance as of
	~~March 31,~~June 30, 2021
Credit facilities, notes payable and repurchase facilities, net	$	~~2,445,246~~2,540,809
Deferred costs and net premiums (1)	~~4,308~~3,881

Less: Cash and cash equivalents	~~(57,550)~~(141,299)
Net debt	$	~~2,392,004~~2,403,391
Gross real estate and related assets, net (2)	$	~~5,001,401~~5,037,539
Net debt leverage ratio	~~47.8~~47.7		%

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

(2) Net of gross intangible lease liabilities. Includes gross assets held for sale, as well as real estate-related securities and loans held-for-investment principal balance, net of allowance for credit losses, of ~~$1.1~~$1.4 billion.

Cash Flow Analysis

Operating Activities. Net cash provided by operating activities increased by ~~$11.6~~$28.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020. The increase was primarily due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by the disposition of 61 properties subsequent to June 30, 2020 and lower net income after non-cash adjustments primarily resulting from the Company’s foreclosure of the assets which previously secured the Company’s mezzanine loans during the ~~three~~six months ended ~~March 31,~~June 30, 2021. See “— Results of Operations” for a more complete discussion of the factors impacting our operating performance.

Investing Activities. Net cash used in investing activities increased ~~$43.0~~$59.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, as compared to the same period in 2020. The change was primarily due to ~~a decrease in proceeds from disposition of real estate assets of $123.1 million and~~ an increase in the net investment in loans held-for-investment of ~~$138.0~~$494.1 million, The change was partially offset by a decrease in the net investment in broadly syndicated loans of $279.2 million, an increase in proceeds from disposition of real estate assets of $147.2 million, and an increase in net proceeds from the sale of real estate-related securities of ~~$227.5~~$27.6 million.

Financing Activities. Net cash provided by financing activities ~~was $163.3~~increased $209.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, as compared to ~~net cash used~~the same period in ~~financing activities of $45.9 million for the three months ended March 31,~~ 2020. The change was primarily due to an increase in net proceeds on the credit facilities, notes payable and repurchase facilities of ~~$194.2~~$190.0 million as a result of entering into the Repurchase Facilities, ~~subsequent to March 31, 2020,~~ coupled with a decrease in

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redemptions of common stock of ~~$19.5~~$38.7 million ~~resulting from~~as a result of the Board’s suspension of the Amended Share Redemption ~~Program.~~Program from August 30, 2020 through March 31, 2021.

Election as a REIT

We elected to be taxed, and currently 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 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 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 taxes related to the operations of properties in certain locations, which have been provided for in our accompanying condensed consolidated financial statements.

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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, 2020. We consider our critical accounting policies to be the following:

•Recoverability of Real Estate Assets;

•Allocation of Purchase Price of Real Estate Assets; and

•Allowance for 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, 2020. 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 year ended December 31, 2020 and related notes thereto.

We continually monitor events and changes in circumstances that could indicate that the carrying amounts of our real estate assets may not be recoverable. Impairment indicators that we consider include, but are not limited to: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, lease concessions and other factors; a significant decrease in a property’s revenues due to lease terminations; vacancies; co-tenancy clauses; reduced lease rates; or changes in anticipated holding periods. We continue to evaluate our portfolio to determine if anticipated holding periods for certain properties may materially differ from the initial intended holding periods for such properties, which could result in an impairment charge in the future.

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Related-Party Transactions and Agreements

We have entered into agreements with CMFT Management or its affiliates whereby we agree to pay certain fees to, or reimburse certain expenses of, CMFT Management or its affiliates such as management and advisory fees and expenses, organization and offering costs, leasing fees and reimbursement of certain operating costs. See Note 12 — Related-Party Transactions and Arrangements to 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

Richard S. Ressler, the chairman of our Board, chief executive officer and president, who is also a founder and principal of CIM and is an officer/director of certain of its affiliates including CMFT Management, is the chairman of the board, chief executive officer and president of CIM Income NAV. One of our directors, Avraham Shemesh, who is also a founder and principal of CIM and is an officer/director of certain of its affiliates including CMFT Management, serves as a director of CIM Income NAV. One of our directors, Elaine Y. Wong, ~~who is a principal of CIM,~~ also serves as a director of CIM Income NAV. One of our independent directors, W. Brian Kretzmer, also serves as an independent director of CIM Income NAV. Nathan D. DeBacker, our chief financial officer and treasurer, who is also an officer of other real estate programs sponsored by CCO Group, is a vice president of CMFT Management and is an officer of certain of its affiliates. In addition, affiliates of CMFT Management act as an advisor to CIM Income NAV. As such, there may be conflicts of interest where CMFT Management or its affiliates, while serving in the capacity as sponsor, general partner, officer, director, key personnel and/or advisor for CIM or another real estate program sponsored or operated by CIM or CCO Group, including other real estate offerings in registration, 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 CMFT Management and these other real estate programs sponsored or operated by CCO Group 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, 2020.

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Off-Balance Sheet Arrangements

As of ~~March 31,~~June 30, 2021 and December 31, 2020, 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.

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 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

As of ~~March 31,~~June 30, 2021, we had an aggregate of ~~$1.7~~$1.8 billion of variable rate debt, excluding any debt subject to interest rate swap agreements, and therefore, we are exposed to interest rate changes in LIBOR. As of ~~March 31,~~June 30, 2021, an increase or decrease of 50 basis points in interest rates would result in an increase or decrease in interest expense of ~~$8.3~~$9.0 million per year.

As of ~~March 31,~~June 30, 2021, we had three interest rate swap agreements outstanding and four interest rate ~~swap~~cap agreements outstanding, which mature on various dates from ~~April~~July 2021 through March 2023, with an aggregate notional amount of ~~$273.6~~$344.1 million and an aggregate fair value of the net derivative liability of ~~$7.6~~$6.3 million. The fair value of these interest rate swap agreements and interest rate cap agreements is dependent upon existing market interest rates and swap spreads. As of ~~March 31,~~June 30, 2021, an increase of 50 basis points in interest rates would result in a change of ~~$1.6~~$1.3 million to the fair value of the net derivative liability, resulting in a net derivative liability of ~~$6.0~~$5.0 million. A decrease of 50 basis points in interest rates would result in a ~~$1.7~~$1.4 million change to the fair value of the net derivative liability, resulting in a net derivative liability of ~~$9.3~~$7.7 million.

As the information presented above includes only those exposures that existed as of ~~March 31,~~June 30, 2021, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value. Future actual

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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 the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to U.S. dollar LIBOR in derivatives and other financial contracts. In March 2021, the FCA confirmed its intention to cease publishing one week and two-month LIBOR after December 31, 2021 and 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. Additionally, banking regulators are encouraging banks to discontinue new LIBOR debt issuances by December 31, 2021. The Company anticipates that LIBOR will continue to be available at least until June 30, ~~2023.Any~~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 interest rate swap agreements and interest rate cap agreements maturing on various dates from ~~April~~July 2021 through March 2023, as further discussed above, that are 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.

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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.

Adjustments to systems and mathematical models to properly process and account for alternative rates will be required, which may strain the model risk management and information technology functions and result in substantial incremental costs for the Company.

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.

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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.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of ~~March 31,~~June 30, 2021 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 ~~March 31,~~June 30, 2021, 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 ~~March 31,~~June 30, 2021 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

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 are a party or to which our properties are the subject.

Item 1A.Risk Factors

Except as set forth below, 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, 2020.

Risks Related to Real Estate Assets

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, which may reduce the amount of capital we ultimately deploy in our real estate operations and may negatively impact the value of our common stock. Additionally, distributions at any point in time may not reflect the current performance of our properties or our current operating cash flows.

To the extent that cash flows from operations have been or are 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 flows from operations. Such sources may include borrowings, proceeds from asset sales or the sale of our securities. We have no limits on the amounts we may use to pay distributions from sources other than cash flows from operations. The payment of distributions from sources other than cash provided by operating activities may reduce the amount of proceeds available for acquisitions and operations or cause us to incur additional interest expense as a result of borrowed funds, and may cause subsequent holders of our common stock to experience dilution. This may negatively impact the value of our common stock.

Because the amount we pay in distributions may exceed our earnings and our cash flows from operations, distributions may not reflect the current performance of our properties or our current operating cash flows. To the extent distributions exceed cash flows from operations, distributions may be treated as a return of our stockholders’ investment and could reduce their basis in our common stock. A reduction in a stockholder’s basis in our common stock could result in the stockholder recognizing more gain upon the disposition of his or her shares, which, in turn, could result in greater taxable income to such stockholder.

The following table presents distributions and the source of distributions for the periods indicated below (dollar amounts in thousands):


		Three Months Ended March 31, 2021				Year Ended December 31, 2020						Six Months Ended June 30, 2021				Year Ended December 31, 2020
		Amount		Percent		Amount			Percent			Amount		Percent		Amount			Percent
Distributions paid in cash	Distributions paid in cash	$	32,906	100	%	$	90,655		73	%	Distributions paid in cash	$	59,166	90	%	$	90,655		73	%
Distributions reinvested	Distributions reinvested	—		—	%	34,191			27	%	Distributions reinvested	6,660		10	%	34,191			27	%
Total distributions	Total distributions	$	32,906	100	%	$	124,846		100	%	Total distributions	$	65,826	100	%	$	124,846		100	%
Sources of distributions:	Sources of distributions:										Sources of distributions:
Net cash provided by operating activities (1)	Net cash provided by operating activities (1)	$	28,747	87	%	$	115,985	(2)	93	%	Net cash provided by operating activities (1)	$	65,347	99	%	$	115,985	(2)	93	%
Proceeds from the issuance of debt (3)	Proceeds from the issuance of debt (3)	4,159		13	%	553			—	%	Proceeds from the issuance of debt (3)	479		1	%	553			—	%
Proceeds from the issuance of common stock	Proceeds from the issuance of common stock	—		—	%	8,308		(4)	7	%	Proceeds from the issuance of common stock	—		—	%	8,308		(4)	7	%
Total sources	Total sources	$	32,906	100	%	$	124,846		100	%	Total sources	$	65,826	100	%	$	124,846		100	%

(1)Net cash provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and the year ended December 31, 2020 was ~~$28.7~~$65.3 million and $106.4 million, respectively.

(2)Our distributions covered by cash flows from operating activities for the year ended December 31, 2020 include cash flows from operating activities in excess of distributions from prior periods of $9.6 million.

(3)Net proceeds on the credit facilities, notes payable and repurchase facilities for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and the year ended December 31, 2020 were ~~$197.0~~$292.2 million and $159.0 million, respectively.

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of distributions for the year ended December 31, 2020 include the amount by which real estate acquisition-related fees and expenses have reduced net cash flows from operating activities in those prior periods.

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

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

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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 ~~March 31,~~June 30, 2021 (and are numbered in accordance with Item 601 of Regulation S-K).


Exhibit No.			Description















3.1			Articles of Amendment and Restatement of CIM Real Estate Finance Trust, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 20, 2019).
3.2			Amended and Restated Bylaws of CIM Real Estate Finance Trust, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 20, 2019).
4.1			Second Amended and Restated Distribution Reinvestment Plan (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed May 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 (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 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 (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 3, 2021).


















10.1			Master Repurchase Agreement, dated May 20, 2021, by and between CMFT RE Lending RF Sub WF, LLC and Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed May 26, 2021).
10.2			Guaranty and Subordination Agreement, dated as of May 20, 2021, by CIM Real Estate Finance Trust, Inc. for the benefit of Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed May 26, 2021).
10.3			Loan Agreement, dated as of July 15, 2021, by and between the Borrowers identified on Schedule 1.1(A) thereto, and JPMorgan Chase Bank, National Association and DBR Investments Co. Limited (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed July 21, 2021).
10.4			Guaranty Agreement, dated July 15, 2021, by CIM Real Estate Finance Trust, Inc. for the benefit of JPMorgan Chase Bank, National Association and DBR Investments Co. Limited (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed July 21, 2021).
10.5			Guaranty, dated as of July 28, 2021, by CIM Real Estate Finance Operating Partnership, LP for the benefit of Citibank N.A., as indenture trustee (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 3 , 2021).
10.6			Property Management Agreement, dated as of July 28, 2021, by and among CMFT Net Lease Master Issuer, LLC, as issuer, CIM Real Estate Finance Operating Partnership, LP, as issuer manager, CREI Advisors, LLC, as property manager and special servicer, KeyBank National Association, as back-up manager, and Citibank N.A., as indenture trustee (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 3 , 2021).
10.7			First Amendment to Master Repurchase Agreement, dated July 27, 2021, by and between CMFT RE Lending RF Sub BB, LLC and Barclays Bank PLC (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 2, 2021).
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).


*			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.

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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.


	CIM Real Estate Finance Trust, Inc. (Registrant)

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

Date: ~~May 17,~~August 16, 2021

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