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 September 30, ~~2021~~2022


☐			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 November 8, ~~2021,~~2022, there were approximately ~~362.2~~436.9 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 (Unaudited)

Condensed Consolidated Balance Sheets as of ~~September~~Sept ember 30, ~~2021~~2022 and December 31, ~~2020~~2021			3

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			4

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			5

Condensed Consolidated Statements of Stockholders’ Equity for the three and n ~~ine~~nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			8

Notes to Condensed Consolidated Financial Statements			10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			4546

Item 3. Quantitative and Qualitative Disclosures About Market Risk			6263

Item 4. Controls and Procedures			64

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			6566

Item 1A. Risk Factors			6566

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			6866

Item 3. Defaults Upon Senior Securities			6866

Item 4. Mine Safety Disclosures			6866

Item 5. Other Information			6866

Item 6. Exhibits			6967

Signature			7068

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)


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Real estate assets:	Real estate assets:					Real estate assets:
Land	Land	$	812,308	$	881,896	Land	$	585,100	$	655,273
Buildings, fixtures and improvements	Buildings, fixtures and improvements	2,145,479		2,490,030		Buildings, fixtures and improvements	1,479,525		1,706,902
Intangible lease assets	Intangible lease assets	347,370		389,564		Intangible lease assets	279,806		314,832
Condominium developments	Condominium developments	189,277		—		Condominium developments	153,569		171,080
Total real estate assets, at cost	Total real estate assets, at cost	3,494,434		3,761,490		Total real estate assets, at cost	2,498,000		2,848,087
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(459,138)		(453,385)		Less: accumulated depreciation and amortization	(258,216)		(235,481)
Total real estate assets, net	Total real estate assets, net	3,035,296		3,308,105		Total real estate assets, net	2,239,784		2,612,606
Real estate-related securities		185,247		38,194

Investment in unconsolidated entities						Investment in unconsolidated entities	132,375		109,547
Real estate-related securities ($470,121 and $41,981 held at fair value as of September 30, 2022 and December 31, 2021, respectively)						Real estate-related securities ($470,121 and $41,981 held at fair value as of September 30, 2022 and December 31, 2021, respectively)	470,121		105,471
Loans held-for-investment and related receivables, net	Loans held-for-investment and related receivables, net	1,462,292		962,624		Loans held-for-investment and related receivables, net	4,022,726		2,624,101
Less: Allowance for credit losses		(11,219)		(70,358)
Less: Current expected credit losses						Less: Current expected credit losses	(29,584)		(15,201)
Total loans held-for-investment and related receivables, net	Total loans held-for-investment and related receivables, net	1,451,073		892,266		Total loans held-for-investment and related receivables, net	3,993,142		2,608,900
Cash and cash equivalents	Cash and cash equivalents	289,840		121,385		Cash and cash equivalents	124,836		107,381
Restricted cash	Restricted cash	36,762		7,023		Restricted cash	62,941		36,792
Rents and tenant receivables, net	Rents and tenant receivables, net	60,476		74,419		Rents and tenant receivables, net	32,957		58,948

Prepaid expenses and other assets		16,830		10,406
Prepaid expenses, derivative assets and other assets						Prepaid expenses, derivative assets and other assets	52,410		16,279
Deferred costs, net	Deferred costs, net	4,034		4,293		Deferred costs, net	16,212		7,214
Assets held for sale	Assets held for sale	1,301		3,518		Assets held for sale	—		1,299,638
Total assets	Total assets	$	5,080,859	$	4,459,609	Total assets	$	7,124,778	$	6,962,776
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Notes payable, repurchase facilities and credit facilities, net		$	2,776,215	$	2,144,993
Repurchase facilities, notes payable and credit facilities, net						Repurchase facilities, notes payable and credit facilities, net	$	4,358,187	$	4,143,205
Accrued expenses and accounts payable	Accrued expenses and accounts payable	36,935		30,419		Accrued expenses and accounts payable	29,390		45,872

Due to affiliates	Due to affiliates	15,124		14,723		Due to affiliates	14,556		14,594
Intangible lease liabilities, net	Intangible lease liabilities, net	24,998		32,718		Intangible lease liabilities, net	19,512		24,896
Distributions payable	Distributions payable	10,985		10,969		Distributions payable	13,337		13,252
Deferred rental income and other liabilities		11,666		27,361
Deferred rental income, derivative liabilities and other liabilities						Deferred rental income, derivative liabilities and other liabilities	8,436		21,282
Total liabilities	Total liabilities	2,875,923		2,261,183		Total liabilities	4,443,418		4,263,101
Commitments and contingencies		0		0
Commitments and contingencies (Note 11)						Commitments and contingencies (Note 11)
Redeemable common stock	Redeemable common stock	170,629		—		Redeemable common stock	169,748		170,714
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding	Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding	—		—		Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding	—		—
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 362,545,190 and 362,001,968 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		3,625		3,620
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 437,262,738 and 437,373,981 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively						Common stock, $0.01 par value per share; 490,000,000 shares authorized, 437,262,738 and 437,373,981 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	4,373		4,374
Capital in excess of par value	Capital in excess of par value	2,991,308		3,157,859		Capital in excess of par value	3,529,404		3,529,126
Accumulated distributions in excess of earnings	Accumulated distributions in excess of earnings	(962,190)		(961,006)		Accumulated distributions in excess of earnings	(1,000,420)		(1,008,561)
Accumulated other comprehensive income (loss)		1,564		(2,047)
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(21,737)		2,949
Total stockholders’ equity	Total stockholders’ equity	2,034,307		2,198,426		Total stockholders’ equity	2,511,620		2,527,888
Total liabilities, redeemable common stock and stockholders’ equity		$	5,080,859	$	4,459,609
Non-controlling interests						Non-controlling interests	(8)		1,073
Total equity						Total equity	2,511,612		2,528,961
Total liabilities, redeemable common stock, non-controlling interests and stockholders’ equity						Total liabilities, redeemable common stock, non-controlling interests and stockholders’ equity	$	7,124,778	$	6,962,776

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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues:	Revenues:									Revenues:
Rental and other property income	Rental and other property income	$	70,794	$	66,011	$	223,026	$	194,550	Rental and other property income	$	43,559	$	70,794	$	170,803	$	223,026
Interest income	Interest income	19,755		6,631		48,168		19,395		Interest income	66,222		19,755		142,669		48,168
Total revenues	Total revenues	90,549		72,642		271,194		213,945		Total revenues	109,781		90,549		313,472		271,194
Operating expenses:	Operating expenses:									Operating expenses:
General and administrative	General and administrative	3,076		3,208		11,109		9,110		General and administrative	3,435		3,076		10,590		11,109
Property operating	Property operating	11,157		5,214		32,632		16,890		Property operating	4,432		11,157		17,408		32,632
Real estate tax	Real estate tax	7,591		6,566		27,516		20,292		Real estate tax	1,793		7,591		10,530		27,516
Expense reimbursements to related parties	Expense reimbursements to related parties	2,516		1,439		8,387		6,674		Expense reimbursements to related parties	3,428		2,516		10,899		8,387
Management fees	Management fees	11,703		10,139		35,035		29,739		Management fees	12,915		11,703		39,613		35,035
Transaction-related	Transaction-related	6		58		37		308		Transaction-related	9		6		462		37
Depreciation and amortization	Depreciation and amortization	22,801		19,967		73,186		60,486		Depreciation and amortization	16,948		22,801		54,104		73,186
Real estate impairment	Real estate impairment	891		476		5,268		15,983		Real estate impairment	527		891		19,814		5,268
(Decrease) increase in provision for credit losses		(1,792)		7,355		(1,101)		33,037
Increase (decrease) in provision for credit losses										Increase (decrease) in provision for credit losses	5,664		(1,792)		15,315		(1,101)
Total operating expenses	Total operating expenses	57,949		54,422		192,069		192,519		Total operating expenses	49,151		57,949		178,735		192,069
Gain on disposition of real estate and condominium developments, net	Gain on disposition of real estate and condominium developments, net	34,033		3,219		80,502		20,120		Gain on disposition of real estate and condominium developments, net	4,454		34,033		118,135		80,502

Merger-related expenses, net	Merger-related expenses, net	(398)		(1,207)		(398)		(1,207)		Merger-related expenses, net	—		(398)		—		(398)

Operating income	Operating income	66,235		20,232		159,229		40,339		Operating income	65,084		66,235		252,872		159,229
Other expense:	Other expense:									Other expense:
Gain on investment in unconsolidated entities										Gain on investment in unconsolidated entities	2,195		—		8,858		—
Unrealized loss on equity security										Unrealized loss on equity security	(9,030)		—		(15,440)		—
Interest expense and other, net	Interest expense and other, net	(20,381)		(15,964)		(56,863)		(47,240)		Interest expense and other, net	(39,366)		(20,381)		(98,453)		(56,863)
Loss on extinguishment of debt	Loss on extinguishment of debt	(3,251)		(89)		(4,729)		(4,841)		Loss on extinguishment of debt	(3,344)		(3,251)		(19,584)		(4,729)
Total other expense	Total other expense	(23,632)		(16,053)		(61,592)		(52,081)		Total other expense	(49,545)		(23,632)		(124,619)		(61,592)
Net income (loss)		$	42,603	$	4,179	$	97,637	$	(11,742)

Net income										Net income	$	15,539	$	42,603	$	128,253	$	97,637
Net income allocated to noncontrolling interest										Net income allocated to noncontrolling interest	129		—		66		—
Net income attributable to the Company										Net income attributable to the Company	$	15,410	$	42,603	$	128,187	$	97,637
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	362,705,253		309,694,214		362,387,909		310,497,436		Basic and diluted	437,298,345		362,705,253		437,339,348		362,387,909
Net income (loss) per common share:
Net income per common share:										Net income per common share:
Basic and diluted	Basic and diluted	$	0.12	$	0.01	$	0.27	$	(0.04)	Basic and diluted	$	0.04	$	0.12	$	0.29	$	0.27

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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income (loss)		$	42,603	$	4,179	$	97,637	$	(11,742)
Net income										Net income	$	15,539	$	42,603	$	128,253	$	97,637
Other comprehensive (loss) income	Other comprehensive (loss) income									Other comprehensive (loss) income
Unrealized (loss) gain on real estate-related securities	Unrealized (loss) gain on real estate-related securities	(813)		41		1,239		61		Unrealized (loss) gain on real estate-related securities	(8,709)		(813)		(24,496)		1,239
Reclassification adjustment for realized gain included in income as other income	Reclassification adjustment for realized gain included in income as other income	—		—		(648)		—		Reclassification adjustment for realized gain included in income as other income	—		—		—		(648)
Unrealized loss on interest rate swaps		(84)		(35)		(13)		(11,645)
Amount of (gain) loss reclassified from other comprehensive (loss) income into income (loss) as interest expense and other, net		(170)		3,979		3,033		8,299
Unrealized gain (loss) on interest rate swaps										Unrealized gain (loss) on interest rate swaps	78		(84)		2,361		(13)
Amount of (gain) loss reclassified from other comprehensive (loss) income into income as interest expense and other, net										Amount of (gain) loss reclassified from other comprehensive (loss) income into income as interest expense and other, net	(2,613)		(170)		(2,551)		3,033
Total other comprehensive (loss) income	Total other comprehensive (loss) income	(1,067)		3,985		3,611		(3,285)		Total other comprehensive (loss) income	(11,244)		(1,067)		(24,686)		3,611
Comprehensive income (loss)		$	41,536	$	8,164	101,248		(15,027)

Comprehensive income										Comprehensive income	4,295		41,536		103,567		101,248
Comprehensive income attributable to noncontrolling interest										Comprehensive income attributable to noncontrolling interest	129		—		66		—
Comprehensive income attributable to the Company										Comprehensive income attributable to the Company	$	4,166	$	41,536	$	103,501	$	101,248

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 Income (Loss)		Total Stockholders’ Equity		Non-Controlling Interests		Total Equity
		Number of Shares	Par Value											Number of Shares	Par Value
Balance as of January 1, 2021		362,001,968	$	3,620	$	3,157,859	$	(961,006)	$	(2,047)	$	2,198,426
Equity-based compensation		—	—		40		—		—		40
Distributions declared on common stock — $0.09 per common share		—	—		—		(32,906)		—		(32,906)
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
Issuance of common stock		917,769	9		6,651		—		—		6,660
Equity-based compensation		4,104	—		49		—		—		49
Distributions declared on common stock — $0.09 per common share		—	—		—		(32,948)		—		(32,948)

Changes in redeemable common stock		—	—		(173,628)		—		—		(173,628)
Comprehensive income		—	—		—		57,787		1,301		59,088
Balance as of June 30, 2021		362,923,841	$	3,629	$	2,990,971	$	(971,826)	$	2,631	$	2,025,405
Balance as of January 1, 2022													Balance as of January 1, 2022	437,373,981	$	4,374			$	3,529,126	$	(1,008,561)	$	2,949	$	2,527,888	$	1,073	$	2,528,961
Issuance of common stock	Issuance of common stock	1,334,145	13		9,591		—		—		9,604		Issuance of common stock	1,329,825	13		9,561		—		—		9,574		—		9,574
Equity-based compensation	Equity-based compensation	—	—		62		—		—		62		Equity-based compensation	—	—		37		—		—		37		—		37
Distributions declared on common stock — $0.09 per common share	Distributions declared on common stock — $0.09 per common share	—	—		—		(32,967)		—		(32,967)		Distributions declared on common stock — $0.09 per common share	—	—		—		(40,018)		—		(40,018)		—		(40,018)
Redemptions of common stock	Redemptions of common stock	(1,712,796)	(17)		(12,315)		—		—		(12,332)		Redemptions of common stock	(1,345,814)	(13)		(9,676)		—		—		(9,689)		—		(9,689)
Changes in redeemable common stock	Changes in redeemable common stock	—	—		2,999		—		—		2,999		Changes in redeemable common stock	—	—		115		—		—		115		—		115
Distributions to non-controlling interests													Distributions to non-controlling interests	—	—		—		—		—		—		(14)		(14)
Comprehensive income (loss)	Comprehensive income (loss)	—	—		—		42,603		(1,067)		41,536		Comprehensive income (loss)	—	—		—		39,092		(3,397)		35,695		9		35,704
Balance as of September 30, 2021		362,545,190	$	3,625	$	2,991,308	$	(962,190)	$	1,564	$	2,034,307
Balance as of March 31, 2022													Balance as of March 31, 2022	437,357,992	$	4,374	$	3,529,163	$	(1,009,487)	$	(448)	$	2,523,602	$	1,068	$	2,524,670
Issuance of common stock													Issuance of common stock	1,325,282	13		9,529		—		—		9,542		—		9,542
Equity-based compensation													Equity-based compensation	22,892	—		120		—		—		120		—		120
Distributions declared on common stock — $0.09 per common share													Distributions declared on common stock — $0.09 per common share	—	—		—		(40,018)		—		(40,018)		—		(40,018)
Redemptions of common stock													Redemptions of common stock	(1,395,095)	(14)		(10,030)		—		—		(10,044)		—		(10,044)
Changes in redeemable common stock													Changes in redeemable common stock	—	—		503		—		—		503		—		503
Distributions to non-controlling interests													Distributions to non-controlling interests	—	—		—		—		—		—		(16)		(16)
Comprehensive income (loss)													Comprehensive income (loss)	—	—		—		73,685		(10,045)		63,640		(72)		63,568
Balance as of June 30, 2022													Balance as of June 30, 2022	437,311,071	$	4,373	$	3,529,285	$	(975,820)	$	(10,493)	$	2,547,345	$	980	$	2,548,325
Issuance of common stock													Issuance of common stock	1,326,177	13		9,535		—		—		9,548		—		9,548
Equity-based compensation													Equity-based compensation	—	—		120		—		—		120		—		120
Distributions declared on common stock — $0.09 per common share													Distributions declared on common stock — $0.09 per common share	—	—		—		(40,010)		—		(40,010)		—		(40,010)
Redemptions of common stock													Redemptions of common stock	(1,374,510)	(13)		(9,884)		—		—		(9,897)		—		(9,897)
Changes in redeemable common stock													Changes in redeemable common stock	—	—		348		—		—		348		—		348
Distributions to non-controlling interests													Distributions to non-controlling interests	—	—		—		—		—		—		(1,117)		(1,117)
Comprehensive income (loss)													Comprehensive income (loss)	—	—		—		15,410		(11,244)		4,166		129		4,295
Balance as of September 30, 2022													Balance as of September 30, 2022	437,262,738	$	4,373	$	3,529,404	$	(1,000,420)	$	(21,737)	$	2,511,620	$	(8)	$	2,511,612

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts) (Unaudited) — Continued


		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		Non-Controlling Interests		Total Equity
		Number of Shares	Par Value											Number of Shares	Par Value
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		—	—		—		(2,002)		—		(2,002)
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	$	—	$	2,198,426

Equity-based compensation													Equity-based compensation	—	—		40		—		—		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)		—		(32,906)

Comprehensive (loss) income													Comprehensive (loss) income	—	—		—		(2,753)		3,377		624		—		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	$	—	$	2,166,184
Issuance of common stock	Issuance of common stock	2,223,298	22		19,209		—		—		19,231		Issuance of common stock	917,769	9		6,651		—		—		6,660		—		6,660
Equity-based compensation	Equity-based compensation	—	—		40		—		—		40		Equity-based compensation	4,104	—		49		—		—		49		—		49
Distributions declared on common stock — $0.15 per common share		—	—		—		(48,332)		—		(48,332)
Redemptions of common stock		(2,256,037)	(22)		(19,492)		—		—		(19,514)
Distributions declared on common stock — $0.09 per common share													Distributions declared on common stock — $0.09 per common share	—	—		—		(32,948)		—		(32,948)		—		(32,948)
Changes in redeemable common stock	Changes in redeemable common stock	—	—		283		—		—		283		Changes in redeemable common stock	—	—		(173,628)		—		—		(173,628)		—		(173,628)
Comprehensive loss		—	—		—		(12,175)		(9,828)		(22,003)
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		1,242,475	12		9,531		—		—		9,543
Equity-based compensation		—	—		40		—		—		40
Distributions declared on common stock — $0.04 per common share		—	—		—		(13,072)		—		(13,072)
Redemptions of common stock		(2,468,754)	(25)		(19,166)		—		—		(19,191)
Changes in redeemable common stock		—	—		9,643		—		—		9,643
Comprehensive (loss) income		—	—		—		(3,746)		2,558		(1,188)
Balance as of June 30, 2020		309,948,707	$	3,099	$	2,607,013	$	(895,508)	$	(11,178)	$	1,703,426
Comprehensive income													Comprehensive income	—	—		—		57,787		1,301		59,088		—		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	$	—	$	2,025,405
Issuance of common stock	Issuance of common stock	746,001	8		5,409		—		—		5,417		Issuance of common stock	1,334,145	13		9,591		—		—		9,604		—		9,604
Equity-based compensation	Equity-based compensation	—	—		40		—		—		40		Equity-based compensation	—	—		62		—		—		62		—		62
Distributions declared on common stock — $0.09 per common share	Distributions declared on common stock — $0.09 per common share	—	—		—		(28,181)		—		(28,181)		Distributions declared on common stock — $0.09 per common share	—	—		—		(32,967)		—		(32,967)		—		(32,967)
Redemptions of common stock	Redemptions of common stock	(1,289,203)	(13)		(9,347)		—		—		(9,360)		Redemptions of common stock	(1,712,796)	(17)		(12,315)		—		—		(12,332)		—		(12,332)
Changes in redeemable common stock	Changes in redeemable common stock	—	—		170,912		—		—		170,912		Changes in redeemable common stock	—	—		2,999		—		—		2,999		—		2,999
Comprehensive income		—	—		—		4,179		3,985		8,164
Balance as of September 30, 2020		309,405,505	$	3,094	$	2,774,027	$	(919,510)	$	(7,193)	$	1,850,418
Comprehensive income (loss)													Comprehensive income (loss)	—	—		—		42,603		(1,067)		41,536		—		41,536
Balance as of September 30, 2021													Balance as of September 30, 2021	362,545,190	$	3,625	$	2,991,308	$	(962,190)	$	1,564	$	2,034,307	$	—	$	2,034,307

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)

Nine Months Ended September 30,
2021 2020
Cash flows from operating activities:
Net income (loss) $ 97,637 $ (11,742)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization, net 71,535 59,546
Amortization of deferred financing costs 6,616 3,061
Amortization of fair value adjustment of mortgage notes payable assumed (149) (70)
Amortization and accretion on deferred loan fees (1,945) (1,603)
Amortization of premiums and discounts on credit investments (6,368) (342)
Capitalized interest income on real estate-related securities (703) (539)
Equity-based compensation 151 120
Straight-line rental income (4,398) (4,416)
Write-offs for uncollectible lease-related receivables 109 5,334
Gain on disposition of real estate assets and condominium developments, net (80,502) (20,120)
(Gain) loss on sale of credit investments, net (902) 562
Amortization of fair value adjustment and gain on interest rate swaps (2,887) (11)
Loss on interest rate caps 171 —
Impairment of real estate assets 5,268 15,983
(Decrease) increase in provision for credit losses (1,101) 33,037
Write-off of deferred financing costs 2,951 633
Changes in assets and liabilities:
Rents and tenant receivables, net 15,889 (12,923)
Prepaid expenses and other assets (7,908) 1,698
Accrued expenses and accounts payable 7,040 9,552
Deferred rental income and other liabilities (3,387) (4,254)
Due to affiliates 401 (1,740)
Net cash provided by operating activities 97,518 71,766
Cash flows from investing activities:
Investment in real estate-related securities (171,880) (76,644)
Investment in broadly syndicated loans (266,978) (474,990)
Investment in real estate assets and capital expenditures (23,391) (18,795)
Origination and acquisition of loans held-for-investment, net (720,134) (223,608)
Origination and exit fees received on loans held-for-investment 7,320 3,200
Principal payments received on loans held-for-investment 285,104 80,263
Principal payments received on real estate-related securities 31 1,448
Net proceeds from sale of real estate-related securities 27,625 —
Net proceeds from disposition of real estate assets and condominium developments 459,705 194,691
Net proceeds from sale of broadly syndicated loans 55,224 25,837
Payment of property escrow deposits — (550)
Refund of property escrow deposits — 250
Proceeds from the settlement of insurance claims 58 —
Net cash used in investing activities (347,316) (488,898)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	128,253	$	97,637
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization, net	54,155		71,535
Amortization of deferred financing costs	9,130		6,616
Amortization of fair value adjustment of mortgage notes payable assumed	—		(149)
Amortization and accretion on deferred loan fees	(7,337)		(1,945)
Amortization of premiums and discounts on credit investments	(2,762)		(6,368)
Capitalized interest income on real estate-related securities and loans held-for-investment	(888)		(703)
Equity-based compensation	277		151
Straight-line rental income	(4,855)		(4,398)
Write-offs for uncollectible lease-related receivables	(1,088)		109
Gain on disposition of real estate assets and condominium developments, net	(118,135)		(80,502)
Loss (gain) on sale of credit investments, net	464		(902)
Gain on investment in unconsolidated entities	(8,858)		—
Gain on sale of marketable security	(22)		—
Unrealized loss on equity security	15,462		—
Amortization of fair value adjustment and gain on interest rate swaps	(2,417)		(2,887)
(Gain) loss on interest rate caps	(4,252)		171
Impairment of real estate assets	19,814		5,268
Increase (decrease) in provision for credit losses	15,315		(1,101)
Write-off of deferred financing costs	8,092		2,951
Return on investment in unconsolidated entities	4,217		—
Changes in assets and liabilities:
Rents and tenant receivables, net	66,914		18,228
Prepaid expenses and other assets	(32,224)		(10,247)
Accrued expenses and accounts payable	(3,466)		7,040
Deferred rental income and other liabilities	(10,380)		(3,387)
Due to affiliates	(38)		401
Net cash provided by operating activities	125,371		97,518
Cash flows from investing activities:
Investment in unconsolidated entities	(79,475)		—
Return of investment in unconsolidated entities	625		—
Investment in real estate-related securities	(433,219)		(171,880)
Investment in liquid senior loans	(160,928)		(266,978)
Investment in real estate assets and capital expenditures	(16,524)		(23,391)
Investment in corporate senior loans	(74,801)		—
Origination and acquisition of loans held-for-investment	(1,310,406)		(720,134)
Origination and exit fees received on loans held-for-investment	13,977		7,320
Principal payments received on loans held-for-investment	156,920		285,104
Principal payments received on real estate-related securities	16,157		31
Net proceeds from sale of real estate-related securities	132		27,625
Net proceeds from disposition of real estate assets and condominium developments	1,278,609		459,705
Net proceeds from sale of liquid senior loans	52,868		55,224


Redemption of investment in unconsolidated entities	60,663		—
Proceeds from the settlement of insurance claims	619		58
Net cash used in investing activities	$	(494,783)	$	(347,316)

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited) — Continued


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Redemptions of common stock	Redemptions of common stock	(12,332)		(48,065)		Redemptions of common stock	$	(29,630)	$	(12,332)
Distributions to stockholders	Distributions to stockholders	(82,541)		(62,529)		Distributions to stockholders	(91,297)		(82,541)
Proceeds from notes payable, repurchase facilities and credit facilities		2,217,489		461,194
Repayments of notes payable, repurchase facilities and credit facilities		(1,633,426)		(223,351)
Proceeds from borrowings						Proceeds from borrowings	2,303,006		2,217,489
Repayments of borrowings, and prepayment penalties						Repayments of borrowings, and prepayment penalties	(1,748,868)		(1,633,426)
Termination of interest rate swaps	Termination of interest rate swaps	(6,401)		—		Termination of interest rate swaps	(239)		(6,401)
Payment of loan deposits	Payment of loan deposits	(650)		(65)		Payment of loan deposits	—		(650)
Refund of loan deposits	Refund of loan deposits	565		—		Refund of loan deposits	—		565
Distributions to non-controlling interests						Distributions to non-controlling interests	(1,147)		—
Deferred financing costs paid	Deferred financing costs paid	(34,712)		(2,258)		Deferred financing costs paid	(18,809)		(34,712)
Net cash provided by financing activities	Net cash provided by financing activities	447,992		124,926		Net cash provided by financing activities	413,016		447,992
Net increase (decrease) in cash and cash equivalents and restricted cash		198,194		(292,206)
Net increase in cash and cash equivalents and restricted cash						Net increase in cash and cash equivalents and restricted cash	43,604		198,194
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	144,173		128,408
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	326,602	$	181,149	Cash and cash equivalents and restricted cash, end of period	$	187,777	$	326,602
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	$	289,840	$	175,224	Cash and cash equivalents	$	124,836	$	289,840
Restricted cash	Restricted cash	36,762		5,925		Restricted cash	62,941		36,762
Total cash and cash equivalents and restricted cash	Total cash and cash equivalents and restricted cash	$	326,602	$	181,149	Total cash and cash equivalents and restricted cash	$	187,777	$	326,602
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	$	10,985	$	9,375	Distributions declared and unpaid	$	13,337	$	10,985
Accrued capital expenditures	Accrued capital expenditures	$	1,374	$	365	Accrued capital expenditures	$	1,590	$	1,374
Accrued deferred financing costs	Accrued deferred financing costs	$	40	$	251	Accrued deferred financing costs	$	1,868	$	40
Real estate acquired via foreclosure	Real estate acquired via foreclosure	$	191,990	$	—	Real estate acquired via foreclosure	$	—	$	191,990
Foreclosure of assets securing the mezzanine loans	Foreclosure of assets securing the mezzanine loans	$	(79,968)	$	—	Foreclosure of assets securing the mezzanine loans	$	—	$	(79,968)
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	$	—	Mortgage notes payable assumed in connection with foreclosure of assets securing the mezzanine loans	$	—	$	102,553
Mortgage note payable assumed by buyer in connection with disposition of real estate assets		$	(31,801)	$	—
Mortgage notes payable assumed by buyer in connection with disposition of real estate assets						Mortgage notes payable assumed by buyer in connection with disposition of real estate assets	$	(356,477)	$	(31,801)
Equity security received in connection with disposition of real estate assets						Equity security received in connection with disposition of real estate assets	$	(53,388)	$	—
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)
Common stock issued through distribution reinvestment plan	Common stock issued through distribution reinvestment plan	$	16,264	$	34,191	Common stock issued through distribution reinvestment plan	$	28,664	$	16,264
Change in fair value of derivative instruments	Change in fair value of derivative instruments	$	5,907	$	(3,335)	Change in fair value of derivative instruments	$	2,252	$	5,907
Change in fair value of real estate-related securities	Change in fair value of real estate-related securities	$	591	$	—	Change in fair value of real estate-related securities	$	(24,497)	$	591
Conversion of preferred units to loans held-for-investment						Conversion of preferred units to loans held-for-investment	$	68,242	$	—
Supplemental Cash Flow Disclosures:	Supplemental Cash Flow Disclosures:					Supplemental Cash Flow Disclosures:
Interest paid	Interest paid	$	52,200	$	45,297	Interest paid	$	79,201	$	52,200
Cash paid for taxes	Cash paid for taxes	$	1,851	$	1,555	Cash paid for taxes	$	1,318	$	1,851

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

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022 (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,~~operates its business to qualify, 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 short duration senior secured loans, 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 loansStates, and other credit ~~investments in which the Company’s sponsor and its affiliates have expertise.~~investments. As of September 30, ~~2021,~~2022, the Company owned ~~403~~384 properties, ~~comprising 17.6~~comprised of 11.0 million rentable square feet of commercial space located in 4044 states. As of September 30, ~~2021,~~2022, the rentable square feet at these properties was ~~94.2%~~99.3% leased, including month-to-month agreements, if any. As of September 30, ~~2021,~~2022, the Company’s loan portfolio consisted of ~~273~~346 loans with a net book value of ~~$1.5~~$4.0 billion, and investments in real estate-related securities ~~with a net book value~~ of ~~$185.2~~$470.1 million. 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 September 30, ~~2021,~~2022, the Company owned condominium developments with a net book value of ~~$189.3~~$153.6 million.

A majority of the Company’s business is conducted through CIM Real Estate Finance Operating Partnership, LP, a Delaware limited partnership, of which the Company is the sole general partner 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~~CIM is headquartered in Los Angeles, ~~California,~~CA, with offices in Atlanta, GA, Bethesda, MD, Chicago, IL, Dallas, TX, New York, NY, Orlando, FL, Phoenix, AZ and Tokyo, Japan. CIM ~~has~~also maintains additional offices across the Unites States, as well as in Korea, Hong Kong and the United ~~States and in Tokyo, Japan.~~Kingdom to support its platform.

CCO Group, LLC is a subsidiary of CIM and 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”).~~sponsor. 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.~~securities and certain other investments.

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

The Company registered $247.0 million of shares of common stock under the DRIP (the “Initial DRIP Offering”) pursuant to a Registration Statement 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 Initial Offering, the “Offerings”) pursuant to a Registration Statement on Form S-3 (Registration No. 333-212832), which was filed with the SEC on August 2, 2016 and automatically became effective with the SEC upon filing. The Company began to issue shares under the Secondary DRIP Offering on August 2, 2016 and ~~continued~~continues to issue shares under the Secondary DRIP ~~Offering until, on August 30, 2020, the~~Offering.

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.~~

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

(“CCIT III”) and Cole Credit Property Trust V, Inc. (“CCPT V”) (the “CCIT III and CCPT V 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 Initial Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231.

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

Distributions are reinvested in shares of the Company’s common stock ~~under~~for participants in 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 September 30, ~~2021,~~2022, the estimated per share NAV of the Company’s common stock was $7.20, which was established by the Board on May 25, 2021 using a valuation date of March 31, 2021. Commencing on 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, 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.

~~Pending Merger~~

On September 21, 2021, the Company, CIM Income NAV and Cypress Merger Sub, LLC, a wholly owned subsidiary of the Company (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). Subject to the terms and conditions of the Merger Agreement, CIM Income NAV will merge with and into Merger Sub (the “CIM Income NAV Merger”), with Merger Sub surviving the CIM Income NAV Merger, such that following the CIM Income NAV Merger, the surviving entity will continue as a wholly owned subsidiary of the Company. In accordance with the applicable provisions of the Maryland General Corporation Law, the separate existence of CIM Income NAV shall cease.

At the effective time of the CIM Income NAV Merger and subject to the terms and conditions of the Merger Agreement, each issued and outstanding share of CIM Income NAV’s Class D common stock, $0.01 par value per share (the “Class D Common Stock”), will be converted into the right to receive 2.574 shares of the Company’s common stock, $0.01 par value per share (the “CMFT Common Stock”), each issued and outstanding share of CIM Income NAV’s Class T common stock, $0.01 par value per share (the “Class T Common Stock”), will be converted into the right to receive 2.510 shares of CMFT Common Stock, each issued and outstanding share of CIM Income NAV’s Class S common stock, $0.01 par value per share (the “Class S Common Stock”), will be converted into the right to receive 2.508 shares of CMFT Common Stock, and each issued and outstanding share of CIM Income NAV’s Class I common stock, $0.01 par value per share (the “Class I Common Stock” and, together with the Class D Common Stock, Class T Common Stock and Class S Common Stock, the “CIM Income NAV Common Stock”), will be converted into the right to receive 2.622 shares of CMFT Common Stock, in each case, subject to the treatment of fractional shares in accordance with the Merger Agreement (the “Merger Consideration”). At the effective time of the CIM Income NAV Merger and subject to the terms and conditions of the Merger Agreement, each issued and outstanding share of CIM Income NAV Common Stock granted under CIM Income NAV’s 2018 Equity Incentive Plan, whether vested or unvested, will be cancelled in exchange for an amount equal to the Merger Consideration for the applicable share class.

The Merger Agreement contains customary representations, warranties and covenants, including covenants relating to the conduct of CIM Income NAV’s and the Company’s respective businesses during the period between the execution of the Merger Agreement and the completion of the CIM Income NAV Merger, subject to certain exceptions.

CIM Income NAV has agreed not to solicit or enter into an agreement regarding an Acquisition Proposal (as defined in the Merger Agreement), and, subject to certain exceptions, is not permitted to enter into discussions or negotiations concerning, or provide nonpublic information to a third party in connection with, any Acquisition Proposal. However, prior to obtaining Stockholder Approval (as defined below), CIM Income NAV may engage in discussions or negotiations and provide nonpublic information to a third party which has made an unsolicited, bona fide written Acquisition Proposal if the special committee of CIM Income NAV’s board of directors determines in good faith, after consultation with outside legal counsel and outside financial advisors, that such Acquisition Proposal either constitutes or could reasonably be expected to lead to a Superior Proposal (as defined in the Merger Agreement).

The Merger Agreement also provides that prior to the Stockholder Approval, the board of directors may, under specified circumstances, make an Adverse Recommendation Change (as defined in the Merger Agreement), including withdrawing its recommendation of the CIM Income NAV Merger, subject to complying with certain conditions set forth in the Merger Agreement.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

The Merger Agreement may be terminated under certain circumstances, including but not limited to, by either the Company or CIM Income NAV if the CIM Income NAV Merger has not been consummated on or before 11:59 p.m. New York City time on May 30, 2022 (the “Outside Date”), if a final and non-appealable order is entered permanently restraining or otherwise prohibiting the transactions contemplated by the Merger Agreement, if the Stockholder Approval has not been obtained at the stockholders meeting to be called to consider the CIM Income NAV Merger or upon a material uncured breach of the respective obligations, covenants or agreements by the other party that would cause the closing conditions in the Merger Agreement not to be satisfied.

In addition, CIM Income NAV may terminate the Merger Agreement in order to enter into an “Alternative Acquisition Agreement” with respect to a “Superior Proposal” (each as defined in the Merger Agreement) at any time prior to receipt by CIM Income NAV of the Stockholder Approval pursuant to and subject to the terms and conditions of the Merger Agreement.

The Company may terminate the Merger Agreement at any time prior to the receipt of the Stockholder Approval, in certain limited circumstances, including upon (i) an Adverse Recommendation Change, (ii) a tender offer or exchange offer that is commenced which CIM Income NAV’s board of directors fails to recommend against or (iii) a breach by CIM Income NAV, in any material respect, of its obligations under the no solicitation provisions set forth in the Merger Agreement.

If the Merger Agreement is terminated because the CIM Income NAV Merger was not consummated before the Outside Date or because the Stockholder Approval was not obtained, and (i) an Acquisition Proposal has been publicly announced or otherwise communicated to CIM Income NAV stockholders prior to the CIM Income NAV Stockholders Meeting (as defined in the Merger Agreement) and (ii) within 12 months after the date of such termination (A) CIM Income NAV consummates or enters into an agreement (that is thereafter consummated) in respect of an Acquisition Proposal for 50% or more of CIM Income NAV’s equity or 75% or more of CIM Income NAV’s assets or (B) the board of directors of CIM Income NAV recommends or fails to recommend against an Acquisition Proposal structured as a tender or exchange offer for 75% or more of CIM Income NAV’s equity and such Acquisition Proposal is actually consummated, then CIM Income NAV must pay the Company a termination payment of $14.78 million and up to $2.68 million as reimbursement for CMFT’s Expenses (as defined in the Merger Agreement).

The Merger Agreement provides that, in connection with the termination of the Merger Agreement under specified circumstances, CIM Income NAV may be required to pay to the Company a termination payment of $14.78 million and reimburse CMFT’s Expenses up to an amount equal to $2.68 million. However, the termination payment payable by CIM Income NAV to the Company will be $6.72 million if the Merger Agreement is terminated before the end of the “Window Period End Time” by (i) CIM Income NAV in order for CIM Income NAV to accept a Superior Proposal from a Qualified Bidder (as defined in the Merger Agreement) or (ii) the Company in response to an Adverse Recommendation Change with respect to or as a result of a Superior Proposal by a Qualified Bidder. The term “Window Period End Time” in the Merger Agreement means, with respect to a Qualified Bidder, the later of (i) 11:59 p.m. (New York City time) on October 21, 2021, and (ii) 11:59 p.m. (New York City time) on the first (1st) business day after the end of a required notice period with respect to a Superior Proposal by such Qualified Bidder provided that such notice period (as may be extended) began on or prior to 11:59 p.m. (New York City Time) on October 21, 2021.

The obligation of each party to consummate the CIM Income NAV Merger is subject to a number of customary conditions, including receipt of the approval of the CIM Income NAV Merger (and of an amendment to the CIM Income NAV charter that is required to consummate the CIM Income NAV Merger) by holders of a majority of the outstanding shares of the CIM Income NAV Common Stock entitled to vote thereon (the “Stockholder Approval”), delivery of certain documents and legal opinions, the truth and correctness of the representations and warranties of the parties (subject to the materiality standards contained in the Merger Agreement), the effectiveness of the registration statement on Form S-4 (Registration No. 333-260358) filed by the Company on October 19, 2021 to register the shares of the CMFT Common Stock to be issued as consideration in the CIM Income NAV Merger, and the absence of a CIM Income NAV Material Adverse Effect or CMFT Material Adverse Effect (as each term is defined in the Merger Agreement).

Concurrently with the entry into the Merger Agreement, CIM Income NAV, its operating partnership and its advisor entered into a letter agreement (the “Termination Agreement”). Pursuant to the Termination Agreement, the advisory agreement between CIM Income NAV and its advisor (the “Advisory Agreement”) will be terminated at the effective time of the CIM Income NAV Merger. Also pursuant to the Termination Agreement, CIM Income NAV’s advisor agreed to waive any Performance Fee (as defined in the Advisory Agreement) it otherwise would be entitled to pursuant to the Advisory Agreement related to the CIM Income NAV Merger. In the event the Merger Agreement is terminated in accordance with its terms, the Termination Agreement will be automatically terminated.

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~~September 30, 2021 (Unaudited) – (Continued)~~

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,~~2021, and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. 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.

In determining whether the Company has controlling interests in an entity and the requirement to consolidate the accounts in that entity, the Company analyzes its credit and real estate investments in accordance with standards set forth in GAAP to determine whether they are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary. The Company’s judgment with respect to its level of influence or control over an entity and whether the Company is the primary beneficiary of a VIE involves consideration of various factors, including the form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions. The Company’s ability to correctly assess its influence or control over an entity affects the presentation of these credit and real estate investments on the Company’s condensed consolidated financial statements. During the nine months ended September 30, 2022, the Company disposed of two properties previously owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”) and therefore determined it no longer had a controlling financial interest in the Consolidated Joint Venture as of September 30, 2022. See Note 4 — Real Estate Assets for additional information.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (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. Other than as shown below, ~~the~~these reclassifications had no effect on previously reported totals or subtotals. The reclassifications have been made to the condensed consolidated ~~statements~~balance sheet as of ~~operations~~December 31, 2021, and to the condensed consolidated statement of cash flows for the ~~three and~~ nine months ended September 30, ~~2020~~2021 as follows (in thousands):

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
As previously reported Reclassification As Revised As previously reported Reclassification As Revised
Condensed Consolidated Statements of Operations
General and administrative $ 3,762 $ (554) $ 3,208 $ 11,679 $ (2,569) $ 9,110
Management fees $ 10,934 $ (795) $ 10,139 $ 33,422 $ (3,683) $ 29,739
Transaction-related $ 148 $ (90) $ 58 $ 730 $ (422) $ 308
Expense reimbursements to related parties $ — $ 1,439 $ 1,439 $ — $ 6,674 $ 6,674
Condensed Consolidated Statements of Cash Flows
Accrued expenses and accounts payable $ 5,344 $ 4,208 $ 9,552
Net cash provided by operating activities $ 67,558 $ 4,208 $ 71,766
Repayments of notes payable, repurchase facilities and credit facilities $ (219,143) $ (4,208) $ (223,351)
Net cash provided by financing activities $ 129,134 $ (4,208) $ 124,926


	As of December 31, 2021
		As previously reported		Reclassifications		As Revised

Condensed Consolidated Balance Sheets
Rents and tenant receivables, net		$	61,468	$	(2,520)	$	58,948
Prepaid expenses and other assets		$	13,759	$	2,520	$	16,279

Additionally, the Company reclassified $1.2 million of merger-related expenses, net that were previously included in operating expenses in the condensed consolidated statements of operations for the three and nine months ended September 30, 2020. This reclassification had no effect on previously reported operating income in the condensed consolidated statements of operations.


	Nine Months Ended September 30, 2021
		As previously reported		Reclassifications		As Revised









Condensed Consolidated Statements of Cash Flows
Rents and tenant receivables, net		$	15,889	$	2,339	$	18,228
Prepaid expenses and other assets		$	(7,908)	$	(2,339)	$	(10,247)

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Real Estate 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.~~periods; and significant increases to budgeted costs for units under development. 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 nine months ended September 30, ~~2021,~~2022, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of ~~$5.3~~$11.9 million related to 1119 properties, all of which ~~impairment at 7 properties~~ was due to sales prices that were less than their respective carrying values. Additionally, during the nine months ended September 30, 2022, certain condominium units

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were deemed to be impaired and their carrying values ~~and~~were reduced to their estimated fair value, resulting in impairment ~~at 4 properties was due to vacancy.~~charges of $7.9 million. The Company’s impairment assessment as of September 30, ~~2021~~2022 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~~2022 or in future periods. During the nine months ended September 30, ~~2020,~~2021, the Company recorded impairment charges of ~~$16.0~~$5.3 million related to 1011 properties, of which impairment at seven properties was due to ~~revised cash flow estimates as a result of market conditions~~sales prices that were less than their respective carrying values and ~~1 property~~impairment at four properties was due to ~~a tenant bankruptcy.~~vacancy. 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 September 30, 2022, there were no assets identified as held for sale. As of December 31, 2021, in connection with the Purchase and Sale Agreement (as defined in Note 4 — Real Estate Assets), the Company identified ~~1 property~~81 properties with a ~~fair~~carrying value of $1.3 ~~million~~billion as held for sale, all of which ~~was sold subsequent to September 30, 2021 at a gain~~were disposed of ~~$16,000. 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 nine months ended September 30, ~~2021. No gain or loss was recognized on this disposition.~~2022.

~~Disposition~~Dispositions of Real Estate Assets

Gains and losses from dispositions are recognized once the various criteria relating to the terms of sale and any subsequent involvement by the Company with the asset sold are met. A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect on an entity’s financial results. The Company’s dispositions during the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 did not qualify for discontinued operations

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

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~~dispositions 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 nine months ended September 30, ~~2021.~~2022.

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 continue to be expensed as incurred and are included in transaction-related expenses in the accompanying condensed consolidated statements of operations.

Investment in Unconsolidated Entities

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

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investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and subsequently adjusted for the Company’s share of equity in CIM UII Onshore’s earnings and distributions. Prior to redemption, the Company recorded its share of CIM UII Onshore’s profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations. The Company recorded its share of CIM UII Onshore’s gain, totaling $5.2 million during the nine months ended September 30, 2022, in the condensed consolidated statements of operations. During the nine months ended September 30, 2022, the Company received distributions of $531,000 related to its investment in CIM UII Onshore, all of which was recognized as a return on investment. As of December 31, 2021, the Company’s investment in CIM UII Onshore had a carrying value of $56.0 million.

CMFT MT JV Holdings, LLC, an indirect wholly-owned subsidiary of the Company, is engaged in an unconsolidated joint venture arrangement through CIM NP JV Holdings, LLC (“NP JV Holdings”) (the “Unconsolidated Joint Venture”), of which it owns 50% of the outstanding equity. Through the Unconsolidated Joint Venture, which holds approximately 91% of the membership interest in NewPoint JV, LLC (the “NewPoint JV”) pursuant to the terms of the Operating Agreement entered into between the Unconsolidated Joint Venture and NewPoint Bridge Lending, LLC, the Company indirectly owns approximately 45% of the outstanding equity of the NewPoint JV on a fully diluted basis. The Company accounts for its investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and is subsequently adjusted for the Company’s share of equity in NP JV Holdings’ earnings and distributions, including unrealized gains and losses as a result of changes in fair value of the NewPoint JV. The Company records its share of NP JV Holdings’ profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations. The Company recorded a gain totaling $3.7 million, which represented its share of NP JV Holdings’ gain, during the nine months ended September 30, 2022 in the condensed consolidated statements of operations. During the nine months ended September 30, 2022, the Company contributed an additional $79.5 million in NP JV Holdings. As of September 30, 2022, the Company’s aggregate investment in NP JV Holdings of $132.4 million is included in investment in unconsolidated entities on the condensed consolidated balance sheets. The Company received $4.3 million in distributions related to its investment in NP JV Holdings during the nine months ended September 30, 2022.

Noncontrolling Interest in Consolidated Joint Venture

From December 2021 to July 2022, the Company determined it had a controlling interest in the Consolidated Joint Venture and, therefore, met the requirements for consolidation. During the nine months ended September 30, 2022, the Company recorded net income of $66,000 and paid distributions of $1.1 million to the noncontrolling interest.

During the nine months ended September 30, 2022, the Company disposed of the underlying properties previously owned through the Consolidated Joint Venture, as further discussed in Note 4 — Real Estate Assets. Therefore, the Company determined it no longer had a controlling financial interest in the Consolidated Joint Venture as of September 30, 2022.

Restricted Cash

The Company had ~~$36.8~~$62.9 million and ~~$7.0~~$36.8 million in restricted cash as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Included in restricted cash was ~~$6.9~~$6.7 million and ~~$3.6~~$7.8 million held by lenders in lockbox accounts, as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 ~~$29.8~~$56.2 million and ~~$3.4~~$29.0 million of construction reserves, amounts held by lenders in escrow accounts for real estate taxes and other lender reserves for certain properties, in accordance with the associated lender’s loan agreement as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Real Estate-Related Securities

Real estate-related securities consists primarily of the Company’s ~~investment~~investments in commercial mortgage-backed securities (“CMBS”) and ~~preferred units.~~equity securities. The Company determines the appropriate classification for real estate-related securities at the time of purchase and reevaluates such designation as of each balance sheet date.

As of September 30, ~~2021,~~2022, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities; however, the Company may sell them prior to their maturity. These investments are carried at their estimated fair value with unrealized gains and losses reported in other comprehensive (loss) income. During the nine months ended September 30, 2021, the Company invested $108.4 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 September 30, 2021, the Company had investments in 15 CMBS with an estimated aggregate fair value of $121.8 million.

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September 30, ~~2021~~2022 (Unaudited) – (Continued)

months ended September 30, 2022, the Company invested $433.2 million in CMBS. As of September 30, 2022, the Company had investments in 16 CMBS with an estimated aggregate fair value of $432.2 million.

In addition, the Company had an investment in an equity security with an estimated aggregate fair value of $37.9 million as of September 30, 2022, which is comprised of RTL Common Stock (as defined in Note 4 — Real Estate Assets) received as consideration in connection with the Purchase and Sale Agreement. These investments are carried at their estimated fair value with unrealized gains and losses reported on the condensed consolidated statements of operations. During the nine months ended September 30, 2022, the Company recorded $2.7 million of dividend income on RTL Common Stock, which is included in interest expense and other, net on the condensed consolidated statements of operations. The Company also recorded $15.5 million of unrealized loss on RTL Common Stock during the nine months ended September 30, 2022, which is included in unrealized loss on equity security in the condensed consolidated statements of operations.

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~~A loss 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~~current expected 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, 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.

During the nine months ended September 30, 2022 and 2021, the Company ~~invested $63.5 million in preferred units~~did not record current expected credit losses related to a multi-family, office and retail building in Fort Lauderdale, Florida with a preferred dividend rate of 8.9% and a maturity date of June 1, 2022. As of September 30, 2021, the Company classified the investment as held-to-maturity as the Company has the intent and ability to hold the preferred units to maturity and included the investment in real estate-related securities on the condensed consolidated balance sheets. Investments classified as held-to-maturity are initially recognized at cost and are subsequently measured using amortized cost.CMBS.

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

Interest earned is either received in cash or capitalized to real estate-related securities in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each security agreement. During the three and nine months ended September 30, ~~2021,~~2022, the Company capitalized ~~$703,000~~$280,000 and $826,000, respectively, of interest income to real estate-related securities. ~~No such amounts were capitalized during~~During the three and nine months ended September 30, ~~2020.~~2021, the Company capitalized $268,000 and $703,000, respectively, of interest income to real estate-related securities.

Loans Held-for-Investment

The ~~Company has acquired, and may continue to acquire,~~Company’s loans held-for-investment include loans related to real estate ~~assets. Additionally, the Company may acquire and originate~~assets, as well as 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~~current expected 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~~ nine months ended September 30, ~~2020,~~2022, the Company ~~recorded $6.6 million and $19.4 million, respectively, in~~capitalized $62,000 of interest income ~~on its credit investments, $539,000 of which was capitalized during the nine months ended September 30, 2020. No such amounts were capitalized during the three months ended September 30, 2020.~~to loans held-for-investment.

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 September 30, ~~2021,~~2022, the Company did not have nonaccrual loans.

~~Allowance for~~

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Current Expected Credit Losses

The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), on January 1, 2020. ~~The allowance for~~Current expected credit losses (“CECL”) required under ASU 2016-13 reflects the Company’s current estimate of potential credit losses related to the Company’s loans held-for-investment included in the condensed consolidated balance sheets. ~~The initial allowance for credit losses recorded on January 1, 2020 is reflected as a direct charge~~Changes to ~~retained earnings on the Company’s condensed consolidated statements of stockholders’ equity; however,~~

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~~subsequent changes to the allowance for~~current expected credit losses are recognized through net income on the Company’s condensed consolidated statements of operations. While ASU 2016-13 does not require any particular method for determining ~~the allowance for~~current expected credit losses, it does specify ~~the allowance~~current expected credit losses should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan. In addition, other than a few narrow exceptions, ASU 2016-13 requires that all financial instruments subject to the credit loss model have some amount of loss reserve to reflect the GAAP principal underlying the credit loss model that all loans, debt securities, and similar assets have some inherent risk of loss, regardless of credit quality, subordinate capital, or other mitigating factors.

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

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 no 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 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

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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.

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 $2.3 million and $2.4 million was recorded as of September 30, 2021 and December 31, 2020, respectively. See Note 14 — 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 nine months ended September 30, 2022 and 2021, the Company capitalized ~~$1.4~~$10.9 million and $5.9 million, respectively, of ~~interest expense~~expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets. ~~There were no development projects~~Included in the amounts capitalized during the nine months ended September 30, ~~2020.~~2022 and 2021 was $1.1 million and $1.4 million, respectively, of capitalized interest expense.

Revenue Recognition

Revenue from leasing activities

Rental and other property income is primarily derived from fixed contractual payments from operating leases, and therefore, is generally recognized on a straight-line basis over the term of the lease, which typically begins the date the tenant takes control of the space. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. Variable rental and other property income consists primarily of tenant reimbursements for recoverable real estate taxes and operating expenses which are included in rental and other property income in the period when such costs are incurred, with offsetting expenses in real estate taxes and property operating expenses,

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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.

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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.

During the nine months ended September 30, 2021, the Company identified certain tenants where collection was no longer probable. For these tenants, the Company made the determination to record revenue on a cash basis and wrote off a net total of outstanding receivables of $109,000 for the nine months ended September 30, 2021. These write-offs reduced rental and other property income during the nine months ended September 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~~liquid senior loans is accrued as earned beginning on the settlement date.

Reportable Segments

~~During the year ended December 31, 2020, the Company updated its reportable~~The Company’s segment information ~~to reflect~~reflects how the chief operating decision makers ~~regularly~~ review ~~and manage the business and determined that it~~information for operational decision-making purposes. The Company has 2two reportable segments:

Credit — engages primarily in acquiring and originating loans, either directly or through co-investments in joint ventures, 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~~real estate-related securities, liquid senior loans and ~~broadly syndicated~~corporate senior 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 1516 — 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.

In April 2020, the Financial Accounting Standards Board (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”) 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

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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 nine months ended September 30, 2021, the majority of the lease concessions provided by the Company were in the form of rental abatements, to certain tenants in response to the impact of the COVID-19 pandemic on those tenants.

~~As of~~ ~~November 8, 2021, the Company has collected approximately 99% of rental payments billed to tenants during the~~ ~~three months ended September 30, 2021. During the three months ended September 30, 2021, the Company granted an additional $104,000 in rent deferrals.~~ ~~As of~~ ~~November 8, 2021, the Company collected $6.4 million of deferred rent, representing approximately 97% of amounts due through September 30, 2021.~~

In January 2021, 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 and SOFR 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.~~instruments. The Company has evaluated the impact of this ASU’s adoption, and ~~does not believe~~has determined that this ASU will not have a material impact on its condensed consolidated financial statements.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this update clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new disclosure requirements related to such equity securities. The amendments are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

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NOTE 3 — FAIR VALUE MEASUREMENTS

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

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

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

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

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

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

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

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significance of the fair value inputs used in determining these fair values, these securities are valued using Level 1, Level 2 or Level 3 inputs. As of September 30, 2022, the Company concluded that $401.1 million of its CMBS fell under Level 2 and $31.1 million of its CMBS fell under Level 3.

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

Credit facilities and notes payable — 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 September 30, ~~2021,~~2022, the estimated fair value of the Company’s debt was ~~$2.74~~$4.27 billion, compared to a carrying value of ~~$2.81~~$4.38 billion. The estimated fair value of the Company’s debt as of December 31, ~~2020~~2021 was ~~$2.14~~$4.11 billion, compared to a carrying value of ~~$2.15~~$4.17 billion.

Derivative instruments — The Company’s derivative instruments are comprised of ~~interest rate 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 September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.

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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~~commercial real estate (“CRE”) loans held-for-investment and corporate senior loans are classified in Level 3 of the fair value hierarchy. The Company’s ~~broadly syndicated~~liquid senior loans are classified as Level 2 or Level 3 depending on the number of market quotations or indicative prices from pricing services that are available, and whether the depth of the market is sufficient to transact at those prices in amounts approximating the Company’s investment position at the measurement date. As of September 30, ~~2021, $474.9~~2022, $471.5 million and ~~$96.8~~$189.8 million of the Company’s ~~broadly syndicated~~liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of December 31, ~~2020, $359.6~~2021, $560.4 million and ~~$114.1~~$94.1 million of the Company’s ~~broadly syndicated~~liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of September 30, ~~2021,~~2022, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was ~~$1.47~~$4.0 billion, ~~compared to its~~which approximated carrying ~~value of $1.45 billion.~~value. As of December 31, ~~2020,~~2021, the estimated fair value of the Company’s loans held-for-investment was ~~$907.8 million,~~$2.63 billion, compared to ~~its~~their carrying value of ~~$892.3 million.~~$2.61 billion.

Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses, other liabilities, due to affiliates and distributions payable 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 September 30, 2021~~The Company evaluates its hierarchy disclosures each quarter and ~~December 31, 2020, there have been~~ ~~no transfers of financial assets~~depending on various factors, it is possible that an asset or ~~liabilities~~liability may be classified differently from quarter to quarter. The Company does not expect that changes in classifications between ~~fair value hierarchy levels.~~levels will be frequent.

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Items Measured at Fair Value on a Recurring Basis

In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):


		Balance as of September 30, 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 September 30, 2022		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	$	121,756	$	47,750	$	32,133	$	41,873	CMBS	$	432,195	$	—	$	401,050	$	31,145
Equity security										Equity security	37,926		37,926		—		—
Interest rate caps	Interest rate caps	51		—		51		—		Interest rate caps	4,705		—		4,705		—

Total financial assets	Total financial assets	$	121,807	$	47,750	$	32,184	$	41,873	Total financial assets	$	474,826	$	37,926	$	405,755	$	31,145


		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)			Balance as of December 31, 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	$	38,194	$	—	$	27,461	$	10,733	CMBS	$	41,871	$	—	$	—	$	41,871
Preferred units										Preferred units	63,490		—		—		63,490
Marketable security										Marketable security	110		110		—		—
Interest rate caps										Interest rate caps	179		—		179		—
Total financial assets	Total financial assets	$	38,194	$	—	$	27,461	$	10,733	Total financial assets	$	105,650	$	110	$	179	$	105,361
Financial liabilities:	Financial liabilities:									Financial liabilities:
Interest rate swaps	Interest rate swaps	$	(12,308)	$	—	$	(12,308)	$	—	Interest rate swaps	$	(2,466)	$	—	$	(2,466)	$	—
Total financial liabilities	Total financial liabilities	$	(12,308)	$	—	$	(12,308)	$	—	Total financial liabilities	$	(2,466)	$	—	$	(2,466)	$	—

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The following are reconciliations of the changes in financial assets with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, ~~2021~~2022 (in thousands):


	~~CMBS~~Level 3
Beginning Balance, January 1, ~~2021~~2022	$	~~10,733~~105,361
Total gains and losses:
Unrealized loss included in other comprehensive (loss) income, ~~(loss),~~ net	~~1,045~~ (12,487)
Purchases and payments received:
Conversion of preferred units (1)	(68,243)
Purchases	~~34,491~~4,752
Discounts, net	~~(5,068)~~936
Capitalized interest income	~~703~~826
~~Principal payments received~~	~~(31)~~
Ending Balance, September 30, ~~2021~~2022	$	~~41,873~~31,145

____________________________________

(1) Reflects the Company’s investment in preferred units which matured during the nine months ended September 30, 2022 and was redeemed in exchange for an investment in a first mortgage loan. Refer to Note 8 — Loans Held-For-Investment for further discussion.

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 nine months ended September 30, 2022, real estate assets related to 19 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $114.1 million, resulting in impairment charges of $11.9 million. Additionally, during the nine months ended September 30, 2022, certain condominium units were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $7.9 million. During the nine months ended September 30, 2021, real estate assets related to 11 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $43.1 million, resulting in impairment charges of $5.3 million. During the nine months ended September 30, 2020, real estate assets related to 11 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $71.5 million, resulting in impairment charges of $16.0 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 nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,
2021 2020
Discount Rate Terminal Capitalization Rate Discount Rate Terminal Capitalization Rate
8.0% – 9.7% 7.5% – 9.2% 7.9% – 9.7% 7.4% – 9.2%

~~The following table presents the impairment charges by asset class recorded during the nine months ended September 30, 2021 and 2020 (in thousands):~~

Nine Months Ended September 30,
2021 2020
Asset class impaired:
Land $ 997 $ 3,595
Buildings, fixtures and improvements 4,138 11,737
Intangible lease assets 263 696
Intangible lease liabilities (130) (45)
Total impairment loss $ 5,268 $ 15,983

~~NOTE 4 — REAL ESTATE ASSETS~~

~~2021 Property Acquisitions~~

~~During the nine months ended September 30, 2021, the Company did not acquire any properties.~~

~~Assets Acquired Via Foreclosure~~

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, including certain units that are under development. No land was acquired in connection with the foreclosure.

Nine Months Ended September 30,

2022

2021

Discount Rate

Terminal Capitalization Rate

Discount Rate

Terminal Capitalization Rate

8.0% – 9.7%

7.5% – 9.2%

8.0% – 9.7%

7.5% – 9.2%

2321

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022 (Unaudited) – (Continued)

The following table presents the impairment charges by asset class recorded during the nine months ended September 30, 2022 and 2021 (in thousands):


	Nine Months Ended September 30,
	2022		2021
Asset class impaired:
Land	$	2,041	$	997
Buildings, fixtures and improvements	8,793		4,138
Intangible lease assets	1,039		263

Intangible lease liabilities	(4)		(130)
Condominium developments	7,945		—
Total impairment loss	$	19,814	$	5,268

NOTE 4 — REAL ESTATE ASSETS

2022 Property Acquisitions

During the nine months ended September 30, 2022, the Company did not acquire any properties.

2022 Condominium Development Project

During the nine months ended September 30, 2022, the Company capitalized $10.9 million of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

2022 Condominium Dispositions

During the nine months ended September 30, 2022, the Company disposed of condominium units for an aggregate sales price of $24.2 million, resulting in proceeds of $22.0 million after closing costs and a gain of $3.1 million. The Company has no continuing involvement that would preclude sale treatment with these condominium units. The gain on sale of condominium units is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

2022 Property Dispositions

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

During the nine months ended September 30, 2022, the Company disposed of 130 properties, including 65 retail properties, 56 anchored shopping centers, six industrial properties and three office buildings, and an outparcel of land for an aggregate gross sales price of $1.71 billion, resulting in proceeds of $1.67 billion after closing costs and a gain of $115.0 million. Included in this amount of properties disposed were the two properties previously owned through the Consolidated Joint Venture. The sale of 81 of these properties closed pursuant to the Purchase and Sale Agreement for total consideration of $1.33 billion, which consisted of $1.28 billion in cash proceeds and $53.4 million of RTL Common Stock, which shares are subject to certain registration rights as described in the Purchase and Sale Agreement. Such shares are included in real estate-related securities in the condensed consolidated balance sheets. During the nine months ended September 30, 2022, the Company recognized earnout income of $68.7 million related to the disposition of properties pursuant to the Purchase and Sale Agreement, and recorded a related receivable of $20.3 million, which is included in prepaid expenses and other assets in the condensed consolidated balance sheets as of September 30, 2022. The Company has no continuing involvement that would preclude sale

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

treatment with these properties. The gain on sale of real estate, including the earnout income, is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

2022 Impairment

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

During the nine months ended September 30, 2022, 19 properties totaling approximately 832,000 square feet with a carrying value of $126.0 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $114.1 million, resulting in impairment charges of $11.9 million, which were recorded in the condensed consolidated statements of operations. Additionally, during the nine months ended September 30, 2022, certain condominium units were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $7.9 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.

2021 Property Acquisitions

During the nine months ended September 30, 2021, the Company did not acquire any properties.

2021 Assets Acquired Via Foreclosure

During the nine months ended September 30, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its eight mezzanine loans, including 75 condominium units and 21 rental units across four buildings, including certain units that are under development. No 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):


	As of September 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 910 — ~~Notes Payable,~~ Repurchase Facilities, Credit Facilities and ~~Credit Facilities.~~Notes Payable.

2021 Condominium Development Project

During the nine months ended September 30, 2021, the Company capitalized $5.9 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 nine months ended September 30, 2021, the Company disposed of condominium units for an aggregate sales price of $28.6 million, resulting in proceeds of $26.5 million after closing costs and a gain of $4.9 million. The Company has no continuing involvement that would preclude sale treatment with these condominium units. The gain on sale of condominium units is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

2021 Property Dispositions and Real Estate Assets Held for Sale

During the nine months ended September 30, 2021, the Company disposed of 113 ~~properties, including 109~~ retail properties, ~~3 anchored shopping centers, 1 industrial property and an outparcel of land~~ for an aggregate gross sales price of $484.4 million, resulting in proceeds of $470.2 million after closing costs and a gain of $75.6 million. The Company has no continuing involvement that would preclude sale treatment with these properties. ~~The gain on sale~~

Table of ~~real estate is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.~~Contents

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

As of September 30, 2021, there was 1one property classified as held for sale with a carrying value of $1.3 million included in assets held for sale in the accompanying condensed consolidated balance sheets. Subsequent to September 30, 2021, the Company disposed of this ~~property, as further discussed in Note 16 — Subsequent Events.~~property.

2021 Impairment

During the nine months ended September 30, 2021, 11 properties totaling approximately 260,000 square feet with a carrying value of $48.4 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $43.1 million, resulting in impairment charges of $5.3 million, which were recorded in the condensed consolidated statements of operations. See Note 3 — Fair Value Measurements for a further discussion regarding these impairment charges.

~~2020 Property Acquisitions~~

During the nine months ended September 30, 2020, the Company acquired 3 commercial properties for an aggregate purchase price of $14.5 million (the “2020 Property Acquisitions”), which includes $111,000 of external acquisition-related expenses that were capitalized. The Company funded the 2020 Property Acquisitions with proceeds from real estate dispositions and available borrowings.

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

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


	~~2020 Property Acquisitions~~
~~Land~~	$	~~4,677~~
~~Buildings, fixtures and improvements~~	~~8,415~~
~~Acquired in-place leases and other intangibles~~ ~~(1)~~	~~1,418~~



~~Total purchase price~~	$	~~14,510~~

~~______________________~~

~~(1) The amortization period for acquired in-place leases and other intangibles is 14.7 years.~~

~~2020 Property Dispositions~~

During the nine months ended September 30, 2020, the Company disposed of 19 properties, consisting of 12 retail properties and 7 anchored shopping centers, for an aggregate gross sales price of $199.2 million, resulting in proceeds of $194.7 million after closing costs and disposition fees due to CMFT Management or its affiliates, and a gain of $20.1 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 nine months ended September 30, 2020, 11 properties totaling approximately 699,000 square feet with a carrying value of $87.5 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $71.5 million, resulting in impairment charges of $16.0 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.

NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES

Intangible lease assets and liabilities consisted of the following as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands, except weighted average life remaining):


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Intangible lease assets:	Intangible lease assets:					Intangible lease assets:
In-place leases and other intangibles, net of accumulated amortization of td37,730 and td32,967, respectively (with a weighted average life remaining of 9.3 years and 9.7 years, respectively)
		$	173,336	$	217,431
Acquired above-market leases, net of accumulated amortization of td1,704 and td2,054, respectively (with a weighted average life remaining of 7.7 years and 7.6 years, respectively)
		14,600		17,112
In-place leases and other intangibles, net of accumulated amortization of $82,454 and $73,923, respectively (with a weighted average life remaining of 11.3 years and 11.4 years, respectively)						In-place leases and other intangibles, net of accumulated amortization of $82,454 and $73,923, respectively (with a weighted average life remaining of 11.3 years and 11.4 years, respectively)
							$	182,337	$	224,931
Acquired above-market leases, net of accumulated amortization of $4,000 and $3,204, respectively (with a weighted average life remaining of 13.0 years and 13.3 years, respectively)						Acquired above-market leases, net of accumulated amortization of $4,000 and $3,204, respectively (with a weighted average life remaining of 13.0 years and 13.3 years, respectively)
							11,015		12,774
Total intangible lease assets, net	Total intangible lease assets, net	$	187,936	$	234,543	Total intangible lease assets, net	$	193,352	$	237,705
Intangible lease liabilities:	Intangible lease liabilities:					Intangible lease liabilities:
Acquired below-market leases, net of accumulated amortization of $32,303 and $31,933, respectively (with a weighted average life remaining of 7.3 years and 7.5 years, respectively)
		$	25,337	$	32,718
Acquired below-market leases, net of accumulated amortization of $5,117 and $9,043, respectively (with a weighted average life remaining of 12.7 years and 11.5 years, respectively)						Acquired below-market leases, net of accumulated amortization of $5,117 and $9,043, respectively (with a weighted average life remaining of 12.7 years and 11.5 years, respectively)
							$	19,512	$	24,896

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 nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
In-place lease and other intangible amortization	In-place lease and other intangible amortization	$	6,865	$	5,837	$	22,066	$	17,392	In-place lease and other intangible amortization	$	5,866	$	6,865	$	18,978	$	22,066
Above-market lease amortization	Above-market lease amortization	$	590	$	772	$	1,839	$	2,409	Above-market lease amortization	$	272	$	590	$	893	$	1,839
Below-market lease amortization	Below-market lease amortization	$	1,240	$	1,273	$	4,083	$	3,939	Below-market lease amortization	$	469	$	1,240	$	1,532	$	4,083

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

As of September 30, 2022, 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 2022	$	5,723	$	272	$	458
2023	22,067		1,081		1,802
2024	20,664		975		1,675
2025	17,702		916		1,603
2026	15,947		871		1,595
Thereafter	100,234		6,900		12,379
Total	$	182,337	$	11,015	$	19,512

NOTE 6 — INVESTMENT IN UNCONSOLIDATED ENTITIES

On December 16, 2021, as a result of the merger with CIM Income NAV, Inc. (“CIM Income NAV”) (the “CIM Income NAV Merger”), the Company acquired a limited partnership interest in CIM UII Onshore. CIM UII Onshore’s sole purpose is to invest all of its assets in CIM Urban Income Investments, L.P. (“CIM Urban Income”), which is a private institutional fund that acquires, owns and operates substantially stabilized, diversified real estate and real estate-related assets in urban markets primarily located throughout North America.

During the nine months ended September 30, 2022, the Company recognized an equity method net gain of $5.2 million related to its investment in CIM UII Onshore. The Company recognized distributions of $531,000 related to its investment in CIM UII Onshore during the nine months ended September 30, 2022, all of which was recognized as a return on investment. On March 31, 2022, the Company fully redeemed its $60.7 million investment in CIM UII Onshore, which represented less than 5% ownership of CIM UII Onshore and approximated fair value.

Additionally, during the year ended December 31, 2021, the Company entered into the Unconsolidated Joint Venture, of which the Company owns 50% of the outstanding equity. The Unconsolidated Joint Venture holds approximately 91% of the membership interest in the NewPoint JV. Through the Unconsolidated Joint Venture, the Company has a 45% interest in the NewPoint JV and accounts for its investment under the equity method. The primary purpose of the NewPoint JV is to source, underwrite, close and service on an ongoing basis multifamily bridge loans, participation interests, and other debt instruments such as loans. As of September 30, 2022, the carrying value of the Company’s investment in NP JV Holdings was $132.4 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance sheets. The Company received $4.3 million in distributions related to its investment in NP JV Holdings during the nine months ended September 30, 2022, $3.7 million of which was recognized as a return on investment and $625,000 of which was recognized as a return of investment and reduced the invested capital and the carrying amount.

NOTE 7 — REAL ESTATE-RELATED SECURITIES

As of September 30, 2022, the Company had real estate-related securities with an aggregate estimated fair value of $470.1 million, which included 16 CMBS investments and an investment in a publicly-traded equity security. The CMBS mature on various dates from July 2023 through June 2058 and have interest rates ranging from 6.5% to 10.2% as of September 30, 2022, with one CMBS earning a zero coupon rate. The following is a summary of the Company’s real estate-related securities as of September 30, 2022 (in thousands):


	Real Estate-Related Securities
	Amortized Cost Basis		Unrealized Loss		Fair Value
CMBS	$	453,894	$	(21,699)	$	432,195
Equity security	53,388		(15,462)		37,926

Total real estate-related securities	$	507,282	$	(37,161)	$	470,121

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022 (Unaudited) – (Continued)

~~As of September 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 $ 6,714 $ 586 $ 1,221
2022 25,224 2,249 4,319
2023 21,965 1,996 3,655
2024 18,797 1,501 2,695
2025 15,034 1,259 2,326
Thereafter 85,602 7,009 11,121
Total $ 173,336 $ 14,600 $ 25,337

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

As of September 30, 2021, the Company had CMBS investment securities and an investment in preferred units with an aggregate estimated fair value of $185.2 million. The CMBS mature on various dates from September 2023 through June 2058 and have interest rates ranging from 1.2% to 13.0%, with 1 CMBS earning a zero coupon rate. The preferred units mature on June 1, 2022 and have an interest rate of 8.9%. The following is a summary of the Company’s real estate-related securities as of September 30, 2021 (in thousands):

Real Estate-Related Securities
Amortized Cost Basis Unrealized Gain Fair Value
CMBS $ 120,019 $ 1,738 $ 121,757
Preferred units 63,490 — 63,490
Total real estate-related securities $ 183,509 $ 1,738 $ 185,247

The following table provides the activity for the real estate-related securities during the nine months ended September 30, ~~2021~~2022 (in thousands):


		Amortized Cost Basis		Unrealized Gain		Fair Value			Amortized Cost Basis		Unrealized Gain (Loss)		Fair Value
Real estate-related securities as of January 1, 2021		$	37,047	$	1,147	$	38,194
Real estate-related securities as of January 1, 2022								Real estate-related securities as of January 1, 2022	$	102,674	$	2,797	$	105,471
Face value of real estate-related securities acquired	Face value of real estate-related securities acquired	114,373		—		114,373		Face value of real estate-related securities acquired	507,915		—		507,915
Investment in preferred units		63,490		—		63,490
Investment in preferred units, net (1)								Investment in preferred units, net (1)	(63,490)		—		(63,490)
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	(26,060)		—		(26,060)
Amortization of discount on real estate-related securities	Amortization of discount on real estate-related securities	886		—		886		Amortization of discount on real estate-related securities	1,684		—		1,684
Sale of real estate-related securities		(26,977)		(648)		(27,625)
Realized gain on sale of real estate-related securities								Realized gain on sale of real estate-related securities	(110)		(22)		(132)
Capitalized interest income on real estate-related securities	Capitalized interest income on real estate-related securities	703		—		703		Capitalized interest income on real estate-related securities	826		—		826
Principal payments received on real estate-related securities	Principal payments received on real estate-related securities	(31)		—		(31)		Principal payments received on real estate-related securities	(16,157)		—		(16,157)
Unrealized gain on real estate-related securities		—		1,239		1,239
Real estate-related securities as of September 30, 2021		$	183,509	$	1,738	$	185,247
Unrealized loss on real estate-related securities								Unrealized loss on real estate-related securities	—		(39,936)		(39,936)
Real estate-related securities as of September 30, 2022								Real estate-related securities as of September 30, 2022	$	507,282	$	(37,161)	$	470,121

____________________________________

(1) Included in this balance is $68.2 million of the Company’s investment in preferred units which were redeemed during the nine months ended September 30, 2022 in exchange for an investment in a first mortgage loan, as further discussed in Note 8 — Loans Held-For-Investment.

During the nine months ended September 30, ~~2021,~~2022, the Company invested ~~$171.9~~$433.2 million in ~~CMBS and preferred units.~~CMBS. During the same period, the Company sold ~~CMBS~~one marketable security with aan aggregate carrying value of ~~$27.0 million~~$110,000 resulting in net proceeds of ~~$27.6 million~~$132,000 and a gain of ~~$648,000.~~$22,000. The Company also received $53.4 million in an equity security during the nine months ended September 30, 2022 as consideration in connection with the Purchase and Sale Agreement. Unrealized gains and losses on CMBS are recorded in other comprehensive (loss) income, 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. Unrealized gains and losses on the equity security are reported on the condensed consolidated statements of operations. During the ~~three and~~ nine months ended September 30, ~~2021,~~2022, the Company recorded ~~$813,000 and $1.2~~$39.9 million ~~respectively,~~ of unrealized ~~gains~~loss on its ~~CMBS~~real estate-related securities, $24.5 million of which is included in other comprehensive (loss) income in the accompanying condensed consolidated statements of comprehensive ~~income (loss).~~

~~Table~~income. The remaining $15.4 million of ~~Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

unrealized loss on the Company’s equity security is included in unrealized loss on equity security in the accompanying condensed consolidated statements of operations.

The scheduled maturities of the Company’s ~~real estate-related securities~~CMBS as of September 30, ~~2021~~2022 are as follows (in thousands):


		Real estate-related securities					CMBS
		Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
Due within one year	Due within one year	$	63,490	$	63,490	Due within one year	$	—	$	—
Due after one year through five years	Due after one year through five years	79,882		79,882		Due after one year through five years	413,059		401,050
Due after five years through ten years	Due after five years through ten years	—		—		Due after five years through ten years	—		—
Due after ten years	Due after ten years	40,137		41,875		Due after ten years	40,835		31,145
Total	Total	$	183,509	$	185,247	Total	$	453,894	$	432,195

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~~but not limited to, the ~~Company has~~extent to which the ~~intent to sell~~fair value is less than the ~~impaired security before the recovery of its~~ amortized cost basis, ~~(2) whether~~recent events specific to the ~~Company expects to hold~~security, industry or geographic area, 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~~payment structure of the ~~security.~~security, the failure of the issuer of the security to make scheduled interest or principal payments, and external credit ratings and recent changes in such ratings. As of September 30, ~~2021,~~2022, the Company had no credit losses related to real estate-related securities.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

NOTE 78 — LOANS HELD-FOR-INVESTMENT

The Company’s loans held-for-investment consisted of the following as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):


	As of September 30,		As of December 31,
	2022		2021

First mortgage loans (1)	$	3,259,744	$	1,968,585
Total CRE loans held-for-investment and related receivables, net	3,259,744		1,968,585
Liquid senior loans	705,750		655,516
Corporate senior loans	57,232		—
Loans held-for-investment and related receivables, net	$	4,022,726	$	2,624,101

Less: Current expected credit losses	$	(29,584)	$	(15,201)
Total loans held-for-investment and related receivable, net	$	3,993,142	$	2,608,900

(1) As of September 30, 2022, first mortgage loans included $20.1 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan.

The following table details overall statistics for the Company’s loans held-for-investment as of September 30, 2022 and December 31, 2021 (dollar amounts in thousands):

As of September 30, As of December 31,
2021 2020
Mezzanine loans $ — $ 147,475
Senior loans 890,804 341,546
Total CRE loans held-for-investment and related receivables, net 890,804 489,021
Broadly syndicated loans 571,488 473,603
Loans held-for-investment and related receivables, net $ 1,462,292 $ 962,624
Less: Allowance for credit losses $ (11,219) $ (70,358)
Total loans held-for-investment and related receivable, net $ 1,451,073 $ 892,266


	CRE Loans (1) (2)						Liquid Senior Loans						Corporate Senior Loans
	September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Number of loans	29			22			313			295			4			—
Principal balance	$	3,283,523		$	1,985,722		$	711,947		$	659,007		$	58,031		$	—
Net book value	$	3,244,737		$	1,958,655		$	691,981		$	650,245		$	56,424		$	—
Weighted-average interest rate	5.9		%	3.3		%	6.7		%	3.7		%	9.2		%	—		%

Weighted-average maximum years to maturity	3.9			4.3			4.9			5.1			4.8			0.0
Unfunded loan commitments (3)	$	338,539		$	209,368		$	1,886		$	1,562		$	4,324		$	—

During the nine months ended September 30, 2021, the Company invested $267.0 million in broadly syndicated loans. During the same period, the Company received $188.1 million of principal payments on broadly syndicated loans and sold $55.5 million of broadly syndicated loans, resulting in proceeds of $55.2 million after closing costs and a gain of $254,000. The gain was recorded as a decrease to interest expense and other, net in the condensed consolidated statements of operations. (1)As of September 30, ~~2021,~~2022, 100% of the ~~Company had $87.4~~Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR and the Secured Overnight Financing Rate (“SOFR”).

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

(3)Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying condensed consolidated balance sheets. This balance does not include unsettled liquid senior loan purchases of $6.3 million ~~of unsettled broadly syndicated loan purchases~~that are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

As of September 30, 2021, the Company had $123.7 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 sheets.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022 (Unaudited) – (Continued)

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

CRE Loans (1) (2)
Broadly Syndicated Loans
September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020
Number of loans 11 12 262 194
Principal balance $ 900,533 $ 481,438 $ 574,787 $ 477,777
Net book value $ 885,517 $ 428,393 $ 565,556 $ 463,873
Weighted-average interest rate 3.7 % 7.5 % 3.6 % 3.8 %
Weighted-average maximum years to maturity
2.7 2.2 5.0 4.9

~~(1) As of September 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.~~

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

Principal Balance
Deferred Fees / Other Items (1)
Loan Fees Receivable Net Book Value
Balance, January 1, 2021 $ 959,215 $ (74,116) $ 7,167 $ 892,266
Loan originations and acquisitions 993,841 — — 993,841
Cure payments receivable (2)
— (7,351) — (7,351)
Sale of loans (55,498) 528 — (54,970)
Principal repayments received (3)
(285,449) 345 — (285,104)
Capitalized interest (2)
(9,469) — — (9,469)
Deferred fees and other items — (9,206) — (9,206)
Accretion and amortization of fees and other items — 2,583 — 2,583
Foreclosure of assets (2)
(127,320) 3,831 (7,167) (130,656)
Allowance for credit losses (4)
— 59,139 — 59,139
Balance, September 30, 2021 $ 1,475,320 $ (24,247) $ — $ 1,451,073


	CRE Loans		Liquid Senior Loans		Corporate Senior Loans		Total Loan Portfolio
Balance, January 1, 2022	$	1,958,655	$	650,245	$	—	$	2,608,900
Loan originations and acquisitions (1)	1,378,649		164,325		75,851		1,618,825
Sale of loans	—		(53,332)		—		(53,332)
Principal repayments received	(80,911)		(58,189)		(17,820)		(156,920)
Capitalized interest	62		—		—		62
Deferred fees and other items (2)	(13,978)		(3,397)		(1,050)		(18,425)
Accretion and amortization of fees and other items	7,337		827		251		8,415
Current expected credit losses	(5,077)		(8,498)		(808)		(14,383)
Balance, September 30, 2022	$	3,244,737	$	691,981	$	56,424	$	3,993,142

(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 Company’s investment in preferred units, which was previously recorded in real estate-related securities on the ~~nine months ended September 30, 2021, the Company completed foreclosure of the assets which previously secured its 8 mezzanine loans.~~

~~(3) Includes the repayment of a $69.2 million senior loan prior to the maturity date.~~

(4) 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-investmentaccompanying condensed consolidated balance sheets, was redeemed during the nine months ended September 30, ~~2021.~~2022 in exchange for an investment in a first mortgage loan. The converted investment in preferred units of $68.2 million is included in the CRE loans balance with an all-in-rate of 9.4% and an initial maturity date of October 9, 2023.

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

Current Expected Credit Losses

~~The allowance for~~Current expected credit losses ~~reflects~~reflect 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~~current expected credit losses.

The following table presents the activity in the Company’s current expected credit losses by loan type for the nine months ended September 30, 2022 (in thousands):


	First Mortgage Loans		Unfunded First Mortgage Loans (1)		Liquid Senior Loans		Unfunded or Unsettled Liquid Senior Loans (1)		Corporate Senior Loans		Unfunded Corporate Senior Loans (1)		Total
Current expected credit losses as of January 1, 2022	$	9,930	$	—	$	5,271	$	—	$	—	$	—	$	15,201

Provision for credit losses	1,312		360		2,581		400		56		—		4,709
Current expected credit losses as of March 31, 2022	$	11,242	$	360	$	7,852	$	400	$	56	$	—	$	19,910
Provision for (reversal of) credit losses	1,832		170		2,338		(96)		615		83		4,942
Current expected credit losses as of June 30, 2022	$	13,074	$	530	$	10,190	$	304	$	671	$	83	$	24,852
Provision for (reversal of) credit losses	1,933		121		3,579		(85)		137		(21)		5,664
Current expected credit losses as of September 30, 2022	$	15,007	$	651	$	13,769	$	219	$	808	$	62	$	30,516

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

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

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022 (Unaudited) – (Continued)

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

Mezzanine Loans Senior Loans Broadly Syndicated Loans Total
Allowance for credit losses as of January 1, 2021 $ 58,038 $ 2,590 $ 9,730 $ 70,358
Foreclosure of assets (1)
(58,038) — — (58,038)
Provision for (reversal of) credit losses — 1,295 (727) 568
Allowance for credit losses as of March 31, 2021 $ — $ 3,885 $ 9,003 $ 12,888
Provision for (reversal of) credit losses — 2,581 (2,458) 123
Allowance for credit losses as of June 30, 2021 $ — $ 6,466 $ 6,545 $ 13,011
Reversal of provision for credit losses — (1,179) (613) (1,792)
Allowance for credit losses as of September 30, 2021 $ — $ 5,287 $ 5,932 $ 11,219

~~(1) During the nine months ended September 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 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~~Current expected credit losses for financial instruments that are ~~trouble~~troubled 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 8eight 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 4four 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 nine months ended September 30, 2021, the Company recorded a $1.1 million net decrease 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 $11.2 million as of September 30, 2021. The Company recorded a decrease in the provision for credit losses related to its senior loans and broadly syndicated loans during the three months ended September 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 ratio, debt yield, collateral performance, and the quality and condition of the sponsor, borrower, and guarantor(s). Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 — Summary of Significant Accounting Policies.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022 (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 September 30, ~~2021~~2022 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 September 30, 2021										As of September 30, 2022
		Number of Loans	2021		2020		2019		Total			Number of Loans	2022		2021		2020		2019		Total
Senior loans by internal risk rating:
First mortgage loans by internal risk rating:											First mortgage loans by internal risk rating:
1	1	—	$	—	$	—	$	—	$	—	1	—	$	—	$	—	$	—	$	—	$	—
2	2	—	—		—		—		—		2	—	—		—		—		—		—
3	3	11	705,930		137,544		47,330		890,804		3	29	1,238,852		1,819,168		152,458		49,266		3,259,744
4	4	—	—		—		—		—		4	—	—		—		—		—		—
5	5	—	—		—		—		—		5	—	—		—		—		—		—
Total senior loans		11	705,930		137,544		47,330		890,804
Broadly syndicated loans by internal risk rating:
Total first mortgage loans											Total first mortgage loans	29	1,238,852		1,819,168		152,458		49,266		3,259,744
Liquid senior loans by internal risk rating:											Liquid senior loans by internal risk rating:
1	1	—	—		—		—		—		1	—	—		—		—		—		—
2	2	3	—		8,299		—		8,299		2	2	—		—		5,312		—		5,312
3	3	257	227,648		326,614		3,044		557,306		3	305	132,470		338,755		213,813		3,017		688,055
4	4	2	—		5,883		—		5,883		4	6	3,298		—		9,085		—		12,383
5	5	—	—		—		—		—		5	—	—		—		—		—		—
Total broadly syndicated loans		262	227,648		340,796		3,044		571,488
Less: Allowance for credit losses									(11,219)
Total liquid senior loans											Total liquid senior loans	313	135,768		338,755		228,210		3,017		705,750
Corporate senior loans by internal risk rating:											Corporate senior loans by internal risk rating:
1											1	—	—		—		—		—		—
2											2	—	—		—		—		—		—
3											3	4	57,232		—		—		—		57,232
4											4	—	—		—		—		—		—
5											5	—	—		—		—		—		—
Total corporate senior loans											Total corporate senior loans	4	57,232		—		—		—		57,232
Less: Current expected credit losses											Less: Current expected credit losses										(29,584)
Total loans held-for-investment and related receivables, net	Total loans held-for-investment and related receivables, net	273							$	1,451,073	Total loans held-for-investment and related receivables, net	346									$	3,993,142
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 89 — 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 nine months ended September 30, ~~2021, 3~~2022, two of the Company’s interest rate swap agreements ~~matured. Additionally, in connection with the origination~~matured, four of the Mortgage Loan (as defined below in Note 9 — Notes Payable, Repurchase Facilities and Credit Facilities), the Company terminated its 2 remaining interest rate swap agreements. The Company also entered into 5Company’s interest rate cap agreements ~~during~~matured, the ~~nine months ended September 30, 2021.~~Company terminated three interest rate swap agreements prior to the maturity dates, and the Company entered into one interest rate cap agreement. As of September 30, ~~2021,~~2022, the Company had 5two non-designated interest rate cap ~~agreements and no interest rate swap agreements designated as hedging instruments.~~agreements.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022 (Unaudited) – (Continued)

The following table summarizes the terms of the Company’s interest rate cap agreements ~~and interest rate swap agreements~~ as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 (dollar amounts in thousands):


			Outstanding Notional					Fair Value of Assets (Liabilities) as of						Outstanding Notional					Fair Value of Assets (Liabilities) as of
		Balance Sheet	Amount as of		Interest	Effective	Maturity	September 30,		December 31,			Balance Sheet	Amount as of		Interest	Effective	Maturity	September 30,		December 31,
		Location	September 30, 2021		Rates (1)	Dates	Dates	2021		2020 (2)			Location	September 30, 2022		Rates (1)	Dates	Dates	2022		2021
Interest Rate Caps	Interest Rate Caps	Prepaid expenses and other assets	$	752,553	2.83% to 5.45%	5/7/2021 to 7/15/2021	5/9/2022 to 7/15/2023	$	51	$	—	Interest Rate Caps	Prepaid expenses, derivative assets and other assets	$	712,000	7.51% to 7.78%	7/15/2021 to 9/13/2022	7/15/2023 to 10/9/2023	$	4,705	$	179
Interest Rate Swaps		Deferred rental income and other liabilities	$	—	—%	—	—	$	—	$	(12,308)

Interest Rate Swap												Interest Rate Swap	Deferred rental income, derivative liabilities and other liabilities	$	—	—%	—	—	$	—	$	(2,466)

(1)The interest rate consists of the underlying index capped to a fixed rate as of September 30, ~~2021.~~

~~(2)~~As of December 31, 2020, the Company had 5 interest rate swap agreements designated as hedging instruments in a liability position with an aggregate outstanding notional amount of $1.1 billion and an aggregate fair value balance of $12.3 million included in deferred rental income and other liabilities in the accompanying condensed consolidated balance sheets.2022.

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 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 ~~had~~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. During the ~~three and~~ nine months ended September 30, ~~2021,~~2022, the Company had interest rate swaps 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 designated as hedges is recorded in other comprehensive (loss) income, 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 nine months ended September 30, 2022, the amount of gain reclassified from other comprehensive (loss) income as a decrease to interest expense was $2.6 million for both periods. For the three months ended September 30, 2021, the amount of gain reclassified from other comprehensive (loss) income as a decrease to interest expense was $170,000. For the nine months ended September 30, 2021, the amount of loss reclassified from other comprehensive (loss) income as an increase to interest expense was $3.0 million. For the three and nine months ended September 30, 2020, the amount of losses reclassified from other comprehensive (loss) income as an increase to interest expense was $4.0 million and $8.3 million, respectively. The total unrealized loss on interest rate swaps ~~was $174,000 and $3.2 million~~of $20,000 as of September 30, ~~2021~~2022, and the total unrealized gain on interest rate swaps of $152,000 as of December 31, ~~2020,~~2021, respectively, ~~which are~~is included in accumulated other comprehensive (loss) income in the accompanying condensed consolidated ~~statement~~statements of stockholders’ equity. During the next 12 months, the Company estimates that $20,000 will be reclassified from other comprehensive (loss) income 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. ~~As of September 30, 2021, all derivatives were in an asset position. Therefore, there was no termination value as of September 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 caps~~derivative instruments based on the credit quality of the Company and the respective counterparty. There were no ~~termination events or~~ events of default related to the ~~interest rate caps~~derivative instruments as of September 30, ~~2021.~~2022.

NOTE 910 — ~~NOTES PAYABLE,~~ REPURCHASE FACILITIES, ~~AND~~ CREDIT FACILITIES AND NOTES PAYABLE

As of September 30, ~~2021,~~2022, the Company had ~~$2.8~~$4.4 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of ~~3.9~~3.3 years and a weighted average interest rate of ~~2.8%~~4.5%. The weighted average years to

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

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.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

The following table summarizes the debt balances as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, and the debt activity for the nine months ended September 30, ~~2021~~2022 (in thousands):


				During the Nine Months Ended September 30, 2021											During the Nine Months Ended September 30, 2022
		Balance as of December 31, 2020		Debt Issuances & Assumptions (1)		Repayments & Modifications (2)		Accretion and (Amortization)		Balance as of September 30, 2021			Balance as of December 31, 2021		Debt Issuances & Assumptions (1)		Repayments & Modifications (2)			Accretion & (Amortization)		Balance as of September 30, 2022
Notes payable – fixed rate debt	Notes payable – fixed rate debt	$	578,096	$	—	$	(190,834)	$	—	$	387,262	Notes payable – fixed rate debt	$	471,967	$	—	$	(435,320)	(4)	$	—	$	36,647
Notes payable – variable rate debt	Notes payable – variable rate debt	—		102,553		(19,710)		—		82,843		Notes payable – variable rate debt	70,268		470,860		(70,268)			—		470,860
First lien mortgage loan	First lien mortgage loan	—		650,000		—		—		650,000		First lien mortgage loan	650,000		—		(515,993)			—		134,007
Net-lease mortgage notes		—		774,000		(1,290)		—		772,710
ABS mortgage notes												ABS mortgage notes	770,775		—		(5,805)			—		764,970
Credit facilities	Credit facilities	1,336,500		410,000		(1,340,000)		—		406,500		Credit facilities	910,000		767,000		(985,500)			—		691,500
Repurchase facilities	Repurchase facilities	235,380		383,489		(111,615)		—		507,254		Repurchase facilities	1,298,414		1,065,146		(80,967)			—		2,282,593
Total debt	Total debt	2,149,976		2,320,042		(1,663,449)		—		2,806,569		Total debt	4,171,424		2,303,006		(2,093,853)			—		4,380,577
Net premiums (3)		149		—		—		(149)		—

Deferred costs – credit facility ~~(4)~~(3)	Deferred costs – credit facility ~~(4)~~(3)	(3,543)		—		1,955		1,588		—		Deferred costs – credit facility ~~(4)~~(3)	(143)		(999)		89			321		(732)
Deferred costs – fixed rate debt and first lien mortgage loan	Deferred costs – fixed rate debt and first lien mortgage loan	(1,589)		(13,838)		133		1,954		(13,340)		Deferred costs – fixed rate debt and first lien mortgage loan	(11,678)		—		7,648			2,422		(1,608)
Deferred costs – variable rate debt	Deferred costs – variable rate debt	—		(1,347)		—		893		(454)		Deferred costs – variable rate debt	(271)		(6,141)		—			647		(5,765)
Deferred costs – net-lease mortgage notes		—		(16,979)		—		419		(16,560)
Deferred costs – ABS mortgage notes												Deferred costs – ABS mortgage notes	(16,127)		—		382			1,460		(14,285)
Total debt, net	Total debt, net	$	2,144,993	$	2,287,878	$	(1,661,361)	$	4,705	$	2,776,215	Total debt, net	$	4,143,205	$	2,295,866	$	(2,085,734)		$	4,850	$	4,358,187

(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 ~~$4.7~~$19.6 million during the nine months ended September 30, ~~2021.~~2022.

(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.

~~(4)~~Deferred costs related to the term portion of the CIM Income NAV Credit Facility and the CMFT Credit Facility ~~(as~~(both defined below).

(4)Includes mortgage notes of $356.5 million that were assumed by buyer in connection with disposition of real estate assets.

Notes Payable

As of September 30, ~~2021,~~2022, the Company had fixed rate debt outstanding ~~was $387.3~~of $36.6 million. The fixed rate debt has interest rates ranging from ~~3.6%~~4.1% to ~~4.6%~~4.5% per annum. The fixed rate debt outstanding matures on various dates from ~~May 2022 to~~ December ~~2024.~~2024 through February 2025. 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 ~~$656.6~~$59.4 million as of September 30, ~~2021.~~2022. Each of the mortgage notes payable comprising the fixed rate debt is secured by the respective properties on which the debt was placed.

~~Upon~~As of September 30, 2022, the Company had $470.9 million of variable rate debt outstanding, which included $421.5 million of borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”). In addition, upon completing foreclosure proceedings to take control of the assets which previously secured the Company’s mezzanine loans in January 2021, the Company assumed $102.6 million in variable rate debt related to the underlying ~~properties.~~properties (the “Assumed Variable Rate Debt”). During the nine months endedSeptember 30, 2022, the Company refinanced the Assumed Variable Rate Debt and paid down the outstanding balance. The amended borrowing agreement related to the refinanced Assumed Variable Rate Debt provides for borrowings up to $62.0 million. As of September 30, ~~2021,~~2022, the amount outstanding on the refinanced Assumed Variable Rate Debt totaled $49.4 million. The Company’s outstanding variable rate debt ~~outstanding of $82.8 million~~ had a weighted average interest rate of ~~5.5%.The variable rate debt outstanding~~5.3% as of September 30, 2022, and matures on ~~May 9, 2022.~~various dates from October 2024 to January 2028.

First Lien Mortgage Loan

On July 15, 2021, JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan Chase”), and DBR Investments Co. Limited originated a $650.0 million first lien mortgage loan (the “Mortgage Loan”) to 114 single purpose entities (the “Borrowers”), each of which is an affiliate of the Company and ~~are~~is managed on a day-to-day basis by affiliates of CIM. ~~The~~As of September 30, 2022, the Mortgage Loan is secured by, among other things, cross-collateralized and cross-defaulted first priority mortgages, deeds of trust, security agreements or other similar security instruments on the Borrowers’ fee simple interests in ~~113 properties, comprised of 50 anchored shopping centers, 61 single-tenant retail properties, 1 office property and 1 industrial property.~~51

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September 30, ~~2021~~2022 (Unaudited) – (Continued)

properties, comprised of 50 single-tenant retail properties and one office property. As of September 30, ~~2021,~~2022, the aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the notes was ~~$1.3 billion.~~$332.1 million. Amounts outstanding on the Mortgage Loan totaled ~~$650.0~~$134.0 million with a weighted average interest rate of ~~2.8%~~7.5% as of September 30, ~~2021.~~2022. The Mortgage Loan is a floating-rate, interest-only, non-recourse loan with a two-year initial term ending on August 9, 2023, with 3three one-year extension options, subject to certain conditions.

~~Net-Lease~~ABS Mortgage Notes

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

Class of Notes

Initial Principal Balance

Note Rate

Anticipated Repayment Date

Rated Final Payment Date

Credit Rating(1)

Class of Notes

Initial Principal Balance

Note Rate

Anticipated Repayment Date

Rated Final Payment Date

Credit Rating (1)

A-1 (AAA)

146,400,000

2.09%

July 2028

July 2051

AAA (sf)

A-1 (AAA)

146,400,000

2.09%

July 2028

July 2051

AAA (sf)

A-2 (AAA)

219,600,000

2.57%

July 2031

July 2051

AAA (sf)

A-2 (AAA)

219,600,000

2.57%

July 2031

July 2051

AAA (sf)

A-3 (AA)

39,200,000

2.51%

July 2028

July 2051

AA (sf)

A-3 (AA)

39,200,000

2.51%

July 2028

July 2051

AA (sf)

A-4 (AA)

58,800,000

3.04%

July 2031

July 2051

AA (sf)

A-4 (AA)

58,800,000

3.04%

July 2031

July 2051

AA (sf)

A-5 (A)

124,000,000

2.91%

July 2028

July 2051

A (sf)

A-5 (A)

124,000,000

2.91%

July 2028

July 2051

A (sf)

A-6 (A)

186,000,000

3.44%

July 2031

July 2051

A (sf)

A-6 (A)

186,000,000

3.44%

July 2031

July 2051

A (sf)

____________________________________

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

The collateral pool for the Class A Notes is comprised of ~~170~~168 of the Company’s double- and triple-net leased single tenant properties, together with the related leases and certain other rights and interests. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the Class A Notes was ~~$1.0 billion.~~$977.3 million. As of September 30, ~~2021,~~2022, amounts outstanding on the Class A Notes totaled ~~$772.7~~$765.0 million with a weighted average interest rate of 2.8%. The Company may prepay the Class A Notes in full on or after the payment date beginning in July 2026 for the Class A-1 (AAA) Notes, the Class A-3 (AA) Notes and the Class A-5 (A) Notes, and on or after the payment date in July 2028 for the Class A-2 (AAA) Notes, the Class A-4 (AA) Notes and the Class A-6 (A) Notes.

Credit Facilities

CMFT SCF Borrower, LLC, an indirect wholly owned subsidiary of the Company (the “CMFT Borrowing Sub”), has a credit agreement (the “Credit Agreement”) with the lenders from time to time parties thereto, JPMorgan Chase, as administrative agent, letter of credit issuer and syndication agent, and PNC Bank, N.A., as syndication agent, which provides for borrowings in the initial amount of $300.0 million (the “CMFT Credit Facility”), which includes a $100.0 million term loan facility (the “CMFT Term Loan”) and the ability to borrow up to $200.0 million in revolving loans (the “CMFT Revolving Loans”) under a revolving credit facility (the “CMFT Revolving Facility”) with a $30.0 million letter of credit subfacility. The CMFT Term Loan and the CMFT Revolving Facility both mature on July 15, 2025.

Borrowings under the Credit Agreement bear interest at rates depending upon the type of loan specified by the CMFT Borrowing Sub, the interest period, and the Company’s adjusted leverage ratio. For alternate base rate (“ABR”) loans, the interest rate will be equal to the greater of: (a) JPMorgan Chase’s prime rate (as defined in the Credit Agreement), (b) the NYFRB Rate (as defined in the Credit Agreement) plus 0.50%, and (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus 1.0% for the interest period plus the applicable rate. For term benchmark (“Term Benchmark”) loans and risk-free rate (“RFR”) loans, the interest rate is based on the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as defined in the Credit Agreement), respectively, for the applicable interest period plus the applicable rate. The applicable rate is based upon the adjusted leverage ratio, and for ABR Loans, ranges from 0.50% at an adjusted leverage ratio below 2.50:1.00 to 1.375% at an adjusted leverage ratio greater than 3.50:1.00. For Term Benchmark loans and RFR loans, the applicable rate is 1.00% higher than for ABR loans at each adjusted leverage ratio range.

In connection with the CMFT Credit Facility, certain subsidiaries of the Company, including the CMFT Borrowing Sub, entered into a collateral assignment of equity interest and security agreement, by which certain subsidiaries of the Company, including the CMFT Borrowing Sub, pledged equity interests in certain property-owning subsidiaries as collateral to secure on a first priority basis the obligations under the CMFT Credit Facility. The Company and certain subsidiaries of the Company

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

also entered into a guaranty with the lenders, under which the Company and certain subsidiaries agreed to guarantee the CMFT Borrowing Sub’ obligations under the Credit Agreement.

As of September 30, 2022, the CMFT Term Loan and CMFT Revolving Loans outstanding totaled $100.0 million and $50.0 million, respectively. As of September 30, 2022, the Company had $150.0 million outstanding under the CMFT Credit Facility at a weighted average interest rate of 4.5% and $150.0 million in unused capacity, subject to borrowing availability. The Company had available borrowings of $150.0 million as of September 30, 2022.

The Company had a ~~second amended and restated unsecured~~ credit agreement (the ~~“CMFT Second Amended and Restated~~“CIM Income NAV Credit Agreement”) with JPMorgan Chase, as administrative agent, and the ~~other lenders party~~lender parties thereto, that provided for borrowings of up to ~~$1.24 billion~~$425.0 million (the ~~“CMFT~~“CIM Income NAV Credit Facility”).

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”). The ~~CCPT V Credit Agreement allowed for borrowings of up to $350.0 million (the “CCPT V Credit Facility”).~~

~~The CMFT~~CIM Income NAV Credit Facility ~~and the CCPT V Credit Facility (collectively, the “Credit Facilities”) were~~was set to mature on ~~March 15,~~September 6, 2022. During the nine months endedSeptember 30, ~~2021, and with the proceeds from the Mortgage Loan and the sale of the Class A Notes,~~2022, the Company paid down the ~~$1.11 billion~~$212.5 million outstanding balance under the CIM Income NAV Credit ~~Facilities~~Facility with proceeds from the closing of the CMFT Credit Facility and terminated the CIM Income NAV Credit ~~Facilities.~~Facility.

~~On December 31, 2019 (the “Closing Date”),~~ CMFT Corporate Credit Securities, LLC, an indirect wholly-owned, bankruptcy-remote subsidiary of the Company, ~~entered into~~has a revolving credit and security agreement (the ~~“Credit~~“Third Amended 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 Third Amended Credit and Security Agreement provides for available borrowings inunder the revolving credit facility to an aggregate principal amount up to ~~$500.0~~$550.0 million (the “Credit Securities Revolver”)~~, which~~. The Credit Securities Revolver may be increased from time to time pursuant to the Third Amended Credit and Security Agreement. As of September 30, ~~2021,~~2022, the amounts borrowed and outstanding under the Credit Securities Revolver totaled ~~$406.5~~$541.5 million at a weighted average interest rate of ~~1.8%~~5.2%. Subsequent to September 30, 2021, the Company amended the Credit and Security Agreement by increasing available borrowings under the Credit Securities Revolver up to $550.0 million, as discussed in Note 16 — Subsequent Events.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

Borrowings under the Third Amended Credit and Security Agreement will bear interest equal to the ~~three-month LIBOR~~one-month Term SOFR (as defined in the Third Amended Credit and Security Agreement) for the relevant interest period, plus an applicable rate. The applicable rate is ~~1.70%~~dependent on the type of loan being financed, which includes broadly syndicated, private and middle market loans meeting certain criteria as set forth in the Third Amended Credit and Security Agreement and ranges from 1.90% to 2.75% per annum during the first two years of the reinvestment period and 2.00% to 2.85% during the last year of the reinvestment period and 2.10% to 2.95% per annum during the amortization period (and, in each case, an additional 2.00% per annum following an event of default under the Third Amended Credit and Security Agreement). The reinvestment period ~~begins~~began on ~~the Closing Date~~December 31, 2019 (the “Closing Date”) and concludes on the earlier of (i) the date that is three years after June 23, 2022, the ~~Closing Date,~~date the third amendment became effective, (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 Third Amended 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~~liquid senior secured loans subject to certain eligibility criteria under the Third Amended Credit and Security Agreement.

The Company believes it was in compliance with the financial covenants under the Company’s various fixed and variable rate debt agreements, as of September 30, ~~2021.~~2022.

Repurchase Facilities

As of September 30, ~~2021,~~2022, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays Bank PLC (“Barclays”) ~~and~~, Wells Fargo Bank, N.A. (“Wells Fargo”), Deutsche Bank AG (“Deutsche Bank”), and J.P. Morgan Securities LLC (“J.P. Morgan”) (collectively, the “Repurchase Agreements”) to provide financing primarily through each bank’s purchase of the Company’s CRE mortgage loans and CMBS and future funding advances (the “Repurchase Facilities”).

The following table is a summary of the Repurchase Facilities as of September 30, ~~2021~~2022 (dollar amounts in thousands):

Repurchase Facility Date of Agreement
Maturity Date(1)
Maximum Facility Size(2)
Weighted Average Interest Rate Carrying Value of Loans Financed under Repurchase Facility Amount Financed
Citibank 6/4/2020 8/17/2024 $ 400,000 2.2% $ 291,855 $ 199,216
Barclays 9/21/2020 9/21/2024 500,000 2.5% 249,334 184,400
Wells Fargo 5/20/2021 5/19/2024 250,000 1.8% 171,578 123,638
Total $ 1,150,000 $ 712,767 $ 507,254

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)


Repurchase Facility	Date of Agreement	Maturity Date(1)		Maximum Facility Size(2)		Weighted Average Interest Rate		Carrying Value of Loans Financed under Repurchase Facility		Amount Financed
Citibank	6/4/2020	8/17/2024		$	400,000	4.6%	(3)	$	460,573	$	333,532
Barclays	9/21/2020	9/21/2024		1,250,000		4.7%	(3)	1,171,039		915,452
Wells Fargo	5/20/2021	8/30/2025		750,000		4.4%	(3)	887,423		693,616
Deutsche Bank	10/8/2021	10/8/2023		300,000		5.1%	(4)	189,365		144,520
J.P. Morgan	6/1/2022	10/7/2022	(5)	(5)		4.1%	(6)	351,647		195,473
Total				$	2,700,000			$	3,060,047	$	2,282,593

(1)The ~~Repurchase Facilities were~~repurchase facilities with Citibank and Barclays are set to mature in August 2024 and September 2024, with up to two one-year extension options. The repurchase facility with Wells Fargo was set to mature on ~~various dates between June 2023 and~~ May 19, 2024, with up to 2two one-year extension options. During the nine months ended September 30, 2022, the Company extended the initial facility termination date to August 30, 2025 under the Third Amendment to the Master Repurchase Agreement with Wells Fargo. The repurchase facility with Deutsche Bank (“Deutsche Bank Repurchase Facility”) was set to mature on October 8, 2022, with four one-year extension options, all of which are subject to certain conditions set forth in the Repurchase Agreements. During the nine months ended September 30, ~~2021,~~2022, the Company exercised the Deutsche Bank Repurchase Facility’s first extension option, extending the date of maturity to October 8, 2023. Subsequent to September 30, 2022, the Company extended the current maturity ~~dates of the repurchase facility with Citibank (the “Citibank Repurchase Facility”) and~~date under the repurchase facility with Barclays (the “Barclays Repurchase Facility”)., extending the maturity date to September 22, 2025, as discussed in Note 17 — Subsequent Events.

(2)During the nine months endedSeptember 30, ~~2021,~~2022, the Company increased the ~~Citibank~~Barclays Repurchase Facility ~~to provide up to $400.0 million in financing. Subsequent to September 30, 2021, the Company increased~~and the repurchase facility with Wells Fargo (the “Wells Fargo Repurchase Facility”) to ~~$580.0~~provide up to $1.25 billion and $750.0 million, ~~as discussed~~respectively, in ~~Note 16 — Subsequent Events.~~financing.

The Repurchase Agreements provide for simultaneous agreements by Citibank, Barclays and Wells Fargo to re-sell such purchased CRE mortgage loans back to CMFT Lending Subs at a certain future date or upon demand. (3)Advances under the Repurchase Agreements accrue interest at per annum rates based on the one-month LIBOR, Term SOFR (as such term is defined in the applicable Repurchase Agreement), 30-day SOFR average, or the daily compounded SOFR plus a spread ranging from ~~1.40%~~1.25% to ~~4.60%~~2.15% to be determined on a case-by-case basis between Citibank, Barclays or Wells Fargo and the CMFT Lending Subs.

(4)Under the Amended and Restated Master Repurchase Agreement with Deutsche Bank, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by Deutsche Bank, and the interest rate used for certain existing advances under the existing Deutsche Bank Repurchase Facility may be converted from the one-month LIBOR to one-month SOFR plus a spread ranging from 1.90% to 2.75%.

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

(6)Under the Master Repurchase Agreement with J.P. Morgan, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by J.P. Morgan, which as of September 30, 2022, ranges from 1.10% to 1.35%.

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

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

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

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

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 September 30, ~~2021.~~2022.

~~Maturities~~

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~~Liquidity and Financial Condition— As of~~ CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021, the Company had $88.0 million of debt maturing within the next 12 months following the date these financial statements are issued. 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 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.2022 (Unaudited) – (Continued)

Maturities

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to September 30, ~~2021~~2022 (in thousands):


		Principal Repayments			Principal Repayments
Remainder of 2021		$	2,607
2022		98,479
Remainder of 2022				Remainder of 2022	$	197,518
2023	2023	1,246,984		2023	283,490
2024	2024	699,979		2024	1,863,177
2025	2025	—		2025	856,378
2026				2026	—
Thereafter	Thereafter	758,520		Thereafter	1,180,014
Total	Total	$	2,806,569	Total	$	4,380,577

NOTE 1011 — 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 September 30, ~~2021,~~2022, the Company had ~~$123.7~~$344.7 million of unfunded loan commitments related to its existing CRE loans ~~held-for-investment.~~held-for-investment, corporate senior loans, and liquid senior loans, and $79.5 million of unfunded commitments related to the NewPoint JV. These commitments are not reflected in the accompanying condensed consolidated balance ~~sheets.~~

~~Unsettled Broadly Syndicated Loans~~sheet.

As of September 30, ~~2021,~~2022, the Company had ~~$87.4~~$6.3 million of unsettled ~~broadly syndicated~~liquid senior loan acquisitions, ~~$63.1~~$5.8 million of which settled subsequent to September 30, ~~2021. Additionally, the Company had $4.4 million of unsettled broadly syndicated loan sales, $3.4 million of which settled subsequent to September 30, 2021.~~2022. Unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance ~~sheets.~~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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~~CIM REAL ESTATE FINANCE TRUST, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

~~Merger Agreement~~

On September 21, 2021, the Company announced it had entered into the Merger Agreement. In the event the Merger Agreement is terminated in connection with CIM Income NAV’s acceptance of a Superior Proposal or an Adverse Recommendation Change, then CIM Income NAV must pay to the Company a termination payment of $14.78 million, and up to $2.68 million as reimbursement for CMFT’s Expenses, subject to certain exceptions set forth in the Merger Agreement. However, the termination payment payable by CIM Income NAV to the Company will be $6.72 million if the Merger Agreement is terminated before the end of the Window Period End Time (as defined in the Merger Agreement) by (i) CIM Income NAV in order for CIM Income NAV to accept a Superior Proposal from a Qualified Bidder (as defined in the Merger Agreement) or (ii) the Company in response to an Adverse Recommendation Change with respect to or as a result of a Superior Proposal by a Qualified Bidder. If the Merger Agreement is terminated because the CIM Income NAV Merger was not consummated before the Outside Date or because the Stockholder Approval was not obtained, and (i) an Acquisition Proposal has been publicly announced or otherwise communicated to CIM Income NAV’s stockholders prior to the Stockholders Meeting and (ii) within 12 months after the date of such termination (A) CIM Income NAV consummates or enters into an agreement (that is thereafter consummated) in respect of an Acquisition Proposal for 50% or more of CIM Income NAV’s equity or 75% or more of CIM Income NAV’s assets or (B) the board of directors of CIM Income NAV recommends or fails to recommend against an Acquisition Proposal structured as a tender or exchange offer for 75% or more of CIM Income NAV’s equity and such Acquisition Proposal is actually consummated, then CIM Income NAV must pay to the Company a termination payment of $14.78 million, and up to $2.68 million as reimbursement for CMFT’s Expenses. No such fees were paid as of September 30, 2021.

NOTE 1112 — 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”).~~2012.

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).

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

CMFT Securities has an investment advisory and management agreement dated December 6, 2019 (the “Investment Advisory and Management Agreement”) with the Investment Advisor. CMFT Securities was formed for the purpose of holding any securities investments and certain other investments made by the Company. The Investment Advisor, a wholly-owned subsidiary of CIM, 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~~principally provides investment management services with respect to the corporate credit-related securities held by CMFT ~~Securities.~~Securities and its subsidiaries. The Sub-Advisor may allocate a portion of these corporate credit-related securities to its other clients, including affiliates of CIM. On a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee and incentive compensation attributable to the assets for which Sub-Advisor has provided investment management services payable to the Investment Advisor as sub-advisory fees.

Incentive compensation

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

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 period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable). During the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, no 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.~~

Expense reimbursements to related parties

The Company reimburses CMFT Management, the Investment Advisor or ~~its~~their 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, the Investment Advisor, or ~~its~~their affiliates for salaries and benefits paid to personnel who provide services to the Company, ~~including~~excluding the Company’s executive officers and any portfolio management, acquisitions or investment professionals.

~~Disposition fees~~

Pursuant 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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Management fees	Management fees	$	11,703	$	10,139	$	35,035	$	29,739	Management fees	$	12,915	$	11,703	$	39,613	$	35,035

Disposition fees		$	—	$	93	$	—	$	434

Expense reimbursements to related parties(1)	Expense reimbursements to related parties(1)	$	2,516	$	1,439	$	8,387	$	6,674	Expense reimbursements to related parties(1)	$	3,428	$	2,516	$	10,899	$	8,387

____________________________________

(1)During the nine months endedSeptember 30, 2022, the Company paid $984,000 of expense reimbursements attributable to earnout leasing costs under the Purchase and Sale Agreement, which are included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

Due to Affiliates

Of the amounts shown above, ~~$15.1~~$14.6 million and ~~$13.8~~$15.1 million had been incurred, but not yet paid, for services provided by CMFT Management or its affiliates in connection with the management and operating activities during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

~~Due to Affiliates~~

As of September 30, 2021 and December 31, 2020, $15.1 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~~Repurchase Facilities

~~On January 7, 2021,~~As of September 30, 2022, indirect wholly-owned subsidiaries of the Company ~~completed foreclosure proceedings~~(collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays Bank PLC (“Barclays”), Wells Fargo Bank, N.A. (“Wells Fargo”), Deutsche Bank AG (“Deutsche Bank”), and J.P. Morgan Securities LLC (“J.P. Morgan”) (collectively, the “Repurchase Agreements”) to ~~take control~~provide financing primarily through each bank’s purchase of the ~~assets~~Company’s CRE mortgage loans and CMBS and future funding advances (the “Repurchase Facilities”).

The following table is a summary of the Repurchase Facilities as of September 30, 2022 (dollar amounts in thousands):

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)


Repurchase Facility	Date of Agreement	Maturity Date(1)		Maximum Facility Size(2)		Weighted Average Interest Rate		Carrying Value of Loans Financed under Repurchase Facility		Amount Financed
Citibank	6/4/2020	8/17/2024		$	400,000	4.6%	(3)	$	460,573	$	333,532
Barclays	9/21/2020	9/21/2024		1,250,000		4.7%	(3)	1,171,039		915,452
Wells Fargo	5/20/2021	8/30/2025		750,000		4.4%	(3)	887,423		693,616
Deutsche Bank	10/8/2021	10/8/2023		300,000		5.1%	(4)	189,365		144,520
J.P. Morgan	6/1/2022	10/7/2022	(5)	(5)		4.1%	(6)	351,647		195,473
Total				$	2,700,000			$	3,060,047	$	2,282,593

(1)The repurchase facilities with Citibank and Barclays are set to mature in August 2024 and September 2024, with up to two one-year extension options. The repurchase facility with Wells Fargo was set to mature on May 19, 2024, with up to two one-year extension options. During the nine months ended September 30, 2022, the Company extended the initial facility termination date to August 30, 2025 under the Third Amendment to the Master Repurchase Agreement with Wells Fargo. The repurchase facility with Deutsche Bank (“Deutsche Bank Repurchase Facility”) was set to mature on October 8, 2022, with four one-year extension options, all of which ~~previously secured its mezzanine~~are subject to certain conditions set forth in the Repurchase Agreements. During the nine months ended September 30, 2022, the Company exercised the Deutsche Bank Repurchase Facility’s first extension option, extending the date of maturity to October 8, 2023. Subsequent to September 30, 2022, the Company extended the current maturity date under the repurchase facility with Barclays (the “Barclays Repurchase Facility”), extending the maturity date to September 22, 2025, as discussed in Note 17 — Subsequent Events.

(2)During the nine months endedSeptember 30, 2022, the Company increased the Barclays Repurchase Facility and the repurchase facility with Wells Fargo (the “Wells Fargo Repurchase Facility”) to provide up to $1.25 billion and $750.0 million, respectively, in financing.

(3)Advances under the Repurchase Agreements accrue interest at per annum rates based on the one-month LIBOR, Term SOFR (as such term is defined in the applicable Repurchase Agreement), 30-day SOFR average, or the daily compounded SOFR plus a spread ranging from 1.25% to 2.15% to be determined on a case-by-case basis between Citibank, Barclays or Wells Fargo and the CMFT Lending Subs.

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

The Repurchase Agreements provide for simultaneous agreements by Citibank, Barclays, Wells Fargo, Deutsche Bank and J.P. Morgan to re-sell such purchased CRE mortgage loans ~~including 75 condominium units~~ and ~~21 rental units across 4 buildings~~CMBS back to CMFT Lending Subs at a certain future date or upon demand.

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

The Repurchase Agreements and the Guaranties contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guaranties contain financial covenants that require the Company to maintain: (i) minimum liquidity of not less than the lower of (a) $50.0 million and (b) the greater of (A) $10.0 million and (B) 5% of the Company’s recourse indebtedness, as defined in ~~New York. Upon foreclosure,~~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 ~~approval~~financial covenants under the Repurchase Agreements as of September 30, 2022.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

Maturities

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to September 30, 2022 (in thousands):


	Principal Repayments
Remainder of 2022	$	197,518
2023	283,490
2024	1,863,177
2025	856,378
2026	—
Thereafter	1,180,014
Total	$	4,380,577

NOTE 11 — COMMITMENTS AND CONTINGENCIES

Litigation

Unfunded Commitments

As of September 30, 2022, the Company had $344.7 million of unfunded loan commitments related to its existing CRE loans held-for-investment, corporate senior loans, and liquid senior loans, and $79.5 million of unfunded commitments related to the NewPoint JV. These commitments are not reflected in the accompanying condensed consolidated balance sheet.

As of September 30, 2022, the Company had $6.3 million of unsettled liquid senior loan acquisitions, $5.8 million of which settled subsequent to September 30, 2022. 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 ~~valuation, compensation and affiliate transactions committee~~property, the tenant of the ~~Board,~~ property and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify the Company against future remediation costs. The Company also carries environmental liability insurance on its properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which the Company may be liable. The Company is not aware of any environmental matters which it believes are reasonably likely to have a material effect on its results of operations, financial condition or liquidity.

NOTE 12 — RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS

Management and investment advisory fees

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CIM NYREAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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 ~~Company’s manager~~ Investment Advisor. The Sub-Advisor principally provides investment management services with respect to the corporate credit-related securities held by CMFT Securities and its subsidiaries. The Sub-Advisor may allocate a portion of these corporate credit-related securities to its other clients, including affiliates of CIM. On a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee and incentive compensation attributable to the assets for which Sub-Advisor has provided investment management services payable to the Investment Advisor as sub-advisory fees.

Incentive compensation

CMFT Management ~~entered into~~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 period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable). During the three and nine months ended September 30, 2022 and 2021, no incentive compensation fees were incurred.

In addition, the Investment Advisor is eligible to receive a ~~Development~~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.

Expense reimbursements to related parties

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Management fees	$	12,915	$	11,703	$	39,613	$	35,035



Expense reimbursements to related parties (1)	$	3,428	$	2,516	$	10,899	$	8,387

____________________________________

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022 (Unaudited) – (Continued)

~~Agreement with~~Due to Affiliates

Of 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~~amounts shown above, $14.6 million and ~~construction of property improvements in accordance with each respective Development Management Agreement (the “Development Services”). In consideration~~$15.1 million had been incurred, but not yet paid, for the Development Services, CIM NY Management, LLC will receive a development management fee from the Building Owners equal to 4% of the aggregate gross project costs expended during the term of the Development Management Agreement, subject to the conditions in each respective Development Management Agreement. 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 12 — 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~~in connection with 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.

~~NOTE 13 — 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 341,000 shares of common stock are available for future grant at September 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 September 30, 2021, the Company has granted awards of approximately 58,700 restricted shares to the independent members of the Board under the Plan. As of September 30, 2021, 32,500 of the restricted shares had vested based on one year of continuous service, and on October 1, 2021, 22,100 of the restricted shares vested based on one year of continuous service. The remaining 4,100 restricted shares issued had not vested or been forfeited as of September 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 $62,000 and $151,000 for the three and nine months ended September 30, 2021, respectively, and $40,000 and $120,000 for the three and nine months ended September 30, 2020, respectively, related to the restricted shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. All compensation expense related to these restricted shares was recognized ratably over the period of service prior to September 30, 2021.

~~NOTE 14 — 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 September 30, 2021, the Company’s leases had a weighted-average remaining term of 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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~~CIM REAL ESTATE FINANCE TRUST, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

As of September 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
Remainder of 2021 $ 56,316
2022 224,208
2023 209,844
2024 192,953
2025 176,377
Thereafter 1,111,469
Total $ 1,971,167

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 nine months ended September 30, 2021 and 2020, the amount of the contingent rent earned by the Company ~~was not significant~~.

~~Rental and other property income during the three and nine months ended September 30, 2021 and 2020 consisted of the following (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Fixed rental and other property income (1)
$ 60,031 $ 56,300 $ 190,632 $ 164,396
Variable rental and other property income (2)
10,763 9,711 32,394 30,154
Total rental and other property income $ 70,794 $ 66,011 $ 223,026 $ 194,550

~~(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 11.9 years, with a lease liability (in~~ ~~deferred rental income, derivative liabilities and other liabilities) and a related ROU asset (in~~ ~~prepaid expenses and other 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 $188,000 of ground lease expense during the three and nine months ended September 30, 2021, respectively, of which $61,000 and $182,000 was paid in cash during the period it was recognized. As of September 30, 2021, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $63,000 for the remainder of 2021, $250,000 annually for 2022 through 2026, and $1.7 million thereafter through the maturity date of the lease in August 2033.

~~NOTE 15 — 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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~~CIM REAL ESTATE FINANCE TRUST, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

~~The following tables present segment reporting for the three and~~ ~~nine months ended September 30, 2021 and 2020(in thousands):~~

Real Estate Credit
Corporate/Other (1)
Company Total
Three Months Ended September 30, 2021
Rental and other property income $ 70,694 $ — $ 100 $ 70,794
Interest income — 19,755 — 19,755
Total revenues 70,694 19,755 100 90,549
General and administrative 86 265 2,725 3,076
Property operating 7,555 — 3,602 11,157
Real estate tax 7,325 — 266 7,591
Expense reimbursements to related parties — — 2,516 2,516
Management fees 8,713 2,990 — 11,703
Transaction-related 6 — — 6
Depreciation and amortization 22,801 — — 22,801
Real estate impairment 891 — — 891
Decrease in provision for credit losses — (1,792) — (1,792)
Total operating expenses 47,377 1,463 9,109 57,949
Gain on disposition of real estate and condominium developments, net 30,657 — 3,376 34,033
Merger-related expenses, net — — (398) (398)
Operating income (loss) 53,974 18,292 (6,031) 66,235
Other expense:
Interest expense and other, net (12,820) (5,117) (2,444) (20,381)
Loss on extinguishment of debt (249) — (3,002) (3,251)
Segment net income (loss) $ 40,905 $ 13,175 $ (11,477) $ 42,603
Total assets as of September 30, 2021 $ 2,947,031 $ 1,866,913 $ 266,915 $ 5,080,859
~~__________________________________~~

~~(1)Includes condominium and rental units acquired via foreclosure~~ during the nine months ended September 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 payments2022 and ~~became delinquent on principal~~2021, respectively, and ~~interest. As a result,~~such amounts were recorded as liabilities of 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.

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

Real Estate Credit
Corporate/Other (1)
Company Total
Nine Months Ended September 30, 2021
Rental and other property income $ 222,691 $ — $ 335 $ 223,026
Interest income — 48,168 — 48,168
Total revenues 222,691 48,168 335 271,194
General and administrative 204 978 9,927 11,109
Property operating 22,297 — 10,335 32,632
Real estate tax 22,390 — 5,126 27,516
Expense reimbursements to related parties — — 8,387 8,387
Management fees 26,577 8,458 — 35,035
Transaction-related 37 — — 37
Depreciation and amortization 73,186 — — 73,186
Real estate impairment 5,268 — — 5,268
Decrease in provision for credit losses — (1,101) — (1,101)
Total operating expenses 149,959 8,335 33,775 192,069
Gain on disposition of real estate and condominium developments, net 75,633 — 4,869 80,502
Merger-related expenses, net — — (398) (398)
Operating income (loss) 148,365 39,833 (28,969) 159,229
Other expense:
Interest expense and other, net (20,649) (12,005) (24,209) (56,863)
Loss on extinguishment of debt (1,621) — (3,108) (4,729)
Segment net income (loss) $ 126,095 $ 27,828 $ (56,286) $ 97,637
Total assets as of September 30, 2021 $ 2,947,031 $ 1,866,913 $ 266,915 $ 5,080,859
~~__________________________________~~

~~(1)~~Includes condominium and rental units acquired via foreclosure during the nine months ended September 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.

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

Real Estate Credit Corporate/Other Company Total
Three Months Ended September 30, 2020
Rental and other property income $ 66,011 $ — $ — $ 66,011
Interest income — 6,631 — 6,631
Total revenues 66,011 6,631 — 72,642
General and administrative 147 522 2,539 3,208
Property operating 5,214 — — 5,214
Real estate tax 6,566 — — 6,566
Expense reimbursements to related parties — — 1,439 1,439
Management fees 9,113 1,026 — 10,139
Transaction-related 55 3 — 58
Depreciation and amortization 19,967 — — 19,967
Real estate impairment 476 — — 476
Increase in provision for credit losses — 7,355 — 7,355
Total operating expenses 41,538 8,906 3,978 54,422
Gain on disposition of real estate, net 3,219 — — 3,219
Merger-related expenses, net — — (1,207) (1,207)
Operating income (loss) 27,692 (2,275) (5,185) 20,232
Other expense:
Interest expense and other, net (4,596) (2,134) (9,234) (15,964)
Loss on extinguishment of debt — — (89) (89)
Segment net income (loss) $ 23,096 $ (4,409) $ (14,508) $ 4,179
Total assets as of September 30, 2020 $ 2,673,887 $ 946,827 $ 163,254 $ 3,783,968

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

Real Estate Credit Corporate/Other Company Total
Nine Months Ended September 30, 2020
Rental and other property income $ 194,550 $ — $ — $ 194,550
Interest income — 19,395 — 19,395
Total revenues 194,550 19,395 — 213,945
General and administrative 263 1,047 7,800 9,110
Property operating 16,890 — — 16,890
Real estate tax 20,292 — — 20,292
Expense reimbursements to related parties — — 6,674 6,674
Management fees 26,636 3,103 — 29,739
Transaction-related 300 8 — 308
Depreciation and amortization 60,486 — — 60,486
Real estate impairment 15,983 — — 15,983
Increase in provision for credit losses — 33,037 — 33,037
Total operating expenses 140,850 37,195 14,474 192,519
Gain on disposition of real estate, net 20,120 — — 20,120
Merger-related expenses, net — — (1,207) (1,207)
Operating income (loss) 73,820 (17,800) (15,681) 40,339
Other expense:
Interest expense and other, net (16,492) (2,696) (28,052) (47,240)
Loss on extinguishment of debt (4,394) — (447) (4,841)
Segment net income (loss) $ 52,934 $ (20,496) $ (44,180) $ (11,742)
Total assets as of September 30, 2020 $ 2,673,887 $ 946,827 $ 163,254 $ 3,783,968

~~NOTE 16 — SUBSEQUENT EVENTS~~

~~The following events occurred subsequent to September 30, 2021:~~

~~Redemptions of Shares of Common Stock~~

Subsequent to September 30, 2021, the Company redeemed approximately 1.3 million shares for $9.4 million (at a redemption price of $7.20 per share). The remaining redemption requests received during the three months ended September 30, 2021 totaling approximately 27.7 million shares went unfulfilled.

~~Property Dispositions~~

Subsequent to September 30, 2021, the Company disposed of 2 properties for an aggregate gross sales price of $2.5 million, resulting in net proceeds of $2.4 million after closing costs and a net gain of approximately $29,000. The Company has no continuing involvement with these properties. Additionally, the Company disposed of condominium units for an aggregate gross sales price of $10.4 million and a net gain of $1.1 million.

~~CRE Loans~~

Subsequent to September 30, 2021, the Company acquired 3 senior loans with an aggregate principal balance of $345.0 million and unfunded commitments of $11.9 million, the funding of which is subject to the satisfaction of borrower milestones.

~~Broadly Syndicated Loans~~

~~Subsequent to September 30, 2021, the Company settled $75.2 million of broadly syndicated loan transactions, $59.7 million of which were traded~~ as of ~~September 30, 2021.~~such dates.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2021 (Unaudited) – (Continued)~~

~~CMBS Purchases~~

~~Subsequent to September 30, 2021, the Company purchased $61.0 million of CMBS.~~

~~Credit and Security Agreement~~

Subsequent to September 30, 2021, the Company entered into an amendment to the Credit and Security Agreement, pursuant to which available borrowings on the Credit Security Revolver were increased up to $550.0 million. The Company also borrowed an additional $50.0 million under the Credit Security Revolver.

Repurchase Facilities

As of September 30, 2022, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays Bank PLC (“Barclays”), Wells Fargo Bank, N.A. (“Wells Fargo”), Deutsche Bank AG (“Deutsche Bank”), and J.P. Morgan Securities LLC (“J.P. Morgan”) (collectively, the “Repurchase Agreements”) to provide financing primarily through each bank’s purchase of the Company’s CRE mortgage loans and CMBS and future funding advances (the “Repurchase Facilities”).

The following table is a summary of the Repurchase Facilities as of September 30, 2022 (dollar amounts in thousands):

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)


Repurchase Facility	Date of Agreement	Maturity Date(1)		Maximum Facility Size(2)		Weighted Average Interest Rate		Carrying Value of Loans Financed under Repurchase Facility		Amount Financed
Citibank	6/4/2020	8/17/2024		$	400,000	4.6%	(3)	$	460,573	$	333,532
Barclays	9/21/2020	9/21/2024		1,250,000		4.7%	(3)	1,171,039		915,452
Wells Fargo	5/20/2021	8/30/2025		750,000		4.4%	(3)	887,423		693,616
Deutsche Bank	10/8/2021	10/8/2023		300,000		5.1%	(4)	189,365		144,520
J.P. Morgan	6/1/2022	10/7/2022	(5)	(5)		4.1%	(6)	351,647		195,473
Total				$	2,700,000			$	3,060,047	$	2,282,593

(1)The repurchase facilities with Citibank and Barclays are set to mature in August 2024 and September 2024, with up to two one-year extension options. The repurchase facility with Wells Fargo was set to mature on May 19, 2024, with up to two one-year extension options. During the nine months ended September 30, 2022, the Company extended the initial facility termination date to August 30, 2025 under the Third Amendment to the Master Repurchase Agreement with Wells Fargo. The repurchase facility with Deutsche Bank (“Deutsche Bank Repurchase Facility”) was set to mature on October 8, 2022, with four one-year extension options, all of which are subject to certain conditions set forth in the Repurchase Agreements. During the nine months ended September 30, 2022, the Company exercised the Deutsche Bank Repurchase Facility’s first extension option, extending the date of maturity to October 8, 2023. Subsequent to September 30, ~~2021,~~2022, the Company ~~entered into an amendment~~extended the current maturity date under the repurchase facility with Barclays (the “Barclays Repurchase Facility”), extending the maturity date to September 22, 2025, as discussed in Note 17 — Subsequent Events.

(2)During thenine months endedSeptember 30, 2022, the Company increased the Barclays Repurchase Facility and the repurchase facility with Wells Fargo (the “Wells Fargo Repurchase ~~Agreement~~Facility”) to ~~increase~~provide up to $1.25 billion and $750.0 million, respectively, in financing.

(3)Advances under the ~~maximum financing amount~~Repurchase Agreements accrue interest at per annum rates based on the one-month LIBOR, Term SOFR (as such term is defined in the applicable Repurchase Agreement), 30-day SOFR average, or the daily compounded SOFR plus a spread ranging from ~~$250.0 million~~1.25% to ~~$580.0 million. The Company also borrowed an additional $431.6 million~~2.15% to be determined on ~~its Repurchase Facilities.~~a case-by-case basis between Citibank, Barclays or Wells Fargo and the CMFT Lending Subs.

~~Deutsche Bank Repurchase Agreement~~

~~Subsequent to September 30, 2021, CMFT RE Lending RF Sub DB, LLC, an indirect wholly-owned subsidiary of~~(4)Under the ~~Company, entered into a~~Amended and Restated Master Repurchase Agreement with Deutsche Bank, ~~AG, New York Branch (“~~advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by Deutsche ~~Bank”) (the “Deutsche~~ Bank, ~~Repurchase Agreement”), which provides up to $300.0 million of financing primarily through Deutsche Bank’s purchase of~~and the interest rate used for certain ~~eligible assets from~~existing advances under the ~~Company (the “Deutsche Bank Repurchase Facility”). The~~existing Deutsche Bank Repurchase Facility may be converted from the one-month LIBOR to one-month SOFR plus a spread ranging from 1.90% to 2.75%.

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

(6)Under the Master Repurchase Agreement ~~provides~~with J.P. Morgan, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by J.P. Morgan, which as of September 30, 2022, ranges from 1.10% to 1.35%.

The Repurchase Agreements provide for a simultaneous ~~agreement~~agreements by Citibank, Barclays, Wells Fargo, Deutsche Bank and J.P. Morgan to re-sell such ~~assets~~purchased CRE mortgage loans and CMBS back to ~~the lending subsidiary~~CMFT Lending Subs at a certain future date or upon demand. ~~The Deutsche Bank Repurchase Facility matures on October 8, 2022, with 4 one-year extension options, subject to certain conditions set forth in the Deutsche Bank Repurchase Agreement.~~

In connection with certain of the ~~Deutsche Bank~~ Repurchase ~~Agreement,~~Agreements, the Company (as the guarantor) entered into ~~a guaranty~~guaranties with ~~the buyer,~~Citibank, Barclays, Wells Fargo, and Deutsche Bank (the “Guaranties”), under which the Company agreed to guarantee ~~CMFT RE Lending RF Sub DB, LLC’s obligations under the Deutsche Bank Repurchase Agreement. Subject~~up to ~~certain exceptions, the maximum aggregate liability under the guaranty will not exceed~~ 25% of the ~~then~~CMFT Lending Subs’ obligations under certain Repurchase Agreements.

The Repurchase Agreements and the Guaranties contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guaranties contain financial covenants that require the Company to maintain: (i) minimum liquidity of not less than the lower of (a) $50.0 million and (b) the greater of (A) $10.0 million and (B) 5% of the Company’s recourse indebtedness, as defined in the Guaranties; (ii) minimum consolidated net worth greater than or equal to $1.0 billion plus (a) 75% of the equity issued by the Company following the respective closing dates of the Repurchase Agreements (the “Repurchase Closing Dates”) minus (b) the aggregate ~~repurchase price~~amount of ~~all purchased assets.~~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 September 30, 2022.

~~Registration Statements on Form S-4~~

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

Maturities

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to September 30, 2022 (in thousands):


	Principal Repayments
Remainder of 2022	$	197,518
2023	283,490
2024	1,863,177
2025	856,378
2026	—
Thereafter	1,180,014
Total	$	4,380,577

NOTE 11 — COMMITMENTS AND CONTINGENCIES

Litigation

Unfunded Commitments

Environmental Matters

NOTE 12 — RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS

Management and investment advisory fees

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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 principally provides investment management services with respect to the corporate credit-related securities held by CMFT Securities and its subsidiaries. The Sub-Advisor may allocate a portion of these corporate credit-related securities to its other clients, including affiliates of CIM. On a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee and incentive compensation attributable to the assets for which Sub-Advisor has provided investment management services payable to the Investment Advisor as sub-advisory fees.

Incentive compensation

CMFT Management is entitled to receive incentive compensation, payable with respect to each quarter, which is generally equal to the excess of (a) the product of (i) 20% and (ii) the excess of (A) Core Earnings (as defined in the 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 period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable). During the three and nine months ended September 30, 2022 and 2021, no incentive compensation fees were incurred.

Expense reimbursements to related parties


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Management fees	$	12,915	$	11,703	$	39,613	$	35,035



Expense reimbursements to related parties (1)	$	3,428	$	2,516	$	10,899	$	8,387

____________________________________

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

Due to Affiliates

Of the amounts shown above, $14.6 million and $15.1 million had been incurred, but not yet paid, for services provided by CMFT Management or its affiliates in connection with the management and operating activities during the nine months ended September 30, 2022 and 2021, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

Development Management Agreements

On January 7, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its mezzanine loans, including 75 condominium units and 21 rental units across four buildings in New York. Upon foreclosure, and with the approval of the 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 four buildings (the “Building Owners”), wherein CIM NY Management, LLC will act as project manager in overseeing the development and construction of property improvements in accordance with each respective Development Management Agreement (the “Development Services”). In consideration for the Development Services, CIM NY Management, LLC will receive a development management fee from the Building Owners equal to 4% of the aggregate gross project costs expended during the term of the Development Management Agreement, subject to the conditions in each respective Development Management Agreement. During the nine months ended September 30, 2022 and 2021, the Company recorded $337,000 and $85,000, respectively, in development management fees. Additionally, CIM NY Management, LLC is reimbursed by the Building Owners for expenses incurred in connection with the Development Services, including services provided that are incidental to but not part of the Development Services. The Development Management Agreement shall remain in effect until the project completion date, and is terminable by either party with fifteen days prior notice to the other party, with or without cause.

Affiliated Investments

In September 2021, the Company co-invested $68.4 million in preferred units and $138.8 million in a mortgage loan to a third-party for the purchase of a multi-family, office and retail building in Fort Lauderdale, Florida with CIM Real Assets & Credit Fund, a fund that is advised by affiliates of CMFT Management (“CIM RACR”). During the nine months ended September 30, 2022, the Company and CIM RACR upsized their investment in the preferred units with an additional $4.8 million and $364,000, respectively, and upsized their investment in the mortgage loan with an additional $6.4 million and $490,000, respectively. The Company subsequently redeemed its investment in the preferred units during the nine months ended September 30, 2022 in exchange for an investment in a first mortgage loan. As a result of the upsize and the conversion of preferred units, as of September 30, 2022, the Company had $203.6 million invested in the mortgage loan.

In October 2021, the Company invested in a $130.0 million first mortgage loan, with an initial advance of $119.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management. As of September 30, 2022, $122.4 million of the first mortgage loan was outstanding. An affiliate of CMFT Management serves as the property manager for this property and has entered into a subordination agreement with the Company in connection with the loan.

In November 2021, the Company entered into the Unconsolidated Joint Venture (the “MT-FT JV”) with CMMT Holdings, LLC, a fund that is advised by an affiliate of CMFT Management, for the purposes of investing in the NewPoint JV. The Company owns 50% of the equity interests of the MT-FT JV and has committed to fund capital to the MT-FT JV up to $212.5 million, of which $133.0 million has been funded. For more information on the NewPoint JV, see Note 2 — Summary of Significant Accounting Policies.

In December 2021, the Company invested in a $155.0 million first mortgage loan, with an initial advance of $154.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management. As of September 30, 2022, $154.0 million of the first mortgage loan was outstanding.

During the nine months ended September 30, 2022, the Company invested in a $147.0 million first mortgage loan, with an initial advance of $143.0 million, to a third-party, which was previously funded by a fund that is advised by an affiliate of CMFT Management. As of September 30, 2022, $144.7 million of the first mortgage loan was outstanding.

As a result of the CIM Income NAV Merger, the Company ~~filed~~had an investment in CIM UII Onshore, a ~~registration statement on Form S-4 (File No. 333-260358),~~fund that is advised by an affiliate of CMFT Management, which was ~~declared effective~~fully redeemed for $60.7 million during the nine months ended September 30, 2022. See Note 2 — Summary of Significant Accounting Policies for more information on the CIM UII Onshore investment.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

During the nine months ended September 30, 2022, the Company and CIM RACR co-invested $75.9 million and $14.7 million, respectively, in five corporate senior loans to a third-party. As of September 30, 2022, $58.0 million of the corporate senior loans was outstanding. The Sub-Advisor provided investment management services related to these corporate senior loans pursuant to the Sub-Advisory Agreement.

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 ~~SEC on November 4, 2021,~~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 ~~contains a prospectus~~these companies are unable to provide the Company with these services, the Company would be required to find alternative providers of ~~the Company. The CIM Income NAV Merger is currently anticipated to close by year end 2021 or shortly thereafter.~~these services.

~~Board~~

NOTE 14 — STOCKHOLDERS’ EQUITY

Equity-Based Compensation

On ~~November 8, 2021,~~August 10, 2018, the Board approved the ~~acceleration~~adoption of the ~~vesting~~Company’s 2018 Equity Incentive Plan (the “2018 Plan”), under which 400,000 of ~~all restricted shares for all non-returning independent directors to the date on which~~ the Company’s ~~2021 annual meeting (the “Annual Meeting”) is held. In addition,~~shares of common stock were reserved for issuance. On April 27, 2022, the Board and the compensation committee of the Board approved the ~~payment~~Amended and Restated CIM Real Estate Finance Trust, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Plan was approved by the Company’s stockholders at the Company’s 2022 Annual Meeting of ~~cash compensation to each~~Stockholders held on July 12, 2022. The 2022 Plan superseded and replaced the 2018 Plan. Awards that are granted on or after the effective date of the ~~non-returning independent directors, payable in one lump sum following the Annual Meeting, equal~~2022 Plan are subject to the ~~cash~~terms and provisions of the 2022 Plan. The total number of shares of Company common stock reserved and available for issuance under the 2022 Plan at any time during the term of the 2022 Plan are 250,000 shares, which is a reduction from 400,000 shares authorized for issuance under the 2018 Plan, and awards of approximately 250,000 shares of common stock were available for future grant at September 30, 2022. Under the 2022 Plan, the Board or the compensation ~~each non-returning independent director would have received if they had continued to serve as a member~~committee of the Board ~~through~~has the authority to grant certain awards to employees, non-employee directors, and consultants or advisors of the Company, including stock option awards, restricted stock awards or deferred stock awards, which awards will further align such persons’ interests with the interests of the Company’s stockholders. The Board or the compensation committee of the Board also has the authority to determine the terms of any award granted pursuant to the 2022 Plan, including vesting schedules, restrictions and acceleration of any restrictions. The 2022 Plan may be amended or terminated by the Board or the compensation committee of the Board at any time, subject to the right of the Company’s stockholders to approve certain amendments.

As of September 30, 2022, the Company has granted awards of approximately 116,000 restricted shares in the aggregate to the independent members of the Board under the 2018 Plan. As of September 30, 2022, 73,000 of the restricted shares had vested based on one year of continuous service, and on October 1, 2022, 43,000 of the restricted shares vested based on one year of continuous service. The fair value of the Company’s share awards is determined using the Company’s per share NAV on the date of grant. Compensation expense related to the restricted shares is recognized over the vesting period. The Company recorded compensation expense of $120,000 and $277,000 for the three and nine months ended September 30, 2022, respectively, and $62,000 and $151,000 for the three and nine months ended September 30, 2021, respectively, related to the restricted shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. All compensation expense related to these restricted shares was recognized ratably over the period of service prior to September 30, 2022. On October 1, 2022, as part of the annual retainers paid to the independent members of the Board and pursuant to the 2022 Plan, the independent members of the Board were each granted 11,111 restricted shares. The restricted shares will vest on October 1, 2023.

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.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

As of September 30, 2022, the Company’s leases had a weighted-average remaining term of 10.7 years. Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of September 30, 2022, 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
Remainder of 2022	$	38,611
2023	153,721
2024	151,924
2025	148,037
2026	143,815
Thereafter	1,104,039
Total	$	1,740,147

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 nine months ended September 30, 2022 and 2021, the amount of the contingent rent earned by the Company was not significant.

Rental and other property income during the three and nine months ended September 30, 2022 and 2021 consisted of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Fixed rental and other property income (1)	$	40,875	$	60,031	$	153,522	$	190,632
Variable rental and other property income (2)	2,684		10,763		17,281		32,394
Total rental and other property income	$	43,559	$	70,794	$	170,803	$	223,026

(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 one property subject to a non-cancelable operating ground lease with a remaining term of 10.9 years, with a lease liability (in deferred rental income, derivative liabilities and other liabilities) and a related right-of-use (“ROU”) asset (in prepaid expenses, derivative assets and other assets) of $2.2 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 $188,000 of ground lease expense during the three and nine months ended September 30, 2022, of which $61,000 and $182,000 was paid in cash during the period it was recognized. As of September 30, 2022, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $63,000 for the remainder of 2022, $250,000 annually for 2023 through 2027, and $1.4 million thereafter through the maturity date of the lease in August 2033.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

NOTE 16 — SEGMENT REPORTING

The Company has two 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.

The following tables present segment reporting for the three and nine months ended September 30, 2022 and 2021(in thousands):


	Real Estate		Credit		Corporate/Other (1)		Company Total
Three Months Ended September 30, 2022
Rental and other property income	$	43,465	$	—	$	94	$	43,559
Interest income	—		66,222		—		66,222
Total revenues	43,465		66,222		94		109,781

General and administrative	215		77		3,143		3,435
Property operating	2,109		—		2,323		4,432
Real estate tax	1,385		—		408		1,793
Expense reimbursements to related parties	—		—		3,428		3,428
Management fees	4,849		8,066		—		12,915
Transaction-related	2		—		7		9
Depreciation and amortization	16,948		—		—		16,948
Real estate impairment	527		—		—		527
Increase in provision for credit losses	—		5,664		—		5,664
Total operating expenses	26,035		13,807		9,309		49,151
Gain (loss) on disposition of real estate and condominium developments, net	4,604		—		(150)		4,454

Operating income (loss)	22,034		52,415		(9,365)		65,084
Other expense:
Gain on investment in unconsolidated entities	—		2,195		—		2,195
Unrealized (loss) on equity security	—		(9,030)		—		(9,030)
Interest expense and other, net	(4,517)		(32,152)		(2,697)		(39,366)
(Loss) gain on extinguishment of debt	(5,615)		—		2,271		(3,344)
Segment net income (loss)	$	11,902	$	13,428	$	(9,791)	$	15,539
Net income allocated to noncontrolling interest	129		—		—		129
Segment net income (loss) attributable to the Company	11,773		13,428		(9,791)		15,410
Total assets as of September 30, 2022	$	2,189,724	$	4,725,858	$	209,196	$	7,124,778

__________________________________

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)


	Real Estate		Credit		Corporate/Other (1) (2)		Company Total
Nine Months Ended September 30, 2022
Rental and other property income	$	170,509	$	—	$	294	$	170,803
Interest income	—		142,669		—		142,669
Total revenues	170,509		142,669		294		313,472

General and administrative	494		246		9,850		10,590
Property operating	13,403		—		4,005		17,408
Real estate tax	9,251		—		1,279		10,530
Expense reimbursements to related parties	—		—		10,899		10,899
Management fees	17,176		22,437		—		39,613
Transaction-related	439		—		23		462
Depreciation and amortization	54,104		—		—		54,104
Real estate impairment	11,869		—		7,945		19,814
Increase in provision for credit losses	—		15,315		—		15,315
Total operating expenses	106,736		37,998		34,001		178,735
Gain on disposition of real estate and condominium developments, net	115,050		—		3,085		118,135

Operating income (loss)	178,823		104,671		(30,622)		252,872
Other expense:
Gain on investment in unconsolidated entities	—		3,686		5,172		8,858
Unrealized (loss) gain on equity security	—		(15,462)		22		(15,440)
Interest expense and other, net	(27,527)		(61,332)		(9,594)		(98,453)
Loss on extinguishment of debt	(18,609)		—		(975)		(19,584)
Segment net income (loss)	$	132,687	$	31,563	$	(35,997)	$	128,253
Net income allocated to noncontrolling interest	66		—		—		66
Segment net income (loss) attributable to the Company	132,621		31,563		(35,997)		128,187
Total assets as of September 30, 2022	$	2,189,724	$	4,725,858	$	209,196	$	7,124,778

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

(2)Includes the Company’s investment in CIM UII Onshore.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)


	Real Estate		Credit		Corporate/Other (1)		Company Total
Three Months Ended September 30, 2021
Rental and other property income	$	70,694	$	—	$	100	$	70,794
Interest income	—		19,755		—		19,755
Total revenues	70,694		19,755		100		90,549

General and administrative	86		265		2,725		3,076
Property operating	7,555		—		3,602		11,157
Real estate tax	7,325		—		266		7,591
Expense reimbursements to related parties	—		—		2,516		2,516
Management fees	8,713		2,990		—		11,703
Transaction-related	6		—		—		6
Depreciation and amortization	22,801		—		—		22,801
Real estate impairment	891		—		—		891
Decrease in provision for credit losses	—		(1,792)		—		(1,792)
Total operating expenses	47,377		1,463		9,109		57,949
Gain on disposition of real estate and condominium developments, net	30,657		—		3,376		34,033
Merger-related expenses, net	—		—		(398)		(398)

Operating income (loss)	53,974		18,292		(6,031)		66,235
Other expense:
Interest expense and other, net	(12,820)		(5,117)		(2,444)		(20,381)
Loss on extinguishment of debt	(249)		—		(3,002)		(3,251)
Segment net income (loss)	$	40,905	$	13,175	$	(11,477)	$	42,603

Total assets as of September 30, 2021	$	2,947,031	$	1,866,913	$	266,915	$	5,080,859

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

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)


	Real Estate		Credit		Corporate/Other (1)		Company Total
Nine Months Ended September 30, 2021
Rental and other property income	$	222,691	$	—	$	335	$	223,026
Interest income	—		48,168		—		48,168
Total revenues	222,691		48,168		335		271,194

General and administrative	204		978		9,927		11,109
Property operating	22,297		—		10,335		32,632
Real estate tax	22,390		—		5,126		27,516
Expense reimbursements to related parties	—		—		8,387		8,387
Management fees	26,577		8,458		—		35,035
Transaction-related	37		—		—		37
Depreciation and amortization	73,186		—		—		73,186
Real estate impairment	5,268		—		—		5,268
Decrease in provision for credit losses	—		(1,101)		—		(1,101)
Total operating expenses	149,959		8,335		33,775		192,069
Gain on disposition of real estate and condominium developments, net	75,633		—		4,869		80,502
Merger-related expenses, net	—		—		(398)		(398)

Operating income (loss)	148,365		39,833		(28,969)		159,229
Other expense:
Interest expense and other, net	(20,649)		(12,005)		(24,209)		(56,863)
Loss on extinguishment of debt	(1,621)		—		(3,108)		(4,729)
Segment net income (loss)	$	126,095	$	27,828	$	(56,286)	$	97,637

Total assets as of September 30, 2021	$	2,947,031	$	1,866,913	$	266,915	$	5,080,859

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

NOTE 17 — SUBSEQUENT EVENTS

Redemptions of Shares of Common Stock

Subsequent to September 30, 2022, the Company redeemed approximately 1.3 million shares for $9.6 million (at a redemption price of $7.20 per share). The remaining redemption requests received during the three months ended September 30, 2022 totaling approximately 23.9 million shares went unfulfilled.

Investment and Disposition Activity

Subsequent to September 30, 2022, the Company’s investment and disposition activity included the following:

•Disposed of one property and condominium units for an aggregate gross sales price of $14.1 million, resulting in net proceeds of $12.8 million after closing costs and a net gain of approximately $627,000.

•Purchased $55.0 million in CMBS.

•Settled $6.3 million of liquid senior loan purchases, $5.8 million of which were traded as of September 30, 2022, and sold $3.3 million of liquid senior loans.

•The extension option was exercised on two of the Company’s first mortgage loans for $101.4 million that were initially set to mature on November 7, 2022, extending the date of maturity to November 7, 2023.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

Financing Activity

Subsequent to September 30, 2022, the Company’s financing activity included the following:

•Extended the Barclays Repurchase Facility’s initial maturity date which was set to mature on September 21, 2024, to September 22, 2025.

•Borrowed $35.0 million under the CMFT Credit Facility.

•Financed CMBS under the J.P. Morgan Repurchase Facility for $31.3 million and repaid $5.3 million of borrowings under the J.P. Morgan Repurchase Facility.

•Increased borrowings on first mortgage loans under the Deutsche Bank Repurchase Facility for $1.7 million.

•Repaid $10.8 million of borrowings under the Mortgage Loan.

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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.~~2021. 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.~~2021.

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 investments and properties.

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

•We could be subject to unexpected costs or unexpected liabilities that may arise from 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 our borrowers and tenants and from borrower or ~~from~~ tenant defaults generally.

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

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

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

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

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•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, including those associated with the COVID-19 pandemic.

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

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

•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 CCIT III and CCPT V Mergers and the CIM Income NAV Merger.~~

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~~are primarily focused on ~~July 27, 2010,~~originating, acquiring, financing and ~~we elected to be taxed,~~managing shorter duration senior secured loans, other related credit investments 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 intend to continue to pursue a diversified investment strategy across the capital structure by balancing our existing portfolio of~~ core commercial real ~~estate assets with investments in commercial mortgage loans and other real estate-related credit investments in which our sponsor and its affiliates have expertise. We expect~~estate. Our investment strategy allows us to adapt ~~our investment strategy~~ over time in order to respond to evolving market conditions and to capitalize on investment opportunities that may arise at different points in the economic and real estate investment cycle. We are continuing our strategy as a credit focused REIT, balancing our existing core of necessity commercial real estate assets leased to creditworthy tenants under long-term net leases with a portfolio of commercial mortgage loans and other credit investments. Assuming the successful repositioning of our portfolio and subject to market conditions, we then expect to pursue a listing of our common stock on a national securities exchange, ~~in 2022,~~ though we can provide no assurances that a listing will happen on that timeframe or at all.

We were formed on July 27, 2010, and we elected to be taxed, and conduct our operations to qualify, as a REIT for U.S. federal income tax purposes. We have no paid employees and are externally managed by CMFT Management and, with respect to investments in securities and certain other of our investments, our Investment Advisor, each of which is an affiliate of CIM, a community-focused real estate and infrastructure owner, operator, lender and developer.

As of September 30, 2022, our loan portfolio consisted of 346 loans with a net book value of $4.0 billion, and investments in real estate-related securities of $470.1 million.

As of September 30, 2022, we owned 384 properties, which consisted of 367 retail properties, nine office properties, and eight industrial properties, representing 25 industry sectors and comprising 11.0 million rentable square feet of commercial space located in 44 states, with a net book value of $2.2 billion. As of September 30, 2022, we owned condominium developments with a net book value of $153.6 million.

In furtherance of our strategy, during the nine months ended September 30, 2022, we disposed of 130 properties and an outparcel of land, including the two properties previously owned through the Consolidated Joint Venture, encompassing 11.7

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million gross rentable square feet. On December 20, 2021, certain subsidiaries of the Company entered into the Purchase and Sale Agreement to sell 79 shopping centers and two single-tenant properties, for which we were to receive, in the aggregate, approximately $1.32 billion in total consideration at closing. During the nine months ended September 30, 2022, the sale of the 81 properties closed under the Purchase and Sale Agreement for total consideration of $1.33 billion, as further discussed in Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Our operating results and cash flows are primarily influenced by interest income from our credit investments, rental and other property income from our commercial properties, interest ~~income from our credit investments, interest~~ expense on our indebtedness and investment and operating expenses. ~~As 94.2%~~CMFT Management reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. In addition, as 99.3% of our rentable square feet was under lease, including any month-to-month agreements, as of September 30, ~~2021,~~2022, with a weighted average remaining lease term of ~~8.3~~10.7 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.~~factors, including due to circumstances related to COVID-19. 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~~our manager identifies significant changes or trends that may adversely affect the creditworthiness of a tenant, it will gather a more in-depth knowledge of the tenant’s financial condition and, if necessary, attempt to mitigate the tenant credit risk by evaluating the possible sale of the property or identifying a possible replacement tenant should the current tenant fail to perform on the lease. In addition, our manager reviews our investment portfolios and in certain instances is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

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As of September 30, 2021, we owned 403 properties, which consisted of 346 retail properties, 53 anchored shopping centers, three industrial properties and one office property, representing 36 industry sectors and comprising 17.6 million rentable square feet of commercial space located in 40 states. In addition, during the nine months ended September 30, 2021, we completed foreclosure proceedings and took control of the assets which previously secured our mezzanine loans. As of September 30, 2021, we owned $189.3 million of condominium developments.

As of September 30, 2021, our loan portfolio consisted of 273 loans with a net book value of $1.5 billion. As of September 30, 2021, we had $87.4 million of unsettled broadly syndicated loan purchases included in cash and cash equivalents, and investments in real estate-related securities of $185.2 million.

COVID-19

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, including, among other factors, the duration, spread and resurgences of the virus, including certain variants thereof, along with related travel advisories and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, the pace, scope and efficacy of vaccination programs, and general uncertainty as to the impact of COVID-19, including related variants, on the global economy.

~~During~~Macroeconomic Environment

This year has been characterized by steep declines and significant volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth and geopolitical uncertainty. Inflation across many key economies reached generational highs, prompting central banks to take monetary policy tightening actions that have, and will likely continue to create headwinds to economic growth. The ongoing war between Russia and Ukraine is also contributing to mounting inflationary pressure.

Inflation has caused the ~~three~~Federal Reserve to continue raising interest rates, which has created further uncertainty for the economy and ~~nine months ended September 30, 2021,~~for our borrowers and tenants. Although the majority of ~~lease concessions provided were~~our business model is such that rising interest rates will, all else being equal, correlate to increases in our net income, increases in interest rates may adversely affect our existing borrowers, tenants and owned property values. Additionally, rising rates and increasing costs may dampen consumer spending and slow corporate profit growth, which may negatively impact the collateral underlying certain of our loans. While there is debate among economists as to whether such factors, coupled with economic contraction in the ~~form of rent abatements~~U.S. in 2022, indicate that the U.S. has entered, or in the near term will enter, a recession, it remains difficult to ~~certain tenants in response to~~predict the full impact of ~~the COVID-19 pandemic on those tenants.~~

~~As of~~ ~~November 8, 2021, we have collected approximately 99.3% of rental payments billed to tenants during the~~ ~~three months ended September 30, 2021,~~recent changes and ~~as of November 8, 2021, we collected~~ ~~$6.4 million~~ ~~of deferred rent, representing approximately~~ ~~97%~~ ~~of amounts due through September 30, 2021~~.

~~Pending Merger~~

On ~~September 21, 2021~~, we entered into the Merger Agreement. Subject to the terms and conditions of the Merger Agreements, CIM Income NAV will merge with and into Merger Sub with Merger Sub surviving the CIM Income NAV Merger, such that following the CIM Income NAV Merger, the surviving entity will continue as our wholly owned subsidiary. In accordance with the applicable provisions of the ~~Maryland General Corporation Law~~, ~~the separate existence of CIM Income NAV shall cease.~~

At the effective time of the CIM Income NAV Merger and subject to the terms and conditions of the Merger Agreement, each issued and outstanding share of the Class D Common Stock will be converted into the right to receive 2.574 shares of CMFT Common Stock, each issued and outstanding share of the Class T Common Stock will be converted into the right to receive 2.510 shares of CMFT Common Stock, each issued and outstanding share of the Class S Common Stock will be converted into the right to receive 2.508 shares of CMFT Common Stock, and each issued and outstanding share of the Class I Common Stock will be converted into the right to receive 2.622 shares of CMFT Common Stock,any future changes in ~~each case, subject to the treatment of fractional shares in accordance with the Merger Agreement.~~

The combined company after the Merger will retain the name CIM Real Estate Finance Trust, Inc. The Merger is intended to qualify as a “reorganization” under, and within the meaning of, Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).

For additional information on the Merger, see Note 1 — Organization and Business to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q and our Current Reports on Form 8-K filed with the SEC on September 22, 2021.interest rates or inflation.

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Operating Highlights and Key Performance Indicators

Activity from January 1, 2022 through September 30, ~~2021~~2022

Operating Results:

•Net income attributable to the Company of $128.2 million, or $0.29 per share.

•Declared aggregate distributions of $0.27 per share.

Credit Portfolio Activity:

•Invested ~~$720.1 million~~$1.3 billion in ~~senior~~first mortgage loans and received principal repayments on loans held-for-investment of ~~$285.1~~$156.9 million.

•Invested ~~$267.0~~$160.9 million in ~~broadly syndicated~~liquid senior loans and sold ~~broadly syndicated~~liquid senior loans for an aggregate gross sales price of ~~$55.5~~$53.7 million.

•Invested ~~$171.9~~$433.2 million in CMBS and ~~preferred units and~~ sold ~~CMBS~~one marketable security for an aggregate gross sales price of ~~$27.0 million.~~$132,000.

•Converted $68.2 million of preferred units into a CRE loan upon maturity.

•Invested $74.8 million in corporate senior loans.

Real Estate Portfolio Activity:

•Disposed of ~~113~~130 properties and ~~one~~an outparcel of land, including the two properties previously owned through the Consolidated Joint Venture, for an aggregate sales price of ~~$484.4 million.~~$1.71 billion.

•~~Completed foreclosure to take control~~Disposed of ~~the assets which previously secured our mezzanine loans, including 75~~ condominium units ~~and 21 rental units across four buildings.~~for an aggregate sales price of $24.2 million.

Financing Activity:

•Increased total debt by ~~$656.6~~$209.2 million.

•Entered into a new repurchase agreement and increased maximum financing amounts on two existing repurchase facilities to provide up to $1.25 billion and $750.0 million, ~~from $2.1 billion~~respectively, to ~~$2.8 billion.~~finance a portfolio of existing and future commercial real estate mortgage loans and CMBS.

•Entered into a new credit agreement that provides for borrowings of up to $300.0 million, which includes a $100.0 million term loan facility and the ability to borrow up to $200.0 million in revolving loans under a revolving credit facility with a $30.0 million letter of credit subfacility.

•Paid down the $212.5 million outstanding balance under the CIM Income NAV Credit Facility and terminated the CIM Income NAV Credit Facility.

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Portfolio Information

The following table shows the carrying value of our portfolio by investment type as of September 30, ~~2021~~2022 and ~~2020~~2021 (dollar amounts in thousands):


		As of September 30,											As of September 30,
		2021					2020						2022					2021
		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		—	$	—	—	%	8	$	146,516	4.2	%
Senior loans		11	890,804		19.2	%	4	327,244		9.3	%
Broadly syndicated loans		262	571,488		12.3	%	161	419,135		12.0	%
Less: Allowance for credit losses			(11,219)		(0.2)	%		(35,039)		(1.0)	%

First mortgage loans												First mortgage loans	29	$	3,259,744	48.7	%	11	$	890,804	19.2	%
Liquid senior loans												Liquid senior loans	313	705,750		10.6	%	262	571,488		12.3	%
Corporate senior loans												Corporate senior loans	4	57,232		0.9	%	—	—		—	%
Less: Current expected credit losses												Less: Current expected credit losses		(29,584)		(0.4)	%		(11,219)		(0.2)	%
Total loans held-for-investment and related receivable, net	Total loans held-for-investment and related receivable, net	273	1,451,073		31.2	%	173	857,856		24.5	%	Total loans held-for-investment and related receivable, net	346	3,993,142		59.8	%	273	1,451,073		31.2	%
Real Estate-Related Securities	Real Estate-Related Securities											Real Estate-Related Securities
CMBS		15	121,757		2.6	%	5	75,212		2.1	%
CMBS and equity security												CMBS and equity security	17	470,121		7.0	%	15	121,757		2.6	%
Preferred units	Preferred units	1	63,490		1.4	%	—	—		—	%	Preferred units	—	—		—	%	1	63,490		1.4	%
Real Estate	Real Estate											Real Estate
Total real estate assets and intangible lease liabilities, net	Total real estate assets and intangible lease liabilities, net	403	3,011,599		64.8	%	380	2,568,842		73.4	%	Total real estate assets and intangible lease liabilities, net	384	2,220,272		33.2	%	403	3,011,599		64.8	%
Total Investment Portfolio	Total Investment Portfolio	691	$	4,647,919	100.0	%	558	$	3,501,910	100.0	%	Total Investment Portfolio	747	$	6,683,535	100.0	%	692	$	4,647,919	100.0	%

Credit Portfolio Information

The following table details overall statistics offor our credit portfolio as of September 30, ~~2021~~2022 (dollar amounts in thousands):


		Senior Loans (1) (2)			Broadly Syndicated Loans			CMBS			Preferred Units				CRE Loans (1)			Liquid Senior Loans			CMBS and Equity Security			Corporate Senior Loans
Number of loans		11			262			15			1
Number of investments (3)														Number of investments (3)	29			313			17			4
Principal balance														Principal balance	$	3,283,523		$	711,947		$	551,738		$	58,031
Net book value	Net book value	$	885,517		$	565,556		$	121,757		$	63,490		Net book value	$	3,244,737		$	691,981		$	470,121		$	56,424
Unfunded loan commitments														Unfunded loan commitments	$	338,539		$	1,886		$	—		$	4,324
Weighted-average interest rate	Weighted-average interest rate	3.7		%	3.6		%	2.8		%	8.9		%	Weighted-average interest rate	5.9		%	6.7		%	7.4		%	9.2		%
Weighted-average maximum years to maturity		2.7			5.0			12.4			0.7
Weighted-average maximum years to maturity (2)														Weighted-average maximum years to maturity (2)	3.9			4.9			4.3			4.8

(1)As of September 30, ~~2021,~~2022, 100% of our loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar ~~LIBOR.~~LIBOR and SOFR.

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

(3)Table does not include our investment in the Unconsolidated Joint Venture, which had a carrying value of $132.4 million as of September 30, 2022.

Real Estate Portfolio Information

As of September 30, ~~2021,~~2022, we owned ~~403~~384 properties located in 4044 states, the gross rentable square feet of which was ~~94.2%~~99.3% leased, including any month-to-month agreements, with a weighted average lease term remaining of ~~8.3~~10.7 years. As of

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September 30, ~~2021,~~2022, no single tenant accounted for greater than 10% of our ~~2021~~2022 annualized rental income. As of September 30, ~~2021,~~2022, we had certain geographic and industry concentrations in our property holdings. In particular, ~~46 of our~~we had properties ~~were~~ located in ~~California,~~Ohio, which accounted for ~~11%~~12% of our ~~2021~~2022 annualized rental income. In addition, we had tenants in the health and personal care stores, sporting goods, hobby and musical ~~instruments~~instrument stores, and ~~health and personal care stores~~grocery store industries, which accounted for 13%, 10% and ~~11%~~10%, respectively, of our ~~2021~~2022 annualized rental income. During the nine months ended September 30, 2022, we disposed of 130 properties and an outparcel of land, including the two properties previously

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owned through the Consolidated Joint Venture, for an aggregate gross sales price of $1.71 billion. Additionally, during the nine months ended September 30, 2022, we sold condominium units for an aggregate gross sales price of $24.2 million.

The following table shows the property statistics of our real estate assets as of September 30, ~~2021~~2022 and ~~2020:~~2021:


		As of September 30,					As of September 30,
		2021		2020			2022		2021
Number of commercial properties	Number of commercial properties	403		380		Number of commercial properties	384		403
Rentable square feet (in thousands) (1)	Rentable square feet (in thousands) (1)	17,623		17,938		Rentable square feet (in thousands) (1)	11,043		17,623
Percentage of rentable square feet leased	Percentage of rentable square feet leased	94.2	%	94.3	%	Percentage of rentable square feet leased	99.3	%	94.2	%
Percentage of investment-grade tenants (2)	Percentage of investment-grade tenants (2)	36.9	%	37.9	%	Percentage of investment-grade tenants (2)	39.3	%	36.9	%

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

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

~~The following table summarizes our real estate acquisition activity during~~During the nine months ended September 30, 2022 and 2021, ~~and 2020:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Commercial properties acquired — 2 — 3
Purchase price of acquired properties (in thousands) $ — $ 9,851 $ — $ 14,510
Rentable square feet (in thousands) (1)
— 37 — 56

~~(1) Includes square feet of buildings on land parcels subject to ground leases.~~the Company did not acquire any properties.

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~~2021 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 fees, (d) transaction-related expenses, (e) real estate impairment, (f) increase in provision for credit losses, (g) gain on disposition of real estate and condominium developments, net, (h) merger-related expenses, net and (i) interest income. Our ~~net~~

~~Table~~calculation of ~~Contents~~

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).~~income. In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment.

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Comparison of the Three Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

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


		For the Three Months Ended September 30,							For the Three Months Ended September 30,
		2021		2020		Change			2022		2021		Change
Net income	Net income	$	42,603	$	4,179	$	38,424	Net income	$	15,539	$	42,603	$	(27,064)
Loss on extinguishment of debt	Loss on extinguishment of debt	3,251		89		3,162		Loss on extinguishment of debt	3,344		3,251		93
Interest expense and other, net	Interest expense and other, net	20,381		15,964		4,417		Interest expense and other, net	39,366		20,381		18,985
Unrealized loss on equity security								Unrealized loss on equity security	9,030		—		9,030
Gain on investment in unconsolidated entities								Gain on investment in unconsolidated entities	(2,195)		—		(2,195)
Operating income	Operating income	66,235		20,232		46,003		Operating income	65,084		66,235		(1,151)

Merger-related expenses, net	Merger-related expenses, net	398		1,207		(809)		Merger-related expenses, net	—		398		(398)
Gain on disposition of real estate and condominium developments, net	Gain on disposition of real estate and condominium developments, net	(34,033)		(3,219)		(30,814)		Gain on disposition of real estate and condominium developments, net	(4,454)		(34,033)		29,579
(Decrease) increase in provision for credit losses		(1,792)		7,355		(9,147)
Increase (decrease) in provision for credit losses								Increase (decrease) in provision for credit losses	5,664		(1,792)		7,456
Real estate impairment	Real estate impairment	891		476		415		Real estate impairment	527		891		(364)
Depreciation and amortization	Depreciation and amortization	22,801		19,967		2,834		Depreciation and amortization	16,948		22,801		(5,853)
Transaction-related expenses	Transaction-related expenses	6		58		(52)		Transaction-related expenses	9		6		3
Management fees	Management fees	11,703		10,139		1,564		Management fees	12,915		11,703		1,212
Expense reimbursements to related parties	Expense reimbursements to related parties	2,516		1,439		1,077		Expense reimbursements to related parties	3,428		2,516		912
General and administrative expenses	General and administrative expenses	3,076		3,208		(132)		General and administrative expenses	3,435		3,076		359
Interest income	Interest income	(19,755)		(6,631)		(13,124)		Interest income	(66,222)		(19,755)		(46,467)
Net operating income	Net operating income	$	52,046	$	54,231	$	(2,185)	Net operating income	$	37,334	$	52,046	$	(14,712)

Our operating segments include credit and real estate. Refer to Note 1516 — Segment Reporting to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of our operating segments.

Credit Segment

Interest Income

The increase in interest income of $46.5 million for the three months ended September 30, 2022, as compared to the same period in 2021, was due to an increase in the overall size of our investment portfolio. As of September 30, 2022, we held $4.5 billion in credit investments compared to $1.6 billion in credit investments as of September 30, 2021.

Increase (Decrease) in Provision for Credit Losses

The increase in provision for credit losses of $7.5 million during the three months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the increased number of loan investments entered into during the three months ended September 30, 2022, as compared to the same period in 2021.

Real Estate Segment

A total of ~~295~~302 properties were acquired before July 1, ~~2020~~2021 and represent our “same store” properties during the three months ended September 30, ~~2021~~2022 and ~~2020.~~2021. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after July 1, ~~2020.~~2021.

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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~~(in thousands):


		Total						Same Store						Non-Same Store							Total						Same Store						Non-Same Store
		For the Three Months Ended September 30,						For the Three Months Ended September 30,						For the Three Months Ended September 30,							For the Three Months Ended September 30,						For the Three Months Ended September 30,						For the Three Months Ended September 30,
		2021		2020		Change		2021		2020		Change		2021		2020		Change			2022		2021		Change		2022		2021		Change		2022		2021		Change

Rental and other property income	Rental and other property income	$	70,794	$	66,011	$	4,783	$	55,202	$	55,490	$	(288)	$	15,592	$	10,521	$	5,071	Rental and other property income	$	43,559	$	70,794	$	(27,235)	$	29,354	$	29,822	$	(468)	$	14,205	$	40,972	$	(26,767)

Property operating expenses	Property operating expenses	11,157		5,214		5,943		5,534		4,556		978		5,623		658		4,965		Property operating expenses	4,432		11,157		(6,725)		739		872		(133)		3,693		10,285		(6,592)
Real estate tax expenses	Real estate tax expenses	7,591		6,566		1,025		6,095		5,924		171		1,496		642		854		Real estate tax expenses	1,793		7,591		(5,798)		900		1,001		(101)		893		6,590		(5,697)
Total property operating expenses	Total property operating expenses	18,748		11,780		6,968		11,629		10,480		1,149		7,119		1,300		5,819		Total property operating expenses	6,225		18,748		(12,523)		1,639		1,873		(234)		4,586		16,875		(12,289)

Net operating income	Net operating income	$	52,046	$	54,231	$	(2,185)	$	43,573	$	45,010	$	(1,437)	$	8,473	$	9,221	$	(748)	Net operating income	$	37,334	$	52,046	$	(14,712)	$	27,715	$	27,949	$	(234)	$	9,619	$	24,097	$	(14,478)

Loss on Extinguishment of Debt

The increase in loss on extinguishment of debt of ~~$3.2~~$93,000 for the three months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the increase in terminations of certain mortgage notes in connection with the disposition of the underlying properties during the three months ended September 30, 2022, as compared to the same period in 2021.

Gain on Investment in Unconsolidated Entities

The increase in gain on investment in unconsolidated entities of $2.2 million for the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was ~~primarily~~ due to the ~~extinguishment of five mortgage loans with an aggregate carrying value of $89.4 million and~~Company’s investment in NP JV Holdings, which was not invested in by the ~~repayment and termination of~~Company during the ~~Credit Facilities.~~three months ended September 30, 2021.

Interest Expense and Other, Net

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

The increase in interest expense and other, net, of ~~$4.4~~$19.0 million for the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to an increase in the three-month average aggregate amount of debt outstanding from ~~$1.8 billion as of September 30, 2020 to~~ $2.8 billion as of September 30, 2021 to $4.3 billion as of September 30, 2022, primarily as a result of entering into and upsizing additional repurchase agreements ~~originating the Mortgage Loan and Class A Notes, and assuming the CCPT V Credit Facility as part of the CCIT III and CCPT V Mergers~~ subsequent to September 30, ~~2020. This~~2021, coupled with an increase ~~was partially offset by a decrease~~ in the Company’s weighted average interest rate from ~~3.3% as of September 30, 2020 to~~ 2.8% as of September 30, ~~2021.~~2021 to 4.5% as of September 30, 2022.

Merger-Related Expenses, Net

The decrease in merger-related expenses, net of ~~$809,000~~$398,000 for the three months ended September 30, 2022, as compared to the same period in 2021, was due to expenses incurred related to the CIM Income NAV Merger during the three months ended September 30, ~~2021, as compared to the same period in 2020, was primarily due to incurring~~2021. No such expenses ~~related to the CIM Income NAV Merger of $398,000~~were incurred during the three months ended September 30, ~~2021, compared to incurring expenses related to the CCIT III and CCPT V Mergers of $1.2 million during the three months ended September 30, 2020.~~2022.

Gain on Disposition of Real Estate and Condominium Developments, Net

The ~~increase~~decrease in gain on disposition of real estate and condominium developments, net, of ~~$30.8~~$29.6 million during the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was ~~primarily~~ due to the disposition of 6618 properties, ~~and one~~an outparcel of land and condominium units for a gain of ~~$30.7~~$4.5 million during the three months ended September 30, ~~2021~~2022, compared to the disposition of ~~three~~66 properties, an outparcel of land and condominium units for a gain of ~~$3.2~~$34.0 million during the three months ended September 30, ~~2020.~~2021.

Real Estate Impairment

The ~~increase~~decrease in real estate impairments of ~~$415,000~~$364,000 during the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was due to one property that was deemed to be impaired, resulting in impairment charges of $527,000 during the three months ended September 30, 2022, compared to six properties that ~~was~~were deemed to be impaired, resulting in impairment charges of $891,000 during the three months ended September 30, ~~2021, compared to one property that was deemed to be impaired, resulting in impairment charges of $476,000 during the three months ended September 30, 2020.~~

~~Depreciation and Amortization~~

The increase in depreciation and amortization of $2.8 million during the three months ended September 30, 2021, as compared to the same period in 2020, was primarily due to the acquisition of 146 properties in connection with the CCIT III and CCPT V Mergers that closed in December 2020, partially offset by the disposition of 124 properties subsequent to September 30, 2020.2021.

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Depreciation and Amortization

The decrease in depreciation and amortization of $5.9 million during the three months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the disposition of 134 properties subsequent to September 30, 2021, partially offset by the acquisition of 115 properties through the CIM Income NAV Merger that closed in December 2021.

Transaction-Related Expenses

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

Transaction-related expenses remained generally consistent during the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020.~~2021.

Management Fees

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 Company’s Equity (as defined in the Management Agreement). Furthermore, as discussed in Note 1112 — 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). 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 fees of ~~$1.6~~$1.2 million during the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to increased equity from the issuance of common stock in connection with the ~~CCIT III and CCPT V Mergers~~CIM Income NAV Merger that closed in December ~~2020.~~2021.

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 1112 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q).

The increase in expense reimbursements to related parties of ~~$1.1 million~~$912,000 during the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to ~~acquiring 146 properties~~increased operating expense reimbursements due to CMFT Management, primarily as ~~part~~a result of ~~the CCIT III and CCPT V Mergers that closed in December 2020.~~increased allocated payroll resulting from increased portfolio activity.

General and Administrative Expenses

The primary general and administrative expense items are legal and accounting fees, banking fees and transfer agency ~~costs~~ and ~~banking fees.~~board of directors costs.

~~The decrease in general~~General and administrative expenses ~~of $132,000 for~~remained generally consistent during the three months ended September 30, ~~2021,~~2022, as compared to the same period in 2020, was primarily due to a decrease in fees related to the unused portion of our line of credit due to the pay down and termination of the Credit Facilities during the three months ended September 30, 2021. This decrease was partially offset by increased expenses related to the CCIT III and CCPT V 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 remained relatively consistent during the three months ended September 30, 2022, as compared to the same period in 2021.

Non-same store property net operating income decreased ~~$1.4~~$14.5 million during the three months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020.~~2021. The ~~change was primarily due to a~~ decrease ~~in occupancy from 94.3% as of September 30, 2020 to 93.8% as of September 30, 2021.~~

~~Non-same store property net operating income decreased $748,000 during the three months ended September 30, 2021, as compared to the same period in 2020. The increase~~ was primarily due to the disposition of 134 properties subsequent to September 30, 2021, partially offset by an increase in net operating income due to the acquisition of ~~146~~115 properties in connection with the ~~CCIT III and CCPT V Mergers~~CIM Income NAV Merger that closed in December ~~2020, offset by the disposition of 124 properties subsequent to September 30, 2020.~~2021.

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~~Credit Segment~~

~~(Decrease ) Increase in Provision for Credit Losses~~

The decrease in provision for credit losses of $9.1 million during the three months ended September 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 September 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 $3.6 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 September 30, 2021. During the three months ended September 30, 2021, a decrease in the provision for credit losses was recorded related to its senior loans and broadly syndicated loans due to the ongoing market recovery from COVID-19.

~~Interest Income~~

The increase in interest income of $13.1 million for the three months ended September 30, 2021, compared to the same period in 2020, was due to an increase in credit investments. As of September 30, 2021, we held investments in CRE loans held-for-investment of $890.8 million, broadly syndicated loans of $571.5 million, and CMBS of $121.8 million. As of September 30, 2020, we held investments in CRE loans held-for-investment of $473.8 million, broadly syndicated loans of $419.1 million, and CMBS of $75.2 million.

Comparison of the Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

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


		For the Nine Months Ended September 30,							For the Nine Months Ended September 30,
		2021		2020		Change			2022		2021		Change
Net income (loss)		$	97,637	$	(11,742)	$	109,379
Net income								Net income	$	128,253	$	97,637	$	30,616
Loss on extinguishment of debt	Loss on extinguishment of debt	4,729		4,841		(112)		Loss on extinguishment of debt	19,584		4,729		14,855
Interest expense and other, net	Interest expense and other, net	56,863		47,240		9,623		Interest expense and other, net	98,453		56,863		41,590
Unrealized loss on equity security								Unrealized loss on equity security	15,440		—		15,440
Gain on investment in unconsolidated entities								Gain on investment in unconsolidated entities	(8,858)		—		(8,858)
Operating income	Operating income	159,229		40,339		118,890		Operating income	252,872		159,229		93,643

Merger-related expenses, net	Merger-related expenses, net	398		1,207		(809)		Merger-related expenses, net	—		398		(398)
Gain on disposition of real estate and condominium developments, net	Gain on disposition of real estate and condominium developments, net	(80,502)		(20,120)		(60,382)		Gain on disposition of real estate and condominium developments, net	(118,135)		(80,502)		(37,633)
(Decrease) increase in provision for credit losses		(1,101)		33,037		(34,138)
Increase (decrease) in provision for credit losses								Increase (decrease) in provision for credit losses	15,315		(1,101)		16,416
Real estate impairment	Real estate impairment	5,268		15,983		(10,715)		Real estate impairment	19,814		5,268		14,546
Depreciation and amortization	Depreciation and amortization	73,186		60,486		12,700		Depreciation and amortization	54,104		73,186		(19,082)
Transaction-related expenses	Transaction-related expenses	37		308		(271)		Transaction-related expenses	462		37		425
Management fees	Management fees	35,035		29,739		5,296		Management fees	39,613		35,035		4,578
Expense reimbursements to related parties	Expense reimbursements to related parties	8,387		6,674		1,713		Expense reimbursements to related parties	10,899		8,387		2,512
General and administrative expenses	General and administrative expenses	11,109		9,110		1,999		General and administrative expenses	10,590		11,109		(519)
Interest income	Interest income	(48,168)		(19,395)		(28,773)		Interest income	(142,669)		(48,168)		(94,501)
Net operating income	Net operating income	$	162,878	$	157,368	$	5,510	Net operating income	$	142,865	$	162,878	$	(20,013)

Credit Segment

Interest Income

The increase in interest income of $94.5 million for the nine months ended September 30, 2022, as compared to the same period in 2021, was due to an increase in the overall size of our investment portfolio. As of September 30, 2022, we held $4.5 billion in credit investments compared to $1.6 billion in credit investments as of September 30, 2021.

Increase (Decrease) in Provision for Credit Losses

The increase in provision for credit losses of $16.4 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the increased number of loan investments entered into during the nine months ended September 30, 2022, as compared to the same period in 2021.

Real Estate Segment

A total of ~~294~~302 properties were acquired before January 1, ~~2020~~2021 and represent our “same store” properties during the nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, ~~2020.~~2021.

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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~~(in thousands):


		Total						Same Store						Non-Same Store							Total						Same Store						Non-Same Store
		For the Nine Months Ended September 30,						For the Nine Months Ended September 30,						For the Nine Months Ended September 30,							For the Nine Months Ended September 30,						For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
		2021		2020		Change		2021		2020		Change		2021		2020		Change			2022		2021		Change		2022		2021		Change		2022		2021		Change

Rental and other property income	Rental and other property income	$	223,026	$	194,550	$	28,476	$	163,049	$	161,609	$	1,440	$	59,977	$	32,941	$	27,036	Rental and other property income	$	170,803	$	223,026	$	(52,223)	$	88,639	$	88,066	$	573	$	82,164	$	134,960	$	(52,796)

Property operating expenses	Property operating expenses	32,632		16,890		15,742		17,237		14,547		2,690		15,395		2,343		13,052		Property operating expenses	17,408		32,632		(15,224)		2,269		2,485		(216)		15,139		30,147		(15,008)
Real estate tax expenses	Real estate tax expenses	27,516		20,292		7,224		18,183		17,926		257		9,333		2,366		6,967		Real estate tax expenses	10,530		27,516		(16,986)		2,969		3,211		(242)		7,561		24,305		(16,744)
Total property operating expenses	Total property operating expenses	60,148		37,182		22,966		35,420		32,473		2,947		24,728		4,709		20,019		Total property operating expenses	27,938		60,148		(32,210)		5,238		5,696		(458)		22,700		54,452		(31,752)

Net operating income	Net operating income	$	162,878	$	157,368	$	5,510	$	127,629	$	129,136	$	(1,507)	$	35,249	$	28,232	$	7,017	Net operating income	$	142,865	$	162,878	$	(20,013)	$	83,401	$	82,370	$	1,031	$	59,464	$	80,508	$	(21,044)

Loss on Extinguishment of Debt

The ~~decrease~~increase in loss on extinguishment of debt of ~~$112,000~~$14.9 million for the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to the ~~extinguishment~~increased terminations of ~~five~~certain mortgage ~~note~~notes in connection with ~~an aggregate carrying value of $89.4.0 million and~~ the ~~pay down and termination~~disposition of the ~~Credit Facilities~~underlying properties during the nine months ended September 30, ~~2021,~~2022, as compared to the ~~extinguishment~~same period in 2021.

Gain on Investment in Unconsolidated Entities

The increase in gain on investment in unconsolidated entities of ~~two mortgage notes with an aggregate carrying value~~$8.9 million for the nine months ended September 30, 2022, as compared to the same period in 2021, was due to the Company’s investment in CIM UII Onshore and NP JV Holdings, neither of ~~$97.0 million~~which were invested in by the Company during the nine months ended September 30, ~~2020.~~2021.

Interest Expense and Other, Net

The increase in interest expense and other, net, of ~~$9.6~~$41.6 million for the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to an increase in the nine-month average aggregate amount of debt outstanding from ~~$1.7 billion as of September 30, 2020 to~~ $2.5 billion as of September 30, 2021 to $4.2 billion as of September 30, 2022 as a result of entering into and upsizing additional repurchase agreements ~~originating the Mortgage Loan and Class A Notes,~~ and assuming the ~~CCPT V~~CIM Income NAV Credit Facility as part of the ~~CCIT III and CCPT V Mergers~~CIM Income NAV Merger subsequent to September 30, ~~2020. This~~2021, coupled with an increase ~~was partially offset by a decrease~~ in the Company’s weighted average interest rate from ~~3.3% as of September 30, 2020 to~~ 2.8% as of September 30, ~~2021.~~2021 to 4.5% as of September 30, 2022.

Merger-Related Expenses, Net

The decrease in merger-related expenses, net of ~~$809,000~~$398,000 for the nine months ended September 30, 2022, as compared to the same period in 2021, was due to expenses incurred related to the CIM Income NAV Merger during the nine months ended September 30, ~~2021, as compared to the same period in 2020, was primarily due to incurring~~2021. No such expenses ~~related to the CIM Income NAV Merger of $398,000~~were incurred during the nine months ended September 30, ~~2021, compared to incurring expenses related to the CCIT III and CCPT V Mergers of $1.2 million during the nine months ended September 30, 2020.~~2022.

Gain on Disposition of Real Estate and Condominium Developments, Net

The increase in gain on disposition of real estate and condominium developments, net, of ~~$60.4~~$37.6 million during the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to the disposition of 130 properties and one outparcel of land, including the two properties previously owned through the Consolidated Joint Venture, for a gain of $115.0 million and the disposition of condominium units for a gain of $3.1 million during the nine months ended September 30, 2022, compared to the disposition of 113 properties and ~~one~~an outparcel of land for a gain of $75.6 million ~~during the nine months ended September 30, 2021, compared to~~and the disposition of ~~19 properties~~condominium units for a gain of ~~$20.1~~$4.9 million during the nine months ended September 30, ~~2020.~~2021.

Real Estate Impairment

The ~~decrease~~increase in impairments of ~~$10.7~~$14.5 million during the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was due to 19 properties and certain condominium units that were deemed to be impaired, resulting in impairment charges of $19.8 million during the nine months ended September 30, 2022, compared to 11 properties that were deemed to be impaired, resulting in impairment charges of $5.3 million during the nine months ended September 30, ~~2021, compared to 11 properties that were deemed to be impaired, resulting in impairment charges of $16.0 million during the nine months ended September 30, 2020.~~

~~Depreciation and Amortization~~

The increase in depreciation and amortization of $12.7 million during the nine months ended September 30, 2021, as compared to the same period in 2020, was primarily due to the acquisition of 146 properties in connection with the CCIT III and CCPT V Mergers that closed in December 2020, partially offset by the disposition of 124 properties subsequent to September 30, 2020.2021.

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~~Transaction-Related Expenses~~Depreciation and Amortization

The decrease in ~~transaction-related expenses~~depreciation and amortization of ~~$271,000~~$19.1 million during the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to ~~a decrease~~the disposition of 134 properties subsequent to September 30, 2021, partially offset by the acquisition of 115 properties through the CIM Income NAV Merger that closed in ~~abandoned deal costs for~~December 2021.

Transaction-Related Expenses

The increase in transaction-related expenses of $425,000 during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to escrow holdbacks that were deemed uncollectible as of September 30, 2022 and were therefore written off. No such write-offs occurred during the same period in 2021.

Management Fees

The increase in management fees of ~~$5.3~~$4.6 million during the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to increased equity from the issuance of common stock in connection with the ~~CCIT III and CCPT V Mergers~~CIM Income NAV Merger that closed in December ~~2020.~~2021.

Expense Reimbursements to Related Parties

The increase in expense reimbursements to related parties of ~~$1.7~~$2.5 million during the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was primarily due to increased operating expense reimbursements due to CMFT Management, primarily as a result of ~~acquiring 146 properties as part of the CCIT III and CCPT V Mergers that closed in December 2020.~~increased allocated payroll resulting from increased portfolio activity.

General and Administrative Expenses

The ~~increase~~decrease in general and administrative expenses of ~~$2.0 million~~$519,000 for the nine months ended September 30, ~~2021,~~2022, compared to the same period in ~~2020,~~2021, was primarily due to increased legal expenses ~~resulting from board members added to our Board and~~incurred during the ~~acquisition of 146 properties in connection with the CCIT III and CCPT V Mergers that closed in December 2020. The increase was also due to increases in appraisal fees~~nine months ended September 30, 2021 related to the foreclosure completed in January 2021 to take control of the assets which previously secured the Company’s mezzanine loans, as discussed in Note 78 — Loans Held-For-Investment to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q. The overall decrease was partially offset by increased expenses related to the assumption of the CIM Income NAV Credit Facility in connection with the CIM Income NAV Merger completed in December 2021.

Net Operating Income

Same store property net operating income ~~decreased $1.5~~increased $1.0 million during the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020.~~2021. The ~~decrease~~increase was ~~primarily~~partially due to ~~increases in property operating expenses relating to parking lot repairs, partially offset by~~amended lease agreements, coupled with an increase in ~~rental income~~same store occupancy to 98.9% as ~~a result~~ of ~~the impact of COVID-19 leading to a temporary reduction in rental income during the nine months ended~~ September 30, ~~2020 for certain tenants.~~2022 from 98.8% as of September 30, 2021.

Non-same store property net operating income ~~increased $7.0~~decreased $21.0 million during the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020.~~2021. The decrease was primarily due to the disposition of 134 properties subsequent to September 30, 2021, partially offset by an increase isin net operating income due to the acquisition of ~~146~~115 properties in connection with the ~~CCIT III and CCPT V Mergers~~CIM Income NAV Merger that closed in December ~~2020, partially offset by the disposition of 124 properties subsequent to September 30, 2020.~~

~~Credit Segment~~

~~(Decrease ) Increase in Provision for Credit Losses~~

The decrease in provision for credit losses of $34.1 million during the nine months ended September 30, 2021, as compared to the same period in 2020, was primarily due to the Company recording $23.4 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 nine months ended September 30, 2021 related to these loans.

~~Interest Income~~

The increase in interest income of $28.8 million for the nine months ended September 30, 2021, as compared to the same period in 2020, was due to an increase in credit investments. As of September 30, 2021, we held investments in CRE loans held-for-investment of $890.8 million, broadly syndicated loans of $571.5 million, and CMBS of $121.8 million. As of September 30, 2020, we held investments in CRE loans held-for-investment of $473.8 million, broadly syndicated loans of $419.1 million, and CMBS of $75.2 million.2021.

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:

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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

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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, which are paid out on a monthly basis.

Since April 2020, our Board authorized the following monthly distribution amounts per share, payable to stockholders as of the record date for the applicable month, for the periods indicated below:

~~Record Date~~Period Commencing

Period Ending

Monthly Distribution Amount

April ~~30,~~ 2020

~~$0.0130~~

May ~~31,~~ 2020

$0.0130

June ~~30,~~2020

June 2020

$0.0161

July ~~30,~~2020

July 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~~2021

$0.0303

January ~~28, 2021~~2022

September 2022

$~~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~~0.0305

October ~~28, 2021~~2022

December 2022

$~~0.0303~~0.0339

~~November 29, 2021~~January 2023

March 2023

$~~0.0303~~

~~December 30, 2021~~

~~$0.0303~~0.0350

As of September 30, ~~2021,~~2022, we had distributions payable of ~~$11.0~~$13.3 million.

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


		Nine Months Ended September 30,										Nine Months Ended September 30,
		2021				2020						2022				2021
		Amount		Percent		Amount			Percent			Amount		Percent		Amount		Percent
Distributions paid in cash	Distributions paid in cash	$	82,541	84	%	$	62,529		65	%	Distributions paid in cash	$	91,297	76	%	$	82,541	84	%
Distributions reinvested	Distributions reinvested	16,264		16	%	34,191			35	%	Distributions reinvested	28,664		24	%	16,264		16	%
Total distributions	Total distributions	$	98,805	100	%	$	96,720		100	%	Total distributions	$	119,961	100	%	$	98,805	100	%
Sources of distributions:	Sources of distributions:										Sources of distributions:
Net cash provided by operating activities (1)	Net cash provided by operating activities (1)	$	97,518	99	%	$	81,390	(2)	84	%	Net cash provided by operating activities (1)	$	119,961	100	%	$	97,518	99	%
Proceeds from the issuance of debt ~~(3)~~(2)	Proceeds from the issuance of debt ~~(3)~~(2)	1,287		1	%	7,022			7	%	Proceeds from the issuance of debt ~~(3)~~(2)	—		—	%	1,287		1	%
Proceeds from the issuance of common stock		—		—	%	8,308		(4)	9	%

Total sources	Total sources	$	98,805	100	%	$	96,720		100	%	Total sources	$	119,961	100	%	$	98,805	100	%

(1)Net cash provided by operating activities for the nine months ended September 30, 2022 and 2021 ~~and 2020~~ was ~~$97.5~~$125.4 million and ~~$71.8~~$97.5 million, respectively.

(2)Our distributions covered by cash flows from operating activities for the nine months ended September 30, 2020 include cash flows from operating activities in excess of distributions from prior periods of $9.6 million.

~~(3)~~Net proceeds on the repurchase facilities, credit facilities and notes payable for the nine months ended September 30, 2021 ~~and 2020 were~~was $584.1 ~~million and $237.8 million, respectively.~~million.

~~(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 nine months ended September 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.

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~~We will limit the number of shares redeemed pursuant to our share redemption program as follows: (1) we will not redeem in excess of 5% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being paid; and (2) funding for the redemption of shares will be limited, among other things, to the ~~cumulative~~ net proceeds we receive from the sale of shares under ~~the Secondary~~our DRIP, ~~Offering,~~ net of shares redeemed to date. In ~~addition,~~an effort to accommodate redemption requests throughout the calendar year, we will generally limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we receive from the sale of shares in the respective quarter under the Secondary DRIP Offering. Any of the foregoing limits might prevent us from accommodating all redemption requests made in any fiscal quarter or in any 12-month period. We will determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable payment date. If we cannot purchase all shares presented for redemption in any fiscal quarter, based upon insufficient cash available from the sale of shares under our DRIP and/or the limit on the number of shares we may redeem during any quarter or year, we will give priority to the redemption of deceased stockholders’ shares. While deceased

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stockholders’ shares will be included in calculating the maximum number of shares that may be redeemed in any annual or quarterly period, they will not be subject to the annual or quarterly percentage caps; therefore, if the volume of requests to redeem deceased stockholders’ shares in a particular quarter were large enough to cause the annual or quarterly percentage caps to be exceeded, even if no other redemption requests were processed, the redemptions of deceased stockholders’ shares would be completed in full, assuming sufficient proceeds from the sale of shares under our DRIP, net of shares redeemed to date, were available. If sufficient proceeds from the sale of shares under our DRIP, net of shares redeemed to date, were not available to pay all such redemptions in full, the requests to redeem deceased stockholders’ shares would be honored on a pro rata basis. We next will give priority to requests for full redemption of accounts with a balance of 250 shares or less at the time we receive the request, in order to reduce the expense of maintaining small accounts. Thereafter, we will honor the remaining redemption requests on a pro rata basis. Following such quarterly redemption period, if a stockholder would like to resubmit the unsatisfied portion of the prior request for redemption, such stockholder must submit a new request for redemption of such shares prior to the last day of the new quarter. Unfulfilled requests for redemption will not be carried over automatically to subsequent redemption periods. In addition, our management reserves the right, in its sole discretion at any time, and from time to time, to reject any request for redemption for any reason. Our Board may choose to amend the terms of, suspend or terminate our ~~Amended Share Redemption Program~~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~~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 CCIT III and CCPT V 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 until March 25, 2021, when our Board reinstated the Amended Share Redemption Program, effective April 1, 2021. During the nine months ended September 30, ~~2021,~~2022, we received valid redemption requests under our share redemption program totaling approximately ~~61.8~~74.8 million shares, of which we redeemed approximately ~~1.7~~2.8 million shares as of September 30, ~~2021~~2022 for ~~$12.0~~$19.9 million at(at an average redemption price of $7.20 per ~~share,~~share) and approximately 1.3 million shares subsequent to September 30, ~~2021~~2022 for ~~$9.4~~$9.6 million (at a redemption price of $7.20 per share). The remaining redemption requests relating to approximately ~~58.8~~70.8 million shares went unfulfilled. A valid redemption request is one that complies with the applicable requirements and guidelines of ~~our~~the 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

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acquisitions and loan originations, repayment of certain indebtedness and for general corporate uses. The sources of our operating cash flows will primarily be provided by interest income from our portfolio of credit investments and the rental and other property income received from current and future leased ~~properties and interest income from our portfolio~~properties.

Sources of ~~credit investments.~~Liquidity

~~During the nine months ended September 30, 2021, and with the proceeds from the Mortgage Loan and the sale~~Our primary sources of ~~the Class A Notes, the Company paid down the $1.11 billion outstanding balance under the Credit Facilities and terminated the Credit Facilities. As of September 30, 2021, we had~~liquidity include cash and cash equivalents ~~of $289.8 million, which included $87.4 million of unsettled broadly syndicated loan purchases.~~

~~As of September 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 September 30, 2021, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $406.5 million. Subsequent to September 30, 2021, the Company amended the Credit and Security Agreement by increasing available borrowings under our debt facilities, which are set forth in the following table:


	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	124,836	$	107,381
Unused borrowing capacity (1)	575,907		549,811
	$	700,743	$	657,192

(1)Subject to borrowing availability.

See Note 10 — Repurchase Facilities, Credit ~~Securities Revolver up to $550.0 million, as discussed in Note 16 — Subsequent Events~~Facilities and Notes Payable to our condensed consolidated financial statements in this Quarterly Report on Form ~~10-Q.~~

As10-Q for additional details regarding our repurchase facilities, notes payable and credit facilities. The following table details our outstanding financing arrangements and borrowing capacity as of September 30, ~~2021, the Repurchase Agreements provided up~~2022 (in thousands):

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	Portfolio Financing Outstanding Principal Balance		Maximum Capacity (1)
Notes payable – fixed rate debt	$	36,647	$	36,647
Notes payable – variable rate debt	470,860		470,860
First lien mortgage loan	134,007		134,007
ABS mortgage notes	764,970		764,970
Credit facilities	691,500		850,000
Repurchase facilities	2,282,593		2,700,000		(2)
Total portfolio financing	$	4,380,577	$	4,956,484

(1)Subject to ~~an aggregate of $1.2 billion of financing~~borrowing availability.

(2)Facilities under the Master Repurchase Facilities. The Repurchase Agreements provide for simultaneous agreements by the banks to re-sell purchased CRE mortgage loans back to the CMFT Lending Subs at a certain future date or upon demand. As of September 30, 2021, we had nine senior loansAgreement with an aggregate carrying value of $712.8 million financed with $507.3 million under the Repurchase Facilities, $184.4 million of which was financed under the Barclays Repurchase Facility, $199.2 million of which was financed under the Citibank Repurchase Facility and $123.6 million of which was financed under the Wells Fargo Repurchase Facility.J.P. Morgan carry no maximum facility size.

As of September 30, 2021, we believe that we were in compliance with the financial covenants of the Mortgage Loan, the Class A Notes, and the Repurchase Agreements, as well as the financial covenants under our various fixed and variable rate debt agreements, as further discussed in Note 9 — Notes Payable, Repurchase Facilities and Credit 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~~Our principal demands for funds will be for the acquisition or origination of ~~real estate-related securities,~~credit investments and real estate, ~~and real estate-related assets~~ and the payment of tenant improvements, acquisition-related ~~fees and~~ expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of ~~$98.5~~$336.4 million within the next 12 ~~months.~~months, $195.5 million of which has a rolling term that resets monthly, as further discussed in Note 17 — Subsequent Events to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

WeGenerally, 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. 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 our unencumbered assets. To the extent that cash flows from operations are lower, distributions paid to our stockholders may be lower. Operating cash flows are expected to increase as we complete future acquisitions. We expect that substantially all net cash flows from the Secondary DRIP Offering or debt financings will be used to fund acquisitions, loan originations, certain capital expenditures, repayments of outstanding debt or distributions and redemptions to our stockholders. 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 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, 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 our unencumbered assets. To the extent that cash flows from operations are lower, distributions paid to our stockholders may be lower. We expect that

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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 September 30, ~~2021,~~2022, we had debt outstanding with a carrying value of ~~$2.8~~$4.4 billion and a weighted average interest rate of ~~2.8%~~4.5%. See Note 910 — ~~Notes Payable,~~ Repurchase Facilities, ~~and~~ Credit Facilities and Notes Payable to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for certain terms of our debt outstanding.

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Our contractual obligations as of September 30, ~~2021~~2022 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)~~	$	387,262	$	7,870	$	356,411	$	22,981	$	—	Principal payments — fixed rate debt ~~(2)~~	$	36,647	$	443	$	36,204	$	—	$	—
Interest payments — fixed rate debt ~~(3)~~	Interest payments — fixed rate debt ~~(3)~~	29,488		15,279		14,022		187		—		Interest payments — fixed rate debt ~~(3)~~	3,537		1,591		1,946		—		—
Principal payments — variable rate debt	Principal payments — variable rate debt	82,844		82,844		—		—		—		Principal payments — variable rate debt	470,860		—		49,366		175,710		245,784
Interest payments — variable rate debt ~~(4)~~(2)	Interest payments — variable rate debt ~~(4)~~(2)	2,759		2,759		—		—		—		Interest payments — variable rate debt ~~(4)~~(2)	113,857		24,972		46,267		41,289		1,329
Principal payments — first lien mortgage loan ~~(5)~~	Principal payments — first lien mortgage loan ~~(5)~~	650,000		—		650,000		—		—		Principal payments — first lien mortgage loan ~~(5)~~	134,007		134,007		—		—		—
Interest payments — first lien mortgage loan ~~(5)~~(2)	Interest payments — first lien mortgage loan ~~(5)~~(2)	33,857		18,200		15,657		—		—		Interest payments — first lien mortgage loan ~~(5)~~(2)	8,630		8,630		—		—		—
Principal payments — net-lease mortgage notes (6)		772,710		7,740		6,450		—		758,520
Interest payments — net-lease mortgage notes (6)		186,543		21,636		43,450		43,390		78,067
Principal payments — ABS mortgage notes												Principal payments — ABS mortgage notes	764,970		6,450		—		—		758,520
Interest payments — ABS mortgage notes (2)												Interest payments — ABS mortgage notes (2)	163,355		21,179		42,227		42,227		57,722
Principal payments — credit facilities	Principal payments — credit facilities	406,500		—		—		406,500		—		Principal payments — credit facilities	691,500		—		691,500		—		—
Interest payments — credit facilities(2)	Interest payments — credit facilities(2)	23,815		7,317		14,654		1,844		—		Interest payments — credit facilities(2)	81,735		34,655		47,080		—		—
Principal payments — repurchase facilities ~~(7)~~	Principal payments — repurchase facilities ~~(7)~~	507,253		—		507,253		—		—		Principal payments — repurchase facilities ~~(7)~~	2,282,593		195,473		2,087,120		—		—
Interest payments — repurchase facilities ~~(7)~~(2)	Interest payments — repurchase facilities ~~(7)~~(2)	28,094		10,650		17,444		—		—		Interest payments — repurchase facilities ~~(7)~~(2)	209,479		95,751		113,728		—		—
Total	Total	$	3,111,125	$	174,295	$	1,625,341	$	474,902	$	836,587	Total	$	4,961,170	$	523,151	$	3,115,438	$	259,226	$	1,063,355

(1)The table does not include amounts due to CMFT Management or its affiliates pursuant to our Management Agreement because such amounts are not fixed and determinable. The table also does not include ~~$123.7~~$344.7 million of unfunded commitments related to our existing CRE loans held-for-investment, corporate senior loans held-for-investment and liquid senior loans and $79.5 million of unfunded commitments related to the NewPoint JV, which are subject to the satisfaction of borrower milestones. In addition, the table does not include $6.3 million of unsettled liquid senior loan acquisitions, which is included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

(2)~~Principal payment amounts reflect actual~~Interest payments on the variable rate debt, first lien mortgage loan, ABS mortgage notes, credit facilities and repurchase facilities have been calculated 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.~~

~~(3)~~Asoutstanding balances as of September 30, ~~2021, we had variable rate debt outstanding of $82.8 million with a weighted average~~2022 through their respective maturity dates. This is only an estimate as actual amounts borrowed and interest ~~rate of 5.5%. We used the weighted average interest rate to calculate the debt payment obligations in future periods.~~rates could vary over time.

~~(4)As of September 30, 2021, the amounts outstanding under the Credit Securities Revolver totaled $406.5 million and had a weighted average interest rate of 1.8%.~~

~~(5)As of September 30, 2021, the amounts outstanding under the Mortgage Loan totaled $650.0 million and had a weighted average interest rate of 2.8%.~~

~~(6)As of September 30, 2021, the amounts outstanding under the Class A Notes totaled $772.7 million and had a weighted average interest rate of 2.8%.~~

~~(7)~~As of September 30, 2021, the amount outstanding under the Citibank Repurchase Facility was $199.2 million at a weighted average interest rate of 2.1%, the amount outstanding under the Barclays Repurchase Facility was $184.4 million at a weighted average interest rate of 2.3%, and the amount outstanding under the Wells Fargo Repurchase Facility was $123.6 million at a weighted average interest rate of 1.8%.

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We expect to incur additional borrowings in the future to acquire additional properties and credit investments. There is no limitation on the amount we may borrow against any single improved property. As of September 30, ~~2021,~~2022, our ratio of debt to total gross assets net of gross intangible lease liabilities was ~~55.0%~~61.0% and our ratio of debt to the fair market value of our gross assets net of gross intangible lease liabilities was ~~57.1%~~61.1%. Fair market value of our first mortgage loans is based on the estimated market value as of September 30, 2022. Fair market value of the remaining credit investments is based on the market value as of September 30, 2022. Fair market value of our real estate assets is based on the estimated market value as of ~~September 30, 2020~~March 31, 2021 that ~~were~~was used to determine our estimated per share NAV, and for those assets acquired from ~~July~~April 1, ~~2020~~2021 through September 30, ~~2021~~2022 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 September 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 49.3%.

The following table provides a reconciliation of the notes payable and credit facility, net balance, as reported on our condensed consolidated balance sheet, to net debt as of September 30, 2021 (dollar amounts in thousands):


	~~Balance as of~~
	~~September 30, 2021~~
~~Notes payable, repurchase facilities and credit facilities, net~~	$	~~2,776,215~~
~~Deferred costs and net premiums~~ ~~(1)~~	~~30,354~~

~~Less: Cash and cash equivalents~~	~~(289,840)~~
~~Net debt~~	$	~~2,516,729~~
~~Gross real estate and related assets, net~~ ~~(2)~~	$	~~5,107,228~~
~~Net debt leverage ratio~~	~~49.3~~		%

~~(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 $1.7 billion.

Cash Flow Analysis

Operating Activities. Net cash provided by operating activities increased by ~~$25.8~~$27.9 million for the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020.~~2021. The increase was primarily due to net increases in credit investments of $2.8 billion driving higher interest income and the acquisition of ~~146~~115 properties in connection with the ~~CCIT III and CCPT V Mergers that closed in December 2020 along with increases in credit investments driving higher interest income,~~CIM Income NAV Merger, partially offset by the disposition of ~~124~~134 properties ~~and one outparcel of land~~ subsequent to September 30, ~~2020.~~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 ~~decreased $141.6~~increased $147.5 million for the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020.~~2021. The change was primarily due to ~~a decrease in the net investment in broadly syndicated loans of $237.4 million, and an increase in proceeds from disposition of real estate assets of $265.0 million. The change was partially offset by~~ an increase in the net investment in loans held-for-investment of ~~$287.6~~$682.9 million and an increase in the net investment of real estate-related securities of ~~$67.6~~$272.7 million, partially offset by an increase in proceeds from disposition of real estate assets of $818.9 million.

Financing Activities. Net cash provided by financing activities ~~increased $323.1~~decreased $35.0 million for the nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020.~~2021. The change was primarily due to an increase in net ~~proceeds~~repayments on the ~~credit~~repurchase facilities, notes payable and ~~repurchase~~credit facilities of ~~$346.2~~$29.9 million, ~~as a result of entering into and upsizing the Repurchase Facilities, the Mortgage Loan and the Class A Notes,~~ coupled with ~~a decrease~~an increase in redemptions of common stock of ~~$35.7~~$17.3 million ~~as a result~~due to the reinstatement of the ~~Board’s suspension of the Amended Share Redemption Program from August 30, 2020 through March 31,~~share redemption program on April 1, 2021. The change was ~~offset by increased deferred financing costs paid as a result of entering into new debt agreements as described above.~~

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partially offset by decreased deferred financing costs paid as a result of a reduced amount of debt agreements entered into compared to the same period in 2021.

Election as a REIT

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

If we fail to maintain our qualification as a REIT for any reason in a taxable year and applicable relief provisions do not apply, we will be subject to tax 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.

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.~~2021. 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~~Current Expected Credit Losses.

A complete description of such policies and our considerations is contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. 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~~2021 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~~and our Investment Advisor whereby we agree to pay certain fees to, or reimburse certain expenses of, CMFT Management, the Investment Advisor or ~~its affiliates such as management~~their affiliates. In addition, we have invested in, and ~~advisory fees and expenses, organization and offering costs, leasing fees and reimbursement~~may continue to invest in, certain co-investments with funds that are advised by an affiliate of ~~certain operating costs.~~CMFT Management. We may also originate loans to third parties that use the proceeds to finance the acquisition of real estate from funds that are advised by an affiliate of CMFT Management. See Note 1112 — 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.

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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~~vice president of ~~CIM Income NAV.~~our manager. 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~~is the president and treasurer of ~~CIM Income NAV. One~~our manager. Additionally, two of our directors, ~~Elaine Y. Wong, also serves as a director~~Jason Schreiber and Emily Vande Krol, are employees of ~~CIM Income NAV. One of our independent directors, W. Brian Kretzmer, also serves as an independent director of CIM Income NAV.~~CIM. Nathan D. DeBacker, our chief financial officer and treasurer, ~~who is also the chief financial officer and treasurer of CIM Income NAV,~~ is a vice president of ~~CMFT Management~~our manager 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,~~affiliates of our manager, may be in conflict with us in connection with providing services to other real estate-related programs related to property acquisitions, ~~and loan investments (and the allocation thereof),~~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 ~~CIM and CCO Group~~affiliates of our manager could influence the advice provided to us. See Part I, Item 1. Business — Conflicts of Interest in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

~~Off-Balance Sheet Arrangements~~

As of September 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.2021.

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

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

As of September 30, ~~2021,~~2022, we had an aggregate of ~~$1.6~~$3.4 billion of variable rate debt, excluding any debt subject to interest rate swap agreements and interest rate cap agreements, and therefore, we are exposed to interest rate changes in ~~LIBOR.~~LIBOR and SOFR. As of September 30, ~~2021,~~2022, an increase or decrease of 50 basis points in interest rates would result in an increase or decrease in interest expense of ~~$8.2~~$17.0 million per year.

As of September 30, ~~2021,~~2022, we had ~~five~~two interest rate cap agreements outstanding, which ~~mature on various~~had maturity dates ranging from ~~May 2022~~July 2023 through ~~July~~October 2023, with an aggregate notional amount of ~~$752.6~~$712.0 million and an aggregate fair value of the net derivative asset of ~~$51,000.~~$4.7 million. The fair value of these interest rate cap agreements is dependent upon existing market interest ~~rates.~~rates and spreads. As of September 30, ~~2021,~~2022, an increase of 50 basis points in interest rates would result in a change of ~~$166,000~~$2.4 million to the fair value of the

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net derivative asset, resulting in a net derivative asset of ~~$217,000.~~$7.1 million. A decrease of 50 basis points in interest rates would result in a ~~$45,000~~$1.9 million change to the fair value of the net derivative asset, resulting in a net derivative asset of ~~$6,000.~~$2.8 million.

As the information presented above includes only those exposures that existed as of September 30, ~~2021,~~2022, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

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

In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced ~~it intends~~its intent 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”)~~SOFR as its preferred alternative to U.S. dollar LIBOR in derivatives and other financial contracts. ~~In March~~On December 31, 2021, the FCA ~~confirmed its intention~~ceased publishing one week

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and two-month LIBOR, and the FCA intends 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 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.

WeAs of September 30, 2022, we have interest rate cap agreements maturing on various dates from ~~May 2022~~July 2023 through ~~July~~October 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.

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

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primary metric); change in tenant space needs (i.e., expansion/downsize); tenant financial performance; economic conditions in a specific geographic region; and industry specific credit considerations. We believe that the credit risk of our portfolio is reduced by the high quality of our existing tenant base, reviews of prospective tenants’ risk profiles prior to lease execution and consistent monitoring of our portfolio to identify potential problem tenants and mitigation options.

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

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

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As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of September 30, ~~2021~~2022 was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of September 30, ~~2021,~~2022, were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

No change occurred in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended September 30, ~~2021~~2022 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 or our subsidiaries are a party or to which our properties are the subject.

Item 1A.Risk Factors

~~Except as set forth below, there~~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.~~2021.

~~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):~~

Nine Months Ended
September 30, 2021
Year Ended
December 31, 2020
Amount Percent Amount Percent
Distributions paid in cash $ 82,541 84 % $ 90,655 73 %
Distributions reinvested 16,264 16 % 34,191 27 %
Total distributions $ 98,805 100 % $ 124,846 100 %
Sources of distributions:
Net cash provided by operating activities (1)
$ 97,518 99 % $ 115,985 (2) 93 %
Proceeds from the issuance of debt (3)
1,287 1 % 553 — %
Proceeds from the issuance of common stock — — % 8,308 (4) 7 %
Total sources $ 98,805 100 % $ 124,846 100 %

~~(1)Net cash provided by operating activities for the nine months ended September 30, 2021 and the year ended December 31, 2020 was $97.5 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 nine months ended September 30, 2021 and the year ended December 31, 2020 were $584.1 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.

~~Risks Related to the CIM Income NAV Merger~~

~~Failure to complete the CIM Income NAV Merger could negatively impact our future business and financial results.~~

If the CIM Income NAV Merger is not completed, our ongoing business could be materially adversely affected and we will be subject to a variety of risks associated with the failure to complete the CIM Income NAV Merger, including the following:

•CIM Income NAV may be unable to pay us the termination payment of either $6,720,000 or $14,780,000, depending upon the date of such termination and certain other factors, and may not be able to reimburse us for expenses incurred by us in connection with the CIM Income NAV Merger of up to $2,675,000;

•~~We may have to bear certain costs incurred by us relating to the CIM Income NAV Merger, such as legal, accounting, financial advisor, filing, printing and mailing fees; and~~

•~~the diversion of our management’s focus and resources from operational matters and other strategic opportunities while working to implement the CIM Income NAV Merger.~~

~~If the CIM Income NAV Merger is not completed, these risks could materially affect our business and financial results.~~

The pendency of the CIM Income NAV Merger, including as a result of the restrictions on the operation of our business and CIM Income NAV’s business during the period between signing the Merger Agreement and the completion of the CIM Income NAV Merger, as well as the suspension of CIM Income NAV’s public offering of securities, could adversely affect the business and operations of us, CIM Income NAV, or both.

In connection with the pending CIM Income NAV Merger, some business partners or vendors of each of us and CIM Income NAV may delay or defer decisions, which could negatively impact the revenues, earnings, cash flows and expenses of us and CIM Income NAV, regardless of whether the CIM Income NAV Merger is completed. In addition, due to operating covenants in the Merger Agreement, each of us and CIM Income NAV may be unable, during the pendency of the CIM Income NAV Merger, to pursue certain strategic transactions, undertake certain significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions that are not in the ordinary course of business, even if such actions would prove beneficial. Furthermore, CIM Income NAV has suspended its public offering of securities in connection with the pending CIM Income NAV Merger, which may reduce the cash available to CIM Income NAV to fund its ongoing business and operations.

~~In certain circumstances, either we or CIM Income NAV may terminate the Merger Agreement.~~

Either we or CIM Income NAV may terminate the Merger Agreement if the CIM Income NAV Merger has not been consummated by the Outside Date. Also, the Merger Agreement may be terminated in certain circumstances if a final and non-appealable order is entered prohibiting the transactions contemplated by the Merger Agreement, upon a material uncured breach by the other party that would cause the closing conditions not to be satisfied, or if CIM Income NAV stockholders fail to approve the CIM Income NAV Merger or the amendment to the CIM Income NAV charter that is required to consummate the CIM Income NAV Merger (the “Charter Amendment Proposal”). In addition, at any time prior to the time CIM Income NAV stockholders approve the CIM Income NAV Merger and the Charter Amendment Proposal, CIM Income NAV has the right to terminate the Merger Agreement in order to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal (as such terms are defined in the Merger Agreement). Finally, at any time prior to the time CIM Income NAV stockholders approve the Merger Proposal and the Charter Amendment Proposal, we have the right to terminate the Merger Agreement upon an Adverse Recommendation Change, upon the commencement of a tender offer or exchange offer for any shares of CIM Income NAV Common Stock that constitutes an Acquisition Proposal if the CIM Income NAV board of directors fails to recommend against acceptance of such tender offer or exchange offer or to publicly reaffirm the CIM Income NAV board of directors recommendation after being requested to do so by us or if CIM Income NAV breaches or fails to comply in any material respect with certain of its obligations regarding the solicitation of and response to Acquisition Proposals.

~~We and CIM Income NAV each expect to incur substantial expenses related to the CIM Income NAV Merger.~~

We and CIM Income NAV each expect to incur substantial expenses in connection with completing the CIM Income NAV Merger and integrating the properties and operations of CIM Income NAV with ours. While we and CIM Income NAV each has assumed that a certain level of transaction expenses would be incurred, there are a number of factors beyond the control of each company that could affect the total amount or the timing of such expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. As a result, the transaction expenses associated with the CIM Income NAV Merger could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of

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~~duplicative expenses and the realization of economies of scale and cost savings following the completion of the CIM Income NAV Merger.~~

~~The CIM Income NAV Merger may be dilutive to estimated net income for our stockholders.~~

The CIM Income NAV Merger may be dilutive to estimated net income for our stockholders, which would potentially decrease the amount of funds available to distribute to our stockholders as stockholders of the combined company following the CIM Income NAV Merger (the “Combined Company”). For instance, on a pro forma basis, assuming the CIM Income NAV Merger had been consummated on January 1, 2020, the net income per share of the Combined Company for the year ended December 31, 2020 and the six months ended June 30, 2021 would have been less than the actual net income per share of our common stock during the same periods.

In approving and recommending the CIM Income NAV Merger, our Board considered, among other things, the most recent estimated per share NAV of our common stock and CIM Income NAV Common Stock as determined by our Board and the CIM Income NAV board of directors, respectively, with the assistance of their respective third-party valuation experts. The estimated per share NAV of CIM Income NAV Common Stock may not be immediately determined following the consummation of the CIM Income NAV Merger. In the event that the Combined Company completes a liquidity event after consummation of the CIM Income NAV Merger, such as a listing of its shares on a national securities exchange, a merger in which stockholders of the Combined Company receive securities that are listed on a national securities exchange, or a sale of the Combined Company for cash, the market value of the shares of the Combined Company upon consummation of such liquidity event may be significantly lower than the current estimated value considered by our Board and the estimated per share NAV that may be reflected on the account statements of stockholders of the Combined Company after consummation of the CIM Income NAV Merger.

~~If the CIM Income NAV Merger does not qualify as a tax-free reorganization, there may be adverse tax consequences.~~

The CIM Income NAV Merger is intended to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1896, as amended (the “Code”). The closing of the CIM Income NAV Merger is conditioned on the receipt by each of us and CIM Income NAV of an opinion of counsel to the effect that the CIM Income NAV Merger will qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code. However, these legal opinions will not be binding on the Internal Revenue Service or on the courts. If, for any reason, the CIM Income NAV Merger were to fail to qualify as a tax-free reorganization, then each stockholder generally would recognize gain or loss, as applicable, equal to the difference between (1) the merger consideration (i.e. the fair market value of the shares of our common stock) received by such stockholder in the CIM Income NAV Merger; and (2) such stockholder’s adjusted tax basis in our common stock.

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

Our ~~Amended Share Redemption Program~~share redemption program permits our stockholders to sell their shares of common stock back to us, subject to ~~significant~~certain conditions and limitations. ~~Funding~~We will limit the number of shares redeemed pursuant to our share redemption program as follows: (1) we will not redeem in excess of 5% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being paid; and (2) funding for the redemption of shares will be limited, among other things, to the ~~cumulative~~ net proceeds we receive from the sale of shares under ~~the Secondary~~our DRIP, ~~Offering,~~ net of shares redeemed to date. In ~~addition, generally~~an effort to accommodate redemption requests throughout the calendar year, we will generally limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we receive from the sale of shares in the respective quarter under the Secondary DRIP Offering. Any of the foregoing limits might prevent us from accommodating all redemption requests made in any fiscal quarter or in any 12-month period. In connection with the CCIT III and CCPT V Mergers, our Board suspended our Amended Share Redemption Program on August 30, 2020, and therefore, no shares were redeemed from our stockholders until our Board reinstated the Amended Share Redemption Program effective April 1, 2021. As of September 30, ~~2021,~~2022, the estimated per share NAV was $7.20, which was determined by the Board on May 25, 2021 using a valuation date of March 31, 2021. This estimated per share NAV serves as the most recent estimated value for purposes of the Amended Share Redemption Program, effective May 26, 2021, until such time as the Board determines a new estimated per share NAV.

In general, we redeem shares on a quarterly basis. Shares are redeemed with a trade date no later than the end of the month following the end of each fiscal quarter. Any redemption capacity that is not used as a result of the withdrawal or rejection of redemption requests may be used to satisfy the redemption requests of other stockholders received for that fiscal quarter, and such redemption payments may be made at a later time than when that quarter’s redemption payments are made. During the three months ended September 30, ~~2021,~~2022, we redeemed shares, including those redeemable due to death, as follows:

Period Total Number
of Shares
Redeemed Average Price
Paid per Share Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
July 1, 2021 - July 31, 2021 — $ — — (1)
August 1, 2021 - August 31, 2021 1,699,924 $ 7.20 1,699,924 (1)
September 1, 2021 - September 30, 2021 12,872 $ 7.20 12,872 (1)
Total 1,712,796 1,712,796 (1)


Period (1)	Total Number of Shares Redeemed	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2022 - July 31, 2022	—	$	—	—	(2)
August 1, 2022 - August 31, 2022	1,346,138	$	7.20	1,346,138	(2)
September 1, 2022 - September 30, 2022	28,372	$	7.20	28,372	(2)
Total	1,374,510			1,374,510	(2)

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

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

Unregistered Sales of Equity Securities

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 September 30, ~~2021~~2022 (and are numbered in accordance with Item 601 of Regulation S-K).


Exhibit No.			Description















2.1*			Agreement and Plan of Merger, dated as of September 21, 2021, by and among CIM Real Estate Finance Trust, Inc., Cypress Merger Sub, LLC and CIM Income NAV, Inc. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed September 22, 2021).
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~~Credit Agreement, dated as of July 15, ~~2021, by and between~~2022, among CMFT SCF Borrower, LLC, as the ~~Borrowers identified on Schedule 1.1(A) thereto, and~~Borrower, JPMorgan Chase Bank, ~~National Association~~N.A., as Administrative Agent, L/C Issuer and ~~DBR Investments Co. Limited~~Syndication Agent and the lenders party thereto and PNC Bank, N.A., as Syndication Agent (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)~~2022).
~~10.4~~10.2			Continuing Guaranty, ~~Agreement,~~ dated as of July 15, ~~2021,~~2022, by ~~CIM Real Estate Finance Trust, Inc. for the benefit of JPMorgan Chase Bank, National Association and DBR Investments Co. Limited~~CMFT SCF Borrower, LLC (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)~~2022).
~~10.5~~10.3			~~Guaranty,~~Third Amendment To Master Repurchase And Securities Contract And Termination Of Preferred Equity Related Pledge And Security Agreement, dated August 31, 2022, by and among CMFT RE Lending RF Sub WF, LLC, as ~~of July 28, 2021, by CIM Real Estate Finance Operating Partnership, LP for the benefit of Citibank~~seller, Wells Fargo Bank, N.A., as ~~indenture trustee~~buyer, and CMFT Securities Investments, LLC, as preferred equity pledgor (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)~~September 7, 2022).
~~10.6~~10.4			~~Property Management~~Third Amendment To Master Repurchase Agreement, dated ~~as of July 28, 2021,~~October 7, 2022, 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).between
~~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).~~
~~10.8~~			First Amendment to Master Repurchase Agreement, dated August 17, 2021, by and between CMFT RE Lending RF Sub CB, LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 23, 2021).
~~10.9~~			Amendment No. 2 to Credit and Security Agreement, dated October 4, 2021, by and between CMFT Corporate Credit Securities, LLC, as borrower, CMFT Securities Investments, LLC, as collateral manager and equityholder, Citibank, N.A., as administrative agent and as lender, Citibank, N.A. (acting through its Agency & Trust division), as collateral custodian and as collateral agent, and Virtus Group, LP, as collateral administrator (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. ~~000-54939), filed October 8, 2021).~~
~~10.10~~			Master Repurchase Agreement, dated October 8, 2021, by and between CMFT RE Lending RF Sub DB, LLC and Deutsche Bank AG, New York Branch (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. ~~000-54939), filed October 14, 2021).~~
~~10.11~~			~~Guaranty, dated as of October 8, 2021, by CIM Real Estate Finance Trust, Inc. for the benefit of Deutsche Bank AG, New York Branch (Incorporated by reference to Exhibit 10.~~2 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed October ~~14, 2021)~~13, 2022).
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).


*			~~Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule to the SEC upon request.~~
**			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: November ~~15, 2021~~14, 2022

7068


	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
	As previously reported		Reclassification		As Revised		As previously reported		Reclassification		As Revised
Condensed Consolidated Statements of Operations
General and administrative	$	3,762	$	(554)	$	3,208	$	11,679	$	(2,569)	$	9,110
Management fees	$	10,934	$	(795)	$	10,139	$	33,422	$	(3,683)	$	29,739
Transaction-related	$	148	$	(90)	$	58	$	730	$	(422)	$	308
Expense reimbursements to related parties	$	—	$	1,439	$	1,439	$	—	$	6,674	$	6,674
Condensed Consolidated Statements of Cash Flows
Accrued expenses and accounts payable							$	5,344	$	4,208	$	9,552
Net cash provided by operating activities							$	67,558	$	4,208	$	71,766
Repayments of notes payable, repurchase facilities and credit facilities							$	(219,143)	$	(4,208)	$	(223,351)
Net cash provided by financing activities							$	129,134	$	(4,208)	$	124,926


	Principal Balance		Deferred Fees / Other Items (1)		Loan Fees Receivable		Net Book Value
Balance, January 1, 2021	$	959,215	$	(74,116)	$	7,167	$	892,266
Loan originations and acquisitions	993,841		—		—		993,841
Cure payments receivable (2)	—		(7,351)		—		(7,351)
Sale of loans	(55,498)		528		—		(54,970)
Principal repayments received (3)	(285,449)		345		—		(285,104)
Capitalized interest (2)	(9,469)		—		—		(9,469)
Deferred fees and other items	—		(9,206)		—		(9,206)
Accretion and amortization of fees and other items	—		2,583		—		2,583
Foreclosure of assets (2)	(127,320)		3,831		(7,167)		(130,656)
Allowance for credit losses (4)	—		59,139		—		59,139
Balance, September 30, 2021	$	1,475,320	$	(24,247)	$	—	$	1,451,073


	Future Minimum Rental Income
Remainder of 2021	$	56,316
2022	224,208
2023	209,844
2024	192,953
2025	176,377
Thereafter	1,111,469
Total	$	1,971,167


	Real Estate		Credit		Corporate/Other		Company Total
Three Months Ended September 30, 2020
Rental and other property income	$	66,011	$	—	$	—	$	66,011
Interest income	—		6,631		—		6,631
Total revenues	66,011		6,631		—		72,642

General and administrative	147		522		2,539		3,208
Property operating	5,214		—		—		5,214
Real estate tax	6,566		—		—		6,566
Expense reimbursements to related parties	—		—		1,439		1,439
Management fees	9,113		1,026		—		10,139
Transaction-related	55		3		—		58
Depreciation and amortization	19,967		—		—		19,967
Real estate impairment	476		—		—		476
Increase in provision for credit losses	—		7,355		—		7,355
Total operating expenses	41,538		8,906		3,978		54,422
Gain on disposition of real estate, net	3,219		—		—		3,219
Merger-related expenses, net	—		—		(1,207)		(1,207)

Operating income (loss)	27,692		(2,275)		(5,185)		20,232
Other expense:
Interest expense and other, net	(4,596)		(2,134)		(9,234)		(15,964)
Loss on extinguishment of debt	—		—		(89)		(89)
Segment net income (loss)	$	23,096	$	(4,409)	$	(14,508)	$	4,179

Total assets as of September 30, 2020	$	2,673,887	$	946,827	$	163,254	$	3,783,968


	Nine Months Ended September 30, 2021				Year Ended December 31, 2020
	Amount		Percent		Amount			Percent
Distributions paid in cash	$	82,541	84	%	$	90,655		73	%
Distributions reinvested	16,264		16	%	34,191			27	%
Total distributions	$	98,805	100	%	$	124,846		100	%
Sources of distributions:
Net cash provided by operating activities (1)	$	97,518	99	%	$	115,985	(2)	93	%
Proceeds from the issuance of debt (3)	1,287		1	%	553			—	%
Proceeds from the issuance of common stock	—		—	%	8,308		(4)	7	%
Total sources	$	98,805	100	%	$	124,846		100	%


Period	Total Number of Shares Redeemed	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2021 - July 31, 2021	—	$	—	—	(1)
August 1, 2021 - August 31, 2021	1,699,924	$	7.20	1,699,924	(1)
September 1, 2021 - September 30, 2021	12,872	$	7.20	12,872	(1)
Total	1,712,796			1,712,796	(1)