UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

For the quarterly period ended ~~March 31,~~September 30, 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 ~~May 2,~~November 8, 2022, there were approximately 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 ~~March 31,~~Sept ember 30, 2022 and December 31, 2021			3

Condensed Consolidated Statements of Operations for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021			4

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021			5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021			6

Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021			78

Notes to Condensed Consolidated Financial Statements			910

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			4246

Item 3. Quantitative and Qualitative Disclosures About Market Risk			5563

Item 4. Controls and Procedures			5664

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			5866

Item 1A. Risk Factors			5866

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5866

Item 3. Defaults Upon Senior Securities			5866

Item 4. Mine Safety Disclosures			5866

Item 5. Other Information			5866

Item 6. Exhibits			5967

Signature			6068

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Real estate assets:	Real estate assets:					Real estate assets:
Land	Land	$	628,630	$	655,273	Land	$	585,100	$	655,273
Buildings, fixtures and improvements	Buildings, fixtures and improvements	1,621,687		1,706,902		Buildings, fixtures and improvements	1,479,525		1,706,902
Intangible lease assets	Intangible lease assets	300,996		314,832		Intangible lease assets	279,806		314,832
Condominium developments	Condominium developments	158,145		171,080		Condominium developments	153,569		171,080
Total real estate assets, at cost	Total real estate assets, at cost	2,709,458		2,848,087		Total real estate assets, at cost	2,498,000		2,848,087
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(231,543)		(235,481)		Less: accumulated depreciation and amortization	(258,216)		(235,481)
Total real estate assets, net	Total real estate assets, net	2,477,915		2,612,606		Total real estate assets, net	2,239,784		2,612,606
Investments in unconsolidated entities		78,443		109,547
Real estate-related securities ($186,070 and $41,981 held at fair value as of March 31, 2022 and December 31, 2021, respectively)		254,313		105,471
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	3,346,198		2,624,101		Loans held-for-investment and related receivables, net	4,022,726		2,624,101
Less: Current expected credit losses	Less: Current expected credit losses	(19,150)		(15,201)		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	3,327,048		2,608,900		Total loans held-for-investment and related receivables, net	3,993,142		2,608,900
Cash and cash equivalents	Cash and cash equivalents	165,111		107,381		Cash and cash equivalents	124,836		107,381
Restricted cash	Restricted cash	72,486		36,792		Restricted cash	62,941		36,792
Rents and tenant receivables, net	Rents and tenant receivables, net	42,925		58,948		Rents and tenant receivables, net	32,957		58,948

Prepaid expenses and other assets		52,940		16,279
Prepaid expenses, derivative assets and other assets						Prepaid expenses, derivative assets and other assets	52,410		16,279
Deferred costs, net	Deferred costs, net	9,770		7,214		Deferred costs, net	16,212		7,214
Assets held for sale	Assets held for sale	487,469		1,299,638		Assets held for sale	—		1,299,638
Total assets	Total assets	$	6,968,420	$	6,962,776	Total assets	$	7,124,778	$	6,962,776
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Repurchase facilities, notes payable and credit facilities, net	Repurchase facilities, notes payable and credit facilities, net	$	4,181,313	$	4,143,205	Repurchase facilities, notes payable and credit facilities, net	$	4,358,187	$	4,143,205
Accrued expenses and accounts payable	Accrued expenses and accounts payable	29,979		45,872		Accrued expenses and accounts payable	29,390		45,872

Due to affiliates	Due to affiliates	16,051		14,594		Due to affiliates	14,556		14,594
Intangible lease liabilities, net	Intangible lease liabilities, net	21,086		24,896		Intangible lease liabilities, net	19,512		24,896
Distributions payable	Distributions payable	13,339		13,252		Distributions payable	13,337		13,252
Deferred rental income, derivative liabilities and other liabilities	Deferred rental income, derivative liabilities and other liabilities	11,383		21,282		Deferred rental income, derivative liabilities and other liabilities	8,436		21,282
Total liabilities	Total liabilities	4,273,151		4,263,101		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	170,599		170,714		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, 437,357,992 and 437,373,981 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		4,374		4,374
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	3,529,163		3,529,126		Capital in excess of par value	3,529,404		3,529,126
Accumulated distributions in excess of earnings	Accumulated distributions in excess of earnings	(1,009,487)		(1,008,561)		Accumulated distributions in excess of earnings	(1,000,420)		(1,008,561)
Accumulated other comprehensive (loss) income	Accumulated other comprehensive (loss) income	(448)		2,949		Accumulated other comprehensive (loss) income	(21,737)		2,949
Total stockholders’ equity	Total stockholders’ equity	2,523,602		2,527,888		Total stockholders’ equity	2,511,620		2,527,888
Non-controlling interests	Non-controlling interests	1,068		1,073		Non-controlling interests	(8)		1,073
Total equity	Total equity	2,524,670		2,528,961		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	$	6,968,420	$	6,962,776	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 March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2022			2021			2022		2021		2022		2021
Revenues:	Revenues:							Revenues:
Rental and other property income	Rental and other property income		$	73,736		$	76,930	Rental and other property income	$	43,559	$	70,794	$	170,803	$	223,026
Interest income	Interest income		31,463			11,953		Interest income	66,222		19,755		142,669		48,168
Total revenues	Total revenues		105,199			88,883		Total revenues	109,781		90,549		313,472		271,194
Operating expenses:	Operating expenses:							Operating expenses:
General and administrative	General and administrative		3,475			4,428		General and administrative	3,435		3,076		10,590		11,109
Property operating	Property operating		7,727			10,119		Property operating	4,432		11,157		17,408		32,632
Real estate tax	Real estate tax		6,713			12,219		Real estate tax	1,793		7,591		10,530		27,516
Expense reimbursements to related parties	Expense reimbursements to related parties		3,694			2,661		Expense reimbursements to related parties	3,428		2,516		10,899		8,387
Management fees	Management fees		13,347			11,577		Management fees	12,915		11,703		39,613		35,035
Transaction-related	Transaction-related		7			4		Transaction-related	9		6		462		37
Depreciation and amortization	Depreciation and amortization		19,141			25,738		Depreciation and amortization	16,948		22,801		54,104		73,186
Real estate impairment	Real estate impairment		3,291			4,300		Real estate impairment	527		891		19,814		5,268
Increase in provision for credit losses			4,709			568
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		62,104			71,614		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		32,574			—		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)		—		(398)

Operating income	Operating income		75,669			17,269		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		5,340			—		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		(31,037)			(20,022)		Interest expense and other, net	(39,366)		(20,381)		(98,453)		(56,863)
Loss on extinguishment of debt	Loss on extinguishment of debt		(10,871)			—		Loss on extinguishment of debt	(3,344)		(3,251)		(19,584)		(4,729)
Total other expense	Total other expense		(36,568)			(20,022)		Total other expense	(49,545)		(23,632)		(124,619)		(61,592)
Net income (loss)			$	39,101		$	(2,753)
Net income								Net income	$	15,539	$	42,603	$	128,253	$	97,637
Net income allocated to noncontrolling interest	Net income allocated to noncontrolling interest		9			—		Net income allocated to noncontrolling interest	129		—		66		—
Net income (loss) attributable to the Company			$	39,092		$	(2,753)
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		437,374,008			362,001,968		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		$	0.09		$	(0.01)	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

(in thousands) (Unaudited)


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2022			2021			2022		2021		2022		2021
Net income (loss)			$	39,101		$	(2,753)
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		(4,878)			122		Unrealized (loss) gain on real estate-related securities	(8,709)		(813)		(24,496)		1,239

Unrealized gain on interest rate swaps			1,488			123
Amount of (gain) loss reclassified from other comprehensive (loss) income into income (loss) as interest expense and other, net			(7)			3,132
Reclassification adjustment for realized gain included in income as other income								Reclassification adjustment for realized gain included in income as other income	—		—		—		(648)
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		(3,397)			3,377		Total other comprehensive (loss) income	(11,244)		(1,067)		(24,686)		3,611

Comprehensive income	Comprehensive income		35,704			624		Comprehensive income	4,295		41,536		103,567		101,248
Comprehensive income attributable to noncontrolling interest	Comprehensive income attributable to noncontrolling interest		9			—		Comprehensive income attributable to noncontrolling interest	129		—		66		—
Comprehensive income attributable to the Company	Comprehensive income attributable to the Company		$	35,695		$	624	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 Income (Loss)		Total Stockholders’ Equity			Non-Controlling Interests				Total 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, 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	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	1,329,825	13		9,561		—		—		9,574			—				9,574			Issuance of common stock	1,329,825			13			9,561				—				—				9,574				—				9,574
Equity-based compensation	Equity-based compensation	—	—		37		—		—		37			—				37			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	—	—		—		(40,018)		—		(40,018)			—				(40,018)			Distributions declared on common stock — $0.09 per common share	—			—			—				(40,018)				—				(40,018)				—				(40,018)
Redemptions of common stock	Redemptions of common stock	(1,345,814)	(13)		(9,676)		—		—		(9,689)			—				(9,689)			Redemptions of common stock	(1,345,814)			(13)			(9,676)				—				—				(9,689)				—				(9,689)
Changes in redeemable common stock	Changes in redeemable common stock	—	—		115		—		—		115			—				115			Changes in redeemable common stock	—			—			115				—				—				115				—				115
Distributions to non-controlling interests	Distributions to non-controlling interests	—	—		—		—		—		—			(14)				(14)			Distributions to non-controlling interests	—			—			—				—				—				—				(14)				(14)
Comprehensive income (loss)	Comprehensive income (loss)	—	—		—		39,092		(3,397)		35,695			9				35,704			Comprehensive income (loss)	—			—			—				39,092				(3,397)				35,695				9				35,704
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		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

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
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 — — 40 — — 40 — 40
Distributions declared on common stock — $0.09 per common share — — — (32,906) — (32,906) — (32,906)
Comprehensive (loss) income — — — (2,753) 3,377 624 — 624
Balance as of March 31, 2021 362,001,968 $ 3,620 $ 3,157,899 $ (996,665) $ 1,330 $ 2,166,184 $ — $ 2,166,184

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		Non-Controlling Interests		Total Equity
	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	$	—	$	2,198,426


Equity-based compensation	—	—		40		—		—		40		—		40
Distributions declared on common stock — $0.09 per common share	—	—		—		(32,906)		—		(32,906)		—		(32,906)


Comprehensive (loss) income	—	—		—		(2,753)		3,377		624		—		624
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	917,769	9		6,651		—		—		6,660		—		6,660
Equity-based compensation	4,104	—		49		—		—		49		—		49
Distributions declared on common stock — $0.09 per common share	—	—		—		(32,948)		—		(32,948)		—		(32,948)
Changes in redeemable common stock	—	—		(173,628)		—		—		(173,628)		—		(173,628)
Comprehensive income	—	—		—		57,787		1,301		59,088		—		59,088
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	1,334,145	13		9,591		—		—		9,604		—		9,604
Equity-based compensation	—	—		62		—		—		62		—		62
Distributions declared on common stock — $0.09 per common share	—	—		—		(32,967)		—		(32,967)		—		(32,967)
Redemptions of common stock	(1,712,796)	(17)		(12,315)		—		—		(12,332)		—		(12,332)
Changes in redeemable common stock	—	—		2,999		—		—		2,999		—		2,999
Comprehensive income (loss)	—	—		—		42,603		(1,067)		41,536		—		41,536
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)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2022		2021			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	39,101	$	(2,753)
Net income						Net income	$	128,253	$	97,637
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization, net	Depreciation and amortization, net	19,108		25,118		Depreciation and amortization, net	54,155		71,535
Amortization of deferred financing costs	Amortization of deferred financing costs	3,381		1,871		Amortization of deferred financing costs	9,130		6,616
Amortization of fair value adjustment of mortgage notes payable assumed	Amortization of fair value adjustment of mortgage notes payable assumed	—		(23)		Amortization of fair value adjustment of mortgage notes payable assumed	—		(149)
Amortization and accretion on deferred loan fees	Amortization and accretion on deferred loan fees	(2,441)		(376)		Amortization and accretion on deferred loan fees	(7,337)		(1,945)
Amortization of premiums and discounts on credit investments	Amortization of premiums and discounts on credit investments	(591)		(442)		Amortization of premiums and discounts on credit investments	(2,762)		(6,368)
Capitalized interest income on real estate-related securities		(272)		(173)
Capitalized interest income on real estate-related securities and loans held-for-investment						Capitalized interest income on real estate-related securities and loans held-for-investment	(888)		(703)
Equity-based compensation	Equity-based compensation	37		40		Equity-based compensation	277		151
Straight-line rental income	Straight-line rental income	(1,721)		(1,706)		Straight-line rental income	(4,855)		(4,398)
Write-offs for uncollectible lease-related receivables	Write-offs for uncollectible lease-related receivables	187		1,773		Write-offs for uncollectible lease-related receivables	(1,088)		109
Gain on disposition of real estate assets and condominium developments, net	Gain on disposition of real estate assets and condominium developments, net	(32,574)		—		Gain on disposition of real estate assets and condominium developments, net	(118,135)		(80,502)
(Gain) loss on sale of credit investments, net		(65)		111
Loss (gain) on sale of credit investments, net						Loss (gain) on sale of credit investments, net	464		(902)
Gain on investment in unconsolidated entities	Gain on investment in unconsolidated entities	(5,340)		—		Gain on investment in unconsolidated entities	(8,858)		—
Gain on sale of marketable security	Gain on sale of marketable security	(22)		—		Gain on sale of marketable security	(22)		—
Unrealized loss on equity securities		2,368		—
Unrealized loss on equity security						Unrealized loss on equity security	15,462		—
Amortization of fair value adjustment and gain on interest rate swaps	Amortization of fair value adjustment and gain on interest rate swaps	92		(1,431)		Amortization of fair value adjustment and gain on interest rate swaps	(2,417)		(2,887)
Gain on interest rate caps		(1,176)		—
(Gain) loss on interest rate caps						(Gain) loss on interest rate caps	(4,252)		171
Impairment of real estate assets	Impairment of real estate assets	3,291		4,300		Impairment of real estate assets	19,814		5,268
Increase in provision for credit losses		4,709		568
Increase (decrease) in provision for credit losses						Increase (decrease) in provision for credit losses	15,315		(1,101)
Write-off of deferred financing costs	Write-off of deferred financing costs	7,068		—		Write-off of deferred financing costs	8,092		2,951
Return on investment in unconsolidated entities	Return on investment in unconsolidated entities	531		—		Return on investment in unconsolidated entities	4,217		—
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Rents and tenant receivables, net	Rents and tenant receivables, net	33,078		8,033		Rents and tenant receivables, net	66,914		18,228
Prepaid expenses and other assets	Prepaid expenses and other assets	(23,322)		(5,057)		Prepaid expenses and other assets	(32,224)		(10,247)
Accrued expenses and accounts payable	Accrued expenses and accounts payable	(7,648)		(435)		Accrued expenses and accounts payable	(3,466)		7,040
Deferred rental income and other liabilities	Deferred rental income and other liabilities	(9,167)		(1,324)		Deferred rental income and other liabilities	(10,380)		(3,387)
Due to affiliates	Due to affiliates	1,457		653		Due to affiliates	(38)		401
Net cash provided by operating activities	Net cash provided by operating activities	30,069		28,747		Net cash provided by operating activities	125,371		97,518
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Investment in unconsolidated entities	Investment in unconsolidated entities	(24,750)		—		Investment in unconsolidated entities	(79,475)		—
Return of investment in unconsolidated entities						Return of investment in unconsolidated entities	625		—
Investment in real estate-related securities	Investment in real estate-related securities	(155,618)		(28,509)		Investment in real estate-related securities	(433,219)		(171,880)
Investment in liquid senior loans	Investment in liquid senior loans	(61,030)		(82,144)		Investment in liquid senior loans	(160,928)		(266,978)
Investment in real estate assets and capital expenditures	Investment in real estate assets and capital expenditures	(9,533)		(10,864)		Investment in real estate assets and capital expenditures	(16,524)		(23,391)
Investment in corporate senior loan		(10,000)		—
Origination and acquisition of loans held-for-investment, net		(784,129)		(185,652)
Investment in corporate senior loans						Investment in corporate senior loans	(74,801)		—
Origination and acquisition of loans held-for-investment						Origination and acquisition of loans held-for-investment	(1,310,406)		(720,134)
Origination and exit fees received on loans held-for-investment	Origination and exit fees received on loans held-for-investment	9,540		2,043		Origination and exit fees received on loans held-for-investment	13,977		7,320
Principal payments received on loans held-for-investment	Principal payments received on loans held-for-investment	102,475		51,650		Principal payments received on loans held-for-investment	156,920		285,104
Principal payments received on real estate-related securities	Principal payments received on real estate-related securities	—		10		Principal payments received on real estate-related securities	16,157		31
Net proceeds from sale of real estate-related securities	Net proceeds from sale of real estate-related securities	132		—		Net proceeds from sale of real estate-related securities	132		27,625
Net proceeds from disposition of real estate assets and condominium developments	Net proceeds from disposition of real estate assets and condominium developments	923,400		3,511		Net proceeds from disposition of real estate assets and condominium developments	1,278,609		459,705
Net proceeds from sale of liquid senior loans	Net proceeds from sale of liquid senior loans	23,834		7,445		Net proceeds from sale of liquid senior loans	52,868		55,224

Redemption of investment in unconsolidated entities	Redemption of investment in unconsolidated entities	48,500		—		Redemption of investment in unconsolidated entities	60,663		—

Net cash provided by (used in) investing activities		$	62,821	$	(242,510)
Proceeds from the settlement of insurance claims						Proceeds from the settlement of insurance claims	619		58
Net cash used in investing activities						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


		Three Months Ended March 31,					Nine Months Ended September 30,
		2022		2021			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	$	(9,689)	$	—	Redemptions of common stock	$	(29,630)	$	(12,332)
Distributions to stockholders	Distributions to stockholders	(30,357)		(32,906)		Distributions to stockholders	(91,297)		(82,541)
Proceeds from repurchase facilities, notes payable and credit facilities		903,060		282,323
Repayments of repurchase facilities, notes payable and credit facilities		(857,815)		(85,298)
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	(101)		—		Termination of interest rate swaps	(239)		(6,401)

Payment of loan deposits						Payment of loan deposits	—		(650)
Refund of loan deposits	Refund of loan deposits	—		65		Refund of loan deposits	—		565
Distributions to non-controlling interests	Distributions to non-controlling interests	(14)		—		Distributions to non-controlling interests	(1,147)		—
Deferred financing costs paid	Deferred financing costs paid	(4,550)		(907)		Deferred financing costs paid	(18,809)		(34,712)
Net cash provided by financing activities	Net cash provided by financing activities	534		163,277		Net cash provided by financing activities	413,016		447,992
Net increase (decrease) in cash and cash equivalents and restricted cash		93,424		(50,486)
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	144,173		128,408		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	$	237,597	$	77,922	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	$	165,111	$	57,550	Cash and cash equivalents	$	124,836	$	289,840
Restricted cash	Restricted cash	72,486		20,372		Restricted cash	62,941		36,762
Total cash and cash equivalents and restricted cash	Total cash and cash equivalents and restricted cash	$	237,597	$	77,922	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	$	13,339	$	10,969	Distributions declared and unpaid	$	13,337	$	10,985
Accrued capital expenditures	Accrued capital expenditures	$	1,315	$	1,412	Accrued capital expenditures	$	1,590	$	1,374
Accrued deferred financing costs	Accrued deferred financing costs	$	157	$	417	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		$	(19,250)	$	—
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)	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	$	9,574	$	—	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	$	1,389	$	4,686	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	$	(7,246)	$	122	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	$	28,622	$	18,493	Interest paid	$	79,201	$	52,200
Cash paid for taxes	Cash paid for taxes	$	47	$	739	Cash paid for taxes	$	1,318	$	1,851

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

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 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 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 primarily consisting of net leased properties located throughout the United States, and ~~short duration senior secured loans and~~ other credit investments. As of ~~March 31,~~September 30, 2022, the Company owned ~~445~~384 properties, ~~including 2 properties owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”),~~ comprised of ~~15.4~~11.0 million rentable square feet of commercial space located in 4544 states. As of ~~March 31,~~September 30, 2022, the rentable square feet at these properties was ~~97.2%~~99.3% leased, including month-to-month agreements, if any. As of ~~March 31,~~September 30, 2022, the Company’s loan portfolio consisted of ~~332~~346 loans with a net book value of ~~$3.3~~$4.0 billion, and investments in real estate-related securities of ~~$254.3~~$470.1 million. As of ~~March 31,~~September 30, 2022, the Company owned condominium developments with a net book value of ~~$158.1~~$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. CIM is headquartered in Los Angeles, CA, with offices in Atlanta, GA, Bethesda, MD, Chicago, IL, Dallas, TX, New York, NY, Orlando, FL, Phoenix, AZ and Tokyo, Japan. CIM also maintains additional offices across the Unites States, as well as in Korea, Hong Kong and the United 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. The Company relies upon CIM Capital IC Management, LLC, the Company’s investment advisor (the “Investment Advisor”), to provide substantially all of the Company’s day-to-day management with respect to investments in securities and certain other investments.

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 ~~will continue~~continues to issue shares under the Secondary DRIP Offering.

The ~~Board~~Company’s board of directors (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. ~~Distributions are reinvested in shares of the~~

910

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~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 ~~March 31,~~September 30, 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.

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, 2021, and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 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, and the Consolidated Joint Venture in which the Company has a controlling financial interest.~~subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

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 ~~investments in~~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 ~~investments in~~credit and real estate investments on the Company’s condensed consolidated financial statements. ~~As of March 31,~~During the nine months ended September 30, 2022, the Company ~~has~~disposed of two properties previously owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”) and therefore determined ~~that~~it no longer had a controlling financial interest in the Consolidated Joint Venture ~~is considered a VIE. Applying the consolidation requirements~~as of September 30, 2022. See Note 4 — Real Estate Assets for VIEs, the Company determined that it is the primary beneficiary based on its power to direct activities through its role as servicer and its obligations to absorb losses and right to receive benefits and therefore met the requirements for consolidation.additional information.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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


	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

Three Months Ended March 31, 2021
As previously reported Reclassifications As Revised
Condensed Consolidated Statements of Operations
General and administrative $ 5,471 $ (1,043) $ 4,428
Management fees $ 13,014 $ (1,437) $ 11,577
Transaction-related $ 185 $ (181) $ 4
Expense reimbursements to related parties $ — $ 2,661 $ 2,661
Condensed Consolidated Statements of Cash Flows
Rents and tenant receivables, net $ 7,151 $ 882 $ 8,033
Prepaid expenses and other assets $ (4,175) $ (882) $ (5,057)


	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)

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; changes in anticipated holding 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

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and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value is determined using a discounted cash flow analysis and recent comparable sales transactions. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of ~~$3.3~~$11.9 million related to 719 properties, all of which 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 were reduced to their estimated fair value, resulting in impairment charges of $7.9 million. The Company’s impairment assessment as of ~~March 31,~~September 30, 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 2022 or in future periods. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company recorded impairment charges of ~~$4.3~~$5.3 million related to 511 properties, of which impairment at 3seven properties was due to sales prices that were less than their respective carrying values and impairment at 2four properties was due to 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 ~~March 31,~~September 30, 2022, ~~the Company~~there were no assets identified ~~26 properties with a carrying value of $487.5 million~~ as held for ~~sale, 25~~sale. As of ~~which are~~December 31, 2021, in connection with the Purchase and Sale Agreement (as defined in Note 4 — Real Estate Assets). The Company has mortgage notes payable of $344.2 million that are related to the held for sale properties, all of which the Company expects to repay or transfer to the buyer in connection with the disposition of the underlying held for sale properties. The Company disposed of certain of these properties in phases subsequent to March 31, 2022, as further discussed in Note 17 — Subsequent Events. As of December 31, 2021, in connection with the Purchase and Sale Agreement,, the Company identified 81 properties with a carrying value of $1.3 billion as held for sale, all of which ~~56 such properties closed~~were disposed of during the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

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 ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 did not qualify for discontinued operations presentation and thus, the results of the properties and condominiums that were sold will remain in operating income, and any associated gains or losses from the 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 ~~three~~nine months ended ~~March 31,~~September 30, 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.

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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.

~~Investments~~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”) and received redemption proceeds of $48.5 million as of March 31, 2022. The remaining $12.2 million redemption proceeds were included in prepaid expenses and other assets in the condensed consolidated balance sheets as of March 31, 2022.. 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 ~~three~~nine months ended ~~March 31,~~September 30, 2022, in the condensed consolidated statements of operations. During the ~~three~~nine months ended ~~March 31,~~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 ~~90%~~approximately 91% of the membership interest in NewPoint JV, LLC ~~(“NewPoint~~(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 Company has elected the fair value option (“FVO”) for its equity method investment and therefore reports this investment at fair value.~~ 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.~~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 ~~$168,000,~~$3.7 million, which represented its share of NP JV Holdings’ gain, during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 in the condensed consolidated statements of operations. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company contributed an additional ~~$24.8~~$79.5 million in NP JV Holdings. As of ~~March 31,~~September 30, 2022, the Company’s aggregate investment in NP JV Holdings of ~~$78.4~~$132.4 million is included in investment in unconsolidated entities on the condensed consolidated balance sheets. The Company ~~did not receive any~~received $4.3 million in distributions related to its investment in ~~the~~ NP JV Holdings during the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

Noncontrolling Interest in Consolidated Joint Venture

~~The~~From December 2021 to July 2022, the Company ~~has~~determined it had a controlling interest in the Consolidated Joint Venture and, therefore, ~~meets~~met the requirements for consolidation. ~~The~~During the nine months ended September 30, 2022, the Company recorded net income of ~~$9,000~~$66,000 and paid distributions of ~~$14,000~~$1.1 million to the noncontrolling ~~interest during~~interest.

During the ~~three~~nine months ended ~~March 31, 2022. The~~September 30, 2022, the Company ~~recorded~~disposed of the ~~noncontrolling~~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 ~~of $1.1 million~~in the Consolidated Joint Venture as of ~~both March 31, 2022 and December 31, 2021 on the condensed consolidated balance sheets.~~September 30, 2022.

Restricted Cash

The Company had ~~$72.5~~$62.9 million and $36.8 million in restricted cash as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. Included in restricted cash was ~~$15.9~~$6.7 million and $7.8 million held by lenders in lockbox accounts, as of ~~March 31,~~September 30, 2022 and December 31, 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 ~~$56.6~~$56.2 million and $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 ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

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Real Estate-Related Securities

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

As of ~~March 31,~~September 30, 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 ~~three~~ nine

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months ended ~~March 31,~~September 30, 2022, the Company invested ~~$97.5~~$433.2 million in CMBS. As of ~~March 31,~~September 30, 2022, the Company had investments in 716 CMBS with an estimated aggregate fair value of ~~$135.0~~$432.2 million.

In addition, the Company had ~~investments~~an investment in an equity ~~securities~~security with an estimated aggregate fair value of ~~$51.0~~$37.9 million as of ~~March 31,~~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. ~~Dividends received are~~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 ~~income~~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. ~~Current expected credit losses are 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 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 ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company did not record current expected credit losses related to CMBS.

As of March 31, 2022, the Company classified its investment in preferred units 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 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. Upon maturity, the preferred units will be redeemed in exchange for debt. Investments classified as held-to-maturity are initially recognized at cost and are subsequently measured using amortized cost. The Company evaluates their held-to-maturity investments for any other-than-temporary impairment each reporting period.

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 ~~March 31,~~September 30, 2022, the Company capitalized $280,000 and $826,000, respectively, of interest income to real estate-related securities. During the three and nine months ended September 30, 2021, the Company capitalized ~~$272,000~~$268,000 and ~~$173,000,~~$703,000, respectively, of interest income to real estate-related securities.

Loans Held-for-Investment

The Company’s loans held-for-investment include loans related to real estate assets, as well as credit investments, including commercial mortgage loans ~~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 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.

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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~~nine months ended ~~March 31,~~September 30, 2022, the Company ~~recorded $31.5 million in~~capitalized $62,000 of interest income ~~on its credit investments. No amounts were capitalized during the three months ended March 31, 2022.~~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 ~~March 31,~~September 30, 2022, the Company did not have nonaccrual loans.

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

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

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

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

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

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,

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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.

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

Development Activities

Project costs and expenses, including interest incurred, associated with the development, construction and lease-up of a real estate project are capitalized as construction in progress. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company capitalized ~~$3.1~~$10.9 million and ~~$1.5~~$5.9 million, respectively, of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets. Included in the amounts capitalized during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 was ~~$387,000~~$1.1 million and ~~$514,000,~~$1.4 million, respectively, of capitalized interest expense.

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Revenue Recognition

Revenue from leasing activities

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

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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.

Revenue from lending activities

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

Reportable Segments

The Company’s segment information reflects how the chief operating decision makers review information for 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 real estate-related securities, liquid senior loans and a corporate senior ~~loan.~~loans.

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

See Note 16 — Segment Reporting for a further discussion regarding these segments.

Recent Accounting Pronouncements

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

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

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~~March 31, 2022 (Unaudited) – (Continued)~~

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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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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 significance of the fair value inputs used in determining these fair values, these securities are valued using Level 1, Level 2 or Level 3 inputs. As of ~~March 31,~~September 30, 2022, the Company concluded that ~~$97.5~~$401.1 million of its CMBS fell under Level 2 and ~~$37.6~~$31.1 million of its CMBS ~~and $68.2 million of its preferred units~~ fell under Level 3.

The Company’s ~~investment in~~ equity ~~securities~~security investment is valued using Level 1 inputs. The estimated fair value of the Company’s equity ~~securities~~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 ~~March 31,~~September 30, 2022, the estimated fair value of the Company’s debt was ~~$4.12~~$4.27 billion, compared to a carrying value of ~~$4.20~~$4.38 billion. The estimated fair value of the Company’s debt as of December 31, 2021 was $4.11 billion, compared to a carrying value of $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 ~~March 31,~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022 (Unaudited) – (Continued)~~

September 30, 2022 and December 31, 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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 commercial real estate (“CRE”) loans held-for-investment and corporate senior ~~loan~~loans are classified in Level 3 of the fair value hierarchy. The Company’s 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 ~~March 31,~~September 30, 2022, ~~$549.7~~$471.5 million and ~~$113.6~~$189.8 million of the Company’s liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of December 31, 2021, $560.4 million and $94.1 million of the Company’s liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of ~~March 31,~~September 30, 2022, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was ~~$3.35~~$4.0 billion, ~~compared to their~~which approximated carrying ~~value of $3.33 billion.~~value. As of December 31, 2021, the estimated fair value of the Company’s loans held-for-investment was $2.63 billion, compared to their carrying value of $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. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. The Company does not expect that changes in classifications between levels will be frequent.

Items Measured at Fair Value on a Recurring Basis

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

Balance as of
March 31, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Financial assets:
CMBS $ 135,049 $ — $ 97,476 $ 37,573
Preferred units 68,243 — — 68,243
Equity securities 51,021 51,021 — —
Interest rate caps 1,355 — 1,355 —
Total financial assets $ 255,668 $ 51,021 $ 98,831 $ 105,816
Financial liabilities:
Interest rate swaps $ (976) $ — $ (976) $ —
Total financial liabilities $ (976) $ — $ (976) $ —


	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:
CMBS	$	432,195	$	—	$	401,050	$	31,145
Equity security	37,926		37,926		—		—
Interest rate caps	4,705		—		4,705		—

Total financial assets	$	474,826	$	37,926	$	405,755	$	31,145


	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:
CMBS	$	41,871	$	—	$	—	$	41,871
Preferred units	63,490		—		—		63,490
Marketable security	110		110		—		—
Interest rate caps	179		—		179		—
Total financial assets	$	105,650	$	110	$	179	$	105,361
Financial liabilities:
Interest rate swaps	$	(2,466)	$	—	$	(2,466)	$	—
Total financial liabilities	$	(2,466)	$	—	$	(2,466)	$	—

1920

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

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:
CMBS $ 41,871 $ — $ — $ 41,871
Preferred units 63,490 — — 63,490
Marketable security 110 110 — —
Interest rate caps 179 — 179 —
Total financial assets $ 105,650 $ 110 $ 179 $ 105,361
Financial liabilities:
Interest rate swaps $ (2,466) $ — $ (2,466) $ —
Total financial liabilities $ (2,466) $ — $ (2,466) $ —

The following are reconciliations of the changes in financial assets with Level 3 inputs in the fair value hierarchy for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 (in thousands):


	Level 3
Beginning Balance, January 1, 2022	$	105,361
Total gains and losses:
Unrealized loss included in other comprehensive (loss) income, net	~~(4,878)~~(12,487)
Purchases and payments received:
Conversion of preferred units (1)	(68,243)
Purchases	4,752
Discounts, net	~~309~~936
Capitalized interest income	~~272~~826

Ending Balance, ~~March 31,~~September 30, 2022	$	~~105,816~~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.

As discussed in Note 4 — Real Estate Assets, during the ~~three~~nine months ended ~~March 31,~~September 30, 2022, real estate assets related to 719 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of ~~$29.1~~$114.1 million, resulting in impairment charges of ~~$3.3~~$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 ~~three~~nine months ended ~~March 31,~~September 30, 2021, real estate assets related to 511 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of ~~$31.3~~$43.1 million, resulting in impairment charges of ~~$4.3~~$5.3 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.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022 (Unaudited) – (Continued)~~

The following summarizes the ranges of discount rates and terminal capitalization rates used for the Company’s impairment test for the real estate assets during the ~~three~~nine months ended ~~March 31, 2022:~~September 30, 2022 and 2021:

Three Months Ended March 31,

Nine Months Ended September 30,

2022

2021

2022

2021

Discount Rate

Terminal Capitalization Rate

Discount Rate

Terminal Capitalization Rate

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%

8.0% – 9.7%

7.5% – 9.2%

8.0% – 9.7%

7.5% – 9.2%

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

The following table presents the impairment charges by asset class recorded during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 (in thousands):


		Three Months Ended March 31,				Nine Months Ended September 30,
		2022		2021				2022		2021
Asset class impaired:	Asset class impaired:						Asset class impaired:
Land	Land	$	964	$	768		Land	$	2,041	$	997
Buildings, fixtures and improvements	Buildings, fixtures and improvements	1,974		3,434			Buildings, fixtures and improvements	8,793		4,138
Intangible lease assets	Intangible lease assets	354		225			Intangible lease assets	1,039		263

Intangible lease liabilities	Intangible lease liabilities	(1)		(127)			Intangible lease liabilities	(4)		(130)
Condominium developments							Condominium developments	7,945		—
Total impairment loss	Total impairment loss	$	3,291	$	4,300		Total impairment loss	$	19,814	$	5,268

NOTE 4 — REAL ESTATE ASSETS

2022 Property Acquisitions

During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company did not acquire any properties.

2022 Condominium Development Project

During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company capitalized ~~$3.1~~$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 ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company disposed of condominium units for an aggregate sales price of ~~$21.1~~$24.2 million, resulting in proceeds of ~~$19.4~~$22.0 million after closing costs and a gain of ~~$3.3~~$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 ~~and Real Estate Assets Held for Sale~~

On December 20, 2021, certain subsidiaries of the Company entered into an Agreement of Purchase and Sale, as amended (the “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 2two single-tenant properties encompassing approximately 9.5 million gross rentable square feet of commercial space across 27 states for total consideration of $1.32 billion (the “Purchase Price”). The Purchase Price ~~includes~~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 ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company disposed of 69130 properties, including 3265 retail properties, ~~and 37~~56 anchored shopping centers, six industrial properties and three office buildings, and an outparcel of land for an aggregate gross sales price of ~~$925.3 million,~~$1.71 billion, resulting in proceeds of ~~$923.2 million~~$1.67 billion after closing costs and a gain of ~~$29.2~~$115.0 million. Included in this amount of properties disposed were the two properties previously owned through the Consolidated Joint Venture. The sale of 5681 of these properties closed pursuant to the Purchase and Sale Agreement for total consideration of ~~$811.8 million,~~$1.33 billion, which consisted of ~~$758.4 million~~$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 ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company recognized earnout income of ~~$31.5~~$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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~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

these properties pursuant to the Purchase and Sale Agreement, and recorded a related receivable of $21.3 million in prepaid expenses and other assets in the condensed consolidated balance sheets. The Company has no continuing involvementtreatment with these properties. The gain on sale of real estate, including the earnout income, is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

As of March 31, 2022, the Company identified 26 properties with a carrying value of $487.5 million as held for sale, 25 of which are in connection with the Purchase and Sale Agreement. The Company disposed of certain of these properties in phases subsequent to March 31, 2022, as further discussed in Note 17 — Subsequent Events.

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 ~~three~~nine months ended ~~March 31,~~September 30, 2022, 719 properties totaling approximately ~~215,000~~832,000 square feet with a carrying value of ~~$32.4~~$126.0 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of ~~$29.1~~$114.1 million, resulting in impairment charges of ~~$3.3~~$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 ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company did not acquire any properties.

2021 Assets Acquired Via Foreclosure

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its 8eight mezzanine loans, including 75 condominium units and 21 rental units across 4four 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 ~~March 31,~~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 10 — Repurchase Facilities, Credit Facilities and Notes Payable.

2021 Condominium Development Project

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company capitalized ~~$1.5~~$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 ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company disposed of 1113 retail ~~property,~~properties, for aan aggregate gross sales price of ~~$3.7~~$484.4 million, resulting in proceeds of ~~$3.5~~$470.2 million after closing ~~costs.~~costs and a gain of $75.6 million. The Company has no continuing involvement ~~with this property.~~

~~As of March 31, 2021, there were 2 properties classified as held for~~that would preclude sale treatment with ~~a carrying value of $31.2 million included in assets held for sale in the accompanying condensed consolidated balance sheets. Subsequent to March 31, 2021, the Company disposed of~~ these properties.

2223

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

As of September 30, 2021, there was one 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.

2021 Impairment

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, 511 properties totaling approximately ~~165,000~~260,000 square feet with a carrying value of ~~$35.6~~$48.4 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of ~~$31.3~~$43.1 million, resulting in impairment charges of ~~$4.3~~$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.

~~Consolidated Joint Venture~~

As of March 31, 2022, the Company had an interest in a Consolidated Joint Venture that owns and manages 2 properties, with total assets of $6.8 million, which included $7.2 million of land, building and improvements and $641,000 of intangible assets, net of accumulated depreciation and amortization of $1.2 million, and total liabilities of $47,000. The Consolidated Joint Venture did not have any debt outstanding as of March 31, 2022. The Company has the ability to control operating and financial policies of the Consolidated Joint Venture. There are restrictions on the use of these assets as the Company would generally be required to obtain the approval of the partner (the “Consolidated Joint Venture Partner”) in accordance with the joint venture agreement for any major transactions. The Company and the Consolidated Joint Venture Partner are subject to the provisions of the joint venture agreement, which includes provisions for when additional contributions may be required to fund certain cash shortfalls.

NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES

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


		March 31, 2022		December 31, 2021			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 $73,317 and $73,923, respectively (both with a weighted average life remaining of 11.4 years)
		$	211,838	$	224,931
Acquired above-market leases, net of accumulated amortization of $3,502 and $3,204, respectively (with a weighted average life remaining of 13.1 years and 13.3 years, respectively)
		12,339		12,774
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	$	224,177	$	237,705	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 $4,458 and $9,043, respectively (with a weighted average life remaining of 13.0 years and 11.5 years, respectively)
		$	21,086	$	24,896
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 ~~March 31,~~September 30, 2022 and 2021 (in thousands):


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2022			2021			2022		2021		2022		2021
In-place lease and other intangible amortization	In-place lease and other intangible amortization		$	6,786		$	7,773	In-place lease and other intangible amortization	$	5,866	$	6,865	$	18,978	$	22,066
Above-market lease amortization	Above-market lease amortization		$	316		$	650	Above-market lease amortization	$	272	$	590	$	893	$	1,839
Below-market lease amortization	Below-market lease amortization		$	579		$	1,466	Below-market lease amortization	$	469	$	1,240	$	1,532	$	4,083

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

As of ~~March 31,~~September 30, 2022, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):


		Amortization							Amortization
		In-Place Leases and Other Intangibles		Above-Market Leases		Below-Market Leases			In-Place Leases and Other Intangibles		Above-Market Leases		Below-Market Leases
Remainder of 2022	Remainder of 2022	$	21,164	$	1,449	$	1,668	Remainder of 2022	$	5,723	$	272	$	458
2023	2023	26,808		1,846		2,137		2023	22,067		1,081		1,802
2024	2024	24,911		1,490		1,873		2024	20,664		975		1,675
2025	2025	21,740		1,358		1,745		2025	17,702		916		1,603
2026	2026	19,692		1,313		1,720		2026	15,947		871		1,595
Thereafter	Thereafter	97,523		4,883		11,943		Thereafter	100,234		6,900		12,379
Total	Total	$	211,838	$	12,339	$	21,086	Total	$	182,337	$	11,015	$	19,512

NOTE 6 — ~~INVESTMENTS~~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 ~~three~~nine months ended ~~March 31,~~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 ~~three~~nine months ended ~~March 31,~~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. As of March 31, 2022, the Company received redemption proceeds of $48.5 million. The remaining $12.2 million redemption proceeds were included in prepaid expenses and other assets in the condensed consolidated balance sheets as of March 31, 2022.

Additionally, during the year ended December 31, 2021, the Company entered into the Unconsolidated Joint ~~Venture.~~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~~loans. As of ~~March 31,~~September 30, 2022, the carrying value of the Company’s investment in NP JV Holdings was ~~$78.4~~$132.4 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance sheets. The Company ~~did not receive any~~received $4.3 million in distributions related to its investment in NP JV Holdings during the ~~three~~nine months ended ~~March 31, 2022.~~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 ~~March 31,~~September 30, 2022, the Company had real estate-related securities with an aggregate estimated fair value of ~~$254.3~~$470.1 million, which included 716 CMBS ~~equity securities~~investments and an investment in ~~preferred units.~~a publicly-traded equity security. The CMBS mature on various dates from ~~March 2024~~July 2023 through June 2058 and have interest rates ranging from ~~4.1%~~6.5% to ~~6.9%,~~10.2% as of September 30, 2022, with one CMBS earning a 0zero 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 ~~March 31,~~September 30, 2022 (in thousands):


		Real Estate-Related Securities							Real Estate-Related Securities
		Amortized Cost Basis		Unrealized Loss		Fair Value			Amortized Cost Basis		Unrealized Loss		Fair Value
CMBS	CMBS	$	137,130	$	(2,081)	$	135,049	CMBS	$	453,894	$	(21,699)	$	432,195
Equity securities		53,389		(2,368)		51,021
Preferred units		68,243		—		68,243
Equity security								Equity security	53,388		(15,462)		37,926

Total real estate-related securities	Total real estate-related securities	$	258,762	$	(4,449)	$	254,313	Total real estate-related securities	$	507,282	$	(37,161)	$	470,121

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

The following table provides the activity for the real estate-related securities during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 (in thousands):


		Amortized Cost Basis		Unrealized Gain (Loss)		Fair Value			Amortized Cost Basis		Unrealized Gain (Loss)		Fair Value
Real estate-related securities as of January 1, 2022	Real estate-related securities as of January 1, 2022	$	102,674	$	2,797	$	105,471	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	151,238		—		151,238		Face value of real estate-related securities acquired	507,915		—		507,915
Investment in preferred units		4,752		—		4,752
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	(372)		—		(372)		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	308		—		308		Amortization of discount on real estate-related securities	1,684		—		1,684
Realized gain on sale of real estate-related securities	Realized gain on sale of real estate-related securities	(110)		(22)		(132)		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	272		—		272		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	(16,157)		—		(16,157)
Unrealized loss on real estate-related securities	Unrealized loss on real estate-related securities	—		(7,224)		(7,224)		Unrealized loss on real estate-related securities	—		(39,936)		(39,936)
Real estate-related securities as of March 31, 2022		$	258,762	$	(4,449)	$	254,313
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 ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company invested ~~$97.5~~$433.2 million in CMBS and $4.8 million in preferred units. The Company also received $53.4 million in equity securities during the three months ended March 31, 2022 as consideration in connection with the Purchase and Sale Agreement.CMBS. During the same period, the Company sold 1one marketable security with an aggregate carrying value of $110,000 resulting in net proceeds of $132,000 and a gain of $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 ~~and equity securities~~ 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~~nine months ended ~~March 31,~~September 30, 2022, the Company recorded ~~$7.2~~$39.9 million of unrealized loss on its real estate-related securities, ~~$4.9~~$24.5 million of which is included in other comprehensive (loss) income in the accompanying condensed consolidated statements of comprehensive income. The remaining ~~$2.3~~$15.4 million of unrealized loss on the Company’s equity ~~securities~~security is included in ~~interest expense and other, net~~unrealized loss on equity security in the accompanying condensed consolidated statements of operations.

The scheduled maturities of the Company’s CMBS ~~and preferred units~~ as of ~~March 31,~~September 30, 2022 are as follows (in thousands):


		CMBS and Preferred Units					CMBS
		Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
Due within one year	Due within one year	$	68,243	$	68,243	Due within one year	$	—	$	—
Due after one year through five years	Due after one year through five years	97,476		97,476		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	39,654		37,573		Due after ten years	40,835		31,145
Total	Total	$	205,373	$	203,292	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 ~~March 31,~~September 30, 2022, the Company had no credit losses related to real estate-related securities.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

NOTE 8 — LOANS HELD-FOR-INVESTMENT

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


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

First mortgage loans (1)	First mortgage loans (1)	$	2,664,702	$	1,968,585	First mortgage loans (1)	$	3,259,744	$	1,968,585
Total CRE loans held-for-investment and related receivables, net	Total CRE loans held-for-investment and related receivables, net	2,664,702		1,968,585		Total CRE loans held-for-investment and related receivables, net	3,259,744		1,968,585
Liquid senior loans	Liquid senior loans	671,569		655,516		Liquid senior loans	705,750		655,516
Corporate senior loan		9,927		—
Corporate senior loans						Corporate senior loans	57,232		—
Loans held-for-investment and related receivables, net	Loans held-for-investment and related receivables, net	$	3,346,198	$	2,624,101	Loans held-for-investment and related receivables, net	$	4,022,726	$	2,624,101

Less: Current expected credit losses	Less: Current expected credit losses	$	(19,150)	$	(15,201)	Less: Current expected credit losses	$	(29,584)	$	(15,201)
Total loans held-for-investment and related receivable, net	Total loans held-for-investment and related receivable, net	$	3,327,048	$	2,608,900	Total loans held-for-investment and related receivable, net	$	3,993,142	$	2,608,900

(1) As of ~~March 31,~~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.

During the three months ended March 31, 2022, the Company invested $61.0 million in liquid senior loans and invested $10.0 million in a corporate senior loan. During the same period, the Company received $21.5 million of principal payments on liquid senior loans and sold $23.9 million of liquid senior loans, resulting in proceeds of $23.8 million after closing costs and a gain of $65,000. The gain was recorded as a decrease to interest expense and other, net in the condensed consolidated statements of operations. As of March 31, 2022, the Company had $39.5 million of unfunded or unsettled liquid senior loan purchases included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

As of March 31, 2022, the Company had $384.7 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.

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


		CRE Loans (1) (2)						Liquid Senior Loans						Corporate Senior Loan							CRE Loans (1) (2)						Liquid Senior Loans						Corporate Senior Loans
		March 31, 2022			December 31, 2021			March 31, 2022			December 31, 2021			March 31, 2022			December 31, 2021				September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Number of loans	Number of loans	25			22			306			295			1			—			Number of loans	29			22			313			295			4			—
Principal balance	Principal balance	$	2,688,941		$	1,985,722		$	675,086		$	659,007		$	10,000		$	—		Principal balance	$	3,283,523		$	1,985,722		$	711,947		$	659,007		$	58,031		$	—
Net book value	Net book value	$	2,653,460		$	1,958,655		$	663,717		$	650,245		$	9,871		$	—		Net book value	$	3,244,737		$	1,958,655		$	691,981		$	650,245		$	56,424		$	—
Weighted-average interest rate	Weighted-average interest rate	3.4		%	3.3		%	4.0		%	3.7		%	7.0		%	—		%	Weighted-average interest rate	5.9		%	3.3		%	6.7		%	3.7		%	9.2		%	—		%

Weighted-average maximum years to maturity	Weighted-average maximum years to maturity	4.3			4.3			5.1			5.1			5.6			0			Weighted-average maximum years to maturity	3.9			4.3			4.9			5.1			4.8			0.0
Unfunded loan commitments (3)																				Unfunded loan commitments (3)	$	338,539		$	209,368		$	1,886		$	1,562		$	4,324		$	—

(1)As of ~~March 31,~~September 30, 2022, 100% of the 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 that are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

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)		Net Book Value			CRE Loans		Liquid Senior Loans		Corporate Senior Loans		Total Loan Portfolio
Balance, January 1, 2022	Balance, January 1, 2022	$	2,644,728	$	(35,828)	$	2,608,900	Balance, January 1, 2022	$	1,958,655	$	650,245	$	—	$	2,608,900
Loan originations and acquisitions(1)	Loan originations and acquisitions(1)	855,693		—		855,693		Loan originations and acquisitions(1)	1,378,649		164,325		75,851		1,618,825

Sale of loans	Sale of loans	(23,854)		85		(23,769)		Sale of loans	—		(53,332)		—		(53,332)
Principal repayments received (2)		(102,540)		65		(102,475)

Deferred fees and other items		—		(10,076)		(10,076)
Principal repayments received								Principal repayments received	(80,911)		(58,189)		(17,820)		(156,920)
Capitalized interest								Capitalized interest	62		—		—		62
Deferred fees and other items (2)								Deferred fees and other items (2)	(13,978)		(3,397)		(1,050)		(18,425)
Accretion and amortization of fees and other items	Accretion and amortization of fees and other items	—		2,724		2,724		Accretion and amortization of fees and other items	7,337		827		251		8,415

Current expected credit losses	Current expected credit losses	—		(3,949)		(3,949)		Current expected credit losses	(5,077)		(8,498)		(808)		(14,383)
Balance, March 31, 2022		$	3,374,027	$	(46,979)	$	3,327,048

Balance, September 30, 2022								Balance, September 30, 2022	$	3,244,737	$	691,981	$	56,424	$	3,993,142

(1)The Company’s investment in preferred units, which was previously recorded in real estate-related securities on the accompanying condensed consolidated balance sheets, was redeemed during the nine months ended September 30, 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.

(2)Other items primarily consist of ~~current expected credit losses (as discussed below),~~ purchase discounts or premiums ~~accretion of exit fees~~ and deferred origination expenses.

~~(2) Includes the repayment of a $80.9 million first mortgage loan prior to the maturity date.~~

Current Expected Credit Losses

Current expected credit losses 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 current expected credit losses.

The following table presents the activity in the Company’s current expected credit losses by loan type for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~(dollar amounts in~~(in thousands):


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

Provision for credit losses	Provision for credit losses	1,312		360		2,581		400		56		4,709		Provision for credit losses	1,312		360		2,581		400		56		—		4,709
Current expected credit losses as of March 31, 2022	Current expected credit losses as of March 31, 2022	$	11,242	$	360	$	7,852	$	400	$	56	$	19,910	Current expected credit losses as of March 31, 2022	$	11,242	$	360	$	7,852	$	400	$	56	$	—	$	19,910
Provision for (reversal of) credit losses														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														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														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														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 are recognized through net income ~~(loss)~~ 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, 2022 (Unaudited) – (Continued)

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. Current expected credit losses for financial instruments that are 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

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022 (Unaudited) – (Continued)~~

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 three months ended March 31, 2022, the Company recorded a $3.9 million net increase to the provision for credit losses related to its first mortgage loans, liquid senior loans, and its corporate senior loan to reflect the estimated fair value of such loans, bringing the total current expected credit losses to $19.2 million as of March 31, 2022.

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, 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 ~~March 31,~~September 30, 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 March 31, 2022												As of September 30, 2022
		Number of Loans	2022		2021		2020		2019		Total			Number of Loans	2022		2021		2020		2019		Total
First mortgage 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	25	757,254		1,714,550		145,133		47,765		2,664,702		3	29	1,238,852		1,819,168		152,458		49,266		3,259,744
4	4	—	—		—		—		—		—		4	—	—		—		—		—		—
5	5	—	—		—		—		—		—		5	—	—		—		—		—		—
Total first mortgage loans	Total first mortgage loans	25	757,254		1,714,550		145,133		47,765		2,664,702		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:												Liquid senior loans by internal risk rating:
1	1	—	—		—		—		—		—		1	—	—		—		—		—		—
2	2	2	—		—		5,338		—		5,338		2	2	—		—		5,312		—		5,312
3	3	298	45,447		347,678		256,586		3,031		652,742		3	305	132,470		338,755		213,813		3,017		688,055
4	4	6	3,314		—		10,175		—		13,489		4	6	3,298		—		9,085		—		12,383
5	5	—	—		—		—		—		—		5	—	—		—		—		—		—
Total liquid senior loans	Total liquid senior loans	306	48,761		347,678		272,099		3,031		671,569		Total liquid senior loans	313	135,768		338,755		228,210		3,017		705,750
Corporate senior loan by internal risk rating:
Corporate senior loans by internal risk rating:													Corporate senior loans by internal risk rating:
1	1	—	—		—		—		—		—		1	—	—		—		—		—		—
2	2	—	—		—		—		—		—		2	—	—		—		—		—		—
3	3	1	9,927		—		—		—		9,927		3	4	57,232		—		—		—		57,232
4	4	—	—		—		—		—		—		4	—	—		—		—		—		—
5	5	—	—		—		—		—		—		5	—	—		—		—		—		—
Total corporate senior loan		1	9,927		—		—		—		9,927
Total corporate senior loans													Total corporate senior loans	4	57,232		—		—		—		57,232
Less: Current expected credit losses	Less: Current expected credit losses										(19,150)		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	332									$	3,327,048	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.

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022 (Unaudited) – (Continued)~~

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

NOTE 9 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, the Company uses certain types of derivative instruments for the purpose of managing or hedging its interest rate risk. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, 1two of the Company’s interest rate swap agreements matured, ~~and~~four of the Company’s interest rate cap agreements matured, the Company terminated 1three interest rate swap ~~agreement~~agreements prior to the maturity ~~date.~~dates, and the Company entered into one interest rate cap agreement. As of ~~March 31,~~September 30, 2022, the Company had 5two non-designated interest rate cap ~~agreements and 3 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, 2022 (Unaudited) – (Continued)

The following table summarizes the terms of the Company’s interest rate cap agreements ~~and interest rate swap agreements designated as hedging instruments~~ as of ~~March 31,~~September 30, 2022 and December 31, 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

March 31,

December 31,

Balance Sheet

Amount as of

Interest

Effective

Maturity

September 30,

December 31,

Location

March 31, 2022

Rates (1)

Dates

2022

2021

Location

September 30, 2022

Rates (1)

Dates

2022

2021

Interest Rate Caps

Prepaid expenses and other assets

752,553

4.81% to 5.45%

5/7/2021 to 7/15/2021

5/9/2022 to 7/15/2023

1,355

179

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, derivative liabilities and other liabilities

155,800

3.31% to 4.84%

6/27/2017 to 9/30/2019

7/1/2022 to 9/6/2022

(976)

(2,466)

Interest Rate Swap

Deferred rental income, derivative liabilities and other liabilities

—

—%

—

(2,466)

(1)The interest rate consists of the underlying index ~~swapped or~~ capped to a fixed rate as of ~~March 31,~~September 30, 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 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~~nine months ended ~~March 31,~~September 30, 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 ~~March 31,~~September 30, 2022, the amount of gain reclassified from other comprehensive (loss) income as a decrease to interest expense was ~~$7,000.~~$2.6 million for both periods. For the three months ended ~~March 31,~~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 ~~$3.1~~$3.0 million. The total unrealized ~~gain~~loss on interest rate swaps of ~~$1.6 million~~$20,000 as of ~~March 31,~~September 30, 2022, and the total unrealized gain on interest rate swaps of $152,000 as of December 31, 2021, respectively, is included in accumulated other comprehensive (loss) income in the accompanying condensed consolidated statements of stockholders’ equity. During the next 12 months, the Company estimates that ~~$1.1 million~~$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 of $1.0 million as of March 31, 2022.~~interest. In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. The Company records credit risk valuation adjustments on its 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 derivative instruments as of ~~March 31,~~September 30, 2022.

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022 (Unaudited) – (Continued)~~

NOTE 10 — REPURCHASE FACILITIES, CREDIT FACILITIES AND NOTES PAYABLE

As of ~~March 31,~~September 30, 2022, the Company had ~~$4.2~~$4.4 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of ~~3.2~~3.3 years and a weighted average interest rate of ~~2.7%~~4.5%. The weighted average years to maturity is computed using the scheduled repayment date as specified in each loan agreement where applicable. The weighted average interest rate is computed using the interest rate in effect until the scheduled repayment date.

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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 ~~March 31,~~September 30, 2022 and December 31, 2021, and the debt activity for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 (in thousands):


				During the Three Months Ended March 31, 2022											During the Nine Months Ended September 30, 2022
		Balance as of December 31, 2021		Debt Issuances & Assumptions (1)		Repayments & Modifications (2)		Accretion & (Amortization)		Balance as of March 31, 2022			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	$	471,967	$	—	$	(72,558)	$	—	$	399,409	Notes payable – fixed rate debt	$	471,967	$	—	$	(435,320)	(4)	$	—	$	36,647
Notes payable – variable rate debt	Notes payable – variable rate debt	70,268		62,775		(10,555)		—		122,488		Notes payable – variable rate debt	70,268		470,860		(70,268)			—		470,860
First lien mortgage loan	First lien mortgage loan	650,000		—		(493,839)		—		156,161		First lien mortgage loan	650,000		—		(515,993)			—		134,007
ABS mortgage notes	ABS mortgage notes	770,775		—		(1,935)		—		768,840		ABS mortgage notes	770,775		—		(5,805)			—		764,970
Credit facilities	Credit facilities	910,000		82,000		(218,000)		—		774,000		Credit facilities	910,000		767,000		(985,500)			—		691,500
Repurchase facilities	Repurchase facilities	1,298,414		758,285		(76,375)		—		1,980,324		Repurchase facilities	1,298,414		1,065,146		(80,967)			—		2,282,593
Total debt	Total debt	4,171,424		903,060		(873,262)		—		4,201,222		Total debt	4,171,424		2,303,006		(2,093,853)			—		4,380,577

Deferred costs – credit facility (3)	Deferred costs – credit facility (3)	(143)		(213)		—		75		(281)		Deferred costs – credit facility (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	(11,678)		—		7,068		1,382		(3,228)		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	(271)		(685)		—		182		(774)		Deferred costs – variable rate debt	(271)		(6,141)		—			647		(5,765)
Deferred costs – ABS mortgage notes	Deferred costs – ABS mortgage notes	(16,127)		—		—		501		(15,626)		Deferred costs – ABS mortgage notes	(16,127)		—		382			1,460		(14,285)
Total debt, net	Total debt, net	$	4,143,205	$	902,162	$	(866,194)	$	2,140	$	4,181,313	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 ~~$10.9~~$19.6 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

(3)Deferred costs related to the term portion of the CIM Income NAV Credit Facility ~~(as~~and the CMFT Credit Facility (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 ~~March 31,~~September 30, 2022, the Company had fixed rate debt outstanding of $399.4 million included $15.8 million of variable rate debt that is fixed through interest rate swap agreements, which has the effect of fixing the variable interest rates per annum through the maturity date of the variable rate debt.$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~~December 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 ~~$685.3~~$59.4 million as of ~~March 31,~~September 30, 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. As of March 31,~~properties (the “Assumed Variable Rate Debt”). During the nine months endedSeptember 30, 2022, the Company ~~had $122.5 million~~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, 2022, the amount outstanding on the refinanced Assumed Variable Rate Debt totaled $49.4 million. The Company’s outstanding variable rate debt ~~outstanding, which included $62.8 million of borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”), which~~ had a weighted average interest rate of ~~3.9%.The variable rate debt outstanding~~5.3% as of September 30, 2022, and matures on various dates from ~~May 2022~~October 2024 to ~~July 2027.~~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 is managed on a day-to-day basis by affiliates of CIM. As of

September 30,

~~Table of Contents~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022 (Unaudited) – (Continued)~~

~~March 31,~~ 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 57 51

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September 30, 2022 (Unaudited) – (Continued)

properties, comprised of ~~1 anchored shopping center, 54~~50 single-tenant retail properties 1and one office ~~property and 1 industrial~~ property. As of ~~March 31,~~September 30, 2022, the aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the notes was ~~$365.9~~$332.1 million. Amounts outstanding on the Mortgage Loan totaled ~~$156.2~~$134.0 million with a weighted average interest rate of ~~4.8%~~7.5% as of ~~March 31,~~September 30, 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.

ABS Mortgage Notes

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

Class of Notes

Initial Principal Balance

Note Rate

Anticipated Repayment Date

Rated Final Payment Date

Credit Rating (1)

A-1 (AAA)

146,400,000

2.09%

July 2028

July 2051

AAA (sf)

A-2 (AAA)

219,600,000

2.57%

July 2031

July 2051

AAA (sf)

A-3 (AA)

39,200,000

2.51%

July 2028

July 2051

AA (sf)

A-4 (AA)

58,800,000

3.04%

July 2031

July 2051

AA (sf)

A-5 (A)

124,000,000

2.91%

July 2028

July 2051

A (sf)

A-6 (A)

186,000,000

3.44%

July 2031

July 2051

A (sf)

____________________________________

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

The collateral pool for the Class A Notes is comprised of 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 $977.3 million. As of ~~March 31,~~September 30, 2022, amounts outstanding on the Class A Notes totaled ~~$768.8~~$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

~~On December 16, 2021, as a result of the CIM Income NAV Merger, a~~CMFT SCF Borrower, LLC, an indirect wholly owned subsidiary of the Company ~~assumed CIM Income NAV’s obligations pursuant to the~~(the “CMFT Borrowing Sub”), has a credit agreement ~~by and among CIM Income NAV Operating Partnership, LP,~~(the “Credit Agreement”) with the ~~operating partnership of CIM Income NAV (“CIM Income NAV OP”),~~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 lender parties thereto (the “CIM Income NAV Credit Agreement”), including as guarantor under a guaranty provided by CIM Income NAV, and as modified by a modification agreement dated as of September 6, 2017 and subsequently modified following the consummation of the CIM Income NAV Merger by a second modification agreement on December 16, 2021. The CIM Income NAV Credit Agreement allows for borrowings ofability to borrow up to ~~$425.0 million (the “CIM Income NAV Credit Facility”). The CIM Income NAV Credit Facility includes $212.5 million in term loans (the “CIM Income NAV Term Loans”) and up to $212.5~~$200.0 million in revolving loans (the ~~“CIM Income NAV~~“CMFT Revolving Loans”). under a revolving credit facility (the “CMFT Revolving Facility”) with a $30.0 million letter of credit subfacility. The ~~CIM Income NAV~~CMFT Term ~~Loans~~Loan and the ~~CIM Income NAV~~CMFT Revolving ~~Loans~~Facility both mature on ~~September 6, 2022.~~July 15, 2025.

~~Depending~~Borrowings under the Credit Agreement bear interest at rates depending upon the type of loan specified ~~and overall leverage ratio, the CIM Income NAV Credit Facility bears interest at (i) the one-month, three-month or six-month LIBOR multiplied~~ by the ~~statutory reserve~~CMFT Borrowing Sub, the interest period, and the Company’s adjusted leverage ratio. For alternate base rate ~~plus an~~(“ABR”) loans, the interest rate ~~spread ranging from 1.60%~~will be equal to ~~2.10% for term loans and 1.70% to 2.20% for revolving loans; or (ii) a base rate ranging from 0.60% to 1.10% for term loans and 0.70% to 1.20% for revolving loans, plus~~ the greater of: (a) JPMorgan Chase’s ~~Prime~~prime rate (as defined in the Credit Agreement), (b) the NYFRB Rate (as defined in the ~~CIM Income NAV~~ Credit Agreement)~~; (b)~~ plus 0.50%, and (c) the ~~greater of (1) the Federal Funds Effective~~Adjusted Term SOFR Rate (as defined in the ~~CIM Income NAV~~ Credit Agreement) plus 1.0% for the interest period plus the applicable rate. For term benchmark (“Term Benchmark”) loans and ~~(2)~~risk-free rate (“RFR”) loans, the ~~Overnight Bank Funding~~interest rate is based on the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as defined in the ~~CIM Income NAV~~ Credit Agreement), respectively, for the applicable interest period plus ~~0.50%; or (c)~~ the ~~one-month LIBOR multiplied~~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 ~~statutory reserve rate plus 1.0%.~~

~~As of March 31, 2022, $40.0 million was outstanding~~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 ~~CIM Income NAV Revolving Loans. As~~CMFT Credit Facility. The Company and certain subsidiaries of ~~March 31, 2022,~~ the CIM Income NAV Term Loans outstanding totaled $212.5 million, $140.0 million of which is subject to interest rate swap agreements (the “Swapped Term Loans”). The interest rate swap agreements had the effect of fixing the Eurodollar RateCompany

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~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

~~per annum of~~also entered into a guaranty with the ~~Swapped Term Loans at an all-in rate of 4.4%.~~ lenders, under which the Company and certain subsidiaries agreed to guarantee the CMFT Borrowing Sub’ obligations under the Credit Agreement.

As of ~~March 31,~~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 ~~$252.5~~$150.0 million outstanding under the ~~CIM Income NAV~~CMFT Credit Facility at a weighted average interest rate of ~~3.8%~~4.5% and ~~$172.5~~$150.0 million in unused capacity, subject to borrowing availability. The Company had available borrowings of ~~$171.6~~$150.0 million as of ~~March 31,~~September 30, 2022.

The ~~CIM~~Company had a credit agreement (the “CIM Income NAV Credit ~~Agreement contains provisions~~Agreement”) with ~~respect~~JPMorgan Chase, as administrative agent, and the lender parties thereto, that provided for borrowings of up to ~~covenants, events of default and remedies customary for facilities of this nature. In particular, the CIM~~$425.0 million (the “CIM Income NAV Credit Agreement requires the Company to maintain a minimum consolidated net worth greater than or equal to the total of (i) $367.1 million, plus (ii) 75% of the aggregate increases in stockholders’ equity of the Company, minus (iii) the aggregate amount of any redemptions or similar transactions (but not to exceed the amount in clause (ii) above) and a leverage ratio less than or equal to 60%Facility”). The CIM Income NAV Credit ~~Agreement requires~~Facility was set to mature on September 6, 2022. During the nine months endedSeptember 30, 2022, the Company to maintain a fixed charge coverage ratio greater than 1.50 to 1.00, an unsecured debt to unencumbered asset value ratio equal to or less than 60%, an unsecured debt service coverage ratio greater than 1.75 to 1.00, a secured debt ratio equal to or less than 40% andpaid down the ~~amount of secured debt that is real estate recourse debt at no greater than 15% of total asset value. The Company believes it was in compliance with the financial covenants~~$212.5 million outstanding balance under the CIM Income NAV Credit ~~Agreement, as well as~~Facility with proceeds from the ~~financial covenants under~~closing of the ~~Company’s various fixed~~CMFT Credit Facility and ~~variable rate debt agreements, as of March 31, 2022.~~terminated the CIM Income NAV Credit 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. ~~During the year ended December 31, 2021, the Company amended the~~The Third Amended Credit and Security Agreement ~~(the “Second Amended Credit and Security Agreement”) by increasing~~provides for available borrowings under the revolving credit facility to an aggregate principal amount up to $550.0 million (the “Credit Securities Revolver”). The Credit Securities Revolver may be increased from time to time pursuant to the ~~Second~~Third Amended Credit and Security Agreement. As of ~~March 31,~~September 30, 2022, the amounts borrowed and outstanding under the Credit Securities Revolver totaled ~~$521.5~~$541.5 million at a weighted average interest rate of ~~2.5%~~5.2%.

Borrowings under the ~~Second~~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 ~~Second~~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 ~~Second~~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 liquid senior secured loans subject to certain eligibility criteria under the ~~Second~~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 ~~March 31,~~September 30, 2022.

Repurchase Facilities

As of ~~March 31,~~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”), ~~and~~ Deutsche Bank AG (“Deutsche Bank”), and J.P. Morgan Securities LLC (“J.P. Morgan”) (collectively, the “Repurchase Agreements”) to provide financing primarily through each bank’s purchase of the Company’s CRE mortgage loans and CMBS and future funding advances (the “Repurchase Facilities”).

The following table is a summary of the Repurchase Facilities as of ~~March 31,~~September 30, 2022 (dollar amounts in thousands):

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)


Repurchase Facility	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		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	Citibank	6/4/2020	8/17/2024	$	400,000	2.1%	(3)	$	450,919	$	322,416	Citibank	6/4/2020	8/17/2024		$	400,000	4.6%	(3)	$	460,573	$	333,532
Barclays	Barclays	9/21/2020	9/21/2024	1,250,000		2.1%	(3)	1,145,974		906,937		Barclays	9/21/2020	9/21/2024		1,250,000		4.7%	(3)	1,171,039		915,452
Wells Fargo	Wells Fargo	5/20/2021	5/19/2024	750,000		1.8%	(3)	807,354		657,598		Wells Fargo	5/20/2021	8/30/2025		750,000		4.4%	(3)	887,423		693,616
Deutsche Bank	Deutsche Bank	10/8/2021	10/8/2022	300,000		2.3%	(4)	120,256		93,373		Deutsche Bank	10/8/2021	10/8/2023		300,000		5.1%	(4)	189,365		144,520
J.P. Morgan												J.P. Morgan	6/1/2022	10/7/2022	(5)	(5)		4.1%	(6)	351,647		195,473
Total	Total			$	2,700,000			$	2,524,503	$	1,980,324	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 ~~were~~was set to mature on ~~various dates between June 2023 and~~ May 19, 2024, with up to 2two one-year extension ~~options, while~~options. During thenine 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”) iswas set to mature on October 8, 2022, with 4four 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, 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 ~~three~~nine months ended ~~March 31,~~September 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 agreement~~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.

(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 ~~(as such term is defined in the repurchase agreement)~~ 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 ~~2.00%~~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, ~~and~~ Deutsche Bank and J.P. Morgan to re-sell such purchased CRE mortgage loans and CMBS back to CMFT Lending Subs at a certain future date or upon demand.

In connection with certain of the Repurchase Agreements, the Company (as the guarantor) entered into guaranties with Citibank, Barclays, Wells Fargo, and Deutsche Bank (the “Guaranties”), under which the Company agreed to guarantee up to 25% of the CMFT Lending Subs’ obligations under ~~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 defined in the Guaranties) to interest expense equal to or greater than 1.40. The Company believes it was in compliance with the financial covenants under the Repurchase Agreements as of ~~March 31,~~September 30, 2022.

~~Maturities~~

~~Liquidity and Financial Condition~~— The Company had $618.1 million of debt maturing within the next 12 months following the date these financial statements are issued. The Company plans 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 LTV ratios, the occupancy of the Company’s properties and assessment of the current lending environment. Additionally, in the normal course of business, the Company is in discussions with its lenders to extend, amend or replace any financing facilities which contain near term expirations. The Company plans to use cash on hand, proceeds from real estate asset dispositions, net cash provided by operations, borrowings available under the credit facilities and the entry into new financing arrangements, which management believes 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.

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~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

Maturities

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to ~~March 31,~~September 30, 2022 (in thousands):


		Principal Repayments			Principal Repayments
Remainder of 2022	Remainder of 2022	$	434,406	Remainder of 2022	$	197,518
2023	2023	429,029		2023	283,490
2024	2024	2,499,542		2024	1,863,177
2025	2025	16,950		2025	856,378
2026	2026	—		2026	—
Thereafter	Thereafter	821,295		Thereafter	1,180,014
Total	Total	$	4,201,222	Total	$	4,380,577

NOTE 11 — COMMITMENTS AND CONTINGENCIES

Litigation

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

Unfunded Commitments

As of ~~March 31,~~September 30, 2022, the Company had ~~$384.7~~$344.7 million of unfunded loan commitments related to its existing CRE loans held-for-investment, corporate senior loans, and ~~$16.2~~liquid senior loans, and $79.5 million of unfunded commitments related to ~~NP JV Holdings.~~the NewPoint JV. These commitments are not reflected in the accompanying condensed consolidated balance sheet.

~~Unfunded Liquid Senior Loans~~

As of ~~March 31,~~September 30, 2022, the Company had ~~$39.5~~$6.3 million of ~~unfunded or~~ unsettled liquid senior loan acquisitions, ~~$24.3~~$5.8 million of which settled subsequent to ~~March 31,~~September 30, 2022. ~~Unfunded and unsettled~~Unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

Environmental Matters

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

NOTE 12 — RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS

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

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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~~March 31,~~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 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 ~~March 31,~~September 30, 2022 and 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.

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.

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2022			2021			2022		2021		2022		2021
Management fees	Management fees		$	13,347		$	11,577	Management fees	$	12,915	$	11,703	$	39,613	$	35,035

Expense reimbursements to related parties(1)	Expense reimbursements to related parties(1)		$	3,694		$	2,661	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, ~~$16.1~~$14.6 million and ~~$15.4~~$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 ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022 (Unaudited) – (Continued)~~

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 4four 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 4four 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 in $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 ~~three~~nine months ended ~~March 31,~~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 ~~March 31,~~the upsize and the conversion of preferred units, as of September 30, 2022, the Company had ~~$68.2 million invested in preferred units and $135.3~~$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 ~~March 31,~~September 30, 2022, ~~$120.4~~$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~~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 ~~$112.5~~$212.5 million, of which ~~$78.3~~$133.0 million has been funded. For more information on the ~~NewPointJV,~~NewPoint JV, see Note 2 — Summary of Significant Accounting Policies. ~~Subsequent to March 31, 2022, the Company contributed an additional $18.7 million in capital to NP JV Holdings.~~

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 ~~March 31,~~September 30, 2022, $154.0 million of the first mortgage loan was outstanding. ~~Subsequent to March 31,~~

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 had an investment in CIM UII Onshore, a fund that is advised by an affiliate of CMFT Management, which was fully redeemed for $60.7 million ~~on March 31,~~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.

During the three months ended March 31, 2022, the Company and CIM RACR co-invested $10.0 million and $1.9 million, respectively, in a corporate senior loan to a third-party. As of March 31, 2022, $10.0 million of the corporate senior loan was outstanding. Subsequent to March 31, 2022, the Company and CIM RACR co-invested $17.7 million and $5.0 million, respectively, in a corporate senior loan to a third-party. The Sub-Advisor provided investment management services related to this corporate senior loan pursuant to the Sub-Advisory Agreement.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~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 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 14 — STOCKHOLDERS’ EQUITY

Equity-Based Compensation

On August 10, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “2018 Plan”), under which 400,000 of the Company’s shares of common stock were reserved for ~~issuance and awards of approximately 306,000 shares of common stock were available for future grant at March 31, 2022.~~issuance. On April 27, 2022, the Board and the compensation committee of the Board approved ~~subject to stockholder approval,~~ the Amended and Restated CIM Real Estate Finance Trust, Inc. 2022 Equity Incentive Plan (the “2022 Plan”). and the 2022 Plan was approved by the Company’s stockholders at the Company’s 2022 Annual Meeting of Stockholders held on July 12, 2022. The 2022 Plan ~~would supersede~~superseded and ~~replace~~replaced the 2018 Plan. Awards that are granted on or after the effective date of the 2022 Plan ~~will be~~are subject to the terms and provisions of the 2022 Plan. The total number of shares of Company common stock reserved and available for issuance under the 2022 Plan at any time during the term of the 2022 Plan ~~shall be~~are 250,000 shares, which is a reduction from 400,000 shares authorized for issuance under the 2018 ~~Plan.~~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 committee of the Board has the authority to grant certain awards to employees, non-employee directors, and consultants or advisors of the Company, including stock option awards, restricted stock awards or deferred stock awards, which awards will further align such persons’ interests with the interests of the Company’s stockholders. The Board or the compensation committee of the Board also has the authority to determine the terms of any award granted pursuant to the 2022 Plan, including vesting schedules, restrictions and acceleration of any restrictions. The 2022 Plan may be amended or terminated by the Board or the compensation committee of the Board at any time, subject to the right of the Company’s stockholders to approve certain amendments.

As of ~~March 31,~~September 30, 2022, the Company has granted awards of approximately ~~94,000~~116,000 restricted shares in the aggregate to the independent members of the Board under the 2018 Plan. As of ~~March 31,~~September 30, 2022, 73,000 of the restricted shares had vested based on one year of continuous ~~service. The remaining 21,000~~service, and on October 1, 2022, 43,000 of the restricted shares ~~issued had not~~ vested ~~or been forfeited as~~based on one year of ~~March 31, 2022.~~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 ~~$37,000~~$120,000 and ~~$40,000~~$277,000 for the three and nine months ended ~~March 31,~~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. ~~As of March 31, 2022, there was $76,000 of total unrecognized~~All compensation expense related to these restricted shares ~~which will be~~was recognized ratably over the ~~remaining~~ period of service prior to September 30, 2022. On October ~~2022.~~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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

As of ~~March 31,~~September 30, 2022, the Company’s leases had a weighted-average remaining term of ~~9.8~~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.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~March 31, 2022 (Unaudited) – (Continued)~~

As of ~~March 31,~~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			Future Minimum Rental Income
Remainder of 2022	Remainder of 2022	$	157,093	Remainder of 2022	$	38,611
2023	2023	204,036		2023	153,721
2024	2024	197,687		2024	151,924
2025	2025	190,190		2025	148,037
2026	2026	179,233		2026	143,815
Thereafter	Thereafter	1,219,950		Thereafter	1,104,039
Total	Total	$	2,148,189	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 ~~March 31,~~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 ~~March 31,~~September 30, 2022 and 2021 consisted of the following (in thousands):


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2022			2021			2022		2021		2022		2021
Fixed rental and other property income (1)	Fixed rental and other property income (1)		$	64,706		$	66,541	Fixed rental and other property income (1)	$	40,875	$	60,031	$	153,522	$	190,632
Variable rental and other property income (2)	Variable rental and other property income (2)		9,030			10,389		Variable rental and other property income (2)	2,684		10,763		17,281		32,394
Total rental and other property income	Total rental and other property income		$	73,736		$	76,930	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 1one property subject to a non-cancelable operating ground lease with a remaining term of ~~11.4~~10.9 years, with a lease liability (in deferred rental income, derivative liabilities and other liabilities) and a related ~~ROU~~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 ~~March 31,~~September 30, 2022, of which $61,000 and $182,000 was paid in cash during the period it was recognized. As of ~~March 31,~~September 30, 2022, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately ~~$187,000~~$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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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

NOTE 16 — SEGMENT REPORTING

The Company has 2two 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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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

~~The following tables present segment reporting for the~~ ~~three months ended March 31, 2022 and 2021(in thousands):~~


	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

Real Estate Credit
Corporate/Other (1) (2)
Company Total
Three Months Ended March 31, 2022
Rental and other property income $ 73,639 $ — $ 97 $ 73,736
Interest income — 31,463 — 31,463
Total revenues 73,639 31,463 97 105,199
General and administrative 149 230 3,096 3,475
Property operating 7,136 — 591 7,727
Real estate tax 6,350 — 363 6,713
Expense reimbursements to related parties — — 3,694 3,694
Management fees 7,131 6,216 — 13,347
Transaction-related 7 — — 7
Depreciation and amortization 19,141 — — 19,141
Real estate impairment 3,291 — — 3,291
Increase in provision for credit losses — 4,709 — 4,709
Total operating expenses 43,205 11,155 7,744 62,104
Gain on disposition of real estate and condominium developments, net 29,265 — 3,309 32,574
Operating income (loss) 59,699 20,308 (4,338) 75,669
Other expense:
Gain on investment in unconsolidated entities — 168 5,172 5,340
Interest expense and other, net (13,839) (13,914) (3,284) (31,037)
Loss on extinguishment of debt (10,737) — (134) (10,871)
Segment net income (loss) $ 35,123 $ 6,562 $ (2,584) $ 39,101
Net income allocated to noncontrolling interest 9 — — 9
Segment net income (loss) attributable to the Company 35,114 6,562 (2,584) 39,092
Total assets as of March 31, 2022 $ 2,919,412 $ 3,767,306 $ 281,702 $ 6,968,420
~~__________________________________~~

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

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

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)


		Real Estate		Credit		Corporate/Other		Company Total			Real Estate		Credit		Corporate/Other (1)		Company Total
Three Months Ended March 31, 2021
Three Months Ended September 30, 2021										Three Months Ended September 30, 2021
Rental and other property income	Rental and other property income	$	76,794	$	—	$	136	$	76,930	Rental and other property income	$	70,694	$	—	$	100	$	70,794
Interest income	Interest income	—		11,953		—		11,953		Interest income	—		19,755		—		19,755
Total revenues	Total revenues	76,794		11,953		136		88,883		Total revenues	70,694		19,755		100		90,549

General and administrative	General and administrative	64		376		3,988		4,428		General and administrative	86		265		2,725		3,076
Property operating	Property operating	8,523		—		1,596		10,119		Property operating	7,555		—		3,602		11,157
Real estate tax	Real estate tax	7,869		—		4,350		12,219		Real estate tax	7,325		—		266		7,591
Expense reimbursements to related parties	Expense reimbursements to related parties	—		—		2,661		2,661		Expense reimbursements to related parties	—		—		2,516		2,516
Management fees	Management fees	—		—		11,577		11,577		Management fees	8,713		2,990		—		11,703
Transaction-related	Transaction-related	4		—		—		4		Transaction-related	6		—		—		6
Depreciation and amortization	Depreciation and amortization	25,738		—		—		25,738		Depreciation and amortization	22,801		—		—		22,801
Real estate impairment	Real estate impairment	4,300		—		—		4,300		Real estate impairment	891		—		—		891
Increase in provision for credit losses		—		568		—		568
Decrease in provision for credit losses										Decrease in provision for credit losses	—		(1,792)		—		(1,792)
Total operating expenses	Total operating expenses	46,498		944		24,172		71,614		Total operating expenses	47,377		1,463		9,109		57,949

Gain on disposition of real estate and condominium developments, net										Gain on disposition of real estate and condominium developments, net	30,657		—		3,376		34,033
Merger-related expenses, net										Merger-related expenses, net	—		—		(398)		(398)

Operating income (loss)	Operating income (loss)	30,296		11,009		(24,036)		17,269		Operating income (loss)	53,974		18,292		(6,031)		66,235
Other expense:	Other expense:									Other expense:
Interest expense and other, net	Interest expense and other, net	(4,116)		(3,547)		(12,359)		(20,022)		Interest expense and other, net	(12,820)		(5,117)		(2,444)		(20,381)

Loss on extinguishment of debt										Loss on extinguishment of debt	(249)		—		(3,002)		(3,251)
Segment net income (loss)	Segment net income (loss)	$	26,180	$	7,462	$	(36,395)	$	(2,753)	Segment net income (loss)	$	40,905	$	13,175	$	(11,477)	$	42,603

Total assets as of March 31, 2021		$	3,371,496	$	1,155,640	$	194,718	$	4,721,854
Total assets as of September 30, 2021										Total assets as of September 30, 2021	$	2,947,031	$	1,866,913	$	266,915	$	5,080,859

~~NOTE 17 — SUBSEQUENT EVENTS~~

~~Redemptions of Shares of Common Stock~~

~~Subsequent to March 31, 2022, the Company redeemed approximately 1.4 million shares for $9.9 million (at a redemption price of $7.20 per share). The remaining redemption requests received~~(1)Includes condominium and rental units acquired via foreclosure during the ~~three months~~year ended ~~March~~December 31, ~~2022 totaling approximately 23.8 million shares went unfulfilled.~~

~~Property Dispositions~~

Subsequent to March 31, 2022, the sale of 23 properties under contract for sale pursuant to the Purchase and Sale Agreement closed for total consideration of $289.2 million. The remaining 2 properties are expected to close in the second quarter of 2022.

In addition to the properties disposed of pursuant to the Purchase and Sale Agreement, the Company disposed of 4 properties and a condominium unit subsequent to March 31, 2022 for an aggregate gross sales price of $27.3 million, resulting in net proceeds of $26.1 million after closing costs and mortgage note payoffs and a net gain of approximately $1.8 million. The Company has no continuing involvement with these properties.

~~CRE Loans~~

Subsequent to March 31, 2022, the Company originated a first mortgage loan with a principal balance of $147.0 million and unfunded commitments of $4.0 million, the funding of which is subject to the satisfaction of borrower milestones.

~~Liquid Senior Loans~~

~~Subsequent to March 31, 2022, the Company settled $29.4 million of liquid senior loan transactions, $24.3 million of which were traded as of March 31, 2022.~~2021.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2022 (Unaudited) – (Continued)

~~Corporate Senior Loans~~


	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 ~~March 31,~~September 30, 2022, the Company ~~invested $17.7~~redeemed approximately 1.3 million inshares for $9.6 million (at a ~~corporate senior loan to a third-party.~~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.

~~NP JV Holdings~~Investment and Disposition Activity

Subsequent to ~~March 31,~~September 30, 2022, the ~~Company contributed~~Company’s investment and disposition activity included the following:

•Disposed of one property and condominium units for an ~~additional $18.7~~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 ~~capital to NP JV Holdings.~~CMBS.

~~Mortgage Notes Payable~~

~~Subsequent to March 31, 2022, the Company extended the maturity date on $59.7~~•Settled $6.3 million of ~~its~~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 ~~note payable~~loans for $101.4 million that ~~was~~were initially set to mature ~~in May~~on November 7, 2022, extending the date of maturity to ~~July 11, 2022. In addition, subsequent to March 31,~~November 7, 2023.

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CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 ~~one of the Company’s mortgage notes payable matured and the Company repaid in full $5.1 million.~~(Unaudited) – (Continued)

~~Repurchase Facilities~~

Financing Activity

Subsequent to ~~March 31,~~September 30, 2022, ~~one of~~ 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 ~~was financed~~ under the Deutsche Bank Repurchase Facility for ~~$45.5~~$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, 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, 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 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.

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•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.

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 are primarily focused on originating, acquiring, financing and managing shorter duration senior secured loans, other related credit investments and core commercial real estate. Our investment strategy allows us to adapt over time in order to respond to evolving market conditions and to capitalize on investment opportunities that may arise at different points in the economic and real estate investment cycle. 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, 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 ~~March 31,~~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 ~~445~~384 properties, which consisted of ~~400~~367 retail properties, ~~19 anchored shopping centers, 14~~nine office properties, and eight industrial properties, ~~and 12 office properties,~~ representing 3825 industry sectors and comprising ~~15.4~~11.0 million rentable square feet of commercial space located in ~~45 states.~~44 states, with a net book value of $2.2 billion. As of ~~March 31,~~September 30, 2022, we owned condominium developments with a net book value of ~~$158.1 million.~~

As of March 31, 2022, our loan portfolio consisted of 332 loans with a net book value of $3.3 billion. As of March 31, 2022, we had $39.5 million of unfunded or unsettled liquid senior loan purchases included in cash and cash equivalents, and investments in real estate-related securities of $254.3$153.6 million.

In furtherance of our strategy, during the ~~three~~nine months ended ~~March 31,~~September 30, 2022, we disposed of 69130 properties and an outparcel of land, including the two properties previously owned through the Consolidated Joint Venture, encompassing ~~7.4~~ 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 ~~are~~were to receive, in the aggregate, approximately $1.32 billion in total consideration at closing. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the sale of 56the 81 properties closed under the Purchase and Sale Agreement for total consideration of ~~$811.8 million,~~$1.33 billion, as further discussed in Note

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4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q. The remaining 25 properties are classified as held for sale in the condensed consolidated balance sheets as of March 31, 2022 with a carrying value of $481.4 million. The sale of 23 such properties closed in phases for total consideration of $289.2 million subsequent to March 31, 2022, as further discussed in Note 17 — Subsequent Events to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q, with the remaining two properties expected to close during the second quarter of 2022.

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 97.2%~~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 ~~March 31,~~September 30, 2022, with a weighted average remaining lease term of ~~9.8~~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, 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 is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.~~

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.

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 Federal Reserve to continue raising interest rates, which has created further uncertainty for the economy and for our borrowers and tenants. Although the majority of our business model is such that rising interest rates will, all else being equal, correlate to increases in our net income, increases in interest rates may adversely affect our existing borrowers, tenants and owned property values. Additionally, rising rates and increasing costs may dampen consumer spending and slow corporate profit growth, which may negatively impact the collateral underlying certain of our loans. While there is debate among economists as to whether such factors, coupled with economic contraction in the U.S. in 2022, indicate that the U.S. has entered, or in the near term will enter, a recession, it remains difficult to predict the full impact of recent changes and any future changes in interest rates or inflation.

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Operating Highlights and Key Performance Indicators

Activity from January 1, 2022 through ~~March 31,~~September 30, 2022

Operating Results:

•Net income attributable to the Company of ~~$39.1~~$128.2 million, or ~~$0.09~~$0.29 per share.

•Declared aggregate distributions of ~~$0.09~~$0.27 per share.

Credit Portfolio Activity:

•Invested ~~$784.1 million~~$1.3 billion in first mortgage loans and received principal repayments on loans held-for-investment of ~~$102.5~~$156.9 million.

•Invested ~~$61.0~~$160.9 million in liquid senior loans and sold liquid senior loans for an aggregate gross sales price of ~~$23.8~~$53.7 million.

•Invested ~~$102.2~~$433.2 million in CMBS ~~and preferred units~~ and sold one marketable security for an aggregate gross sales price of $132,000.

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

•Invested ~~$10.0~~$74.8 million in a corporate senior ~~loan.~~loans.

Real Estate Portfolio Activity:

•Disposed of 69130 properties and an outparcel of land, including the two properties previously owned through the Consolidated Joint Venture, for an aggregate sales price of ~~$925.3 million.~~$1.71 billion.

•Disposed of condominium units for an aggregate sales price of ~~$21.1~~$24.2 million.

Financing Activity:

•Increased total debt by ~~$29.8~~$209.2 million.

•~~Increased~~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, respectively, to finance a portfolio of existing and future commercial real estate mortgage ~~loans.~~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 ~~March 31,~~September 30, 2022 and 2021 (dollar amounts in thousands):


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

First mortgage loans	First mortgage loans	25	$	2,664,702	40.8	%	6	$	525,447	11.6	%	First mortgage loans	29	$	3,259,744	48.7	%	11	$	890,804	19.2	%
Liquid senior loans	Liquid senior loans	306	671,569		10.3	%	221	496,832		11.0	%	Liquid senior loans	313	705,750		10.6	%	262	571,488		12.3	%
Corporate senior loan		1	9,927		0.2	%	—	—		—	%
Corporate senior loans												Corporate senior loans	4	57,232		0.9	%	—	—		—	%
Less: Current expected credit losses	Less: Current expected credit losses		(19,150)		(0.3)	%		(12,888)		(0.3)	%	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	332	3,327,048		51.0	%	227	1,009,391		22.3	%	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 and equity securities		8	186,070		2.9	%	5	67,222		1.5	%
CMBS and equity security												CMBS and equity security	17	470,121		7.0	%	15	121,757		2.6	%
Preferred units	Preferred units	1	68,243		1.0	%	—	—		—	%	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	445	2,944,298		45.1	%	515	3,450,076		76.2	%	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	786	$	6,525,659	100.0	%	747	$	4,526,689	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 for our credit portfolio as of ~~March 31,~~September 30, 2022 (dollar amounts in thousands):


		First Mortgage Loans and Preferred Units (1)			Liquid Senior Loans			CMBS and Equity Securities			Corporate Senior Loan				CRE Loans (1)			Liquid Senior Loans			CMBS and Equity Security			Corporate Senior Loans
Number of investments(3)	Number of investments(3)	26			306			8			1			Number of investments(3)	29			313			17			4
Principal balance	Principal balance	$	2,757,184		$	675,086		$	157,830		$	10,000		Principal balance	$	3,283,523		$	711,947		$	551,738		$	58,031
Net book value	Net book value	$	2,721,703		$	663,717		$	186,070		$	9,871		Net book value	$	3,244,737		$	691,981		$	470,121		$	56,424
Unfunded or unsettled loan commitments		$	384,659		$	39,489		$	—		$	—
Unfunded loan commitments														Unfunded loan commitments	$	338,539		$	1,886		$	—		$	4,324
Weighted-average interest rate	Weighted-average interest rate	3.5		%	4.0		%	4.8		%	7.0		%	Weighted-average interest rate	5.9		%	6.7		%	7.4		%	9.2		%
Weighted-average maximum years to maturity (2)	Weighted-average maximum years to maturity (2)	4.2			5.1			11.0			5.6			Weighted-average maximum years to maturity (2)	3.9			4.9			4.3			4.8

(1)As of ~~March 31,~~September 30, 2022, 100% of our loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR and SOFR.

(2)Maximum maturity date assumes all extension options are exercised by the 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 ~~March 31,~~September 30, 2022, we owned ~~445~~384 properties located in 4544 states, the gross rentable square feet of which was ~~97.2%~~99.3% leased, including any month-to-month agreements, with a weighted average lease term remaining of ~~9.8~~10.7 years. As of ~~March 31,~~September 30, 2022, no single tenant accounted for greater than 10% of our 2022 annualized rental income. As of ~~March 31,~~September 30, 2022, we had certain geographic and industry concentrations in our property holdings. In particular, we had properties located in ~~California and~~ Ohio, which accounted for 12% ~~and 11%, respectively,~~ of our 2022 annualized rental income. In addition, we had tenants in the health and personal care stores, ~~and~~ sporting goods, hobby and musical ~~instruments~~instrument stores, and grocery store industries, which accounted for ~~11%~~13%, 10% and 10%, respectively, of our 2022 annualized rental income. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, we disposed of 69130 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 ~~$925.3 million.~~$1.71 billion. Additionally, during the ~~three~~nine months ended ~~March 31,~~September 30, 2022, we sold condominium units for an aggregate gross sales price of ~~$21.1~~$24.2 million.

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The following table shows the property statistics of our real estate assets as of ~~March 31,~~September 30, 2022 and 2021:


		As of March 31,					As of September 30,
		2022		2021			2022		2021
Number of commercial properties	Number of commercial properties	445		515		Number of commercial properties	384		403
Rentable square feet (in thousands) (1)	Rentable square feet (in thousands) (1)	15,357		21,293		Rentable square feet (in thousands) (1)	11,043		17,623
Percentage of rentable square feet leased	Percentage of rentable square feet leased	97.2	%	93.7	%	Percentage of rentable square feet leased	99.3	%	94.2	%
Percentage of investment-grade tenants (2)	Percentage of investment-grade tenants (2)	38.8	%	38.6	%	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.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, 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, 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 calculation of 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 ~~March 31,~~September 30, 2022 and 2021

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


		For the Three Months Ended March 31,							For the Three Months Ended September 30,
		2022		2021		Change			2022		2021		Change
Net income (loss)		$	39,101	$	(2,753)	$	41,854
Net income								Net income	$	15,539	$	42,603	$	(27,064)
Loss on extinguishment of debt	Loss on extinguishment of debt	10,871		—		10,871		Loss on extinguishment of debt	3,344		3,251		93
Interest expense and other, net	Interest expense and other, net	31,037		20,022		11,015		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	(5,340)		—		(5,340)		Gain on investment in unconsolidated entities	(2,195)		—		(2,195)
Operating income	Operating income	75,669		17,269		58,400		Operating income	65,084		66,235		(1,151)

Merger-related expenses, net								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	(32,574)		—		(32,574)		Gain on disposition of real estate and condominium developments, net	(4,454)		(34,033)		29,579
Increase in provision for credit losses		4,709		568		4,141
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	3,291		4,300		(1,009)		Real estate impairment	527		891		(364)
Depreciation and amortization	Depreciation and amortization	19,141		25,738		(6,597)		Depreciation and amortization	16,948		22,801		(5,853)
Transaction-related expenses	Transaction-related expenses	7		4		3		Transaction-related expenses	9		6		3
Management fees	Management fees	13,347		11,577		1,770		Management fees	12,915		11,703		1,212
Expense reimbursements to related parties	Expense reimbursements to related parties	3,694		2,661		1,033		Expense reimbursements to related parties	3,428		2,516		912
General and administrative expenses	General and administrative expenses	3,475		4,428		(953)		General and administrative expenses	3,435		3,076		359
Interest income	Interest income	(31,463)		(11,953)		(19,510)		Interest income	(66,222)		(19,755)		(46,467)
Net operating income	Net operating income	$	59,296	$	54,592	$	4,704	Net operating income	$	37,334	$	52,046	$	(14,712)

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

Credit Segment

Interest Income

The increase in interest income of ~~$19.5~~$46.5 million for the three months ended ~~March 31,~~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 ~~March 31,~~September 30, 2022, we held $4.5 billion in credit investments compared to $1.6 billion in ~~CRE loans held-for-investment~~credit investments as of ~~$2.7 billion, liquid senior loans of $671.6 million, an investment~~September 30, 2021.

Increase (Decrease) in a corporate senior loan of $9.9 million, CMBS and other securities of $186.1 million, and an investment in preferred units of $68.2 million. As of March 31, 2021, we held investments in CRE loans held-for-investment of $525.4 million, liquid senior loans of $496.8 million, and CMBS of $67.2 million.

Provision for Credit Losses

The increase in provision for credit losses of ~~$4.1~~$7.5 million during the three months ended ~~March 31,~~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 ~~March 31,~~September 30, 2022, as compared to the same period in 2021.

Real Estate Segment

A total of ~~336~~302 properties were acquired before ~~January~~July 1, 2021 and represent our “same store” properties during the three months ended ~~March 31,~~September 30, 2022 and 2021. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after ~~January~~July 1, 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 March 31,						For the Three Months Ended March 31,						For the Three Months Ended March 31,							For the Three Months Ended September 30,						For the Three Months Ended September 30,						For the Three Months Ended September 30,
		2022		2021		Change		2022		2021		Change		2022		2021		Change			2022		2021		Change		2022		2021		Change		2022		2021		Change

Rental and other property income	Rental and other property income	$	73,736	$	76,930	$	(3,194)	$	43,254	$	43,154	$	100	$	30,482	$	33,776	$	(3,294)	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	7,727		10,119		(2,392)		2,879		2,703		176		4,848		7,416		(2,568)		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	6,713		12,219		(5,506)		3,175		3,264		(89)		3,538		8,955		(5,417)		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	14,440		22,338		(7,898)		6,054		5,967		87		8,386		16,371		(7,985)		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	$	59,296	$	54,592	$	4,704	$	37,200	$	37,187	$	13	$	22,096	$	17,405	$	4,691	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 ~~$10.9 million~~$93,000 for the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021, was primarily due to the ~~termination~~increase in terminations of certain mortgage notes in connection with the disposition of the underlying properties during the three months ended ~~March 31, 2022.~~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 ~~$5.3~~$2.2 million for the three months ended ~~March 31,~~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, ~~both of~~ which ~~were~~was not invested in by the Company during the three months ended ~~March 31,~~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 ~~$11.0~~$19.0 million for the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021, was primarily due to an increase in the three-month average aggregate amount of debt outstanding from ~~$2.5~~$2.8 billion as of ~~March 31,~~September 30, 2021 to ~~$4.2~~$4.3 billion as of ~~March 31,~~September 30, 2022, primarily as a result of entering into and upsizing additional repurchase agreements ~~originating~~subsequent to September 30, 2021, coupled with an increase in the ~~Mortgage Loan and Class A Notes, and assuming~~Company’s weighted average interest rate from 2.8% as of September 30, 2021 to 4.5% as of September 30, 2022.

Merger-Related Expenses, Net

The decrease in merger-related expenses, net of $398,000 for the ~~CIM Income NAV Credit Facility~~three months ended September 30, 2022, as ~~part of~~compared to the same period in 2021, was due to expenses incurred related to the CIM Income NAV Merger ~~subsequent to March 31,~~during the three months ended September 30, 2021. No such expenses were incurred during the three months ended September 30, 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 ~~$32.6~~$29.6 million during the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021, was due to the disposition of 6918 properties, ~~for a gain~~an outparcel of ~~$29.2 million~~land and ~~the disposition of~~ condominium units for a gain of ~~$3.3~~$4.5 million during the three months ended ~~March 31,~~September 30, 2022, compared to the disposition of ~~one property with no~~66 properties, an outparcel of land and condominium units for a gain ~~or loss recognized~~of $34.0 million during the three months ended ~~March 31,~~September 30, 2021.

Real Estate Impairment

The decrease in real estate impairments of ~~$1.0 million~~$364,000 during the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021, was due to ~~seven~~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 were deemed to be impaired, resulting in impairment charges of ~~$3.3 million~~$891,000 during the three months ended ~~March 31, 2022, compared to five properties that were deemed to be impaired, resulting in impairment charges~~September 30, 2021.

Table of ~~$4.3 million during the three months ended March 31, 2021.~~Contents

Depreciation and Amortization

The decrease in depreciation and amortization of ~~$6.6~~$5.9 million during the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021, was primarily due to the disposition of ~~185~~134 properties subsequent to ~~March 31,~~September 30, 2021, partially offset by the acquisition of 115 properties through the CIM Income NAV Merger that closed in December 2021.

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Transaction-Related Expenses

Transaction-related expenses remained generally consistent during the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 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 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, pursuant to the Investment Advisory and Management Agreement, for management of investments in the Managed Assets (as defined in the Investment Advisory and Management Agreement), CMFT Securities pays the Investment Advisor the Investment Advisory Fee, payable quarterly in arrears, equal to 1.50% per annum (0.375% per quarter) of CMFT Securities’ Equity (as defined in the Investment Advisory and Management Agreement). 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 ~~$1.8~~$1.2 million during the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021, was primarily due to increased equity from the issuance of common stock in connection with the CIM Income NAV Merger that closed in December 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 12 — 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 ~~$1.0 million~~$912,000 during the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021, was primarily due to increased operating expense reimbursements due to CMFT Management, primarily as a result of 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 ~~escrow~~transfer agency and ~~trustee fees.~~board of directors costs.

~~The decrease in general~~General and administrative expenses ~~of $1.0 million for~~remained generally consistent during the three months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021.

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 $14.5 million during the three months ended September 30, 2022, as compared to the same period in 2021. The decrease 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 115 properties in connection with the CIM Income NAV Merger that closed in December 2021.

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

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


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

Merger-related expenses, net	—		398		(398)
Gain on disposition of real estate and condominium developments, net	(118,135)		(80,502)		(37,633)
Increase (decrease) in provision for credit losses	15,315		(1,101)		16,416
Real estate impairment	19,814		5,268		14,546
Depreciation and amortization	54,104		73,186		(19,082)
Transaction-related expenses	462		37		425
Management fees	39,613		35,035		4,578
Expense reimbursements to related parties	10,899		8,387		2,512
General and administrative expenses	10,590		11,109		(519)
Interest income	(142,669)		(48,168)		(94,501)
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 302 properties were acquired before January 1, 2021 and represent our “same store” properties during the nine months ended September 30, 2022 and 2021. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, 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 (in thousands):


	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,
	2022		2021		Change		2022		2021		Change		2022		2021		Change


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	17,408		32,632		(15,224)		2,269		2,485		(216)		15,139		30,147		(15,008)
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	27,938		60,148		(32,210)		5,238		5,696		(458)		22,700		54,452		(31,752)

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 increase in loss on extinguishment of debt of $14.9 million for the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the increased terminations of certain mortgage notes in connection with the disposition of the underlying properties during the nine 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 $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 which were invested in by the Company during the nine months ended September 30, 2021.

Interest Expense and Other, Net

The increase in interest expense and other, net, of $41.6 million for the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to an increase in the nine-month average aggregate amount of debt outstanding from $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 and assuming the CIM Income NAV Credit Facility as part of the CIM Income NAV Merger subsequent to September 30, 2021, coupled with an increase in the Company’s weighted average interest rate from 2.8% as of September 30, 2021 to 4.5% as of September 30, 2022.

Merger-Related Expenses, Net

The decrease in ~~fees~~merger-related expenses, net of $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 ~~unused portion~~CIM Income NAV Merger during the nine months ended September 30, 2021. No such expenses were incurred during the nine months ended September 30, 2022.

Gain on Disposition of ~~our line~~Real Estate and Condominium Developments, Net

The increase in gain on disposition of ~~credit~~real estate and condominium developments, net, of $37.6 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the ~~pay down~~disposition of 130 properties and ~~termination~~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 an outparcel of land for a gain of $75.6 million and the disposition of condominium units for a gain of $4.9 million during the nine months ended September 30, 2021.

Real Estate Impairment

The increase in impairments of $14.5 million during the nine months ended September 30, 2022, as compared to the same period in 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.

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Depreciation and Amortization

The decrease in depreciation and amortization of $19.1 million during the nine 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

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 $4.6 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to increased equity from the issuance of common stock in connection with the CIM Income NAV Merger that closed in December 2021.

Expense Reimbursements to Related Parties

The increase in expense reimbursements to related parties of $2.5 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to increased operating expense reimbursements due to CMFT Management, primarily as a result of increased allocated payroll resulting from increased portfolio activity.

General and Administrative Expenses

The decrease in general and administrative expenses of $519,000 for the nine months ended September 30, 2022, compared to the same period in 2021, was primarily due to increased legal expenses incurred during the 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 ~~credit facilities subsequent~~mezzanine loans, as discussed in Note 8 — Loans Held-For-Investment to ~~March 31, 2021 as well as a decrease~~our condensed consolidated financial statements in ~~legal costs and other professional fees. This~~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 ~~remained relatively consistent during the three months ended March 31, 2022, as compared to the same period in 2021.~~

~~Non-same store property net operating income~~ increased ~~$4.7~~$1.0 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021. The increase was partially due to amended lease agreements, coupled with an increase in same store occupancy to 98.9% as of September 30, 2022 from 98.8% as of September 30, 2021.

Non-same store property net operating income decreased $21.0 million during the nine months ended September 30, 2022, as compared to the same period in 2021. The decrease 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 115 properties in connection with the CIM Income NAV Merger that closed in December ~~2021 and the acquisition of 146 properties that closed in December 2020, partially offset by a decrease in net operating income due to the disposition of 185 properties subsequent to March 31,~~ 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 ~~shareholders~~stockholders as of the record date for the applicable month, for the periods indicated below:

Period Commencing

Period Ending

Monthly Distribution Amount

April 2020

May 2020

$0.0130

June 2020

$0.0161

July 2020

$0.0304

August 2020

December 2021

$0.0303

January 2022

September 2022

$0.0305

October 2022

December 2022

$0.0339

January 2023

March 2023

$0.0350

As of ~~March 31,~~September 30, 2022, we had distributions payable of $13.3 million.

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


		Three Months Ended March 31,									Nine Months Ended September 30,
		2022				2021					2022				2021
		Amount		Percent		Amount		Percent			Amount		Percent		Amount		Percent
Distributions paid in cash	Distributions paid in cash	$	30,357	76	%	$	32,906	100	%	Distributions paid in cash	$	91,297	76	%	$	82,541	84	%
Distributions reinvested	Distributions reinvested	9,574		24	%	—		—	%	Distributions reinvested	28,664		24	%	16,264		16	%
Total distributions	Total distributions	$	39,931	100	%	$	32,906	100	%	Total distributions	$	119,961	100	%	$	98,805	100	%
Sources of distributions:	Sources of distributions:									Sources of distributions:
Net cash provided by operating activities ~~(2)~~(1)	Net cash provided by operating activities ~~(2)~~(1)	$	39,931	100	%	$	28,747	87	%	Net cash provided by operating activities ~~(2)~~(1)	$	119,961	100	%	$	97,518	99	%
Proceeds from the issuance of debt ~~(3)~~(2)	Proceeds from the issuance of debt ~~(3)~~(2)	—		—	%	4,159		13	%	Proceeds from the issuance of debt ~~(3)~~(2)	—		—	%	1,287		1	%

Total sources	Total sources	$	39,931	100	%	$	32,906	100	%	Total sources	$	119,961	100	%	$	98,805	100	%

(1)Net cash provided by operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 was ~~$30.1~~$125.4 million and ~~$28.7~~$97.5 million, respectively.

(2)Our distributions covered by cash flows from operating activities for the three months ended March 31, 2022 include cash flows from operating activities in excess of distributions from prior periods of $9.9 million.

~~(3)~~Net proceeds on the repurchase facilities, credit facilities and notes payable for the ~~three~~nine months ended ~~March 31, 2022 and~~September 30, 2021 was ~~$45.2 million and $197.0 million, respectively.~~$584.1 million.

Share Redemptions

Our share redemption program permits our stockholders to sell their shares of common stock back to us, subject to certain conditions and limitations. ~~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

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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 share redemption program at any time in its sole discretion if it believes that such action is in the best interest of us and our stockholders. Any material modifications or suspension of the share redemption program will be disclosed to our stockholders as promptly as practicable in our reports filed with the SEC and via our website. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, we received valid redemption requests under our share redemption program totaling approximately ~~25.2~~74.8 million shares, of which we redeemed approximately ~~1.4~~2.8 million shares as of September 30, 2022 for $19.9 million (at an average redemption price of $7.20 per share) and approximately 1.3 million shares subsequent to ~~March 31,~~September 30, 2022 for ~~$9.9~~$9.6 million (at a redemption price of $7.20 per share). The remaining redemption requests relating to approximately ~~23.8~~70.8 million shares went unfulfilled. A valid redemption request is one that complies with the applicable requirements and guidelines of 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 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

~~As a result~~Our primary sources of the CIM Income NAV Merger that closed in December 2021, our subsidiary assumed CIM Income NAV’s obligations pursuant to the CIM Income NAV Credit Agreement, including as guarantor under a guaranty provided by CIM Income NAV. As of March 31, 2022, the CIM Income NAV Credit Agreement allows for borrowings of up to $425.0 million (the “CIM Income NAV Credit Facility”). The CIM Income NAV Credit Facility includes $212.5 million in term loans and up to $212.5 million in revolving loans. As of March 31, 2022, we hadliquidity include cash and cash equivalents ~~of $165.1 million, which included $39.5 million of unfunded or unsettled liquid senior loan purchases.~~

~~As of March 31, 2022, CMFT Corporate Credit Securities, LLC, our indirect wholly-owned subsidiary, had a revolving credit~~ and ~~security agreement with Citibank, as administrative agent, that provided for~~available borrowings secured by substantially all of the assets held by CMFT Corporate Credit Securities, LLC, which shall primarily consist of liquid senior secured loans subject to certain eligibility criteria under the Credit and Security Agreement.

As of March 31, 2022, the CMFT Lending Subs had Master Repurchase Agreements with Citibank, Barclays, Wells Fargo, and Deutsche Bank to provide financing primarily through each bank’s purchase of our CRE mortgage loans and future funding advances.

~~The following table details our outstanding financing arrangements as of March 31, 2022 (in thousands):~~

Portfolio Financing Outstanding Principal Balance Maximum Capacity
Notes payable – fixed rate debt $ 399,409 $ 399,409
Notes payable – variable rate debt 122,488 122,488
First lien mortgage loan 156,161 650,000
ABS mortgage notes 768,840 774,000
Credit facilities 774,000 975,000
Repurchase facilities 1,980,324 2,700,000
Total portfolio financing $ 4,201,222 $ 5,620,897

As of March 31, 2022, we believe that we were in compliance with the financial covenants of the Mortgage Loan, the ABS mortgage notes, and the Repurchase Agreements, as well as the financial covenants under our ~~various fixed and variable rate~~ debt ~~agreements, as further discussed~~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 Facilities and Notes Payable to our condensed consolidated financial statements in this Quarterly Report on Form ~~10-Q.~~

~~Short-term Liquidity~~10-Q for additional details regarding our repurchase facilities, notes payable and ~~Capital Resources~~

~~On a short-term basis,~~credit facilities. The following table details our ~~principal demands for funds will be for the acquisition~~outstanding financing arrangements and borrowing capacity as of ~~real estate-related securities, real estate and real estate-related assets and the payment of acquisition-related fees and expenses, operating expenses, distributions,~~September 30, 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 borrowing availability.

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

Liquidity and Capital Resources

Our principal demands for funds will be for the acquisition or origination of credit investments and real estate, and the payment of tenant improvements, acquisition-related expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of ~~$437.0~~$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 substantially all net cash flows from the Offerings or debt financings will be used to fund acquisitions, loan originations, certain capital expenditures, repayments of outstanding debt or distributions and redemptions to our stockholders.

Contractual Obligations

As of ~~March 31,~~September 30, 2022, we had debt outstanding with a carrying value of ~~$4.2~~$4.4 billion and a weighted average interest rate of ~~2.7%~~4.5%. See Note 10 — Repurchase Facilities, 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 ~~March 31,~~September 30, 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	Principal payments — fixed rate debt	$	399,409	$	23,722	$	375,687	$	—	$	—	Principal payments — fixed rate debt	$	36,647	$	443	$	36,204	$	—	$	—
Interest payments — fixed rate debt ~~(2)~~	Interest payments — fixed rate debt ~~(2)~~	22,670		15,121		7,549		—		—		Interest payments — fixed rate debt ~~(2)~~	3,537		1,591		1,946		—		—
Principal payments — variable rate debt	Principal payments — variable rate debt	122,488		59,713		—		—		62,775		Principal payments — variable rate debt	470,860		—		49,366		175,710		245,784
Interest payments — variable rate debt ~~(3)~~(2)	Interest payments — variable rate debt ~~(3)~~(2)	8,573		1,897		3,111		3,107		458		Interest payments — variable rate debt ~~(3)~~(2)	113,857		24,972		46,267		41,289		1,329
Principal payments — first lien mortgage loan ~~(4)~~	Principal payments — first lien mortgage loan ~~(4)~~	156,161		—		156,161		—		—		Principal payments — first lien mortgage loan ~~(4)~~	134,007		134,007		—		—		—
Interest payments — first lien mortgage loan ~~(4)~~(2)	Interest payments — first lien mortgage loan ~~(4)~~(2)	10,227		7,511		2,716		—		—		Interest payments — first lien mortgage loan ~~(4)~~(2)	8,630		8,630		—		—		—
Principal payments — ABS mortgage notes ~~(5)~~	Principal payments — ABS mortgage notes ~~(5)~~	768,840		7,740		2,580		—		758,520		Principal payments — ABS mortgage notes ~~(5)~~	764,970		6,450		—		—		758,520
Interest payments — ABS mortgage notes ~~(5)~~(2)	Interest payments — ABS mortgage notes ~~(5)~~(2)	190,254		21,377		42,930		42,871		83,076		Interest payments — ABS mortgage notes ~~(5)~~(2)	163,355		21,179		42,227		42,227		57,722
Principal payments — credit facilities ~~(6)~~	Principal payments — credit facilities ~~(6)~~	774,000		252,500		521,500		—		—		Principal payments — credit facilities ~~(6)~~	691,500		—		691,500		—		—
Interest payments — credit facilities ~~(6)~~(2)	Interest payments — credit facilities ~~(6)~~(2)	40,251		17,257		22,994		—		—		Interest payments — credit facilities ~~(6)~~(2)	81,735		34,655		47,080		—		—
Principal payments — repurchase facilities ~~(7)~~	Principal payments — repurchase facilities ~~(7)~~	1,980,324		93,373		1,886,951		—		—		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)	91,150		39,320		51,830		—		—		Interest payments — repurchase facilities ~~(7)~~(2)	209,479		95,751		113,728		—		—
Total	Total	$	4,564,347	$	539,531	$	3,074,009	$	45,978	$	904,829	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 ~~$384.7~~$344.7 million of unfunded commitments related to our existing CRE loans held-for-investment, ~~$16.2~~corporate senior loans held-for-investment and liquid senior loans and $79.5 million of unfunded commitments related to NPthe NewPoint JV, ~~Holdings,~~ which are subject to the satisfaction of borrower milestones. In addition, the table does not include ~~$39.5~~

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$6.3 million of ~~unfunded or~~ unsettled liquid senior loan acquisitions, which ~~are~~is included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

(2)~~As of March 31, 2022, we had $15.8 million of~~Interest payments on the variable rate debt, effectively fixed through the use of interest rate swap agreements. We used the effective interest rates fixed under our interest rate swap agreements to calculate the debt payment obligations in future periods.

~~(3)~~As of March 31, 2022, we had variable rate debt outstanding of $122.5 million with a weighted average interest rate of 3.9%. We used the weighted average interest rate to calculate the debt payment obligations in future periods.

~~(4)As of March 31, 2022, the amounts outstanding under the Mortgage Loan totaled $156.2 million and had a weighted average interest rate of 4.8%.~~

~~(5)As of March 31, 2022, the amounts outstanding under the~~first lien mortgage loan, ABS mortgage notes, ~~totaled $768.8 million and had a weighted average interest rate of 2.8%.~~

~~(6)~~As of March 31, 2022, the amounts outstanding under the Credit Securities Revolver (as defined in Note 10 — Repurchase Facilities, Credit Facilities and Notes Payable to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q) totaled $521.5 million and had a weighted average interest rate of 2.5% and the amounts outstanding under the CIM Income NAV Revolving Loans totaled $40.0 million and had a weighted average interest rate of 4.4%. As of March 31, 2022, the CIM Income NAV Term Loans outstanding totaled $212.5 million, $140.0 million of which is subject to interest rate swap agreements. As of March 31, 2022, the weighted average all-in interest rate for the Swapped Term Loans was 4.4%. The remaining $72.5 million outstanding under our credit facilities ~~had a weighted average interest rate of 2.3%~~and repurchase facilities have been calculated based on outstanding balances as of ~~March 31, 2022.~~

~~(7)As of March 31,~~September 30, 2022 ~~the amount outstanding under the Citibank Repurchase Facility was $322.4 million at a weighted average~~through their respective maturity dates. This is only an estimate as actual amounts borrowed and interest rate of 2.1%, the amount outstanding under the Barclays Repurchase Facility was $906.9 million at a weighted average interest rate of 2.1%, the amount outstanding under the Wells Fargo Repurchase Facility was $657.6 million at a weighted average interest rate of 1.8%, and the amount outstanding under the Deutsche Bank Repurchase Facility was $93.4 million at a weighted average interest rate of 2.3%.rates could vary over time.

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 ~~March 31,~~September 30, 2022, our ratio of debt to total gross assets net of gross intangible lease liabilities was ~~60.1%~~61.0% and our ratio of debt to the fair market value of our gross assets net of gross intangible lease liabilities was ~~60.8%~~61.1%. Fair market value of our first mortgage loans is based on the estimated market value as of ~~March 31,~~September 30, 2022. Fair market value of the remaining credit investments is based on the market value as of ~~March 31,~~September 30, 2022. Fair market value of our real estate assets is based on the estimated market value as of March 31, 2021 that was used to determine our estimated per share NAV, and for those assets acquired from April 1, 2021 through ~~March 31,~~September 30, 2022 is based on the purchase price.

Cash Flow Analysis

Operating Activities. Net cash provided by operating activities increased by ~~$1.3~~$27.9 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021. The increase was primarily due to net increases in credit investments of $2.8 billion driving higher interest income and the acquisition of 115 properties ~~through~~in connection with the CIM Income NAV Merger, ~~and the growth in our loan portfolio,~~partially offset by the disposition of ~~185~~134 properties subsequent to ~~March 31,~~September 30, 2021. See “— Results of Operations” for a more complete discussion of the factors impacting our operating performance.

Investing Activities. Net cash ~~provided by~~used in investing activities increased ~~$305.3~~$147.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021. The change was primarily due to an increase in ~~proceeds from disposition of real estate assets of $919.9 million, partially offset by an increase in~~ the net investment in loans held-for-investment of ~~$540.2~~$682.9 million and an increase in the net investment of real estate-related securities of ~~$127.0~~$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 decreased ~~$162.7~~$35.0 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, as compared to the same period in 2021. The change was primarily due to ~~a decrease~~an increase in net ~~proceeds~~repayments on the ~~credit~~repurchase facilities, notes payable and ~~repurchase~~credit facilities of ~~$151.8~~$29.9 million, ~~in addition to~~coupled with an increase in redemptions of common stock of $17.3 million due to the reinstatement of the share redemption program ~~subsequent~~on April 1, 2021. The change was

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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 ~~March 31,~~the same period in 2021.

Election as a REIT

We elected to be taxed, and 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

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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, 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

•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, 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, 2021 and related notes thereto.

Related-Party Transactions and Agreements

We have entered into agreements with CMFT Management and our Investment Advisor whereby we agree to pay certain fees to, or reimburse certain expenses of, CMFT Management, the Investment Advisor or their affiliates. In addition, we have invested in, and may continue to invest in, certain co-investments with funds that are advised by an affiliate of CMFT Management. We may also originate loans to third parties that use the proceeds to finance the acquisition of real estate from funds that are advised by an affiliate of CMFT Management. See Note 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the various related-party transactions, agreements and fees.

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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, is the vice president of 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, is the president and treasurer of our manager. Additionally, two of our directors, Jason Schreiber and Emily Vande Krol, are employees of CIM. Nathan D. DeBacker, our chief financial officer and treasurer, is a vice president of our manager and is an officer of certain of its affiliates. 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 program sponsored or operated by affiliates of our manager, may be in conflict with us in connection with providing services to other real estate-related programs related to property acquisitions, property dispositions, and property management, among others. The compensation

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arrangements between affiliates of CMFT Management and these other real estate programs sponsored or operated by 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, 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 ~~March 31,~~September 30, 2022, we had an aggregate of ~~$2.9~~$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 ~~March 31,~~September 30, 2022, an increase or decrease of 50 basis points in interest rates would result in an increase or decrease in interest expense of ~~$14.5~~$17.0 million per year.

As of ~~March 31,~~September 30, 2022, we had ~~three interest rate swap agreements and 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 ~~$908.4~~$712.0 million and an aggregate fair value of the net derivative asset of ~~$379,000.~~$4.7 million. The fair value of these ~~interest rate swap agreements and~~ interest rate cap agreements is dependent upon existing market interest rates and spreads. As of ~~March 31,~~September 30, 2022, an increase of 50 basis points in interest rates would result in a change of ~~$1.3~~$2.4 million to the fair value of the net derivative asset, resulting in a net derivative asset of ~~$1.7~~$7.1 million. A decrease of 50 basis points in interest rates would result in a ~~$946,000~~$1.9 million change to the fair value of the net derivative asset, resulting in a net derivative ~~liability~~asset of ~~$567,000.~~$2.8 million.

As the information presented above includes only those exposures that existed as of ~~March 31,~~September 30, 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 SOFR as its preferred alternative to U.S. dollar LIBOR in derivatives and other financial contracts. On December 31, 2021, the FCA ceased publishing one week

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and two-month LIBOR, and the FCA intends to cease publishing all remaining LIBOR after June 30, 2023. This announcement has several implications, including setting the spread that may be used to automatically convert contracts from LIBOR to SOFR. The Company anticipates that LIBOR will continue to be available at least until June 30, 2023. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

WeAs of September 30, 2022, we have ~~interest rate swap agreements and~~ 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

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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.

Credit Risk

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

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

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

Item 4.Controls and Procedures

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 ~~March 31,~~September 30, 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 ~~March 31,~~September 30, 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 ~~March 31,~~September 30, 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

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, 2021.

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

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 ~~March 31,~~September 30, 2022, we redeemed shares, including those redeemable due to death, as follows:

Period (1)
Total Number
of Shares
Redeemed Average Price
Paid per Share Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
January 1, 2022 - January 31, 2022 — $ 7.20 — (2)
February 1, 2022 - February 28, 2022 1,338,131 $ 7.20 1,338,131 (2)
March 1, 2022 - March 31, 2022 7,683 $ 7.20 7,683 (2)
Total 1,345,814 1,345,814 (2)


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 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 ~~March 31,~~September 30, 2022 (and are numbered in accordance with Item 601 of Regulation S-K).


Exhibit No.			Description















3.1			Articles of Amendment and Restatement of CIM Real Estate Finance Trust, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 20, 2019).
3.2			Amended and Restated Bylaws of CIM Real Estate Finance Trust, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 20, 2019).
4.1			Second Amended and Restated Distribution Reinvestment Plan (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed May 1, 2020).
4.2			Master Indenture, dated as of July 28, 2021, by and among CMFT Net Lease Master Issuer, LLC, as issuer, and Citibank N.A., as indenture trustee (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 3, 2021).
4.3			Series 2021-1 Indenture Supplement, dated as of July 28, 2021, by and among CMFT Net Lease Master Issuer, LLC, as issuer, and Citibank N.A., as indenture trustee (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed August 3, 2021).




10.1			~~Second Amendment to Master Repurchase~~Credit Agreement, dated ~~January 27,~~as of July 15, 2022, byamong CMFT SCF Borrower, LLC, as the Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, L/C Issuer and ~~between CMFT RE Lending RF Sub CB, LLC~~Syndication Agent and ~~Citibank,~~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 ~~February 1,~~July 21, 2022).
10.2			~~Second~~Continuing Guaranty, dated as of July 15, 2022, by 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, 2022).
10.3			Third Amendment toTo Master Repurchase And Securities Contract And Termination Of Preferred Equity Related Pledge And Security Agreement, dated ~~February 23,~~August 31, 2022, by and ~~between~~among CMFT RE Lending RF Sub ~~BB,~~WF, LLC, as seller, Wells Fargo Bank, N.A., as buyer, and ~~Barclays Bank PLC~~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 ~~March~~ 1,September 7, 2022).
~~10.3~~10.4			~~Second~~Third Amendment toTo Master Repurchase Agreement, dated ~~March 4,~~October 7, 2022, by and between CMFT RE Lending RF Sub ~~WF,~~BB, LLC and ~~Wells Fargo~~Barclays Bank ~~N.A.~~PLC (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed ~~March 10,~~October 13, 2022).
10.4*			Modification Agreement and Limited Consent, dated December 16, 2021, by and among CIM Income NAV Operating Partnership, LP, the Lenders party thereto, and JPMorgan Chase, N.A., as administrative agent for the Lenders.
31.1*			Certifications of the Principal Executive Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certifications of the Principal Financial Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**			Certifications of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*			XBRL Instance Document.
101.SCH*			XBRL Taxonomy Extension Schema Document.
101.CAL*			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*			XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*			XBRL Taxonomy Extension Presentation Linkbase Document.
104*			Cover Page Interactive Data File (formatted as InLine XBRL and contained in Exhibit 101).


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

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SIGNATURE

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


	CIM Real Estate Finance Trust, Inc. (Registrant)

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

Date: ~~May 11,~~November 14, 2022

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	Portfolio Financing Outstanding Principal Balance		Maximum Capacity
Notes payable – fixed rate debt	$	399,409	$	399,409
Notes payable – variable rate debt	122,488		122,488
First lien mortgage loan	156,161		650,000
ABS mortgage notes	768,840		774,000
Credit facilities	774,000		975,000
Repurchase facilities	1,980,324		2,700,000
Total portfolio financing	$	4,201,222	$	5,620,897