What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-10 · 299 added, 207 removed, 805 unchanged (39% of the section changed)

3 unchanged sentences

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Investments in real estate, net $ 498,521 $ 506,040

18 unchanged sentences

36,000,000 shares authorized;

1,973,186 and 1,972,786 shares issued and outstanding, respectively, as of March 31, 2021 and 2,008,256 and 2,007,856 shares issued and outstanding, respectively, as of December 31, 2020;

1,845,681 and 1,844,881 shares issued and outstanding, respectively, as of June 30, 2021 and 2,008,256 and 2,007,856 shares issued and outstanding, respectively, as of December 31, 2020;

liquidation preference of $ 25.00 per share, subject to adjustment

2 unchanged sentences

36,000,000 shares authorized;

4,851,367 and 4,715,291 shares issued and outstanding, respectively, as of March 31, 2021 and 4,484,376 and 4,377,762 shares issued and outstanding, respectively, as of December 31, 2020;

5,408,954 and 5,253,377 shares issued and outstanding, respectively, as of June 30, 2021 and 4,484,376 and 4,377,762 shares issued and outstanding, respectively, as of December 31, 2020;

liquidation preference of $ 25.00 per share, subject to adjustment

2 unchanged sentences

32,000,000 shares authorized;

23,190 shares issued and outstanding as of March 31, 2021 and 19,145 shares issued and outstanding as of December 31, 2020;

31,025 shares issued and outstanding as of June 30, 2021 and 19,145 shares issued and outstanding as of December 31, 2020;

liquidation preference of $ 25.00 per share, subject to adjustment

1 unchanged sentence

9,000,000 shares authorized;

8,080,740 and 5,387,160 shares issued and outstanding, respectively, as of March 31, 2021 and December 31, 2020;

8,080,740 and 5,387,160 shares issued and outstanding, respectively, as of June 30, 2021 and December 31, 2020;

liquidation preference of $ 28.37 per share, subject to adjustment

2 unchanged sentences

900,000,000 shares authorized;

14,827,410 shares issued and outstanding as of March 31, 2021 and 14,827,410 shares issued and outstanding as of December 31, 2020.

23,369,331 shares issued and outstanding as of June 30, 2021 and 14,827,410 shares issued and outstanding as of December 31, 2020.

Additional paid-in capital 868,929 794,127

8 unchanged sentences

(In thousands, except per share amounts) (Unaudited)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Rental and other property income $ 13,309 $ 13,700 $ 26,658 $ 28,519

10 unchanged sentences

21,150 21,242 43,326 48,055

LOSS BEFORE PROVISION (BENEFIT) FOR INCOME TAXES ( 3,297 ) ( 1,278 )

INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES 1,523 ( 4,732 ) ( 1,774 ) ( 6,010 )

Provision (benefit) for income taxes 996 ( 691 ) 1,370 ( 713 )

NET LOSS ( 3,671 ) ( 1,256 )

NET INCOME (LOSS) 527 ( 4,041 ) ( 3,144 ) ( 5,297 )

Net loss (income) attributable to noncontrolling interests 3 ( 2 ) 4 ( 6 )

NET LOSS ATTRIBUTABLE TO THE COMPANY ( 3,670 ) ( 1,260 )

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY 530 ( 4,043 ) ( 3,140 ) ( 5,303 )

Redeemable preferred stock dividends declared or accumulated (Note 9) ( 4,621 ) ( 3,990 ) ( 9,087 ) ( 9,346 )

12 unchanged sentences

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

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Common Stock Preferred Stock

20 unchanged sentences

Balances, March 31, 2021 14,827,410 $ 15 10,125,641 $ 270,546 $ 793,344 $ ( 785,730 ) $ 278,175 $ 340 $ 278,515

Three Months Ended March 31, 2020

Stock-based compensation expense 20,332 — — — 50 — 50 — 50

Common dividends ($ 0.075 per share)

— — — — — ( 1,114 ) ( 1,114 ) — ( 1,114 )

Dividends to holders of Series A Preferred Stock ($ 0.34375 per share)

— — — — — ( 2,511 ) ( 2,511 ) — ( 2,511 )

Issuance of Series D Preferred Stock — — 7,835 192 ( 7 ) — 185 — 185

Dividends to holders of Series D Preferred Stock ($ 0.35313 per share)

— — — — — ( 13 ) ( 13 ) — ( 13 )

Reclassification of Series A Preferred Stock to permanent equity — — 556,587 13,915 ( 1,434 ) — 12,481 — 12,481

Redeemable Preferred Stock deemed dividends — — — — — ( 106 ) ( 106 ) — ( 106 )

Redemption of Series A Preferred Stock — — ( 18,501 ) ( 460 ) 42 ( 13 ) ( 431 ) — ( 431 )

Issuance of Common Stock 8,521,589 9 — — 76,934 — 76,943 — 76,943

Net (loss) income — — — — — 530 530 ( 3 ) 527

Balances, June 30, 2021 23,369,331 $ 24 10,671,562 $ 284,193 $ 868,929 $ ( 788,957 ) $ 364,189 $ 337 $ 364,526

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity (Continued)

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

Six Months Ended June 30, 2020

Common Stock Preferred Stock

19 unchanged sentences

Balances, March 31, 2020 14,602,149 $ 15 8,532,056 231,144 $ 794,269 $ ( 746,398 ) 279,030 $ 509 $ 279,539

Distributions to noncontrolling interests — — — — — — — ( 45 ) ( 45 )

Stock-based compensation expense 21,912 — — — 56 — 56 — 56

Issuance of shares of Common Stock in exchange for asset management fees 203,349 — — — 2,359 — 2,359 — 2,359

Common dividends ($ 0.075 per share)

— — — — — ( 1,112 ) ( 1,112 ) — ( 1,112 )

Issuance of Series D Preferred Stock — — 920 23 ( 1 ) — 22 — 22

Dividends to holders of Series D Preferred Stock ($ 0.35313 per share)

— — — — — ( 3 ) ( 3 ) — ( 3 )

Dividends to holders of Series A Preferred Stock ($ 0.34375 per share)

— — — — — ( 1,886 ) ( 1,886 ) — ( 1,886 )

Reclassification of Series A Preferred Stock to permanent equity — — 427,064 10,638 ( 899 ) — 9,739 — 9,739

Redeemable Preferred Stock deemed dividends — — — — — ( 52 ) ( 52 ) — ( 52 )

Redemption of Series A Preferred Stock — — ( 5,532 ) ( 138 ) 11 ( 56 ) ( 183 ) — ( 183 )

Net (loss) income — — — — — ( 4,043 ) ( 4,043 ) 2 ( 4,041 )

Balances, June 30, 2020 14,827,410 $ 15 8,954,508 241,667 $ 795,795 $ ( 753,550 ) 283,927 $ 466 $ 284,393

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

2 unchanged sentences

(In thousands) (Unaudited)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

28 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of unsecured revolving lines of credit, revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes ( 7,653 ) ( 9,249 )

Proceeds from unsecured revolving lines of credit, revolving credit facilities and term notes 14,985 11,500

Payment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes ( 94,351 ) ( 10,370 )

Proceeds from revolving credit facilities and term notes 30,396 76,966

Payment of principal on secured borrowings ( 291 ) ( 2,613 )

2 unchanged sentences

Payment of common dividends ( 2,226 ) ( 2,207 )

Proceeds from issuance of Common Stock 78,825 —

Payment of Common Stock offering costs ( 325 ) —

Net proceeds from issuance of Series A Preferred Warrants — 29

3 unchanged sentences

Noncontrolling interests’ distributions ( 114 ) ( 45 )

Net cash used in financing activities ( 231 ) ( 3,498 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 847 ( 2,759 )

Net cash provided by financing activities 12,867 68,307

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(In thousands) (Unaudited)

Three Months Ended

Six Months Ended

NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 25,885 50,205

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:

15 unchanged sentences

Accrued deferred costs $ 1 $ 457

Reclassification of Series A Preferred Stock from permanent equity to accounts payable and accrued expenses $ — $ 18

Reclassification of loans receivable, net to real estate owned $ — $ 174

Redeemable preferred stock deemed dividends $ 163 $ 213

1 unchanged sentence

Equity-based payment for management fees $ 2,419 $ 2,359

Accrued Common Stock offering costs included in additional paid-in capital $ 1,557 $ —

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

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited)

June 30, 2021 (Unaudited)

ORGANIZATION AND OPERATIONS

CIM Commercial Trust Corporation (“CIM Commercial” or the “Company”), a Maryland corporation and real estate investment trust (“REIT”), together with its wholly-owned subsidiaries primarily acquires, owns, and operates Class A and creative office assets in vibrant and improving metropolitan communities throughout the United States (including improving and developing such assets).

CIM Commercial Trust Corporation (“CIM Commercial” or the “Company”), a Maryland corporation and real estate investment trust (“REIT”), together with its wholly-owned subsidiaries, primarily owns and operates Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States.

The Company, supported by the broad real estate capabilities of CIM Group, L.P.

(“CIM Group”), seeks to focus on the acquisition, ownership, operation and development of cash flowing creative office, multifamily, retail, parking, infill industrial and limited service hospitality real assets in communities qualified by CIM Group.

These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth.

The Company was originally organized in 1993 as PMC Commercial Trust (“PMC Commercial”), a Texas real estate investment trust.

On July 8, 2013, PMC Commercial entered into a merger agreement with CIM Urban REIT, LLC (“CIM REIT”), an affiliate of CIM Group, L.P.

(“CIM Group” or “CIM”), and subsidiaries of the respective parties.

On July 8, 2013, PMC Commercial entered into a merger agreement with CIM Urban REIT, LLC (“CIM REIT”), an affiliate of CIM Group, and subsidiaries of the respective parties.

CIM REIT was a private commercial REIT and was the owner of CIM Urban Partners, L.P.

10 unchanged sentences

The selling price of the Series A Preferred Stock in the offering has been, and is expected to continue to be, $ 25.00 per share and the selling price of the Series D Preferred Stock was $ 25.00 per share for all sales that occurred from the beginning of the offering to and including June 28, 2020 and is expected to be, and since June 29, 2020, has been, $ 24.50 per share through the end of the life of the offering.

In June 2021, the Company conducted a rights offering (the “Rights Offering”) pursuant to which the Company issued an aggregate of 8,521,589 shares of Common Stock at a subscription price of $ 9.25 per share for aggregate gross proceeds of $ 78.8 million before issuance costs of $ 1.9 million .

CIM Commercial has qualified and intends to continue to qualify as a REIT, as defined in the Internal Revenue Code of 1986, as amended.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For more information regarding the Company’s significant accounting policies and estimates, please refer to “Basis of Presentation and Summary of Significant Accounting Policies” contained in Note 2 to the Company’s consolidated financial statements for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2021.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Information —The accompanying interim consolidated financial statements of CIM Commercial have been prepared by the Company’s management in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

2 unchanged sentences

The accompanying financial information reflects all adjustments which are, in the opinion of the Company’s management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 given, among other things, the uncertain impact of the novel coronavirus (“COVID-19”) on the Company’s operations during the remainder of the year.

The accompanying interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2021.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 given, among other things, the uncertain impact of the novel coronavirus (“COVID-19”) on the Company’s operations during the remainder of the year.

Principles of Consolidation —The consolidated financial statements include the accounts of CIM Commercial and its subsidiaries.

3 unchanged sentences

The Company’s ability to correctly assess its influence or control over an entity affects the presentation of these investments in real estate on the Company’s consolidated financial statements.

As of March 31, 2021, the Company determined that the trust formed for the benefit of the note holders (the “Trust”) for the securitization of the unguaranteed portion of certain of the Company’s SBA 7(a) loans receivable is considered a VIE.

As of June 30, 2021, the Company determined that the trust formed for the benefit of the note holders (the “Trust”) for the securitization of the unguaranteed portion of certain of the Company’s SBA 7(a) loans receivable is considered a VIE.

Applying the consolidation requirements 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.

11 unchanged sentences

If the undiscounted cash flows are less than the carrying amount of the assets, an impairment is recognized to the extent the carrying amount of the assets exceeds the estimated fair value of the assets.

The process for evaluating real estate impairment requires management to make significant assumptions related to certain inputs, including rental rates, lease-up period, occupancy, estimated holding periods, capital expenditures, growth rates, market discount rates and terminal capitalization rates.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

discount rates and terminal capitalization rates.

For the Company’s hotel property, additional inputs considered include revenue per available room and average daily rate.

2 unchanged sentences

Any asset held for sale is reported at the lower of the asset’s carrying amount or fair value, less costs to sell.

When an asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

For the three months ended March 31, 2021 and 2020, the Company recognized no impairment of long-lived assets ( Note 3 ).

When an asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the asset.

For the three and six months ended June 30, 2021 and 2020, the Company recognized no impairment of long-lived assets ( Note 3 ).

Revenue Recognition —At the inception of a revenue-producing contract, the Company determines if a contract qualifies as a lease and if not, then as a customer contract.

1 unchanged sentence

Revenue from leasing activities

The Company operates as a lessor of real estate assets, primarily in Class A and creative office assets.

The Company operates as a lessor of real estate assets.

The Company determined that the Company’s contracts with its tenants explicitly identify the premises and that any substitution rights to relocate tenants to other premises within the same building stated in the contract are not substantive.

7 unchanged sentences

Lease incentives paid to tenants are included in other assets and amortized as a reduction to rental revenue on a straight-line basis over the term of the related lease.

Lease incentives of $ 4.0 million are presented net of accumulated amortization of $ 2.5 million and $ 2.4 million as of March 31, 2021 and December 31, 2020, respectively.

As of June 30, 2021 and December 31, 2020, lease incentives of $ 3.9 million and $ 4.0 million, respectively, are presented net of accumulated amortization of $ 2.5 million and $ 2.4 million, respectively.

Reimbursements from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes, insurance, and other recoverable costs, are recognized as revenue and are included in rental and other property income in the period the expenses are incurred, with the corresponding expenses included in rental and other property operating expense.

3 unchanged sentences

Percentage rent is recognized once lessees’ specified sales targets have been met.

For the three months ended March 31, 2021 and 2020, the Company recognized rental income as follows (in thousands):

Three Months Ended March 31,

For the three and six months ended June 30, 2021 and 2020, the Company recognized rental income as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Rental and other property income

2 unchanged sentences

Variable lease payments (2)

1,243 1,133 2,148 2,607

Rental and other property income $ 13,309 $ 13,700 $ 26,658 $ 28,519

1 unchanged sentence

(1) Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above-market leases, below-market leases and lease incentives.

(2) Variable lease payments include expense reimbursements billed to tenants and percentage rent, net of bad debt expense from the Company’s operating leases.

The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants is probable.

The determination of whether collectability is

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

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.

June 30, 2021 (Unaudited) – (Continued)

(2) Variable lease payments include expense reimbursements billed to tenants and percentage rent, net of bad debt expense from the Company’s operating leases.

The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants is 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.

2 unchanged sentences

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.

As of March 31, 2021 and December 31, 2020, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $ 2.6 million and $ 1.9 million, respectively.

As of June 30, 2021 and December 31, 2020, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $ 3.0 million and $ 1.9 million, respectively, across all operating leases.

Revenue from lending activities

2 unchanged sentences

Revenue from hotel activities

Hotel revenue is recognized upon establishment of a contract with a customer.

At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct.

9 unchanged sentences

At inception of these contracts with customers for hotel revenues, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate.

The Company presents hotel revenues net of sales, occupancy, and other taxes.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 15 (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Hotel properties

5 unchanged sentences

Tenant recoveries outside of the lease agreements are related to construction projects in which the Company’s tenants have agreed to fully reimburse the Company for all costs related to construction.

These services include architectural, permit

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

expediter and construction services.

These services include architectural, permit expediter and construction services.

At inception of the contract with the customer, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate.

1 unchanged sentence

The Company satisfies its performance obligation and recognizes revenues associated with these services over time as the construction is completed.

No such amounts were recognized for tenant recoveries outside of the lease agreements for each of the three months ended March 31, 2021 and 2020, which amounts are included in interest and other income on the consolidated statements of operations.

As of March 31, 2021, there were no remaining performance obligations associated with tenant recoveries outside of the lease agreements.

No such amounts were recognized for tenant recoveries outside of the lease agreements for each of the three and six months ended June 30, 2021 and 2020.

As of June 30, 2021, there were no remaining performance obligations associated with tenant recoveries outside of the lease agreements.

Loans Receivable —The Company’s loans receivable are carried at their unamortized principal balance less unamortized acquisition discounts and premiums, deferred origination fees, retained loan discounts and loan loss reserves.

4 unchanged sentences

Upon sale of the SBA guaranteed portion of the loans, which are accounted for as sales, the unguaranteed portion of the loan retained by the Company is recorded at fair value and a discount is recorded as a reduction in basis of the retained portion of the loan.

Unamortized retained loan discounts were $ 8.1 million and $ 7.8 million as of March 31, 2021 and December 31, 2020, respectively.

Unamortized retained loan discounts were $ 9.0 million and $ 7.8 million as of June 30, 2021 and December 31, 2020, respectively.

At the Acquisition Date, the carrying value of the Company’s loans was adjusted to estimated fair market value and acquisition discounts of $ 33.9 million were recorded, which are being accreted to interest and other income using the effective interest method.

Acquisition discounts of $ 470,000 and $ 492,000 remained as of March 31, 2021 and December 31, 2020, respectively.

Acquisition discounts of $ 438,000 and $ 492,000 remained as of June 30, 2021 and December 31, 2020, respectively.

A loan receivable is generally classified as non-accrual (a “Non-Accrual Loan”) if (i) it is past due as to payment of principal or interest for a period of 60 days or more, (ii) any portion of the loan is classified as doubtful or is charged-off or (iii) the repayment in full of the principal and or interest is in doubt.

3 unchanged sentences

The Company’s evaluation of collectability involves significant judgment, estimates, and a review of the ability of the borrower to make principal and interest payments, the underlying collateral and the borrowers’ business models and future operations.

For the three months ended March 31, 2021 and 2020, the Company recorded a net impairment of $ 92,000 and a net recovery of $ 52,000 , respectively, on its loans receivable.

There were no material loans receivable subject to credit risk which were considered to be impaired as of March 31, 2021 or December 31, 2020.

The Company considers a loan to be impaired when the Company does not expect to collect all of the contractual interest and principal payments as scheduled in the loan agreements.

For the three and six months ended June 30, 2021, the Company recorded a net recovery of $ 88,000 and a net impairment of $ 4,000 , respectively, on its loans receivable.

For the three and six months ended June 30, 2020, the Company recorded a net impairment of $ 36,000 and a net recovery of $ 16,000 , respectively, on its loans receivable.

There were no material loans receivable subject to credit risk which were considered to be impaired as of June 30, 2021 or December 31, 2020.

The Company considers a loan to be impaired when the Company does not expect to collect all of the

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

contractual interest and principal payments as scheduled in the loan agreements.

The Company also establishes a general loan loss reserve when available information indicates that it is probable a loss has occurred based on the carrying value of the portfolio and the amount of the loss can be reasonably estimated.

3 unchanged sentences

These loss percentages are based on many factors, primarily cumulative and recent loss history and general economic conditions.

As of March 31, 2021 and December 31, 2020, the Company had loan loss reserves of $ 989,000 and $ 885,000 , respectively.

As of June 30, 2021 and December 31, 2020, the Company had loan loss reserves of $ 930,000 and $ 885,000 , respectively.

Deferred Rent Receivable and Charges —Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 9) and other deferred costs.

Deferred leasing costs, which represent lease commissions and other direct costs associated with the acquisition of tenants, are capitalized and amortized on a straight-line basis over the terms of the related leases.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

Stock, excluding costs specifically identifiable to a closing, such as commissions, dealer-manager fees, and other offering fees and expenses.

Deferred offering costs represent direct costs incurred in connection with the Company’s offerings of Series A Preferred Units, and, after January 2020, Series A Preferred Stock and Series D Preferred Stock, excluding costs specifically identifiable to a closing, such as commissions, dealer-manager fees, and other offering fees and expenses.

Generally, for a specific issuance of securities, issuance-specific offering costs are recorded as a reduction of proceeds raised on the issuance date and offering costs incurred but not directly related to a specifically identifiable closing of a security are deferred.

2 unchanged sentences

The deferred offering costs allocated to the Series A Preferred Stock and Series A Preferred Warrants are reductions to temporary equity and permanent equity, respectively.

As of March 31, 2021 and December 31, 2020, deferred rent receivable and charges consist of the following (in thousands):

March 31, 2021 December 31, 2020

As of June 30, 2021 and December 31, 2020, deferred rent receivable and charges consist of the following (in thousands):

June 30, 2021 December 31, 2020

Deferred rent receivable $ 21,200 $ 20,470

13 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

Reclassifications —Certain prior period amounts have been reclassified to conform with the current period presentation.

These reclassifications had no effect on previously reported totals or subtotals.

The reclassifications have been made to the consolidated statements of operations and the consolidated statements of cash flows for the three months ended March 31, 2020 as follows (in thousands):

Three Months Ended March 31, 2020

The reclassifications have been made to the consolidated statement of cash flows for the six months ended June 30, 2020 as follows (in thousands):

Six Months Ended June 30, 2020

As previously reported Reclassification As Revised

Consolidated Statements of Operations

Asset management and other fees to related parties $ 4,139 $ ( 1,494 ) $ 2,645

Expense reimbursements to related parties—corporate $ — $ 812 $ 812

Expense reimbursements to related parties—lending segment $ — $ 682 $ 682

Consolidated Statements of Cash Flows

2 unchanged sentences

Other assets $ 578 $ ( 1,130 ) $ ( 552 )

Payment of unsecured revolving lines of credit, revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes $ ( 5,000 ) $ ( 4,249 ) $ ( 9,249 )

Payment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes $ — $ ( 10,370 ) $ ( 10,370 )

Payment of principal on SBA 7(a) loan-backed notes $ ( 5,370 ) $ 5,370 $ —

Payment of unsecured revolving lines of credit, revolving credit facility and or term note $ ( 5,000 ) $ 5,000 $ —

Proceeds from revolving credit facilities and term notes $ — $ 76,966 $ 76,966

Proceeds from unsecured revolving lines of credit, revolving credit facility and or term note $ 61,500 $ ( 61,500 ) $ —

Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility $ 15,466 $ ( 15,466 ) $ —

Payment of deferred costs $ ( 70 ) $ ( 133 ) $ ( 203 )

Payment of deferred loan costs $ ( 133 ) $ 133 $ —

Net proceeds from issuance of Preferred Stock $ 21,296 $ 170 $ 21,466

Net proceeds from issuance of Series D Preferred Stock $ 170 $ ( 170 ) $ —

Additions to deferred loan costs included in accounts payable and accrued expenses $ 292 $ ( 292 ) $ —

Accrued deferred costs $ 165 $ 292 $ 457

Preferred stock offering costs offset against redeemable preferred stock $ 303 $ 2 $ 305

Preferred stock offering costs offset against redeemable preferred stock in permanent equity $ 2 $ ( 2 ) $ —

Accrued redeemable preferred stock fees $ 247 $ 2 $ 249

Redeemable Series D Preferred Stock fees included in accounts payable and accrued expenses $ 2 $ ( 2 ) $ —

Use of Estimates —The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

13 unchanged sentences

ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis.

The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP.

The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP.

ASU 2018-19 clarified that receivables arising from operating leases are not within the scope of Topic 326.

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The Company has not yet adopted ASU 2016-13 and the related updates and remains in the process of evaluating the impact of adoption of this new accounting guidance on its consolidated financial statements.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

On April 10, 2020, the FASB issued a question-and-answer document (the “Q&A”) to address stakeholder questions on the application of the lease accounting guidance for lease concessions related to the effects of COVID-19.

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Investments in real estate consist of the following (in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Land $ 139,397 $ 139,397

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Net investments in real estate $ 498,521 $ 506,040

The Company recorded depreciation expense of $ 4.2 million and $ 4.3 million for the three months ended March 31, 2021 and 2020, respectively.

The Company recorded depreciation expense of $ 4.2 million and $ 4.3 million for the three months ended June 30, 2021 and 2020, respectively, and $ 8.5 million and $ 8.6 million for the six months ended June 30, 2021 and 2020, respectively.

The fair value of real estate acquired is recorded to the acquired tangible assets, consisting primarily of land, land improvements, building and improvements, tenant improvements, furniture, fixtures, and equipment, and identified intangible assets and liabilities, consisting of the value of acquired above-market and below-market leases, in-place leases and ground leases, if any, based in each case on their respective fair values.

Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market rate loans, are recorded based on the fair value of any loans assumed in connection with acquiring the real estate.

2021 and 2020 Transactions —There were no acquisitions or dispositions during the three months ended March 31, 2021 and 2020.

2021 and 2020 Transactions —There were no acquisitions or dispositions during the six months ended June 30, 2021 or June 30, 2020.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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LOANS RECEIVABLE

Loans receivable consist of the following (in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

SBA 7(a) loans receivable, subject to credit risk $ 37,185 $ 32,226

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These loans are subject to credit risk.

SBA 7(a) Loans Receivable, Paycheck Protection Program —As a SBA 7(a) licensee, the Company is an authorized lender under the PPP and has originated $ 26.2 million in loans under the program with $ 17.3 million outstanding as of March 31, 2021.

SBA 7(a) Loans Receivable, Paycheck Protection Program —As a SBA 7(a) licensee, the Company is an authorized lender under the PPP and has originated $ 26.4 million in loans under the program with $ 12.4 million outstanding as of June 30, 2021.

The Company expects a significant portion of these loans will be forgiven and repaid, either in part or in full, by the SBA, including both principal and accrued interest.

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SBA 7(a) Loans Receivable, Held for Sale — Represents the government guaranteed portion of loans held for sale at the end of the period or that had been sold but in respect of which proceeds had not been received as of the end of the period.

As of March 31, 2021 and December 31, 2020, the Company’s loans subject to credit risk were 99.3 % and 99.1 %, respectively, concentrated in the hospitality industry.

As of March 31, 2021 and December 31, 2020, 98.7 % and 98.8 %, respectively, of the Company’s loans subject to credit risk were current.

As of June 30, 2021 and December 31, 2020, the Company’s loans subject to credit risk were 99.7 % and 99.1 %, respectively, concentrated in the hospitality industry.

As of June 30, 2021 and December 31, 2020, 99.9 % and 98.8 %, respectively, of the Company’s loans subject to credit risk were current.

The Company classifies loans with negative characteristics in substandard categories ranging from special mention to doubtful.

As of March 31, 2021 and December 31, 2020, $ 1.3 million and $ 1.4 million, respectively, of loans subject to credit risk were classified in substandard categories.

As of both June 30, 2021 and December 31, 2020, $ 1.4 million of loans subject to credit risk were classified in substandard categories.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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OTHER INTANGIBLE ASSETS AND LIABILITIES

A schedule of the Company’s intangible assets and liabilities and related accumulated amortization and accretion as of March 31, 2021 and December 31, 2020 is as follows (in thousands):

March 31, 2021 December 31, 2020

A schedule of the Company’s intangible assets and liabilities and related accumulated amortization and accretion as of June 30, 2021 and December 31, 2020 is as follows (in thousands):

June 30, 2021 December 31, 2020

Intangible lease assets:

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Amortization of the acquired below-market leases is recorded as an increase to rental and other property income in the accompanying consolidated statements of operations.

During the three months ended March 31, 2021 and 2020, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):

Three Months Ended March 31,

During the three and six months ended June 30, 2021 and 2020, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Acquired above-market lease amortization $ 3 $ 1 $ 6 $ 7

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Acquired below-market lease amortization $ 84 $ 148 $ 199 $ 402

A schedule of future amortization and accretion of acquired intangible assets and liabilities as of March 31, 2021, is as follows (in thousands):

A schedule of future amortization and accretion of acquired intangible assets and liabilities as of June 30, 2021, is as follows (in thousands):

Assets Liabilities

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Leases Acquired

2021 (Nine months ending December 31, 2021) $ 9 $ 753 $ ( 234 )

2021 (Six months ending December 31, 2021) $ 6 $ 496 $ ( 150 )

2022 12 813 ( 236 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

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

During the Three Months Ended March 31, 2021

Balances as of December 31, 2020 Debt Issuances & Assumptions Repayments & Modifications Accretion & (Amortization) Balances as of March 31, 2021

June 30, 2021 (Unaudited) – (Continued)

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

During the Six Months Ended June 30, 2021

Balances as of December 31, 2020 Debt Issuances & Assumptions Repayments & Modifications Accretion & (Amortization) Balances as of June 30, 2021

Mortgage Payable:

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Total Debt, Net $ 324,313 $ 30,396 $ ( 94,642 ) $ 650 $ 260,717

Mortgages Payable —The mortgages payable are secured by deeds of trust on certain of the properties and assignments of rents.

As of March 31, 2021, the Company’s mortgages payable had a fixed interest rate of 4.14 % per annum, with monthly payments of interest only, due on July 1, 2026.

Mortgage Payable —The mortgage payable is secured by a deed of trust on a property and assignments of rents receivable.

As of June 30, 2021, the Company’s mortgage payable had a fixed interest rate of 4.14 % per annum, with monthly payments of interest only, due on July 1, 2026.

The loan is nonrecourse.

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These loans included cash premiums that are amortized as a reduction to interest expense over the life of the loan using the effective interest method and are fully amortized when the underlying loan is repaid in full.

As of March 31, 2021, the Company’s secured borrowings-government guaranteed loans included $ 5.5 million of loans sold for a premium and excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.86 %, and $ 2.7 million of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.56 %.

As of June 30, 2021, the Company’s secured borrowings-government guaranteed loans included $ 5.5 million of loans sold for a premium and excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.86 %, and $ 2.7 million of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.56 %.

2018 Revolving Credit Facility —In October 2018, CIM Commercial entered into a secured revolving credit facility with a bank syndicate that, as amended, allows CIM Commercial to borrow up to $ 209.5 million, subject to a borrowing base calculation (the “2018 revolving credit facility”).

In September 2020, the 2018 revolving credit facility was amended (the “2018 Credit Facility Modification”) to remedy the effect that COVID-19 had on CIM Commercial’s ability to borrow under the 2018 revolving credit facility during the period from September 2, 2020 through June 30, 2021 (the “Deferral Period”).

The 2018 revolving credit facility bears interest (i) during the Deferral Period at (A) the base rate plus 1.05 % or (B) LIBOR plus 2.05 %

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and (ii) after the Deferral Period, at (A) the base rate plus 0.55 % or (B) LIBOR plus 1.55 %.

As of March 31, 2021 and December 31, 2020, the variable interest rate was 2.16 % and 2.20 %, respectively.

As of June 30, 2021 and December 31, 2020, the variable interest rate was 2.13 % and 2.20 %, respectively.

The 2018 revolving credit facility is also subject to an unused commitment fee of 0.15 % or 0.25 % depending on the amount of aggregate unused commitments.

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The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions.

As of March 31, 2021 and December 31, 2020, $ 171.5 million and $ 166.5 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $ 23.0 million and $ 28.0 million, respectively, was available for future borrowings.

As of June 30, 2021 and December 31, 2020, $ 107.0 million and $ 166.5 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $ 87.5 million and $ 28.0 million, respectively, was available for future borrowings.

2020 Unsecured Revolving Credit Facility —In May 2020, to further enhance its liquidity position and maintain financial flexibility, CIM Commercial entered into an unsecured revolving credit facility with a bank (the “2020 unsecured revolving credit facility”) pursuant to which CIM Commercial can borrow up to a maximum of $ 10.0 million.

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The 2020 unsecured revolving credit facility matures in May 2022.

As of March 31, 2021, $ 0 was outstanding under the 2020 unsecured revolving credit facility and $ 10.0 million was available for future borrowings.

As of June 30, 2021, $ 0 was outstanding under the 2020 unsecured revolving credit facility and $ 10.0 million was available for future borrowings.

Junior Subordinated Notes —The Company has junior subordinated notes with a variable interest rate which resets quarterly based on the three-month LIBOR plus 3.25 %, with quarterly interest only payments.

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The Company reflects the SBA 7(a) loans receivable as assets on its consolidated balance sheets and the SBA 7(a) loan-backed notes as debt on its consolidated balance sheets.

The restricted cash on the Company’s consolidated balance sheets included $ 1.2 million as of both March 31, 2021 and December 31, 2020, of funds related to the Company’s SBA 7(a) loan-backed notes.

The restricted cash on the Company’s consolidated balance sheets included funds related to the Company’s SBA 7(a) loan-backed notes of $ 1.1 million and $ 1.2 million as of June 30, 2021 and December 31, 2020, respectively.

Paycheck Protection Program Liquidity Facility —In June 2020, the Company commenced borrowing funds from the Federal Reserve through the PPP Liquidity Facility (the “PPPLF”).

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The maturity date of a PPPLF borrowing will be accelerated if, among other things, the Company has been reimbursed by the SBA for a loan forgiveness (to the extent of the forgiveness), the Company has received payment from the SBA representing exercise of the loan guarantee or the Company has received payment from the underlying borrower (to the extent of the payment received).

No new extensions of credit will be made under the PPPLF after June 30, 2021 unless the Federal Reserve Board and the United States Department of the Treasury decide to extend the PPPLF.

The Company borrowed money under the PPPLF to finance all the loans the Company originated under the PPP.

As of March 31, 2021, $ 18.1 million was outstanding under the PPPLF.

As of June 30, 2021, $ 12.4 million was outstanding under the PPPLF.

As of July 31, 2021, no new extensions of credit may be made under the PPPLF, unless the Federal Reserve Board and the United States Department of the Treasury decide to extend the PPPLF.

Deferred loan costs, which represent legal and third-party fees incurred in connection with the Company’s borrowing activities, are capitalized and amortized to interest expense on a straight-line basis over the life of the related loan,

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approximating the effective interest method.

Deferred loan costs are presented net of accumulated amortization and are a reduction to total debt.

As of March 31, 2021 and December 31, 2020, accrued interest and unused commitment fees payable of $ 537,000 and $ 564,000 , respectively, were included in accounts payable and accrued expenses.

Future principal payments on the Company’s debt (face value) as of March 31, 2021 are as follows (in thousands):

As of June 30, 2021 and December 31, 2020, accrued interest and unused commitment fees payable of $ 613,000 and $ 564,000 , respectively, were included in accounts payable and accrued expenses.

Future principal payments on the Company’s debt (face value) as of June 30, 2021 are as follows (in thousands):

Years Ending December 31, Mortgage Payable Secured Borrowings Principal (1)

2018 Revolving Credit Facility Other (1) (2)

2021 (Nine months ending December 31, 2021) $ — $ 324 $ — $ 4,849 $ 5,173

2021 (Six months ending December 31, 2021) $ — $ 471 $ — $ 1,783 $ 2,254

2022 — 431 107,000 3,296 110,727

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(2) Represents the junior subordinated notes, SBA 7(a) loan-backed notes, and borrowed funds from the Federal Reserve through the PPPLF.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

STOCK-BASED COMPENSATION PLANS

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May 2020 February 2021 (3) 5,478 5,478

May 2020 May 2021 5,478 16,434

May 2021 (4) 5,083 20,332

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(1) Compensation expense related to these restricted shares of Common Stock is recognized over the vesting period, and generally vests based on one year of continuous service.

The Company recorded compensation expense related to these restricted shares of Common Stoc k in the amount of $ 60,000 and $ 56,000 for the three months ended March 31, 2021 and 2020, respectively .

The Company recorded compensation expense related to these restricted shares of Common Stoc k in the amount of $ 50,000 and $ 56,000 for the three months ended June 30, 2021 and 2020, respectively, and $ 110,000 an d $ 112,000 for the six months ended June 30, 2021 and 2020 , respectively.

(2) These shares vested in May 2020 concurrent with the vesting of the restricted shares of Common Stock granted in May 2019.

(3) On February 11, 2021, the Company’s Board of Directors approved the immediate vesting of 5,478 shares that had been granted in May 2020 to a former independent member of the Board of Directors following his death.

(4) These shares vested in May 2021 after one year of continuous service.

As of March 31, 2021, there was $ 13,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized ratably over the remaining vesting period.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

(4) These shares will vest after one year of continuous service.

As of June 30, 2021, there was $ 183,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized ratably over the remaining vesting period.

EARNINGS PER SHARE (“EPS”)

The computations of basic EPS are based on the Company’s weighted average shares outstanding.

The basic weighted average number of shares of Common Stock outstanding was 14,808,000 and 14,598,000 for the three months ended March 31, 2021 and 2020, respectively.

In order to calculate the diluted weighted average number of shares of Common Stock outstanding for the three months ended March 31, 2021, the basic weighted average number of shares of Common Stock outstanding was increased by 0 shares to reflect the dilutive effect of certain shares of the Company’s Series A Preferred Stock.

In order to calculate the diluted weighted average number of shares of Common Stock outstanding for the three months ended March 31, 2020, the basic weighted average number of shares of Common Stock outstanding was increased by 1,000 to reflect the dilutive effect of certain shares of the Company’s Series A Preferred Stock.

No shares of Series D Preferred Stock outstanding as of March 31, 2021 had a dilutive effect and no shares of Series D Preferred Stock were outstanding as of March 31, 2020.

Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three months ended March 31, 2021 and 2020 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 10).

Outstanding shares of Series L Preferred Stock were not included in the computation of diluted EPS for the three months ended March 31, 2021 and 2020 because such shares were not redeemable during such periods.

The basic weighted average number of shares of Common Stock outstanding was 15,102,000 and 14,782,000 for the three months ended June 30, 2021 and 2020, respectively, and 14,956,000 and 14,690,000 for the six months ended June 30, 2021 and 2020, respectively.

For the three and six months ended June 30, 2021, there was no difference in the diluted weighted average number of shares of Common Stock outstanding as compared the basic weighted average number of shares of Common Stock outstanding.

In order to calculate the diluted weighted average number of shares of Common Stock outstanding for the three and six months ended June 30, 2020, the basic weighted average number of shares of Common Stock outstanding was increased by 0 and 162 shares, respectively, to reflect the dilutive effect of certain shares of the Company’s Series A Preferred Stock.

No shares of Series D Preferred Stock outstanding as of June 30, 2021 had a dilutive effect and no shares of Series D Preferred Stock were outstanding as of June 30, 2020.

Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three and six months ended June 30, 2021 and 2020 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 10).

Outstanding shares of Series L Preferred Stock were not included in the computation of diluted EPS for the three and six months ended June 30, 2021 and 2020 because such shares were not redeemable during such periods.

EPS for the year-to-date period may differ from the sum of quarterly EPS amounts due to the required method for computing EPS in the respective periods.

In addition, EPS is calculated independently for each component and may not be additive due to rounding.

The following table reconciles the numerator and denominator used in computing the Company’s basic and diluted per-share amounts for net loss attributable to common stockholders for the three months ended March 31, 2021 and 2020 (in thousands, except per share amounts):

Three Months Ended March 31,

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

The following table reconciles the numerator and denominator used in computing the Company’s basic and diluted per-share amounts for net loss attributable to common stockholders for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net loss attributable to common stockholders $ ( 4,210 ) $ ( 8,141 ) $ ( 12,416 ) $ ( 14,928 )

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June 30, 2021 (Unaudited) – (Continued)

REDEEMABLE PREFERRED STOCK

The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three months ended March 31, 2021 and 2020 (dollar amounts in thousands):

The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three and six months ended June 30, 2021 and 2020 (dollar amounts in thousands):

Preferred Stock

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Balances, March 31, 2020 3,138,916 $ 78,160 5,980 $ 150 5,387,160 $ 152,834 8,532,056 $ 231,144

Issuance of Series D Preferred Stock — — 920 23 — — 920 23

Reclassification of Series A Preferred Stock to permanent equity 427,064 10,638 — — — — 427,064 10,638

Redemption of Series A Preferred Stock ( 5,532 ) ( 138 ) — — — — ( 5,532 ) ( 138 )

Balances, June 30, 2020 3,560,448 $ 88,660 6,900 $ 173 5,387,160 $ 152,834 8,954,508 $ 241,667

Balances, December 31, 2020 4,377,762 $ 108,729 19,145 $ 473 5,387,160 $ 152,834 9,784,067 $ 262,036

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Balances, March 31, 2021 4,715,291 $ 117,140 23,190 $ 572 5,387,160 $ 152,834 10,125,641 $ 270,546

As of March 31, 2021, the Company had iss ued in regist ered public offerings 6,526,081 shares of Series A Preferred Stock, 4,603,287 Series A Preferred Warrants and 23,190 shares of Series D Preferred Stock and received gross proceeds of $ 163.7 million ($ 162.4 million of which was allocated to the Series A Preferred Stock, $ 761,000 of which was allocated to the Series A Preferred Warrants, and $ 572,000 of which was allocated to the Series D Preferred Stock) and, additionally, had issued 298,472 shares of Series A Preferred Stock as payment for services to the Administrator, for which no cash proceeds were received.

Issuance of Series D Preferred Stock — — 7,835 192 — — 7,835 192

Reclassification of Series A Preferred Stock to permanent equity 556,587 13,915 — — — — 556,587 13,915

Redemption of Series A Preferred Stock ( 18,501 ) ( 460 ) — — — — ( 18,501 ) ( 460 )

Balances, June 30, 2021 5,253,377 $ 130,595 31,025 $ 764 5,387,160 $ 152,834 10,671,562 $ 284,193

As of June 30, 2021, the Company had iss ued in regist ered public offerings 6,956,163 shares of Series A Preferred Stock, 4,603,287 Series A Preferred Warrants and 31,025 shares of Series D Preferred Stock and received gross proceeds of $ 174.7 million ($ 173.1 million of which was allocated to the Series A Preferred Stock, $ 761,000 of which was allocated to the Series A Preferred Warrants, and $ 764,000 of which was allocated to the Series D Preferred Stock) and, additionally, had issued 298,472 shares of Series A Preferred Stock as payment for services to the Administrator, for which no cash proceeds were received.

In connection with such issuance, costs specifically identifiable to the offering of Series A Preferred Stock, Series A Preferred Warrants and Series D Preferred Stock, such as commissions, dealer manager fees and other offering fees and expenses, totaled $ 14.6 million ($ 14.4 million of which was allocated to the Series A Preferred Stock, $ 142,000 of which was allocated to the Series A Preferred Warrants, and $ 27,000 of which was allocated to the Series D Preferred Stock).

In addition, as of March 31, 2021, non-issuance-specific costs related to this offering totaled $ 7.5 million.

As of March 31, 2021, the Company had reclassified and allocated $ 1.4 million, $ 5,000 and $ 5,000 from deferred charges to Series A Preferred Stock, Series A Preferred Warrants and Series D Preferred Stock, respectively, as a reduction to the gross proceeds received.

In addition, as of June 30, 2021, non-issuance-specific costs related to this offering totaled $ 7.9 million.

As of June 30, 2021, the Company had reclassified and allocated $ 1.5 million, $ 5,000 and $ 7,000 from deferred charges to Series A Preferred Stock,

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

Series A Preferred Warrants and Series D Preferred Stock, respectively, as a reduction to the gross proceeds received.

Such reclassification was based on the cumulative number of securities issued relative to the maximum number of securities expected to be issued under the offering.

As of March 31, 2021, there were 6,688,077 shares of Series A Preferred Stock outstanding, 4,603,287 Series A Preferred Warrants to purchase 1,194,159 shares of Common Stock outstanding, and 23,190 shares of Series D Preferred Stock outstanding.

As of March 31, 2021, 136,476 shares of Series A Preferred Stock and no shares of Series D Preferred Stock had been redeemed.

As of June 30, 2021, there were 7,098,258 shares of Series A Preferred Stock outstanding, 4,603,287 Series A Preferred Warrants to purchase 1,194,159 shares of Common Stock outstanding, and 31,025 shares of Series D Preferred Stock outstanding.

As of June 30, 2021, 156,377 shares of Series A Preferred Stock and no shares of Series D Preferred Stock had been redeemed.

Series A Preferred Stock —The Company conducted a continuous public offering of Series A Preferred Units from October 2016 through January 2020, where each Series A Preferred Unit consisted of one share of Series A Preferred Stock, par value $ 0.001 per share, of the Company with an initial stated value of $ 25.00 per share, subject to adjustment, and one warrant to purchase 0.25 of a share of Common Stock.

Proceeds and expenses from the sale of the Series A Preferred Units were allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

Since February 2020, the Company has been conducting a continuous public offering with respect to shares of the Company’s Series A Preferred Stock, which, since such time, is no longer being issued as a unit with an accompanying Series A Preferred Warrant.

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Such adjustment is considered a deemed dividend for purposes of calculating basic and diluted EPS.

For the three months ended March 31, 2021 and 2020, the Company recorded redeemable preferred stock deemed divid ends of $ 57,000 and $ 161,000 , respectively, related to such adjustments.

For the three and six months ended June 30, 2021, the Company recorded redeemable preferred stock deemed divid ends of $ 106,000 and $ 163,000 , respectively, related to such adjustments.

For the three and six months ended June 30, 2020, the Company recorded redeemable preferred stock deemed divid ends of $ 52,000 and $ 213,000 , respectively, related to such adjustments.

On the first anniversary of the issuance of a particular share of Series A Preferred Stock, the Company reclassifies such share of Series A Preferred Stock from temporary equity to permanent equity because the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date.

As of March 31, 2021, the Company had reclassified an aggregate of $ 108.7 million in net proceeds from temporary equity to permanent equity.

As of June 30, 2021, the Company had reclassified an aggregate of $ 121.2 million in net proceeds from temporary equity to permanent equity.

Series D Preferred Stock —Since February 2020, the Company has been conducting a continuous public offering with respect to shares of its Series D Preferred Stock, par value $ 0.001 per share, subject to adjustment.

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Until the fifth anniversary of the date of original issuance of the Series L Preferred Stock, the Company is prohibited from issuing any shares of preferred stock ranking senior to or on parity with the Series L Preferred Stock with respect to the payment of dividends, other distributions, liquidation, and or dissolution or winding up of the Company unless the Minimum Fixed Charge Coverage Ratio, calculated in accordance with the Articles Supplementary describing the Series L Preferred Stock, is equal to or greater than 1.25 :1.00.

As of March 31, 2021 and December 31, 2020 , the Company was in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.

As of June 30, 2021 and December 31, 2020 , the Company was in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.

Refer to Note 12 for a discussion of certain payments the Company has made in shares of Common Stock and in shares of Preferred Stock and may make in shares of Preferred Stock in lieu of cash payments in order to remain in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.

Dividends —With respect to the payment of dividends, the Series A Preferred Stock ranks senior to the Series L Preferred Stock and the Common Stock, and on parity with the Series D Preferred Stock.

The Series L Preferred Stock ranks senior to the Common Stock (except with respect to and only to the extent of the Initial Dividend) and junior to the Series A Preferred Stock, Series D Preferred Stock and Common Stock (with respect to and only to the extent of the Initial Dividend).

With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series A Preferred Stock ranks on parity with the Series D Preferred Stock and Series L Preferred Stock, to the extent of the Series L Preferred Stock Stated Value, and otherwise ranks senior to the Series L Preferred Stock and the Common Stock.

With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series L Preferred Stock ranks senior to the Common Stock, both (i) to the extent of the Series L Preferred Stock Stated Value and (ii) following payment to holders of the Common Stock of an amount equal to any unpaid Initial Dividend, to the extent of any accrued and unpaid dividends on the Series L Preferred Stock, on parity with the Series A Preferred Stock and Series D Preferred Stock, to the extent of the Series L Preferred Stock Stated Value and junior to the Series A Preferred Stock, Series D Preferred Stock and Common Stock (to the extent of the Initial Dividend), in all instances with respect to any accrued and unpaid dividends on the Series L Preferred Stock.

The Series L Preferred Stock ranks

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

senior to the Common Stock (except with respect to and only to the extent of the Initial Dividend) and junior to the Series A Preferred Stock, Series D Preferred Stock and Common Stock (with respect to and only to the extent of the Initial Dividend).

Holders of Series A Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends on each share of Series A Preferred Stock at an annual rate of 5.50 % of the Series A Preferred Stock Stated Value (i.e., the equivalent of $ 0.34375 per share per quarter) (the “Series A Dividend”).

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However, prior to the payment of any distributions on Series L Preferred Stock in respect of a given year, the Company must first declare and pay dividends on the Common Stock in respect of such year in an aggregate amount equal to the Initial Dividend announced by the Company’s Board of Directors at the end of the prior fiscal year.

On December 22, 2020, the Company announced an Initial Dividend on shares of its Common Stock for fiscal year 2021 in the aggregate amount of $ 4,448,223 , of which $ 1,112,000 had been paid as of March 31, 2021.

During the three months ended March 31, 2021, the Company paid $ 2.2 million, $ 7,000 and $ 8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively.

During the three months ended March 31, 2020, the Company paid $ 2.5 million, $ 0 and $ 8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively.

On December 22, 2020, the Company announced an Initial Dividend on shares of its Common Stock for fiscal year 2021 in the aggregate amount of $ 4,448,223 , of which $ 2,226,000 had been paid as of June 30, 2021.

During the six months ended June 30, 2021, the Company paid $ 4.5 million, $ 16,000 and $ 8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively.

During the six months ended June 30, 2020, the Company paid $ 4.2 million, $ 1,000 and $ 8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively.

Redemptions —The Company’s Series A Preferred Stock and Series D Preferred Stock are redeemable at the option of the holder or CIM Commercial.

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CIM Commercial has the right to redeem the Series A Preferred Stock or Series D Preferred Stock after the fifth anniversary of the date of original issuance of such shares at the Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, plus accrued and unpaid dividends.

At the Company’s discretion, the redemption price will be paid in cash or in Common Stock based on the volume weighted average price of the Company’s Common Stock for the 20 trading days prior to the redemption;

At the Company’s discretion, the redemption price will be paid in cash or in Common Stock based on the volume weighted average price of the Company’s Common Stock for the 20 trading days

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

prior to the redemption;

provided that the redemption price of any shares of Series A Preferred Stock redeemed prior to the first anniversary of the date of original issuance of such shares must be paid in cash.

1 unchanged sentence

Notwithstanding the foregoing, a holder of shares of the Company’s Series L Preferred Stock may require the Company to redeem such shares at any time prior to the fifth anniversary of the date of original issuance of the Series L Preferred Stock if (1) the Company does not declare and pay in full the distribution on the Series L Preferred Stock for any annual period prior to such fifth anniversary or (2) the Company does not declare and pay all accrued and unpaid distributions on the Series L Preferred Stock for all past dividend periods prior to the applicable holder redemption date.

The applicable redemption price payable upon redemption of any Series L Preferred Stock

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

will be made, in the Company’s sole discretion, in the form of (A) cash in ILS at the then-current currency exchange rate determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, (B) in equal value through the issuance of shares of Common Stock, with the value of such Common Stock to be deemed the lower of (i) the NAV per share of the Company’s Common Stock as most recently published by the Company as of the effective date of redemption and (ii) the volume-weighted average price of the Company’s Common Stock, determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, or (C) in a combination of cash in ILS and the Company’s Common Stock, based on the conversion mechanisms set forth in (A) and (B), respectively.

The applicable redemption price payable upon redemption of any Series L Preferred Stock will be made, in the Company’s sole discretion, in the form of (A) cash in ILS at the then-current currency exchange rate determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, (B) in equal value through the issuance of shares of Common Stock, with the value of such Common Stock to be deemed the lower of (i) the NAV per share of the Company’s Common Stock as most recently published by the Company as of the effective date of redemption and (ii) the volume-weighted average price of the Company’s Common Stock, determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, or (C) in a combination of cash in ILS and the Company’s Common Stock, based on the conversion mechanisms set forth in (A) and (B), respectively.

STOCKHOLDERS’ EQUITY

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Consequently, the dividend rate on a quarterly basis does not necessarily correlate directly to any individual factor.

Cash dividends per share of Common Stock paid in respect of the three months ended March 31, 2021 and 2020 consist of the following:

Cash dividends per share of Common Stock paid in respect of the six months ended June 30, 2021 and 2020 consist of the following:

Declaration Date Payment Date Type Cash Dividend Per Share of Common Stock

June 7, 2021 June 30, 2021 Regular Quarterly $ 0.075

March 5, 2021 March 30, 2021 Regular Quarterly $ 0.075

June 3, 2020 June 29, 2020 Regular Quarterly $ 0.075

March 2, 2020 March 25, 2020 Regular Quarterly $ 0.075

Rights Offering

In June 2021, the Company conducted the Rights Offering pursuant to which the Company issued an aggregate of 8,521,589 shares of Common Stock at a subscription price of $ 9.25 per share for aggregate gross proceeds of $ 78.8 million.

Offering costs of $ 1.9 million were incurred in connection with the Rights Offering and recorded as a reduction to additional paid-in capital.

Series A Preferred Warrants

2 unchanged sentences

At the time of issuance, the exercise price of each Series A Preferred Warrant was at a 15.0 % premium to the per share estimated NAV of the Company’s Common Stock then most recently published and designated as the Applicable NAV.

However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the Reverse Stock Split was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of the Company’s Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant issued prior to the Special Dividend was adjusted to reflect the effect of the Special Dividend.

As of March 31, 2021, the Company had issued 4,603,287 Series A Preferred Warrants to purchase 1,194,159 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $ 614,000 , after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

shares issuable upon exercise of each Series A Preferred Warrant issued prior to the Special Dividend was adjusted to reflect the effect of the Special Dividend.

As of June 30, 2021, the Company had issued 4,603,287 Series A Preferred Warrants to purchase 1,194,159 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $ 614,000 , after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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These credit spreads take into account factors such as the Company’s credit standing, the maturity of the debt, whether the debt is secured or unsecured, and the loan-to-value ratios of the debt.

When estimating the fair value of the Company’s mortgages payable as of March 31, 2021 and December 31, 2020, the Company used a rate of 3.59 % and 3.38 %, respectively.

The rate used to estimate the fair value of the Company’s junior subordinated notes was 4.44 % and 4.49 % as of March 31, 2021 and December 31, 2020, respectively.

When estimating the fair value of the Company’s mortgages payable as of June 30, 2021 and December 31, 2020, the Company used a rate of 3.30 % and 3.38 %, respectively.

The rate used to estimate the fair value of the Company’s junior subordinated notes was 4.40 % and 4.49 % as of June 30, 2021 and December 31, 2020, respectively.

Loans Receivable —The Company determines the fair value of loans receivable by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk and using an anticipated prepayment rate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

primarily on the anticipated proceeds to be received upon sale.

The following summarizes the ranges of discount rates and prepayment rates used to arrive at the estimated fair values of the Company’s loans receivable:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Discount Rate Prepayment Rate Discount Rate Prepayment Rate

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5.00 % - 17.50 %

Other Financial Instruments —The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to their short-term maturities at March 31, 2021 and December 31, 2020.

The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on the Company’s consolidated balance sheets are as follows (dollar amounts in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Amount Estimated

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

CIM Urban pays asset management fees to the Operator on a quarterly basis in arrears.

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Asset management fees are included in asset management and other fees to related parties in the accompanying consolidated statements of operations.

In lieu of cash payment of the asset management fee during the year ended December 31, 2020, the Company issued to the Operator shares of its Common Stock and shares of its Series A Preferred Stock.

Subject to applicable laws and regulations under Nasdaq and the TASE and the agreement of the Operator, it is likely that the Company will seek to pay some or part of the asset management fees for part of 2021 in shares of Series A Preferred Stock.

In lieu of cash payment of the asset management fee, the Company has issued to the Operator shares of its Common Stock and shares of its Series A Preferred Stock.

Property Management Fees and Reimbursements — CIM Management, Inc.

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In addition, pursuant to the terms of the Master Services Agreement, the Administrator may receive compensation and or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered by the Base Service Fee or the Incentive Fee, as the case may be.

During the three months ended March 31, 2021 and 2020, such services performed by the Administrator and its affiliates included accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, and from and after September 2018, operational and on-going support in connection with the Company’s offering of Preferred Stock.

During the six months ended June 30, 2021 and 2020, such services performed by the Administrator and its affiliates included accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, operational and on-going support in connection with the Company’s offering of Preferred Stock.

The Administrator’s compensation is based on the salaries and benefits of the employees of the Administrator and or its affiliates who performed these services (allocated based on the percentage of time spent on the affairs of CIM Commercial and its subsidiaries).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

CIM SBA for the costs and expenses of providing such personnel and resources.

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Asset Management Fees:

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Base service fee (2)

$ — $ — $ — $ 282

Expense reimbursements to related parties - corporate $ 454 $ 615 $ 1,059 $ 1,427

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$ 43 $ 21 $ 64 $ 45

(1) For the three months ended March 31, 2020, the Company issued to the Operator 203,349 shares of Common Stock, in lieu of cash payment of the asset management fee for the first quarter of 2020.

(2) For the three months ended March 31, 2020, the Company issued to the Administrator 11,273 shares of Series A Preferred Stock, in lieu of cash as payment of the Base Service Fee for the first quarter of 2020.

______________________

(1) For the three and six months ended June 30, 2020, the Company issued to the Operator 203,349 shares of Common Stock, in lieu of cash payment of the asset management fee for the first quarter of 2020, and 95,245 shares of our Series A Preferred Stock , in lieu of cash payment of the asset management fee for the second quarter of 2020 .

Subsequent to June 30, 2021, the Company issued to the Operator 89,338 shares of Series A Preferred Stock in lieu of cash payment of the asset management fee for the first quarter of 2021 .

(2) For the three and six months ended June 30, 2020, the Company issued to the Administrator 11,273 shares of Series A Preferred Stock, in lieu of cash as payment of the Base Service Fee for the first quarter of 2020.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

(3) As of March 31, 2021 and December 31, 2020, $ 1.7 million and $ 1.5 million, respectively, was included in deferred costs as reimbursable expenses incurred pursuant to the Master Services Agreement and the then applicable dealer manager agreement with CCO Capital.

June 30, 2021 (Unaudited) – (Continued)

(3) As of June 30, 2021 and December 31, 2020, $ 2.0 million and $ 1.5 million, respectively, was included in deferred costs as reimbursable expenses incurred pursuant to the Master Services Agreement and the then applicable dealer manager agreement with CCO Capital.

These non-issuance specific costs are allocated against the gross proceeds from the sale of the Series A Preferred Stock and the Series D Preferred Stock on a pro rata basis for each issuance as a percentage of the total offering.

As of March 31, 2021 and December 31, 2020, due to related parties consisted of the following (in thousands):

March 31, 2021 December 31, 2020

As of June 30, 2021 and December 31, 2020, due to related parties consisted of the following (in thousands):

June 30, 2021 December 31, 2020

Asset management fees $ 4,487 $ 2,386

11 unchanged sentences

Salit devoted to the Company relative to other matters relating to CIM Group.

As of March 31, 2021, the $ 287,000 remained due to CIM Group.

On October 1, 2015, an affiliate of CIM Group entered into a five-year lease renewal with respect to a property owned by the Company.

The lease was amended to a month-to-month term in February 2019 and was terminated in October 2020.

The Company recorded rental and other property income related to this tenant of $ 0 and $ 29,000 for the three months ended March 31, 2021 and 2020, respectively.

The Company recorded rental and other property income related to this tenant of $ 0 and $ 29,000 for the three months ended June 30, 2021 and 2020, respectively, and $ 0 and $ 58,000 for the six months ended June 30, 2021 and 2020, respectively.

On May 15, 2019, CIM Group entered into an approximately 11-year lease for approximately 32,000 rentable square feet with respect to a property owned by the Company.

The lease was amended on August 7, 2019 to reduce the rentable square feet to approximately 30,000 rentable square feet.

The Company recorded rental and other property income related to this tenant of $ 370,000 for both of the three month periods ended March 31, 2021 and 2020 .

The Company recorded rental and other property income related to this tenant of $ 370,000 and $ 740,000 for the three and six months, respectively, ended both June 30, 2021 and 2020, respectively.

COMMITMENTS AND CONTINGENCIES

Loan Commitments —Commitments to extend credit are agreements to lend to a customer provided the terms established in the contract are met.

The Company’s outstanding commitments to fund loans were $ 60.0 million as of March 31, 2021, the majority of which are for prime-based loans to be originated by the Company’s subsidiary engaged in SBA 7(a) Small Business Loan Program lending, the government guaranteed portion of which is intended to be sold.

The Company’s outstanding commitments to fund loans were $ 61.1 million as of June 30, 2021, the majority of which are for prime-based loans to be originated by the Company’s subsidiary engaged in SBA 7(a) Small Business Loan Program lending, the government guaranteed portion of which is intended to be sold.

Commitments generally have fixed expiration dates.

Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements.

Purchase Commitments —As of June 30, 2021, the Company had entered into a purchase agreement with an unaffiliated third-party seller to acquire a 100 % interest in one office property, subject to meeting certain criteria, for an aggregate purchase price of $ 2.9 million, exclusive of closing costs.

As of June 30, 2021, the Company had $ 150,000 of property escrow deposits held by an escrow agent in connection with this future property acquisition.

This deposit is included in the accompanying consolidated balance sheets in loan servicing asset, net and other assets.

This property was subsequently acquired in July 2021 (Note 16).

General —In connection with the ownership and operation of real estate properties, the Company has certain obligations for the payment of tenant improvement allowances and lease commissions in connection with new leases and renewals.

CIM Commercial had a total of $ 7.6 million in future obligations under leases to fund tenant improvements and other future construction obligations as of March 31, 2021.

As of March 31, 2021, $ 2.5 million was funded to reserve accounts included in restricted cash on the Company’s consolidated balance sheet for these tenant improvement obligations in connection with the mortgage loan agreement entered into in June 2016.

Employment Agreements —The Company has an employment agreement with one of its officers.

Under certain circumstances, this employment agreement provides for (1) severance payment equal to the annual base salary paid to the officer and (2) death and disability payments in an amount equal to two times and one time, respectively, the annual base salary paid to the officer.

CIM Commercial had a total of $ 8.0 million in future obligations under leases to fund tenant improvements and other future construction obligations as of June 30, 2021.

As of June 30, 2021, $ 2.5 million was funded to reserve accounts included

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

in restricted cash on the Company’s consolidated balance sheet for these tenant improvement obligations in connection with the mortgage loan agreement entered into in June 2016.

Employment Agreements —The Company has an employment agreement with one of its officers.

Litigation —The Company is not currently involved in any material pending or threatened legal proceedings nor, to the Company’s knowledge, are any material legal proceedings currently threatened against the Company, other than routine litigation arising in the ordinary course of business.

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The Company has not been notified by any governmental authority of any noncompliance, liability, or other claim in connection with any of the properties, and the Company is not aware of any other environmental condition with respect to any of the properties that management believes will have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company’s ability to satisfy its debt service obligations or to maintain its level of distributions on Common Stock or Preferred Stock.

Future minimum rental revenue under long-term operating leases as of March 31, 2021, excluding tenant reimbursements of certain costs, are as follows (in thousands):

Years Ending December 31, Total

2021 (Nine months ending December 31, 2021) $ 32,877

Thereafter 39,843

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

June 30, 2021 (Unaudited) – (Continued)

Future minimum rental revenue under long-term operating leases as of June 30, 2021, excluding tenant reimbursements of certain costs, are as follows (in thousands):

Years Ending December 31, Total

2021 (Six months ending December 31, 2021) $ 22,321

Thereafter 40,472

SEGMENT DISCLOSURE

The Company’s reportable segments during the three months ended March 31, 2021 and 2020 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for the Company’s lending business.

The Company’s reportable segments during the three and six months ended June 30, 2021 and 2020 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for the Company’s lending business.

Management internally evaluates the operating performance and financial results of the segments based on net operating income.

The Company also has certain general and administrative level activities, including public company expenses, legal, accounting, and tax preparation that are not considered separate operating segments.

The reportable segments are accounted for on the same basis of accounting as described in the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2021.

For the Company’s real estate segments, the Company defines net operating income (loss) as rental and other property income and expense reimbursements less property related expenses, and excludes non-property income and expenses, interest expense, depreciation and amortization, corporate related general and administrative expenses, gain (loss) on sale of real estate, gain (loss) on early extinguishment of debt, impairment of real estate, transaction costs, and provision (benefit) for income taxes.

For the Company’s lending segment, the Company defines net operating income as interest income net of interest expense and general overhead expenses.

The net operating income (loss) of the Company’s segments for the three months ended March 31, 2021 and 2020 is as follows (in thousands):

Three Months Ended March 31,

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

The net operating income (loss) of the Company’s segments for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Revenues $ 13,356 $ 13,763 $ 26,883 $ 28,660

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Total lending expenses 792 1,708 2,160 3,081

Segment net operating income—lending 2,106 1,011

Segment net operating income (loss)—lending 5,047 ( 110 ) 7,153 901

Total segment net operating income $ 12,631 $ 7,031 $ 21,717 $ 18,566

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 (Unaudited) – (Continued)

A reconciliation of segment net operating income to net income attributable to the Company for the three months ended March 31, 2021 and 2020 is as follows (in thousands):

Three Months Ended March 31,

June 30, 2021 (Unaudited) – (Continued)

A reconciliation of segment net operating income to net income attributable to the Company for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Total segment net operating income $ 12,631 $ 7,031 $ 21,717 $ 18,566

5 unchanged sentences

Depreciation and amortization ( 5,069 ) ( 5,197 ) ( 10,106 ) ( 10,455 )

Loss before provision for income taxes ( 3,297 ) ( 1,278 )

Income (loss) before provision for income taxes 1,523 ( 4,732 ) ( 1,774 ) ( 6,010 )

(Provision) benefit for income taxes ( 996 ) 691 ( 1,370 ) 713

Net loss ( 3,671 ) ( 1,256 )

Net income (loss) 527 ( 4,041 ) ( 3,144 ) ( 5,297 )

Net loss (income) attributable to noncontrolling interests 3 ( 2 ) 4 ( 6 )

Net loss attributable to the Company $ ( 3,670 ) $ ( 1,260 )

The condensed assets for each of the segments as of March 31, 2021 and December 31, 2020, along with capital expenditures and loan originations for the three months ended March 31, 2021 and 2020, are as follows (in thousands):

March 31, 2021 December 31, 2020

Net income (loss) attributable to the Company $ 530 $ ( 4,043 ) $ ( 3,140 ) $ ( 5,303 )

The condensed assets for each of the segments as of June 30, 2021 and December 31, 2020, along with capital expenditures and loan originations for the six months ended June 30, 2021 and 2020, are as follows (in thousands):

June 30, 2021 December 31, 2020

Condensed assets:

4 unchanged sentences

Total assets $ 704,824 $ 685,617

Three Months Ended March 31,

Capital expenditures (1):

Six Months Ended June 30,

Capital expenditures (1) and loan originations:

Office $ 818 $ 7,087

Hotel 128 556

Total capital expenditures 946 7,643

4 unchanged sentences

Includes the activity for dispositions through their respective disposition dates.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

SUBSEQUENT EVENTS

In May 2021, the Company granted awards of 5,083 restricted shares of Common Stock to each of the independent members of the Board of Directors ( 20,332 shares in the aggregate) under the 2015 Equity Incentive Plan, which vest after one year of continuous service.

The following events occurred subsequent to June 30, 2021:

Property Acquisition

In July 2021, the Company acquired from an unrelated third-party a 100 % fee-simple interest in an office property located in Los Angeles, California for a purchase price of $ 2.9 million, which excludes transaction costs of $ 44,000 that were incurred and capitalized in connection with this acquisition.

The property has approximately 4,900 square feet of office space.

Subsequent to June 30, 2021, the Company repaid $ 25.0 million on its 2018 revolving credit facility.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements