What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 286 added, 243 removed, 861 unchanged (38% of the section changed)

3 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Investments in real estate, net $ 498,878 $ 506,040

18 unchanged sentences

36,000,000 shares authorized;

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;

1,550,884 and 1,548,884 shares issued and outstanding, respectively, as of September 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;

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;

6,003,054 and 5,821,113 shares issued and outstanding, respectively, as of September 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;

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

56,857 shares issued and outstanding as of September 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 June 30, 2021 and December 31, 2020;

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

liquidation preference of $ 28.37 per share, subject to adjustment

2 unchanged sentences

900,000,000 shares authorized;

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.

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

Additional paid-in capital 867,636 794,127

8 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

10 unchanged sentences

Depreciation and amortization 5,061 5,273 15,167 15,728

Loss on early extinguishment of debt (Note 6) — 281 — 281

21,679 22,682 65,005 70,737

2 unchanged sentences

NET INCOME (LOSS) 1,624 ( 5,330 ) ( 1,520 ) ( 10,627 )

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

Net (income) loss attributable to noncontrolling interests — 7 4 1

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY 1,624 ( 5,323 ) ( 1,516 ) ( 10,626 )

13 unchanged sentences

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Common Stock Preferred Stock

5 unchanged sentences

Balances, December 31, 2020 14,827,410 $ 15 9,784,067 $ 262,036 $ 794,127 $ ( 778,519 ) $ 277,659 $ 455 $ 278,114

Contributions to noncontrolling interests — — — — — — — — —

Distributions to noncontrolling interests — — — — — — — ( 114 ) ( 114 )

26 unchanged sentences

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

Contributions to noncontrolling interests — — — — — — — 9 9

Distributions to noncontrolling interests — — — — — — — ( 4 ) ( 4 )

Stock-based compensation expense — — — — 55 — 55 — 55

Common dividends ($ 0.075 per share)

— — — — — ( 1,753 ) ( 1,753 ) — ( 1,753 )

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

— — — — — ( 2,597 ) ( 2,597 ) — ( 2,597 )

Issuance of Series D Preferred Stock — — 25,832 632 ( 20 ) — 612 — 612

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

— — — — — ( 20 ) ( 20 ) — ( 20 )

Reclassification of Series A Preferred Stock to permanent equity — — 593,300 15,132 ( 1,304 ) — 13,828 — 13,828

Redeemable Preferred Stock deemed dividends — — — — — ( 90 ) ( 90 ) — ( 90 )

Redemption of Series A Preferred Stock — — ( 25,564 ) ( 634 ) 54 ( 27 ) ( 607 ) — ( 607 )

Rights Offering costs — — — — ( 78 ) — ( 78 ) — ( 78 )

Net income — — — — — 1,624 1,624 — 1,624

Balances, September 30, 2021 23,369,331 $ 24 11,265,130 $ 299,323 $ 867,636 $ ( 791,820 ) $ 375,163 $ 342 $ 375,505

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Common Stock Preferred Stock

34 unchanged sentences

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

Stock-based compensation expense — — — — 55 — 55 — 55

Common dividends ($ 0.075 per share)

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

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

— — — — — ( 2,162 ) ( 2,162 ) — ( 2,162 )

Issuance of Series D Preferred Stock — — 11,837 290 ( 10 ) — 280 — 280

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

— — — — — ( 10 ) ( 10 ) — ( 10 )

Reclassification of Series A Preferred Stock to permanent equity — — 482,374 11,786 ( 1,039 ) — 10,747 — 10,747

Redeemable Preferred Stock deemed dividends — — — — — ( 87 ) ( 87 ) — ( 87 )

Redemption of Series A Preferred Stock — — ( 2,393 ) ( 60 ) 6 ( 1 ) ( 55 ) — ( 55 )

Net loss — — — — — ( 5,323 ) ( 5,323 ) ( 7 ) ( 5,330 )

Balances, September 30, 2020 14,827,410 $ 15 9,446,326 253,683 $ 794,807 $ ( 762,245 ) $ 286,260 $ 459 $ 286,719

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

2 unchanged sentences

(In thousands) (Unaudited)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 1,520 ) $ ( 10,627 )

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization, net 15,211 15,461

Loss on early extinguishment of debt — 281

Amortization of deferred loan costs 791 859

2 unchanged sentences

Amortization and accretion on loans receivable, net ( 426 ) ( 290 )

Write-offs of uncollectible receivables 1,076 302

(Recoveries) write-offs of uncollectible receivables ( 119 ) 2,311

Deferred income taxes 110 ( 915 )

3 unchanged sentences

Principal collected on loans subject to secured borrowings 651 3,600

Other operating activity ( 925 ) ( 407 )

Commitment fees remitted and other operating activity ( 2,200 ) ( 813 )

Changes in operating assets and liabilities:

7 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Additions to investments in real estate ( 823 ) ( 9,545 )

Capital expenditures ( 1,781 ) ( 13,210 )

Acquisition of real estate ( 2,933 ) —

Loans funded ( 24,676 ) ( 24,057 )

16 unchanged sentences

Noncontrolling interests’ distributions ( 109 ) ( 45 )

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

Net cash (used in) provided by financing activities ( 25,675 ) 30,766

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(In thousands) (Unaudited)

Six Months Ended

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

Nine Months Ended

September 30,

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 17,504 ) 6,041

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:

23 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited)

September 30, 2021 (Unaudited)

ORGANIZATION AND OPERATIONS

17 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 .

During the nine months ended September 30, 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 $ 2.0 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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

September 30, 2021 (Unaudited) – (Continued)

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4 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 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.

Operating results for the three and nine months ended September 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.

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 2020 Form 10-K.

4 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 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.

As of September 30, 2021, the Company has 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.

4 unchanged sentences

Tenant improvements Lesser of useful life or lease term

The fair value of real estate acquired is recorded to 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.

Capitalized Project Costs

The Company capitalizes project costs, including pre-construction costs, interest expense, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, or construction of a project, while activities are ongoing to prepare an asset for its intended use.

2 unchanged sentences

Ordinary repairs and maintenance are expensed as incurred.

Recoverability of Investments in Real Estate —Investments in real estate are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If, and when, such events or changes in circumstances are present, the recoverability of assets to be held and used requires significant judgment and estimates and is measured by a comparison of the carrying amount to the future undiscounted cash flows expected to be generated by the assets and their eventual disposition.

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

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

discount rates and terminal capitalization rates.

September 30, 2021 (Unaudited) – (Continued)

Recoverability of Investments in Real Estate —The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable.

Investments in real estate are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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

3 unchanged sentences

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 ).

For the three and nine months ended September 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.

2 unchanged sentences

The Company operates as a lessor of real estate assets.

When the Company enters into a contract or amends an existing contract, the Company evaluates if the contracts meet the definition of a lease using the following criteria:

• One party (lessor) must hold an identified asset;

• The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of the contract;

• The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract.

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.

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.

As of September 30, 2021 and December 31, 2020, lease incentives of $ 4.0 million and $ 4.0 million, respectively, are presented net of accumulated amortization of $ 2.6 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.

1 unchanged sentence

The Company has elected not to separate lease and non-lease components as the pattern of revenue recognition does not differ for the two components, and the non-lease component is not the primary component in the Company’s leases.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

In addition to minimum rents, certain leases, including the Company’s parking leases with third-party operators, provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums.

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

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

7 unchanged sentences

(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.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Collectability of Lease-Related Receivables

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.

Upon the determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income and a decrease in the outstanding receivable.

Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable.

Management’s estimate of the collectability of lease-related receivables is based on the best information available at the time of estimate.

The Company does not use a general reserve approach and lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable.

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.

The Company does not use a general reserve approach.

As of September 30, 2021 and December 31, 2020, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $ 1.7 million and $ 1.9 million, respectively, across all operating leases.

Revenue from lending activities

2 unchanged sentences

Revenue from hotel activities

The Company recognizes revenue from hotel activities separate from its leasing activities.

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.

6 unchanged sentences

The Company satisfies its performance obligation and recognizes revenues associated with noncancelable reservations at the earlier of (i) the date on which the customer cancels the reservation or (ii) over time as services are rendered to the customer.

Ancillary services include facilities usage and providing food and beverage.

The Company satisfies its performance obligation and recognizes revenues associated with these services at a point in time as the good or service is delivered to the customer.

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)

September 30, 2021 (Unaudited) – (Continued)

Ancillary services include facilities usage and providing food and beverage.

The Company satisfies its performance obligation and recognizes revenues associated with these services at a point in time when the good or service is delivered to the customer.

At inception of a contract with a customer for hotel goods and services, 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.

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

10 unchanged sentences

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 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.

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

As of September 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 $ 9.0 million and $ 7.8 million as of June 30, 2021 and December 31, 2020, respectively.

Unamortized retained loan discounts were $ 9.4 million and $ 7.8 million as of September 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 $ 438,000 and $ 492,000 remained as of June 30, 2021 and December 31, 2020, respectively.

Acquisition discounts of $ 420,000 and $ 492,000 remained as of September 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.

Generally, loans are charged-off when management determines that the Company will be unable to collect any remaining amounts due under the loan agreement, either through liquidation of collateral or other means.

Generally, loans are charged-off when management determines that the Company will be unable to collect any remaining amounts due under the loan agreement, either through

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

liquidation of collateral or other means.

Interest income, included in interest and other income, on a Non-Accrual Loan is recognized on the cost recovery basis.

1 unchanged sentence

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 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.

For the three and nine months ended September 30, 2021, the Company recorded a net impairment of $ 7,000 and $ 11,000 , respectively, on its loans receivable.

For the three and nine months ended September 30, 2020, the Company recorded a net impairment of $ 1,000 and a net recovery of $ 15,000 , respectively, on its loans receivable.

There were no material loans receivable subject to credit risk which were considered to be impaired as of September 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 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 June 30, 2021 and December 31, 2020, the Company had loan loss reserves of $ 930,000 and $ 885,000 , respectively.

As of September 30, 2021 and December 31, 2020, the Company had loan loss reserves of $ 959,000 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.

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

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Deferred rent receivable $ 20,858 $ 20,470

7 unchanged sentences

As a result, the Company records issuances of Series A Preferred Stock in temporary equity.

On the first anniversary of the date of original 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.

On the first anniversary of the date of original issuance of a particular share of Series A Preferred Stock, the

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

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.

Noncontrolling Interests —Noncontrolling interests represent the interests in various properties owned by third-parties.

1 unchanged sentence

Restricted cash also includes cash required to be segregated in connection with certain of the Company’s loans receivable.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 statement of cash flows for the six months ended June 30, 2020 as follows (in thousands):

Six Months Ended June 30, 2020

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

Nine Months Ended September 30, 2020

As previously reported Reclassification As Revised

19 unchanged sentences

Redeemable Series D Preferred Stock fees included in accounts payable and accrued expenses $ 6 $ ( 6 ) $ —

Equity-based payment for management fees $ 2,359 $ 2,663 $ 5,022

Payment of management fees and base service fee in preferred stock $ 2,663 $ ( 2,663 ) $ —

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.

The Company bases such estimates on historical experience, information available at the time, and assumptions the Company believes to be reasonable under the circumstances and at such time, including the impact of extraordinary events such as COVID-19.

The Company bases such estimates on historical experience, information available at the

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

time, and assumptions the Company believes to be reasonable under the circumstances and at such time, including the impact of extraordinary events such as COVID-19.

Actual results could differ from those estimates.

11 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

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.

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

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

7 unchanged sentences

However, the Q&A provides that the Company may bypass the lease by lease analysis if certain criteria are met, and instead elect to either consistently apply, or consistently not apply, the lease modification framework to groups of leases with similar characteristics and similar circumstances.

As described below, the Company has elected not to apply the lease modification guidance to concessions related to the effects of COVID-19 that do not result in a substantial increase in the Company’s rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than the total payments required by the original lease.

The Company has elected not to apply the lease modification guidance to concessions related to the effects of COVID-19 that do not result in a substantial increase in the Company’s rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than the total payments required by the original lease.

INVESTMENTS IN REAL ESTATE

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Land $ 141,237 $ 139,397

7 unchanged sentences

Net investments in real estate $ 498,878 $ 506,040

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.

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

June 30, 2021 (Unaudited) – (Continued)

September 30, 2021 (Unaudited) – (Continued)

The Company recorded depreciation expense of $ 4.3 million and $ 4.4 million for the three months ended September 30, 2021 and 2020, respectively, and $ 12.7 million and $ 13.0 million for the nine months ended September 30, 2021 and 2020, respectively.

2021 and 2020 Transactions —During the nine months ended September 30, 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 was accounted for as an asset acquisition.

The purchase price excludes transaction costs of $ 33,000 that were incurred and capitalized in connection with this acquisition.

The property has 4,455 square feet of office space.

There were no acquisitions or dispositions during the nine months ended September 30, 2020.

LOANS RECEIVABLE

Loans receivable consist of the following (in thousands):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

SBA 7(a) loans receivable, subject to credit risk $ 42,498 $ 32,226

11 unchanged sentences

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 $ 26.4 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.

SBA 7(a) Loans Receivable, Paycheck Protection Program —As a SBA 7(a) licensee, the Company originated $ 26.4 million in loans under the PPP with $ 7.6 million outstanding as of September 30, 2021.

As of September 30, 2021, a significant portion of these loans have been either forgiven or repaid, and the Company expects a significant portion of the outstanding balance at September 30, 2021 will be forgiven or repaid, either in part or in full, by the SBA, including both principal and accrued interest.

SBA 7(a) Loans Receivable, Subject to Secured Borrowings —Represents the government guaranteed portions of loans originated under the SBA 7(a) Small Business Loan Program which were sold with the proceeds received from the sale reflected as secured borrowings—government guaranteed loans.

1 unchanged sentence

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 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.

As of September 30, 2021 and December 31, 2020, the Company’s loans subject to credit risk were 99.8 % and 99.1 %, respectively, concentrated in the hospitality industry.

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

As of both September 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

June 30, 2021 (Unaudited) – (Continued)

September 30, 2021 (Unaudited) – (Continued)

OTHER INTANGIBLE ASSETS AND LIABILITIES

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

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

September 30, 2021 December 31, 2020

Intangible lease assets:

8 unchanged sentences

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 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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

2 unchanged sentences

Acquired below-market lease amortization $ 79 $ 150 $ 278 $ 552

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

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

Assets Liabilities

2 unchanged sentences

Leases Acquired

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

2021 (Three months ending December 31, 2021) $ 3 $ 243 $ ( 71 )

2022 12 813 ( 236 )

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2021 (Unaudited) – (Continued)

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

During the Nine Months Ended September 30, 2021

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

Mortgage Payable:

16 unchanged sentences

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.

As of September 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.

1 unchanged sentence

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 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 %.

As of September 30, 2021, the Company’s secured borrowings-government guaranteed loans included $ 5.1 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”).

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

September 30, 2021 (Unaudited) – (Continued)

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

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

As of September 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.

The 2018 revolving credit facility is secured by deeds of trust on certain of the Company’s properties.

During the Deferral Period, the Company’s borrowing capacity is subject to a $ 15.0 million reserve, which may be reduced by certain capital expenditures made in respect of the Company’s properties securing the 2018 revolving credit facility, and the requirement that the Company maintain a minimum balance of “liquid assets” of $ 15.0 million, which are defined as (1) unencumbered cash and cash equivalents and (2) up to $ 5.0 million unfunded availability under the 2018 revolving credit facility.

Other than as described in the preceding sentence, the 2018 revolving credit facility contains customary covenants and is not subject to any financial covenants (though the amount the Company may borrow under the 2018 revolving credit facility is determined by a borrowing base calculation).

The 2018 revolving credit facility contains customary covenants and is not subject to any financial covenants (though the amount the Company may borrow under the 2018 revolving credit facility is determined by a borrowing base calculation).

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

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.

As of September 30, 2021 and December 31, 2020, $ 75.0 million and $ 166.5 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $ 91.0 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.

3 unchanged sentences

The 2020 unsecured revolving credit facility matures in May 2022.

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

As of September 30, 2021, no amounts were 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.

8 unchanged sentences

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 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”).

The restricted cash on the Company’s consolidated balance sheets included funds related to the Company’s SBA 7(a) loan-backed notes of $ 1.9 million and $ 1.2 million as of September 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”) to finance all the loans the Company originated under the PPP.

Advances under the PPPLF carry an interest rate of 0.35%, are made on a dollar-for-dollar basis based on the amount of loans originated under the PPP and are secured by loans made by the Company under the PPP.

3 unchanged sentences

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).

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

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,

As of September 30, 2021, $ 7.6 million was outstanding under the PPPLF.

As the PPP has ended, no new extensions of credit may be made under the PPPLF.

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

As of September 30, 2021 and December 31, 2020, accrued interest and unused commitment fees payable of $ 529,000 and $ 564,000 , respectively, were included in accounts payable and accrued expenses.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

approximating the effective interest method.

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

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):

September 30, 2021 (Unaudited) – (Continued)

Future principal payments on the Company’s debt (face value) as of September 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 (Six months ending December 31, 2021) $ — $ 471 $ — $ 1,783 $ 2,254

2021 (Three months ending December 31, 2021) $ — $ 469 $ — $ 1,206 $ 1,675

2022 — 412 75,000 2,436 77,848

10 unchanged sentences

(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

9 unchanged sentences

(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 $ 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.

The Company recorded compensation expense related to these restricted shares of Common Stoc k in the amount of $ 55,000 and $ 55,000 for the three months ended September 30, 2021 and 2020, respectively, and $ 165,000 an d $ 167,000 for the nine months ended September 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.

1 unchanged sentence

(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.

As of September 30, 2021, there was $ 128,000 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

September 30, 2021 (Unaudited) – (Continued)

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 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.

For the three and nine months ended September 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 nine months ended September 30, 2020, the basic weighted average number of shares of Common Stock outstanding was increased by 0 and 108 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 September 30, 2021 had a dilutive effect and no shares of Series D Preferred Stock were outstanding as of September 30, 2020.

Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three and nine months ended September 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 nine months ended September 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.

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,

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 nine months ended September 30, 2021 and 2020 (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

8 unchanged sentences

Diluted $ ( 0.14 ) $ ( 0.65 ) $ ( 0.88 ) $ ( 1.67 )

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 and nine months ended September 30, 2021 and 2020 (dollar amounts in thousands):

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 and six months ended June 30, 2021 and 2020 (dollar amounts in thousands):

September 30, 2021 (Unaudited) – (Continued)

Preferred Stock

10 unchanged sentences

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

Issuance of Series D Preferred Stock — $ — 11,837 $ 290 — $ — 11,837 $ 290

Reclassification of Series A Preferred Stock to permanent equity 482,374 11,786 — — — — 482,374 11,786

Redemption of Series A Preferred Stock ( 2,393 ) ( 60 ) — — — — ( 2,393 ) ( 60 )

Balances, September 30, 2020 4,040,429 $ 100,386 18,737 $ 463 5,387,160 $ 152,834 9,446,326 $ 253,683

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

7 unchanged sentences

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 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,

Issuance of Series D Preferred Stock — — 25,832 632 — — 25,832 632

Reclassification of Series A Preferred Stock to permanent equity 593,300 15,132 — — — — 593,300 15,132

Redemption of Series A Preferred Stock ( 25,564 ) ( 634 ) — — — — ( 25,564 ) ( 634 )

Balances, September 30, 2021 5,821,113 $ 145,093 56,857 $ 1,396 5,387,160 $ 152,834 11,265,130 $ 299,323

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.

September 30, 2021 (Unaudited) – (Continued)

As of September 30, 2021, the Company had iss ued in regist ered public offerings 7,166,128 shares of Series A Preferred Stock, 4,603,287 Series A Preferred Warrants and 56,857 shares of Series D Preferred Stock and received gross proceeds of $ 180.5 million ($ 178.4 million of which was allocated to the Series A Preferred Stock, $ 761,000 of which was allocated to the Series A Preferred Warrants, and $ 1.4 million of which was allocated to the Series D Preferred Stock) and, additionally, had issued 387,810 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 $ 15.1 million ($ 14.9 million of which was allocated to the Series A Preferred Stock, $ 142,000 of which was allocated to the Series A Preferred Warrants, and $ 35,000 of which was allocated to the Series D Preferred Stock).

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

As of September 30, 2021, the Company had reclassified and allocated $ 1.6 million, $ 5,000 and $ 7,000 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.

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 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.

As of September 30, 2021, there were 7,369,997 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 56,857 shares of Series D Preferred Stock outstanding.

As of September 30, 2021, 183,941 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.

4 unchanged sentences

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

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.

For the three and nine months ended September 30, 2021, the Company recorded redeemable preferred stock deemed divid ends of $ 90,000 and $ 253,000 , respectively, related to such adjustments.

For the three and nine months ended September 30, 2020, the Company recorded redeemable preferred stock deemed divid ends of $ 87,000 and $ 300,000 , 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 June 30, 2021, the Company had reclassified an aggregate of $ 121.2 million in net proceeds from temporary equity to permanent equity.

As of September 30, 2021, the Company had reclassified an aggregate of $ 134.7 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.

4 unchanged sentences

These fees have been recorded as a reduction to the gross proceeds in permanent equity.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

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

As of September 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

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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).

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.

10 unchanged sentences

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 $ 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.

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 $ 3,979,000 had been paid as of September 30, 2021.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

During the nine months ended September 30, 2021, the Company paid $ 7.0 million, $ 26,000 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 nine months ended September 30, 2020, the Company paid $ 6.1 million, $ 4,000 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.

1 unchanged sentence

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

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

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 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.

5 unchanged sentences

In determining the Company’s dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, the Company’s financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects.

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 six months ended June 30, 2021 and 2020 consist of the following:

Consequently, the dividend rate on a quarterly basis

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

does not necessarily correlate directly to any individual factor.

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

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

September 7, 2021 September 29, 2021 Regular Quarterly $ 0.075

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

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

September 2, 2020 September 29, 2020 Regular Quarterly $ 0.075

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

1 unchanged sentence

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.

During the nine months ended September 30, 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 $ 2.0 million were incurred in connection with the Rights Offering and recorded as a reduction to additional paid-in capital.

3 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.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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.

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.

As of September 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

7 unchanged sentences

Management’s estimation of the fair value of the Company’s financial instruments is based on a Level 3 valuation in the fair value hierarchy established for disclosure of how a company values its financial instruments.

In general, quoted market prices from active markets for the identical financial instrument (Level 1 inputs), if available, should be used to value a financial instrument.

In general, quoted market prices from active markets for the identical financial instrument (Level 1 inputs), if available, should be used to value a

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

financial instrument.

If quoted prices are not available for the identical financial instrument, then a determination should be made if Level 2 inputs are available.

10 unchanged sentences

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 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.

When estimating the fair value of the Company’s mortgages payable as of September 30, 2021 and December 31, 2020, the Company used a rate of 3.22 % and 3.38 %, respectively.

The rate used to estimate the fair value of the Company’s junior subordinated notes was 4.38 % and 4.49 % as of September 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.

The value of the government guaranteed portions of loans held for sale is based

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

primarily on the anticipated proceeds to be received upon sale.

The value of the government guaranteed portions of loans held for sale is based 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:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Discount Rate Prepayment Rate Discount Rate Prepayment Rate

12 unchanged sentences

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 June 30, 2021 and December 31, 2020.

Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

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):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Amount Estimated

19 unchanged sentences

The “Operator” refers to CIM Capital and its four wholly-owned subsidiaries.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

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

11 unchanged sentences

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.

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 during 2021 in shares of Series A Preferred Stock.

The Company has issued shares of its Series A Preferred Stock to the Operator as payment for the quarterly asset management fee for the first three quarters of 2021.

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 fourth quarter asset management fees in shares of Series A Preferred Stock.

Property Management Fees and Reimbursements — CIM Management, Inc.

and certain of its affiliates (collectively, the “CIM Management Entities”), all affiliates of CIM REIT and CIM Group, provide property management, leasing, and development services to CIM Urban.

and certain of its affiliates (collectively, the “CIM Management Entities”), all affiliates of CIM REIT and CIM Group, provide property management, leasing, and

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

development services to CIM Urban.

Property management fees earned by the CIM Management entities and onsite management costs incurred on behalf of CIM Urban are included in rental and other property operating expenses in the accompanying consolidated statements of operations.

8 unchanged sentences

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 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.

During the nine months ended September 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).

1 unchanged sentence

Lending Segment Expenses — The Company has a Staffing and Reimbursement Agreement with CIM SBA Staffing, LLC (“CIM SBA”), an affiliate of CIM Group, and the Company’s subsidiary, PMC Commercial Lending, LLC.

The agreement provides that CIM SBA will provide personnel and resources to the Company and that the Company will reimburse

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

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

The agreement provides that CIM SBA will provide personnel and resources to the Company and that the Company will reimburse CIM SBA for the costs and expenses of providing such personnel and resources.

The expense for such services is included in expense reimbursements to related parties—lending segment in the accompanying consolidated statements of operations.

9 unchanged sentences

The Company has been informed that CCO Capital generally reallows 100 % of the selling commissions on sales of Series A Preferred Stock and generally reallows substantially all of the upfront dealer manager fee on sales of Series A Preferred Stock and Series D Preferred Stock, to participating broker-dealers.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

On September 22, 2021, the Company entered into Amendment No.

2 to the Second Amended and Restated Dealer Manager Agreement, pursuant to which the upfront dealer manager fee payable to the Dealer Manager was changed to up to 3.00 % and the trailing dealer manager fee with respect to the sale of shares of Series A Preferred Stock sold in the Offering on or after September 9, 2021 was eliminated.

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine months ended September 30,

2021 2020 2021 2020

18 unchanged sentences

______________________

(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

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.

(1) The Company issued to the Operator an aggregate of 203,349 shares of our Common Stock and 190,459 shares of our Series A Preferred Stock , in lieu of cash payment of the asset management fees incurred during the nine months ended September 30, 2020 .

T he Company issued to the Operator 89,338 shares of Series A Preferred Stock in lieu of cash payment of the asset management fees incurred during the nine months ended September 30, 2021.

(2) For the nine months ended September 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 incurred for the first quarter of 2020.

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

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Asset management fees $ 4,515 $ 2,386

6 unchanged sentences

Total due to related parties $ 9,423 $ 6,706

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

During the year ended December 31, 2020 , the Company’s President, Jan F.

5 unchanged sentences

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 June 30, 2021 and 2020, respectively, and $ 0 and $ 58,000 for the six months ended June 30, 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 September 30, 2021 and 2020, respectively, and $ 0 and $ 87,000 for the nine months ended September 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 and $ 740,000 for the three and six months, respectively, ended both June 30, 2021 and 2020, respectively.

The Company recorded rental and other property income related to this tenant of $ 370,000 and $ 1.1 million for the three and nine months, respectively, ended on each of September 30, 2021 and 2020.

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 $ 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.

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

The Company’s outstanding commitments to fund loans were $ 24.4 million as of September 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 $ 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

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.

CIM Commercial had a total of $ 8.1 million in future obligations under leases to fund tenant improvements and other future construction obligations as of September 30, 2021.

As of September 30, 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.

5 unchanged sentences

The Company disputed that such penalties, interest and legal fees were payable but, in order to contest the asserted tax obligations, the Company had to pay such amounts to the City and County of San Francisco in August 2017.

The Company has been vigorously pursuing this litigation and intend to continue to do so.

The Company has been vigorously pursuing this litigation and intends to continue to do so.

A subsidiary of the Company is a defendant in a lawsuit in connection with injuries sustained by a third-party contractor at a property previously owned by such subsidiary.

While it is possible that a loss may be incurred, the Company is unable to estimate a range of potential losses due to the complexity and current status of the lawsuit.

However, the Company maintains insurance coverage to mitigate the impact of adverse exposures in lawsuits of this nature and do not expect this lawsuit to have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company ability to satisfy its debt service obligations or to maintain the level of distributions on the Company’s Common Stock or Preferred Stock.

However, the Company maintains insurance coverage to mitigate the impact of adverse exposures in lawsuits of this nature and do not expect this

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

lawsuit to have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company ability to satisfy its debt service obligations or to maintain the level of distributions on the Company’s Common Stock or Preferred Stock.

SBA Related —If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced under the PPP or the SBA 7(a) Small Business Loan Program, the SBA may seek recovery of the principal loss related to the deficiency from the Company.

4 unchanged sentences

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.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

Future minimum rental revenue under long-term operating leases as of September 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

2021 (Three months ending December 31, 2021) $ 11,286

Thereafter 42,256

SEGMENT DISCLOSURE

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.

The Company’s reportable segments during the three and nine months ended September 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.

5 unchanged sentences

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,

September 30, 2021 (Unaudited) – (Continued)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

10 unchanged sentences

Total property expenses 4,601 2,831 10,765 11,545

Segment net operating (loss) income—hotel ( 2 ) ( 1,118 ) ( 809 ) 653

Segment net operating income (loss)—hotel 877 ( 1,069 ) 68 ( 416 )

Revenues 5,773 1,981 15,086 5,963

4 unchanged sentences

Total lending expenses 904 1,712 3,064 4,793

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

Segment net operating income—lending 4,869 269 12,022 1,170

Total segment net operating income $ 13,259 $ 6,642 $ 34,976 $ 25,208

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,

September 30, 2021 (Unaudited) – (Continued)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

6 unchanged sentences

Depreciation and amortization ( 5,061 ) ( 5,273 ) ( 15,167 ) ( 15,728 )

Loss on early extinguishment of debt — ( 281 ) — ( 281 )

Income (loss) before provision for income taxes 2,570 ( 5,348 ) 796 ( 11,358 )

1 unchanged sentence

Net income (loss) 1,624 ( 5,330 ) ( 1,520 ) ( 10,627 )

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

Net (income) loss attributable to noncontrolling interests — 7 4 1

Net income (loss) attributable to the Company $ 1,624 $ ( 5,323 ) $ ( 1,516 ) $ ( 10,626 )

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

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

September 30, 2021 December 31, 2020

Condensed assets:

4 unchanged sentences

Total assets $ 675,020 $ 685,617

Six Months Ended June 30,

Nine Months Ended September 30,

Capital expenditures (1) and loan originations:

9 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited) – (Continued)

September 30, 2021 (Unaudited) – (Continued)

SUBSEQUENT EVENTS

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.

The Company evaluated events subsequent to September 30, 2021, and concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated unaudited financial statements.

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