Creative Media & Community Trust Corp 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk The fair value of our mortgage payable is sensitive to fluctuations in interest rates. Discounted cash flow analysis is generally used to estimate the fair value of our mortgage payable, using a rate of 3.22% and 3.38% as of December 31, 2021 and 2020, respectively. As of both December 31, 2021 and 2020, our mortgage payable had a book value of $97.1 million and a fair value of $100.8 million. Our future income, cash flow and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We are exposed to market risk in the form of changes in interest rates and the potential impact such changes may have on the cash flows from our floating rate debt or the fair values of our fixed rate debt. As of December 31, 2021 and 2020 (excluding premiums, discounts, and deferred loan costs), $102.1 million (or 50.2%) and $111.6 million (or 34.0%) of our debt, respectively, was fixed rate mortgage loans, and $101.4 million (or 49.8%) and $216.3 million (or 66.0%), respectively, was floating rate borrowings. Based on the level of floating rate debt outstanding as of December 31, 2021 and 2020, a 50 basis point change in LIBOR would result in an annual impact to our earnings of approximately $507,000 and $1.1 million, respectively. We calculate interest rate sensitivity by multiplying the amount of floating rate debt by the respective change in rate. The sensitivity analysis does not take into consideration possible changes in the balances or fair value of our floating rate debt. Item 8. Financial Statements and Supplementary Data The information required by this Item is incorporated herein by reference to the Financial Statements and Auditors’ Report beginning on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.