What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 361 added, 277 removed, 802 unchanged (44% of the section changed)

3 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Investments in real estate, net $ 502,607 $ 497,984

Investment in unconsolidated entity - at fair value 22,528 —

Investment in unconsolidated entity 22,788 —

Cash and cash equivalents 16,480 22,311

17 unchanged sentences

36,000,000 shares authorized;

1,693,649 and 1,693,649 shares issued and outstanding, respectively, as of March 31, 2022 and 1,633,965 and 1,631,965 shares issued and outstanding, respectively, as of December 31, 2021;

1,565,703 and 1,565,703 shares issued and outstanding, respectively, as of June 30, 2022 and 1,633,965 and 1,631,965 shares issued and outstanding, respectively, as of December 31, 2021;

liquidation preference of $ 25.00 per share, subject to adjustment

2 unchanged sentences

36,000,000 shares authorized;

6,824,553 and 6,551,917 shares issued and outstanding, respectively, as of March 31, 2022 and 6,492,632 and 6,271,337 shares issued and outstanding, respectively, as of December 31, 2021;

7,254,635 and 6,893,774 shares issued and outstanding, respectively, as of June 30, 2022 and 6,492,632 and 6,271,337 shares issued and outstanding, respectively, as of December 31, 2021;

liquidation preference of $ 25.00 per share, subject to adjustment

172,176 156,431

Series A1 cumulative redeemable preferred stock, $ 0.001 par value;

28,000,000 shares authorized;

192,440 shares issued and outstanding as of June 30, 2022 and no shares issued or outstanding as of December 31, 2021;

liquidation preference of $ 25.00 per share, subject to adjustment

Series D cumulative redeemable preferred stock, $ 0.001 par value;

27,000,000 shares authorized;

56,857 shares issued and outstanding as of March 31, 2022 and 56,857 shares issued and outstanding as of December 31, 2021;

56,857 shares issued and outstanding as of June 30, 2022 and 56,857 shares issued and outstanding as of December 31, 2021;

liquidation preference of $ 25.00 per share, subject to adjustment

1 unchanged sentence

9,000,000 shares authorized;

8,080,740 and 5,387,160 shares issued and outstanding, respectively, as of March 31, 2022 and December 31, 2021;

8,080,740 and 5,387,160 shares issued and outstanding, respectively, as of June 30, 2022 and December 31, 2021;

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 March 31, 2022 and 23,369,331 shares issued and outstanding as of December 31, 2021.

23,358,941 shares issued and outstanding as of June 30, 2022 and 23,369,331 shares issued and outstanding as of December 31, 2021.

Additional paid-in capital 864,602 866,746

8 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Rental and other property income $ 14,194 $ 13,309 $ 28,290 $ 26,658

30 unchanged sentences

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

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Common Stock Preferred Stock

12 unchanged sentences

— — — — — ( 21 ) ( 21 ) — ( 21 )

Reclassification of Series A Preferred stock to Perm Equity — — 329,921 8,304 ( 637 ) — 7,667 — 7,667

Reclassification of Series A Preferred stock to permanent equity — — 329,921 8,304 ( 637 ) — 7,667 — 7,667

Redeemable preferred stock accretion — — — — — ( 15 ) ( 15 ) — ( 15 )

2 unchanged sentences

Balances, March 31, 2022 23,369,331 $ 24 11,995,934 $ 317,737 $ 866,272 $ ( 806,923 ) $ 377,110 $ 350 $ 377,460

Three Months Ended March 31, 2021

Contributions to noncontrolling interests — — — — — — — 5 5

Distributions to noncontrolling interests — — — — — — — ( 3 ) ( 3 )

Stock based compensation expense 30,984 — — — 37 — 37 — 37

Repurchase of common stock ( 41,374 ) — — — ( 303 ) — ( 303 ) — ( 303 )

Common dividends ($ 0.085 per share)

— — — — — ( 1,986 ) ( 1,986 ) — ( 1,986 )

Issuance of Series A1 Preferred Stock — — 192,440 4,770 ( 416 ) — 4,354 — 4,354

Dividends to holders of Series A1 Preferred Stock ($ 0.37500 per share)

— — — — — ( 79 ) ( 79 ) — ( 79 )

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

— — — — — ( 2,960 ) ( 2,960 ) — ( 2,960 )

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

— — — — — ( 21 ) ( 21 ) — ( 21 )

Reclassification of Series A Preferred stock to permanent equity — — 430,082 10,857 ( 1,189 ) — 9,668 — 9,668

Redeemable preferred stock accretion — — — — — ( 4 ) ( 4 ) — ( 4 )

Redemption of Series A Preferred Stock — — ( 88,225 ) ( 2,188 ) 201 ( 106 ) ( 2,093 ) — ( 2,093 )

Net income — — — — — 2,922 2,922 9 2,931

Balances, June 30, 2022 23,358,941 $ 24 12,530,231 $ 331,176 $ 864,602 $ ( 809,157 ) $ 386,645 $ 361 $ 387,006

Six Months Ended June 30, 2021

Common Stock Preferred Stock

19 unchanged sentences

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

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

Common dividends ($ 0.075 per share) (1)

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

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

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

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

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

— — — — — ( 13 ) ( 13 ) — ( 13 )

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

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

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

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

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

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

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

2 unchanged sentences

(In thousands) (Unaudited)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Amortization of deferred costs and accretion of fees on loans receivable, net ( 294 ) ( 279 )

(Recoveries) write-offs of uncollectible receivables 109 811

Write-offs of uncollectible receivables 39 1,076

Deferred income taxes 47 ( 13 )

27 unchanged sentences

Payment of common dividends ( 3,739 ) ( 2,226 )

Repurchase of Common Stock ( 303 ) —

Proceeds from issuance of Common Stock — 78,825

Payment of Common Stock offering costs — ( 325 )

Net proceeds from issuance of Preferred Stock 20,246 15,484

2 unchanged sentences

Noncontrolling interests’ distributions ( 3 ) ( 114 )

Net cash provided by (used in) financing activities 21,412 ( 231 )

Noncontrolling interests’ contributions 5 —

Net cash provided by financing activities 4,495 12,867

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(In thousands) (Unaudited)

Three Months Ended

Six Months Ended

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 5,963 ) 25,885

19 unchanged sentences

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

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

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

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited)

June 30, 2022 (Unaudited)

ORGANIZATION AND OPERATIONS

10 unchanged sentences

All Common Stock and per share of Common Stock amounts set forth in this Quarterly Report on Form 10-Q have been adjusted to give retroactive effect to the Reverse Stock Split, unless otherwise stated.

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 (collectively, the “Series A Preferred Stock”) with an initial stated value of $ 25.00 per share, subject to adjustment (the “Series A Preferred Stock Stated Value”), and one warrant (collectively, the “Series A Preferred Warrants”) to purchase 0.25 of a share of Common Stock, subject to adjustment (Note 11).

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.

Since February 2020, the Company has been conducting a continuous public offering of Series A Preferred Stock and Series D preferred stock, par value $ 0.001 per share (the “Series D Preferred Stock”), with an initial stated value of $ 25.00 per share, subject to adjustment (the “Series D Preferred Stock Stated Value”).

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.

Since June 2022, the Company has been conducting a continuous public offering with respect to shares of its Series A1 Preferred Stock, par value $ 0.001 per share with an initial stated value of $ 25.00 per share, subject to adjustment.

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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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 six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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 2021 Form 10-K.

2 unchanged sentences

In determining whether the Company has controlling interests in an entity and the requirement to consolidate the accounts in that entity, the Company analyzes its investments in real estate in accordance with standards set forth in GAAP to determine whether they are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary.

The Company’s judgment with respect to its level of influence or control over an entity and whether the Company is the primary beneficiary of a VIE involves consideration of various factors, including the form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions.

The Company’s judgment with respect to its level of influence or control over an entity and whether the Company is the primary beneficiary of a VIE involves

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

consideration of various factors, including the form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions.

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

As of March 31, 2022, 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.

As of June 30, 2022, 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.

19 unchanged sentences

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

When an asset is identified by the Company as held for sale, the Company will

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

The Company did no t recognize any impairment of long-lived assets during the three and six months ended June 30, 2022 and 2021 (Note 3).

Investment in Unconsolidated Entity —In February 2022, the Company invested in an unconsolidated joint venture arrangement (the “Unconsolidated Joint Venture”) with a CIM-managed separate account (the “CIM JV Partner”) to purchase an office property in Los Angeles, California for approximately $ 51.0 million, gross of proration amounts, of which the Company initially contributed approximately $ 22.4 million and the CIM JV Partner initially contributed the remaining balance.

The Company accounts for its approximately 44 % investment in the Unconsolidated Joint Venture under the equity method, as it has the ability to exercise significant influence over the investment.

The Unconsolidated Joint Venture records its assets and liabilities at fair value.

As such, the Company records its share of the Unconsolidated Joint Venture’s unrealized gains or losses as well as its share of the revenues and expenses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s consolidated balance sheet and such share is recognized within the Company’s income from unconsolidated entity on the consolidated statements of operations.

The Company recorded income of $ 260,000 and $ 380,000 related to its

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

cease recording depreciation and amortization of the asset.

The Company did no t recognize any impairment of long-lived assets during the three months ended March 31, 2022 and 2021 (Note 3).

Investment in Unconsolidated Entity —In February 2022, the Company invested in an unconsolidated joint venture arrangement (the “Unconsolidated Joint Venture”) with a CIM-managed separate account (the “CM JV Partner”) to purchase an office property in Los Angeles, California for approximately $ 51.0 million, gross of proration amounts, of which the Company initially contributed approximately $ 22.4 million and the CIM JV Partner initially contributed the remaining balance.

The Company accounts for its approximately 44 % investment in the Unconsolidated Joint Venture under the equity method, as it has the ability to exercise significant influence over the investment.

The Company has elected the fair value option (“FVO”) for its equity method investment and therefore reports this investment at fair value.

As such, the Company records its share of the Unconsolidated Joint Venture’s profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s consolidated balance sheet and such share is recognized as a profit or loss on the consolidated statements of operations.

The Company recorded income of $ 120,000 related to its investment in the Unconsolidated Joint Venture during the three months ended March 31, 2022 in the consolidated statements of operations.

June 30, 2022 (Unaudited) – (Continued)

investment in the Unconsolidated Joint Venture during the three and six months ended June 30, 2022, respectively, in the consolidated statements of operations.

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.

15 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 March 31, 2022 and December 31, 2021, lease incentives of $ 4.0 million and $ 4.0 million, respectively, are presented net of accumulated amortization of $ 2.8 million and $ 2.7 million, respectively.

As of June 30, 2022 and December 31, 2021, lease incentives of $ 4.0 million and $ 4.0 million, respectively, are presented net of accumulated amortization of $ 2.9 million and $ 2.7 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.

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

For the three months ended March 31, 2022 and 2021, the Company recognized rental income as follows (in thousands):

Three Months Ended March 31,

June 30, 2022 (Unaudited) – (Continued)

For the three and six months ended June 30, 2022 and 2021, the Company recognized rental income as follows (in thousands):

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

2022 2021 2022 2021

Rental and other property income

2 unchanged sentences

Variable lease payments (2)

2,633 1,243 5,106 2,148

Rental and other property income $ 14,194 $ 13,309 $ 28,290 $ 26,658

9 unchanged sentences

The Company does not use a general reserve approach.

As of March 31, 2022 and December 31, 2021, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $ 416,000 and $ 579,000 , respectively, across all operating leases.

As of June 30, 2022 and December 31, 2021, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $ 314,000 and $ 579,000 , respectively, across all operating leases.

Revenue from lending activities

15 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

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.

1 unchanged sentence

Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 16 (in thousands):

Three Months Ended March 31,

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

2022 2021 2022 2021

Hotel properties

9 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 months ended March 31, 2022 and 2021.

As of March 31, 2022, there were no remaining performance obligations associated with tenant recoveries outside of the lease agreements.

No such amounts were recognized for tenant recoveries outside of the lease agreements for each of the three and six months ended June 30, 2022 and 2021.

As of June 30, 2022, 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, 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 $ 9.8 million and $ 9.6 million as of March 31, 2022 and December 31, 2021, respectively.

Unamortized retained loan discounts were $ 9.8 million and $ 9.6 million as of June 30, 2022 and December 31, 2021, respectively.

At the closing of the merger in 2014 between CIM Urban REIT, LLC (“CIM REIT”), an affiliate of CIM Group, and certain of its subsidiaries and PMC Commercial Trust, the predecessor to the Company, 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 $ 330,000 and $ 381,000 remained as of March 31, 2022 and December 31, 2021, respectively.

Acquisition discounts of $ 321,000 and $ 381,000 remained as of June 30, 2022 and December 31, 2021, 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.

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

review of the ability of the borrower to make principal and interest payments, the underlying collateral and the borrowers’ business models and future operations.

For the three months ended March 31, 2022 and 2021, the Company recorded a net impairment losses of $ 0 and 92,000 , respectively, on its loans receivable.

There were no material loans receivable subject to credit risk which were considered to be impaired as of March 31, 2022 or December 31, 2021.

For the three and six months ended June 30, 2022, the Company recorded no net impairment losses on its loans receivable.

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.

There were no material loans receivable subject to credit risk which were considered to be impaired as of June 30, 2022 or December 31, 2021.

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.

4 unchanged sentences

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

As of March 31, 2022 and December 31, 2021, the Company had loan loss reserves of $ 980,000 and $ 943,000 , respectively.

As of June 30, 2022 and December 31, 2021, the Company had loan loss reserves of $ 954,000 and $ 943,000 , respectively.

Deferred Rent Receivable and Charges —Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 10) and other deferred costs.

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

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

Deferred offering costs represent direct costs incurred in connection with the Company’s offerings of Series A1 Preferred Stock (as defined below), Series A Preferred Units (as defined below), and, after January 2020, Series A Preferred Stock (as defined below) and Series D Preferred Stock (as defined below), excluding costs specifically identifiable to a closing, such as commissions, dealer-manager fees, and other offering fees and expenses.

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

2 unchanged sentences

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

As of March 31, 2022 and December 31, 2021, deferred rent receivable and charges consist of the following (in thousands):

March 31, 2022 December 31, 2021

As of June 30, 2022 and December 31, 2021, deferred rent receivable and charges consist of the following (in thousands):

June 30, 2022 December 31, 2021

Deferred rent receivable $ 21,260 $ 20,870

3 unchanged sentences

Deferred rent receivable and charges, net $ 36,474 $ 36,095

Redeemable Preferred Stock —Beginning on the date of original issuance of any given shares of Series A Preferred Stock or Series D Preferred Stock, and from and after the fifth anniversary date of the original issuance of the Series L Preferred Stock, the holder of such shares has the right to require the Company to redeem such shares, subject to certain limitations as discussed in Note 10.

The Company records the activity related to the Series A Preferred Warrants, Series D Preferred Stock and Series L Preferred Stock in permanent equity.

Redeemable Preferred Stock —Beginning on the date of original issuance of any given shares of Series A1 Preferred Stock, par value $ .001 per share (“Series A1 Preferred Stock”), with an initial stated value of $ 25.00 per share, subject to adjustment (the “Series A1 Preferred Stock Stated Value”), Series A Preferred Stock, par value $ 0.001 per share (“Series A Preferred Stock”) with an initial stated value of $ 25.00 per share, subject to adjustment (the “Series A Preferred Stock Stated Value”), or Series D Preferred Stock, par value $ 0.001 per share (“Series D Preferred Stock”), with an initial stated value of $ 25.00 per share, subject to adjustment (the “Series D Preferred Stock Stated Value”), and from and after the fifth anniversary date of the original issuance of the Series L Preferred Stock, the holder of such shares has the right to require the Company to redeem such shares, subject to certain limitations as discussed in Note 10.

The Company records the activity related to the Series A1 Preferred Stock, Series A Preferred Warrants, Series D Preferred Stock and Series L Preferred Stock in permanent equity.

In the event a holder of Series A Preferred Stock requests redemption of such shares and such redemption takes place prior to the first anniversary of the date of original issuance, the Company is required to pay such redemption in cash.

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.

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

result, the Company recorded issuances of Series A Preferred Stock in temporary equity.

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

Restricted Cash —The Company’s mortgage loan and hotel management agreements provide for depositing cash into restricted accounts reserved for capital expenditures, free rent, tenant improvement and leasing commission obligations.

25 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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

INVESTMENTS IN REAL ESTATE

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Land $ 149,144 $ 141,236

7 unchanged sentences

Net investments in real estate $ 502,607 $ 497,984

For the three months ended March 31, 2022 and 2021, the Company recorded depreciation expense of $ 4.2 million and $ 4.2 million.

2022 Transactions — During the three months ended March 31, 2022, the Company acquired a 100 % fee-simple interest in the following property from an unrelated third-party.

The purchase was accounted for as an asset acquisition.

Please see “Investments in Unconsolidated Entities” (Note 4) below for information on the Company’s acquisition of an approximate 44 % interest in an office property in February 2022.

For the three months ended June 30, 2022 and 2021, the Company recorded depreciation expense of $ 4.2 million and $ 4.2 million.

For the six months ended June 30, 2022 and 2021, the Company recorded depreciation expense of $ 8.4 million and $ 8.5 million.

2022 Transactions — During the six months ended June 30, 2022, the Company acquired a 100 % fee-simple interest in the following properties from unrelated third-parties.

The purchases were accounted for as asset acquisitions.

Please see “Investments in Unconsolidated Entities” (Note 4) for information on the Company’s acquisition of an approximate 44 % interest in an office property in February 2022.

Asset Date of Purchase

3 unchanged sentences

Multifamily (3)

May 20, 2022 6,000 $ 5,650

3101 S Western Avenue, Los Angeles, CA (2) (4)

Multifamily (4)

February 11, 2022 3,752 $ 2,260

(1) Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $ 191,000 , which are not included in the purchase price above.

(2) Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $ 14,000 , which are not included in the purchase price above.

(3) The property is located on a land site of approximately 28,300 square feet.

The Company intends to entitle the property and develop approximately 45 residential units.

There were no dispositions during the three months ended March 31, 2022.

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

The results of operations of the property the Company acquired have been included in the consolidated statements of operations from the date of acquisition.

The purchase price of the acquisition completed during the three months ended March 31, 2022 was less than 10% of the Company’s total assets as of the respective most recent annual consolidated financial statements filed at or prior to the date of acquisition.

The following table summarizes the purchase price allocation of the aforementioned acquisition during the three months ended March 31, 2022.

The Company intends to entitle the property and develop approximately 114 residential units starting in 2024.

(4) The property is located on a land site of approximately 11,300 square feet.

The Company intends to entitle the property and develop approximately 45 residential units starting in 2023.

There were no dispositions during the six months ended June 30, 2022.

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

The results of operations of the properties the Company acquired have been included in the consolidated statements of operations from the date of acquisition.

The purchase price of the acquisitions completed during the six months ended June 30, 2022 were less than 10% of the Company’s total assets as of the respective most recent annual consolidated financial statements filed at or prior to the date of acquisitions.

The following table summarizes the purchase price allocation of the aforementioned acquisitions during the six months ended June 30, 2022.

(in thousands)

Land improvements 52

Buildings and improvements 156

Net assets acquired $ 8,115

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

INVESTMENTS IN UNCONSOLIDATED ENTITIES

INVESTMENT IN UNCONSOLIDATED ENTITY

The following table details the Company’s equity method investments in unconsolidated entities.

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Carrying Value

Property Asset Type Location Date of Acquisition Ownership Interest March 31, 2022 December 31, 2021

1910 Sunset Blvd (1)

Property Asset Type Location Date of Acquisition Ownership Interest June 30, 2022 December 31, 2021

1910 Sunset Boulevard (1)

Office Los Angeles, CA February 11, 2022 44 % $ 22,788 $ —

______________________

(1) 1910 Sunset Blvd is an office building with 97,564 square feet of office space and 2,760 square feet of retail space.

(1) 1910 Sunset Boulevard is an office building with 97,002 square feet of office space and 2,760 square feet of retail space.

The Unconsolidated Joint Venture plans to undertake a capital improvement program to renovate and modernize the building into creative office space as well as a limited number of multifamily units.

The Company did no t receive any distributions from the Unconsolidated Joint Venture during the three months ended March 31, 2022.

The Company did no t receive any distributions from the Unconsolidated Joint Venture during the six months ended June 30, 2022.

LOANS RECEIVABLE

Loans receivable consist of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

SBA 7(a) loans receivable, subject to credit risk $ 44,582 $ 42,103

12 unchanged sentences

SBA 7(a) Loans Receivable, Paycheck Protection Program —As an SBA 7(a) licensee, the Company originated loans under the PPP.

As of March 31, 2022, a significant portion of these loans have been either forgiven or repaid, and the Company expects that all of the outstanding PPP loans will be forgiven, either in part or in full, by the SBA or be repaid by the borrower, including both principal and accrued interest.

As of June 30, 2022, substantially all of the loans originated under the PPP have been satisfied in full.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

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

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

As of March 31, 2022 and December 31, 2021, the Company’s loans subject to credit risk were 99.9 % and 99.8 %, respectively, concentrated in the hospitality industry.

As of March 31, 2022 and December 31, 2021, 100.0 % and 100.0 %,

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

respectively, of the Company’s loans subject to credit risk were current.

As of June 30, 2022 and December 31, 2021, the Company’s loans subject to credit risk were 99.9 % and 99.8 %, respectively, concentrated in the hospitality industry.

As of June 30, 2022 and December 31, 2021, 100.0 % and 100.0 %, respectively, of the Company’s loans subject to credit risk were current.

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

As of March 31, 2022 and December 31, 2021, $ 1.0 million and $ 1.1 million, respectively, of loans subject to credit risk were classified in substandard categories.

As of June 30, 2022 and December 31, 2021, $ 1.0 million and $ 1.1 million, respectively, of loans subject to credit risk were classified in substandard categories.

OTHER INTANGIBLE ASSETS AND LIABILITIES

A schedule of the Company’s intangible assets and liabilities and related accumulated amortization and accretion as of March 31, 2022 and December 31, 2021 is as follows (in thousands):

March 31, 2022 December 31, 2021

A schedule of the Company’s intangible assets and liabilities and related accumulated amortization and accretion as of June 30, 2022 and December 31, 2021 is as follows (in thousands):

June 30, 2022 December 31, 2021

Intangible assets:

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

During the three months ended March 31, 2022 and 2021, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):

Three Months Ended March 31,

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

During the three and six months ended June 30, 2022 and 2021, 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,

2022 2021 2022 2021

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

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Acquired below-market lease amortization $ 60 $ 84 $ 129 $ 199

A schedule of future amortization and accretion of acquired intangible assets and liabilities as of March 31, 2022, is as follows (in thousands):

A schedule of future amortization and accretion of acquired intangible assets and liabilities as of June 30, 2022, is as follows (in thousands):

Assets Liabilities

2 unchanged sentences

Leases Acquired

2022 (Nine months ending December 31, 2022) $ 9 $ 574 $ ( 166 )

2022 (Six months ending December 31, 2022) $ 6 $ 379 $ ( 106 )

2023 9 469 ( 2 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

The following table summarizes the debt balances as of March 31, 2022 and December 31, 2021, and the debt activity for the three months ended March 31, 2022 (in thousands):

During the Three Months Ended March 31, 2022

Balances as of December 31, 2021 Debt Issuances & Assumptions Repayments Accretion & (Amortization) Balances as of March 31, 2022

June 30, 2022 (Unaudited) – (Continued)

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

During the Six Months Ended June 30, 2022

Balances as of December 31, 2021 Debt Issuances & Assumptions Repayments Accretion & (Amortization) Balances as of June 30, 2022

Mortgage Payable:

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

As of March 31, 2022, 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 June 30, 2022, the Company’s mortgage payable had a fixed interest rate of 4.14 % per annum, with monthly payments of interest only, due on July 1, 2026.

The loan is nonrecourse.

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

As of March 31, 2022, the Company’s secured borrowings-government guaranteed loans included $ 3.7 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 3.88 %, and $ 2.6 million of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.56 %.

As of June 30, 2022, the Company’s secured borrowings-government guaranteed loans included $ 3.7 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 4.13 %, and $ 2.6 million of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.81 %.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

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

As of March 31, 2022 and December 31, 2021, the variable interest rate was 2.49 % and 2.15 %, respectively.

As of June 30, 2022 and December 31, 2021, the variable interest rate was 3.72 % and 2.15 %, 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.

2 unchanged sentences

The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions, including providing notice of the election and paying an extension fee of 0.15 % of each lender’s commitment being extended on the effective date of such extension.

The Company expects to extend its maturity to October 2023, subject to satisfying such conditions, and/or refinance such indebtedness.

As of March 31, 2022 and December 31, 2021, $ 90.0 million and $ 60.0 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $ 106.2 million and $ 117.6 million, respectively, was available for future borrowings.

2020 Unsecured Revolving Credit Facility —In May 2020, the Company entered into an unsecured revolving credit facility with a bank (the “2020 unsecured revolving credit facility”) pursuant to which the Company can borrow up to a maximum of $ 10.0 million.

Outstanding advances under the 2020 unsecured revolving credit facility bear interest at the rate of 1.00 %.

The Company also pays a revolving credit facility fee of 1.12 % with each advance under the 2020 unsecured revolving credit facility, which fee is subject to a cap of $ 112,000 in the aggregate.

The Company is working with a bank to refinance the 2018 revolving credit facility prior to its maturity date.

There can, however, be no assurance that such refinancing will occur.

In the interim, in order to preserve flexibility with respect to the Company’s liquidity, the Company submitted an extension notice in July 2022 to extend the maturity of the 2018 Revolving Credit Facility to October 2023.

The extension is subject to the satisfaction of certain conditions that the Company expects to be able to satisfy (if the refinancing does not occur).

As of June 30, 2022 and December 31, 2021, $ 75.0 million and $ 60.0 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $ 125.9 million and $ 117.6 million, respectively, was available for future borrowings.

Outstanding advances under the 2020 unsecured revolving credit facility bore interest at the rate of 1.00 %.

The 2020 unsecured revolving credit facility contains certain customary covenants including a maximum leverage ratio and a minimum fixed charge coverage ratio, as well as certain other conditions.

The 2020 unsecured revolving credit facility matured on May 1, 2022.

As of March 31, 2022, 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.

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The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40 % or the prime rate less 1.08 %.

As of March 31, 2022 and December 31, 2021, the variable interest rate was 1.56 % and 1.49 %, respectively.

As of June 30, 2022 and December 31, 2021, the variable interest rate was 3.00 % and 1.49 %, respectively.

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 $ 2.0 million and $ 1.9 million as of March 31, 2022 and December 31, 2021, respectively.

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 $ 1.9 million as of June 30, 2022 and December 31, 2021, 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.

4 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).

As of March 31, 2022 and December 31, 2021, $ 3.7 million and $ 5.0 million, respectively, was outstanding under the PPPLF.

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

As of June 30, 2022 and December 31, 2021, $ 205,000 and $ 5.0 million, respectively, was outstanding under the PPPLF.

As the PPP has ended, no new extensions of credit may be made under the PPPLF and, as of June 30, 2022, substantially all obligations to the Federal Reserve have been satisfied.

Deferred debt issuance 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, approximating the effective interest method.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

As of March 31, 2022 and December 31, 2021, accrued interest and unused commitment fees payable of $ 473,000 and $ 467,000 , respectively, were included in accounts payable and accrued expenses.

Future principal payments on the Company’s debt (face value) as of March 31, 2022 are as follows (in thousands):

June 30, 2022 (Unaudited) – (Continued)

As of June 30, 2022 and December 31, 2021, accrued interest and unused commitment fees payable of $ 652,000 and $ 467,000 , respectively, were included in accounts payable and accrued expenses.

Future principal payments on the Company’s debt (face value) as of June 30, 2022 are as follows (in thousands):

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

2018 Revolving Credit Facility Other (1) (2)

2022 (Nine months ending December 31, 2022) $ — $ 370 $ 90,000 $ 1,797 $ 92,167

2022 (Six months ending December 31, 2022) $ — $ 365 $ 75,000 $ 682 $ 76,047

2023 — 376 — 243 619

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May 2021 (3) 5,083 20,332

June 2022 June 2023 7,746 30,984

______________________

(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 Stock in the amount of $ 55,000 and $ 60,000 for the three months ended March 31, 2022 and 2021, respectively.

The Company recorded compensation expense related to these restricted shares of Common Stock in the amount of $ 37,000 and $ 50,000 for the three months ended June 30, 2022 and 2021, respectively, and $ 92,000 and $ 110,000 for the six months ended June 30, 2022 and 2021, respectively.

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

(3) These shares will vest after one year of continuous service, other than the shares granted to Mr.

Frank Golay, Jr., a former independent director of the Company, which vested on May 2, 2022.

(3) These shares vested after one year of continuous service, other than the shares granted to Mr.

Frank Golay, Jr., a former independent director of the Company, which vested on April 29, 2022.

Golay retired from the Board on May 2, 2022 and, in recognition of his service to the Company, the Board accelerated the vesting of Mr.

Golay’s shares.

As of March 31, 2022, there was $ 18,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized ratably over the remaining vesting period.

EARNINGS PER SHARE ("EPS")

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

In order to calculate the diluted weighted average number of shares of Common Stock outstanding for the three months ended March 31, 2022, the

As of June 30, 2022, there was $ 202,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized ratably over the remaining vesting period.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

basic weighted average number of shares of Common Stock outstanding was increased by 2,477 shares to reflect the dilutive effect of certain shares of the Company’s Series A Preferred Stock, while no shares of Series A Preferred Stock outstanding as of March 31, 2021 were included in the computation of diluted EPS because they had no dilutive effect.

No shares of Series D Preferred Stock outstanding as of March 31, 2022 or 2021 were included in the computation of diluted EPS because they had no dilutive effect.

Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three months ended March 31, 2022 and 2021 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 11).

Outstanding shares of Series L Preferred Stock were not included in the computation of diluted EPS for the three months ended March 31, 2022 and 2021 because such shares were not redeemable during such periods.

June 30, 2022 (Unaudited) – (Continued)

EARNINGS PER SHARE ("EPS")

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

No shares of Series D Preferred Stock, Series A Preferred Stock, or Series A1 Preferred Stock outstanding as of June 30, 2022 or 2021 were included in the computation of diluted EPS because they had no dilutive effect.

Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three and six months ended June 30, 2022 and 2021 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 11).

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, 2022 and 2021 because such shares were not redeemable during such periods.

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

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

The following table reconciles the numerator and denominator used in computing the Company’s basic and diluted per-share amounts for net loss attributable to common stockholders for the three months ended March 31, 2022 and 2021 (in thousands, except per share amounts):

Three Months Ended March 31,

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, 2022 and 2021 (in thousands, except per share amounts):

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

2022 2021 2022 2021

Net loss attributable to common stockholders $ ( 2,349 ) $ ( 4,210 ) $ ( 5,160 ) $ ( 12,416 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

REDEEMABLE PREFERRED STOCK

The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three months ended March 31, 2022 and 2021 (dollar amounts in thousands):

The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three and six months ended June 30, 2022 and 2021 (dollar amounts in thousands):

Preferred Stock

Series A Series D Series L Total

Shares Amount Shares Amount Shares Amount Shares Amount

Series A1 Series A Series D Series L Total

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

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

3 unchanged sentences

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

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

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

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

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

Balances, December 31, 2021 — $ — 6,271,337 $ 156,431 56,857 $ 1,396 5,387,160 $ 152,834 11,715,354 $ 310,661

Issuance of Series D Preferred Stock — — — — — — — — — —

Reclassification of Series A Preferred stock to Perm Equity 329,921 8,304 — — — — 329,921 8,304

Reclassification of Series A Preferred stock to permanent equity — — 329,921 8,304 — — — — 329,921 8,304

Redemption of Series A Preferred Stock — — ( 49,341 ) ( 1,228 ) — — — — ( 49,341 ) ( 1,228 )

Balances, March 31, 2022 — $ — 6,551,917 $ 163,507 56,857 $ 1,396 5,387,160 $ 152,834 11,995,934 $ 317,737

As of March 31, 2022, the Company had issued in registered public offerings 7,949,521 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 $ 200.1 million ($ 197.9 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 568,681 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 $ 16.6 million ($ 16.4 million of which was allocated to the Series A Preferred Stock, $ 142,000 of which was allocated to the Series A Preferred Warrants, and $ 35,000 of which was allocated to the Series D Preferred Stock).

In addition, as of March 31, 2022, non-issuance-specific costs related to this offering totaled $ 8.2 million.

As of March 31, 2022, the Company had reclassified and allocated $ 1.8 million, $ 5,000 and $ 13,000 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 March 31, 2022, there were 8,245,566 shares of Series A Preferred Stock outstanding, 4,458,589 Series A Preferred Warrants to purchase 1,156,393 shares of Common Stock outstanding, and 56,857 shares of Series D Preferred Stock outstanding.

As of March 31, 2022, 272,636 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.

Issuance of Series A1 Preferred Stock 192,440 4,770 — — — — — — 192,440 4,770

Reclassification of Series A Preferred stock to permanent equity — — 430,082 10,857 — — — — 430,082 10,857

Redemption of Series A Preferred Stock — — ( 88,225 ) ( 2,188 ) — — — — ( 88,225 ) ( 2,188 )

Balances, June 30, 2022 192,440 $ 4,770 6,893,774 $ 172,176 56,857 $ 1,396 5,387,160 $ 152,834 12,530,231 $ 331,176

As of June 30, 2022, the Company had issued in registered public offerings 192,440 shares of Series A1 Preferred Stock, 8,251,657 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 $ 212.3 million ($ 4.8 million of which was allocated to the Series A1 Preferred Stock, $ 205.4 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 568,681 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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

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

Net proceeds from the issuance of shares of Series A Preferred Stock are initially recorded in temporary equity at an amount equal to the gross proceeds allocated to such shares of Series A Preferred Stock minus the costs specifically identifiable to the issuance of such shares and the non-issuance specific offering costs allocated to such shares.

If the net proceeds from the issuance of shares of Series A Preferred Stock are less than the redemption value of such shares at the time they are issued, or if the redemption value of such shares subsequently becomes greater than the carrying value of such shares, an adjustment is recorded to increase the carrying amount of such shares to their redemption value as of the balance sheet date.

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

For the three months ended March 31, 2022 and 2021, the Company recorded redeemable preferred stock deemed divid ends of $ 15,000 and $ 57,000 , respectively, related to such adjustments.

June 30, 2022 (Unaudited) – (Continued)

Preferred Warrants and Series D Preferred Stock, such as commissions, dealer manager fees and other offering fees and expenses, totaled $ 17.5 million ($ 356,000 of which was allocated to the Series A1 Preferred Stock, $ 17.0 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 June 30, 2022, non-issuance-specific costs related to this offering totaled $ 8.6 million.

As of June 30, 2022, the Company had reclassified and allocated $ 60,000 , $ 1.9 million, $ 5,000 and $ 13,000 from deferred charges to Series A1 Preferred Stock, 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, 2022, there were 192,440 shares of Series A1 Preferred Stock outstanding, 8,459,477 shares of Series A Preferred Stock outstanding, 4,294,512 Series A Preferred Warrants to purchase 1,113,569 shares of Common Stock outstanding, and 56,857 shares of Series D Preferred Stock outstanding.

As of June 30, 2022, no shares of Series A1 Preferred Stock, 360,861 shares of Series A Preferred Stock and no shares of Series D Preferred Stock had been redeemed.

Series A1 Preferred Stock —Since June 2022, the Company has been conducting a continuous public offering with respect to shares of its Series A1 Preferred Stock, par value $ 0.001 per share with an initial stated value of $ 25.00 per share, subject to adjustment.

Shares of Series A1 Preferred Stock are recorded in permanent equity at the time of their issuance.

Series A Preferred Stock —The Company conducted a continuous public offering of Series A Preferred Units (with each unit (“Series A Preferred Unit”) consisting of one share of Series A Preferred Stock and, initially, one warrant (“Series A Preferred Warrant”) to purchase 0.25 of a share of Common Stock, subject to adjustment) 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.

From February 2020 through June 2022, the Company conducted a continuous public offering with respect to shares of the Company’s Series A Preferred Stock, which, since February 2020, was no longer being issued as a unit with an accompanying Series A Preferred Warrant.

In June 2022, the Company concluded the offering of Series A Preferred Stock.

Net proceeds from the issuance of shares of Series A Preferred Stock were initially recorded in temporary equity at an amount equal to the gross proceeds allocated to such shares of Series A Preferred Stock minus the costs specifically identifiable to the issuance of such shares and the non-issuance specific offering costs allocated to such shares.

If the net proceeds from the issuance of shares of Series A Preferred Stock were less than the redemption value of such shares at the time they were issued, or if the redemption value of such shares subsequently becomes greater than the carrying value of such shares, an adjustment was recorded to increase the carrying amount of such shares to their redemption value as of the balance sheet date.

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

For the three and six months ended June 30, 2022, the Company recorded redeemable preferred stock deemed divid ends of $ 4,000 and $ 19,000 , respectively, related to such adjustments.

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

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

As of March 31, 2022, the Company had reclassified an aggregate of $ 153.9 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.

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.

Shares of Series D Preferred Stock are recorded in permanent equity at the time of their issuance.

As of June 30, 2022, the Company had reclassified an aggregate of $ 163.6 million in net proceeds from temporary equity to permanent equity.

Series D Preferred Stock —From February 2020 through June 2022, the Company conducted a continuous public offering with respect to shares of its Series D Preferred Stock, par value $ 0.001 per share, subject to adjustment.

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 $ 24.50 per share thereafter.

Shares of Series D Preferred Stock were recorded in permanent equity at the time of their issuance.

In June 2022, the Company concluded the offering of Series D Preferred Stock.

Series L Preferred Stock —On November 21, 2017, the Company issued 8,080,740 shares of Series L Preferred Stock having an initial stated value of $ 28.37 per share (“Series L Preferred Stock Stated Value”), subject to adjustment.

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

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

As of March 31, 2022 and December 31, 2021 , the Company was in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.

Refer to Note 13 for a discussion of certain payments the Company has made in shares of Common Stock and in shares of Preferred Stock and may make in shares of Preferred Stock in lieu of cash payments in order to remain in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.

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

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

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

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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As of June 30, 2022 and December 31, 2021 , the Company was in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.

Dividends —With respect to the payment of dividends, the Series A1 Preferred Stock, as well as the Series A Preferred Stock and Series D Preferred Stock, ranks senior to the Series L Preferred Stock and the Common Stock.

The Series L Preferred Stock ranks senior to the Common Stock (except with respect to and only to the extent of the Initial Dividend) and junior to the Series A Preferred Stock, Series 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 A1 Preferred Stock ranks on parity with the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, to the extent of the Series L Preferred Stock Stated Value, and otherwise ranks senior to the Series L Preferred Stock and the Common Stock.

With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series L Preferred Stock ranks senior to the Common Stock, both (i) to the extent of the Series L Preferred Stock Stated Value and (ii) following payment to holders of the Common Stock of an amount equal to any unpaid Initial Dividend, to the extent of any accrued and unpaid dividends on the Series L Preferred Stock, on parity with the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock, to the extent of the Series L Preferred Stock Stated Value and junior to the Series A1 Preferred Stock, Series A Preferred Stock, Series D Preferred Stock and Common Stock (to the extent of the Initial Dividend), in all instances with respect to any accrued and unpaid dividends on the Series L Preferred Stock.

Holders of Series A1 Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends (“Series A1 Dividend”) on each share of Series A1 Preferred Stock at the greater of (i) an annual rate of 6.0 % of the Series A1 Preferred Stock Stated Value (i.e., the equivalent of $ 0.3750 per share per quarter) and (ii) the Federal Funds (Effective) Rate for such quarter and plus 2.5 % of the Series A1 Preferred Stock Stated Value divided by four, up to a maximum of 2.5 % of the Series A1 Preferred Stock Stated Value per quarter.

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

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Dividends on each share of Series A Preferred Stock and Series D Preferred Stock begin accruing on, and are cumulative from, the date of issuance.

The Company expects to pay the Series A Dividend and Series D Dividend in arrears on a monthly basis in accordance with the foregoing provisions, unless the Company’s results of operations, general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so.

The timing and amount of the Series A Dividend and the Series D Dividend will be determined by the Company’s Board of Directors, in its sole discretion, and may vary from time to time.

The Company expects to pay the Series A1 Dividend, Series A Dividend and Series D Dividend in arrears on a monthly basis in accordance with the foregoing provisions, unless the Company’s results of operations, general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so.

The timing and amount of the Series A1 Dividend, Series A Dividend and the Series D Dividend will be determined by the Company’s Board of Directors, in its sole discretion, and may vary from time to time.

Holders of Series L Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends on each share of Series L Preferred Stock at an annual rate of 5.50 % of the Series L Preferred Stock Stated Value (i.e., the equivalent of $ 1.56035 per share per year).

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If the Company fails to timely declare distributions or fails to timely pay distributions on the Series L Preferred Stock, the annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.00 % per year, up to a maximum rate of 8.50 % per annum.

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 29, 2021, the Company announced an Initial Dividend on shares of its Common Stock for fiscal year 2022 in the aggregate amount of $ 7,010,799 , of which $ 1,986,000 had been paid as of March 31, 2022.

During the three months ended March 31, 2022, the Company paid $ 2.7 million, $ 20,000 and $ 8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively.

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

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

The redemption schedule of the Series A Preferred Stock and Series D Preferred Stock allows redemptions at the option of the holder of Series A Preferred Stock or Series D Preferred Stock from the date of original issuance of any such shares at the Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, less a redemption fee applicable prior to the fifth anniversary of the issuance of such shares, plus accrued and unpaid dividends.

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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 29, 2021, the Company announced an Initial Dividend on shares of its Common Stock for fiscal year 2022 in the aggregate amount of $ 7,010,799 , of which $ 3,972,000 had been paid as of June 30, 2022.

During the six months ended June 30, 2022, the Company paid $ 5.6 million, $ 40,000 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, 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.

Redemptions —The Company’s Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock are redeemable at the option of the holder or the Company.

The redemption schedule of the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock allows redemptions at the option of the holder of Series A1 Preferred Stock, Series A Preferred Stock or Series D Preferred Stock from the date of original issuance of any such shares at the Series A1 Preferred Stock Stated Value, Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, less a redemption fee applicable prior to the fifth anniversary of the issuance of such shares, plus accrued and unpaid dividends.

The Company has the right to redeem the Series A1 Preferred Stock after the date that is twenty-four months following the original issuance of such shares of Series A1 Preferred Stock at the Series A1 Preferred Stock Stated Value, plus accrued and unpaid dividends.

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

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

With respect to redemptions of the Series A1 Preferred Stock, Series A Preferred Stock or Series D Preferred Stock, 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.

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

STOCKHOLDERS’ EQUITY

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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 declared in respect of the three months ended March 31, 2022 and 2021 consist of the following:

Consequently, the dividend rate on a quarterly basis

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

does not necessarily correlate directly to any individual factor.

Cash dividends per share of Common Stock declared in respect of the six months ended June 30, 2022 and 2021 consist of the following:

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

June 10, 2022 July 5, 2022 Regular Quarterly $ 0.085

March 8, 2022 April 1, 2022 Regular Quarterly $ 0.085

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

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

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As of March 31, 2022, the Company had 4,458,589 Series A Preferred Warrants outstanding to purchase 1,156,393 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $ 606,000 , after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.

As of June 30, 2022, the Company had 4,294,512 Series A Preferred Warrants outstanding to purchase 1,113,569 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $ 584,000 , after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.

Share Repurchase Program

In May 2022, the Company’s Board of Directors approved a repurchase program of up to $ 10.0 million of the Company’s Common Stock (the “SRP”).

Under the SRP, the Company, in its discretion, may purchase shares of its Common Stock from time to time in the open market or in privately negotiated transactions.

The amount and timing of purchases of shares will depend on a number of factors, including, without limitation, the price and availability of shares, trading volume, general market conditions and compliance with applicable securities law.

The SRP has no termination date and may be suspended or discontinued at any time.

As of June 30, 2022, share repurchases executed under the SRP were as follows:

Period Shares Repurchased Average price paid per share Cumulative amount of shares repurchased

(in thousands)

Three months ended June 30, 2022

41,374 $ 7.32 $ 303

FAIR VALUE OF FINANCIAL INSTRUMENTS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

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.

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 f or 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.

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

Investment in Unconsolidated Entity —The Company has elected the FVO for its equity method investment and, therefore, reports this investment at fair value.

To determine the fair value of the assets and liabilities of its equity method investment, the Company utilizes a discounted cash flow methodology, taking into consideration various factors including discount rate and exit capitalization rate.

After the fair value of the assets and liabilities are determined, the Company applies its ownership interest to the net asset value and reflects this amount as its equity method investment at fair value on the consolidated balance sheet.

The inputs used in determining the Company’s equity method investments carried at fair value are considered Level 3.

As the investment in the Unconsolidated Joint Venture was made in February 2022, the Company carried the investment at cost as of March 31, 2022 as it believes this approximates fair value.

Debt —The carrying amounts of the Company’s secured borrowings—government guaranteed loans, SBA 7(a) loan-backed notes, 2018 Revolving Credit Facility and borrowed funds from the Federal Reserve through the PPPLF approximate their fair values, as the interest rates on these securities are variable and approximate current market interest rates.

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

When estimating the fair value of the Company’s mortgages payable as of March 31, 2022 and December 31, 2021, the Company used a rate of 4.42 % and 3.22 %, respectively.

The rate used to estimate the fair value of the Company’s junior subordinated notes was 5.21 % and 4.46 % as of March 31, 2022 and December 31, 2021, respectively.

When estimating the fair value of the Company’s mortgages payable as of June 30, 2022 and December 31, 2021, the Company used a rate of 5.23 % and 3.22 %, respectively.

The rate used to estimate the fair value of the Company’s junior subordinated notes was 6.54 % and 4.46 % as of June 30, 2022 and December 31, 2021, respectively.

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

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Discount Rate Prepayment Rate Discount Rate Prepayment Rate

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5.00 % - 17.50 %

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Other Financial Instruments —The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to their short-term maturities at March 31, 2022 and December 31, 2021.

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

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

March 31, 2022 December 31, 2021

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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June 30, 2022 December 31, 2021

Amount Estimated

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(1) The carrying amounts for the mortgage payable and junior subordinated notes represents the principal outstanding amounts, excluding deferred debt issuance costs and discounts.

The estimated fair values of those financial instruments which are recorded at fair value on a recurring basis on the Company’s consolidated balance sheets are as follows (dollar amounts in thousands):

Estimated Fair Value

March 31, 2022 December 31, 2021 Level

Investment in unconsolidated entity (1) $ 22,528 $ — 3

______________________

(1) Represents the Company’s equity-method investment in 1910 Sunset Blvd which was acquired in February 2022 and was carried at cost as of March 31, 2022.

The following table details the Company’s share of the Unconsolidated Joint Venture measured at fair value on a recurring basis using Level 3 inputs ($ in thousands):

Investment in Unconsolidated Entity

Balance as of December 31, 2021 $ —

Purchases 22,408

Income from unconsolidated entity 120

Balance as of March 31, 2022 $ 22,528

RELATED-PARTY TRANSACTIONS

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CIM Capital has assigned its duties under the Investment Management Agreement to its four wholly-owned subsidiaries:

CIM Capital Securities

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Management, LLC, a securities manager, CIM Capital RE Debt Management, LLC, a debt manager, CIM Capital Controlled Company Management, LLC, a controlled company manager, and CIM Capital Real Property Management, LLC, a real property manager.

CIM Capital Securities Management, LLC, a securities manager, CIM Capital RE Debt Management, LLC, a debt manager, CIM Capital Controlled Company Management, LLC, a controlled company manager, and CIM Capital Real Property Management, LLC, a real property manager.

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

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Pursuant to the Fee Waiver, the Administrator agreed to voluntarily waive any fees in excess of those set forth in the Fee Waiver, to the extent it would otherwise have been entitled to such additional compensation under the Master Service Agreement, and the Operator agreed to voluntarily waive any fees in excess of those set forth in the Fee Waiver, to the extent it would otherwise have been entitled to such additional compensation under the Investment Management Agreement.

Following the end of each quarter, the Administrator will deliver to the Company (i) a calculation of the cumulative fees earned by the Operator and the Administrator under the methodology prescribed by the Fee Waiver from the Effective Date through the end of such quarter and (ii) a calculation of the cumulative fees that would have been earned by the Operator and the Administrator during such period under the Master Services Agreement and the Investment Management Agreement without giving effect to the Fee Waiver.

If, in respect of any quarter, the aggregate fees that are payable under the methodology prescribed by the Fee Waiver exceed the aggregate fees that would have been payable under the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver, such quarter will be deemed an “Excess Quarter”.

For any quarter following an Excess Quarter, the Company (upon the direction of the independent members of the Board) may, at its option and upon written notice to Administrator, elect to calculate all fees due to the Administrator and the Operator in accordance with the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver, from and after such Excess Quarter.

Any such election by the Company will be irrevocable, and all fees due to the Administrator and the Operator from and after such election will be calculated in accordance with the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

The fees payable to the Operator and the Administrator are determined as follows under the Fee Waiver.

A base asset management fee (the “Base Fee”) is payable quarterly in arrears to the Operator in an amount equal to an annual rate of 1 % (or 0.25 % per quarter) of the average of the “Net Asset Value Attributable to Common Stockholders” as of the first and last day of the applicable quarter.

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Realized capital gains and realized capital losses are calculated by subtracting from the sales price of a property:

(a) any costs incurred to sell such property, and (b) the current gross value of the property (meaning the property’s

(a) any costs incurred to sell such property, and (b) the current gross value of the property (meaning the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements thereon paid for by the Company).

In lieu of cash payment of the Base Fee, the Company has issued to the Operator shares of its Series A1 Preferred Stock in July 2022 as payment for the quarterly Base Fee for the three months ended March 31, 2022.

Subject to applicable laws and regulations under Nasdaq and TASE and the agreement of the Operator, and it is likely the Company will issue shares of its Series A1 Preferred Stock in lieu of cash payment of the Base Fee for the remainder of 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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original acquisition price plus any subsequent, non-reimbursed capital improvements thereon paid for by the Company).

Following the end of each quarter, the Administrator will deliver to the Company (i) a calculation of the cumulative fees earned by the Operator and the Administrator under the methodology prescribed by the Fee Waiver (the “Fee Waiver Methodology”) from the Effective Date through the end of such quarter and (ii) a calculation of the cumulative fees that would have been earned, in the absence of the Fee Waiver, by the Operator and the Administrator during such period under the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver (the “Prior Methodology”).

If, in respect of any quarter, the aggregate fees that are payable under the Fee Waiver Methodology exceed the aggregate fees that would have been payable under the Prior Methodology for the equivalent period, such quarter is deemed an “Excess Quarter”.

For any quarter following an Excess Quarter, the Company (upon the direction of the independent members of the Board) may, at its option and upon written notice to Administrator, elect to calculate all fees due to the Administrator and the Operator in accordance with the Prior Methodology from and after such Excess Quarter.

Any election by the Company to adopt the Prior Methodology is irrevocable, and all fees due to the Administrator and the Operator from and after such election will be calculated in accordance with the Prior Methodology .

Pursuant to the Investment Management Agreement, the asset management fee prior to January 1, 2022 (the “Prior Asset Management Fee”) was calculated as a percentage of the daily average adjusted fair value of CIM Urban’s assets as follows (dollar amounts in thousands):

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Pursuant to the Investment Management Agreement, the asset management fee prior to January 1, 2022 fee was calculated (without giving effect to the Fee Waiver) as a percentage of the daily average adjusted fair value of CIM Urban’s assets as follows (dollar amounts in thousands):

Daily Average Adjusted Fair

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$ 4,000,000 $ 20,000,000 0.1000 %

In lieu of cash payment of the Prior Asset Management Fee, the Company has issued to the Operator shares of its Series A Preferred Stock.

Subject to applicable laws and regulations under Nasdaq and the TASE and the agreement of the Operator, the Company will issue shares of its Series A Preferred Stock to the Operator as payment for the quarterly Prior Asset Management Fee for the quarter ended December 31, 2021.

In lieu of cash payment, the Company has issued to the Operator shares of its Series A1 Preferred Stock in July 2022 as payment for the quarterly asset management fee for the three months ended December 31, 2021.

Under the Master Services Agreement, for fiscal quarters prior to April 1,2020, the Company paid a base service fee (the “Base Service Fee”) to the Administrator initially set at $ 1.0 million per year (subject to an annual escalation by a specified inflation factor beginning on January 1, 2015), payable quarterly in arrears.

On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with an incentive fee (the “Prior Incentive Fee”) pursuant to which the Administrator was entitled to receive, on a quarterly basis, 15.00 % of the Company’s quarterly core funds from operations in excess of a quarterly threshold equal to 1.75 % (i.e., 7.00 % on an annualized basis) of the Company’s average Adjusted Common Equity (defined above) for such quarter.

On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with an incentive fee pursuant to which the Administrator was entitled to receive, on a quarterly basis, 15.00 % of the Company’s quarterly core funds from operations in excess of a quarterly threshold equal to 1.75 % (i.e., 7.00 % on an annualized basis) of the Company’s average Adjusted Common Equity (defined above) for such quarter.

The amendment was effective as of April 1, 2020 and was further modified by the Fee Waiver described above.

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

During the three months ended March 31, 2022 and 2021, 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.

No such incentive fee was paid by the Company.

During the six months ended June 30, 2022 and 2021, 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 the Company and its subsidiaries).

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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.

Property management fees earned by the CIM Management entities and onsite

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

management costs incurred on behalf of CIM Urban are included in rental and other property operating expenses in the accompanying consolidated statements of operations.

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.

Leasing commissions earned are capitalized to deferred charges on the accompanying consolidated balance sheets.

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The Company’s offering of the Series A Preferred Units ended at the end of January 2020.

On January 28, 2020, the Company entered into the Second Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital acts as the exclusive dealer manager for the Company’s public offering of its Series A Preferred Stock and Series D Preferred Stock.

On January 28, 2020, the Company entered into the Second Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital acted as the exclusive dealer manager for the Company’s public offering of its Series A Preferred Stock and Series D Preferred Stock.

Thereunder, the Company agreed to compensate CCO Capital, as the dealer manager for the offering, as follows:

(1) an upfront dealer manager fee of up to 1.25 % of the selling price of each share of Preferred Stock sold, (2) selling commissions of up to 5.50 % of the selling price of each share of Series A Preferred Stock sold (with no selling commissions payable in respect of shares of Series D Preferred Stock sold) and (3) a trailing dealer manager fee that accrues daily in an amount equal to 1/365 th of 0.25 % per annum of the selling price of each share of Preferred Stock sold.

(1) an upfront dealer manager fee of up to 1.25 % of the selling price

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

of each share of Preferred Stock sold, (2) selling commissions of up to 5.50 % of the selling price of each share of Series A Preferred Stock sold (with no selling commissions payable in respect of shares of Series D Preferred Stock sold) and (3) a trailing dealer manager fee that accrues daily in an amount equal to 1/365 th of 0.25 % per annum of the selling price of each share of Preferred Stock sold.

CCO Capital, in its sole discretion, may reallow to another broker-dealer authorized by it to sell shares in the offering a portion of the upfront dealer manager fee earned by it in respect of shares sold by such broker-dealer.

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1 to the Second Amended and Restated Dealer Manager Agreement, pursuant to which the selling commissions were increased from up to 5.50 % to up to 7.00 % of the selling price of each share of Series A Preferred Stock sold thereafter.

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.

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

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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

On June 16, 2022, the Company entered into the Third Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital acts as the exclusive dealer manager for the Company’s public offering of its Series A1 Preferred Stock.

Thereunder, the Company agreed to compensate CCO Capital, as the dealer manager for the offering, as follows:

(1) a dealer manager fee of up to 3.00 % of the selling price of each share of Series A1 Preferred Stock sold and (2) selling commissions of up to 7.00 % of the selling price of each share of Series A1 Preferred Stock sold.

The Company has been informed that CCO Capital generally reallows 100 % of the selling commissions on sales of Series A1 Preferred Stock and generally reallows substantially all of the dealer manager fee on sales of Series A1 Preferred Stock, to participating broker-dealers.

In addition, pursuant to the Third Amended and Restated Dealer Manager Agreement, CCO Capital will not solicit or make any offers for the sale of shares of Series A Preferred Stock or Series D Preferred Stock.

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30, 2022

2022 2021 2022 2021

Asset Management Fees:

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Property management fees (2)

$ 413 $ 404 $ 851 $ 807

Onsite management and other cost reimbursement (3)

$ 806 $ 755 $ 1,231 $ 1,564

Leasing commissions $ 27 $ 33 $ 105 $ 48

Construction management fees (4)

$ 138 $ 22 $ 198 $ 35

Administrative Fees and Expenses:

2 unchanged sentences

Expense reimbursements to related parties - lending segment (5)

$ 604 $ 433 $ 1,073 $ 1,164

Offering-Related Fees:

Upfront dealer manager and trailing dealer manager fees (6)

$ 152 $ 272 $ 274 $ 422

Non-issuance specific offering costs (7)

$ 50 $ 43 $ 89 $ 64

(1) The 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 three months ended March 31, 2021.

(2) Expense reimbursements to related parties - lending segment do not include personnel costs capitalized to deferred loan origination costs of $ 81,000 and $ 62,000 for the three months ended March 31, 2022 and 2021, respectively.

(3) Represents fees earned by CCO Capital and allocated to Series A Preferred Stock and Series D Preferred Stock.

(4) As of March 31, 2022 and March 31, 2021, $ 2.2 million and $ 1.7 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 179,762 shares of Series A Preferred Stock in lieu of cash payment of the asset management fees incurred during the six months ended June 30, 2021.

In July 2022, the Company issued to the Operator 36,843 shares of Series A1 Preferred Stock in lieu of cash payment of the asset management fee incurred during the three months ended March 31, 2022.

(2) Does not include the company’s share of the property management fees from the Unconsolidated Joint Venture of $ 11,000 and $ 15,000 for the three and six months ended June 30, 2022, respectively.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

(3) Does not include the company’s share of the onsite management and other cost reimbursements from the Unconsolidated Joint Venture of $ 21,000 and $ 33,000 for the three and six months ended June 30, 2022, respectively.

(4) Does not include the company’s share of the construction management fees from the Unconsolidated Joint Venture of $ 2,000 and $ 3,000 for the three and six months ended June 30, 2022, respectively.

(5) Expense reimbursements to related parties - lending segment do not include personnel costs capitalized to deferred loan origination costs of $ 105,000 and $ 174,000 for the six months ended June 30, 2022 and 2021, respectively.

(6) Represents fees earned by CCO Capital and allocated to Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock.

(7) As of June 30, 2022 and June 30, 2021, $ 2.3 million and $ 2.0 million, respectively, was included in deferred costs as reimbursable expenses incurred pursuant to the Master Services Agreement and the then applicable dealer manager agreement with CCO Capital.

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

As of March 31, 2022 and December 31, 2021, due to related parties consisted of the following (in thousands):

March 31, 2022 December 31, 2021

As of June 30, 2022 and December 31, 2021, due to related parties consisted of the following (in thousands):

June 30, 2022 December 31, 2021

Asset management fees $ 4,083 $ 2,244

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Total due to related parties $ 7,013 $ 4,541

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Affiliate Investments

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

For the three months ended March 31, 2022 and 2021, the Company recorded rental and other property income related to this tenant of $ 370,000 and $ 370,000 , respectively.

For the three and six months ended both June 30, 2022 and 2021, the Company recorded rental and other property income related to this tenant of $ 370,000 and $ 740,000 , respectively.

COMMITMENTS AND CONTINGENCIES

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 $ 16.4 million as of March 31, 2022, the majority of which are for prime-based loans to be originated by the Company’s subsidiary engaged in SBA 7(a) Small Business Loan Program lending, the government guaranteed portion of which is intended to be sold.

The Company’s outstanding commitments to fund loans were $ 7.1 million as of June 30, 2022, 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.

1 unchanged sentence

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.

The Company had a total of $ 6.7 million in future obligations under leases to fund tenant improvements and other future construction obligations as of March 31, 2022.

As of March 31, 2022, $ 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.

The Company had a total of $ 6.0 million in future obligations under leases to fund tenant improvements and other future construction obligations as of June 30, 2022.

As of June 30, 2022, $ 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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

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

3 unchanged sentences

While the outcome of these legal actions and proceedings cannot be predicted with certainty, in management’s opinion, the resolution of these legal proceedings and actions will not 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.

In September 2018, the Company filed a lawsuit against the City and County of San Francisco seeking a refund of the $ 11.8 million in penalties, interest and legal fees paid by the Company for real property transfer tax allegedly due for a transaction in a prior year.

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 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.

1 unchanged sentence

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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Loan Program, the SBA may seek recovery of the principal loss related to the deficiency from the Company.

As of March 31, 2022, the Company serviced an aggregate of $ 266.5 million of the guaranteed portion of SBA 7(a) loans.

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.

As of June 30, 2022, the Company serviced an aggregate of $ 265.5 million of the guaranteed portion of SBA 7(a) loans.

With respect to the guaranteed portion of SBA loans that have been sold, the SBA will first honor its guarantee and then seek compensation from the Company in the event that a loss is deemed to be attributable to technical deficiencies.

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

Future minimum rental revenue under long-term operating leases as of March 31, 2022, excluding tenant reimbursements of certain costs, are as follows (excludes unconsolidated properties, in thousands):

Future minimum rental revenue under long-term operating leases as of June 30, 2022, excluding tenant reimbursements of certain costs, are as follows (excludes unconsolidated properties, in thousands):

Years Ending December 31, Total

2022 (Nine months ending December 31, 2022) $ 33,549

2022 (Six months ending December 31, 2022) $ 22,785

Thereafter 36,637

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

SEGMENT DISCLOSURE

The Company’s reportable segments during the three months ended March 31, 2022 and 2021 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for the Company’s lending business.

The Company’s reportable segments during the three and six months ended June 30, 2022 and 2021 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.

3 unchanged sentences

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

The net operating income (loss) of the Company’s segments for the three months ended March 31, 2022 and 2021 is as follows (in thousands):

Three Months Ended March 31,

The net operating income (loss) of the Company’s segments for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):

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

2022 2021 2022 2021

Revenues $ 14,077 $ 13,356 $ 28,182 $ 26,883

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

A reconciliation of segment net operating income to net income attributable to the Company for the three months ended March 31, 2022 and 2021 is as follows (in thousands):

Three Months Ended March 31,

June 30, 2022 (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, 2022 and 2021 is as follows (in thousands):

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

2022 2021 2022 2021

Total segment net operating income $ 12,836 $ 12,631 $ 24,992 $ 21,717

10 unchanged sentences

Net income (loss) attributable to the Company $ 2,922 $ 530 $ 5,219 $ ( 3,140 )

The condensed assets for each of the segments as of March 31, 2022 and December 31, 2021, along with capital expenditures and loan originations for the three months ended March 31, 2022 and 2021, are as follows (in thousands):

March 31, 2022 December 31, 2021

The condensed assets for each of the segments as of June 30, 2022 and December 31, 2021, along with capital expenditures and loan originations for the six months ended June 30, 2022 and 2021, are as follows (in thousands):

June 30, 2022 December 31, 2021

Condensed assets:

3 unchanged sentences

Non-segment assets (1)

24,722 12,986

Total assets $ 677,745 $ 660,866

Three Months Ended March 31,

Six Months Ended June 30,

Capital expenditures (2) and loan originations:

Office $ 4,304 $ 818

Hotel 963 128

Total capital expenditures 5,267 946

2 unchanged sentences

______________________

(1) Includes investments in real estate of $ 8.3 million representing two development sites which the Company intends to develop into multifamily assets.

(2) Represents additions and improvements to real estate investments, excluding acquisitions.

Includes the activity for dispositions through their respective disposition dates.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

SUBSEQUENT EVENTS

The Company evaluated events subsequent to March 31, 2022, and concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated unaudited financial statements.

On July 1, 2022, the Company acquired from an unrelated third-party a 100 % fee-simple interest in a 1,352 square foot office property located in Austin, Texas for a purchase price of $ 1.9 million.

The property has approximately 7,450 square feet of land which the Company intends to further develop.

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