What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-09 · 356 added, 264 removed, 899 unchanged (41% of the section changed)

3 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Investments in real estate, net $ 503,790 $ 497,984

19 unchanged sentences

36,000,000 shares authorized;

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;

1,266,400 and 1,265,200 shares issued and outstanding, respectively, as of September 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;

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;

7,553,938 and 7,134,335 shares issued and outstanding, respectively, as of September 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

2 unchanged sentences

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;

2,859,441 shares issued and outstanding as of September 30, 2022 and no shares issued or outstanding as of December 31, 2021;

liquidation preference of $ 25.00 per share, subject to adjustment

1 unchanged sentence

27,000,000 shares authorized;

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

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

8,080,740 and 2,951,876 shares issued and outstanding, respectively, as of September 30, 2022 and 8,080,740 and 5,387,160 shares issued and outstanding, respectively, as of December 31, 2021;

liquidation preference of $ 28.37 per share, subject to adjustment

2 unchanged sentences

900,000,000 shares authorized;

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.

22,737,853 shares issued and outstanding as of September 30, 2022 and 23,369,331 shares issued and outstanding as of December 31, 2021.

Additional paid-in capital 862,360 866,746

8 unchanged sentences

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

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

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

2022 2021 2022 2021

9 unchanged sentences

General and administrative 1,907 1,625 4,975 5,393

Transaction costs 201 — 201 —

Depreciation and amortization 5,093 5,061 15,071 15,167

Total Expenses 24,694 21,679 70,398 65,005

Income from unconsolidated entity 260 — 380 —

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 3,252 1,523 5,861 ( 1,774 )

(Loss) income from unconsolidated entity ( 204 ) — 176 —

(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES ( 45 ) 2,570 5,816 796

Provision for income taxes 187 946 815 2,316

NET INCOME (LOSS) 2,931 527 5,233 ( 3,144 )

NET (LOSS) INCOME ( 232 ) 1,624 5,001 ( 1,520 )

Net (income) loss attributable to noncontrolling interests ( 5 ) — ( 19 ) 4

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY 2,922 530 5,219 ( 3,140 )

NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY ( 237 ) 1,624 4,982 ( 1,516 )

Redeemable preferred stock dividends declared or accumulated (Note 10) ( 6,584 ) ( 4,723 ) ( 16,763 ) ( 13,810 )

12 unchanged sentences

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

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Common Stock Preferred Stock

35 unchanged sentences

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

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

Repurchase of common stock ( 621,088 ) ( 1 ) — — ( 4,411 ) — ( 4,412 ) — ( 4,412 )

Common dividends ($ 0.085 per share)

— — — — — ( 1,933 ) ( 1,933 ) — ( 1,933 )

Issuance of Series A1 Preferred Stock — — 2,667,001 64,720 ( 3,940 ) — 60,780 — 60,780

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

— — — — — ( 1,708 ) ( 1,708 ) — ( 1,708 )

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

— — — — — ( 2,880 ) ( 2,880 ) — ( 2,880 )

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

— — — — — ( 22 ) ( 22 ) — ( 22 )

Dividends to holders of Series L Preferred Stock ($ 1.12 per share)

— — — — — ( 2,723 ) ( 2,723 ) — ( 2,723 )

Repurchase of Series L Preferred Stock — — ( 2,435,284 ) ( 69,089 ) 6,451 ( 4,779 ) ( 67,417 ) — ( 67,417 )

Reclassification of Series A Preferred stock to permanent equity — — 299,303 7,574 ( 536 ) — 7,038 — 7,038

Redeemable preferred stock accretion — — — — — — — — —

Redemption of Series A Preferred Stock — — ( 58,742 ) ( 1,463 ) 139 ( 84 ) ( 1,408 ) — ( 1,408 )

Net (loss) income — — — — — ( 237 ) ( 237 ) 5 ( 232 )

Balances, September 30, 2022 22,737,853 $ 23 13,002,509 $ 332,918 $ 862,360 $ ( 823,523 ) $ 371,778 $ 366 $ 372,144

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity

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

Nine Months Ended September 30, 2021

Common Stock Preferred Stock

33 unchanged sentences

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

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

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

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

Common dividends ($ 0.075 per share)

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

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

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

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

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

— — — — — ( 20 ) ( 20 ) — ( 20 )

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

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

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

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

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

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

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

2 unchanged sentences

(In thousands) (Unaudited)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Amortization of deferred costs and accretion of fees on loans receivable, net ( 399 ) ( 426 )

Write-offs of uncollectible receivables 39 1,076

Write-offs (recoveries) of uncollectible receivables 215 ( 119 )

Deferred income taxes 15 110

5 unchanged sentences

Commitment fees remitted and other operating activity ( 961 ) ( 2,200 )

Return on investment from unconsolidated entity 176 —

Changes in operating assets and liabilities:

10 unchanged sentences

Investment in unconsolidated entity ( 22,408 ) —

Distributions from unconsolidated entity 10,259 —

Loans funded ( 8,751 ) ( 24,676 )

13 unchanged sentences

Payment of preferred stock dividends ( 20,075 ) ( 15,440 )

Repurchase of Series L Preferred Stock ( 67,417 ) —

Redemption of Preferred Stock ( 4,781 ) ( 1,832 )

1 unchanged sentence

Noncontrolling interests’ contributions 5 —

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

Net cash used in financing activities ( 11,508 ) ( 25,675 )

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(In thousands) (Unaudited)

Six Months Ended

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

Nine Months Ended

September 30,

NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 6,851 ) ( 17,504 )

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:

14 unchanged sentences

Reclassification of Series A Preferred Stock from temporary equity to permanent equity $ 24,373 $ 34,552

Accrued deferred costs $ — $ 1

Redeemable preferred stock deemed dividends $ 19 $ 253

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited)

September 30, 2022 (Unaudited)

ORGANIZATION AND OPERATIONS

6 unchanged sentences

The Company’s common stock, $ 0.001 par value per share (“Common Stock”), is currently traded on the Nasdaq Global Market (“Nasdaq”) under the ticker symbol “CMCT”, and on the Tel Aviv Stock Exchange (the “TASE”) under the ticker symbol “CMCT-L.” The Company’s Series L preferred stock, $ 0.001 par value per share (“Series L Preferred Stock”), is currently traded on Nasdaq and on the TASE, in each case under the ticker symbol “CMCTP.” The Company has authorized for issuance 900,000,000 shares of common stock and 100,000,000 shares of preferred stock (“Preferred Stock”).

The Company filed Articles of Amendment (the “Reverse Stock Split Amendment”) to effectuate a one-for-three reverse stock split of the Company’s Common Stock, effective on September 3, 2019 (the “Reverse Stock Split”).

Pursuant to the Reverse Stock Split Amendment, every three shares of Common Stock issued and outstanding immediately prior to the effective time of the Reverse Stock Split were converted into one share of Common Stock, par value $ 0.003 per share.

In connection with the Reverse Split Amendment, the Company filed Articles of Amendment to revert the par value of the Common Stock issued and outstanding from $ 0.003 per share to $ 0.001 per share, effective as of September 3, 2019, following the effective time of the Reverse Split Amendment.

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.

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.

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.

Operating results for the three and nine months ended September 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

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

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

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.

As of September 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.

In addition, as of September 30, 2022, the Company has determined that its Unconsolidated Joint Venture (as defined below) is considered a VIE.

Applying the consolidation requirements for

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

VIEs, the Company determined that it is not the primary beneficiary based on its lack of power to direct activities and its obligations to absorb losses and right to receive benefits.

Investments in Real Estate —Investments in real estate are stated at depreciated cost.

19 unchanged sentences

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

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 Company did no t recognize any impairment of long-lived assets during the three and nine months ended September 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 a gross purchase price of approximately $ 51.0 million, 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 the Company 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

The Company recorded a loss of $ 204,000 and income of $ 176,000 related to its investment in the Unconsolidated Joint Venture during the three and nine months ended September 30, 2022, respectively, in the consolidated statements of operations.

In connection with the closing of the financing of the property owned by the Unconsolidated Joint Venture, the Company received a distribution from the Unconsolidated Joint Venture of $ 10.4 million during the three months ended September 30, 2022, $ 176,000 of which was recognized as a return on investment and $ 10.3 million of which was recognized as a return of investment, bringing its investment in the Unconsolidated Joint

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2022 (Unaudited) – (Continued)

Venture to $ 12.1 million as of September 30, 2022.

The Company’s ownership percentage remains unchanged after the distribution.

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.

6 unchanged sentences

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

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

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

Additionally, so long as payments are made timely under such contracts, the Company’s tenants have the right to obtain substantially all the economic benefits from the use of the identified asset and can direct how and for what purpose the premises are used to conduct their operations.

Therefore, the contracts with the Company’s tenants constitute leases.

Therefore, all of the Company’s contracts with its tenants constitute leases.

All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases when collectability is probable and the tenant has taken possession or controls the physical use of the leased asset.

4 unchanged sentences

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

As of June 30, 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.

As of September 30, 2022 and December 31, 2021, lease incentives of $ 4.1 million and $ 4.0 million, respectively, are presented net of accumulated amortization of $ 3.0 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

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,

September 30, 2022 (Unaudited) – (Continued)

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

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

2022 2021 2022 2021

15 unchanged sentences

The Company does not use a general reserve approach.

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.

As of September 30, 2022 and December 31, 2021, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $ 337,000 and $ 579,000 , respectively, across all operating leases.

Revenue from lending activities

15 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

September 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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

10 unchanged sentences

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

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

As of June 30, 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 nine months ended September 30, 2022 and 2021.

As of September 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.

1 unchanged sentence

All loans were originated pursuant to programs sponsored by the Small Business Administration (the “SBA”).

The programs consist of loans originated under the SBA 7(a) Small Business Loan Program (the “SBA 7(a) Program”) and, commencing with the quarter ended June 30, 2020, the Paycheck Protection Program (the “PPP”).

The programs consist of loans originated under the SBA 7(a) Small Business Loan Program (the “SBA 7(a) Program”) and, commencing with the quarter ended June 30, 2020 and ending during the quarter ended September 30, 2022, the Paycheck Protection Program (the “PPP”).

Pursuant to the SBA 7(a) Program, the Company sells the portion of the loan that is guaranteed by the SBA.

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

Unamortized retained loan discounts were $ 9.6 million and $ 9.6 million as of September 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.

1 unchanged sentence

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

Loan Loss Reserves —On a quarterly basis, and more frequently if indicators exist, the Company evaluates the collectability of its loans receivable.

The Company’s evaluation of collectability involves significant judgment, estimates, and a

Loan Loss Reserves —On a quarterly basis, the Company evaluates the collectability of its loans receivable.

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

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

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

There were no material loans receivable subject to credit risk which were considered to be

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

September 30, 2022 (Unaudited) – (Continued)

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

As of September 30, 2022 and December 31, 2021, the Company had loan loss reserves of $ 1.1 million 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.

5 unchanged sentences

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

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

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

Deferred rent receivable $ 20,993 $ 20,870

6 unchanged sentences

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 recorded 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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

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

September 30, 2022 (Unaudited) – (Continued)

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

22 unchanged sentences

Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018.

The Company has been evaluating the impact of adoption of ASU 2016-13 on its consolidated financial statements and expects to adopt ASU 2016-13 and the related updates beginning on January 1, 2023.

The Company has been evaluating the impact of adoption of ASU 2016-13 and does not believe this ASU will have a material impact on its condensed consolidated financial statements.

The Company expects to adopt ASU 2016-13 and the related updates beginning on January 1, 2023.

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

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

September 30, 2022 (Unaudited) – (Continued)

INVESTMENTS IN REAL ESTATE

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Land $ 151,718 $ 141,236

7 unchanged sentences

Net investments in real estate $ 503,790 $ 497,984

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.

For the three months ended September 30, 2022 and 2021, the Company recorded depreciation expense of $ 4.3 million and $ 4.3 million, respectively.

For the nine months ended September 30, 2022 and 2021, the Company recorded depreciation expense of $ 12.8 million and $ 12.7 million, respectively.

2022 Transactions — During the nine months ended September 30, 2022, the Company acquired a 100 % fee-simple interest in the following properties from unrelated third-parties which were accounted for as asset acquisitions.

Asset Date of Purchase

3 unchanged sentences

Multifamily (5)

August 4, 2022 5,900 $ 700

1007 E 7th Street, Austin, TX (2) (6)

July 1, 2022 1,352 $ 1,900

3022 S Western Avenue, Los Angeles, CA (3) (7)

Multifamily (7)

May 20, 2022 6,000 $ 5,650

4 unchanged sentences

(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 $ 50,000 , which are not included in the purchase price above.

(3) 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.

(4) 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.

(5) The Company intends to redevelop approximately seven commercial units totaling 5,635 rentable square feet and six parking stalls starting in 2024.

(6) The property is located on a land site of approximately 7,450 square feet.

The Company intends to complete pre-development and entitlement work to provide optionality for future development.

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

The Company intends to entitle the property and develop approximately 119 residential units starting in 2024.

1 unchanged sentence

The Company intends to entitle the property and develop approximately 40 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.

In addition, 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.

There were no dispositions during the nine months ended September 30, 2022.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

September 30, 2022 (Unaudited) – (Continued)

2021 Transactions — During the nine months ended September 30, 2021, the Company acquired a 100 % fee-simple interest in the following properties from unrelated third-parties.

The purchases were accounted for as asset acquisitions.

Asset Date of Purchase

Property Type Acquisition Square Feet Price

(in thousands)

1037 N Sycamore, Los Angeles, CA (1)

Office July 13, 2021 4,900 $ 2,900

(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 $ 33,000 , which are not included in the purchase price above.

There were no dispositions during the nine months ended September 30, 2021.

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.

The purchase price of the acquisitions completed during the nine months ended September 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 nine months ended September 30, 2022 and 2021.

Nine Months Ended September 30,

(in thousands)

Land $ 10,480 $ 1,839

Land improvements 54 33

Buildings and improvements 164 1,061

Tenant improvements 47 —

Acquired in-place leases (1) 68 —

Acquired below-market leases (3) ( 37 ) —

Net assets acquired $ 10,776 $ 2,933

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

INVESTMENT IN UNCONSOLIDATED ENTITY

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

Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies for more details (dollars in thousands):

In February 2022, the Company invested in the Unconsolidated Joint Venture with the CIM JV Partner to purchase an office property in Los Angeles, California for a gross purchase price of approximately $ 51.0 million, of which the Company initially contributed approximately $ 22.4 million and the CIM JV Partner initially contributed the remaining balance.

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

The following table details the Company’s equity method investment in the Unconsolidated Joint Venture.

See to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (dollars in thousands):

Carrying Value

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

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

1910 Sunset Boulevard (1)

3 unchanged sentences

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 six months ended June 30, 2022.

In September 2022, the Unconsolidated Joint Venture obtained financing through a mortgage loan of $ 23.9 million secured by its investment in real estate with an estimated fair value of $ 51.7 million as of September 30, 2022 (the “1910 Sunset Mortgage Loan”).

The 1910 Sunset Mortgage Loan has a three-year term with interest-only monthly payments.

The Company entered into a guaranty with the lenders, under which the Company agreed to guarantee the Unconsolidated Joint Venture’s obligations under the 1910 Sunset Mortgage Loan (the “1910 Sunset Guarantee”).

Under the terms of the Unconsolidated Joint Venture, the Company and the CIM JV Partner are subject to cross indemnity obligations pursuant to which the CIM JV Partner agrees to reimburse the Company for its share of any indemnity payment, to the extent any such indemnity payment did not result from the Company’s fraud, gross neglect, or willful misconduct.

In connection with the closing of the 1910 Sunset Mortgage Loan, the Company received a distribution from the Unconsolidated Joint Venture of $ 10.4 million during the three months ended September 30, 2022, $ 176,000 of which was recognized as a return on investment and $ 10.3 million of which was recognized as a return of investment .

LOANS RECEIVABLE

Loans receivable consist of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

SBA 7(a) loans receivable, subject to credit risk $ 44,771 $ 42,103

8 unchanged sentences

SBA 7(a) Loans Receivable, Subject to Credit Risk —Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were retained by the Company.

SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes —Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were transferred to a trust and are held as collateral in connection with a securitization transaction.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

securitization transaction.

The proceeds received from the transfer are reflected as loan-backed notes payable (Note 7).

1 unchanged sentence

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

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)

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

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.

1 unchanged sentence

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

As of June 30, 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.

As of September 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 September 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 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.

As of September 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 June 30, 2022 and December 31, 2021 is as follows (in thousands):

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

Intangible assets:

3 unchanged sentences

Trade name and license 2,957 2,957

Total intangible lease assets, net $ 4,812 $ 5,251

Total intangible assets, net $ 4,664 $ 5,251

Intangible lease liabilities:

4 unchanged sentences

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,

September 30, 2022 (Unaudited) – (Continued)

During the three and nine months ended September 30, 2022 and 2021, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):

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

2022 2021 2022 2021

2 unchanged sentences

Acquired below-market lease amortization $ 67 $ 79 $ 196 $ 278

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

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

Assets Liabilities

2 unchanged sentences

Leases Acquired

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

2022 (Three months ending December 31, 2022) $ 3 $ 200 $ ( 58 )

2023 9 503 ( 20 )

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2022 (Unaudited) – (Continued)

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

During the Nine Months Ended September 30, 2022

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

Mortgage Payable:

7 unchanged sentences

2018 revolving credit facility 60,000 110,000 ( 85,000 ) — 85,000

2020 unsecured revolving credit facility — — — — —

Junior subordinated notes 27,070 — — — 27,070

6 unchanged sentences

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

As of June 30, 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 September 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.

1 unchanged sentence

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

As of June 30, 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 %.

As of September 30, 2022, the Company’s secured borrowings-government guaranteed loans included $ 3.6 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 5.38 % at September 30, 2022, and $ 2.4 million of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.07 % at September 30, 2022.

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”).

The 2018 revolving credit facility is secured by properties in the Company’s real estate portfolio:

eight office properties and one hotel property.

In September 2020, the 2018 revolving credit facility was amended (the “2018 Credit Facility Modification”) to remedy the effect that COVID-19 had on the Company’s ability to borrow under the 2018 revolving credit facility during the period from September 2, 2020 through August 14, 2021 (the “Deferral Period”).

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

The 2018 revolving credit facility bore interest during the Deferral Period at (A) the base rate plus 1.05 % or (B) LIBOR plus 2.05 % and (ii) bears interest after the Deferral Period, at (A) the base rate plus 0.55 % or (B) LIBOR plus 1.55 %.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2022 (Unaudited) – (Continued)

September 30, 2022 and December 31, 2021, the variable interest rate was 4.33 % 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.

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

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

The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions, 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 is working with a bank to refinance the 2018 revolving credit facility prior to its maturity date.

The Company is working with a bank to refinance the 2018 revolving credit facility which management believes is probable based on its projected performance and current capital market conditions.

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.

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 could borrow up to a maximum of $ 10.0 million.

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.

In the interim, the Company has executed a one-year extension of the 2018 Revolving Credit Facility to extend its maturity to October 2023.

In connection with the extension, the Company paid 25 % of the extension fee specified in the 2018 Revolving Credit Facility (i.e., 25 % of 0.15 % of each lender’s commitment being extended) on October 30, 2022, with the remaining 75 % of the extension fee specified in the 2018 Revolving Credit Facility (i.e., 75 % of 0.15 % of each lender’s commitment being extended) being due and payable on the date that is 90 days after October 30, 2022.

The Company believes cash on hand, proceeds from the sale of our Series A1 Preferred Stock, net cash provided by operations and the entry into new financing arrangements will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these financial statements are issued.

As of September 30, 2022 and December 31, 2021, $ 85.0 million and $ 60.0 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $ 119.9 million and $ 117.6 million, respectively, 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.

6 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, the variable interest rate was 4.41 % 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 $ 1.1 million and $ 1.9 million as of June 30, 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 $ 1.5 million and $ 1.9 million as of September 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.

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

The PPPLF contains customary covenants but is not subject to any financial covenants.

The maturity date of PPPLF borrowings is the same as the maturity date of the loans pledged to secure the extension of credit, generally two years.

At maturity, both principal and accrued interest are due.

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 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.

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

The maturity date of PPPLF borrowings was the same as the maturity date of the loans pledged to secure the extension of credit, generally two years.

As of September 30, 2022 and December 31, 2021, $ 0 and $ 5.0 million, respectively, was outstanding under the PPPLF as the PPP has ended and as of September 30, 2022, 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.

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

As of September 30, 2022 and December 31, 2021, accrued interest and unused commitment fees payable of $ 351,000 and $ 467,000 , respectively, were included in accounts payable and accrued expenses.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

September 30, 2022 (Unaudited) – (Continued)

Future principal payments on the Company’s debt (face value) as of September 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 (Six months ending December 31, 2022) $ — $ 365 $ 75,000 $ 682 $ 76,047

2022 (Three months ending December 31, 2022) $ — $ 81 $ — $ 327 $ 408

2023 — 335 85,000 166 85,501

9 unchanged sentences

No payment is due unless payments are received from the borrowers on the underlying loans.

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

(2) Represents the junior subordinated notes and SBA 7(a) loan-backed notes.

STOCK-BASED COMPENSATION PLANS

4 unchanged sentences

May 2020 May 2021 5,478 16,434

May 2021 (3) 5,083 20,332

May 2021 May 2022 (3) 5,083 20,332

June 2022 June 2023 7,746 30,984

1 unchanged sentence

(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 $ 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.

The Company recorded compensation expense related to these restricted shares of Common Stock in the amount of $ 55,000 and $ 55,000 for the three months ended September 30, 2022 and 2021, respectively, and $ 147,000 and $ 165,000 for the nine months ended September 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 unchanged sentences

Golay’s shares.

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

June 30, 2022 (Unaudited) – (Continued)

As of September 30, 2022, there was $ 147,000 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.

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.

No shares of Series D Preferred Stock, Series A Preferred Stock, or Series A1 Preferred Stock outstanding as of September 30, 2022 or 2021 were

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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 nine months ended September 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 nine months ended September 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 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,

The following table reconciles the numerator and denominator used in computing the Company’s basic and diluted per-share amounts for net loss attributable to common stockholders for the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share amounts):

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

2022 2021 2022 2021

8 unchanged sentences

Diluted $ ( 0.50 ) $ ( 0.14 ) $ ( 0.72 ) $ ( 0.88 )

REDEEMABLE PREFERRED STOCK

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 and six months ended June 30, 2022 and 2021 (dollar amounts in thousands):

September 30, 2022 (Unaudited) – (Continued)

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

Preferred Stock

10 unchanged sentences

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

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

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

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

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

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

7 unchanged sentences

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

Issuance of Series A1 Preferred Stock 2,667,001 64,720 — — — — — — 2,667,001 64,720

Repurchase of Series L Preferred Stock — — — — — — ( 2,435,284 ) ( 69,089 ) ( 2,435,284 ) ( 69,089 )

Reclassification of Series A Preferred stock to permanent equity — — 299,303 7,574 — — — — 299,303 7,574

Redemption of Series A Preferred Stock — — ( 58,742 ) ( 1,463 ) — — — — ( 58,742 ) ( 1,463 )

Balances, September 30, 2022 2,859,441 $ 69,490 7,134,335 $ 178,287 56,857 $ 1,396 2,951,876 $ 83,745 13,002,509 $ 332,918

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2022 (Unaudited) – (Continued)

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.

As of September 30, 2022, the Company had issued in registered public offerings 2,859,441 shares of the Series A1 Preferred Stock and received gross proceeds of $ 69.5 million.

In connection with such issuance, $ 3.6 million of costs specifically identifiable to the offering of Series A1 Preferred Stock was allocated to the Series A1 Preferred Stock.

Such costs include commissions, dealer manager fees and other offering fees and expenses but do not include non-issuance-specific costs of $ 9.1 million related to the Company’s offering of Series A Preferred Stock, Series A Preferred Warrants, Series A1 Preferred Stock and Series D Preferred Stock.

As of September 30, 2022, the Company had reclassified and allocated $ 793,000 from deferred charges to Series A1 Preferred Stock 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 September 30, 2022, there were 2,859,441 shares of Series A1 Preferred Stock outstanding and no shares of Series A1 Preferred Stock had been redeemed.

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.

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

As of September 30, 2022, the Company had issued in registered public offerings 8,251,657 shares of Series A Preferred Stock and 4,603,287 Series A Preferred Warrants and received gross proceeds of $ 205.4 million and $ 761,000 , respectively, and additionally, had issued 568,681 shares of Series A Preferred Stock as payment for services to the CIM Service Provider, LLC (the “Administrator”), for which no cash proceeds were received.

In connection with such issuance, $ 17.0 million and $ 142,000 of costs specifically identifiable to the offering of the Series A Preferred Stock and Series A Preferred Warrants, respectively, were allocated to the Series A Preferred Stock and Series A Preferred Warrants, respectively.

As of September 30, 2022, the Company had reclassified and allocated $ 1.9 million and $ 5,000 from deferred charges to Series A Preferred Stock and Series A Preferred Warrants, 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.

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.

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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.

For the three and nine months ended September 30, 2022, the Company recorded redeemable preferred stock deemed dividends of $ 0 and $ 19,000 , respectively, related to such adjustments.

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

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

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

As of September 30, 2022, the Company had reclassified an aggregate of $ 170.6 million in net proceeds from temporary equity to permanent equity.

As of September 30, 2022, there were 8,399,535 shares of Series A Preferred Stock outstanding and 420,803 shares of Series A Preferred Stock had been redeemed.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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.

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

As of September 30, 2022, the Company had issued in registered public offerings 56,857 shares of Series D Preferred Stock and received gross proceeds of $ 1.4 million.

In connection with such issuance, $ 35,000 of costs specifically identifiable to the offering of Series D Preferred Stock were allocated to the Series D Preferred Stock.

As of September 30, 2022, the Company had reclassified and allocated $ 13,000 from from deferred charges to Series D Preferred Stock 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 September 30, 2022, there were 56,857 shares of Series D Preferred Stock outstanding and no shares of Series D Preferred Stock had been redeemed.

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.

1 unchanged sentence

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

On September 15, 2022, the Company repurchased 2,435,284 shares of its Series L Preferred Stock in a privately negotiated transaction (the “Series L Repurchase”).

The shares were repurchased at a purchase price of $ 27.40 per share (a 3.4 % discount to the stated value of $ 28.37 ) plus $ 1.12 per share of accrued and unpaid dividends (or $ 2.7 million accrued and unpaid dividends in the aggregate).

The total cost to complete the Series L Repurchase, including transactions costs of $ 700,000 (or $ 0.29 per share), was $ 70.1 million.

In connection with the Series L Repurchase, the Company recognized redeemable preferred stock redemptions of $ 4.8 million on its consolidated statement of operations for the three and nine months ended September 30, 2022.

The $ 4.8 million of redeemable preferred stock redemptions represents the difference between the repurchase price (including $ 0.29 per share of transaction costs) and the carrying value of the repurchased Series L Preferred Stock (representing the stated value of $ 28.37 per share reduced by $ 2.65 per share of stock offering costs).

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

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

As of September 30, 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.

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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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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.

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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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

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.

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.

During the nine months ended September 30, 2022, the Company paid $ 384,000 , $ 8.5 million, $ 60,000 and $ 11.1 million of cash dividends on the Series A1 Preferred Stock, Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively.

During the nine months ended September 30, 2021, the Company paid $ 7.0 million, $ 26,000 and $ 8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively.

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.

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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.

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;

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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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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

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:

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 nine months ended September 30, 2022 and 2021 consist of the following:

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

September 22, 2022 October 17, 2022 Regular Quarterly $ 0.085

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

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

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

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

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

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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

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

As of June 30, 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.

As of September 30, 2022, the Company had 4,034,366 Series A Preferred Warrants outstanding to purchase 1,045,671 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $ 556,000 , after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.

Share Repurchase Program

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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

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

Period Shares Repurchased Average price paid per share Cost of shares repurchased

(in thousands)

Three months ended June 30, 2022

41,374 $ 7.32 $ 303

August 2022 33,374 $ 7.15 $ 239

September 2022 587,714 $ 7.10 $ 4,173

Total as of September 30, 2022 662,462 $ 4,715

FAIR VALUE OF FINANCIAL INSTRUMENTS

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Level 3 Inputs —Unobservable inputs

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

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

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Accordingly, the estimates presented are made at a point in time and may not be indicative of the amounts the Company could realize in a current market exchange.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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

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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 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.

When estimating the fair value of the Company’s mortgages payable as of September 30, 2022 and December 31, 2021, the Company used a rate of 6.28 % and 3.22 %, respectively.

The rate used to estimate the fair value of the Company’s junior subordinated notes was 8.00 % and 4.46 % as of September 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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Discount Rate Prepayment Rate Discount Rate Prepayment Rate

7 unchanged sentences

5.00 % - 17.50 %

SBA 7(a) loans receivable, paycheck protection program 1.00 %

SBA 7(a) loans receivable, paycheck protection program N/A N/A 1.00 %

SBA 7(a) loans receivable, subject to secured borrowings 11.00 % - 11.25 %

2 unchanged sentences

5.00 % - 17.50 %

Other Financial Instruments —The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to their short-term maturities at June 30, 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):

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

June 30, 2022 December 31, 2021

September 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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

RELATED-PARTY TRANSACTIONS

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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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

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.

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Subject to applicable laws and regulations under Nasdaq and the TASE and the agreement of the Operator, the Company will pay the Base Fee owed with respect to the first quarter of 2022 in shares of its Series A Preferred Stock and it is likely that the Company will pay some or part of the remainder of the Base Fees incurred during the year ended December 31, 2022 in shares of Series A Preferred Stock.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

Incentive Fee:

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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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

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):

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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 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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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

1 unchanged sentence

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.

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.

During the nine months ended September 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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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

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.

On April 9, 2020, the Company entered into Amendment No.

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 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.

The Second Amended and Restated Dealer Manager Agreement was subsequently amended by the Company and CCO Capital to address changes to, among other things, selling commissions and dealer manager fees.

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.

4 unchanged sentences

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

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

Three Months Ended September 30, Nine Months Ended September 30, 2022

2022 2021 2022 2021

8 unchanged sentences

Leasing commissions (4)

$ 635 $ 59 $ 740 $ 107

Construction management fees (5)

11 unchanged sentences

______________________

(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.

(1) The Company issued to the Operator 270,209 shares of Series A Preferred Stock in lieu of cash payment of the asset management fees incurred during the nine months ended September 30, 2021.The Company issued to the Operator 36,843 and 36,779 shares of Series A1 Preferred Stock in lieu of cash payment for the asset management fees incurred during the three months ended March 31, 2022 and June 30, 2022, respectively.

(2) Does not include the company’s share of the property management fees from the Unconsolidated Joint Venture of $ 13,000 and $ 28,000 for the three and nine months ended September 30, 2022, respectively.

(3) Does not include the Company’s share of the onsite management and other cost reimbursements from the Unconsolidated Joint Venture of $ 33,000 and $ 66,000 for the three and nine months ended September 30, 2022, respectively.

(4) Does not include the Company’s share of the leasing commissions from the Unconsolidated Joint Venture of $ 4,000 for the three and nine months ended September 30, 2022.

(5) Does not include the Company’s share of the construction management fees from the Unconsolidated Joint Venture of $ 6,000 and $ 9,000 for the three and nine months ended September 30, 2022, respectively.

(6) Expense reimbursements to related parties - lending segment do not include personnel costs capitalized to deferred loan origination costs of $ 118,000 and $ 316,000 for the nine months ended September 30, 2022 and 2021, respectively.

(7) 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.

(8) As of September 30, 2022 and September 30, 2021, $ 2.6 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 June 30, 2022 and December 31, 2021, due to related parties consisted of the following (in thousands):

June 30, 2022 December 31, 2021

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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

September 30, 2022 December 31, 2021

Asset management fees $ 917 $ 2,244

7 unchanged sentences

Affiliate Investments

In February 2022, the Company invested with a CIM-managed separate account (the “CIM JV Partner”) in the Unconsolidated Joint Venture which purchased 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.

In February 2022, the Company invested with the CIM JV Partner, a CIM-managed separate account, in the Unconsolidated Joint Venture which purchased 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.

See Note 2 and Note 4 for more information.

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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 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.

For the three and nine months ended both September 30, 2022 and 2021, the Company recorded rental and other property income related to this tenant of $ 370,000 and $ 1.1 million, 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 $ 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.

The Company’s outstanding commitments to fund loans were $ 11.5 million as of September 30, 2022, all 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 $ 6.0 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)

The Company had a total of $ 5.6 million in future obligations under leases to fund tenant improvements and other future construction obligations as of September 30, 2022.

As of September 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.

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

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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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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.

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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.

As of September 30, 2022, $ 261.8 million of the guaranteed portion of the Company’s SBA 7(a) loans were serviced by the Company.

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.

3 unchanged sentences

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

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):

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

Years Ending December 31, Total

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

2022 (Three months ending December 31, 2022) $ 11,398

Thereafter 66,231

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 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.

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

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

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

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

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

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

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

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

2022 2021 2022 2021

4 unchanged sentences

Total property expenses 7,320 5,485 19,968 16,995

Income from unconsolidated entity 260 — 380

(Loss) income from unconsolidated entity ( 204 ) — 176

Segment net operating income—office 6,519 7,513 22,433 22,886

4 unchanged sentences

Total property expenses 6,079 4,601 17,807 10,765

Segment net operating income (loss)—hotel 3,247 ( 2 ) 5,641 ( 809 )

Segment net operating income—hotel 2,377 877 8,018 68

Revenues 2,353 5,773 7,987 15,086

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,

September 30, 2022 (Unaudited) – (Continued)

A reconciliation of segment net operating income to net income attributable to the Company for the three and nine months ended September 30, 2022 and 2021 is as follows (in thousands):

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

2022 2021 2022 2021

5 unchanged sentences

General and administrative ( 1,353 ) ( 753 ) ( 3,370 ) ( 3,629 )

Transaction costs ( 201 ) — ( 201 ) —

Depreciation and amortization ( 5,093 ) ( 5,061 ) ( 15,071 ) ( 15,167 )

Income (loss) before provision for income taxes 3,252 1,523 5,861 ( 1,774 )

(Loss) income before provision for income taxes ( 45 ) 2,570 5,816 796

Provision for income taxes ( 187 ) ( 946 ) ( 815 ) ( 2,316 )

Net income (loss) 2,931 527 5,233 ( 3,144 )

Net (loss) income ( 232 ) 1,624 5,001 ( 1,520 )

Net (income) loss attributable to noncontrolling interests ( 5 ) — ( 19 ) 4

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

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

Net (loss) income attributable to the Company $ ( 237 ) $ 1,624 $ 4,982 $ ( 1,516 )

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

September 30, 2022 December 31, 2021

Condensed assets:

5 unchanged sentences

Total assets $ 665,597 $ 660,866

Six Months Ended June 30,

Nine Months Ended September 30,

Capital expenditures (2) and loan originations:

5 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.

(1) Includes investments in real estate of $ 9.4 million representing three development sites which the Company intends to develop into multifamily assets.

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

1 unchanged sentence

SUBSEQUENT EVENTS

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.

The Company evaluated events subsequent to September 30, 2022, and concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated unaudited financial statements.

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

What changed 10-Q

Item 1. Financial Statements