What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-14 · 471 added, 518 removed, 737 unchanged (57% of the section changed)

3 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Investments in real estate, net $ 715,850 $ 502,006

Investment in unconsolidated entity 12,149 —

Investments in unconsolidated entities 28,375 12,381

Cash and cash equivalents 22,491 46,190

Restricted cash 24,342 11,290

Loans receivable, net 66,627 73,543

Loans receivable, net (Note 5) 62,442 62,547

Accounts receivable, net 7,982 3,780

14 unchanged sentences

35,246,719 shares authorized;

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;

302,136 and 302,136 shares issued and outstanding, respectively, as of March 31, 2023 and 693,741 and 693,741 shares issued and outstanding, respectively, as of December 31, 2022;

liquidation preference of $ 25.00 per share, subject to adjustment

29,073 37,782

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

35,246,719 shares authorized;

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;

8,518,202 and 7,764,921 shares issued and outstanding, respectively, as of March 31, 2023 and 8,126,597 and 7,565,349 shares issued and outstanding, respectively, as of December 31, 2022;

liquidation preference of $ 25.00 per share, subject to adjustment

2 unchanged sentences

27,977,200 shares authorized;

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

6,998,510 and 6,975,710 shares issued and outstanding, respectively, as of March 31, 2023 and 5,966,077 and 5,956,147 shares issued and outstanding, respectively, as of December 31, 2022;

liquidation preference of $ 25.00 per share, subject to adjustment

172,764 147,514

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

26,992,000 shares authorized;

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

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

9,000,000 shares authorized;

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;

56,857 and 48,857 shares issued and outstanding, respectively, as of March 31, 2023 and 56,857 and 48,857 shares issued and outstanding, respectively, as of December 31, 2022;

liquidation preference of $ 25.00 per share, subject to adjustment

83,745 152,834

Common stock, $ 0.001 par value;

900,000,000 shares authorized;

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.

22,737,853 shares issued and outstanding as of March 31, 2023 and 22,737,853 shares issued and outstanding as of December 31, 2022.

Additional paid-in capital 859,029 861,721

8 unchanged sentences

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Rental and other property income $ 14,886 $ 14,096

8 unchanged sentences

General and administrative 1,925 1,815

Transaction costs 201 — 201 —

Transaction-related costs 3,360 —

Depreciation and amortization 9,502 5,004

Total Expenses 38,104 22,293

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

Income from unconsolidated entities 768 120

Gain on sale of real estate (Note 3) 1,104 —

(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES ( 7,320 ) 2,609

1 unchanged sentence

NET (LOSS) INCOME ( 7,576 ) 2,302

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

Net loss (income) attributable to noncontrolling interests 625 ( 5 )

NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY ( 6,951 ) 2,297

13 unchanged sentences

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

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Common Stock Preferred Stock

5 unchanged sentences

Balances, December 31, 2022 22,737,853 $ 23 13,570,353 $ 337,762 $ 861,721 $ ( 837,846 ) $ 361,660 $ 373 $ 362,033

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

Common dividends ($ 0.085 per share)

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

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

— — — — — ( 2,896 ) ( 2,896 ) — ( 2,896 )

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

Cumulative-effect adjustment upon adoption of ASU 2016-13 (Note 2)

— — — — — ( 619 ) ( 619 ) — ( 619 )

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

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

Redemption of Series A Preferred Stock — — ( 49,341 ) ( 1,228 ) 108 ( 75 ) ( 1,195 ) — ( 1,195 )

Net income — — — — — 2,297 2,297 5 2,302

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

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

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

Adjustment to noncontrolling interests — — — — — — — 5,002 5,002

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

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

Common dividends ($ 0.085 per share)

1 unchanged sentence

Issuance of Series A1 Preferred Stock — — 1,032,433 25,569 ( 2,291 ) — 23,278 — 23,278

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

— — — — — ( 79 ) ( 79 ) — ( 79 )

Redemption of Series A1 Preferred Stock — — ( 12,870 ) ( 319 ) 28 ( 11 ) ( 302 ) — ( 302 )

Dividends to holders of Series A1 Preferred Stock ($ 0.39563 per share)

3 unchanged sentences

Reclassification of Series A Preferred stock to permanent equity — — 389,325 9,699 ( 887 ) — 8,812 — 8,812

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

Redemption of Series A Preferred Stock — — ( 189,753 ) ( 4,723 ) 403 ( 362 ) ( 4,682 ) — ( 4,682 )

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

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

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 A Preferred Stock ($ 0.34375 per share)

— — — — — ( 2,810 ) ( 2,810 ) — ( 2,810 )

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

Net loss — — — — — ( 6,951 ) ( 6,951 ) ( 625 ) ( 7,576 )

Balances, March 31, 2023 22,737,853 $ 23 14,789,488 $ 367,988 $ 859,029 $ ( 853,108 ) $ 373,932 $ 4,750 $ 378,682

Three Months Ended March 31, 2022

Common Stock Preferred Stock

5 unchanged sentences

Balances, December 31, 2021 23,369,331 $ 24 11,715,354 $ 310,661 $ 866,746 $ ( 804,227 ) $ 373,204 $ 345 $ 373,549

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

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

3 unchanged sentences

— — — — — ( 2,896 ) ( 2,896 ) — ( 2,896 )

Issuance of Series D Preferred Stock — — 4,045 99 ( 3 ) — 96 — 96

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

3 unchanged sentences

Redemption of Series A Preferred Stock — — ( 49,341 ) ( 1,228 ) 108 ( 75 ) ( 1,195 ) — ( 1,195 )

Net loss — — — — — ( 3,670 ) ( 3,670 ) ( 1 ) ( 3,671 )

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

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

Common dividends ($ 0.075 per share) (1)

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

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

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

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

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

— — — — — ( 13 ) ( 13 ) — ( 13 )

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

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

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

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

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

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

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 — — — — — 2,297 2,297 5 2,302

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

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

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

2 unchanged sentences

(In thousands) (Unaudited)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 5,001 $ ( 1,520 )

Net (loss) income $ ( 7,576 ) $ 2,302

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization, net 9,604 5,037

Gain on sale of real estate ( 1,104 ) —

Amortization of deferred debt origination costs 395 297

2 unchanged sentences

Amortization of deferred costs and accretion of fees on loans receivable, net ( 99 ) ( 150 )

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

Write-offs of uncollectible receivables 13 109

Loss on interest rate caps 339 —

Deferred income taxes ( 11 ) 56

Stock-based compensation 55 55

Income from unconsolidated entity ( 176 ) —

Income from unconsolidated entities ( 768 ) ( 120 )

Loans funded, held for sale to secondary market ( 7,849 ) ( 12,369 )

2 unchanged sentences

Commitment fees remitted and other operating activity ( 150 ) ( 600 )

Return on investment from unconsolidated entity 176 —

Changes in operating assets and liabilities:

9 unchanged sentences

Acquisition of real estate ( 96,731 ) ( 2,274 )

Proceeds from sale of real estate, net 16,714 —

Investment in unconsolidated entity ( 6,626 ) ( 22,408 )

Distributions from unconsolidated entity 10,259 —

Loans funded ( 2,932 ) ( 10,407 )

3 unchanged sentences

Payment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes ( 108,203 ) ( 12,867 )

Proceeds from revolving credit facilities and term notes 110,000 30,396

Proceeds from revolving credit facilities, term notes and mortgages 212,000 40,000

Proceeds from the issuance of SBA 7(a) loan-backed notes 54,141 —

Payment of principal on secured borrowings ( 607 ) ( 374 )

Payment of deferred preferred stock offering costs ( 283 ) ( 223 )

Payment of deferred costs — ( 2 )

Payment of deferred debt origination costs ( 2,400 ) —

Payment of common dividends ( 1,933 ) ( 1,753 )

Repurchase of Common Stock ( 4,715 ) —

Proceeds from issuance of Common Stock — 78,825

Payment of Common Stock offering costs — ( 540 )

Net proceeds from issuance of Preferred Stock 23,644 8,942

Payment of preferred stock dividends ( 9,820 ) ( 11,166 )

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

Redemption of Preferred Stock ( 88,884 ) ( 1,147 )

Noncontrolling interests’ distributions ( 3 ) ( 109 )

Noncontrolling interests’ contributions 5 —

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

Net cash provided by financing activities 77,655 21,412

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(In thousands) (Unaudited)

Nine Months Ended

September 30,

Three Months Ended

NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 10,647 ) ( 3,028 )

8 unchanged sentences

Cash paid during the period for interest $ 4,093 $ 1,865

Federal income taxes paid $ 905 $ 2,100

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Accrued capital expenditures, tenant improvements and real estate developments $ 3,494 $ 1,144

Proceeds from the sale of real estate committed but not yet paid $ 17,657 $ —

Other amounts due from unconsolidated joint venture partners included in other assets $ 1,445 $ —

Non-cash contributions to unconsolidated joint venture $ 8,600 $ —

Accrued preferred stock offering costs $ 101 $ 151

Accrual of dividends payable to common stockholders $ 1,933 $ 1,986

Accrual of dividends payable to preferred stockholders $ 1,832 $ 3,802

1 unchanged sentence

Reclassification of Series A Preferred Stock from temporary equity to permanent equity $ 8,812 $ 7,667

Mortgage notes assumed in connection with our acquisition of real estate $ 181,318 $ —

Redeemable preferred stock deemed dividends $ — $ 15

Accrued redeemable preferred stock fees $ 413 $ 596

Equity-based payment for management fees $ 4,083 $ 4,652

Accrued Common Stock offering costs included in additional paid-in capital $ — $ 1,420

Adjustment to noncontrolling interests $ 5,002 $ —

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

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited)

March 31, 2023 (Unaudited)

ORGANIZATION AND OPERATIONS

Creative Media & Community Trust Corporation (formerly known as CIM Commercial Trust Corporation) (the “Company”), is a Maryland corporation and real estate investment trust (“REIT”).

The Company primarily owns and operates Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States.

The Company primarily acquires, develops, owns and operates both premier multifamily properties situated in vibrant communities throughout the United States and Class A and creative office real assets in markets with similar business and employment characteristics to its multifamily investments.

The Company also owns one hotel in northern California and a lending platform that originates loans under the Small Business Administration (“SBA”) 7(a) loan program.

The Company seeks to acquire, operate and develop premier multifamily and creative office assets that cater to rapidly growing industries such as technology, media and entertainment in vibrant and emerging communities throughout the United States.

The Company seeks to apply the expertise of CIM Group, L.P.

(“CIM Group”) to the acquisition, development and operation of top-tier multifamily properties situated in dynamic markets with similar business and employment characteristics to its creative office investments.

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”).

(“CIM Group”) to the acquisition, development and operation of premier multifamily properties and creative office assets that cater to rapidly growing industries such as technology, media and entertainment in vibrant and emerging communities throughout the United States.

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.” The Company has authorized for issuance 900,000,000 shares of common stock and 100,000,000 shares of preferred stock (“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 (Note 11).

5 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 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.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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 2022 Form 10-K.

4 unchanged sentences

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

As of 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.

As of March 31, 2023, 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

In addition, as of March 31, 2023, the Company has determined that its Unconsolidated Joint Ventures (as defined below) are considered VIEs.

Applying the consolidation requirements for 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.

Therefore, the Unconsolidated Joint Ventures do not qualify for consolidation.

The Company accounts for its investments in Unconsolidated Joint Ventures as equity method investments.

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.

March 31, 2023 (Unaudited) – (Continued)

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 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 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

The Company did no t recognize any impairment of long-lived assets during the three months ended March 31, 2023 and 2022 (Note 3).

Investments in Unconsolidated Entities —The Company accounts for its investments in the unconsolidated joint ventures (the “Unconsolidated Joint Ventures”) under the equity method, as the Company has the ability to exercise significant influence over the investments.

The Unconsolidated Joint Ventures record their assets and liabilities at fair value.

As such, the Company records its share of the Unconsolidated Joint Ventures’ 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 entities on the consolidated statements of operations.

Derivative Financial Instruments —As part of risk management and operational strategies, from time to time, we may enter into derivative contracts with various counterparties.

All derivatives are recognized on the balance sheet at their estimated fair value.

On the date that we enter into a derivative contract, we designate the derivative as a fair value hedge, a cash flow hedge, a foreign currency fair value or cash flow hedge, a hedge of a net investment in a foreign operation, or a trading or non-hedging instrument.

Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument.

The Company has interest rate caps that are used to manage exposure to interest rate movements, but do not meet the requirements to be designated as hedging instruments.

The change in fair value of the derivative instruments that are not designated as hedges is recorded directly to earnings as interest expense on the accompanying consolidated statements of operations.

See Note 8 for further disclosures about our derivative financial instruments and hedging activities.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

March 31, 2023 (Unaudited) – (Continued)

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

1 unchanged sentence

Revenue from leasing activities

The Company operates as a lessor of real estate assets.

The Company operates as a lessor of both office and multifamily real estate assets.

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

2 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 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.

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.

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

Therefore, the contracts with the Company’s 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 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.

As of March 31, 2023 and December 31, 2022, lease incentives of $ 3.9 million and $ 3.9 million, respectively, are presented net of accumulated amortization of $ 3.0 million and $ 3.0 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

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

March 31, 2023 (Unaudited) – (Continued)

For the three months ended March 31, 2023 and 2022, the Company recognized rental income as follows (in thousands):

Three Months Ended March 31,

Rental and other property income

2 unchanged sentences

Variable lease payments (2)

2,545 3,091 7,651 5,239

Rental and other property income $ 14,886 $ 14,096

9 unchanged sentences

The Company does not use a general reserve approach.

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.

As of March 31, 2023 and December 31, 2022, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $ 673,000 and $ 387,000 , respectively, across all operating leases.

Revenue from lending activities

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

March 31, 2023 (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.

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Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 17 (in thousands):

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

2022 2021 2022 2021

Three Months Ended March 31,

Hotel properties

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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 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.

No such amounts were recognized for tenant recoveries outside of the lease agreements for each of the three months ended March 31, 2023 and 2022.

As of March 31, 2023, 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 reserves for expected credit losses.

Acquisition discounts or premiums, origination fees and retained loan discounts are amortized as a component of interest and other income using the effective interest method over the life of the respective loans, or on a straight-line basis when it approximates the effective interest method.

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 and ending during the quarter ended September 30, 2022, 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”).

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 $ 9.6 million and $ 9.6 million as of September 30, 2022 and December 31, 2021, respectively.

Unamortized retained loan discounts were $ 8.8 million and $ 9.0 million as of March 31, 2023 and December 31, 2022, 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.

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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, 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

Current Expected Credit Losses — On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments-Credit Losses , and subsequent amendments (“ASU 2016-13”).

The current expected credit losses (“CECL”) required under ASU 2016-13 reflects the Company’s current estimate of potential credit losses related to the Company’s loans receivable included in the consolidated balance sheets.

The initial current expected credit losses recorded on January 1, 2023 is reflected as a direct charge to distributions in excess of earnings on the Company’s consolidated statements of equity;

however subsequent changes to the current expected credit losses are recognized through net income on the Company’s consolidated statements of operations.

While ASU 2016-13 does not require any particular method for determining the current expected credit losses, it does specify the allowance should be based on relevant information about past

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

Significant judgment is required in determining the general loan loss reserve, including estimates of the likelihood of default and the estimated fair value of the collateral.

The general loan loss reserve includes those loans, which may have negative characteristics which have not yet become known to the Company.

In addition to the reserves established on loans not considered impaired that have been evaluated under a specific evaluation, the Company establishes the general loan loss reserve using a consistent methodology to determine a loss percentage to be applied to loan balances.

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

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.

March 31, 2023 (Unaudited) – (Continued)

events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan.

In addition, other than a few narrow exceptions, ASU 2016-13 requires that all financial instruments subject to the credit loss model have some amount of loss reserve to reflect the GAAP principal underlying the credit loss model that all loans, debt securities, and similar assets have some inherent risk of loss, regardless of credit quality, subordinate capital, or other mitigating factors.

The Company estimates the current expected credit loss for its loans primarily using its historical experience with loan write-offs, historical charge-offs from third-party firms, and the Weighted Average Remaining Maturity method, which has been identified as an acceptable method for estimating CECL reserves in the Financial Accounting Standards Board (“FASB”) Staff Q&A Topic 326, No.

This method requires the Company to reference historical loan loss data across a comparable data set and apply such loss rate to each loan investment over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe.

The Company considers loans that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans.

For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral less costs to sell and the amortized cost basis of the loan as of the measurement date.

For collateral-dependent loans with respect to which the Company determines foreclosure is not probable, the Company applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan.

The Company may use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data.

The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost.

The Company recorded a cumulative-effective adjustment to the opening distributions in excess of earnings in its consolidated statement of equity as of January 1, 2023 of $ 619,000 .

This represents a total CECL reserve transition adjustment of approximately $ 783,000 , net of a $ 164,000 deferred tax asset.

Prior to adoption, the Company considered a loan to be impaired when the Company did not expect to collect all of the contractual interest and principal payments as scheduled in the loan agreements .

The Company also established a general loan loss reserve when available information indicated that it was probable a loss had occurred based on the carrying value of the portfolio and if the amount of the loss could be reasonably estimated.

As of December 31, 2022, the Company had loan loss reserves of $ 1.1 million, which is recorded as a reduction to the loans receivable, net balance on the consolidated balance sheet.

As of March 31, 2023, the Company had a total current expected credit loss of $ 1.9 million.

Deferred Rent Receivable and Charges —Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 11) deferred financing costs and other deferred costs.

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

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

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

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

Deferred offering costs are first allocated to each issuance of a security on a pro-rata basis equal to the ratio of the number of securities issued in a given issuance to the maximum number of securities that are expected to be issued in the related offering.

In the case of the Series A Preferred Units, which were issued prior to February 2020, the issuance-specific offering costs and the deferred offering costs allocated to such issuance were further allocated to the Series A Preferred Stock and Series A Preferred Warrants issued in such issuance based on the relative fair value of the instruments on the date of issuance.

In the case of the Series A Preferred Stock issued prior to February 2020, the issuance-specific offering costs and the deferred offering costs allocated to such issuance were further allocated to the Series A Preferred Stock and Series A Preferred Warrants issued in such issuance based on the relative fair value of the instruments on the date of issuance.

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 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 financing costs related to the securing of a revolving line of credit are presented as an asset and amortized ratably over the term of the line of credit arrangement.

As such, the Company’s current and corresponding prior period total deferred costs, net in the accompanying consolidated balance sheets relate only to the revolving loan portion of the credit facilities.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

As of March 31, 2023 and December 31, 2022, deferred rent receivable and charges consist of the following (in thousands):

March 31, 2023 December 31, 2022

Deferred rent receivable $ 18,210 $ 20,949

1 unchanged sentence

Deferred offering costs 5,577 5,664

Deferred financing costs, net of accumulated amortization of $ 213 and $ 30 , respectively

Other deferred costs 491 491

Deferred rent receivable and charges, net $ 33,894 $ 37,543

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

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

Redeemable Preferred Stock —Beginning on the date of original issuance of any given shares of Series A1 Preferred Stock, par value $ 0.001 per share (“Series A1 Preferred Stock”), with an initial stated value of $ 25.00 per share, subject to adjustment (the “Series A1 Preferred Stock Stated Value”), Series A Preferred Stock, par value $ 0.001 per share (“Series A Preferred Stock”) with an initial stated value of $ 25.00 per share, subject to adjustment (the “Series A Preferred Stock Stated Value”), or Series D Preferred Stock, par value $ 0.001 per share (“Series D Preferred Stock”), with an initial stated value of $ 25.00 per share, subject to adjustment (the “Series D Preferred Stock Stated Value”), the holder of such shares has the right to require the Company to redeem such shares, subject to certain limitations as discussed in Note 11.

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

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

1 unchanged sentence

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

September 30, 2022 (Unaudited) – (Continued)

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

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

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

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

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

Actual results could differ from those estimates.

Restricted cash also includes cash required to be segregated in connection with certain of the Company’s loans receivable and with its SBA 7(a) loan-backed notes.

Use of Estimates —The preparation of consolidated financial statements in conformity with GAAP requires

management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of

contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and

expenses during the reporting period.

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

time, and assumptions the Company believes to be reasonable under the circumstances at such time.

Actual results could

differ from those estimates.

Recently Issued Accounting Pronouncements —In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASU No.

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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 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.

The lease modification guidance in Topic 842, Leases , (or Topic 840, Leases ) would require the Company to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was made pursuant to the enforceable rights and obligations of the existing lease agreement (precluded from applying the lease modification accounting framework).

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

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

The Company adopted ASU 2016-13 and the related updates on January 1, 2023 and the adoption did not have a material impact.

On March 31, 2022, the FASB issued ASU No.

2022-02, Troubled Debt Restructurings and Vintage Disclosures (Topic 326) (“ASU 2022-02”).

ASU 2022-02 eliminates the recognition and measurement guidance for troubled debt restructurings (“TDRs”) and, instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.

The ASU also enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

The ASU became effective for the Company beginning January 1, 2023 and is generally to be applied prospectively.

ASU 2022-02 did not have an impact on the Company’s consolidated financial statements for the three months ended March 31, 2023.

INVESTMENTS IN REAL ESTATE

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Land $ 175,709 $ 151,727

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Net investments in real estate $ 715,850 $ 502,006

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.

For the three months ended March 31, 2023 and 2022, the Company recorded depreciation expense of $ 4.8 million and $ 4.2 million, respectively.

2023 Transactions — During the three months ended March 31, 2023, the Company acquired an interest in the following properties from subsidiaries indirectly wholly-owned by a fund that is managed by affiliates of CIM Group Management, LLC.

The purchases were accounted for as asset acquisitions.

Asset Date of Interest Purchase

Property Type Acquisition Units Acquired Price

(in thousands)

Channel House Multifamily (1)

January 31, 2023 333 89.4 % $ 134,615

F3 Land Site Multifamily (1)

January 31, 2023 N/A 89.4 % $ 250

466 Water Street Land Site Multifamily (1)

January 31, 2023 N/A 89.4 % $ 2,500

1150 Clay Multifamily (2)

March 28, 2023 288 98.1 % $ 145,500

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

(1) Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of these property totaled $ 37,000 , which are not included in the purchase prices above.

The building at Channel House also includes approximately 1,864 square feet of retail space.

The F3 Land Site is c urrently being utilized as a surface parking lot.

(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 $ 149,000 , which are not included in the purchase price above.

The building also includes approximately 3,968 square feet of retail space.

In addition, please see “Investments in Unconsolidated Entities” (Note 4) for information on the Company’s real estate acquisitions through its investments in unconsolidated entities.

The Company sold an interest in the following property during the three months ended March 31, 2023.

Asset Date of Interest Sales Gain on

Property Type Sale Sold Price Sale

(in thousands)

4750 Wilshire Boulevard (1)

Office / Multifamily February 17, 2023 80.0 % $ 34,400 $ 1,104

(1) The Company sold 80 % of its interest in 4750 Wilshire Boulevard (excluding a vacant land parcel which was not included in the sale) to co-investors with whom it formed the 4750 Wilshire JV (defined in Note 4).

The Company received net proceeds of $ 16.7 million and recorded a receivable of $ 17.7 million, which the Company expects to collect over a six month period, is included in other assets on the consolidated balance sheet as of March 31, 2023.

The Company owns a 20 % interest in the 4750 Wilshire JV and accounts for its investment as an equity method investment as of March 31, 2023.

2022 Transactions — During the three months ended March 31, 2022, the Company acquired a 100 % fee-simple interest in the following properties from unrelated third-parties which transaction was accounted for as an asset acquisition.

Asset Date of Purchase

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3101 S Western Avenue, Los Angeles, CA (1) (2)

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

3101 S Western Avenue, Los Angeles, CA (4) (8)

Multifamily (8)

Multifamily development site (2)

February 11, 2022 3,752 $ 2,260

(1) Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $ 22,000 , which are not included in the purchase price above.

(2) Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $ 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.

(2) The property is located on a land site of approximately 11,300 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 40 residential units starting in 2023.

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

The Company intends to entitle the property and develop approximately 40 residential units starting in 2023.

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

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 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,

March 31, 2023 (Unaudited) – (Continued)

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

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

The following table summarizes the purchase price allocation of the aforementioned acquisitions during the three months ended March 31, 2023 and 2022.

Three Months Ended March 31,

(in thousands)

2 unchanged sentences

Buildings and improvements 206,717 —

Tenant improvements 47 —

Furniture, fixtures, and equipment 8,140

Acquired in-place leases (1) 27,210 —

Acquired above-market leases (2) 71 —

Acquired below-market leases (3) ( 223 ) —

Net assets acquired $ 283,051 $ 2,274

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022 (Unaudited) – (Continued)

INVESTMENT IN UNCONSOLIDATED ENTITY

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):

(1) The amortization period for the acquired in-place leases was approximately 6 months at the date of acquisition.

(2) The amortization period for the acquired above-market leases was approximately 7 months at the date of acquisition.

(3) The amortization period for the acquired below-market leases was approximately 5 months at the date of acquisition.

INVESTMENT IN UNCONSOLIDATED ENTITIES

The following table details the Company’s equity method investments in its Unconsolidated Joint Ventures.

See 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 September 30, 2022 December 31, 2021

Property Asset Type Location Acquisition Date Ownership Interest March 31, 2023 December 31, 2022

1910 Sunset Boulevard (1)

Office Los Angeles, CA February 11, 2022 44.2 % $ 12,320 $ 12,381

4750 Wilshire Boulevard (2)

Office / Multifamily Los Angeles, CA February 17, 2023 20.0 % 8,597 —

1902 Park Avenue (3)

Multifamily Los Angeles, CA February 28, 2023 50.0 % 7,458 —

Total investments in unconsolidated entities $ 28,375 $ 12,381

______________________

(1) 1910 Sunset Boulevard is an office building with 97,746 square feet of office space and 2,760 square feet of retail space.

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

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 .

(1) 1910 Sunset Boulevard is an office building with 97,202 square feet of office space and 2,760 square feet of retail space The plan for the property is 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.

(2) 4750 Wilshire Boulevard is a three-story office building with 30,335 square feet of office space located on the first floor.

The remainder of the building is being converted into for-lease multifamily units.

(3) 1902 Park Avenue is a 75 -unit four-story multifamily building.

1910 Sunset Boulevard — In February 2022, the Company invested in a joint venture (the “1910 Sunset JV”) with a CIM-managed separate account (the “1910 Sunset 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.

In September 2022, the 1910 Sunset JV obtained financing through a mortgage loan of $ 23.9 million secured by the office property (the “1910 Sunset Mortgage Loan”).

The Company provided a limited guarantee to the lender under the 1910 Sunset Mortgage Loan.

The Company recorded a loss of $ 61,000 and income of $ 120,000 related to its investment in the 1910 Sunset JV during the three months ended March 31, 2023 and March 31, 2022, respectively, in the consolidated statements of operations.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The Company’s investment in the 1910 Sunset JV was $ 12.3 million and its ownership percentage remained unchanged as of March 31, 2023.

4750 Wilshire Boulevard — In February 2023, three co-investors (the “4750 Wilshire JV Partners”) acquired an 80 % interest in a property owned by a subsidiary of the Company located at 4750 Wilshire Boulevard in Los Angeles, California (“4750 Wilshire”) for a gross sales price of $ 34.4 million (excluding transaction costs).

The Company retained a 20 % interest in 4750 Wilshire through a joint venture arrangement between the Company and the 4750 Wilshire JV Partners (the “4750 Wilshire JV”).

The 4750 Wilshire JV Partners is converting two of the three floors of 4750 Wilshire from office-use into for-lease multifamily units, with the first floor of 4750 Wilshire continuing to function as 30,335 square feet of office space.

The total cost of the conversion is expected to be approximately $ 31.0 million, which will be financed by a combination of equity contributions from the 4750 Wilshire JV Partners and a third-party construction loan, secured by 4750 Wilshire, which closed in March 2023, that allows for total draws of $ 38.5 million (the “4750 Wilshire Construction Loan”).

The Company provided a limited guarantee to the lender, under the 4750 Wilshire Construction Loan.

Pursuant to the co-investment agreement, the 4750 Wilshire JV Partners will pay an on-going management fee to the Company.

In addition, the Company may earn incentive fees based on the performance of 4750 Wilshire after the conversion.

The Company recorded a loss of $ 3,000 related to its investment in the 4750 Wilshire JV during the three months ended March 31, 2023 in the consolidated statements of operations.

The Company’s investment in the 4750 Wilshire JV was $ 8.6 million and its ownership percentage remained unchanged as of March 31, 2023.

1902 Park Avenue — In February 2023, the Company and a CIM-managed interval fund (the “1902 Park JV Partner) purchased a multifamily property in the Echo Park neighborhood of Los Angeles, California for a gross purchase price of $ 19.1 million (excluding transaction costs) (the “1902 Park JV”).

The Company owns 50 % of the 1902 Park JV.

In connection with the closing in February 2023, the 1902 Park JV obtained financing through a mortgage loan of $ 9.6 million secured by the multifamily property (the “1902 Park Mortgage Loan”).

The Company provided a limited guarantee to the lender under the 1902 Park Mortgage Loan.

The Company recorded income of $ 832,000 related to its investment in the 1902 Park JV during the three months ended March 31, 2023 in the consolidated statements of operations.

The Company’s investment in the 1902 Park JV was $ 7.5 million as of March 31, 2023.

LOANS RECEIVABLE

Loans receivable consist of the following (in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

SBA 7(a) loans receivable, subject to credit risk $ 2,915 $ 56,116

SBA 7(a) loans receivable, subject to loan-backed notes 53,010 —

SBA 7(a) loans receivable, Paycheck Protection Program — 5,050

SBA 7(a) loans receivable, subject to secured borrowings 5,497 6,127

4 unchanged sentences

Loans receivable, net $ 62,442 $ 62,547

____________________

(1) On January 1, 2023, the Company adopted ASU 2016-13.

As such, the amounts as of March 31, 2023 reflect the Company’s current estimate of potential credit losses related to the Company’s loans receivable .

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

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

These loans were subject to credit risk.

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).

These loans are subject to credit risk.

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

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

March 31, 2023 (Unaudited) – (Continued)

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

There is no credit risk associated with these loans since the SBA has guaranteed payment of the principal.

There was no credit risk associated with these loans since the SBA has guaranteed payment of the principal.

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 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.

Current Expected Credit Losses

Current expected credit losses (“CECL”) reflect the Company’s current estimate of potential credit losses related to loans receivable included in the Company’s consolidated balance sheets as of March 31, 2023 pursuant to ASU 2016-13 as implemented effective January 1, 2023.

Refer to Note 2 for further discussion of CECL.

The following table presents the activity in the Company’s current expected credit losses for the three months ended March 31, 2023 (dollar amounts in thousands):

Loans Receivable

Allowance for credit losses as of December 31, 2022 $ 1,106

Transition adjustment on January 1, 2023 783

Reserve for expected credit losses 51

Current expected credit losses as of March 31, 2023 $ 1,940

The Company’s initial estimate of its current expected credit losses against the loans receivable of $ 783,000 , net of a $ 164,000 deferred tax asset, was recorded on January 1, 2023 directly to distributions in excess of earnings on the Company’s consolidated statements of equity.

Subsequent changes to the allowance for credit losses are recognized through net income on the Company’s consolidated statements of operations.

During the three months ended March 31, 2023, the Company recorded a $ 51,000 increase in its current expected credit losses related to its loans receivable, which is recorded in general and administrative in the consolidated statement of operations, bringing the total current expected credit loss to $ 1.9 million as of March 31, 2023.

As of March 31, 2023 and December 31, 2022, the Company’s loans subject to credit risk were 99.9 % and 99.9 %, respectively, concentrated in the hospitality industry.

As of March 31, 2023 and December 31, 2022, 98.9 % and 98.4 %, 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 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.

As of March 31, 2023 and December 31, 2022, $ 740,000 and $ 1.0 million, respectively, of loans subject to credit risk were classified in substandard categories.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

OTHER INTANGIBLE ASSETS AND LIABILITIES

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

September 30, 2022 December 31, 2021

A schedule of the Company’s intangible assets and liabilities and related accumulated amortization and accretion as of March 31, 2023 and December 31, 2022 is as follows (in thousands):

March 31, 2023 December 31, 2022

Intangible assets:

Acquired in-place leases, net of accumulated amortization of $ 8,871 and $ 9,030 , respectively, both with an average useful life of 9 years

Acquired in-place leases, net of accumulated amortization of $ 11,923 and $ 7,795 , respectively, with an average useful life of 3 and 8 years, respectively.

$ 24,571 $ 1,488

Acquired above-market leases, net of accumulated amortization of $ 36 and $ 27 , respectively, both with an average useful life of 6 years

Acquired above-market leases, net of accumulated amortization of $ 63 and $ 39 , respectively, with an average useful life of 3 and 6 years, respectively

Trade name and license 2,957 2,957

1 unchanged sentence

Intangible lease liabilities:

Acquired below-market leases, net of accumulated amortization of $ 1,123 and $ 1,134 , respectively, both with an average useful life of 5 years

Acquired below-market leases, net of accumulated amortization of $ 32 and $ 22 , respectively, both with an average useful life of 1 year

Amortization of the acquired above-market leases is recorded as a reduction to rental and other property income, and amortization of the acquired in-place leases is included in depreciation and amortization in the accompanying consolidated statements of operations.

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

During the three months ended March 31, 2023 and 2022, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):

Three Months Ended March 31,

Acquired above-market lease amortization $ 24 $ 3

1 unchanged sentence

Acquired below-market lease amortization $ 9 $ 69

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

A schedule of future amortization and accretion of acquired intangible assets and liabilities as of March 31, 2023, is as follows (in thousands):

Assets Liabilities

2 unchanged sentences

Leases Acquired

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

2023 $ 57 $ 23,585 $ ( 234 )

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

Outstanding Balance $ 97,100 $ — $ — $ — $ 97,100

Deferred debt origination costs — Mortgage Payable ( 120 ) — — 19 ( 101 )

Total Mortgage Payable 96,980 — — 19 96,999

March 31, 2023 (Unaudited) – (Continued)

The following table summarizes the debt balances as of March 31, 2023 and December 31, 2022, and the debt activity for the three months ended March 31, 2023 (in thousands):

During the Three Months Ended March 31, 2023

Balances as of December 31, 2022 Debt Issuances & Assumptions Repayments Accretion & (Amortization) Balances as of March 31, 2023

Mortgages Payable:

Fixed rate mortgage payable $ 97,100 $ — $ — $ — $ 97,100

Variable rate mortgages payable 181,318 ( 16,000 ) — 165,318

97,100 181,318 ( 16,000 ) — 262,418

Deferred debt origination costs — Mortgages Payable ( 94 ) ( 1,088 ) — 135 ( 1,047 )

Total Mortgages Payable 97,006 180,230 ( 16,000 ) 135 261,371

Secured Borrowings — Government Guaranteed Loans:

2 unchanged sentences

Total Secured Borrowings — Government Guaranteed Loans 6,237 — ( 607 ) ( 26 ) 5,604

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

2022 credit facility revolver — 212,000 ( 90,000 ) — 122,000

2022 credit facility term loan 56,230 — — — 56,230

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

SBA 7(a) loan-backed notes — 54,141 ( 2,203 ) — 51,938

Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility 5,030 — ( 5,030 ) — —

Deferred debt origination costs — other ( 779 ) ( 1,312 ) — 98 ( 1,993 )

2 unchanged sentences

Total Debt, Net $ 184,267 $ 445,059 $ ( 108,810 ) $ 232 $ 520,748

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

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.

Fixed Rate Mortgage Payable —The Company’s fixed rate mortgage payable is secured by a deed of trust on a property and assignments of rents receivable.

As of March 31, 2023, the Company’s fixed rate 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.

Variable Rate Mortgages Payable —The Company’s variable rate mortgages payable are secured by a deed of trust on the respective properties and assignments of rents receivable.

As of March 31, 2023, the Company’s variable rate mortgages payable had a variable interest rates ranging from SOFR plus 3.25 % - 3.35 %, with monthly payments of interest only, due on various dates from June 7, 2024 to July 7, 2025 with extension options subject to certain conditions being met.

The loans are nonrecourse.

Secured Borrowings — Government Guaranteed Loans —Secured borrowings—government guaranteed loans represent sold loans which are treated as secured borrowings because the loan sales did not meet the derecognition criteria provided for in ASC 860-30, Secured Borrowing and Collateral .

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

As of March 31, 2023, the Company’s secured borrowings-government guaranteed loans included $ 3.0 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 8.13 % at March 31, 2023, 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 5.82 % at March 31, 2023.

2022 Credit Facility —In December 2022, the Company refinanced its 2018 credit facility and replaced it with a new 2022 credit facility, entered into with a bank syndicate, that includes a $ 56.2 million term loan (the “2022 Credit Facility Term

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 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, 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.

March 31, 2023 (Unaudited) – (Continued)

Loan”) as well as a revolver allowing the Company to borrow up to $ 150.0 million (the “2022 Credit Facility Revolver”), both of which are collectively subject to a borrowing base calculation.

The 2022 credit facility is secured by certain properties in the Company’s real estate portfolio:

six office properties and one hotel property (as well as the hotel’s adjacent parking garage and retail property).

The 2022 credit facility bears interest at (A) the base rate plus 1.50 % or (B) SOFR plus 2.60 %.

As of March 31, 2023, the variable interest rate was 7.36 %.

The 2022 Credit Facility Revolver is also subject to an unused commitment fee of 0.15 % or 0.25 % depending on the amount of aggregate unused commitments.

The 2022 credit facility is guaranteed by the Company and the Company is subject to certain financial maintenance covenants.

The 2022 credit facility matures in December 2025 and provides for two one-year extension options 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.

As of March 31, 2023 and December 31, 2022, $ 28.0 million and $ 150.0 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.

1 unchanged sentence

The junior subordinated notes may be redeemed at par at the Company’s option.

SBA 7(a) Loan-Backed Notes —On May 30, 2018, the Company completed a securitization of the unguaranteed portion of certain of its SBA 7(a) loans receivable with the issuance of $ 38.2 million of unguaranteed SBA 7(a) loan-backed notes.

The SBA 7(a) loan-backed notes are secured by deeds of trust or mortgages and are collateralized solely by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of the Company’s SBA 7(a) loans receivable.

SBA 7(a) Loan-Backed Notes —On March 9, 2023, the Company completed a securitization of the unguaranteed portion of certain of its SBA 7(a) loans receivable with the issuance of $ 54.1 million of unguaranteed SBA 7(a) loan-backed notes (with net proceeds of approximately $ 43.3 million, after payment of fees and expenses in connection with the securitization and the funding of a reserve account and an escrow account).

The SBA 7(a) loan-backed notes are collateralized by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of our SBA 7(a) loans receivable.

The SBA 7(a) loan-backed notes mature on March 20, 2048, with monthly payments due as payments on the collateralized loans are received.

Based on the anticipated repayments of the Company’s collateralized SBA 7(a) loans, at issuance, the Company estimated the weighted average remaining life of the SBA 7(a) loan-backed notes to be approximately two years .

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 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 $ 1.5 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 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.

The SBA 7(a) loan-backed notes bear interest at a per annum rate equal to the lesser of (i) 30-day average compounded SOFR plus 2.90 % and (ii) prime rate minus 0.35 %.

As of March 31, 2023, the variable interest rate was 7.40 %.

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

The restricted cash on the Company’s consolidated balance sheets included funds related to the Company’s SBA 7(a) loan-backed notes was $ 7.7 million as of March 31, 2023.

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

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):

As of March 31, 2023 and December 31, 2022, accrued interest and unused commitment fees payable of $ 2.0 million and $ 562,000 , respectively, were included in accounts payable and accrued expenses.

Future principal payments on the Company’s debt (face value) as of March 31, 2023 are as follows (in thousands):

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

2018 Revolving Credit Facility Other (1) (2)

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

2022 Credit Facility Other (1) (2)

2023 (Nine months ending December 31, 2023) $ — $ 186 $ — $ 6,834 $ 7,020

2024 78,318 263 — 8,576 87,157

8 unchanged sentences

The Company’s estimate will differ from actual amounts to the extent the Company experiences prepayments and or loan liquidations or charge-offs.

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

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, the Company may use certain types of derivative instruments for the purpose of managing or hedging its interest rate risk.

During the three months ended March 31, 2023, the Company entered into two interest rate cap agreements in connection with the assumption of two mortgage loans.

The following table summarizes the terms of the Company’s interest rate cap agreements as of March 31, 2023 (dollar amounts in thousands):

Outstanding Notional Fair Value of Assets as of

Balance Sheet Amount as of Strike Effective Maturity March 31,

Location March 31, 2023 Rates (1)

Dates Dates 2023

Interest Rate Caps Other assets $ 165,318 2.5 % to

6/15/2021 to 8/07/2022

7/07/2023 to 6/07/2024

____________________________________

(1) The index used for the Company’s interest rate cap agreements is 1-Month Term SOFR.

Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 13.

The notional amount under the derivative instruments is an indication of the extent of the Company’s involvement in each instrument, but does not represent exposure to credit, interest rate or market risks.

Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument.

The Company has interest rate caps that are used to manage exposure to interest rate movements, but do not meet the requirements to be designated as hedging instruments.

STOCK-BASED COMPENSATION PLANS

2 unchanged sentences

Grant Date (1) Vesting Date Restricted Shares of Common Stock - Individual Restricted Shares of Common Stock - Aggregate

May 2020 February 2021 (2) 5,478 5,478

May 2021 May 2022 (2) 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 $ 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.

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 March 31, 2023 and 2022, respectively.

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

2 unchanged sentences

Golay’s shares.

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.

As of March 31, 2023, there was $ 37,000 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 September 30, 2022 or 2021 were

No shares of Series D Preferred Stock, Series A Preferred Stock, or Series A1 Preferred Stock outstanding as of March 31, 2023 were included in

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.

March 31, 2023 (Unaudited) – (Continued)

the computation of diluted EPS because they had no dilutive effect.

For the three months ended March 31, 2022, the basic weighted average number of shares of Common Stock outstanding was increased by 2,477 shares to reflect the dilutive effect of certain shares of the Company’s Series A Preferred Stock.

Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three months ended March 31, 2023 and 2022 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 12).

Outstanding shares of Series L Preferred Stock were not included in the computation of diluted EPS for the three months ended March 31, 2023 (because they were redeemed in January 2023) and 2022 (because such shares were not redeemable during such period).

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 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

The following table reconciles the numerator and denominator used in computing the Company’s basic and diluted per-share amounts for net loss attributable to common stockholders for the three months ended March 31, 2023 and 2022 (in thousands, except per share amounts):

Three Months Ended March 31,

Net loss attributable to common stockholders $ ( 12,715 ) $ ( 2,811 )

7 unchanged sentences

Diluted $ ( 0.56 ) $ ( 0.12 )

REDEEMABLE PREFERRED STOCK

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

March 31, 2023 (Unaudited) – (Continued)

REDEEMABLE PREFERRED STOCK

The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three months ended March 31, 2023 and 2022 (dollar amounts in thousands):

Preferred Stock

2 unchanged sentences

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

Issuance of Series D Preferred Stock — — — — 4,045 99 — — 4,045 99

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

1 unchanged sentence

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

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

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

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

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

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, 2022 5,956,147 $ 147,514 7,565,349 $ 189,048 48,857 $ 1,200 — $ — 13,570,353 $ 337,762

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

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

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

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

Issuance of Series A1 Preferred Stock 1,032,433 25,569 — — — — — — 1,032,433 25,569

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

Redemption of Series A1 Preferred Stock ( 12,870 ) ( 319 ) — — — — — — ( 12,870 ) ( 319 )

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

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 — — 389,325 9,699 — — — — 389,325 9,699

Redemption of Series A Preferred Stock — — ( 189,753 ) ( 4,723 ) — — — — ( 189,753 ) ( 4,723 )

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

September 30, 2022 (Unaudited) – (Continued)

Balances, March 31, 2023 6,975,710 $ 172,764 7,764,921 $ 194,024 48,857 $ 1,200 — $ — 14,789,488 $ 367,988

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.

As of March 31, 2023, the Company had issued in registered public offerings 6,798,510 shares of the Series A1 Preferred Stock and received gross proceeds of $ 168.3 million and additionally, had issued 200,000 shares of Series A1 Preferred Stock as payment for services to the CIM Service Provider, LLC (the “Administrator”), for which no cash proceeds were received.

In connection with the issuance of shares of Series A1 Preferred Stock, $ 12.4 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 $ 9.8 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.

As of March 31, 2023, the Company had reclassified and allocated $ 2.3 million 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.

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 March 31, 2023, there were 6,975,710 shares of Series A1 Preferred Stock outstanding and 22,800 shares of Series A1 Preferred Stock had been redeemed.

Series A Preferred Stock —The Company conducted a continuous public offering of Series A Preferred Stock (with each issued share of Series A Preferred Stock, initially accompanied by 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.

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

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

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

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 March 31, 2023, 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 Administrator, for which no cash proceeds were received.

In connection with the cumulative issuance of Series A Preferred Stock and Series A Preferred

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Warrants, $ 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.

As of March 31, 2023, 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.

2 unchanged sentences

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

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.

During the three months ended March 31, 2023 and March 31, 2022, the Company recorded redeemable preferred stock deemed dividends of $ 0 and $ 15,000 , 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 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)

As of March 31, 2023, the Company had reclassified an aggregate of $ 192.8 million in net proceeds from temporary equity to permanent equity.

As of March 31, 2023, there were 8,067,057 shares of Series A Preferred Stock outstanding and 753,281 shares of Series A Preferred Stock had been redeemed.

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.

1 unchanged sentence

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

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

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

As of March 31, 2023, 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.

As of March 31, 2023, 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.

As of March 31, 2023, there were 48,857 shares of Series D Preferred Stock outstanding and 8,000 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.

The Company received gross proceeds of $ 229.3 million from the sale of the Series L Preferred Stock, which was reduced by issuance-specific offering costs, such as commissions, dealer manager fees, and other offering fees and expenses, totaling $ 15.9 million, a discount of $ 2.9 million, and non-issuance-specific costs of $ 2.5 million.

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

The Company received gross proceeds of $ 229.3 million from the sale of the Series L Preferred Stock, which was reduced by issuance-specific offering costs.

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 shares were repurchased at a purchase price of $ 27.40 per share (a 3.4 % discount to the stated value of $ 28.37 per share) 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 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.

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

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

With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series A1 Preferred Stock ranks on parity with the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, to the extent of the Series L Preferred Stock Stated Value, and otherwise ranks senior to the Series L Preferred Stock and the Common Stock.

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

The $ 4.8 million of redeemable preferred stock redemptions represents the difference between the

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.

March 31, 2023 (Unaudited) – (Continued)

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).

Dividends —With respect to the payment of dividends or the distribution of amounts upon liquidation, dissolution or winding-up, the Series A1 Preferred Stock, the Series A Preferred Stock and Series D Preferred Stock rank on parity with respect to each other and senior to the Common 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 (the “Series A1 Dividend”) on each share of Series A1 Preferred Stock at the greater of (i) an annual rate of 6.0 % of the Series A1 Preferred Stock Stated Value (i.e., the equivalent of $ 0.3750 per share per quarter) and (ii) the Federal Funds (Effective) Rate for such quarter and plus 2.5 % of the Series A1 Preferred Stock Stated Value divided by four, up to a maximum of 2.5 % of the Series A1 Preferred Stock Stated Value per quarter.

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

Holders of Series D Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends on each share of Series D Preferred Stock at an annual rate of 5.65 % of the Series D Preferred Stock Stated Value (i.e., the equivalent of $ 0.35313 per share per quarter) (the “Series D Dividend”).

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

Dividends on each share of Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock begin accruing on, and are cumulative from, the date of issuance.

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

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

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

Dividends on each share of Series L Preferred Stock began accruing on, and are cumulative from, the date of issuance.

The Company expects to pay dividends on the Series L Preferred Stock in arrears on an annual basis in accordance with the foregoing provisions, unless the Company’s results of operations, general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so.

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

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

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

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.

During the three months ended March 31, 2023, the Company paid $ 2,384,000 , $ 2.8 million, $ 17,000 and $ 4.6 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 three months ended March 31, 2022, the Company paid $—, $ 2.7 million, $ 20,000 and $ 8.4 million of cash dividends on the Series A1 Preferred Stock, 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.

2 unchanged sentences

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

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 and/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.

The Company redeemed all outstanding shares of Series L Preferred Stock in cash in January 2023.

The total cost to complete the redemption, including transaction costs of $ 93,000 , was $ 83.8 million.

The accrued and unpaid dividends on the redeemed shares of Series L Preferred Stock through December 31, 2022 of $ 1.56 per share (or $ 4.6 million accrued and unpaid dividends in the aggregate) were also paid January 25, 2023.

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.

From and after the fifth anniversary of the date of original issuance of the Series L Preferred Stock, each holder will have the right to require the Company to redeem, and the Company will also have the option to redeem (subject to certain conditions), such shares of Series L Preferred Stock at a redemption price equal to the Series L Preferred Stock Stated Value, plus, provided certain conditions are met, all accrued and unpaid distributions.

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

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

March 31, 2023 (Unaudited) – (Continued)

STOCKHOLDERS’ EQUITY

2 unchanged sentences

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:

Cash dividends per share of Common Stock paid in respect of the three months ended March 31, 2023 and 2022 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 20, 2023 April 11, 2023 Regular Quarterly $ 0.085

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

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

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

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

Series A Preferred Warrants

2 unchanged sentences

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

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.

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.

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

Proceeds and expenses from the sale of the Series A Preferred Stock and Series A Preferred Warrants 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 March 31, 2023, the Company had 2,925,501 Series A Preferred Warrants outstanding to purchase 756,257 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $ 466,000 , after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.

Share Repurchase Program

3 unchanged sentences

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

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)

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

There were no repurchases during the three months ended March 31, 2023.

As of March 31, 2023, the Company had repurchased 662,462 shares of Common Stock for $ 4.7 million.

FAIR VALUE OF FINANCIAL INSTRUMENTS

2 unchanged sentences

Level 1 Inputs —Quoted prices in active markets for identical assets or liabilities

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Level 2 Inputs —Observable inputs other than quoted prices in active markets for identical assets and liabilities

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

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

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

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

6 unchanged sentences

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.

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

Debt —The carrying amounts of the Company’s secured borrowings—government guaranteed loans, SBA 7(a) loan-backed notes, 2022 Revolving Credit Facility and variable rate mortgages payable approximate their fair values, as the interest rates on these securities are variable and approximate current market interest rates.

The Company determines the fair value of mortgage notes payable and junior subordinated notes by performing discounted cash flow analyses using an appropriate market discount rate.

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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 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.

When estimating the fair value of the Company’s mortgages payable as of March 31, 2023 and December 31, 2022, the Company used a rate of 6.20 % and 6.48 %, respectively.

The rate used to estimate the fair value of the Company’s junior subordinated notes was 9.44 % and 9.02 % as of March 31, 2023 and December 31, 2022, 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.

1 unchanged sentence

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:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Discount Rate Prepayment Rate Discount Rate Prepayment Rate

5 unchanged sentences

4.67 % - 17.00 %

5.75 % - 7.75 %

5.00 % - 17.50 %

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 % - 17.00 %

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 September 30, 2022 and December 31, 2021.

Derivative Instruments — The Company’s derivative instruments are comprised of interest rate caps.

All derivative instruments are carried at fair value and are valued using Level 2 inputs.

The fair value of these instruments is determined using interest rate market pricing models.

In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

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):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Amount Estimated

4 unchanged sentences

SBA 7(a) loans receivable, subject to loan-backed notes $ 52,365 $ 55,101 $ — $ — 3

SBA 7(a) loans receivable, paycheck protection program $ — $ — $ 4,903 $ 5,050 3

SBA 7(a) loans receivable, subject to secured borrowings $ 5,528 $ 5,605 $ 6,158 $ 6,237 3

SBA 7(a) loans receivable, held for sale $ 1,742 $ 1,818 $ 152 $ 126 3

Mortgages payable (1)

Fixed rate mortgage payable (1)

$ 97,100 $ 91,090 $ 97,100 $ 90,002 2, 3

3 unchanged sentences

(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

12 unchanged sentences

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

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

For any quarter following an Excess Quarter, the Company (upon the direction of the independent

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

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

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

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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:

An incentive fee (the “Revised Incentive Fee”) is payable quarterly in arrears to the Administrator with respect to the 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 “Adjusted Common Equity” (as defined below) for such quarter (“Excess Core FFO”) as follows:

(i) no Incentive Fee in any quarter in which the Excess Core FFO is $ 0 ;

(i) no Revised Incentive Fee in any quarter in which the Excess Core FFO is $ 0 ;

(ii) 100 % of any Excess Core FFO up to an amount equal to the product of (x) the average of the Adjusted Common Equity as of the first and last day of the applicable quarter and (y) 0.4375 %;

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

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

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

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):

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Daily Average Adjusted Fair

7 unchanged sentences

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

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

Asset management fees are included in asset management and other fees to related parties in the accompanying

consolidated statements of operations.

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

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 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.

During the three months ended March 31, 2023 and 2022, 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).

2 unchanged sentences

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

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

capitalized in some cases.

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

3 unchanged sentences

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

Offering-Related Fees — CCO Capital, LLC (“CCO Capital”) became the exclusive dealer manager for the Company’s public offering of the Series A Preferred Units effective as of May 31, 2019.

Offering-Related Fees — CCO Capital, LLC (“CCO Capital”) became the exclusive dealer manager for the Company’s public offering of the Series A Preferred Stock and Series A Preferred Warrants effective as of May 31, 2019.

CCO Capital is a registered broker dealer and is under common control with the Operator and the Administrator.

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

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

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

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.

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

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

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

1 unchanged sentence

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

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

In addition, pursuant to the Third Amended and Restated Dealer Manager Agreement, CCO Capital will no longer solicit or make any offers for the sale of shares of Series A Preferred Stock or Series D Preferred Stock.

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

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

Three Months Ended March 31,

Asset Management Fees:

Asset management fees (1)

$ 916 $ 2,262 $ 2,757 $ 6,781

Property Management Fees and Reimbursements:

Property management fees (2)

$ 442 $ 416 $ 1,293 $ 1,223

Onsite management and other cost reimbursement (3)

1 unchanged sentence

Leasing commissions (4)

$ 635 $ 59 $ 740 $ 107

Construction management fees (5)

$ 102 $ 70 $ 300 $ 105

Administrative Fees and Expenses:

2 unchanged sentences

Expense reimbursements to related parties - lending segment (6)

$ 539 $ 55 $ 1,612 $ 1,219

Offering-Related Fees:

Upfront dealer manager and trailing dealer manager fees (7)

$ 778 $ 145 $ 1,052 $ 567

Non-issuance specific offering costs (8)

______________________

(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.

(1) The Company issued to the Operator 36,843 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.

(2) Does not include the company’s share of the property management fees from the Unconsolidated Joint Ventures of $ 17,000 and $ 4,000 for the three months ended March 31, 2023 and March 31, 2022, respectively.

(3) Does not include the Company’s share of the onsite management and other cost reimbursements from the Unconsolidated Joint Ventures of $ 29,000 and $ 12,000 for the three months ended March 31, 2023 and March 31, 2022, respectively.

(4) Does not include the Company’s share of the leasing commissions from the Unconsolidated Joint Ventures of $ 12,000 for the three months ended March 31, 2023.

(5) Does not include the Company’s share of the construction management fees from the Unconsolidated Joint Ventures of $ 4,000 and $ 1,000 for the three months ended March 31, 2023 and March 31, 2022, respectively.

(6) Expense reimbursements to related parties - lending segment do not include personnel costs capitalized to deferred loan origination costs of $ 65,000 and $ 81,000 for the three months ended March 31, 2023 and 2022, respectively.

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

(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.

(8) As of March 31, 2023 and March 31, 2022, $ 2.5 million and $ 2.2 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 A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock on a pro rata basis for each issuance as a percentage of the total offering.

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

March 31, 2023 (Unaudited) – (Continued)

As of March 31, 2023 and December 31, 2022, due to related parties consisted of the following (in thousands):

March 31, 2023 December 31, 2022

Asset management fees $ 720 $ 812

7 unchanged sentences

Affiliate Investments

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.

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 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.

See Note 2 and Note 4 for more information.

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

In February 2023, the Company and the 1902 Park JV Partner invested in the 1902 Park JV, which purchased a multifamily property in the Echo Park neighborhood of Los Angeles, California for a gross purchase price of $ 19.1 million.

The Company owns 50 % of the 1902 Park JV.

In connection with the closing in February 2023, the 1902 Park JV obtained financing of $ 9.6 million through the 1902 Park Mortgage Loan.

The Company and the 1902 Park JV Partner both initially contributed $ 6.6 million to the 1902 Park JV.

See Note 2 and Note 4 for more information.

During the three months ended both March 31, 2023, the Company acquired an interest in four assets from entities indirectly wholly-owned by a fund that is managed by affiliates of CIM Group Management, LLC for $ 282.9 million (exclusive of transactions costs) .

As part of this transaction, the Company had a $ 3.7 million receivable due from the affiliate related to certain post-closing items that was included in accounts receivable, net on the consolidated balance sheet as of March 31, 2023.

Subsequent to March 31, 2023, the Company received the full proceeds related to these post-closing items.

See Note 3 and Note 7 for more information.

On May 15, 2019, CIM Group entered into an approximately 11-year lease for approximately 32,000 rentable square feet with respect to a property owned by the Company (4750 Wilshire).

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 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.

In February 2023, the Company sold an 80 % interest in 4750 Wilshire and now holds its retained 20 % interest in the property through the 4750 Wilshire JV.

For the three months ended both March 31, 2023 and 2022, the Company recorded rental and other property income related to this tenant of $ 194,000 and $ 370,000 , respectively, and for the three months ended March 31, 2023 the Company’s share of the income from the tenant earned by the 4750 Wilshire JV was $ 37,000 .

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 $ 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.

The Company’s outstanding commitments to fund loans were $ 8.0 million as of March 31, 2023, 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 $ 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.

The Company had a total of $ 7.4 million in future obligations under leases to fund tenant improvements and other future construction obligations as of March 31, 2023.

As of March 31, 2023, $ 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

March 31, 2023 (Unaudited) – (Continued)

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

3 unchanged sentences

While the outcome of these legal actions and proceedings cannot be predicted with certainty, in management’s opinion, the resolution of these legal proceedings and actions will not have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company’s ability to satisfy its debt service obligations or to maintain its level of distributions on Common Stock or Preferred Stock.

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.

2 unchanged sentences

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

As of March 31, 2023, the Company serviced an aggregate of $ 246.6 million of the guaranteed portion of SBA 7(a) loans.

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

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 September 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 March 31, 2023, excluding tenant reimbursements of certain costs, are as follows (excludes unconsolidated properties, in thousands):

Years Ending December 31, Total

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

2023 (Nine months ending December 31, 2023) $ 44,197

Thereafter 47,408

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

SEGMENT DISCLOSURE

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.

The Company’s reportable segments during the three months ended March 31, 2023 consist of four types of commercial real estate properties, namely, office, hotel and multifamily, as well as a segment for the Company’s lending business.

The Company’s reportable segments during the three months ended March 31, 2022 consist of three 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.

1 unchanged sentence

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, 2022 included in the 2022 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

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

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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

March 31, 2023 (Unaudited) – (Continued)

The net operating income (loss) of the Company’s segments for the three months ended March 31, 2023 and 2022 is as follows (in thousands):

Three Months Ended March 31,

Revenues $ 13,487 $ 14,105

3 unchanged sentences

Total property expenses 6,623 6,211

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

(Loss) income from unconsolidated entities ( 64 ) 120

Segment net operating income—office 6,800 8,014

6 unchanged sentences

Revenues 1,223 —

Property expenses:

Operating 1,363 —

General and administrative 17 —

Total property expenses 1,380 —

Income from unconsolidated entity 832 —

Segment net operating income—multifamily 675 —

Revenues 2,710 2,884

Lending expenses:

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

March 31, 2023 (Unaudited) – (Continued)

A reconciliation of segment net operating income to net income attributable to the Company for the three months ended March 31, 2023 and 2022 is as follows (in thousands):

Three Months Ended March 31,

Total segment net operating income $ 12,978 $ 12,156

Interest and other income 1 — 1 1

Asset management and other fees to related parties ( 720 ) ( 921 )

2 unchanged sentences

General and administrative ( 1,301 ) ( 1,137 )

Transaction costs ( 201 ) — ( 201 ) —

Transaction-related costs ( 3,360 ) —

Depreciation and amortization ( 9,502 ) ( 5,004 )

Gain on sale of real estate 1,104 —

(Loss) income before provision for income taxes ( 7,320 ) 2,609

1 unchanged sentence

Net (loss) income ( 7,576 ) 2,302

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

Net loss (income) attributable to noncontrolling interests 625 ( 5 )

Net (loss) income attributable to the Company $ ( 6,951 ) $ 2,297

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

The condensed assets for each of the segments as of March 31, 2023 and December 31, 2022, along with capital expenditures and loan originations for the three months ended March 31, 2023 and 2022, are as follows (in thousands):

March 31, 2023 December 31, 2022

Condensed assets:

1 unchanged sentence

Hotel 99,151 99,082

Multifamily 310,990 —

Lending 84,812 76,148

Non-segment assets 3,667 43,341

11,856 12,986

Total assets $ 957,556 $ 690,248

Nine Months Ended September 30,

Three Months Ended March 31,

Capital expenditures (1) and loan originations:

1 unchanged sentence

Hotel 1,629 8

Multifamily 5,327 —

Total capital expenditures 9,112 1,400

2 unchanged sentences

______________________

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

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

1 unchanged sentence

SUBSEQUENT EVENTS

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.

The Company made a paydown of $ 20.0 million on the revolving portion of its 2022 Credit Facility on April 28, 2023.

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