Creative Media & Community Trust Corp 10-Q

Item 1. Financial Statements CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share and per share amounts) (Unaudited) September 30, 2024 December 31, 2023 ASSETS Investments in real estate, net $ 702,845 $ 704,762 Investments in unconsolidated entities 34,196 33,505 Cash and cash equivalents 18,454 19,290 Restricted cash 17,521 24,938 Loans receivable, net (Note 5) 55,742 57,005 Accounts receivable, net 4,198 5,347 Deferred rent receivable and charges, net 21,087 28,222 Other intangible assets, net 3,663 3,948 Other assets 10,343 14,183 TOTAL ASSETS $ 868,049 $ 891,200 LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY LIABILITIES: Debt, net $ 478,339 $ 471,561 Accounts payable and accrued expenses 26,582 26,426 Due to related parties 8,864 3,463 Other liabilities 10,604 12,981 Total liabilities 524,389 514,431 COMMITMENTS AND CONTINGENCIES (Note 15) REDEEMABLE PREFERRED STOCK: Series A1 cumulative redeemable preferred stock, $ 0.001 par value; 25,226,343 and 27,904,974 shares authorized as of September 30, 2024 and December 31, 2023, respectively; 913,630 shares issued and outstanding as of September 30, 2024 and no shares issued or outstanding as of December 31, 2023; liquidation preference of $ 25.00 per share, subject to adjustment 20,799 — EQUITY: Series A cumulative redeemable preferred stock, $ 0.001 par value; 31,519,738 and 34,611,501 shares authorized as of September 30, 2024 and December 31, 2023, respectively; 8,820,338 and 4,340,076 shares issued and outstanding, respectively, as of September 30, 2024 and 8,820,338 and 7,431,839 shares issued and outstanding, respectively, as of December 31, 2023; liquidation preference of $ 25.00 per share, subject to adjustment 108,703 185,704 Series A1 cumulative redeemable preferred stock, $ 0.001 par value; 25,226,343 and 27,904,974 shares authorized as of September 30, 2024 and December 31, 2023, respectively; 11,327,248 and 8,553,591 shares issued and outstanding, respectively, as of September 30, 2024 and 10,473,369 and 10,378,343 shares issued and outstanding, respectively, as of December 31, 2023; liquidation preference of $ 25.00 per share, subject to adjustment 211,877 256,935 Series D cumulative redeemable preferred stock, $ 0.001 par value; 26,991,590 shares authorized as of September 30, 2024 and December 31, 2023; 56,857 and 48,447 shares issued and outstanding, respectively, as of September 30, 2024 and 56,857 and 48,447 shares issued and outstanding, respectively, as of December 31, 2023; liquidation preference of $ 25.00 per share, subject to adjustment 1,190 1,190 Common stock, $ 0.001 par value; 900,000,000 shares authorized; 83,447,280 shares issued and outstanding as of September 30, 2024 and 22,786,741 shares issued and outstanding as of December 31, 2023 87 23 Additional paid-in capital 984,978 852,476 Distributions in excess of earnings ( 985,874 ) ( 921,925 ) Total stockholders’ equity 320,961 374,403 Non-controlling interests 1,900 2,366 Total equity 322,861 376,769 TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY $ 868,049 $ 891,200 The accompanying notes are an integral part of these consolidated financial statements. 1 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 REVENUES: Rental and other property income $ 18,150 $ 17,061 $ 56,172 $ 49,999 Hotel income 6,808 7,485 29,768 29,590 Interest and other income 3,658 3,572 11,113 10,201 Total Revenues 28,616 28,118 97,053 89,790 EXPENSES: Rental and other property operating 17,373 15,509 52,550 47,713 Asset management and other fees to related parties 515 724 1,334 2,071 Expense reimbursements to related parties—corporate 592 524 1,809 1,729 Expense reimbursements to related parties—lending segment 672 648 1,908 2,166 Interest 9,616 9,733 27,819 24,678 General and administrative 2,221 2,142 5,243 5,751 Transaction-related costs 526 38 1,351 3,398 Depreciation and amortization 6,423 16,082 19,357 46,056 Total Expenses 37,938 45,400 111,371 133,562 (Loss) income from unconsolidated entities ( 1,239 ) 1,189 ( 442 ) 1,053 Gain on sale of real estate (Note 3) — — — 1,104 LOSS BEFORE PROVISION FOR INCOME TAXES ( 10,561 ) ( 16,093 ) ( 14,760 ) ( 41,615 ) Provision for income taxes 15 554 573 969 NET LOSS ( 10,576 ) ( 16,647 ) ( 15,333 ) ( 42,584 ) Net loss attributable to non-controlling interests 192 874 423 2,501 NET LOSS ATTRIBUTABLE TO THE COMPANY ( 10,384 ) ( 15,773 ) ( 14,910 ) ( 40,083 ) Redeemable preferred stock dividends declared or accumulated (Note 11) ( 7,966 ) ( 6,809 ) ( 23,601 ) ( 18,341 ) Redeemable preferred stock deemed dividends (Note 11) ( 327 ) — ( 755 ) — Redeemable preferred stock redemptions (Note 11) ( 16,098 ) ( 352 ) ( 17,471 ) ( 1,040 ) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 34,775 ) $ ( 22,934 ) $ ( 56,737 ) $ ( 59,464 ) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE: Basic $ ( 1.22 ) $ ( 0.94 ) $ ( 2.20 ) $ ( 2.44 ) Diluted $ ( 1.22 ) $ ( 0.94 ) $ ( 2.20 ) $ ( 2.44 ) WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 28,493 24,422 25,789 24,402 Diluted 28,493 24,422 25,789 24,402 The accompanying notes are an integral part of these consolidated financial statements. 2 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Equity (In thousands, except share and per share amounts) (Unaudited) Nine Months Ended September 30, 2024 Common Stock Preferred Stock Shares Par Value Shares Par Value Additional Paid-in Capital Distributions in Excess of Earnings Total Stockholders’ Equity Non-controlling Interests Total Equity Balances, December 31, 2023 22,786,741 $ 23 17,858,629 $ 443,829 $ 852,476 $ ( 921,925 ) $ 374,403 $ 2,366 $ 376,769 Stock-based compensation expense — — — — 55 — 55 — 55 Common dividends ($ 0.085 per share) — — — — — ( 1,937 ) ( 1,937 ) — ( 1,937 ) Issuance of Series A1 Preferred Stock — — 853,879 21,246 ( 2,180 ) — 19,066 — 19,066 Redemption of Series A1 Preferred Stock paid in cash — — ( 24,046 ) ( 595 ) 52 ( 24 ) ( 567 ) — ( 567 ) Dividends to holders of Series A1 Preferred Stock ($ 0.48938 per share) — — — — — ( 5,251 ) ( 5,251 ) — ( 5,251 ) Dividends to holders of Series D Preferred Stock ($ 0.35313 per share) — — — — — ( 17 ) ( 17 ) — ( 17 ) Redemption of Series A Preferred Stock paid in cash — — ( 389,506 ) ( 9,698 ) 831 ( 776 ) ( 9,643 ) — ( 9,643 ) Dividends to holders of Series A Preferred Stock ($ 0.34375 per share) — — — — — ( 2,491 ) ( 2,491 ) — ( 2,491 ) Net loss — — — — — ( 3,730 ) ( 3,730 ) ( 175 ) ( 3,905 ) Balances, March 31, 2024 22,786,741 $ 23 18,298,956 $ 454,782 $ 851,234 $ ( 936,151 ) $ 369,888 $ 2,191 $ 372,079 Distributions to noncontrolling interests — — — — — — — ( 43 ) ( 43 ) Stock based compensation expense — — — — 55 — 55 — 55 Common dividends ($ 0.085 per share) — — — — — ( 1,937 ) ( 1,937 ) — ( 1,937 ) Redemption of Series A1 Preferred Stock paid in cash — — ( 32,002 ) ( 791 ) 69 ( 16 ) ( 738 ) — ( 738 ) Dividends to holders of Series A1 Preferred Stock ($ 0.48938 per share) — — — — — ( 5,491 ) ( 5,491 ) — ( 5,491 ) Redeemable preferred stock accretion — — — — — ( 428 ) ( 428 ) — ( 428 ) Dividends to holders of Series D Preferred Stock ($ 0.35313 per share) — — — — — ( 17 ) ( 17 ) — ( 17 ) Redemption of Series A Preferred Stock paid in cash — — ( 287,474 ) ( 7,162 ) 621 ( 558 ) ( 7,099 ) — ( 7,099 ) Dividends to holders of Series A Preferred Stock ($ 0.34375 per share) — — — — — ( 2,368 ) ( 2,368 ) — ( 2,368 ) Net loss — — — — — ( 796 ) ( 796 ) ( 56 ) ( 852 ) Balances, June 30, 2024 22,786,741 $ 23 17,979,480 $ 446,829 $ 851,979 $ ( 947,762 ) $ 351,069 $ 2,092 $ 353,161 Stock based compensation expense 107,840 — — — 55 — 55 — 55 Stock dividend ($ 0.04 per share) — 3 — — 3,336 ( 3,339 ) — — — Redemption of Series A1 Preferred Stock paid in cash — — ( 31,967 ) ( 791 ) 70 ( 17 ) ( 738 ) — ( 738 ) Redemption of Series A1 Preferred Stock paid in Common Stock 32,998,865 33 ( 2,590,616 ) ( 64,127 ) 70,147 ( 8,440 ) ( 2,387 ) — ( 2,387 ) Dividends to holders of Series A1 Preferred Stock ($ 0.48938 per share) — — — — — ( 5,710 ) ( 5,710 ) — ( 5,710 ) Redemption of Series D Preferred Stock — — — — — — — — — Dividends to holders of Series D Preferred Stock ($ 0.35313 per share) — — — — — ( 17 ) ( 17 ) — ( 17 ) Reclassification of Series A Preferred stock to permanent equity — — — — — — — — — Redeemable preferred stock accretion — — — — — ( 327 ) ( 327 ) — ( 327 ) Redemption of Series A Preferred Stock paid in cash — — ( 247,627 ) ( 6,214 ) 530 ( 459 ) ( 6,143 ) — ( 6,143 ) Redemption of Series A Preferred Stock paid in Common Stock 27,553,834 28 ( 2,167,156 ) ( 53,927 ) 58,861 ( 7,180 ) ( 2,218 ) — ( 2,218 ) Dividends to holders of Series A Preferred Stock ($ 0.34375 per share) — — — — — ( 2,239 ) ( 2,239 ) — ( 2,239 ) Net loss — — — — — ( 10,384 ) ( 10,384 ) ( 192 ) ( 10,576 ) Balances, September 30, 2024 83,447,280 $ 87 12,942,114 $ 321,770 $ 984,978 $ ( 985,874 ) $ 320,961 $ 1,900 $ 322,861 3 Table of Contents Nine Months Ended September 30, 2023 Common Stock Preferred Stock Shares Par Value Shares Par Value Additional Paid-in Capital Distributions in Excess of Earnings Total Stockholders’ Equity Non-controlling Interests Total Equity Balances, December 31, 2022 22,737,853 $ 23 13,570,353 $ 337,762 $ 861,721 $ ( 837,846 ) $ 361,660 $ 373 $ 362,033 Cumulative-effect adjustment upon adoption of ASU 2016-13 — — — — — ( 619 ) ( 619 ) — ( 619 ) Acquisition of non-controlling interests — — — — — — — 5,002 5,002 Stock-based compensation expense — — — — 55 — 55 — 55 Common dividends ($ 0.085 per share) — — — — — ( 1,933 ) ( 1,933 ) — ( 1,933 ) Issuance of Series A1 Preferred Stock — — 1,032,433 25,569 ( 2,291 ) — 23,278 — 23,278 Redemption of Series A1 Preferred Stock paid in cash — — ( 12,870 ) ( 319 ) 28 ( 11 ) ( 302 ) — ( 302 ) Dividends to holders of Series A1 Preferred Stock ($ 0.39563 per share) — — — — — ( 2,559 ) ( 2,559 ) — ( 2,559 ) Dividends to holders of Series D Preferred Stock ($ 0.35313 per share) — — — — — ( 17 ) ( 17 ) — ( 17 ) Reclassification of Series A Preferred stock to permanent equity — — 389,325 9,699 ( 887 ) — 8,812 — 8,812 Redemption of Series A Preferred Stock paid in cash — — ( 189,753 ) ( 4,723 ) 403 ( 362 ) ( 4,682 ) — ( 4,682 ) Dividends to holders of Series A Preferred Stock ($ 0.34375 per share) — — — — — ( 2,810 ) ( 2,810 ) — ( 2,810 ) 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 Stock based compensation expense — — — — 37 — 37 — 37 Common dividends ($ 0.085 per share) — — — — — ( 1,933 ) ( 1,933 ) — ( 1,933 ) Issuance of Series A1 Preferred Stock — — 1,195,589 29,582 ( 2,597 ) — 26,985 — 26,985 Redemption of Series A1 Preferred Stock paid in cash — — ( 11,200 ) ( 277 ) 23 ( 24 ) ( 278 ) — ( 278 ) Dividends to holders of Series A1 Preferred Stock $ 0.4425 per share) — — — — — ( 3,373 ) ( 3,373 ) — ( 3,373 ) Redemption of Series D Preferred Stock paid in cash — — ( 410 ) ( 10 ) — — ( 10 ) — ( 10 ) Dividends to holders of Series D Preferred Stock ($ 0.35313 per share) — — — — — ( 17 ) ( 17 ) — ( 17 ) Reclassification of Series A Preferred stock to permanent equity — — 300,846 7,462 ( 658 ) — 6,804 — 6,804 Redemption of Series A Preferred Stock paid in cash — — ( 183,809 ) ( 4,575 ) 401 ( 291 ) ( 4,465 ) — ( 4,465 ) Dividends to holders of Series A Preferred Stock ($ 0.34375 per share) — — — — — ( 2,749 ) ( 2,749 ) — ( 2,749 ) Net loss — — — — — ( 17,359 ) ( 17,359 ) ( 1,002 ) ( 18,361 ) Balances, June 30, 2023 22,737,853 $ 23 16,090,504 $ 400,170 $ 856,235 $ ( 878,854 ) $ 377,574 $ 3,748 $ 381,322 Distributions to noncontrolling interests — — — — — — — ( 38 ) ( 38 ) Stock based compensation expense 48,888 — — — 36 — 36 — 36 Common dividends ($ 0.085 per share) — — — — — ( 1,937 ) ( 1,937 ) — ( 1,937 ) Issuance of Series A1 Preferred Stock — — 1,094,386 27,015 ( 2,314 ) — 24,701 — 24,701 Redemption of Series A1 Preferred Stock paid in cash — — ( 30,941 ) ( 760 ) 64 ( 41 ) ( 737 ) — ( 737 ) Dividends to holders of Series A1 Preferred Stock ($ 0.47375 per share) — — — — — ( 4,116 ) ( 4,116 ) — ( 4,116 ) Dividends to holders of Series D Preferred Stock ($ 0.35313 per share) — — — — — ( 17 ) ( 17 ) — ( 17 ) Redemption of Series A Preferred Stock paid in cash — — ( 187,759 ) ( 4,676 ) 356 ( 311 ) ( 4,631 ) — ( 4,631 ) Dividends to holders of Series A Preferred Stock ($ 0.34375 per share) — — — — — ( 2,676 ) ( 2,676 ) — ( 2,676 ) Net loss — — — — — ( 15,773 ) ( 15,773 ) ( 874 ) ( 16,647 ) Balances, September 30, 2023 22,786,741 $ 23 16,966,190 $ 421,749 $ 854,377 $ ( 903,725 ) $ 372,424 $ 2,836 $ 375,260 The accompanying notes are an integral part of these consolidated financial statements. 4 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended September 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 15,333 ) $ ( 42,584 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization, net 19,624 46,153 Gain on sale of real estate — ( 1,104 ) Amortization of deferred debt origination costs 1,639 1,646 Amortization of premiums and discounts on debt ( 1 ) 36 Unrealized premium adjustment 549 548 Amortization of deferred costs and accretion of fees on loans receivable, net ( 105 ) ( 279 ) Write-offs (recoveries) of uncollectible receivables 782 160 Write-off of other deferred costs 491 — Loss (gain) on interest rate caps 425 349 Deferred income taxes ( 27 ) 28 Stock-based compensation 165 128 Loss (income) from unconsolidated entities 442 ( 1,053 ) Loans funded, held for sale to secondary market ( 13,017 ) ( 13,468 ) Proceeds from sale of guaranteed loans 15,257 13,560 Principal collected on loans subject to secured borrowings 1,198 1,434 Commitment fees remitted and other operating activity ( 461 ) ( 314 ) Changes in operating assets and liabilities: Accounts receivable 553 695 Other assets 2,536 ( 3,961 ) Accounts payable and accrued expenses ( 766 ) 18,376 Deferred leasing costs ( 1,095 ) ( 717 ) Other liabilities ( 2,377 ) ( 4,455 ) Due to related parties 5,401 1,584 Net cash provided by operating activities 15,880 16,762 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 12,778 ) ( 10,895 ) Acquisition of real estate — ( 96,731 ) Proceeds from sale of real estate, net 1,096 31,419 Investment in unconsolidated entity ( 1,463 ) ( 7,218 ) Distributions from unconsolidated entity 330 — Loans funded ( 9,279 ) ( 8,550 ) Principal collected on loans 7,390 9,108 Net cash used in investing activities ( 14,704 ) ( 82,867 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes ( 12,690 ) ( 194,239 ) Proceeds from revolving credit facilities, term notes and mortgages 20,000 248,282 Proceeds from SBA 7(a) loan-backed notes — 54,141 Payment of principal on secured borrowings ( 1,198 ) ( 1,434 ) Payment of deferred preferred stock offering costs ( 1,029 ) ( 665 ) Payment of deferred debt origination costs ( 622 ) ( 3,164 ) Payment of common dividends ( 5,811 ) ( 5,795 ) Net proceeds from issuance of Preferred Stock 40,450 76,082 Payment of Preferred Stock dividends ( 23,543 ) ( 22,303 ) Redemption of Preferred Stock ( 24,943 ) ( 99,031 ) Distributions to noncontrolling interests ( 43 ) ( 38 ) Net cash (used in) provided by financing activities ( 9,429 ) 51,836 (Continued) 5 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued) (In thousands) (Unaudited) Nine Months Ended September 30, 2024 2023 NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ( 8,253 ) ( 14,269 ) CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: Beginning of period 44,228 57,480 End of period $ 35,975 $ 43,211 RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS: Cash and cash equivalents $ 18,454 $ 19,261 Restricted cash 17,521 23,950 Total cash and cash equivalents and restricted cash $ 35,975 $ 43,211 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest $ 25,714 $ 21,525 Federal income taxes paid $ 366 $ 575 SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: Accrued capital expenditures, tenant improvements and real estate developments $ 4,327 $ 1,555 Proceeds from the sale of real estate committed but not yet received $ — $ 2,981 Other amounts due from Unconsolidated Joint Venture partners included in other assets $ 396 $ 1,445 Non-cash contributions to Unconsolidated Joint Venture $ — $ 8,600 Accrued preferred stock offering costs $ 714 $ 166 Accrual of dividends payable to common stockholders $ — $ 1,937 Accrual of dividends payable to preferred stockholders $ 2,045 $ 2,307 Preferred stock offering costs offset against redeemable preferred stock in permanent equity $ 508 $ 1,242 Preferred stock offering costs offset against redeemable preferred stock in temporary equity $ 912 $ — Reclassification of Series A Preferred Stock from temporary equity to permanent equity $ — $ 15,616 Mortgage notes assumed in connection with our acquisition of real estate $ — $ 181,318 Redeemable preferred stock deemed dividends $ 755 $ — Accrued redeemable preferred stock fees $ 191 $ 369 Acquisition of non-controlling interests $ — $ 5,002 Write-off of preferred stock deferred offering costs $ 5,123 $ — The accompanying notes are an integral part of these consolidated financial statements. 6 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) 1. 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 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 apply the expertise of CIM Group Management, LLC (“CIM Group”) and its affiliates 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.” 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES For more information regarding the Company’s significant accounting policies and estimates, please refer to “Basis of Presentation and Summary of Significant Accounting Policies” contained in Note 2 to the Company’s consolidated financial statements for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 29, 2024. Interim Financial Information —The accompanying interim consolidated financial statements of the Company have been prepared by the Company’s management in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. 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, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. 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 2023 Form 10-K. Principles of Consolidation —The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In determining whether the Company has controlling interests in an entity and the requirement to consolidate the accounts in that entity, the Company analyzes its investments in real estate in accordance with standards set forth in GAAP to determine whether they are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary. The Company’s judgment with respect to its level of influence or control over an entity and whether the Company is the primary beneficiary of a VIE involves consideration of various factors, including the form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions. The Company’s 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, 2024, 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, 2024, 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. Investments in Real Estate —Investments in real estate are stated at depreciated cost. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows: 7 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) Buildings and improvements 15 - 40 years Furniture, fixtures, and equipment 3 - 5 years Tenant improvements Lesser of useful life or lease term The fair value of real estate acquired is recorded to acquired tangible assets, consisting primarily of land, land improvements, building and improvements, tenant improvements, furniture, fixtures, and equipment, and identified intangible assets and liabilities, consisting of the value of acquired above-market and below-market leases, in-place leases and ground leases, if any, based in each case on their respective relative fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market rate loans, are recorded based on the fair value of any loans assumed in connection with acquiring the real estate. Capitalized Project Costs The Company capitalizes project costs, including pre-construction costs, interest expense, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, or construction of a project, while activities are ongoing to prepare an asset for its intended use. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. Ordinary repairs and maintenance are expensed as incurred. Recoverability of Investments in Real Estate —The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Investments in real estate are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If, and when, such events or changes in circumstances are present, the recoverability of assets to be held and used requires significant judgment and estimates and is measured by a comparison of the carrying amount to the future undiscounted cash flows expected to be generated by the assets and their eventual disposition. If the undiscounted cash flows are less than the carrying amount of the assets, an impairment is recognized to the extent the carrying amount of the assets exceeds the estimated fair value of the assets. The process for evaluating real estate impairment requires management to make significant assumptions related to certain inputs, including rental rates, lease-up period, occupancy, estimated holding periods, capital expenditures, growth rates, market discount rates and terminal capitalization rates. These inputs require a subjective evaluation based on the specific property and market. Changes in the assumptions could have a significant impact on either the fair value, the amount of impairment charge, if any, or both. Any asset held for sale is reported at the lower of the asset’s carrying amount or fair value, less costs to sell. When an asset is identified by the Company as held for sale, the Company will 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, 2024 and 2023 (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. 8 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (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. Based on this determination, the appropriate treatment in accordance with GAAP is applied to the contract, including its revenue recognition. Revenue from leasing activities 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: • One party (lessor) must hold an identified asset; • The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of the contract; and • The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract. The Company determined that the Company’s contracts with its tenants explicitly identify the premises and that any substitution rights to relocate tenants to other premises within the same building stated in the contract are not substantive. Additionally, so long as payments are made timely under such contracts, the Company’s tenants have the right to obtain substantially all the economic benefits from the use of the identified asset and can direct how and for what purpose the premises are used to conduct their operations. Therefore, the contracts with the Company’s tenants constitute leases. 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. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is recorded as deferred rent. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is considered the owner of the improvements, any tenant improvement allowance that is funded is treated as an incentive. 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, 2024 and December 31, 2023, lease incentives of $ 3.9 million and $ 3.9 million, respectively, are presented net of accumulated amortization of $ 3.6 million and $ 3.3 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. Tenant reimbursements are recognized and presented on a gross basis when the Company is primarily responsible for fulfilling the promise to provide the specified good or service and control that specified good or service before it is transferred to the tenant. The Company has elected not to separate lease and non-lease components as the pattern of revenue recognition does not differ for the two components, and the non-lease component is not the primary component in the Company’s leases. In addition to minimum rents, certain leases, including the Company’s parking leases with third-party operators, provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums. Percentage rent is recognized once lessees’ specified sales targets have been met. 9 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) For the three and nine months ended September 30, 2024 and 2023, the Company recognized rental income as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Rental and other property income Fixed lease payments (1) $ 15,397 $ 14,579 $ 48,083 $ 42,251 Variable lease payments (2) 2,753 2,482 8,089 7,748 Rental and other property income $ 18,150 $ 17,061 $ 56,172 $ 49,999 ______________________ (1) Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above-market leases, below-market leases and lease incentives. (2) Variable lease payments include expense reimbursements billed to tenants and percentage rent, net of bad debt expense from the Company’s operating leases plus cash payments from tenants deemed not probable of collection. Collectability of Future Lease Payments The Company continually reviews whether collection of future lease payments, including any straight-line rent, and current and future operating expense reimbursements from tenants is probable. The determination of whether collectability is probable takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon the determination that the collectability of future lease payments is not probable, the Company will record a reduction to rental and other property income and a decrease in the outstanding receivable. Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of future lease payments is based on the best information available at the time of estimate. The Company does not use a general reserve approach. As of September 30, 2024 and December 31, 2023, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $ 536,000 and $ 868,000 , respectively, across all operating leases. Revenue from lending activities Interest income included in interest and other income is comprised of interest earned on loans and the Company’s short-term investments and the accretion of loan discounts. Interest income on loans is accrued as earned with the accrual of interest suspended when the related loan becomes a Non-Accrual Loan (as defined below). Revenue from hotel activities The Company recognizes revenue from hotel activities separate from its leasing activities. At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. Various performance obligations of hotel revenues can be categorized as follows: • cancellable and noncancelable room revenues from reservations and • ancillary services including facility usage and food or beverage. Cancellable reservations represent a single performance obligation of providing lodging services at the hotel. The Company satisfies its performance obligation and recognizes revenues associated with these reservations over time as services are rendered to the customer. The Company satisfies its performance obligation and recognizes revenues associated with noncancelable reservations at the earlier of (i) the date on which the customer cancels the reservation or (ii) over time as services are rendered to the customer. Ancillary services include facilities usage and providing food and beverage. The Company satisfies its performance obligation and recognizes revenues associated with these services at a point in time when the good or service is delivered to the customer. 10 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (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. The Company presents hotel revenues net of sales, occupancy, and other taxes. Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 17 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Hotel properties Hotel income $ 6,808 $ 7,485 $ 29,768 $ 29,590 Rental and other property income 221 367 1,056 1,259 Interest and other income 113 96 327 259 Hotel revenues $ 7,142 $ 7,948 $ 31,151 $ 31,108 Tenant recoveries outside of the lease agreements Tenant recoveries outside of the lease agreements are related to construction projects in which the Company’s tenants have agreed to fully reimburse the Company for all costs related to construction. These services include architectural, permit expediter and construction services. At inception of the contract with the customer, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate. While these individual services are distinct, in the context of the arrangement with the customer, all of these services are bundled together and represent a single package of construction services requested by the customer. 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, 2024 and 2023. As of September 30, 2024, 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 expected 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”) 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 $ 7.9 million and $ 8.4 million as of September 30, 2024 and December 31, 2023, respectively. A loan receivable is generally classified as non-accrual (a “Non-Accrual Loan”) if (i) it is past due as to payment of principal or interest for a period of 60 days or more, (ii) any portion of the loan is classified as doubtful or is charged-off or (iii) the repayment in full of the principal and/or interest is in doubt. Generally, loans are charged-off when management determines that the Company will be unable to collect any remaining amounts due under the loan agreement, either through liquidation of collateral or other means. Interest income, included in interest and other income, on a Non-Accrual Loan is recognized on the cost recovery basis. 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 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 CECL 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 CECL, it does specify the allowance should be based on relevant information about past events, including historical loss experience, current portfolio and 11 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 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 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. As of September 30, 2024 and December 31, 2023, the Company had a total CECL of $ 1.9 million and $ 1.7 million, respectively. The Company estimates CECL 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. 1. 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 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. Quarterly, the Company evaluates the risk of all loans receivable and assigns a risk rating based on a variety of factors, which are grouped as follows: (i) loan and credit structure, including the as-is loan-to-value (“LTV”) ratio and structural features; (ii) quality and stability of real estate value and operating cash flow, including debt yield, dynamics of the geography, local market, physical condition and stability of cash flow; and (iii) quality, experience and financial condition of the borrower. Based on a 5-point scale, the Company’s loans receivable are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows: 1- Acceptable — These are assets of high quality; 2- Other Assets Especially Mentioned (“OAEM”) — These are assets that are generally profitable but exhibit potential weakness or weaknesses, including, but not limited to, no significant pay history as detailed below for loans originated generally within the last year. Such weaknesses could result in deterioration if not corrected ; 3- Substandard — These assets generally have a well-defined weakness or weaknesses which could hinder collection efforts; 4- Doubtful — These assets have weakness or weaknesses similar to substandard loans; however, the weakness or weaknesses are so extreme that significant loss potential exists in all cases and 5- Loss — Assets assigned this classification have no value and thus have been or are in the process of being charged off. The Company generally assigns a risk rating of “2” to all newly originated loans (generally within one year of origination) due to lack of management experience and/or lack of adequate historical debt coverage at the origination date. These loans likely will be classified to acceptable within two years of origination. 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. 12 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) Deferred offering costs represented 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 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 were 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 were expected to be issued in the related offering. With respect to shares of Series A1 Preferred Stock issued from June 2024 through September 2024, in the event a holder of Series A1 Preferred Stock requests redemption of such shares and such redemption takes place prior to the first anniversary of the date of original issuance, the Company is required to pay such redemption in cash. As a result, from June 2024 through September 2024, deferred offering costs allocated to each issuance were recorded as reductions to temporary equity and will subsequently be reclassified to permanent equity on the first anniversary of each 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 were reductions to temporary equity and permanent equity, respectively, with the deferred offering costs allocated to Series A Preferred Stock being reclassified from temporary equity to permanent equity on the first anniversary of each issuance. The Company discontinued its issuance of Series A Preferred Stock and Series D Preferred stock in June 2022. In September 2024, the Company, at its option, redeemed 2,589,606 and 2,167,156 shares of its Series A1 Preferred Stock and Series A Preferred Stock, respectively, in shares of Common Stock and suspended its offering of Series A1 Preferred Stock. Following the suspension of its Series A1 Preferred Stock’s offering, the Company no longer deemed it probable that future proceeds would be raised from the sale of these securities and, as a result, the Company recognized $ 5.1 million of redeemable preferred stock redemptions in its consolidated statement of operations for the three months ended September 30, 2024 related to amounts that had been recorded as deferred offering costs. 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. As of September 30, 2024 and December 31, 2023, deferred rent receivable and charges consist of the following (in thousands): September 30, 2024 December 31, 2023 Deferred rent receivable $ 13,849 $ 14,757 Deferred leasing costs, net of accumulated amortization of $ 11,413 and $ 10,483 , respectively 6,152 6,613 Deferred offering costs — 4,925 Deferred financing costs, net of accumulated amortization of $ 1,363 and $ 764 , respectively 1,086 1,436 Other deferred costs — 491 Deferred rent receivable and charges, net $ 21,087 $ 28,222 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 (for issuances prior to June 2024), Series A Preferred Stock, Series A Preferred Warrants and Series D Preferred Stock in permanent equity. With respect to shares of Series A1 Preferred Stock issued from June 2024 through September 2024, in the event a holder of Series A1 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 13 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) redemption in cash. As a result, beginning from June 2024 through September 2024, the Company recorded issuances of Series A1 Preferred Stock in temporary equity. With respect to shares of Series A1 Preferred Stock issued from June 2024 through September 2024, on the first anniversary of the date of original issuance of a particular share of Series A1 Preferred Stock the Company reclassifies such share of Series A1 Preferred Stock from temporary equity to permanent equity as the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. Non-controlling Interests —Non-controlling 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 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 August 2023, the FASB issued ASU No. 2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 applies to the formation of a joint venture and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance is intended to reduce diversity in practice and provide users of joint venture financial statements with more decision-useful information. The amendments are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. The Company does not believe the adoption of ASU 2023-05 will have a material impact on its consolidated financial statements and disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 enhances the disclosures required for reportable segments on an annual and interim basis. ASU 2023-07 is effective on a retrospective basis for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating whether the the adoption of ASU 2023-07 will have a material impact on its consolidated financial statements and disclosures. 3. INVESTMENTS IN REAL ESTATE Investments in real estate consist of the following (in thousands): September 30, 2024 December 31, 2023 Land $ 175,682 $ 175,715 Land improvements 5,863 5,862 Buildings and improvements 635,150 633,299 Furniture, fixtures, and equipment 11,973 11,627 Tenant improvements 26,601 26,460 Work in progress 27,074 15,915 Investments in real estate 882,343 868,878 Accumulated depreciation ( 179,498 ) ( 164,116 ) Net investments in real estate $ 702,845 $ 704,762 14 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) For the three months ended September 30, 2024 and 2023, the Company recorded depreciation expense of $ 5.9 million and $ 5.9 million, respectively. For the nine months ended September 30, 2024 and 2023, the Company recorded depreciation expense of $ 17.5 million and $ 16.6 million, respectively. 2024 Transactions —There were no acquisitions or dispositions during the nine months ended September 30, 2024. 2023 Transactions — During the nine months ended September 30, 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. The purchases were accounted for as asset acquisitions. Asset Date of Interest Purchase Property Type Acquisition Units Acquired (1) Price (in thousands) Channel House Multifamily (2) January 31, 2023 333 89.4 % $ 134,615 F3 Land Site Multifamily (2) January 31, 2023 N/A 89.4 % $ 250 466 Water Street Land Site Multifamily (2) January 31, 2023 N/A 89.4 % $ 2,500 1150 Clay Multifamily (3) March 28, 2023 288 98.1 % $ 145,500 (1) As of September 30, 2024 the Company’s ownership interests in Channel House, F3 Land Site, and 466 Water Street Land Site had changed to 93.9 %, 93.2 %, and 90.9 %, respectively, as result of additional contributions made to the entities by the Company subsequent to the applicable initial acquisition. (2) Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of these properties 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 and being evaluated for future development options including hotel development but there are no formal plans in place to begin development as of September 30, 2024. (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 $ 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 Joint Ventures. The Company sold an interest in the following property during the nine months ended September 30, 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 the Company formed the 4750 Wilshire JV (defined in Note 4). At the acquisition date, the Company received net proceeds of $ 16.7 million and recorded a receivable of $ 17.7 million, all of which has been collected as of September 30, 2024. Additionally, as of September 30, 2024, the Company has a receivable of $ 396,000 due from the 4750 Wilshire JV included in other assets on the Company’s consolidated balance sheet related to development costs incurred by the Company at 4750 Wilshire Boulevard prior to the sale of 80 % of its interest in the property to the 4750 Wilshire JV. The Company owns a 20 % interest in the 4750 Wilshire JV and accounts for its investment as an equity method investment. 15 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 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 nine months ended September 30, 2023. There were no acquisitions during the nine months ended September 30, 2024. Nine Months Ended September 30, 2023 (in thousands) Land $ 36,613 Land improvements 4,523 Buildings and improvements 206,717 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 (1) The amortization period for the in-place leases acquired during the nine months ended September 30, 2023 was approximately 6 months at the date of acquisition. (2) The amortization period for the above-market leases acquired during the nine months ended September 30, 2023 was approximately 7 months at the date of acquisition. (3) The amortization period for the below-market leases acquired during the nine months ended September 30, 2023 was approximately 5 months at the date of acquisition. 16 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 4. 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 Joint Venture Asset Type Location Acquisition Date Ownership Interest September 30, 2024 December 31, 2023 1910 Sunset Boulevard (1) Office / Multifamily (Development) Los Angeles, CA February 11, 2022 44.2 % $ 12,159 $ 12,040 4750 Wilshire Boulevard (2) Office / Multifamily Los Angeles, CA February 17, 2023 20.0 % 9,342 9,119 1902 Park Avenue (3) Multifamily Los Angeles, CA February 28, 2023 50.0 % 6,303 7,082 1015 N Mansfield Avenue (4) Office (Development) Los Angeles, CA October 10, 2023 28.8 % 6,392 5,264 Total investments in unconsolidated entities $ 34,196 $ 33,505 ______________________ (1) 1910 Sunset Boulevard is an office building with 104,764 square feet of office space and 2,760 square feet of retail space. The 1910 Sunset JV (defined below). The 1910 Sunset JV has begun the 1915 Park Project (defined below) to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building. (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 was substantially converted into 68 for-lease multifamily units in September, 2024. (3) 1902 Park Avenue is a 75 -unit four-story multifamily building. (4) 1015 N Mansfield Avenue is an office building with a 44,141 square foot site area and a parking garage. The site is being evaluated for different development options, including creative office or other commercial space. As of September 30, 2024, this property was in pre-development phase and the Company has not finalized the formal development plan for the property. 1910 Sunset Boulevard — In February 2022, the Company invested in an Unconsolidated Joint Venture (the “1910 Sunset JV”) with a CIM-managed separate account (the “1910 Sunset JV Partner) to purchase an office property located at 1910 Sunset Boulevard in Los Angeles, California along with an adjacent vacant land parcel located at 1915 Park Avenue, for a gross purchase price of approximately $ 51.0 million, of which the Company initially contributed approximately $ 22.4 million and the 1910 Sunset 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 1910 Sunset JV has begun construction to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building (the “1915 Park Project”). The 1915 Park Project is expected to be completed by the third quarter of 2025 and to cost approximately $ 14.7 million (excluding the land acquisition cost), the Company’s share of which will be $ 6.5 million. The 1910 Sunset JV plans to finance the project through a combination of cash from operations at its office property, additional equity contributions from existing investors, and proceeds from a mortgage loan from a third-party lender (which is in-place but currently has no outstanding borrowings and is subject to additional equity contribution requirements which have not yet been met). As of September 30, 2024, the 1910 Sunset JV had incurred total costs of $ 4.8 million in connection with the 1915 Park Project. The Company recorded a loss of $ 763,000 and $ 764,000 related to its investment in the 1910 Sunset JV during the three and nine months ended September 30, 2024, respectively, and a loss of $ 402,000 and $ 683,000 during the three and nine months ended September 30, 2023, respectively. The Company’s investment in the 1910 Sunset JV was $ 12.2 million and its ownership percentage remained unchanged as of September 30, 2024. 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 an Unconsolidated Joint Venture arrangement between the Company and the 4750 Wilshire JV Partners 17 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) (the “4750 Wilshire JV”). The goal of the 4750 Wilshire JV was to convert two of the three floors of 4750 Wilshire from office-use into 68 for-lease multifamily units (the “4750 Wilshire Project”), with the first floor of 4750 Wilshire continuing to function as 30,335 square feet of office space. The 4750 Wilshire Project was substantially completed in September 2024 the 4750 Wilshire JV has commenced leasing of the multifamily units. The total cost of the conversion is estimated to be approximately $ 31.0 million (the Company’s share of which is $ 6.2 million), which is being 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 and 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. As of September 30, 2024, total costs of $ 27.9 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project. Pursuant to the co-investment agreement, the 4750 Wilshire JV pays an ongoing 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 $ 71,000 and income of $ 123,000 related to its investment in the 4750 Wilshire JV during the three and nine months ended September 30, 2024, respectively, and income of $ 2.0 million and $ 1.5 million during the three and nine months ended September 30, 2023, respectively, in the consolidated statements of operations. The Company’s investment in the 4750 Wilshire JV was $ 9.3 million and its ownership percentage remained unchanged at 20 % as of September 30, 2024. 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 of this transaction 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 a loss of $ 405,000 and $ 929,000 related to its investment in the 1902 Park JV during the three and nine months ended September 30, 2024, respectively, and a loss of $ 422,000 and income of $ 216,000 during the three and nine months ended September 30, 2023, respectively, in the consolidated statements of operations. The Company’s investment in the 1902 Park JV was $ 6.3 million as of September 30, 2024. 1015 N Mansfield Avenue — In October, 2023, the Company and a co-investor affiliated with CIM Group (the “1015 N Mansfield JV Partner”) acquired from an unrelated third party a 100 % fee-simple interest in a plot of land located in the Sycamore media district of Los Angeles, California for a gross purchase price of $ 18.0 million (excluding transaction costs) (the “1015 N Mansfield JV”). The property has a site area of approximately 44,141 square feet and contains a parking garage that has been leased to a third-party tenant. The site is being evaluated for different creative office or other commercial space development options and was in pre-development phase as the Company has not finalized the formal development plan for the property. The Company owns 28.8 % of the 1015 N Mansfield JV. The Company recorded income of $ 0 and $ 1.1 million related to its investment in the 1015 N Mansfield JV during the three and nine months ended September 30, 2024, respectively, in the consolidated statements of operations. The Company’s investment in the 1015 N Mansfield JV was $ 6.4 million as of September 30, 2024. 18 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 5. LOANS RECEIVABLE Loans receivable consist of the following (in thousands): September 30, 2024 December 31, 2023 SBA 7(a) loans receivable, subject to credit risk $ 13,660 $ 10,393 SBA 7(a) loans receivable, subject to loan-backed notes 39,466 43,983 SBA 7(a) loans receivable, subject to secured borrowings 1,832 3,105 SBA 7(a) loans receivable, held for sale 1,539 74 Loans receivable 56,497 57,555 Deferred capitalized costs, net 1,111 1,130 Current expected credit losses ( 1,866 ) ( 1,680 ) Loans receivable, net $ 55,742 $ 57,005 SBA 7(a) Loans Receivable, Subject to Credit Risk —Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were retained by the Company. SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes —Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were transferred to a trust and are held as collateral in connection with a securitization transaction. The proceeds received from the transfer were reflected as loan-backed notes payable (Note 7). These loans are subject to credit risk. 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 guarantees 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. Current Expected Credit Losses CECL reflects the Company’s current estimate of potential credit losses related to loans receivable included in the Company’s consolidated balance sheets as of September 30, 2024 pursuant to ASU 2016-13 as implemented effective January 1, 2023. Refer to Note 2 for further discussion of CECL. 19 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) The following table presents the activity in the Company’s CECL for the nine months ended September 30, 2024 and September 30, 2023 (dollar amounts in thousands): Loans Receivable Current expected credit losses as of December 31, 2023 $ 1,680 Net adjustment to reserve for expected credit losses ( 36 ) Current expected credit losses as of March 31, 2024 $ 1,644 Net adjustment to reserve for expected credit losses ( 37 ) Current expected credit losses as of June 30, 2024 $ 1,607 Net adjustment to reserve for expected credit losses 259 Current expected credit losses as of September 30, 2024 $ 1,866 Allowance for credit losses as of December 31, 2022 $ 1,106 Transition adjustment on January 1, 2023 783 Net adjustment to reserve for expected credit losses 51 Current expected credit losses as of March 31, 2023 $ 1,940 Write-offs ( 85 ) Reserve for expected credit losses ( 142 ) Current expected credit losses as of June 30, 2023 $ 1,713 Reserve for expected credit losses ( 9 ) Current expected credit losses as of September 30, 2023 $ 1,704 The net adjustments to the reserve for expected credit losses are recognized through net income on the Company’s consolidated statements of operations. During the three and nine months ended September 30, 2024, the Company recorded an increase of $ 259,000 and $ 186,000 , respectively, in its CECL related to its loans receivable, which was recorded in general and administrative expenses in the consolidated statement of operations. During the three and nine months ended September 30, 2023, the Company recorded a decrease of $ 9,000 and $ 100,000 , respectively, in its CECL related to its loan receivable, which is recorded in general and administrative expenses in the consolidated statement of operations, and recorded a decrease due to write-offs of $ 85,000 . Risk Ratings As further described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, the Company evaluates its loans receivable portfolio on a quarterly basis. Each quarter, the Company assesses the risk factors of each loan and assigns a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, loan and credit structure, current LTV ratio, debt yield, collateral performance and the quality and condition of the sponsor, borrower and guarantor(s). Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies. 20 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) The Company’s primary credit quality indicator is its risk ratings, which are further discussed above. The following table presents the net book value of the Company’s loans receivable portfolio as of September 30, 2024 by year of origination, loan type and risk rating (dollar amounts in thousands): Amortized Cost of Loans Receivable by Year of Origination As of September 30, 2024 Number of Loans 2024 2023 2022 2021 2020 Prior Total Loans by internal risk rating: 1 106 $ 4,050 $ 5,357 $ 4,807 $ 6,946 $ 2,187 $ 10,089 $ 33,436 2 55 475 4,100 3,475 2,491 1,494 6,323 $ 18,358 3 1 — — — 430 — — $ 430 4 1 — 902 — — — — $ 902 5 — — — — — — — — Total 163 $ 4,525 $ 10,359 $ 8,282 $ 9,867 $ 3,681 $ 16,412 $ 53,126 Plus: SBA 7(a) loans receivable, subject to secured borrowings (1) 1,832 Plus: Deferred capitalized costs, net 1,111 Less: Current expected credit losses ( 1,866 ) Less: Held for sale guaranteed portion 1,539 Total loans receivable, net $ 55,742 Weighted average risk rating 1.4 ____________________ (1) The Company does not assign a risk rating to its SBA 7(a) loans receivable that are subject to secured borrowings or the government guaranteed portion of loans held for sale. The Company has determined there is no credit risk associated with these loans since the SBA has guaranteed payment of the principal. Other As of September 30, 2024 and December 31, 2023, 99.4 % and 100.0 %, respectively, of the Company’s loans subject to credit risk were concentrated in the hospitality industry. As of September 30, 2024 and December 31, 2023, 94.9 % and 99.3 %, 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, 2024 and December 31, 2023, $ 4.0 million and $ 1.3 million, respectively, of loans subject to credit risk were classified in substandard categories. 21 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 6. 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, 2024 and December 31, 2023 is as follows (in thousands): September 30, 2024 December 31, 2023 Intangible assets: Acquired in-place leases, net of accumulated amortization of $ 5,102 and $ 4,821 , respectively, both with an average useful life of 6 years, respectively. $ 703 $ 984 Acquired above-market leases, net of accumulated amortization of $ 34 and $ 30 , respectively, both with an average useful life of 7 years, respectively 3 7 Trade name and license 2,957 2,957 Total intangible assets, net $ 3,663 $ 3,948 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. During the three and nine months ended September 30, 2024 and 2023, 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, 2024 2023 2024 2023 Acquired above-market lease amortization $ 1 $ 21 $ 4 $ 79 Acquired in-place lease amortization $ 94 $ 9,488 $ 281 $ 27,620 Acquired below-market lease amortization $ — $ 93 $ — $ 243 A schedule of future amortization and accretion of acquired intangible assets and liabilities as of September 30, 2024, is as follows (in thousands): Assets Years Ending December 31, Acquired Above-Market Leases Acquired In-Place Leases 2024 (Three months ended December 31, 2024) $ 2 $ 92 2025 1 171 2026 — 123 2027 — 123 2028 — 122 Thereafter — 72 $ 3 $ 703 22 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 7. DEBT The following table summarizes the debt balances as of September 30, 2024 and December 31, 2023, and the debt activity for the nine months ended September 30, 2024 (in thousands): During the Nine Months Ended September 30, 2024 Balances as of December 31, 2023 Debt Issuances & Assumptions Repayments Accretion & (Amortization) Balances as of September 30, 2024 Mortgages Payable: Fixed rate mortgages payable $ 163,700 $ — $ — $ — $ 163,700 Variable rate mortgage payable 87,000 — — — 87,000 250,700 — — — 250,700 Deferred debt origination costs — Mortgages Payable ( 954 ) — — 569 ( 385 ) Total Mortgages Payable 249,746 — — 569 250,315 Secured Borrowings — Government Guaranteed Loans: Outstanding Balance 3,007 — ( 1,198 ) — 1,809 Unamortized premiums 100 — — ( 77 ) 23 Total Secured Borrowings — Government Guaranteed Loans 3,107 — ( 1,198 ) ( 77 ) 1,832 Other Debt: 2022 credit facility revolver 97,000 20,000 ( 3,967 ) — 113,033 2022 credit facility term loan 56,230 — — — 56,230 Junior subordinated notes 27,070 — — — 27,070 SBA 7(a) loan-backed notes 41,394 — ( 8,723 ) — 32,671 Deferred debt origination costs — other ( 1,588 ) ( 373 ) — 471 ( 1,490 ) Discount on junior subordinated notes ( 1,398 ) — — 76 ( 1,322 ) Total Other Debt 218,708 19,627 ( 12,690 ) 547 226,192 Total Debt, Net $ 471,561 $ 19,627 $ ( 13,888 ) $ 1,039 $ 478,339 Fixed Rate Mortgages Payable —The Company’s fixed rate mortgages payable are secured by a deed of trust on the properties underlying such mortgages and assignments of rents receivable. As of September 30, 2024, the Company’s fixed rate mortgages payable had fixed interest rates of 4.14 % and 6.25 % per annum, respectively, with payments of interest only and initial maturity dates of July 1, 2026 and June 7, 2025, respectively. In regards to the mortgage payable maturing on June 7, 2025, the Company has a one-year extension option at its discretion. These loans are non-recourse. The Company has been in discussion with the largest tenant at One Kaiser Plaza in Oakland, California, a property that is secured by a fixed rate mortgage with a balance of $ 97.1 million as of September 30, 2024, about renewing a portion of its existing lease. This extension would require a sizable capital investment by the Company for tenant improvements, leasing commissions and certain building improvements and may not meet the Company’s return hurdles and falls outside of the Company’s strategy of reducing its footprint in traditional office investments. The Company is exploring whether the lender holding the fixed-rate mortgage on the property will agree to loan concessions relating to such upfront capital costs. If we are not able to receive such concessions, we may elect to cease interest payments on the mortgage, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, declare principal and interest on the mortgage loan to be immediately due and payable. Variable Rate Mortgage Payable —The Company’s variable rate mortgage payable is secured by a deed of trust on the property and assignment of rents receivable. As of September 30, 2024, the Company’s variable rate mortgage payable had a variable interest rate of SOFR plus 3.36 %, with monthly payments of interest only, with an initial maturity date of July 7, 2025 and an extension option subject to certain conditions being met. The loan is non-recourse. 23 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) The Company has been in discussions with the lender under its variable rate mortgage for Channel House, a multifamily property in Oakland, California, to restructure the terms of the mortgage, as rent payments from the property will likely be insufficient to meet debt service payments under the mortgage. There can be no assurance that such restructuring will occur. If the Company and the lender under the variable rate mortgage cannot agree on a modification of the mortgage and the Company fails to make a required monthly debt service payment, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, declare principal and interest under the mortgage loan to be immediately due and payable. 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, 2024, the Company’s secured borrowings-government guaranteed loans included $ 355,000 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 9.21 % at September 30, 2024, and $ 1.5 million of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 6.87 % at September 30, 2024. 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 included a $ 56.2 million term loan (the “2022 Credit Facility Term Loan”) as well as a revolver that originally allowed 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 September 30, 2024, the variable interest rate was 7.53 %. 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 September 30, 2024 and December 31, 2023, $ 0 and $ 53.0 million, respectively, was available for future borrowings. As of each of March 31, 2024, June 30, 2024 and September 30, 2024, the Company was not in compliance with a financial covenant under the 2022 credit facility. Such non-compliance constituted an event of default under the 2022 Credit Facility. On May 14, 2024, lenders under the 2022 Credit Facility and the Company entered into an agreement (the “First Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending March 31, 2024. Among other restrictions, the First Modification Agreement also prohibits subsidiaries of the Company that own properties that secured the 2022 Credit Facility from making any distributions to its parent entities. On August 7, 2024, lenders under the 2022 Credit Facility and the Company entered into an agreement (the “Second Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending June 30, 2024. Simultaneously with the execution of the Second Modification Agreement, the Company made a $ 4.0 million repayment under the 2022 credit facility. On October 24, 2024, lenders under the 2022 Credit Facility and the Company entered into an agreement (the “Third Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending September 30, 2024. Pursuant to the Third Modification Agreement, the Company will not be able to borrow under the 2022 Credit Facility without the consent of the lenders until certain conditions are satisfied, including delivery of a revised business plan acceptable to the lenders and re-establishing compliance with the financial covenant. Under the Third Modification Agreement, the aggregate commitments under the 2022 Credit Facility were reduced from $ 206.2 million to $ 169.3 million. Pursuant to the Third Modification Agreement, the Company and the lenders agreed that, starting April 1, 2025, excess cash flow generated by the borrowers under the 2022 Credit Facility will be deposited into a collateral account controlled by the administrative agent. The borrowers’ ability to withdraw funds from the collateral account will be limited to specified uses and subject to certain requirements. In addition, the lenders agreed (i) to modify the borrowing base formula to remove certain limitations on the inclusion of office, retail, flex office/industrial and standalone parking assets and (ii) subject to certain conditions, to release assets relating to the Sacramento Sheraton to facilitate a refinancing of such property. The Third Modification Agreement did not waive compliance with the financial covenant for the test period ending December 31, 2024 or any future period. If the Company breaches any financial covenant under the 2022 Credit Facility in the future and is unable to obtain a further waiver from the lenders thereunder with respect to such breach, an event of default would occur under the 2022 Credit 24 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) Facility, which would allow lenders under the 2022 Credit Facility to, among other remedies, declare the unpaid principal amount of all outstanding loans, and all interest accrued and unpaid thereon, to be immediately due and payable. The occurrence of any future event of default would raise substantial doubt about the Company’s ability to continue as a going concern. Management plans to address any possible future event of default under the 2022 Credit Facility by entering into new financing arrangements to repay amounts outstanding under the 2022 Credit Facility. The Company is in the process of obtaining refinancing for the Company’s hotel in Sacramento, California (the “Sheraton Refinancing”). If completed, the Company intends to use the proceeds of the Sheraton Refinancing to repay part of the amount outstanding under the 2022 Credit Facility and to pay for the Hotel Renovation described above. In addition, the Company is in the process of obtaining refinancing (the “Los Angeles Refinancing”) for three of its properties in Los Angeles, California. If completed, the proceeds of the Los Angeles Refinancing, along with a portion of the proceeds from the Sheraton Refinancing, are anticipated to be in an amount sufficient to repay all amounts outstanding under the 2022 Credit Facility, with the rest to be used for general corporate purposes. The Company expects that each of the Sheraton Refinancing and the Los Angeles Refinancing will close by the end of the first quarter of 2025. Management of the Company believes that its plans to repay amounts outstanding under the 2022 Credit Facility are probable based on the following: (1) the Company has executed term sheets with the respective lenders under the Sheraton Refinancing and the Los Angles Refinancing; (2) the Company expects that both the Los Angeles Refinancing and the Sheraton Refinancing will close by the end of the first quarter of 2025; (3) the favorable loan-to-value ratios (“LTVs”) of the properties that are the subject of the Sheraton Refinancing and the Los Angeles Refinancing and (4) the Company’s plans and efforts to date to obtain additional financing to be secured by two properties that it owns (in addition to the Sheraton Refinancing and the Los Angeles Refinancing), and the favorable LTVs of these two properties. Management’s plans are intended to mitigate the relevant condition that would raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the interim financial information contained in this Quarterly Report on Form 10-Q is issued. The accompanying consolidated financial statements have been prepared assuming that the Company will continue its operations as a going concern and do not include any adjustments that might result from the outcome of events described in this paragraph. Junior Subordinated Notes —The Company has junior subordinated notes with a variable interest rate which resets quarterly based on the three-month SOFR plus 3.51 %, with quarterly interest only payments. The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at the Company’s option. 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. 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 September 30, 2024, the variable interest rate was 8.15 %. 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 $ 3.6 million as of September 30, 2024. Other —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 or effective interest method over the life of the related loan. Deferred debt issuance costs are presented net of accumulated amortization and are a reduction to total debt. As of September 30, 2024 and December 31, 2023, accrued interest and unused commitment fees payable of $ 1.8 million and $ 1.8 million, respectively, were included in accounts payable and accrued expenses. Future principal payments on the Company’s debt (face value) as of September 30, 2024 are as follows (in thousands): 25 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) Years Ending December 31, Mortgage Payable Secured Borrowings Principal (1) 2022 Credit Facility Other (1) (2) Total 2024 (Three months ending December 31, 2024) $ — $ 479 $ — $ 3,316 $ 3,795 2025 153,600 89 169,263 9,947 332,899 2026 97,100 96 — 8,504 105,700 2027 — 103 — 10,904 11,007 2028 — 111 — — 111 Thereafter — 931 — 27,070 28,001 $ 250,700 $ 1,809 $ 169,263 $ 59,741 $ 481,513 ______________________ (1) Principal payments on secured borrowings and SBA 7(a) loan-backed notes, which are included in Other, are generally dependent upon cash flows received from the underlying loans. The Company’s estimate of their repayment is based on scheduled payments on the underlying loans. The Company’s estimate will differ from actual amounts to the extent the Company experiences prepayments and/or loan liquidations or charge-offs. (2) Represents the junior subordinated notes and SBA 7(a) loan-backed notes. 8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In the ordinary course of business, the Company may use certain types of derivative instruments for the purpose of managing or hedging its interest rate risk. The following table summarizes the terms of the Company’s interest rate cap agreement as of September 30, 2024 (dollar amounts in thousands): Outstanding Notional Fair Value of Assets as of Balance Sheet Amount as of Strike Effective Maturity September 30, Location September 30, 2024 Rates (1) Dates Dates 2024 Interest Rate Caps Other assets $ 87,000 4.5 % 5/03/2023 7/07/2025 $ 65 ____________________________________ (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 instrument is included in Note 13. The notional amount under the derivative instrument is an indication of the extent of the Company’s involvement in the 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 an interest rate cap that is used to manage exposure to interest rate movements but does not meet the requirements to be designated as a hedging instrument. The change in fair value of the derivative instrument that is not designated as a hedge is recorded directly to earnings as interest expense on the accompanying consolidated statements of operations. During the three and nine months ended September 30, 2024, the Company recorded an unrealized loss of $ 407,000 and $ 425,000 , respectively, which was included in interest expense on the accompanying consolidated statements of operations related to its interest rate cap. During the three and nine months ended September 30, 2023, the Company recorded an unrealized loss of $ 624,024 and $ 348,912 , respectively, which was included in interest expense on the accompanying consolidated statements of operations related to its interest rate caps. 26 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 9. STOCK-BASED COMPENSATION PLANS On April 3, 2015, the Company’s board of directors (the “Board of Directors”) unanimously approved the Company’s Equity Incentive Plan (the “Equity Incentive Plan”), which was approved by the Company’s stockholders. On June 27, 2023, the Equity Incentive Plan was amended by the Board of Directors, and subsequently approved by the Company’s stockholders, to authorize additional shares of Common Stock for issuance as compensation . The Company has granted awards of restricted shares of Common Stock to each of the independent members of the Board of Directors under the Equity Incentive Plan as follows: Grant Date (1) Vesting Date Restricted Shares of Common Stock - Individual Restricted Shares of Common Stock - Aggregate August 2023 August 2024 12,222 48,888 August 2024 August 2025 26,960 107,840 ______________________ (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 $ 36,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 165,000 and $ 128,000 for the nine months ended September 30, 2024 and 2023. As of September 30, 2024, there was $ 183,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized ratably over the remaining vesting period. 10. EARNINGS PER SHARE ("EPS") The computation 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, 2024 or 2023 were included in the computation of diluted EPS because they had no dilutive effect. Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three and nine months ended September 30, 2024 and 2023 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 12). 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, 2024 and 2023 (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Numerator: Net loss attributable to common stockholders $ ( 34,775 ) $ ( 22,934 ) $ ( 56,737 ) $ ( 59,464 ) Redeemable preferred stock dividends declared on dilutive shares — — — — Diluted net loss attributable to common stockholders $ ( 34,775 ) $ ( 22,934 ) $ ( 56,737 ) $ ( 59,464 ) Denominator: Basic weighted average shares of Common Stock outstanding 28,493 24,422 25,789 24,402 Effect of dilutive securities—contingently issuable shares — — — — Diluted weighted average shares and common stock equivalents outstanding 28,493 24,422 25,789 24,402 Net loss attributable to common stockholders per share: Basic $ ( 1.22 ) $ ( 0.94 ) $ ( 2.20 ) $ ( 2.44 ) Diluted $ ( 1.22 ) $ ( 0.94 ) $ ( 2.20 ) $ ( 2.44 ) 27 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 11. REDEEMABLE PREFERRED STOCK The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three and nine months ended September 30, 2024 and 2023 (dollar amounts in thousands): Preferred Stock Series A1 Series A Series D Total Shares Amount Shares Amount Shares Amount Shares Amount 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 A1 Preferred Stock 1,032,433 25,569 — — — — 1,032,433 25,569 Redemption of Series A1 Preferred Stock paid in cash ( 12,870 ) ( 319 ) — — — — ( 12,870 ) ( 319 ) Reclassification of Series A Preferred stock to permanent equity — — 389,325 9,699 — — 389,325 9,699 Redemption of Series A Preferred Stock paid in cash — — ( 189,753 ) ( 4,723 ) — — ( 189,753 ) ( 4,723 ) Balances, March 31, 2023 6,975,710 $ 172,764 7,764,921 $ 194,024 48,857 $ 1,200 14,789,488 $ 367,988 Issuance of Series A1 Preferred Stock 1,195,589 29,582 — — — — 1,195,589 29,582 Redemption of Series A1 Preferred Stock paid in cash ( 11,200 ) ( 277 ) — — — — ( 11,200 ) ( 277 ) Redemption of Series D Preferred Stock paid in cash — — — — ( 410 ) ( 10 ) ( 410 ) ( 10 ) Reclassification of Series A Preferred stock to permanent equity — — 300,846 7,462 — — 300,846 7,462 Redemption of Series A Preferred Stock paid in cash — — ( 183,809 ) ( 4,575 ) — — ( 183,809 ) ( 4,575 ) Balances, June 30, 2023 8,160,099 $ 202,069 7,881,958 $ 196,911 48,447 $ 1,190 16,090,504 $ 400,170 Issuance of Series A1 Preferred Stock 1,094,386 27,015 — — — — 1,094,386 27,015 Redemption of Series A1 Preferred Stock paid in cash ( 30,941 ) ( 760 ) — — — — ( 30,941 ) ( 760 ) Redemption of Series A Preferred Stock paid in cash — — ( 187,759 ) ( 4,676 ) — — ( 187,759 ) ( 4,676 ) Balances, September 30, 2023 9,223,544 $ 228,324 7,694,199 $ 192,235 48,447 $ 1,190 16,966,190 $ 421,749 Balances, December 31, 2023 10,378,343 $ 256,935 7,431,839 $ 185,704 48,447 $ 1,190 17,858,629 $ 443,829 Issuance of Series A1 Preferred Stock 853,879 21,246 — — — — 853,879 21,246 Redemption of Series A1 Preferred Stock paid in cash ( 24,046 ) ( 595 ) — — — — ( 24,046 ) ( 595 ) Redemption of Series A Preferred Stock paid in cash — — ( 389,506 ) ( 9,698 ) — — ( 389,506 ) ( 9,698 ) Balances, March 31, 2024 11,208,176 $ 277,586 7,042,333 $ 176,006 48,447 $ 1,190 18,298,956 $ 454,782 Redemption of Series A1 Preferred Stock paid in cash ( 32,002 ) ( 791 ) — — — — ( 32,002 ) ( 791 ) Redemption of Series A Preferred Stock paid in cash — — ( 287,474 ) ( 7,162 ) — — ( 287,474 ) ( 7,162 ) Balances, June 30, 2024 11,176,174 $ 276,795 6,754,859 $ 168,844 48,447 $ 1,190 17,979,480 $ 446,829 Redemption of Series A1 Preferred Stock paid in cash ( 31,967 ) $ ( 791 ) — $ — — $ — ( 31,967 ) $ ( 791 ) Redemption of Series A1 Preferred Stock paid in Common Stock ( 2,590,616 ) $ ( 64,127 ) — $ — — $ — ( 2,590,616 ) $ ( 64,127 ) Redemption of Series A Preferred Stock paid in cash — $ — ( 247,627 ) $ ( 6,214 ) — $ — ( 247,627 ) $ ( 6,214 ) Redemption of Series A Preferred Stock paid in Common Stock — $ — ( 2,167,156 ) $ ( 53,927 ) — $ — ( 2,167,156 ) $ ( 53,927 ) Balances, September 30, 2024 8,553,591 $ 211,877 4,340,076 $ 108,703 48,447 $ 1,190 12,942,114 $ 321,770 Series A1 Preferred Stock —From June 2022 through September 2024, the Company conducted a 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. As of September 2024, the Company has suspended its offering of Series A1 Preferred Stock. Shares of Series A1 Preferred Stock issued from June 2022 through May 2024 were recorded in permanent equity at the time of their issuance. With respect to Series A1 Preferred Stock, for shares issued in June 2024 and thereafter, in the event 28 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) a holder of Series A1 Preferred Stock requests redemption of such shares and such redemption takes place prior to the first anniversary of the date of original issuance, the Company is required to pay such redemption in cash, As a result, net proceeds from the issuance of shares of Series A1 Preferred Stock from June 2024 and through September 2024 were initially recorded in temporary equity at an amount equal to the gross proceeds allocated to such shares of Series A1 Preferred Stock minus the costs specifically identifiable to the issuance of such shares and the non-issuance specific offering costs allocated to such shares. With respect to shares of Series A1 Preferred Stock issued from June 2024 through September 2024, on the first anniversary of the issuance of a particular share of such Series A1 Preferred Stock, the Company will reclassify such shares of Series A1 Preferred Stock from temporary equity to permanent equity as 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, 2024, the Company had made no such reclassification from temporary equity to permanent equity. As of September 30, 2024, the Company had issued in registered public offerings 12,040,878 shares of the Series A1 Preferred Stock and received gross proceeds of $ 298.2 million, and additionally had issued 200,000 shares of Series A1 Preferred Stock as payment for services to 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, $ 22.0 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 $ 12.0 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, 2024, the Company had reclassified and allocated $ 5.0 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. If the net proceeds from the issuance of shares of Series A1 Preferred Stock are less than the redemption value of such shares at the time they were issued, or if the redemption value of such shares subsequently becomes greater than the carrying value of such shares, an adjustment is recorded to increase the carrying amount of such shares to their redemption value as of the balance sheet date. Such adjustment is considered a deemed dividend for purposes of calculating basic and diluted EPS. The Company recorded redeemable preferred stock deemed dividends related to such adjustments of $ 327,000 and $ 755,000 during the three and nine months ended September 30, 2024, respectively, and recorded no deemed dividends during the three and nine months ended September 30, 2023. As of September 30, 2024, there were 9,467,221 shares of Series A1 Preferred Stock outstanding and 2,773,657 shares of Series A1 Preferred Stock had been redeemed. Of the 2,773,657 shares of Series A1 Preferred Stock that have been redeemed, the redemption of 183,041 shares of Series A1 Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). In September, the Company (at its option) redeemed 2,589,606 shares of Series A1 Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date and, in addition, in September 1,010 shares redeemed at the option of the holders were paid in shares of Common stock, including all accrued and unpaid dividends as of the redemption date (collectively the “Series A1 In-Kind Redemptions”). The Series A1 In-Kind Redemptions resulted in the aggregate issuance of 32,998,865 shares of Common Stock, all of which were issued in September 2024. 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, 2024, 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 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. Such costs include commissions, dealer manager fees and other offering fees and expenses but do not include non-issuance-specific costs of $ 12.0 million related to the Company’s offering of Series A Preferred Stock, 29 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) Series A Preferred Warrants, Series A1 Preferred Stock and Series D Preferred Stock. As of September 30, 2024, 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. 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 as 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, 2024, the Company had reclassified an aggregate of $ 199.6 million in net proceeds from temporary equity to permanent equity. As of September 30, 2024, there were 4,340,076 shares of Series A Preferred Stock outstanding and 4,480,262 shares of Series A Preferred Stock had been redeemed. Of the 4,480,262 shares of Series A Preferred Stock that have been redeemed, the redemption of 2,313,106 shares of Series A Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). In September, the Company (at its option) redeemed 2,167,156 shares of Series A Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date (the “Series A In-Kind Redemptions”). The Series A In-Kind Redemptions resulted in the aggregate issuance of 27,553,834 shares of Common Stock, all of which were issued in September 2024. Series D Preferred Stock —From February 2020 through June 2022, the Company conducted a continuous public offering with respect to shares of its Series D Preferred Stock, par value $ 0.001 per share, subject to adjustment. The selling price of the Series D Preferred Stock was $ 25.00 per share for all sales that occurred from the beginning of the offering to and including June 28, 2020 and $ 24.50 per share thereafter. Shares of Series D Preferred Stock were recorded in permanent equity at the time of their issuance. In June 2022, the Company concluded the offering of its Series D Preferred Stock. As of September 30, 2024, 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. Such costs include commissions, dealer manager fees and other offering fees and expenses but do not include non-issuance-specific costs of $ 12.0 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, 2024, the Company had reclassified and allocated $ 13,000 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, 2024, there were 48,447 shares of Series D Preferred Stock outstanding and 8,410 shares of Series D Preferred Stock had been redeemed (all such redemptions were paid in cash and redeemed at the option of the holders). 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. 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 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 December 2022, the Company announced the redemption of all remaining outstanding shares of its Series L Preferred Stock. In January 2023, the Company completed such previously-announced redemption of all outstanding shares of its Series L Preferred Stock in cash at its stated value of $ 28.37 per share (plus accrued and unpaid dividends of $ 1.56 per share, or $ 4.6 million in the aggregate). The total cost to complete the Series L Redemption, including transaction costs of $ 93,000 (or $ 0.03 per share), was $ 83.8 million. 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. 30 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 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 A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock begin accruing on, and are cumulative from, the date of issuance. During the nine months ended September 30, 2024, the Company paid $ 16.2 million, $ 7.3 million, and $ 51,000 of cash dividends on the Series A1 Preferred Stock, Series A Preferred Stock, and Series D Preferred Stock, respectively. During the nine months ended September 30, 2023, the Company paid $ 9.3 million, $ 8.3 million, $ 52,000 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. Redemptions —The Company’s Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock are redeemable at the option of the holder or the Company. The redemption schedule of the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock allows redemptions at the option of the holder of Series A1 Preferred Stock, Series A Preferred Stock or Series D Preferred Stock from the date of original issuance of any such shares at the Series A1 Preferred Stock Stated Value, Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, less a redemption fee applicable prior to the fifth anniversary of the issuance of such shares, plus accrued and unpaid dividends. The Company has the right to redeem the Series A1 Preferred Stock after the date that is twenty-four months following the original issuance of such shares of Series A1 Preferred Stock at the Series A1 Preferred Stock Stated Value, plus accrued and unpaid dividends. The Company has the right to redeem the Series A Preferred Stock or Series D Preferred Stock after the fifth anniversary of the date of original issuance of such shares at the Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, plus accrued and unpaid dividends. 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 A1 Preferred Stock issued in June 2024 and thereafter that are redeemed prior to the first anniversary of the date of original issuance of such shares must be paid in cash.The Company currently plans to continue to satisfy some or all redemption requests submitted by holders of its shares of Preferred Stock in shares of Common Stock during the fourth quarter of 2024. 12. STOCKHOLDERS’ EQUITY Dividends Holders of the Company’s Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by the Company out of legally available funds. In determining the Company’s dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, the Company’s financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects. Consequently, the dividend rate on a quarterly basis 31 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) does not necessarily correlate directly to any individual factor. Cash dividends per share of Common Stock paid in respect of the nine months ended September 30, 2024 and 2023 consist of the following: Declaration Date Payment Date Type Cash Dividend Per Share of Common Stock September 16, 2024 October 8, 2024 Quarterly - Stock Dividend (1) June 25, 2024 July 22, 2024 Regular Quarterly $ 0.085 March 27, 2024 April 8, 2024 Regular Quarterly $ 0.085 September 27, 2023 October 23, 2023 Regular Quarterly $ 0.085 June 27, 2023 July 24, 2023 Regular Quarterly $ 0.085 March 20, 2023 April 11, 2023 Regular Quarterly $ 0.085 ______________________ (1) The Company’s Board of Directors declared a stock dividend of $ 0.04 (or 0.0202 shares of Common Stock) per share of Common Stock, payable in shares of Common Stock, using a price of $ 1.985 per share, resulting in the issuance of 1,684,634 shares of Common Stock. The stock dividend was retrospectively applied to the periods reflected in the consolidated statements of operations included in this Quarterly Report on Form 10-Q. Series A Preferred Warrants Prior to February 2020, the Series A Preferred Stock was sold as a unit that included one share of Series A Preferred Stock and one Series A Preferred Warrant that could be exercised to purchase 0.25 of a share of Common Stock. The Series A Preferred Warrants are exercisable beginning on the first anniversary of the date of their original issuance until and including the fifth anniversary of the date of such issuance. At the time of issuance, the exercise price of each Series A Preferred Warrant was at a 15.0 % premium to the per share estimated NAV of the Company’s Common Stock then most recently published and designated as the applicable NAV. However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the Reverse Stock Split was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of the Company’s Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant issued prior to the Special Dividend was adjusted to reflect the effect of the Special Dividend. 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 September 30, 2024, the Company had 498,420 Series A Preferred Warrants outstanding to purchase 124,605 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $ 118,000 , after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity. Share Repurchase Program In May 2022, the Company’s Board of Directors approved a repurchase program of up to $ 10.0 million of the Company’s Common Stock (the “SRP”). Under the SRP, the Company, in its discretion, may purchase shares of its Common Stock from time to time in the open market or in privately negotiated transactions. The amount and timing of purchases of shares will depend on a number of factors, including, without limitation, the price and availability of shares, trading volume, general market conditions and compliance with applicable securities law. The SRP has no termination date and may be suspended or discontinued at any time. There were no repurchases during the three and nine months ended September 30, 2024. As of September 30, 2024, the Company had repurchased 662,462 shares of Common Stock for $ 4.7 million. 13. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company determines the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The hierarchy for inputs used in measuring fair value is as follows: 32 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) Level 1 Inputs —Quoted prices in active markets for identical assets or liabilities Level 2 Inputs —Observable inputs other than quoted prices in active markets for identical assets and liabilities Level 3 Inputs —Unobservable inputs In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Management’s estimation of the fair value of the Company’s financial instruments is based on a Level 3 valuation in the fair value hierarchy established for disclosure of how a company values its financial instruments. 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. If quoted prices are not available for the identical financial instrument, then a determination should be made if Level 2 inputs are available. Level 2 inputs include quoted prices for similar financial instruments in active markets for identical or similar financial instruments in markets that are not active (i.e., markets in which there are few transactions for the financial instruments, the prices are not current, price quotations vary substantially, or in which little information is released publicly). There is limited reliable market information for the Company’s financial instruments and the Company utilizes other methodologies based on unobservable inputs for valuation purposes since there are no Level 1 or Level 2 inputs available. Accordingly, Level 3 inputs are used to measure fair value. In general, estimates of fair value may differ from the carrying amounts of the financial assets and liabilities primarily as a result of the effects of discounting future cash flows. Considerable judgment is required to interpret market data and develop estimates of fair value. 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. 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, 2022 Credit Facility and variable rate mortgage 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 fixed rate mortgage notes payable and junior subordinated notes by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. Loans Receivable —The Company determines the fair value of loans receivable by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk and using an anticipated prepayment rate. The value of the government guaranteed portions of loans held for sale is based primarily on the anticipated proceeds to be received upon sale. The following summarizes the ranges of discount rates and prepayment rates used to arrive at the estimated fair values of the Company’s loans receivable: September 30, 2024 December 31, 2023 Discount Rate Prepayment Rate Discount Rate Prepayment Rate SBA 7(a) loans receivable, subject to credit risk 7.83 % - 11.00 % 4.88 % - 17.50 % 7.83 % - 11.00 % 4.88 % - 17.50 % SBA 7(a) loans receivable, subject to loan-backed notes 10.00 % - 11.00 % 4.88 % - 17.50 % 10.00 % - 11.00 % 4.88 % - 17.50 % SBA 7(a) loans receivable, subject to secured borrowings 10.00 % - 10.50 % 5.00 % - 17.50 % 10.00 % - 10.50 % 5.00 % - 17.50 % 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. 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 33 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) September 30, 2024 and December 31, 2023. 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, 2024 December 31, 2023 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Level Assets: SBA 7(a) loans receivable, subject to credit risk $ 15,435 $ 15,400 $ 10,539 $ 10,482 3 SBA 7(a) loans receivable, subject to loan-backed notes $ 36,913 $ 39,815 $ 43,263 $ 46,701 3 SBA 7(a) loans receivable, subject to secured borrowings $ 1,832 $ 1,832 $ 3,105 $ 3,105 3 SBA 7(a) loans receivable, held for sale $ 1,562 $ 1,699 $ 98 $ 82 3 Liabilities: Mortgages payable (1) $ 163,700 $ 160,545 $ 163,700 $ 158,529 3 Junior subordinated notes (1) $ 27,070 $ 24,839 $ 27,070 $ 24,667 3 ______________________ (1) The carrying amounts for the mortgages payable and junior subordinated notes represents the principal outstanding amounts, excluding deferred debt issuance costs and discounts. 14. RELATED-PARTY TRANSACTIONS Asset Management and Other Fees to Related Parties Asset Management Fees; Administrative Fees and Expenses — CIM Urban Partners, L.P., a wholly-owned subsidiary of the Company, and CIM Capital, LLC, an affiliate of CIM Group (“CIM Capital”), have an investment management agreement, pursuant to which CIM Urban engaged CIM Capital to provide certain services to CIM Urban (the “Investment Management Agreement”). CIM Capital has assigned its duties under the Investment Management Agreement to its four wholly-owned subsidiaries: CIM Capital Securities Management, LLC, a securities manager, CIM Capital RE Debt Management, LLC, a debt manager, CIM Capital Controlled Company Management, LLC, a controlled company manager, and CIM Capital Real Property Management, LLC, a real property manager. The “Operator” refers to CIM Capital and its four wholly-owned subsidiaries. The Company and its subsidiaries have a master services agreement (the “Master Services Agreement”) with CIM Service Provider, LLC (the “Administrator”), an affiliate of CIM Group, pursuant to which the Administrator provides, or arranges for other service providers to provide, management and administration services to the Company and its subsidiaries. On January 5, 2022, the Company and certain of its subsidiaries entered into a Fee Waiver (the “Fee Waiver”) with the Operator and the Administrator with respect to fees that are payable to them. The Fee Waiver is effective retroactively to January 1, 2022 (the “Effective Date”). Pursuant to the Fee Waiver, the Administrator agreed to voluntarily waive any fees in excess of those set forth in the Fee Waiver, to the extent it would otherwise have been entitled to such additional compensation under the Master Service Agreement, and the Operator agreed to voluntarily waive any fees in excess of those set forth in the Fee Waiver, to the extent it would otherwise have been entitled to such additional compensation under the Investment Management Agreement. Following the end of each quarter, the Administrator will deliver to the Company (i) a calculation of the cumulative fees earned by the Operator and the Administrator under the methodology prescribed by the Fee Waiver from the Effective Date through the end of such quarter and (ii) a calculation of the cumulative fees that would have been earned by the Operator and the Administrator during such period under the Master Services Agreement and the Investment Management Agreement without giving effect to the Fee Waiver. If, in respect of any quarter, the aggregate fees that are payable under the methodology prescribed by the Fee Waiver exceed the aggregate fees that would have been payable under the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver, such quarter will be deemed an “Excess Quarter”. For any quarter following an Excess Quarter, the Company (upon the direction of the independent members of the Board) may, at its option and upon written notice to Administrator, elect to calculate all fees due to the Administrator and the Operator in accordance with the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver, from and after such Excess Quarter. Any such election by the Company 34 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 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. The fees payable to the Operator and the Administrator are determined as follows under the Fee Waiver. 1. Base Fee: A base asset management fee (the “Base Fee”) is payable quarterly in arrears to the Operator in an amount equal to an annual rate of 1 % (or 0.25 % per quarter) of the average of the “Net Asset Value Attributable to Common Stockholders” as of the first and last day of the applicable quarter. Net Asset Value Attributable to Common stockholders is defined as (a) the sum of the Company’s (1) investments in real estate at fair value, (2) cash, (3) loans receivable at fair value and (4) the book value of the other assets of the Company, excluding deferred costs and net of other liabilities at book value, less (b) the Company’s (i) debt at face value, (ii) outstanding preferred stock at stated value, and (iii) non-controlling interests at book value; provided, that, non-controlling interests in any UPREIT operating partnership relating to the Company shall not be excluded. 2. 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 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 %; and (iii) 20 % of any Excess Core FFO thereafter. Revised Incentive Fees payable for any partial quarter will be appropriately prorated. “Adjusted Common Equity” means Common Equity plus Excluded Depreciation and Amortization. “Common Equity” means Total Stockholders’ Equity minus Excluded Equity. “Total Stockholders’ Equity” means the amount reflected as total stockholders’ equity in accordance with GAAP on the consolidated balance sheet of the Company and its subsidiaries as of the last day of a given quarter. “Excluded Equity” means the sum of all preferred securities of the Company and its subsidiaries classified as permanent equity in accordance with GAAP on the consolidated balance sheet of the Company and its subsidiaries as of the last day of a given quarter. “Excluded Depreciation and Amortization” means, for a given quarter, the amount of all accumulated depreciation and amortization of (i) the Company and its subsidiaries and (ii) to the extent allocable to the Company and its subsidiaries, the unconsolidated affiliates, in each case as of the last day of such quarter that corresponds to the periodic depreciation and amortization expense calculated in each case in accordance with GAAP that is a permitted add back to net income calculated in accordance with GAAP when calculating funds from operations. 3. Capital Gains Fee: A capital gains fee (the “Capital Gains Fee”) is payable quarterly in arrears to the Administrator in an amount equal to (i) 15 % of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses (in each case since the Effective Date), minus (ii) the aggregate capital gains fees paid since the Effective Date. Realized capital gains and realized capital losses are calculated by subtracting from the sales price of a property: (a) any costs incurred to sell such property, and (b) the current gross value of the property (meaning the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements thereon paid for by the Company). Pursuant to the Investment Management Agreement, the asset management fee prior to January 1, 2022 fee was calculated (without giving effect to the Fee Waiver) as a percentage of the daily average adjusted fair value of CIM Urban’s assets as follows (dollar amounts in thousands): Daily Average Adjusted Fair Value of CIM Urban’s Assets Quarterly Fee Percentage From Greater of To and Including $ — $ 500,000 0.2500 % $ 500,000 $ 1,000,000 0.2375 % $ 1,000,000 $ 1,500,000 0.2250 % $ 1,500,000 $ 4,000,000 0.2125 % $ 4,000,000 $ 20,000,000 0.1000 % 35 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 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 quarter. The amendment was effective as of April 1, 2020 and was further modified by the Fee Waiver described above. No such incentive fee was paid by the Company. 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 Fee. During the years ended December 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 Company will also reimburse the Administrator for the Company’s share of broken deal expenses that are incurred by the Administrator and its affiliates (i.e., fees and expenses relating to investments that were contemplated but the Company did not make and/or transactions that could have been executed by the Company but that the Company did not consummate, including fees and expenses associated with performing due diligence review and negotiating the terms of such investments or transactions). 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). The expense for such services is included in expense reimbursements to related parties—corporate in the accompanying consolidated statements of operations. Property Management Fees and Reimbursements — CIM Management, Inc. and certain of its affiliates (collectively, the “CIM Management Entities”), all affiliates of CIM Group, provide property management, leasing, and development services to properties owned by the Company. Property management fees earned by the CIM Management entities and onsite management costs incurred are included in rental and other property operating expenses in the accompanying consolidated statements of operations, with the exception of certain onsite management costs which are capitalized in some cases. Leasing commissions earned are capitalized to deferred charges on the accompanying consolidated balance sheets. Construction management fees and development management reimbursements are capitalized to investments in real estate on the accompanying consolidated balance sheets. Lending Segment Expenses — The Company has a Staffing and Reimbursement Agreement with CIM SBA Staffing, LLC (“CIM SBA”), an affiliate of CIM Group, and the Company’s subsidiary, PMC Commercial Lending, LLC. The agreement provides that CIM SBA will provide personnel and resources to the Company and that the Company will reimburse CIM SBA for the costs and expenses of providing such personnel and resources. The expense for such services is included in expense reimbursements to related parties—lending segment in the accompanying consolidated statements of operations. 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 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 November 22, 2022, the Company entered into the Fourth 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) a dealer manager fee of up to 3.00 % of the selling price of each share of Series A1 Preferred Stock sold and (2) selling commissions of up to 7.00 % of the selling price of each share of Series A1 Preferred Stock sold. The Company has been informed that CCO Capital generally reallows 100 % of the selling commissions on sales of Series A1 Preferred Stock and generally reallows substantially all of the dealer manager fee on sales of Series A1 Preferred Stock, to participating broker- 36 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) dealers. 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): Three Months Ended September 30, Nine Months Ended September 30, 2024 2024 2023 2024 2023 Asset Management Fees: Asset management fees $ 515 $ 724 $ 1,334 $ 2,071 Property Management Fees and Reimbursements: Property management fees (1) $ 582 $ 551 $ 1,742 $ 1,579 Onsite management and other cost reimbursements (2) $ 2,397 $ 1,707 $ 5,866 $ 4,238 Leasing commissions (3) $ 97 $ 27 $ 335 $ 103 Construction management fees (4) $ 362 $ 112 $ 552 $ 282 Development management reimbursements (5) $ 397 $ 327 $ 1,410 $ 980 Administrative Fees and Expenses: Expense reimbursements to related parties - corporate $ 592 $ 524 $ 1,809 $ 1,729 Lending Segment Expenses: Expense reimbursements to related parties - lending segment (6) $ 672 $ 648 $ 1,908 $ 2,166 Offering-Related Fees: Upfront dealer manager and trailing dealer manager fees (7) $ 169 $ 337 $ 546 $ 1,027 Non-issuance specific offering costs (8) $ 183 $ 154 $ 606 $ 460 ______________________ (1) Does not include the Company’s share of the property management fees from the Unconsolidated Joint Ventures of $ 24,000 and $ 74,000 for the three and nine months ended September 30, 2024, respectively, and $ 20,000 and $ 57,000 for the three and nine months ended September 30, 2023, respectively. (2) Does not include the Company’s share of the onsite management and other cost reimbursements from the Unconsolidated Joint Ventures of $ 176,000 and $ 414,000 for the three and nine months ended September 30, 2024, respectively, and $ 114,000 and $ 255,000 for the three and nine months ended September 30, 2023, respectively. (3) Does not include the Company’s share of the leasing commissions from the Unconsolidated Joint Ventures of $ 0 and $ 10,000 for the three and nine months ended September 30, 2024, respectively, and $ 18,000 and $ 32,000 for the three and nine months ended September 30, 2023, respectively. (4) Does not include the Company’s share of the construction management fees from the Unconsolidated Joint Ventures of $ 6,000 and $ 128,000 for the three and nine months ended September 30, 2024, respectively, and $ 26,000 and $ 85,000 for the three and nine months ended September 30, 2023, respectively. (5) Does not include the Company’s share of the development management reimbursements from the Unconsolidated Joint Ventures of $ 241,000 and $ 625,000 for the three and nine months ended September 30, 2024, respectively, and $ 135,000 and $ 322,000 for the three and nine months ended September 30, 2023, respectively. (6) Expense reimbursements to related parties - lending segment do not include personnel costs capitalized to deferred loan origination costs of $ 24,000 and $ 84,000 for the three and nine months ended September 30, 2024, respectively, and $ 6,000 and $ 67,000 for the three and nine months ended September 30, 2023, 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, 2024 and September 30, 2023, $ 3.2 million and $ 2.6 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. 37 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) As of September 30, 2024 and December 31, 2023, due to related parties consisted of the following (in thousands): September 30, 2024 December 31, 2023 Asset management fees $ 939 $ 555 Property management fees and reimbursements 4,500 1,505 Expense reimbursements - corporate 1,204 613 Expense reimbursements - lending segment 1,337 156 Upfront dealer manager and trailing dealer manager fees 191 283 Non-issuance specific offering costs 289 61 Other amounts due to the CIM Management Entities and certain of its affiliates 404 290 Total due to related parties $ 8,864 $ 3,463 Investments with Affiliates of CIM Group In February 2022, the Company invested with the 1910 Sunset JV Partner, a CIM-managed separate account, in the 1910 Sunset JV 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 1910 Sunset JV Partner initially contributed the remaining balance. See Note 2 and Note 4 for more information. 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, Note 4 and Note 18 for more information. In October 2023, the Company and the 1015 N Mansfield JV Partner acquired from an unrelated third party a 100 % fee-simple interest in a plot of land located in the Sycamore media district of Los Angeles, California for a gross purchase price of $ 18.0 million (excluding transaction costs). The property has a site area of approximately 44,141 square feet and contains a parking garage that has been leased to a third-party tenant. The Company owns 28.8 % of the 1015 N Mansfield JV. During the nine months ended September 30, 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 for $ 282.9 million (exclusive of transactions costs) . See Note 3 and Note 7 for more information. Other On May 15, 2019, an affiliate of 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. 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. Prior to the sale, for the three months ended March 31, 2023, the Company recorded rental and other property income related to this tenant of $ 194,000 . For the three and nine months ended September 30, 2024 the Company’s share of the income from the tenant earned by the 4750 Wilshire JV was $ 84,000 and $ 248,000 , respectively, and for the three and nine months ended September 30, 2023, the Company’s share of the income from the tenant earned by the 4750 Wilshire JV was $ 80,000 and $ 170,000 , respectively. 15. 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 $ 18.5 million as of September 30, 2024, 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. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. 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 38 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) renewals. The Company had a total of $ 12.6 million in future obligations under leases to fund tenant improvements and other future construction obligations as of September 30, 2024. As of September 30, 2024, $ 2.5 million was funded to reserve accounts included in restricted cash on the Company’s consolidated balance sheet for these tenant improvement obligations in connection with the mortgage loan agreement entered into in June 2016. Employment Agreements —The Company has an employment agreement with one of its officers. Under certain circumstances, this employment agreement provides for (1) severance payment equal to the annual base salary paid to the officer and (2) death and disability payments in an amount equal to two times and one time, respectively, the annual base salary paid to the officer. Litigation —The Company is not currently involved in any material pending or threatened legal proceedings nor, to the Company’s knowledge, are any material legal proceedings currently threatened against the Company, other than routine litigation arising in the ordinary course of business. In the normal course of business, the Company is periodically party to certain legal actions and proceedings involving matters that are generally incidental to the Company’s business. 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. 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. Such subsidiary has reached an agreement in principle to settle the lawsuit with the plaintiff pursuant to which such subsidiary’s share of the settlement payment will be approximately $ 700,000 . The Company anticipates that such payment will be made directly from the Company’s insurance carrier, which will be responsible for the entire payment. Accordingly, the Company does not expect this lawsuit to have any adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company ability to satisfy its debt service obligations or to maintain the level of distributions on the Company’s Common Stock or Preferred Stock. SBA Related —If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced under the 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, 2024, the Company serviced an aggregate of $ 221.9 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. Based on historical experience, the Company does not expect that this contingency is probable to be asserted. However, if asserted, it could 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. Environmental Matters —In connection with the ownership and operation of real estate properties, the Company may be potentially liable for costs and damages related to environmental matters, including asbestos-containing materials. 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. 39 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) 16. LEASES Future minimum rental revenue under long-term operating leases as of September 30, 2024, excluding tenant reimbursements of certain costs, are as follows (excludes unconsolidated properties, in thousands): Years Ending December 31, Total 2024 (Three months ending December 31, 2024) $ 14,540 2025 41,259 2026 27,370 2027 19,463 2028 15,091 Thereafter 52,760 $ 170,483 17. SEGMENT DISCLOSURE The Company’s reportable segments during the three and nine months ended September 30, 2024 and September 30, 2023 consist of three types of commercial real estate properties, namely, office, hotel and multifamily, 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. The Company also has certain general and administrative level activities, including public company expenses, legal, accounting, and tax preparation that are not considered separate operating segments. 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, 2023 included in the 2023 Form 10-K. For the Company’s real estate segments, the Company defines net operating income (loss) as rental and other property income and expense reimbursements less property related expenses, and excludes non-property income and expenses, interest expense, depreciation and amortization, corporate related general and administrative expenses, gain (loss) on sale of real estate, gain (loss) on early extinguishment of debt, impairment of real estate, transaction costs, and provision (benefit) for income taxes. For the Company’s lending segment, the Company defines net operating income as interest income net of interest expense and general overhead expenses. 40 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (Unaudited) – (Continued) The net operating income (loss) of the Company’s segments for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Office: Revenues $ 13,819 $ 14,049 $ 42,531 $ 41,511 Property expenses: Operating 7,444 6,267 20,634 19,159 General and administrative 122 75 192 232 Total property expenses 7,566 6,342 20,826 19,391 (Loss) income from unconsolidated entities ( 834 ) 1,611 487 837 Segment net operating income—office 5,419 9,318 22,192 22,957 Hotel: Revenues 7,142 7,948 31,151 31,108 Property expenses: Operating 6,147 6,030 21,763 20,912 General and administrative 22 ( 3 ) 33 17 Total property expenses 6,169 6,027 21,796 20,929 Segment net operating income—hotel 973 1,921 9,355 10,179 Multifamily: Revenues 4,773 3,331 14,971 8,632 Property expenses: Operating 3,782 3,212 10,153 7,642 General and administrative 78 88 212 400 Total property expenses 3,860 3,300 10,365 8,042 (Loss) income from unconsolidated entity ( 405 ) ( 422 ) ( 929 ) 216 Segment net operating income (loss)—multifamily 508 ( 391 ) 3,677 806 Lending: Revenues 2,724 2,570 7,928 8,243 Lending expenses: Interest expense 786 1,177 2,586 2,737 Expense reimbursements to related parties—lending segment 672 648 1,908 2,166 General and administrative 578 379 1,214 1,092 Total lending expenses 2,036 2,204 5,708 5,995 Segment net operating income—lending 688 366 2,220 2,248 Total segment net operating income $ 7,588 $ 11,214 $ 37,444 $ 36,190 41 Table of Contents CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (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, 2024 and 2023 is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Total segment net operating income $ 7,588 $ 11,214 $ 37,444 $ 36,190 Interest and other income 158 220 472 296 Asset management and other fees to related parties ( 515 ) ( 724 ) ( 1,334 ) ( 2,071 ) Expense reimbursements to related parties—corporate ( 592 ) ( 524 ) ( 1,809 ) ( 1,729 ) Interest expense ( 8,830 ) ( 8,556 ) ( 25,233 ) ( 21,941 ) General and administrative ( 1,421 ) ( 1,603 ) ( 3,592 ) ( 4,010 ) Transaction-related costs ( 526 ) ( 38 ) ( 1,351 ) ( 3,398 ) Depreciation and amortization ( 6,423 ) ( 16,082 ) ( 19,357 ) ( 46,056 ) Gain on sale of real estate — — — 1,104 Loss before provision for income taxes ( 10,561 ) ( 16,093 ) ( 14,760 ) ( 41,615 ) Provision for income taxes ( 15 ) ( 554 ) ( 573 ) ( 969 ) Net loss ( 10,576 ) ( 16,647 ) ( 15,333 ) ( 42,584 ) Net loss attributable to non-controlling interests 192 874 423 2,501 Net loss attributable to the Company $ ( 10,384 ) $ ( 15,773 ) $ ( 14,910 ) $ ( 40,083 ) The condensed assets for each of the segments as of September 30, 2024 and December 31, 2023 are as follows (in thousands): September 30, 2024 December 31, 2023 Condensed assets: Office $ 418,886 $ 419,443 Hotel 102,621 95,998 Multifamily 270,260 278,492 Lending 75,472 76,374 Non-segment assets 810 20,893 Total assets $ 868,049 $ 891,200 18. SUBSEQUENT EVENTS At the end of October, 2024, the 1902 JV Partner admitted a new third party co-investor and used part of the net capital contribution of such third party co-investor to satisfy the 1902 Park Mortgage Loan in full. The remaining contribution was used to make a distribution of approximately $ 1.0 million to each of the Company and the 1902 Park JV Partner. Subsequent to this contribution, the Company’s ownership share of the 1902 Park JV was approximately 25.5% . In addition, the Company and the 1902 Park JV Partner will be receiving an on-going fee from such third party co-investor in connection with its co-investment in 1902 Park JV. 42 Table of Contents