What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-16 compared with 2021-05-17 · 224 added, 127 removed, 297 unchanged (54% of the section changed)

25 unchanged sentences

• We may not generate cash flows sufficient to pay our distributions to stockholders or meet our debt service obligations.

• Our continued compliance with debt covenants depends on many factors and could be impacted by current or future economic conditions associated with the current novel coronavirus (“COVID-19”) pandemic.

• Our continued compliance with debt covenants depends on many factors and could be impacted by current or future economic conditions associated with the COVID-19 pandemic.

• We may be affected by risks resulting from losses in excess of insured limits.

25 unchanged sentences

Our operating results and cash flows are primarily influenced by rental and other property income from our commercial properties, interest expense on our indebtedness and acquisition and operating expenses.

As 93.7% of our rentable square feet was under lease, including any month-to-month agreements, as of March 31, 2021, with a weighted average remaining lease term of 8.7 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors.

As 93.1% of our rentable square feet was under lease, including any month-to-month agreements, as of June 30, 2021, with a weighted average remaining lease term of 8.3 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors.

Our manager regularly monitors the creditworthiness of our tenants by reviewing each tenant’s financial results, any available credit rating agency reports on the tenant or guarantor, the operating history of the property with such tenant, the tenant’s market share and track record within its industry segment, the general health and outlook of the tenant’s industry segment and other information for changes and possible trends.

1 unchanged sentence

We have primarily acquired core commercial real estate assets principally consisting of retail properties located throughout the United States.

As of March 31, 2021, we owned 515 properties, comprising 21.3 million rentable square feet of commercial space located in 45 states.

In addition, during the three months ended March 31, 2021, we completed foreclosure proceedings and took control of the assets which previously secured our mezzanine loans, including 75 condominium units and 21 rental units across four buildings.

As of June 30, 2021, we owned 469 properties, comprising 18.6 million rentable square feet of commercial space located in 41 states.

In addition, during the six months ended June 30, 2021, we completed foreclosure proceedings and took control of the assets which previously secured our mezzanine loans.

As of June 30, 2021, we owned $197.1 million of condominium developments.

We intend to continue to pursue a more diversified investment strategy across the capital structure by balancing our existing portfolio of core commercial real estate assets with our future investments in a portfolio of commercial mortgage loans

and other real estate-related credit investments in which our sponsor and its affiliates have expertise, that we would originate, acquire, finance and manage.

As of March 31, 2021, our loan portfolio consisted of 227 loans with a net book value of $1.0 billion.

As of March 31, 2021, we had $34.5 million of unsettled broadly syndicated loan purchases included in cash and cash equivalents, and investments in real estate-related securities of $67.2 million.

During the three months ended March 31, 2021, we disposed of one property, encompassing approximately 15,000 gross rentable square feet.

As of March 31, 2021, our real estate portfolio consisted of 454 retail properties, 56 anchored shopping centers, four industrial properties and one office property representing 35 industry sectors.

In addition, we acquired 75 condominium units and 21 rental units via foreclosure during the three months ended March 31, 2021.

See Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the disposition of individual properties during the three months ended March 31, 2021.

Assuming the successful repositioning of our portfolio, we then intend to pursue a listing of our common stock on a national securities exchange.

We cannot make assurances that we will successfully reposition our portfolio or list our common stock on a national securities exchange within a particular timeframe or at all.

As of June 30, 2021, our loan portfolio consisted of 247 loans with a net book value of $1.3 billion.

As of June 30, 2021, we had $43.2 million of unsettled broadly syndicated loan purchases included in cash and cash equivalents, and investments in real estate-related securities of $42.1 million.

During the six months ended June 30, 2021, we disposed of 47 properties for an aggregate sales price of $304.0 million.

The dispositions resulted in proceeds of $296.0 million after closing costs and we recorded a gain of $46.5 million which is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

As of June 30, 2021, our real estate portfolio consisted of 411 retail properties, 54 anchored shopping centers, three industrial properties and one office property representing 31 industry sectors.

In addition, we acquired 75 condominium units and 21 rental units via foreclosure during the six months ended June 30, 2021.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic.

Since then, COVID-19 has spread worldwide, causing significant disruptions to the U.S.

and world economies.

and has triggered a period of significant global economic slowdown.

In the first half of 2021, the U.S.

and world economy have begun to show signs of recovery from the impact of COVID-19 as vaccination rates increased, virus caseloads declined and businesses, schools and public services have begun the reopening process.

However, the emergence of variant strains of COVID-19 has threatened to slow or reverse these trends in the third quarter of 2021 and beyond.

As a result, there continues to be uncertainty around impact of COVID-19 on the U.S.

economy and world economies.

We are closely monitoring the negative impacts that the COVID-19 pandemic and the efforts to mitigate its spread are having on the economy, our tenants and our business.

T he extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the timing and pace of reopening efforts, and the direct and indirect economic effects of the pandemic and containment measures, among others.

During the three months ended March 31, 2021, we provided lease concessions, either in the form of rental deferrals or abatements, to certain tenants in response to the impact of the COVID-19 pandemic.

During the three months ended March 31, 2021, we granted total rent deferrals with an aggregate deferral amount o f $431,000 .

Additionally, during the three months ended March 31, 2021, we granted rent abatements to tenants with an abatement amount of $248,000 .

As of May 6, 2021, we have collected approximately 98% of rental payments billed to tenants during the three months ended March 31, 2021 .

Additionally, as of May 6, 2021, we have collected 97% of April rental payments billed to tenants.

T he extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the distribution and acceptance of vaccines, the spread of new variants of COVID-19, the extent to which federal, state and local governments provide relief or assistance to those affected by COVID-19 and the impact that these developments will have on the timing and speed of the recovery of the U.S.

and world economy.

During the three and six months ended June 30, 2021, the majority of lease concessions provided were in the form of rent abatements to certain tenants in response to the impact of the COVID-19 pandemic on those tenants.

As of August 9, 2021, we have collected approximately 99% of rental payments billed to tenants during the three months ended June 30, 2021, and as of August 9, 2021, we collected $4.1 million of deferred rent, representing approximately 99% of amounts due through June 30, 2021 .

Operating Highlights and Key Performance Indicators

2021 Activity

• Completed foreclosure to take control of the assets which previously secured our mezzanine loans, including 75 condominium units and 21 rental units across four buildings.

Activity through June 30, 2021

• Invested $142.3 million in broadly syndicated loans and sold broadly syndicated loans for an aggregate gross sales price of $36.7 million.

• Invested $28.5 million in CMBS.

• Disposed of one retail property for an aggregate sales price of $3.7 million.

• Invested $28.5 million in CMBS and sold CMBS for an aggregate gross sales price of $27.0 million.

• Disposed of 47 retail properties for an aggregate sales price of $304.0 million.

• Completed foreclosure to take control of the assets which previously secured our mezzanine loans, including 75 condominium units and 21 rental units across four buildings.

• Increased total debt by $394.7 million, from $2.1 billion to $2.5 billion.

Portfolio Information

The following table shows the carrying value of our portfolio by investment type as of March 31, 2021 and 2020 (dollar amounts in thousands):

As of March 31,

The following table shows the carrying value of our portfolio by investment type as of June 30, 2021 and 2020 (dollar amounts in thousands):

As of June 30,

Asset Count Carrying Value Asset Count Carrying Value

9 unchanged sentences

Total Investment Portfolio 719 $ 4,566,552 100.0 % 526 $ 3,225,649 100.0 %

The following table details overall statistics of our credit portfolio as of March 31, 2021 (dollar amounts in thousands):

The following table details overall statistics of our credit portfolio as of June 30, 2021 (dollar amounts in thousands):

Senior Loans (1) (2)

5 unchanged sentences

____________________________________

(1) As of March 31, 2021, 100% of our loans by principal balance earned a floating rate of interest, primarily indexed to U.S.

(1) As of June 30, 2021, 100% of our loans by principal balance earned a floating rate of interest, primarily indexed to U.S.

dollar LIBOR.

2 unchanged sentences

Real Estate Portfolio Information

As of March 31, 2021, we owned 515 properties located in 45 states, the gross rentable square feet of which was 93.7% leased, including any month-to-month agreements, with a weighted average lease term remaining of 8.7 years.

As of March 31, 2021, no single tenant accounted for greater than 10% of our 2021 annualized rental income.

As of March 31, 2021, we had certain geographic and industry concentrations in our property holdings.

As of June 30, 2021, we owned 469 properties located in 41 states, the gross rentable square feet of which was 93.1% leased, including any month-to-month agreements, with a weighted average lease term remaining of 8.3 years.

As of June 30, 2021, no single tenant accounted for greater than 10% of our 2021 annualized rental income.

As of June 30, 2021, we had certain geographic and industry concentrations in our property holdings.

In particular, 61 of our properties were located in California, which accounted for 11% of our 2021 annualized rental income.

In addition, we had tenants in the sporting goods, home and garden and general merchandise store industries, which accounted for 12%, 11% and 10%, respectively, of our 2021 annualized rental income.

The following table shows the property statistics of our real estate assets as of March 31, 2021 and 2020:

As of March 31,

In addition, we had tenants in the sporting goods, hobby and musical instruments stores;

health and personal care stores;

and general merchandise stores industries, which accounted for 12%, 11% and 10%, respectively, of our 2021 annualized rental income.

The following table shows the property statistics of our real estate assets as of June 30, 2021 and 2020:

As of June 30,

Number of commercial properties 469 381

9 unchanged sentences

The weighted average credit rating is weighted based on annualized rental income and is for only those tenants rated by Standard & Poor’s.

During the three months ended March 31, 2021 and 2020, the Company did not acquire any properties.

The following table summarizes our real estate acquisition activity during the six months ended June 30, 2021 and 2020:

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

2021 2020 2021 2020

Commercial properties acquired — 1 — 1

Purchase price of acquired properties (in thousands)

$ — $ 4,659 $ — $ 4,659

Rentable square feet (in thousands) (1)

— 18,635 — 18,635

____________________________________

(1) Includes square feet of buildings on land parcels subject to ground leases.

Results of Operations

6 unchanged sentences

Net operating income is considered by management to be a helpful supplemental performance measure, as it enables management to evaluate the impact of occupancy, rents, leasing activity, and other controllable property operating results at our real estate properties, and it provides a consistent method for the comparison of our properties.

We define net operating income as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and other non-property related revenue and expense items such as (a) general and administrative expenses, (b) management and advisory fees and expenses, (c) transaction-related expenses, (d) real estate impairment, (e) provision for credit losses, (f) gain on disposition of real estate, net, (g) merger-related items and (h) interest income.

We define net operating income as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and other non-property related revenue and expense items such as (a) general and administrative expenses, (b) expense reimbursements to related parties, (c) management fees, (d) transaction-related expenses, (e) real estate impairment, (f) provision for credit losses, (g) gain on disposition of real estate and condominium developments, net, and (h) interest income.

Our net operating income may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income (loss).

In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment.

Comparison of the Three Months Ended March 31, 2021 and 2020

Comparison of the Three Months Ended June 30, 2021 and 2020

The following table reconciles net loss, calculated in accordance with GAAP, to net operating income (dollar amounts in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30,

2021 2020 Change

Net loss $ (2,753) $ (12,175) $ 9,422

Net income (loss) $ 57,787 $ (3,746) $ 61,533

Loss on extinguishment of debt 1,478 370 1,108

1 unchanged sentence

Operating income 75,725 12,144 63,581

Gain on disposition of real estate, net — (13,110) 13,110

Gain on disposition of real estate and condominium developments, net (46,469) (3,791) (42,678)

Provision for credit losses 123 7,905 (7,782)

2 unchanged sentences

Transaction-related expenses 27 125 (98)

Management and advisory fees and expenses 13,014 11,090 1,924

Management fees 11,755 9,750 2,005

Expense reimbursements to related parties 3,210 3,057 153

General and administrative expenses 3,605 3,020 585

3 unchanged sentences

Refer to Note 16 — Segment Reporting for further discussion of our operating segments.

Credit Segment

Interest Income

The increase in interest income of $6.4 million for the three months ended March 31, 2021, compared to the same period in 2020, was due to an increase in credit investments.

As of March 31, 2021, we held investments in 221 broadly syndicated loans, six CRE loans held-for-investment and five CMBS.

As of March 31, 2020, we held investments in 113 broadly syndicated loans and 11 CRE loans held-for-investment.

Provision for Credit Losses

The decrease in provision for credit losses of $17.2 million during the three months ended March 31, 2021, as compared to the same period in 2020 was primarily due to the foreclosure of the assets securing the Company’s mezzanine loans.

During the three months ended March 31, 2020, the borrower on the Company’s eight mezzanine loans remained delinquent on the required reserve payments and became delinquent on principal and interest, resulting in the Company recording $13.0 million in credit losses related to the mezzanine loans.

Upon completing foreclosure proceedings in January 2021, the Company took control of the assets which previously secured the loans, and as such, a provision for credit losses related to the mezzanine loans was not recorded for the three months ended March 31, 2021.

Real Estate Segment

A total of 368 properties were acquired before January 1, 2020 and represent our “same store” properties during the three months ended March 31, 2021 and 2020.

“Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, 2020.

A total of 343 properties were acquired before April 1, 2020 and represent our “same store” properties during the three months ended June 30, 2021 and 2020.

“Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after April 1, 2020.

The following table details the components of net operating income broken out between same store and non-same store properties (dollar amounts in thousands):

Total Same Store Non-Same Store

For the Three Months Ended March 31,

For the Three Months Ended June 30,

2021 2020 Change 2021 2020 Change 2021 2020 Change

5 unchanged sentences

Loss on Extinguishment of Debt

Loss on extinguishment of debt decreased $4.4 million for the three months ended March 31, 2021, as compared to the same period in 2020.

During the three months ended March 31, 2020, we recorded losses on the extinguishment of mortgage loans with an aggregate carrying value of $97.0 million.

No such losses were recorded during the three months ended March 31, 2021.

The increase in loss on extinguishment of debt of $1.1 million for the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the extinguishment of one mortgage loan with an aggregate carrying value of $22.0 million.

Interest Expense and Other, Net

Interest expense and other, net also includes amortization of deferred financing costs.

The increase in interest expense and other, net, of $4.3 million for the three months ended March 31, 2021, as compared to the same period in 2020, was primarily due to an increase in the average aggregate amount of debt outstanding from $1.56 billion as of March 31, 2020 to $2.46 billion as of March 31, 2021, partially offset by a decrease in the weighted average interest rate from 3.8% as of March 31, 2020 to 2.8% as of March 31, 2021.

Gain on Disposition of Real Estate, Net

The decrease in gain on disposition of real estate, net, of $13.1 million during the three months ended March 31, 2021, as compared to the same period in 2020, was primarily due to the disposition of one property with no gain or loss recognized during the three months ended March 31, 2021 compared to the disposition of 12 properties for a gain of $13.1 million during the three months ended March 31, 2020.

The increase in interest expense and other, net, of $940,000 for the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to an increase in the average aggregate amount of debt outstanding from $1.6 billion as of June 30, 2020 to $2.4 billion as of June 30, 2021 as a result of entering into additional repurchase agreements and assuming the CCPT V Credit Facility as part of the Mergers subsequent to June 30, 2020.

This increase was partially offset by a decrease in the weighted average interest rate from 3.3% as of June 30, 2020 to 2.8% as of June 30, 2021.

Gain on Disposition of Real Estate and Condominium Developments, Net

The increase in gain on disposition of real estate and condominium developments, net, of $42.7 million during the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the disposition of 46 properties for a gain of $45.0 million during the three months ended June 30, 2021 compared to the disposition of four properties for a gain of $3.8 million during the three months ended June 30, 2020.

Real Estate Impairment

The decrease in real estate impairments of $7.4 million during the three months ended March 31, 2021, as compared to the same period in 2020, was due to five properties that were deemed to be impaired, resulting in impairment charges of $4.3 million during the three months ended March 31, 2021, compared to seven properties that were deemed to be impaired, resulting in impairment charges of $11.7 million during the three months ended March 31, 2020.

The decrease in real estate impairments of $3.8 million during the three months ended June 30, 2021, as compared to the same period in 2020, was due to one property that was deemed to be impaired, resulting in impairment charges of $77,000 during the three months ended June 30, 2021, compared to three properties that were deemed to be impaired, resulting in impairment charges of $3.8 million during the three months ended June 30, 2020.

Depreciation and Amortization

The increase in depreciation and amortization of $4.9 million during the three months ended March 31, 2021, as compared to the same period in 2020, was primarily due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by the disposition of 19 properties subsequent to March 31, 2020.

The increase in depreciation and amortization of $5.0 million during the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by the disposition of 61 properties subsequent to June 30, 2020.

Transaction-Related Expenses

Transaction-related expenses include manager reimbursements for acquisition and disposition activities.

Transaction-related expenses remained generally consistent during the three months ended March 31, 2021, as compared to the same period in 2020.

Management and Advisory Fees and Expenses

We pay CMFT Management a management fee pursuant to the Management Agreement, payable quarterly in arrears, equal to the greater of (a) $250,000 per annum ($62,500 per quarter) and (b) 1.50% per annum (0.375% per quarter) of the

Company’s Equity (as defined in the Management Agreement).

Additionally, we may be required to reimburse certain expenses incurred by CMFT Management in providing management services, subject to limitations as set forth in the Management Agreement (as discussed in Note 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q).

Transaction-related expenses include abandoned deal costs for acquisition and disposition activity.

Transaction-related expenses remained generally consistent during the three months ended June 30, 2021, as compared to the same period in 2020.

Management Fees

Furthermore, as discussed in Note 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, pursuant to the Investment Advisory and Management Agreement, for management of investments in the Managed Assets (as defined in the Investment Advisory and Management Agreement), CMFT Securities pays the Investment Advisor the Investment Advisory Fee, payable quarterly in arrears, equal to 1.50% per annum (0.375% per quarter) of CMFT Securities’ Equity (as defined in the Investment Advisory and Management Agreement).

Pursuant to the Investment Advisory and Management Agreement, CMFT Securities reimburses the Investment Advisor for costs and expenses incurred by the Investment Advisor on its behalf.

Because the Managed Assets are excluded from the calculation of management fees payable by the Company to CMFT Management pursuant to the Management Agreement, the total management and advisory fees payable by the Company to its external advisors are not increased as a result of the Investment Advisory and Management Agreement.

In addition, pursuant to the Sub-Advisory Agreement, in connection with providing investment management services with respect to the corporate credit-related securities held by CMFT Securities, on a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee payable to the Investment Advisor as sub-advisory fees.

The increase in management and advisory fees and expenses of $1.9 million during the three months ended March 31, 2021, as compared to the same period in 2020, was primarily due to an increase in manager expense reimbursements.

Additionally, we incurred management fees of $11.6 million during the three months ended March 31, 2021, as compared to $11.1 million in management fees during the same period 2020.

The increase in management fees of $2.0 million during the three months ended June 30, 2021, as compared to the same period in 2020 was primarily due to the issuance of common stock in connection with the Mergers that closed in December 2020.

Expense Reimbursements to Related Parties

Pursuant to the Investment Advisory and Management Agreement, CMFT Securities reimburses the Investment Advisor for costs and expenses incurred by the Investment Advisor on its behalf.

The increase in expense reimbursements to related parties of $153,000 during the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to operating expense reimbursements due to CMFT Management as a result of acquiring 146 properties as part of the Mergers that closed in December 2020.

General and Administrative Expenses

The primary general and administrative expense items are certain expense reimbursements to our manager, banking fees and transfer agency costs.

The increase in general and administrative expenses of $1.8 million for the three months ended March 31, 2021, as compared to the same period in 2020, was primarily due to an increase in legal costs related to the foreclosure completed in January 2021 to take control of the assets securing the Company’s mezzanine loans, as discussed in Note 7 — Loans Held-For-Investment to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

The primary general and administrative expense items are banking fees and transfer agency costs.

The increase in general and administrative expenses of $585,000 for the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to increased expenses related to the Mergers completed in December 2020 and the foreclosure completed in January 2021 to take control of the assets which previously secured the Company’s mezzanine loans, as discussed in Note 7 — Loans Held-For-Investment to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Net Operating Income

Same store property net operating income decreased $2.5 million during the three months ended March 31, 2021, as compared to the same period in 2020.

The change was primarily due to a reduction in same store occupancy to 92.8% as of March 31, 2021, compared to 94.9% as of March 31, 2020, resulting in a $1.5 million decrease in net operating income.

Additionally, the bankruptcy of one tenant resulted in a decrease in rental income of $805,000.

Non-same store property net operating income increased $2.5 million during the three months ended March 31, 2021, as compared to the same period in 2020.

The increase was primarily due to the acquisition of 146 properties in connection with the Mergers that closed December 2020, and the disposition of 19 properties subsequent to March 31, 2020.

Same store property net operating income increased $2.3 million during the three months ended June 30, 2021, as compared to the same period in 2020.

The change was primarily due to an increase in rental income, as a result of the impact of COVID-19 leading to a temporary reduction in rental income during the three months ended June 30, 2020 for certain tenants, partially offset by increases in property operating expenses.

Non-same store property net operating income increased $5.4 million during the three months ended June 30, 2021, as compared to the same period in 2020.

The increase was primarily due to the acquisition of 146 properties in connection with the Mergers that closed December 2020, offset by the disposition of 61 properties subsequent to June 30, 2020.

Credit Segment

Provision for Credit Losses

The decrease in provision for credit losses of $7.8 million during the three months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the Company’s foreclosure of the assets which previously secured the Company’s mezzanine loans.

During the three months ended June 30, 2020, the borrower on the Company’s eight mezzanine loans remained delinquent on the required reserve payments and became delinquent on principal and interest, resulting in the Company recording $6.7 million in credit losses related to the mezzanine loans.

Upon completing foreclosure in January 2021, the Company took control of the assets which previously secured the loans, and as such, a provision for credit losses related to the mezzanine loans was not recorded for the three months ended June 30, 2021.

Interest Income

The increase in interest income of $9.3 million for the three months ended June 30, 2021, compared to the same period in 2020, was due to an increase in credit investments.

As of June 30, 2021, we held investments in broadly syndicated loans of $484.1 million, CRE loans held-for-investment of $872.2 million, and CMBS of $42.1 million.

As of June 30, 2020, we held investments in broadly syndicated loans of $372.3 million, CRE loans held-for-investment of $253.8 million, and CMBS of $16.1 million.

Comparison of the Six Months Ended June 30, 2021 and 2020

The following table reconciles net income, calculated in accordance with GAAP, to net operating income (dollar amounts in thousands):

For the Six Months Ended June 30,

2021 2020 Change

Net income (loss) $ 55,034 $ (15,921) $ 70,955

Loss on extinguishment of debt 1,478 4,752 (3,274)

Interest expense and other, net 36,482 31,276 5,206

Operating income 92,994 20,107 72,887

Gain on disposition of real estate and condominium developments, net (46,469) (16,901) (29,568)

Provision for credit losses 691 25,682 (24,991)

Real estate impairment 4,377 15,507 (11,130)

Depreciation and amortization 50,385 40,519 9,866

Transaction-related expenses 31 250 (219)

Management fees 23,332 19,600 3,732

Expense reimbursements to related parties 5,871 5,235 636

General and administrative expenses 8,033 5,902 2,131

Interest income (28,413) (12,764) (15,649)

Net operating income $ 110,832 $ 103,137 $ 7,695

Real Estate Segment

A total of 343 properties were acquired before January 1, 2020 and represent our “same store” properties during the six months ended June 30, 2021 and 2020.

“Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, 2020.

The following table details the components of net operating income broken out between same store and non-same store properties (dollar amounts in thousands):

Total Same Store Non-Same Store

For the Six Months Ended June 30,

2021 2020 Change 2021 2020 Change 2021 2020 Change

Rental and other property income $ 152,232 $ 128,539 $ 23,693 $ 114,317 $ 112,312 $ 2,005 $ 37,915 $ 16,227 $ 21,688

Property operating expenses 21,475 11,676 9,799 12,321 10,378 1,943 9,154 1,298 7,856

Real estate tax expenses 19,925 13,726 6,199 12,731 12,569 162 7,194 1,157 6,037

Total property operating expenses 41,400 25,402 15,998 25,052 22,947 2,105 16,348 2,455 13,893

Net operating income $ 110,832 $ 103,137 $ 7,695 $ 89,265 $ 89,365 $ (100) $ 21,567 $ 13,772 $ 7,795

Loss on Extinguishment of Debt

The decrease in loss on extinguishment of debt of $3.3 million for the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the extinguishment of one mortgage note with an aggregate carrying value of $22.0 million, as compared the extinguishment of mortgage notes with an aggregate carrying value of $97.0 million during the six months ended June 30, 2020.

Interest Expense and Other, Net

The increase in interest expense and other, net, of $5.2 million for the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to an increase in the average aggregate amount of debt outstanding from $1.6 billion as of June 30, 2020 to $2.4 billion as of June 30, 2021 as a result of entering into additional repurchase agreements and assuming

the CCPT V Credit Facility as part of the Mergers subsequent to June 30, 2020.

This increase was partially offset by a decrease in the weighted average interest rate from 3.3% as of June 30, 2020 to 2.8% as of June 30, 2021.

Gain on Disposition of Real Estate and Condominium Developments, Net

The increase in gain on disposition of real estate and condominium developments, net, of $29.6 million during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the disposition of 47 properties for a gain of $45.0 million during the six months ended June 30, 2021, compared to the disposition of 16 properties for a gain of $16.9 million during the six months ended June 30, 2021.

Real Estate Impairment

The decrease in impairments of $11.1 million during the six months ended June 30, 2021, as compared to the same period in 2020, was due to five properties that were deemed to be impaired, resulting in impairment charges of $4.4 million during the six months ended June 30, 2021, compared to 10 properties that were deemed to be impaired, resulting in impairment charges of $15.5 million during the six months ended June 30, 2020.

Depreciation and Amortization

The increase in depreciation and amortization of $9.9 million during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by the disposition of 61 properties subsequent to June 30, 2020.

Transaction-Related Expenses

The decrease in transaction-related expenses of $219,000 during the six months ended June 30, 2021, as compared to the same period in 2020, was due to a decrease in abandoned deal costs for the six months ended June 30, 2021.

Management Fees

The increase in management fees of $3.7 million during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the issuance of common stock in connection with the Mergers that closed in December 2020.

Expense Reimbursements to Related Parties

The increase in expense reimbursements to related parties of $636,000 during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to increased operating expense reimbursements due to CMFT Management as a result of acquiring 146 properties as part of the Mergers that closed in December 2020.

General and Administrative Expenses

The increase in general and administrative expenses of $2.1 million for the six months ended June 30, 2021, compared to the same period in 2020, was primarily due to increased expenses resulting from board members added to our board and the acquisition of 146 properties in connection with the Mergers that closed in December 2020.

The increase was also due to increases in insurance costs, banking fees and appraisal fees related to the foreclosure completed in January 2021 to take control of the assets which previously secured the Company’s mezzanine loans, as discussed in Note 7 — Loans Held-For-Investment to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Net Operating Income

Same store property net operating income decreased $100,000 during the six months ended June 30, 2021, as compared to the same period in 2020.

The decrease was primarily due to increases in property operating expenses, partially offset by an increase in rental income as a result of the impact of COVID-19 leading to a temporary reduction in rental income during the three months ended June 30, 2020 for certain tenants.

Non-same store property net operating income increased $7.8 million during the six months ended June 30, 2021, as compared to the same period in 2020.

The increase is due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by the disposition of 61 properties subsequent to June 30, 2020.

Credit Segment

Provision for Credit Losses

The decrease in provision for credit losses of $25.0 million during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to the Company recording $19.8 million in credit losses related to the mezzanine loans.

The mezzanine loans and underlying assets were foreclosed on in January 2021 ,and as such a provision for credit losses was not recorded during the six months ended June 30, 2021 related to these loans.

Interest Income

The increase in interest income of $15.6 million for the six months ended June 30, 2021, as compared to the same period in 2020, was due to an increase in credit investments.

As of June 30, 2021, we held investments in broadly syndicated loans of $484.1 million, CRE loans held-for-investment of $872.2 million, and CMBS of $42.1 million.

As of June 30, 2020, we held investments in broadly syndicated loans of $372.3 million, CRE loans held-for-investment of $253.8 million, and CMBS of $16.1 million.

Distributions

8 unchanged sentences

On April 20, 2020, our Board decided to make a determination as to the amount and timing of distributions on a monthly, instead of a quarterly, basis until such time that we had greater visibility into the impact that the COVID-19 pandemic would have on our tenants’ ability to continue to pay rent on their leases on a timely basis or at all, the degree to which federal, state or local governmental authorities grant rent relief or other relief or amnesty programs applicable to our tenants, our ability to access the capital markets, and on the United States and worldwide financial markets and economy.

On March 25, 2021, the

Board resumed declaring distributions on a quarterly basis by declaring a monthly per share distribution for the months of March, April, May and June of 2021.

Since April of 2020, our Board authorized the following monthly distribution amounts per share for the periods indicated below:

On March 25, 2021, the Board resumed declaring distributions on a quarterly basis.

Since April 2020, our Board authorized the following monthly distribution amounts per share for the periods indicated below:

Record Date Distribution Amount

14 unchanged sentences

June 29, 2021 $0.0303

As of March 31, 2021, we had distributions payable of $11.0 million.

July 29, 2021 $0.0303

August 30, 2021 $0.0303

September 29, 2021 $0.0303

October 28, 2021 $0.0303

November 29, 2021 $0.0303

December 30, 2021 $0.0303

As of June 30, 2021, we had distributions payable of $11.0 million.

The following table presents distributions and sources of distributions for the periods indicated below (dollar amounts in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Amount Percent Amount Percent

10 unchanged sentences

____________________________________

(1) Net cash provided by operating activities for the three months ended March 31, 2021 and 2020 was $28.7 million and $17.1 million, respectively.

(2) Our distributions covered by cash flows from operating activities for the three months ended March 31, 2020 include cash flows from operating activities in excess of distributions from prior periods of $9.6 million.

(3) Net proceeds on the credit facilities and notes payable for the three months ended March 31, 2021 and 2020 were $197.0 million and $2.9 million, respectively.

(1) Net cash provided by operating activities for the six months ended June 30, 2021 and 2020 was $65.3 million and $37.2 million, respectively.

(2) Our distributions covered by cash flows from operating activities for the six months ended June 30, 2020 include cash flows from operating activities in excess of distributions from prior periods of $9.6 million.

(3) Net proceeds on the credit facilities and notes payable for the six months ended June 30, 2021 and 2020 were $292.2 million and $102.2 million, respectively.

(4) In accordance with GAAP, certain real estate acquisition-related fees and expenses, such as expenses and fees incurred in connection with property acquisitions accounted for as business combinations, are expensed, and therefore reduce net cash flows from operating activities.

Therefore, for consistency, proceeds from the issuance of common stock used as a source of distributions for the three months ended March 31, 2020 include the amount by which real estate acquisition-related fees and expenses have reduced net cash flows from operating activities in those prior periods.

Therefore, for consistency, proceeds from the issuance of common stock used as a source of distributions for the six months ended June 30, 2020 include the amount by which real estate acquisition-related fees and expenses have reduced net cash flows from operating activities in those prior periods.

Share Redemptions

5 unchanged sentences

Any material modifications or suspension of the Amended Share Redemption Program will be disclosed to our stockholders as promptly as practicable in our reports filed with the SEC and via our website.

In connection with the Mergers, our Board suspended our Amended Share Redemption Program on August 30, 2020, and therefore, no shares were redeemed from our stockholders after that date.

On March 25, 2021 our Board reinstated the Amended Share Redemption Program, effective April 1, 2021.

In connection with the Mergers, our Board suspended our Amended Share Redemption Program on August 30, 2020, and therefore, no shares were redeemed from our stockholders after that date until March 25, 2021, when our Board reinstated the Amended Share Redemption Program, effective April 1, 2021.

During the six months ended June 30, 2021, we received valid redemption requests under our share redemption program totaling approximately 32.8 million shares, of which we redeemed approximately 1.7 million shares subsequent to June 30, 2021 for $12.0 million (at a redemption price of $7.20 per share).

The remaining redemption requests relating to approximately 31.1 million shares went unfulfilled.

A valid redemption request is one that complies with the applicable requirements and guidelines of our share redemption program then in effect.

The share redemptions were funded with proceeds from the Secondary DRIP Offering and available borrowings.

Liquidity and Capital Resources

1 unchanged sentence

The sources of our operating cash flows will primarily be provided by the rental and other property income received from current and future leased properties and interest income from our portfolio of credit investments.

As of March 31, 2021, the CMFT Credit Facility provided for borrowings of up to $1.24 billion, which includes the $885.0 million CMFT Term Loan and up to $350.0 million on the CMFT Revolving Loans.

As of June 30, 2021, the CMFT Credit Facility provided for borrowings of up to $1.24 billion, which includes the $885.0 million CMFT Term Loan and up to $350.0 million on the CMFT Revolving Loans.

The CCPT V Credit Facility provides for borrowings of $220.0 million under the CCPT V Term Loans and up to $130.0 million under the CCPT V Revolving Loans.

As of March 31, 2021, we had $430.0 million in unused capacity under the Credit Facilities, subject to borrowing availability.

We had available borrowings of $44.2 million as of March 31, 2021.

As of March 31, 2021, we also had cash and cash equivalents of $57.6 million, which included $34.5 million of unsettled broadly syndicated loan purchases.

As of March 31, 2021, the Credit and Security Agreement provided for borrowings in an aggregate principal amount up to $500.0 million under the Credit Securities Revolver, which may be increased from time to time pursuant to the Credit and Security Agreement.

As of June 30, 2021, we had $480.0 million in unused capacity under the Credit Facilities, subject to borrowing availability.

We had available borrowings of $12.2 million as of June 30, 2021.

As of June 30, 2021, we also had cash and cash equivalents of $141.3 million, which included $43.2 million of unsettled broadly syndicated loan purchases.

Subsequent to June 30, 2021, and with the proceeds from the Mortgage Loan and the sale of the Class A Notes, the Company repaid fixed rate debt of $104.1 million, paid down the $1.11 billion outstanding balance under the Credit Facilities and terminated the CCPT V Credit Facility and the CMFT Credit Facility, as further discussed in Note 17 — Subsequent Events.

As of June 30, 2021, the Credit and Security Agreement provided for borrowings in an aggregate principal amount up to $500.0 million under the Credit Securities Revolver, which may be increased from time to time pursuant to the Credit and Security Agreement.

Borrowings under the Credit and Security Agreement are secured by substantially all of the assets held by CMFT Corporate Credit Securities, LLC, which shall primarily consist of broadly-syndicated senior secured loans subject to certain eligibility criteria under the Credit and Security Agreement.

As of March 31, 2021, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $256.5 million.

As of March 31, 2021, the Citibank Repurchase Agreement provided up to $300.0 million under the Citibank Repurchase Facility.

Additionally, as of March 31, 2021, the Barclays Repurchase Agreement provided up to $500.0 million of financing primarily through the Barclays Repurchase Facility.

The Citibank Repurchase Agreement and the Barclays Repurchase Agreement provide for simultaneous agreements by Citibank and Barclays to re-sell purchased CRE mortgage loans back to CMFT RE Lending RF Sub CB, LLC and CMFT RE Lending RF Sub BB, LLC at a certain future date or upon demand.

As of March 31, 2021, we had six senior loans with an aggregate carrying value of $525.4 million financed with $357.6 million under the Repurchase Facilities, $170.2 million of which was financed under the Barclays Repurchase Facility and $187.4 million of which was financed under the Citibank Repurchase Facility.

As of March 31, 2021, we believe that we were in compliance with the financial covenants of the CMFT Second Amended and Restated Credit Agreement, the CCPT V Credit Agreement, the Citibank Repurchase Agreement and the Barclays Repurchase Agreement, as well as the financial covenants under our various fixed and variable rate debt agreements, as further discussed in Note 9 — Credit Facilities, Notes Payable and Repurchase Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

As of June 30, 2021, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $316.5 million.

Subsequent to June 30, 2021, the Company received borrowings in an aggregate principal amount of $50.0 million under the Credit and Security Agreement, as further discussed in Note 17 — Subsequent Events.

As of June 30, 2021, the Repurchase Agreements provided up to an aggregate of $1.1 billion of financing under the Repurchase Facilities.

The Repurchase Agreements provide for simultaneous agreements by the banks to re-sell purchased CRE mortgage loans back to the CMFT Lending Subs at a certain future date or upon demand.

As of June 30, 2021, we had nine senior loans with an aggregate carrying value of $727.4 million financed with $505.4 million under the Repurchase Facilities,

$250.0 million of which was financed under the Barclays Repurchase Facility, $188.0 million of which was financed under the Citibank Repurchase Facility and $67.4 million of which was financed under the Wells Fargo Repurchase Facility.

Additionally, subsequent to June 30, 2021, the Company amended the Barclays Repurchase Agreement to extend the maturity date to September 21, 2024.

See further discussion of these repayments in Note 17 — Subsequent Events.

As of June 30, 2021, we believe that we were in compliance with the financial covenants of the CMFT Second Amended and Restated Credit Agreement, the CCPT V Credit Agreement, the Citibank Repurchase Agreement, the Barclays Repurchase Agreement and the Wells Fargo Repurchase Agreement, as well as the financial covenants under our various fixed and variable rate debt agreements, as further discussed in Note 9 — Credit Facilities, Notes Payable and Repurchase Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Short-term Liquidity and Capital Resources

within the next 12 months.

On a short-term basis, our principal demands for funds will be for the acquisition of real estate-related securities, real estate and real estate-related assets and the payment of acquisition-related fees and expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of $1.3 billion within the next 12 months, $1.2 billion of which was paid down subsequent to June 30, 2021 with proceeds from the Mortgage Loan and the sale of the Class A Notes, as further discussed in Note 17 — Subsequent Events.

We expect to meet our short-term liquidity requirements through cash proceeds from real estate asset dispositions, net cash provided by operations and proceeds from the Secondary DRIP Offering, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions and loan originations.

3 unchanged sentences

Long-term Liquidity and Capital Resources

On a long-term basis, our principal demands for funds will be for the acquisition of real estate-related securities, real estate and real estate-related credit investments and the payment of tenant improvements, acquisition-related fees and expenses, operating expenses, distributions and redemptions to stockholders and interest and principal on any current and future indebtedness.

Generally, we expect to meet our long-term liquidity requirements through proceeds from cash flows from operations, borrowings on the Credit Facilities, proceeds from secured or unsecured borrowings from banks and other lenders, and proceeds raised pursuant to the Secondary DRIP Offering.

On a long-term basis, our principal demands for funds will be for the acquisition of real estate-related securities, real estate and real estate-related credit investments and the payment of tenant improvements, acquisition-related expenses, operating expenses, distributions and redemptions to stockholders and interest and principal on any current and future indebtedness.

Generally, we expect to meet our long-term liquidity requirements through proceeds from cash flows from operations, proceeds from secured or unsecured borrowings from banks and other lenders, and proceeds raised pursuant to the Secondary DRIP Offering.

We expect that substantially all net cash flows from operations will be used to pay distributions to our stockholders after certain capital expenditures, including tenant improvements and leasing commissions, are paid;

however, we have used, and may continue to use, other sources to fund distributions, as necessary, including borrowings on the Credit Facilities and/or future borrowings on our unencumbered assets.

however, we have used, and may continue to use, other sources to fund distributions, as necessary, including borrowings on our unencumbered assets.

To the extent that cash flows from operations are lower due to fewer properties being acquired or lower than expected returns on the properties, distributions paid to our stockholders may be lower.

1 unchanged sentence

Contractual Obligations

As of March 31, 2021, we had debt outstanding with a carrying value of $2.4 billion and a weighted average interest rate of 2.8%.

As of June 30, 2021, we had debt outstanding with a carrying value of $2.5 billion and a weighted average interest rate of 2.8%.

See Note 9 — Credit Facilities, Notes Payable and Repurchase Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for certain terms of our debt outstanding.

Our contractual obligations as of March 31, 2021 were as follows (in thousands):

Our contractual obligations as of June 30, 2021 were as follows (in thousands):

Payments due by period (1)

19 unchanged sentences

(1) The table does not include amounts due to CMFT Management or its affiliates pursuant to our Management Agreement because such amounts are not fixed and determinable.

(2) Principal payment amounts reflect actual payments based on the face amount of notes payable secured by our wholly-owned properties, which excludes the fair value adjustment, net of amortization, of mortgage notes assumed of $126,000 as of March 31, 2021.

(3) As of March 31, 2021, we had $53.6 million of variable rate debt effectively fixed through the use of interest rate swap agreements.

(3) As of June 30, 2021, we had $21.5 million of variable rate debt effectively fixed through the use of interest rate swap agreements.

We used the effective interest rates fixed under our interest rate swap agreements to calculate the debt payment obligations in future periods.

(4) As of March 31, 2021, we had variable rate debt outstanding of $102.6 million with a weighted average interest rate of 5.5%.

(4) As of June 30, 2021, we had variable rate debt outstanding of $94.2 million with a weighted average interest rate of 5.5%.

We used the weighted average interest rate to calculate the debt payment obligations in future periods.

(5) As of March 31, 2021, the Term Loans outstanding totaled $1.1 billion, $220.0 million of which is subject to interest rate swap agreements.

As of March 31, 2021, the weighted average all-in interest rate for the Swapped Term Loans was 4.2%.

The remaining $935.0 million outstanding under the Credit Facilities had a weighted average interest rate of 1.9% as of March 31, 2021.

As of March 31, 2021, the amounts outstanding under the Credit Securities Revolver totaled $256.5 million and had a weighted average interest rate of 1.9%.

(6) As of March 31, 2021, the amount outstanding under the Citibank Repurchase Facility was $187.4 million at a weighted average interest rate of 2.2%, and the amount outstanding under the Barclays Repurchase Facility was $170.2 million at a weighted average interest rate of 2.7%.

We expect to incur additional borrowings in the future to acquire additional properties and other real estate-related assets.

(5) As of June 30, 2021, the Term Loans outstanding totaled $1.1 billion, $220.0 million of which is subject to interest rate swap agreements.

As of June 30, 2021, the weighted average all-in interest rate for the Swapped Term Loans was 4.2%.

The remaining $885.0 million outstanding under the Credit Facilities had a weighted average interest rate of 2.1% as of June 30, 2021.

As of June 30, 2021, the amounts outstanding under the Credit Securities Revolver totaled $316.5 million and had a weighted average interest rate of 1.8%.

(6) As of June 30, 2021, the amount outstanding under the Citibank Repurchase Facility was $188.0 million at a weighted average interest rate of 2.2%, the amount outstanding under the Barclays Repurchase Facility was $250.0 million at a weighted average interest rate of 2.5%, and the amount outstanding under the Wells Fargo Repurchase Facility was $67.4 million at a weighted average interest rate of 1.8%.

We expect to incur additional borrowings in the future to acquire additional properties and credit investments.

There is no limitation on the amount we may borrow against any single improved property.

As of March 31, 2021, our ratio of debt to total gross assets net of gross intangible lease liabilities was 49.0% and our ratio of debt to the fair market value of our gross assets net of gross intangible lease liabilities was 49.5%.

Fair market value is based on the estimated market value of our real estate assets as of June 30, 2020 that were used to determine our estimated per share NAV, and for those assets acquired from July 1, 2020 through March 31, 2021 is based on the purchase price.

As of June 30, 2021, our ratio of debt to total gross assets net of gross intangible lease liabilities was 50.5% and our ratio of debt to the fair market value of our gross assets net of gross intangible lease liabilities was 50.9%.

Our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage, and we therefore believe that the presentation of net debt provides useful information to stockholders.

Net debt is a non-GAAP measure used to show our outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums or discounts, financing and issuance costs, and related accumulated amortization, less all cash and cash equivalents.

As of March 31, 2021, our net debt leverage ratio, which is the ratio of net debt to total gross real estate and related assets net of gross intangible lease liabilities, was 47.8%.

The following table provides a reconciliation of the notes payable and credit facility, net balance, as reported on our condensed consolidated balance sheet, to net debt as of March 31, 2021 (dollar amounts in thousands):

As of June 30, 2021, our net debt leverage ratio, which is the ratio of net debt to total gross real estate and related assets net of gross intangible lease liabilities, was 47.7%.

The following table provides a reconciliation of the notes payable and credit facility, net balance, as reported on our condensed consolidated balance sheet, to net debt as of June 30, 2021 (dollar amounts in thousands):

Balance as of

March 31, 2021

June 30, 2021

Credit facilities, notes payable and repurchase facilities, net $ 2,540,809

10 unchanged sentences

Operating Activities.

Net cash provided by operating activities increased by $11.6 million for the three months ended March 31, 2021, as compared to the same period in 2020.

The increase was primarily due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by lower net income after non-cash adjustments primarily resulting from foreclosure of the assets which previously secured the Company’s mezzanine loans during the three months ended March 31, 2021.

Net cash provided by operating activities increased by $28.1 million for the six months ended June 30, 2021, as compared to the same period in 2020.

The increase was primarily due to the acquisition of 146 properties in connection with the Mergers that closed in December 2020, partially offset by the disposition of 61 properties subsequent to June 30, 2020 and lower net income after non-cash adjustments primarily resulting from the Company’s foreclosure of the assets which previously secured the Company’s mezzanine loans during the six months ended June 30, 2021.

See “— Results of Operations” for a more complete discussion of the factors impacting our operating performance.

Investing Activities.

Net cash used in investing activities increased $43.0 million for the three months ended March 31, 2021, as compared to the same period in 2020.

The change was primarily due to a decrease in proceeds from disposition of real estate assets of $123.1 million and an increase in the net investment in loans held-for-investment of $138.0 million, partially offset by a decrease in the net investment in broadly syndicated loans and real estate-related securities of $227.5 million.

Net cash used in investing activities increased $59.7 million for the six months ended June 30, 2021, as compared to the same period in 2020.

The change was primarily due to an increase in the net investment in loans held-for-investment of $494.1 million, The change was partially offset by a decrease in the net investment in broadly syndicated loans of $279.2 million, an increase in proceeds from disposition of real estate assets of $147.2 million, and an increase in net proceeds from the sale of real estate-related securities of $27.6 million.

Financing Activities.

Net cash provided by financing activities was $163.3 million for the three months ended March 31, 2021, as compared to net cash used in financing activities of $45.9 million for the three months ended March 31, 2020.

The change was primarily due to an increase in net proceeds on the credit facilities, notes payable and repurchase facilities of $194.2 million as a result of entering into the Repurchase Facilities subsequent to March 31, 2020, coupled with a decrease in

redemptions of common stock of $19.5 million resulting from the Board’s suspension of the Amended Share Redemption Program.

Net cash provided by financing activities increased $209.8 million for the six months ended June 30, 2021, as compared to the same period in 2020.

The change was primarily due to an increase in net proceeds on the credit facilities, notes payable and repurchase facilities of $190.0 million as a result of entering into the Repurchase Facilities, coupled with a decrease in redemptions of common stock of $38.7 million as a result of the Board’s suspension of the Amended Share Redemption Program from August 30, 2020 through March 31, 2021.

Election as a REIT

40 unchanged sentences

One of our directors, Elaine Y.

Wong, who is a principal of CIM, also serves as a director of CIM Income NAV.

Wong, also serves as a director of CIM Income NAV.

One of our independent directors, W.

7 unchanged sentences

Off-Balance Sheet Arrangements

As of March 31, 2021 and December 31, 2020, we had no material off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity or capital resources.

As of June 30, 2021 and December 31, 2020, we had no material off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity or capital resources.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis