What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-12 compared with 2022-05-11 · 551 added, 414 removed, 945 unchanged (51% of the section changed)

3 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Real estate assets:

7 unchanged sentences

Investments in unconsolidated entities 96,161 109,547

Real estate-related securities ($ 186,070 and $ 41,981 held at fair value as of March 31, 2022 and December 31, 2021, respectively)

Real estate-related securities ($ 274,382 and $ 41,981 held at fair value as of June 30, 2022 and December 31, 2021, respectively)

274,382 105,471

5 unchanged sentences

Rents and tenant receivables, net 33,101 58,948

Prepaid expenses and other assets 52,940 16,279

Prepaid expenses, derivative assets and other assets 76,348 16,279

Deferred costs, net 11,373 7,214

9 unchanged sentences

Total liabilities 4,312,230 4,263,101

Commitments and contingencies

Commitments and contingencies (Note 11)

Redeemable common stock 170,096 170,714

3 unchanged sentences

Common stock, $ 0.01 par value per share;

490,000,000 shares authorized, 437,357,992 and 437,373,981 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

490,000,000 shares authorized, 437,311,071 and 437,373,981 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Capital in excess of par value 3,529,285 3,529,126

9 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Rental and other property income $ 53,508 $ 75,302 $ 127,244 $ 152,232

19 unchanged sentences

Total other expense ( 38,506 ) ( 17,938 ) ( 75,074 ) ( 37,960 )

Net income (loss) $ 39,101 $ ( 2,753 )

Net income allocated to noncontrolling interest 9 —

Net income (loss) attributable to the Company $ 39,092 $ ( 2,753 )

Net income $ 73,613 $ 57,787 $ 112,714 $ 55,034

Net loss allocated to noncontrolling interest ( 72 ) — ( 63 ) —

Net income attributable to the Company $ 73,685 $ 57,787 $ 112,777 $ 55,034

Weighted average number of common shares outstanding:

Basic and diluted 437,346,523 362,448,778 437,360,190 362,226,607

Net income (loss) per common share:

Net income per common share:

Basic and diluted $ 0.17 $ 0.16 $ 0.26 $ 0.15

3 unchanged sentences

(in thousands) (Unaudited)

Three Months Ended March 31,

Net income (loss) $ 39,101 $ ( 2,753 )

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

2022 2021 2022 2021

Net income $ 73,613 $ 57,787 $ 112,714 $ 55,034

Other comprehensive (loss) income

Unrealized (loss) gain on real estate-related securities ( 10,909 ) 1,930 ( 15,787 ) 2,052

Unrealized gain on interest rate swaps 1,488 123

Amount of (gain) loss reclassified from other comprehensive (loss) income into income (loss) as interest expense and other, net ( 7 ) 3,132

Reclassification adjustment for realized gain included in income as other income — ( 648 ) — ( 648 )

Unrealized gain (loss) on interest rate swaps 795 ( 52 ) 2,283 71

Amount of loss reclassified from other comprehensive (loss) income into income as interest expense and other, net 69 71 62 3,203

Total other comprehensive (loss) income ( 10,045 ) 1,301 ( 13,442 ) 4,678

Comprehensive income 63,568 59,088 99,272 59,712

Comprehensive income attributable to noncontrolling interest 9 —

Comprehensive loss attributable to noncontrolling interest ( 72 ) — ( 63 ) —

Comprehensive income attributable to the Company $ 63,640 $ 59,088 $ 99,335 $ 59,712

19 unchanged sentences

Balance as of March 31, 2022 437,357,992 $ 4,374 $ 3,529,163 $ ( 1,009,487 ) $ ( 448 ) $ 2,523,602 $ 1,068 $ 2,524,670

Issuance of common stock 1,325,282 $ 13 $ 9,529 $ — $ — $ 9,542 $ — $ 9,542

Equity-based compensation 22,892 — 120 — — 120 — 120

Distributions declared on common stock — $ 0.09 per common share

— — — ( 40,018 ) — ( 40,018 ) — ( 40,018 )

Redemptions of common stock ( 1,395,095 ) ( 14 ) ( 10,030 ) — — ( 10,044 ) — ( 10,044 )

Changes in redeemable common stock — — 503 — — 503 — 503

Distributions to non-controlling interests — — — — — — ( 16 ) ( 16 )

Comprehensive income (loss) — — — 73,685 ( 10,045 ) 63,640 ( 72 ) 63,568

Balance as of June 30, 2022 437,311,071 $ 4,373 $ 3,529,285 $ ( 975,820 ) $ ( 10,493 ) $ 2,547,345 $ 980 $ 2,548,325

Common Stock Capital in Excess

11 unchanged sentences

Balance as of March 31, 2021 362,001,968 $ 3,620 $ 3,157,899 $ ( 996,665 ) $ 1,330 $ 2,166,184 $ — $ 2,166,184

Issuance of common stock 917,769 9 6,651 — — 6,660 — 6,660

Equity-based compensation 4,104 — 49 — — 49 — 49

Distributions declared on common stock — $ 0.09 per common share

— — — ( 32,948 ) — ( 32,948 ) — ( 32,948 )

Changes in redeemable common stock — — ( 173,628 ) — — ( 173,628 ) — ( 173,628 )

Comprehensive income — — — 57,787 1,301 59,088 — 59,088

Balance as of June 30, 2021 362,923,841 $ 3,629 $ 2,990,971 $ ( 971,826 ) $ 2,631 $ 2,025,405 $ — $ 2,025,405

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

2 unchanged sentences

(in thousands) (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income (loss) $ 39,101 $ ( 2,753 )

Net income $ 112,714 $ 55,034

Adjustments to reconcile net loss to net cash provided by operating activities:

4 unchanged sentences

Amortization of premiums and discounts on credit investments ( 1,585 ) ( 3,767 )

Capitalized interest income on real estate-related securities ( 272 ) ( 173 )

Capitalized interest income on real estate-related securities and loans held-for-investment ( 608 ) ( 435 )

Equity-based compensation 157 89

2 unchanged sentences

Gain on disposition of real estate assets and condominium developments, net ( 113,681 ) ( 46,469 )

(Gain) loss on sale of credit investments, net ( 65 ) 111

Loss (gain) on sale of credit investments, net 170 ( 813 )

Gain on investment in unconsolidated entities ( 6,663 ) —

Gain on sale of marketable security ( 22 ) —

Unrealized loss on equity securities 2,368 —

Unrealized loss on equity security 6,431 —

Amortization of fair value adjustment and gain on interest rate swaps 140 ( 2,757 )

13 unchanged sentences

Investment in unconsolidated entities ( 43,250 ) —

Return of investment in unconsolidated entities 614 —

Investment in real estate-related securities ( 259,198 ) ( 28,509 )

1 unchanged sentence

Investment in real estate assets and capital expenditures ( 14,426 ) ( 14,543 )

Investment in corporate senior loan ( 10,000 ) —

Investment in corporate senior loans ( 55,251 ) —

Origination and acquisition of loans held-for-investment, net ( 1,223,605 ) ( 533,222 )

6 unchanged sentences

Redemption of investment in unconsolidated entities 60,663 —

Net cash provided by (used in) investing activities $ 62,821 $ ( 242,510 )

Proceeds from the settlement of insurance claims 619 58

Net cash used in investing activities $ ( 261,882 ) $ ( 247,855 )

CIM REAL ESTATE FINANCE TRUST, INC.

1 unchanged sentence

(in thousands) (Unaudited) — Continued

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from financing activities:

1 unchanged sentence

Distributions to stockholders ( 60,834 ) ( 59,166 )

Proceeds from repurchase facilities, notes payable and credit facilities 903,060 282,323

Repayments of repurchase facilities, notes payable and credit facilities ( 857,815 ) ( 85,298 )

Proceeds from borrowings 1,615,858 590,182

Repayments of borrowings, and prepayment penalties ( 1,235,322 ) ( 298,021 )

Termination of interest rate swaps ( 101 ) —

Payment of loan deposits — ( 650 )

Refund of loan deposits — 65

2 unchanged sentences

Net cash provided by financing activities 290,917 228,317

Net increase (decrease) in cash and cash equivalents and restricted cash 93,424 ( 50,486 )

Net increase in cash and cash equivalents and restricted cash 90,266 45,809

Cash and cash equivalents and restricted cash, beginning of period 144,173 128,408

11 unchanged sentences

Mortgage notes payable assumed in connection with foreclosure of assets securing the mezzanine loans $ — $ 102,553

Mortgage note payable assumed by buyer in connection with disposition of real estate assets $ ( 19,250 ) $ —

Mortgage notes payable assumed by buyer in connection with disposition of real estate assets $ ( 313,712 ) $ —

Change in interest income capitalized to loans held-for-investment $ — $ ( 9,469 )

2 unchanged sentences

Change in fair value of real estate-related securities $ ( 15,787 ) $ 1,404

Conversion of preferred units to debt $ 68,242 $ —

Supplemental Cash Flow Disclosures:

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited)

June 30, 2022 (Unaudited)

NOTE 1 — ORGANIZATION AND BUSINESS

3 unchanged sentences

The Company operates a diversified portfolio of core commercial real estate primarily consisting of net leased properties located throughout the United States and short duration senior secured loans and other credit investments.

As of March 31, 2022, the Company owned 445 properties, including two properties owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”), comprised of 15.4 million rentable square feet of commercial space located in 45 states.

As of March 31, 2022, the rentable square feet at these properties was 97.2 % leased, including month-to-month agreements, if any.

As of March 31, 2022, the Company’s loan portfolio consisted of 332 loans with a net book value of $ 3.3 billion, and investments in real estate-related securities of $ 254.3 million.

As of March 31, 2022, the Company owned condominium developments with a net book value of $ 158.1 million.

As of June 30, 2022, the Company owned 402 properties, including two properties owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”), comprised of 12.1 million rentable square feet of commercial space located in 45 states.

As of June 30, 2022, the rentable square feet at these properties was 99.2 % leased, including month-to-month agreements, if any.

As of June 30, 2022, the Company’s loan portfolio consisted of 341 loans with a net book value of $ 3.9 billion, and investments in real estate-related securities of $ 274.4 million.

As of June 30, 2022, the Company owned condominium developments with a net book value of $ 152.5 million.

A majority of the Company’s business is conducted through CIM Real Estate Finance Operating Partnership, LP, a Delaware limited partnership, of which the Company is the sole general partner and owns, directly or indirectly, 100 % of the partnership interests.

19 unchanged sentences

The Company began to issue shares under the Secondary DRIP Offering on August 2, 2016 and will continue to issue shares under the Secondary DRIP Offering.

The Board establishes an updated estimated per share net asset value (“NAV”) of the Company’s common stock on at least an annual basis for purposes of assisting broker-dealers that participated in the Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231.

Distributions are reinvested in shares of the

The Company’s board of directors (the “Board”) establishes an updated estimated per share net asset value (“NAV”) of the Company’s common stock on at least an annual basis for purposes of assisting broker-dealers that participated in the Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231.

Distributions

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Company’s common stock under the DRIP at the estimated per share NAV as determined by the Board.

June 30, 2022 (Unaudited) – (Continued)

are reinvested in shares of the Company’s common stock for participants in the DRIP at the estimated per share NAV as determined by the Board.

Additionally, the estimated per share NAV as determined by the Board serves as the per share NAV for purposes of the share redemption program.

As of March 31, 2022, the estimated per share NAV of the Company’s common stock was $ 7.20 , which was established by the Board on May 25, 2021 using a valuation date of March 31, 2021.

As of June 30, 2022, the estimated per share NAV of the Company’s common stock was $ 7.20 , which was established by the Board on May 25, 2021 using a valuation date of March 31, 2021.

Commencing on May 26, 2021, $ 7.20 served as the per share NAV under the DRIP.

12 unchanged sentences

All intercompany balances and transactions 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.

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 credit and real estate investments 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 condensed consolidated financial statements.

As of March 31, 2022, the Company has determined that the Consolidated Joint Venture is considered a VIE.

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

As of June 30, 2022, the Company has determined that the Consolidated Joint Venture 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 and therefore met the requirements for consolidation.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

Reclassifications

1 unchanged sentence

Other than as shown below, these reclassifications had no effect on previously reported totals or subtotals.

The reclassifications have been made to the condensed consolidated balance sheet as of December 31, 2021, and to the condensed consolidated statements of operations and condensed consolidated statement of cash flows for the three months ended March 31, 2021 as follows (in thousands):

The reclassifications have been made to the condensed consolidated balance sheet as of December 31, 2021, and to the condensed consolidated statement of cash flows for the six months ended June 30, 2021 as follows (in thousands):

As of December 31, 2021

3 unchanged sentences

Prepaid expenses and other assets $ 13,759 $ 2,520 $ 16,279

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

As previously reported Reclassifications As Revised

Condensed Consolidated Statements of Operations

General and administrative $ 5,471 $ ( 1,043 ) $ 4,428

Management fees $ 13,014 $ ( 1,437 ) $ 11,577

Transaction-related $ 185 $ ( 181 ) $ 4

Expense reimbursements to related parties $ — $ 2,661 $ 2,661

Condensed Consolidated Statements of Cash Flows

21 unchanged sentences

and significant increases to budgeted costs for units under development.

When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

and their eventual disposition.

In the event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss.

Generally, fair value is determined using a discounted cash flow analysis and recent comparable sales transactions.

During the three months ended March 31, 2022, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of $ 3.3 million related to seven properties, all of which was due to sales prices that were less than their respective carrying values.

The Company’s impairment assessment as of March 31, 2022 was based on the most current information available to the Company, including expected holding periods.

During the six months ended June 30, 2022, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of $ 11.3 million related to 18 properties, all of which was due to sales prices that were less than their respective carrying values.

Additionally, during the six months ended June 30, 2022, certain condominium units were deemed

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $ 7.9 million.

The Company’s impairment assessment as of June 30, 2022 was based on the most current information available to the Company, including expected holding periods.

If the Company’s expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future.

The Company cannot provide any assurance that additional material impairment charges with respect to the Company’s real estate assets will not occur during 2022 or in future periods.

During the three months ended March 31, 2021, the Company recorded impairment charges of $ 4.3 million related to five properties, of which impairment at three properties was due to sales prices that were less than their respective carrying values and impairment at two properties was due to vacancy.

During the six months ended June 30, 2021, the Company recorded impairment charges of $ 4.4 million related to five properties, of which impairment at three properties was due to sales prices that were less than their respective carrying values and impairment at two properties was due to vacancy.

The assumptions and uncertainties utilized in the evaluation of the impairment of real estate assets are discussed in detail in Note 3 — Fair Value Measurements.

3 unchanged sentences

If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount is then recorded to reflect the estimated fair value of the property, net of selling costs.

As of March 31, 2022, the Company identified 26 properties with a carrying value of $ 487.5 million as held for sale, 25 of which are in connection with the Purchase and Sale Agreement (as defined in Note 4 — Real Estate Assets).

The Company has mortgage notes payable of $ 344.2 million that are related to the held for sale properties, all of which the Company expects to repay or transfer to the buyer in connection with the disposition of the underlying held for sale properties.

The Company disposed of certain of these properties in phases subsequent to March 31, 2022, as further discussed in Note 17 — Subsequent Events.

As of December 31, 2021, in connection with the Purchase and Sale Agreement, the Company identified 81 properties with a carrying value of $ 1.3 billion as held for sale, of which 56 such properties closed during the three months ended March 31, 2022.

As of June 30, 2022, the Company identified four properties with a carrying value of $ 76.6 million as held for sale, one of which is in connection with the Purchase and Sale Agreement (as defined in Note 4 — Real Estate Assets).

The Company had a mortgage note payable of $ 42.8 million that was related to the held for sale property in connection with the Purchase and Sale Agreement, which was assumed by the buyer in connection with the disposition of the underlying held for sale property.

The Company disposed of these properties subsequent to June 30, 2022, as further discussed in Note 17 — Subsequent Events.

As of December 31, 2021, in connection with the Purchase and Sale Agreement, the Company identified 81 properties with a carrying value of $ 1.3 billion as held for sale, of which the sale of 80 such properties closed during the six months ended June 30, 2022.

Dispositions of Real Estate Assets

1 unchanged sentence

A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect on an entity’s financial results.

The Company’s dispositions during the three months ended March 31, 2022 and 2021 did not qualify for discontinued operations presentation and thus, the results of the properties and condominiums that were sold will remain in operating income, and any associated gains or losses from the dispositions are included in gain on disposition of real estate and condominium developments, net.

See Note 4 — Real Estate Assets for a discussion of the disposition of individual properties and condominiums during the three months ended March 31, 2022.

The Company’s dispositions during the six months ended June 30, 2022 and 2021 did not qualify for discontinued operations presentation and thus, the results of the properties and condominiums that were sold will remain in operating income, and any associated gains or losses from the dispositions are included in gain on disposition of real estate and condominium developments, net.

See Note 4 — Real Estate Assets for a discussion of the disposition of individual properties and condominiums during the six months ended June 30, 2022.

Allocation of Purchase Price of Real Estate Assets

6 unchanged sentences

The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Certain acquisition-related expenses related to asset acquisitions are capitalized and allocated to tangible and intangible assets and liabilities, as described above.

1 unchanged sentence

Other acquisition-related expenses continue to be expensed as incurred and are included in transaction-related expenses in the accompanying condensed consolidated statements of operations.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

Investments in Unconsolidated Entities

On March 31, 2022, the Company fully redeemed its $ 60.7 million investment in CIM UII Onshore, L.

(“CIM UII Onshore”) and received redemption proceeds of $ 48.5 million as of March 31, 2022.

The remaining $ 12.2 million redemption proceeds were included in prepaid expenses and other assets in the condensed consolidated balance sheets as of March 31, 2022.

(“CIM UII Onshore”) and received 100% of the $ 60.7 million redemption proceeds as of June 30, 2022.

Prior to redemption, the Company had less than 5 % ownership of CIM UII Onshore and accounted for its investment under the equity method.

1 unchanged sentence

Prior to redemption, the Company recorded its share of CIM UII Onshore’s profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations.

The Company recorded its share of CIM UII Onshore’s gain, totaling $ 5.2 million during the three months ended March 31, 2022, in the condensed consolidated statements of operations.

During the three months ended March 31, 2022, the Company received distributions of $ 531,000 related to its investment in CIM UII Onshore, all of which was recognized as a return on investment.

The Company recorded its share of CIM UII Onshore’s gain, totaling $ 5.2 million during the six months ended June 30, 2022, in the condensed consolidated statements of operations.

During the six months ended June 30, 2022, the Company received distributions of $ 531,000 related to its investment in CIM UII Onshore, all of which was recognized as a return on investment.

As of December 31, 2021, the Company’s investment in CIM UII Onshore had a carrying value of $ 56.0 million.

CMFT MT JV Holdings, LLC, an indirect wholly-owned subsidiary of the Company, is engaged in an unconsolidated joint venture arrangement through CIM NP JV Holdings, LLC (“NP JV Holdings”) (the “Unconsolidated Joint Venture”), of which it owns 50 % of the outstanding equity.

Through the Unconsolidated Joint Venture, which holds 90 % of the membership interest in NewPoint JV, LLC (“NewPoint JV”) pursuant to the terms of the Operating Agreement entered into between the Unconsolidated Joint Venture and NewPoint Bridge Lending, LLC, the Company indirectly owns 45 % of the outstanding equity of the NewPoint JV on a fully diluted basis.

Through the Unconsolidated Joint Venture, which holds 90 % of the membership interest in NewPoint JV, LLC (the “NewPoint JV”) pursuant to the terms of the Operating Agreement entered into between the Unconsolidated Joint Venture and NewPoint Bridge Lending, LLC, the Company indirectly owns 45 % of the outstanding equity of the NewPoint JV on a fully diluted basis.

The Company accounts for its investment under the equity method.

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

The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and is subsequently adjusted for the Company’s share of equity in NP JV Holdings’ earnings and distributions.

The Company records its share of NP JV Holdings’ profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations.

The Company recorded a gain totaling $ 168,000 , which represented its share of NP JV Holdings’ gain, during the three months ended March 31, 2022 in the condensed consolidated statements of operations.

During the three months ended March 31, 2022, the Company contributed an additional $ 24.8 million in NP JV Holdings.

As of March 31, 2022, the Company’s aggregate investment in NP JV Holdings of $ 78.4 million is included in investment in unconsolidated entities on the condensed consolidated balance sheets.

The Company did not receive any distributions related to its investment in the NP JV Holdings during the three months ended March 31, 2022.

The Company recorded a gain totaling $ 1.5 million, which represented its share of NP JV Holdings’ gain, during the six months ended June 30, 2022 in the condensed consolidated statements of operations.

During the six months ended June 30, 2022, the Company contributed an additional $ 43.3 million in NP JV Holdings.

As of June 30, 2022, the Company’s aggregate investment in NP JV Holdings of $ 96.2 million is included in investment in unconsolidated entities on the condensed consolidated balance sheets.

The Company received $ 2.1 million in distributions related to its investment in the NP JV Holdings during the six months ended June 30, 2022.

Noncontrolling Interest in Consolidated Joint Venture

The Company has a controlling interest in the Consolidated Joint Venture and, therefore, meets the requirements for consolidation.

The Company recorded net income of $ 9,000 and paid distributions of $ 14,000 to the noncontrolling interest during the three months ended March 31, 2022.

The Company recorded the noncontrolling interest of $ 1.1 million as of both March 31, 2022 and December 31, 2021 on the condensed consolidated balance sheets.

As of June 30, 2022, the Company had a controlling interest in the Consolidated Joint Venture and, therefore, met the requirements for consolidation.

The Company recorded a net loss of $ 63,000 and paid distributions of $ 30,000 to the noncontrolling interest during the six months ended June 30, 2022.

The Company recorded the noncontrolling interest of $ 1.0 million and $ 1.1 million as of June 30, 2022 and December 31, 2021, respectively, on the condensed consolidated balance sheets.

Restricted Cash

The Company had $ 72.5 million and $ 36.8 million in restricted cash as of March 31, 2022 and December 31, 2021, respectively.

Included in restricted cash was $ 15.9 million and $ 7.8 million held by lenders in lockbox accounts, as of March 31, 2022 and December 31, 2021, respectively.

The Company had $ 61.0 million and $ 36.8 million in restricted cash as of June 30, 2022 and December 31, 2021, respectively.

Included in restricted cash was $ 5.7 million and $ 7.8 million held by lenders in lockbox accounts, as of June 30, 2022 and December 31, 2021, respectively.

As part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company.

Also included in restricted cash was $ 56.6 million and $ 29.0 million of construction reserves, amounts held by lenders in escrow accounts for real estate taxes and other lender reserves for certain properties, in accordance with the associated lender’s loan agreement as of March 31, 2022 and December 31, 2021, respectively.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Also included in restricted cash was $ 55.3 million and $ 29.0 million of construction reserves, amounts held by lenders in escrow accounts for real estate taxes and other lender reserves for certain properties, in accordance with the associated lender’s loan agreement as of June 30, 2022 and December 31, 2021, respectively.

Real Estate-Related Securities

Real estate-related securities consists primarily of the Company’s investment in commercial mortgage-backed securities (“CMBS”), preferred units, and equity securities.

Real estate-related securities consists primarily of the Company’s investments in commercial mortgage-backed securities (“CMBS”) and equity securities.

The Company determines the appropriate classification for real estate-related securities at the time of purchase and reevaluates such designation as of each balance sheet date.

As of March 31, 2022, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities;

As of June 30, 2022, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities;

however, the Company may sell them prior to their maturity.

These investments are carried at their estimated fair value with unrealized gains and losses reported in other comprehensive (loss) income.

During the three months ended March 31, 2022, the Company invested $ 97.5 million in CMBS.

As of March 31, 2022, the Company had investments in seven CMBS with an estimated aggregate fair value of $ 135.0 million.

In addition, the Company had investments in equity securities with an estimated aggregate fair value of $ 51.0 million as of March 31, 2022, which is comprised of RTL Common Stock (as defined in Note 4 — Real Estate Assets) received as consideration in connection with the Purchase and Sale Agreement.

These investments are carried at their

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

estimated fair value with unrealized gains and losses reported in other comprehensive (loss) income.

During the six months ended June 30, 2022, the Company invested $ 259.2 million in CMBS.

As of June 30, 2022, the Company had investments in 10 CMBS with an estimated aggregate fair value of $ 227.4 million.

In addition, the Company had an investment in an equity security with an estimated aggregate fair value of $ 47.0 million as of June 30, 2022, which is comprised of RTL Common Stock (as defined in Note 4 — Real Estate Assets) received as consideration in connection with the Purchase and Sale Agreement.

These investments are carried at their estimated fair value with unrealized gains and losses reported on the condensed consolidated statements of operations.

1 unchanged sentence

The Company monitors its available-for-sale securities for changes in fair value.

Current expected credit losses are recorded when the Company acquires CMBS, and any subsequent impairment is recognized when the Company determines that a decline in the estimated fair value of a security below its amortized cost has resulted from a credit loss or other factors.

A loss is recognized when the Company determines that a decline in the estimated fair value of a security below its amortized cost has resulted from a credit loss or other factors.

The Company records impairments related to credit losses through current expected credit losses.

3 unchanged sentences

The use of alternative judgments and assumptions could result in a different conclusion.

During the three months ended March 31, 2022 and 2021, the Company did not record current expected credit losses related to CMBS.

As of March 31, 2022, the Company classified its investment in preferred units related to a multi-family, office and retail building in Fort Lauderdale, Florida with a preferred dividend rate of 8.9 % and a maturity date of June 1, 2022 as held-to-maturity as the Company has the intent and ability to hold the preferred units to maturity and included the investment in real estate-related securities on the condensed consolidated balance sheets.

Upon maturity, the preferred units will be redeemed in exchange for debt.

Investments classified as held-to-maturity are initially recognized at cost and are subsequently measured using amortized cost.

The Company evaluates their held-to-maturity investments for any other-than-temporary impairment each reporting period.

During the six months ended June 30, 2022 and 2021, the Company did not record current expected credit losses related to CMBS.

The amortized cost of real estate-related securities is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method and is recorded in the accompanying condensed consolidated statements of operations in interest income.

2 unchanged sentences

Interest is capitalized when certain conditions are met as specified in each security agreement.

During the three months ended March 31, 2022 and 2021, the Company capitalized $ 272,000 and $ 173,000 , respectively, of interest income to real estate-related securities.

During the three and six months ended June 30, 2022, the Company capitalized $ 274,000 and $ 546,000 , respectively, of interest income to real estate-related securities.

During the three and six months ended June 30, 2021, the Company capitalized $ 262,000 and $ 435,000 , respectively, of interest income to real estate-related securities.

Loans Held-for-Investment

The Company’s loans held-for-investment include loans related to real estate assets, as well as credit investments, including commercial mortgage loans, mezzanine loans, preferred equity, and other loans and securities related to commercial real estate assets, as well as corporate loan opportunities that are consistent with the Company’s investment strategy and objectives.

The Company’s loans held-for-investment include loans related to real estate assets, as well as credit investments, including commercial mortgage loans and other loans and securities related to commercial real estate assets, as well as corporate loan opportunities that are consistent with the Company’s investment strategy and objectives.

The Company intends to hold the loans held-for-investment for the foreseeable future or until maturity.

2 unchanged sentences

Upon the sale of a loan, the realized net gain or loss is computed on the specific identification method.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Interest earned is either received in cash or capitalized to loans held-for-investment and related receivables, net in the Company’s condensed consolidated balance sheets.

Interest is capitalized when certain conditions are met as specified in each loan agreement.

During the three months ended March 31, 2022, the Company recorded $ 31.5 million in interest income on its credit investments.

No amounts were capitalized during the three months ended March 31, 2022.

During the three and six months ended June 30, 2022, the Company capitalized $ 62,000 of interest income to loans held-for-investment.

Accrual of interest income is suspended on nonaccrual loans.

2 unchanged sentences

Loans may be restored to accrual status when all principal and interest are current and full repayment of the remaining contractual principal and interest are reasonably assured.

As of March 31, 2022, the Company did no t have nonaccrual loans.

As of June 30, 2022, the Company did no t have nonaccrual loans.

Current Expected Credit Losses

1 unchanged sentence

2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), on January 1, 2020.

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 held-for-investment included in the condensed consolidated balance sheets.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

condensed consolidated balance sheets.

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

21 unchanged sentences

however, the credit demonstrates an ample current cash flow from operations.

The trends and outlook for the credit's operations,

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

balance sheet, and industry are generally positive or neutral.

The trends and outlook for the credit's operations, balance sheet, and industry are generally positive or neutral.

Collateral performance, if appropriate, meets or exceeds substantially all performance metrics included in original or current underwriting / business plan;

10 unchanged sentences

defaults may exist, or may soon occur absent material improvement;

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

5- Default/Possibility of Loss — The debt investment is protected inadequately by the current enterprise value or paying capacity of the obligor or of the collateral, if any.

19 unchanged sentences

Project costs and expenses, including interest incurred, associated with the development, construction and lease-up of a real estate project are capitalized as construction in progress.

During the three months ended March 31, 2022 and 2021, the Company capitalized $ 3.1 million and $ 1.5 million of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

Included in the amounts capitalized during the three months ended March 31, 2022 and 2021 was $ 387,000 and $ 514,000 , respectively, of capitalized interest expense.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

During the six months ended June 30, 2022 and 2021, the Company capitalized $ 7.2 million and $ 4.5 million, respectively, of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

Included in the amounts capitalized during the six months ended June 30, 2022 and 2021 was $ 711,000 and $ 1.8 million, respectively, of capitalized interest expense.

Revenue Recognition

6 unchanged sentences

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 a receivable is not probable, the Company will record a reduction to rental and other property income for amounts previously recorded and a decrease in the outstanding receivable.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income for amounts previously recorded 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.

10 unchanged sentences

The Company may acquire first and second lien mortgage loans, mezzanine loans, bridge loans, wraparound mortgage loans, construction mortgage loans on real property and loans on leasehold interest mortgages.

This segment also includes investments in real estate-related securities, liquid senior loans and a corporate senior loan.

Real estate — engages primarily in acquiring and managing income-producing retail properties that are primarily single-tenant properties or anchored shopping centers, which are leased to creditworthy tenants under long-term net leases.

This segment also includes investments in real estate-related securities, liquid senior loans and corporate senior loans.

Real estate — engages primarily in acquiring and managing income-producing retail properties that are primarily single-tenant properties, which are leased to creditworthy tenants under long-term net leases.

The commercial properties are geographically diversified throughout the United States and have similar economic characteristics.

6 unchanged sentences

The amendments in ASU 2021-01 clarify that certain optional expedients and exceptions for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of the discontinuation of the use of the London Interbank Offered Rate (“LIBOR”) as a benchmark interest rate due to reference rate reform.

ASU 2021-01 is effective immediately for all entities with the option to apply

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

retrospectively as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, and can be applied prospectively to any new contract modifications made on or after January 7, 2021.

ASU 2021-01 is effective immediately for all entities with the option to apply retrospectively as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, and can be applied prospectively to any new contract modifications made on or after January 7, 2021.

The Company currently uses LIBOR as its benchmark interest rate for its derivative instruments, and has not entered into any new contracts on or after the effective date of ASU 2021-01.

The Company has evaluated the impact of this ASU’s adoption, and does not believe this ASU will have a material impact on its condensed consolidated financial statements.

In June 2022, the FASB issued ASU No.

2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

The amendments in this update clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new disclosure requirements related to such equity securities.

The amendments are effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

NOTE 3 — FAIR VALUE MEASUREMENTS

1 unchanged sentence

GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.

9 unchanged sentences

Depending upon the significance of the fair value inputs used in determining these fair values, these securities are valued using Level 1, Level 2 or Level 3 inputs.

As of March 31, 2022, the Company concluded that $ 97.5 million of its CMBS fell under Level 2 and $ 37.6 million of its CMBS and $ 68.2 million of its preferred units fell under Level 3.

The Company’s investment in equity securities is valued using Level 1 inputs.

The estimated fair value of the Company’s equity securities is based on quoted market prices that are readily and regularly available in an active market.

As of June 30, 2022, the Company concluded that $ 193.1 million of its CMBS fell under Level 2 and $ 34.4 million of its CMBS fell under Level 3.

The Company’s equity security investment is valued using Level 1 inputs.

The estimated fair value of the Company’s equity security is based on quoted market prices that are readily and regularly available in an active market.

Credit facilities and notes payable — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date.

1 unchanged sentence

These financial instruments are valued using Level 2 inputs.

As of March 31, 2022, the estimated fair value of the Company’s debt was $ 4.12 billion, compared to a carrying value of $ 4.20 billion.

As of June 30, 2022, the estimated fair value of the Company’s debt was $ 4.11 billion, compared to a carrying value of $ 4.25 billion.

The estimated fair value of the Company’s debt as of December 31, 2021 was $ 4.11 billion, compared to a carrying value of $ 4.17 billion.

4 unchanged sentences

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties.

However, as of March 31,

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

2022 and December 31, 2021, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives.

However, as of June 30, 2022 and December 31, 2021, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives.

As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

1 unchanged sentence

The Company estimates the fair value of its loans held-for-investment by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk.

The Company has determined that its commercial real estate (“CRE”) loans held-for-investment and corporate senior loan are classified in Level 3 of the fair value hierarchy.

The Company’s liquid senior loans are classified as Level 2 or Level 3 depending on the number of market quotations or indicative prices from pricing services that are available, and whether the depth of the market is sufficient to transact at those prices in amounts approximating the Company’s investment position at the measurement date.

As of March 31, 2022, $ 549.7 million and $ 113.6 million of the Company’s liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively.

The Company has determined that its commercial real estate (“CRE”) loans held-for-investment and corporate senior loans are classified in Level 3 of the fair value hierarchy.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

the measurement date.

As of June 30, 2022, $ 491.3 million and $ 149.2 million of the Company’s liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively.

As of December 31, 2021, $ 560.4 million and $ 94.1 million of the Company’s liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively.

As of March 31, 2022, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $ 3.35 billion, compared to their carrying value of $ 3.33 billion.

As of June 30, 2022, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $ 3.89 billion, which approximated carrying value.

As of December 31, 2021, the estimated fair value of the Company’s loans held-for-investment was $ 2.63 billion, compared to their carrying value of $ 2.61 billion.

6 unchanged sentences

Items Measured at Fair Value on a Recurring Basis

In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 (in thousands):

In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (in thousands):

Balance as of

March 31, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

June 30, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Financial assets:

CMBS $ 227,425 $ — $ 193,074 $ 34,351

Preferred units 68,243 — — 68,243

Equity securities 51,021 51,021 — —

Equity security 46,957 46,957 — —

Interest rate caps 2,030 — 2,030 —

Interest rate swaps 35 — 35 —

Total financial assets $ 276,447 $ 46,957 $ 195,139 $ 34,351

2 unchanged sentences

Total financial liabilities $ ( 195 ) $ — $ ( 195 ) $ —

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Balance as of

10 unchanged sentences

Total financial liabilities $ ( 2,466 ) $ — $ ( 2,466 ) $ —

The following are reconciliations of the changes in financial assets with Level 3 inputs in the fair value hierarchy for the three months ended March 31, 2022 (in thousands):

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

The following are reconciliations of the changes in financial assets with Level 3 inputs in the fair value hierarchy for the six months ended June 30, 2022 (in thousands):

Beginning Balance, January 1, 2022

2 unchanged sentences

Purchases and payments received:

Conversion of preferred units (1)

Discounts, net 622

Capitalized interest income 546

Ending Balance, March 31, 2022

Ending Balance, June 30, 2022

____________________________________

(1) Reflects the Company’s investment in preferred units which matured during the six months ended June 30, 2022 and was redeemed in exchange for an investment in a first mortgage loan.

Refer to Note 8 — Loans Held-For-Investment for further discussion.

Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges)

1 unchanged sentence

The Company’s process for identifying and recording impairment related to real estate assets and intangible assets is discussed in Note 2 — Summary of Significant Accounting Policies.

As discussed in Note 4 — Real Estate Assets, during the three months ended March 31, 2022, real estate assets related to seven properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 29.1 million, resulting in impairment charges of $ 3.3 million.

During the three months ended March 31, 2021, real estate assets related to five properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 31.3 million, resulting in impairment charges of $ 4.3 million.

As discussed in Note 4 — Real Estate Assets, during the six months ended June 30, 2022, real estate assets related to 18 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 110.5 million, resulting in impairment charges of $ 11.3 million.

Additionally, during the six months ended June 30, 2022, certain condominium units were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $ 7.9 million.

During the six months ended June 30, 2021, real estate assets related to five properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 31.2 million, resulting in impairment charges of $ 4.4 million.

The Company estimates fair values using Level 3 inputs and a combined income and market approach, specifically using discounted cash flow analysis and recent comparable sales transactions.

7 unchanged sentences

The Company determined that the selling prices used to determine the fair values were Level 2 inputs.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

The following summarizes the ranges of discount rates and terminal capitalization rates used for the Company’s impairment test for the real estate assets during the three months ended March 31, 2022:

Three Months Ended March 31,

The following summarizes the ranges of discount rates and terminal capitalization rates used for the Company’s impairment test for the real estate assets during the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

Discount Rate Terminal Capitalization Rate Discount Rate Terminal Capitalization Rate

3 unchanged sentences

7.4 % – 9.2 %

The following table presents the impairment charges by asset class recorded during the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

The following table presents the impairment charges by asset class recorded during the six months ended June 30, 2022 and 2021 (in thousands):

Six Months Ended June 30,

Asset class impaired:

3 unchanged sentences

Intangible lease liabilities ( 4 ) ( 130 )

Condominium developments 7,945 —

Total impairment loss $ 19,287 $ 4,377

1 unchanged sentence

2022 Property Acquisitions

During the three months ended March 31, 2022, the Company did no t acquire any properties.

During the six months ended June 30, 2022, the Company did no t acquire any properties.

2022 Condominium Development Project

During the three months ended March 31, 2022, the Company capitalized $ 3.1 million of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

During the six months ended June 30, 2022, the Company capitalized $ 7.2 million of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

2022 Condominium Dispositions

During the three months ended March 31, 2022, the Company disposed of condominium units for an aggregate sales price of $ 21.1 million, resulting in proceeds of $ 19.4 million after closing costs and a gain of $ 3.3 million.

The Company has no continuing involvement with these condominium units.

During the six months ended June 30, 2022, the Company disposed of condominium units for an aggregate sales price of $ 22.5 million, resulting in proceeds of $ 20.6 million after closing costs and a gain of $ 3.3 million.

The Company has no continuing involvement that would preclude sale treatment with these condominium units.

The gain on sale of condominium units is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

4 unchanged sentences

(now known as The Necessity Retail REIT Operating Partnership, L.P.) (“RTL OP”), and certain of their subsidiaries (collectively, the “Purchaser”) to sell to the Purchaser 79 shopping centers and two single-tenant properties encompassing approximately 9.5 million gross rentable square feet of commercial space across 27 states for total consideration of $ 1.32 billion (the “Purchase Price”).

The Purchase Price includes the Purchaser’s option to seek the assumption of certain existing debt, and Purchaser’s issuance of up to $ 53.4 million in value of RTL’s Class A common stock, par value $ 0.01 per share (“RTL Common Stock”), or Class A units in RTL OP (“RTL OP Units”), subject to certain limits described more fully in the Purchase and Sale Agreement.

During the three months ended March 31, 2022, the Company disposed of 69 properties, including 32 retail properties and 37 anchored shopping centers for an aggregate gross sales price of $ 925.3 million, resulting in proceeds of $ 923.2 million after closing costs and a gain of $ 29.2 million.

The sale of 56 of these properties closed pursuant to the Purchase and Sale Agreement for total consideration of $ 811.8 million, which consisted of $ 758.4 million in cash proceeds and $ 53.4 million of RTL Common Stock, which shares are subject to certain registration rights as described in the Purchase and Sale Agreement.

During the three months ended March 31, 2022, the Company recognized earnout income of $ 31.5 million related to the disposition of

The Purchase Price included the Purchaser’s option to seek the assumption of certain existing debt, and Purchaser’s issuance of up to $ 53.4 million in value of RTL’s Class A common stock, par value $ 0.01 per share (“RTL Common Stock”), or Class A units in RTL OP (“RTL OP Units”), subject to certain limits described more fully in the Purchase and Sale Agreement.

During the six months ended June 30, 2022, the Company disposed of 112 properties, including 55 anchored shopping centers, 54 retail properties, two office buildings and one industrial property, and an outparcel of land for an aggregate gross sales price of $ 1.55 billion, resulting in proceeds of $ 1.50 billion after closing costs and a gain of $ 110.4 million.

The sale of 80 of these properties closed pursuant to the Purchase and Sale Agreement for total consideration of $ 1.3 billion, which consisted of $ 1.2 billion in cash proceeds and $ 53.4 million of RTL Common Stock, which shares are subject to certain registration rights as described in the Purchase and Sale Agreement.

Such shares are included in real estate-related securities in the condensed consolidated balance sheets.

During the six months ended June 30, 2022, the Company recognized earnout income of $ 74.1 million related to the disposition of these properties pursuant to the Purchase and Sale Agreement, and recorded a related receivable of $ 51.0 million in prepaid expenses and other assets in the condensed consolidated balance sheets.

The Company has no continuing involvement that would preclude sale treatment with these properties.

The gain on sale of real estate, including the earnout income, is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

these properties pursuant to the Purchase and Sale Agreement, and recorded a related receivable of $ 21.3 million in prepaid expenses and other assets in the condensed consolidated balance sheets.

The Company has no continuing involvement with these properties.

As of March 31, 2022, the Company identified 26 properties with a carrying value of $ 487.5 million as held for sale, 25 of which are in connection with the Purchase and Sale Agreement.

The Company disposed of certain of these properties in phases subsequent to March 31, 2022, as further discussed in Note 17 — Subsequent Events.

June 30, 2022 (Unaudited) – (Continued)

As of June 30, 2022, the Company identified four properties with a carrying value of $ 76.6 million as held for sale, one of which is in connection with the Purchase and Sale Agreement.

Subsequent to June 30, 2022, the Company disposed of these properties, as further discussed in Note 17 — Subsequent Events.

2022 Impairment

1 unchanged sentence

See Note 2 — Summary of Significant Accounting Policies for a discussion of the Company’s accounting policies regarding impairment of real estate assets.

During the three months ended March 31, 2022, seven properties totaling approximately 215,000 square feet with a carrying value of $ 32.4 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 29.1 million, resulting in impairment charges of $ 3.3 million, which were recorded in the condensed consolidated statements of operations.

During the six months ended June 30, 2022, 18 properties totaling approximately 800,000 square feet with a carrying value of $ 121.8 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 110.5 million, resulting in impairment charges of $ 11.3 million, which were recorded in the condensed consolidated statements of operations.

See Note 3 — Fair Value Measurements for a further discussion regarding these impairment charges.

2021 Property Acquisitions

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

During the six months ended June 30, 2021, the Company did not acquire any properties.

Assets Acquired Via Foreclosure

During the three months ended March 31, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its eight mezzanine loans, including 75 condominium units and 21 rental units across four buildings, including certain units that are under development.

During the six months ended June 30, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its eight mezzanine loans, including 75 condominium units and 21 rental units across four buildings, including certain units that are under development.

No land was acquired in connection with the foreclosure.

The following table summarizes the purchase price allocation for the real estate acquired via foreclosure (in thousands):

As of March 31, 2021

As of June 30, 2021

Buildings, fixtures and improvements $ 192,182

4 unchanged sentences

2021 Condominium Development Project

During the three months ended March 31, 2021, the Company capitalized $ 1.5 million of expenses as construction in progress associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

During the six months ended June 30, 2021, the Company capitalized $ 4.5 million of expenses as construction in progress associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

2021 Condominium Dispositions

During the six months ended June 30, 2021, the Company disposed of condominium units for an aggregate sales price of $ 8.8 million, resulting in proceeds of $ 8.5 million after closing costs and a gain of $ 1.5 million.

The Company has no continuing involvement that would preclude sale treatment with these condominium units.

The gain on sale of condominium units is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

2021 Property Dispositions and Real Estate Assets Held for Sale

During the three months ended March 31, 2021, the Company disposed of one retail property, for a gross sales price of $ 3.7 million, resulting in proceeds of $ 3.5 million after closing costs.

The Company has no continuing involvement with this property.

As of March 31, 2021, there were two properties classified as held for sale with a carrying value of $ 31.2 million included in assets held for sale in the accompanying condensed consolidated balance sheets.

Subsequent to March 31, 2021, the Company disposed of these properties.

During the six months ended June 30, 2021, the Company disposed of 47 retail properties, for an aggregate gross sales price of $ 304.0 million, resulting in proceeds of $ 269.0 million after closing costs and a gain of $ 46.5 million.

The Company has no continuing involvement that would preclude sale treatment with these properties.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

As of June 30, 2021, there were two properties classified as held for sale with a carrying value of $ 6.1 million included in assets held for sale in the accompanying condensed consolidated balance sheets.

Subsequent to June 30, 2021, the Company disposed of these properties.

2021 Impairment

During the three months ended March 31, 2021, five properties totaling approximately 165,000 square feet with a carrying value of $ 35.6 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 31.3 million, resulting in impairment charges of $ 4.3 million, which were recorded in the condensed consolidated statements of operations.

During the six months ended June 30, 2021, five properties totaling approximately 165,000 square feet with a carrying value of $ 35.5 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 31.2 million, resulting in impairment charges of $ 4.4 million, which were recorded in the condensed consolidated statements of operations.

See Note 3 — Fair Value Measurements for a further discussion regarding these impairment charges.

Consolidated Joint Venture

As of March 31, 2022, the Company had an interest in a Consolidated Joint Venture that owns and manages two properties, with total assets of $ 6.8 million, which included $ 7.2 million of land, building and improvements and $ 641,000 of intangible assets, net of accumulated depreciation and amortization of $ 1.2 million, and total liabilities of $ 47,000 .

The Consolidated Joint Venture did not have any debt outstanding as of March 31, 2022.

As of June 30, 2022, the Company had an interest in a Consolidated Joint Venture that owned and managed two properties, with total assets of $ 6.8 million, which included $ 7.2 million of land, building and improvements and $ 641,000 of intangible assets, net of accumulated depreciation and amortization of $ 1.2 million, and total liabilities of $ 47,000 .

The Consolidated Joint Venture did not have any debt outstanding as of June 30, 2022.

The Company has the ability to control operating and financial policies of the Consolidated Joint Venture.

1 unchanged sentence

The Company and the Consolidated Joint Venture Partner are subject to the provisions of the joint venture agreement, which includes provisions for when additional contributions may be required to fund certain cash shortfalls.

Subsequent to June 30, 2022, the Company disposed of the two properties previously owned through the Consolidated Joint Venture, as further discussed in Note 17 — Subsequent Events.

NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES

Intangible lease assets and liabilities consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands, except weighted average life remaining):

March 31, 2022 December 31, 2021

Intangible lease assets and liabilities consisted of the following as of June 30, 2022 and December 31, 2021 (in thousands, except weighted average life remaining):

June 30, 2022 December 31, 2021

Intangible lease assets:

9 unchanged sentences

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

The following table summarizes the amortization related to the intangible lease assets and liabilities for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

The following table summarizes the amortization related to the intangible lease assets and liabilities for the three and six months ended June 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

In-place lease and other intangible amortization $ 6,326 $ 7,428 $ 13,112 $ 15,201

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

As of March 31, 2022, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):

June 30, 2022 (Unaudited) – (Continued)

As of June 30, 2022, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):

In-Place Leases and

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(“CIM Urban Income”), which is a private institutional fund that acquires, owns and operates substantially stabilized, diversified real estate and real estate-related assets in urban markets primarily located throughout North America.

During the three months ended March 31, 2022, the Company recognized an equity method net gain of $ 5.2 million related to its investment in CIM UII Onshore.

The Company recognized distributions of $ 531,000 related to its investment in CIM UII Onshore during the three months ended March 31, 2022, all of which was recognized as a return on investment.

During the three and six months ended June 30, 2022, the Company recognized an equity method net gain of $ 5.2 million related to its investment in CIM UII Onshore.

The Company recognized distributions of $ 531,000 related to its investment in CIM UII Onshore during the six months ended June 30, 2022, all of which was recognized as a return on investment.

On March 31, 2022, the Company fully redeemed its $ 60.7 million investment in CIM UII Onshore, which represented less than 5 % ownership of CIM UII Onshore and approximated fair value.

As of March 31, 2022, the Company received redemption proceeds of $ 48.5 million.

The remaining $ 12.2 million redemption proceeds were included in prepaid expenses and other assets in the condensed consolidated balance sheets as of March 31, 2022.

Additionally, during the year ended December 31, 2021, the Company entered into the Unconsolidated Joint Venture.

As of June 30, 2022, the Company received 100 % of the redemption proceeds.

Additionally, during the year ended December 31, 2021, the Company entered into the Unconsolidated Joint Venture, of which the Company owns 50 % of the outstanding equity.

The Unconsolidated Joint Venture holds 90 % of the membership interest in the NewPoint JV.

Through the Unconsolidated Joint Venture, the Company has a 45 % interest in the NewPoint JV and accounts for its investment under the equity method.

The primary purpose of the NewPoint JV is to source, underwrite, close and service on an ongoing basis multifamily bridge loans, participation interests, and other debt instruments such as loans.As of March 31, 2022, the carrying value of the Company’s investment in NP JV Holdings was $ 78.4 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance sheets.

The Company did not receive any distributions related to its investment in NP JV Holdings during the three months ended March 31, 2022.

The primary purpose of the NewPoint JV is to source, underwrite, close and service on an ongoing basis multifamily bridge loans, participation interests, and other debt instruments such as loans.

As of June 30, 2022, the carrying value of the Company’s investment in NP JV Holdings was $ 96.2 million, which approximates fair value and is included in investments in unconsolidated entities on the condensed consolidated balance sheets.

The Company received $ 2.1 million in distributions related to its investment in NP JV Holdings during the six months ended June 30, 2022, $ 1.5 million of which was recognized as a return on investment and $ 614,000 of which was recognized as a return of investment and reduced the invested capital and the carrying amount.

NOTE 7 — REAL ESTATE-RELATED SECURITIES

As of March 31, 2022, the Company had real estate-related securities with an aggregate estimated fair value of $ 254.3 million, which included seven CMBS, equity securities and an investment in preferred units.

As of June 30, 2022, the Company had real estate-related securities with an aggregate estimated fair value of $ 274.4 million, which included 10 CMBS investments and an investment in a publicly-traded equity security.

The CMBS mature on various dates from March 2024 through June 2058 and have interest rates ranging from 5.4 % to 7.6 %, with one CMBS earning a zero coupon rate.

The preferred units mature on June 1, 2022 and have an interest rate of 8.9 %.

The following is a summary of the Company’s real estate-related securities as of March 31, 2022 (in thousands):

The following is a summary of the Company’s real estate-related securities as of June 30, 2022 (in thousands):

Real Estate-Related Securities

1 unchanged sentence

CMBS $ 240,415 $ ( 12,990 ) $ 227,425

Equity securities 53,389 ( 2,368 ) 51,021

Preferred units 68,243 — 68,243

Equity security 53,388 ( 6,431 ) 46,957

Total real estate-related securities $ 293,803 $ ( 19,421 ) $ 274,382

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

The following table provides the activity for the real estate-related securities during the three months ended March 31, 2022 (in thousands):

June 30, 2022 (Unaudited) – (Continued)

The following table provides the activity for the real estate-related securities during the six months ended June 30, 2022 (in thousands):

Amortized Cost Basis Unrealized Gain (Loss) Fair Value

2 unchanged sentences

Face value of real estate-related securities acquired 258,820 — 258,820

Investment in preferred units 4,752 — 4,752

Investment in preferred units, net (1)

( 63,490 ) — ( 63,490 )

Premiums and discounts on purchase of real estate-related securities, net of acquisition costs

3 unchanged sentences

Capitalized interest income on real estate-related securities 546 — 546

Principal payments received on real estate-related securities ( 1,250 ) — ( 1,250 )

Unrealized loss on real estate-related securities

— ( 22,196 ) ( 22,196 )

Real estate-related securities as of March 31, 2022

Real estate-related securities as of June 30, 2022

$ 293,803 $ ( 19,421 ) $ 274,382

During the three months ended March 31, 2022, the Company invested $ 97.5 million in CMBS and $ 4.8 million in preferred units.

The Company also received $ 53.4 million in equity securities during the three months ended March 31, 2022 as consideration in connection with the Purchase and Sale Agreement.

____________________________________

(1) Included in this balance is $ 68.2 million of the Company’s investment in preferred units which were redeemed during the six months ended June 30, 2022 in exchange for an investment in a first mortgage loan, as further discussed in Note 8 — Loans Held-For-Investment.

During the six months ended June 30, 2022, the Company invested $ 259.2 million in CMBS.

During the same period, the Company sold one marketable security with an aggregate carrying value of $ 110,000 resulting in net proceeds of $ 132,000 and a gain of $ 22,000 .

Unrealized gains and losses on CMBS and equity securities are recorded in other comprehensive (loss) income, with a portion of the amount subsequently reclassified into interest expense and other, net in the accompanying condensed consolidated statements of operations as securities are sold and gains and losses are recognized.

During the three months ended March 31, 2022, the Company recorded $ 7.2 million of unrealized loss on its real estate-related securities, $ 4.9 million of which is included in other comprehensive (loss) income in the accompanying condensed consolidated statements of comprehensive income.

The remaining $ 2.3 million of unrealized loss on the Company’s equity securities is included in interest expense and other, net in the accompanying condensed consolidated statements of operations.

The scheduled maturities of the Company’s CMBS and preferred units as of March 31, 2022 are as follows (in thousands):

CMBS and Preferred Units

The Company also received $ 53.4 million in an equity security during the six months ended June 30, 2022 as consideration in connection with the Purchase and Sale Agreement.

Unrealized gains and losses on CMBS are recorded in other comprehensive (loss) income, with a portion of the amount subsequently reclassified into interest expense and other, net in the accompanying condensed consolidated statements of operations as securities are sold and gains and losses are recognized.

Unrealized gains and losses on the equity security are reported on the condensed consolidated statements of operations.

During the six months ended June 30, 2022, the Company recorded $ 22.2 million of unrealized loss on its real estate-related securities, $ 15.8 million of which is included in other comprehensive (loss) income in the accompanying condensed consolidated statements of comprehensive income.

The remaining $ 6.4 million of unrealized loss on the Company’s equity security is included in interest expense and other, net in the accompanying condensed consolidated statements of operations.

The scheduled maturities of the Company’s CMBS as of June 30, 2022 are as follows (in thousands):

Amortized Cost Estimated Fair Value

7 unchanged sentences

In estimating credit losses related to real estate-related securities, management considers a variety of factors, including (1) whether the Company has the intent to sell the impaired security before the recovery of its amortized cost basis, (2) whether the Company expects to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value, and (3) whether the Company expects to recover the entire amortized cost basis of the security.

As of March 31, 2022, the Company had no credit losses related to real estate-related securities.

As of June 30, 2022, the Company had no credit losses related to real estate-related securities.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

June 30, 2022 (Unaudited) – (Continued)

NOTE 8 — LOANS HELD-FOR-INVESTMENT

The Company’s loans held-for-investment consisted of the following as of March 31, 2022 and December 31, 2021 (dollar amounts in thousands):

As of March 31, As of December 31,

The Company’s loans held-for-investment consisted of the following as of June 30, 2022 and December 31, 2021 (in thousands):

As of June 30, As of December 31,

First mortgage loans (1)

2 unchanged sentences

Liquid senior loans 684,866 655,516

Corporate senior loan 9,927 —

Corporate senior loans 55,218 —

Loans held-for-investment and related receivables, net $ 3,911,239 $ 2,624,101

2 unchanged sentences

____________________________________

(1) As of March 31, 2022, first mortgage loans included $ 20.1 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan.

During the three months ended March 31, 2022, the Company invested $ 61.0 million in liquid senior loans and invested $ 10.0 million in a corporate senior loan.

During the same period, the Company received $ 21.5 million of principal payments on liquid senior loans and sold $ 23.9 million of liquid senior loans, resulting in proceeds of $ 23.8 million after closing costs and a gain of $ 65,000 .

The gain was recorded as a decrease to interest expense and other, net in the condensed consolidated statements of operations.

As of March 31, 2022, the Company had $ 39.5 million of unfunded or unsettled liquid senior loan purchases included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

As of March 31, 2022, the Company had $ 384.7 million of unfunded commitments related to CRE loans held-for-investment, the funding of which is subject to the satisfaction of borrower milestones.

These commitments are not reflected in the accompanying condensed consolidated balance sheets.

The following table details overall statistics for the Company’s loans held-for-investment as of March 31, 2022 and December 31, 2021 (dollar amounts in thousands):

(1) As of June 30, 2022, first mortgage loans included $ 20.1 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan.

The following table details overall statistics for the Company’s loans held-for-investment as of June 30, 2022 and December 31, 2021 (dollar amounts in thousands):

CRE Loans (1) (2)

Liquid Senior Loans Corporate Senior Loan

March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

Liquid Senior Loans Corporate Senior Loans

June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

Number of loans 28 22 309 295 4 —

4 unchanged sentences

4.1 4.3 5.0 5.1 5.3 0.0

Unfunded loan commitments (3)

$ 364,221 $ 209,368 $ 2,031 $ 1,562 $ 6,649 $ —

(1) As of March 31, 2022, 100 % of the Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to U.S.

____________________________________

(1) As of June 30, 2022, 100 % of the Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to U.S.

dollar LIBOR and the Secured Overnight Financing Rate (“SOFR”).

1 unchanged sentence

however, the Company’s CRE loans may be repaid prior to such date.

(3) Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying condensed consolidated balance sheets.

This balance does not include unsettled liquid senior loan purchases of $ 22.4 million that are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Activity relating to the Company’s loans held-for-investment portfolio was as follows (dollar amounts in thousands):

Principal Balance Deferred Fees / Other Items (1)

Net Book Value

June 30, 2022 (Unaudited) – (Continued)

Activity relating to the Company’s loans held-for-investment portfolio was as follows (in thousands):

CRE Loans Liquid Senior Loans Corporate Senior Loans Total Loan Portfolio

Balance, January 1, 2022 $ 1,958,655 $ 650,245 $ — $ 2,608,900

Loan originations and acquisitions (1)

1,291,847 111,546 55,851 1,459,244

Sale of loans — ( 35,460 ) — ( 35,460 )

1 unchanged sentence

( 80,911 ) ( 46,140 ) ( 50 ) ( 127,101 )

Capitalized interest 62 — — 62

Deferred fees and other items (3)

1 unchanged sentence

Accretion and amortization of fees and other items 4,938 581 17 5,536

— 2,724 2,724

Current expected credit losses ( 3,144 ) ( 4,919 ) ( 671 ) ( 8,734 )

Balance, March 31, 2022

Balance, June 30, 2022

$ 3,158,080 $ 674,677 $ 54,547 $ 3,887,304

____________________________________

(1) Other items primarily consist of current expected credit losses (as discussed below), purchase discounts or premiums, accretion of exit fees and deferred origination expenses.

(1) The Company’s investment in preferred units, which was previously recorded in real estate-related securities on the accompanying condensed consolidated balance sheets, was redeemed during the six months ended June 30, 2022 in exchange for an investment in a first mortgage loan.

The converted investment in preferred units of $ 68.2 million is included in the CRE loans balance with an all-in-rate of 8.0 % and an initial maturity date of October 9, 2023.

(2) Includes the repayment of a $ 80.9 million first mortgage loan prior to the maturity date.

(3) Other items primarily consist of purchase discounts or premiums, accretion of exit fees and deferred origination expenses.

Current Expected Credit Losses

1 unchanged sentence

Refer to Note 2 — Summary of Significant Accounting Policies for further discussion of the Company’s current expected credit losses.

The following table presents the activity in the Company’s current expected credit losses by loan type for the three months ended March 31, 2022 (dollar amounts in thousands):

The following table presents the activity in the Company’s current expected credit losses by loan type for the six months ended June 30, 2022 (in thousands):

First Mortgage Loans Unfunded First Mortgage Loans (1)

Liquid Senior Loans Unfunded or Unsettled Liquid Senior Loans (1)

Corporate Senior Loan Total

Corporate Senior Loans Unfunded Corporate Senior Loans (1)

Current expected credit losses as of January 1, 2022 $ 9,930 $ — $ 5,271 $ — $ — $ — $ 15,201

2 unchanged sentences

$ 11,242 $ 360 $ 7,852 $ 400 $ 56 $ — $ 19,910

Provision for credit losses 1,832 170 2,338 ( 96 ) 615 83 4,942

Current expected credit losses as of June 30, 2022

$ 13,074 $ 530 $ 10,190 $ 304 $ 671 $ 83 $ 24,852

____________________________________

(1) Current expected losses for unfunded or unsettled loan commitments are included in accrued expenses and accounts payable in the condensed consolidated balance sheets.

Changes to current expected credit losses are recognized through net income (loss) on the Company’s condensed consolidated statements of operations.

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

Troubled Debt Restructuring

An individual financial instrument is classified as a troubled debt restructuring when there is a reasonable expectation that the financial instrument’s contractual terms will be modified in a manner that grants concessions to the borrower who is experiencing financial difficulties.

Concessions could include term extensions, payment deferrals, interest rate reductions, principal forgiveness, forbearance, or other actions designed to maximize the Company’s collection on the financial instrument.

Concessions could include term extensions, payment deferrals, interest rate reductions,

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

principal forgiveness, forbearance, or other actions designed to maximize the Company’s collection on the financial instrument.

Current expected credit losses for financial instruments that are troubled debt restructurings are determined individually.

3 unchanged sentences

As a result, the Company classified the loans as a troubled debt restructuring and commenced foreclosure proceedings during the year ended December 31, 2020.

Upon completing foreclosure in January 2021, the Company took control of the assets which previously secured the loans, including

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

75 condominium units and 21 rental units across four buildings.

Upon completing foreclosure in January 2021, the Company took control of the assets which previously secured the loans, including 75 condominium units and 21 rental units across four buildings.

As a result of the foreclosure, the Company recorded a $ 58.0 million decrease to its provision for credit losses related to its mezzanine loans during the three months ended March 31, 2021.

During the three months ended March 31, 2022, the Company recorded a $ 3.9 million net increase to the provision for credit losses related to its first mortgage loans, liquid senior loans, and its corporate senior loan to reflect the estimated fair value of such loans, bringing the total current expected credit losses to $ 19.2 million as of March 31, 2022.

As further described in Note 2 — Summary of Significant Accounting Policies, the Company evaluates its loans held-for-investment portfolio on a quarterly basis.

3 unchanged sentences

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 held-for-investment portfolio as of March 31, 2022 by year of origination, loan type, and risk rating (dollar amounts in thousands):

The following table presents the net book value of the Company’s loans held-for-investment portfolio as of June 30, 2022 by year of origination, loan type, and risk rating (dollar amounts in thousands):

Amortized Cost of Loans Held-For-Investment by Year of Origination (1)

As of March 31, 2022

As of June 30, 2022

Number of Loans 2022 2021 2020 2019 Total

13 unchanged sentences

Total liquid senior loans 309 92,803 338,809 250,230 3,024 684,866

Corporate senior loan by internal risk rating:

Corporate senior loans by internal risk rating:

1 — — — — — —

3 unchanged sentences

5 — — — — — —

Total corporate senior loan 1 9,927 — — — 9,927

Total corporate senior loans 4 55,218 — — — 55,218

Current expected credit losses ( 23,935 )

1 unchanged sentence

Weighted Average Risk Rating (2)

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

____________________________________

1 unchanged sentence

Origination dates are subsequently updated to reflect material loan modifications.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

(2) Weighted average risk rating calculated based on carrying value at period end.

1 unchanged sentence

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

During the three months ended March 31, 2022, one of the Company’s interest rate swap agreements matured, and the Company terminated one interest rate swap agreement prior to the maturity date.

As of March 31, 2022, the Company had five non-designated interest rate cap agreements and three interest rate swap agreements designated as hedging instruments.

The following table summarizes the terms of the Company’s interest rate cap agreements and interest rate swap agreements designated as hedging instruments as of March 31, 2022 and December 31, 2021 (dollar amounts in thousands):

During the six months ended June 30, 2022, one of the Company’s interest rate swap agreements matured, four of the Company’s interest rate cap agreements matured, and the Company terminated one interest rate swap agreement prior to the maturity date.

As of June 30, 2022, the Company had one non-designated interest rate cap agreement and three interest rate swap agreements designated as hedging instruments.

Subsequent to June 30, 2022, one of the Company’s interest rate swap agreements matured, as further discussed in Note 17 — Subsequent Events.

The following table summarizes the terms of the Company’s interest rate cap agreements and interest rate swap agreements as of June 30, 2022 and December 31, 2021 (dollar amounts in thousands):

Outstanding Notional Fair Value of Assets (Liabilities) as of

Balance Sheet Amount as of Interest Effective Maturity March 31, December 31,

Location March 31, 2022 Rates (1)

Balance Sheet Amount as of Interest Effective Maturity June 30, December 31,

Location June 30, 2022 Rates (1)

Dates Dates 2022 2021

Interest Rate Caps Prepaid expenses and other assets $ 752,553 4.81 % to 5.45 %

5/7/2021 to 7/15/2021

5/9/2022 to 7/15/2023

Interest Rate Cap Prepaid expenses, derivative assets and other assets $ 650,000 5.99 %

$ 2,030 $ 179

Interest Rate Swaps Deferred rental income, derivative liabilities and other liabilities $ 155,800 3.31 % to 4.84 %

Interest Rate Swaps Prepaid expenses, derivative assets and other assets $ 55,800 3.46 % to 4.04 %

6/27/2017 to 9/30/2019

7/1/2022 to 9/6/2022

Interest Rate Swap Deferred rental income, derivative liabilities and other liabilities $ 100,000 4.99 %

$ ( 195 ) $ ( 2,466 )

(1) The interest rate consists of the underlying index swapped or capped to a fixed rate as of March 31, 2022.

____________________________________

(1) The interest rate consists of the underlying index swapped or capped to a fixed rate as of June 30, 2022.

Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 3 — Fair Value Measurements.

3 unchanged sentences

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

During the three months ended March 31, 2022, the Company had interest rate swaps designated as cash flow hedges in order to hedge the variability of the anticipated cash flows on its variable rate debt.

During the six months ended June 30, 2022, the Company had interest rate swaps designated as cash flow hedges in order to hedge the variability of the anticipated cash flows on its variable rate debt.

The change in fair value of the derivative instruments designated as hedges is recorded in other comprehensive (loss) income, with a portion of the amount subsequently reclassified to interest expense as interest payments are made on the Company’s variable rate debt.

For the three months ended March 31, 2022, the amount of gain reclassified from other comprehensive (loss) income as a decrease to interest expense was $ 7,000 .

For the three months ended March 31, 2021, the amount of loss reclassified from other comprehensive (loss) income as an increase to interest expense was $ 3.1 million.

The total unrealized gain on interest rate swaps of $ 1.6 million as of March 31, 2022, and the total unrealized gain on interest rate swaps of $ 152,000 as of December 31, 2021, respectively, is included in accumulated other comprehensive (loss) income in the accompanying condensed consolidated statements of stockholders’ equity.

During the next 12 months, the Company estimates that $ 1.1 million will be reclassified from other comprehensive (loss) income as an increase to interest expense.

For the three and six months ended June 30, 2022, the amount of loss reclassified from other comprehensive (loss) income as an increase to interest expense was $ 69,000 and $ 62,000 , respectively.

For the three and six months ended June 30, 2021, the amount of loss reclassified from other comprehensive (loss) income as an increase to interest expense was $ 71,000 and $ 3.2 million, respectively.

The total unrealized gain on interest rate swaps of $ 2.5 million as of June 30, 2022, and the total unrealized gain on interest rate swaps of $ 152,000 as of December 31, 2021, respectively, is included in accumulated other comprehensive (loss) income in the accompanying condensed consolidated statements of stockholders’ equity.

During the next 12 months, the Company estimates that $ 203,000 will be reclassified from other comprehensive (loss) income as an increase to interest expense.

The Company includes cash flows from interest rate swap agreements in net cash flows provided by operating activities on its condensed consolidated statements of cash flows, as the Company’s accounting policy is to present cash flows from hedging instruments in the same category in its condensed consolidated statements of cash flows as the category for cash flows from the hedged items.

The Company has agreements with each of its derivative counterparties that contain provisions whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment.

If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value, inclusive of interest payments and accrued interest of $ 1.0 million as of March 31, 2022.

If the Company had breached any of these provisions, it could have been required to

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

settle its obligations under the agreements at their aggregate termination value, inclusive of interest payments and accrued interest of $ 210,000 as of June 30, 2022.

In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties.

1 unchanged sentence

The Company records credit risk valuation adjustments on its derivative instruments based on the credit quality of the Company and the respective counterparty.

There were no termination events or events of default related to the derivative instruments as of March 31, 2022.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

There were no events of default related to the derivative instruments as of June 30, 2022.

NOTE 10 — REPURCHASE FACILITIES, CREDIT FACILITIES AND NOTES PAYABLE

As of March 31, 2022, the Company had $ 4.2 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of 3.2 years and a weighted average interest rate of 2.7 %.

As of June 30, 2022, the Company had $ 4.2 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of 3.2 years and a weighted average interest rate of 3.3 %.

The weighted average years to maturity is computed using the scheduled repayment date as specified in each loan agreement where applicable.

The weighted average interest rate is computed using the interest rate in effect until the scheduled repayment date.

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

During the Three Months Ended March 31, 2022

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

During the Six Months Ended June 30, 2022

Balance as of December 31, 2021 Debt Issuances & Assumptions (1)

1 unchanged sentence

Accretion & (Amortization) Balance as of

March 31, 2022

June 30, 2022

Notes payable – fixed rate debt $ 471,967 $ — $ ( 376,650 ) (4)

13 unchanged sentences

(1) Includes deferred financing costs incurred during the period.

(2) In connection with the repayment of certain mortgage notes, the Company recognized a loss on extinguishment of debt of $ 10.9 million during the three months ended March 31, 2022.

(2) In connection with the repayment of certain mortgage notes, the Company recognized a loss on extinguishment of debt of $ 16.2 million during the six months ended June 30, 2022.

(3) Deferred costs related to the term portion of the CIM Income NAV Credit Facility (as defined below).

(4) Includes mortgage notes of $ 313.7 million that were assumed by buyer in connection with disposition of real estate assets.

Notes Payable

As of March 31, 2022, the fixed rate debt outstanding of $ 399.4 million included $ 15.8 million of variable rate debt that is fixed through interest rate swap agreements, which has the effect of fixing the variable interest rates per annum through the maturity date of the variable rate debt.

As of June 30, 2022, the fixed rate debt outstanding of $ 95.3 million included $ 15.8 million of variable rate debt that is fixed through interest rate swap agreements, which has the effect of fixing the variable interest rates per annum through the maturity date of the variable rate debt.

The fixed rate debt has interest rates ranging from 4.0 % to 4.5 % per annum.

The fixed rate debt outstanding matures on various dates from May 2022 through February 2025.

The fixed rate debt outstanding matures on various dates from July 2022 through February 2025.

Should a loan not be repaid by its scheduled repayment date, the applicable interest rate may increase as specified in the respective loan agreement.

The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt outstanding was $ 685.3 million as of March 31, 2022.

The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt outstanding was $ 173.4 million as of June 30, 2022.

Each of the mortgage notes payable comprising the fixed rate debt is secured by the respective properties on which the debt was placed.

Upon completing foreclosure proceedings to take control of the assets which previously secured the Company’s mezzanine loans in January 2021, the Company assumed $ 102.6 million in variable rate debt related to the underlying properties.

As of March 31, 2022, the Company had $ 122.5 million of variable rate debt outstanding, which included $ 62.8 million of borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”), which had a weighted average interest rate of 3.9 %.The variable rate debt outstanding matures on various dates from May 2022 to July 2027.

As of June 30, 2022, the Company had $ 364.2 million of variable rate debt outstanding, which included $ 314.9 million of borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”).

In addition, upon completing foreclosure proceedings to take control of the assets which previously

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

secured the Company’s mezzanine loans in January 2021, the Company assumed $ 102.6 million in variable rate debt related to the underlying properties.

The variable rate debt outstanding had a weighted average interest rate of 3.8 % as of June 30, 2022, and matures on various dates from July 2022 to October 2027.

First Lien Mortgage Loan

1 unchanged sentence

Limited originated a $ 650.0 million first lien mortgage loan (the “Mortgage Loan”) to 114 single purpose entities (the “Borrowers”), each of which is an affiliate of the Company and is managed on a day-to-day basis by affiliates of CIM.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

March 31, 2022, the Mortgage Loan is secured by, among other things, cross-collateralized and cross-defaulted first priority mortgages, deeds of trust, security agreements or other similar security instruments on the Borrowers’ fee simple interests in 57 properties, comprised of one anchored shopping center, 54 single-tenant retail properties, one office property and one industrial property.

As of March 31, 2022, the aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the notes was $ 365.9 million.

Amounts outstanding on the Mortgage Loan totaled $ 156.2 million with a weighted average interest rate of 4.8 % as of March 31, 2022.

As of June 30, 2022, the Mortgage Loan is secured by, among other things, cross-collateralized and cross-defaulted first priority mortgages, deeds of trust, security agreements or other similar security instruments on the Borrowers’ fee simple interests in 53 properties, comprised of 52 single-tenant retail properties and one office property.

As of June 30, 2022, the aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the notes was $ 333.9 million.

Amounts outstanding on the Mortgage Loan totaled $ 135.3 million with a weighted average interest rate of 6.0 % as of June 30, 2022.

The Mortgage Loan is a floating-rate, interest-only, non-recourse loan with a two-year initial term ending on August 9, 2023, with three one-year extension options, subject to certain conditions.

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The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the Class A Notes was $ 977.3 million.

As of March 31, 2022, amounts outstanding on the Class A Notes totaled $ 768.8 million with a weighted average interest rate of 2.8 %.

As of June 30, 2022, amounts outstanding on the Class A Notes totaled $ 766.9 million with a weighted average interest rate of 2.8 %.

The Company may prepay the Class A Notes in full on or after the payment date beginning in July 2026 for the Class A-1 (AAA) Notes, the Class A-3 (AA) Notes and the Class A-5 (A) Notes, and on or after the payment date in July 2028 for the Class A-2 (AAA) Notes, the Class A-4 (AA) Notes and the Class A-6 (A) Notes.

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On December 16, 2021, as a result of the CIM Income NAV Merger, a subsidiary of the Company assumed CIM Income NAV’s obligations pursuant to the credit agreement by and among CIM Income NAV Operating Partnership, LP, the operating partnership of CIM Income NAV (“CIM Income NAV OP”), JPMorgan Chase, as administrative agent, and the lender parties thereto (the “CIM Income NAV Credit Agreement”), including as guarantor under a guaranty provided by CIM Income NAV, and as modified by a modification agreement dated as of September 6, 2017 and subsequently modified following the consummation of the CIM Income NAV Merger by a second modification agreement on December 16, 2021.

The CIM Income NAV Credit Agreement allows for borrowings of up to $ 425.0 million (the “CIM Income NAV Credit Facility”).

The CIM Income NAV Credit Facility includes $ 212.5 million in term loans (the “CIM Income NAV Term Loans”) and up to $ 212.5 million in revolving loans (the “CIM Income NAV Revolving Loans”).

The CIM Income NAV Term Loans and the CIM Income NAV Revolving Loans mature on September 6, 2022.

Depending upon the type of loan specified and overall leverage ratio, the CIM Income NAV Credit Facility bears interest at (i) the one-month, three-month or six-month LIBOR multiplied by the statutory reserve rate plus an interest rate spread ranging from 1.60 % to 2.10 % for term loans and 1.70 % to 2.20 % for revolving loans;

or (ii) a base rate ranging from 0.60 % to 1.10 % for term loans and 0.70 % to 1.20 % for revolving loans, plus the greater of:

(a) JPMorgan Chase’s Prime Rate (as defined in the CIM Income NAV Credit Agreement);

(b) the greater of (1) the Federal Funds Effective Rate (as defined in the CIM Income NAV Credit Agreement) and (2) the Overnight Bank Funding Rate (as defined in the CIM Income NAV Credit Agreement) plus 0.50 %;

or (c) the one-month LIBOR multiplied by the statutory reserve rate plus 1.0 %.

As of March 31, 2022, $ 40.0 million was outstanding under the CIM Income NAV Revolving Loans.

As of March 31, 2022, the CIM Income NAV Term Loans outstanding totaled $ 212.5 million, $ 140.0 million of which is subject to interest rate swap agreements (the “Swapped Term Loans”).

The interest rate swap agreements had the effect of fixing the Eurodollar Rate

The CIM Income NAV Credit Agreement allowed for borrowings of up to $ 425.0 million (the “CIM Income NAV Credit Facility”), including $ 212.5 million in term loans (the “CIM Income NAV Term Loans”) and up to $ 212.5 million in revolving loans (the “CIM Income NAV Revolving Loans”).

The CIM Income NAV Term Loans and the CIM Income NAV Revolving Loans had a maturity date of September 6, 2022.

The Company paid down the $ 212.5 million outstanding balance under the CIM Income NAV Credit Facility and terminated the CIM Income NAV Credit Facility subsequent to June 30, 2022, as further discussed in Note 17 — Subsequent Events.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

per annum of the Swapped Term Loans at an all-in rate of 4.4 %.

As of March 31, 2022, the Company had $ 252.5 million outstanding under the CIM Income NAV Credit Facility at a weighted average interest rate of 3.8 % and $ 172.5 million in unused capacity, subject to borrowing availability.

The Company had available borrowings of $ 171.6 million as of March 31, 2022.

The CIM Income NAV Credit Agreement contains provisions with respect to covenants, events of default and remedies customary for facilities of this nature.

In particular, the CIM Income NAV Credit Agreement requires the Company to maintain a minimum consolidated net worth greater than or equal to the total of (i) $ 367.1 million, plus (ii) 75 % of the aggregate increases in stockholders’ equity of the Company, minus (iii) the aggregate amount of any redemptions or similar transactions (but not to exceed the amount in clause (ii) above) and a leverage ratio less than or equal to 60 %.

The CIM Income NAV Credit Agreement requires the Company to maintain a fixed charge coverage ratio greater than 1.50 to 1.00, an unsecured debt to unencumbered asset value ratio equal to or less than 60 %, an unsecured debt service coverage ratio greater than 1.75 to 1.00, a secured debt ratio equal to or less than 40 % and the amount of secured debt that is real estate recourse debt at no greater than 15 % of total asset value.

The Company believes it was in compliance with the financial covenants under the CIM Income NAV Credit Agreement, as well as the financial covenants under the Company’s various fixed and variable rate debt agreements, as of March 31, 2022.

On December 31, 2019 (the “Closing Date”), CMFT Corporate Credit Securities, LLC, an indirect wholly-owned, bankruptcy-remote subsidiary of the Company, entered into a revolving credit and security agreement (the “Credit and Security Agreement”) with the lenders from time to time parties thereto, Citibank, N.A.

June 30, 2022 (Unaudited) – (Continued)

As of June 30, 2022, the CIM Income NAV Term Loans outstanding totaled $ 212.5 million, $ 140.0 million of which was subject to interest rate swap agreements (the “Swapped Term Loans”).

The interest rate swap agreements had the effect of fixing the Eurodollar Rate per annum of the Swapped Term Loans at an all-in rate of 4.6 %.

As of June 30, 2022, the Company had $ 212.5 million outstanding under the CIM Income NAV Credit Facility at a weighted average interest rate of 4.2 % and $ 212.5 million in unused capacity, subject to borrowing availability.

CMFT Corporate Credit Securities, LLC, an indirect wholly-owned, bankruptcy-remote subsidiary of the Company, has a revolving credit and security agreement (the “Third Amended Credit and Security Agreement”) with the lenders from time to time parties thereto, Citibank, N.A.

(“Citibank”), as administrative agent, CMFT Securities Investments, LLC, a wholly-owned subsidiary of the Company (“CMFT Securities”), as equityholder and as collateral manager, Citibank (acting through its Agency & Trust division), as both a collateral agent and as a collateral custodian, and Virtus Group, LP, as collateral administrator.

During the year ended December 31, 2021, the Company amended the Credit and Security Agreement (the “Second Amended Credit and Security Agreement”) by increasing available borrowings under the revolving credit facility to an aggregate principal amount up to $ 550.0 million (the “Credit Securities Revolver”).

The Credit Securities Revolver may be increased from time to time pursuant to the Second Amended Credit and Security Agreement.

As of March 31, 2022, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $ 521.5 million at a weighted average interest rate of 2.5 %.

Borrowings under the Second Amended Credit and Security Agreement will bear interest equal to the three-month LIBOR for the relevant interest period, plus an applicable rate.

The applicable rate is 1.70 % per annum during the reinvestment period and 2.00 % per annum during the amortization period (and, in each case, an additional 2.00 % per annum following an event of default under the Second Amended Credit and Security Agreement).

The reinvestment period begins on the Closing Date and concludes on the earlier of (i) the date that is three years after the Closing Date, (ii) the final maturity date and (iii) the date on which the total assets under management of the Company and its wholly-owned subsidiaries is less than $ 1.25 billion (the “Reinvestment Period”).

The Third Amended Credit and Security Agreement provides for available borrowings under the revolving credit facility to an aggregate principal amount up to $ 550.0 million (the “Credit Securities Revolver”).

The Credit Securities Revolver may be increased from time to time pursuant to the Third Amended Credit and Security Agreement.

As of June 30, 2022, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $ 521.5 million at a weighted average interest rate of 3.4 %.

Borrowings under the Third Amended Credit and Security Agreement will bear interest equal to the one-month Term SOFR (as defined in the Third Amended Credit and Security Agreement) for the relevant interest period, plus an applicable rate.

The applicable rate is dependent on the type of loan being financed, which includes broadly syndicated, private and middle market loans meeting certain criteria as set forth in the Third Amended Credit and Security Agreement and ranges from 1.90 % to 2.75 % per annum during the first two years of the reinvestment period and 2.00 % to 2.85 % during the last year of the reinvestment period and 2.10 % to 2.95 % per annum during the amortization period (and, in each case, an additional 2.00 % per annum following an event of default under the Third Amended Credit and Security Agreement).

The reinvestment period began on December 31, 2019 (the “Closing Date”) and concludes on the earlier of (i) the date that is three years after the Closing Date, (ii) the final maturity date and (iii) the date on which the total assets under management of the Company and its wholly-owned subsidiaries is less than $ 1.25 billion (the “Reinvestment Period”).

The final maturity date is the earliest to occur of:

(i) the date that the Credit Securities Revolver is paid down and (ii) the second anniversary after the Reinvestment Period concludes.

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

The Company believes it was in compliance with the financial covenants under the Company’s various fixed and variable rate debt agreements, as of March 31, 2022.

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

The Company believes it was in compliance with the financial covenants under the Company’s various fixed and variable rate debt agreements, as of June 30, 2022.

Repurchase Facilities

As of March 31, 2022, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays Bank PLC (“Barclays”), Wells Fargo Bank, N.A.

(“Wells Fargo”), and Deutsche Bank AG (“Deutsche Bank”) (collectively, the “Repurchase Agreements”) to provide financing primarily through each bank’s purchase of the Company’s CRE mortgage loans and future funding advances (the “Repurchase Facilities”).

The following table is a summary of the Repurchase Facilities as of March 31, 2022 (dollar amounts in thousands):

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

As of June 30, 2022, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays Bank PLC (“Barclays”), Wells Fargo Bank, N.A.

(“Wells Fargo”), Deutsche Bank AG (“Deutsche Bank”), and J.P.

Morgan Securities LLC (“J.P.

Morgan”) (collectively, the “Repurchase Agreements”) to provide financing primarily through each bank’s purchase of the Company’s CRE mortgage loans and CMBS and future funding advances (the “Repurchase Facilities”).

The following table is a summary of the Repurchase Facilities as of June 30, 2022 (dollar amounts in thousands):

Repurchase Facility Date of Agreement Maturity Date (1)

9 unchanged sentences

186,253 143,023

Morgan 6/1/2022 7/13/2022 (5)

193,075 75,410

Total $ 2,700,000 $ 2,875,177 $ 2,150,994

__________________________________

(1) The repurchase facilities with Citibank, Barclays, and Wells Fargo were set to mature on various dates between June 2023 and May 2024, with up to two one-year extension options, while the repurchase facility with Deutsche Bank (“Deutsche Bank Repurchase Facility”) is set to mature on October 8, 2022, with four one-year extension options, all of which are subject to certain conditions set forth in the Repurchase Agreements .

(2) During the three months ended March 31, 2022 , the Company increased the Barclays Repurchase Facility and the repurchase facility with Wells Fargo (the “Wells Fargo Repurchase Facility”) to provide up to $ 1.25 billion and $ 750.0 million, respectively, in financing.

(3) Advances under the repurchase agreement accrue interest at per annum rates based on the one-month LIBOR, plus a spread ranging from 1.25 % to 2.15 % to be determined on a case-by-case basis between Citibank, Barclays or Wells Fargo and the CMFT Lending Subs.

(4) Under the Amended and Restated Master Repurchase Agreement with Deutsche Bank, advances under the repurchase agreement may be made based on one-month Term SOFR (as such term is defined in the repurchase agreement) plus a spread designated by Deutsche Bank and the interest rate used for certain existing advances under the existing Deutsche Bank Repurchase Facility may be converted from the one-month LIBOR to one-month SOFR plus a spread ranging from 1.90 % to 2.00 %.

The Repurchase Agreements provide for simultaneous agreements by Citibank, Barclays, Wells Fargo and Deutsche Bank to re-sell such purchased CRE mortgage loans back to CMFT Lending Subs at a certain future date or upon demand.

In connection with the Repurchase Agreements, the Company (as the guarantor) entered into guaranties with Citibank, Barclays, Wells Fargo, and Deutsche Bank (the “Guaranties”), under which the Company agreed to guarantee up to 25 % of the CMFT Lending Subs’ obligations under the Repurchase Agreements.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

(1) The repurchase facilities with Citibank, Barclays, and Wells Fargo are set to mature on various dates between May 2024 and September 2024, with up to two one-year extension options, while the repurchase facility with Deutsche Bank (“Deutsche Bank Repurchase Facility”) is set to mature on October 8, 2022, with four one-year extension options, all of which are subject to certain conditions set forth in the Repurchase Agreements .

Subsequent to June 30, 2022, the Company exercised the Deutsche Bank Repurchase Facility’s first extension option, extending the date of maturity to October 8, 2023, as discussed in Note 17 — Subsequent Events.

(2) During the six months ended June 30, 2022 , the Company increased the repurchase facility with Barclays (the “Barclays Repurchase Facility”) and Wells Fargo (the “Wells Fargo Repurchase Facility”) to provide up to $ 1.25 billion and $ 750.0 million, respectively, in financing.

(3) Advances under the repurchase agreement accrue interest at per annum rates based on the one-month LIBOR, Term SOFR (as such term is defined in the applicable Repurchase Agreement), 30-day SOFR average, or the daily compounded SOFR plus a spread ranging from 1.25 % to 2.15 % to be determined on a case-by-case basis between Citibank, Barclays or Wells Fargo and the CMFT Lending Subs.

(4) Under the Amended and Restated Master Repurchase Agreement with Deutsche Bank, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by Deutsche Bank and the interest rate used for certain existing advances under the existing Deutsche Bank Repurchase Facility may be converted from the one-month LIBOR to one-month SOFR plus a spread ranging from 1.90 % to 2.75 %.

(5) Facilities under the Master Repurchase Agreement with J.P.

Morgan carry a rolling term which is reset monthly.

Such facilities carry no maximum facility size.

(6) Under the Master Repurchase Agreement with J.P.

Morgan, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by J.P.

Morgan ranging from 1.20 % to 1.35 %.

The Repurchase Agreements provide for simultaneous agreements by Citibank, Barclays, Wells Fargo, Deutsche Bank and J.P.

Morgan to re-sell such purchased CRE mortgage loans and CMBS back to CMFT Lending Subs at a certain future date or upon demand.

In connection with certain of the Repurchase Agreements, the Company (as the guarantor) entered into guaranties with Citibank, Barclays, Wells Fargo, and Deutsche Bank (the “Guaranties”), under which the Company agreed to guarantee up to 25 % of the CMFT Lending Subs’ obligations under certain Repurchase Agreements.

The Repurchase Agreements and the Guaranties contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types.

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and (iv) minimum interest coverage ratio of EBITDA (as defined in the Guaranties) to interest expense equal to or greater than 1.40 .

The Company believes it was in compliance with the financial covenants under the Repurchase Agreements as of March 31, 2022.

Liquidity and Financial Condition — The Company had $ 618.1 million of debt maturing within the next 12 months following the date these financial statements are issued.

The Company plans to enter into new financing arrangements or refinance existing arrangements to meet its obligations as they become due, which management believes is probable based on the current LTV ratios, the occupancy of the Company’s properties and assessment of the current lending environment.

Additionally, in the normal course of business, the Company is in discussions with its lenders to extend, amend or replace any financing facilities which contain near term expirations.

The Company plans to use cash on hand, proceeds from real estate asset dispositions, net cash provided by operations, borrowings available under the credit facilities and the entry into new financing arrangements, which management believes will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these financial statements are issued.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to March 31, 2022 (in thousands):

The Company believes it was in compliance with the financial covenants under the Repurchase Agreements as of June 30, 2022.

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to June 30, 2022 (in thousands):

Principal Repayments

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Total $ 4,246,652

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

NOTE 11 — COMMITMENTS AND CONTINGENCIES

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Unfunded Commitments

As of March 31, 2022, the Company had $ 384.7 million of unfunded commitments related to its existing CRE loans held-for-investment and $ 16.2 million of unfunded commitments related to NP JV Holdings.

As of June 30, 2022, the Company had $ 370.9 million of unfunded loan commitments related to its existing CRE loans held-for-investment and corporate senior loans, and $ 115.7 million of unfunded commitments related to the NewPoint JV.

These commitments are not reflected in the accompanying condensed consolidated balance sheet.

Unfunded Liquid Senior Loans

As of March 31, 2022, the Company had $ 39.5 million of unfunded or unsettled liquid senior loan acquisitions, $ 24.3 million of which settled subsequent to March 31, 2022.

Unfunded and unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

As of June 30, 2022, the Company had $ 2.0 million of unfunded liquid senior loans and $ 22.4 million of unsettled liquid senior loan acquisitions, $ 14.8 million of which settled subsequent to June 30, 2022.

Unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

Environmental Matters

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The Company pays CMFT Management a management fee, 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).

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

CMFT Securities has an investment advisory and management agreement dated December 6, 2019 (the “Investment Advisory and Management Agreement”) with the Investment Advisor.

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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.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

In addition, the Investment Advisor has a sub-advisory agreement dated December 6, 2019 (the “Sub-Advisory Agreement”) with OFS Capital Management, LLC (the “Sub-Advisor”) to act as an investment sub-advisor to CMFT Securities.

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CMFT Management is entitled to receive incentive compensation, payable with respect to each quarter, which is generally equal to the excess of (a) the product of (i) 20 % and (ii) the excess of (A) Core Earnings (as defined in the Management Agreement) of the Company for the previous 12-month period, over (B) the product of (1) the Company’s Consolidated Equity (as defined in the Management Agreement) in the previous 12-month period, and (2) 7 % per annum, over (b) the sum of any incentive compensation paid to CMFT Management with respect to the first three calendar quarters of such previous 12-month period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable).

During the three months ended March 31, 2022 and 2021, no incentive compensation fees were incurred.

During the three and six months ended June 30, 2022 and 2021, no incentive compensation fees were incurred.

In addition, the Investment Advisor is eligible to receive a portion of the incentive compensation payable to CMFT Management pursuant to the Management Agreement.

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Management fees $ 13,351 $ 11,755 $ 26,698 $ 23,332

Expense reimbursements to related parties (1)

$ 3,777 $ 3,210 $ 7,471

____________________________________

(1) During the six months ended June 30, 2022, the Company paid $ 461,000 of expense reimbursements attributable to earnout leasing costs under the Purchase and Sale Agreement, which are included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

Due to Affiliates

Of the amounts shown above, $ 16.1 million and $ 15.4 million had been incurred, but not yet paid, for services provided by CMFT Management or its affiliates in connection with the management and operating activities during the three months ended March 31, 2022 and 2021, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Of the amounts shown above, $ 14.4 million and $ 16.0 million had been incurred, but not yet paid, for services provided by CMFT Management or its affiliates in connection with the management and operating activities during the six months ended June 30, 2022 and 2021, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

Development Management Agreements

On January 7, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its mezzanine loans, including 75 condominium units and 21 rental units across four buildings in New York.

Upon foreclosure, and with the approval of the valuation, compensation and affiliate transactions committee of the Board, CIM NY Management, LLC, an affiliate of the Company’s manager, CMFT Management, entered into a Development Management Agreement with the indirect wholly owned subsidiaries of the Company that own each of the four buildings (the “Building Owners”), wherein CIM NY Management, LLC will act as project manager in overseeing the development and construction of property improvements in accordance with each respective Development Management Agreement (the “Development Services”).

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

In consideration for the Development Services, CIM NY Management, LLC will receive a development management fee from the Building Owners equal to 4 % of the aggregate gross project costs expended during the term of the Development Management Agreement, subject to the conditions in each respective Development Management Agreement.

During the six months ended June 30, 2022 and 2021, the Company recorded $ 234,000 and $ 56,000 , respectively, in development management fees.

Additionally, CIM NY Management, LLC is reimbursed by the Building Owners for expenses incurred in connection with the Development Services, including services provided that are incidental to but not part of the Development Services.

1 unchanged sentence

Affiliated Investments

In September 2021, the Company co-invested in $ 68.4 million in preferred units and $ 138.8 million in a mortgage loan to a third-party for the purchase of a multi-family, office and retail building in Fort Lauderdale, Florida with CIM Real Assets & Credit Fund, a fund that is advised by affiliates of CMFT Management (“CIM RACR”).

During the three months ended March 31, 2022, the Company and CIM RACR upsized their investment in the preferred units with an additional $ 4.8 million and $ 364,000 , respectively, and upsized their investment in the mortgage loan with an additional $ 6.4 million and $ 490,000 , respectively.

As of March 31, 2022, the Company had $ 68.2 million invested in preferred units and $ 135.3 million invested in the mortgage loan.

In September 2021, the Company co-invested $ 68.4 million in preferred units and $ 138.8 million in a mortgage loan to a third-party for the purchase of a multi-family, office and retail building in Fort Lauderdale, Florida with CIM Real Assets & Credit Fund, a fund that is advised by affiliates of CMFT Management (“CIM RACR”).

During the six months ended June 30, 2022, the Company and CIM RACR upsized their investment in the preferred units with an additional $ 4.8 million and $ 364,000 , respectively, and upsized their investment in the mortgage loan with an additional $ 6.4 million and $ 490,000 , respectively.

The Company subsequently redeemed its investment in the preferred units during the six months ended June 30, 2022 in exchange for an investment in a first mortgage loan.

As a result of the upsize and the conversion of preferred units, as of June 30, 2022, the Company had $ 203.6 million invested in the mortgage loan.

In October 2021, the Company invested in a $ 130.0 million first mortgage loan, with an initial advance of $ 119.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management.

As of March 31, 2022, $ 120.4 million of the first mortgage loan was outstanding.

As of June 30, 2022, $ 121.2 million of the first mortgage loan was outstanding.

An affiliate of CMFT Management serves as the property manager for this property and has entered into a subordination agreement with the Company in connection with the loan.

1 unchanged sentence

The Company owns 50 % of the equity interests of the MT-FT JV and has committed to fund capital to the MT-FT JV up to $ 212.5 million, of which $ 96.8 million has been funded.

For more information on the NewPointJV, see Note 2 — Summary of Significant Accounting Policies.

Subsequent to March 31, 2022, the Company contributed an additional $ 18.7 million in capital to NP JV Holdings.

For more information on the NewPoint JV, see Note 2 — Summary of Significant Accounting Policies.

In December 2021, the Company invested in a $ 155.0 million first mortgage loan, with an initial advance of $ 154.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management.

As of March 31, 2022, $ 154.0 million of the first mortgage loan was outstanding.

Subsequent to March 31, 2022, the Company invested in a $ 147.0 million first mortgage loan, with an initial advance of $ 143.0 million, to a third-party, which was previously funded by a fund that is advised by an affiliate of CMFT Management.

As a result of the CIM Income NAV Merger, the Company had an investment in CIM UII Onshore, a fund that is advised by an affiliate of CMFT Management, which was fully redeemed for $ 60.7 million on March 31, 2022.

As of June 30, 2022, $ 154.0 million of the first mortgage loan was outstanding.

During the six months ended June 30, 2022, the Company invested in a $ 147.0 million first mortgage loan, with an initial advance of $ 143.0 million, to a third-party, which was previously funded by a fund that is advised by an affiliate of CMFT Management.

As of June 30, 2022, $ 143.3 million of the first mortgage loan was outstanding.

See Note 2 — Summary of Significant Accounting Policies for more information on the CIM UII Onshore investment.

During the three months ended March 31, 2022, the Company and CIM RACR co-invested $ 10.0 million and $ 1.9 million, respectively, in a corporate senior loan to a third-party.

As of March 31, 2022, $ 10.0 million of the corporate senior loan was outstanding.

Subsequent to March 31, 2022, the Company and CIM RACR co-invested $ 17.7 million and $ 5.0 million, respectively, in a corporate senior loan to a third-party.

The Sub-Advisor provided investment management services related to this corporate senior loan pursuant to the Sub-Advisory Agreement.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

During the six months ended June 30, 2022, the Company and CIM RACR co-invested $ 55.9 million and $ 12.2 million, respectively, in four corporate senior loans to a third-party.

As of June 30, 2022, $ 55.8 million of the corporate senior loans was outstanding.

Subsequent to June 30, 2022, the Company and CIM RACR co-invested $ 20.0 million and $ 2.5 million, respectively, in a corporate senior loan to a third-party.

The Sub-Advisor provided investment management services related to these corporate senior loans pursuant to the Sub-Advisory Agreement.

NOTE 13 — ECONOMIC DEPENDENCY

2 unchanged sentences

In the event that these companies are unable to provide the Company with these services, the Company would be required to find alternative providers of these services.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

NOTE 14 — STOCKHOLDERS’ EQUITY

Equity-Based Compensation

On August 10, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “2018 Plan”), under which 400,000 of the Company’s shares of common stock were reserved for issuance and awards of approximately 306,000 shares of common stock were available for future grant at March 31, 2022.

On April 27, 2022, the Board and the compensation committee of the Board approved, subject to stockholder approval, the Amended and Restated CIM Real Estate Finance Trust, Inc.

2022 Equity Incentive Plan (the “2022 Plan”).

The 2022 Plan would supersede and replace the 2018 Plan.

Awards that are granted on or after the effective date of the 2022 Plan will be subject to the terms and provisions of the 2022 Plan.

The total number of shares of Company common stock reserved and available for issuance under the 2022 Plan at any time during the term of the 2022 Plan shall be 250,000 shares, which is a reduction from 400,000 shares authorized for issuance under the 2018 Plan.

On August 10, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “2018 Plan”), under which 400,000 of the Company’s shares of common stock were reserved for issuance and awards of approximately 284,000 shares of common stock were available for future grant at June 30, 2022.

On April 27, 2022, the Board and the compensation committee of the Board approved the Amended and Restated CIM Real Estate Finance Trust, Inc.

2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Plan was approved by the Company’s stockholders at the Company’s 2022 Annual Meeting of Stockholders held on July 12, 2022.

The 2022 Plan supersedes and replaces the 2018 Plan.

Awards that are granted on or after the effective date of the 2022 Plan are subject to the terms and provisions of the 2022 Plan.

The total number of shares of Company common stock reserved and available for issuance under the 2022 Plan at any time during the term of the 2022 Plan are 250,000 shares, which is a reduction from 400,000 shares authorized for issuance under the 2018 Plan.

Under the 2022 Plan, the Board or the compensation committee of the Board has the authority to grant certain awards to employees, non-employee directors, and consultants or advisors of the Company, including stock option awards, restricted stock awards or deferred stock awards, which awards will further align such persons’ interests with the interests of the Company’s stockholders.

1 unchanged sentence

The 2022 Plan may be amended or terminated by the Board or the compensation committee of the Board at any time, subject to the right of the Company’s stockholders to approve certain amendments.

As of March 31, 2022, the Company has granted awards of approximately 94,000 restricted shares in the aggregate to the independent members of the Board under the 2018 Plan.

As of March 31, 2022, 73,000 of the restricted shares had vested based on one year of continuous service.

The remaining 21,000 restricted shares issued had not vested or been forfeited as of March 31, 2022.

As of June 30, 2022, the Company has granted awards of approximately 116,000 restricted shares in the aggregate to the independent members of the Board under the 2018 Plan.

As of June 30, 2022, 73,000 of the restricted shares had vested based on one year of continuous service.

The remaining 43,000 restricted shares issued had not vested or been forfeited as of June 30, 2022.

The fair value of the Company’s share awards is determined using the Company’s per share NAV on the date of grant.

Compensation expense related to the restricted shares is recognized over the vesting period.

The Company recorded compensation expense of $ 37,000 and $ 40,000 for the three months ended March 31, 2022 and 2021, respectively, related to the restricted shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

As of March 31, 2022, there was $ 76,000 of total unrecognized compensation expense related to these restricted shares, which will be recognized ratably over the remaining period of service prior to October 2022.

The Company recorded compensation expense of $ 120,000 and $ 157,000 for the three and six months ended June 30, 2022, respectively, and $ 49,000 and $ 89,000 for the three and six months ended June 30, 2021, respectively, related to the restricted shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

As of June 30, 2022, there was $ 285,000 of total unrecognized compensation expense related to these restricted shares, which will be recognized ratably over the applicable remaining service period.

NOTE 15 — LEASES

5 unchanged sentences

Non-lease components are considered to be variable rental and other property income and are recognized in the period incurred.

As of March 31, 2022, the Company’s leases had a weighted-average remaining term of 9.8 years.

As of June 30, 2022, the Company’s leases had a weighted-average remaining term of 10.6 years.

Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

As of March 31, 2022, the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands):

June 30, 2022 (Unaudited) – (Continued)

As of June 30, 2022, the future minimum rental income from the Company’s real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands):

Future Minimum Rental Income

4 unchanged sentences

These contingent rents are subject to the tenant achieving periodic revenues in excess of specified levels.

For the three months ended March 31, 2022 and 2021, the amount of the contingent rent earned by the Company was not significant .

Rental and other property income during the three months ended March 31, 2022 and 2021 consisted of the following (in thousands):

Three Months Ended March 31,

For the three and six months ended June 30, 2022 and 2021, the amount of the contingent rent earned by the Company was not significant .

Rental and other property income during the three and six months ended June 30, 2022 and 2021 consisted of the following (in thousands):

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

2022 2021 2022 2021

Fixed rental and other property income (1)

1 unchanged sentence

Variable rental and other property income (2)

5,567 11,242 14,597 21,631

Total rental and other property income $ 53,508 $ 75,302 $ 127,244 $ 152,232

2 unchanged sentences

(2) Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses, and percentage rent.

The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 11.4 years, with a lease liability (in deferred rental income, derivative liabilities and other liabilities ) and a related ROU asset (in prepaid expenses and other assets ) of $ 2.2 million in the condensed consolidated balance sheets.

The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 11.2 years, with a lease liability (in deferred rental income, derivative liabilities and other liabilities ) and a related right-of-use (“ROU”) asset (in prepaid expenses, derivative assets and other assets ) of $ 2.2 million in the condensed consolidated balance sheets.

The lease liability and ROU asset were initially measured at the present value of the future minimum lease payments using a discount rate of 4.3 %.

This reflects the Company’s incremental borrowing rate, which was calculated based on the interest rate the Company would incur to borrow on a fully collateralized basis over a term similar to the lease.

The Company recognized $ 63,000 of ground lease expense during the three months ended March 31, 2022, of which $ 61,000 was paid in cash during the period it was recognized.

As of March 31, 2022, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $ 187,000 for the remainder of 2022, $ 250,000 annually for 2023 through 2027, and $ 1.4 million thereafter through the maturity date of the lease in August 2033.

The Company recognized $ 63,000 and $ 125,000 of ground lease expense during the three and six months ended June 30, 2022, of which $ 61,000 and $ 121,000 was paid in cash during the period it was recognized.

As of June 30, 2022, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $ 125,000 for the remainder of 2022, $ 250,000 annually for 2023 through 2027, and $ 1.4 million thereafter through the maturity date of the lease in August 2033.

NOTE 16 — SEGMENT REPORTING

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

The following tables present segment reporting for the three months ended March 31, 2022 and 2021 (in thousands):

June 30, 2022 (Unaudited) – (Continued)

The following tables present segment reporting for the three and six months ended June 30, 2022 and 2021 (in thousands):

Real Estate Credit Corporate/Other (1)

Company Total

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Rental and other property income $ 53,405 $ — $ 103 $ 53,508

11 unchanged sentences

Total operating expenses 37,492 13,036 16,952 67,480

Gain (loss) on disposition of real estate and condominium developments, net 81,181 — ( 74 ) 81,107

Operating income (loss) 97,094 31,948 ( 16,923 ) 112,119

Other expense:

Gain on investment in unconsolidated entities — 1,323 — 1,323

Interest expense and other, net ( 9,169 ) ( 21,698 ) ( 3,593 ) ( 34,460 )

Loss on extinguishment of debt ( 2,257 ) — ( 3,112 ) ( 5,369 )

Segment net income (loss) $ 85,668 $ 11,573 $ ( 23,628 ) $ 73,613

Net income allocated to noncontrolling interest ( 72 ) — — ( 72 )

Segment net income (loss) attributable to the Company 85,740 11,573 ( 23,628 ) 73,685

Total assets as of June 30, 2022

$ 2,399,845 $ 4,375,338 $ 255,468 $ 7,030,651

__________________________________

(1) Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

Real Estate Credit Corporate/Other (1) (2)

Company Total

Six Months Ended June 30, 2022

Rental and other property income

$ 127,044 $ — $ 200 $ 127,244

Interest income

— 76,447 — 76,447

Total revenues

127,044 76,447 200 203,691

General and administrative

279 169 6,707 7,155

Property operating

11,292 — 1,684 12,976

Real estate tax

7,866 — 871 8,737

Expense reimbursements to related parties — — 7,471 7,471

Management fees 12,327 14,371 — 26,698

Transaction-related

Depreciation and amortization

37,156 — — 37,156

Real estate impairment 11,342 — 7,945 19,287

Increase in provision for credit losses — 9,651 — 9,651

Total operating expenses

80,699 24,191 24,694 129,584

Gain on disposition of real estate and condominium developments, net 110,446 — 3,235 113,681

Operating income (loss)

156,791 52,256 ( 21,259 ) 187,788

Other expense:

1 unchanged sentence

Interest expense and other, net

( 23,010 ) ( 35,612 ) ( 6,875 ) ( 65,497 )

Loss on extinguishment of debt

( 12,994 ) — ( 3,246 ) ( 16,240 )

Segment net income (loss)

$ 120,787 $ 18,135 $ ( 26,208 ) $ 112,714

Net income allocated to noncontrolling interest ( 63 ) — — ( 63 )

Segment net income (loss) attributable to the Company 120,850 18,135 ( 26,208 ) 112,777

Total assets as of March 31, 2022

Total assets as of June 30, 2022

$ 2,399,845 $ 4,375,338 $ 255,468 $ 7,030,651

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Real Estate Credit Corporate/Other Company Total

Three Months Ended March 31, 2021

June 30, 2022 (Unaudited) – (Continued)

Real Estate Credit Corporate/Other (1)

Company Total

Three Months Ended June 30, 2021

Rental and other property income

19 unchanged sentences

48,148 3,676 10,682 62,506

Gain on disposition of real estate and condominium developments, net 44,976 — 1,493 46,469

Operating income (loss)

3 unchanged sentences

( 3,713 ) ( 3,341 ) ( 9,406 ) ( 16,460 )

Loss on extinguishment of debt ( 1,372 ) — ( 106 ) ( 1,478 )

Segment net income (loss)

$ 66,946 $ 9,443 $ ( 18,602 ) $ 57,787

Total assets as of March 31, 2021

Total assets as of June 30, 2021

$ 3,089,744 $ 1,479,061 $ 280,357 $ 4,849,162

__________________________________

(1) Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 (Unaudited) – (Continued)

Real Estate Credit Corporate/Other (1)

Company Total

Six Months Ended June 30, 2021

Rental and other property income

$ 151,998 $ — $ 234 $ 152,232

Interest income

— 28,413 — 28,413

Total revenues

151,998 28,413 234 180,645

General and administrative

119 713 7,201 8,033

Property operating

14,742 — 6,733 21,475

Real estate tax

15,065 — 4,860 19,925

Expense reimbursements to related parties — — 5,871 5,871

Management fees 17,864 5,468 — 23,332

Transaction-related

Depreciation and amortization

50,385 — — 50,385

Real estate impairment 4,377 — — 4,377

Increase in provision for credit losses — 691 — 691

Total operating expenses

102,583 6,872 24,665 134,120

Gain on disposition of real estate and condominium developments, net 44,976 — 1,493 46,469

Operating income (loss)

94,391 21,541 ( 22,938 ) 92,994

Other expense:

Interest expense and other, net

( 7,829 ) ( 6,888 ) ( 21,765 ) ( 36,482 )

Loss on extinguishment of debt ( 1,372 ) — ( 106 ) ( 1,478 )

Segment net income (loss)

$ 85,190 $ 14,653 $ ( 44,809 ) $ 55,034

Total assets as of June 30, 2021

$ 3,089,744 $ 1,479,061 $ 280,357 $ 4,849,162

__________________________________

(1) Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.

NOTE 17 — SUBSEQUENT EVENTS

Redemptions of Shares of Common Stock

Subsequent to March 31, 2022, the Company redeemed approximately 1.4 million shares for $ 9.9 million (at a redemption price of $ 7.20 per share).

The remaining redemption requests received during the three months ended March 31, 2022 totaling approximately 23.8 million shares went unfulfilled.

Property Dispositions

Subsequent to March 31, 2022, the sale of 23 properties under contract for sale pursuant to the Purchase and Sale Agreement closed for total consideration of $ 289.2 million.

The remaining two properties are expected to close in the second quarter of 2022.

In addition to the properties disposed of pursuant to the Purchase and Sale Agreement, the Company disposed of four properties and a condominium unit subsequent to March 31, 2022 for an aggregate gross sales price of $ 27.3 million, resulting in net proceeds of $ 26.1 million after closing costs and mortgage note payoffs and a net gain of approximately $ 1.8 million.

The Company has no continuing involvement with these properties.

Subsequent to March 31, 2022, the Company originated a first mortgage loan with a principal balance of $ 147.0 million and unfunded commitments of $ 4.0 million, the funding of which is subject to the satisfaction of borrower milestones.

Liquid Senior Loans

Subsequent to March 31, 2022, the Company settled $ 29.4 million of liquid senior loan transactions, $ 24.3 million of which were traded as of March 31, 2022.

Subsequent to June 30, 2022, the Company redeemed approximately 1.3 million shares for $ 9.4 million (at a redemption price of $ 7.20 per share).

The remaining redemption requests received during the three months ended June 30, 2022 totaling approximately 23.1 million shares went unfulfilled.

Investment and Disposition Activity

Subsequent to June 30, 2022, the Company’s investment and disposition activity included the following:

• Disposed of the final property under contract for sale pursuant to the Purchase and Sale Agreement for total consideration of $ 68.3 million.

• In addition to the property disposed of pursuant to the Purchase and Sale Agreement, the Company disposed of seven properties and condominium units for an aggregate gross sales price of $ 36.9 million, resulting in net proceeds of $ 33.3 million after closing costs and a net gain of approximately $ 1.6 million.

• Invested $ 20.0 million in a corporate senior loan to a third-party and received principal repayments of $ 17.6 million.

• Purchased $ 4.4 million in CMBS.

• Settled $ 37.7 million of liquid senior loan transactions, $ 14.1 million of which were traded as of June 30, 2022.

• Contributed an additional $ 5.4 million in capital to NP JV Holdings.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited) – (Continued)

Corporate Senior Loans

Subsequent to March 31, 2022, the Company invested $ 17.7 million in a corporate senior loan to a third-party.

NP JV Holdings

Subsequent to March 31, 2022, the Company contributed an additional $ 18.7 million in capital to NP JV Holdings.

Mortgage Notes Payable

Subsequent to March 31, 2022, the Company extended the maturity date on $ 59.7 million of its mortgage note payable that was set to mature in May 2022, extending the date of maturity to July 11, 2022.

In addition, subsequent to March 31, 2022, one of the Company’s mortgage notes payable matured and the Company repaid in full $ 5.1 million.

Repurchase Facilities

Subsequent to March 31, 2022, one of the Company’s first mortgage loans was financed under the Deutsche Bank Repurchase Facility for $ 45.5 million.

June 30, 2022 (Unaudited) – (Continued)

Financing Activity

Subsequent to June 30, 2022, the Company’s financing activity included the following:

• Financed one of the Company’s first mortgage loans under the Mass Mutual Financing arrangement for $ 60.8 million.

• Extended the maturity date on $ 49.3 million of its mortgage note payable that was set to mature in July 2022, extending the date of maturity to September 1, 2022.

• Exercised the Deutsche Bank Repurchase Facility’s first extension option which was set to mature on October 8, 2022, extending the date of maturity to October 8, 2023.

• Paid down the $ 212.5 million outstanding balance under the CIM Income NAV Credit Facility and terminated the CIM Income NAV Credit Facility.

In connection with the facility pay down and termination, the Company terminated two interest rate swap agreements that held an aggregate notional value of $ 140.0 million upon termination.

• Entered into a credit agreement with JPMorgan Chase, which provides for borrowings of $ 300.0 million, which includes a $ 100.0 million term loan facility and the ability to borrow up to $ 200.0 million in revolving loans under a revolving credit facility with a $ 30.0 million letter of credit subfacility.

The term loan and the revolving facility both mature on July 15, 2025.

• Borrowed $ 215.0 million under the credit agreement entered into with JPMorgan Chase subsequent to June 30, 2022 and repaid $ 100.0 million of such borrowings.

• One of the Company’s interest rate swap agreements matured and the Company repaid in full $ 15.8 million of the underlying mortgage notes payable.

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

What changed 10-Q

Item 1. Financial Statements