What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-12 compared with 2022-05-11 · 212 added, 133 removed, 275 unchanged (56% of the section changed)

23 unchanged sentences

• We are subject to fluctuations in interest rates which could reduce our ability to generate income on our credit investments.

• We are subject to an increase in inflation that could increase our credit and real estate portfolio related costs at a higher rate than our rental income and other revenue and adversely impact demand for rental space and future extensions of our tenants’ leases.

• We are subject to competition from entities engaged in lending which may impact the availability of origination and acquisition opportunities acceptable to us.

24 unchanged sentences

We have no paid employees and are externally managed by CMFT Management and, with respect to investments in securities and certain other of our investments, our Investment Advisor, each of which is an affiliate of CIM, a community-focused real estate and infrastructure owner, operator, lender and developer.

As of March 31, 2022, we owned 445 properties, which consisted of 400 retail properties, 19 anchored shopping centers, 14 industrial properties and 12 office properties, representing 38 industry sectors and comprising 15.4 million rentable square feet of commercial space located in 45 states.

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

As of March 31, 2022, our loan portfolio consisted of 332 loans with a net book value of $3.3 billion.

As of March 31, 2022, we had $39.5 million of unfunded or unsettled liquid senior loan purchases included in cash and cash equivalents, and investments in real estate-related securities of $254.3 million.

In furtherance of our strategy, during the three months ended March 31, 2022, we disposed of 69 properties, encompassing 7.4 million gross rentable square feet.

On December 20, 2021, certain subsidiaries of the Company entered into the Purchase and Sale Agreement to sell 79 shopping centers and two single-tenant properties, for which we are to receive, in the aggregate, approximately $1.32 billion in total consideration at closing.

During the three months ended March 31, 2022, the sale of 56 properties closed under the Purchase and Sale Agreement for total consideration of $811.8 million, as further discussed in Note

4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

The remaining 25 properties are classified as held for sale in the condensed consolidated balance sheets as of March 31, 2022 with a carrying value of $481.4 million.

The sale of 23 such properties closed in phases for total consideration of $289.2 million subsequent to March 31, 2022, as further discussed in Note 17 — Subsequent Events to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q, with the remaining two properties expected to close during the second quarter of 2022.

As of June 30, 2022, we owned 402 properties, which consisted of 378 retail properties, 13 industrial properties, 10 office properties, and one anchored shopping center, representing 33 industry sectors and comprising 12.1 million rentable square feet of commercial space located in 45 states.

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

As of June 30, 2022, our 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.

In furtherance of our strategy, during the six months ended June 30, 2022, we disposed of 112 properties and an outparcel of land, encompassing 10.6 million gross rentable square feet.

On December 20, 2021, certain subsidiaries of the Company

entered into the Purchase and Sale Agreement to sell 79 shopping centers and two single-tenant properties, for which we were to receive, in the aggregate, approximately $1.32 billion in total consideration at closing.

During the six months ended June 30, 2022, the sale of 80 properties closed under the Purchase and Sale Agreement for total consideration of $1.3 billion, as further discussed in Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

The remaining property is classified as held for sale in the condensed consolidated balance sheets as of June 30, 2022 with a carrying value of $66.2 million.

The sale of the final property closed for total consideration of $68.3 million subsequent to June 30, 2022, as further discussed in Note 17 — Subsequent Events to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

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

As 97.2% of our rentable square feet was under lease, including any month-to-month agreements, as of March 31, 2022, with a weighted average remaining lease term of 9.8 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors, including due to circumstances related to COVID-19.

As 99.2% of our rentable square feet was under lease, including any month-to-month agreements, as of June 30, 2022, with a weighted average remaining lease term of 10.6 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors, including due to circumstances related to COVID-19.

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

3 unchanged sentences

T he extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments, including, among other factors, the duration, spread and resurgences of the virus, including certain variants thereof, along with related travel advisories and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, the pace, scope and efficacy of vaccination programs, and general uncertainty as to the impact of COVID-19, including related variants, on the global economy.

Macroeconomic Environment

Federal Reserve’s recent actions to increase interest rates in order to control inflation have created further uncertainty for the economy and for our borrowers and tenants.

Although the majority of our business model is such that rising interest rates will, all else being equal, correlate to increases in our net income, increases in interest rates may adversely affect our existing borrowers, tenants and owned property values.

It is difficult to predict the full impact of recent changes and any future changes in interest rates or inflation.

Operating Highlights and Key Performance Indicators

Activity from January 1, 2022 through March 31, 2022

Activity from January 1, 2022 through June 30, 2022

Operating Results:

• Net income of $39.1 million, or $0.09 per share.

• Declared distributions of $0.09 per share.

• Net income attributable to the Company of $112.8 million, or $0.26 per share.

• Declared aggregate distributions of $0.18 per share.

Credit Portfolio Activity:

• Invested $784.1 million in first mortgage loans and received principal repayments of $102.5 million.

• Invested $1.2 billion in first mortgage loans and received principal repayments on loans held-for-investment of $127.1 million.

• Invested $110.4 million in liquid senior loans and sold liquid senior loans for an aggregate gross sales price of $35.6 million.

• Invested $102.2 million in CMBS and preferred units and sold one marketable security for an aggregate gross sales price of $132,000.

• Invested $10.0 million in a corporate senior loan.

• Invested $259.2 million in CMBS and sold one marketable security for an aggregate gross sales price of $132,000.

• Converted $68.2 million of preferred units into a CRE loan upon maturity.

• Invested $55.3 million in corporate senior loans and received principal repayments of $50,000.

Real Estate Portfolio Activity:

• Disposed of 69 properties for an aggregate sales price of $925.3 million.

• Disposed of 112 properties and an outparcel of land for an aggregate sales price of $1.55 billion.

• Disposed of condominium units for an aggregate sales price of $22.5 million.

1 unchanged sentence

• Increased total debt by $75.2 million.

• Increased maximum financing amounts on two existing repurchase facilities to provide up to $1.25 billion and $750.0 million, respectively, to finance a portfolio of existing and future commercial real estate mortgage loans.

• Entered into a new repurchase agreement and increased maximum financing amounts on two existing repurchase facilities to provide up to $1.25 billion and $750.0 million, respectively, to finance a portfolio of existing and future commercial real estate mortgage loans and CMBS.

Portfolio Information

The following table shows the carrying value of our portfolio by investment type as of March 31, 2022 and 2021 (dollar amounts in thousands):

As of March 31,

The following table shows the carrying value of our portfolio by investment type as of June 30, 2022 and 2021 (dollar amounts in thousands):

As of June 30,

Asset Count Carrying Value Asset Count Carrying Value

2 unchanged sentences

Liquid senior loans 309 684,866 10.4 % 237 484,059 10.6 %

Corporate senior loan 1 9,927 0.2 % — — — %

Corporate senior loans 4 55,218 0.8 % — — — %

Current expected credit losses (23,935) (0.4) % (13,011) (0.3) %

1 unchanged sentence

Real Estate-Related Securities

CMBS and equity securities 8 186,070 2.9 % 5 67,222 1.5 %

Preferred units 1 68,243 1.0 % — — — %

CMBS and equity security 11 274,382 4.2 % 3 42,071 0.9 %

Total real estate assets and intangible lease liabilities, net 402 2,397,206 36.5 % 469 3,181,245 69.7 %

1 unchanged sentence

Credit Portfolio Information

The following table details overall statistics for our credit portfolio as of March 31, 2022 (dollar amounts in thousands):

First Mortgage Loans and Preferred Units (1)

Liquid Senior Loans CMBS and Equity Securities Corporate Senior Loan

The following table details overall statistics for our credit portfolio as of June 30, 2022 (dollar amounts in thousands):

First Mortgage Loans (1)

Liquid Senior Loans CMBS and Equity Security Corporate Senior Loans

Number of investments 28 309 11 4

1 unchanged sentence

Net book value $ 3,158,080 $ 674,677 $ 274,382 $ 54,547

Unfunded or unsettled loan commitments $ 384,659 $ 39,489 $ — $ —

Unfunded loan commitments $ 364,221 $ 2,031 $ — $ 6,649

Weighted-average interest rate 4.5 % 5.1 % 5.7 % 7.8 %

2 unchanged sentences

____________________________________

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

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

dollar LIBOR and SOFR.

2 unchanged sentences

Real Estate Portfolio Information

As of March 31, 2022, we owned 445 properties located in 45 states, the gross rentable square feet of which was 97.2% leased, including any month-to-month agreements, with a weighted average lease term remaining of 9.8 years.

As of March 31, 2022, no single tenant accounted for greater than 10% of our 2022 annualized rental income.

As of March 31, 2022, we had certain geographic and industry concentrations in our property holdings.

In particular, we had properties located in California and Ohio, which accounted for 12% and 11%, respectively, of our 2022 annualized rental income.

As of June 30, 2022, we owned 402 properties located in 45 states, the gross rentable square feet of which was 99.2% leased, including any month-to-month agreements, with a weighted average lease term remaining of 10.6 years.

As of June 30, 2022, no single tenant accounted for greater than 10% of our 2022 annualized rental income.

As of June 30, 2022, we had certain geographic and industry concentrations in our property holdings.

In particular, we had properties located in Ohio, which accounted for 11% of our 2022 annualized rental income.

In addition, we had tenants in the health and personal care stores and sporting goods, hobby and musical instruments store industries, which accounted for 12% and 10%, respectively, of our 2022 annualized rental income.

During the three months ended March 31, 2022, we disposed of 69 properties, for an aggregate gross sales price of $925.3 million.

Additionally, during the three months ended March 31, 2022, we sold condominium units for an aggregate gross sales price of $21.1 million.

The following table shows the property statistics of our real estate assets as of March 31, 2022 and 2021:

As of March 31,

During the six months ended June 30, 2022, we disposed of 112 properties and an outparcel of land, for an aggregate gross sales price of $1.55 billion.

Additionally, during the six months ended June 30, 2022, we sold condominium units for an aggregate gross sales price of $22.5 million.

The following table shows the property statistics of our real estate assets as of June 30, 2022 and 2021:

As of June 30,

Number of commercial properties 402 469

9 unchanged sentences

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

During the three months ended March 31, 2022 and 2021, the Company did not acquire any properties.

During the six months ended June 30, 2022 and 2021, the Company did not acquire any properties.

Results of Operations

7 unchanged sentences

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

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

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

Comparison of the Three Months Ended March 31, 2022 and 2021

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

For the Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2022 and 2021

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

For the Three Months Ended June 30,

2022 2021 Change

Net income (loss) $ 39,101 $ (2,753) $ 41,854

Net income $ 73,613 $ 57,787 $ 15,826

Loss on extinguishment of debt 5,369 1,478 3,891

16 unchanged sentences

Interest Income

The increase in interest income of $19.5 million for the three months ended March 31, 2022, as compared to the same period in 2021, was due to an increase in the overall size of our investment portfolio.

As of March 31, 2022, we held investments in CRE loans held-for-investment of $2.7 billion, liquid senior loans of $671.6 million, an investment in a corporate senior loan of $9.9 million, CMBS and other securities of $186.1 million, and an investment in preferred units of $68.2 million.

As of March 31, 2021, we held investments in CRE loans held-for-investment of $525.4 million, liquid senior loans of $496.8 million, and CMBS of $67.2 million.

Provision for Credit Losses

The increase in provision for credit losses of $4.1 million during the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to the increased number of loan investments entered into during the three months ended March 31, 2022, as compared to the same period in 2021.

The increase in interest income of $28.5 million for the three months ended June 30, 2022, as compared to the same period in 2021, was due to an increase in the overall size of our investment portfolio.

As of June 30, 2022, we held investments in CRE loans held-for-investment of $3.2 billion, liquid senior loans of $684.9 million, corporate senior loans of $55.2 million, and CMBS and other securities of $274.4 million.

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

Increase in Provision for Credit Losses

The increase in provision for credit losses of $4.8 million during the three months ended June 30, 2022, as compared to the same period in 2021, was primarily due to the increased number of loan investments entered into during the three months ended June 30, 2022, as compared to the same period in 2021.

Real Estate Segment

A total of 336 properties were acquired before January 1, 2021 and represent our “same store” properties during the three months ended March 31, 2022 and 2021.

“Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, 2021.

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

A total of 307 properties were acquired before April 1, 2021 and represent our “same store” properties during the three months ended June 30, 2022 and 2021.

“Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after April 1, 2021.

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

Total Same Store Non-Same Store

For the Three Months Ended March 31,

For the Three Months Ended June 30,

2022 2021 Change 2022 2021 Change 2022 2021 Change

5 unchanged sentences

Loss on Extinguishment of Debt

The increase in loss on extinguishment of debt of $10.9 million for the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to the termination of certain mortgage notes in connection with the disposition of the underlying properties during the three months ended March 31, 2022.

The increase in loss on extinguishment of debt of $3.9 million for the three months ended June 30, 2022, as compared to the same period in 2021, was primarily due to the increase in terminations of certain mortgage notes in connection with the disposition of the underlying properties during the three months ended June 30, 2022, as compared to the same period in 2021.

Gain on Investment in Unconsolidated Entities

The increase in gain on investment in unconsolidated entities of $5.3 million for the three months ended March 31, 2022, as compared to the same period in 2021, was due to the Company’s investment in CIM UII Onshore and NP JV Holdings, both of which were not invested in by the Company during the three months ended March 31, 2021.

The increase in gain on investment in unconsolidated entities of $1.3 million for the three months ended June 30, 2022, as compared to the same period in 2021, was due to the Company’s investment in NP JV Holdings, which was not invested in by the Company during the three months ended June 30, 2021.

Interest Expense and Other, Net

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

The increase in interest expense and other, net, of $11.0 million for the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to an increase in the average aggregate amount of debt outstanding from $2.5 billion as of March 31, 2021 to $4.2 billion as of March 31, 2022 as a result of entering into and upsizing additional repurchase agreements, originating the Mortgage Loan and Class A Notes, and assuming the CIM Income NAV Credit Facility as part of the CIM Income NAV Merger subsequent to March 31, 2021.

The increase in interest expense and other, net, of $18.0 million for the three months ended June 30, 2022, as compared to the same period in 2021, was primarily due to an increase in the three-month average aggregate amount of debt outstanding from $2.2 billion as of June 30, 2021 to $4.1 billion as of June 30, 2022 as a result of entering into and upsizing additional repurchase agreements, originating the Mortgage Loan and Class A Notes, and assuming the CIM Income NAV Credit Facility as part of the CIM Income NAV Merger subsequent to June 30, 2021.

In addition, interest expense and other, net was further increased by the unrealized loss on the Company’s equity security of $4.1 million during the three months ended June 30, 2022.

Gain on Disposition of Real Estate and Condominium Developments, Net

The increase in gain on disposition of real estate and condominium developments, net, of $32.6 million during the three months ended March 31, 2022, as compared to the same period in 2021, was due to the disposition of 69 properties for a gain of $29.2 million and the disposition of condominium units for a gain of $3.3 million during the three months ended March 31, 2022, compared to the disposition of one property with no gain or loss recognized during the three months ended March 31, 2021.

The increase in gain on disposition of real estate and condominium developments, net, of $34.6 million during the three months ended June 30, 2022, as compared to the same period in 2021, was due to the disposition of 43 properties and an outparcel of land for a gain of $81.2 million, partially offset by the disposition of condominium units for a loss of $74,000 during the three months ended June 30, 2022, compared to the disposition of 46 properties for a gain of $45.0 million during the three months ended June 30, 2021.

Real Estate Impairment

The decrease in real estate impairments of $1.0 million during the three months ended March 31, 2022, as compared to the same period in 2021, was due to seven properties that were deemed to be impaired, resulting in impairment charges of $3.3 million during the three months ended March 31, 2022, compared to five properties that were deemed to be impaired, resulting in impairment charges of $4.3 million during the three months ended March 31, 2021.

The increase in real estate impairments of $15.9 million during the three months ended June 30, 2022, as compared to the same period in 2021, was due to 11 properties and certain condominium units that were deemed to be impaired, resulting in impairment charges of $16.0 million during the three months ended June 30, 2022, compared to one property that was deemed to be impaired, resulting in impairment charges of $77,000 during the three months ended June 30, 2021.

Depreciation and Amortization

The decrease in depreciation and amortization of $6.6 million during the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to the disposition of 185 properties subsequent to March 31, 2021, partially offset by the acquisition of 115 properties through the CIM Income NAV Merger that closed in December 2021.

The decrease in depreciation and amortization of $6.6 million during the three months ended June 30, 2022, as compared to the same period in 2021, was primarily due to the disposition of 182 properties subsequent to June 30, 2021, partially offset by the acquisition of 115 properties through the CIM Income NAV Merger that closed in December 2021.

Transaction-Related Expenses

Transaction-related expenses remained generally consistent during the three months ended March 31, 2022, as compared to the same period in 2021.

The increase in transaction-related expenses of $419,000 during the three months ended June 30, 2022, as compared to the same period in 2021, was primarily due to escrow holdbacks that were deemed uncollectible as of June 30, 2022 and were therefore written off.

No such write-offs occurred during the same period in 2021.

Management Fees

3 unchanged sentences

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

The increase in management fees of $1.8 million during the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to increased equity from the issuance of common stock in connection with the CIM Income NAV Merger that closed in December 2021.

The increase in management fees of $1.6 million during the three months ended June 30, 2022, as compared to the same period in 2021, was primarily due to increased equity from the issuance of common stock in connection with the CIM Income NAV Merger that closed in December 2021.

Expense Reimbursements to Related Parties

1 unchanged sentence

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

The increase in expense reimbursements to related parties of $1.0 million during the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to increased operating expense reimbursements due to CMFT Management, primarily as a result of increased allocated payroll resulting from increased portfolio activity.

The increase in expense reimbursements to related parties of $567,000 during the three months ended June 30, 2022, as compared to the same period in 2021, was primarily due to increased operating expense reimbursements due to CMFT Management, primarily as a result of increased allocated payroll resulting from increased portfolio activity.

General and Administrative Expenses

The primary general and administrative expense items are banking fees and escrow and trustee fees.

The decrease in general and administrative expenses of $1.0 million for the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to a decrease in fees related to the unused portion of our line of credit due to the pay down and termination of the Company’s credit facilities subsequent to March 31, 2021 as well as a decrease in legal costs and other professional fees.

This decrease was partially offset by increased expenses related to the assumption of the CIM Income NAV Credit Facility in connection with the CIM Income NAV Merger completed in December 2021.

The primary general and administrative expense items are legal and accounting fees, banking fees and transfer agency and board of directors costs.

General and administrative expenses remained generally consistent during the three months ended June 30, 2022, as compared to the same period in 2021.

Net Operating Income

Same store property net operating income remained relatively consistent during the three months ended March 31, 2022, as compared to the same period in 2021.

Non-same store property net operating income increased $4.7 million during the three months ended March 31, 2022, as compared to the same period in 2021.

The increase was primarily due to the acquisition of 115 properties in connection with the CIM Income NAV Merger that closed in December 2021 and the acquisition of 146 properties that closed in December 2020, partially offset by a decrease in net operating income due to the disposition of 185 properties subsequent to March 31, 2021.

Same store property net operating income increased $1.4 million during the three months ended June 30, 2022, as compared to the same period in 2021.

The increase was partially due to an increase in same store occupancy to 98.9% as of June 30, 2022 from 98.8% as of June 30, 2021.

Non-same store property net operating income decreased $11.4 million during the three months ended June 30, 2022, as compared to the same period in 2021.

The decrease was primarily due to the disposition of 182 properties subsequent to June 30, 2021, partially offset by an increase in net operating income due to the acquisition of 115 properties in connection with the CIM Income NAV Merger that closed in December 2021.

Comparison of the Six Months Ended June 30, 2022 and 2021

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

For the Six Months Ended June 30,

2022 2021 Change

Net income $ 112,714 $ 55,034 $ 57,680

Loss on extinguishment of debt 16,240 1,478 14,762

Interest expense and other, net 65,497 36,482 29,015

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

Operating income 187,788 92,994 94,794

Gain on disposition of real estate and condominium developments, net (113,681) (46,469) (67,212)

Increase in provision for credit losses 9,651 691 8,960

Real estate impairment 19,287 4,377 14,910

Depreciation and amortization 37,156 50,385 (13,229)

Transaction-related expenses 453 31 422

Management fees 26,698 23,332 3,366

Expense reimbursements to related parties 7,471 5,871 1,600

General and administrative expenses 7,155 8,033 (878)

Interest income (76,447) (28,413) (48,034)

Net operating income $ 105,531 $ 110,832 $ (5,301)

Credit Segment

Interest Income

The increase in interest income of $48.0 million for the six months ended June 30, 2022, as compared to the same period in 2021, was due to an increase in the overall size of our investment portfolio.

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

Increase in Provision for Credit Losses

The increase in provision for credit losses of $9.0 million during the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to the increased number of loan investments entered into during the six months ended June 30, 2022, as compared to the same period in 2021.

Real Estate Segment

A total of 307 properties were acquired before January 1, 2021 and represent our “same store” properties during the six months ended June 30, 2022 and 2021.

“Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, 2021.

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

Total Same Store Non-Same Store

For the Six Months Ended June 30,

2022 2021 Change 2022 2021 Change 2022 2021 Change

Rental and other property income $ 127,244 $ 152,232 $ (24,988) $ 63,150 $ 62,040 $ 1,110 $ 64,094 $ 90,192 $ (26,098)

Property operating expenses 12,976 21,475 (8,499) 1,727 1,915 (188) 11,249 19,560 (8,311)

Real estate tax expenses 8,737 19,925 (11,188) 2,414 2,556 (142) 6,323 17,369 (11,046)

Total property operating expenses 21,713 41,400 (19,687) 4,141 4,471 (330) 17,572 36,929 (19,357)

Net operating income $ 105,531 $ 110,832 $ (5,301) $ 59,009 $ 57,569 $ 1,440 $ 46,522 $ 53,263 $ (6,741)

Loss on Extinguishment of Debt

The increase in loss on extinguishment of debt of $14.8 million for the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to the increased terminations of certain mortgage notes in connection with the disposition of the underlying properties during the six months ended June 30, 2022, as compared to the same period in 2021.

Gain on Investment in Unconsolidated Entities

The increase in gain on investment in unconsolidated entities of $6.7 million for the six months ended June 30, 2022, as compared to the same period in 2021, was due to the Company’s investment in CIM UII Onshore and NP JV Holdings, neither of which were invested in by the Company during the six months ended June 30, 2021.

Interest Expense and Other, Net

The increase in interest expense and other, net, of $29.0 million for the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to an increase in the six-month average aggregate amount of debt outstanding from $2.4 billion as of June 30, 2021 to $4.2 billion as of June 30, 2022 as a result of entering into and upsizing additional repurchase agreements, originating the Mortgage Loan and Class A Notes, and assuming the CIM Income NAV Credit Facility as part of the CIM Income NAV Merger subsequent to June 30, 2021.

In addition, interest expense and other, net was further increased by the unrealized loss on the Company’s equity security of $6.4 million during the six months ended June 30, 2022.

Gain on Disposition of Real Estate and Condominium Developments, Net

The increase in gain on disposition of real estate and condominium developments, net, of $67.2 million during the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to the disposition of 112 properties and one outparcel of land for a gain of $110.4 million and the disposition of condominium units for a gain of $3.3 million during the six months ended June 30, 2022, compared to the disposition of 47 properties for a gain of $45.0 million during the six months ended June 30, 2021.

Real Estate Impairment

The increase in impairments of $14.9 million during the six months ended June 30, 2022, as compared to the same period in 2021, was due to 18 properties and certain condominium units that were deemed to be impaired, resulting in impairment charges of $19.3 million during the six months ended June 30, 2022, compared to five properties that were deemed to be impaired, resulting in impairment charges of $4.4 million during the six months ended June 30, 2021.

Depreciation and Amortization

The decrease in depreciation and amortization of $13.2 million during the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to the disposition of 182 properties subsequent to June 30, 2021, partially offset by the acquisition of 115 properties through the CIM Income NAV Merger that closed in December 2021.

Transaction-Related Expenses

The increase in transaction-related expenses of $422,000 during the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to escrow holdbacks that were deemed uncollectible as of June 30, 2022 and were therefore written off.

No such write-offs occurred during the same period in 2021.

Management Fees

The increase in management fees of $3.4 million during the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to increased equity from the issuance of common stock in connection with the CIM Income NAV Merger that closed in December 2021.

Expense Reimbursements to Related Parties

The increase in expense reimbursements to related parties of $1.6 million during the six months ended June 30, 2022, as compared to the same period in 2021, was primarily due to increased operating expense reimbursements due to CMFT Management, primarily as a result of increased allocated payroll resulting from increased portfolio activity.

General and Administrative Expenses

The decrease in general and administrative expenses of $878,000 for the six months ended June 30, 2022, compared to the same period in 2021, was primarily due to increased legal expenses incurred during the six months ended June 30, 2021 related to the foreclosure completed in January 2021 to take control of the assets which previously secured the Company’s mezzanine loans, as discussed in Note 8 — Loans Held-For-Investment to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Such foreclosure activity did not occur during the six months ended June 30, 2022.

The overall decrease was partially offset by increased expenses related to the assumption of the CIM Income NAV Credit Facility in connection with the CIM Income NAV Merger completed in December 2021.

Net Operating Income

Same store property net operating income increased $1.4 million during the six months ended June 30, 2022, as compared to the same period in 2021.

The increase was partially due to an increase in same store occupancy to 98.9% as of June 30, 2022 from 98.8% as of June 30, 2021.

Non-same store property net operating income decreased $6.7 million during the six months ended June 30, 2022, as compared to the same period in 2021.

Distributions

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On March 25, 2021, the Board resumed declaring distributions on a quarterly basis, which are paid out on a monthly basis.

Since April 2020, our Board authorized the following monthly distribution amounts per share, payable to shareholders as of the record date for the applicable month, for the periods indicated below:

Since April 2020, our Board authorized the following monthly distribution amounts per share, payable to stockholders as of the record date for the applicable month, for the periods indicated below:

Period Commencing Period Ending Monthly Distribution Amount

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January 2022 September 2022 $0.0305

As of March 31, 2022, we had distributions payable of $13.3 million.

As of June 30, 2022, we had distributions payable of $13.3 million.

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

Three Months Ended March 31,

Six Months Ended June 30,

Amount Percent Amount Percent

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(1) Net cash provided by operating activities for the three months ended March 31, 2022 and 2021 was $30.1 million and $28.7 million, respectively.

(2) Our distributions covered by cash flows from operating activities for the three months ended March 31, 2022 include cash flows from operating activities in excess of distributions from prior periods of $9.9 million.

(3) Net proceeds on the repurchase facilities, credit facilities and notes payable for the three months ended March 31, 2022 and 2021 was $45.2 million and $197.0 million, respectively.

(1) Net cash provided by operating activities for the six months ended June 30, 2022 and 2021 was $61.2 million and $65.3 million, respectively.

(2) Our distributions covered by cash flows from operating activities for the six months ended June 30, 2022 include cash flows from operating activities in excess of distributions from prior periods of $18.7 million.

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

Share Redemptions

Our share redemption program permits our stockholders to sell their shares of common stock back to us, subject to certain conditions and limitations.

Funding for the redemption of shares will be limited to the cumulative net proceeds we receive from the sale of shares under the Secondary DRIP Offering, net of shares redeemed to date.

In addition, we will generally limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we

receive from the sale of shares in the respective quarter under the Secondary DRIP Offering.

We will limit the number of shares redeemed pursuant to our share redemption program as follows:

(1) we will not redeem in excess of 5% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being paid;

and (2) funding for the redemption of shares will be limited, among other things, to the net proceeds we receive from the sale of shares under our DRIP, net of shares redeemed to date.

In an effort to accommodate redemption requests throughout the calendar year, we will generally limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we receive from the sale of shares in the respective quarter under the Secondary DRIP Offering.

Any of the foregoing limits might prevent us from accommodating all redemption requests made in any fiscal quarter or in any 12-month period.

In addition, our Board may choose to amend the terms of, suspend or terminate our share redemption program at any time in its sole discretion if it believes that such action is in the best interest of us and our stockholders.

We will determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable payment date.

If we cannot purchase all shares presented for redemption in any fiscal quarter, based upon insufficient cash available from DRIP and/or the limit on the number of shares we may redeem during any quarter or year, we will give priority to the redemption of deceased stockholders’ shares.

While deceased stockholders’ shares will be included in

calculating the maximum number of shares that may be redeemed in any annual or quarterly period, they will not be subject to the annual or quarterly percentage caps;

therefore, if the volume of requests to redeem deceased stockholders’ shares in a particular quarter were large enough to cause the annual or quarterly percentage caps to be exceeded, even if no other redemption requests were processed, the redemptions of deceased stockholders’ shares would be completed in full, assuming sufficient proceeds from the sale of shares under our DRIP, net of shares redeemed to date, were available.

If sufficient proceeds from the sale of shares under our DRIP, net of shares redeemed to date, were not available to pay all such redemptions in full, the requests to redeem deceased stockholders’ shares would be honored on a pro rata basis.

We next will give priority to requests for full redemption of accounts with a balance of 250 shares or less at the time we receive the request, in order to reduce the expense of maintaining small accounts.

Thereafter, we will honor the remaining redemption requests on a pro rata basis.

Following such quarterly redemption period, if a stockholder would like to resubmit the unsatisfied portion of the prior request for redemption, such stockholder must submit a new request for redemption of such shares prior to the last day of the new quarter.

Unfulfilled requests for redemption will not be carried over automatically to subsequent redemption periods.

In addition, our management reserves the right, in its sole discretion at any time, and from time to time, to reject any request for redemption for any reason.

Our Board may choose to amend the terms of, suspend or terminate our share redemption program at any time in its sole discretion if it believes that such action is in the best interest of us and our stockholders.

Any material modifications or suspension of the share redemption program will be disclosed to our stockholders as promptly as practicable in our reports filed with the SEC and via our website.

During the three months ended March 31, 2022, we received valid redemption requests under our share redemption program totaling approximately 25.2 million shares, of which we redeemed approximately 1.4 million shares subsequent to March 31, 2022 for $9.9 million (at a redemption price of $7.20 per share).

During the six months ended June 30, 2022, we received valid redemption requests under our share redemption program totaling approximately 49.6 million shares, of which we redeemed approximately 1.4 million shares as of June 30, 2022 for $10.0 million (at an average redemption price of $7.20 per share) and approximately 1.3 million shares subsequent to June 30, 2022 for $9.4 million (at a redemption price of $7.20 per share).

The remaining redemption requests relating to approximately 46.9 million shares went unfulfilled.

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We expect to utilize proceeds from real estate dispositions, sales proceeds and principal payments received on credit investments, cash flows from operations and future proceeds from secured or unsecured financing to complete future acquisitions and loan originations, repayment of certain indebtedness and for general corporate uses.

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

As a result of the CIM Income NAV Merger that closed in December 2021, our subsidiary assumed CIM Income NAV’s obligations pursuant to the CIM Income NAV Credit Agreement, including as guarantor under a guaranty provided by CIM Income NAV.

As of March 31, 2022, 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 and up to $212.5 million in revolving loans.

As of March 31, 2022, we had cash and cash equivalents of $165.1 million, which included $39.5 million of unfunded or unsettled liquid senior loan purchases.

As of March 31, 2022, CMFT Corporate Credit Securities, LLC, our indirect wholly-owned subsidiary, had a revolving credit and security agreement with Citibank, as administrative agent, that provided for borrowings 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 Credit and Security Agreement.

As of March 31, 2022, the CMFT Lending Subs had Master Repurchase Agreements with Citibank, Barclays, Wells Fargo, and Deutsche Bank to provide financing primarily through each bank’s purchase of our CRE mortgage loans and future funding advances.

The following table details our outstanding financing arrangements as of March 31, 2022 (in thousands):

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

Sources of Liquidity

Our primary sources of liquidity include cash and cash equivalents and available borrowings under our debt facilities, which are set forth in the following table:

June 30, 2022 December 31, 2021

Cash and cash equivalents $ 173,417 $ 107,381

Unused borrowing capacity (1)

797,101 549,811

$ 970,518 $ 657,192

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(1) Subject to borrowing availability.

See Note 10 — Repurchase Facilities, Credit Facilities and Notes Payable to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional details regarding our notes payable, credit facilities and repurchase facilities.

The following table details our outstanding financing arrangements and borrowing capacity as of June 30, 2022 (in thousands):

Portfolio Financing Outstanding Principal Balance Maximum Capacity (1)

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Total portfolio financing $ 4,246,652 $ 5,043,753

As of March 31, 2022, we believe that we were in compliance with the financial covenants of the Mortgage Loan, the ABS mortgage notes, and the Repurchase Agreements, as well as the financial covenants under our various fixed and variable rate debt agreements, as further discussed in Note 10 — Repurchase Facilities, Credit Facilities and Notes Payable to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Short-term Liquidity and Capital Resources

On a short-term basis, our principal demands for funds will be for the acquisition of real estate-related securities, real estate and real estate-related assets and the payment of acquisition-related fees and expenses, operating expenses, distributions,

redemptions and interest and principal on current and any future debt financings, including principal repayments of $437.0 million within the next 12 months.

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

Operating cash flows are expected to increase as we complete future acquisitions.

We believe that the resources stated above will be sufficient to satisfy our operating requirements for the foreseeable future, and we do not anticipate a need to raise funds from sources other than those described above within the next 12 months.

Management intends to use the proceeds from the disposition of properties to, among other things, acquire additional high-quality net-lease properties and credit investments in furtherance of our investment objectives and for other general corporate purposes.

Long-term Liquidity and Capital Resources

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

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

____________________________________

(1) Subject to borrowing availability.

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

Morgan carry no maximum facility size.

Liquidity and Capital Resources

Our principal demands for funds will be for the acquisition of real estate-related securities, real estate and real estate-related assets and the payment of tenant improvements, acquisition-related expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of $504.2 million within the next 12 months, $228.3 million of which was paid down subsequent to June 30, 2022, as further discussed in Note 17 — Subsequent Events to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Subsequent to June 30, 2022, we entered into a new credit agreement with JPMorgan Chase which provides for borrowings of $300.0 million, the proceeds of which were used to pay down the $212.5 million outstanding balance under the CIM Income NAV Credit Facility.

We also 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.

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

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

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To the extent that cash flows from operations are lower, distributions paid to our stockholders may be lower.

We expect that substantially all net cash flows from the Offerings or debt financings will be used to fund acquisitions, loan originations, certain capital expenditures, repayments of outstanding debt or distributions and redemptions to our stockholders.

Operating cash flows are expected to increase as we complete future acquisitions.

We expect that substantially all net cash flows from the Secondary DRIP Offering or debt financings will be used to fund acquisitions, loan originations, certain capital expenditures, repayments of outstanding debt or distributions and redemptions to our stockholders.

Contractual Obligations

As of March 31, 2022, we had debt outstanding with a carrying value of $4.2 billion and a weighted average interest rate of 2.7%.

As of June 30, 2022, we had debt outstanding with a carrying value of $4.2 billion and a weighted average interest rate of 3.3%.

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

Our contractual obligations as of March 31, 2022 were as follows (in thousands):

Our contractual obligations as of June 30, 2022 were as follows (in thousands):

Payments due by period (1)

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Principal payments — first lien mortgage loan 135,272 — 135,272 — —

156,161 — 156,161 — —

Interest payments — first lien mortgage loan (3)

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Principal payments — ABS mortgage notes 766,905 7,740 645 — 758,520

768,840 7,740 2,580 — 758,520

Interest payments — ABS mortgage notes (3)

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Principal payments — credit facilities 734,000 212,500 521,500 — —

774,000 252,500 521,500 — —

Interest payments — credit facilities (3)

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Principal payments — repurchase facilities 2,150,994 218,433 1,932,561 — —

1,980,324 93,373 1,886,951 — —

Interest payments — repurchase facilities (3)

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

The table also does not include $384.7 million of unfunded commitments related to our existing CRE loans held-for-investment, $16.2 million of unfunded commitments related to NP JV Holdings, which are subject to the satisfaction of borrower milestones.

In addition, the table does not include $39.5

million of unfunded or unsettled liquid senior loan acquisitions, which are included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

(2) As of March 31, 2022, we had $15.8 million of variable rate debt effectively fixed through the use of interest rate swap agreements.

The table also does not include $370.9 million of unfunded commitments related to our existing CRE loans held-for-investment and corporate senior loans held-for-investment and $115.7 million of unfunded commitments related to the NewPoint JV, which are subject to the satisfaction of borrower milestones.

In addition, the table does not include $2.0 million of unfunded liquid senior loans and $22.4 million of unsettled liquid senior loan acquisitions, the unsettled amount of which is included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.

(2) As of June 30, 2022, we had $15.8 million of variable rate debt effectively fixed through the use of interest rate swap agreements.

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

(3) As of March 31, 2022, we had variable rate debt outstanding of $122.5 million with a weighted average interest rate of 3.9%.

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

(4) As of March 31, 2022, the amounts outstanding under the Mortgage Loan totaled $156.2 million and had a weighted average interest rate of 4.8%.

(5) As of March 31, 2022, the amounts outstanding under the ABS mortgage notes totaled $768.8 million and had a weighted average interest rate of 2.8%.

(6) As of March 31, 2022, the amounts outstanding under the Credit Securities Revolver (as defined in Note 10 — Repurchase Facilities, Credit Facilities and Notes Payable to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q) totaled $521.5 million and had a weighted average interest rate of 2.5% and the amounts outstanding under the CIM Income NAV Revolving Loans totaled $40.0 million and had a weighted average interest rate of 4.4%.

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.

As of March 31, 2022, the weighted average all-in interest rate for the Swapped Term Loans was 4.4%.

The remaining $72.5 million outstanding under our credit facilities had a weighted average interest rate of 2.3% as of March 31, 2022.

(7) As of March 31, 2022, the amount outstanding under the Citibank Repurchase Facility was $322.4 million at a weighted average interest rate of 2.1%, the amount outstanding under the Barclays Repurchase Facility was $906.9 million at a weighted average interest rate of 2.1%, the amount outstanding under the Wells Fargo Repurchase Facility was $657.6 million at a weighted average interest rate of 1.8%, and the amount outstanding under the Deutsche Bank Repurchase Facility was $93.4 million at a weighted average interest rate of 2.3%.

(3) Interest payments on the variable rate debt, first lien mortgage loan, ABS mortgage notes, credit facilities and repurchase facilities have been calculated based on outstanding balances as of June 30, 2022 through their respective maturity dates.

This is only an estimate as actual amounts borrowed and interest rates could vary over time.

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

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

As of March 31, 2022, our ratio of debt to total gross assets net of gross intangible lease liabilities was 60.1% and our ratio of debt to the fair market value of our gross assets net of gross intangible lease liabilities was 60.8%.

Fair market value of our first mortgage loans is based on the estimated market value as of March 31, 2022.

Fair market value of the remaining credit investments is based on the market value as of March 31, 2022.

Fair market value of our real estate assets is based on the estimated market value as of March 31, 2021 that was used to determine our estimated per share NAV, and for those assets acquired from April 1, 2021 through March 31, 2022 is based on the purchase price.

As of June 30, 2022, our ratio of debt to total gross assets net of gross intangible lease liabilities was 60.8% and our ratio of debt to the fair market value of our gross assets net of gross intangible lease liabilities was 60.5%.

Fair market value of our first mortgage loans is based on the estimated market value as of June 30, 2022.

Fair market value of the remaining credit investments is based on the market value as of June 30, 2022.

Cash Flow Analysis

Operating Activities.

Net cash provided by operating activities increased by $1.3 million for the three months ended March 31, 2022, as compared to the same period in 2021.

The increase was primarily due to the acquisition of 115 properties through the CIM Income NAV Merger and the growth in our loan portfolio, offset by the disposition of 185 properties subsequent to March 31, 2021.

Net cash provided by operating activities decreased by $4.1 million for the six months ended June 30, 2022, as compared to the same period in 2021.

The decrease was primarily due to the disposition of 182 properties subsequent to June 30, 2021, offset by the acquisition of 115 properties through the CIM Income NAV Merger.

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

Investing Activities.

Net cash provided by investing activities increased $305.3 million for the three months ended March 31, 2022, as compared to the same period in 2021.

The change was primarily due to an increase in proceeds from disposition of real estate assets of $919.9 million, partially offset by an increase in the net investment in loans held-for-investment of $540.2 million and an increase in the net investment of real estate-related securities of $127.0 million.

Net cash used in investing activities increased $14.0 million for the six months ended June 30, 2022, as compared to the same period in 2021.

The change was primarily due to an increase in the net investment in loans held-for-investment of $676.6 million and an increase in the net investment of real estate-related securities of $257.0 million, partially offset by an increase in proceeds from disposition of real estate assets of $900.8 million.

Financing Activities.

Net cash provided by financing activities decreased $162.7 million for the three months ended March 31, 2022, as compared to the same period in 2021.

The change was primarily due to a decrease in net proceeds on the credit facilities, notes payable and repurchase facilities of $151.8 million in addition to an increase in redemptions of common stock due to the reinstatement of the share redemption program subsequent to March 31, 2021.

Net cash provided by financing activities increased $62.6 million for the six months ended June 30, 2022, as compared to the same period in 2021.

The change was primarily due to an increase in net proceeds on the repurchase

facilities, notes payable and credit facilities of $88.4 million, partially offset by an increase in redemptions of common stock of $19.7 million due to the reinstatement of the share redemption program on April 1, 2021.

Election as a REIT

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To maintain our qualification as a REIT, we must continue to meet certain requirements relating to our organization, sources of income, nature of assets, distributions of income to our stockholders and recordkeeping.

As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our

stockholders so long as we distribute at least 90% of our annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains).

As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders so long as we distribute at least 90% of our annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains).

If we fail to maintain our qualification as a REIT for any reason in a taxable year and applicable relief provisions do not apply, we will be subject to tax on our taxable income at regular corporate rates.

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As such, there may be conflicts of interest where CMFT Management or its affiliates, while serving in the capacity as sponsor, general partner, officer, director, key personnel and/or advisor for CIM or another program sponsored or operated by affiliates of our manager, may be in conflict with us in connection with providing services to other real estate-related programs related to property acquisitions, property dispositions, and property management, among others.

The compensation

arrangements between affiliates of CMFT Management and these other real estate programs sponsored or operated by affiliates of our manager could influence the advice provided to us.

The compensation arrangements between affiliates of CMFT Management and these other real estate programs sponsored or operated by affiliates of our manager could influence the advice provided to us.

See Part I, Item 1.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis