What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-11 compared with 2023-05-12 · 437 added, 303 removed, 985 unchanged (43% of the section changed)

3 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Real estate assets:

7 unchanged sentences

Investment in unconsolidated entities 101,223 100,604

Real estate-related securities ($ 520,639 and $ 576,391 held at fair value as of March 31, 2023 and December 31, 2022, respectively)

Real estate-related securities, at fair value, net of credit loss allowances of $ 23,452 and $ 0 as of June 30, 2023 and December 31, 2022, respectively

647,327 576,391

5 unchanged sentences

Rents and tenant receivables, net 16,481 33,968

Derivative assets, prepaid expenses and other assets 10,711 26,243

Prepaid expenses, derivative assets and other assets 9,322 26,243

Deferred costs, net 15,335 16,429

Accrued interest receivable 26,861 22,343

Assets held for sale 65,011 —

Total assets $ 6,664,606 $ 7,132,054

13 unchanged sentences

Common stock, $ 0.01 par value per share;

490,000,000 shares authorized, 437,429,808 and 437,397,414 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

490,000,000 shares authorized, 437,381,972 and 437,397,414 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Capital in excess of par value 3,529,765 3,529,523

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,

2023 2022 2023 2022

Rental and other property income $ 25,682 $ 53,508 $ 64,463 $ 127,244

14 unchanged sentences

Gain on disposition of real estate and condominium developments, net 26,563 81,107 46,186 113,681

(Loss) gain on investment in unconsolidated entities ( 770 ) 5,340

Gain on investment in unconsolidated entities 5,806 1,323 5,036 6,663

Unrealized gain (loss) on equity security 3,096 ( 4,064 ) 5,354 ( 6,410 )

1 unchanged sentence

Loss on extinguishment of debt ( 894 ) ( 5,369 ) ( 4,539 ) ( 16,240 )

Total other income (expense) 17,790 26,002

Total other income 35,421 75,269 53,211 101,271

Net income $ 31,875 $ 73,613 $ 86,067 $ 112,714

Net income allocated to noncontrolling interest 8 9

Net (loss) income allocated to noncontrolling interest — ( 72 ) 8 ( 63 )

Net income attributable to the Company $ 31,875 $ 73,685 $ 86,059 $ 112,777

7 unchanged sentences

(in thousands) (Unaudited)

Three Months Ended March 31,

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

2023 2022 2023 2022

Net income $ 31,875 $ 73,613 $ 86,067 $ 112,714

Other comprehensive loss

Other comprehensive income (loss)

Unrealized loss on real estate-related securities ( 5,606 ) ( 10,909 ) ( 31,916 ) ( 15,787 )

Amount of loss reclassified from other comprehensive loss into income as an increase in provision for credit losses 13,594 — 13,594 —

Unrealized gain on interest rate swaps — 795 — 2,283

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

Total other comprehensive loss ( 26,310 ) ( 3,397 )

Amount of loss reclassified from other comprehensive loss into income as interest expense, net — 69 — 62

Total other comprehensive income (loss) 7,988 ( 10,045 ) ( 18,322 ) ( 13,442 )

Comprehensive income 39,863 63,568 67,745 99,272

Comprehensive income attributable to noncontrolling interest 8 9

Comprehensive (loss) income attributable to noncontrolling interest — ( 72 ) 8 ( 63 )

Comprehensive income attributable to the Company $ 39,863 $ 63,640 $ 67,737 $ 99,335

18 unchanged sentences

Balance as of March 31, 2023 437,429,808 $ 4,374 $ 3,529,644 $ ( 1,021,032 ) $ ( 74,836 ) $ 2,438,150 $ — $ 2,438,150

Issuance of common stock 1,637,602 16 10,743 — — 10,759 — 10,759

Equity-based compensation — — 120 — — 120 — 120

Distributions declared on common stock — $ 0.11 per common share

— — — ( 45,927 ) — ( 45,927 ) — ( 45,927 )

Redemptions of common stock ( 1,685,438 ) ( 16 ) ( 11,057 ) — — ( 11,073 ) — ( 11,073 )

Changes in redeemable common stock — — 315 — — 315 — 315

Comprehensive income — — — 31,875 7,988 39,863 — 39,863

Balance as of June 30, 2023 437,381,972 $ 4,374 $ 3,529,765 $ ( 1,035,084 ) $ ( 66,848 ) $ 2,432,207 $ — $ 2,432,207

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts) (Unaudited) — Continued

Common Stock Capital in Excess

15 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

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 $ 86,067 $ 112,714

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

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

Depreciation and amortization, net 24,376 37,174

2 unchanged sentences

Amortization of premiums and discounts on credit investments ( 18,717 ) ( 1,585 )

Capitalized interest income on real estate-related securities ( 284 ) ( 272 )

Capitalized interest income on real estate-related securities and loans held-for-investment ( 571 ) ( 608 )

Equity-based compensation 240 157

2 unchanged sentences

Gain on disposition of real estate assets and condominium developments, net ( 46,186 ) ( 113,681 )

Loss (gain) on sale of credit investments, net 64 ( 65 )

Loss (gain) on investment in unconsolidated entities 770 ( 5,340 )

Loss on sale of credit investments, net 690 170

Gain on investment in unconsolidated entities ( 5,036 ) ( 6,663 )

Gain on sale of marketable security — ( 22 )

29 unchanged sentences

Redemption of investment in unconsolidated entities — 60,663

Net cash provided by investing activities $ 886,406 $ 62,821

Proceeds from the settlement of insurance claims — 619

Net cash provided by (used in) investing activities $ 715,187 $ ( 261,882 )

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:

23 unchanged sentences

Change in fair value of real estate-related securities $ ( 18,322 ) $ ( 15,787 )

Conversion of preferred units to loans held-for-investment $ — $ 68,242

Supplemental Cash Flow Disclosures:

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited)

June 30, 2023 (Unaudited)

NOTE 1 — ORGANIZATION AND BUSINESS

3 unchanged sentences

The Company seeks to attain attractive risk-adjusted returns and create long term value for its investors by investing in a diversified portfolio of senior secured mortgage loans, creditworthy long-term net-leased property investments and other senior loan and liquid credit investments.

As of March 31, 2023, the Company owned 228 properties, comprising approximately 6.9 million rentable square feet of commercial space located in 37 states.

As of March 31, 2023, the rentable square feet at these properties was 98.9 % leased, including month-to-month agreements, if any.

As of March 31, 2023, the Company’s loan portfolio consisted of 349 loans with a net book value of $ 3.9 billion, and investments in real estate-related securities of $ 520.6 million.

As of March 31, 2023, the Company owned condominium developments with a net book value of $ 131.6 million.

As of June 30, 2023, the Company’s loan portfolio consisted of 357 loans with a net book value of $ 4.1 billion, and investments in real estate-related securities of $ 647.3 million.

As of June 30, 2023, the Company owned 195 properties, comprising approximately 6.3 million rentable square feet of commercial space located in 37 states.

As of June 30, 2023, the rentable square feet at these properties was 99.8 % leased, including month-to-month agreements, if any.

As of June 30, 2023, the Company owned condominium developments with a net book value of $ 112.0 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.

18 unchanged sentences

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

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 Initial Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231.

Distributions 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, 2023, the estimated per share NAV of the Company’s common stock was $ 6.57 , which was established by the Board on December 19, 2022 using a valuation date of September 30, 2022.

As of June 30, 2023, the estimated per share NAV of the Company’s common stock was $ 6.57 , which was established by the Board on December 19, 2022 using a valuation date of September 30, 2022.

Commencing on December 21, 2022, $ 6.57 served as the per share NAV, including for shares issued pursuant to the DRIP.

14 unchanged sentences

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.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

Reclassifications

Certain amounts in the Company’s prior period condensed consolidated financial statements have been reclassified to conform to the current period presentation.

The Company has chosen to break out the details of $ 30.0 million of interest expense, net from other income, net into expenses in the Company’s condensed consolidated statement of operations for the three months ended March 31, 2022, driven by the Company’s current investment portfolio composition being predominantly comprised of credit investments.

The Company has chosen to break out the details of $ 32.7 million and $ 62.7 million of interest expense, net from other income, net into expenses in the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2022, respectively, driven by the Company’s current investment portfolio composition being predominantly comprised of credit investments.

This reclassification of interest expense, net did not have an impact on net income or cash flow from operating activities.

I n addition, the Company has chosen to break out the details of $ 2.3 million of unrealized loss on equity security from other income, net in the Company’s condensed consolidated statement of operations for the three months ended March 31, 2022.

The Company has also chosen to break out the details of $ 7.2 million of accrued interest receivable from derivative assets, prepaid expenses and other assets in the Company’s condensed consolidated balance sheet for the three months ended March 31, 2022, which resulted in a corresponding breakout of $ 2.8 million from derivative assets, prepaid expenses and other assets to accrued interest receivable in the Company’s condensed consolidated statement of cash flows from the three months ended March 31, 2022.

I n addition, the Company has chosen to break out the details of $ 4.1 million and $ 6.4 million of unrealized loss on equity security from other income, net in the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2022, respectively.

The Company has also chosen to break out the details of $ 11.9 million of accrued interest receivable from prepaid expenses, derivative assets and other assets in the Company’s condensed consolidated balance sheet as of June 30, 2022, which resulted in a corresponding breakout of $ 7.4 million from prepaid expenses, derivative assets and other assets to accrued interest receivable in the Company’s condensed consolidated statement of cash flows for the six months ended June 30, 2022.

The reclassifications had no effect on previously reported totals or subtotals.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Use of Estimates

22 unchanged sentences

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

During the three months ended March 31, 2023, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of $ 4.8 million related to one property, due to the sales price being less than its respective carrying value.

The Company’s impairment assessment as of March 31, 2023 was based on the most current information available to the Company, including expected holding periods.

During the six months ended June 30, 2023, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of $ 4.8 million related to one property, due to the sales price being less than its respective carrying value.

The Company’s impairment assessment as of June 30, 2023 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 2023 or in future periods.

During the three months ended March 31, 2022, 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.

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

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.

See also Note 4 — Real Estate Assets for further discussion regarding real estate investment activity.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

Assets Held for Sale

1 unchanged sentence

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, 2023, in connection with the Realty Income Purchase and Sale Agreement (as defined in Note 4 — Real Estate Assets), the Company identified 27 properties with a fair value of $ 65.0 million as held for sale.

The Company disposed of these properties subsequent to March 31, 2023, as further discussed in Note 17 — Subsequent Events.

As of June 30, 2023, the Company did not identify any real estate assets as held for sale.

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.

Given the Company’s current asset portfolio and strategy, the Company’s dispositions during the three months ended March 31, 2023 and

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

2022 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, 2023.

Given the Company’s current asset portfolio and strategy, the Company’s dispositions during the six months ended June 30, 2023 and 2022 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, 2023.

Allocation of Purchase Price of Real Estate Assets

15 unchanged sentences

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 loss totaling $ 770,000 , which represented its share of NP JV Holdings’ loss, during the three months ended March 31, 2023 in the condensed consolidated statements of operations.

As of March 31, 2023, the Company’s aggregate investment in NP JV Holdings of $ 97.4 million is included in investment in unconsolidated entities on the condensed consolidated balance sheets.

The Company recorded a gain of $ 5.8 million and $ 5.0 million, respectively, which represented its share of NP JV Holdings’ gain, during the three and six months ended June 30, 2023, respectively, in the condensed consolidated statements of operations.

The Company recorded a gain of $ 1.3 million and $ 1.5 million, respectively, which represented its share of NP JV Holdings’ gain, during the three and six months ended June 30, 2022.

During the six

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

months ended June 30, 2023, the Company contributed an additional $ 5.4 million in NP JV Holdings and received $ 5.8 million as a return of capital that can be called back by NewPoint JV through NP JV Holdings as a capital call on a future date.

As of June 30, 2023 and December 31, 2022, the Company’s aggregate investment in NP JV Holdings of $ 101.2 million and $ 100.6 million, respectively, is included in investment in unconsolidated entities on the condensed consolidated balance sheets.

For more information, refer to Note 6 — Investment in Unconsolidated Entities.

4 unchanged sentences

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 consolidated balance sheet and such share is recognized as a profit or loss on the consolidated statements of operations.

During the three months ended March 31, 2022, the Company recorded its share of CIM UII Onshore’s gain totaling $ 5.2 million.

During the six months ended June 30, 2022, the Company recorded its share of CIM UII Onshore’s gain totaling $ 5.2 million.

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.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

Restricted Cash

The Company had $ 58.4 million and $ 57.6 million in restricted cash as of March 31, 2023 and December 31, 2022, respectively.

Included in restricted cash was $ 16.8 million and $ 15.4 million held by lenders in lockbox accounts, as of March 31, 2023 and December 31, 2022, respectively.

The Company had $ 51.8 million and $ 57.6 million in restricted cash as of June 30, 2023 and December 31, 2022, respectively.

Included in restricted cash was $ 7.4 million and $ 15.4 million held by lenders in lockbox accounts, as of June 30, 2023 and December 31, 2022, 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 $ 22.0 million and $ 22.6 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, 2023 and December 31, 2022, respectively.

In addition, the Company had a $ 19.6 million deposit held as cash collateral included in restricted cash as of March 31, 2023 and December 31, 2022 to be applied by Barclays Bank PLC (“Barclays”) as repayment of certain eligible assets transferred under the master repurchase agreement with Barclays.

Also included in restricted cash was $ 24.8 million and $ 22.6 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, 2023 and December 31, 2022, respectively.

In addition, the Company had a $ 19.6 million deposit held as cash collateral included in restricted cash as of June 30, 2023 and December 31, 2022 to be applied by Barclays Bank PLC (“Barclays”) as repayment of certain eligible assets transferred under the master repurchase agreement with Barclays.

Real Estate-Related Securities

1 unchanged sentence

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, 2023, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities;

As of June 30, 2023, 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.

During the three months ended March 31, 2023, the Company invested $ 9.4 million in CMBS.

As of March 31, 2023, the Company had investments in 18 CMBS with an estimated aggregate fair value of $ 480.1 million.

In addition, the Company had an investment in an equity security with an estimated aggregate fair value of $ 40.5 million as of March 31, 2023, which is comprised of RTL Common Stock received as consideration in connection with the RTL Purchase and Sale Agreement (both of which are defined in Note 4 — Real Estate Assets).

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

During the six months ended June 30, 2023, the Company invested $ 143.2 million in CMBS.

As of June 30, 2023, the Company had investments in 24 CMBS with an estimated aggregate fair value of $ 603.7 million.

In addition, the Company had an investment in an equity security with an estimated aggregate fair value of $ 43.6 million as of June 30, 2023, which is comprised of RTL Common Stock received as consideration in connection with the RTL Purchase and Sale Agreement (both of which are defined in Note 4 — Real Estate Assets).

This investment is carried at its estimated fair value with unrealized gains and losses reported on the condensed consolidated statements of operations.

During the three months ended March 31, 2023, the Company recorded $ 1.4 million of dividend income on RTL Common Stock, which is included in other income, net on the condensed consolidated statements of operations.

The Company also recorded $ 2.3 million of unrealized gain and $ 2.4 million of unrealized loss on RTL Common Stock during the three months ended March 31, 2023 and 2022, respectively, which is included in unrealized gain (loss) on equity security in the condensed consolidated statements of operations.

During the three and six months ended June 30, 2023, the Company recorded $ 1.4 million and $ 2.7 million, respectively, of dividend income on RTL Common Stock.

During the three and six months ended June 30, 2022, the Company recorded $ 1.4 million of dividend income on RTL Common Stock.

Dividend income is included in other income, net on the condensed consolidated statements of operations.

The Company also recorded $ 3.1 million and $ 5.4 million of unrealized gain on RTL Common Stock during the three and six months ended June 30, 2023, respectively, and recorded $ 4.1 million and $ 6.4 million of unrealized loss on RTL Common Stock during the three and six months ended June 30, 2022, respectively, all of which is included in unrealized gain (loss) on equity security in the condensed consolidated statements of operations.

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

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.

However, the allowance is limited by the amount that the fair value is less than the amortized cost basis.

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, such as market conditions.

Such losses that are credit related are recorded as a current expected credit loss in increase in provision to credit losses on the Company’s condensed consolidated statements of operations.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

cumulative adverse changes in expected cash flows on the Company’s available-for-sale securities are recognized as an increase to current expected credit losses.

However, the allowance is limited to the amount by which the available-for-sale security’s amortized cost exceeds its fair value.

Favorable changes in expected cash flows are recognized as a decrease to current expected credit losses.

For additional information regarding the Company’s process for estimating current expected credit losses for its real estate-related securities, see the Current Expected Credit Losses section below.

3 unchanged sentences

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

During the three months ended March 31, 2023 and 2022, the Company capitalized $ 284,000 and $ 272,000 , respectively, of interest income to real estate-related securities.

During the three and six months ended June 30, 2023, the Company capitalized $ 287,000 and $ 571,000 , 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.

Loans Held-for-Investment

2 unchanged sentences

Loans held-for-investment are carried on the Company’s condensed consolidated balance sheets at amortized cost, net of any current expected credit losses.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

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

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

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

1 unchanged sentence

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

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, 2023, one of the Company’s liquid corporate senior loan investments was on a nonaccrual status with a carrying value of $ 2.9 million, which represented less than 1 % of the carrying value of the Company’s liquid corporate senior loans portfolio.

As of June 30, 2023, one of the Company’s liquid corporate senior loan investments was on a nonaccrual status with a carrying value of $ 2.9 million, which represented less than 1 % of the carrying value of the Company’s liquid corporate senior loans portfolio.

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.

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 and CMBS included in the condensed consolidated balance sheets.

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

2 unchanged sentences

The Company estimates the current expected credit loss for its first mortgage loans primarily using the Weighted Average Remaining Maturity method, which has been identified as an acceptable method for estimating CECL reserves in the Financial Accounting Standards Board (“FASB”) Staff Q&A Topic 326, No.

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

This method requires the Company to reference historic loan loss data across a comparable data set and apply such loss rate to each loan investment over its expected remaining term,

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

taking into consideration expected economic conditions over the relevant timeframe.

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

3 unchanged sentences

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

Quarterly, the Company evaluates the risk of all loans and assigns a risk rating based on a variety of factors, grouped as follows:

Quarterly, the Company evaluates the risk of all loans held-for-investment and assigns a risk rating based on a variety of factors, grouped as follows:

(i) loan and credit structure, including the as-is loan-to-value (“LTV”) ratio and structural features;

7 unchanged sentences

Collateral, if appropriate, exceeds performance metrics;

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March 31, 2023 (Unaudited) – (Continued)

2- Meets or Exceeds Expectations — Acceptable asset quality, moderate excess liquidity, modest leverage capacity.

22 unchanged sentences

The Company generally assigns a risk rating of “3” to all newly originated or acquired loans held-for-investment during a most recent quarter, except in the case of specific circumstances warranting an exception.

In estimating credit losses related to real estate-related securities, management considers a variety of factors, including, but not limited to, the extent to which the fair value is less than the amortized cost basis, recent events specific to the security, industry or geographic area, the payment structure of the security, the failure of the issuer of the security to make scheduled interest or principal payments, and external credit ratings and recent changes in such ratings.

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June 30, 2023 (Unaudited) – (Continued)

interest or principal payments, and external credit ratings and recent changes in such ratings.

Credit losses, if any, are estimated by calculating the difference between (i) the present value of estimated cash flows expected to be collected from the security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) the net amortized cost basis of the security.

Significant judgment is used in estimating future cash flows for the Company’s real estate-related securities.

The Company has lease agreements with lease and non-lease components.

9 unchanged sentences

Upon successful lease execution, leasing commissions are capitalized.

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March 31, 2023 (Unaudited) – (Continued)

Development Activities

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, 2023 and 2022, the Company capitalized $ 2.7 million and $ 3.1 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 three months ended March 31, 2023 and 2022 was $ 458,000 and $ 387,000 , respectively, of capitalized interest expense.

During the six months ended June 30, 2023 and 2022, the Company capitalized $ 5.3 million and $ 7.2 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, 2023 and 2022 was $ 848,000 and $ 711,000 , respectively, of capitalized interest expense.

Revenue Recognition

9 unchanged sentences

Management’s estimate of the collectability of lease-related receivables is based on the best information available at the time of estimate.

The Company does not use a general reserve approach and lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

Company does not use a general reserve approach and lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable.

Revenue from lending activities

11 unchanged sentences

From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting.

Except as otherwise stated below, the Company is currently evaluating the effect

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

that certain new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements.

Except as otherwise stated below, the Company is currently evaluating the effect that certain new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements.

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

3 unchanged sentences

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

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

ASU 2022-02 did not have an impact on the Company’s condensed consolidated financial statements for the six months ended June 30, 2023.

In June 2022, the FASB issued ASU No.

10 unchanged sentences

Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows:

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June 30, 2023 (Unaudited) – (Continued)

Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

3 unchanged sentences

The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities:

Real estate-related securities — The Company generally determines the fair value of its real estate-related securities by utilizing broker-dealer quotations, reported trades or valuation estimates from pricing models to determine the reported price.

Pricing models for real estate-related securities are generally discounted cash flow models that usually consider the attributes applicable to a particular class of security (e.g., credit rating, seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available.

Real estate-related securities — The Company generally determines the fair value of its CMBS by utilizing broker-dealer quotations, reported trades or valuation estimates from pricing models to determine the reported price.

Pricing models for CMBS are generally discounted cash flow models that usually consider the attributes applicable to a particular class of security (e.g., credit rating, seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available.

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, 2023, the Company concluded that $ 307.5 million of its CMBS fell under Level 2 and $ 172.6 million of its CMBS fell under Level 3.

As of June 30, 2023, the Company concluded that $ 440.2 million of its CMBS fell under Level 2 and $ 163.5 million of its CMBS fell under Level 3.

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

1 unchanged sentence

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.

Current and prior period liabilities’ carrying

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March 31, 2023 (Unaudited) – (Continued)

and fair values exclude net deferred financing costs.

Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs.

These financial instruments are valued using Level 2 inputs.

As of March 31, 2023, the estimated fair value of the Company’s debt was $ 3.86 billion, compared to a carrying value of $ 3.98 billion.

As of June 30, 2023, the estimated fair value of the Company’s debt was $ 3.90 billion, compared to a carrying value of $ 4.01 billion.

The estimated fair value of the Company’s debt as of December 31, 2022 was $ 4.32 billion, compared to a carrying value of $ 4.44 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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, 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.

3 unchanged sentences

The Company’s liquid corporate 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, 2023, $ 542.2 million and $ 129.5 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively.

As of June 30, 2023, $ 551.3 million and $ 132.1 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively.

As of December 31, 2022, $ 494.4 million and $ 168.0 million of the Company’s liquid corporate senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively.

As of March 31, 2023, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $ 3.91 billion, compared to its carrying value of $ 3.93 billion.

As of December 31, 2022, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $ 3.98 billion, compared to its carrying value of $ 4.00 billion.

As of June 30, 2023, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $ 4.15 billion, compared to its carrying value of $ 4.10 billion.

As of December 31, 2022, the

CIM REAL ESTATE FINANCE TRUST, INC.

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June 30, 2023 (Unaudited) – (Continued)

estimated fair value of the Company’s loans held-for-investment and related receivables, net was $ 3.98 billion, compared to its carrying value of $ 4.00 billion.

Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses, other liabilities, due to affiliates and distributions payable to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature.

4 unchanged sentences

The Company does not expect that changes in classifications between levels will be frequent.

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March 31, 2023 (Unaudited) – (Continued)

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 that are required to be measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 (in thousands):

In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets that are required to be measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):

Balance as of

March 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

June 30, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Financial assets:

11 unchanged sentences

$ 581,431 $ 38,249 $ 353,281 $ 189,901

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, 2023 (in thousands):

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (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, 2023 (in thousands):

Beginning Balance, January 1, 2023

1 unchanged sentence

Unrealized loss included in other comprehensive loss, net ( 19,552 )

Current expected credit losses (1)

Purchases and payments received:

1 unchanged sentence

Capitalized interest income 571

Ending Balance, March 31, 2023

Ending Balance, June 30, 2023

____________________________________

(1) Does not include $ 7.1 million of unrealized losses recognized prior to January 1, 2023 that were reclassified from other comprehensive income on the condensed consolidated statements of comprehensive income to increase in provision for credit losses on the condensed consolidated statements of operations during the six months ended June 30, 2023.

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, 2023, real estate assets related to one property was deemed to be impaired and its carrying value was reduced to an estimated fair value of $ 4.8 million, resulting in impairment charges of $ 4.8 million.

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.

As discussed in Note 4 — Real Estate Assets, during the six months ended June 30, 2023, real estate assets related to one property was deemed to be impaired and its carrying value was reduced to an estimated fair value of $ 4.8 million, resulting in impairment charges of $ 4.8 million.

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.

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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (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, 2023 and 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, 2023 and 2022:

Six Months Ended June 30,

Discount Rate Terminal Capitalization Rate Discount Rate Terminal Capitalization Rate

2 unchanged sentences

7.5 % – 9.2 %

The following table presents the impairment charges by asset class recorded during the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

CIM REAL ESTATE FINANCE TRUST, INC.

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June 30, 2023 (Unaudited) – (Continued)

The following table presents the impairment charges by asset class recorded during the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended June 30,

Asset class impaired:

3 unchanged sentences

Intangible lease liabilities — ( 4 )

Condominium developments — 7,945

Total impairment loss $ 4,814 $ 19,287

1 unchanged sentence

Property Acquisitions

During the three months ended March 31, 2023 and 2022, the Company did no t acquire any properties.

During the six months ended June 30, 2023 and 2022, the Company did no t acquire any properties.

Condominium Development Project

Condominium Dispositions

During the three months ended March 31, 2023, the Company disposed of one condominium unit for a sales price of $ 1.6 million, resulting in proceeds of $ 1.5 million after closing costs and a gain of $ 60,000 .

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.

During the six months ended June 30, 2023, the Company disposed of condominium units for a sales price of $ 29.0 million, resulting in proceeds of $ 26.1 million after closing costs and a gain of $ 2.4 million.

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.

2023 Property Dispositions and Real Estate Assets Held for Sale

2023 Property Dispositions

On December 29, 2022, certain subsidiaries of the Company entered into an Agreement of Purchase and Sale (the “Realty Income Purchase and Sale Agreement”) with certain subsidiaries of Realty Income Corporation (NYSE:

O) (“Realty Income”), to sell to Realty Income 185 single-tenant net lease properties encompassing approximately 4.6 million gross rentable square feet of commercial space across 34 states for total consideration of $ 894.0 million.

The consideration is to be paid in cash.

During the three months ended March 31, 2023, the Company disposed of 152 properties, including 150 retail properties and two industrial properties, for an aggregate gross sales price of $ 781.2 million, resulting in proceeds of $ 773.7 million after closing costs and a gain of $ 19.6 million.

The consideration was paid in cash.

During the six months ended June 30, 2023, the Company disposed of 185 properties, including 183 retail properties and two industrial properties, for an aggregate gross sales price of $ 909.3 million, resulting in proceeds of $ 899.7 million after closing costs and a gain of $ 43.8 million.

The sale of 178 of these properties closed pursuant to the Realty Income Purchase and Sale Agreement for total consideration of $ 861.0 million, resulting in proceeds of $ 852.6 million after closing costs and a gain of $ 32.3 million.

No properties are remaining to be sold pursuant to the Realty Income Purchase and Sale Agreement.

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

The gain on sale of real estate 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, 2023 (Unaudited) – (Continued)

As of March 31, 2023, the Company identified 27 properties with a fair value of $ 65.0 million as held for sale, all of which are in connection with the Realty Income Purchase and Sale Agreement.

The Company disposed of these properties subsequent to March 31, 2023, as further discussed in Note 17 — Subsequent Events.

2022 Property Dispositions and Real Estate Assets Held for Sale

2 unchanged sentences

RTL) (“RTL”), American Finance Operating Partnership, L.P.

(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”).

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June 30, 2023 (Unaudited) – (Continued)

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 RTL 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 RTL 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 RTL 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 these properties pursuant to the RTL 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.

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 RTL 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 RTL Purchase and Sale Agreement.

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 RTL 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 with these properties that would preclude sale treatment.

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.

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 RTL Purchase and Sale Agreement.

The Company disposed of these properties in phases subsequent to 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 was in connection with the RTL Purchase and Sale Agreement.

The Company disposed of these properties in phases subsequent to June 30, 2022.

The Company performs quarterly impairment review procedures, primarily through continuous monitoring of events and changes in circumstances that could indicate that the carrying value of certain of its real estate assets may not be recoverable.

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, 2023, one property totaling approximately 45,000 square feet with a carrying value of $ 9.6 million was deemed to be impaired and its carrying value was reduced to an estimated fair value of $ 4.8 million, resulting in impairment charges of $ 4.8 million, which were recorded in the condensed consolidated statements of operations.

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, 2023, one property totaling approximately 45,000 square feet with a carrying value of $ 9.6 million was deemed to be impaired and its carrying value was reduced to an estimated fair value of $ 4.8 million, resulting in impairment charges of $ 4.8 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.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES

Intangible lease assets and liabilities consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands, except weighted average life remaining):

March 31, 2023 December 31, 2022

Intangible lease assets and liabilities consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands, except weighted average life remaining):

June 30, 2023 December 31, 2022

Intangible lease assets:

6 unchanged sentences

$ 13,956 $ 19,054

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

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

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, 2023 and 2022 (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, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

In-place lease and other intangible amortization $ 3,014 $ 6,326 $ 8,096 $ 13,112

1 unchanged sentence

Below-market lease amortization $ 313 $ 484 $ 746 $ 1,063

As of March 31, 2023, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):

As of June 30, 2023, the estimated amortization relating to the intangible lease assets and liabilities is as follows (in thousands):

In-Place Leases and

12 unchanged sentences

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, 2023, the carrying value of the Company’s investment in NP JV Holdings was $ 97.4 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The Company received $ 2.4 million in distributions related to its investment in NP JV Holdings during the three months ended March 31, 2023, all of which was recognized as a return of investment and reduced the invested capital and the carrying amount.

As of March 31, 2023, the Company had $ 112.6 million of unfunded commitments related to NewPoint JV.

As of June 30, 2023, the carrying value of the Company’s investment in NP JV Holdings was $ 101.2 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance sheets.

The Company received $ 9.8 million in distributions related to its investment in NP JV Holdings during the six months ended June 30, 2023, $ 5.0 million of which was recognized as a return on investment and $ 4.8 million of which was recognized as a return of investment and reduced the invested capital and the carrying amount.

As of June 30, 2023, the Company had $ 113.0 million of unfunded commitments related to NewPoint JV.

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

1 unchanged sentence

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.

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 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.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

NOTE 7 — REAL ESTATE-RELATED SECURITIES

As of March 31, 2023, the Company had real estate-related securities with an aggregate estimated fair value of $ 520.6 million, which included 18 CMBS investments and an investment in a publicly-traded equity security.

The CMBS mature on various dates from July 2023 through June 2058 and have interest rates ranging from 6.2 % to 12.2 % as of March 31, 2023, with one CMBS earning a zero coupon rate.

The following is a summary of the Company’s real estate-related securities as of March 31, 2023 (in thousands):

As of June 30, 2023, the Company had real estate-related securities with an aggregate estimated fair value of $ 647.3 million, which included 24 CMBS investments and an investment in a publicly-traded equity security.

The CMBS mature on various dates from July 2023 through June 2058 and have interest rates ranging from 6.7 % to 12.5 % as of June 30, 2023, with one CMBS earning a zero coupon rate.

The following is a summary of the Company’s real estate-related securities as of June 30, 2023 (in thousands):

Real Estate-Related Securities

Amortized Cost Basis Unrealized Loss Fair Value

Amortized Cost Basis Unrealized Loss CECL Fair Value

CMBS $ 694,006 $ ( 66,830 ) $ ( 23,452 ) $ 603,724

1 unchanged sentence

Total real estate-related securities $ 747,394 $ ( 76,615 ) $ ( 23,452 ) $ 647,327

The following table provides the activity for the real estate-related securities during the three months ended March 31, 2023 (in thousands):

Amortized Cost Basis Unrealized Loss Fair Value

The following table provides the activity for the real estate-related securities during the six months ended June 30, 2023 (in thousands):

Amortized Cost Basis Unrealized Loss CECL Fair Value

Real estate-related securities as of January 1, 2023

7 unchanged sentences

( 53,591 ) — — ( 53,591 )

Unrealized loss on real estate-related securities

Unrealized loss on real estate-related securities, net

— ( 12,969 ) — ( 12,969 )

Real estate-related securities as of March 31, 2023

Current expected credit losses — — ( 23,452 ) ( 23,452 )

Real estate-related securities as of June 30, 2023

$ 747,394 $ ( 76,615 ) $ ( 23,452 ) $ 647,327

1 unchanged sentence

(1) Includes the repayment of the Company’s position in two different tranches of a CMBS instrument prior to their stated maturity dates.

During the three months ended March 31, 2023, the Company invested $ 9.4 million in CMBS.

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

During the six months ended June 30, 2023, the Company invested $ 143.2 million in CMBS.

Unrealized gains and losses on CMBS are recorded in other comprehensive income (loss), with a portion of the amount subsequently reclassified into other income, 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 three months ended March 31, 2023, the Company recorded $ 26.3 million of unrealized loss on its CMBS, which is included in other comprehensive loss in the accompanying condensed consolidated statements of comprehensive income, and recorded $ 2.3 million of unrealized gain on the Company’s equity security, which is included in unrealized gain (loss) on equity security in the accompanying condensed consolidated statements of operations.

During the six months ended June 30, 2023, the Company recorded $ 13.0 million of net unrealized loss on its real estate-related securities, comprised of an $ 18.3 million unrealized loss on CMBS, which is included in other comprehensive income (loss) in the accompanying condensed consolidated statements of comprehensive income and a $ 5.4 million unrealized gain on the Company’s equity security, which is included in unrealized gain (loss) on equity security in the accompanying condensed consolidated statements of operations.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The scheduled maturities of the Company’s CMBS as of March 31, 2023 are as follows (in thousands):

June 30, 2023 (Unaudited) – (Continued)

The scheduled maturities of the Company’s CMBS as of June 30, 2023 are as follows (in thousands):

Amortized Cost Estimated Fair Value

6 unchanged sentences

In addition, factors such as prepayments and interest rates may affect the yields on such securities.

As of March 31, 2023, the Company had no credit losses related to real estate-related securities.

Current Expected Credit Losses

Current expected credit losses reflect the Company’s current estimate for potential credit losses related to real estate-related securities included in the Company’s condensed consolidated balance sheets.

Current expected credit related losses are recorded in increase in provision to credit losses on the Company’s condensed consolidated statements of operations.

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 related to its position in one of two different tranches of a CMBS instrument for the six months ended June 30, 2023 (dollar amounts in thousands):

Current expected credit losses as of January 1, 2023 $ —

Provision for credit losses —

Current expected credit losses as of March 31, 2023 —

Provision for credit losses 23,452

Current expected credit losses as of June 30, 2023 $ 23,452

During the six months ended June 30, 2023, the loan collateralizing one of the Company’s CMBS positions was transferred from the master servicer to a special servicer due to payment default generated by halted rent payments on the underlying office properties being mortgaged.

During the three months ended June 30, 2023, the underlying collateral of the loan was appraised by the special servicer, resulting in an appraisal reduction representing approximately 44 % of one of the CMBS position’s tranches the Company is invested in.

Further, the appraisal reduction resulted in reduced cash flows received from the respective CMBS investment during the three months ended June 30, 2023.

The Company considered various factors, including the factors noted above, in determining whether a credit loss existed.

The present value of cash flows expected to be collected from the CMBS position did not exceed its amortized cost basis, and as such the Company determined the security had incurred a credit loss.

The Company does not intend to sell the CMBS position and it is not considered more likely than not that the Company will be forced to sell the security prior to recovering the amortized cost.

As a result of the credit loss incurred, the Company reclassified $ 13.6 million of unrealized loss from other comprehensive income on the condensed consolidated statements of comprehensive income to increase in provision for credit losses on the condensed consolidated statements of operations during the three months ended June 30, 2023, and recorded an incremental $ 9.9 million to increase in provision for credit losses on the condensed consolidated statements of operations identified as part of the Company’s quantitative credit loss assessment.

The Company will continue to monitor for changes in expected cash flows in order to continue to measure the credit loss.

As of June 30, 2023, there were 15 CMBS positions with unrealized losses reflected in other comprehensive income (loss) in the accompanying condensed consolidated statements of comprehensive income.

Upon evaluating these securities, the Company concluded that the unrealized losses included in other comprehensive income (loss) as of June 30, 2023 were noncredit-related and would be recovered from the securities’ estimated future cash flows.

The Company considered various factors in reaching this conclusion, including that the Company did not intend to sell the securities, it was not considered more

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

likely than not that the Company would be forced to sell the securities prior to recovering the amortized cost, and there were no material credit events that would have caused the Company to conclude that the amortized cost would not be recovered.

NOTE 8 — LOANS HELD-FOR-INVESTMENT

The Company’s loans held-for-investment consisted of the following as of March 31, 2023 and December 31, 2022 (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, 2023 and December 31, 2022 (in thousands):

As of June 30, As of December 31,

First mortgage loans (1)

5 unchanged sentences

Current expected credit losses $ ( 67,562 ) $ ( 42,344 )

Total loans held-for-investment and related receivable, net $ 3,932,537 $ 4,001,554

Total loans held-for-investment and related receivables, net $ 4,097,959 $ 4,001,554

____________________________________

(1) As of March 31, 2023, 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 March 31, 2023 and December 31, 2022 (dollar amounts in thousands):

(1) As of June 30, 2023, first mortgage loans included $ 20.2 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, 2023 and December 31, 2022 (dollar amounts in thousands):

CRE Loans (1) (2)

Liquid Corporate Senior Loans Corporate Senior Loans

March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

Number of loans 29 29 317 317 11 4

7 unchanged sentences

____________________________________

(1) As of March 31, 2023, 100 % of the Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to SOFR and U.S.

dollar LIBOR.

(1) As of June 30, 2023, 100 % of the Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to the Secured Overnight Financing Rate (“SOFR”).

(2) Maximum maturity date assumes all extension options are exercised by the borrowers;

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

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

9 unchanged sentences

Accretion and amortization of fees and other items 6,058 1,279 138 7,475

Current expected credit losses (3)

(Provision for) reversal of credit losses (3)

( 24,417 ) 363 ( 1,164 ) ( 25,218 )

Balance, March 31, 2023

Balance, June 30, 2023

$ 3,272,258 $ 689,714 $ 135,987 $ 4,097,959

7 unchanged sentences

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 related to loans held-for-investment by loan type for the three months ended March 31, 2023 (in thousands):

The following table presents the activity in the Company’s current expected credit losses related to loans held-for-investment by loan type for the six months ended June 30, 2023 (in thousands):

First Mortgage Loans Unfunded First Mortgage Loans (1)

6 unchanged sentences

$ 22,301 $ 2,028 $ 20,281 $ 256 $ 1,197 $ 67 $ 46,130

Provision for credit losses 22,468 2,140 551 3 764 259 26,185

Current expected credit losses as of June 30, 2023

$ 44,769 $ 4,168 $ 20,832 $ 259 $ 1,961 $ 326 $ 72,315

____________________________________

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

3 unchanged sentences

Factors considered in the assessment include, but are not limited to, loan and credit structure, current LTV ratio, debt yield, collateral performance, and the quality and condition of the sponsor, borrower, and guarantor(s).

Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 — Summary of Significant Accounting Policies.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 — Summary of Significant Accounting Policies.

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, 2023 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, 2023 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, 2023

As of June 30, 2023

Number of Loans 2023 2022 2021 2020 2019 Total

26 unchanged sentences

Origination dates are subsequently updated to reflect material loan modifications.

(2) As of March 31, 2023, one of the Company’s liquid corporate senior loan investments was on nonaccrual status with a carrying value of $ 2.9 million, which represented less than 1 % of the carrying value of the Company’s liquid corporate senior loans portfolio.

(2) As of June 30, 2023, one of the Company’s liquid corporate senior loan investments was on nonaccrual status with a carrying value of $ 2.9 million, which represented less than 1 % of the carrying value of the Company’s liquid corporate senior loans portfolio.

(3) 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.

As of March 31, 2023, the Company had two non-designated interest rate cap agreements.

As of June 30, 2023, the Company had two non-designated interest rate cap agreements.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

The following table summarizes the terms of the Company’s interest rate cap agreements as of March 31, 2023 and December 31, 2022 (dollar amounts in thousands):

June 30, 2023 (Unaudited) – (Continued)

The following table summarizes the terms of the Company’s interest rate cap agreements as of June 30, 2023 and December 31, 2022 (dollar amounts in thousands):

Outstanding Notional Fair Value of Assets as of

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

Location March 31, 2023 Rates Dates Dates 2023 2022

Interest Rate Caps Derivative assets, prepaid expenses and other assets $ 712,000 3.50 % (1) to

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

Location June 30, 2023 Rates Dates Dates 2023 2022

Interest Rate Caps Prepaid expenses, derivative assets and other assets $ 712,000 3.50 % (1) to

7/15/2021 to 9/13/2022

2 unchanged sentences

____________________________________

(1) The index used for this derivative instrument is 1-Month LIBOR.

(1) The index used for this derivative instrument is 1-Month London Inter-bank Offered Rate (“LIBOR”).

(2) The index used for this derivative instrument is 1-Month Term SOFR.

5 unchanged sentences

Interest rate swaps are designated as cash flow hedges in order to hedge the variability of the anticipated cash flows on the Company’s variable rate debt.

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

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

During the year ended December 31, 2022, two of the Company’s interest rate swap agreements matured and three interest rate swap agreements were terminated prior to the maturity dates.

For the three months ended March 31, 2023, no amounts were reclassified from other comprehensive loss as a change to interest expense.

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

The total unrealized gain on interest rate swaps of $ 1.6 million as of March 31, 2022 is included in accumulated other comprehensive loss in the accompanying condensed consolidated statements of stockholders’ equity.

No such unrealized amounts on interest rate swaps were remaining in other comprehensive loss as of March 31, 2023.

For the three and six months ended June 30, 2023, no amounts were reclassified from other comprehensive income (loss) as a change to interest expense.

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

The total unrealized gain on interest rate swaps of $ 2.5 million as of June 30, 2022 is included in accumulated other comprehensive loss in the accompanying condensed consolidated statements of stockholders’ equity.

No such unrealized amounts on interest rate swaps were remaining in other comprehensive income (loss) as of June 30, 2023.

Subsequent to June 30, 2023, the interest rate cap indexed to LIBOR matured.

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.

4 unchanged sentences

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 events of default related to the derivative instruments as of March 31, 2023.

There were no events of default related to the derivative instruments as of June 30, 2023.

NOTE 10 — REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT FACILITIES

As of March 31, 2023, the Company had $ 4.0 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of 3.5 years and a weighted average interest rate of 5.9 %.

As of June 30, 2023, the Company had $ 4.0 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 6.2 %.

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

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

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

During the Three Months Ended March 31, 2023

June 30, 2023 (Unaudited) – (Continued)

The following table summarizes the debt balances as of June 30, 2023 and December 31, 2022, and the debt activity for the six months ended June 30, 2023 (in thousands):

During the Six Months Ended June 30, 2023

Balance as of December 31, 2022 Debt Issuances & Assumptions (1)

1 unchanged sentence

Amortization Balance as of

March 31, 2023

June 30, 2023

Notes payable – fixed rate debt $ 36,538 $ — $ ( 36,538 )

14 unchanged sentences

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

(2) In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility, the Company recognized a loss on extinguishment of debt of $ 3.6 million during the three months ended March 31, 2023, which included $ 1.3 million in prepayment penalties.

(3) Deferred costs related to the term portion of the CMFT Credit Facility (defined below).

(2) In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility (defined below), the Company recognized a loss on extinguishment of debt of $ 4.5 million during the six months ended June 30, 2023, which included approximately $ 1.0 million in prepayment penalties.

(3) Deferred costs related to the term portion of the CMFT Credit Facility.

(4) In connection with the repayment of certain mortgage notes and the termination of the CMFT Credit Facility, the Company wrote off approximately $ 2.6 million of unamortized deferred loan costs.

Notes Payable

During the three months ended March 31, 2023, the Company legally defeased a mortgage loan with an outstanding balance of $ 23.7 million, resulting in a $ 205,000 loss on extinguishment of debt in the Company’s condensed consolidated statement of operations during the three months ended March 31, 2023, and repaid the remaining $ 12.8 million of fixed rate debt outstanding, both in connection with the disposition of the underlying properties securing the fixed rate debt.

As of March 31, 2023, the Company had $ 461.1 million of variable rate debt outstanding, which included $ 423.5 million of borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”).

During the six months ended June 30, 2023, the Company legally defeased a mortgage loan with an outstanding balance of $ 23.7 million, resulting in a $ 205,000 loss on extinguishment of debt in the Company’s condensed consolidated statement of operations during the six months ended June 30, 2023, and repaid the remaining $ 12.8 million of fixed rate debt outstanding, both in connection with the disposition of the underlying properties securing the fixed rate debt.

As of June 30, 2023, the Company had $ 512.6 million of variable rate debt outstanding, which included $ 420.8 million of borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”) and $ 75.0 million of borrowings financed through a note on note financing agreement with Citibank, N.A.

(the “Citibank Financing”).

In addition, 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 (the “Assumed Variable Rate Debt”), which the Company subsequently refinanced and paid down the outstanding balance during the year ended December 31, 2022.

The amended borrowing agreement related to the refinanced Assumed Variable Rate Debt provides for borrowings up to $ 62.0 million.

As of March 31, 2023, the amount outstanding on the refinanced Assumed Variable Rate Debt totaled $ 37.6 million.

The Company’s outstanding variable rate debt had a weighted average interest rate of 7.2 % as of March 31, 2023, and matures on various dates from October 2024 to January 2028.

As of June 30, 2023, the amount outstanding on the refinanced Assumed Variable Rate Debt totaled $ 16.8 million.

The Company’s outstanding variable rate debt had a weighted average interest rate of 7.2 % as of June 30, 2023, and matures on various dates from August 2024 to January 2028.

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, each of which is an affiliate of the Company and is managed on a day-to-day basis by affiliates of CIM.

During the three months ended March 31, 2023, the Company paid down the $ 121.9 million outstanding balance on the Mortgage Loan, $ 105.8 million of which was in connection with the sale of properties pursuant to the Realty Income Purchase and Sale Agreement.

Refer to Note 4 — Real Estate Assets for additional information regarding the sale.

During the six months ended June 30, 2023, the Company paid down the $ 121.9 million outstanding balance on the Mortgage Loan, $ 105.8 million of which

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

was in connection with the sale of properties pursuant to the Realty Income Purchase and Sale Agreement.

Refer to Note 4 — Real Estate Assets for additional information regarding the sale.

ABS Mortgage Notes

11 unchanged sentences

The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the Class A Notes was $ 963.8 million.

As of March 31, 2023, amounts outstanding on the Class A Notes totaled $ 761.1 million with a weighted average interest rate of 2.8 %.

As of June 30, 2023, amounts outstanding on the Class A Notes totaled $ 759.2 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.

Credit Facilities

During the three months ended March 31, 2023, CMFT CL Lending Sub AB, LLC (the “Borrower”), an indirect wholly owned subsidiary of the Company, entered into a revolving loan and security agreement (the “Loan and Security Agreement”) with each of the lenders from time to time party thereto (the “Lenders”), Ally Bank as administrative agent and arranger (“Ally Bank”), U.S.

During the six months ended June 30, 2023, CMFT CL Lending Sub AB, LLC (the “Borrower”), an indirect wholly owned subsidiary of the Company, entered into a revolving loan and security agreement (the “Loan and Security Agreement”) with each of the lenders from time to time party thereto (the “Lenders”), Ally Bank as administrative agent and arranger (“Ally Bank”), U.S.

Bank Trust Company, National Association, as the collateral custodian, and U.S.

2 unchanged sentences

The applicable rate is 2.875 % per annum (and an additional 2.00 % per annum following an event of default under the Loan and Security Agreement).

The revolving period begins on February 10, 2023 and concludes on the day preceding the earlier to occur of (i) the scheduled revolving period end date of February 10, 2026, (ii) the date of the declaration of the revolving period end date upon the occurrence and continuation of an event of default, and (iii) the termination date.

The revolving period began on February 10, 2023 and concludes on the day preceding the earlier to occur of (i) the scheduled revolving period end date of February 10, 2026, (ii) the date of the declaration of the revolving period end date upon the occurrence and continuation of an event of default, and (iii) the termination date.

The termination date is the earlier to occur of (i) February 10, 2028 (two years after the revolving period end date) and (ii) the date of the declaration of the termination date or the date of the automatic occurrence of the termination date upon the occurrence and continuation of an event of default.

As of March 31, 2023, no amounts were borrowed and outstanding under the Loan Facility.

As of June 30, 2023, no amounts were borrowed and outstanding under the Loan Facility.

The Company had a credit agreement with the lenders from time to time parties thereto, JPMorgan Chase, as administrative agent, letter of credit issuer and syndication agent, and PNC Bank, N.A., as syndication agent, that provided for borrowings in the initial amount of $ 300.0 million (the “CMFT Credit Facility”).

The CMFT Credit Facility was set to mature on July 15, 2025.

During the three months ended March 31, 2023, the Company paid down the $ 240.0 million outstanding balance under the CMFT Credit Facility and terminated the CMFT Credit Facility.

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.

The Third Amended Credit and Security Agreement provides for available borrowings under the revolving credit

During the six months ended June 30, 2023, the Company paid down the $ 240.0 million outstanding balance under the CMFT Credit Facility and terminated the CMFT Credit Facility.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

facility to an aggregate principal amount up to $ 550.0 million (the “Credit Securities Revolver”).

June 30, 2023 (Unaudited) – (Continued)

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.

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 March 31, 2023, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $ 533.5 million at a weighted average interest rate of 7.0 %.

As of June 30, 2023, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $ 445.5 million at a weighted average interest rate of 7.2 %.

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.

4 unchanged sentences

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 corporate 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 March 31, 2023.

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, 2023.

Repurchase Facilities

As of March 31, 2023, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays, Wells Fargo Bank, N.A.

As of June 30, 2023, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays, Wells Fargo Bank, N.A.

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

1 unchanged sentence

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 March 31, 2023 (dollar amounts in thousands):

The following table is a summary of the Repurchase Facilities as of June 30, 2023 (dollar amounts in thousands):

Repurchase Facility Date of Agreement Maturity Date (1)

13 unchanged sentences

__________________________________

(1) As of March 31, 2023, the repurchase facility with Citibank and Wells Fargo each have two one-year extension options remaining, the repurchase facility with Barclays has one one-year extension option remaining and the repurchase facility with Deutsche Bank has four one-year extension options remaining.

(1) As of June 30, 2023, the repurchase facilities with Citibank and Wells Fargo each have two one-year extension options remaining, the repurchase facility with Barclays has one one-year extension option remaining and the repurchase facility with Deutsche Bank has four one-year extension options remaining.

All repurchase facilities are subject to certain conditions set forth in their respective Repurchase Agreements.

1 unchanged sentence

Morgan Repurchase Facility reflects fair value.

(3) Advances under the Repurchase Agreements accrue interest at per annum rates based on the one-month LIBOR, Term SOFR (as such term is defined in the applicable Repurchase Agreement) or the daily compounded SOFR plus a spread ranging from 1.30 % to 2.85 % to be determined on a case-by-case basis between Citibank, Barclays,Wells Fargo or Deutsche Bank and the CMFT Lending Subs.

(3) Advances under the Repurchase Agreements accrue interest at per annum rates based on Term SOFR (as such term is defined in the applicable Repurchase Agreement) or the daily compounded SOFR plus a spread ranging from 1.30 % to 2.85 % to be determined on a case-by-case basis between Citibank, Barclays, Wells Fargo or Deutsche Bank and the CMFT Lending Subs.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

(4) Facilities under the repurchase facility with J.P.

2 unchanged sentences

Such facilities carry no maximum facility size.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

(5) 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, which as of March 31, 2023, ranges from 0.95 % to 1.35 %.

Morgan, which as of June 30, 2023, ranges from 1.05 % to 1.45 %.

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

7 unchanged sentences

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, 2023.

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to March 31, 2023 (in thousands):

The Company believes it was in compliance with the financial covenants under the Repurchase Agreements as of June 30, 2023.

The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to June 30, 2023 (in thousands):

Principal Repayments

7 unchanged sentences

Unfunded Commitments

As of March 31, 2023, the Company had $ 292.7 million of unfunded loan commitments related to its existing CRE loans held-for-investment, corporate senior loans, and liquid corporate senior loans, and $ 112.6 million of unfunded commitments related to NewPoint JV.

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

As of March 31, 2023, the Company had $ 18.0 million of unsettled liquid corporate senior loan acquisitions, $ 13.0 million of which settled subsequent to March 31, 2023.

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

As of June 30, 2023, the Company had $ 298.6 million of unfunded loan commitments related to its existing CRE loans held-for-investment, corporate senior loans, and liquid corporate senior loans, and $ 113.0 million of unfunded commitments related to NewPoint JV.

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

As of June 30, 2023, the Company had $ 18.4 million of unsettled liquid corporate senior loan acquisitions, $ 10.5 million of which settled subsequent to June 30, 2023.

Unsettled acquisitions 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, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

Environmental Matters

23 unchanged sentences

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, 2023 and 2022, no incentive compensation fees were incurred.

During the three and six months ended June 30, 2023 and 2022, no incentive compensation fees were incurred.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

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

4 unchanged sentences

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,

2023 2022 2023 2022

Management fees $ 12,859 $ 13,351 $ 25,438 $ 26,698

1 unchanged sentence

Due to Affiliates

Of the amounts shown above, $ 13.8 million and $ 16.1 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, 2023 and 2022, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

Of the amounts shown above, $ 14.3 million and $ 14.4 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 six months ended June 30, 2023 and 2022, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

Development Management Agreements

2 unchanged sentences

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 three months ended March 31, 2023 and 2022, the Company recorded $ 76,000 and $ 130,000 , respectively, in development management fees.

During the six months ended June 30, 2023 and 2022, the Company recorded $ 107,000 and $ 234,000 , 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.

3 unchanged sentences

The Company redeemed its investment in the preferred units during the year ended December 31, 2022 in exchange for an investment in a first mortgage loan.

As of March 31, 2023, $ 203.6 million of the first mortgage loan was outstanding.

As of June 30, 2023, $ 203.6 million of the first mortgage loan was outstanding.

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, 2023, $ 123.0 million of the first mortgage loan was outstanding.

As of June 30, 2023, $ 123.0 million of the first mortgage loan was outstanding.

In November 2021, the Company entered into the Unconsolidated Joint Venture (the “MT-FT JV”) with CMMT Holdings, LLC, a fund that is advised by an affiliate of CMFT Management (“CMMT”), for the purposes of investing in the NewPoint JV.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

$ 212.5 million, of which $ 99.5 million has been funded, net of $ 45.8 million returned as a return of capital that can be called back by NewPoint JV through NP JV Holdings as a capital call on a future date.

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

For more information on the NewPoint JV, see Note 2 — Summary of Significant Accounting Policies and Note 6 — Investment in Unconsolidated Entities.

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, 2023, $ 154.0 million of the first mortgage loan was outstanding.

As of June 30, 2023, $ 154.0 million of the first mortgage loan was outstanding.

In April 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 March 31, 2023, $ 145.5 million of the first mortgage loan was outstanding.

As of June 30, 2023, $ 145.5 million of the first mortgage loan was outstanding.

During the year ended December 31, 2022, the Company and CIM RACR co-invested $ 75.9 million and $ 14.7 million, respectively, in five corporate senior loans to a third-party.

During the three months ended March 31, 2023, the Company and CIM RACR co-invested $ 15.5 million and $ 3.1 million, respectively, in two corporate senior loans to a third-party.

In addition, the Company and CIM RACR upsized a co-invested corporate senior loan to a third-party by $ 1.7 million and $ 348,000 , respectively, during the three months ended March 31, 2023.

As of March 31, 2023, $ 74.9 million of the corporate senior loans was outstanding.

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

Subsequent to March 31, 2023, the Company and CIM RACR co-invested $ 34.1 million and $ 6.0 million, respectively, in two corporate senior loans to a third-party.

During the six months ended June 30, 2023, the Company and CIM RACR co-invested $ 71.6 million and $ 13.6 million, respectively, in six corporate senior loans to a third-party.

In addition, the Company and CIM RACR upsized a co-invested corporate senior loan to a third-party by $ 1.7 million and $ 348,000 , respectively, during the six months ended June 30, 2023.

As of June 30, 2023, $ 130.2 million of the corporate senior loans was outstanding.

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

Subsequent to June 30, 2023, the Company and CIM RACR co-invested $ 464,000 and $ 58,000 , respectively, in one 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.

NOTE 13 — ECONOMIC DEPENDENCY

9 unchanged sentences

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, and awards of approximately 183,000 shares of common stock are available for future grant at March 31, 2023.

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 is 250,000 shares, which is a reduction from 400,000 shares authorized for issuance under the 2018 Plan, and awards of approximately 183,000 shares of common stock are available for future grant at June 30, 2023.

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, 2023, 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 and approximately 67,000 restricted shares in the aggregate to the independent members of the Board under the 2022 Plan.

As of March 31, 2023, 116,000 of the restricted shares had vested based on one year of continuous service.

The remaining 67,000 restricted shares issued had not vested or been forfeited as of

As of June 30, 2023, 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 and approximately 67,000 restricted shares in the aggregate to the independent members of the Board under the 2022 Plan.

As of June 30, 2023, 116,000 of the restricted shares had vested based on one year of continuous service.

The remaining 67,000 restricted shares issued had not vested or been forfeited as of June 30, 2023.

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

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

March 31, 2023.

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

June 30, 2023 (Unaudited) – (Continued)

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

The Company recorded compensation expense of $ 120,000 and $ 37,000 for the three months ended March 31, 2023 and 2022, 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, 2023, there was $ 240,000 of total unrecognized compensation expense related to these restricted shares, which will be recognized ratably over the remaining period of service prior to October 2023.

The Company recorded compensation expense of $ 120,000 and $ 240,000 for the three and six months ended June 30, 2023, respectively, and $ 120,000 and $ 157,000 for the three and six months ended June 30, 2022, 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, 2023, there was $ 120,000 of total unrecognized compensation expense related to these restricted shares, which will be recognized ratably over the remaining period of service prior to October 2023.

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, 2023, the Company’s leases had a weighted-average remaining term of 11.3 years.

As of June 30, 2023, the Company’s leases had a weighted-average remaining term of 11.1 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.

1 unchanged sentence

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of March 31, 2023, 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):

As of June 30, 2023, 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, 2023 and 2022, 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, 2023 and 2022 consisted of the following (in thousands):

Three Months Ended March 31,

For the three and six months ended June 30, 2023 and 2022, 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, 2023 and 2022 consisted of the following (in thousands):

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

2023 2022 2023 2022

Fixed rental and other property income (1)

1 unchanged sentence

Variable rental and other property income (2)

2,647 5,567 4,071 14,597

Total rental and other property income $ 25,682 $ 53,508 $ 64,463 $ 127,244

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 10.2 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 $ 2.0 million in the condensed consolidated balance sheets.

1 unchanged sentence

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, 2023, of which $ 61,000 was paid in cash during the period it was recognized.

As of March 31, 2023, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $ 187,000 for the remainder of 2023, $ 250,000 annually for 2024 through 2028, and $ 1.2 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, 2023, respectively, of which $ 61,000 and $ 121,000 , respectively, was paid in cash during the period it was recognized.

As of June 30, 2023, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $ 125,000 for the remainder of 2023, $ 250,000 annually for 2024 through 2028, and $ 1.2 million thereafter through the maturity date of the lease in August 2033.

NOTE 16 — SEGMENT REPORTING

4 unchanged sentences

Prior period amounts have been revised to conform to the current year presentation shown below.

The following tables present segment reporting for the three months ended March 31, 2023 and 2022 (in thousands):

The following tables present segment reporting for the three and six months ended June 30, 2023 and 2022 (in thousands):

Real Estate Credit Corporate/Other (1)

Company Total

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Rental and other property income $ 25,590 $ — $ 92 $ 25,682

9 unchanged sentences

Depreciation and amortization 9,319 — — 9,319

Increase in provision for credit losses — 49,637 — 49,637

Total expenses 17,576 117,091 9,599 144,266

Other income (expense):

Gain on disposition of real estate and condominium developments, net 24,285 — 2,278 26,563

Gain on investment in unconsolidated entities — 5,806 — 5,806

Unrealized gain on equity security — 3,096 — 3,096

Other (expense) income, net ( 2,352 ) 1,166 2,036 850

Loss on extinguishment of debt ( 24 ) — ( 870 ) ( 894 )

Segment net income (loss) $ 29,923 $ 8,015 $ ( 6,063 ) $ 31,875

Total assets as of June 30, 2023

$ 1,198,007 $ 4,948,370 $ 518,229 $ 6,664,606

__________________________________

(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, 2023 (Unaudited) – (Continued)

Real Estate Credit Corporate/Other (1)

Company Total

Six Months Ended June 30, 2023

Rental and other property income $ 64,305 $ — $ 158 $ 64,463

Interest income — 223,121 — 223,121

Total revenues 64,305 223,121 158 287,584

General and administrative 422 1,559 6,238 8,219

Interest expense, net 11,316 110,066 4,400 125,782

Property operating 2,888 — 2,695 5,583

Real estate tax 1,315 — 733 2,048

Expense reimbursements to related parties — — 7,249 7,249

Management fees 5,891 19,547 — 25,438

Transaction-related 25 — 51 76

Depreciation and amortization 24,429 — — 24,429

Real estate impairment 4,814 — — 4,814

3 unchanged sentences

Gain on disposition of real estate and condominium developments, net 43,845 — 2,341 46,186

Loss on investment in unconsolidated entities — ( 770 ) — ( 770 )

Gain on investment in unconsolidated entities — 5,036 — 5,036

Unrealized gain on equity security — 5,354 — 5,354

4 unchanged sentences

Segment net income (loss) attributable to the Company $ 51,655 $ 54,256 $ ( 19,852 ) $ 86,059

Total assets as of March 31, 2023

Total assets as of June 30, 2023

$ 1,198,007 $ 4,948,370 $ 518,229 $ 6,664,606

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

June 30, 2023 (Unaudited) – (Continued)

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

20 unchanged sentences

Other income (expense):

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

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

Unrealized loss on equity security — ( 4,064 ) — ( 4,064 )

Other income, net 1,089 1,150 33 2,272

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

Segment net income (loss)

$ 85,668 $ 11,573 $ ( 23,628 ) $ 73,613

Net loss 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, 2023 (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

Interest expense, net 25,341 30,391 6,932 62,664

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 expenses 106,040 54,582 31,626 192,248

Other income (expense):

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

5 unchanged sentences

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

Net income allocated to noncontrolling interest 9 — — 9

Net loss 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

5 unchanged sentences

Redemptions of Shares of Common Stock

Subsequent to March 31, 2023, the Company redeemed approximately 1.6 million shares for $ 10.8 million (at a redemption price of $ 6.57 per share).

The remaining redemption requests received during the three months ended March 31, 2023 totaling approximately 23.9 million shares went unfulfilled.

Subsequent to June 30, 2023, the Company redeemed approximately 1.6 million shares for $ 10.8 million (at a redemption price of $ 6.57 per share).

The remaining redemption requests received during the three months ended June 30, 2023 totaling approximately 24.8 million shares went unfulfilled.

Investment and Disposition Activity

Subsequent to March 31, 2023, the Company’s investment and disposition activity included the following:

• Sold 27 of the properties under contract for sale pursuant to the Realty Income Purchase and Sale Agreement for total consideration of $ 82.1 million and a gain of approximately $ 12.8 million.

Subsequent to June 30, 2023, the Company’s investment and disposition activity included the following:

• Disposed of one condominium unit for a sales price of $ 1.5 million, resulting in net proceeds of $ 1.4 million after closing costs and a gain of approximately $ 459,000 .

• Settled $ 10.5 million of liquid senior loan purchases, all of which were traded as of June 30, 2023, and sold $ 25.8 million of liquid senior loans.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023 (Unaudited) – (Continued)

• In addition to the properties disposed of pursuant to the Realty Income Purchase and Sale Agreement, the Company disposed of two properties and condominium units for an aggregate gross sales price of $ 25.4 million, resulting in net proceeds of $ 23.9 million after closing costs and a net gain of approximately $ 7.6 million.

• Purchased $ 63.5 million in CMBS.

• Settled $ 13.0 million of liquid senior loan purchases, all of which were traded as of March 31, 2023, and sold $ 5.8 million of liquid senior loans.

• Invested $ 44.1 million in three corporate senior loans to a third-party.

• Funded an aggregate amount of $ 4.9 million to six of the Company’s first mortgage loans.

Financing Activity

Subsequent to March 31, 2023, the Company’s financing activity included the following:

• Financed CMBS under the J.P.

Morgan Repurchase Facility for $ 36.2 million and repaid $ 551,000 of borrowings under the J.P.

Morgan Repurchase Facility.

• Repaid $ 88.0 million of borrowings under the Credit Securities Revolver.

• Repaid $ 5.0 million of borrowings under the Deutsche Bank Repurchase Facility.

June 30, 2023 (Unaudited) – (Continued)

• Invested $ 9.1 million in two corporate senior loans to a third-party.

• Funded an aggregate amount of $ 5.2 million to five of the Company’s first mortgage loans, and received $ 4.9 million of principal repayments.

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