What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-14 compared with 2023-08-11 · 401 added, 327 removed, 1095 unchanged (40% of the section changed)

3 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Real estate assets:

7 unchanged sentences

Investment in unconsolidated entities 110,788 100,604

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

Real estate-related securities, at fair value, net of credit loss allowances of $ 25,748 and $ 0 as of September 30, 2023 and December 31, 2022, respectively

639,144 576,391

23 unchanged sentences

Common stock, $ 0.01 par value per share;

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

490,000,000 shares authorized, 437,267,415 and 437,397,414 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Capital in excess of par value 3,529,885 3,529,523

9 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

12 unchanged sentences

Increase in provision for credit losses

50,219 5,664 101,309 15,315

Total expenses 160,999 92,147 415,727 284,395

2 unchanged sentences

Gain on investment in unconsolidated entities 3,136 2,195 8,172 8,858

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

Unrealized (loss) gain on equity security ( 2,073 ) ( 9,030 ) 3,281 ( 15,440 )

Other income, net 5,172 3,630 6,346 7,207

Loss on extinguishment of debt ( 1,085 ) ( 3,344 ) ( 5,624 ) ( 19,584 )

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

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

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

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

Total other income (loss)

11,118 ( 2,095 ) 64,329 99,176

Net (loss) income $ ( 11,042 ) $ 15,539 $ 75,025 $ 128,253

Net income allocated to noncontrolling interest — 129 8 66

Net (loss) income attributable to the Company $ ( 11,042 ) $ 15,410 $ 75,017 $ 128,187

Weighted average number of common shares outstanding:

Basic and diluted 437,339,532 437,298,345 437,391,323 437,339,348

Net income per common share:

Net (loss) income per common share:

Basic and diluted $ ( 0.03 ) $ 0.04 $ 0.17 $ 0.29

1 unchanged sentence

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands) (Unaudited)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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

Other comprehensive income (loss)

Net (loss) income $ ( 11,042 ) $ 15,539 $ 75,025 $ 128,253

Other comprehensive loss

Unrealized loss on real estate-related securities ( 944 ) ( 8,709 ) ( 32,860 ) ( 24,496 )

1 unchanged sentence

Unrealized gain on interest rate swaps — 78 — 2,361

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

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

Amount of gain reclassified from other comprehensive loss into income as interest expense, net — ( 2,613 ) — ( 2,551 )

Total other comprehensive loss ( 944 ) ( 11,244 ) ( 19,266 ) ( 24,686 )

Comprehensive (loss) income ( 11,986 ) 4,295 55,759 103,567

Comprehensive income attributable to noncontrolling interest — 129 8 66

Comprehensive (loss) income attributable to the Company $ ( 11,986 ) $ 4,166 $ 55,751 $ 103,501

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

4 unchanged sentences

of Par Value Accumulated

Distributions in Excess of Earnings Accumulated Other Comprehensive Loss Total

Distributions in Excess of Earnings Accumulated Other Comprehensive (Loss) Income Total

Stockholders’

18 unchanged sentences

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

Issuance of common stock 1,612,843 16 10,579 — — 10,595 — 10,595

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

Distributions declared on common stock — $ 0.11 per common share

— — — ( 45,916 ) — ( 45,916 ) — ( 45,916 )

Redemptions of common stock ( 1,727,400 ) ( 17 ) ( 11,332 ) — — ( 11,349 ) — ( 11,349 )

Changes in redeemable common stock — — 753 — — 753 — 753

Comprehensive loss

— — — ( 11,042 ) ( 944 ) ( 11,986 ) — ( 11,986 )

Balance as of September 30, 2023 437,267,415 $ 4,373 $ 3,529,885 $ ( 1,092,042 ) $ ( 67,792 ) $ 2,374,424 $ — $ 2,374,424

CIM REAL ESTATE FINANCE TRUST, INC.

27 unchanged sentences

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

Issuance of common stock 1,326,177 13 9,535 — — 9,548 — 9,548

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

Distributions declared on common stock — $ 0.09 per common share

— — — ( 40,010 ) — ( 40,010 ) — ( 40,010 )

Redemptions of common stock ( 1,374,510 ) ( 13 ) ( 9,884 ) — — ( 9,897 ) — ( 9,897 )

Changes in redeemable common stock — — 348 — — 348 — 348

Distributions to non-controlling interests — — — — — — ( 1,117 ) ( 1,117 )

Comprehensive income (loss) — — — 15,410 ( 11,244 ) 4,166 129 4,295

Balance as of September 30, 2022 437,262,738 $ 4,373 $ 3,529,404 $ ( 1,000,420 ) $ ( 21,737 ) $ 2,511,620 $ ( 8 ) $ 2,511,612

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

2 unchanged sentences

(in thousands) (Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

48 unchanged sentences

(in thousands) (Unaudited) — Continued

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities:

20 unchanged sentences

Mortgage notes payable assumed by buyer in connection with disposition of real estate assets $ — $ ( 356,477 )

Equity security received in connection with disposition of real estate assets $ — $ ( 53,388 )

Common stock issued through distribution reinvestment plan $ 32,117 $ 28,664

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited)

September 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 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.

As of September 30, 2023, the Company’s loan portfolio consisted of 346 loans with a net book value of $ 4.1 billion, and investments in real estate-related securities of $ 639.1 million.

As of September 30, 2023, the Company owned 194 properties, comprising approximately 6.2 million rentable square feet of commercial space located in 37 states.

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

As of September 30, 2023, the Company owned condominium developments with a net book value of $ 106.5 million.

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

21 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

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

1 unchanged sentence

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 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.

As of September 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.

On November 9, 2023, the Board established an updated estimated per share NAV of the Company’s common stock, using a valuation date of September 30, 2023, of $ 6.31 per share.

Commencing on November 14, 2023, distributions are reinvested in shares of the Company’s common stock under the DRIP at a price of $ 6.31 per share and $ 6.31 per share serves as the most recent estimated per share NAV for purposes of the share redemption program.

The Company’s estimated per share NAVs are not audited or reviewed by its independent registered public accounting firm.

15 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 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 $ 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.

The Company has chosen to break out the details of $ 43.0 million and $ 105.7 million of interest expense, net from other income, net into expenses in the Company’s condensed consolidated statement of operations for the three and nine months ended September 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 $ 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.

In addition, the Company has chosen to break out the details of $ 17.7 million of accrued interest receivable from prepaid expenses, derivative assets and other assets in the Company’s condensed consolidated balance sheet as of September 30, 2022, which resulted in a corresponding breakout of $ 13.2 million from prepaid expenses and other assets to accrued interest receivable in the Company’s condensed consolidated statement of cash flows for the nine months ended September 30, 2022.

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

23 unchanged sentences

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

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.

During the nine months ended September 30, 2023, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of $ 11.6 million related to five properties due to sales prices or revised cash flow estimates that were less than their respective carrying values.

Additionally, during the nine months ended September 30, 2023, one condominium unit was deemed to be impaired and its carrying value was reduced to its estimated fair value, resulting in impairment charges of $ 156,000 .

The Company’s impairment assessment as of September 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.

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.

During the nine months ended September 30, 2022, the Company recorded impairment charges of $ 11.9 million related to 19 properties, all of which was due to sales prices that were less than their respective carrying values.

Additionally, during the nine months ended September 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

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

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.

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

As of September 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 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.

Given the Company’s current asset portfolio and strategy, the Company’s dispositions during the nine months ended September 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 nine months ended September 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 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

The Company recorded a gain of $ 3.1 million and $ 8.2 million, respectively,

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.

September 30, 2023 (Unaudited) – (Continued)

which represented its share of NP JV Holdings’ gain, during the three and nine months ended September 30, 2023, respectively, in the condensed consolidated statements of operations.

The Company recorded a gain of $ 2.2 million and $ 3.7 million, respectively, which represented its share of NP JV Holdings’ gain, during the three and nine months ended September 30, 2022.

During the nine months ended September 30, 2023, the Company contributed an additional $ 14.5 million in NP JV Holdings.

The Company also received $ 12.4 million in distributions during the nine months ended September 30, 2023, $ 5.8 million of which can be called back by NewPoint JV through NP JV Holdings as a capital call on a future date.

As of September 30, 2023 and December 31, 2022, the Company’s aggregate investment in NP JV Holdings of $ 110.8 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 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.

During the nine months ended September 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 during the nine months ended September 30, 2022.

Restricted Cash

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.

The Company had $ 23.3 million and $ 57.6 million in restricted cash as of September 30, 2023 and December 31, 2022, respectively.

Included in restricted cash was $ 1.7 million and $ 15.4 million held by lenders in lockbox accounts, as of September 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 $ 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.

Also included in restricted cash was $ 2.0 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 September 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 September 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.

Subsequent to September 30, 2023, Barclays applied the $ 19.6 million deposit held as cash collateral as repayment towards certain eligible assets financed under the repurchase facility 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 June 30, 2023, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities;

As of September 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 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).

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

During the nine months ended September 30, 2023, the Company invested $ 143.2 million in CMBS.

As of September 30, 2023, the Company had investments in 24 CMBS with an estimated aggregate fair value of $ 597.6 million.

The amortized cost of the Company’s available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 (Unaudited) – (Continued)

In addition, the Company had an investment in an equity security with an estimated aggregate fair value of $ 41.5 million as of September 30, 2023, which is comprised of Global Net Lease, Inc.’s common stock (“GNL Common Stock”).

The GNL Common Stock was converted from RTL Common Stock, which was received as consideration in connection with the RTL Purchase and Sale Agreement (both of which are defined in Note 4 — Real Estate Assets), upon the consummation of the transactions pursuant to the agreement and plan of merger by and among Global Net Lease, Inc.

GNL) (“GNL”) and The Necessity Retail REIT, Inc.

RTL) (“RTL”), among others.

The RTL Common Stock was cancelled in accordance with the terms of the aforementioned agreement and plan of merger and was converted into 0.670 shares of GNL Common Stock during the three months ended September 30, 2023.

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 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.

During the three and nine months ended September 30, 2023, the Company recorded $ 1.4 million and $ 4.1 million, respectively, of dividend income on GNL Common Stock.

During the three and nine months ended September 30, 2022, the Company recorded $ 1.4 million and $ 2.7 million, respectively, of dividend income on GNL 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 also recorded $ 2.1 million of unrealized loss and $ 3.3 million of unrealized gain on GNL Common Stock during the three and nine months ended September 30, 2023, respectively, and recorded $ 9.0 million and $ 15.5 million of unrealized loss on GNL Common Stock during the three and nine months ended September 30, 2022, respectively, all of which is included in unrealized (loss) gain 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, 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.

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

Subsequent 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.

1 unchanged sentence

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.

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

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

Interest earned is either received in cash or capitalized to real estate-related securities in the Company’s condensed consolidated balance sheets.

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

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.

During the three and nine months ended September 30, 2023, the Company capitalized $ 292,000 and $ 863,000 , respectively, of interest income to real estate-related securities.

During the three and nine months ended September 30, 2022, the Company capitalized $ 280,000 and $ 826,000 , respectively, of interest income to real estate-related securities.

Loans Held-for-Investment

1 unchanged sentence

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

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

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.

Loans held-for-investment are carried on the Company’s condensed consolidated balance sheets at amortized cost, net of any current expected credit losses, and is adjusted for amortization of premiums and accretion of discounts to maturity.

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

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

During the three 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.

During the nine months ended September 30, 2022, the Company capitalized $ 62,000 of interest income to loans held-for-investment.

Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status.

Interest collected is recognized on a cash basis by crediting income when received.

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 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.

See the Revenue Recognition section below for additional information regarding the Company’s revenue from lending activities.

As of September 30, 2023, the Company had two first mortgage loan investments on nonaccrual status with an aggregate carrying value of $ 206.0 million, which represented approximately 8 % of the carrying value of the Company’s first mortgage loan portfolio.

As of September 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.

For more information regarding these loans, refer to Note 8 — Loans Held-For-Investment.

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Current Expected Credit Losses

6 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,

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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, 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.

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4- Underperformance — The debt investment possesses credit deficiencies or potential weaknesses which deserve management’s close and continued attention.

The portfolio company’s operations and/or balance sheet have demonstrated an adverse trend or deterioration which, while serious, has not reached the point where the liquidation of debt is jeopardized.

The portfolio company’s operations and/or balance sheet have demonstrated an adverse trend or deterioration which, while serious, has not reached the point where the

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liquidation of debt is jeopardized.

These weaknesses are generally considered correctable by the borrower in the normal course of business but may weaken the asset or inadequately protect the Company’s credit position if not checked or corrected.

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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

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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.

13 unchanged sentences

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

During the 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.

During the nine months ended September 30, 2023 and 2022, the Company capitalized $ 9.1 million and $ 10.9 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 nine months ended September 30, 2023 and 2022 was $ 1.0 million and $ 1.1 million, respectively, of capitalized interest expense.

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Revenue Recognition

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

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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.

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.

Revenue from lending activities

Interest income from the Company’s loans held-for-investment and real estate-related securities is comprised of interest earned on loans and the accretion and amortization of net loan origination fees and discounts.

Interest income from the Company’s loans held-for-investment and available-for-sale securities is recognized using the effective interest method (or the modified straight-line method when it is materially consistent with the effective interest method).

Interest income is comprised of interest earned on loans and the accretion and amortization of net loan origination fees and discounts recognized through the life of each investment.

Interest income on loans is accrued as earned, with the accrual of interest suspended when the related loan becomes a nonaccrual loan.

Interest income on the Company’s liquid corporate senior loans is accrued as earned beginning on the settlement date.

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

Accrual of interest income is suspended on nonaccrual loans.

Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status.

Interest collected is recognized on a cash basis when received or as a reduction in the amortized cost basis, based on specific facts and circumstances, until accrual is resumed when the loan becomes contractually current and the Company believes all future principal and interest will be received according to the contractual loan terms.

Reportable Segments

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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 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

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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.

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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 six months ended June 30, 2023.

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

In June 2022, the FASB issued ASU No.

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

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

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”).

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

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

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

The Company does not believe the adoption of ASU 2022-03 will have an impact on its condensed consolidated financial statements and disclosures.

In August 2023, the FASB issued ASU No.

2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement (“ASU 2023-05”).

ASU 2023-05 applies to the formation of a joint venture and requires a joint venture to initially measure all contributions received upon its formation at fair value.

The guidance is intended to reduce diversity in practice and provide users of joint venture financial statements with more decision-useful information.

The amendments are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025.

The Company does not believe the adoption of ASU 2023-05 will have a material impact on its condensed consolidated financial statements and disclosures.

NOTE 3 — FAIR VALUE MEASUREMENTS

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

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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.

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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 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.

As of September 30,

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2023, the Company concluded that $ 438.1 million of its CMBS fell under Level 2 and $ 159.6 million of its CMBS fell under Level 3.

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

3 unchanged sentences

These financial instruments are valued using Level 2 inputs.

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.

As of September 30, 2023, the estimated fair value of the Company’s debt was $ 3.95 billion, compared to a carrying value of $ 4.07 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 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.

However, as of September 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.

Loans held-for-investment — The Company’s loans held-for-investment are recorded at cost upon origination and adjusted by net loan origination fees and discounts.

Loans held-for-investment — The Company’s loans held-for-investment are recorded at cost upon origination net of loan origination fees and discounts.

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

1 unchanged sentence

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 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 September 30, 2023, $ 576.7 million and $ 65.6 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 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

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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 September 30, 2023, the estimated fair value of the Company’s loans held-for-investment and related receivables, net was $ 4.14 billion, compared to its carrying value of $ 4.11 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.

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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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 June 30, 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 September 30, 2023 and December 31, 2022 (in thousands):

Balance as of

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

September 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:

1 unchanged sentence

Equity security 41,530 41,530 — —

Interest rate caps 641 — 641 —

Interest rate cap

Total financial assets $ 639,162 $ 41,530 $ 438,074 $ 159,558

7 unchanged sentences

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

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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):

The following are reconciliations of the changes in financial assets with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, 2023 (in thousands):

Beginning Balance, January 1, 2023

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Capitalized interest income 863

Ending Balance, June 30, 2023

Ending Balance, September 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.

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

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

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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 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.

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September 30, 2023 (Unaudited) – (Continued)

As discussed in Note 4 — Real Estate Assets, during the nine months ended September 30, 2023, real estate assets related to five properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 38.6 million, resulting in impairment charges of $ 11.6 million.

During the nine months ended September 30, 2022, real estate assets related to 19 properties were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 114.1 million, resulting in impairment charges of $ 11.9 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.

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,

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 nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

Discount Rate Terminal Capitalization Rate Discount Rate Terminal Capitalization Rate

2 unchanged sentences

8.0 % – 9.7 %

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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,

7.5 % – 9.2 %

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

Nine Months Ended September 30,

Asset class impaired:

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Property Acquisitions

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

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

Condominium Development Project

During the nine months ended September 30, 2023 and 2022, the Company capitalized $ 9.1 million and $ 10.9 million, respectively, of expenditures associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.

Condominium Dispositions

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.

During the nine months ended September 30, 2023, the Company disposed of condominium units for an aggregate sales price of $ 43.1 million, resulting in proceeds of $ 39.1 million after closing costs and a gain of $ 3.0 million.

During the nine months ended September 30, 2022, the Company disposed of condominium units for an aggregate sales price of $ 24.2 million, resulting in proceeds of $ 22.0 million after closing costs and a gain of $ 3.1 million.

The Company has no continuing

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September 30, 2023 (Unaudited) – (Continued)

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.

3 unchanged sentences

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.

During the nine months ended September 30, 2023, the Company disposed of 186 properties, including 183 retail properties and three industrial properties, for an aggregate gross sales price of $ 913.5 million, resulting in proceeds of $ 903.7 million after closing costs and a gain of $ 43.9 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.

2 unchanged sentences

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.

2022 Property Dispositions and Real Estate Assets Held for Sale

2022 Property Dispositions

On December 20, 2021, certain subsidiaries of the Company entered into an Agreement of Purchase and Sale, as amended (the “RTL Purchase and Sale Agreement”), with American Finance Trust, Inc.

(now known as The Necessity Retail REIT, Inc.) (NASDAQ:

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

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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 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.

(subsequently known as RTL), American Finance Operating Partnership, L.P.

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

The Purchase Price included the Purchaser’s option to seek the assumption of certain existing debt, and Purchaser’s issuance of up to $ 53.4 million in value of RTL’s Class A common stock, par value $ 0.01 per share (“RTL Common Stock”) (now known as GNL Common Stock;

refer to Note 2 — Summary of Significant Accounting Policies for additional information), 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 nine months ended September 30, 2022, the Company disposed of 130 properties, including 65 retail properties, 56 anchored shopping centers, six industrial properties and three office buildings and an outparcel of land for an aggregate gross sales price of $ 1.71 billion, resulting in proceeds of $ 1.67 billion after closing costs and a gain of $ 115.0 million.

Included in this amount of properties disposed were two properties previously owned through a consolidated joint venture arrangement.

The sale of 81 of these properties closed pursuant to the RTL Purchase and Sale Agreement for total consideration of $ 1.33 billion, which consisted of $ 1.28 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.

During the nine months ended September 30, 2022, the Company recognized earnout income of $ 68.7 million related to the disposition of these properties pursuant to the RTL Purchase and Sale Agreement, and recorded a related receivable of $ 20.3 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 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.

During the three and nine months ended September 30, 2023, the Company received $ 5.3 million in additional earnout proceeds upon the settlement of earnout claims related to the disposition of the properties pursuant to the RTL Purchase and Sale Agreement, which is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

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 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.

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September 30, 2023 (Unaudited) – (Continued)

During the nine months ended September 30, 2023, five properties totaling approximately 240,000 square feet with a carrying value of $ 50.2 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 38.6 million, resulting in impairment charges of $ 11.6 million, which were recorded in the condensed consolidated statements of operations.

During the nine months ended September 30, 2022, 19 properties totaling approximately 832,000 square feet with a carrying value of $ 126.0 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $ 114.1 million, resulting in impairment charges of $ 11.9 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.

NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES

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

September 30, 2023 December 31, 2022

Intangible lease assets:

6 unchanged sentences

$ 13,647 $ 19,054

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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 and six months ended June 30, 2023 and 2022 (in thousands):

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

The following table summarizes the amortization related to the intangible lease assets and liabilities for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Below-market lease amortization $ 309 $ 469 $ 1,055 $ 1,532

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

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As of September 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 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.

As of September 30, 2023, the carrying value of the Company’s investment in NP JV Holdings was $ 110.8 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance sheets.

The Company received $ 12.4 million in distributions related to its investment in NP JV Holdings during the nine months ended September 30, 2023, $ 7.6 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 September 30, 2023, the Company had $ 104.0 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 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)

During the nine months ended September 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 nine months ended September 30, 2022, all of which was recognized as a return on investment.

NOTE 7 — REAL ESTATE-RELATED SECURITIES

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):

As of September 30, 2023, the Company had real estate-related securities with an aggregate estimated fair value of $ 639.1 million, which included 24 CMBS investments and an investment in a publicly-traded equity security.

The CMBS have initial maturity dates ranging from December 2023 through June 2058 and have interest rates ranging from 6.6 % to 12.4 % as of September 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 September 30, 2023 (in thousands):

Real Estate-Related Securities

3 unchanged sentences

Total real estate-related securities $ 744,524 $ ( 79,632 ) $ ( 25,748 ) $ 639,144

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

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 (Unaudited) – (Continued)

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

Amortized Cost Basis Unrealized Loss CECL Fair Value

2 unchanged sentences

Face value of real estate-related securities acquired 146,037 — — 146,037

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

Discounts on purchase of real estate-related securities, net of acquisition costs

( 2,879 ) — — ( 2,879 )

6 unchanged sentences

Current expected credit losses — — ( 25,748 ) ( 25,748 )

Real estate-related securities as of June 30, 2023

Real estate-related securities as of September 30, 2023

$ 744,524 $ ( 79,632 ) $ ( 25,748 ) $ 639,144

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 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.

During the nine months ended September 30, 2023, the Company invested $ 143.2 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.

Unrealized gains and losses on the equity security are reported on the 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

June 30, 2023 (Unaudited) – (Continued)

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

During the nine months ended September 30, 2023, the Company recorded $ 16.0 million of net unrealized loss on its real estate-related securities, comprised of a $ 19.3 million unrealized loss on CMBS, which is included in other comprehensive loss in the accompanying condensed consolidated statements of comprehensive (loss) income and a $ 3.3 million unrealized gain on the Company’s equity security, which is included in unrealized (loss) gain on equity security in the accompanying condensed consolidated statements of operations.

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

Amortized Cost Estimated Fair Value

8 unchanged sentences

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.

Current expected credit related losses are recorded in increase in provision for 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):

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 nine months ended September 30, 2023 (in thousands):

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 (Unaudited) – (Continued)

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

3 unchanged sentences

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.

Provision for credit losses 2,296

Current expected credit losses as of September 30, 2023 $ 25,748

During the nine months ended September 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.

In March 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.

Though the appraisal reduction was subsequently reversed during the nine months ended September 30, 2023, the initial appraisal reduction resulted in reduced cash flows received from the respective CMBS investment during the nine months ended September 30, 2023.

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

1 unchanged sentence

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.

As a result of the credit loss incurred, the Company reclassified $ 13.6 million of unrealized loss from other comprehensive loss on the condensed consolidated statements of comprehensive (loss) income to increase in provision for credit losses on the condensed consolidated statements of operations during the nine months ended September 30, 2023, and recorded an incremental $ 12.1 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

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

Upon evaluating these securities, the Company concluded that the unrealized losses included in other comprehensive loss as of September 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 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.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2023 (Unaudited) – (Continued)

NOTE 8 — LOANS HELD-FOR-INVESTMENT

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,

The Company’s loans held-for-investment consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):

As of September 30, As of December 31,

First mortgage loans (1)

7 unchanged sentences

____________________________________

(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):

(1) As of September 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 September 30, 2023 and December 31, 2022 (dollar amounts in thousands):

CRE Loans (1) (2)

Liquid Corporate Senior Loans Corporate Senior Loans

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

September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Number of loans 31 29 298 317 17 4

7 unchanged sentences

____________________________________

(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”).

(1) As of September 30, 2023, 100 % of the Company’s CRE loans by principal balance earned a floating rate of interest 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

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

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

11 unchanged sentences

( 70,068 ) 3,204 ( 1,502 ) ( 68,366 )

Balance, June 30, 2023

Balance, September 30, 2023

$ 3,299,530 $ 646,753 $ 160,653 $ 4,106,936

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 six months ended June 30, 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 nine months ended September 30, 2023 (in thousands):

First Mortgage Loans Unfunded First Mortgage Loans (1)

9 unchanged sentences

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

Provision for (reversal of) credit losses

45,651 5,030 ( 2,841 ) ( 259 ) 338 4 47,923

Current expected credit losses as of September 30, 2023

$ 90,420 $ 9,198 $ 17,991 $ — $ 2,299 $ 330 $ 120,238

____________________________________

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

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 (Unaudited) – (Continued)

During the three months ended September 30, 2023, the Company recorded a net increase of $ 47.9 million in the current expected credit loss reserve against the loans held-for-investment portfolio, bringing the total current expected credit loss reserve on funded and unfunded commitments to $ 120.2 million.

The current expected credit loss reserve reflects certain loans assessed for impairment as well as macroeconomic and current portfolio conditions.

As of September 30, 2023, the Company had two collateral dependent risk-rated 5 first mortgage loan investments on nonaccrual status:

(i) a $ 134.2 million commercial first mortgage loan on an office building in Massachusetts primarily due to a decrease in rent collection, reduced leasing activity, and stabilization costs required;

and (ii) a $ 128.9 million commercial first mortgage loan on an office building in Virginia primarily due to slower than anticipated leasing activity driven by COVID-accelerated office trends and decreased in-place occupancy.

Future interest collections related to these loans will be recognized as interest income on a cash basis.

As of September 30, 2023, the Company’s asset-specific credit loss reserve totaled $ 63.9 million, which related to the Company’s impaired risk-rated 5 first mortgage loans.

The asset-specific credit loss reserve is recorded based on the Company’s estimation of the fair value of each of the loan’s underlying collateral as of September 30, 2023.

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

1 unchanged sentence

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

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.

September 30, 2023 (Unaudited) – (Continued)

The Company’s primary credit quality indicator is its risk ratings, which are further discussed above.

The following table presents the net book value of the Company’s loans held-for-investment portfolio as of June 30, 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 September 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 June 30, 2023

As of September 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 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.

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

During the nine months ended September 30, 2023, one of the Company’s interest rate cap agreements matured.

As of September 30, 2023, the Company had one non-designated interest rate cap agreement.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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):

September 30, 2023 (Unaudited) – (Continued)

The following table summarizes the terms of the Company’s interest rate cap agreement as of September 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 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

7/15/2023 to 10/9/2023

$ 641 $ 5,040

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

Location September 30, 2023 Rate

Interest Rate Cap

Prepaid expenses, derivative assets and other assets $ 62,000 4.00 % (1)

____________________________________

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

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

2 unchanged sentences

Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument.

The Company has interest rate caps that are used to manage exposure to interest rate movements, but do not meet the requirements to be designated as hedging instruments.

The Company has an interest rate cap that is used to manage exposure to interest rate movements, but does not meet the requirements to be designated as a hedging instrument.

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

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 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.

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.

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 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.

For the three and nine months ended September 30, 2023, no amounts were reclassified from other comprehensive loss as a change to interest expense.

For the three and nine months ended September 30, 2022, the amount of gain reclassified from other comprehensive loss as a decrease to interest expense was $ 2.6 million for both periods.

The total unrealized loss on interest rate swaps of $ 20,000 as of September 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 loss as of September 30, 2023.

Subsequent to September 30, 2023, the Company’s remaining interest rate cap 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 June 30, 2023.

There were no events of default related to the derivative instrument as of September 30, 2023.

NOTE 10 — REPURCHASE FACILITIES, NOTES PAYABLE AND CREDIT FACILITIES

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 %.

As of September 30, 2023, the Company had $ 4.1 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of 3.0 years and a weighted average interest rate of 6.4 %.

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

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

September 30, 2023 (Unaudited) – (Continued)

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

During the Nine Months Ended September 30, 2023

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

1 unchanged sentence

Amortization Balance as of

June 30, 2023

September 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 (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.

(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 $ 5.6 million during the nine months ended September 30, 2023, which included approximately $ 1.0 million in prepayment penalties.

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

1 unchanged sentence

Notes Payable

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.

During the nine months ended September 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 nine months ended September 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 September 30, 2023, the Company had $ 494.4 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 $ 73.6 million of borrowings financed through a note on note financing arrangement with Citibank, N.A.

(the “Citibank Financing”).

As of September 30, 2023, the Citibank Financing had three one-year extension options remaining, subject to certain conditions set forth in its financing agreement.

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 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.

During the nine months ended September 30, 2023, the Company paid down the $ 43.1 million outstanding balance on the refinanced Assumed Variable Rate Debt and terminated the Assumed Variable Rate Debt.

The Company’s outstanding variable rate debt had a weighted average interest rate of 7.4 % as of September 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 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

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

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

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

September 30, 2023 (Unaudited) – (Continued)

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.

12 unchanged sentences

The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the Class A Notes was $ 963.9 million.

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 %.

As of September 30, 2023, amounts outstanding on the Class A Notes totaled $ 758.5 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 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.

During the nine months ended September 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.

4 unchanged sentences

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

As of September 30, 2023, the amounts borrowed and outstanding under the Loan Facility totaled $ 75.0 million at a weighted average interest rate of 8.2 %.

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 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.

During the nine months ended September 30, 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, as administrative agent, CMFT Securities Investments, LLC, a wholly-owned subsidiary of the

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 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.

1 unchanged sentence

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

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 %.

As of September 30, 2023, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $ 415.5 million at a weighted average interest rate of 7.4 %.

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

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 June 30, 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 September 30, 2023.

Repurchase Facilities

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.

As of September 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 June 30, 2023 (dollar amounts in thousands):

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

Repurchase Facility Date of Agreement Maturity Date (1)

13 unchanged sentences

__________________________________

(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.

(1) As of September 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 three one-year extension options remaining.

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

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

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

4 unchanged sentences

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 June 30, 2023, ranges from 1.05 % to 1.45 %.

Morgan, which as of September 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 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):

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

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

Principal Repayments

7 unchanged sentences

Unfunded Commitments

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.

As of September 30, 2023, the Company had $ 280.6 million of unfunded loan commitments related to its existing CRE loans held-for-investment, corporate senior loans, and liquid corporate senior loans, and $ 104.0 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

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

As of September 30, 2023, the Company had $ 9.3 million of unsettled liquid corporate senior loan acquisitions, $ 5.9 million of which settled subsequent to September 30, 2023.

Additionally, the Company had $ 89.1 million of unsettled liquid corporate senior loan sales as of September 30, 2023, $ 75.8 million of which settled subsequent to September 30, 2023.

Unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets and unsettled sales are included in loans held-for-investment and related receivables, net in the accompanying condensed consolidated balance sheets.

Environmental Matters

22 unchanged sentences

Incentive compensation

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 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

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

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 and nine months ended September 30, 2023 and 2022, no incentive compensation fees were incurred.

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

2 unchanged sentences

The Company reimburses CMFT Management, the Investment Advisor or their affiliates for certain expenses paid or incurred in connection with the services provided to the Company.

The Company will reimburse CMFT Management, the Investment Advisor, or their affiliates for salaries and benefits paid to personnel who provide services to the Company, excluding the Company’s executive officers and any portfolio management, acquisitions or investment professionals.

The Company will reimburse CMFT Management, the Investment Advisor, or their affiliates for salaries and benefits paid to personnel who provide services to the Company, excluding the Company’s executive officers (other than the chief financial officer) and any portfolio management, acquisitions or investment professionals.

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

1 unchanged sentence

Expense reimbursements to related parties (1)

$ 3,349 $ 3,428 $ 10,598

____________________________________

(1) Excludes $ 984,000 of expense reimbursements recorded during the nine months ended September 30, 2022 attributable to earnout leasing costs under the RTL Purchase and Sale Agreement, which are included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.

Due to Affiliates

Of the amounts shown above, $ 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.

Of the amounts shown above, $ 14.8 million and $ 14.6 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 nine months ended September 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 six months ended June 30, 2023 and 2022, the Company recorded $ 107,000 and $ 234,000 , respectively, in development management fees.

During the nine months ended September 30, 2023 and 2022, the Company recorded $ 311,000 and $ 337,000 , 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.

The Development Management Agreement shall remain in effect until the project completion date, and is terminable by either party with fifteen days prior notice to the other party, with or without cause.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 (Unaudited) – (Continued)

Affiliated Investments

1 unchanged sentence

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

As of September 30, 2023, $ 203.7 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 June 30, 2023, $ 123.0 million of the first mortgage loan was outstanding.

As of September 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.

The Company owns 50 % of the equity interests of the MT-FT JV and has committed to fund capital to the MT-FT JV up to

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

The Company owns 50 % of the equity interests of the MT-FT JV and has committed to fund capital to the MT-FT JV up to $ 212.5 million, of which $ 108.5 million has been funded, net of $ 45.8 million returned to the Company 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 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 June 30, 2023, $ 154.0 million of the first mortgage loan was outstanding.

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

As of September 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 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.

During the nine months ended September 30, 2023, the Company and CIM RACR co-invested $ 77.0 million and $ 15.0 million, respectively, in eight corporate senior loans to a third-party.

As of September 30, 2023, $ 133.6 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.

Subsequent to September 30, 2023, the Company and CIM RACR co-invested $ 26.1 million and $ 1.5 million, 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.

10 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 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.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 (Unaudited) – (Continued)

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

As of September 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 September 30, 2023, the 116,000 restricted shares granted under the 2018 plan had vested based on one year of continuous service, and on October 1, 2023, the 67,000 restricted shares granted under the 2022 Plan vested based on one year of continuous service.

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

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 $ 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.

The Company recorded compensation expense of $ 120,000 and $ 360,000 for the three and nine months ended September 30, 2023, respectively, and $ 120,000 and $ 277,000 for the three and nine months ended September 30, 2022, respectively, related to the restricted shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

All compensation expense related to these restricted shares was recognized ratably over the period of service as of September 30, 2023.

On October 1, 2023, as part of the annual retainers paid to the independent members of the Board and pursuant to the 2022 Plan, the independent members of the Board were each granted 12,177 restricted shares, which will vest on October 1, 2024.

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

As of September 30, 2023, the Company’s leases had a weighted-average remaining term of 10.9 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 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):

As of September 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 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,

For the three and nine months ended September 30, 2023 and 2022, the amount of the contingent rent earned by the Company was not significant .

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 (Unaudited) – (Continued)

Rental and other property income during the three and nine months ended September 30, 2023 and 2022 consisted of the following (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

7 unchanged sentences

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

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 9.9 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 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.

The Company recognized $ 63,000 and $ 188,000 of ground lease expense during the three and nine months ended September 30, 2023, respectively, of which $ 61,000 and $ 182,000 , respectively, was paid in cash during the period it was recognized.

As of September 30, 2023, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $ 63,000 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 and six months ended June 30, 2023 and 2022 (in thousands):

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 (Unaudited) – (Continued)

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

Real Estate Credit Corporate/Other (1)

Company Total

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Rental and other property income $ 25,008 $ — $ 65 $ 25,073

9 unchanged sentences

Depreciation and amortization 9,193 — — 9,193

Real estate impairment 6,754 — 156 6,910

Increase in provision for credit losses

— 50,219 — 50,219

Total expenses 26,845 121,762 12,392 160,999

2 unchanged sentences

Gain on investment in unconsolidated entities — 3,136 — 3,136

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

Unrealized loss on equity security

— ( 2,073 ) — ( 2,073 )

Other (expense) income, net ( 385 ) 2,412 3,145 5,172

1 unchanged sentence

Segment net income (loss) $ 3,110 $ ( 4,521 ) $ ( 9,631 ) $ ( 11,042 )

Total assets as of June 30, 2023

Total assets as of September 30, 2023

$ 1,189,447 $ 5,007,190 $ 491,405 $ 6,688,042

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

Real Estate Credit Corporate/Other (1)

Company Total

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Rental and other property income $ 89,311 $ — $ 225 $ 89,536

21 unchanged sentences

Segment net income (loss) attributable to the Company $ 54,769 $ 49,737 $ ( 29,489 ) $ 75,017

Total assets as of June 30, 2023

Total assets as of September 30, 2023

$ 1,189,447 $ 5,007,190 $ 491,405 $ 6,688,042

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

Real Estate Credit Corporate/Other (1)

Company Total

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Rental and other property income

24 unchanged sentences

Other income, net 2,423 1,150 57 3,630

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

(Loss) gain on extinguishment of debt

( 5,615 ) — 2,271 ( 3,344 )

Segment net income (loss)

$ 11,902 $ 13,428 $ ( 9,791 ) $ 15,539

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

Net income allocated to noncontrolling interest

Segment net income (loss) attributable to the Company $ 11,773 $ 13,428 $ ( 9,791 ) $ 15,410

Total assets as of June 30, 2022

Total assets as of September 30, 2022

$ 2,189,724 $ 4,725,858 $ 209,196 $ 7,124,778

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

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

Company Total

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Rental and other property income

27 unchanged sentences

$ 132,687 $ 31,563 $ ( 35,997 ) $ 128,253

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

Net income allocated to noncontrolling interest

Segment net income (loss) attributable to the Company $ 132,621 $ 31,563 $ ( 35,997 ) $ 128,187

Total assets as of June 30, 2022

Total assets as of September 30, 2022

$ 2,189,724 $ 4,725,858 $ 209,196 $ 7,124,778

1 unchanged sentence

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

(2) Includes the Company’s investment in CIM UII Onshore, L.P.

(“CIM UII Onshore”).

(2) Includes the Company’s investment in CIM UII Onshore.

NOTE 17 — SUBSEQUENT EVENTS

Redemptions of Shares of Common Stock

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.

Redemption of Shares of Common Stock

Subsequent to September 30, 2023, the Company redeemed approximately 1.6 million shares for $ 10.7 million (at a redemption price of $ 6.57 per share).

The remaining redemption requests received during the three months ended September 30, 2023 totaling approximately 27.3 million shares went unfulfilled.

Investment and Disposition Activity

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.

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

• Disposed of two properties and two condominium units for an aggregate gross sales price of $ 17.3 million, resulting in net proceeds of $ 15.5 million after closing costs and a gain of approximately $ 1.1 million.

• Purchased $ 8.8 million in one CMBS.

CIM REAL ESTATE FINANCE TRUST, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023 (Unaudited) – (Continued)

September 30, 2023 (Unaudited) – (Continued)

• Settled $ 6.9 million of liquid corporate senior loan purchases, $ 5.9 million of which were traded as of September 30, 2023, and settled $ 89.9 million of liquid corporate senior loans sales, resulting in a $ 150,000 net loss on sale.

• Invested $ 44.4 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.

• Acquired one first mortgage loan with a principal balance of $ 169.4 million.

• Contributed an additional $ 25.6 million in NP JV Holdings.

Financing Activity

• Barclays applied the $ 19.6 million deposit held as cash collateral as repayment towards certain eligible assets financed under the repurchase facility with Barclays.

• Repaid $ 51.8 million of borrowings under the repurchase facilities with Deutsche Bank, Citibank, Wells Fargo, and J.P.

• Financed a first mortgage loan under a note on note financing arrangement with Barclays for $ 127.1 million.

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