What changed in this filing

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Item 1A. Risk Factors

2025-03-28 compared with 2024-03-28 · 136 added, 92 removed, 1111 unchanged (17% of the section changed)

15 unchanged sentences

• We are subject to risks relating to real estate-related securities, including CMBS.

• We operate in a highly competitive market for lending and investment opportunities, which may limit our ability to originate or acquire desirable loans and investments in our target assets.

• Commercial real estate-related investments that are secured, directly or indirectly, by real property are subject to delinquency, foreclosure and loss, which could result in losses to us.

• We operate in a highly competitive market for lending and investment opportunities, which may limit our ability to originate or acquire desirable loans and investments in our target assets.

Risks Associated with Our Real Estate Segment

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We expect that our Board will make that determination in the future based, in part, upon advice from our manager.

If our stockholders are able to find a buyer for their shares, our stockholders will likely have to sell them at a substantial discount to the most recent estimated per share NAV of our common stock of $6.09 as of January 31, 2024.

If our stockholders are able to find a buyer for their shares, our stockholders will likely have to sell them at a substantial discount to the most recent estimated per share NAV of our common stock.

It also is likely that our common stock will not be accepted as the primary collateral for a loan.

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Distributions are based primarily on cash flows from operations.

The amount of cash available for distributions is affected by many factors, such as the performance of our manager in selecting investments for us to make, selecting tenants for our properties and securing financing arrangements, our ability to make investments, the amount of income we receive from our investments, and our

operating expense levels, as well as many other variables.

We may not always be in a position to pay distributions to our stockholders and any distributions we do make may not increase over time.

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Furthermore, our manager monitors our portfolio, but it may be difficult to reflect changing market conditions or material events that may impact the value of our portfolio between valuations, or to obtain timely or complete information regarding any such events.

Therefore, the estimated per share NAV published before the announcement of an extraordinary event may differ

significantly from our actual per share NAV until such time as sufficient information is available and analyzed, the financial impact is fully evaluated, and the appropriate adjustment is made to our estimated per share NAV, as determined by our Board.

Therefore, the estimated per share NAV published before the announcement of an extraordinary event may differ significantly from our actual per share NAV until such time as sufficient information is available and analyzed, the financial impact is fully evaluated, and the appropriate adjustment is made to our estimated per share NAV, as determined by our Board.

Any resulting disparity may be to the detriment of an acquiror of our common stock or a stockholder requesting share redemptions pursuant to our share redemption program.

As of December 31, 2023, the Board last established an updated estimated per share NAV of the Company’s shares as of September 30, 2023 on November 9, 2023.

On February 29, 2024, the Board established an updated estimated per share NAV of the Company’s shares using a valuation date of January 31, 2024.

The Board last established an updated estimated per share NAV of the Company’s shares as of January 31, 2024 on February 29, 2024.

The Board established an updated estimated per share NAV of the Company’s shares effective on March 28, 2025, using a valuation date as of December 31, 2024.

Our future success depends to a significant degree upon certain key personnel of our manager.

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If our manager loses or is unable to obtain the services of key personnel, our ability to implement our investment strategies could be delayed or hindered, and the value of our stockholders’ investment may decline.

If we seek to internalize our management functions in connection with a listing of our shares of common stock on an exchange or other liquidity event, our stockholders’ interest in us could be diluted, and we could incur other significant costs associated with being self-managed.

In the future, we may undertake a listing of our common stock on an exchange or other liquidity event that may involve internalizing our management functions.

If we seek to internalize our management functions in connection with a listing of our shares of common stock on an exchange, an other liquidity event, or otherwise, our stockholders’ interest in us could be diluted, and we could incur other significant costs associated with being self-managed.

In the future, we may undertake a listing of our common stock on an exchange, an other liquidity event or other action that may involve internalizing our management functions.

If our Board determines that it is in our best interest to internalize our management functions, we may negotiate to acquire our manager’s assets and personnel.

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Even if these claims are without merit, we could be forced to spend significant amounts of money defending claims, which would reduce the amount of funds available to operate our business and to pay distributions.

In addition, while we would no longer bear the costs of the various fees and expenses, we expect to pay to our manager under the Management Agreement, our direct expenses would include general and administrative costs, including legal, accounting, and other expenses related to corporate governance, including SEC reporting and compliance.

We would also incur the compensation and benefits costs of our officers and other employees and consultants that we now expect will be paid by our manager or its affiliates.

In addition, while we would no longer bear the costs of the various fees and expenses we pay to our manager under the Management Agreement, our direct expenses would include general and administrative costs, including legal, accounting, and other expenses related to corporate governance, including SEC reporting and compliance.

We would also incur the compensation and benefits costs of our officers and other employees and consultants that are now generally paid by our manager or its affiliates.

If the expenses we assume as a result of an internalization are higher than the expenses we avoid paying to our manager, our net income per share would be lower as a result of the internalization than it otherwise would have been, potentially decreasing the amount of funds available to distribute to our stockholders and the value of our shares.

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The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased, and will likely continue to increase in the future.

threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers”, threat actors, “hacktivists”, organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.

Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers”, threat actors, “hacktivists”, organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.

Some actors now engage and are expected to continue to engage in cyberattacks, including, without limitation, nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.

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Ineffective internal controls could also cause holders of our securities to lose confidence in our reported financial information, which would likely have a negative effect on our business.

The overturning of the Chevron doctrine could have an unfavorable impact on us.

In June 2024, the U.S.

Supreme Court issued a decision in the Loper Bright Enterprises v.

Raimondo case that overturned the long-standing federal Chevron doctrine.

The Chevron doctrine set forth a test that outlined when courts should defer to an agency’s interpretation of federal law.

Under the doctrine, if Congress had not spoken directly to the precise issue in question, the courts were to defer to the agency’s interpretation so long as the interpretation was reasonable.

Under the Loper Bright

decision, courts are now required to exercise their independent judgment in deciding whether an agency has acted within its statutory authority and may not defer to an agency interpretation of the law simply because a statute is ambiguous.

The overturning of the Chevron doctrine is likely to result in challenges to numerous agency interpretations in various areas of law including energy, environment, taxation, and labor, among others.

If these challenges are upheld, they could have both favorable and unfavorable impacts on us, depending on whether the interpretations that are overturned were more favorable toward our business and operations than subsequent revised agency interpretations.

The likely increase of challenges to agency actions may also increase legal costs and create less certainty around agency actions, at least in the near term.

Risks Associated with Our Credit Segment

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Real estate-related securities are often unsecured and also may be subordinated to other obligations of the issuer.

the issuer, (4) the operation of mandatory sinking fund or call/redemption provisions during periods of declining interest rates that could cause the issuer to reinvest redemption proceeds in lower yielding assets, (5) the possibility that earnings of the issuer or that income from collateral may be insufficient to meet debt service and distribution obligations and (6) the declining creditworthiness and potential for insolvency of the issuer during periods of rising interest rates and economic slowdown or downturn.

As a result, investments in real estate-related securities may be subject to risks of (1) limited liquidity in the secondary trading market in the case of unlisted or thinly traded securities, (2) substantial market price volatility resulting from changes in prevailing interest rates in the case of traded securities, (3) subordination to the prior claims of banks and other senior lenders to the issuer, (4) the operation of mandatory sinking fund or call/redemption provisions during periods of declining interest rates that could cause the issuer to reinvest redemption proceeds in lower yielding assets, (5) the possibility that earnings of the issuer or that income from collateral may be insufficient to meet debt service and distribution obligations and (6) the declining creditworthiness and potential for insolvency of the issuer during periods of rising interest rates and economic slowdown or downturn.

These risks may adversely affect the value of outstanding real estate-related securities and the ability of the obliged parties to repay principal and interest or make distribution payments.

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In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan.

If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt.

If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied

only after the senior debt.

As a result, we may not recover some or all of our investment.

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We may find it necessary or desirable to foreclose on certain of the loans or CMBS that we acquire, and the foreclosure process may be lengthy and expensive.

The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower.

income or assets of the borrower.

If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired.

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The protection of the terms of the applicable loan, including the validity or enforceability of the loan and the maintenance of the anticipated priority and perfection of the applicable security interests may not be adequate.

Furthermore, claims may be

asserted by lenders or borrowers that might interfere with enforcement of our rights.

Furthermore, claims may be asserted by lenders or borrowers that might interfere with enforcement of our rights.

Borrowers may resist foreclosure actions by asserting numerous claims, counterclaims and defenses against us, including, without limitation, lender liability claims and defenses, even when the assertions may have no basis in fact, in an effort to prolong the foreclosure action and seek to force the lender into a modification of the loan or a favorable buy-out of the borrower’s position in the loan.

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This measurement takes place at the time the financial asset is first added to the balance sheet and updated quarterly thereafter.

This differs significantly from the “incurred loss” model previously required under GAAP, which delayed recognition until it was probable a loss had been incurred.

This differs significantly from the “incurred loss” model previously required under

GAAP, which delayed recognition until it was probable a loss had been incurred.

Accordingly, the current expected credit losses (“CECL”) model creates more volatility in the level of our credit loss provisions.

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If we were to purchase these securities at a premium to par value, when borrowers prepay the mortgage loans underlying these securities faster than expected, the increase in corresponding prepayments on these securities will likely reduce the expected yield.

Conversely, if we were to purchase these securities at a discount to par value,

when borrowers prepay the mortgage loans underlying these securities slower than expected, the decrease in corresponding prepayments on these securities will likely increase the expected yield.

Conversely, if we were to purchase these securities at a discount to par value, when borrowers prepay the mortgage loans underlying these securities slower than expected, the decrease in corresponding prepayments on these securities will likely increase the expected yield.

In addition, if we were to purchase these securities at a discount to par value, when borrowers prepay the mortgage loans underlying these securities faster than expected, the increase in corresponding prepayments on these securities will likely increase the expected yield.

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Any credit ratings on our investments are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that any such ratings will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant.

significantly decline, which would adversely affect the value of our investment portfolio and could result in losses upon disposition or the failure of borrowers to satisfy their debt service obligations to us.

If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our investments in the future, the value of these investments could significantly decline, which would adversely affect the value of our investment portfolio and could result in losses upon disposition or the failure of borrowers to satisfy their debt service obligations to us.

Our commercial construction lending may expose us to increased lending risks.

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If we cannot operate our properties so as to meet our financial expectations, because of these or other risks, we may be prevented from being profitable or growing the values of our real estate properties, and our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions to our stockholders may be significantly negatively impacted.

Additionally, global trade disruption, significant introduction of trade barriers and bilateral trade frictions, including due to tariffs and other changes to trade policy in the U.S.

and other jurisdictions, together with any future downturns in the global economy resulting therefrom, could adversely affect our performance.

We are dependent on single-tenant leases for a substantial portion of our revenue and, accordingly, if we are unable to renew leases, lease vacant space, including vacant space resulting from tenant defaults, or re-lease space as leases expire on favorable terms or at all, our financial condition could be adversely affected.

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In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.

In addition, we carry several

different lines of insurance, placed with several large insurance carriers.

In addition, we carry several different lines of insurance, placed with several large insurance carriers.

If any one of these large insurance carriers were to become insolvent, we would be forced to replace the existing insurance coverage with another suitable carrier, and any outstanding claims would be at risk for collection.

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Some of our leases may not contain rental increases over time, or the rental increases may be less than the fair market rate at a future point in time.

When that is the case, the value of the leased property to a potential purchaser may not increase over

time, which may restrict our ability to sell that property, or if we are able to sell that property, may result in a sale price less than the price that we paid to purchase the property or the price that could be obtained if the rental was at the then-current market rate.

When that is the case, the value of the leased property to a potential purchaser may not increase over time, which may restrict our ability to sell that property, or if we are able to sell that property, may result in a sale price less than the price that we paid to purchase the property or the price that could be obtained if the rental was at the then-current market rate.

We expect to hold the various real properties we acquire until such time as we decide that a sale or other disposition is appropriate given our REIT status and business objectives.

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During the 12 months ended December 2024, the consumer price index rose 2.9%.

The Federal Reserve raised the federal funds rate a total of four times during 2023, to control inflation, resulting in a range from 5.25% to 5.50% as of December 31, 2023.

Although there are expectations that the Federal Reserve will begin reducing the federal funds rate in 2024, these expectations may not materialize.

Should the Federal Reserve continue to raise rates in the future, this will likely result in further increases in market interest rates.

Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised the federal funds rate, which led to increases in interest rates in the credit market.

Although the Federal Reserve began lowering the federal funds rate in the second half of 2024, and there are expectations that the Federal Reserve will continue lowering the federal funds rate in 2025, these expectations may not materialize and the Federal Reserve may increase rates in the future in an effort to combat inflation.

Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates.

In a rising interest rate environment, any leverage that we incur may bear a higher interest rate than may currently be available.

There may not, however, be a corresponding increase in our revenues.

Any reduction in the rate of return on new investments relative to the rate of return on current investments, and any reduction in the rate of return on current investments, could adversely impact our income, reducing our ability to service the interest obligations on, and to repay the principal of, our indebtedness.

Any reduction in the rate of return on new investments relative to the rate of return on current investments, and any reduction in the rate of return on current investments, which could adversely impact our income, reducing our ability to service the interest obligations on, and to repay the principal of, our indebtedness.

An increase in inflation could have an adverse impact on our floating rate mortgages, credit facilities and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue.

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Many of our properties are or will be subject to significant covenants, conditions and restrictions, known as “CC&Rs,” restricting their operation and any improvements on such properties.

Compliance with CC&Rs may adversely affect the types of tenants we are able to attract to such properties, our operating costs and reduce the amount of funds that we have available to pay distributions to our stockholders.

Compliance with CC&Rs may adversely affect the types

of tenants we are able to attract to such properties, our operating costs and reduce the amount of funds that we have available to pay distributions to our stockholders.

Our operating results may be negatively affected by potential development and construction delays and the resultant increased costs and risks.

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From time to time, we may acquire multiple properties in a single transaction.

Portfolio acquisitions are often more complex and expensive than single-property acquisitions, and the risk that a multiple-property acquisition does not close may be greater than in a single-property acquisition.

Portfolio acquisitions are often more complex and expensive than single-property acquisitions, and the risk that a multiple-property acquisition does not close may

be greater than in a single-property acquisition.

Portfolio acquisitions may also result in us owning assets in geographically dispersed markets, placing additional demands on our ability to manage the properties in the portfolio.

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We might want to sell our co-ownership interests in a given property or other investment at a time when the other co-owners in such property or investment do not desire to sell their interests.

Therefore, because we anticipate that it will be much

more difficult to find a willing buyer for our co-ownership interests in an investment than it would be to find a buyer for a property we owned outright, we may not be able to sell our co-ownership interest in a property at the time we would like to sell.

Therefore, because we anticipate that it will be much more difficult to find a willing buyer for our co-ownership interests in an investment than it would be to find a buyer for a property we owned outright, we may not be able to sell our co-ownership interest in a property at the time we would like to sell.

Terrorist attacks, acts of violence or war or public health crises may affect the markets in which we operate and have a material adverse effect on our financial condition, results of operations and ability to pay distributions to our stockholders.

The strength and profitability of our business depends on demand for and the value of our properties.

The war between Russia and Ukraine and the current escalating Israel-Hamas conflict have led to disruption, instability and volatility in global markets and industries and have had a negative impact on the global economy and global supply chains.

The war between Russia and Ukraine and the ongoing Israel-Hamas conflict have led to disruption, instability and volatility in global markets and industries and have had a negative impact on the global economy and global supply chains.

Disruption, instability, volatility and decline in global economic activity, whether caused by acts of war, other acts of aggression or terrorism, in each case regardless of where it occurs, could in turn harm the demand for and the value of our properties.

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We may acquire real estate assets located in areas that are susceptible to terrorist attacks or acts of war.

These attacks may directly impact the value of our assets through damage, destruction, loss or increased security costs.

These attacks may directly impact the value of our assets through damage,

destruction, loss or increased security costs.

Although we may obtain terrorism insurance, we may not be able to obtain sufficient coverage to fund any losses we may incur.

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While many of the direct impacts of the COVID-19 pandemic have eased, the longer-term macroeconomic effects on global supply chains, inflation, labor shortages and wage increases continue to impact many industries, including those of certain of our tenants.

Moreover, with the potential for new variants of COVID-19 to emerge, governments and businesses may re-impose aggressive measures to help slow its spread in the future.

For this reason, among others, the potential global impacts are uncertain and difficult to assess.

While we believe that our business is well-positioned for the post-COVID environment, long-term macroeconomic effects, including from supply and labor shortages, of the COVID-19 pandemic may in the future have an adverse impact on our estimated per share NAV, results of operations and cash flows, and may have an adverse impact on our ability to source new investments, obtain financing, fund distributions to stockholders and satisfy redemption requests, among other factors.

The full extent of the impact and effects of COVID-19 will depend on future developments, including, among other factors, future variants of the virus, availability, acceptance and effectiveness of vaccines along with related travel advisories, quarantines and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, and uncertainty with respect to the duration of the global economic slowdown.

COVID-19, or any future pandemics or epidemics, and resulting impacts on the financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our performance, results of operations and ability to continue to pay distributions to our stockholders.

We are subject to risks that affect the retail real estate environment generally.

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increases in operating costs, such as common area maintenance, real estate taxes, utility rates and insurance premiums;

higher energy or fuel costs resulting from adverse weather conditions, natural disasters, geopolitical concerns (including the war between Russia and Ukraine and the current escalating Israel-Hamas conflict, which have led to disruption, instability and volatility in global markets and industries), terrorist activities and other factors;

higher energy or fuel costs resulting from adverse weather conditions, natural disasters, geopolitical concerns (including the war between Russia and Ukraine and the ongoing Israel-Hamas conflict, which have led to disruption, instability and volatility in global markets and industries), terrorist activities and other factors;

changes in interest rate levels and the cost and availability of financing;

a weakening of local real estate conditions, such as an oversupply of, or a reduction in demand for, retail space or

retail goods, and the availability and creditworthiness of current and prospective tenants;

the imposition of tariffs and other changes to trade policy in the U.S.

and other jurisdictions;

a weakening of local real estate conditions, such as an oversupply of, or a reduction in demand for, retail space or retail goods, and the availability and creditworthiness of current and prospective tenants;

trends in the retail industry;

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• changes in demographics (including the number of households and average household income) surrounding our properties;

• the imposition of tariffs and other changes to trade policy in the U.S.

and other jurisdictions;

• adverse financial conditions for retail, service, medical or restaurant tenants;

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Under the terms of the majority of our net leases, in addition to satisfying their rent obligations, our tenants will be responsible for the payment or reimbursement of property expenses such as real estate taxes, insurance and ordinary maintenance and repairs.

liabilities, roof and structural repairs, real estate taxes, insurance, certain non-structural repairs and maintenance.

However, under the provisions of certain existing leases and leases that we may enter into in the future with our tenants, we may be required to pay some or all of the expenses of the property, such as the costs of environmental liabilities, roof and structural repairs, real estate taxes, insurance, certain non-structural repairs and maintenance.

If our properties incur significant expenses that must be paid by us under the terms of our leases, our business, financial condition and results of operations may be adversely affected and the amount of cash available to meet expenses and to pay distributions to stockholders may be reduced.

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CMFT Securities has engaged our Investment Advisor to select and manage our investment securities.

Our Investment Advisor has engaged its sub-advisor to provide management services with respect to corporate credit-related securities and certain other investments.

Our Investment Advisor has engaged its sub-advisor to provide management services with respect to corporate credit-related securities and

certain other investments.

We rely on the performance of our Investment Advisor and its sub-advisor in implementing the investment securities portion of our investment strategy.

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In addition, our manager will have substantial influence with respect to how and when our Board elects to provide liquidity to our stockholders, and these performance-based fees could influence our manager’s recommendations to us in this regard.

Our manager also has the right to terminate the Management Agreement upon 60 days’ written notice without cause or penalty which, under certain

circumstances, could result in our manager earning a performance fee.

Our manager also has the right to terminate the Management Agreement upon 60 days’ written notice without cause or penalty which, under certain circumstances, could result in our manager earning a performance fee.

This could have the effect of delaying, deferring or preventing a change of control.

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Ressler, the chairman of our Board, chief executive officer and president, who is also a founder and principal of CIM Group and is an officer or director of certain of its affiliates, is the vice president of our manager.

One of our directors, Avraham Shemesh, who is also a founder and principal of CIM Group and is an officer or director of certain of its affiliates, is the president and treasurer of our manager.

Additionally, two of our directors, Jason Schreiber and Emily Vande Krol, are employees of CIM Group.

Through his affiliation with Orchard Capital Corporation, Mr.

Ressler chairs the executive committee of Orchard First Source Asset Management Holdings, LLC, the holding Company of our Investment Advisor.

Additionally, one of our directors, Jason Schreiber, is an employee of CIM Group.

Our chief financial officer, principal accounting officer and treasurer, Nathan D.

DeBacker, is a vice president of our manager and is an officer of certain of its affiliates.

DeBacker, is an employee of CIM Group, the vice president of our manager and is an officer of certain of its affiliates.

Conflicts with our business and interests are most likely to arise from involvement in activities related to (1) allocation of new acquisition opportunities, management time and operational expertise among us and the other entities, (2) our purchase of assets from, or sale of assets to, affiliated entities, (3) the timing and terms of the acquisition or sale of an asset, (4) development of our properties by affiliates, (5) investments with affiliates of our manager, (6) compensation to our manager and its affiliates, and (7) our relationship with, and compensation to, our dealer manager.

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Any such borrowings, sale or lease transaction must be approved by a majority of our directors, including a majority of our independent directors, not otherwise interested in such transaction as being fair and reasonable to us.

To the extent that we acquire any properties from

affiliates of our manager, borrow funds from affiliates of our manager or sell or lease our assets to affiliates of our manager, such transactions could result in a conflict of interest.

To the extent that we acquire any properties from affiliates of our manager, borrow funds from affiliates of our manager or sell or lease our assets to affiliates of our manager, such transactions could result in a conflict of interest.

Our manager faces conflicts of interest relating to joint ventures or other co-ownership arrangements that we may enter into with CIM or its affiliates, or another real estate program sponsored or operated by CIM, which could result in a disproportionate benefit to CIM or its affiliates, or another program sponsored by CIM.

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In addition, if we become listed for trading on a national securities exchange, we may develop more divergent goals and objectives from any affiliated co-venturer or co-owner that is not listed for trading.

In the event we enter into a joint venture or other co-ownership arrangement with another real estate program sponsored by CIM or its affiliates, or another real estate investment program sponsored by CIM that has a term shorter than ours, the joint venture may be required to sell its assets earlier than we may desire to sell the assets.

In the event we enter into a joint venture or other co-ownership arrangement with another

real estate program sponsored by CIM or its affiliates, or another real estate investment program sponsored by CIM that has a term shorter than ours, the joint venture may be required to sell its assets earlier than we may desire to sell the assets.

Even if the terms of any joint venture or other co-ownership agreement between us and CIM or its affiliates, or another real estate program sponsored by CIM grants us the right of first refusal to buy such assets, we may not have sufficient funds or borrowing capacity to exercise our right of first refusal under these circumstances.

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Business — Conflicts of Interest in this Annual Report on Form 10-K.

We face risks associated with our investment in CLR.

We currently own more than 99% of the outstanding equity interests in CLR and, through our ownership of the Special Common Share as designated in CLR’s Amended and Restated Declaration of Trust, are entitled to elect all of the members of CLR’s board of trustees.

While we currently have the ability to control all matters submitted to CLR’s shareholders for approval, CLR’s shareholders have limited voting rights, and CLR’s board of trustees has broad discretion to control the management of CLR.

For example, CLR’s board of trustees determines any major policies of CLR, including CLR’s policies regarding investments.

The CLR board of trustees may amend or revise CLR’s investment policies or other policies without a vote of CLR’s shareholders.

As a result, the nature of CLR’s investments in assets could change without our consent.

Additionally, CLR has investment objectives, strategy and criteria, including targeted asset types, substantially similar to ours.

As a result, CLR may compete with us for investments, and there is no assurance that any conflicts of interest created by such competition will be resolved in our favor.

Moreover, CLR’s management and board of trustees determine CLR’s investments in assets without any input or oversight by us.

Therefore, CLR may make investments in assets that ultimately prove not to be in the best interests of us or our stockholders.

In addition, CLR’s officers are employees of CIM Group, and Nathan D.

DeBacker, our chief financial officer, principal accounting officer and treasurer, also serves as CLR’s chief financial officer.

Conflicts with our business and interests are most likely to arise from involvement in activities related to allocation of new acquisition opportunities and operational expertise among us and CLR.

Even if these persons do not violate their duties to us and our stockholders, they will have competing demands on their time and resources and may have conflicts of interest in allocating their time and resources among us and CLR.

Should such persons devote insufficient time or resources to our business, returns on our investments may suffer.

To the extent that these persons take actions that are more favorable to CLR than to us, these actions could have a negative impact on our financial performance and, consequently, on distributions to our stockholders and the value of their investments.

Furthermore, the net asset value of our shares of CLR will be determined by CLR’s manager in accordance with valuation guidelines adopted by CLR’s board of trustees.

The methodologies used to determine such net asset value per share will be based on judgments, assumptions and opinions about future events that may or may not prove to be correct, and if different judgments, assumptions or opinions were used, a different estimate would likely result.

Furthermore, such net asset value per share may not fully reflect certain extraordinary events because CLR may not be able to immediately quantify the financial impact of such events on its portfolio.

The net asset value of our shares of CLR may not represent the amount we would be able to realize if we attempted to sell such shares.

Additionally, we do not have preemptive rights to any shares issued by CLR in the future.

CLR’s Amended and Restated Declaration of Trust authorizes the issuance of an unlimited number of shares of beneficial interest, and such shares may be issued in the discretion of CLR’s board of trustees.

We will suffer dilution of our equity investment in CLR upon future issuances of shares of beneficial interest in CLR.

Risks Related to Our Corporate Structure

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Thus, our Board could authorize the issuance of preferred stock with terms and conditions that have a priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock.

Preferred stock could also have the effect of delaying, deferring or preventing the removal of incumbent management or a change of control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium to the purchase price of our common stock for our stockholders.

Preferred stock could also have the effect of delaying, deferring or preventing the removal of incumbent management or a change of control of us, including an

extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium to the purchase price of our common stock for our stockholders.

Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may limit our stockholders’ ability to dispose of their shares.

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If we are unable to qualify for an exclusion from the definition of an investment company under the Investment Company Act, it could have a material adverse effect on us.

We currently conduct, and intend to continue to conduct, our operations so that neither we nor our subsidiaries would be defined as investment companies under the Investment Company Act.

Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities, which for these purposes includes loans and participation interests therein.

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Government securities and cash items) on an unconsolidated basis.

We intend to conduct our operations, and the operations of our operating partnership and any other subsidiaries, so as to qualify for the exclusion from the definition of an investment company provided by Section 3(c)(5)(C) of the Investment Company Act.

Because certain of our assets, or assets held by our subsidiaries, would be deemed securities or investment securities under these tests, we intend to conduct our operations, and the operations of our operating partnership and certain other subsidiaries, so as to qualify for certain exclusions from the definition of an investment company provided under Section 3(c), if necessary.

Certain of our subsidiaries rely on Section 3(c)(5)(C).

Section 3(c)(5)(C) excludes from the definition of an investment company entities that are “primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate” (“Qualifying Interests”).

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and also that the interests in real estate meet other criteria described in such no-action letters.

We will classify our assets for purposes of our 3(c)(5)(C) exemption based upon the no-action positions taken by the SEC staff and interpretive guidance provided by the SEC and its staff.

We assess our 3(c)(5)(C) subsidiaries’ compliance with the exemption by reference to no-action positions taken by the SEC staff and interpretive guidance provided by the SEC and its staff.

These no-action positions are based on specific factual situations that may be substantially different from the factual situations we may face, and a number of these no-action positions were issued more than 20 years ago.

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In addition, the SEC or its staff may, in the future, issue further guidance that may require us to re-classify our assets for purposes of the Investment Company Act.

If we are required to re-classify our assets, we may no longer be in compliance with the exemption from the definition of an investment company provided by Section 3(c)(5)(C) of the Investment Company Act.

If we are required to re-classify our assets, we or our subsidiaries no longer be in compliance with the exemption from the definition of an investment company provided by Section 3(c)(5)(C) of the Investment Company Act.

Qualifying for an exemption from registration under the Investment Company Act will limit our ability to make certain investments.

For example, these restrictions may limit our and our subsidiaries’ ability to invest directly in mortgage-backed securities that represent less than the entire ownership in a pool of mortgage loans, debt and equity tranches of securitizations and certain asset-backed securities, non-controlling equity interests in real estate companies or in assets not related to real estate.

Although we intend to monitor our portfolio, there can be no assurance that we will be able to maintain this exemption from registration.

A change in the value of any of our assets could negatively affect our ability to maintain our exemption from regulation under the Investment Company Act.

To maintain compliance with the Section 3(c)(5)(C) exemption, we may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain.

We and certain of our subsidiaries may rely on Section 3(c)(6).

Section 3(c)(6) exempts from the definition of investment company any company primarily engaged, directly or through majority-owned subsidiaries, in one or more of the businesses described in certain enumerated exemptions, including 3(c)(5)(C), or in one or more such businesses (from which not less than 25% of such company’s gross income during its last fiscal year was derived) together with an additional business or businesses other than investing, reinvesting, owning, holding or trading in securities.

Although we intend to monitor our portfolio, there can be no assurance that we or our subsidiaries will be able to maintain an exemption from registration as an investment company.

A change in the value of any of our assets could negatively affect our ability to maintain our exemption from registration under the Investment Company Act.

To maintain compliance with the Section 3(c)(5)(C) and Section 3(c)(6) exemptions, we may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain.

In addition, we may have to acquire additional assets that we might not otherwise have acquired or may have to forego opportunities to acquire assets that we would otherwise want to acquire and would be important to our investment strategy.

If we were obligated to register as an investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act imposing, among other things:

If we are unable to maintain our exemptions and it was established that we were operating as an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to enforce contracts with third parties, that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company.

If we were required to register as an investment company, we would be required to comply with a variety of substantive requirements under the Investment Company Act imposing, among other things:

• limitations on capital structure;

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Additionally, our charter limits, subject to certain exceptions, the liability of our directors and officers to us and our stockholders for monetary damages.

Although our charter does not allow us to indemnify our directors or our manager and its affiliates for any liability or loss suffered by them or hold harmless our directors or our manager and its affiliates for any loss or liability suffered by us to a greater extent than permitted under Maryland law, we and our stockholders may have more limited rights against our directors, officers, employees and agents, and our manager and its affiliates, than might otherwise exist under common law, which could reduce our stockholders’ and our recovery against them.

Although our charter does not allow us to indemnify our directors or our manager and its affiliates for any liability or loss suffered by them or hold

harmless our directors or our manager and its affiliates for any loss or liability suffered by us to a greater extent than permitted under Maryland law, we and our stockholders may have more limited rights against our directors, officers, employees and agents, and our manager and its affiliates, than might otherwise exist under common law, which could reduce our stockholders’ and our recovery against them.

In addition, our manager is not required to retain cash to pay potential liabilities and it may not have sufficient cash available to pay liabilities if they arise.

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All of such shares may be issued in the discretion of our Board.

or assigns, in payment of an outstanding fee obligation as set forth under our Management Agreement or (5) issue shares of our common stock to sellers of properties acquired by us in connection with an exchange of limited partnership interests of our operating partnership.

Our stockholders will suffer dilution of their equity investment in us upon future issuances of our capital stock, including in the event that we (1) issue shares pursuant to our Secondary DRIP Offering (unless such stockholders elect to fully participate in the Secondary DRIP Offering), (2) sell securities that are convertible into shares of our common stock, (3) issue shares of our common stock in a private offering of securities to institutional investors, (4) issue shares of our common stock to our manager, its successors or assigns, in payment of an outstanding fee obligation as set forth under our Management Agreement or (5) issue shares of our common stock to sellers of properties acquired by us in connection with an exchange of limited partnership interests of our operating partnership.

In addition, the partnership agreement of our operating partnership contains provisions that would allow, under certain circumstances, other entities, including other real estate programs sponsored or operated by CIM, to merge into or cause the exchange or conversion of their interest in that entity for interests of our operating partnership.

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Because of this dividend requirement, we may not be able to fund from cash retained from operations all of our future capital needs, including capital needed to refinance maturing obligations or make new acquisitions.

Although there are expectations that the Federal Reserve will begin reducing the federal funds rate in 2024, these expectations might not materialize and the Federal Reserve may instead continue to raise interest rates in 2024 to combat inflation.

If interest rates remain at an elevated level because of the Federal Reserve’s attempt to combat inflation, it could hinder our ability to obtain new debt financing or refinance our maturing debt on favorable terms or at all or to raise debt and equity capital.

If interest rates remain at an elevated level because of the Federal Reserve’s attempt to combat inflation, it could hinder our ability to obtain new debt financing or

refinance our maturing debt on favorable terms or at all or to raise debt and equity capital.

Our access to capital will depend upon a number of factors, including:

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We run the risk of being unable to finance or refinance our assets on favorable terms or at all.

If interest rates are high when we desire to mortgage our assets or when existing loans come due and the assets need to be refinanced, we may not be

able to, or may choose not to, finance the assets and we would be required to use cash to purchase or repay outstanding obligations.

If interest rates are high when we desire to mortgage our assets or when existing loans come due and the assets need to be refinanced, we may not be able to, or may choose not to, finance the assets and we would be required to use cash to purchase or repay outstanding obligations.

Our inability to use debt to finance or refinance our assets could reduce the number of assets we can acquire, which could reduce our operating cash flows and the amount of cash distributions we can make to our stockholders.

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We have incurred indebtedness, and in the future may incur additional indebtedness, that bears interest at a variable rate.

The Federal Reserve raised the federal funds rate a total of four times during 2023 and although there are expectations that the Federal Reserve will begin reducing the federal funds rate in 2024, these expectations might not materialize.

Should the Federal Reserve continue to raise rates in the future, this will likely result in further increases in market interest rates.

The Federal Reserve began lowering the federal funds rate in the second half of 2024, and while there are expectations that the Federal Reserve will continue lowering the federal funds rate in 2025, these expectations may not materialize and the Federal Reserve may increase rates in the future in an effort to combat inflation.

Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates.

To the extent that we incur variable rate debt and do not hedge our exposure thereunder, increases in interest rates would increase the amounts payable under such indebtedness, which could reduce our operating cash flows and our ability to pay distributions to our stockholders.

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Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective.

Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract.

Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the

terms of, or fail to perform its obligations under, the derivative contract.

If we are unable to manage these risks effectively, our results of operations, financial condition and ability to pay distributions to our stockholders will be adversely affected.

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• we generally would not be eligible to requalify as a REIT for the subsequent four full taxable years.

We could be subject to a material tax liability if our sales of properties during 2023 are treated as prohibited transactions.

We could be subject to a material tax liability if our sales of properties are treated as prohibited transactions.

The Code imposes a tax of 100% on net income derived by a REIT from a prohibited transaction, which is generally a sale or other disposition of property held primarily for sale in the ordinary course of a trade or business.

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(1) during the taxable year the REIT does not make more than seven sales of property, (2) the aggregate adjusted bases of properties sold during the year does not exceed 10% of the aggregate bases of all of the properties of the REIT at the beginning of the year, (3) the fair market value of properties sold during the year does not exceed 10% of the fair market value of all of the properties of the REIT at the beginning of the year, (4) the aggregate adjusted bases of properties sold during the year does not exceed 20% of the aggregate bases of all of the properties of the REIT at the beginning of the year, provided that the “3-year average adjusted bases percentage” for the taxable year does not exceed 10%, or (5) the fair market value of properties sold during the year does not exceed 20% of the fair market value of all of the properties of the REIT at the beginning of the year, provided that the “3-year average fair market value percentage” for the taxable year does not exceed 10%.

During the year ended December 31, 2023, we sold a total of 188 properties (the “2023 Sales”), which, excluding assets sold for a loss, resulted in a tax gain of approximately $272.3 million.

The sales did not qualify under the Safe Harbor because there were more than seven sales during the year ended December 31, 2023 and the total value and basis of the assets sold exceeded the 10% threshold for the year ended December 31, 2023 and also the 20% limitation with respect to the three-year average, as discussed above.

During the years ended December 31, 2023 and 2022, we sold a total of 322 properties, which, excluding assets sold for a loss, resulted in a tax gain of approximately $410.6 million.

The sales did not qualify under the Safe Harbor because there were more than seven sales during each year and the total value and basis of the assets sold exceeded the 10% threshold for the applicable year and also the 20% limitation with respect to the three-year average, as discussed above.

However, failing to satisfy the Safe Harbor in connection with a particular sale does not necessarily mean that the sale will conclusively be treated as a prohibited transaction.

Rather, a sale will be treated as a prohibited transaction only if all of the facts and circumstances establish that the property is held for sale to customers in the ordinary course of business.

While we believe that the facts and circumstances establish that the 2023 Sales should not be treated as a prohibited transaction, there can be no assurances that the IRS will agree with that assessment.

If the IRS successfully asserts that the 2023 Sales are prohibited transactions, the resulting tax liability of approximately $272.3 million would substantially reduce the amount of cash available for distribution to stockholders.

While we believe that the facts and circumstances establish that these sales should not be treated as a prohibited transaction, there can be no assurances that the IRS will agree with that assessment.

If the IRS successfully asserts that such sales are prohibited transactions, the resulting tax liability would substantially reduce the amount of cash available for distribution to stockholders.

Re-characterization of sale-leaseback transactions may cause us to lose our REIT status.

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federal income tax laws and regulations or other considerations mean it is no longer in our best interest to qualify as a REIT.

According to publicly released statements, a top legislative priority of President Biden’s administration and of Democrats in the Senate and the House of Representatives is significant tax increases and various other changes to U.S.

It is unclear whether any legislation will be enacted into law or, if enacted, what form it would take, and it is also unclear whether there could be regulatory or administrative action that could affect U.S.

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Among the changes made by the Tax Cuts and Jobs Act are permanently reducing the generally applicable corporate tax rate, generally reducing the tax rate applicable to individuals and other noncorporate taxpayers for tax years beginning after December 31, 2017 and before January 1, 2026, eliminating or modifying certain previously allowed deductions (including substantially limiting interest deductibility and, for individuals, the deduction for non-business state and local taxes), and, for taxable years beginning after December 31, 2017 and before January 1, 2026, providing for preferential rates of taxation through a deduction of up to 20% (subject to certain limitations) on most ordinary REIT dividends and certain trade or business income of non-corporate taxpayers.

The Tax Cuts and Jobs Act also imposes new limitations on the deduction of net operating losses and requires us to recognize income for tax purposes no later than when we take it into account on our financial statements, which may result in us having to make additional taxable distributions to our stockholders in order to comply with REIT distribution requirements or avoid taxes on retained income and gains.

and Jobs Act also imposes new limitations on the deduction of net operating losses and requires us to recognize income for tax purposes no later than when we take it into account on our financial statements, which may result in us having to make additional taxable distributions to our stockholders in order to comply with REIT distribution requirements or avoid taxes on retained income and gains.

The Tax Cuts and Jobs Act also made numerous large and small changes to the tax rules that do not affect the REIT qualification rules directly but may otherwise affect us or our stockholders.

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We urge our stockholders to consult with their own tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on holding our common stock.

Our Board is authorized to revoke our REIT election without stockholder approval, which may cause adverse consequences to our stockholders.

Our charter authorizes our Board to revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that changes to U.S.

federal income tax laws and regulations or other considerations mean it is no longer in our best interests to qualify as a REIT.

Our Board has fiduciary duties to us and our stockholders and could only cause such changes in our tax treatment if it determines in good faith that such changes are in our best interests and in the best interests of our stockholders.

In this event, we would become subject to U.S.

federal income tax on our taxable income and we would no longer be required to distribute most of our net income to our stockholders, which may cause a reduction in the total return to our stockholders.

We may incur tax liabilities that would reduce our cash available for distribution to our stockholders.

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federal income taxes and related state and local taxes.

For example, as discussed above, net income from the sale of properties that are “dealer” properties sold by a REIT (a

“prohibited transaction” under the Code) will be subject to a 100% excise tax.

For example, as discussed above, net income from the sale of properties that are “dealer” properties sold by a REIT (a “prohibited transaction” under the Code) will be subject to a 100% excise tax.

We may not make sufficient distributions to avoid excise taxes applicable to REITs.

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To maintain our qualification as a REIT, we must ensure that we meet the REIT gross income tests annually and that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and certain kinds of mortgage-related securities.

The remainder of our investment in securities (other than qualified real estate assets and government securities) generally cannot

include more than 10% of the voting securities (other than securities that qualify for the straight debt safe harbor) of any one issuer or more than 10% of the value of the outstanding securities of more than any one issuer unless we and such issuer jointly elect for such issuer to be treated as a “taxable REIT subsidiary” under the Code (“TRS”).

The remainder of our investment in securities (other than qualified real estate assets and government securities) generally cannot include more than 10% of the voting securities (other than securities that qualify for the straight debt safe harbor) of any one issuer or more than 10% of the value of the outstanding securities of more than any one issuer unless we and such issuer jointly elect for such issuer to be treated as a “taxable REIT subsidiary” under the Code (“TRS”).

Debt will generally meet the “straight debt” safe harbor if the debt is a written unconditional promise to pay on demand or on a specified date a certain sum of money, the debt is not convertible, directly or indirectly, into shares of common stock, and the interest rate and the interest payment dates of the debt are not contingent on the profits, the borrower’s discretion, or similar factors.

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Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets or to offset certain other positions, if properly identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of the 75% or 95% gross income tests.

To the extent that we enter into other types of hedging transactions, the income from those transactions will likely be treated as non-qualifying income for purposes of one or both of the gross income tests.

To the extent that we enter into other types of hedging transactions, the income from those transactions will likely be treated as non-qualifying income for

purposes of one or both of the gross income tests.

As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a TRS.

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Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT.

Unless exempted by our Board, for so long as we continue to qualify as a REIT, our charter prohibits, among other limitations on ownership and transfer of shares of our stock, any person from beneficially or constructively owning (applying certain attribution rules under the Code) more than 9.8% in value of the aggregate of our outstanding shares of stock and more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or

series of our shares of stock.

The Board, in its sole discretion and upon receipt of certain representations and undertakings, may exempt a person (prospectively or retrospectively) from the ownership limits.

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While we intend that all transactions between us and our TRSs would be conducted on an arm’s-length basis, and therefore, any amounts paid by our TRSs to us would not be subject to the excise tax, no assurance can be given that the IRS would not disagree with such conclusion and levy an excise tax on such transactions.

If a stockholder that is an employee benefit plan, individual retirement account (“IRA”), annuity described in Sections 403(a) or (b) of the Code, Archer Medical Savings Account, health savings account, Coverdell education savings account, or other arrangement that is subject to the Employee Retirement Income Securities Act (“ERISA”) or Section 4975 of the Code (referred to generally as “Benefit Plans and IRAs”) fails to meet the fiduciary and other standards under ERISA or the Code as a result of an investment in shares of our common stock, such stockholder could be subject to civil and criminal, if the failure is willful, penalties.

other arrangement that is subject to the Employee Retirement Income Securities Act (“ERISA”) or Section 4975 of the Code (referred to generally as “Benefit Plans and IRAs”) fails to meet the fiduciary and other standards under ERISA or the Code as a result of an investment in shares of our common stock, such stockholder could be subject to civil and criminal, if the failure is willful, penalties.

There are special considerations that apply to Benefit Plans and IRAs investing in shares of our common stock.

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Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA, the Code, or other applicable statutory or common law may result in the imposition of civil and criminal (if the violation is willful) penalties, and can subject the fiduciary to equitable remedies.

the meaning of the Code) who authorized or directed the investment may have to compensate the plan for any losses the plan suffered as a result of the transaction or restore to the plan any profits made by such person as a result of the transaction, or may be subject to excise taxes with respect to the amount involved.

In addition, if an investment in our common stock constitutes a prohibited transaction under ERISA or the Code, the “party-in-interest” (within the meaning of ERISA) or “disqualified person” (within the meaning of the Code) who authorized or directed the investment may have to compensate the plan for any losses the plan suffered as a result of the transaction or restore to the plan any profits made by such person as a result of the transaction, or may be subject to excise taxes with respect to the amount involved.

In the case of a prohibited transaction involving an IRA, the IRA may be disqualified and all of the assets of the IRA may be deemed distributed and subject to tax.

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As a general rule, certain employee benefit plans, including foreign pension plans, governmental plans established or maintained in the United States (as defined in Section 3(32) of ERISA), and certain church plans (as defined in Section 3(33) of ERISA), are not subject to ERISA’s requirements and are not “benefit plan investors” for purposes of investing in “plan assets” subject to ERISA’s requirements.

Any such plan that is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code may nonetheless be subject to the prohibited transaction rules set forth in Section 503 of the Code and, under certain circumstances in the case of church plans, Section 4975 of the Code.

under certain circumstances in the case of church plans, Section 4975 of the Code.

Also, some foreign plans and governmental plans may be subject to foreign, state, or local laws which are, to a material extent, similar to the provisions of ERISA or Section 4975 of the Code.

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

What changed 10-K

Item 1A. Risk Factors