What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-14 compared with 2024-11-14 · 130 added, 194 removed, 315 unchanged (51% of the section changed)

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

• We are subject to risks associated with 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 downturns in the global economy resulting therefrom.

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

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• We may fail to remain qualified as a REIT for U.S.

federal income tax purposes.

federal income tax purposes or revoke our REIT election.

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

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federal income tax purposes.

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

As of September 30, 2024, our loan portfolio consisted of 71 loans with a net book value of $3.5 billion, and 22 investments in real estate-related securities and other of $389.6 million.

We are externally managed by CMFT Management and, with respect to investments in securities and certain other investments of ours, our Investment Advisor, each of which is an affiliate of CIM Group, a vertically-integrated community-focused real estate and infrastructure owner, operator, lender and developer.

As of March 31, 2025, our loan portfolio consisted of 68 loans with a net book value of $3.3 billion, and 20 investments in real estate-related securities and other of $302.0 million.

The Company conducts and expects to continue to conduct its commercial real estate lending business through CLR, a Maryland statutory trust and subsidiary of the Company which we expect to be taxed as a REIT for U.S.

federal income tax purposes.

As of September 30, 2024, CLR holds a diversified portfolio of approximately $1.4 billion of the Company’s senior secured mortgage loans and commercial mortgage-backed securities.

As of September 30, 2024, we owned 191 properties, which consisted of 180 retail properties, seven office properties, and four industrial properties, representing 16 industry sectors and comprising approximately 6.0 million rentable square feet of commercial space located in 36 states, with a net book value of $1.0 billion.

As of September 30, 2024, we owned condominium developments with a net book value of $61.4 million.

During the nine months ended September 30, 2024, we disposed of three properties encompassing approximately 260,000 gross rentable square feet, as further discussed in Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

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

As of March 31, 2025, CLR holds a diversified portfolio of

approximately $1.5 billion which includes first mortgage loans with a net book value of $1.1 billion, CMBS with an estimated fair value of $196.3 million, and an investment in the Unconsolidated Joint Venture with a carrying value of $182.8 million.

As of March 31, 2025, we owned 186 properties, which consisted of 173 retail properties, nine office properties, and four industrial properties, representing 25 industry sectors and comprising approximately 6.6 million rentable square feet of commercial space located in 36 states, with a net book value of $1.1 billion.

As of March 31, 2025, we owned condominium developments with a net book value of $53.4 million.

During the three months ended March 31, 2025, we disposed of three properties encompassing approximately 40,000 gross rentable square feet and five condominium units for a total consideration of $31.4 million, as further discussed in Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

In general, our business model is such that rising interest rates will correlate to increases in our net income, while declining interest rates will correlate to decreases in our net income.

As of September 30, 2024, 99.1% of our CMBS and loans held-for-investment by net book value earned a floating rate of interest, indexed to SOFR, and were financed with liabilities that pay interest at floating rates, which resulted in an amount of net equity that is positively correlated to rising interest rates, subject to the impact of interest rate floors on certain of our floating rate loans.

As of March 31, 2025, 91.3% of our CMBS and loans held-for-investment by carrying value earned a floating rate of interest, indexed to SOFR, and were financed with liabilities that pay interest at floating rates, which resulted in an amount of net equity that is positively correlated to rising interest rates, subject to the impact of interest rate floors on certain of our floating rate loans.

CMFT Management reviews our investment portfolio and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

In addition, as 100.0% of our rentable square feet was under lease, including any month-to-month agreements, as of September 30, 2024, with a weighted average remaining lease term of 10.7 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors.

In addition, as 94.8% of our rentable square feet was under lease, including any month-to-month agreements, as of March 31, 2025, with a weighted average remaining lease term of 9.3 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors.

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

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Macroeconomic Environment

The nine months ended September 30, 2024 have been characterized by a mix of positive and challenging developments leading to continued volatility in global markets.

Investor concerns over inflation, higher interest rates, slowing economic growth, political and regulatory uncertainty and geopolitical conditions have persisted.

Continued inflation caused the Federal Reserve to raise interest rates in 2022 and 2023.

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

The Federal Reserve has begun to, and has indicated that it may continue to, decrease interest rates in 2024.

The three months ended March 31, 2025 have been characterized by a mix of positive and challenging developments leading to continued volatility in global markets.

Investor concerns over inflation, higher interest rates, slowing economic growth, uncertainty around tariffs, political and regulatory uncertainty and geopolitical conditions have persisted.

Heightened inflation caused the Federal Reserve to raise interest rates in 2022 and 2023.

Although the majority of our business model is such that elevated interest rates will, all else being equal, correlate to increases in our net income, increases in interest rates may adversely affect the ability of our existing borrowers to pay debt service, tenants and property values of our own portfolio and the assets that serve as collateral for our loans.

The Federal Reserve began to decrease interest rates in the second half of 2024 and has indicated that it may continue to decrease interest rates in 2025.

In a period of declining interest rates, our interest income on floating-rate investments may generally decrease, subject to the impact of interest rate floors in our investment portfolio.

In addition, the U.S.

office sector has been adversely affected by the increase in remote working arrangements and, over the past several years, the retail sector has been adversely affected by electronic commerce.

These negative factors have been considered in the determination of our CECL allowance.

We may be required to record further increases to our current expected credit loss reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves, particularly if market conditions relevant to the office sector do not improve.

Any such reserve increases are difficult to predict.

For a complete discussion of risk factors related to the economy that could impact our lending and our business, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 .

Operating Highlights and Key Performance Indicators

Activity from January 1, 2024 through September 30, 2024

Activity from January 1, 2025 through March 31, 2025

Operating Results:

• Net loss attributable to the Company of $32.9 million, or $0.08 per share.

• Redeemed 1.8 million shares under the share redemption program for $11.2 million at an average price of $6.09 per share.

• Declared aggregate distributions of $0.08 per share.

Credit Portfolio Activity:

• Originated a $44.6 million first mortgage loan.

• Originated $116.0 million first mortgage loans, $55.0 million of which was a result of a loan modification.

• Funded $29.8 million in existing first mortgage loans.

• Invested $65.1 million in liquid corporate senior loans and sold liquid corporate senior loans for an aggregate gross sales price of $447.0 million, including $265.4 million as part of the Master Participation Agreement.

• Invested $1.3 million in liquid corporate senior loans and sold liquid corporate senior loans for an aggregate gross sales price of $2.9 million.

• Invested $32.6 million in corporate senior loans.

• Received principal repayments on loans held-for-investment of $54.3 million.

• Received repayments on CMBS of $98.7 million.

• Invested $27.6 million in a CLO subordinated note.

• Received repayments on CMBS of $1.8 million and sold CMBS for an aggregate gross sales price of $43.6 million.

• Received proceeds from the repayment of portfolio investments on the CLO subordinated note of $2.3 million.

• Funded an additional $14.0 million in NP JV Holdings.

Real Estate Portfolio Activity:

• Acquired two properties for an aggregate purchase price of $44.1 million.

• Took control of assets securing two risk-rated 5 first mortgage loans, comprised of two office buildings, through deeds-in-lieu of foreclosure for an aggregate fair value of $151.0 million.

• Disposed of three properties for an aggregate sales price of $13.0 million.

• Disposed of 11 condominium units for an aggregate sales price of $37.4 million.

• Disposed of five condominium units for an aggregate sales price of $18.4 million.

Financing Activity:

• Decreased total debt by $664.8 million.

• Decreased total debt by $25.9 million, reducing our ratio of debt to total gross assets net of gross intangible lease liabilities to 61.8%.

Portfolio Information

The following table shows the net book value of our portfolio by investment type as of September 30, 2024 and 2023 (dollar amounts in thousands):

As of September 30,

The following table shows the net book value of our portfolio by investment type as of March 31, 2025 and 2024 (dollar amounts in thousands):

As of March 31,

Asset Count Net Book Value

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(1) Table does not include our investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q), which had a carrying value of $154.6 million as of September 30, 2024.

(1) Table does not include our investment in the Unconsolidated Joint Venture, which had a carrying value of $192.5 million as of March 31, 2025, $182.8 million of which is held through CLR as of March 31, 2025.

(2) As of March 31, 2025, first mortgage loans with a net book value of $1.1 billion and CMBS with an estimated fair value of $196.3 million were held through CLR.

Credit Portfolio Information

The following table details overall statistics for our credit portfolio as of September 30, 2024 (dollar amounts in thousands):

The following table details overall statistics for our credit portfolio as of March 31, 2025 (dollar amounts in thousands):

CRE Loans (1)(2)

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(1) As of September 30, 2024, 94.4% of our loans by principal balance earned a floating rate of interest, primarily indexed to SOFR.

(1) As of March 31, 2025, 91.3% of our loans by principal balance earned a floating rate of interest, primarily indexed to SOFR.

(2) Maximum maturity date assumes all extension options are exercised by the borrower and assumes all relevant conditions are met for such extensions;

however, our loans and CMBS may be repaid prior to such date.

(3) Table does not include our investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q), which had a carrying value of $154.6 million as of September 30, 2024.

(3) Table does not include our investment in the Unconsolidated Joint Venture, which had a carrying value of $192.5 million as of March 31, 2025.

(4) The weighted-average interest rate for variable rate investments is based on the relevant floating benchmark plus a spread.

(5) Does not include the CLO subordinated note.

As of March 31, 2025, the CLO subordinated note has an initial maturity date of July 2037 and an estimated effective yield of 14.9%.

Real Estate Portfolio Information

As of September 30, 2024, we owned 191 properties located in 36 states, the gross rentable square feet of which was 100.0% leased, including any month-to-month agreements, with a weighted average lease term remaining of 10.7 years.

As of September 30, 2024, we had certain tenant, geographic and industry concentrations in our property holdings.

As of September 30, 2024, one of the Company’s tenants, CVS, accounted for 10% of our 2024 annualized rental income across 33 properties.

As of September 30, 2024, we had properties located in Ohio, which accounted for 16% of our 2024 annualized rental income.

In addition, we had tenants in the health and personal care stores, manufacturing, and sporting goods, hobby, and musical instrument retailers industries, which accounted for 14%, 12%, and 11%, respectively, of our 2024 annualized rental income.

During the nine months ended September 30, 2024, we disposed of three properties for an aggregate gross sales price of $60.8 million as well as 11 condominium units for a gross sales price of $37.4 million.

The following table shows the property statistics of our real estate assets as of September 30, 2024 and 2023:

As of September 30,

As of March 31, 2025, we owned 186 properties located in 36 states, the gross rentable square feet of which was 94.8% leased, including any month-to-month agreements, with a weighted average lease term remaining of 9.3 years.

As of March 31, 2025, we had certain geographic and industry concentrations in our property holdings.

As of March 31, 2025, we had properties located in California, Virginia, and Ohio which accounted for 17%, 14%, and 13%, respectively, of our 2025 annualized rental income.

In addition, we had tenants in the health and personal care stores and manufacturing industries, which accounted for 12% and 10%, respectively, of our 2025 annualized rental income.

During the three months ended March 31, 2025, we disposed of three properties for an aggregate gross sales price of $13.0 million as well as five condominium units for a gross sales price of $18.4 million.

The following table shows the property statistics of our real estate assets as of March 31, 2025 and 2024:

As of March 31,

Number of commercial properties 186 192

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

The following table summarizes our real estate acquisition activity during the three and nine months ended September 30, 2024.

No properties were acquired during the three and nine months ended September 30, 2023.

Three Months Ended September 30,

Nine Months Ended September 30,

The following table summarizes our real estate acquisition activity during the three months ended March 31, 2025.

No properties were acquired during the three months ended March 31, 2024.

Three Months Ended March 31,

Commercial properties acquired

Purchase price of acquired properties (in thousands)

$ 44,148 $ 44,148

Rentable square feet (in thousands)

Results of Operations

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such as inflation and high interest rates, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties and credit investments other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q.

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such as inflation and heightened interest rates and the imposition of tariffs and other changes to trade policy in the U.S.

and other jurisdictions, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties and credit investments other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 and this Quarterly Report on Form 10-Q.

Our operating segments include Credit and Real Estate.

Refer to Note 15 — Segment Reporting to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of our operating segments.

The following table compares our summarized results of operations for the three and nine months ended September 30, 2024 and 2023 by operating segment (amounts in thousands):

For the Three Months Ended For the Nine Months Ended

September 30, 2024 September 30, 2023 Change September 30, 2024 September 30, 2023 Change

The following table compares our summarized results of operations for the three months ended March 31, 2025 and 2024 by operating segment (amounts in thousands):

For the Three Months Ended

March 31, 2025 March 31, 2024 Change

Credit Segment $ 77,596 $ 109,855 $ (32,259)

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7,472 (4,557) 12,029

Net income (loss)

7,315 (11,042) 18,357 (277,028) 75,025 (352,053)

Net loss (32,874) (38,542) 5,668

Net income allocated to non-controlling interest

3 — 3 3 8 (5)

Net income (loss) attributable to the Company

$ 7,312 $ (11,042) $ 18,354 $ (277,031) $ 75,017 $ (352,048)

Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

Net loss attributable to the Company $ (32,883) $ (38,542) $ 5,659

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Credit Segment

Our Credit segment revenues decreased $15.3 million for the three months ended September 30, 2024, as compared to the same period in 2023.

The decrease was primarily due to the suspension of interest income on three of our risk-rated 5 first mortgage loans with a carrying value of $372.2 million that were placed on nonaccrual status and were past due on their interest payments as of September 30, 2024, as well as a decrease in the overall size of our investment portfolio during the three months ended September 30, 2024 as compared to the same period in 2023.

As of September 30, 2024, we held credit investments with an outstanding principal balance of $4.5 billion compared to credit investments with an outstanding principal balance of $5.0 billion as of September 30, 2023.

Our Credit segment revenues decreased $32.3 million for the three months ended March 31, 2025, as compared to the same period in 2024.

The decrease was primarily due to a decrease in the overall size of our investment portfolio during the three months ended March 31, 2025 as compared to the same period in 2024.

As of March 31, 2025, we held credit investments with an outstanding principal balance of $4.2 billion compared to credit investments with an outstanding principal balance of $5.0 billion as of March 31, 2024.

Expenses for our Credit segment consist primarily of interest expense, management fees, increases (decreases) to our provision for credit losses, and general and administrative expenses.

The decrease in our Credit segment expenses of $31.6 million for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a $25.7 million decrease in the provision for credit losses during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily driven by a net decrease in the asset-specific credit loss provision of $20.9 million on funded and unfunded commitments recognized during the three months ended September 30, 2024.

The decrease was further driven by a $5.5 million decrease in interest expense primarily due to decreased outstanding borrowings used to fund credit investments, as well as a decrease in average index rates during the three months ended September 30, 2024 as compared to the same period in 2023.

The decrease in our Credit segment expenses of $26.3 million for the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to a $20.3 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments, as well as a decrease in average index rates during the three months ended March 31, 2025 as compared to the same period in 2024.

The decrease was further driven by a $61.8 million increase in provision for credit losses during the three months ended March 31, 2025, as compared to a $67.1 million increase in provision for credit losses during the same period in 2024.

This change was primarily related to the reclassification of $71.0 million of unrealized loss related to one CMBS position previously recorded in other comprehensive income in the accompanying condensed consolidated statements of comprehensive income (loss) to increase in provision for credit losses on the condensed consolidated statements of operations during the three months ended March 31, 2025, partially offset by the sale of loans held-for-investment with asset-specific credit loss provisions.

Other Income (Expense)

Other income for our Credit segment consists of gain on investment in unconsolidated entities, unrealized gain (loss) on equity securities, loss on debt extinguishment, along with dividend income from our equity securities.

The increase in our Credit segment other income of $939,000 during the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a $4.5 million unrealized gain on equity securities during the three months ended September 30, 2024, as compared to a $2.1 million unrealized loss on equity securities for the same period in 2023.

The increase was further driven by a $1.5 million increase in gain on investment in unconsolidated entities during the three months ended September 30, 2024, as compared to the same period in 2023.

The increase was partially offset by the recognition of $3.7 million of other

expense, net during the three months ended September 30, 2024 as compared to $2.4 million of other income, net during the three months ended September 30, 2023, primarily related to the recognition of a $7.0 million loss on sale of liquid corporate senior loans during the three months ended September 30, 2024, as compared to a $402,000 gain on sale of liquid corporate senior loans during the same period in 2023, partially offset by a $1.4 million increase in interest income generated by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets, during the three months ended September 30, 2024 as compared to the same period in 2023.

The increase in our Credit segment other income (expense) of $11.7 million during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to a $3.3 million unrealized gain on equity securities during the three months ended March 31, 2025, as compared to a $11.4 million unrealized loss on equity securities for the same period in 2024.

The increase was partially offset by a $1.5 million decrease in gain on investment in unconsolidated entities during the three months ended March 31, 2025, as compared to the same period in 2024.

The increase was further offset by a $1.5 million decrease in other

income, net during the three months ended March 31, 2025, as compared to the same period in 2024, primarily related to the $922,000 decrease in interest income generated by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets, during the three months ended March 31, 2025 as compared to the same period in 2024.

Real Estate Segment

The decrease in our Real Estate segment revenues of $2.2 million for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of five properties subsequent to September 30, 2023.

The increase in our Real Estate segment revenues of $4.3 million for the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to the addition of four properties subsequent to March 31, 2024.

Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

The decrease in our Real Estate segment expenses of $9.9 million for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a decrease in impairment charges of $6.7 million for the three months ended September 30, 2024, as compared to the same period in 2023, as there were $9,000 of impairment charges related to the disposition of a property during the three months ended September 30, 2024, compared to four properties that were deemed to be impaired during the three months ended September 30, 2023, due to sales prices or revised cash flow estimates that were less than their respective carrying values, resulting in impairment charges of $6.8 million.

The decrease was further driven by the disposition of five properties subsequent to September 30, 2023.

The increase in our Real Estate segment expenses of $7.9 million for the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to an increase in impairment charges of $7.0 million for the three months ended March 31, 2025, as compared to the same period in 2024, as one property was deemed to be impaired during the three months ended March 31, 2025, due to sales prices or revised cash flow estimates that was less than its carrying values, resulting in impairment charges of $7.0 million, as compared to no impairments recorded during the three months ended March 31, 2024.

Additionally the increase in Real Estate segment expenses was further driven by an increase in property operating expenses of $582,000 driven by the acquisition of four properties subsequent to March 31, 2024, partially offset by the disposition of 10 properties subsequent to March 31, 2024.

Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Other income for our Real Estate segment primarily consists of gain on disposition of real estate and condominium developments, net, and other income.

The decrease in our Real Estate segment other income of $4.8 million for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of one property resulting in no gain or loss during the three months ended September 30, 2024, compared to the disposition of one property resulting in a net gain of $5.3 million during the three months ended September 30, 2023.

The decrease was partially offset due to $428,000 of unrealized loss on interest rate caps included in other income on the condensed consolidated statements of operations for the three months ended September 30, 2023.

Corporate and Other

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, did not meaningfully change during the three months ended September 30, 2024 as compared to the same period in 2023.

Our corporate expenses consist primarily of general and administrative expenses, expense reimbursements to related parties, interest expense, net related to our credit facilities, and property operating expenses related to our condominium and rental units acquired via foreclosure.

The increase in corporate expenses of $1.7 million during the three months ended September 30, 2024 as compared to the same period in 2023, was partially due to an increase of $3.3 million in impairment charges related to condominium units during the during the three months ended September 30, 2024 as compared to the same period in 2023.

The increase was further driven by an increase of $2.1 million in general and administrative expenses during the three months ended September 30, 2024 as compared to the same period in 2023, primarily in connection with restricted stock unit related expenses recorded during the three months ended September 30, 2024.

The increase was partially offset by a decrease in property operating expenses of $3.3 million, primarily driven by decreased condominium-related legal expenses during the three months ended September 30, 2024 as compared to the same period in 2023.

The increase was further offset by a decrease in interest expense, net of $788,000 during the three months ended September 30, 2024 as compared to the same period in 2023, driven by the paydown and termination of the variable rate debt assumed by the Company upon completing the January 2021 foreclosure of assets which previously secured the Company's mezzanine loans (the “Assumed Variable Rate Debt”) during the three months ended September 30, 2023.

The decrease in corporate other income of $21,000 during the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a decrease in other income, net of $1.7 million primarily due to a decrease in interest income generated by decreased short-term liquid investments included in cash and cash equivalents on the condensed consolidated balance sheets during the three months ended September 30, 2024, as compared to the same period in 2023.

The decrease was partially offset by $1.1 million in loss on extinguishment of debt recognized during the three months ended September 30, 2023, driven by the paydown and termination of the Assumed Variable Rate Debt during the three months ended September 30, 2023.

The decrease was further offset by the disposition of three condominium units resulting in a net gain of $1.2 million during the three months ended September 30, 2024, compared to the disposition of four condominium units for a gain of $636,000 for the three months ended September 30, 2023.

Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Credit Segment

Our Credit segment revenues decreased $30.3 million for the nine months ended September 30, 2024, as compared to the same period in 2023.

The decrease was primarily due to the suspension of interest income on three of our risk-rated 5 first mortgage loans with a carrying value of $372.2 million that were placed on nonaccrual status and were past due on their interest payments as of September 30, 2024, as well as a decrease in the overall size of our investment portfolio during the nine months ended September 30, 2024 as compared to the same period in 2023.

Expenses for our Credit segment consist primarily of interest expense, management fees, increases (decreases) to our provision for credit losses, and general and administrative expenses.

The increase in our Credit segment expenses of $211.2 million for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a $207.2 million increase in the provision for credit losses during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to the asset-specific credit loss provision of $253.5 million on funded and unfunded commitments recognized on eight of the Company’s first mortgage loan investments during the nine months ended September 30, 2024, as a result of the increased risk of potential principal loss and as collateral performance was deemed to be worse than underwriting.

Other (Expense) Income

Other (expense) income for our Credit segment consists of gain on investment in unconsolidated entities, unrealized gain (loss) on equity securities, and loss on extinguishment of debt, along with dividend income from our equity securities.

The decrease in our Credit segment other (expense) income of $18.5 million during the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to recognizing an $11.2 million unrealized loss on equity securities during the nine months ended September 30, 2024, as compared to a $3.3 million unrealized gain on equity securities for the same period in 2023.

The change was further driven by a $4.8 million decrease in other income, net during the nine months ended September 30, 2024, as compared to the same period in 2023, which primarily related to an $8.2 million increase in loss on sale of liquid corporate senior loans during the nine months ended September 30, 2024, as compared to the same period in 2023, partially offset by a $3.7 million increase in interest income generated by by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets.

Real Estate Segment

The decrease in our Real Estate segment revenues of $18.5 million for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of 186 properties during the nine months ended September 30, 2023.

Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

The increase in our Real Estate segment expenses of $27.2 million for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the increase in impairment charges of $39.9 million, as there were seven properties deemed to be impaired during the nine months ended September 30, 2024, due to sales prices or revised cash flow estimates that were less than their respective carrying values, resulting in impairment charges of $51.5 million, compared to five properties that were deemed to be impaired during the nine months ended September 30, 2023, due to sales prices or revised cash flow estimates that were less than their respective carrying values, resulting in impairment charges of $11.6 million.

The increase was partially offset by the disposition of five properties subsequent to September 30, 2023.

Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Other income for our Real Estate segment primarily consists of gain on disposition of real estate and condominium developments, net, loss on extinguishment of debt and other (expense) income, net.

The decrease in our Real Estate segment other income of $43.1 million for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of three properties resulting in no gain or loss during the nine months ended September 30, 2024, compared to the disposition of 186 properties resulting in a net gain of $49.2 million during the nine months ended September 30, 2023.

The decrease was partially offset by $4.6 million of unrealized loss on interest rate caps included in other (expense) income, net on the condensed consolidated statements of operations for the nine months ended September 30, 2023.

The increase in our Real Estate segment other income of $391,000 for the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to the disposition of three properties resulting in a net gain of $418,000 during the three months ended March 31, 2025, compared to no properties being disposed of during the three months ended March 31, 2024.

Corporate and Other

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, did not meaningfully change during the nine months ended September 30, 2024, as compared to the same period in 2023.

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, did not meaningfully change during the three months ended March 31, 2025 as compared to the same period in 2024.

The increase in corporate expenses of $7.7 million during the nine months ended September 30, 2024 as compared to the same period in 2023, was primarily due to an $8.8 million increase in impairment charges related to condominium units during the nine months ended September 30, 2024, as compared to the same period in 2023, as well as an increase in general and administrative expenses of $5.9 million, primarily in connection with restricted stock unit expenses recorded during the nine months ended September 30, 2024.

The increase was partially offset by a $5.2 million decrease in interest expense, net driven by the pay down and termination of the credit agreement with JPMorgan Chase Bank, N.A.

and PNC Bank, N.A.

(the “CMFT Credit Facility”) and the paydown and termination of the Assumed Variable Rate Debt during the nine months ended September 30, 2023.

The increase was further offset by a $1.5 million decrease in property operating expenses, primarily driven by decreased litigation expenses during the nine months ended September 30, 2024, as compared to the same period in 2023.

The increase in corporate other income of $4.4 million during the nine months ended September 30, 2024 as compared to the same period in 2023, was primarily due to $4.4 million in loss on extinguishment of debt recognized during the nine months ended September 30, 2023 driven by the paydown and termination of the CMFT Credit Facility and the Assumed Variable Rate Debt during the nine months ended September 30, 2023.

The increase was further driven by the disposition of 11 condominium units resulting in a net gain of $4.5 million during the nine months ended September 30, 2024, compared to the disposition of 14 condominium units resulting in a net gain of $3.0 million during the nine months ended September 30, 2023.

The increase was partially offset by a decrease in other income, net of $1.6 million primarily due to a decrease in interest income generated by decreased short-term liquid investments included in cash and cash equivalents on the condensed consolidated balance sheets during the nine months ended September 30, 2024, as compared to the same period in 2023.

The decrease in corporate expenses of $3.2 million during the three months ended March 31, 2025 as compared to the same period in 2024, was partially due to a decrease in property operating expenses of $2.1 million, primarily driven by decreased condominium-related legal expenses during the three months ended March 31, 2025 as compared to the same period in 2024.

Our corporate other income did not meaningfully change during the .three months ended March 31, 2025 as compared to the same period in 2024.

Same Store Analysis

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We review our stabilized operating results, measured by net operating income, from properties that we owned for the entirety of both the current and prior year reporting periods, referred to as “same store” properties, and we believe that the presentation of operating results for same store properties provides useful information to stockholders.

Net operating income is

a supplemental non-GAAP financial measure of a real estate company’s operating performance.

Net operating income is considered by management to be a helpful supplemental performance measure, as it enables management to evaluate the impact of occupancy, rents, leasing activity and other controllable property operating results at our real estate properties, and it provides a consistent method for the comparison of our properties.

Net operating income is a supplemental non-GAAP financial measure of a real estate company’s operating performance.

provides a consistent method for the comparison of our properties.

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

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

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

Comparison of the Three Months Ended September 30, 2024 and 2023

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

For the Three Months Ended September 30,

2024 2023 Change

$ 5,999 $ 3,110 $ 2,889

Other (expense) income, net

(120) 385 (505)

Gain on disposition of real estate and condominium developments, net

— (5,332) 5,332

Real estate impairment 9 6,754 (6,745)

Depreciation and amortization 7,381 9,193 (1,812)

Transaction-related expenses — 82 (82)

Management fees 2,008 2,580 (572)

General and administrative expenses 115 118 (3)

Interest expense, net 5,814 5,358 456

Net operating income $ 21,206 $ 22,248 $ (1,042)

A total of 189 properties were acquired before July 1, 2023 and represent our “same store” properties during the three months ended September 30, 2024 and 2023.

“Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after July 1, 2023.

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

Total Same Store Non-Same Store

For the Three Months Ended September 30,

2024 2023 Change 2024 2023 Change 2024 2023 Change

Rental and other property income $ 22,829 $ 25,008 $ (2,179) $ 22,586 $ 22,589 $ (3) $ 243 $ 2,419 $ (2,176)

Property operating expenses 965 1,515 (550) 770 906 (136) 195 609 (414)

Real estate tax expenses 658 1,245 (587) 704 803 (99) (46) 442 (488)

Total property operating expenses 1,623 2,760 (1,137) 1,474 1,709 (235) 149 1,051 (902)

Net operating income

$ 21,206 $ 22,248 $ (1,042) $ 21,112 $ 20,880 $ 232 $ 94 $ 1,368 $ (1,274)

Net Operating Income

Same store property net operating income remained relatively consistent during the three months ended September 30, 2024, as compared to the same period in 2023.

Non-same store property net operating income decreased $1.3 million during the three months ended September 30, 2024, as compared to the same period in 2023.

The decrease was primarily due to the disposition of five properties subsequent to September 30, 2023.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Comparison of the Three Months Ended March 31, 2025 and 2024

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

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

2025 2024 Change

Net (loss) income

$ 2,579 $ 5,804 $ (3,225)

Loss on extinguishment of debt — 1,192 (1,192)

Other (expense) income, net

(268) 4,577 (4,845)

Other income, net (41) (68) 27

Gain on disposition of real estate and condominium developments, net

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Net operating income $ 26,211 $ 22,355 $ 3,856

A total of 189 properties were acquired before January 1, 2023 and represent our “same store” properties during the nine months ended September 30, 2024 and 2023.

A total of 182 properties were acquired before January 1, 2024 and represent our “same store” properties during the three months ended March 31, 2025 and 2024.

“Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, 2024.

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Total Same Store Non-Same Store

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

2025 2024 Change 2025 2024 Change 2025 2024 Change

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Real estate tax expenses 886 1,041 (155) 493 627 (134) 393 414 (21)

2,532 2,560 (28) 2,429 2,444 (15) 103 116 (13)

Total property operating expenses 2,529 2,102 427 1,717 1,456 261 812 646 166

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Net Operating Income

Same store property net operating income remained relatively consistent during the nine months ended September 30, 2024, as compared to the same period in 2023.

Non-same store property net operating income decreased $17.4 million during the nine months ended September 30, 2024, as compared to the same period in 2023.

The decrease was primarily due to the disposition of 186 properties during the nine months ended September 30, 2023.

Same store property net operating income remained relatively consistent during the three months ended March 31, 2025, as compared to the same period in 2024.

Non-same store property net operating income increased $3.9 million during the three months ended March 31, 2025, as compared to the same period in 2024.

The increase was primarily due to the acquisition of four properties, including two properties acquired through deeds-in-lieu of foreclosure, for an aggregate fair value at the time of acquisition of $195.2 million

subsequent to March 31, 2024, partially offset by the disposition of 10 properties for an aggregate gross sales price of $104.3 million subsequent to March 31, 2024.

Distributions

Our Board authorizes distributions on a quarterly basis, which are paid out on a monthly basis.

Our Board authorized the following monthly distribution amounts per share, payable to stockholders as of the record date for the applicable month, during the year ended December 31, 2023 and the nine months ended September 30, 2024 for the periods indicated below:

Our Board authorized the following monthly distribution amounts per share, payable to stockholders as of the record date for the applicable month, during the year ended December 31, 2024 and the three months ended March 31, 2025 for the periods indicated below:

Period Commencing Period Ending Monthly Distribution Amount

January 2023 September 2023 $0.0350

October 2023 December 2023 $0.0367

January 2024 December 2024 $0.0375

January 2025 March 2025 $0.0283

As of September 30, 2024, we had distributions payable of $16.7 million.

January 2025 September 2025 $0.0283

As of March 31, 2025, we had distributions payable of $12.6 million.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Amount Percent Amount Percent

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____________________________________

(1) Net cash provided by operating activities for the nine months ended September 30, 2024 and 2023 was $130.7 million and $170.5 million, respectively.

(2) Our distributions covered by cash flows for the nine months ended September 30, 2024 include cash flows from operating activities in excess of distributions from prior periods of $16.5 million.

(1) Net cash provided by operating activities for the three months ended March 31, 2025 and 2024 was $31.8 million and $50.7 million, respectively.

(2) Our distributions covered by cash flows for the three months ended March 31, 2025 include cash flows from operating activities in excess of distributions from prior periods of $9.4 million.

We have paid, and may continue to pay, some of our distributions from sources other than cash flows from operations, including proceeds from asset sales, proceeds from loan repayments, and borrowings.

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If we cannot purchase all shares presented for redemption in any fiscal quarter, based upon insufficient cash available from the sale of shares under our DRIP and/or the limit on the number of shares we may redeem during any quarter or year, we will give priority to the redemption of deceased stockholders’ shares and stockholders with exigent circumstances, as determined in our sole discretion and accompanied by such evidentiary documentation as we may request.

While the shares of deceased stockholders and stockholders determined to have exigent circumstances will be included in calculating the maximum number of shares that may be redeemed in any annual or quarterly period, they will not be subject to the annual or quarterly percentage caps;

therefore, if the volume of requests to redeem deceased stockholders’ shares and

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

to the annual or quarterly percentage caps;

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

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

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

During the nine months ended September 30, 2024, we received valid redemption requests under our share redemption program totaling approximately 109.9 million shares, of which we redeemed approximately 3.7 million shares as of September 30, 2024 for $22.4 million (at an average redemption price of $6.09 per share) and approximately 1.8 million shares subsequent to September 30, 2024 for $10.7 million (at an average redemption price of $6.09 per share).

During the three months ended March 31, 2025, we received valid redemption requests under our share redemption program totaling approximately 43.0 million shares, of which we redeemed approximately 1.7 million shares subsequent to March 31, 2025 for $8.8 million (at an average redemption price of $5.23 per share).

The remaining redemption requests relating to 41.3 million shares went unfulfilled.

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Liquidity and Capital Resources

We expect to utilize proceeds from net cash provided by operations, cash proceeds from the sale of credit investments, principal payments received on credit investments, cash proceeds from real estate asset dispositions, proceeds from the Secondary DRIP Offering, proceeds from the sale of subsidiary equity, distributions, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions and loan originations, repayment of certain indebtedness and for general corporate uses.

We expect to utilize proceeds from net cash provided by operations, cash proceeds from the sale of credit investments, principal payments received on credit investments, cash proceeds from real estate asset dispositions, proceeds from the Secondary DRIP Offering, proceeds from the sale of subsidiary equity, distributions from certain investments, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions and loan originations, repayment of certain indebtedness, distributions, redemptions and for general corporate uses.

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

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 139,308 $ 181,291

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See Note 9 — Repurchase Facilities, Notes Payable and Credit Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional details regarding our repurchase facilities, notes payable and credit facilities.

The following table details our outstanding financing arrangements and borrowing capacity as of September 30, 2024 (in thousands):

The following table details our outstanding financing arrangements and borrowing capacity as of March 31, 2025 (in thousands):

Portfolio Financing Outstanding Principal Balance Maximum Capacity (1)

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March 31, 2025 $ 1,688,721 $ 1,681,737 $ 6,984

June 30, 2024 $ 1,929,204 $ 1,975,822 $ (46,618)

September 30, 2024 $ 1,810,749 $ 1,888,858 $ (78,109)

____________________________________

(1) Variance driven by late quarter timing of CMBS sales and debt pay downs primarily in connection with the amended and restated Master Repurchase Agreement with Barclays (as described in further detail in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities).

(1) Variance driven by late quarter timing of CMBS sales and debt pay downs, primarily in connection with the Master Repurchase agreement with Wells Fargo and the amended and restated Master Repurchase Agreement with Barclays Bank (as described in further detail in Note 9 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K).

Capital Resources

Our principal demands for funds will be for the acquisition or origination of credit investments and real estate, and the payment of tenant improvements, acquisition-related expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of $1.6 billion within the next 12 months, $96.7 million of which has a rolling term that resets monthly, as further discussed in Note 9 — Repurchase Facilities, Notes Payable and Credit Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

As of September 30, 2024, we had unfunded commitments of $265.9 million related to 35 loans and unfunded commitments of $60.5 million related to the NewPoint JV.

As of March 31, 2025, we had unfunded commitments of $229.2 million related to 33 loans and unfunded commitments of $19.9 million related to the NewPoint JV.

Loan funding commitments are generally subject to certain conditions and the satisfaction of borrower milestones.

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Contractual Obligations

As of September 30, 2024, we had debt outstanding with a carrying value of $3.3 billion and a weighted average interest rate of 6.0%.

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

Our contractual obligations as of September 30, 2024 were as follows (in thousands):

As of March 31, 2025, we had debt outstanding with a carrying value of $3.2 billion and a weighted average interest rate of 5.4%.

See Note 9 — Repurchase Facilities, Notes Payable and Credit Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for certain terms of our debt outstanding, including extension options.

Our contractual obligations as of March 31, 2025 were as follows (in thousands):

Payments due by period (1)

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

(2) Comprised of our off-balance sheet unfunded loan commitments to provide additional CRE loan, corporate senior loan and liquid corporate senior loan financing as of September 30, 2024.

(2) Comprised of our unfunded loan commitments to provide additional CRE loan, corporate senior loan and liquid corporate senior loan financing as of March 31, 2025.

The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date or the final maturity date;

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This table does not include $19.9 million of unfunded commitments related to the NewPoint JV.

(3) Interest payments on the variable rate debt, credit facilities and repurchase facilities have been calculated based on outstanding balances as of September 30, 2024 through their respective maturity dates.

(3) Interest payments on the variable rate debt, credit facilities and repurchase facilities have been calculated based on outstanding balances as of March 31, 2025 through their respective maturity dates.

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

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

As of September 30, 2024, our ratio of debt to total gross assets net of gross intangible lease liabilities was 62.6%.

As of March 31, 2025, our ratio of debt to total gross assets net of gross intangible lease liabilities was 61.8%.

Cash Flow Analysis

Operating Activities.

Net cash provided by operating activities decreased by $39.7 million for the nine months ended September 30, 2024, as compared to the same period in 2023.

The decrease was primarily due to decreased interest income of $14.0 million as a result of our three first mortgage loans that were placed on nonaccrual status and were past due on their interest payments as of September 30, 2024, along with the disposition of five properties and a net decrease in credit investments of $531.5 million subsequent to September 30, 2023.

Net cash provided by operating activities decreased by $18.9 million for the three months ended March 31, 2025, as compared to the same period in 2024.

The decrease was primarily due to a net decrease in credit investments of $849.3 million and decreased interest income of $32.3 million.

The decrease in credit investments was primarily a result of a net decrease of $399.2 million in liquid corporate senior loans subsequent to March 31, 2024, $265.4 million of which related to the sale of liquid corporate senior loans associated with the Master Participation Agreement, a net decrease of $386.1 million in first mortgage loans subsequent to March 31, 2024, primarily related to the Company taking possession of the underlying assets of two first mortgage loans through deeds-in-lieu of foreclosure, and a net decrease of real estate-related securities and other of $125.4 million.

The decrease was further driven by a decline in interest rates during the period ending March 31, 2025 as compared to the same period in 2024.

The decrease was also due to the disposition of 10 properties for an aggregate gross sales price of $104.3 million subsequent to March 31, 2024.

This decrease was partially offset by the acquisition of four properties, including two properties acquired through deeds-in-lieu of foreclosure, for an aggregate fair value at the time of acquisition of $195.2 million subsequent to March 31, 2024.

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

Investing Activities.

For the nine months ended September 30, 2024, net cash provided by investing activities decreased by $58.3 million, as compared to the same period in 2023.

The change was primarily due to a decrease in net proceeds from the disposition of real estate assets and condominium units of $903.5 million, as the Company disposed of three properties and 11 condominium units during the nine months ended September 30, 2024, as compared to 186 properties and 14 condominium units disposed of during the same period in 2023.

The change was offset by $542.0 million of net proceeds from loans held-for-investment during the nine months ended September 30, 2024, as compared to the $164.6 million net investment in loans held-for-investment during the nine months ended September 30, 2023.

The change was further offset by $71.0 million of net proceeds from real estate-related securities during the nine months ended September 30, 2024, as compared to the $85.7 million net investment in real estate-related securities during the nine months ended September 30, 2023.

For the three months ended March 31, 2025, net cash used in investing activities was $4.6 million, as compared to net cash provided by investing activities of $79.5 million, during the same period in 2024.

The change was primarily due to $67.5 million in net investments from loans held-for-investment during the three months ended March 31, 2025, as compared to the $79.7 million net proceeds in loans held-for-investment during the three months ended March 31, 2024.

The change was partially offset by an increase in net proceeds from the sale of real estate-related securities of $42.2 million and an increase in net proceeds from the disposition of real estate assets and condominium units of $15.5 million, as the Company disposed of three properties and five condominium units during the three months ended March 31, 2025, as compared to four condominium units disposed of during the same period in 2024

Financing Activities.

For the nine months ended September 30, 2024, net cash used in financing activities increased by $298.0 million, as compared to the same period in 2023.

The change was primarily due to an increase in net repayments on the repurchase facilities, notes payable and credit facilities of $291.9 million.

For the three months ended March 31, 2025, net cash used in financing activities decreased by $15.4 million, as compared to the same period in 2024.

The change was primarily due to a decrease in net repayments on the repurchase facilities, notes payable and credit facilities of $9.6 million and a decrease in distributions to shareholders of $5.5 million for the three months ended March 31, 2025 compared to the same period in 2024.

Election as a REIT

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We have entered into agreements with CMFT Management and our Investment Advisor whereby we agree to pay certain fees to, or reimburse certain expenses of, CMFT Management, the Investment Advisor or their affiliates.

In addition, we have invested in, and may continue to invest in, certain assets with funds that are advised by an affiliate of CMFT Management.

In addition, we have invested in, and may continue to invest in, certain co-investments with funds that are advised by an affiliate of CMFT Management.

We may also originate loans to third parties that use the proceeds to finance the acquisition of real estate from funds that are advised by an affiliate of CMFT Management.

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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/director of certain of its affiliates, is the vice president of our manager.

Additionally, one of our

directors, Jason Schreiber, is an employee of CIM Group.

DeBacker, our chief financial officer, principal accounting officer and treasurer, is an employee of CIM and a vice president of our manager, and is an officer of certain of its affiliates.

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.

DeBacker, our chief financial officer, principal accounting officer and treasurer, is an employee of CIM Group, the vice president of our manager, and is an officer of certain of its affiliates.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis