What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-14 · 166 added, 100 removed, 345 unchanged (44% of the section changed)

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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.

As of June 30, 2025, our loan portfolio consisted of 73 loans with a net book value of $3.2 billion, and 20 investments in real estate-related securities and other of $295.2 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 March 31, 2025, CLR holds a diversified portfolio of

As of June 30, 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 $195.3 million, and an investment in the Unconsolidated Joint Venture with a carrying value of $155.4 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.

As of June 30, 2025, we owned 185 properties, which consisted of 172 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 June 30, 2025, we owned condominium developments with a net book value of $33.3 million.

During the six months ended June 30, 2025, we disposed of four properties encompassing approximately 59,000 gross rentable square feet and 11 condominium units for a total consideration of $66.0 million, 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 other operating expenses.

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 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.

As of June 30, 2025, 91.1% 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 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.

In addition, as 94.9% of our rentable square feet was under lease, including any month-to-month agreements, as of June 30, 2025, with a weighted average remaining lease term of 9.1 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 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.

The six months ended June 30, 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 the impacts of imposed 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.

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, though rates have been held steady so far this year.

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.

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Operating Highlights and Key Performance Indicators

Activity from January 1, 2025 through March 31, 2025

Activity from January 1, 2025 through June 30, 2025

Operating Results:

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

• Disposed of four properties for an aggregate sales price of $15.8 million.

• Disposed of 11 condominium units for an aggregate sales price of $50.2 million.

Financing Activity:

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Portfolio Information

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,

The following table shows the net book value of our portfolio by investment type as of June 30, 2025 and 2024 (dollar amounts in thousands):

As of June 30,

Asset Count Net Book Value

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____________________________________

(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.

(1) Table does not include our investment in the Unconsolidated Joint Venture, which had a carrying value of $165.5 million as of June 30, 2025, $155.4 million of which is held through CLR as of June 30, 2025.

(2) As of June 30, 2025, first mortgage loans with a net book value of $1.1 billion and CMBS with an estimated fair value of $195.3 million were held through CLR.

Credit Portfolio Information

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

The following table details overall statistics for our credit portfolio as of June 30, 2025 (dollar amounts in thousands):

CRE Loans (1)(2)

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____________________________________

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

(1) As of June 30, 2025, 91.1% 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, which had a carrying value of $192.5 million as of March 31, 2025.

(3) Table does not include our investment in the Unconsolidated Joint Venture, which had a carrying value of $165.5 million as of June 30, 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%.

As of June 30, 2025, the CLO subordinated note has an initial maturity date of July 2037 and an estimated effective yield of 15.2%.

Real Estate Portfolio Information

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.

As of June 30, 2025, we owned 185 properties located in 36 states, the gross rentable square feet of which was 94.9% leased, including any month-to-month agreements, with a weighted average lease term remaining of 9.1 years.

As of June 30, 2025, we had certain geographic and industry concentrations in our property holdings.

As of June 30, 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,

During the six months ended June 30, 2025, we disposed of four properties for an aggregate gross sales price of $15.8 million as well as 11 condominium units for a gross sales price of $50.2 million.

The following table shows the property statistics of our real estate assets as of June 30, 2025 and 2024:

As of June 30,

Number of commercial properties 185 190

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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 months ended March 31, 2025.

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

Three Months Ended March 31,

The following table summarizes our real estate acquisition activity during the three and six months ended June 30, 2025.

No properties were acquired during the three and six months ended June 30, 2024.

Three Months Ended June 30,

Six Months Ended June 30,

Commercial properties acquired — 2

Purchase price of acquired properties (in thousands)

$ — $ 151,043

Rentable square feet (in thousands)

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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 months ended March 31, 2025 and 2024 by operating segment (amounts in thousands):

The following table compares our summarized results of operations for the three and six months ended June 30, 2025 and 2024 by operating segment (amounts in thousands):

For the Three Months Ended

March 31, 2025 March 31, 2024 Change

For the Six Months Ended

June 30, 2025 June 30, 2024 Change June 30, 2025 June 30, 2024 Change

Credit Segment $ 78,011 $ 98,309 $ (20,298) $ 155,607 $ 208,164 $ (52,557)

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6,567 4,444 2,123 14,039 (113) 14,152

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

Net income (loss) 25,215 (245,801) 271,016 (7,659) (284,343) 276,684

Net income allocated to non-controlling interest

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

23 — 23 32 — 32

Net income (loss) attributable to the Company $ 25,192 $ (245,801) $ 270,993 $ (7,691) $ (284,343) $ 276,652

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Credit Segment

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.

Our Credit segment revenues decreased $20.3 million for the three months ended June 30, 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 June 30, 2025 as compared to the same period in 2024.

As of June 30, 2025, we held credit investments with an outstanding principal balance of $4.1 billion compared to credit investments with an outstanding principal balance of $4.8 billion as of June 30, 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 $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.

The decrease in our Credit segment expenses of $232.5 million for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a $211.7 million decrease in provision for credit losses during the three months ended June 30, 2025, as compared to the same period in 2024 due to a decrease in incremental asset-specific credit loss provisions on funded and unfunded commitments related to the Company’s first mortgage loans.

The decrease was further driven by a $19.2 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments during the three months ended June 30, 2025 as compared to the same period in 2024.

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

The increase in our Credit segment other income of $882,000 during the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a $2.1 million decrease in unrealized loss on equity securities during the three months ended June 30, 2025, as compared to the same period in 2024.

Furthermore, there was a $169,000 increase in gain on investment in unconsolidated entities during the three months ended June 30, 2025, as compared to the same period in 2024.

The increase was partially offset by a $1.4 million decrease in other income, net during the three months ended June 30, 2025, as compared to the same period in 2024, primarily related to a

$2.0 million decrease in interest income generated by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets, which was partially offset by a $942,000 decrease in the loss on sale of liquid corporate senior loans during the three months ended June 30, 2025 as compared to the same period in 2024.

Real Estate Segment

The increase in our Real Estate segment revenues of $5.7 million for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to the addition of four properties subsequent to June 30, 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 $46.5 million for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a decrease in impairment charges of $50.8 million for the three months ended June 30, 2025, as compared to the same period in 2024, as two properties were deemed to be impaired during the three months ended June 30, 2025, resulting in impairment charges of $648,000, as compared to seven properties impaired during the three months ended June 30, 2024, resulting in impairment charges of $51.5 million.

The decrease in Real Estate segment expenses was partially offset by an increase in property operating expenses of $2.1 million driven by the acquisition of four properties subsequent to June 30, 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, which primarily consists of gain on disposition of real estate, net, and other income, did not meaningfully change during the three months ended June 30, 2025, compared to the same period in 2024 .

Corporate and Other

During the three months ended June 30, 2025, we did not generate any corporate revenues, which primarily consists of rental income from our condominium and rental units acquired via foreclosure.

There was no revenue generated as the Company has disposed of all rent stabilized condominium units as of June 30, 2025.

The units that remained during the three months ended June 30, 2025 are under development.

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 decrease in corporate expenses of $4.6 million during the three months ended June 30, 2025 was primarily due to no condominium-related impairment expense being recorded for the three months ended June 30, 2025 as compared to $5.5 million during the same period in 2024.

The increase in corporate other income of $1.3 million during the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a $1.6 million increase in gain on disposition of real estate and condominium developments, net, as a result of the disposition of six condominium units resulting in a net gain of $4.0 million during the three months ended June 30, 2025, compared to the disposition of four condominium units resulting in a net gain of $2.5 million for the three months ended June 30, 2024.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Credit Segment

Our Credit segment revenues decreased $52.6 million for the six months ended June 30, 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 six months ended June 30, 2025 as compared to the same period in 2024.

As of June 30, 2025, we held credit investments with an

outstanding principal balance of $4.1 billion compared to credit investments with an outstanding principal balance of $4.8 billion as of June 30, 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 $259.6 million for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a $217.0 million decrease in provision for credit losses during the six months ended June 30, 2025, as compared to the same period in 2024 due to six first mortgage loans that were moved to a risk rating of 5 during the six months ended June 30, 2024, compared to no downgrades to a risk rating of 5 during the six months ended June 30, 2025.

The decrease was further driven by a $39.5 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments during the six months ended June 30, 2025 as compared to the same period in 2024.

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 (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.

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

The increase in our Credit segment other income (expense) of $12.6 million during the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a $1.2 million unrealized gain on equity securities during the six months ended June 30, 2025, as compared to a $15.6 million unrealized loss on equity securities for the same period in 2024.

The increase was partially offset by a $2.9 million decrease in other income, net during the six months ended June 30, 2025, as compared to the same period in 2024, primarily related to a $2.9 million decrease in interest income generated by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets, during the six months ended June 30, 2025 as compared to the same period in 2024.

The increase was further offset by a $1.3 million decrease in gain on investment in unconsolidated entities during the six months ended June 30, 2025, as compared to the same period in 2024.

Real Estate Segment

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.

The increase in our Real Estate segment revenues of $10.0 million for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to the addition of four properties subsequent to June 30, 2024.

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 $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.

The decrease in our Real Estate segment expenses of $38.6 million for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a decrease in impairment charges of $43.8 million for the six months ended June 30, 2025, as compared to the same period in 2024, as three properties were deemed to be impaired during the six months ended June 30, 2025, resulting in impairment charges of $7.7 million, as compared to seven properties that were deemed to be impaired during the six months ended June 30, 2024, resulting in impairment charges of $51.5 million.

The decrease in Real Estate segment expenses were partially offset by an increase in property operating expenses of $2.6 million driven by the acquisition of four properties subsequent to June 30, 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 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.

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

The increase in our Real Estate segment other income of $322,000 for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to the disposition of four properties resulting in a net gain of $411,000 during the six months ended June 30, 2025, compared to the disposition of two properties resulting in no gain or loss during the six months ended June 30, 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 three months ended March 31, 2025 as compared to the same period in 2024.

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, decreased $119,000 during the six months ended June 30, 2025 as compared to the same period in 2024, due to the disposition of all condominium units not under development during the six months ended June 30, 2025.

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.

The decrease in corporate expenses of $7.0 million during the six months ended June 30, 2025 as compared to the same period in 2024, was primarily due to no condominium-related impairment expense recorded during the six months ended June 30, 2025, as compared to $5.5 million during the same period in 2024.

The decrease in corporate expenses was further driven by a decrease in property operating expenses of $2.1 million, due to decreased condominium-related legal expenses and miscellaneous condominium repairs and maintenance expense during the six months ended June 30, 2025 as compared to the same period in 2024.

The increase in corporate other income of $1.3 million during the six months ended June 30, 2025 as compared to the same period in 2024, was primarily due to the disposition of 11 condominium units resulting in a net gain of $5.2 million during the six months ended June 30, 2025, compared to the disposition of eight condominium units resulting in a net gain of $3.3 million during the six months ended June 30, 2024.

Same Store Analysis

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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.

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 loss.

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

Comparison of the Three Months Ended March 31, 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 Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2025 and 2024

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

For the Three Months Ended June 30,

2025 2024 Change

Net income (loss)

$ 6,314 $ (45,854) $ 52,168

Other income, net (18) (80) 62

Real estate impairment 648 51,469 (50,821)

Depreciation and amortization 9,770 8,397 1,373

Transaction-related

Management fees 2,376 2,034 342

General and administrative

Interest expense, net 5,885 5,811 74

Net operating income $ 25,096 $ 21,894 $ 3,202

A total of 181 properties were acquired before April 1, 2024 and represent our “same store” properties during the three months ended June 30, 2025 and 2024.

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

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 June 30,

2025 2024 Change 2025 2024 Change 2025 2024 Change

Rental and other property income $ 29,179 $ 23,492 $ 5,687 $ 21,449 $ 21,505 $ (56) $ 7,730 $ 1,987 $ 5,743

Property operating expenses 2,830 765 2,065 618 710 (92) 2,212 55 2,157

Real estate tax expenses 1,253 833 420 583 651 (68) 670 182 488

Total property operating expenses 4,083 1,598 2,485 1,201 1,361 (160) 2,882 237 2,645

Net operating income

$ 25,096 $ 21,894 $ 3,202 $ 20,248 $ 20,144 $ 104 $ 4,848 $ 1,750 $ 3,098

Net Operating Income

Same store property net operating income remained relatively consistent during the three months ended June 30, 2025, as compared to the same period in 2024.

Non-same store property net operating income increased $3.1 million during the three months ended June 30, 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 June 30, 2024, partially offset by the disposition of nine properties for an aggregate gross sales price of $52.5 million subsequent to June 30, 2024.

Comparison of the Six Months Ended June 30, 2025 and 2024

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

For the Six Months Ended

2025 2024 Change

Net income (loss)

$ 8,886 $ (40,050) $ 48,936

Other income, net (59) (148) 89

Gain on disposition of real estate and condominium developments, net

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Depreciation and amortization 18,598 16,939 1,659

Transaction-related expenses 53 — 53

Transaction-related

Management fees 4,672 4,172 500

General and administrative expenses 67 128 (61)

General and administrative

127 245 (118)

Interest expense, net 11,706 11,622 84

Net operating income $ 51,307 $ 44,249 $ 7,058

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.

A total of 181 properties were acquired before January 1, 2024 and represent our “same store” properties during the six months ended June 30, 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 Three Months Ended March 31,

For the Six Months Ended June 30,

2025 2024 Change 2025 2024 Change 2025 2024 Change

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Net Operating Income

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.

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.

Same store property net operating income remained relatively consistent during the six months ended June 30, 2025, as compared to the same period in 2024.

Non-same store property net operating income increased $7.0 million during the six months ended June 30, 2025, as compared to the same period in 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, 2024 and the three months ended March 31, 2025 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 six months ended June 30, 2025 for the periods indicated below:

Period Commencing Period Ending Monthly Distribution Amount

January 2024 December 2024 $0.0375

January 2025 September 2025 $0.0283

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

January 2025 December 2025 $0.0283

As of June 30, 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):

Three Months Ended March 31,

Six Months Ended June 30,

Amount Percent Amount Percent

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____________________________________

(1) Net cash provided by operating activities for the three months ended March 31, 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.

(1) Net cash provided by operating activities for the six months ended June 30, 2025 and 2024 was $68.0 million and $86.1 million, respectively.

(2) Our distributions covered by cash flows for the six months ended June 30, 2025 and 2024 include cash flows from operating activities in excess of distributions from prior periods of $10.4 million and $11.9 million, respectively.

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.

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 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).

During the six months ended June 30, 2025, we received valid redemption requests under our share redemption program totaling approximately 87.9 million shares, of which we redeemed approximately 1.8 million shares as of June 30, 2025 for $9.2 million (at an average redemption price of $5.24 per share) and approximately 1.4 million shares subsequent to June 30, 2025 for $7.7 million (at an average redemption price of $5.24 per share).

The remaining redemption requests relating to 84.7 million shares went unfulfilled.

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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):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Cash and cash equivalents $ 161,543 $ 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 March 31, 2025 (in thousands):

The following table details our outstanding financing arrangements and borrowing capacity as of June 30, 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, 2025 $ 1,693,710 $ 1,621,436 $ 72,274

____________________________________

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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 $1.7 billion within the next 12 months, $111.1 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 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.

As of June 30, 2025, we had unfunded commitments of $191.0 million related to 30 loans and unfunded commitments of $47.6 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 March 31, 2025, we had debt outstanding with a carrying value of $3.2 billion and a weighted average interest rate of 5.4%.

As of June 30, 2025, we had debt outstanding with a carrying value of $3.0 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):

Our contractual obligations as of June 30, 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 unfunded loan commitments to provide additional CRE loan, corporate senior loan and liquid corporate senior loan financing as of March 31, 2025.

(2) Comprised of our unfunded loan commitments to provide additional CRE loan, corporate senior loan and liquid corporate senior loan financing as of June 30, 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 $47.6 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 March 31, 2025 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 June 30, 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 March 31, 2025, our ratio of debt to total gross assets net of gross intangible lease liabilities was 61.8%.

As of June 30, 2025, our ratio of debt to total gross assets net of gross intangible lease liabilities was 61.2%.

Cash Flow Analysis

Operating Activities.

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.

Net cash provided by operating activities decreased by $18.1 million for the six months ended June 30, 2025, as compared to the same period in 2024.

The change was primarily due to a decrease in interest income of $52.6 million, primarily driven by a net decrease in credit investments of $732.6 million.

The decrease in credit investments was primarily a result of a net decrease of $317.1 million in liquid corporate senior loans subsequent to June 30, 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 $487.8 million in first mortgage loans subsequent to June 30, 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 $37.9 million.

The decrease was further driven by a decline in interest rates during the period ending June 30, 2025 as compared to the same period in 2024.

The decrease was also due to the disposition of nine properties for an aggregate gross sales price of $52.5 million subsequent to June 30, 2024.

The 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 June 30, 2024.

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

Investing Activities.

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

For the six months ended June 30, 2025, net cash provided by investing activities decreased $190.6 million during the six months ended June 30, 2025, as compared to the same period in 2024.

The change was primarily due to a $164.4 million decrease in net proceeds from loans held-for-investment during the six months ended June 30, 2025 as well as a decrease in principal payments received on real estate-related securities of $49.8 million.

The change was further driven by a decrease in net proceeds from the disposition of real estate assets and condominium units of $24.6 million, as the Company disposed of four properties and 11 condominium units during the six months ended June 30, 2025, as compared to two properties and eight condominium units disposed of during the same period in 2024.

The decrease was partially offset by $17.1 million in net proceeds on unconsolidated entities during the six months ended June 30, 2025, as compared to $25.6 million in net investment in unconsolidated entities during the same period in 2024.

Financing Activities.

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.

For the six months ended June 30, 2025, net cash used in financing activities decreased by $19.9 million, as compared to the same period in 2024.

The change was primarily due to a decrease in distributions to shareholders of $14.3 million for the six months ended June 30, 2025 compared to the same period in 2024.

Election as a REIT

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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.

Through his affiliation with Orchard Capital Corporation, Mr.

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.

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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