What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-13 · 141 added, 127 removed, 384 unchanged (41% 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 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.

As of September 30, 2025, our loan portfolio consisted of 76 loans with a net book value of $3.2 billion, and 18 investments in real estate-related securities and other of $246.1 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 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 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.

As of September 30, 2025, CLR holds a diversified portfolio of approximately $1.4 billion which includes first mortgage loans with a net book value of $1.1 billion,

CMBS with an estimated fair value of $142.7 million, and an investment in the Unconsolidated Joint Venture with a carrying value of $152.7 million.

As of September 30, 2025, we owned 198 properties, which consisted of 186 retail properties, eight office properties, and four industrial properties, representing 22 industry sectors and comprising approximately 6.4 million rentable square feet of commercial space located in 37 states, with a net book value of $1.0 billion.

As of September 30, 2025, we owned condominium developments with a net book value of $17.7 million.

During the nine months ended September 30, 2025, we disposed of five properties encompassing approximately 401,000 gross rentable square feet and 15 condominium units for a total consideration of $175.2 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 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.

As of September 30, 2025, 90.7% 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 94.9% 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.

In addition, as 96.9% of our rentable square feet was under lease, including any month-to-month agreements, as of September 30, 2025, with a weighted average remaining lease term of 9.6 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 six months ended June 30, 2025 have been characterized by a mix of positive and challenging developments leading to continued volatility in global markets.

The nine months ended September 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.

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

The Federal Reserve began to decrease interest rates in the second half of 2024 and in September 2025, however the timing, direction and extent of any future interest rate changes remains uncertain.

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 June 30, 2025

Activity from January 1, 2025 through September 30, 2025

Operating Results:

• Net loss attributable to the Company of $7.7 million, or $0.02 per share.

• Net income attributable to the Company of $22.6 million, or $0.05 per share.

• Redeemed 5.2 million shares under the share redemption program for $28.8 million at an average price of $5.54 per share.

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• Received principal repayments on loans held-for-investment of $341.7 million.

• Received repayments on CMBS of $2.7 million and sold CMBS for an aggregate gross sales price of $43.6 million.

• Invested $4.6 million in CMBS, received repayments on CMBS of $42.8 million and sold CMBS for an aggregate gross sales price of $60.9 million.

• Received proceeds from the repayment of portfolio investments on the CLO subordinated note of $4.8 million.

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Real Estate Portfolio Activity:

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

• Acquired 14 commercial properties for an aggregate purchase price of $28.7 million.

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

During the three months ended September 30, 2025, the Company disposed of one of the properties acquired via deed-in-lieu of foreclosure for an aggregate sales price of $91.3 million.

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

• Disposed of 15 condominium units for an aggregate sales price of $68.1 million.

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Portfolio Information

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,

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

As of September 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 $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.

(1) Table does not include our investment in the Unconsolidated Joint Venture, which had a carrying value of $163.0 million as of September 30, 2025, $152.7 million of which is held through CLR as of September 30, 2025.

(2) As of September 30, 2025, first mortgage loans with a net book value of $1.1 billion and CMBS with an estimated fair value of $142.7 million were held through CLR.

Credit Portfolio Information

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

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

CRE Loans (1)(2)

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(1) As of June 30, 2025, 91.1% of our loans by principal balance earned a floating rate of interest, primarily indexed to SOFR.

(1) As of September 30, 2025, 90.7% 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 $165.5 million as of June 30, 2025.

(3) Table does not include our investment in the Unconsolidated Joint Venture, which had a carrying value of $163.0 million as of September 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 June 30, 2025, the CLO subordinated note has an initial maturity date of July 2037 and an estimated effective yield of 15.2%.

As of September 30, 2025, the CLO subordinated note has an initial maturity date of July 2037 and an estimated effective yield of 15.1%.

Real Estate Portfolio Information

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.

As of September 30, 2025, we owned 198 properties located in 37 states, the gross rentable square feet of which was 96.9% leased, including any month-to-month agreements, with a weighted average lease term remaining of 9.6 years.

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

As of September 30, 2025, we had properties located in Virginia and Ohio which accounted for 16% and 14%, 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 13% and 11% respectively, of our 2025 annualized rental income.

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,

During the nine months ended September 30, 2025, we disposed of five properties for an aggregate gross sales price of $107.1 million as well as 15 condominium units for a gross sales price of $68.1 million.

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

As of September 30,

Number of commercial properties 198 191

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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 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,

The following table summarizes our real estate acquisition activity during the three and nine months ended September 30, 2025 and 2024.

Three Months Ended September 30,

Nine Months Ended September 30,

2025 2024 2025

Commercial properties acquired 14 2 16 2

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Rentable square feet (in thousands)

153 105 948 105

Results of Operations

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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 and six months ended June 30, 2025 and 2024 by operating segment (amounts in thousands):

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

For the Three Months Ended

For the Six Months Ended

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

For the Nine Months Ended

September 30, 2025 September 30, 2024 Change September 30, 2025 September 30, 2024 Change

Credit Segment $ 77,023 $ 98,430 $ (21,407) $ 232,630 $ 306,594 $ (73,964)

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Net income (loss)

30,309 7,315 22,994 22,650 (277,028) 299,678

Net income allocated to non-controlling interest

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Net income (loss) attributable to the Company

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

$ 30,282 $ 7,312 $ 22,970 $ 22,591 $ (277,031) $ 299,622

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

Credit Segment

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.

Our Credit segment revenues decreased $21.4 million for the three months ended September 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 September 30, 2025 as compared to the same period in 2024.

As of September 30, 2025, we held credit investments with an outstanding principal balance of $4.0 billion compared to credit investments with an outstanding principal balance of $4.5 billion as of September 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 $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.

The decrease in our Credit segment expenses of $36.4 million for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to an $18.1 million decrease in provision for credit losses during the three months ended September 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 $17.4 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments during the three months ended September 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 gain (loss) on equity securities, and dividend income from our equity securities.

The increase in our Credit segment other income of $3.0 million during the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a $4.9 million increase in other income, net during the three months ended September 30, 2025, as compared to the same period in 2024, 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, partially offset by a $1.8 million 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

September 30, 2025, as compared to the same period in 2024.

The increase was offset by a $2.0 million decrease in unrealized gain on equity securities during the three months ended September 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.

The increase in our Real Estate segment revenues of $4.6 million for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to the addition of 16 properties subsequent to September 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.

The increase in our Real Estate segment expenses of $3.0 million for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to an increase in depreciation and amortization expense of $1.6 million.

The increase was further driven by a $1.5 million increase in property operating, real estate tax and management fees expense.

These increases were driven by the addition of 16 properties subsequent to September 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 .

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 $1.1 million during the three months ended September 30, 2025, as compared to the same period in 2024 was primarily due to the disposition of one property resulting in a net gain of $1.1 million during the three months ended September 30, 2025, as compared to the disposition of one property and no gain or loss during 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.

During the three months ended September 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 September 30, 2025.

The units that remained during the three months ended September 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

The decrease in corporate expenses of $3.0 million during the three months ended September 30, 2025 was primarily due to no condominium-related impairment expense recorded for the three months ended September 30, 2025 as compared to $3.5 million during the same period in 2024.

The decrease was partially offset by an increase of $898,000 in general and administrative expenses during the three months ended September 30, 2025 as compared to the same period in 2024, primarily in connection with restricted stock unit related expenses recorded during the three months ended September 30, 2025.

The decrease in corporate other income of $515,000 during the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a decrease in interest income generated by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets for the three months ended September 30, 2025.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 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.

Our Credit segment revenues decreased $74.0 million for the nine months ended September 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 nine months ended September 30, 2025 as compared to the same period in 2024.

As of September 30, 2025, we held credit

investments with an outstanding principal balance of $4.0 billion compared to credit investments with an outstanding principal balance of $4.5 billion as of September 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.

The decrease in our Credit segment expenses of $296.0 million for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a $235.1 million decrease in provision for credit losses during the nine months ended September 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 nine months ended September 30, 2024, compared to no downgrades to a risk rating of 5 during the nine months ended September 30, 2025.

The decrease was further driven by a $56.9 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments during the nine months ended September 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 (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.

Other income (expense) 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.

Our Credit segment had other income of $14.0 million during the nine months ended September 30, 2025, as compared to other expense of $1.6 million during the same period in 2024.

The change was primarily due to a $3.6 million unrealized gain on equity securities during the nine months ended September 30, 2025, as compared to an $11.2 million unrealized loss on equity securities for the same period in 2024.

The increase was further driven by a $2.0 million increase in other income, net primarily related to an $8.0 million decrease in loss on sale of liquid corporate senior loans during the three months ended September 30, 2025, as compared to the same period in 2024, partially offset by a $4.7 million decrease in interest income generated by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets and a $1.1 million decrease in dividend income from our equity securities during the three months ended September 30, 2025, as compared to the same period in 2024.

The increase was offset by a $2.2 million decrease in gain on investment in unconsolidated entities during the nine months ended September 30, 2025, as compared to the same period in 2024.

Real Estate Segment

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.

The increase in our Real Estate segment revenues of $14.6 million for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to the addition of 16 properties subsequent to September 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 $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.

The decrease in our Real Estate segment expenses of $35.6 million for the nine months ended September 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 nine months ended September 30, 2025, as compared to the same period in 2024, as three properties were deemed to be impaired during the nine months ended September 30, 2025, resulting in impairment charges of $7.7 million, as compared to seven properties that were deemed to be impaired during the nine months ended September 30, 2024, resulting in impairment charges of $51.5 million.

The decrease in Real Estate segment expenses was partially offset by an increase in depreciation and amortization expenses of $3.3 million and an increase in property operating expenses of $3.2 million driven by the acquisition of 16 properties subsequent to September 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, 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.

The increase in our Real Estate segment other income of $1.4 million for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to the disposition of five properties resulting in a net gain of $1.5 million during the nine months ended September 30, 2025, compared to the disposition of three properties resulting in no gain or loss during the nine months ended September 30, 2024.

Corporate and Other

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.

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, decreased $218,000 during the nine months ended September 30, 2025 as compared to the same period in 2024, due to the disposition of all condominium units not under development during the nine months ended September 30, 2025.

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.

The decrease in corporate expenses of $9.9 million during the nine months ended September 30, 2025 as compared to the same period in 2024, was primarily due to no condominium-related impairment expense recorded during the nine months ended September 30, 2025, as compared to $8.9 million during the same period in 2024.

The decrease in corporate expenses was further driven by a decrease in property operating expenses of $2.2 million, due to decreased condominium-related legal expenses and miscellaneous condominium repairs and maintenance expense during the nine months ended September 30, 2025, as compared to the same period in 2024.

The decrease was partially offset by an increase of $2.2 million in general and administrative expenses during the nine months ended September 30, 2025, as compared to the same period in 2024, primarily in connection with restricted stock unit related expenses recorded during the nine months ended September 30, 2025.

The increase in corporate other income of $758,000 during the nine months ended September 30, 2025 as compared to the same period in 2024, was primarily due to the disposition of 15 condominium units resulting in a net gain of $6.3 million during the nine months ended September 30, 2025, compared to the disposition of 11 condominium units resulting in a net gain of $4.5 million during the nine months ended September 30, 2024.

The increase was partially offset by a decrease in other income, net of $1.1 million due to a decrease in interest income generated by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets for the nine months ended September 30, 2025.

Same Store Analysis

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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 June 30, 2025 and 2024

Comparison of the Three Months Ended September 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,

For the Three Months Ended September 30,

2025 2024 Change

Net income (loss)

$ 8,682 $ 5,999 $ 2,683

Other income, net (18) (80) 62

Other expense, net

(77) (120) 43

Gain on disposition of real estate and condominium developments, net

(1,128) — (1,128)

Real estate impairment — 9 (9)

Depreciation and amortization 8,980 7,381 1,599

Transaction-related

Management fees 2,403 2,008 395

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Net operating income $ 24,740 $ 21,206 $ 3,534

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.

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

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

For the Three Months Ended September 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 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

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

Non-same store property net operating income increased $3.5 million during the three months ended September 30, 2025, as compared to the same period in 2024.

The increase was primarily due to the acquisition of 16 properties, including two properties acquired through deeds-in-lieu of foreclosure, for an aggregate fair value at the time of acquisition of $179.8 million subsequent to September 30, 2024, partially offset by the disposition of nine properties for an aggregate gross sales price of $136.9 million subsequent to September 30, 2024.

Comparison of the Nine Months Ended September 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

For the Nine Months Ended

2025 2024 Change

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$ 17,568 $ (34,051) $ 51,619

Other income, net (59) (148) 89

Other expense, net

(136) (268) 132

Gain on disposition of real estate and condominium developments, net

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Net operating income $ 76,047 $ 65,455 $ 10,592

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.

A total of 181 properties were acquired before January 1, 2024 and represent our “same store” properties during the nine months ended September 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 Six Months Ended June 30,

For the Nine Months Ended September 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 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.

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

Non-same store property net operating income increased $10.6 million during the nine months ended September 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 six months ended June 30, 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 nine months ended September 30, 2025 for the periods indicated below:

Period Commencing Period Ending Monthly Distribution Amount

January 2024 December 2024 $0.0375

January 2025 December 2025 $0.0283

As of June 30, 2025, we had distributions payable of $12.6 million.

January 2025 March 2026 $0.0283

As of September 30, 2025, we had distributions payable of $12.7 million.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Amount Percent Amount Percent

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____________________________________

(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.

(1) Net cash provided by operating activities for the nine months ended September 30, 2025 and 2024 was $102.7 million and $130.7 million, respectively.

(2) Our distributions covered by cash flows for the nine months ended September 30, 2025 and 2024 include cash flows from operating activities in excess of distributions from prior periods of $12.7 million and $16.5 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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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 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).

During the nine months ended September 30, 2025, we received valid redemption requests under our share redemption program totaling approximately 133.8 million shares, of which we redeemed approximately 3.4 million shares as of September 30, 2025 for $17.6 million (at an average redemption price of $5.24 per share) and approximately 1.5 million shares subsequent to September 30, 2025 for $7.8 million (at an average redemption price of $5.22 per share).

The remaining redemption requests relating to 128.9 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):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Cash and cash equivalents $ 255,559 $ 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 June 30, 2025 (in thousands):

The following table details our outstanding financing arrangements and borrowing capacity as of September 30, 2025 (in thousands):

Portfolio Financing Outstanding Principal Balance Maximum Capacity (1)

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June 30, 2025 $ 1,693,710 $ 1,621,436 $ 72,274

September 30, 2025 $ 1,613,093 $ 1,618,193 $ (5,100)

____________________________________

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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, $78.1 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 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.

As of September 30, 2025, we had unfunded commitments of $184.1 million related to 37 loans and unfunded commitments of $49.2 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 June 30, 2025, we had debt outstanding with a carrying value of $3.0 billion and a weighted average interest rate of 5.4%.

As of September 30, 2025, we had debt outstanding with a carrying value of $3.0 billion and a weighted average interest rate of 5.2%.

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 June 30, 2025 were as follows (in thousands):

Our contractual obligations as of September 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 June 30, 2025.

(2) Comprised of our unfunded loan commitments to provide additional CRE loan, corporate senior loan and liquid corporate senior loan financing as of September 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 $49.2 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 June 30, 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 September 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 June 30, 2025, our ratio of debt to total gross assets net of gross intangible lease liabilities was 61.2%.

As of September 30, 2025, our ratio of debt to total gross assets net of gross intangible lease liabilities was 62.5%.

Cash Flow Analysis

Operating Activities.

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.

Net cash provided by operating activities decreased by $28.0 million for the nine months ended September 30, 2025, as compared to the same period in 2024.

The change was primarily due to a decrease in interest income of $74.0 million, primarily driven by a net decrease in credit investments of $477.0 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.

The decrease in credit investments was primarily a result of a net decrease of $436.4 million in first mortgage loans subsequent to September 30, 2024, primarily related to the Company taking possession of the underlying assets of two first mortgage loans through deeds-in-lieu of foreclosure, a net decrease of real estate-related securities and other of $120.9 million, and a net decrease of $23.6 million in liquid corporate senior loans subsequent to September 30, 2024.

The decrease was further driven by a decline in interest rates during the period ending September 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 $136.9 million subsequent to September 30, 2024.

The decrease was offset by the acquisition of 16 properties, including two properties acquired through deeds-in-lieu of foreclosure, for an aggregate fair value at the time of acquisition of $179.8 million subsequent to September 30, 2024.

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

Investing Activities.

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.

Net cash provided by investing activities decreased $323.8 million during the nine months ended September 30, 2025, as compared to the same period in 2024.

The change was primarily due to a $490.9 million decrease in net proceeds from loans held-for-investment during the nine months ended September 30, 2025, partially offset by an increase in net proceeds from the disposition of real estate assets and condominium units of $85.0 million, as the Company disposed of five properties and 15 condominium units during the nine months ended September 30, 2025, as compared to three properties and 11 condominium units disposed of during the same period in 2024.

The decrease was partially offset by $19.7 million in net proceeds on unconsolidated entities during the nine months ended September 30, 2025, as compared to $27.8 million in net investment in unconsolidated entities during the same period in 2024.

The decrease was further offset by an increase in net proceeds received from the sale of real estate-related securities of $28.1 million.

Financing Activities.

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.

For the nine months ended September 30, 2025, net cash used in financing activities decreased by $488.7 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 $462.3 million.

The decrease was further driven by a decrease in distributions to shareholders of $23.4 million for the nine months ended September 30, 2025 compared to the same period in 2024.

Election as a REIT

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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.

See Note 11 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the various related-party transactions, agreements and fees.

See Note 11 — Related-Party Transactions and Arrangements to

our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the various related-party transactions, agreements and fees.

Conflicts of Interest

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