CIM GROUP, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. Certain risks may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a complete discussion of such risk factors, see Item 1A — Risk Factors of this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in “Part I — Financial Information” of this Quarterly Report on Form 10-Q, including the notes to the condensed consolidated financial statements contained therein, and the terms “we,” “us,” “our” and the “Company” refer to CIM Real Estate Finance Trust, Inc. Forward-Looking Statements This Quarterly Report on Form 10-Q includes “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect our expectations and projections about our future results, performance, prospects and opportunities. We have attempted to identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” or similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, those discussed below. In addition, these risks and uncertainties include those associated with general economic, market and other conditions. We intend for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or new information, future events or otherwise, except as may be required to satisfy our obligations under federal securities law. The forward-looking statements should be read in light of the risk factors identified in Item 1A — Risk Factors of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025. The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from those presented in our forward-looking statements: • We are subject to risks associated with bankruptcies or insolvencies of our borrowers and tenants and from borrower or tenant defaults generally. • Our credit and real estate investments subject us to domestic and international political, economic, capital markets and other conditions and events, including ongoing geopolitical tensions in the Middle East. • We are subject to fluctuations in interest rates which could reduce our ability to generate income on our credit investments. • We are subject to risks associated with global trade disruption, significant introduction of trade barriers and bilateral trade frictions, including due to tariffs and other changes to trade policy in the U.S. and other jurisdictions, together with any downturns in the global economy resulting therefrom. • We are subject to an increase in inflation that could increase our credit and real estate portfolio related costs at a higher rate than our rental income and other revenue and adversely impact demand for rental space and future extensions of our tenants’ leases. • We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as significant disruptions of CIM Group’s information technology (“IT”) networks and related systems. • We are subject to competition from entities engaged in lending which may impact the availability of origination and acquisition opportunities acceptable to us. • We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all. • We are subject to risks associated with tenant, geographic and industry concentrations with respect to our investments and properties. • Our properties, intangible assets and other assets, as well as the property securing our loans or other investments, may be subject to impairment charges. • We could be subject to unexpected costs or unexpected liabilities that may arise from dispositions. • We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties and we may suffer delays or be unable to acquire, dispose of, or lease properties on advantageous terms. 46 Table of Contents • We have substantial indebtedness, which may affect our ability to pay distributions and expose us to interest rate fluctuation risk and the risk of default under our debt obligations. • We are subject to risks associated with the incurrence of additional secured or unsecured debt. • We may not be able to maintain profitability. • We may not generate cash flows sufficient to pay our distributions to stockholders or meet our debt service obligations. • Our continued compliance with debt covenants depends on many factors and could be impacted by current or future economic conditions. • We may be affected by risks resulting from losses in excess of insured limits. • We may fail to remain qualified as a REIT for U.S. federal income tax purposes or revoke our REIT election. • We could be subject to a material tax liability if our sales of properties are treated as prohibited transactions. • We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability or reduce our operating flexibility. • We may be unable to list our shares on a national securities exchange in a particular timeframe or at all. • If we, our operating partnership and any other subsidiaries do not maintain exemptions from registration under the Investment Company Act of 1940, as amended, we will be subject to significant regulations and restrictions on our business and investments, which could materially and adversely impact us. Definitions We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings: The phrase “annualized rental income” refers to the straight-line rental revenue under our leases on operating properties owned as of the respective reporting date, which includes the effect of rent escalations and any tenant concessions, such as free rent, and excludes any contingent rent, such as percentage rent. Management uses annualized rental income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized rental income is not indicative of future performance. Under a “net lease,” the tenant occupying the leased property (usually as a single tenant) does so in much the same manner as if the tenant were the owner of the property. The tenant generally agrees that it will either have no ability or only limited ability to terminate the lease or abate rent prior to the expiration of the term of the lease as a result of real estate driven events such as casualty, condemnation or failure by the landlord to fulfill its obligations under the lease. There are various forms of net leases, most typically classified as either triple-net or double-net. Triple-net leases typically require the tenant to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs, including roof, structure and parking lot). Double-net leases typically hold the landlord responsible for the capital expenditures for the roof and structure, while the tenant is responsible for all lease payments and remaining operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance). Overview We are a non-traded REIT that seeks to attain attractive risk-adjusted returns and create long term value for our stockholders by investing in a diversified portfolio of senior secured mortgage loans, creditworthy long-term net-leased property investments and other senior loan and liquid credit investments. Our investment strategy allows us to adapt over time in order to respond to evolving market conditions and to capitalize on investment opportunities that may arise at different points in the economic and real estate investment cycle. Subject to market conditions, we expect to pursue a listing of our common stock on a national securities exchange at such time as our Board determines that such a listing would be in the best interests of our stockholders, though we can provide no assurance that a listing will happen in a particular timeframe or at all. We were formed on July 27, 2010, and we elected to be taxed, and conduct our operations to qualify, as a REIT for U.S. federal income tax purposes. 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, 2026, our loan portfolio consisted of 77 loans with a net book value of $3.1 billion, and 14 investments in real estate-related securities and other of $167.6 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, 2026, CLR holds a diversified portfolio of 47 Table of Contents approximately $1.5 billion which includes first mortgage loans with a net book value of $1.3 billion, CMBS with an estimated fair value of $63.5 million, and an investment in the Unconsolidated Joint Venture with a carrying value of $115.5 million. As of March 31, 2026, we owned 199 commercial real estate properties, which consisted of 184 retail properties, eight office properties, and seven industrial properties, representing 22 industry sectors and comprising approximately 6.6 million rentable square feet of commercial space located in 36 states, with a net book value of $1.0 billion. As of March 31, 2026, we owned condominium developments with a net book value of $12.0 million. During the three months ended March 31, 2026, we disposed of three properties encompassing approximately 87,000 gross rentable square feet, as further discussed in Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q. Our operating results and cash flows are primarily influenced by interest income from our credit investments, rental and other property income from our commercial properties, interest expense on our indebtedness and credit investments and 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, 2026, 89.8% 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 95.8% of our rentable square feet was under lease, including any month-to-month agreements, as of March 31, 2026, with a weighted average remaining lease term of 10.2 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. If our manager identifies significant changes or trends that may adversely affect the creditworthiness of a tenant, it will gather a more in-depth knowledge of the tenant’s financial condition and, if necessary, attempt to mitigate the tenant credit risk by evaluating the possible sale of the property or identifying a possible replacement tenant should the current tenant fail to perform on the lease. Macroeconomic Environment The three months ended March 31, 2026 have been characterized by a mix of positive and challenging developments leading to continued volatility in global markets. Investor concerns over inflation, continued high 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 in September, November, and December 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. In addition, the U.S. office sector has been adversely affected by the increase in remote working arrangements and, over the past several years, the retail sector has been adversely affected by electronic commerce. These negative factors have been considered in the determination of our CECL allowance. We may be required to record further increases to our current expected credit loss reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves, particularly if market conditions relevant to the office sector do not improve. Any such reserve increases are difficult to predict. For a complete discussion of risk factors related to the economy that could impact our lending and our business, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. 48 Table of Contents Operating Highlights and Key Performance Indicators Activity from January 1, 2026 through March 31, 2026 Operating Results: • Net income attributable to the Company of $43.0 million, or $0.10 per share. • Redeemed 1.6 million shares under the share redemption program for $8.2 million at an average price of $5.22 per share. • Declared aggregate distributions of $0.08 per share. Credit Portfolio Investment Activity: • Originated $56.0 million of first mortgage loans. • Funded $10.8 million in existing first mortgage loans. • Invested $37.4 million in corporate senior loans. • Received principal repayments on loans held-for-investment of $483.8 million. • Received repayments on CMBS of $513,000. • Received proceeds from the repayment of portfolio investments on the CLO subordinated note of $1.1 million. • Funded an additional $24.4 million in NP JV Holdings. Real Estate Portfolio Investment Activity: • Disposed of three commercial properties for an aggregate sales price of $20.1 million. Financing Activity: • Decreased total debt by $367.5 million, reducing our ratio of debt to total gross assets net of gross intangible lease liabilities to 60.1%. 49 Table of Contents Portfolio Information The following table shows the net book value of our portfolio by investment type as of March 31, 2026 and 2025 (dollar amounts in thousands): As of March 31, 2026 2025 Asset Count Net Book Value Asset Count Net Book Value Loan Held-For-Investment First mortgage loans 30 $ 2,951,719 68.7 % 34 $ 3,286,149 68.8 % Liquid corporate senior loans 8 26,880 0.6 % 11 31,305 0.7 % Corporate senior loans 39 400,469 9.3 % 23 283,198 5.9 % Less: Current expected credit losses (290,707) (6.8) % (289,626) (6.1) % Total loans held-for-investment and related receivables, net 77 3,088,361 71.8 % 68 3,311,026 69.3 % Real Estate-Related Securities and Other CMBS 9 291,338 6.8 % 15 424,033 8.9 % CLO subordinated note 1 17,337 0.4 % 1 24,855 0.5 % Equity securities 4 41,206 1.0 % 4 35,470 0.7 % Less: Current expected credit losses (182,299) (4.2) % (182,328) (3.8) % Total real estate-related securities and other, net 14 167,582 4.0 % 20 302,030 6.3 % Real Estate Total real estate assets and intangible lease liabilities, net 199 1,042,113 24.2 % 186 1,160,835 24.4 % Total Investment Portfolio (1)(2) 290 $ 4,298,056 100.0 % 274 $ 4,773,891 100.0 % ____________________________________ (1) Table does not include our investment in the Unconsolidated Joint Venture, which had a carrying value of $125.1 million as of March 31, 2026, $115.5 million of which is held through CLR as of March 31, 2026. (2) As of March 31, 2026, first mortgage loans with a net book value of $1.3 billion and CMBS with an estimated fair value of $63.5 million were held through CLR. Credit Portfolio Information The following table details overall statistics for our credit portfolio as of March 31, 2026 (dollar amounts in thousands): CRE Loans (1)(2) Liquid Corporate Senior Loans Real Estate-Related Securities and Other (2) Corporate Senior Loans Number of investments (3) 30 8 14 39 Principal balance $ 2,965,205 $ 27,318 $ 412,659 $ 405,937 Net book value $ 2,672,202 $ 22,732 $ 167,582 $ 393,427 Unfunded loan commitments (4) $ 150,816 $ — $ — $ 68,973 Weighted-average interest rate (5)(6) 6.7 % 10.0 % 5.9 % 9.4 % Weighted-average maximum years to maturity (6)(7) 2.4 2.8 11.2 3.0 ____________________________________ (1) As of March 31, 2026, 89.8% 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 $125.1 million as of March 31, 2026. 50 Table of Contents (4) Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying consolidated balance sheets. (5) The weighted-average interest rate is based on the relevant fixed rate or floating benchmark plus a spread. Excludes loans on nonaccrual status. (6) Does not include the CLO subordinated note. As of March 31, 2026, the CLO subordinated note has an initial maturity date of July 2037 and an estimated effective yield of 15.6%. (7) Does not include positions in maturity default. Real Estate Portfolio Information As of March 31, 2026, we owned 199 properties located in 36 states, the gross rentable square feet of which was 95.8% leased, including any month-to-month agreements, with a weighted average lease term remaining of 10.2 years. As of March 31, 2026, we had certain geographic and industry concentrations in our property holdings. As of March 31, 2026, we had properties located in Virginia and Ohio which accounted for 17% and 12%, respectively, of our 2026 annualized rental income. In addition, we had tenants in the health and personal care stores and manufacturing industries, which accounted for 13% and 12%, respectively, of our 2026 annualized rental income. During the three months ended March 31, 2026, we disposed of three properties for an aggregate gross sales price of $20.1 million. The following table shows the property statistics of our real estate assets as of March 31, 2026 and 2025: As of March 31, 2026 2025 Number of commercial properties 199 186 Rentable square feet (in thousands) (1) 6,576 6,576 Percentage of rentable square feet leased 95.8 % 94.8 % Percentage of investment-grade tenants (2) 27.4 % 25.8 % ____________________________________ (1) Includes square feet of buildings on land parcels subject to ground leases. (2) Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”). The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable. 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 commercial properties were acquired during the three months ended March 31, 2026. Three Months Ended March 31, 2025 Commercial properties acquired 2 Purchase price of acquired properties (in thousands) $ 151,043 Rentable square feet (in thousands) 795 Results of Operations Overview We are not aware of any material trends or uncertainties, other than ongoing geopolitical tensions in the Middle East and national economic conditions affecting real estate in general, such as inflation and heightened interest rates and uncertainty around the impacts of imposed tariffs and other changes to trade policy in the U.S. and other jurisdictions, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties and credit investments other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 and this Quarterly Report on Form 10-Q. Our operating segments include Credit and Real Estate. Refer to Note 15 — Segment Reporting to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of our operating segments. 51 Table of Contents The following table compares our summarized results of operations for the three months ended March 31, 2026 and 2025 by operating segment (amounts in thousands): For the Three Months Ended March 31, 2026 March 31, 2025 Change Revenues: Credit Segment $ 71,818 $ 77,596 $ (5,778) Real Estate Segment 25,768 28,740 (2,972) Corporate — 68 (68) 97,586 106,404 (8,818) Expenses: Credit Segment 33,355 111,312 (77,957) Real Estate Segment 20,934 26,620 (5,686) Corporate 9,831 8,818 1,013 64,120 146,750 (82,630) Other income: Credit Segment 3,133 4,993 (1,860) Real Estate Segment 5,766 459 5,307 Corporate 707 2,020 (1,313) 9,606 7,472 2,134 Net income (loss) 43,072 (32,874) 75,946 Net income allocated to non-controlling interest 44 9 35 Net income (loss) attributable to the Company $ 43,028 $ (32,883) $ 75,911 Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025 Credit Segment Revenues Our Credit segment revenues decreased $5.8 million for the three months ended March 31, 2026, as compared to the same period in 2025. The decrease was primarily due to a decrease in the overall size of our investment portfolio during the three months ended March 31, 2026 as compared to the same period in 2025. As of March 31, 2026, we held credit investments with an outstanding principal balance of $3.8 billion compared to credit investments with an outstanding principal balance of $4.2 billion as of March 31, 2025. Expenses 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 $78.0 million for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to a $68.9 million decrease in provision for credit losses during the three months ended March 31, 2026. During the three months ended March 31, 2026, there was a decrease in incremental asset-specific credit loss provisions on funded and unfunded commitments related to the Company’s first mortgage loans, as compared to the same period in 2025, where there was a 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 (loss) income to (decrease) increase in provision for credit losses on the condensed consolidated statements of operations during the three months ended March 31, 2025. The decrease was further driven by a $7.9 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments during the three months ended March 31, 2026, as compared to the same period in 2025. 52 Table of Contents Net Interest Income (amounts in thousands): For the Three Months Ended March 31, 2026 2025 Change Interest income from loans held-for-investment $ 68,828 $ 70,943 $ (2,115) Interest income from real estate-related securities and other 2,990 6,653 (3,663) Interest expense (31,555) (39,429) 7,874 Net interest income $ 40,263 $ 38,167 $ 2,096 For the three months ended March 31, 2026, net interest income for our Credit segment increased $2.1 million. While decreases in our outstanding balances were the primary drivers of the declines in both interest income and interest expense, net interest income was favorably impacted by a larger decline in interest expense paid on outstanding borrowings relative to the decline in weighted average interest rate earned on credit investments. The decline in interest expense due to lower borrowing due to a reduction in average outstanding borrowings used to fund our credit investments, were able to offset the decline in interest income. Other Income Other income for our Credit segment consists of (loss) gain on investment in unconsolidated entities, unrealized gain on equity securities, loss on extinguishment of debt, along with dividend income from equity securities. The decrease in our Credit segment other income of $1.9 million during the three months ended March 31, 2026, as compared to the same period in 2025, was primarily related to a loss on investment in unconsolidated entities of $971,000 during the three months ended March 31, 2026, as compared to a $1.0 million gain on investment in unconsolidated entities for the same period in 2025. The decrease was further driven by a loss on extinguishment of debt of $282,000, partially offset by a $387,000 increase in other income, net during the three months ended March 31, 2026, as compared to the same period in 2025. Real Estate Segment Revenues The decrease in our Real Estate segment revenues of $3.0 million for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to occupancy on our same store properties of 97% at March 31, 2026, compared to 100% at March 31, 2025. The decrease was further driven by the disposition of five properties for an aggregate gross sales price of $114.2 million, partially offset by the acquisition of 18 properties for an aggregate fair value at the time of acquisition of $58.1 million, subsequent to March 31, 2025. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”. Expenses The decrease in our Real Estate segment expenses of $5.7 million for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to there being no impairments recorded during the three months ended March 31, 2026, as compared to $7.0 million of impairment charges recorded during the three months ended March 31, 2025. The decrease in our Real Estate segment expenses was partially offset by increases of $766,000, $348,000, and $219,000 in management fees, real estate tax expense, and property operating expenses, respectively. These increases were driven by the addition of 18 properties subsequent to March 31, 2025. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”. Other Income 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 $5.3 million during the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to the disposition of three properties resulting in a net gain of $5.7 million during the three months ended March 31, 2026, as compared to the disposition of three properties resulting in a net gain of $418,000 during the same period in 2025. 53 Table of Contents Corporate and Other Revenues Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, decreased $68,000 during the three months ended March 31, 2026 as compared to the same period in 2025. The Company disposed of 16 condominium units during the year ended December 31, 2025 and two units remained as of March 31, 2026. Expenses Our corporate expenses consist primarily of general and administrative expenses, expense reimbursements to related parties, interest expense, net related to our credit facilities, and property operating expenses related to our condominium and rental units acquired via foreclosure. The increase in corporate expenses of $1.0 million during the three months ended March 31, 2026 was primarily due to an increase of $1.0 million in general and administrative expenses during the three months ended March 31, 2026 as compared to the same period in 2025, primarily in connection with restricted stock unit related expenses recorded during the three months ended March 31, 2026. Other Income The decrease in corporate other income of $1.3 million during the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to no gain on disposition of condominium units recorded during the three months ended March 31, 2026, as compared to a gain of $1.1 million during the same period in 2025. Same Store Analysis Our results of operations are influenced by the timing of acquisitions and the operating performance of our real estate assets. We review our stabilized operating results, measured by net operating income, from properties that we owned for the entirety of both the current and prior year reporting periods, referred to as “same store” properties, and we believe that the presentation of operating results for same store properties provides useful information to stockholders. Net operating income is a supplemental non-GAAP financial measure of a real estate company’s operating performance. Net operating income is considered by management to be a helpful supplemental performance measure, as it enables management to evaluate the impact of occupancy, rents, leasing activity and other controllable property operating results at our real estate properties, and it provides a consistent method for the comparison of our properties. We define net operating income as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and other non-property related revenue and expense items such as (a) general and administrative expenses, (b) expense reimbursements to related parties, (c) management fees, (d) transaction-related expenses, (e) real estate impairment, (f) increase in provision for credit losses, (g) gain on disposition of real estate and condominium developments, net, (h) merger-related expenses, net and (i) interest income. Our calculation of net operating income may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income (loss). In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment. 54 Table of Contents Comparison of the Three Months Ended March 31, 2026 and 2025 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, 2026 2025 Change Net income $ 10,600 $ 2,579 $ 8,021 Other income, net (23) (41) 18 Gain on disposition of real estate and condominium developments, net (5,743) (418) (5,325) Real estate impairment — 7,026 (7,026) Depreciation and amortization 8,830 8,828 2 Transaction-related — 53 (53) Management fees 3,062 2,296 766 General and administrative 132 67 65 Interest expense, net 5,814 5,821 (7) Net operating income $ 22,672 $ 26,211 $ (3,539) A total of 180 properties were acquired before January 1, 2025 and represent our “same store” properties during the three months ended March 31, 2026 and 2025. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after January 1, 2025. 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 March 31, For the Three Months Ended March 31, For the Three Months Ended March 31, 2026 2025 Change 2026 2025 Change 2026 2025 Change Rental and other property income $ 25,768 $ 28,740 $ (2,972) $ 21,662 $ 22,648 $ (986) $ 4,106 $ 6,092 $ (1,986) Property operating expenses 1,862 1,643 219 982 1,174 (192) 880 469 411 Real estate tax expenses 1,234 886 348 865 483 382 369 403 (34) Total property operating expenses 3,096 2,529 567 1,847 1,657 190 1,249 872 377 Net operating income $ 22,672 $ 26,211 $ (3,539) $ 19,815 $ 20,991 $ (1,176) $ 2,857 $ 5,220 $ (2,363) Net Operating Income Same store property net operating income decreased $1.2 million during the three months ended March 31, 2026, as compared to the same period in 2025 as a result of decreased occupancy. Same store property occupancy decreased from 100% as of March 31, 2025 to 97% as of March 31, 2026. Non-same store property net operating income decreased $2.4 million during the three months ended March 31, 2026, as compared to the same period in 2025. The decrease was primarily due to the disposition of five properties for an aggregate gross sales price of $114.2 million, subsequent to March 31, 2025, partially offset by the acquisition of 18 properties for an aggregate gross purchase price of $58.1 million subsequent to March 31, 2025. 55 Table of Contents Distributions 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, 2025 and the three months ended March 31, 2026 for the periods indicated below: Period Commencing Period Ending Monthly Distribution Amount January 2025 June 2026 $0.0283 As of March 31, 2026, we had distributions payable of $14.8 million. The following table presents distributions and source of distributions for the periods indicated below (dollar amounts in thousands): Three Months Ended March 31, 2026 2025 Amount Percent Amount Percent Distributions paid in cash $ 29,770 80 % $ 32,519 79 % Distributions reinvested 7,319 20 % 8,621 21 % Total distributions $ 37,089 100 % $ 41,140 100 % Source of distributions: Net cash provided by operating activities (1) (2) $ 37,089 100 % $ 41,140 100 % Total sources $ 37,089 100 % $ 41,140 100 % ____________________________________ (1) Net cash provided by operating activities for the three months ended March 31, 2026 and 2025 was $32.5 million and $31.8 million, respectively. (2) Our distributions covered by cash flows for the three months ended March 31, 2026 and 2025 include cash flows from operating activities in excess of distributions from prior periods of $4.6 million and $9.4 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. Distributions at any point in time may not reflect the current performance of our assets or our current operating cash flows. Share Redemptions Our share redemption program permits our stockholders to sell their shares of common stock back to us, subject to certain conditions and limitations. We will limit the number of shares redeemed pursuant to our share redemption program as follows: (1) we will not redeem in excess of 5% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being paid; and (2) funding for the redemption of shares will be limited, among other things, to the net proceeds we receive from the sale of shares under our DRIP, net of shares redeemed to date. In an effort to accommodate redemption requests throughout the calendar year, we will generally limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we receive from the sale of shares in the respective quarter under the Secondary DRIP Offering. Any of the foregoing limits might prevent us from accommodating all redemption requests made in any fiscal quarter or in any 12-month period. We will determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable payment date. 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. 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 56 Table of Contents in full, the requests to redeem deceased stockholders’ shares and shareholders determined to have exigent circumstances would be honored on a pro rata basis. We next will give priority to requests for full redemption of accounts with a balance of 250 shares or less at the time we receive the request, in order to reduce the expense of maintaining small accounts. Thereafter, we will honor the remaining redemption requests on a pro rata basis. Following such quarterly redemption period, if a stockholder would like to resubmit the unsatisfied portion of the prior request for redemption, such stockholder must submit a new request for redemption of such shares prior to the last day of the new quarter. Unfulfilled requests for redemption will not be carried over automatically to subsequent redemption periods. In addition, our management reserves the right, in its sole discretion at any time, and from time to time, to reject any request for redemption for any reason. Our Board may choose to amend the terms of, suspend or terminate our share redemption program at any time in its sole discretion if it believes that such action is in the best interest of us and our stockholders. 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, 2026, we received valid redemption requests under our share redemption program totaling approximately 45.2 million shares, of which we redeemed approximately 1.5 million shares subsequent to March 31, 2026 for $7.6 million (at an average redemption price of $5.14 per share). The remaining redemption requests relating to 43.7 million shares went unfulfilled. A valid redemption request is one that complies with the applicable requirements and guidelines of the share redemption program then in effect. The share redemptions were funded with proceeds from the Secondary DRIP Offering. Liquidity and Capital Resources General We expect to utilize proceeds from net cash provided by operations, cash proceeds from the sale of credit investments, principal payments received on credit investments, cash proceeds from real estate asset dispositions, proceeds from the Secondary DRIP Offering, proceeds from the sale of subsidiary equity, distributions from certain investments, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions and loan originations, repayment of certain indebtedness, distributions, redemptions and for general corporate uses. The sources of our operating cash flows will primarily be provided by interest income from our portfolio of credit investments and the rental and other property income received from current and future leased properties. Sources of Liquidity 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, 2026 December 31, 2025 Cash and cash equivalents $ 183,617 $ 184,674 Unused borrowing capacity (1) 49,032 52,776 $ 232,649 $ 237,450 ____________________________________ (1) Reflects the total borrowing capacity approved by the lenders related to the assets pledged as collateral, less the drawn amount. 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, 2026 (in thousands): Portfolio Financing Outstanding Principal Balance Maximum Capacity (1) Notes payable – variable rate debt $ 252,243 $ 252,243 ABS mortgage notes 758,520 758,520 Credit facilities 212,500 318,000 Repurchase facilities 1,511,386 2,999,361 (2) Total portfolio financing $ 2,734,649 $ 4,328,124 ____________________________________ (1) Subject to borrowing availability. 57 Table of Contents (2) Facilities under the J.P. Morgan Repurchase Facility carry no maximum facility size. Variance between Average and Quarter-End Repurchase Facility Borrowings Outstanding The following table compares the average amount outstanding under our Repurchase Facilities during each quarter and the amount outstanding as of the end of each quarter, together with an explanation of significant variances (amounts in thousands): Quarter Ended Quarter-End Balance Weighted-Average Balance During Quarter Variance December 31, 2025 $ 1,777,400 $ 1,641,465 $ 135,935 (1) March 31, 2026 $ 1,511,386 $ 1,689,556 $ (178,170) (2) ____________________________________ (1) Variance driven by late quarter timing of the origination of six first mortgage loans funded, primarily in connection with the Master Repurchase Agreements with Wells Fargo and Citibank (as described in further detail in Note 9 — Repurchase Facilities, Notes Payable and Credit Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q). (2) Variance driven by late quarter timing of debt repayments, primarily in connection with the Master Repurchase Agreements with Wells Fargo and Citibank (as described in further detail in Note 9 — Repurchase Facilities, Notes Payable and Credit Facilities to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q). Capital Resources Our principal demands for funds will be for the acquisition or origination of credit investments and real estate, and the payment of tenant improvements, acquisition-related expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of $1.5 billion within the next 12 months, $44.5 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. Generally, we expect to meet our liquidity requirements through net cash provided by operations, cash proceeds from the sale of credit investments, principal payments received on credit investments, cash proceeds from real estate asset dispositions, proceeds from the Secondary DRIP Offering, proceeds from the sale of subsidiary equity, distributions, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions and loan originations, repayment of certain indebtedness and for general corporate uses. We expect that substantially all net cash flows from operations will be used to pay distributions to our stockholders after certain capital expenditures, including tenant improvements and leasing commissions, are paid; however, we have used, and may continue to use, other sources to fund distributions, as necessary, including borrowings on our unencumbered assets. To the extent that cash flows from operations are lower, distributions paid to our stockholders may be lower. We expect that substantially all net cash flows from the Secondary DRIP Offering or debt financings will be used to fund acquisitions, loan originations, certain capital expenditures, repayments of outstanding debt or distributions and redemptions to our stockholders. We believe that the resources stated above will be sufficient to satisfy our operating requirements for the foreseeable future, and we do not anticipate a need to raise funds from sources other than those described above within the next 12 months. Contractual Obligations As of March 31, 2026, we had debt outstanding with a carrying value of $2.7 billion and a weighted average interest rate of 4.7%. 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. 58 Table of Contents Our contractual obligations as of March 31, 2026 were as follows (in thousands): Payments due by period (1) Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Unfunded loan commitments (2) $ 219,789 $ 47,503 $ 27,004 $ 145,282 $ — Principal payments — variable rate debt 252,243 174,600 77,643 — — Principal payments — ABS mortgage notes 758,520 — 303,408 — 455,112 Principal payments — credit facilities 212,500 — 12,500 200,000 — Principal payments — repurchase facilities 1,511,386 1,295,336 216,050 — — Interest payments (3) 212,093 92,255 67,233 48,509 4,096 Total $ 3,166,531 $ 1,609,694 $ 703,838 $ 393,791 $ 459,208 ____________________________________ (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, 2026. The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date or the final maturity date; however, we may be obligated to fund these commitments earlier than such date. This table does not include $81.3 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, 2026 through their respective maturity dates. This is only an estimate as actual amounts borrowed and interest rates could vary over time. We expect to incur additional borrowings in the future to acquire additional properties and credit investments. There is no limitation on the amount we may borrow against any single improved property. As of March 31, 2026, our ratio of debt to total gross assets net of gross intangible lease liabilities was 60.1%. Cash Flow Analysis Operating Activities. Net cash provided by operating activities increased by $720,000 for the three months ended March 31, 2026, as compared to the same period in 2025. The change was primarily due to an increase in net interest income of $2.1 million, primarily driven by decreased interest expense of $7.9 million, as compared to a decrease in interest income of $5.8 million. The decrease in interest expense was driven by a decrease in outstanding borrowings of $367.5 million during the three months ended March 31, 2026. 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, 2026 net cash provided by investing activities was $393.3 million, as compared to net cash used in investing activities of $4.6 million during the same period in 2025. The change was primarily due to $380.9 million net proceeds from loans held-for-investment during the three months ended March 31, 2026, as compared to $67.5 million net investment, during the same period in 2025. The change was further driven by $23.1 million in net proceeds on unconsolidated entities during the three months ended March 31, 2026, as compared to $10.1 million in net investment during the same period in 2025. The change was partially offset by a decrease in net proceeds received from the sale of real estate related securities of $45.0 million during the three months ended March 31, 2026. The change was further offset by a decrease in net proceeds from the disposition of real estate assets and condominium units of $8.6 million, as the Company disposed of three properties during the three months ended March 31, 2026, as compared to three properties and five condominium units disposed of during the same period in 2025. Financing Activities. For the three months ended March 31, 2026, net cash used in financing activities increased by $339.0 million, as compared to the same period in 2025. The change was primarily due to an increase in net repayments on the repurchase facilities, notes payable and credit facilities of $341.6 million. Election as a REIT We elected to be taxed, and operate our business to qualify, as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2012. To maintain our qualification as a REIT, we must continue to meet certain requirements relating to our organization, sources of income, nature of assets, distributions of income to our stockholders and recordkeeping. As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our 59 Table of Contents stockholders so long as we distribute at least 90% of our annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains). If we fail to maintain our qualification as a REIT for any reason in a taxable year and applicable relief provisions do not apply, we will be subject to tax on our taxable income at regular corporate rates. We will not be able to deduct distributions paid to our stockholders in any year in which we fail to maintain our qualification as a REIT. We also will be disqualified for the four taxable years following the year during which qualification was lost, unless we are entitled to relief under specific statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we are organized and operate in such a manner as to maintain our qualification as a REIT for federal income tax purposes. No provision for federal income taxes has been made in our accompanying condensed consolidated financial statements. We are subject to certain state and local taxes related to the operations of properties in certain locations, which have been provided for in our accompanying condensed consolidated financial statements. Critical Accounting Policies and Significant Accounting Estimates Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. We believe the following critical accounting policies govern the significant judgments and estimates used in the preparation of our financial statements, which should be read in conjunction with the more complete discussion of our accounting policies and procedures included in Note 2 — Summary of Significant Accounting Policies to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025. We consider our critical accounting policies to be the following: • Current Expected Credit Losses; • Recoverability of Real Estate Assets; and • Allocation of Purchase Price of Real Estate Assets. A complete description of such policies and our considerations is contained in our Annual Report on Form 10-K for the year ended December 31, 2025. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2025 and related notes thereto. Related-Party Transactions and Agreements We have entered into agreements with CMFT Management and our Investment Advisor whereby we agree to pay certain fees to, or reimburse certain expenses of, CMFT Management, the Investment Advisor or their affiliates. In addition, we have invested in, and may continue to invest in, certain co-investments with funds that are advised by an affiliate of CMFT Management. We may also originate loans to third parties that use the proceeds to finance the acquisition of real estate from funds that are advised by an affiliate of CMFT Management. 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 Richard S. 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. Ressler chairs the executive committee of Orchard First Source Asset Management Holdings, LLC, the holding company of our Investment Advisor. Additionally, one of our directors, Jason Schreiber, is an employee of CIM Group. Nathan D. DeBacker, our chief financial officer, principal accounting officer and treasurer, is an employee of CIM Group, the vice president of our manager, and is an officer of certain of its affiliates. As such, there may be conflicts of interest where CMFT Management or its affiliates, while serving in the capacity as sponsor, general partner, officer, director, key personnel and/or advisor for CIM Group or another program sponsored or operated by affiliates of our manager, may be in 60 Table of Contents conflict with us in connection with providing services to other real estate-related programs related to property acquisitions, property dispositions, and property management, among others. The compensation arrangements between affiliates of CMFT Management and these other real estate programs sponsored or operated by affiliates of our manager could influence the advice provided to us. See Part I, Item 1. Business — Conflicts of Interest in our Annual Report on Form 10-K for the year ended December 31, 2025.