CIM REAL ESTATE FINANCE TRUST, INC. [CMRF] Filings

10-Q 1 cmft-20220930.htm 10-Q cmft-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-54939

CIM REAL ESTATE FINANCE TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland

27-3148022

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

2398 East Camelback Road, 4th Floor

Phoenix,

Arizona

85016

(Address of principal executive offices)

(Zip code)

(602)

778-8700

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 8, 2022, there were approximately 436.9 million shares of common stock, par value $0.01 per share, of CIM Real Estate Finance Trust, Inc. outstanding.

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

INDEX



PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of Sept ember 30, 2022 and December 31, 2021			3

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021			4

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021			5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021			6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021			8

Notes to Condensed Consolidated Financial Statements			10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			46

Item 3. Quantitative and Qualitative Disclosures About Market Risk			63

Item 4. Controls and Procedures			64

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			66

Item 1A. Risk Factors			66

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			66

Item 3. Defaults Upon Senior Securities			66

Item 4. Mine Safety Disclosures			66

Item 5. Other Information			66

Item 6. Exhibits			67

Signature			68

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts) (Unaudited)


	September 30, 2022		December 31, 2021
ASSETS
Real estate assets:
Land	$	585,100	$	655,273
Buildings, fixtures and improvements	1,479,525		1,706,902
Intangible lease assets	279,806		314,832
Condominium developments	153,569		171,080
Total real estate assets, at cost	2,498,000		2,848,087
Less: accumulated depreciation and amortization	(258,216)		(235,481)
Total real estate assets, net	2,239,784		2,612,606
Investment in unconsolidated entities	132,375		109,547
Real estate-related securities ($470,121 and $41,981 held at fair value as of September 30, 2022 and December 31, 2021, respectively)	470,121		105,471
Loans held-for-investment and related receivables, net	4,022,726		2,624,101
Less: Current expected credit losses	(29,584)		(15,201)
Total loans held-for-investment and related receivables, net	3,993,142		2,608,900
Cash and cash equivalents	124,836		107,381
Restricted cash	62,941		36,792
Rents and tenant receivables, net	32,957		58,948


Prepaid expenses, derivative assets and other assets	52,410		16,279
Deferred costs, net	16,212		7,214
Assets held for sale	—		1,299,638
Total assets	$	7,124,778	$	6,962,776
LIABILITIES AND STOCKHOLDERS’ EQUITY
Repurchase facilities, notes payable and credit facilities, net	$	4,358,187	$	4,143,205
Accrued expenses and accounts payable	29,390		45,872

Due to affiliates	14,556		14,594
Intangible lease liabilities, net	19,512		24,896
Distributions payable	13,337		13,252
Deferred rental income, derivative liabilities and other liabilities	8,436		21,282
Total liabilities	4,443,418		4,263,101
Commitments and contingencies (Note 11)
Redeemable common stock	169,748		170,714
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding	—		—
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 437,262,738 and 437,373,981 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	4,373		4,374
Capital in excess of par value	3,529,404		3,529,126
Accumulated distributions in excess of earnings	(1,000,420)		(1,008,561)
Accumulated other comprehensive (loss) income	(21,737)		2,949
Total stockholders’ equity	2,511,620		2,527,888
Non-controlling interests	(8)		1,073
Total equity	2,511,612		2,528,961
Total liabilities, redeemable common stock, non-controlling interests and stockholders’ equity	$	7,124,778	$	6,962,776

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Rental and other property income	$	43,559	$	70,794	$	170,803	$	223,026
Interest income	66,222		19,755		142,669		48,168
Total revenues	109,781		90,549		313,472		271,194
Operating expenses:
General and administrative	3,435		3,076		10,590		11,109
Property operating	4,432		11,157		17,408		32,632
Real estate tax	1,793		7,591		10,530		27,516
Expense reimbursements to related parties	3,428		2,516		10,899		8,387
Management fees	12,915		11,703		39,613		35,035
Transaction-related	9		6		462		37
Depreciation and amortization	16,948		22,801		54,104		73,186
Real estate impairment	527		891		19,814		5,268
Increase (decrease) in provision for credit losses	5,664		(1,792)		15,315		(1,101)
Total operating expenses	49,151		57,949		178,735		192,069
Gain on disposition of real estate and condominium developments, net	4,454		34,033		118,135		80,502

Merger-related expenses, net	—		(398)		—		(398)

Operating income	65,084		66,235		252,872		159,229
Other expense:
Gain on investment in unconsolidated entities	2,195		—		8,858		—
Unrealized loss on equity security	(9,030)		—		(15,440)		—
Interest expense and other, net	(39,366)		(20,381)		(98,453)		(56,863)
Loss on extinguishment of debt	(3,344)		(3,251)		(19,584)		(4,729)
Total other expense	(49,545)		(23,632)		(124,619)		(61,592)
Net income	$	15,539	$	42,603	$	128,253	$	97,637
Net income allocated to noncontrolling interest	129		—		66		—
Net income attributable to the Company	$	15,410	$	42,603	$	128,187	$	97,637
Weighted average number of common shares outstanding:
Basic and diluted	437,298,345		362,705,253		437,339,348		362,387,909
Net income per common share:
Basic and diluted	$	0.04	$	0.12	$	0.29	$	0.27

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	15,539	$	42,603	$	128,253	$	97,637
Other comprehensive (loss) income
Unrealized (loss) gain on real estate-related securities	(8,709)		(813)		(24,496)		1,239
Reclassification adjustment for realized gain included in income as other income	—		—		—		(648)
Unrealized gain (loss) on interest rate swaps	78		(84)		2,361		(13)
Amount of (gain) loss reclassified from other comprehensive (loss) income into income as interest expense and other, net	(2,613)		(170)		(2,551)		3,033
Total other comprehensive (loss) income	(11,244)		(1,067)		(24,686)		3,611

Comprehensive income	4,295		41,536		103,567		101,248
Comprehensive income attributable to noncontrolling interest	129		—		66		—
Comprehensive income attributable to the Company	$	4,166	$	41,536	$	103,501	$	101,248

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts) (Unaudited)


	Common Stock			Capital in Excess of Par Value		Accumulated Distributions in Excess of Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Non-Controlling Interests		Total Equity
	Number of Shares	Par Value
Balance as of January 1, 2022	437,373,981	$	4,374	$	3,529,126	$	(1,008,561)	$	2,949	$	2,527,888	$	1,073	$	2,528,961
Issuance of common stock	1,329,825	13		9,561		—		—		9,574		—		9,574
Equity-based compensation	—	—		37		—		—		37		—		37
Distributions declared on common stock — $0.09 per common share	—	—		—		(40,018)		—		(40,018)		—		(40,018)
Redemptions of common stock	(1,345,814)	(13)		(9,676)		—		—		(9,689)		—		(9,689)
Changes in redeemable common stock	—	—		115		—		—		115		—		115
Distributions to non-controlling interests	—	—		—		—		—		—		(14)		(14)
Comprehensive income (loss)	—	—		—		39,092		(3,397)		35,695		9		35,704
Balance as of March 31, 2022	437,357,992	$	4,374	$	3,529,163	$	(1,009,487)	$	(448)	$	2,523,602	$	1,068	$	2,524,670
Issuance of common stock	1,325,282	13		9,529		—		—		9,542		—		9,542
Equity-based compensation	22,892	—		120		—		—		120		—		120
Distributions declared on common stock — $0.09 per common share	—	—		—		(40,018)		—		(40,018)		—		(40,018)
Redemptions of common stock	(1,395,095)	(14)		(10,030)		—		—		(10,044)		—		(10,044)
Changes in redeemable common stock	—	—		503		—		—		503		—		503
Distributions to non-controlling interests	—	—		—		—		—		—		(16)		(16)
Comprehensive income (loss)	—	—		—		73,685		(10,045)		63,640		(72)		63,568
Balance as of June 30, 2022	437,311,071	$	4,373	$	3,529,285	$	(975,820)	$	(10,493)	$	2,547,345	$	980	$	2,548,325
Issuance of common stock	1,326,177	13		9,535		—		—		9,548		—		9,548
Equity-based compensation	—	—		120		—		—		120		—		120
Distributions declared on common stock — $0.09 per common share	—	—		—		(40,010)		—		(40,010)		—		(40,010)
Redemptions of common stock	(1,374,510)	(13)		(9,884)		—		—		(9,897)		—		(9,897)
Changes in redeemable common stock	—	—		348		—		—		348		—		348
Distributions to non-controlling interests	—	—		—		—		—		—		(1,117)		(1,117)
Comprehensive income (loss)	—	—		—		15,410		(11,244)		4,166		129		4,295
Balance as of September 30, 2022	437,262,738	$	4,373	$	3,529,404	$	(1,000,420)	$	(21,737)	$	2,511,620	$	(8)	$	2,511,612

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts) (Unaudited) — Continued


	Common Stock			Capital in Excess of Par Value		Accumulated Distributions in Excess of Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity		Non-Controlling Interests		Total Equity
	Number of Shares	Par Value
Balance as of January 1, 2021	362,001,968	$	3,620	$	3,157,859	$	(961,006)	$	(2,047)	$	2,198,426	$	—	$	2,198,426


Equity-based compensation	—	—		40		—		—		40		—		40
Distributions declared on common stock — $0.09 per common share	—	—		—		(32,906)		—		(32,906)		—		(32,906)


Comprehensive (loss) income	—	—		—		(2,753)		3,377		624		—		624
Balance as of March 31, 2021	362,001,968	$	3,620	$	3,157,899	$	(996,665)	$	1,330	$	2,166,184	$	—	$	2,166,184
Issuance of common stock	917,769	9		6,651		—		—		6,660		—		6,660
Equity-based compensation	4,104	—		49		—		—		49		—		49
Distributions declared on common stock — $0.09 per common share	—	—		—		(32,948)		—		(32,948)		—		(32,948)
Changes in redeemable common stock	—	—		(173,628)		—		—		(173,628)		—		(173,628)
Comprehensive income	—	—		—		57,787		1,301		59,088		—		59,088
Balance as of June 30, 2021	362,923,841	$	3,629	$	2,990,971	$	(971,826)	$	2,631	$	2,025,405	$	—	$	2,025,405
Issuance of common stock	1,334,145	13		9,591		—		—		9,604		—		9,604
Equity-based compensation	—	—		62		—		—		62		—		62
Distributions declared on common stock — $0.09 per common share	—	—		—		(32,967)		—		(32,967)		—		(32,967)
Redemptions of common stock	(1,712,796)	(17)		(12,315)		—		—		(12,332)		—		(12,332)
Changes in redeemable common stock	—	—		2,999		—		—		2,999		—		2,999
Comprehensive income (loss)	—	—		—		42,603		(1,067)		41,536		—		41,536
Balance as of September 30, 2021	362,545,190	$	3,625	$	2,991,308	$	(962,190)	$	1,564	$	2,034,307	$	—	$	2,034,307

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	128,253	$	97,637
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization, net	54,155		71,535
Amortization of deferred financing costs	9,130		6,616
Amortization of fair value adjustment of mortgage notes payable assumed	—		(149)
Amortization and accretion on deferred loan fees	(7,337)		(1,945)
Amortization of premiums and discounts on credit investments	(2,762)		(6,368)
Capitalized interest income on real estate-related securities and loans held-for-investment	(888)		(703)
Equity-based compensation	277		151
Straight-line rental income	(4,855)		(4,398)
Write-offs for uncollectible lease-related receivables	(1,088)		109
Gain on disposition of real estate assets and condominium developments, net	(118,135)		(80,502)
Loss (gain) on sale of credit investments, net	464		(902)
Gain on investment in unconsolidated entities	(8,858)		—
Gain on sale of marketable security	(22)		—
Unrealized loss on equity security	15,462		—
Amortization of fair value adjustment and gain on interest rate swaps	(2,417)		(2,887)
(Gain) loss on interest rate caps	(4,252)		171
Impairment of real estate assets	19,814		5,268
Increase (decrease) in provision for credit losses	15,315		(1,101)
Write-off of deferred financing costs	8,092		2,951
Return on investment in unconsolidated entities	4,217		—
Changes in assets and liabilities:
Rents and tenant receivables, net	66,914		18,228
Prepaid expenses and other assets	(32,224)		(10,247)
Accrued expenses and accounts payable	(3,466)		7,040
Deferred rental income and other liabilities	(10,380)		(3,387)
Due to affiliates	(38)		401
Net cash provided by operating activities	125,371		97,518
Cash flows from investing activities:
Investment in unconsolidated entities	(79,475)		—
Return of investment in unconsolidated entities	625		—
Investment in real estate-related securities	(433,219)		(171,880)
Investment in liquid senior loans	(160,928)		(266,978)
Investment in real estate assets and capital expenditures	(16,524)		(23,391)
Investment in corporate senior loans	(74,801)		—
Origination and acquisition of loans held-for-investment	(1,310,406)		(720,134)
Origination and exit fees received on loans held-for-investment	13,977		7,320
Principal payments received on loans held-for-investment	156,920		285,104
Principal payments received on real estate-related securities	16,157		31
Net proceeds from sale of real estate-related securities	132		27,625
Net proceeds from disposition of real estate assets and condominium developments	1,278,609		459,705
Net proceeds from sale of liquid senior loans	52,868		55,224


Redemption of investment in unconsolidated entities	60,663		—
Proceeds from the settlement of insurance claims	619		58
Net cash used in investing activities	$	(494,783)	$	(347,316)

Table of Contents

CIM REAL ESTATE FINANCE TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited) — Continued


	Nine Months Ended September 30,
	2022	2021
Cash flows from financing activities:
Redemptions of common stock</

CIM REAL ESTATE FINANCE TRUST, INC. [CMRF] Filings
10-Q	[2022-11-14]
10-Q	[2022-08-12]
10-Q	[2022-05-11]
10-K	[2022-03-31]
10-Q	[2021-11-15]
10-Q	[2021-08-16]
10-Q	[2021-05-17]
10-K	[2021-03-31]
10-Q	[2020-11-13]
10-Q	[2020-08-14]
10-Q	[2020-05-15]
10-K	[2020-03-30]
10-Q	[2019-11-14]
10-Q	[2019-08-13]
10-Q	[2019-05-13]
10-K	[2019-03-27]
10-Q	[2018-11-13]
10-Q	[2018-08-13]
10-Q	[2018-05-15]
10-K	[2018-03-30]
10-Q	[2017-11-14]
10-Q	[2017-08-11]
10-Q	[2017-05-12]
10-K	[2017-03-28]
10-Q	[2016-11-14]
10-Q	[2016-08-15]
10-Q	[2016-05-13]
10-K	[2016-03-30]
10-Q	[2015-11-13]
10-Q	[2015-08-14]
10-Q	[2015-05-14]
10-K	[2015-03-31]
10-Q	[2014-11-14]
10-Q	[2014-08-14]
10-Q	[2014-05-15]
10-K	[2014-03-31]
10-Q	[2013-11-12]
10-Q	[2013-08-13]
10-Q	[2013-05-14]
10-K	[2013-03-29]
10-Q	[2012-11-13]
10-Q	[2012-08-14]
10-Q	[2012-05-15]