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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
OR
| | | | | |
☐ | 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 | | None | | 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.
CIM REAL ESTATE FINANCE TRUST, INC.
INDEX
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.
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 | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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 | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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 | |
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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) | |
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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 | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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 | |
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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) | |
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 |