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目录
美国
证券交易委员会
华盛顿特区20549
FORm
10-Q
对于过渡期从 至   
☒根据1934年证券交易所法案第13或15(d)节的季度报告
截至季度结束日期的财务报告2024年9月30日
或者
☐根据《1934年证券交易法》第13或15(d)条规定的过渡报告
过渡期从                             至                            
委员会档案号1-13610
创意媒体和社区信托公司
(根据其章程规定的注册人准确名称)
马里兰州75-6446078
（注册地或其他组织机构的州或其他辖区）（纳税人识别号码）
5956 Sherry Lane,Suite 700,大都市得克萨斯州75225
(主要领导机构的地址)(邮政编码)
(972)
349-3200
(注册人电话号码，包括区号)
 
（如果最后一个报告以来发生了变化，请注明前名称，前地址和前财年）
TSN股票未公开上市交易于任何交易所或市场系统中。但是，TSN的B类股可以按份额兑换成A类股。
普通股，面值0.001美元CMCT
纳斯达克全球货币市场
普通股，面值0.001美元CMCT
特拉维夫证券交易所
(每个类的标题)（交易标的）如果是新兴成长型公司，请按照证交会规定，在选中的复选标记中注明公司选择不使用符合交易所法第13条的任何新的或修改后的财务会计准则的延长过渡期。
请勾选是否已提交按照《1934年证券交易法》13或15(d)条规定应提交的所有报告，在过去12个月内（或注册人根据需要提交上述报告的较短期限），并且在过去90天内已经受到这些报告要求的约束。Yes ☒ 否。☐
勾选是否在过去12个月（或更短的期间内，申报人需要提交此类文件的期间）内，根据S-T规则405条规定（本章232.405条）提交了规定提交的每一个互动数据文件。Yes ☒无☐
​
大型加速行业 ☐加速文件提交人☐非加速文件提交人☒
较小的报告公司☒新兴成长公司 ☐
如果是新兴成长型企业，请勾选复选标记，表明注册者已选择不使用延长过渡期来符合根据证券交易法第13(a)条规定提供的任何新财务会计准则。 ☐
请打勾以指示注册人是否是外壳公司（如交易所法规定12b-2中所定义）。 是☐没有。☒
截至2024年11月1日，注册人持有未到期股份 86,689,854我们仅仅为了在第III部分中增加信息而提交了本修订，该信息原本应从公司的2021年股东大会的确定性代理声明中被引用，因为公司的适当代理声明将不会在公司2021财年结束后的120天内提交给SEC。此修订在其整体上修改了原始提交的第10、11、12、13和14项，并在其整体上修改了原始提交的第IV部分，以包括所要求的主要执行官和主要财务官在“股份投资公司发起人— OXLEY证券法第2002/A4条的302节下的额外证明和先前的展览。由于本修订中没有包含财务报表，因此我们不会根据《 Sarbanes-Oxley Act》第906节提供新的证明。

目录
创意媒体与社区信托公司及其子公司
指数
   页码。
第I部分财务信息
 
 
 
 
 
第二部分其他信息


目录
第一部分
财务信息
项目1。
基本报表
创意媒体与社区信托公司及其子公司
合并资产负债表
(以千为单位，除股票和每股金额外)（未经审计）
 2024年9月30日2023年12月31日
资产  
房地产业投资净额$702,845 $704,762 
在未纳入合并的实体中的投资 34,196 33,505 
现金及现金等价物18,454 19,290 
受限现金17,521 24,938 
应收贷款净额（注5）55,742 57,005 
2,687,823 4,198 5,347 
递延租金应收款及费用，净额21,087 28,222 
其他无形资产，净额3,663 3,948 
其他10,343 14,183 
资产总计$868,049 $891,200 
负债，可赎回优先股和权益  
负债：  
净债务$478,339 $471,561 
应付账款和应计费用26,582 26,426 
由于关联方8,864 3,463 
其他负债10,604 12,981 
负债合计524,389 514,431 
每股面值；授权股数：
可赎回优先股：A1系列累积可赎回优先股，$0.001每股面值; 25,226,343 和 27,904,974 截至2024年9月30日和2023年12月31日，已授权的股份数分别为 913,630 截至2024年9月30日，已发行和流通的股份 no 于2023年12月31日发行或流通股份；每股清算首选股金额为$25.00 ，视情况而定
20,799 — 
股本：  
A系列累积可赎回优先股，$0.001每股面值; 31,519,738 和 34,611,501 截至2024年9月30日和2023年12月31日，已授权的股份数分别为 8,820,338 和 4,340,076 分别截至2024年9月30日和2024年9月30日发行和流通的股份 8,820,338 和 7,431,839 股票已发行并流通，截至2023年12月31日；每股清算优先权为$25.00 每股，视情况调整
108,703 185,704 
A1系列累积可赎回优先股，$0.001每股面值; 25,226,343 和 27,904,974 截至2024年9月30日和2023年12月31日，已授权的股份数分别为 11,327,248 和 8,553,591 于2024年9月30日和分别已发行和流通股数 10,473,369 和 10,378,343 于2023年12月31日分别已发行和正式股份；每股清算优先权为$25.00 每股，视调整而定
211,877 256,935 
D系列累积可赎回优先股，$0.001每股面值; 26,991,590 截至2024年9月30日和2023年12月31日，已授权股票数量为 56,857 和 48,447 自2024年9月30日和2023年12月31日分别发行和流通股份 56,857 和 48,447 分别为2023年12月31日和2022年12月31日发行和流通股份；每股优先清偿金额为$25.00 每股设定为$的清偿优先权，可能会调整
1,190 1,190 
普通股，每股面值为 $0.0001；0.001每股面值; 900,000,000 83,447,280 于2024年9月30日依然存在的已发行和流通股份 22,786,741截至2023年12月31日，已发行并流通的股份为65,052股
87 23 
额外实收资本984,978 852,476 
超过盈余的分配(985,874)(921,925)
股东权益总额320,961 374,403 
非控股权益1,900 2,366 
股东权益总计322,861 376,769 
负债总额，可赎回优先股和股权$868,049 $891,200 
附注是这些合并财务报表的一部分。
1
目录
创意媒体与社区信托公司及其子公司
截至2020年6月30日和2019年6月30日三个月和六个月的营业额
（单位：千元，除每股数据外）（未经审计）
 截至9月30日的三个月截至9月30日的九个月
 2024202320242023
收入:    
租金和其他房地产业收入$18,150 $17,061 $56,172 $49,999 
酒店收入6,808 7,485 29,768 29,590 
利息和其他收入3,658 3,572 11,113 10,201 
总营收28,616 28,118 97,053 89,790 
运费    
房地产出租和其他经营17,373 15,509 52,550 47,713 
资产管理和其他相关方费用515 724 1,334 2,071 
向相关方报销的费用—公司部门592 524 1,809 1,729 
向相关方报销的费用—借贷板块672 648 1,908 2,166 
利息9,616 9,733 27,819 24,678 
一般行政2,221 2,142 5,243 5,751 
交易相关成本526 38 1,351 3,398 
折旧和摊销6,423 16,082 19,357 46,056 
总费用37,938 45,400 111,371 133,562 
未纳入合并范围实体的(亏损)利润(1,239)1,189 (442)1,053 
房地产出售收益（附注3）— — — 1,104 
所得税费用之前的亏损(10,561)(16,093)(14,760)(41,615)
所得税费用15 554 573 969 
净损失(10,576)(16,647)(15,333)(42,584)
归属于少数股东的净亏损192 874 423 2,501 
公司应占净损失(10,384)(15,773)(14,910)(40,083)
可赎回优先股分红宣布或累积（附注11）(7,966)(6,809)(23,601)(18,341)
可赎回优先股被视为分红（附注11）(327)— (755)— 
可赎回优先股赎回（附注11）(16,098)(352)(17,471)(1,040)
归属于普通股股东的净亏损$(34,775)$(22,934)$(56,737)$(59,464)
归属于普通股股东的每股净损失：    
Basic$(1.22)$(0.94)$(2.20)$(2.44)
Diluted$(1.22)$(0.94)$(2.20)$(2.44)
普通股流通的加权平均股数：    
Basic28,493 24,422 25,789 24,402 
Diluted28,493 24,422 25,789 24,402 
附注是这些综合财务报表的组成部分。
2
目录
创意媒体与社区信托公司及其子公司
资产负债表
(以千为单位，除股票和每股金额外)（未经审计）
 2024年9月30日止九个月
普通股优先股
 股份Par
数值		股份Par
数值		额外的
实收资本
资本		分布。在根据本收据条款的规定结束本收据所体现的协议之前，托管人将在确定余额之后以某种方式在底定时间向持有人分配或提供有关本美国存托凭证所体现的存入证券的任何现金股利、其他现金分派、股票分派、认购或其他权利或任何其他有关性质的分派，经过托管人在第十九条中描述的费用和支出的扣除或者付款，并扣除任何相关税款； ，不过需要指出，托管人不会分配可能会违反1933年证券法或任何其他适用法律的分配，并且对于任何可能违反此类法律的情况，该人不会收到相应的保证。对于这种情况，托管人可以售出这样的股份、认购或其他权利、证券或其他财产。如果托管人选择不进行任何此类分配，则托管人只需要通知持有人有关其处置的事宜及任何此类销售的收益，而任何以现金形式以外的方式通过托管人收到的任何现金股息或其他分配的，不受本第十二条的限制。托管人可以自行决定不分配任何分销或者认购权，证券或者其他财产在行使时，托管人授权此类发行人可能不得在法律上向任何持有人或者处置此类权利，以及使任何发售此类权利且在托管人处出售这类权利的净收益对这样的持有人可用。任何由托管人出售的认购权、证券或者其他财产的销售可能在托管人认为适当的时间和方式进行，并且在这种情况下，托管人应将在第十九条中描述的费用和支出扣除后分配给持有人该净收益以及在相应的代扣税或其他政府收费中将，。
盈利过多		股东权益合计非控制权益
利益		总股本
2023年12月31日余额。22,786,741 $23 17,858,629 $443,829 $852,476 $(921,925)$374,403 $2,366 $376,769 
股票补偿费用— — — — 55 — 55 — 55 
普通股股息（$0.085每股)
— — — — — (1,937)(1,937)— (1,937)
发行A1优先股系列— — 853,879 21,246 (2,180)— 19,066 — 19,066 
赎回以现金支付的A1优先股
— — (24,046)(595)52 (24)(567)— (567)
给A1优先股股东分红 ($0.48938每股)
— — — — — (5,251)(5,251)— (5,251)
给D优先股股东分红 ($0.35313每股)
— — — — — (17)(17)— (17)
以现金支付A优先股的赎回
— — (389,506)(9,698)831 (776)(9,643)— (9,643)
给A优先股股东分红 ($0.34375每股)
— — — — — (2,491)(2,491)— (2,491)
净损失— — — — — (3,730)(3,730)(175)(3,905)
2024年3月31日余额22,786,741 $23 18,298,956 $454,782 $851,234 $(936,151)$369,888 $2,191 $372,079 
对非控股权益的分配— — — — — — — (43)(43)
股票补偿费用— — — — 55 — 55 — 55 
普通股分红 ($0.085每股)
— — — — — (1,937)(1,937)— (1,937)
以现金形式支付的A1优先股赎回
— — (32,002)(791)69 (16)(738)— (738)
向A1优先股持有人支付的分红 ($0.48938每股)
— — — — — (5,491)(5,491)— (5,491)
可赎回优先股增值— — — — — (428)(428)— (428)
分红派息给D系列优先股股东（$0.35313每股)
— — — — — (17)(17)— (17)
以现金支付的A系列优先股赎回
— — (287,474)(7,162)621 (558)(7,099)— (7,099)
分红派息给A系列优先股股东（$0.34375每股)
— — — — — (2,368)(2,368)— (2,368)
净损失— — — — — (796)(796)(56)(852)
2024年6月30日的余额22,786,741 $23 17,979,480 $446,829 $851,979 $(947,762)$351,069 $2,092 $353,161 
股票补偿费用107,840 — — — 55 — 55 — 55 
股票红利（$0.04每股)
— 3 — — 3,336 (3,339)— — — 
以现金支付的A1优先股赎回
— — (31,967)(791)70 (17)(738)— (738)
以普通股支付的A1优先股赎回
32,998,865 33 (2,590,616)(64,127)70,147 (8,440)(2,387)— (2,387)
向A1优先股持有人支付的分红派息（$0.48938每股)
— — — — — (5,710)(5,710)— (5,710)
D类优先股的赎回— — — — — — — — — 
对D系列优先股股东的分红0.35313每股)
— — — — — (17)(17)— (17)
将A系列优先股重新分类为永久性股权— — — — — — — — — 
可赎回优先股累积— — — — — (327)(327)— (327)
用现金赎回支付给A系列优先股
— — (247,627)(6,214)530 (459)(6,143)— (6,143)
以普通股支付对A系列优先股的赎回
27,553,834 28 (2,167,156)(53,927)58,861 (7,180)(2,218)— (2,218)
对A系列优先股股东的分红0.34375每股)
— — — — — (2,239)(2,239)— (2,239)
净损失— — — — — (10,384)(10,384)(192)(10,576)
2024年9月30日余额83,447,280 $87 12,942,114 $321,770 $984,978 $(985,874)$320,961 $1,900 $322,861 
    

3
目录
 2023年9月30日止九个月
普通股优先股
 股份Par
数值		股份Par
数值		额外的
实收资本
资本		分布。在根据本收据条款的规定结束本收据所体现的协议之前，托管人将在确定余额之后以某种方式在底定时间向持有人分配或提供有关本美国存托凭证所体现的存入证券的任何现金股利、其他现金分派、股票分派、认购或其他权利或任何其他有关性质的分派，经过托管人在第十九条中描述的费用和支出的扣除或者付款，并扣除任何相关税款； ，不过需要指出，托管人不会分配可能会违反1933年证券法或任何其他适用法律的分配，并且对于任何可能违反此类法律的情况，该人不会收到相应的保证。对于这种情况，托管人可以售出这样的股份、认购或其他权利、证券或其他财产。如果托管人选择不进行任何此类分配，则托管人只需要通知持有人有关其处置的事宜及任何此类销售的收益，而任何以现金形式以外的方式通过托管人收到的任何现金股息或其他分配的，不受本第十二条的限制。托管人可以自行决定不分配任何分销或者认购权，证券或者其他财产在行使时，托管人授权此类发行人可能不得在法律上向任何持有人或者处置此类权利，以及使任何发售此类权利且在托管人处出售这类权利的净收益对这样的持有人可用。任何由托管人出售的认购权、证券或者其他财产的销售可能在托管人认为适当的时间和方式进行，并且在这种情况下，托管人应将在第十九条中描述的费用和支出扣除后分配给持有人该净收益以及在相应的代扣税或其他政府收费中将，。
盈利过多		股东权益合计非控制权益
利益		总股本
2022年12月31日余额22,737,853 $23 13,570,353 $337,762 $861,721 $(837,846)$361,660 $373 $362,033 
采纳ASU 2016-13标准后的累积效应调整— — — — — (619)(619)— (619)
收购非控股股权— — — — — — — 5,002 5,002 
股票补偿费用— — — — 55 — 55 — 55 
普通股分红 ($0.085每股)
— — — — — (1,933)(1,933)— (1,933)
发行A1优先股系列— — 1,032,433 25,569 (2,291)— 23,278 — 23,278 
以现金支付的A1优先股赎回
— — (12,870)(319)28 (11)(302)— (302)
向A1优先股持有人支付的分红派息（$0.39563每股)
— — — — — (2,559)(2,559)— (2,559)
对D系列优先股股东的分红0.35313每股)
— — — — — (17)(17)— (17)
将A系列优先股重新分类为永久性股权— — 389,325 9,699 (887)— 8,812 — 8,812 
用现金赎回支付给A系列优先股
— — (189,753)(4,723)403 (362)(4,682)— (4,682)
对A系列优先股股东的分红0.34375每股)
— — — — — (2,810)(2,810)— (2,810)
净损失— — — — — (6,951)(6,951)(625)(7,576)
2023年3月31日的余额22,737,853 $23 14,789,488 $367,988 $859,029 $(853,108)$373,932 $4,750 $378,682 
股票补偿费用— — — — 37 — 37 — 37 
普通股分红 ($0.085每股)
— — — — — (1,933)(1,933)— (1,933)
发行A1系列优先股
— — 1,195,589 29,582 (2,597)— 26,985 — 26,985 
以现金支付的A1优先股赎回
— — (11,200)(277)23 (24)(278)— (278)
向A1优先股股东支付分红派息$0.4425每股)
— — — — — (3,373)(3,373)— (3,373)
以现金支付赎回D系列优先股
— — (410)(10)— — (10)— (10)
对D系列优先股股东的分红0.35313每股)
— — — — — (17)(17)— (17)
将A系列优先股重新分类为永久性股权— — 300,846 7,462 (658)— 6,804 — 6,804 
用现金赎回支付给A系列优先股
— — (183,809)(4,575)401 (291)(4,465)— (4,465)
对A系列优先股股东的分红0.34375每股)
— — — — — (2,749)(2,749)— (2,749)
净损失— — — — — (17,359)(17,359)(1,002)(18,361)
2023年6月30日的余额22,737,853 $23 16,090,504 $400,170 $856,235 $(878,854)$377,574 $3,748 $381,322 
对非控股权益的分配— — — — — — — (38)(38)
股票补偿费用48,888 — — — 36 — 36 — 36 
普通股分红 ($0.085每股)
— — — — — (1,937)(1,937)— (1,937)
发行A1优先股系列— — 1,094,386 27,015 (2,314)— 24,701 — 24,701 
以现金支付的A1优先股赎回— — (30,941)(760)64 (41)(737)— (737)
向A1优先股持有人支付的分红派息（$0.47375每股)
— — — — — (4,116)(4,116)— (4,116)
对D系列优先股股东的分红0.35313每股)
— — — — — (17)(17)— (17)
用现金赎回支付给A系列优先股— — (187,759)(4,676)356 (311)(4,631)— (4,631)
对A系列优先股股东的分红0.34375每股)
— — — — — (2,676)(2,676)— (2,676)
净损失— — — — — (15,773)(15,773)(874)(16,647)
2023年9月30日22,786,741 $23 16,966,190 $421,749 $854,377 $(903,725)$372,424 $2,836 $375,260 
附注是这些合并财务报表的一部分。
4
目录
创意传媒与社区信托公司及子公司
合并现金流量表
(以千为单位)（未经审计的）
 九个月结束
九月30日,
 20242023
经营活动产生的现金流量：  
净损失$(15,333)$(42,584)
调整使净损失转化为经营活动产生的现金流量：  
折旧和摊销净额19,624 46,153 
房地产业出售收益— (1,104)
递延债务发行费摊销1,639 1,646 
债务溢价和折价摊销(1)36 
未实现的溢价调整549 548 
递延成本摊销和贷款应收费用累积计提净额(105)(279)
呆账回笼782 160 
其他递延成本核销491 — 
利率上限的损失（收益）425 349 
延迟所得税(27)28 
基于股票的报酬165 128 
$442 (1,053)
贷款资金已投放，用于出售给二级市场(13,017)(13,468)
担保贷款出售所得款项15,257 13,560 
受担保借款约束的贷款本金已收回1,198 1,434 
承诺费用已汇缴以及其他经营活动(461)(314)
经营性资产和负债变动:  
应收账款553 695 
其他2,536 (3,961)
应付账款和应计费用(766)18,376 
延期租赁成本(1,095)(717)
其他负债(2,377)(4,455)
由于关联方5,401 1,584 
经营活动产生的现金流量净额15,880 16,762 
投资活动产生的现金流量：  
资本支出(12,778)(10,895)
房地产业收购— (96,731)
房地产业的出售收益，扣除出售支出后的净额1,096 31,419 
对未合并实体的投资(1,463)(7,218)
非合并实体分配330 — 
贷款资助(9,279)(8,550)
贷款本金收回7,390 9,108 
投资活动产生的净现金流出(14,704)(82,867)
筹资活动产生的现金流量：  
支付循环信贷、应付按揭贷款、期票以及SBA 7(a)贷款支持的票据的本金(12,690)(194,239)
循环信贷、期票和按揭的收益20,000 248,282 
SBA 7(a)贷款支持的票据收益— 54,141 
偿还担保借款本金(1,198)(1,434)
支付递延优先股发行成本(1,029)(665)
支付递延债务发行成本(622)(3,164)
支付普通股分红(5,811)(5,795)
优先股发行净收益40,450 76,082 
支付优先股分红派息(23,543)(22,303)
优先股赎回(24,943)(99,031)
对非控股权益的分配(43)(38)
筹资活动的净现金流量(使用)/提供的净现金流量(9,429)51,836 
（续）
5
目录
创意传媒与社区信托公司及子公司
综合现金流量表（续）
(以千为单位)（未经审计的）
 九个月结束
九月30日,
 20242023
现金和现金等价物以及限制性现金的净减少(8,253)(14,269)
现金及现金等价物和受限现金：  
期初44,228 57,480 
期末$35,975 $43,211 
现金及现金等价物和受限现金与合并资产负债表的调节：
现金及现金等价物$18,454 $19,261 
受限现金17,521 23,950 
现金及现金等价物和受限制现金总额$35,975 $43,211 
现金流量信息补充披露:  
期间支付的利息$25,714 $21,525 
已缴纳的联邦所得税$366 $575 
非现金投资和融资活动补充披露：  
应计资本支出、租户改善以及房地产开发$4,327 $1,555 
出售房地产的收益已承诺但尚未收到$— $2,981 
其他资产中包括的其他未合并合资公司合伙人应付款项$396 $1,445 
未实现的对非现金贡献给未合并合资公司$— $8,600 
首选股发行成本的应计费用 $714 $166 
待支付给普通股股东的股利应计$— $1,937 
待支付给优先股股东的股利应计$2,045 $2,307 
永久股本中抵销的优先股发行成本$508 $1,242 
临时股本中抵销的优先股发行成本$912 $— 
从临时股本转为永久股本的A系列优先股重新分类$— $15,616 
房地产业收购中涉及的抵押债券假设$— $181,318 
可赎回优先股被视为股息$755 $— 
应计可赎回优先股费用$191 $369 
取得非控股权益$— $5,002 
优先股推迟发行成本的冲销 $5,123 $— 
附注是这些合并财务报表的一部分。
6
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）

1. 组织和运营
Creative Media & Community Trust Corporation（前身为CIm商业信托公司）（以下简称“公司”）是一家马里兰州公司，也是一家房地产投资信托公司（REIT）。该公司主要收购、开发、拥有和运营位于美国各地充满活力社区的主要多户家庭物业，以及具有类似业务和就业特征的市场上的A类和创意办公室房地产资产。 该公司还拥有位于加利福尼亚北部的一家酒店，以及一个按照小企业管理局（SBA）7(a)贷款计划发放贷款的贷款平台。该公司旨在利用CIm Group Management, LLC（以下简称CIm Group）及其关联公司的专业知识，收购、开发和经营主要多户家庭物业和创意办公室资产，以满足科技、媒体和娱乐等迅速增长行业在充满活力和新兴社区中的需求。 之一 该公司还拥有一家位于加利福尼亚北部的酒店，以及一个贷款平台，在美国各地充满活力和新兴社区从事类似业务和就业特征的7(a)贷款计划下发放贷款。公司希望运用CIm Group Management, LLC（以下简称CIm Group）及其关联公司的专业知识，收购、开发和经营主要适应科技、媒体和娱乐行业等迅速增长行业需求的多户家庭和创意办公室资产。
该公司的普通股，美元0.001 每股面值（“普通股”）目前在纳斯达克全球市场（“纳斯达克”）上市，股票代码为 “CMCT”，在特拉维夫证券交易所（“TASE”）上市，股票代码为 “cmCT”。
2. 报告基础和主要会计政策摘要
有关公司重要会计政策和估计的更多信息，请参阅包含在公司截至2023年12月31日年度综合财务报表附注2中的“报告的基础和重要会计政策摘要”，该报告包括公司于2024年3月29日向证券交易委员会（“SEC”）提交的《10-K表》中。
中期财务报告公司附属的中期综合基本报表已经由公司管理层按照美国通用会计原则（“GAAP”）编制。根据SEC规则和法规的要求，某些年度财务报表所需的信息和附注披露已经进行了简化或排除。因此，中期综合基本报表未包含GAAP所要求的完整财务报表的所有信息和附注。附带的财务信息反映了在公司管理层看来具有正常经常性并且对于对公司的财务状况、经营成果和现金流的公正呈现是必要的所有调整，作用于中期时期。截至2024年9月30日的三个月和九个月的运营业绩并不能充分反映预期在2024年12月31日收盘的结果。附属的中期综合基本报表应该与公司的经审计综合基本报表及2023年10-k表中包括的附注一起阅读。
合并原则——合并基本报表包括公司及其子公司的账户。所有公司间交易和余额在合并中已经被消除。在判断公司是否对某个实体具有控制权并需要合并该实体的账户时，公司根据GAAP制定的标准分析其房地产投资，以判断它们是否属于可变利益实体（“VIEs”），如果是的话，公司是否是主要受益人。公司对其对某个实体的影响或控制水平以及该公司是否是VIE的主要受益人的判断涉及对各种因素的考虑，包括公司所有权利益的形式、公司的表决权益、公司的投资规模（包括贷款）、以及公司参与重大决策的能力。公司正确评估其对某个实体的影响或控制的能力影响了这些房地产投资在公司的合并基本报表上的呈现。截至2024年9月30日，公司已确定用于为持票人（“信托”）形成的信托用于用于某些公司SBA 7（a）贷款应收款项未保证部分的资产证券化被视为VIE。根据VIE的合并要求，公司确定其基于其通过其作为服务商的作用指导活动的权力以及其吸收损失和获得收益的义务被认为是主要受益人。此外，截至2024年9月30日，公司已确定其非合并联营关系（如下所定义）被视为VIE。根据VIE的合并要求，公司确定其不是主要受益人，因为其缺乏指导活动的权力和其吸收损失和获得收益的义务。因此，非合并联营关系不符合合并的条件。公司按权益法投资的方法核算其在非合并联营关系中的投资。
房地产业投资房地产业投资按折旧成本计量。 折旧和摊销按以下预期使用寿命以直线基础记录：
7
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）-（续）
建筑物和改善
15 - 40 年
家具、装置和设备
3 - 5 年
租户改进有用寿命或租赁期限中的较短者
获取的房地产的公允价值记录为获取的有形资产，主要包括土地、土地改良、建筑和改良、租户改善、家具、固定装置和设备，以及确定的无形资产和负债，包括获取的高于市场价和低于市场价租约的价值，在位租约和地面租约，如果有的话，分别基于它们各自的相对公允价值。贷款优惠，在高于市场利率贷款的情况下，或贷款贴现，在低于市场利率贷款的情况下，根据获取房地产相关的任何贷款的公允价值记录。
项目成本资本化
公司会将项目成本资本化，包括前期施工成本、利息费用、房产税、保险和与项目开发、重建或建设直接相关且对项目发展至关重要的其他费用，在准备资产供其预期使用期间，这些活动仍在进行。项目基本完工并准备好供预期使用后发生的成本将视为发生即支出。当改进和更换工作延长资产的使用寿命、增加容量或提高效率时，将对其进行资本化。一般维修和保养费用将在发生时立即支出。
房地产投资的回收能力公司不断监测可能表明其房地产资产账面价值可能无法收回的事件和情况。每当发生可能表明资产账面价值无法收回的事件或情况时，就会对房地产投资进行减值评估。如果存在这样的事件或情况，资产的回收能力需要进行重大判断和估计，并通过将账面价值与资产预期产生的未来未折现现金流进行比较来衡量。如果未折现现金流小于资产的账面价值，则应当确认减值，确认的减值范围是资产的账面价值超过资产估计公允价值的部分。评估房地产减值的过程需要管理层对某些输入做出重大假设，包括租金率、出租期、占用率、估计持有期、资本支出、增长率、市场贴现率和最终资本化率。这些输入需要根据具体的财产和市场进行主观评估。假设的变化可能会对公允价值、减值金额（如有）或两者产生重大影响。任何待售资产的账面金额或公允价值减去销售成本中的较低者。当公司确定某资产为待售资产时，公司将停止记录该资产的折旧和摊销。 公司在2024年6月30日、2023年6月25日和2022年6月26日没有记录商誉减值。 no在2024年和2023年9月30日结束的三个和九个月内（附注3），不承认任何长期资产的减值。
非并表实体投资公司按股权法核算其对未纳入合并范围的合营企业（“未纳入合并的合营企业”）的投资，因为公司有能力对这些投资行使重大影响。未纳入合并的合营企业按公允价值确认其资产和负债。因此，公司根据其持有的未纳入合并的合营企业未实现的收益或损失、以及其未纳入合并的合营企业的营业收入和费用的份额，每季度将其份额视为对公司合并资产负债表中投资价值的调整，并在公司的合并利润表中以公司对未纳入合并实体收入的形式确认。
衍生金融工具作为风险管理和运营策略的一部分，我们不时会与各种交易对手签订衍生合同。所有衍生工具均按其估计公允价值在资产负债表上确认。在签订衍生合同的日期，我们会将衍生工具指定为公允价值套期保值、现金流量套期保值、外币公允价值或现金流量套期保值、对外国机构的净投资的套期保值，或交易或非套期保值工具。
对衍生工具公允价值变动的核算取决于衍生工具的预期用途和指定情况。公司拥有利率上限，用于管理利率变动风险，但不符合指定为套期工具的要求。这些未指定为套期契约的衍生工具公允价值变动会直接录入附表中的利息费用。 有关我们的衍生金融工具和套期交易活动的更多披露，请参见注释8。
8
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）-（续）
收入确认在开始执行一个能够产生营业收入的合同时，公司会确定该合同是否符合租赁合同的标准，若不符合，则属于客户合同。根据这一确定，将会按照美国通用会计准则对该合同进行适当处理，包括其营业收入确认。
租赁活动的营业收入
该公司作为办公室和多户住宅房地产资产的出租方。当公司订立合同或修订现有合同时，公司会根据以下标准评估合同是否符合租赁定义：
•一方（出租方）必须持有确定的资产;
•对手方（承租方）必须有权在合同期间获取几乎所有的资产使用经济利益；并且
•对手方（承租人）必须在合同期间内有权指导使用标的资产。
公司认定，公司与租户的合同明确标识出场所，并且合同中规定将租户迁至同一建筑内其他场所的替代权不具实质性。此外，在此类合同项下及时支付租金的情况下，公司的租户有权获取所标的资产的几乎所有经济利益，并且可以指导如何以及出于何种目的使用场所进行业务活动。因此，公司与租户的合同构成租赁。
所有租赁均被分类为经营租赁，并在租约期内按照直线法确认最低租金，当很可能收回，且租户已取得实际使用租赁资产的所有权或控制权时。在承租合同项下确认的租金超过基础租赁合同约定的金额部分被记录为递延租金。如果租赁协议规定了对承租人的装修改造，公司会确定装修改造在会计上是由承租人还是公司所有。当公司拥有装修改造时，只有在装修改造基本完成之后，承租人才被视为已取得实际使用租赁资产的所有权或控制权。而当承租人被视为改造的所有者时，任何资助的承租人装修津贴被视为奖励。支付给承租人的租赁奖励款项被列入其他资产，并按照相关租赁期限按直线方式摊销，从而减少租赁收入。截至2024年9月30日和2023年12月31日，分别为1500万美元，按累计摊销后的净额为800万美元。3.9万美元和3.9 百万美元，分别，按照累计摊销后的净额为800万美元。3.6万美元和3.32024年4月30日和2023年4月30日的六个月内的外汇重新计量净收益分别为$百万。
租户报销包括租户应支付的公共区域维护、房地产税、保险和其他可收回成本，其将被确认为营业收入，并计入租金和其他物业收入中，即当发生费用时，相应的费用将计入租金和其他物业运营费用中。当公司主要负责履行提供指定商品或服务的承诺并控制该指定商品或服务直到转移给租户时，将租户报销以毛利基础进行确认和呈现。由于租赁和非租赁元件的收入确认模式没有区别，且非租赁元件不是公司租约中的主要元件，因此公司选择不分离租赁和非租赁元件。
除最低租金外，还有一些租赁合同，包括公司与第三方运营商签订的停车租赁合同，根据承租人超过年度最低额的租金收入的不同百分比计算额外租金。一旦承租人达到指定销售目标，便会确认按比例计算的租金。
9
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）-（续）
截至2024年9月30日和2023年，公司按以下方式确认租金收入（以千为单位）：
截至9月30日的三个月截至9月30日的九个月
2024202320242023
租金及其他物业收入
固定租金支付 (1)
$15,397 $14,579 $48,083 $42,251 
变量租金支付 (2)
2,753 2,482 8,089 7,748 
租金及其他物业收入$18,150 $17,061 $56,172 $49,999 
______________________
(1)固定租金支付包括根据租户租约在租赁期内以直线摊销方式确认的合同租金，包括已取得的高于市场租金的租赁、低于市场租金的租赁和租赁激励的摊销。
(2)变量租金支付包括从公司经营租赁中的租户账单中收取的费用补偿和百分比租金，减去来自被认定为不可能收回的租户的应收坏账费用，以及来自租户的现金支付。
未来租金支付的收回性
该公司不断审查是否有可能向租户收取未来的租赁款项，包括任何直线租金以及当前和未来的运营费用报销。确定是否有可能收回时要考虑租户的付款记录、租户的财务状况、租户经营所在行业的业务状况以及房产所在地区的经济状况。在确定未来租赁款项不太可能收取后，公司将记录租金和其他财产收入的减少以及未清应收账款的减少。被认为不可能收款的租赁收入将以现金方式入账，直到有可能收回为止。管理层对未来租金可收性的估计是基于估算时可用的最佳信息。公司不使用一般储备金方法。截至2024年9月30日和2023年12月31日，公司已确定某些租户不再可能收款，并将未清应收账款减少了美元536,000 和 $868,000，分别适用于所有运营租约。
借贷业务的营业收入
利息和其他收入中包括的利息收入由贷款和公司的短期投资所产生的利息以及贷款折扣的累积组成。贷款利息收入按时获得计提，相关贷款变成非计提贷款（如下所定义）时暂停计提利息。
酒店活动的营业收入
公司从酒店业务中识别营业收入，与其租赁业务分开。在合同签订时，公司评估与客户签订合同中承诺的商品和服务，并为转让给客户的每个承诺确定一个履约义务，即转让独立的商品或服务（或捆绑商品或服务）。为了确定履约义务，公司考虑合同中承诺的所有商品或服务，无论它们是否由习惯商业实践明确说明或暗示。酒店营业收入的各个履约义务可分为以下类别：
•可取消和不可取消的客房预订收入
•辅助服务包括设施使用以及餐饮服务。
可取消的预订代表在酒店提供住宿服务的单一履约义务。公司履行其履约义务，并随着向客户提供服务的过程逐渐确认与这些预订相关的收入。公司在客户取消预订的日期或随着向客户提供服务的过程中，较早的时间确认与不可取消预订相关的收入。
辅助服务包括设施使用和提供食品和饮料。公司在商品或服务交付给客户时，满足其履约义务并确认与这些服务相关的收入。
10
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）-（续）
与顾客签订酒店商品和服务合同时，合同价格等同于交易价格，因为没有需要估计的可变考量因素。
公司报告酒店收入净额，扣除销售、入住和其他税收。
以下是酒店营业收入与合同客户的调解，以千为单位，在第17页（按千计）披露的总酒店板块营业收入。
截至9月30日的三个月截至9月30日的九个月
2024202320242023
酒店属性
酒店收入$6,808 $7,485 $29,768 $29,590 
租金及其他物业收入221 367 1,056 1,259 
利息和其他收入113 96 327 259 
酒店收入$7,142 $7,948 $31,151 $31,108 
租户在租赁协议范围外进行费用收回
租户在租赁协议之外进行的收回与公司的施工项目有关，公司的租户已同意全额报销与施工相关的所有成本。这些服务包括建筑、许可证加速器和施工服务。与客户签订合同时，合同价格相当于交易价格，因为没有可变考虑因素需要估计。尽管这些个别服务是独立的，在与客户的安排背景下，所有这些服务被捆绑在一起，代表了客户请求的单一建筑服务套餐。公司满足其履行义务并随着施工完成逐步确认与这些服务相关的收入。 No 在截至2024年9月30日和2023年9月30日的三个月和九个月中，这些金额是为租户在租赁协议之外进行的收回认可的。截至2024年9月30日，租户在租赁协议之外进行的收回尚有 no 剩余履行义务与租户在租赁协议之外进行的收回有关。
贷款应收账款公司的应收贷款账面价值为未摊销本金余额减少
未摊销的收购折让和溢价，保留的贷款折让和预期信用损失准备金。收购折让或溢价、起始费用和保留的贷款折让按照有效利率法在各自贷款的预期存续期内作为利息收入和其他收入的组成部分摊销，或者在近似有效利率法的情况下以直线基础摊销。所有贷款均根据小企业管理局（“SBA”）在SBA 7(a)小企业贷款计划（“SBA 7(a)计划”）下赞助的项目发放。
根据SBA 7(a)计划，公司出售由SBA担保的贷款部分。 在出售作为销售账户的SBA担保部分的贷款时，公司保留的未担保部分按公允价值进行记录，并将折扣记录为贷款保留部分基础的减少。 未摊销的保留贷款折扣金额为$7.9万美元和8.4 截至2024年9月30日和2023年12月31日，分别为百万美元。
如果贷款应收款项（“非应计贷款”）在支付本金或利息方面逾期达 60 或超过天，“”，贷款的任何部分被归类为存疑或被核销，或者还款的本金和/或利息存在疑问。通常，当管理层确定公司无法通过清算抵押品或其他方式收回贷款协议下的任何剩余金额时，贷款被核销。非应计贷款上的利息收入计入利息和其他收入，按成本回收原则确认。
当前的预期信贷损失—2023年1月1日，公司通过了第2016-13号会计准则更新（“ASU”）， 金融工具-信贷损失，以及随后的修正案（“亚利桑那州立大学2016-13”）。亚利桑那州立大学2016-13年度要求的当前预期信贷损失（“CECL”）反映了公司目前对合并资产负债表中与公司应收贷款相关的潜在信用损失的估计。2023年1月1日记录的初始预期信贷损失反映为直接计入超过公司合并权益表收益的分配费用；但是，CECL的后续变动将通过公司合并运营报表的净收益来确认。尽管亚利桑那州立大学2016-13年度不需要任何特定的方法来确定CECL，但它确实规定补贴应基于有关过去事件的相关信息，包括历史亏损经历、当前投资组合和
11
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）-（续）
市场条件，以及每项贷款的持续合理可支持的预测。另外，除了少数个别例外情况外，ASU 2016-13要求所有金融工具在信贷损失模型下都必须有一定数量的损失准备金来反映通用会计准则底层信贷损失模型确定的所有贷款、债务证券和类似资产都有一定的损失风险，无论信用质量、次要资本或其他减轻因素。
公司采用了亚利桑那州立大学2016-13年度，对所有按摊销成本计量的金融资产采用了修改后的回顾法。截至2023年1月1日，公司在合并权益表中对超过收益的期初分配进行了累计有效调整，调整幅度为美元619,000。这意味着CECL储备金过渡调整总额约为美元783,000，扣除一美元164,000 递延所得税资产。 截至2024年9月30日和2023年12月31日，该公司的CECL总额为美元1.9 百万和美元1.7 分别为百万。
公司主要使用历史经验、第三方公司历史冲销、加权平均剩余期限等方法来估算其贷款的CECL，这已被确定为《金融会计准则委员会》（FASB）工作人员问答第326号报告中估算CECL准备金的可接受方法。这种方法要求公司参考可比数据集中的历史贷款损失数据，并将此损失率应用于每笔贷款投资的预期剩余期限内，考虑相关时间范围内的预期经济状况。公司认为对于两方面都符合的贷款，即（i）预计通过控件之业务或出售基础抵押物来大幅偿还，并且（ii）借款人面临财务困难的贷款，应被视为“依赖抵押品”的贷款。对于公司确定抵押物被实现的贷款，公司根据测量日期抵押物的公允价值减去销售成本与贷款的摊销成本基础之间的差额测量预期损失。对于公司确定抵押物未来不太可能被实现的依赖抵押品贷款，公司应用一个便利方法来估计预期损失，该方法使用抵押品的公允价值（减去如果通过出售抵押品预计偿还的货币触观损害物去销售资产）与贷款的摊销成本基础之间的差额。公司可能会根据未来可接受的替代方法，根据贷款类型、基础抵押物和相关历史市场贷款损失数据的可用性等因素，采用其他可接受的替代方法。
公司每季度评估所有应收贷款的风险，并根据各种因素进行风险评级，这些因素分为以下几类：(i) 贷款和信用结构，包括目前的贷款价值比（“LTV”）比率和结构特征；(ii) 房地产价值和经营现金流的质量和稳定性，包括债务收益率、地理动态、当地市场、物理状况和现金流的稳定性；以及(iii) 借款人的质量、经验和财务状况。
根据5分制度评级，公司的贷款应收款分别被评定为“1”至“5”，风险由低到高，其定义如下：
1-可接受 - 这些是高质量的资产;

2-其他特别提到的资产（“OAEM”）- 这些资产通常是有盈利能力的，但可能存在潜在的弱点，包括但不限于以下详细列出的贷款在一般情况下是最近一年内开始的没有显著的支付历史。如果不进行纠正，这些弱点可能导致恶化。 更正;

3-次级资产一般具有明确定义的弱点，可能会阻碍收款工作；

4-存疑 — 这些资产存在与次级贷款类似的弱点；然而，这些弱点非常严重，以至于在所有情况下都存在重大的损失潜在性。

5-亏损 — 被归类为此类别的资产价值为零，因此已被或正在被核销。

公司通常将对所有新发放贷款（一般在发放之后的一年内）进行风险评级为“2”，原因是缺乏管理经验和/或发放日不足够的历史债务偿还能力。这些贷款可能会在发放之后两年内被归类为可接受。
递延租金应收款和费用递延租金应收款和费用包括递延租金、递延租赁成本、递延发行成本（注11）、递延融资成本和其他递延成本。
延期的租赁费用，代表与获取租户相关的租赁佣金和其他直接费用，按相关租约期限的直线基础上资本化和摊销。
12
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）-（续）
推迟发行成本代表公司发行A1优先股（如下定义）、A优先股（如下定义）和D优先股（如下定义）所发生的直接成本，不包括特定交易的费用，如佣金、经纪-经理费和其他发行费用及支出。通常，针对特定证券发行的费用将记录为发行日期筹集的收入减少，而与特定证券封闭交易无直接关联的发行费用将被推迟。首先将推迟发行成本按比例分配给每次证券发行，比例等于在相关发行中预计发行的证券数量与预计发行的最大证券数量之比。关于从2024年6月至2024年9月发行的A1优先股份，在持有人要求赎回这些股份并且在原发行日起第一周年之前进行赎回时，公司需要以现金支付此赎回金额。因此，从2024年6月至2024年9月，分配给每次发行的推迟发行成本被记为临时权益的减少，并将在每次发行的首个周年日后重新分类为永久权益。对于2020年2月之前发行的A优先股，分配给该次发行的发行费用和推迟发行成本进一步按照发行当日的工具相对公平价值分配给了该次发行中发行的A优先股和A优先股认股权证。分配给A优先股和A优先股认股权证的推迟发行成本分别为临时权益和永久权益的减少，其中分配给A优先股的推迟发行成本将在每次发行的首个周年日后从临时权益重新分类为永久权益。
公司于2022年6月终止发行A股优先股和D股优先股。2024年9月，公司根据其选择，赎回 2,589,606 和 2,167,156 其A1系列优先股和A系列优先股的股票，以普通股的形式，暂停了A1系列优先股的发行。在暂停A1系列优先股发行后，公司不再认为未来可能从这些证券的销售中筹集资金，并因此，公司确认其截至2024年9月30日三个月的合并运营报表中赎回5.1 美元的可赎回优先股赎回与已记为递延发行成本的金额有关。
与获得循环信贷有关的递延融资成本被列示为资产，并按照信贷安排的期限进行摊销。因此，附表中公司当前和相应的往年期间总递延成本净额仅与信贷工具中的循环贷款部分相关。
截至2024年9月30日和2023年12月31日，递延租金应收款和费用如下（以千为单位）：
 2024年9月30日2023年12月31日
待摊租金收益$13,849 $14,757 
递延租赁成本，减去累积摊销额$11,413 和 $10,483，分别
6,152 6,613 
延迟募资成本— 4,925 
Deferred financing costs, net of accumulated amortization of $1,363 和 $764，分别
1,086 1,436 
其他待摊费用— 491 
递延租金应收款及费用，净额$21,087 $28,222 

可赎回优先股—自任何给定A1系列优先股的原始发行之日起，面值美元0.001 每股（“A1系列优先股”），初始申报价值为美元25.00 每股，视调整而定（“A1系列优先股法定价值”），A系列优先股，面值美元0.001 每股（“A系列优先股”），初始申报价值为美元25.00 每股，视调整而定（“A系列优先股规定价值”），或D系列优先股，面值美元0.001 每股（“D系列优先股”），初始申报价值为美元25.00 每股股票，视调整情况而定（“D系列优先股规定价值”），此类股份的持有人有权要求公司赎回此类股票，但须遵守附注11中讨论的某些限制。公司以永久股权形式记录了与A1系列优先股（2024年6月之前的发行）、A系列优先股、A系列优先权证和D系列优先股相关的活动。对于在2024年6月至2024年9月期间发行的A1系列优先股的股份，如果A1系列优先股的持有人要求赎回此类股票，并且此类赎回是在最初发行之日一周年之前进行的，则公司必须支付此类股票
13
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）-（续）
以现金赎回。因此，从2024年6月到2024年9月，公司记录了A1优先股的发行，作为暂时权益。关于从2024年6月到2024年9月发行的A1优先股，在特定A1优先股首次发行日期的首个周年纪念日，公司将该A1优先股份从暂时权益重新分类为永久权益，因为导致暂时权益分类的特定特性，即在首个周年日期时赎回请求的要求失效。
非控股权益非控制股权代表第三方拥有的各种资产利益。
限制性现金公司的抵押贷款和酒店管理协议规定将现金存入专用账户，用于资本支出、免租金、租户改善和租赁佣金义务。 限制性现金还包括根据某些公司应收贷款以及其SBA 7(a)贷款支持票据的要求而需分开存放的现金。
使用估计按照GAAP的规定编制合并基本报表需要管理层做出某些估计和假设，这些估计和假设会影响资产和负债的报告金额、合并基本报表日期时预披露的资产和负债，以及报告期间内收入和费用的金额。公司根据历史经验、当时可获得的信息以及公司在相应时间认为合理的假设来做出这些估计。实际结果可能会与这些估计不一致。
最近发布的会计声明—2023年8月，FASB发布了ASU No. 2023-05，即业务组合-联合创业公司构建（标题805-60）：确认和初始计量（“ASU 2023-05”）。ASU 2023-05适用于联合创业公司的构建，并要求联合创业公司最初以公允价值计量其成立时收到的所有贡献。该指南旨在减少实务中的多样性，并为联合创业公司基本财务报表的用户提供更具决策实用性的信息。修订案将从2025年1月1日或此日期后成立的所有联合创业公司构建日开始前瞻性生效。公司认为实施ASU 2023-05不会对其合并财务报表和披露产生重大影响。
2023年11月，FASb发布了ASU No. 2023-07，分部报告（主题280）：改进可报告分部披露（“ASU 2023-07”）。ASU 2023-07增强了对报告分部的披露要求，包括年度和中期。ASU 2023-07自2023年12月15日后开始的年度期间和2024年12月15日后开始的财政年度内的中期期间以追溯方式生效，允许提前采纳。公司目前正在评估采纳ASU 2023-07是否对其合并财务报表和披露产生重大影响。
3. 房地产业投资
房地产业投资包括以下内容（以千为单位）：
 2024 年 9 月 30 日2023 年 12 月 31 日
土地$175,682 $175,715 
土地改善5,863 5,862 
建筑物和装修635,150 633,299 
家具、固定装置和设备11,973 11,627 
租户改进26,601 26,460 
工作进行中27,074 15,915 
投资房地产882,343 868,878 
累计折旧(179,498)(164,116)
房地产净投资$702,845 $704,762 
14
目录
创意传媒与社区信托公司及子公司
基本报表附注
2024年9月30日（未经审计）-（续）
截至2024年和2023年9月30日止三个月，公司计提的折旧费用分别为$5.9万美元和5.9 截至2024年和2023年9月30日止九个月，公司计提的折旧费用为$17.5万美元和16.6百万美元。
2024 笔交易—有 不 截至2024年9月30日的九个月内的收购或处置。
2023年交易：公司发行了普通股股份，作为终止与投资银行公司Revere互动的补偿费用（称为“Revere”）。Revere将这些股份分配给了该公司的一些现有股东。公司记录了与发行股票有关的股份补偿费用528,333美元。—在2023年9月30日结束的九个月期间，公司从由CIm集团附属管理的基金间接完全拥有的子公司处收购了以下物业的权益。这些购买按资产收购计入账。
资产日期为利息 购买
产业类型 收购单位
收购(1)
价格
（以千为单位）
频道之家
多户住宅(2)
2023年1月31日33389.4 %$134,615 
F3土地位置
多户 (2)
2023年1月31日N/A89.4 %$250 
466号水街地块
多户 (2)
2023年1月31日N/A89.4 %$2,500 
1150克雷
多户 (3)
2023年3月28日28898.1 %$145,500 
(1)截至 2024年9月30日，公司对Channel House、F3 Land Site和466 Water Street Land Site的所有权利益发生了变化， 93.9%, 93.2%和90.9分别为%，这是公司在适用初始收购后向实体作出的额外贡献的结果。
(2)作为收购资产的一部分进行资本化的交易成本和与收购这些房产有关的承担的负债总额为美元37,000，这些不包含在上述购买价格中。Channel House 的建筑物还包括大约 1,864 平方英尺的零售空间。F3 陆地站点是 c目前被用作地面停车场，正在评估包括酒店开发在内的未来开发方案，但截至2024年9月30日，尚无开始开发的正式计划。
(3)作为本次物业收购中资产和负债的组成部分进行资本化的交易成本总计为$149,000，这些成本未包含在上述购买价格中。该建筑还包括约 3,968 平方英尺的零售空间。
此外，请参阅《对非合并实体的投资》（附注4）了解公司通过对非合并合资企业的投资进行的房地产业收购情况。
公司在2023年9月30日结束的九个月内出售了以下物业的权益。
资产日期为利息销售收益
产业类型 销售销售价格 销售
（以千为单位）
4750 威尔希尔大道 (1)
办公室/多户住宅2023年2月17日。80.0 %$34,400 $1,104 
(1)公司出售的 80% 的其在4750威尔士大道的权益（不包括未包含在销售中的一块空地）与公司共同投资者形成4750威尔士合资企业（在注释4中定义）。在收购日期，公司收到净收益为 $16.7 百万，并记录了一项应收款 $17.7 百万，截止到2024年9月30日，所有款项均已收回。此外，截止到2024年9月30日，公司在其他资产中有一项应收款 $396,000 来自4750威尔士合资企业，包含在公司合并资产负债表中，与公司在出售之前于4750威尔士大道上发生的开发成本相关。 80% 的其在该物业的权益已出售给4750威尔士合资企业。公司在4750威尔士合资企业拥有一个 20% 的权益，并将其投资按照权益法进行会计处理。
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目录
创媒及社区信托企业及附属机构
基本报表附注
2024年9月30日（未经审核）- (续)
公司收购的物业操作结果已自收购日期起包含于综合利润表中。 以下表格总结了截至2023年9月30日的九个月内上述收购的购买价格分配。共计有 no 截至2024年9月30日的九个月内有收购。
Nine Months Ended
September 30, 2023
(in thousands)
Land$36,613 
Land improvements4,523 
Buildings and improvements206,717 
Furniture, fixtures, and equipment8,140 
Acquired in-place leases (1)27,210 
Acquired above-market leases (2)71 
Acquired below-market leases (3)(223)
Net assets acquired$283,051 
(1)The amortization period for the in-place leases acquired during the nine months ended September 30, 2023 was approximately 6 months at the date of acquisition.
(2)The amortization period for the above-market leases acquired during the nine months ended September 30, 2023 was approximately 7 months at the date of acquisition.
(3)The amortization period for the below-market leases acquired during the nine months ended September 30, 2023 was approximately 5 months at the date of acquisition.
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
4. INVESTMENT IN UNCONSOLIDATED ENTITIES
The following table details the Company’s equity method investments in its Unconsolidated Joint Ventures. See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (dollars in thousands):
Carrying Value
Joint VentureAsset TypeLocationAcquisition DateOwnership InterestSeptember 30, 2024December 31, 2023
1910 Sunset Boulevard (1)
Office / Multifamily (Development)
Los Angeles, CAFebruary 11, 202244.2%$12,159 $12,040 
4750 Wilshire Boulevard (2)
Office / Multifamily
Los Angeles, CAFebruary 17, 202320.0%9,342 9,119 
1902 Park Avenue (3)
MultifamilyLos Angeles, CAFebruary 28, 202350.0%6,303 7,082 
1015 N Mansfield Avenue (4)
Office (Development)
Los Angeles, CAOctober 10, 202328.8%6,392 5,264 
Total investments in unconsolidated entities$34,196 $33,505 
______________________
(1)1910 Sunset Boulevard is an office building with 104,764 square feet of office space and 2,760 square feet of retail space. The 1910 Sunset JV (defined below). The 1910 Sunset JV has begun the 1915 Park Project (defined below) to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building.
(2)4750 Wilshire Boulevard is a three-story office building with 30,335 square feet of office space located on the first floor. The remainder of the building was substantially converted into 68 for-lease multifamily units in September, 2024.
(3)1902 Park Avenue is a 75-unit four-story multifamily building.
(4)1015 N Mansfield Avenue is an office building with a 44,141 square foot site area and a parking garage. The site is being evaluated for different development options, including creative office or other commercial space. As of September 30, 2024, this property was in pre-development phase and the Company has not finalized the formal development plan for the property.
1910 Sunset Boulevard— In February 2022, the Company invested in an Unconsolidated Joint Venture (the “1910 Sunset JV”) with a CIM-managed separate account (the “1910 Sunset JV Partner) to purchase an office property located at 1910 Sunset Boulevard in Los Angeles, California along with an adjacent vacant land parcel located at 1915 Park Avenue, for a gross purchase price of approximately $51.0 million, of which the Company initially contributed approximately $22.4 million and the 1910 Sunset JV Partner initially contributed the remaining balance. In September 2022, the 1910 Sunset JV obtained financing through a mortgage loan of $23.9 million secured by the office property (the “1910 Sunset Mortgage Loan”). The Company provided a limited guarantee to the lender under the 1910 Sunset Mortgage Loan.
The 1910 Sunset JV has begun construction to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building (the “1915 Park Project”). The 1915 Park Project is expected to be completed by the third quarter of 2025 and to cost approximately $14.7 million (excluding the land acquisition cost), the Company’s share of which will be $6.5 million. The 1910 Sunset JV plans to finance the project through a combination of cash from operations at its office property, additional equity contributions from existing investors, and proceeds from a mortgage loan from a third-party lender (which is in-place but currently has no outstanding borrowings and is subject to additional equity contribution requirements which have not yet been met). As of September 30, 2024, the 1910 Sunset JV had incurred total costs of $4.8 million in connection with the 1915 Park Project.
The Company recorded a loss of $763,000 and $764,000 related to its investment in the 1910 Sunset JV during the three and nine months ended September 30, 2024, respectively, and a loss of $402,000 and $683,000 during the three and nine months ended September 30, 2023, respectively. The Company’s investment in the 1910 Sunset JV was $12.2 million and its ownership percentage remained unchanged as of September 30, 2024.
4750 Wilshire Boulevard— In February 2023, three co-investors (the “4750 Wilshire JV Partners”) acquired an 80% interest in a property owned by a subsidiary of the Company located at 4750 Wilshire Boulevard in Los Angeles, California (“4750 Wilshire”) for a gross sales price of $34.4 million (excluding transaction costs). The Company retained a 20% interest in 4750 Wilshire through an Unconsolidated Joint Venture arrangement between the Company and the 4750 Wilshire JV Partners
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
(the “4750 Wilshire JV”). The goal of the 4750 Wilshire JV was to convert two of the three floors of 4750 Wilshire from office-use into 68 for-lease multifamily units (the “4750 Wilshire Project”), with the first floor of 4750 Wilshire continuing to function as 30,335 square feet of office space. The 4750 Wilshire Project was substantially completed in September 2024 the 4750 Wilshire JV has commenced leasing of the multifamily units. The total cost of the conversion is estimated to be approximately $31.0 million (the Company’s share of which is $6.2 million), which is being financed by a combination of equity contributions from the 4750 Wilshire JV Partners and a third-party construction loan, secured by 4750 Wilshire, which closed in March 2023 and that allows for total draws of $38.5 million (the “4750 Wilshire Construction Loan”). The Company provided a limited guarantee to the lender under the 4750 Wilshire Construction Loan. As of September 30, 2024, total costs of $27.9 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project.
Pursuant to the co-investment agreement, the 4750 Wilshire JV pays an ongoing management fee to the Company. In addition, the Company may earn incentive fees based on the performance of 4750 Wilshire after the conversion.
The Company recorded a loss of $71,000 and income of $123,000 related to its investment in the 4750 Wilshire JV during the three and nine months ended September 30, 2024, respectively, and income of $2.0 million and $1.5 million during the three and nine months ended September 30, 2023, respectively, in the consolidated statements of operations. The Company’s investment in the 4750 Wilshire JV was $9.3 million and its ownership percentage remained unchanged at 20% as of September 30, 2024.
1902 Park Avenue— In February 2023, the Company and a CIM-managed interval fund (the “1902 Park JV Partner) purchased a multifamily property in the Echo Park neighborhood of Los Angeles, California for a gross purchase price of $19.1 million (excluding transaction costs) (the “1902 Park JV”). The Company owns 50% of the 1902 Park JV. In connection with the closing of this transaction in February 2023, the 1902 Park JV obtained financing through a mortgage loan of $9.6 million secured by the multifamily property (the “1902 Park Mortgage Loan”). The Company provided a limited guarantee to the lender under the 1902 Park Mortgage Loan.
The Company recorded a loss of $405,000 and $929,000 related to its investment in the 1902 Park JV during the three and nine months ended September 30, 2024, respectively, and a loss of $422,000 and income of $216,000 during the three and nine months ended September 30, 2023, respectively, in the consolidated statements of operations. The Company’s investment in the 1902 Park JV was $6.3 million as of September 30, 2024.
1015 N Mansfield Avenue— In October, 2023, the Company and a co-investor affiliated with CIM Group (the “1015 N Mansfield JV Partner”) acquired from an unrelated third party a 100% fee-simple interest in a plot of land located in the Sycamore media district of Los Angeles, California for a gross purchase price of $18.0 million (excluding transaction costs) (the “1015 N Mansfield JV”). The property has a site area of approximately 44,141 square feet and contains a parking garage that has been leased to a third-party tenant. The site is being evaluated for different creative office or other commercial space development options and was in pre-development phase as the Company has not finalized the formal development plan for the property. The Company owns 28.8% of the 1015 N Mansfield JV.
The Company recorded income of $0 and $1.1 million related to its investment in the 1015 N Mansfield JV during the three and nine months ended September 30, 2024, respectively, in the consolidated statements of operations. The Company’s investment in the 1015 N Mansfield JV was $6.4 million as of September 30, 2024.
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
5. LOANS RECEIVABLE
Loans receivable consist of the following (in thousands):
 September 30, 2024December 31, 2023
SBA 7(a) loans receivable, subject to credit risk$13,660 $10,393 
SBA 7(a) loans receivable, subject to loan-backed notes39,466 43,983 
SBA 7(a) loans receivable, subject to secured borrowings1,832 3,105 
SBA 7(a) loans receivable, held for sale1,539 74 
Loans receivable56,497 57,555 
Deferred capitalized costs, net1,111 1,130 
Current expected credit losses(1,866)(1,680)
Loans receivable, net$55,742 $57,005 
SBA 7(a) Loans Receivable, Subject to Credit Risk—Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were retained by the Company.
SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes—Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were transferred to a trust and are held as collateral in connection with a securitization transaction. The proceeds received from the transfer were reflected as loan-backed notes payable (Note 7). These loans are subject to credit risk.
SBA 7(a) Loans Receivable, Subject to Secured Borrowings—Represents the government guaranteed portions of loans originated under the SBA 7(a) Program which were sold with the proceeds received from the sale reflected as secured borrowings—government guaranteed loans. There is no credit risk associated with these loans since the SBA guarantees payment of the principal.
SBA 7(a) Loans Receivable, Held for Sale— Represents the government guaranteed portion of loans held for sale at the end of the period or that had been sold but in respect of which proceeds had not been received as of the end of the period.
Current Expected Credit Losses
CECL reflects the Company’s current estimate of potential credit losses related to loans receivable included in the Company’s consolidated balance sheets as of September 30, 2024 pursuant to ASU 2016-13 as implemented effective January 1, 2023. Refer to Note 2 for further discussion of CECL.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
The following table presents the activity in the Company’s CECL for the nine months ended September 30, 2024 and September 30, 2023 (dollar amounts in thousands):
Loans Receivable
Current expected credit losses as of December 31, 2023
$1,680 
Net adjustment to reserve for expected credit losses
(36)
Current expected credit losses as of March 31, 2024$1,644 
Net adjustment to reserve for expected credit losses
(37)
Current expected credit losses as of June 30, 2024$1,607 
Net adjustment to reserve for expected credit losses
259 
Current expected credit losses as of September 30, 2024$1,866 
Allowance for credit losses as of December 31, 2022
$1,106 
Transition adjustment on January 1, 2023783 
Net adjustment to reserve for expected credit losses51 
Current expected credit losses as of March 31, 2023$1,940 
Write-offs(85)
Reserve for expected credit losses(142)
Current expected credit losses as of June 30, 2023$1,713 
Reserve for expected credit losses(9)
Current expected credit losses as of September 30, 2023$1,704 
The net adjustments to the reserve for expected credit losses are recognized through net income on the Company’s consolidated statements of operations. During the three and nine months ended September 30, 2024, the Company recorded an increase of $259,000 and $186,000, respectively, in its CECL related to its loans receivable, which was recorded in general and administrative expenses in the consolidated statement of operations. During the three and nine months ended September 30, 2023, the Company recorded a decrease of $9,000 and $100,000, respectively, in its CECL related to its loan receivable, which is recorded in general and administrative expenses in the consolidated statement of operations, and recorded a decrease due to write-offs of $85,000.
Risk Ratings
As further described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, the Company evaluates its loans receivable portfolio on a quarterly basis. Each quarter, the Company assesses the risk factors of each loan and assigns a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, loan and credit structure, current LTV ratio, debt yield, collateral performance and the quality and condition of the sponsor, borrower and guarantor(s). Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies.
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
The Company’s primary credit quality indicator is its risk ratings, which are further discussed above. The following table presents the net book value of the Company’s loans receivable portfolio as of September 30, 2024 by year of origination, loan type and risk rating (dollar amounts in thousands):
Amortized Cost of Loans Receivable by Year of Origination
As of September 30, 2024
Number of Loans20242023202220212020Prior Total
Loans by internal risk rating:
1106$4,050 $5,357 $4,807 $6,946 $2,187 $10,089 $33,436 
255475 4,100 3,475 2,491 1,494 6,323 $18,358 
31— — — 430 — — $430 
41— 902 — — — — $902 
5—— — — — — — — 
Total163$4,525 $10,359 $8,282 $9,867 $3,681 $16,412 $53,126 
Plus: SBA 7(a) loans receivable, subject to secured borrowings (1)
1,832 
Plus: Deferred capitalized costs, net1,111 
Less: Current expected credit losses
(1,866)
Less: Held for sale guaranteed portion1,539 
Total loans receivable, net$55,742 
Weighted average risk rating1.4
____________________
(1)The Company does not assign a risk rating to its SBA 7(a) loans receivable that are subject to secured borrowings or the government guaranteed portion of loans held for sale. The Company has determined there is no credit risk associated with these loans since the SBA has guaranteed payment of the principal.
Other
As of September 30, 2024 and December 31, 2023, 99.4% and 100.0%, respectively, of the Company’s loans subject to credit risk were concentrated in the hospitality industry. As of September 30, 2024 and December 31, 2023, 94.9% and 99.3%, respectively, of the Company’s loans subject to credit risk were current. The Company classifies loans with negative characteristics in substandard categories ranging from special mention to doubtful. As of September 30, 2024 and December 31, 2023, $4.0 million and $1.3 million, respectively, of loans subject to credit risk were classified in substandard categories.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
6. OTHER INTANGIBLE ASSETS AND LIABILITIES
A schedule of the Company’s intangible assets and liabilities and related accumulated amortization and accretion as of September 30, 2024 and December 31, 2023 is as follows (in thousands):
September 30, 2024December 31, 2023
Intangible assets:
Acquired in-place leases, net of accumulated amortization of $5,102 and $4,821, respectively, both with an average useful life of 6 years, respectively.
$703 $984 
Acquired above-market leases, net of accumulated amortization of $34 and $30, respectively, both with an average useful life of 7 years, respectively
3 7 
Trade name and license2,957 2,957 
Total intangible assets, net$3,663 $3,948 
Amortization of the acquired above-market leases is recorded as a reduction to rental and other property income, and amortization of the acquired in-place leases is included in depreciation and amortization in the accompanying consolidated statements of operations. Amortization of the acquired below-market leases is recorded as an increase to rental and other property income in the accompanying consolidated statements of operations.
During the three and nine months ended September 30, 2024 and 2023, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Acquired above-market lease amortization$1 $21 $4 $79 
Acquired in-place lease amortization$94 $9,488 $281 $27,620 
Acquired below-market lease amortization$— $93 $— $243 
A schedule of future amortization and accretion of acquired intangible assets and liabilities as of September 30, 2024, is as follows (in thousands):
 Assets
Years Ending December 31,Acquired
Above-Market
Leases		Acquired
In-Place
Leases
2024 (Three months ended December 31, 2024)$2 $92 
20251 171 
2026— 123 
2027— 123 
2028— 122 
Thereafter— 72 
$3 $703 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
7. DEBT
The following table summarizes the debt balances as of September 30, 2024 and December 31, 2023, and the debt activity for the nine months ended September 30, 2024 (in thousands):
During the Nine Months Ended September 30, 2024
Balances as of December 31, 2023Debt Issuances & AssumptionsRepayments Accretion & (Amortization)Balances as of September 30, 2024
Mortgages Payable:
Fixed rate mortgages payable$163,700 $— $— $— $163,700 
Variable rate mortgage payable87,000 — — — 87,000 
250,700 — — — 250,700 
Deferred debt origination costs — Mortgages Payable(954)— — 569 (385)
Total Mortgages Payable249,746 — — 569 250,315 
Secured Borrowings — Government Guaranteed Loans:
Outstanding Balance3,007 — (1,198)— 1,809 
Unamortized premiums100 — — (77)23 
Total Secured Borrowings — Government Guaranteed Loans3,107 — (1,198)(77)1,832 
Other Debt:
2022 credit facility revolver97,000 20,000 (3,967)— 113,033 
2022 credit facility term loan56,230 — — — 56,230 
Junior subordinated notes27,070 — — — 27,070 
SBA 7(a) loan-backed notes41,394 — (8,723)— 32,671 
Deferred debt origination costs — other(1,588)(373)— 471 (1,490)
Discount on junior subordinated notes(1,398)— — 76 (1,322)
Total Other Debt218,708 19,627 (12,690)547 226,192 
Total Debt, Net$471,561 $19,627 $(13,888)$1,039 $478,339 
Fixed Rate Mortgages Payable—The Company’s fixed rate mortgages payable are secured by a deed of trust on the properties underlying such mortgages and assignments of rents receivable. As of September 30, 2024, the Company’s fixed rate mortgages payable had fixed interest rates of 4.14% and 6.25% per annum, respectively, with payments of interest only and initial maturity dates of July 1, 2026 and June 7, 2025, respectively. In regards to the mortgage payable maturing on June 7, 2025, the Company has a one-year extension option at its discretion. These loans are non-recourse.
The Company has been in discussion with the largest tenant at One Kaiser Plaza in Oakland, California, a property that is secured by a fixed rate mortgage with a balance of $97.1 million as of September 30, 2024, about renewing a portion of its existing lease. This extension would require a sizable capital investment by the Company for tenant improvements, leasing commissions and certain building improvements and may not meet the Company’s return hurdles and falls outside of the Company’s strategy of reducing its footprint in traditional office investments. The Company is exploring whether the lender holding the fixed-rate mortgage on the property will agree to loan concessions relating to such upfront capital costs. If we are not able to receive such concessions, we may elect to cease interest payments on the mortgage, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, declare principal and interest on the mortgage loan to be immediately due and payable.
Variable Rate Mortgage Payable—The Company’s variable rate mortgage payable is secured by a deed of trust on the property and assignment of rents receivable. As of September 30, 2024, the Company’s variable rate mortgage payable had a variable interest rate of SOFR plus 3.36%, with monthly payments of interest only, with an initial maturity date of July 7, 2025 and an extension option subject to certain conditions being met. The loan is non-recourse.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
The Company has been in discussions with the lender under its variable rate mortgage for Channel House, a multifamily property in Oakland, California, to restructure the terms of the mortgage, as rent payments from the property will likely be insufficient to meet debt service payments under the mortgage. There can be no assurance that such restructuring will occur. If the Company and the lender under the variable rate mortgage cannot agree on a modification of the mortgage and the Company fails to make a required monthly debt service payment, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, declare principal and interest under the mortgage loan to be immediately due and payable.
Secured Borrowings—Government Guaranteed Loans—Secured borrowings—government guaranteed loans represent sold loans which are treated as secured borrowings because the loan sales did not meet the derecognition criteria provided for in ASC 860-30, Secured Borrowing and Collateral. These loans included cash premiums that are amortized as a reduction to interest expense over the life of the loan using the effective interest method and are fully amortized when the underlying loan is repaid in full. As of September 30, 2024, the Company’s secured borrowings-government guaranteed loans included $355,000 of loans sold for a premium and excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 9.21% at September 30, 2024, and $1.5 million of loans sold for an excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 6.87% at September 30, 2024.
2022 Credit Facility—In December 2022, the Company refinanced its 2018 credit facility and replaced it with a new 2022 credit facility, entered into with a bank syndicate, that included a $56.2 million term loan (the “2022 Credit Facility Term Loan”) as well as a revolver that originally allowed the Company to borrow up to $150.0 million (the “2022 Credit Facility Revolver”), both of which are collectively subject to a borrowing base calculation. The 2022 Credit Facility is secured by certain properties in the Company’s real estate portfolio: six office properties and one hotel property (as well as the hotel’s adjacent parking garage and retail property). The 2022 Credit Facility bears interest at (A) the base rate plus 1.50% or (B) SOFR plus 2.60%. As of September 30, 2024, the variable interest rate was 7.53%. The 2022 Credit Facility Revolver is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The 2022 Credit Facility is guaranteed by the Company and the Company is subject to certain financial maintenance covenants. The 2022 Credit Facility matures in December 2025 and provides for two one-year extension options under certain conditions, including providing notice of the election and paying an extension fee of 0.15% of each lender’s commitment being extended on the effective date of such extension. As of September 30, 2024 and December 31, 2023, $0 and $53.0 million, respectively, was available for future borrowings.
As of each of March 31, 2024, June 30, 2024 and September 30, 2024, the Company was not in compliance with a financial covenant under the 2022 credit facility. Such non-compliance constituted an event of default under the 2022 Credit Facility. On May 14, 2024, lenders under the 2022 Credit Facility and the Company entered into an agreement (the “First Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending March 31, 2024. Among other restrictions, the First Modification Agreement also prohibits subsidiaries of the Company that own properties that secured the 2022 Credit Facility from making any distributions to its parent entities. On August 7, 2024, lenders under the 2022 Credit Facility and the Company entered into an agreement (the “Second Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending June 30, 2024. Simultaneously with the execution of the Second Modification Agreement, the Company made a $4.0 million repayment under the 2022 credit facility. On October 24, 2024, lenders under the 2022 Credit Facility and the Company entered into an agreement (the “Third Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending September 30, 2024. Pursuant to the Third Modification Agreement, the Company will not be able to borrow under the 2022 Credit Facility without the consent of the lenders until certain conditions are satisfied, including delivery of a revised business plan acceptable to the lenders and re-establishing compliance with the financial covenant. Under the Third Modification Agreement, the aggregate commitments under the 2022 Credit Facility were reduced from $206.2 million to $169.3 million. Pursuant to the Third Modification Agreement, the Company and the lenders agreed that, starting April 1, 2025, excess cash flow generated by the borrowers under the 2022 Credit Facility will be deposited into a collateral account controlled by the administrative agent. The borrowers’ ability to withdraw funds from the collateral account will be limited to specified uses and subject to certain requirements. In addition, the lenders agreed (i) to modify the borrowing base formula to remove certain limitations on the inclusion of office, retail, flex office/industrial and standalone parking assets and (ii) subject to certain conditions, to release assets relating to the Sacramento Sheraton to facilitate a refinancing of such property. The Third Modification Agreement did not waive compliance with the financial covenant for the test period ending December 31, 2024 or any future period.
If the Company breaches any financial covenant under the 2022 Credit Facility in the future and is unable to obtain a further waiver from the lenders thereunder with respect to such breach, an event of default would occur under the 2022 Credit
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
Facility, which would allow lenders under the 2022 Credit Facility to, among other remedies, declare the unpaid principal amount of all outstanding loans, and all interest accrued and unpaid thereon, to be immediately due and payable. The occurrence of any future event of default would raise substantial doubt about the Company’s ability to continue as a going concern. Management plans to address any possible future event of default under the 2022 Credit Facility by entering into new financing arrangements to repay amounts outstanding under the 2022 Credit Facility. The Company is in the process of obtaining refinancing for the Company’s hotel in Sacramento, California (the “Sheraton Refinancing”). If completed, the Company intends to use the proceeds of the Sheraton Refinancing to repay part of the amount outstanding under the 2022 Credit Facility and to pay for the Hotel Renovation described above. In addition, the Company is in the process of obtaining refinancing (the “Los Angeles Refinancing”) for three of its properties in Los Angeles, California. If completed, the proceeds of the Los Angeles Refinancing, along with a portion of the proceeds from the Sheraton Refinancing, are anticipated to be in an amount sufficient to repay all amounts outstanding under the 2022 Credit Facility, with the rest to be used for general corporate purposes. The Company expects that each of the Sheraton Refinancing and the Los Angeles Refinancing will close by the end of the first quarter of 2025.
Management of the Company believes that its plans to repay amounts outstanding under the 2022 Credit Facility are probable based on the following: (1) the Company has executed term sheets with the respective lenders under the Sheraton Refinancing and the Los Angles Refinancing; (2) the Company expects that both the Los Angeles Refinancing and the Sheraton Refinancing will close by the end of the first quarter of 2025; (3) the favorable loan-to-value ratios (“LTVs”) of the properties that are the subject of the Sheraton Refinancing and the Los Angeles Refinancing and (4) the Company’s plans and efforts to date to obtain additional financing to be secured by two properties that it owns (in addition to the Sheraton Refinancing and the Los Angeles Refinancing), and the favorable LTVs of these two properties. Management’s plans are intended to mitigate the relevant condition that would raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the interim financial information contained in this Quarterly Report on Form 10-Q is issued. The accompanying consolidated financial statements have been prepared assuming that the Company will continue its operations as a going concern and do not include any adjustments that might result from the outcome of events described in this paragraph.
Junior Subordinated Notes—The Company has junior subordinated notes with a variable interest rate which resets quarterly based on the three-month SOFR plus 3.51%, with quarterly interest only payments. The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at the Company’s option.
SBA 7(a) Loan-Backed Notes—On March 9, 2023, the Company completed a securitization of the unguaranteed portion of certain of its SBA 7(a) loans receivable with the issuance of $54.1 million of unguaranteed SBA 7(a) loan-backed notes (with net proceeds of approximately $43.3 million, after payment of fees and expenses in connection with the securitization and the funding of a reserve account and an escrow account). The SBA 7(a) loan-backed notes are collateralized by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of our SBA 7(a) loans receivable. The SBA 7(a) loan-backed notes mature on March 20, 2048, with monthly payments due as payments on the collateralized loans are received. The SBA 7(a) loan-backed notes bear interest at a per annum rate equal to the lesser of (i) 30-day average compounded SOFR plus 2.90% and (ii) prime rate minus 0.35%. As of September 30, 2024, the variable interest rate was 8.15%. The Company reflects the SBA 7(a) loans receivable as assets on its consolidated balance sheet and the SBA 7(a) loan-backed notes as debt on its consolidated balance sheet. The restricted cash on the Company’s consolidated balance sheets included funds related to the Company’s SBA 7(a) loan-backed notes was $3.6 million as of September 30, 2024.
Other—Deferred debt issuance costs, which represent legal and third-party fees incurred in connection with the Company’s borrowing activities, are capitalized and amortized to interest expense on a straight-line or effective interest method over the life of the related loan. Deferred debt issuance costs are presented net of accumulated amortization and are a reduction to total debt.
As of September 30, 2024 and December 31, 2023, accrued interest and unused commitment fees payable of $1.8 million and $1.8 million, respectively, were included in accounts payable and accrued expenses.
Future principal payments on the Company’s debt (face value) as of September 30, 2024 are as follows (in thousands):
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Years Ending December 31,Mortgage Payable
Secured Borrowings Principal (1)
2022 Credit Facility
Other (1) (2)
Total
2024 (Three months ending December 31, 2024)$— $479 $— $3,316 $3,795 
2025153,600 89 169,263 9,947 332,899 
202697,100 96 — 8,504 105,700 
2027— 103 — 10,904 11,007 
2028— 111 — — 111 
Thereafter— 931 — 27,070 28,001 
$250,700 $1,809 $169,263 $59,741 $481,513 
______________________
(1)Principal payments on secured borrowings and SBA 7(a) loan-backed notes, which are included in Other, are generally dependent upon cash flows received from the underlying loans. The Company’s estimate of their repayment is based on scheduled payments on the underlying loans. The Company’s estimate will differ from actual amounts to the extent the Company experiences prepayments and/or loan liquidations or charge-offs.
(2)Represents the junior subordinated notes and SBA 7(a) loan-backed notes.

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In the ordinary course of business, the Company may use certain types of derivative instruments for the purpose of managing or hedging its interest rate risk.
The following table summarizes the terms of the Company’s interest rate cap agreement as of September 30, 2024 (dollar amounts in thousands):
   Outstanding Notional   Fair Value of Assets as of
Balance SheetAmount as ofStrikeEffectiveMaturitySeptember 30,
LocationSeptember 30, 2024
Rates (1)
DatesDates2024
Interest Rate CapsOther assets$87,000 

4.5%
 5/03/2023
7/07/2025
$65 
____________________________________
(1)The index used for the Company’s interest rate cap agreements is 1-Month Term SOFR.
Additional disclosures related to the fair value of the Company’s derivative instrument is included in Note 13. The notional amount under the derivative instrument is an indication of the extent of the Company’s involvement in the instrument, but does not represent exposure to credit, interest rate or market risks.
Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company has an interest rate cap that is used to manage exposure to interest rate movements but does not meet the requirements to be designated as a hedging instrument. The change in fair value of the derivative instrument that is not designated as a hedge is recorded directly to earnings as interest expense on the accompanying consolidated statements of operations. During the three and nine months ended September 30, 2024, the Company recorded an unrealized loss of $407,000 and $425,000, respectively, which was included in interest expense on the accompanying consolidated statements of operations related to its interest rate cap. During the three and nine months ended September 30, 2023, the Company recorded an unrealized loss of $624,024 and $348,912, respectively, which was included in interest expense on the accompanying consolidated statements of operations related to its interest rate caps.
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9. STOCK-BASED COMPENSATION PLANS
On April 3, 2015, the Company’s board of directors (the “Board of Directors”) unanimously approved the Company’s Equity Incentive Plan (the “Equity Incentive Plan”), which was approved by the Company’s stockholders. On June 27, 2023, the Equity Incentive Plan was amended by the Board of Directors, and subsequently approved by the Company’s stockholders, to authorize additional shares of Common Stock for issuance as compensation. The Company has granted awards of restricted shares of Common Stock to each of the independent members of the Board of Directors under the Equity Incentive Plan as follows:
Grant Date (1)Vesting DateRestricted Shares of Common Stock - IndividualRestricted Shares of Common Stock - Aggregate
August 2023August 202412,222 48,888 
August 2024August 202526,960 107,840 
______________________
(1)Compensation expense related to these restricted shares of Common Stock is recognized over the vesting period, and generally vests based on one year of continuous service. The Company recorded compensation expense related to these restricted shares of Common Stock in the amount of $55,000 and $36,000 for the three months ended September 30, 2024 and 2023, respectively, and $165,000 and $128,000 for the nine months ended September 30, 2024 and 2023.
As of September 30, 2024, there was $183,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized ratably over the remaining vesting period.
10. EARNINGS PER SHARE ("EPS")
The computation of basic EPS are based on the Company’s weighted average shares outstanding. No shares of Series D Preferred Stock, Series A Preferred Stock, or Series A1 Preferred Stock outstanding as of September 30, 2024 or 2023 were included in the computation of diluted EPS because they had no dilutive effect. Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three and nine months ended September 30, 2024 and 2023 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 12).
EPS for the year-to-date period may differ from the sum of quarterly EPS amounts due to the required method for computing EPS in the respective periods. In addition, EPS is calculated independently for each component and may not be additive due to rounding.
The following table reconciles the numerator and denominator used in computing the Company’s basic and diluted per-share amounts for net loss attributable to common stockholders for the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Numerator:
Net loss attributable to common stockholders$(34,775)$(22,934)$(56,737)$(59,464)
Redeemable preferred stock dividends declared on dilutive shares— — — — 
Diluted net loss attributable to common stockholders$(34,775)$(22,934)$(56,737)$(59,464)
Denominator:
Basic weighted average shares of Common Stock outstanding28,493 24,422 25,789 24,402 
Effect of dilutive securities—contingently issuable shares— — — — 
Diluted weighted average shares and common stock equivalents outstanding28,493 24,422 25,789 24,402 
Net loss attributable to common stockholders per share:
Basic$(1.22)$(0.94)$(2.20)$(2.44)
Diluted$(1.22)$(0.94)$(2.20)$(2.44)
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11. REDEEMABLE PREFERRED STOCK
The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three and nine months ended September 30, 2024 and 2023 (dollar amounts in thousands):
 Preferred Stock
Series A1Series ASeries DTotal
 SharesAmountSharesAmountSharesAmountSharesAmount
Balances, December 31, 20225,956,147 $147,514 7,565,349 $189,048 48,857 $1,200 13,570,353 $337,762 
Issuance of Series A1 Preferred Stock1,032,433 25,569 — — — — 1,032,433 25,569 
Redemption of Series A1 Preferred Stock paid in cash(12,870)(319)— — — — (12,870)(319)
Reclassification of Series A Preferred stock to permanent equity— — 389,325 9,699 — — 389,325 9,699 
Redemption of Series A Preferred Stock paid in cash— — (189,753)(4,723)— — (189,753)(4,723)
Balances, March 31, 20236,975,710 $172,764 7,764,921 $194,024 48,857 $1,200 14,789,488 $367,988 
Issuance of Series A1 Preferred Stock1,195,589 29,582 — — — — 1,195,589 29,582 
Redemption of Series A1 Preferred Stock paid in cash(11,200)(277)— — — — (11,200)(277)
Redemption of Series D Preferred Stock paid in cash— — — — (410)(10)(410)(10)
Reclassification of Series A Preferred stock to permanent equity— — 300,846 7,462 — — 300,846 7,462 
Redemption of Series A Preferred Stock paid in cash— — (183,809)(4,575)— — (183,809)(4,575)
Balances, June 30, 20238,160,099 $202,069 7,881,958 $196,911 48,447 $1,190 16,090,504 $400,170 
Issuance of Series A1 Preferred Stock1,094,386 27,015 — — — — 1,094,386 27,015 
Redemption of Series A1 Preferred Stock paid in cash(30,941)(760)— — — — (30,941)(760)
Redemption of Series A Preferred Stock paid in cash— — (187,759)(4,676)— — (187,759)(4,676)
Balances, September 30, 20239,223,544 $228,324 7,694,199 $192,235 48,447 $1,190 16,966,190 $421,749 
Balances, December 31, 202310,378,343 $256,935 7,431,839 $185,704 48,447 $1,190 17,858,629 $443,829 
Issuance of Series A1 Preferred Stock853,879 21,246 — — — — 853,879 21,246 
Redemption of Series A1 Preferred Stock paid in cash
(24,046)(595)— — — — (24,046)(595)
Redemption of Series A Preferred Stock paid in cash— — (389,506)(9,698)— — (389,506)(9,698)
Balances, March 31, 202411,208,176 $277,586 7,042,333 $176,006 48,447 $1,190 18,298,956 $454,782 
Redemption of Series A1 Preferred Stock paid in cash(32,002)(791)— — — — (32,002)(791)
Redemption of Series A Preferred Stock paid in cash— — (287,474)(7,162)— — (287,474)(7,162)
Balances, June 30, 202411,176,174 $276,795 6,754,859 $168,844 48,447 $1,190 17,979,480 $446,829 
Redemption of Series A1 Preferred Stock paid in cash(31,967)$(791)— $— — $— (31,967)$(791)
Redemption of Series A1 Preferred Stock paid in Common Stock(2,590,616)$(64,127)— $— — $— (2,590,616)$(64,127)
Redemption of Series A Preferred Stock paid in cash— $— (247,627)$(6,214)— $— (247,627)$(6,214)
Redemption of Series A Preferred Stock paid in Common Stock— $— (2,167,156)$(53,927)— $— (2,167,156)$(53,927)
Balances, September 30, 20248,553,591 $211,877 4,340,076 $108,703 48,447 $1,190 12,942,114 $321,770 
Series A1 Preferred Stock—From June 2022 through September 2024, the Company conducted a public offering with respect to shares of its Series A1 Preferred Stock, par value $0.001 per share with an initial stated value of $25.00 per share, subject to adjustment. As of September 2024, the Company has suspended its offering of Series A1 Preferred Stock.
Shares of Series A1 Preferred Stock issued from June 2022 through May 2024 were recorded in permanent equity at the time of their issuance. With respect to Series A1 Preferred Stock, for shares issued in June 2024 and thereafter, in the event
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a holder of Series A1 Preferred Stock requests redemption of such shares and such redemption takes place prior to the first anniversary of the date of original issuance, the Company is required to pay such redemption in cash, As a result, net proceeds from the issuance of shares of Series A1 Preferred Stock from June 2024 and through September 2024 were initially recorded in temporary equity at an amount equal to the gross proceeds allocated to such shares of Series A1 Preferred Stock minus the costs specifically identifiable to the issuance of such shares and the non-issuance specific offering costs allocated to such shares. With respect to shares of Series A1 Preferred Stock issued from June 2024 through September 2024, on the first anniversary of the issuance of a particular share of such Series A1 Preferred Stock, the Company will reclassify such shares of Series A1 Preferred Stock from temporary equity to permanent equity as the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. As of September 30, 2024, the Company had made no such reclassification from temporary equity to permanent equity.
As of September 30, 2024, the Company had issued in registered public offerings 12,040,878 shares of the Series A1 Preferred Stock and received gross proceeds of $298.2 million, and additionally had issued 200,000 shares of Series A1 Preferred Stock as payment for services to CIM Service Provider, LLC (the “Administrator”), for which no cash proceeds were received. In connection with the issuance of shares of Series A1 Preferred Stock, $22.0 million of costs specifically identifiable to the offering of Series A1 Preferred Stock was allocated to the Series A1 Preferred Stock. Such costs include commissions, dealer manager fees and other offering fees and expenses but do not include non-issuance-specific costs of $12.0 million related to the Company’s offering of Series A Preferred Stock, Series A Preferred Warrants, Series A1 Preferred Stock and Series D Preferred Stock. As of September 30, 2024, the Company had reclassified and allocated $5.0 million from deferred charges to Series A1 Preferred Stock as a reduction to the gross proceeds received. Such reclassification was based on the cumulative number of securities issued relative to the maximum number of securities expected to be issued under the offering.
If the net proceeds from the issuance of shares of Series A1 Preferred Stock are less than the redemption value of such shares at the time they were issued, or if the redemption value of such shares subsequently becomes greater than the carrying value of such shares, an adjustment is recorded to increase the carrying amount of such shares to their redemption value as of the balance sheet date. Such adjustment is considered a deemed dividend for purposes of calculating basic and diluted EPS. The Company recorded redeemable preferred stock deemed dividends related to such adjustments of $327,000 and $755,000 during the three and nine months ended September 30, 2024, respectively, and recorded no deemed dividends during the three and nine months ended September 30, 2023.
As of September 30, 2024, there were 9,467,221 shares of Series A1 Preferred Stock outstanding and 2,773,657 shares of Series A1 Preferred Stock had been redeemed. Of the 2,773,657 shares of Series A1 Preferred Stock that have been redeemed, the redemption of 183,041 shares of Series A1 Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). In September, the Company (at its option) redeemed 2,589,606 shares of Series A1 Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date and, in addition, in September 1,010 shares redeemed at the option of the holders were paid in shares of Common stock, including all accrued and unpaid dividends as of the redemption date (collectively the “Series A1 In-Kind Redemptions”). The Series A1 In-Kind Redemptions resulted in the aggregate issuance of 32,998,865 shares of Common Stock, all of which were issued in September 2024.
Series A Preferred Stock—The Company conducted a continuous public offering of Series A Preferred Stock (with each issued share of Series A Preferred Stock, initially accompanied by one warrant (“Series A Preferred Warrant”) to purchase 0.25 of a share of Common Stock, subject to adjustment) from October 2016 through January 2020. Proceeds and expenses from the sale were allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance.
From February 2020 through June 2022, the Company conducted a continuous public offering with respect to shares of the Company’s Series A Preferred Stock, which, since February 2020, was no longer being issued as a unit with an accompanying Series A Preferred Warrant. In June 2022, the Company concluded the offering of Series A Preferred Stock.
As of September 30, 2024, the Company had issued in registered public offerings 8,251,657 shares of Series A Preferred Stock and 4,603,287 Series A Preferred Warrants and received gross proceeds of $205.4 million and $761,000, respectively, and additionally, had issued 568,681 shares of Series A Preferred Stock as payment for services to the Administrator, for which no cash proceeds were received. In connection with the cumulative issuance of Series A Preferred Stock and Series A Preferred Warrants, $17.0 million and $142,000 of costs specifically identifiable to the offering of the Series A Preferred Stock and Series A Preferred Warrants, respectively, were allocated to the Series A Preferred Stock and Series A Preferred Warrants, respectively. Such costs include commissions, dealer manager fees and other offering fees and expenses but do not include non-issuance-specific costs of $12.0 million related to the Company’s offering of Series A Preferred Stock,
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Series A Preferred Warrants, Series A1 Preferred Stock and Series D Preferred Stock. As of September 30, 2024, the Company had reclassified and allocated $1.9 million and $5,000 from deferred charges to Series A Preferred Stock and Series A Preferred Warrants, respectively, as a reduction to the gross proceeds received. Such reclassification was based on the cumulative number of securities issued relative to the maximum number of securities expected to be issued under the offering.
On the first anniversary of the issuance of a particular share of Series A Preferred Stock, the Company reclassifies such share of Series A Preferred Stock from temporary equity to permanent equity as the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. As of September 30, 2024, the Company had reclassified an aggregate of $199.6 million in net proceeds from temporary equity to permanent equity.
As of September 30, 2024, there were 4,340,076 shares of Series A Preferred Stock outstanding and 4,480,262 shares of Series A Preferred Stock had been redeemed. Of the 4,480,262 shares of Series A Preferred Stock that have been redeemed, the redemption of 2,313,106 shares of Series A Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). In September, the Company (at its option) redeemed 2,167,156 shares of Series A Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date (the “Series A In-Kind Redemptions”). The Series A In-Kind Redemptions resulted in the aggregate issuance of 27,553,834 shares of Common Stock, all of which were issued in September 2024.
Series D Preferred Stock—From February 2020 through June 2022, the Company conducted a continuous public offering with respect to shares of its Series D Preferred Stock, par value $0.001 per share, subject to adjustment. The selling price of the Series D Preferred Stock was $25.00 per share for all sales that occurred from the beginning of the offering to and including June 28, 2020 and $24.50 per share thereafter. Shares of Series D Preferred Stock were recorded in permanent equity at the time of their issuance. In June 2022, the Company concluded the offering of its Series D Preferred Stock.
As of September 30, 2024, the Company had issued in registered public offerings 56,857 shares of Series D Preferred Stock and received gross proceeds of $1.4 million. In connection with such issuance, $35,000 of costs specifically identifiable to the offering of Series D Preferred Stock were allocated to the Series D Preferred Stock. Such costs include commissions, dealer manager fees and other offering fees and expenses but do not include non-issuance-specific costs of $12.0 million related to the Company’s offering of Series A Preferred Stock, Series A Preferred Warrants, Series A1 Preferred Stock and Series D Preferred Stock. As of September 30, 2024, the Company had reclassified and allocated $13,000 from deferred charges to Series D Preferred Stock as a reduction to the gross proceeds received. Such reclassification was based on the cumulative number of securities issued relative to the maximum number of securities expected to be issued under the offering.
As of September 30, 2024, there were 48,447 shares of Series D Preferred Stock outstanding and 8,410 shares of Series D Preferred Stock had been redeemed (all such redemptions were paid in cash and redeemed at the option of the holders).
Series L Preferred Stock—On November 21, 2017, the Company issued 8,080,740 shares of Series L Preferred Stock having an initial stated value of $28.37 per share (“Series L Preferred Stock Stated Value”), subject to adjustment. The Company received gross proceeds of $229.3 million from the sale of the Series L Preferred Stock, which was reduced by issuance-specific offering costs.
On September 15, 2022, the Company repurchased 2,435,284 shares of its Series L Preferred Stock in a privately negotiated transaction (the “Series L Repurchase”). The shares were repurchased at a purchase price of $27.40 per share (a 3.4% discount to the stated value of $28.37 per share) plus $1.12 per share of accrued and unpaid dividends (or $2.7 million accrued and unpaid dividends in the aggregate). The total cost to complete the Series L Repurchase, including transactions costs of $700,000 (or $0.29 per share), was $70.1 million.
In December 2022, the Company announced the redemption of all remaining outstanding shares of its Series L Preferred Stock. In January 2023, the Company completed such previously-announced redemption of all outstanding shares of its Series L Preferred Stock in cash at its stated value of $28.37 per share (plus accrued and unpaid dividends of $1.56 per share, or $4.6 million in the aggregate). The total cost to complete the Series L Redemption, including transaction costs of $93,000 (or $0.03 per share), was $83.8 million.
Dividends—With respect to the payment of dividends or the distribution of amounts upon liquidation, dissolution or winding-up, the Series A1 Preferred Stock, the Series A Preferred Stock and Series D Preferred Stock rank on parity with respect to each other and senior to the Common Stock.
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Holders of Series A1 Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends (the “Series A1 Dividend”) on each share of Series A1 Preferred Stock at the greater of (i) an annual rate of 6.0% of the Series A1 Preferred Stock Stated Value (i.e., the equivalent of $0.3750 per share per quarter) and (ii) the Federal Funds (Effective) Rate for such quarter and plus 2.5% of the Series A1 Preferred Stock Stated Value divided by four, up to a maximum of 2.5% of the Series A1 Preferred Stock Stated Value per quarter. Holders of Series A Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends on each share of Series A Preferred Stock at an annual rate of 5.50% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter) (the “Series A Dividend”). Holders of Series D Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends on each share of Series D Preferred Stock at an annual rate of 5.65% of the Series D Preferred Stock Stated Value (i.e., the equivalent of $0.35313 per share per quarter) (the “Series D Dividend”). Dividends on each share of Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock begin accruing on, and are cumulative from, the date of issuance.
During the nine months ended September 30, 2024, the Company paid $16.2 million, $7.3 million, and $51,000 of cash dividends on the Series A1 Preferred Stock, Series A Preferred Stock, and Series D Preferred Stock, respectively. During the nine months ended September 30, 2023, the Company paid $9.3 million, $8.3 million, $52,000 and $4.6 million of cash dividends on the Series A1 Preferred Stock, Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively.
Redemptions—The Company’s Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock are redeemable at the option of the holder or the Company. The redemption schedule of the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock allows redemptions at the option of the holder of Series A1 Preferred Stock, Series A Preferred Stock or Series D Preferred Stock from the date of original issuance of any such shares at the Series A1 Preferred Stock Stated Value, Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, less a redemption fee applicable prior to the fifth anniversary of the issuance of such shares, plus accrued and unpaid dividends. The Company has the right to redeem the Series A1 Preferred Stock after the date that is twenty-four months following the original issuance of such shares of Series A1 Preferred Stock at the Series A1 Preferred Stock Stated Value, plus accrued and unpaid dividends. The Company has the right to redeem the Series A Preferred Stock or Series D Preferred Stock after the fifth anniversary of the date of original issuance of such shares at the Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, plus accrued and unpaid dividends. With respect to redemptions of the Series A1 Preferred Stock, Series A Preferred Stock or Series D Preferred Stock, at the Company’s discretion, the redemption price will be paid in cash and/or in Common Stock based on the volume weighted average price of the Company’s Common Stock for the 20 trading days prior to the redemption; provided that the redemption price of any shares of Series A1 Preferred Stock issued in June 2024 and thereafter that are redeemed prior to the first anniversary of the date of original issuance of such shares must be paid in cash.The Company currently plans to continue to satisfy some or all redemption requests submitted by holders of its shares of Preferred Stock in shares of Common Stock during the fourth quarter of 2024.
12. STOCKHOLDERS’ EQUITY
Dividends
Holders of the Company’s Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by the Company out of legally available funds. In determining the Company’s dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, the Company’s financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects. Consequently, the dividend rate on a quarterly basis
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does not necessarily correlate directly to any individual factor. Cash dividends per share of Common Stock paid in respect of the nine months ended September 30, 2024 and 2023 consist of the following:
Declaration DatePayment DateTypeCash Dividend Per Share of Common Stock
September 16, 2024October 8, 2024Quarterly - Stock Dividend(1)
June 25, 2024July 22, 2024Regular Quarterly$0.085 
March 27, 2024April 8, 2024Regular Quarterly$0.085 
September 27, 2023October 23, 2023Regular Quarterly$0.085 
June 27, 2023July 24, 2023Regular Quarterly$0.085 
March 20, 2023April 11, 2023Regular Quarterly$0.085 
______________________
(1)The Company’s Board of Directors declared a stock dividend of $0.04 (or 0.0202 shares of Common Stock) per share of Common Stock, payable in shares of Common Stock, using a price of $1.985 per share, resulting in the issuance of 1,684,634 shares of Common Stock. The stock dividend was retrospectively applied to the periods reflected in the consolidated statements of operations included in this Quarterly Report on Form 10-Q.
Series A Preferred Warrants
Prior to February 2020, the Series A Preferred Stock was sold as a unit that included one share of Series A Preferred Stock and one Series A Preferred Warrant that could be exercised to purchase 0.25 of a share of Common Stock. The Series A Preferred Warrants are exercisable beginning on the first anniversary of the date of their original issuance until and including the fifth anniversary of the date of such issuance. At the time of issuance, the exercise price of each Series A Preferred Warrant was at a 15.0% premium to the per share estimated NAV of the Company’s Common Stock then most recently published and designated as the applicable NAV. However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the Reverse Stock Split was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of the Company’s Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant issued prior to the Special Dividend was adjusted to reflect the effect of the Special Dividend.
Proceeds and expenses from the sale of the Series A Preferred Stock and Series A Preferred Warrants were allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance. As of September 30, 2024, the Company had 498,420 Series A Preferred Warrants outstanding to purchase 124,605 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $118,000, after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.
Share Repurchase Program
In May 2022, the Company’s Board of Directors approved a repurchase program of up to $10.0 million of the Company’s Common Stock (the “SRP”). Under the SRP, the Company, in its discretion, may purchase shares of its Common Stock from time to time in the open market or in privately negotiated transactions. The amount and timing of purchases of shares will depend on a number of factors, including, without limitation, the price and availability of shares, trading volume, general market conditions and compliance with applicable securities law. The SRP has no termination date and may be suspended or discontinued at any time.
There were no repurchases during the three and nine months ended September 30, 2024. As of September 30, 2024, the Company had repurchased 662,462 shares of Common Stock for $4.7 million.
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company determines the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The hierarchy for inputs used in measuring fair value is as follows:
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Level 1 Inputs—Quoted prices in active markets for identical assets or liabilities
Level 2 Inputs—Observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3 Inputs—Unobservable inputs
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
Management’s estimation of the fair value of the Company’s financial instruments is based on a Level 3 valuation in the fair value hierarchy established for disclosure of how a company values its financial instruments. In general, quoted market prices from active markets for the identical financial instrument (Level 1 inputs), if available, should be used to value a financial instrument. If quoted prices are not available for the identical financial instrument, then a determination should be made if Level 2 inputs are available. Level 2 inputs include quoted prices for similar financial instruments in active markets for identical or similar financial instruments in markets that are not active (i.e., markets in which there are few transactions for the financial instruments, the prices are not current, price quotations vary substantially, or in which little information is released publicly). There is limited reliable market information for the Company’s financial instruments and the Company utilizes other methodologies based on unobservable inputs for valuation purposes since there are no Level 1 or Level 2 inputs available. Accordingly, Level 3 inputs are used to measure fair value.
In general, estimates of fair value may differ from the carrying amounts of the financial assets and liabilities primarily as a result of the effects of discounting future cash flows. Considerable judgment is required to interpret market data and develop estimates of fair value. Accordingly, the estimates presented are made at a point in time and may not be indicative of the amounts the Company could realize in a current market exchange.
The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities.
Debt—The carrying amounts of the Company’s secured borrowings - government guaranteed loans, SBA 7(a) loan-backed notes, 2022 Credit Facility and variable rate mortgage payable approximate their fair values, as the interest rates on these securities are variable and approximate current market interest rates. The Company determines the fair value of fixed rate mortgage notes payable and junior subordinated notes by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs.
Loans Receivable—The Company determines the fair value of loans receivable by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk and using an anticipated prepayment rate. The value of the government guaranteed portions of loans held for sale is based primarily on the anticipated proceeds to be received upon sale. The following summarizes the ranges of discount rates and prepayment rates used to arrive at the estimated fair values of the Company’s loans receivable:
September 30, 2024December 31, 2023
Discount RatePrepayment RateDiscount RatePrepayment Rate
SBA 7(a) loans receivable, subject to credit risk
7.83% - 11.00%
4.88% - 17.50%
7.83% - 11.00%
4.88% - 17.50%
SBA 7(a) loans receivable, subject to loan-backed notes
10.00% - 11.00%
4.88% - 17.50%
10.00% - 11.00%
4.88% - 17.50%
SBA 7(a) loans receivable, subject to secured borrowings
10.00% - 10.50%
5.00% - 17.50%
10.00% - 10.50%
5.00% - 17.50%
Derivative Instruments — The Company’s derivative instruments are comprised of interest rate caps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties.
Other Financial Instruments—The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to their short-term maturities at
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September 30, 2024 and December 31, 2023. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments.
The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on the Company’s consolidated balance sheets are as follows (dollar amounts in thousands):
 September 30, 2024December 31, 2023 
 Carrying
Amount		Estimated
Fair Value		Carrying
Amount		Estimated
Fair Value		Level
Assets: 
SBA 7(a) loans receivable, subject to credit risk$15,435 $15,400 $10,539 $10,482 3 
SBA 7(a) loans receivable, subject to loan-backed notes$36,913 $39,815 $43,263 $46,701 3 
SBA 7(a) loans receivable, subject to secured borrowings$1,832 $1,832 $3,105 $3,105 3 
SBA 7(a) loans receivable, held for sale$1,562 $1,699 $98 $82 3 
Liabilities: 
Mortgages payable (1)
$163,700 $160,545 $163,700 $158,529 3 
Junior subordinated notes (1)
$27,070 $24,839 $27,070 $24,667 3 
______________________
(1)The carrying amounts for the mortgages payable and junior subordinated notes represents the principal outstanding amounts, excluding deferred debt issuance costs and discounts.
14. RELATED-PARTY TRANSACTIONS
Asset Management and Other Fees to Related Parties
Asset Management Fees; Administrative Fees and Expenses—CIM Urban Partners, L.P., a wholly-owned subsidiary of the Company, and CIM Capital, LLC, an affiliate of CIM Group (“CIM Capital”), have an investment management agreement, pursuant to which CIM Urban engaged CIM Capital to provide certain services to CIM Urban (the “Investment Management Agreement”). CIM Capital has assigned its duties under the Investment Management Agreement to its four wholly-owned subsidiaries: CIM Capital Securities Management, LLC, a securities manager, CIM Capital RE Debt Management, LLC, a debt manager, CIM Capital Controlled Company Management, LLC, a controlled company manager, and CIM Capital Real Property Management, LLC, a real property manager. The “Operator” refers to CIM Capital and its four wholly-owned subsidiaries.
The Company and its subsidiaries have a master services agreement (the “Master Services Agreement”) with CIM Service Provider, LLC (the “Administrator”), an affiliate of CIM Group, pursuant to which the Administrator provides, or arranges for other service providers to provide, management and administration services to the Company and its subsidiaries.
On January 5, 2022, the Company and certain of its subsidiaries entered into a Fee Waiver (the “Fee Waiver”) with the Operator and the Administrator with respect to fees that are payable to them. The Fee Waiver is effective retroactively to January 1, 2022 (the “Effective Date”). Pursuant to the Fee Waiver, the Administrator agreed to voluntarily waive any fees in excess of those set forth in the Fee Waiver, to the extent it would otherwise have been entitled to such additional compensation under the Master Service Agreement, and the Operator agreed to voluntarily waive any fees in excess of those set forth in the Fee Waiver, to the extent it would otherwise have been entitled to such additional compensation under the Investment Management Agreement. Following the end of each quarter, the Administrator will deliver to the Company (i) a calculation of the cumulative fees earned by the Operator and the Administrator under the methodology prescribed by the Fee Waiver from the Effective Date through the end of such quarter and (ii) a calculation of the cumulative fees that would have been earned by the Operator and the Administrator during such period under the Master Services Agreement and the Investment Management Agreement without giving effect to the Fee Waiver. If, in respect of any quarter, the aggregate fees that are payable under the methodology prescribed by the Fee Waiver exceed the aggregate fees that would have been payable under the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver, such quarter will be deemed an “Excess Quarter”. For any quarter following an Excess Quarter, the Company (upon the direction of the independent members of the Board) may, at its option and upon written notice to Administrator, elect to calculate all fees due to the Administrator and the Operator in accordance with the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver, from and after such Excess Quarter. Any such election by the Company
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will be irrevocable, and all fees due to the Administrator and the Operator from and after such election will be calculated in accordance with the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver.
The fees payable to the Operator and the Administrator are determined as follows under the Fee Waiver.
1.Base Fee: A base asset management fee (the “Base Fee”) is payable quarterly in arrears to the Operator in an amount equal to an annual rate of 1% (or 0.25% per quarter) of the average of the “Net Asset Value Attributable to Common Stockholders” as of the first and last day of the applicable quarter. Net Asset Value Attributable to Common stockholders is defined as (a) the sum of the Company’s (1) investments in real estate at fair value, (2) cash, (3) loans receivable at fair value and (4) the book value of the other assets of the Company, excluding deferred costs and net of other liabilities at book value, less (b) the Company’s (i) debt at face value, (ii) outstanding preferred stock at stated value, and (iii) non-controlling interests at book value; provided, that, non-controlling interests in any UPREIT operating partnership relating to the Company shall not be excluded.
2.Incentive Fee: An incentive fee (the “Revised Incentive Fee”) is payable quarterly in arrears to the Administrator with respect to the quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of the Company’s “Adjusted Common Equity” (as defined below) for such quarter (“Excess Core FFO”) as follows: (i) no Revised Incentive Fee in any quarter in which the Excess Core FFO is $0; (ii) 100% of any Excess Core FFO up to an amount equal to the product of (x) the average of the Adjusted Common Equity as of the first and last day of the applicable quarter and (y) 0.4375%; and (iii) 20% of any Excess Core FFO thereafter. Revised Incentive Fees payable for any partial quarter will be appropriately prorated.
“Adjusted Common Equity” means Common Equity plus Excluded Depreciation and Amortization. “Common Equity” means Total Stockholders’ Equity minus Excluded Equity. “Total Stockholders’ Equity” means the amount reflected as total stockholders’ equity in accordance with GAAP on the consolidated balance sheet of the Company and its subsidiaries as of the last day of a given quarter. “Excluded Equity” means the sum of all preferred securities of the Company and its subsidiaries classified as permanent equity in accordance with GAAP on the consolidated balance sheet of the Company and its subsidiaries as of the last day of a given quarter. “Excluded Depreciation and Amortization” means, for a given quarter, the amount of all accumulated depreciation and amortization of (i) the Company and its subsidiaries and (ii) to the extent allocable to the Company and its subsidiaries, the unconsolidated affiliates, in each case as of the last day of such quarter that corresponds to the periodic depreciation and amortization expense calculated in each case in accordance with GAAP that is a permitted add back to net income calculated in accordance with GAAP when calculating funds from operations.
3.Capital Gains Fee: A capital gains fee (the “Capital Gains Fee”) is payable quarterly in arrears to the Administrator in an amount equal to (i) 15% of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses (in each case since the Effective Date), minus (ii) the aggregate capital gains fees paid since the Effective Date. Realized capital gains and realized capital losses are calculated by subtracting from the sales price of a property: (a) any costs incurred to sell such property, and (b) the current gross value of the property (meaning the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements thereon paid for by the Company).
Pursuant to the Investment Management Agreement, the asset management fee prior to January 1, 2022 fee was calculated (without giving effect to the Fee Waiver) as a percentage of the daily average adjusted fair value of CIM Urban’s assets as follows (dollar amounts in thousands):
Daily Average Adjusted Fair
Value of CIM Urban’s Assets		 
Quarterly Fee
Percentage
From Greater ofTo and Including
$— $500,000 0.2500%
$500,000 $1,000,000 0.2375%
$1,000,000 $1,500,000 0.2250%
$1,500,000 $4,000,000 0.2125%
$4,000,000 $20,000,000 0.1000%
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Asset management fees are included in asset management and other fees to related parties in the accompanying consolidated statements of operations.
Under the Master Services Agreement, for fiscal quarters prior to April 1, 2020, the Company paid a base service fee (the “Base Service Fee”) to the Administrator initially set at $1.0 million per year (subject to an annual escalation by a specified inflation factor beginning on January 1, 2015), payable quarterly in arrears. On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with an incentive fee pursuant to which the Administrator was entitled to receive, on a quarterly basis, 15.00% of the Company’s quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of the Company’s average Adjusted Common Equity (defined above) for such quarter. The amendment was effective as of April 1, 2020 and was further modified by the Fee Waiver described above. No such incentive fee was paid by the Company.
In addition, pursuant to the terms of the Master Services Agreement, the Administrator may receive compensation and/or reimbursement for performing certain services for the Company and its subsidiaries that are not covered by the Base Fee. During the years ended December 31, 2023 and 2022, such services performed by the Administrator and its affiliates included accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, operational and on-going support in connection with the Company’s offering of Preferred Stock. The Company will also reimburse the Administrator for the Company’s share of broken deal expenses that are incurred by the Administrator and its affiliates (i.e., fees and expenses relating to investments that were contemplated but the Company did not make and/or transactions that could have been executed by the Company but that the Company did not consummate, including fees and expenses associated with performing due diligence review and negotiating the terms of such investments or transactions). The Administrator’s compensation is based on the salaries and benefits of the employees of the Administrator and/or its affiliates who performed these services (allocated based on the percentage of time spent on the affairs of the Company and its subsidiaries). The expense for such services is included in expense reimbursements to related parties—corporate in the accompanying consolidated statements of operations.
Property Management Fees and Reimbursements—CIM Management, Inc. and certain of its affiliates (collectively, the “CIM Management Entities”), all affiliates of CIM Group, provide property management, leasing, and development services to properties owned by the Company. Property management fees earned by the CIM Management entities and onsite management costs incurred are included in rental and other property operating expenses in the accompanying consolidated statements of operations, with the exception of certain onsite management costs which are capitalized in some cases. Leasing commissions earned are capitalized to deferred charges on the accompanying consolidated balance sheets. Construction management fees and development management reimbursements are capitalized to investments in real estate on the accompanying consolidated balance sheets.
Lending Segment Expenses—The Company has a Staffing and Reimbursement Agreement with CIM SBA Staffing, LLC (“CIM SBA”), an affiliate of CIM Group, and the Company’s subsidiary, PMC Commercial Lending, LLC. The agreement provides that CIM SBA will provide personnel and resources to the Company and that the Company will reimburse CIM SBA for the costs and expenses of providing such personnel and resources. The expense for such services is included in expense reimbursements to related parties—lending segment in the accompanying consolidated statements of operations.
Offering-Related Fees—CCO Capital, LLC (“CCO Capital”) became the exclusive dealer manager for the Company’s public offering of the Series A Preferred Stock and Series A Preferred Warrants effective as of May 31, 2019. CCO Capital is a registered broker dealer and is under common control with the Operator and the Administrator. The Company’s offering of the Series A Preferred Warrants ended at the end of January 2020. On January 28, 2020, the Company entered into the Second Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital acted as the exclusive dealer manager for the Company’s public offering of its Series A Preferred Stock and Series D Preferred Stock. The Second Amended and Restated Dealer Manager Agreement was subsequently amended by the Company and CCO Capital to address changes to, among other things, selling commissions and dealer manager fees.
On November 22, 2022, the Company entered into the Fourth Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital has been acting as the exclusive dealer manager for the Company’s public offering of its Series A1 Preferred Stock. Thereunder, the Company agreed to compensate CCO Capital, as the dealer manager for the offering, as follows: (1) a dealer manager fee of up to 3.00% of the selling price of each share of Series A1 Preferred Stock sold and (2) selling commissions of up to 7.00% of the selling price of each share of Series A1 Preferred Stock sold. The Company has been informed that CCO Capital generally reallows 100% of the selling commissions on sales of Series A1 Preferred Stock and generally reallows substantially all of the dealer manager fee on sales of Series A1 Preferred Stock, to participating broker-
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dealers. In addition, pursuant to the Third Amended and Restated Dealer Manager Agreement, CCO Capital will no longer solicit or make any offers for the sale of shares of Series A Preferred Stock or Series D Preferred Stock.
The Company recorded fees and expense reimbursements as shown in the table below for services provided by related parties related to the services described above during the periods indicated (in thousands):
Three Months Ended September 30,Nine Months Ended September 30, 2024
 2024202320242023
Asset Management Fees:
Asset management fees$515 $724 $1,334 $2,071 
Property Management Fees and Reimbursements:
Property management fees(1)
$582 $551 $1,742 $1,579 
Onsite management and other cost reimbursements(2)
$2,397 $1,707 $5,866 $4,238 
Leasing commissions(3)
$97 $27 $335 $103 
Construction management fees(4)
$362 $112 $552 $282 
Development management reimbursements(5)
$397 $327 $1,410 $980 
Administrative Fees and Expenses:
Expense reimbursements to related parties - corporate$592 $524 $1,809 $1,729 
Lending Segment Expenses:
Expense reimbursements to related parties - lending segment(6)
$672 $648 $1,908 $2,166 
Offering-Related Fees:
Upfront dealer manager and trailing dealer manager fees(7)
$169 $337 $546 $1,027 
Non-issuance specific offering costs (8)
$183 $154 $606 $460 
______________________
(1)Does not include the Company’s share of the property management fees from the Unconsolidated Joint Ventures of $24,000 and $74,000 for the three and nine months ended September 30, 2024, respectively, and $20,000 and $57,000 for the three and nine months ended September 30, 2023, respectively.
(2)Does not include the Company’s share of the onsite management and other cost reimbursements from the Unconsolidated Joint Ventures of $176,000 and $414,000 for the three and nine months ended September 30, 2024, respectively, and $114,000 and $255,000 for the three and nine months ended September 30, 2023, respectively.
(3)Does not include the Company’s share of the leasing commissions from the Unconsolidated Joint Ventures of $0 and $10,000 for the three and nine months ended September 30, 2024, respectively, and $18,000 and $32,000 for the three and nine months ended September 30, 2023, respectively.
(4)Does not include the Company’s share of the construction management fees from the Unconsolidated Joint Ventures of $6,000 and $128,000 for the three and nine months ended September 30, 2024, respectively, and $26,000 and $85,000 for the three and nine months ended September 30, 2023, respectively.
(5)Does not include the Company’s share of the development management reimbursements from the Unconsolidated Joint Ventures of $241,000 and $625,000 for the three and nine months ended September 30, 2024, respectively, and $135,000 and $322,000 for the three and nine months ended September 30, 2023, respectively.
(6)Expense reimbursements to related parties - lending segment do not include personnel costs capitalized to deferred loan origination costs of $24,000 and $84,000 for the three and nine months ended September 30, 2024, respectively, and $6,000 and $67,000 for the three and nine months ended September 30, 2023, respectively.
(7)Represents fees earned by CCO Capital and allocated to Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock.
(8)As of September 30, 2024 and September 30, 2023, $3.2 million and $2.6 million, respectively, was included in deferred costs as reimbursable expenses incurred pursuant to the Master Services Agreement and the then applicable dealer manager agreement with CCO Capital. These non-issuance specific costs are allocated against the gross proceeds from the sale of the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock on a pro rata basis for each issuance as a percentage of the total offering.
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As of September 30, 2024 and December 31, 2023, due to related parties consisted of the following (in thousands):
 September 30, 2024December 31, 2023
Asset management fees$939 $555 
Property management fees and reimbursements4,500 1,505 
Expense reimbursements - corporate1,204 613 
Expense reimbursements - lending segment1,337 156 
Upfront dealer manager and trailing dealer manager fees191 283 
Non-issuance specific offering costs289 61 
Other amounts due to the CIM Management Entities and certain of its affiliates404 290 
Total due to related parties$8,864 $3,463 
Investments with Affiliates of CIM Group
In February 2022, the Company invested with the 1910 Sunset JV Partner, a CIM-managed separate account, in the 1910 Sunset JV which purchased an office property in Los Angeles, California for a gross purchase price of approximately $51.0 million, of which the Company initially contributed approximately $22.4 million and the 1910 Sunset JV Partner initially contributed the remaining balance. See Note 2 and Note 4 for more information.
In February 2023, the Company and the 1902 Park JV Partner invested in the 1902 Park JV, which purchased a multifamily property in the Echo Park neighborhood of Los Angeles, California for a gross purchase price of $19.1 million. The Company owns 50% of the 1902 Park JV. In connection with the closing in February 2023, the 1902 Park JV obtained financing of $9.6 million through the 1902 Park Mortgage Loan. The Company and the 1902 Park JV Partner both initially contributed $6.6 million to the 1902 Park JV. See Note 2, Note 4 and Note 18 for more information.
In October 2023, the Company and the 1015 N Mansfield JV Partner acquired from an unrelated third party a 100% fee-simple interest in a plot of land located in the Sycamore media district of Los Angeles, California for a gross purchase price of $18.0 million (excluding transaction costs). The property has a site area of approximately 44,141 square feet and contains a parking garage that has been leased to a third-party tenant. The Company owns 28.8% of the 1015 N Mansfield JV.
During the nine months ended September 30, 2023, the Company acquired an interest in four assets from entities indirectly wholly-owned by a fund that is managed by affiliates of CIM Group for $282.9 million (exclusive of transactions costs). See Note 3 and Note 7 for more information.
Other
On May 15, 2019, an affiliate of CIM Group entered into an approximately 11-year lease for approximately 32,000 rentable square feet with respect to a property owned by the Company (4750 Wilshire). The lease was amended on August 7, 2019 to reduce the rentable square feet to approximately 30,000 rentable square feet. In February 2023, the Company sold an 80% interest in 4750 Wilshire and now holds its retained 20% interest in the property through the 4750 Wilshire JV. Prior to the sale, for the three months ended March 31, 2023, the Company recorded rental and other property income related to this tenant of $194,000. For the three and nine months ended September 30, 2024 the Company’s share of the income from the tenant earned by the 4750 Wilshire JV was $84,000 and $248,000, respectively, and for the three and nine months ended September 30, 2023, the Company’s share of the income from the tenant earned by the 4750 Wilshire JV was $80,000 and $170,000, respectively.
15. COMMITMENTS AND CONTINGENCIES
Loan Commitments—Commitments to extend credit are agreements to lend to a customer when the terms established in the contract are met. The Company’s outstanding commitments to fund loans were $18.5 million as of September 30, 2024, all of which are for prime-based loans to be originated by the Company’s subsidiary engaged in SBA 7(a) Small Business Loan Program lending, the government guaranteed portion of which is intended to be sold. Commitments generally have fixed expiration dates. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements.
General—In connection with the ownership and operation of real estate properties, the Company has certain obligations for the payment of tenant improvement allowances and lease commissions in connection with new leases and
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renewals. The Company had a total of $12.6 million in future obligations under leases to fund tenant improvements and other future construction obligations as of September 30, 2024. As of September 30, 2024, $2.5 million was funded to reserve accounts included in restricted cash on the Company’s consolidated balance sheet for these tenant improvement obligations in connection with the mortgage loan agreement entered into in June 2016.
Employment Agreements—The Company has an employment agreement with one of its officers. Under certain circumstances, this employment agreement provides for (1) severance payment equal to the annual base salary paid to the officer and (2) death and disability payments in an amount equal to two times and one time, respectively, the annual base salary paid to the officer.
Litigation—The Company is not currently involved in any material pending or threatened legal proceedings nor, to the Company’s knowledge, are any material legal proceedings currently threatened against the Company, other than routine litigation arising in the ordinary course of business. In the normal course of business, the Company is periodically party to certain legal actions and proceedings involving matters that are generally incidental to the Company’s business. While the outcome of these legal actions and proceedings cannot be predicted with certainty, in management’s opinion, the resolution of these legal proceedings and actions will not have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company’s ability to satisfy its debt service obligations or to maintain its level of distributions on Common Stock or Preferred Stock.
A subsidiary of the Company is a defendant in a lawsuit in connection with injuries sustained by a third-party contractor at a property previously owned by such subsidiary. Such subsidiary has reached an agreement in principle to settle the lawsuit with the plaintiff pursuant to which such subsidiary’s share of the settlement payment will be approximately $700,000. The Company anticipates that such payment will be made directly from the Company’s insurance carrier, which will be responsible for the entire payment. Accordingly, the Company does not expect this lawsuit to have any adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company ability to satisfy its debt service obligations or to maintain the level of distributions on the Company’s Common Stock or Preferred Stock.
SBA Related—If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced under the SBA 7(a) Small Business Loan Program, the SBA may seek recovery of the principal loss related to the deficiency from the Company. As of September 30, 2024, the Company serviced an aggregate of $221.9 million of the guaranteed portion of SBA 7(a) loans. With respect to the guaranteed portion of SBA loans that have been sold, the SBA will first honor its guarantee and then seek compensation from the Company in the event that a loss is deemed to be attributable to technical deficiencies. Based on historical experience, the Company does not expect that this contingency is probable to be asserted. However, if asserted, it could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company’s ability to satisfy its debt service obligations or to maintain its level of distributions on Common Stock or Preferred Stock.
Environmental Matters—In connection with the ownership and operation of real estate properties, the Company may be potentially liable for costs and damages related to environmental matters, including asbestos-containing materials. The Company has not been notified by any governmental authority of any noncompliance, liability, or other claim in connection with any of the properties, and the Company is not aware of any other environmental condition with respect to any of the properties that management believes will have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company’s ability to satisfy its debt service obligations or to maintain its level of distributions on Common Stock or Preferred Stock.
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
16. LEASES
Future minimum rental revenue under long-term operating leases as of September 30, 2024, excluding tenant reimbursements of certain costs, are as follows (excludes unconsolidated properties, in thousands):
Years Ending December 31,Total
2024 (Three months ending December 31, 2024)$14,540 
202541,259 
202627,370 
202719,463 
202815,091 
Thereafter52,760 
$170,483 
17. SEGMENT DISCLOSURE
The Company’s reportable segments during the three and nine months ended September 30, 2024 and September 30, 2023 consist of three types of commercial real estate properties, namely, office, hotel and multifamily, as well as a segment for the Company’s lending business. Management internally evaluates the operating performance and financial results of the segments based on net operating income. The Company also has certain general and administrative level activities, including public company expenses, legal, accounting, and tax preparation that are not considered separate operating segments. The reportable segments are accounted for on the same basis of accounting as described in the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the 2023 Form 10-K.
For the Company’s real estate segments, the Company defines net operating income (loss) as rental and other property income and expense reimbursements less property related expenses, and excludes non-property income and expenses, interest expense, depreciation and amortization, corporate related general and administrative expenses, gain (loss) on sale of real estate, gain (loss) on early extinguishment of debt, impairment of real estate, transaction costs, and provision (benefit) for income taxes. For the Company’s lending segment, the Company defines net operating income as interest income net of interest expense and general overhead expenses.
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
The net operating income (loss) of the Company’s segments for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Office: 
Revenues$13,819 $14,049 $42,531 $41,511 
Property expenses:    
Operating7,444 6,267 20,634 19,159 
General and administrative122 75 192 232 
Total property expenses7,566 6,342 20,826 19,391 
(Loss) income from unconsolidated entities(834)1,611 487 837 
Segment net operating income—office5,419 9,318 22,192 22,957 
Hotel:    
Revenues7,142 7,948 31,151 31,108 
Property expenses:    
Operating6,147 6,030 21,763 20,912 
General and administrative22 (3)33 17 
Total property expenses6,169 6,027 21,796 20,929 
Segment net operating income—hotel973 1,921 9,355 10,179 
Multifamily:
Revenues4,773 3,331 14,971 8,632 
Property expenses:
Operating3,782 3,212 10,153 7,642 
General and administrative78 88 212 400 
Total property expenses3,860 3,300 10,365 8,042 
(Loss) income from unconsolidated entity(405)(422)(929)216 
Segment net operating income (loss)—multifamily508 (391)3,677 806 
Lending:
Revenues2,724 2,570 7,928 8,243 
Lending expenses:  
Interest expense786 1,177 2,586 2,737 
Expense reimbursements to related parties—lending segment672 648 1,908 2,166 
General and administrative578 379 1,214 1,092 
Total lending expenses2,036 2,204 5,708 5,995 
Segment net operating income—lending688 366 2,220 2,248 
Total segment net operating income$7,588 $11,214 $37,444 $36,190 
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024 (Unaudited) – (Continued)
A reconciliation of segment net operating income to net income attributable to the Company for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Total segment net operating income$7,588 $11,214 $37,444 $36,190 
Interest and other income158 220 472 296 
Asset management and other fees to related parties(515)(724)(1,334)(2,071)
Expense reimbursements to related parties—corporate(592)(524)(1,809)(1,729)
Interest expense(8,830)(8,556)(25,233)(21,941)
General and administrative(1,421)(1,603)(3,592)(4,010)
Transaction-related costs(526)(38)(1,351)(3,398)
Depreciation and amortization(6,423)(16,082)(19,357)(46,056)
Gain on sale of real estate— — — 1,104 
Loss before provision for income taxes(10,561)(16,093)(14,760)(41,615)
Provision for income taxes(15)(554)(573)(969)
Net loss(10,576)(16,647)(15,333)(42,584)
Net loss attributable to non-controlling interests192 874 423 2,501 
Net loss attributable to the Company$(10,384)$(15,773)$(14,910)$(40,083)
The condensed assets for each of the segments as of September 30, 2024 and December 31, 2023 are as follows (in thousands):
 September 30, 2024December 31, 2023
Condensed assets:  
Office$418,886 $419,443 
Hotel102,621 95,998 
Multifamily270,260 278,492 
Lending75,472 76,374 
Non-segment assets810 20,893 
Total assets$868,049 $891,200 
18. SUBSEQUENT EVENTS
At the end of October, 2024, the 1902 JV Partner admitted a new third party co-investor and used part of the net capital contribution of such third party co-investor to satisfy the 1902 Park Mortgage Loan in full. The remaining contribution was used to make a distribution of approximately $1.0 million to each of the Company and the 1902 Park JV Partner. Subsequent to this contribution, the Company’s ownership share of the 1902 Park JV was approximately 25.5%. In addition, the Company and the 1902 Park JV Partner will be receiving an on-going fee from such third party co-investor in connection with its co-investment in 1902 Park JV.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of 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”), which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans and objectives relating to future growth of our business and availability of funds. Such forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “project,” “target,” “expect,” “intend,” “might,” “believe,” “anticipate,” “estimate,” “could,” “would,” “continue,” “pursue,” “potential,” “forecast,” “seek,” “plan,” “should” or “goal” or the negative thereof or other variations or similar words or phrases. Such forward-looking statements also include, among others, statements about our plans and objectives relating to future growth and outlook. Such forward-looking statements are based on particular assumptions that our management has made in light of its experience, as well as its perception of expected future developments and other factors that it believes are appropriate under the circumstances. Forward-looking statements are necessarily estimates reflecting the judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include those associated with (i) the timing, form, and operational effects of our development activities, (ii) our ability to raise in place rents to existing market rents and to maintain or increase occupancy levels, (iii) fluctuations in market rents, (iv) the effects of inflation and continuing higher interest rates on our operations and profitability and (v) general economic, market and other conditions. Additional important factors that could cause our actual results to differ materially from our expectations are discussed in “Item 1A—Risk Factors” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 29, 2024 (the “2023 Form 10-K”) and in Part II, Item 1A of this Quarterly Report on Form 10-Q. The forward-looking statements included herein are based on current expectations and there can be no assurance that these expectations will be attained. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements expressed or implied herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made. We do not undertake to update them to reflect changes that occur after the date they are made, except as may be required by applicable securities laws.
The following discussion of our financial condition as of September 30, 2024 and results of operations for the three and nine months ended September 30, 2024 and 2023 should be read in conjunction with the 2023 Form 10-K. For a more detailed description of the risks affecting our financial condition and results of operations, see “Risk Factors” in Part I, Item 1A of the 2023 Form 10-K and in Part II, Item 1A of this Quarterly Report. 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 consolidated financial statements contained therein. The terms “we,” “us,” “our” and the “Company” refer to Creative Media & Community Trust Corporation and its subsidiaries.
Definitions
We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings:
The phrase “ADR” represents average daily rate. It is calculated as trailing nine-month room revenue divided by the number of rooms occupied. For sold properties, ADR is presented for the Company’s period of ownership only.
The phrase “annualized rent” represents gross monthly base rent, or gross monthly contractual rent under parking and retail leases, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.
The phrase “net annualized rent” represents gross monthly base rent, or gross monthly contractual rent under parking and retail leases, net of total rent abatements granted in the applicable month, multiplied by 12. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.
The phrase “RevPAR” represents revenue per available room. It is calculated as trailing nine-month room revenue divided by the number of available rooms. For sold properties, RevPAR is presented for the Company’s period of ownership only.
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Executive Summary
Business Overview
Creative Media & Community Trust Corporation is a Maryland corporation and REIT. We primarily acquire, develop, own and operate both premier multifamily properties situated in vibrant communities throughout the United States and Class A and creative office real assets in markets with similar business and employment characteristics to our multifamily investments. We seek to apply the expertise of CIM Group to the acquisition, development and operation of premier multifamily properties and creative office assets that cater to rapidly growing industries such as technology, media and entertainment. All of our real estate assets are and will generally be located in communities qualified by CIM Group as described further below. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth. We believe that the critical mass of redevelopment in such areas creates positive externalities, which enhance the value of real estate assets in the area. We believe that these assets will provide greater returns than similar assets in other markets, as a result of the population growth, public commitment and significant private investment that characterize these areas.
CIM is headquartered in Los Angeles, CA, with offices in Atlanta, GA, Chicago, IL, Dallas, TX, London, UK, New York, NY, Orlando, FL, Phoenix, AZ, and Tokyo, Japan. CIM also maintains additional offices across the United States and in South Korea to support its platform.
Properties
As of September 30, 2024, our real estate portfolio consisted of 27 assets, all of which were fee-simple properties and five of which we own through investments in Unconsolidated Joint Ventures. Our Unconsolidated Joint Ventures contain two office properties (one of which has been partially converted into multifamily units), one multifamily site currently under development, one multifamily property and one commercial development site. As of September 30, 2024, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 72.2% occupied, and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $145.74 for the nine months ended September 30, 2024, and our three multifamily properties were 92.0% occupied. Additionally, as of September 30, 2024, we had nine development sites (three of which were being used as parking lots).
Strategy
We are a Maryland corporation and REIT. Our portfolio of investments currently consists of premier multifamily, Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States. We also own one hotel in northern California and a lending platform that originates loans under the Small Business Administration (“SBA”) 7(a) loan program. We seek to apply the expertise of CIM Group to the acquisition, development and operation of premier multifamily properties situated in vibrant communities throughout the United States. While we may acquire, develop and operate creative office assets that cater to rapidly growing industries such as technology, media and entertainment in markets with similar business and employment characteristics to our multifamily investments, we intend to increase our focus towards premier multifamily properties. All of our multifamily and creative office assets are and will generally be located in communities qualified by CIM Group as described further below. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth. We believe that the critical mass of redevelopment in such areas creates positive externalities, which enhance the value of real estate assets in the area. We believe that these assets will provide greater returns than similar assets in other markets, as a result of the population growth, public commitment and significant private investment that characterize these areas.
Our investments in multifamily and creative office assets may take different forms, including direct equity or preferred investments, real estate development activities, side-by-side investments or co-investments with vehicles managed or owned by CIM Group and/or originating loans that are secured directly or indirectly by properties primarily located in qualified communities (“Qualified Communities”) that meet our strategy. Further, we leverage the investor relationships of CIM Group to execute on our investment pipeline using an asset-light approach for certain of our investments. Under this approach, we co-invest with one or more third parties on an asset-level basis by raising capital from such third parties, maintain an economic interest in the asset and, in some cases, earn a management fee and a percentage of the profits. We believe this is a compelling model that is expected to contribute to strong returns on invested capital while reducing risk by reducing our capital outlay.
We intend to dispose of assets that do not fit into our strategy over time and opportunistically (i.e., we do not have any specific time frame with respect to such dispositions). Further, as a matter of prudent management, we regularly evaluate each asset within our portfolio as well as our strategy. Such review may result in dispositions when, among other things, we believe
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the proceeds generated from the sale of an asset can be redeployed in one or more assets that will generate better returns, or the market value of such asset is equal to or exceeds our view of its intrinsic value.
CIM Group Operations
CIM Group believes that a vast majority of the risks associated with acquiring real estate are mitigated by accumulating local market knowledge of the community where the asset is located. As a result, CIM Group typically spends significant resources over a period of between six months and five years evaluating communities prior to making any acquisitions. The distinct districts that CIM Group identifies through this process as targets for acquisitions are referred to as “Qualified Communities.” Qualified Communities typically have dedicated resources to become, or are currently, vibrant communities where people can live, work, shop and be entertained, all within walking distance or close proximity to public transportation. These areas, which include traditional downtown areas and suburban main streets, generally have high barriers to entry, high population density, positive population trends, a propensity for growth and support for investment. CIM Group believes that the critical mass of redevelopment in such Qualified Communities creates positive externalities, which enhance the value of real estate assets in the area. CIM Group targets acquisitions of diverse types of real estate assets, including retail, residential, office, parking, hotel, signage and mixed-use through CIM Group’s extensive network and its current opportunistic activities.
CIM Group seeks to maximize the value of its holdings through active onsite property management and leasing. CIM Group has extensive in-house research, acquisition, credit analysis, development, finance, leasing and onsite property management capabilities, which leverage its deep understanding of metropolitan communities to position properties for multiple uses and to maximize operating income. As a vertically-integrated owner and operator, CIM Group has in-house onsite property management and leasing capabilities. Property managers prepare annual capital and operating budgets and monthly operating reports, monitor results and oversee vendor services, maintenance and capital improvement schedules. In addition, they ensure that revenue objectives are met, lease terms are followed, receivables are collected, preventative maintenance programs are implemented, vendors are evaluated and expenses are controlled. In addition, CIM Group’s real assets management committee (the “Real Assets Management Committee”) reviews and approves strategic decisions related to financing strategies and hold/ sell analyses and performance tracking relative to the overall business plan. CIM Group’s organizational structure provides for continuity through multi-disciplinary teams responsible for an asset from the time of the original investment recommendation, through the implementation of the asset’s business plan, and any repositions or ultimate disposition activities.
CIM Group’s Investments and Development teams are separate groups that work very closely together on transactions requiring development or redevelopment. While the Investments team is ultimately responsible for acquisition analysis, both the Investments and Development teams perform due diligence, evaluate and determine underwriting assumptions and participate in the development management and ongoing asset management of CIM Group’s assets under development. The Development team is also responsible for the oversight and/or execution of securing entitlements and the development/repositioning process. In instances where CIM Group is not the lead developer, CIM Group’s in-house Development team continues to provide development and construction oversight to co-sponsors through a shadow team that oversees the progress of the development from beginning to end to ensure adherence to the budgets, schedules, quality and scope of the project in order to maintain CIM Group’s vision for the final product. Both the Investments and Development teams interact as a cohesive team when sourcing, underwriting, acquiring, executing and managing the business plan of an opportunistic acquisition.
Financing Strategy
We may finance our future activities through one or more of the following methods: (i) offerings of shares of our common stock, par value $0.001 per share (“Common Stock”), preferred stock or other equity and/or debt securities of the Company; (ii) issuances of interests in our operating partnership in exchange for properties; (iii) credit facilities and term loans; (iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral, including the securitization of portions of our loan portfolio; (v) the sale of existing assets; (vi) partnering with co-investors; and/or (vii) cash flows from operations.
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Rental Rate Trends
Office Statistics:    The following table sets forth occupancy rates and annualized rent per occupied square foot across our office portfolio as of the specified periods (includes 100% of our properties partially owned through Unconsolidated Joint Ventures):
 As of September 30,
 20242023
Occupancy (1)72.2 %82.6 %
Annualized rent per occupied square foot (1)(2)$60.31 $56.93 
______________________
(1)The information presented in this table represents historical information as of the date indicated without giving effect to any property sales occurring thereafter. 
(2)Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail. Total abatements, representing lease incentives in the form of free rent, for the twelve months ended September 30, 2024 and 2023 were approximately $1.8 million and $2.9 million, respectively. Giving effect to abatements, net annualized rent per occupied square foot was $59.52 and $54.64 as of September 30, 2024 and 2023, respectively (See Definitions for more detail).
Over the next four quarters, we expect to see expiring cash rents as set forth in the table below (includes 100% of our properties partially owned through Unconsolidated Joint Ventures):
 For the Three Months Ended
 December 31, 2024March 31, 2025June 30, 2025September 30, 2025
Expiring Cash Rents:    
Expiring square feet (1)32,733 212,082 30,485 34,233 
Expiring rent per square foot (2)$57.34 $53.11 $72.86 $58.16 
______________________
(1)Month-to-month tenants occupying a total of 6,670 square feet are included in the expiring leases in the first quarter listed.
(2)Represents gross monthly base rent, as of September 30, 2024, under leases expiring during the periods above, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.
During the three and nine months ended September 30, 2024, we executed leases with terms longer than 12 months totaling 4,850 and 94,157 square feet, respectively. The table below sets forth information on certain of our executed leases during the three and nine months ended September 30, 2024, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party:
Number of
Leases (1)		Rentable
Square
Feet		New Cash
Rents per
Square
Foot (2)		Expiring
Cash
Rents per
Square
Foot (2)
Three months ended September 30, 202422,270$49.23 $59.52 
Nine months ended September 30, 20242085,142$49.99 $55.96 
______________________
(1)Based on the number of tenants that signed leases.
(2)Cash rents represent gross monthly base rent, multiplied by twelve. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.
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Fluctuations in submarkets, buildings and terms of leases cause large variations in these numbers and make predicting the changes in rent in any specific period difficult. Our rental and occupancy rates are impacted by general economic conditions, including the pace of regional and economic growth, and access to capital. Therefore, we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates. Additionally, decreased demand and other negative trends or unforeseeable events that impair our ability to timely renew or re lease space could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
Multifamily Statistics:    The following table sets forth occupancy rates and the monthly rent per occupied unit across our multifamily portfolio for the specified periods (includes 100% of our property partially owned through an Unconsolidated Joint Venture):
 As of September 30,
 20242023
Occupancy92.0 %84.1 %
Monthly rent per occupied unit (1)$2,555 $2,869 
______________________
(1)Represents gross monthly base rent under leases commenced as of the specified period, divided by occupied units. This amount reflects total cash rent before concessions. Net of rent concessions granted in the specified period, monthly rent per occupied unit was $2,444 and $2,100 as of September 30, 2024 and 2023, respectively.
Hotel Statistics:    The following table sets forth the occupancy, ADR and RevPAR for our hotel in Sacramento, California for the specified periods:
 For the Nine Months
Ended September 30,
 20242023
Occupancy71.4 %76.9 %
ADR$203.98 $193.84 
RevPAR$145.74 $149.01 
Seasonality
Our revenues and expenses for our hotel property are subject to seasonality during the year. Generally, our hotel revenues are greater in the first and second quarters than the third and fourth quarters. This seasonality can be expected to cause quarterly fluctuations in revenues, segment net operating income, net income and cash provided by operating activities. In addition, the hotel industry is cyclical and demand generally follows, on a lagged basis, key macroeconomic factors.
Lending Segment
Through our loans originated under the SBA 7(a) Program, we are a national lender that primarily originates loans to small businesses. We identify loan origination opportunities through personal contacts, internet referrals, attendance at trade shows and meetings, direct mailings, advertisements in trade publications and other marketing methods. We also generate loans through referrals from real estate and loan brokers, franchise representatives, existing borrowers, lawyers and accountants.
The SBA 7(a) Loan Program is the SBA’s most common loan program. The maximum loan amount for an SBA 7(a) loan is $5.0 million. Key eligibility factors are based on what the business does to generate its income, its credit history, the liquidity of the borrower, size standards and where the business operates. We work with potential borrowers to identify the type of loan that would be appropriate for each such borrower’s needs. Our SBA 7(a) term loans have monthly repayment terms of principal and interest and are originated with variable interest rates based on the prime rate. Most of our SBA 7(a) loans have maturities of approximately 25 years.
While we have focused on originating real estate loans almost exclusively to the limited service and mid-scale hospitality industry, we intend to increase our efforts to originate other real estate collateralized loans. These loans are anticipated to be primarily concentrated in industries in which we previously had positive experience, including convenience store, RV park and single purpose building owner-occupied restaurant operations and may include owner-occupied industrial operations/warehouse buildings.
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Property Concentration
Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 21.9% of our annualized office rental income for the three months ended September 30, 2024.
2024 Results of Operations
Comparison of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023
Net Loss and FFO
 Three Months Ended September 30,Change
 20242023$%
 (dollars in thousands)
Total revenues$28,616 $28,118 $498 1.8 %
Total expenses$37,938 $45,400 $(7,462)(16.4)%
Net loss$(10,576)$(16,647)$6,071 (36.5)%
Net loss was $10.6 million for the three months ended September 30, 2024 compared to a net loss of $16.6 million for the three months ended September 30, 2023, a decrease of $6.1 million. The decrease in net loss was primarily due to a decrease in depreciation and amortization expense of $9.7 million, partially offset by a decrease of $3.6 million in segment net operating income (discussed in more detail in the following Summary Segment Results).
Funds from Operations
We believe that funds from operations (“FFO”), a non-GAAP measure, is a widely recognized and appropriate measure of the performance of a REIT and that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO represents net income (loss) attributable to common stockholders, computed in accordance with GAAP, which reflects the deduction of redeemable preferred stock dividends accumulated, excluding gains (or losses) from sales of real estate, impairment of real estate, and real estate depreciation and amortization. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (the “NAREIT”).
Like any metric, FFO should not be used as the only measure of our performance because it excludes depreciation and amortization and captures neither the changes in the value of our real estate properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our operating results. Other REITs may not calculate FFO in accordance with the standards established by the NAREIT; accordingly, our FFO may not be comparable to the FFOs of other REITs. Therefore, FFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a supplement to or substitute measure for cash flows from operating activities computed in accordance with GAAP. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.
The following table sets forth a historical reconciliation of net loss attributable to common stockholders to FFO attributable to common stockholders (in thousands):
 Three Months Ended September 30,
 20242023
Net loss attributable to common stockholders(1)
$(34,775)$(22,934)
Depreciation and amortization6,423 16,082 
Non-controlling interests’ proportionate share of depreciation and amortization
(68)(626)
FFO attributable to common stockholders(1)
$(28,420)$(7,478)
______________________
(1)During the three months ended September 30, 2024 and 2023, we recognized $16.1 million and $352,000, respectively, of redeemable preferred stock redemptions. Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.
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FFO attributable to common stockholders, which is a non-GAAP measure, was $(28.4) million for the three months ended September 30, 2024, a decrease of approximately $20.9 million compared to $(7.5) million for the three months ended September 30, 2023. The decrease in FFO was primarily due to an increase in redeemable preferred stock redemptions of $15.7 million, a decrease of $3.6 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and an increase in redeemable preferred stock dividends of $1.2 million.
Summary Segment Results
During the three months ended September 30, 2024 and September 30, 2023, we operated in four segments: office, hotel and multifamily properties and lending. Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).
 Three Months Ended September 30,Change
 20242023$%
Revenues:    
Office$13,819 $14,049 $(230)(1.6)%
Hotel$7,142 $7,948 $(806)(10.1)%
Multifamily$4,773 $3,331 $1,442 43.3 %
Lending$2,724 $2,570 $154 6.0 %
Expenses:    
Office$7,566 $6,342 $1,224 19.3 %
Hotel$6,169 $6,027 $142 2.4 %
Multifamily$3,860 $3,300 $560 17.0 %
Lending$2,036 $2,204 $(168)(7.6)%
(Loss) Income From Unconsolidated Entities:
Office$(834)$1,611 $(2,445)NM*
Multifamily$(405)$(422)$17 (4.0)%
Non-Segment Revenue and Expenses:
Interest and other income$158 $220 $(62)(28.2)%
Asset management and other fees to related parties$(515)$(724)$209 (28.9)%
Expense reimbursements to related parties - corporate$(592)$(524)$(68)13.0 %
Interest expense$(8,830)$(8,556)$(274)3.2 %
General and administrative$(1,421)$(1,603)$182 (11.4)%
Transaction-related costs$(526)$(38)$(488)NM*
Depreciation and amortization$(6,423)$(16,082)$9,659 (60.1)%
Provision for income taxes$(15)$(554)$539 (97.3)%
______________________
(*)Percentage changes in excess of 100% are deemed to be not meaningful (“NM”)
Revenues
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue decreased to $13.8 million for the three months ended September 30, 2024, compared to $14.0 million for the three months ended September 30, 2023. The decrease was primarily due to lower occupancy at an office property in Oakland, California, partially offset by higher rental revenues at an office property in Los Angeles, California due to increased occupancy and at an office property in Beverly Hills, California due to higher rent per occupied square foot.
Hotel Revenue: Hotel revenue decreased to $7.1 million for the three months ended September 30, 2024, compared to $7.9 million for the three months ended September 30, 2023. The decrease was due to a decrease in occupancy for the three
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months ended September 30, 2024 compared to the three months ended September 30, 2023 as occupancy was negatively impacted by ongoing construction related to the Hotel Renovation, which began during the three months ended September 30, 2024, to renovate the hotel.
Multifamily Revenue: Multifamily revenue was $4.8 million for the three months ended September 30, 2024, compared to $3.3 million for the three months ended September 30, 2023. The increase was primarily attributed to higher rental revenues at our multifamily properties due to increased occupancy and increased monthly rent per occupied unit, net of rent concessions, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue was $2.7 million for the three months ended September 30, 2024, compared to $2.6 million for the three months ended September 30, 2023. The increase was primarily due to an increase in premium income as a result of higher loan sale volume, partially offset by decreased interest income due to higher loan payoff volume during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
(Loss) Income From Unconsolidated Office Entities: The income from our Unconsolidated Joint Ventures included in office segment net operating income decreased to a loss of $834,000 for the three months ended September 30, 2024, compared to income of $1.6 million for the three months ended September 30, 2023. The decrease was primarily due to changes in the valuation of investments in real estate at our unconsolidated office entities which recognized a net unrealized loss during the three months ended September 30, 2024, compared to a net unrealized gain for the three months ended September 30, 2023.
Loss From Unconsolidated Multifamily Entity: The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $405,000 for the three months ended September 30, 2024, consistent with a loss of $422,000 for the three months ended September 30, 2023.
Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, was $158,000 for the three months ended September 30, 2024, generally consistent with $220,000 for the three months ended September 30, 2023.
Expenses
Office Expenses: Office expenses increased to $7.6 million for the three months ended September 30, 2024, compared to $6.3 million for the three months ended September 30, 2023. The increase was primarily due to higher repairs and maintenance, utilities, and administrative expenses at an office property in Oakland, California and higher repairs and maintenance expenses and real estate tax expense at an office property in Austin, Texas.
Hotel Expenses: Hotel expenses increased to $6.2 million for the three months ended September 30, 2024, compared to $6.0 million for the three months ended September 30, 2023. The increase was primarily due to increases in room expenses as well as higher utilities, maintenance, and administrative expenses during the three months ended September 30, 2024.
Multifamily Expenses: Multifamily expenses increased to $3.9 million for the three months ended September 30, 2024 compared to $3.3 million for the three months ended September 30, 2023. The increase was primarily attributable to increased occupancy, leading to increases in maintenance, cleaning, and other operating expenses for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties. Lending expenses decreased to $2.0 million, for the three months ended September 30, 2024, compared to $2.2 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in interest expense resulting from the amount of principal repayments on our SBA 7(a) loan-backed notes, partially offset by an increase in current expected credit losses.
Asset Management and Other Fees to Related Parties: Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $515,000 for the three months ended September 30, 2024 compared to $724,000 for the three months ended September 30, 2023. The decrease was a result of a reduction in asset management fees related to a decrease in our net asset value, primarily resulting from a reduction in the fair value of our investments in real estate as of the end of 2023.
Expense Reimbursements to Related Parties—Corporate: The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries. Expense reimbursements to related parties-corporate were $592,000 for the three months ended September 30, 2024, generally consistent with expenses of $524,000 for the three months ended September 30, 2023.
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Interest Expense: Interest expense, which has not been allocated to our operating segments, increased to $8.8 million for the three months ended September 30, 2024, compared to $8.6 million for the three months ended September 30, 2023. The increase was primarily attributable to a higher average outstanding principal balance on our 2022 Credit Facility Revolver for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $1.4 million for the three months ended September 30, 2024, a decrease from $1.6 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in legal fees.
Transaction-Related Costs: Transaction costs, which related to potential real estate transactions, were $526,000 for the three months ended September 30, 2024, compared with $38,000 for such costs for the three months ended September 30, 2023. The increase was primarily related to deferred offering costs that were written off and recognized during the three months ended September 30, 2024 related to Common Stock.
Depreciation and Amortization Expense: Depreciation and amortization expense decreased to $6.4 million for the three months ended September 30, 2024, compared to $16.1 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in acquired in-place lease intangible assets amortization at multifamily properties located in Oakland, California acquired during the first quarter of 2023, which were fully amortized as of December 31, 2023, partially offset by incremental increases to fixed asset depreciation expense related to the acquired properties.
Provision for Income Taxes: Provision for income taxes was $15,000 for the three months ended September 30, 2024, compared to $554,000 for the three months ended September 30, 2023. The decrease was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period.
2024 Results of Operations
Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023
Net Loss and FFO
 Nine Months Ended September 30,Change
 20242023$%
 (dollars in thousands)
Total revenues$97,053 $89,790 $7,263 8.1 %
Total expenses$111,371 $133,562 $(22,191)(16.6)%
Net loss$(15,333)$(42,584)$27,251 (64.0)%
Net loss was $15.3 million for the nine months ended September 30, 2024 compared to a net loss of $42.6 million for the nine months ended September 30, 2023, a decrease of $27.3 million. The decrease in net loss was primarily due to a decrease in depreciation and amortization expense of $26.7 million, a $2.0 million decrease in transaction-related costs, and an increase of $1.3 million in segment net operating income (discussed in more detail in the following Summary Segment Results). These were partially offset by a $3.3 million increase in interest expense not allocated to our operating segments.
Funds from Operations
We believe that funds from operations (“FFO”), a non-GAAP measure, is a widely recognized and appropriate measure of the performance of a REIT and that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO represents net income (loss) attributable to common stockholders, computed in accordance with GAAP, which reflects the deduction of redeemable preferred stock dividends accumulated, excluding gains (or losses) from sales of real estate, impairment of real estate, and real estate depreciation and amortization. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (the “NAREIT”).
Like any metric, FFO should not be used as the only measure of our performance because it excludes depreciation and amortization and captures neither the changes in the value of our real estate properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our operating results. Other REITs may not calculate FFO in accordance with the standards established by the NAREIT; accordingly, our FFO may not be comparable to the FFOs of other REITs. Therefore, FFO should be considered only as a supplement to net income (loss) as a measure of our
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performance and should not be used as a supplement to or substitute measure for cash flows from operating activities computed in accordance with GAAP. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.
The following table sets forth a historical reconciliation of net loss attributable to common stockholders to FFO attributable to common stockholders (in thousands):
 Nine Months Ended September 30,
 20242023
Net loss attributable to common stockholders(1)
$(56,737)$(59,464)
Depreciation and amortization19,357 46,056 
Non-controlling interests’ proportionate share of depreciation and amortization
(240)(1,986)
Gain on sale of real estate— (1,104)
FFO attributable to common stockholders(1)
$(37,620)$(16,498)
______________________
(1)During the nine months ended September 30, 2024 and 2023, we recognized $17.5 million and $1.0 million, respectively, of redeemable preferred stock redemptions. Such amounts are included in, and have the effect of increasing net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.
FFO attributable to common stockholders, which is a non-GAAP measure, was $(37.6) million for the nine months ended September 30, 2024, a decrease of $21.1 million compared to $(16.5) million for the nine months ended September 30, 2023. The decrease in FFO was primarily due to a $16.4 million increase in redeemable preferred stock redemptions and an increase of $5.3 million in redeemable preferred stock dividends as well as a $3.3 million increase in interest expense not allocated to our operating segments. These were partially offset by an increase of $1.3 million in segment net operating income (discussed in more detail in the following Summary Segment Results) and a $2.0 million decrease in transaction-related costs.
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Summary Segment Results
During the nine months ended September 30, 2024 and September 30, 2023, we operated in four segments: office, hotel and multifamily properties and lending. Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).
 Nine Months Ended September 30,Change
 20242023$%
Revenues:    
Office$42,531 $41,511 $1,020 2.5 %
Hotel$31,151 $31,108 $43 0.1 %
Multifamily$14,971 $8,632 $6,339 73.4 %
Lending$7,928 $8,243 $(315)(3.8)%
Expenses:    
Office$20,826 $19,391 $1,435 7.4 %
Hotel$21,796 $20,929 $867 4.1 %
Multifamily$10,365 $8,042 $2,323 28.9 %
Lending$5,708 $5,995 $(287)(4.8)%
Income (Loss) From Unconsolidated Entities
Office$487 $837 $(350)(41.8)%
Multifamily$(929)$216 $(1,145)NM*
Non-Segment Revenue and Expenses:
Interest and other income$472 $296 $176 59.5 %
Asset management and other fees to related parties$(1,334)$(2,071)$737 (35.6)%
Expense reimbursements to related parties - corporate$(1,809)$(1,729)$(80)4.6 %
Interest expense$(25,233)$(21,941)$(3,292)15.0 %
General and administrative$(3,592)$(4,010)$418 (10.4)%
Transaction-related costs$(1,351)$(3,398)$2,047 (60.2)%
Depreciation and amortization$(19,357)$(46,056)$26,699 (58.0)%
Gain on sale of real estate$— $1,104 $(1,104)N/A
Provision for income taxes$(573)$(969)$396 (40.9)%
______________________
(*)Percentage changes in excess of 100% are deemed to be not meaningful (“NM”)
Revenues
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue increased to $42.5 million for the nine months ended September 30, 2024, compared to $41.5 million for the nine months ended September 30, 2023. The increase was primarily due to higher rental revenue at our office property in Beverly Hills, California as a result of increased occupancy.
Hotel Revenue: Hotel revenue was $31.2 million for the nine months ended September 30, 2024, consistent with $31.1 million for the nine months ended September 30, 2023.
Multifamily Revenue: Multifamily revenue was $15.0 million for the nine months ended September 30, 2024, compared to $8.6 million for the nine months ended September 30, 2023. The increase was attributable to higher occupancy and increased monthly rent per occupied unit, net of rent concessions, as well as the nine months ended September 30, 2024 benefiting from three full quarters of income from properties acquired during the three months ended March 31, 2023.
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Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue was $7.9 million for the nine months ended September 30, 2024, compared to $8.2 million for the nine months ended September 30, 2023. The decrease was primarily due to a decrease in premium income and a decrease in interest income as a result of lower loan originations and loan sale volume during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Income From Unconsolidated Office Entities: The income from our Unconsolidated Joint Ventures included in office segment net operating income decreased to $487,000 for the nine months ended September 30, 2024, compared to income of $837,000 for the nine months ended September 30, 2023. The decrease was primarily due to a decrease in unrealized gain recognized on the value of real estate at one of the unconsolidated office entities recognized during the nine months ended September 30, 2024.
(Loss) Income From Unconsolidated Multifamily Entity: The loss from our Unconsolidated Joint Venture included in the multifamily segment net operating income was $929,000 for the nine months ended September 30, 2024, compared to income of $216,000 for the nine months ended September 30, 2023. The decrease was primarily due to an unrealized loss recognized on the value of real estate at the Unconsolidated Joint Venture included in our multifamily segment during the nine months ended September 30, 2024.
Interest and Other Income: Interest and other income, which has not been allocated to our operating segments, increased to $472,000 for the nine months ended September 30, 2024, compared to $296,000 for the nine months ended September 30, 2023. The increase was primarily related to interest earned on money market accounts during the nine months ended September 30, 2024.
Expenses
Office Expenses: Office expenses increased to $20.8 million for the nine months ended September 30, 2024, compared to $19.4 million for the nine months ended September 30, 2023. The increase was primarily due to higher operating expenses at our office property in Oakland, California from increased utilities and repairs and maintenance expense.
Hotel Expenses: Hotel expenses increased by 4.1% to $21.8 million for the nine months ended September 30, 2024, compared to $20.9 million for the nine months ended September 30, 2023. The increase was primarily due to increases in room expenses as well as higher utilities, maintenance, and administrative expenses during the nine months ended September 30, 2024.
Multifamily Expenses: Multifamily expenses increased to $10.4 million for the nine months ended September 30, 2024 compared to $8.0 million for the nine months ended September 30, 2023. The increase was primarily attributable to the nine months ended September 30, 2024 including three full quarters of expense from properties acquired during the three months ended March 31, 2023.
Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties. Lending expenses were $5.7 million, for the nine months ended September 30, 2024, compared with expenses of $6.0 million for the nine months ended September 30, 2023. primarily due to a decrease in interest expense resulting from the amount of principal repayments on our SBA 7(a) loan-backed notes and a decrease in allocated payroll expense.
Asset Management and Other Fees to Related Parties: Asset management fees and other fees to related parties, which have not been allocated to our operating segments, were $1.3 million for the nine months ended September 30, 2024 compared to $2.1 million for the nine months ended September 30, 2023. The decrease was a result of a reduction in asset management fees related to a decrease in our net asset value, primarily resulting from a reduction in the fair value of our investments in real estate as of the end of 2023.
Expense Reimbursements to Related Parties—Corporate: The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries. Expense reimbursements to related parties-corporate were $1.8 million for the nine months ended September 30, 2024, consistent with $1.7 million for the nine months ended September 30, 2023.
Interest Expense: Interest expense, which has not been allocated to our operating segments, increased to $25.2 million for the nine months ended September 30, 2024, compared to $21.9 million for the nine months ended September 30, 2023. The increase was attributable to mortgages assumed in connection with our multifamily acquisitions during the first quarter of 2023, higher average outstanding principal balance on our 2022 Credit Facility Revolver for the nine months ended September 30,
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2024 compared to the nine months ended September 30, 2023 and an increase in the SOFR components of interest rates on our variable-rate debt for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.
General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $3.6 million for the nine months ended September 30, 2024, compared to $4.0 million for the nine months ended September 30, 2023. The decrease was primarily due to decreases in non-recurring legal fees.
Transaction-Related Costs: Transaction costs were $1.4 million for the nine months ended September 30, 2024, compared with $3.4 million for the nine months ended September 30, 2023. The decrease was related to costs incurred in connection with the acquisition of two multifamily properties in Oakland, California in the first quarter of 2023, which increased these costs in the prior year period.
Depreciation and Amortization Expense: Depreciation and amortization expense decreased to $19.4 million for the nine months ended September 30, 2024, compared to $46.1 million for the nine months ended September 30, 2023. The decrease was primarily due to a decrease in acquired in-place lease intangible assets amortization at multifamily properties located in Oakland, California acquired during the first quarter of 2023, which were fully amortized as of December 31, 2023, partially offset by incremental increases to fixed asset depreciation expense related to the acquired properties.
Gain on Sale of Real Estate: Gain on sale of real estate of $1.1 million for the nine months ended September 30, 2023 was related to the sale of 80% of our interest in an office property in Los Angeles, California. There were no dispositions during the nine months ended September 30, 2024.
Provision for Income Taxes: Provision for income taxes was $573,000 for the nine months ended September 30, 2024, compared with $969,000 for the nine months ended September 30, 2023. The decrease was due to lower taxable income at our taxable REIT subsidiaries compared to the prior year period.
Cash Flow Analysis
Our cash flows from operating activities are primarily dependent upon the real estate assets owned, occupancy level of our real estate assets, the rental rates achieved through our leases, the occupancy and ADR of our hotel, the collectability of rent and recoveries from our tenants, and loan related activity. Our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs. Net cash provided by operating activities decreased by $0.9 million for the nine months ended September 30, 2024, as compared to the same period in 2023. The decrease was primarily due to a reduction in net loss adjusted for depreciation and amortization expense and other non-cash items of $4.1 million and an increase in net proceeds from the sale of loans of $1.8 million, partially offset by a $7.3 million decrease resulting from a higher level of net working capital used compared to the prior period.
Our cash flows from investing activities are primarily related to property acquisitions and dispositions, expenditures for the development or repositioning of properties, capital expenditures and cash flows associated with loans originated at our lending segment. Net cash used in investing activities decreased by $68.2 million for the nine months ended September 30, 2024, as compared to the same period in 2023. The decrease in cash used in investing activities was primarily due to a decrease in acquisitions of real estate of $96.7 million and a decrease in cash outlays of $5.8 million related to our investments in Unconsolidated Joint Ventures during the nine months ended September 30, 2024, compared to the same period in 2023. Partially offsetting the decrease in net cash used in investing activities are $30.3 million in proceeds from the sale of a property to the 4750 Wilshire JV during the nine months ended September 30, 2023.
Our cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash used in financing activities decreased by $61.3 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily as a result of net proceeds from our 2022 Credit Facility and mortgages of $7.3 million during the nine months ended September 30, 2024 compared to $54.0 million during the nine months ended September 30, 2023, the issuance of unguaranteed SBA 7(a) loan-backed notes of approximately $54.1 million during the nine months ended September 30, 2023, and a $35.6 million decrease in net proceeds from the issuance of preferred stock. The aforementioned amounts decreasing net cash used in financing activities were partially offset by a decrease in cash redemptions of preferred stock of $74.1 million and a decrease in the payment of deferred debt origination costs of $2.5 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Liquidity and Capital Resources
General
On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties (as further described below) (including pre-construction costs such as obtaining entitlements and
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permits and architectural work), or re-leasing of space in existing properties, capital expenditures, paying interest and principal on current and any future debt financings, SBA 7(a) loan originations, paying distributions on our Preferred Stock and Common Stock and making redemption payments on our Preferred Stock. We may finance our future activities through one or more of the following methods: (i) credit facilities and term loans; (ii) issuances of interests in our operating partnership in exchange for properties; (iii) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral, including the securitization of portions of our loan portfolio; (iv) the sale of existing assets; (v) partnering with co-investors; (vi) offerings of preferred stock or other equity and/or debt securities of the Company; and/or (vii) cash flows from operations. In December 2022, we completed a refinancing of our 2018 credit facility, which was set to mature in October 2023, replacing it with the new facility (the “2022 Credit Facility”). The 2022 Credit Facility included a $56.2 million term loan as well as a revolver that originally allowed the Company to borrow up to $150.0 million, both of which are collectively subject to a borrowing base calculation. The 2022 Credit Facility matures in December 2025 and provides for two one-year extension options, subject to certain conditions being satisfied. On December 23, 2022, the Company announced it would redeem all remaining outstanding shares of its Series L Preferred Stock in cash on January 25, 2023 for a total cost of $83.8 million. The payment for the Series L Redemption was made on January 25, 2023 and was funded by a combination of proceeds from the sale of our Series A1 Preferred Stock, draws on our 2022 Credit Facility, and cash on hand.
Our long-term liquidity needs will consist primarily of funds necessary for acquisitions of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, paying interest and principal on debt financings, refinancing of indebtedness, SBA 7(a) loan originations, paying distributions on our Preferred Stock or any other preferred stock we may issue, any future repurchase of Common Stock and/or redemption of our Preferred Stock (if we choose, or are required, to pay the redemption price in cash instead of in shares of our Common Stock) and distributions on our Common Stock. Additionally, our outstanding commitments to fund loans were $18.5 million as of September 30, 2024, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending. A majority of these commitments have government guarantees of 75% (as the government guarantee has now reverted to 75%) and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. To the extent we decide to proceed with development work on any of our development sites (in addition to those discussed below), we will have increased liquidity needs.
The 4750 Wilshire Project was substantially completed in September 2024 and leasing has commenced. The total cost of the 4750 Wilshire Project is estimated to be approximately $31.0 million (our share of which is $6.2 million), which was financed by a combination of equity contributions from us and co-investors as well as a mortgage loan from a third-party lender. In connection with the 4750 Wilshire JV, we received cash sales proceeds from the joint venture partners, enhancing our liquidity. Further, we have earned and will continue to earn management fees from co-investors in connection with their co-investment in the 4750 Wilshire Project. As of September 30, 2024, total costs of $27.9 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project.
Our long-term liquidity needs include our plan to renovate the Sheraton Grand Hotel in Sacramento, California (the “Hotel Renovation”), which primarily entails renovating the hotel’s guest rooms and corridors and is expected to cost approximately $20.9 million. As of September 30, 2024, $10.6 million of costs had been incurred with respect to the Hotel Renovation, which the Company has started construction as of July 2024, with anticipated completion by the end of 2024. Additionally, an Unconsolidated Joint Venture (the “1910 Sunset JV”), in which we have approximately a 44% ownership interest, has begun construction to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building (the “1915 Park Project) in Los Angeles, California, which development is expected to be completed by the third quarter of 2025 and with an estimated cost of approximately $14.7 million (excluding the land acquisition cost), our share of which will be $6.5 million. The 1910 Sunset JV plans to finance the project through a combination of cash from operations at its office property, additional equity contributions from existing investors, and proceeds from a mortgage loan from a third-party lender (which is in-place but currently has no outstanding borrowings and is subject to additional equity contribution requirements which have not yet been met). As of September 30, 2024, the 1910 Sunset JV had incurred total costs of $4.8 million in connection with the 1915 Park Project.
As of each of March 31, 2024, June 30, 2024 and September 30, 2024, we were not in compliance with a financial covenant under the 2022 Credit Facility. Such non-compliance constituted an event of default under the 2022 credit facility. On May 14, 2024, lenders under the 2022 Credit Facility and us entered into an agreement (the “First Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending March 31, 2024. Among other restrictions, the First Modification Agreement also prohibits our subsidiaries that own properties that secured the 2022 Credit Facility from making any distributions to its parent entities. On August 7, 2024, lenders under the 2022 Credit Facility and the Company entered into an agreement (the “Second Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending June 30, 2024. Simultaneously with the execution of the Second Modification
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Agreement, we made a $4.0 million repayment under the 2022 Credit Facility. On October 24, 2024, lenders under the 2022 Credit Facility and us entered into an agreement (the “Third Modification Agreement”) pursuant to which the lenders waived such event of default with respect to the test period ending September 30, 2024. Pursuant to the Third Modification Agreement, we will not be able to borrow under the 2022 Credit Facility without the consent of the lenders until certain conditions are satisfied, including delivery of a revised business plan acceptable to the lenders and re-establishing compliance with the financial covenant. Under the Third Modification Agreement, the aggregate commitments under the 2022 Credit Facility were reduced from $206.2 million to $169.3 million. Pursuant to the Third Modification Agreement, the lenders and us agreed that, starting April 1, 2025, excess cash flow generated by the borrowers under the 2022 Credit Facility will be deposited into a collateral account controlled by the administrative agent. The borrowers’ ability to withdraw funds from the collateral account will be limited to specified uses and subject to certain requirements. In addition, the lenders agreed (i) to modify the borrowing base formula to remove certain limitations on the inclusion of office, retail, flex office/industrial and standalone parking assets and (ii) subject to certain conditions, to release assets relating to the Sacramento Sheraton to facilitate a refinancing of such property. The Third Modification Agreement did not waive compliance with the financial covenant for the test period ending December 31, 2024 or any future period.

If we breach any financial covenant under the 2022 Credit Facility in the future and are unable to obtain a further waiver from the lenders thereunder with respect to such breach, an event of default would occur under the 2022 Credit Facility, which would allow lenders under the 2022 Credit Facility to, among other remedies, declare the unpaid principal amount of all outstanding loans, and all interest accrued and unpaid thereon, to be immediately due and payable. The occurrence of any future event of default would raise substantial doubt about our ability to continue as a going concern. Our management plans to address any possible future event of default under the 2022 Credit Facility by entering into new financing arrangements to repay amounts outstanding under the 2022 Credit Facility. We are in the process of obtaining refinancing for our hotel in Sacramento, California (the “Sheraton Refinancing”). If completed, we intend to use the proceeds of the Sheraton Refinancing to repay part of the amount outstanding under the 2022 Credit Facility and to pay for the Hotel Renovation described above. In addition, we are in the process of obtaining refinancing (the “Los Angeles Refinancing”) for three of our properties in Los Angeles, California. If completed, the proceeds of the Los Angeles Refinancing, along with a portion of the proceeds from the Sheraton Refinancing, are anticipated to be in an amount sufficient to repay all amounts outstanding under the 2022 Credit Facility, with the rest to be used for general corporate purposes. The Company expects that each of the Sheraton Refinancing and the Los Angeles Refinancing will close by the end of the first quarter of 2025.

Management believes that its plans to repay amounts outstanding under the 2022 Credit Facility are probable based on the following: (1) the we have executed term sheets with the respective lenders under the Sheraton Refinancing and the Los Angles Refinancing; (2) we expect that both the Los Angeles Refinancing and the Sheraton Refinancing will close by the end of the first quarter of 2025; (3) the favorable loan-to-value ratios (“LTVs”) of the properties that are the subject of the Sheraton Refinancing and the Los Angeles Refinancing and (4) our plans and efforts to date to obtain additional financing to be secured by two properties that it owns (in addition to the Sheraton Refinancing and the Los Angeles Refinancing), and the favorable LTVs of these two properties. Management’s plans are intended to mitigate the relevant condition that would raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the interim financial information contained in this Quarterly Report on Form 10-Q is issued. The consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared assuming that the Company will continue its operations as a going concern and do not include any adjustments that might result from the outcome of events described in this paragraph.

In September 2024, at our option, we redeemed 2,589,606 and 2,167,156 shares of Series A1 Preferred Stock and Series A Preferred Stock, respectively, in shares of Common Stock and, additionally, we paid holder-requested redemptions of 1,010 shares of Series A1 Preferred Stock in shares of Common Stock. We currently plan to continue to satisfy some or all redemption requests submitted by holders of our shares Preferred Stock in shares of Common Stock during the fourth quarter of 2024 and are currently evaluating whether we will exercise our right to optionally redeem additional shares of Preferred Stock in shares of Common Stock.

These above measures, taken together, will strengthen our balance sheet, improve liquidity and accelerate our transition towards premier multifamily properties. These actions should also better position the Company to take advantage of opportunities that are expected to arise in a recovering real estate market.

We may not have sufficient funds on hand or may not be able to obtain additional financing to cover all of our long-term cash requirements. While we will seek to satisfy such needs through one or more of the methods described in this Quarterly Report on Form 10-Q, our ability to take such actions is highly uncertain and cannot be predicted, and could be affected by various risks and uncertainties, including, but not limited to, the risks detailed in “Risk Factors” in “Item 1A—Risk Factors” of this Annual Report on Form 10-K and in Part II, Item 1A of this Quarterly Report. If we cannot obtain funding for our long-term liquidity needs, our assets may generate lower cash flows or decline in value, or both, which may cause us to sell assets at a time when we would not otherwise do so which could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
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Sources and Uses of Funds
Mortgages
We have mortgage loan agreements with an outstanding balances of $250.7 million as of September 30, 2024. Our mortgage loans mature on various dates from June 7, 2025 through July 1, 2026, with the two mortgage loans with maturity dates in 2025, each including a 1-year extension option, one of them at the Company’s discretion and one subject to certain conditions being met.
We have been in discussions with the lender under our variable rate mortgage for Channel House, a multifamily property in Oakland, California, to restructure the terms of the mortgage, as rent payments from the property will likely be insufficient to meet debt service payments under the mortgage. There can be no assurance that such restructuring will occur. If we and the lender under the variable rate mortgage cannot agree on a modification of the mortgage and we fail to make a required monthly debt service payment, such failure would constitute an event of default under the mortgage and the would allow the lender to, among other remedies, declare principal and interest under the mortgage loan to be immediately due and payable.
We have also been in discussion with the largest tenant at One Kaiser Plaza in Oakland, California, a property that is secured by a fixed rate mortgage with a balance of $97.1 million as of September 30, 2024, about renewing a portion of its existing lease. This extension would require a sizable capital investment by the Company for tenant improvements, leasing commissions and certain building improvements and may not meet the company’s return hurdles. In addition, as previously disclosed, the company has been focused on reducing its traditional office investments. We are exploring whether the lender holding the fixed-rate mortgage on the property will agree to loan concessions relating to such upfront capital costs. If we are unable to receive such concessions, we may elect to cease interest payments, such failure would constitute an event of default under the mortgage and would allow the lender to, among other remedies, declare principal and interest on the mortgage loan to be immediately due and payable.
Revolving Credit Facilities
In October 2018, we entered into the 2018 revolving credit facility that, as amended, allowed us to borrow up to $209.5 million, subject to a borrowing base calculation. The 2018 revolving credit facility was secured by properties in the Company’s real estate portfolio: eight office properties and one hotel property. In December 2022, the Company refinanced its 2018 credit facility and replaced it with a new 2022 Credit Facility, entered into with a bank syndicate, that included a $56.2 million term loan (the “2022 Credit Facility Term Loan”) as well as a revolver that originally allowed the Company to borrow up to $150.0 million (the “2022 Credit Facility Revolver”), both of which are collectively subject to a borrowing base calculation. The 2022 Credit Facility is secured by properties in the Company’s real estate portfolio: six office properties and one hotel property (as well as the hotel’s adjacent parking garage and retail property). The 2022 Credit Facility bears interest at (A) the base rate plus 1.50% or (B) SOFR plus 2.60%. As of September 30, 2024, the variable interest rate was 7.53%. The 2022 Credit Facility Revolver is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The 2022 Credit Facility is guaranteed by the Company and the Company is subject to certain financial maintenance covenants. The 2022 Credit Facility matures in December 2025 and provides for two one-year extension options, subject to certain conditions being satisfied, including providing notice of the election and paying an extension fee of 0.15% of each lender’s commitment being extended on the effective date of such extension. As of November 1, 2024, September 30, 2024, and December 31, 2023, $169.3 million, $169.3 million, and $153.2 million, respectively, was outstanding under the 2022 Credit Facility and approximately $0.0, $0.0 and $53.0 million, respectively, was available for future borrowings.
For certain event of default under the 2022 Credit Facility, modifications of the 2022 Credit Facility relating to such event of default and steps undertaken by us to address such event of default, please see discussion under “Liquidity and Capital Resources - General” above.
Other Financing Activity
On March 9, 2023, our lending division completed a securitization of the unguaranteed portion of certain of our SBA 7(a) loans receivable with the issuance of $54.1 million of unguaranteed SBA 7(a) loan-backed notes (with net proceeds of approximately $43.3 million, after payment of fees and expenses in connection with the securitization and the funding of a reserve account and an escrow account). The SBA 7(a) loan-backed notes are collateralized by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of our SBA 7(a) loans receivable. The SBA 7(a) loan backed notes mature on March 20, 2048, with monthly payments due as payments on the collateralized loans are received. The SBA 7(a) loan-backed notes bear interest at a per annum rate equal to the lesser of (i) 30-Day average compounded SOFR plus 2.90% and (ii) prime rate minus 0.35%. As of September 30, 2024, the variable interest rate was 8.15%. We reflect the SBA
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7(a) loans receivable as assets on our consolidated balance sheet and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheet.
We have junior subordinated notes with a variable interest rate that resets quarterly based on the three-month SOFR plus 3.51%, with quarterly interest‑only payments. The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at our option. The aggregate principal balance of the junior subordinated notes was $27.1 million as of September 30, 2024.
Securities Offerings
We conducted a continuous public offering of Series A Preferred Stock from October 2016 through January 2020, where one Series A Preferred Warrant was issued along with each issued share of Series A Preferred Stock. During the tenure of the offering, we issued 4,603,287 Series A Preferred Stock and Series A Preferred Warrants and received aggregate net proceeds of $105.2 million after commissions, fees and allocated costs.
The Series A Preferred Warrants are exercisable beginning on the first anniversary of the date of their original issuance until and including the fifth anniversary of the date of such issuance. At the time of issuance, the exercise price of each Series A Preferred Warrant was equal to a 15.0% premium to the per share estimated NAV of our Common Stock most recently published and designated as the applicable NAV by us at the time of issuance. However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the reverse stock split in 2019 (the “Reverse Stock Split”) was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of our Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant issued prior to the special dividend in 2019 was adjusted to reflect the effect of the Special Dividend. As of September 30, 2024, there were 498,420 Series A Preferred Warrants to purchase 124,605 shares of Common Stock outstanding.
From February 2020 through June 2022, we conducted a continuous public offering of our Series A Preferred Stock and Series D Preferred Stock. From June 2022 through September 2024, the we conducted a public offering with respect to shares of its Series A1 Preferred Stock. We used the net proceeds from the offerings for general corporate purposes. We have suspended our offering of Series A1 Preferred Stock.
As of September 30, 2024, we had issued 12,040,878 shares of Series A1 Preferred Stock, 8,251,657 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $459.1 million after commissions, fees and allocated costs.
Dividends on and Redemptions of Preferred Stock
Holders of Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends on each share as follows: (1) at the of greater of (i) an annual rate of 6.0% of the Series A1 Preferred Stock Stated Value (i.e., the equivalent of $0.3750 per share per quarter) and (ii) the Federal Funds (Effective) Rate for such quarter and plus 2.5% of the Series A1 Preferred Stock Stated Value divided by four, up to a maximum of 2.5% of the Series A1 Preferred Stock Stated Value per quarter, (2) 5.50% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter), and (3) 5.65% of the Series D Preferred Stock Stated Value (i.e., the equivalent of $0.35313 per share per quarter), respectively.
We expect to pay dividends on the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock in arrears on a monthly basis, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so. The timing and amount of dividends declared and paid on our Preferred Stock will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.
From the date of issuance until the fifth anniversary of the date of issuance, holders of Series A Preferred Stock and Series D Preferred Stock may require us to redeem such shares at a discount to the Series A1 Preferred Stock, Series A Preferred Stated Value and Series D Preferred Stated Value, respectively. From and after the fifth anniversary of the date of original issuance of any share of our Preferred Stock, we generally (subject to certain conditions) have the right (but not the obligation) to redeem, and the holder of such share may require us to redeem, such share at a redemption price equal to 100% of the stated value of such share, plus any accrued but unpaid dividends in respect of such share as of the effective date of the redemption. The redemption price in respect of any share of Preferred Stock, whether redeemed at our option or at the option of a holder, may be paid in cash or in shares of Common Stock in our sole discretion. As of September 30, 2024, we redeemed 4,480,262 shares of Series A Preferred Stock, 2,773,657 shares of Series A1 Preferred Stock, and 8,410 shares of Series D Preferred Stock.
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Of the 2,773,657 shares of Series A1 Preferred Stock that have been redeemed, the redemption of 183,041 shares of Series A1 Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). In September, the Company (at its option) redeemed 2,589,606 shares of Series A1 Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date and, in addition, in September 1,010 shares redeemed at the option of the holders were paid in shares of Common stock, including all accrued and unpaid dividends as of the redemption date (collectively the “Series A1 In-Kind Redemptions”). The Series A1 In-Kind Redemptions resulted in the aggregate issuance of 32,998,865 shares of Common Stock, all of which were issued in September 2024.
Of the 4,480,262 shares of Series A Preferred Stock that have been redeemed, the redemption of 2,313,106 shares of Series A Preferred Stock were paid in cash (all of which were redeemed at the option of the holders). In September, the Company (at its option) redeemed 2,167,156 shares of Series A Preferred Stock, all of which were paid in shares of Common Stock, including all accrued and unpaid dividends as of each redemption date (the “Series A In-Kind Redemptions”). The Series A In-Kind Redemptions resulted in the aggregate issuance of 27,553,834 shares of Common Stock, all of which were issued in September 2024.
Of the 8,410 shares of Series D Preferred Stock that have been redeemed, all such redemptions were paid in cash and were redeemed at the option of the holder.
Dividends on Common Stock
Holders of our Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by us out of legally available funds. In determining our dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, our financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects. Consequently, the dividend rate on a quarterly basis does not necessarily correlate directly to any individual factor.
Off-Balance Sheet Arrangements
As of September 30, 2024, we did not have any off-balance sheet arrangements.
Recently Issued Accounting Pronouncements
Our recently issued accounting pronouncements are described in Note 2 to the consolidated financial statements included in this Quarterly Report on Form 10-Q.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Our future income, cash flow and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We are exposed to market risk in the form of changes in interest rates and the potential impact such changes may have on the cash flows from our floating rate debt or the fair values of our fixed rate debt. As of September 30, 2024 and December 31, 2023 (including our variable rate mortgages payable subject to interest rate cap agreements and excluding premiums, discounts, and deferred loan costs), $250.7 million (or 52.1%) and $250.7 million (or 52.7%) of our debt, respectively, was fixed rate borrowings. As of September 30, 2024 and December 31, 2023 (excluding our variable rate mortgages payable subject to interest rate cap agreements as well as premiums, discounts and deferred loan costs), $230.8 million (or 47.9%) and $224.7 million (or 47.3%), respectively, was floating rate borrowings. Based on the level of floating rate debt outstanding as of September 30, 2024 and December 31, 2023, a 50 basis point change in SOFR would result in an annual impact to our earnings of approximately $1.2 million and $1.1 million, respectively. We calculate interest rate sensitivity by multiplying the amount of floating rate debt by the respective change in rate.
As of September 30, 2024, we had one interest rate cap agreement outstanding with an aggregate notional amount of $87.0 million and an aggregate fair value of the net derivative asset of $65,000. As of September 30, 2024, an increase or decrease of 50 basis points in interest rates would not result in a significant change to the fair value of the derivative asset.
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Item 4.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, regarding the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, as of September 30, 2024, our Principal Executive Officer and Principal Financial Officer concluded, as of that time, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and include controls and procedures designed to ensure the information required to be disclosed by us in such reports is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
Other Information
Item 1.    Legal Proceedings
We are not currently involved in any material pending or threatened legal proceedings nor, to our knowledge, are any material legal proceedings currently threatened against us, other than routine litigation arising in the ordinary course of business. In the normal course of business, we are periodically party to certain legal actions and proceedings involving matters that are generally incidental to our business. While the outcome of these legal actions and proceedings cannot be predicted with certainty, in management’s opinion, the resolution of these legal proceedings and actions will not have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
Item 1A.    Risk Factors
Except as described below, there have been no material changes in or additions to the risk factors included in our Quarterly Report on Form 10-Q for the period ended June 30, 2024 or our Annual Report on Form 10-K for the year ended December 31, 2023.
Following discussions with our independent registered public accounting firm, we have included in the notes to our financial statements an explanatory paragraph indicating that the occurrence of any future event of default under our 2022 Credit Facility that is not waived by lenders thereunder would raise substantial doubt about our ability continue as a “going concern.”
If the Company breaches any financial covenant under the 2022 Credit Facility in the future and is unable to obtain a further waiver from the lenders thereunder with respect to such breach, an event of default would occur under the 2022 Credit Facility, which would allow lenders under the 2022 Credit Facility to, among other remedies, declare the unpaid principal amount of all outstanding loans, and all interest accrued and unpaid thereon, to be immediately due and payable. The occurrence of any future event of default would raise substantial doubt about the Company’s ability to continue as a going concern. Management plans to address any possible future event of default under the 2022 Credit Facility by entering into new financing arrangements to repay amounts outstanding under the 2022 Credit Facility. The Company is in the process of obtaining refinancing for the Company’s hotel in Sacramento, California (the “Sheraton Refinancing”). If completed, the Company intends to use the proceeds of the Sheraton Refinancing to repay part of the amount outstanding under the 2022 Credit Facility and to pay for the Hotel Renovation described below. In addition, the Company is in the process of obtaining refinancing (the “Los Angeles Refinancing”) for three of its properties in Los Angeles, California. If completed, the proceeds of the Los Angeles Refinancing, along with a portion of the proceeds from the Sheraton Refinancing, are anticipated to be in an amount sufficient to repay all amounts outstanding under the 2022 Credit Facility, with the rest to be used for general corporate purposes. The Company expects that each of the Sheraton Refinancing and the Los Angeles Refinancing will close by the end of the first quarter of 2025.
We may not be able to complete the Sheraton Refinancing and the Los Angeles Refinancing on terms acceptable to us or on the timeline necessary to repay amounts outstanding under the 2022 Credit Facility prior to an event of default thereunder.
Our ability to complete each of the Sheraton Refinancing and the Los Angeles Refinancing will depend upon market conditions, prevailing economic and competitive conditions and financial, business and other factors beyond our control. In addition, while we are in the process of obtaining new financing for each of the Sheraton Refinancing and the Los Angeles Refinancing, the transactions remain subject to completion of final due diligence by lenders thereunder and finalization of definitive documentation, and there can be no assurance that we will enter into such definitive documentation or complete the refinancings on acceptable terms or at all. If we are unable to complete each of the Sheraton Refinancing and the Los Angeles Refinancing and as a result do not have sufficient funds to repay the amounts outstanding under the 2022 Credit Facility and the Company breaches a financial covenant thereunder and is unable to obtain a further waiver from the lenders thereunder, the lenders under the 2022 Credit Facility may, among other remedies, declare the unpaid principal amount of all outstanding loans, and all interest accrued and unpaid thereon, to be immediately due and payable.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
In May 2022, the Company’s Board of Directors approved a repurchase program of up to $10.0 million of the Company’s Common Stock (the “SRP”). Under the SRP, the Company, in its discretion, may purchase shares of its Common Stock from time to time in the open market or in privately negotiated transactions. The amount and timing of purchases of shares will depend on a number of factors, including the price and availability of shares, trading volume and general market conditions. The SRP has no termination date and may be suspended or discontinued at any time. There were no repurchases
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during the three and nine months ended September 30, 2024. As of September 30, 2024, the Company had repurchased 662,462 shares of Common Stock for $4.7 million.
Item 3.    Defaults Upon Senior Securities
None.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
None of our officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K, in effect at any time during the three months ended September 30, 2024.
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Item 6.    Exhibits
Exhibit NumberExhibit Description
10.1
Modification Agreement, dated as of August 7, 2024, by and among 9460 Wilshire Blvd (BH) Owner, L.P., a Delaware limited partnership, CIM/11600 Wilshire (Los Angeles), LP, a Delaware limited partnership, CIM/11620 Wilshire (Los Angeles), LP, a Delaware limited partnership, 1130 Howard (SF) Owner, L.P., a Delaware limited partnership, CIM Urban REIT Properties IX, L.P., a Delaware limited partnership, CIM/J Street Hotel Sacramento, L.P., a California limited partnership, CIM/J Street Garage Sacramento, L.P., a California limited partnership, and Two Kaiser Plaza (Oakland) Owner, LLC, a Delaware limited liability company, and the lenders from time to time party to the Credit Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 10-Q filed with the SEC on August 8, 2024)
*10.2
*31.1
*31.2
*32.1
*32.2
*101.INSXBRL Instance Document — the instance document does not appear in the interactive data files because its XBRL on the Interactive Data File because its XBRL tags are embedded within the inline XBRL document
*101.SCH
XBRL Taxonomy Extension Schema Document
*101.CALXBRL Taxonomy Extension Calculation Linkbase Document
*101.DEFXBRL Taxonomy Extension Definition Linkbase Document
*101.LABXBRL Taxonomy Extension Label Linkbase Document
*101.PREXBRL Taxonomy Extension Presentation Linkbase Document
*104Cover page Interactive Data File, formatted in inline XBRL (included in Exhibit 101).
_______________________________________________________________________________
* Filed herewith.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  CREATIVE MEDIA & COMMUNITY TRUST CORPORATION
Dated: November 7, 2024
 By: 
/s/ DAVID THOMPSON
David Thompson
Chief Executive Officer
Dated: November 7, 2024
 By: 
/s/ BARRY N. BERLIN
Barry N. Berlin
Chief Financial Officer

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