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Cim Real Estate Finance Trust (CMRF)

CIM Real Estate Finance Trust Inc. (formerly known as Cole Credit Property Trust IV Inc.) (the “Company,” “we,” “our” or “us”) is a non-exchange traded REIT formed as a Maryland corporation on July 27, 2010 that elected to be taxed and currently qualifies as a REIT for federal income tax purposes beginning with its taxable year ended December 31, 2012. Historically, we have primarily acquired core commercial real estate assets principally consisting of necessity retail properties located throughout the United States. We use the term “core” to describe existing properties currently operating and generating income that are leased to creditworthy tenants under long-term net leases and are strategically located. In April of 2019, we announced our intention to pursue a more diversified investment strategy, ultimately transitioning to a mortgage REIT, by balancing our existing portfolio of core commercial real estate assets with future investments in a portfolio of commercial mortgage loans and other real estate-related credit investments that we would originate, acquire, finance and manage.

Company profile

Ticker
CMRF
Employees
Incorporated
Location
Fiscal year end
Former names
Cole Advisor Retail Income REIT, Inc., COLE CREDIT PROPERTY TRUST IV, INC.
SEC CIK
Subsidiaries
84 South Furniture, LLC • ARC DGRMYIN001, LLC • ARCP AA Willmar MN, LLC • ARCP AN Arkadelphia AR, LLC • ARCP AP Greenville SC, LLC • ARCP AS Cartersville GA, LLC • ARCP AS Clarksville TN, LLC • ARCP AS Douglasville GA, LLC • ARCP AS Flowood MS, LLC • ARCP AZ Sheffield OH, LLC ...
IRS number
273148022

Calendar

12 Aug 22
19 Aug 22
31 Dec 22
Quarter (USD) Jun 22 Mar 22 Dec 21 Sep 21
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Annual (USD) Dec 21 Dec 20 Dec 19 Dec 18
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Cash burn rate (est.) Burn method: Change in cash Burn method: Operating income Burn method: FCF (opex + capex)
Last Q Avg 4Q Last Q Avg 4Q Last Q Avg 4Q
Cash on hand (at last report) 234.44M 234.44M 234.44M 234.44M 234.44M 234.44M
Cash burn (monthly) 1.05M (no burn) (no burn) (no burn) (no burn) (no burn)
Cash used (since last report) 1.75M n/a n/a n/a n/a n/a
Cash remaining 232.69M n/a n/a n/a n/a n/a
Runway (months of cash) 221.0 n/a n/a n/a n/a n/a

Beta Read what these cash burn values mean

Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
16 Dec 21 Kretzmer W Brian Common Stock Grant Acquire A No No 0 28,240.219 0 55,308.376
16 Dec 21 Roger Snell Common Stock Grant Acquire A No No 0 30,593.56 0 30,593.56
16 Dec 21 Ressler Richard S Common Stock Grant Acquire A Yes No 0 548,924.83 0 548,924.83

Financial report summary

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Risks
  • Risks Related to Our Company
  • Risks Associated with Our Real Estate Segment
  • Risks Related to Conflicts of Interest
  • Risks Related to Our Corporate Structure
  • Risks Associated with Debt Financing
  • U.S. Federal Income and Other Tax Risks
  • We currently have not identified all of the credit investments, properties or other real estate-related assets we intend to purchase. For this and other reasons, an investment in our shares is speculative.
  • There is no public trading market for our common stock, and there may never be one.
  • Our stockholders are limited in their ability to sell their shares pursuant to our share redemption program and may have to hold their shares for an indefinite period of time.
  • Our estimated per share NAV is an estimate as of a given point in time and likely will not represent the amount of net proceeds that would result if we were liquidated or dissolved or completed a merger or other sale.
  • We may be unable to pay or maintain cash distributions or increase distributions over time.
  • We have paid, and may continue to pay, some of our distributions from sources other than cash flows from operations, including borrowings and proceeds from asset sales, which may reduce the amount of capital we ultimately deploy in our real estate operations and may negatively impact the value of our common stock. Additionally, distributions at any point in time may not reflect the current performance of our properties or our current operating cash flows.
  • The declaration, amount and payment of future cash distributions on our common stock are subject to uncertainty due to current market conditions.
  • We have experienced losses in the past, and we may experience additional losses in the future.
  • It may be difficult to accurately reflect material events that may impact the estimated per share NAV of our common stock between valuations and, accordingly, we may issue shares in our DRIP or repurchase shares at too high or too low of a price.
  • Our future success depends to a significant degree upon certain key personnel of our manager. If our manager loses or is unable to attract and retain key personnel, our ability to achieve our investment objectives could be delayed or hindered, which could adversely affect our ability to pay distributions to our stockholders and the value of their investment.
  • If we seek to internalize our management functions in connection with a listing of our shares of common stock on an exchange or other liquidity event, our stockholders’ interest in us could be diluted, and we could incur other significant costs associated with being self-managed.
  • Our participation in a co-ownership arrangement may subject us to risks that otherwise may not be present in other real estate assets.
  • Cybersecurity risks and cyber incidents may adversely affect our business in the event we or our manager, our transfer agent or any other party that provides us with essential services experiences cyber incidents.
  • If we are unable to successfully integrate new assets and manage our growth, our results of operations and financial condition may suffer.
  • If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results.
  • Investing in mortgage, bridge or mezzanine loans could adversely affect our return on our loan investments.
  • Our commercial construction lending may expose us to increased lending risks.
  • Our mezzanine loans involve greater risks of loss than senior loans secured by income‑producing properties.
  • Our loans and investments expose us to risks associated with debt-oriented real estate investments generally.
  • We operate in a highly competitive market for lending and investment opportunities, which may limit our ability to originate or acquire desirable loans and investments in our target assets.
  • Our control over certain loans and investments may be limited.
  • Commercial real estate-related investments that are secured, directly or indirectly, by real property are subject to delinquency, foreclosure and loss, which could result in losses to us.
  • Our secured debt agreements impose, and additional lending facilities may impose, restrictive covenants, which may restrict our flexibility to determine our operating policies and investment strategy.
  • Difficulty in redeploying the proceeds from repayments of our existing loans and other investments could materially and adversely affect us.
  • Prepayment rates may adversely affect our financial performance and cash flows and the value of certain of our investments.
  • We are subject to additional risks associated with investments in the form of loan participation interests.
  • If the loans that we originate or acquire do not comply with applicable laws, we may be subject to penalties, which could materially and adversely affect us.
  • Adverse economic, regulatory and geographic conditions that have an impact on the real estate market in general may prevent us from being profitable or from realizing growth in the value of our real estate properties, and could have a significant negative impact on us.
  • We are dependent on single-tenant leases for a substantial portion of our revenue and, accordingly, if we are unable to renew leases, lease vacant space, including vacant space resulting from tenant defaults, or re-lease space as leases expire on favorable terms or at all, our financial condition could be adversely affected.
  • We are subject to geographic and industry concentrations that make us more susceptible to adverse events with respect to certain geographic areas or industries.
  • If a major tenant declares bankruptcy, we may be unable to collect balances due under relevant leases, which could have a material adverse effect on our financial condition and ability to pay distributions to our stockholders.
  • If a sale-leaseback transaction is re-characterized in a tenant’s bankruptcy proceeding, our financial condition could be adversely affected.
  • We have assumed, and in the future may assume, liabilities in connection with our property acquisitions, including unknown liabilities.
  • Challenging economic conditions could adversely affect vacancy rates, which could have an adverse impact on our ability to make distributions and the value of an investment in our shares.
  • Uninsured losses or losses in excess of our insurance coverage could materially adversely affect our financial condition and cash flows, and there can be no assurance as to future costs and the scope of coverage that may be available under insurance policies.
  • We may be unable to secure funds for future leasing commissions, tenant improvements or capital needs, which could adversely impact our ability to pay cash distributions to our stockholders.
  • Our properties may be subject to impairment charges.
  • We may obtain only limited warranties when we purchase a property and, as a result, have limited recourse in the event our due diligence did not identify issues that lower the value of the property.
  • We may be unable to sell a property if or when we decide to do so, including as a result of uncertain market conditions.
  • Our properties where the underlying tenant has a below investment-grade credit rating, as determined by major credit rating agencies, or has an unrated tenant may have a greater risk of default.
  • Increased operating expenses could reduce cash flows from operations and funds available to acquire properties or make distributions.
  • Inflation may adversely affect our financial condition and results of operations.
  • Real estate-related taxes may increase, and if these increases are not passed on to tenants, our income will be reduced.
  • Covenants, conditions and restrictions may restrict our ability to operate a property.
  • Acquisitions of build-to-suit properties will be subject to additional risks related to properties under development.
  • Our operating results may be negatively affected by potential development and construction delays and the resultant increased costs and risks.
  • Competition with third parties in acquiring, leasing or selling properties and other investments may reduce our profitability and the return on our stockholders’ investment.
  • Our properties face competition that may affect tenants’ ability to pay rent and the amount of rent paid to us may affect the cash available for distributions to our stockholders and the amount of distributions.
  • Acquiring or attempting to acquire multiple properties in a single transaction may adversely affect our operations.
  • Terrorist attacks, acts of violence or war or public health crises may affect the markets in which we operate and have a material adverse effect on our financial condition, results of operations and ability to pay distributions to our stockholders.
  • Our business and/or operations and the businesses of our tenants could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic or other health crisis, such as the recent outbreak of COVID-19 and the emergence of the Delta, Omicron and any future variants.
  • We are subject to risks that affect the retail real estate environment generally.
  • Downturns in the retail industry likely will have a direct adverse impact on our revenues and cash flow.
  • If we sell properties by providing financing to purchasers, defaults by the purchasers would adversely affect our cash flows from operations.
  • Our net leases may require us to pay property-related expenses that are not the obligations of our tenants.
  • Changes in accounting standards may adversely impact our financial condition and/or results of operations.
  • Our real estate business is subject to risks from climate change.
  • Compliance with the Americans with Disabilities Act of 1990, as amended, and fire, safety and other regulations may require us to make unanticipated expenditures that could significantly reduce the cash available for distributions on our common stock.
  • Our manager and its affiliates face conflicts of interest caused by their compensation arrangements with us, including significant compensation that may be required to be paid to our manager if our manager is terminated, which could result in actions that are not in the long-term best interests of our stockholders.
  • CMFT Securities has engaged our Investment Advisor to select and manage our investment securities. Our Investment Advisor has engaged its sub-advisor to provide management services with respect to corporate credit-related securities and certain other investments. We rely on the performance of our Investment Advisor and its sub-advisor in implementing the investment securities portion of our investment strategy.
  • We do not have a direct contractual relationship with the sub-advisor. Therefore, it may be difficult for us to take enforcement action against the sub-advisor if its actions, performance or non-performance do not comply with the agreement.
  • Our manager faces conflicts of interest relating to the incentive fee structure under our Management Agreement, which could result in actions that are not necessarily in the long-term best interests of our stockholders.
  • Other programs sponsored by affiliates of our manager, as well as CIM and certain of its affiliates, use investment strategies that are similar to ours; therefore, our executive officers and the officers and key personnel of our manager and its affiliates may face conflicts of interest relating to the purchase and leasing of properties, and such conflicts may not be resolved in our favor.
  • Our officers, certain of our directors and our manager, including its key personnel and officers, face conflicts of interest related to the positions they hold with affiliated and unaffiliated entities, which could hinder our ability to successfully implement our business strategy and to generate returns to our stockholders.
  • We may acquire assets and borrow funds from affiliates of our manager, and sell or lease our assets to affiliates of our manager, and any such transaction could result in conflicts of interest.
  • Our manager faces conflicts of interest relating to joint ventures or other co-ownership arrangements that we may enter into with CIM or its affiliates, or another real estate program sponsored or operated by CCO Group, which could result in a disproportionate benefit to CIM or its affiliates, or another program sponsored by CCO Group.
  • Our charter permits our Board to authorize the issuance of stock with terms that may subordinate the rights of common stockholders or discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
  • Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may limit our stockholders’ ability to dispose of their shares.
  • Maryland law also limits the ability of a third party to buy a large percentage of our outstanding shares and exercise voting control in electing directors.
  • Our charter includes a provision that may discourage a person, including a stockholder, from launching a tender offer for our shares.
  • If we are required to register as an investment company under the Investment Company Act, we could not continue our current business plan, which may significantly reduce the value of our stockholders’ investment.
  • The Board may change certain of our policies without stockholder approval, which could alter the nature of our stockholders’ investment. If our stockholders do not agree with the decisions of our Board, they only have limited control over changes in our policies and operations and may not be able to change such policies and operations.
  • Our rights and the rights of our stockholders to recover claims against our officers, directors and our manager are limited, which could reduce our stockholders’ and our recovery against them if they cause us to incur losses.
  • Our stockholders’ interest in us will be diluted if we issue additional shares.
  • Our Umbrella Partnership Real Estate Investment Trust (“UPREIT”) structure may result in potential conflicts of interest with limited partners in our operating partnership whose interests may not be aligned with those of our stockholders.
  • The limit on the percentage of shares of our common stock that any person may own may discourage a takeover or business combination that may benefit our stockholders.
  • We have incurred mortgage indebtedness and other borrowings, which may increase our business risks, hinder our ability to make distributions, and decrease the value of our stockholders’ investment.
  • Our increased indebtedness following completion of the CIM Income NAV Merger may present additional risks to our business.
  • We intend to rely on external sources of capital to fund future capital needs, and if we encounter difficulty in obtaining such capital, we may not be able to meet maturing obligations or make any additional acquisitions.
  • High interest rates may make it difficult for us to finance or refinance assets, which could reduce the number of properties we can acquire and the amount of cash distributions we can make.
  • Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay distributions to our stockholders.
  • We may not be able to generate sufficient cash flows to meet our debt service obligations.
  • Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders.
  • Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.
  • To hedge against exchange rate and interest rate fluctuations, we have used, and may continue to use, derivative financial instruments that may be costly and ineffective and may reduce the overall returns on our stockholders’ investment.
  • Changes in banks’ inter-bank lending rate reporting practices or the method pursuant to which the London Interbank Offered Rate (“LIBOR”) is determined may adversely affect the value of the financial obligations to be held or issued by us that are linked to LIBOR.
  • Failure to maintain our qualification as a REIT for U.S. federal income tax purposes would adversely affect our operations and our ability to make distributions.
  • Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the return on our stockholders’ investment.
  • Re-characterization of sale-leaseback transactions may cause us to lose our REIT status.
  • Our stockholders may have current tax liability on distributions they elect to reinvest in our common stock.
  • Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
  • We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability or reduce our operating flexibility.
  • In certain circumstances, we may be subject to certain federal, state and local taxes as a REIT, which would reduce our cash available for distribution to our stockholders.
  • If our operating partnership or certain other subsidiaries fail to maintain their status as disregarded entities or partnerships, their income may be subject to taxation, which would reduce the cash available to us for distribution to our stockholders.
  • To maintain our qualification as a REIT we must meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our investment objectives and reduce our stockholders’ overall return.
  • Our mezzanine loans may not qualify as real estate assets and could adversely affect our status as a REIT.
  • We may fail to qualify as a REIT or become subject to a penalty tax if the IRS successfully challenges our treatment of our mezzanine loans and certain preferred equity investments as debt for U.S. federal income tax purposes.
  • Non-U.S. stockholders may be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax upon the disposition of our shares.
  • Distributions to tax-exempt stockholders may be classified as unrelated business taxable income.
  • Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities.
  • Our property taxes could increase due to property tax rate changes or reassessment, which would impact our cash flows.
  • The share transfer and ownership restrictions applicable to REITs and contained in our charter may inhibit market activity in our shares of stock and restrict our business combination opportunities.
  • If we elect to treat one or more of our subsidiaries as a TRS, it will be subject to corporate-level taxes, and our dealings with our TRSs may be subject to a 100% excise tax.
  • If a stockholder that is an employee benefit plan, individual retirement account (“IRA”), annuity described in Sections 403(a) or (b) of the Code, Archer Medical Savings Account, health savings account, Coverdell education savings account, or other arrangement that is subject to the Employee Retirement Income Securities Act (“ERISA”) or Section 4975 of the Code (referred to generally as “Benefit Plans and IRAs”) fails to meet the fiduciary and other standards under ERISA or the Code as a result of an investment in shares of our common stock, such stockholder could be subject to civil and criminal, if the failure is willful, penalties.
  • Specific rules apply to foreign, governmental and church plans.
  • If stockholders invest in our common stock through an IRA or other retirement plan, they may be limited in their ability to withdraw required minimum distributions.
  • Our investments in construction loans require us to make estimates about the fair value of land improvements that may be challenged by the IRS.
  • Taxable Mortgage Pools and Excess Inclusion Income
Management Discussion
  • We are not aware of any material trends or uncertainties, other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021 and this Quarterly Report on Form 10-Q, the effects of the COVID-19 pandemic, and national economic conditions affecting real estate in general that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties. Currently, we are unable to predict the impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows in future periods due to numerous uncertainties.
  • Our results of operations are influenced by the timing of acquisitions and the operating performance of our real estate assets. We review our stabilized operating results, measured by net operating income, from properties that we owned for the entirety of both the current and prior year reporting periods, referred to as “same store” properties, and we believe that the presentation of operating results for same store properties provides useful information to stockholders. Net operating income is a supplemental non-GAAP financial measure of a real estate company’s operating performance. Net operating income is considered by management to be a helpful supplemental performance measure, as it enables management to evaluate the impact of occupancy, rents, leasing activity and other controllable property operating results at our real estate properties, and it provides a consistent method for the comparison of our properties. We define net operating income as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and other non-property related revenue and expense items such as (a) general and administrative expenses, (b) expense reimbursements to related parties, (c) management fees, (d) transaction-related expenses, (e) real estate impairment, (f) increase in provision for credit losses, (g) gain on disposition of real estate and condominium developments, net, (h) merger-related expenses, net and (i) interest income. Our calculation of net operating income may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income. In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment.
  • Our operating segments include credit and real estate. Refer to Note 16 — Segment Reporting to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of our operating segments.

Content analysis

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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability
H.S. junior Avg
New words: compounded, conversion, deceased, effort, exceeded, honor, honored, inflation, introduce, large, middle, Morgan, rata, reset, resubmit, rolling, small, subfacility, unsatisfied
Removed: bringing, California, charge, entry, environment, hand, refinance