Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
     FORM10-Q
(Mark One):  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 20202021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                             to                            
Commission File Number 1-13610
CIM COMMERCIAL TRUST CORPORATION
(Exact name of registrant as specified in its charter)
Maryland75-6446078
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
17950 Preston Road,Suite 600,Dallas,Texas75252
(Address of Principal Executive Offices)(Zip Code)
(972)349-3200
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, $0.001 Par ValueCMCTNasdaq Global Market
Common Stock, $0.001 Par ValueCMCT-LTel Aviv Stock Exchange
Series L Preferred Stock, $0.001 Par ValueCMCTPNasdaq Global Market
Series L Preferred Stock, $0.001 Par ValueCMCTPTel Aviv Stock Exchange
(Title of each class)(Trading symbol)(Name of each exchange on which registered)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerNon-accelerated filer 
Smaller reporting company Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 
As of November 4, 2020,2021, the Registrant had outstanding 14,827,41023,369,331 shares of common stock, par value $0.001 per share.


Table of Contents
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
INDEX
   PAGE NO.
PART I.Financial Information
Financial Statements
 
 
 
 
 
PART II.Other Information



Table of Contents
PART I
Financial Information

Item 1.
Financial Statements

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share amounts) (Unaudited)
September 30, 2020December 31, 2019
(Unaudited) September 30, 2021December 31, 2020
ASSETSASSETS  ASSETS  
Investments in real estate, netInvestments in real estate, net$504,341 $508,707 Investments in real estate, net$498,878 $506,040 
Cash and cash equivalentsCash and cash equivalents32,111 23,801 Cash and cash equivalents14,552 33,636 
Restricted cashRestricted cash9,877 12,146 Restricted cash11,593 10,013 
Loans receivable, netLoans receivable, net89,314 68,079 Loans receivable, net94,816 83,135 
Accounts receivable, netAccounts receivable, net1,634 3,520 Accounts receivable, net2,569 1,737 
Deferred rent receivable and charges, netDeferred rent receivable and charges, net35,330 34,857 Deferred rent receivable and charges, net35,754 35,956 
Other intangible assets, netOther intangible assets, net6,205 7,260 Other intangible assets, net5,498 6,313 
Other assets9,301 9,222 
Loan servicing asset, net and other assetsLoan servicing asset, net and other assets11,360 8,787 
TOTAL ASSETSTOTAL ASSETS$688,113 $667,592 TOTAL ASSETS$675,020 $685,617 
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITYLIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY  LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY  
LIABILITIES:LIABILITIES:  LIABILITIES:  
Debt, netDebt, net$326,546 $307,421 Debt, net$222,206 $324,313 
Accounts payable and accrued expensesAccounts payable and accrued expenses14,220 24,309 Accounts payable and accrued expenses17,027 20,327 
Intangible liabilities, netIntangible liabilities, net730 1,282 Intangible liabilities, net309 587 
Due to related partiesDue to related parties8,119 9,431 Due to related parties9,423 6,706 
Other liabilitiesOther liabilities9,137 10,113 Other liabilities14,918 9,733 
Total liabilitiesTotal liabilities358,752 352,556 Total liabilities263,883 361,666 
COMMITMENTS AND CONTINGENCIES (Note 14)
REDEEMABLE PREFERRED STOCK: Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 1,898,187 and 1,875,387 shares issued and outstanding, respectively, as of September 30, 2020 and 1,630,821 and 1,630,421 shares issued and outstanding, respectively, as of December 31, 2019; liquidation preference of $25.00 per share, subject to adjustment42,642 36,841 
COMMITMENTS AND CONTINGENCIES (Note 13)COMMITMENTS AND CONTINGENCIES (Note 13)00
REDEEMABLE PREFERRED STOCK: Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 1,550,884 and 1,548,884 shares issued and outstanding, respectively, as of September 30, 2021 and 2,008,256 and 2,007,856 shares issued and outstanding, respectively, as of December 31, 2020; liquidation preference of $25.00 per share, subject to adjustmentREDEEMABLE PREFERRED STOCK: Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 1,550,884 and 1,548,884 shares issued and outstanding, respectively, as of September 30, 2021 and 2,008,256 and 2,007,856 shares issued and outstanding, respectively, as of December 31, 2020; liquidation preference of $25.00 per share, subject to adjustment35,632 45,837 
EQUITY:EQUITY:  EQUITY:  
Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 4,104,867 and 4,040,429 shares issued and outstanding, respectively, as of September 30, 2020 and 2,853,555 and 2,837,094 shares issued and outstanding, respectively, as of December 31, 2019; liquidation preference of $25.00 per share, subject to adjustment100,386 70,633 
Series D cumulative redeemable preferred stock, $0.001 par value; 32,000,000 shares authorized; 18,737 shares issued and outstanding as of September 30, 2020 and 0 shares issued and outstanding as of December 31, 2019; liquidation preference of $25.00 per share, subject to adjustment463 
Series L cumulative redeemable preferred stock, $0.001 par value; 9,000,000 shares authorized; 8,080,740 and 5,387,160 shares issued and outstanding, respectively, as of September 30, 2020 and December 31, 2019; liquidation preference of $28.37 per share, subject to adjustment152,834 152,834 
Common stock, $0.001 par value; 900,000,000 shares authorized; 14,827,410 shares issued and outstanding as of September 30, 2020 and 14,602,149 shares issued and outstanding as of December 31, 2019.15 15 
Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 6,003,054 and 5,821,113 shares issued and outstanding, respectively, as of September 30, 2021 and 4,484,376 and 4,377,762 shares issued and outstanding, respectively, as of December 31, 2020; liquidation preference of $25.00 per share, subject to adjustmentSeries A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 6,003,054 and 5,821,113 shares issued and outstanding, respectively, as of September 30, 2021 and 4,484,376 and 4,377,762 shares issued and outstanding, respectively, as of December 31, 2020; liquidation preference of $25.00 per share, subject to adjustment145,093 108,729 
Series D cumulative redeemable preferred stock, $0.001 par value; 32,000,000 shares authorized; 56,857 shares issued and outstanding as of September 30, 2021 and 19,145 shares issued and outstanding as of December 31, 2020; liquidation preference of $25.00 per share, subject to adjustmentSeries D cumulative redeemable preferred stock, $0.001 par value; 32,000,000 shares authorized; 56,857 shares issued and outstanding as of September 30, 2021 and 19,145 shares issued and outstanding as of December 31, 2020; liquidation preference of $25.00 per share, subject to adjustment1,396 473 
Series L cumulative redeemable preferred stock, $0.001 par value; 9,000,000 shares authorized; 8,080,740 and 5,387,160 shares issued and outstanding, respectively, as of September 30, 2021 and December 31, 2020; liquidation preference of $28.37 per share, subject to adjustmentSeries L cumulative redeemable preferred stock, $0.001 par value; 9,000,000 shares authorized; 8,080,740 and 5,387,160 shares issued and outstanding, respectively, as of September 30, 2021 and December 31, 2020; liquidation preference of $28.37 per share, subject to adjustment152,834 152,834 
Common stock, $0.001 par value; 900,000,000 shares authorized; 23,369,331 shares issued and outstanding as of September 30, 2021 and 14,827,410 shares issued and outstanding as of December 31, 2020.Common stock, $0.001 par value; 900,000,000 shares authorized; 23,369,331 shares issued and outstanding as of September 30, 2021 and 14,827,410 shares issued and outstanding as of December 31, 2020.24 15 
Additional paid-in capitalAdditional paid-in capital794,807 794,825 Additional paid-in capital867,636 794,127 
Distributions in excess of earningsDistributions in excess of earnings(762,245)(740,617)Distributions in excess of earnings(791,820)(778,519)
Total stockholders’ equityTotal stockholders’ equity286,260 277,690 Total stockholders’ equity375,163 277,659 
Noncontrolling interestsNoncontrolling interests459 505 Noncontrolling interests342 455 
Total equityTotal equity286,719 278,195 Total equity375,505 278,114 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITYTOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY$688,113 $667,592 TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY$675,020 $685,617 
           The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (Unaudited)
REVENUES:    
Rental and other property income$12,897 $17,306 $41,416 $73,306 
Hotel income1,525 7,734 10,153 27,087 
Interest and other income2,912 4,175 7,810 12,955 
17,334 29,215 59,379 113,348 
EXPENSES:    
Rental and other property operating8,822 13,286 28,829 49,197 
Asset management and other fees to related parties          2,387 2,699 7,408 10,496 
Expense reimbursements to related parties—corporate639 630 2,066 1,819 
Expense reimbursements to related parties—lending segment901 652 2,581 1,840 
Interest2,643 2,403 8,706 8,998 
General and administrative1,736 1,384 5,138 4,793 
Transaction costs340 600 
Depreciation and amortization5,273 5,180 15,728 21,995 
Loss on early extinguishment of debt (Note 6)281 281 29,982 
Impairment of real estate (Note 3)69,000 
22,682 26,574 70,737 198,720 
Gain on sale of real estate (Note 3)302 433,104 
(LOSS) INCOME BEFORE (BENEFIT) PROVISION FOR INCOME TAXES(5,348)2,943 (11,358)347,732 
(Benefit) provision for income taxes(18)87 (731)686 
NET (LOSS) INCOME(5,330)2,856 (10,627)347,046 
Net loss (income) attributable to noncontrolling interests(8)165 
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY(5,323)2,848 (10,626)347,211 
Redeemable preferred stock dividends declared or accumulated (Note 9)(4,267)(4,470)(13,613)(12,934)
Redeemable preferred stock deemed dividends (Note 9)(87)(300)
Redeemable preferred stock redemptions (Note 9)(1)(67)(8)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$(9,678)$(1,622)$(24,606)$334,269 
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE: (1)    
Basic$(0.65)$(0.11)$(1.67)$22.90 
Diluted$(0.65)$(0.11)$(1.67)$21.24 
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: (1)    
Basic14,805 14,598 14,729 14,598 
Diluted14,805 14,599 14,729 15,825 
(1)All share and per share amounts have been adjusted to give retroactive effect to the one-for-three reverse stock split of our common stock effected on September 3, 2019.
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
REVENUES:    
Rental and other property income$12,838 $12,897 $39,496 $41,416 
Hotel income5,212 1,525 10,074 10,153 
Interest and other income6,199 2,912 16,231 7,810 
Total Revenues24,249 17,334 65,801 59,379 
EXPENSES:    
Rental and other property operating9,958 8,822 27,363 28,829 
Asset management and other fees to related parties          2,262 2,387 6,781 7,408 
Expense reimbursements to related parties—corporate533 639 1,592 2,066 
Expense reimbursements to related parties—lending segment55 901 1,219 2,581 
Interest2,185 2,643 7,490 8,706 
General and administrative1,625 1,736 5,393 5,138 
Depreciation and amortization5,061 5,273 15,167 15,728 
Loss on early extinguishment of debt (Note 6)— 281 — 281 
21,679 22,682 65,005 70,737 
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES2,570 (5,348)796 (11,358)
Provision (benefit) for income taxes946 (18)2,316 (731)
NET INCOME (LOSS)1,624 (5,330)(1,520)(10,627)
Net (income) loss attributable to noncontrolling interests— 
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY1,624 (5,323)(1,516)(10,626)
Redeemable preferred stock dividends declared or accumulated (Note 9)(4,723)(4,267)(13,810)(13,613)
Redeemable preferred stock deemed dividends (Note 9)(90)(87)(253)(300)
Redeemable preferred stock redemptions (Note 9)(27)(1)(53)(67)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS$(3,216)$(9,678)$(15,632)$(24,606)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE:    
Basic$(0.14)$(0.65)$(0.88)$(1.67)
Diluted$(0.14)$(0.65)$(0.88)$(1.67)
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:    
Basic23,349 14,805 17,784 14,729 
Diluted23,350 14,805 17,784 14,729 
   The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In thousands)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (Unaudited)
NET (LOSS) INCOME$(5,330)$2,856 $(10,627)$347,046 
Other comprehensive loss: cash flow hedges(1,806)
COMPREHENSIVE (LOSS) INCOME(5,330)2,856 (10,627)345,240 
Comprehensive loss (income) attributable to noncontrolling interests(8)165 
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY$(5,323)$2,848 $(10,626)$345,405 
The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents
CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity
(In thousands, except share and per share amounts) (Unaudited)
 Nine Months Ended September 30, 2020
Common StockPreferred Stock
Series ASeries DSeries L
 SharesPar
Value
SharesAmountSharesAmountSharesAmountAdditional
Paid-in
Capital
Distributions
in Excess of Earnings
Non-controlling
Interests
Total
Equity
 (Unaudited)
Balances, December 31, 201914,602,149 $15 2,837,094 $70,633 $5,387,160 $152,834 $794,825 $(740,617)$505 $278,195 
Stock-based compensation expense— — — — — — — — 56 — — 56 
Common dividends ($0.075 per share)— — — — — — — — — (1,095)— (1,095)
Issuance of Series A Preferred Warrants— — — — — — — — 28 — — 28 
Dividends to holders of Series A Preferred Stock ($0.68750 per share)— — — — — — — — — (3,252)— (3,252)
Issuance of Series D Preferred Stock— — — — 5,980 150 — — (5)— — 145 
Dividends to holders of Series D Preferred Stock ($0.588542 per share)— — — — — — — — — (3)— (3)
Reclassification of Series A Preferred Stock to permanent equity— — 304,274 7,588 — — — — (640)— — 6,948 
Redeemable Preferred Stock deemed dividends— — — — — — — — — (161)— (161)
Redemption of Series A Preferred Stock— — (2,452)(61)— — — — (10)— (66)
Net (loss) income— — — — — — — — — (1,260)(1,256)
Balances, March 31, 202014,602,149 $15 3,138,916 $78,160 5,980 $150 5,387,160 $152,834 $794,269 $(746,398)$509 $279,539 

 Nine Months Ended September 30, 2021
Common StockPreferred Stock
 SharesPar
Value
SharesPar
Value
Additional
Paid-in
Capital
Distributions
in Excess of Earnings
Total Stockholders’ EquityNon-controlling
Interests
Total Equity
Balances, December 31, 202014,827,410 $15 9,784,067 $262,036 $794,127 $(778,519)$277,659 $455 $278,114 
Distributions to noncontrolling interests— — — — — — — (114)(114)
Stock-based compensation expense— — — — 60 — 60 — 60 
Common dividends ($0.075 per share)— — — — — (1,112)(1,112)— (1,112)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — (2,350)(2,350)— (2,350)
Issuance of Series D Preferred Stock— — 4,045 99 (3)— 96 — 96 
Dividends to holders of Series D Preferred Stock ($0.35313 per share)— — — — — (9)(9)— (9)
Reclassification of Series A Preferred Stock to permanent equity— — 366,991 9,144 (901)— 8,243 — 8,243 
Redeemable Preferred Stock deemed dividends— — — — — (57)(57)— (57)
Redemption of Series A Preferred Stock— — (29,462)(733)61 (13)(685)— (685)
Net loss— — — — — (3,670)(3,670)(1)(3,671)
Balances, March 31, 202114,827,410 $15 10,125,641 $270,546 $793,344 $(785,730)$278,175 $340 $278,515 
Stock-based compensation expense20,332 — — — 50 — 50 — 50 
Common dividends ($0.075 per share)— — — — — (1,114)(1,114)— (1,114)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — (2,511)(2,511)— (2,511)
Issuance of Series D Preferred Stock— — 7,835 192 (7)— 185 — 185 
Dividends to holders of Series D Preferred Stock ($0.35313 per share)— — — — — (13)(13)— (13)
Reclassification of Series A Preferred Stock to permanent equity— — 556,587 13,915 (1,434)— 12,481 — 12,481 
Redeemable Preferred Stock deemed dividends— — — — — (106)(106)— (106)
Redemption of Series A Preferred Stock— — (18,501)(460)42 (13)(431)— (431)
Issuance of Common Stock8,521,589 — — 76,934 — 76,943 — 76,943 
Net (loss) income— — — — — 530 530 (3)527 
Balances, June 30, 202123,369,331 $24 10,671,562 $284,193 $868,929 $(788,957)$364,189 $337 $364,526 
Contributions to noncontrolling interests— — — — — — — 
Distributions to noncontrolling interests— — — — — — — (4)(4)
Stock-based compensation expense— — — — 55 — 55 — 55 
Common dividends ($0.075 per share)— — — — — (1,753)(1,753)— (1,753)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — (2,597)(2,597)— (2,597)
Issuance of Series D Preferred Stock— — 25,832 632 (20)— 612 — 612 
Dividends to holders of Series D Preferred Stock ($0.35313 per share)— — — — — (20)(20)— (20)
Reclassification of Series A Preferred Stock to permanent equity— — 593,300 15,132 (1,304)— 13,828 — 13,828 
Redeemable Preferred Stock deemed dividends— — — — — (90)(90)— (90)
Redemption of Series A Preferred Stock— — (25,564)(634)54 (27)(607)— (607)
Rights Offering costs— — — — (78)— (78)— (78)
Net income— — — — — 1,624 1,624 — 1,624 
Balances, September 30, 202123,369,331 $24 11,265,130 $299,323 $867,636 $(791,820)$375,163 $342 $375,505 
(Continued)













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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity (Continued)
(In thousands, except share and per share amounts) (Unaudited)
 Nine Months Ended September 30, 2020
Common StockPreferred Stock
Series ASeries DSeries L
 SharesPar
Value
SharesAmountSharesAmountSharesAmountAdditional
Paid-in
Capital
Distributions
in Excess of Earnings
Non-controlling
Interests
Total
Equity
 (Unaudited)
Balances, March 31, 202014,602,149 $15 3,138,916 $78,160 5,980 $150 5,387,160 $152,834 $794,269 $(746,398)$509 $279,539 
Distributions to noncontrolling interests— — — — — — — — — — (45)(45)
Stock-based compensation expense21,912 — — — — — — — 56 — — 56 
Issuance of shares of Common Stock in exchange for asset management fees203,349 — — — — — — — 2,359 — — 2,359 
Common dividends ($0.075 per share)— — — — — — — — — (1,112)— (1,112)
Issuance of Series D Preferred Stock— — — — 920 23 — — (1)— — 22 
Dividends to holders of Series D Preferred Stock ($0.35313 per share)— — — — — — — — — (3)— (3)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — — — — — (1,886)— (1,886)
Reclassification of Series A Preferred Stock to permanent equity— — 427,064 10,638 — — — — (899)— — 9,739 
Redeemable Preferred Stock deemed dividends— — — — — — — — — (52)— (52)
Redemption of Series A Preferred Stock— — (5,532)(138)— — — — 11 (56)— (183)
Net (loss) income— — — — — — — — — (4,043)(4,041)
Balances, June 30, 202014,827,410 $15 3,560,448 $88,660 6,900 $173 5,387,160 $152,834 $795,795 $(753,550)$466 $284,393 

(Continued)










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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity (Continued)
(In thousands, except share and per share amounts)
 Nine Months Ended September 30, 2020
Common StockPreferred Stock
Series ASeries DSeries L
 SharesPar
Value
SharesAmountSharesAmountSharesAmountAdditional
Paid-in
Capital
Distributions
in Excess of Earnings
Non-controlling
Interests
Total
Equity
 (Unaudited)
Balances, June 30, 202014,827,410 $15 3,560,448 $88,660 6,900 $173 5,387,160 $152,834 $795,795 $(753,550)$466 $284,393 
Stock-based compensation expense— — — — — — — — 55 — — 55 
Common dividends ($0.075 per share) (1)— — — — — — — — — (1,112)— (1,112)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — — — — — (2,162)— (2,162)
Issuance of Series D Preferred Stock— — — — 11,837 290 — — (10)— — 280 
Dividends to holders of Series D Preferred Stock ($0.35313 per share)— — — — — — — — — (10)— (10)
Reclassification of Series A Preferred Stock to permanent equity— — 482,374 11,786 — — — — (1,039)— — 10,747 
Redeemable Preferred Stock deemed dividends— — — — — — — — — (87)— (87)
Redemption of Series A Preferred Stock— — (2,393)(60)— — — — (1)— (55)
Net loss— — — — — — — — — (5,323)(7)(5,330)
Balances, September 30, 202014,827,410 $15 4,040,429 $100,386 18,737 $463 5,387,160 $152,834 $794,807 $(762,245)$459 $286,719 

(Continued)

















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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity (Continued)
(In thousands, except share and per share amounts)
 Nine Months Ended September 30, 2019
Common Stock (1)Preferred Stock
Series ASeries L
 SharesPar
Value
SharesAmountSharesAmountAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Distributions
in Excess of Earnings
Non-controlling
Interests
Total
Equity
 (Unaudited)
Balances, December 31, 201814,598,357 $44 1,281,804 $31,866 8,080,740 $229,251 $790,354 $1,806 $(436,883)$837 $617,275 
Stock-based compensation expense— — — — — — 38 — — — 38 
Common dividends ($0.375 per share) (1)— — — — — — — — (5,474)— (5,474)
Issuance of Series A Preferred Warrants— — — — — — — — — 
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — — — — (1,010)— (1,010)
Reclassification of Series A Preferred Stock to permanent equity— — 389,577 9,712 — — (822)— — — 8,890 
Redemption of Series A Preferred Stock— — (1,500)(37)— — (1)— — — (38)
Other comprehensive income (loss)— — — — — — — (1,806)— — (1,806)
Net income (loss)— — — — — — — — 291,797 (174)291,623 
Balances, March 31, 201914,598,357 $44 1,669,881 $41,541 8,080,740 $229,251 $789,578 $$(151,570)$663 $909,507 

(Continued)














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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity (Continued)
(In thousands, except share and per share amounts)
 Nine Months Ended September 30, 2019
Common Stock (1)Preferred Stock
Series ASeries L
 SharesPar
Value
SharesAmountSharesAmountAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Distributions
in Excess of Earnings
Non-controlling
Interests
Total
Equity
 (Unaudited)
Balances, March 31, 201914,598,357 $44 1,669,881 $41,541 8,080,740 $229,251 $789,578 $$(151,570)$663 $909,507 
Distributions to noncontrolling interests— — — — — — — — — (47)(47)
Stock-based compensation expense3,556 — — — — — 44 — — — 44 
Common dividends ($0.375 per share) (1)— — — — — — — — (5,476)— (5,476)
Issuance of Series A Preferred Warrants— — — — — — 31 — — — 31 
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — —��— — — — — (1,150)— (1,150)
Reclassification of Series A Preferred Stock to permanent equity— — 474,462 11,827 — — (1,002)— — — 10,825 
Redemption of Series A Preferred Stock— — (1,667)(41)— — — (4)— (41)
Net income— — — — — — — — 52,566 52,567 
Balances, June 30, 201914,601,913 $44 2,142,676 $53,327 8,080,740 $229,251 $788,655 $$(105,634)$617 $966,260 

(Continued)





















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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity (Continued)
(In thousands, except share and per share amounts)
 Nine Months Ended September 30, 2019
Common Stock (1)Preferred Stock
Series ASeries L
 SharesPar
Value
SharesAmountSharesAmountAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Distributions
in Excess of Earnings
Non-controlling
Interests
Total
Equity
 (Unaudited)
Balances, June 30, 201914,601,913 $44 2,142,676 $53,327 8,080,740 $229,251 $788,655 $$(105,634)$617 $966,260 
Contributions to noncontrolling interests— — — — — — — — — 455 455 
Distributions to noncontrolling interests— — — — — — — — — (468)(468)
Extinguishment of noncontrolling interest— — — — — — — — — (113)(113)
Stock-based compensation expense324 — — — — — 56 — — — 56 
Retirement of fractional shares(88)— — — — — (1)— — — (1)
Change in par value— (29)— — — — 29 — — — 
Special cash dividends ($42.00 per share) (Note 10)— — — — — — — — (613,294)— (613,294)
Common dividends ($0.075 per share) (1)— — — — — — — — (1,095)— (1,095)
Issuance of Series A Preferred Warrants— — — — — — 252 — — — 252 
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — — — — (1,318)— (1,318)
Reclassification of Series A Preferred Stock to permanent equity— — 307,856 7,663 — — (649)— — — 7,014 
Redemption of Series A Preferred Stock— — (115)(3)— — — — — — (3)
Net income— — — — — — — — 2,848 2,856 
Balances, September 30, 201914,602,149 $15 2,450,417 $60,987 8,080,740 $229,251 $788,342 $$(718,493)$499 $360,601 
(1)All share and per share amounts have been adjusted to give retroactive effect to the one-for-three reverse stock split of our common stock effected on September 3, 2019.
 Nine Months Ended September 30, 2020
Common StockPreferred Stock
 SharesPar
Value
SharesPar
Value
Additional
Paid-in
Capital
Distributions
in Excess of Earnings
Total Stockholders’ EquityNon-controlling
Interests
Total Equity
Balances, December 31, 201914,602,149 $15 8,224,254 $223,467 $794,825 $(740,617)$277,690 $505 $278,195 
Stock-based compensation expense— — — — 56 — 56 — 56 
Common dividends ($0.075 per share)— — — — — (1,095)(1,095)— (1,095)
Issuance of Series A Preferred Warrants— — — — 28 — 28 — 28 
Dividends to holders of Series A Preferred Stock ($0.68750 per share)— — — — — (3,252)(3,252)— (3,252)
Issuance of Series D Preferred Stock— — 5,980 150 (5)— 145 — 145 
Dividends to holders of Series D Preferred Stock ($0.588542 per share)— — — — — (3)(3)— (3)
Reclassification of Series A Preferred Stock to permanent equity— — 304,274 7,588 (640)— 6,948 — 6,948 
Redeemable Preferred Stock deemed dividends— — — — — (161)(161)— (161)
Redemption of Series A Preferred Stock— — (2,452)(61)(10)(66)— (66)
Net (loss) income— — — — — (1,260)(1,260)(1,256)
Balances, March 31, 202014,602,149 $15 8,532,056 231,144 $794,269 $(746,398)$279,030 $509 $279,539 
Distributions to noncontrolling interests— — — — — — — (45)(45)
Stock-based compensation expense21,912 — — — 56 — 56 — 56 
Issuance of shares of Common Stock in exchange for asset management fees203,349 — — — 2,359 — 2,359 — 2,359 
Common dividends ($0.075 per share)— — — — — (1,112)(1,112)— (1,112)
Issuance of Series D Preferred Stock— — 920 23 (1)— 22 — 22 
Dividends to holders of Series D Preferred Stock ($0.35313 per share)— — — — — (3)(3)— (3)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — (1,886)(1,886)— (1,886)
Reclassification of Series A Preferred Stock to permanent equity— — 427,064 10,638 (899)— 9,739 — 9,739 
Redeemable Preferred Stock deemed dividends— — — — — (52)(52)— (52)
Redemption of Series A Preferred Stock— — (5,532)(138)11 (56)(183)— (183)
Net (loss) income— — — — — (4,043)(4,043)(4,041)
Balances, June 30, 202014,827,410 $15 8,954,508 241,667 $795,795 $(753,550)$283,927 $466 $284,393 
Stock-based compensation expense— — — — 55 — 55 — 55 
Common dividends ($0.075 per share)— — — — — (1,112)(1,112)— (1,112)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)— — — — — (2,162)(2,162)— (2,162)
Issuance of Series D Preferred Stock— — 11,837 290 (10)— 280 — 280 
Dividends to holders of Series D Preferred Stock ($0.35313 per share)— — — — — (10)(10)— (10)
Reclassification of Series A Preferred Stock to permanent equity— — 482,374 11,786 (1,039)— 10,747 — 10,747 
Redeemable Preferred Stock deemed dividends— — — — — (87)(87)— (87)
Redemption of Series A Preferred Stock— — (2,393)(60)(1)(55)— (55)
Net loss— — — — — (5,323)(5,323)(7)(5,330)
Balances, September 30, 202014,827,410 $15 9,446,326 253,683 $794,807 $(762,245)$286,260 $459 $286,719 
The accompanying notes are an integral part of these consolidated financial statements.
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Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
Nine Months Ended
September 30,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES:CASH FLOWS FROM OPERATING ACTIVITIES:  
Net lossNet loss$(1,520)$(10,627)
Adjustments to reconcile net loss to net cash provided by operating activities:Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation and amortization, netDepreciation and amortization, net15,211 15,461 
Nine Months Ended
September 30,
20202019
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net (loss) income$(10,627)$347,046 
Adjustments to reconcile net income to net cash provided by operating activities:  
Deferred rent and amortization of intangible assets, liabilities and lease inducements(1,013)(2,019)
Depreciation and amortization15,728 21,995 
Reclassification from AOCI to interest expense(1,806)
Reclassification from other assets to interest expense for swap termination1,421 
Change in fair value of swaps209 
Gain on sale of real estate(433,104)
Impairment of real estate69,000 
Loss on early extinguishment of debtLoss on early extinguishment of debt281 29,982 Loss on early extinguishment of debt— 281 
Amortization of deferred loan costsAmortization of deferred loan costs859 864 Amortization of deferred loan costs791 859 
Amortization of premiums and discounts on debtAmortization of premiums and discounts on debt(97)(150)Amortization of premiums and discounts on debt(9)(97)
Unrealized premium adjustmentUnrealized premium adjustment844 1,293 Unrealized premium adjustment2,231 844 
Amortization and accretion on loans receivable, netAmortization and accretion on loans receivable, net(290)(250)Amortization and accretion on loans receivable, net(426)(290)
Bad debt expense2,311 73 
(Recoveries) write-offs of uncollectible receivables(Recoveries) write-offs of uncollectible receivables(119)2,311 
Deferred income taxesDeferred income taxes(915)(76)Deferred income taxes110 (915)
Stock-based compensationStock-based compensation167 138 Stock-based compensation165 167 
Loans funded, held for sale to secondary marketLoans funded, held for sale to secondary market(24,122)(20,566)Loans funded, held for sale to secondary market(94,803)(24,122)
Proceeds from sale of guaranteed loansProceeds from sale of guaranteed loans17,159 29,716 Proceeds from sale of guaranteed loans82,400 17,159 
Principal collected on loans subject to secured borrowingsPrincipal collected on loans subject to secured borrowings3,600 2,477 Principal collected on loans subject to secured borrowings651 3,600 
Other operating activity(813)(581)
Commitment fees remitted and other operating activityCommitment fees remitted and other operating activity(2,200)(813)
Changes in operating assets and liabilities:Changes in operating assets and liabilities:  Changes in operating assets and liabilities:  
Accounts receivable and interest receivable(60)1,604 
Accounts receivableAccounts receivable(639)(60)
Other assetsOther assets1,159 2,065 Other assets(1,983)413 
Accounts payable and accrued expensesAccounts payable and accrued expenses598 (3,224)Accounts payable and accrued expenses2,272 598 
Deferred leasing costsDeferred leasing costs(440)(1,296)Deferred leasing costs(792)(440)
Other liabilitiesOther liabilities(870)(7,956)Other liabilities5,185 (870)
Due to related partiesDue to related parties3,710 (4,292)Due to related parties7,369 3,710 
Net cash provided by operating activitiesNet cash provided by operating activities7,169 32,563 Net cash provided by operating activities13,894 7,169 
CASH FLOWS FROM INVESTING ACTIVITIES:CASH FLOWS FROM INVESTING ACTIVITIES:  CASH FLOWS FROM INVESTING ACTIVITIES:  
Additions to investments in real estate(13,210)(19,946)
Capital expendituresCapital expenditures(1,781)(13,210)
Acquisition of real estateAcquisition of real estate(2,933)— 
Proceeds from sale of real estate, net941,032 
Loans fundedLoans funded(24,057)(6,855)Loans funded(24,676)(24,057)
Principal collected on loansPrincipal collected on loans5,292 5,916 Principal collected on loans23,667 5,292 
Other investing activityOther investing activity81 354 Other investing activity— 81 
Net cash (used in) provided by investing activities(31,894)920,501 
Net cash used in investing activitiesNet cash used in investing activities(5,723)(31,894)
CASH FLOWS FROM FINANCING ACTIVITIES:CASH FLOWS FROM FINANCING ACTIVITIES:  CASH FLOWS FROM FINANCING ACTIVITIES:  
Payment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notesPayment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes(132,759)(55,159)
Proceeds from revolving credit facilities and term notesProceeds from revolving credit facilities and term notes30,396 77,516 
Payment of unsecured revolving lines of credit, revolving credit facility and or term note(48,000)(135,500)
Proceeds from unsecured revolving lines of credit, revolving credit facility and or term note61,500 74,000 
Payment of mortgages payable(46,000)
Investments in marketable securities in connection with the legal defeasance of mortgages payable(268,194)
Prepayment penalties and other payments for early extinguishment of debt(5,660)
Payment of principal on SBA 7(a) loan-backed notes(7,159)(7,625)
Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility16,016 
Payment of principal on secured borrowingsPayment of principal on secured borrowings(3,600)(2,477)Payment of principal on secured borrowings(651)(3,600)
Payment of deferred preferred stock offering costsPayment of deferred preferred stock offering costs(483)(683)
Payment of deferred costsPayment of deferred costs(2)(740)
Payment of common dividendsPayment of common dividends(3,979)(3,319)
Proceeds from issuance of Common StockProceeds from issuance of Common Stock78,825 — 
Payment of Common Stock offering costsPayment of Common Stock offering costs(540)— 
Net proceeds from issuance of Series A Preferred WarrantsNet proceeds from issuance of Series A Preferred Warrants— 29 
Net proceeds from issuance of Preferred StockNet proceeds from issuance of Preferred Stock20,899 32,912 
Payment of preferred stock dividendsPayment of preferred stock dividends(15,440)(14,464)
Redemption of Preferred StockRedemption of Preferred Stock(1,832)(1,681)
Noncontrolling interests’ distributionsNoncontrolling interests’ distributions(109)(45)
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(25,675)30,766 
(Continued)

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Consolidated Statements of Cash Flows (Continued)
(In thousands) (Unaudited)
 Nine Months Ended
September 30,
 20202019
 (Unaudited)
Payment of deferred preferred stock offering costs(683)(497)
Payment of deferred loan costs(535)(34)
Payment of other deferred costs(205)(383)
Payment of common dividends(3,319)(12,045)
Payment of special cash dividends(613,294)
Net proceeds from issuance of Series A Preferred Warrants29 295 
Net proceeds from issuance of Series A Preferred Stock32,466 28,535 
Net proceeds from issuance of Series D Preferred Stock446 
Payment of preferred stock dividends(14,464)(17,095)
Redemption of Series A Preferred Stock(1,681)(156)
Retirement of fractional shares of Common Stock(1)
Noncontrolling interests’ distributions(45)(515)
Noncontrolling interests’ contributions455 
Net cash provided by (used in) financing activities30,766 (1,006,191)
Change in cash balances included in assets held for sale755 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH6,041 (52,372)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:  
Beginning of period35,947 77,171 
End of period$41,988 $24,799 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$32,111 $13,292 
Restricted cash9,877 11,507 
Total cash and cash equivalents and restricted cash$41,988 $24,799 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:  
Cash paid during the period for interest$7,952 $10,788 
Federal income taxes paid$273 $850 
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:  
Additions to investments in real estate included in accounts payable and accrued expenses$1,047 $3,275 
Additions to deferred costs included in accounts payable and accrued expenses$221 $344 
Additions to preferred stock offering costs included in accounts payable and accrued expenses$653 $467 
Accrual of dividends payable to preferred stockholders$2,715 $1,318 
Preferred stock offering costs offset against redeemable preferred stock in temporary equity$451 $249 
Preferred stock offering costs offset against redeemable preferred stock in permanent equity$$
Reclassification of Series A Preferred Stock from temporary equity to permanent equity$27,434 $26,729 
Additions to deferred loan costs included in accounts payable and accrued expenses$140 $
Reclassification of loans receivable, net to real estate owned$174 $243 
Establishment of right-of use asset and lease liability$$362 
Marketable securities transferred in connection with the legal defeasance of mortgages payable$$268,194 
Mortgage notes payable legally defeased$$245,000 
Mortgage note assumed in connection with our sale of real estate$$28,200 
Redeemable preferred stock deemed dividends$300 $
Redeemable Series A Preferred Stock fees included in accounts payable and accrued expenses$386 $
Redeemable Series D Preferred Stock fees included in accounts payable and accrued expenses$$
Issuance of shares of Common Stock for asset management fees$2,359 $
Payment of management fees and base service fee in preferred stock$2,663 $
 Nine Months Ended
September 30,
 20212020
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH(17,504)6,041 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:  
Beginning of period43,649 35,947 
End of period$26,145 $41,988 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$14,552 $32,111 
Restricted cash11,593 9,877 
Total cash and cash equivalents and restricted cash$26,145 $41,988 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:  
Cash paid during the period for interest$6,585 $7,952 
Federal income taxes paid$2,100 $273 
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:  
Accrued capital expenditures, tenant improvements and real estate developments$1,118 $1,047 
Accrued preferred stock offering costs$738 $653 
Accrual of dividends payable to preferred stockholders$3,403 $2,715 
Preferred stock offering costs offset against redeemable preferred stock$296 $455 
Reclassification of Series A Preferred Stock from temporary equity to permanent equity$34,552 $27,434 
Accrued deferred costs$— $361 
Reclassification of loans receivable, net to real estate owned$— $174 
Redeemable preferred stock deemed dividends$253 $300 
Accrued redeemable preferred stock fees$677 $392 
Equity-based payment for management fees$4,652 $5,022 
Accrued Common Stock offering costs included in additional paid-in capital$1,420 $— 
The accompanying notes are an integral part of these consolidated financial statements.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 20192021 (Unaudited)


1. ORGANIZATION AND OPERATIONS
CIM Commercial Trust Corporation (“CIM Commercial” or the “Company”), a Maryland corporation and real estate investment trust (“REIT”), together with its wholly-owned subsidiaries, (“we,” “us” or “our”) primarily acquires, owns and operates Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States (including improvingStates. The Company, supported by the broad real estate capabilities of CIM Group, L.P. (“CIM Group”), seeks to focus on the acquisition, ownership, operation and developing such assets).development of cash flowing creative office, multifamily, retail, parking, infill industrial and limited service hospitality real assets in communities qualified by CIM Group. 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 wereThe Company was originally organized in 1993 as PMC Commercial Trust (“PMC Commercial”), a Texas real estate investment trust.
On July 8, 2013, PMC Commercial entered into a merger agreement with CIM Urban REIT, LLC (“CIM REIT”), an affiliate of CIM Group, L.P. (“CIM Group” or “CIM”), and subsidiaries of the respective parties. CIM REIT was a private commercial REIT and was the owner of CIM Urban Partners, L.P. (“CIM Urban”). The merger was completed on March 11, 2014 (the “Acquisition Date”).
OurThe Company’s common stock, $0.001 par value per share (“Common Stock”), is currently traded on the Nasdaq Global Market (“Nasdaq”), under the ticker symbol “CMCT”, and on the Tel Aviv Stock Exchange (the “TASE”), under the ticker symbol “CMCT-L.” OurThe Company’s Series L preferred stock, $0.001 par value per share (“Series L Preferred Stock”), is currently traded on Nasdaq and on the TASE, in each case under the ticker symbol “CMCTP.” We haveThe Company has authorized for issuance 900,000,000 shares of common stock and 100,000,000 shares of preferred stock (“Preferred Stock”).
    WeThe Company filed Articles of Amendment (the “Reverse Stock Split Amendment”) to effectuate a one-for-three reverse stock split of ourthe Company’s Common Stock, effective on September 3, 2019 (the “Reverse Stock Split”). Pursuant to the Reverse Stock Split Amendment, every three shares of Common Stock issued and outstanding immediately prior to the effective time of the Reverse Stock Split were converted into one share of Common Stock, par value $0.003 per share. In connection with the Reverse Split Amendment, the Company filed Articles of Amendment to revert the par value of the Common Stock issued and outstanding from $0.003 per share to $0.001 per share, effective as of September 3, 2019, following the effective time of the Reverse Split Amendment. All Common Stock and per share of Common Stock amounts set forth in this Quarterly Report on Form 10-Q have been adjusted to give retroactive effect to the Reverse Stock Split, unless otherwise stated.
The Company conducted a continuous public offering of Series A Preferred Units from October 2016 through January 2020, where each Series A Preferred Unit consisted of one share of Series A Preferred Stock, par value $0.001 per share, of the Company (collectively, the “Series A Preferred Stock”) with an initial stated value of $25.00 per share, subject to adjustment (the “Series A Preferred Stock Stated Value”), and one warrant (collectively, the “Series A Preferred Warrants”) to purchase 0.25 of a share of Common Stock, subject to adjustment (Note 10). Proceeds and expenses from the sale of the Series A Preferred Units were allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance.
Since February 2020, the Company has been conducting a continuous public offering of Series A Preferred Stock and Series D preferred stock, par value $0.001 per share (the “Series D Preferred Stock”), with an initial stated value of $25.00 per share, subject to adjustment (the “Series D Preferred Stock Stated Value”). The selling price of the Series A Preferred Stock in the offering has been, and is expected to continue to be, $25.00 per share and 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 is expected to be, and since June 29, 2020, has been, $24.50 per share through the end of the life of the offering.
During the nine months ended September 30, 2021, the Company conducted a rights offering (the “Rights Offering”) pursuant to which the Company issued an aggregate of 8,521,589 shares of Common Stock at a subscription price of $9.25 per share for aggregate gross proceeds of $78.8 million before issuance costs of $2.0 million.
CIM Commercial has qualified and intends to continue to qualify as a REIT, as defined in the Internal Revenue Code of 1986, as amended.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For more information regarding ourthe Company’s significant accounting policies and estimates, please refer to “Basis of Presentation and Summary of Significant Accounting Policies” contained in Note 2 to ourthe Company’s consolidated financial statements for the year ended December 31, 2019,2020, included in ourthe Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2020.2021 and amended on April 30, 2021 (the “2020 Form 10-K”).
Interim Financial Information—The accompanying interim consolidated financial statements of CIM Commercial have been prepared by ourthe Company’s management in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying financial information reflects all adjustments which are, in the opinion of ourthe Company’s management, of a normal recurring nature and necessary for a fair presentation of ourthe Company’s financial position, results of operations and cash flows for the interim periods. Operating results for the three and nine months ended September 30, 20202021 are not necessarily indicative of the results that may be expected for the year ending December 31, 20202021 given, among other things, the uncertain impact of the novel coronavirus (“COVID-19”) on ourthe Company’s operations during the remainder of the year. OurThe accompanying interim consolidated financial statements should be read in conjunction with ourthe Company’s audited consolidated financial statements and the notes thereto, included in our Annual Report onthe 2020 Form 10-K filed with the SEC on March 16, 2020.10-K.
Principles of Consolidation—The consolidated financial statements include the accounts of CIM Commercial and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes In determining whether the Company has controlling interests in an entity and the requirement to Consolidated Financial Statements asconsolidate the accounts in that entity, the Company analyzes its investments in real estate in accordance with standards set forth in GAAP to determine whether they are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary. The Company’s judgment with respect to its level of influence or control over an entity and whether the Company is the primary beneficiary of a VIE involves consideration of various factors, including the form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions. The Company’s ability to correctly assess its influence or control over an entity affects the presentation of these investments in real estate on the Company’s consolidated financial statements. As of September 30, 2020 and December 31, 2019, and
2021, the Company has determined that the trust formed for the Threebenefit of the note holders (the “Trust”) for the securitization of the unguaranteed portion of certain of the Company’s SBA 7(a) loans receivable is considered a VIE. Applying the consolidation requirements for VIEs, the Company determined that it is the primary beneficiary based on its power to direct activities through its role as servicer and Nine Months Ended September 30, 2020its obligations to absorb losses and 2019 (Unaudited)

right to receive benefits. (Note 6)
Investments in Real EstateReal estate acquisitions are recorded at cost as of the acquisition date. Costs related to the acquisition of properties were expensed as incurred for acquisitions that occurred prior to October 1, 2017. For any acquisition occurring on or after October 1, 2017, we have conducted and will conduct an analysis to determine if the acquisition constitutes a business combination or an asset purchase. If the acquisition constitutes a business combination, then the transaction costs will be expensed as incurred, and if the acquisition constitutes an asset purchase, then the transaction costs will be capitalized. Investments in real estate are stated at depreciated cost. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:
Buildings and improvements 15 - 40 years
Furniture, fixtures, and equipment 3 - 5 years
Tenant improvements ShorterLesser of the useful liveslife or the
terms of the related leases
lease term
We capitalizeThe fair value of real estate acquired is recorded to acquired tangible assets, consisting primarily of land, land improvements, building and improvements, tenant improvements, furniture, fixtures, and equipment, and identified intangible assets and liabilities, consisting of the value of acquired above-market and below-market leases, in-place leases and ground leases, if any, based in each case on their respective fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market rate loans, are recorded based on the fair value of any loans assumed in connection with acquiring the real estate.
Capitalized Project Costs
The Company capitalizes project costs, including pre-construction costs, interest expense, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, or construction of a project, while activities are ongoing to prepare an asset for its intended use. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred.
Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. Ordinary repairs and maintenance are expensed as incurred.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
Recoverability of Investments in Real Estate—The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Investments in real estate are evaluated for impairment on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. RecoverabilityIf, and when, such events or changes in circumstances are present, the recoverability of assets to be held and used requires significant judgment and estimates and is measured by a comparison of the carrying amount to the future netundiscounted cash flows undiscounted and without interest, expected to be generated by the asset.assets and their eventual disposition. If suchthe undiscounted cash flows are less than the carrying amount of the assets, are consideredan impairment is recognized to be impaired, the impairment to be recognized is measured by the amount by whichextent the carrying amount of the assets exceeds the estimated fair value of the assets. The process for evaluating real estate impairment requires management to make significant assumptions related to certain inputs, including rental rates, lease-up period, occupancy, estimated fair value ofholding periods, capital expenditures, growth rates, market discount rates and terminal capitalization rates. For the asset group identified for step two ofCompany’s hotel property, additional inputs considered include revenue per available room and average daily rate. These inputs require a subjective evaluation based on the impairment testing under GAAP is basedspecific property and market. Changes in the assumptions could have a significant impact on either the income approach, with market discount rate, terminal capitalization rate and rental rate assumptions being most critical to such analysis,fair value, the amount of impairment charge, if any, or on the sales comparison approach to similar properties. Assetsboth. Any asset held for sale areis reported at the lower of the asset’s carrying amount or fair value, less costscosts to sell. When an asset is identified by the Company as held for sale, wethe Company will cease recording depreciation and amortization of the asset. For the three and nine months ended September 30, 2021 and 2020, wethe Company recognized 0 impairment of long-lived assets. For the three and nine months ended September 30, 2019, we recognizedno impairment of long-lived assets of $0 and $69,000,000, respectively (Note 3).
Derivative Financial InstrumentsRevenue RecognitionAs part of risk management and operational strategies, from time to time, we may enter into derivative contracts with various counterparties. All derivatives are recognized onAt the balance sheet at their estimated fair value. On the date that we enter into a derivative contract, we designate the derivative as a fair value hedge, a cash flow hedge, a foreign currency fair value or cash flow hedge, a hedgeinception of a net investment inrevenue-producing contract, the Company determines if a foreign operation, or a trading or non-hedging instrument.
Changes in the estimated fair value of a derivative (effective and ineffective components) that is highly effective and that is designated andcontract qualifies as a cash flow hedge are initially recorded in other comprehensive income (“OCI”),lease and are subsequently reclassified into earningsif not, then as a component of interest expense whencustomer contract. Based on this determination, the variability of cash flows of the hedged transaction affects earnings (e.g., when periodic settlements of a variable-rate asset or liability are recordedappropriate treatment in earnings). When an interest rate swap designated as a cash flow hedge no longer qualifies for hedge accounting, we recognize changes in the estimated fair value of the hedge previously deferredaccordance with GAAP is applied to accumulated other comprehensive income (“AOCI”), along with any changes in estimated fair value occurring thereafter, through earnings. We classify cash flows from interest rate swap agreements as net cash provided by operating activities on the consolidated statements of cash flows as our accounting policy is to present the cash flows from the hedging instruments in the same category in the consolidated statements of cash flows as the category for the cash flows from the hedged items. See Note 11 for disclosures about our derivative financial instruments and hedging activities.
Revenue Recognition—We use a five-step model to recognize revenue for contracts with customers. The five-step model requires that we (i) identify the contract, with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognizeits revenue when (or as) we satisfy the performance obligation.recognition.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Revenue from leasing activities
We operateThe Company operates as a lessor of real estate assets, primarily in Class Aassets. When the Company enters into a contract or amends an existing contract, the Company evaluates if the contracts meet the definition of a lease using the following criteria:
One party (lessor) must hold an identified asset;
The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of the contract; and creative office assets. In determining whether our
The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract.
The Company determined that the Company’s contracts with ourits tenants constitute leases, we determined that our contracts explicitly identify the premises and that any substitution rights to relocate the tenanttenants to other premises within the same building stated in the contract are not substantive. Additionally, so long as payments are made timely under thesesuch contracts, ourthe Company’s tenants have the right to obtain substantially all the economic benefits from the use of thisthe identified asset and can direct how and for what purpose the premises are used to conduct their operations. Therefore, ourthe contracts with ourthe Company’s tenants constitute leases.
All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases when collectability is reasonably assuredprobable and the tenant has taken possession or controls the physical use of the leased asset. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is recorded as deferred rent. If the lease provides for tenant improvements, we determinethe Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or us.the Company. When we arethe Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is considered the owner of the improvements, any tenant improvement allowance that is funded is treated as an incentive. Lease incentives paid to tenants are included in other assets and amortized as a reduction to rental revenue on a straight-line basis over the term of the related lease. As of September 30, 2021 and December 31, 2020, lease incentives of $4.0 million and $4.0 million, respectively, are presented net of accumulated amortization of $2.6 million and $2.4 million, respectively.
Reimbursements from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes, insurance, and other recoverable costs, are recognized as revenue and are included in rental and other property income in the period the expenses are incurred.incurred, with the corresponding expenses included in rental and other property operating expense. Tenant reimbursements are recognized and presented on a gross basis when we arethe Company is primarily responsible for fulfilling the promise to provide the specified good or service and control that specified good or service before it is transferred to the tenant. We haveThe Company has elected not to separate lease and non-lease components as the pattern of revenue recognition does not differ for the two components, and the non-lease component is not the primary component in ourthe Company’s leases.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
In addition to minimum rents, certain leases, including the Company’s parking leases with third-party operators, provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums. Percentage rent is recognized once lessees’ specified sales targets have been met.
We derive parking revenues from leases with third-party operators. Our parking leases provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums. Parking percentage rent is recognized once lessees’ specific sales targets have been met.
For the three and nine months ended September 30, 2021 and 2020, and 2019, wethe Company recognized rental income as follows:follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Rental and other property incomeRental and other property incomeRental and other property income
Fixed lease payments (1)Fixed lease payments (1)$12,382 $15,389 $38,294 $66,925 
Fixed lease payments (1)
$9,747 $12,382 $34,257 $38,294 
Variable lease payments (2)Variable lease payments (2)515 1,917 3,122 6,381 
Variable lease payments (2)
3,091 515 5,239 3,122 
Rental and other property incomeRental and other property income$12,897 $17,306 $41,416 $73,306 Rental and other property income$12,838 $12,897 $39,496 $41,416 
______________________
(1)Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above-market leases, below-market leases and lease incentives.
(2)Variable lease payments include expense reimbursements billed to tenants and percentage rent, net of bad debt expense from ourthe Company’s operating leases.
Collectability of Lease-Related Receivables
The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants is probable. The determination of whether collectability is probable takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon the determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income and a decrease in the outstanding receivable. Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of lease-related receivables is based on the best information available at the time of estimate. The Company does not use a general reserve approach. As of September 30, 2021 and December 31, 2020, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $1.7 million and $1.9 million, respectively, across all operating leases.
Revenue from lending activities
Interest income included in interest and other income is comprised of interest earned on loans and ourthe Company’s short-term investments and the accretion of net loan origination fees and discounts. Interest income on loans is accrued as earned with the accrual of interest suspended when the related loan becomes a Non-Accrual Loan (as defined below).
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Revenue from hotel activities
HotelThe Company recognizes revenue is recognized upon establishment of a contract with a customer.from hotel activities separate from its leasing activities. At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. Various performance obligations of hotel revenues can be categorized as follows:
cancellable and noncancelable room revenues from reservations and
ancillary services including facility usage and food or beverage.
Cancellable reservations represent a single performance obligation of providing lodging services at the hotel. The Company satisfies its performance obligation and recognizes revenues associated with these reservations over time as services are rendered to the customer. The Company satisfies its performance obligation and recognizes revenues associated with noncancelable reservations at the earlier of (i) the date on which the customer cancels the reservation or (ii) over time as services are rendered to the customer.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
Ancillary services include facilities usage and providing food and beverage. The Company satisfies its performance obligation and recognizes revenues associated with these services at a point in time aswhen the good or service is delivered to the customer.
At inception of these contractsa contract with customersa customer for hotel revenues,goods and services, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate.
We recognizedThe Company presents hotel incomerevenues net of $1,525,000sales, occupancy, and $7,734,000 for the three months ended September 30, 2020 and 2019, respectively, and $10,153,000 and $27,087,000 for the nine months ended September 30, 2020 and 2019, respectively. other taxes.
Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 17:15 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Hotel propertiesHotel propertiesHotel properties
Hotel incomeHotel income$1,525 $7,734 $10,153 $27,087 Hotel income$5,212 $1,525 $10,074 $10,153 
Rental and other property incomeRental and other property income222 736 911 2,208 Rental and other property income251 222 716 911 
Interest and other incomeInterest and other income15 41 65 135 Interest and other income15 15 43 65 
Hotel revenuesHotel revenues$1,762 $8,511 $11,129 $29,430 Hotel revenues$5,478 $1,762 $10,833 $11,129 
Tenant recoveries outside of the lease agreements
Tenant recoveries outside of the lease agreements are related to construction projects in which ourthe Company’s tenants have agreed to fully reimburse usthe Company for all costs related to construction. These services include architectural, permit expediter and construction services. At inception of the contract with the customer, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate. While these individual services are distinct, in the context of the arrangement with the customer, all of these services are bundled together and represent a single package of construction services requested by the customer. The Company satisfies its performance obligation and recognizes revenues associated with these services over time as the construction is completed. NaNNo such amounts were recognized for tenant recoveries outside of the lease agreements for each of the three months ended September 30, 2020 and 2019, and $0 and $205,000 were recognized for the nine months ended September 30, 20202021 and 2019, respectively, which amounts are included in interest and other income on the consolidated statements of operations.2020. As of September 30, 2020,2021, there were 0no remaining performance obligations associated with tenant recoveries outside of the lease agreements.
Loans ReceivableOurThe Company’s loans receivable are carried at their unamortized principal balance less unamortized acquisition discounts and premiums, deferred originationsorigination fees, retained loan discounts and loan loss reserves. Acquisition discounts or premiums, origination fees and retained loan discounts are amortized as a component of interest and other income using the effective interest method over the life of the respective loans, or on a straight-line basis when it approximates the effective interest method. All loans were originated pursuant to programs sponsored by the Small Business Administration (the “SBA”). The programs consist of loans
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

originated under the SBA 7(a) Small Business Loan Program and, commencing with the quarter ended June 30, 2020, the Paycheck Protection Program.Program (the “PPP”).
Pursuant to the SBA 7(a) Small Business Loan Program, we sellthe Company sells the portion of the loan that is guaranteed by the SBA. Upon sale of the SBA guaranteed portion of the loans, which are accounted for as sales, the unguaranteed portion of the loan retained by usthe Company is valued on arecorded at fair value basis and a discount (the “Retained Loan Discount”) is recorded as a reduction in basis of the retained portion of the loan. Unamortized retained loan discounts were $7,540,0009.4 million and $7,622,000$7.8 million as of September 30, 20202021 and December 31, 2019,2020, respectively.
At the Acquisition Date, the carrying value of ourthe Company’s loans was adjusted to estimated fair market value and acquisition discounts of $33,907,000$33.9 million were recorded, which are being accreted to interest and other income using the effective interest method. We sold substantially all of our commercial mortgage loans with unamortized acquisition discounts of $15,951,000 to an unrelated third-party in December 2015. Acquisition discounts of $533,000$420,000 and $624,000$492,000 remained as of September 30, 20202021 and December 31, 2019,2020, respectively.
A loan receivable is generally classified as non-accrual (a “Non-Accrual Loan”) if (i) it is past due as to payment of principal or interest for a period of 60 days or more, (ii) any portion of the loan is classified as doubtful or is charged-off or (iii) the repayment in full of the principal and or interest is in doubt. Generally, loans are charged-off when management determines that wethe Company will be unable to collect any remaining amounts due under the loan agreement, either through
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
liquidation of collateral or other means. Interest income, included in interest and other income, on a Non-Accrual Loan is recognized on either the cash basis or the cost recovery basis.
Loan Loss ReservesOn a quarterly basis, and more frequently if indicators exist, we evaluatethe Company evaluates the collectability of ourits loans receivable. OurThe Company’s evaluation of collectability involves significant judgment, estimates, and a review of the ability of the borrower to make principal and interest payments, the underlying collateral and the borrowers’ business models and future operations in accordance with Accounting Standards Codification (“ASC”) 450-20, Contingencies—Loss Contingencies,operations. For the three and ASC 310-10, Receivables.nine months ended September 30, 2021, the Company recorded a net impairment of $7,000 and $11,000, respectively, on its loans receivable. For the three and nine months ended September 30, 2020, wethe Company recorded a net impairment of $1,000 and a net recovery of $15,000, respectively, on our loans receivable. For the three and nine months ended September 30, 2019, we recorded a net impairment of $140,000 and $84,000, respectively, on ourits loans receivable. There were 0no material loans receivable subject to credit risk which were considered to be impaired as of September 30, 20202021 or 2019. WeDecember 31, 2020. The Company considers a loan to be impaired when the Company does not expect to collect all of the contractual interest and principal payments as scheduled in the loan agreements. The Company also establishestablishes a general loan loss reserve when available information indicates that it is probable a loss has occurred based on the carrying value of the portfolio and the amount of the loss can be reasonably estimated. Significant judgment is required in determining the general loan loss reserve, including estimates of the likelihood of default and the estimated fair value of the collateral. The general loan loss reserve includes those loans, which may have negative characteristics which have not yet become known to us.the Company. In addition to the reserves established on loans not considered impaired that have been evaluated under a specific evaluation, we establishthe Company establishes the general loan loss reserve using a consistent methodology to determine a loss percentage to be applied to loan balances. These loss percentages are based on many factors, primarily cumulative and recent loss history and general economic conditions. As of September 30, 2021 and December 31, 2020, the Company had loan loss reserves of $959,000 and $885,000, respectively.
Deferred Rent Receivable and Charges—Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 9) and other deferred costs. Deferred leasing costs, which represent lease commissions and other direct costs associated with the acquisition of tenants, are capitalized and amortized on a straight-line basis over the terms of the related leases. Deferred offering costs represent direct costs incurred in connection with ourthe Company’s offerings of Series A Preferred Units, as described in Note 9, and, after January 2020, Series A Preferred Stock (as defined in Note 9) and Series D Preferred Stock, (as defined in Note 9), excluding costs specifically identifiable to a closing, such as commissions, dealer-manager fees, and other offering fees and expenses. Generally, for a specific issuance of securities, issuance-specific offering costs are recorded as a reduction of proceeds raised on the issuance date and offering costs incurred but not directly related to a specifically identifiable closing of a security are deferred. Deferred offering costs are first allocated to each issuance of a security on a pro-rata basis equal to the ratio of the number of securities issued in a given issuance to the maximum number of securities that are expected to be issued in the related offering. In the case of the Series A Preferred Units, which were issued prior to February 2020, the issuance-specific offering costs and the deferred offering costs allocated to such issuance were further allocated to the Series A Preferred Stock and Series A Preferred Warrants (as defined in Note 9) issued in such issuance based on the relative fair value of the instruments on the date of issuance. The deferred offering costs allocated to the Series A Preferred Stock and Series A Preferred Warrants are reductions to temporary equity while the deferred offering costs allocated to Series A Preferred Warrants and Series D Preferred Stock are reductions to permanent equity.equity, respectively.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

As of September 30, 20202021 and December 31, 2019,2020, deferred rent receivable and charges consist of the following:following (in thousands):
September 30, 2020December 31, 2019
(in thousands) September 30, 2021December 31, 2020
Deferred rent receivableDeferred rent receivable$20,734 $19,988 Deferred rent receivable$20,858 $20,470 
Deferred leasing costs, net of accumulated amortization of $7,987 and $7,438, respectively8,162 9,443 
Deferred leasing costs, net of accumulated amortization of $8,687 and $7,742, respectivelyDeferred leasing costs, net of accumulated amortization of $8,687 and $7,742, respectively8,108 8,950 
Deferred offering costsDeferred offering costs5,892 5,275 Deferred offering costs6,296 6,046 
Other deferred costsOther deferred costs542 151 Other deferred costs492 490 
Deferred rent receivable and charges, netDeferred rent receivable and charges, net$35,330 $34,857 Deferred rent receivable and charges, net$35,754 $35,956 
Redeemable Preferred Stock—Beginning on the date of original issuance of any given shares of Series A Preferred Stock or Series D Preferred Stock, and from and after the fifth anniversary date of the original issuance of the Series L Preferred Stock, the holder of such shares has the right to require the Company to redeem such shares, at a redemption price of 100% ofsubject to certain limitations as discussed in Note 9. The Company records the activity related to the Series A Preferred Stock Stated Value (as defined in Note 9) orWarrants, Series D Preferred Stock Stated Value (as defined in Note 9), as applicable, plus accrued and unpaid dividends, subject to the payment of a redemption fee until the fifth anniversary of such issuance. From and after the fifth anniversary of the date of the original issuance, the holder will have the right to require the Company to redeem such shares at a redemption price of 100% of the Series AL Preferred Stock Stated Value or Series D Preferred Stock Stated Value, as applicable, plus accrued and unpaid dividends, without a redemption fee, andin permanent equity. In the Company will have the right (but not the obligation) to redeem such shares at 100% of the Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, as applicable, plus accrued and unpaid dividends. The applicable redemption price payable upon redemption of any Series A Preferred Stock is payable in cash or, on or after the first anniversary of the issuance of such shares of Series A Preferred Stock to be redeemed, in the Company’s sole discretion, in cash or in equal value through the issuance of shares of Common Stock, based on the volume weighted average price of our Common Stock for the 20 trading days prior to the redemption. The applicable redemption price payable upon redemption of any Series D Preferred Stock is payable in cash or, in the Company’s sole discretion, in equal value through the issuance of shares of Common Stock, based on the volume weighted average price of our Common Stock for the 20 trading days prior to the redemption. Sinceevent a holder of Series A Preferred Stock has the right to requestrequests redemption of such shares and redemptionssuch redemption takes place prior to the first anniversary areof the date of original issuance, the Company is required to be paidpay such redemption in cash, we have recordedcash. As a result, the activity related to ourCompany records issuances of Series A Preferred Stock in temporary equity. We recorded the activity related to our Series A Preferred Warrants (Note 9) in permanent equity. We have recorded the activity related to our Series D Preferred Stock (Note 9) in permanent equity. On the first anniversary of the date of original issuance of a particular share of Series A Preferred Stock, we reclassifythe
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
Company reclassifies such share of Series A Preferred Stock from temporary equity to permanent equity because the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date.
From and after the fifth anniversary of the date of original issuance of the Series L Preferred Stock, each holder will have the right to require the Company to redeem, and the Company will also have the option to redeem (subject to certain conditions), such shares of Series L Preferred Stock at a redemption price equal to the Series L Preferred Stock Stated Value (as defined in Note 9), plus, provided certain conditions are met, all accrued and unpaid distributions. Notwithstanding the foregoing, a holder of shares of our Series L Preferred Stock may require us to redeem such shares at any time prior to the fifth anniversary of the date of original issuance of the Series L Preferred Stock if (1) we do not declare and pay in full the distributions on the Series L Preferred Stock for any annual period prior to such fifth anniversary or (2) we do not declare and pay all accrued and unpaid distributions on the Series L Preferred Stock for all past dividend periods prior to the applicable holder redemption date. The applicable redemption price payable upon redemption of any Series L Preferred Stock will be made, in the Company’s sole discretion, in the form of (A) cash in Israeli New Shekels (“ILS”) at the then-current currency exchange rate determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, (B) in equal value through the issuance of shares of Common Stock, with the value of such Common Stock to be deemed the lower of (i) our net asset value (“NAV”) per share of our Common Stock as most recently published by the Company as of the effective date of redemption and (ii) the volume-weighted average price of our Common Stock, determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, or (C) in a combination of cash in ILS and our Common Stock, based on the conversion mechanisms set forth in (A) and (B), respectively. We recorded the activity related to our Series L Preferred Stock in permanent equity.
Noncontrolling Interests—Noncontrolling interests represent the interests in various properties owned by third-parties.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Restricted CashOurThe Company’s mortgage loan and hotel management agreements provide for depositing cash into restricted accounts reserved for capital expenditures, free rent, tenant improvement and leasing commission obligations. Restricted cash also includes cash required to be segregated in connection with certain of ourthe Company’s loans receivable.
Reclassifications—Certain prior period amounts have been reclassified to conform with the current period presentation. To comply withThese reclassifications had no effect on previously reported totals or subtotals. The reclassifications have been made to the current year presentation, we reclassified $1,308,000 and $272,000, related to certain funds at our hotel property, fromconsolidated statement of cash to other assets as of September 30, 2019 and December 31, 2018, respectively, which resulted in a $1,036,000 decrease in cash provided by operating activitiesflows for the nine months ended September 30, 2019. Furthermore, we reclassified $630,000 and $1,819,000 from asset management and other fees to related parties to expense reimbursements to related parties—corporate for the three and nine months ended September 30, 2019, respectively,2020 and $652,000 and $1,840,000 from asset management and other fees to related parties to expense reimbursements to related parties—lending segment for the three and nine months ended September 30, 2019, respectively.as follows (in thousands):
Assets Held for Sale and Discontinued Operations—In the ordinary course of business, we may periodically enter into agreements to dispose of our assets. Some of these agreements are non-binding because either they do not obligate either party to pursue any transactions until the execution of a definitive agreement or they provide the potential buyer with the ability to terminate without penalty or forfeiture of any material deposit, subject to certain specified contingencies, such as completion of due diligence at the discretion of such buyer. We do not classify assets that are subject to such non-binding agreements as held for sale.
We classify assets as held for sale, if material, when they meet the necessary criteria, which include: a) management commits to and actively embarks upon a plan to sell the assets, b) the assets to be sold are available for immediate sale in their present condition, c) the sale is expected to be completed within one year under terms usual and customary for such sales and d) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. We generally believe that we meet these criteria when the plan for sale has been approved by our management, having the authority to approve the sale, there are no known significant contingencies related to the sale and management believes it is probable that the sale will be completed within one year.

Assets held for sale are recorded at the lower of cost or estimated fair value less cost to sell. In addition, if we were to determine that the asset disposal associated with assets held for sale or disposed of represents a strategic shift, the revenues, expenses and net gain (loss) on dispositions would be recorded in discontinued operations for all periods presented through the date of the applicable disposition.
Consolidation Considerations for Our Investments in Real Estate—ASC 810-10, Consolidation, addresses how a business enterprise should evaluate whether it has a controlling interest in an entity through means other than voting rights that would require the entity to be consolidated. We analyze our investments in real estate in accordance with this accounting standard to determine whether they are variable interest entities, and if so, whether we are the primary beneficiary. Our judgment with respect to our level of influence or control over an entity and whether we are the primary beneficiary of a variable interest entity involves consideration of various factors, including the form of our ownership interest, our voting interest, the size of our investment (including loans), and our ability to participate in major policy-making decisions. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments in real estate on our consolidated financial statements.
Nine Months Ended September 30, 2020
As previously reportedReclassificationAs Revised
Consolidated Statements of Cash Flows
Depreciation and amortization, net$15,728 $(267)$15,461 
Deferred rent and amortization of intangible assets, liabilities and lease inducements$(1,013)$1,013 $— 
Other assets$1,159 $(746)$413 
Payment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes$— $(55,159)$(55,159)
Payment of principal on SBA 7(a) loan-backed notes$(7,159)$7,159 $— 
Payment of unsecured revolving lines of credit, revolving credit facility and or term note$(48,000)$48,000 $— 
Proceeds from revolving credit facilities and term notes$— $77,516 $77,516 
Proceeds from unsecured revolving lines of credit, revolving credit facility and or term note$61,500 $(61,500)$— 
Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility$16,016 $(16,016)$— 
Payment of deferred costs$(205)$(535)$(740)
Payment of deferred loan costs$(535)$535 $— 
Net proceeds from issuance of Preferred Stock$32,466 $446 $32,912 
Net proceeds from issuance of Series D Preferred Stock$446 $(446)$— 
Additions to deferred loan costs included in accounts payable and accrued expenses$221 $(221)$— 
Accrued deferred costs$140 $221 $361 
Preferred stock offering costs offset against redeemable preferred stock$451 $$455 
Preferred stock offering costs offset against redeemable preferred stock in permanent equity$$(4)$— 
Accrued redeemable preferred stock fees$386 $$392 
Redeemable Series D Preferred Stock fees included in accounts payable and accrued expenses$$(6)$— 
Equity-based payment for management fees$2,359 $2,663 $5,022 
Payment of management fees and base service fee in preferred stock$2,663 $(2,663)$— 
Use of Estimates—The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. We baseThe Company bases such estimates on historical experience, information available at the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
time, and assumptions we believethe Company believes to be reasonable under the circumstances and at such time, including the impact of extraordinary events such as COVID-19. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements—In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intendedwas subsequently amended by ASU No. 2018-19, Codification Improvements to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity. The amendmentsTopic 326, Financial Instruments - Credit Losses (“ASU 2018-19”) in the ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018,2018. Subsequently, the FASB issued ASU No. 2018-19, Financial Instruments-
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-02 to Consolidated Financial Statements asprovide additional guidance on the credit losses standard. ASU 2016-13 and the related updates improve financial reporting requiring more timely recognition of September 30, 2020credit losses on loans and December 31, 2019,other financial instruments that are not accounted for at fair value through net income, including loans held-for-investment, held-to-maturity debt securities, net investment in leases and
other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the Threeamortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and Nine Months Ended September 30, 2020reasonable and 2019 (Unaudited)

Credit Losses (Topic 326): Codification Improvements to Topic 326, Financial Instruments-Credit Losses, whichsupportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2018-19 clarified that receivables arising from operating leases are not within the scope of the credit losses standards. In April 2019, the FASB issued ASU 2019-04, Financial Instruments-Credit Losses (Topic 326): Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarified the following: (i) an entity’s estimate326. Instead, impairment of expected credit lossesreceivables arising from operating leases should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (ii) an entity should consider contractual extension or renewal options that it cannot unconditionally cancel when determining the contractual term over which expected credit losses are measured.In May 2019, the FASB issuedaccounted for in accordance with ASU No. 2019-05, Financial Instruments-Credit Losses2016-02, Leases (Topic 326): Targeted Transition Relief, which allows entities to irrevocably elect the fair value option for existing financial assets on an instrument-by-instrument basis upon adoption of ASU 2016-13. Except for existing held-to-maturity debt securities, the alternative is available for all instruments in the scope of ASC 326-20 that are eligible for the fair value option in ASC 825-10. If an entity elects the fair value option, it will recognize a cumulative-effect adjustment for the difference between the fair value of the instrument and its carrying value. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), which deferred the effective date of Topic 326 for certain entities, including smaller reporting companies, public entities that are not SEC filers, and entities that are not public business entities. For public entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2019.842). For smaller reporting companies, public entities that are not SEC filers, and entities that are not public business entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2022. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which made narrow-scope improvements to the credit losses standard, including, but not limited to, adjustments for transition relief for troubled debt restructurings and disclosures related to accrued interest receivables. In February 2020, the FASB issued ASU No. 2020-02, Financial Instruments - Credit Losses (Topic 326): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119, which aligns the SEC guidance with Topic 326 as it relates to (i) measuring current expected credit losses, (ii) development, governance, and documentation of a systematic methodology to measure credit losses, (iii) documenting the results of a systematic methodology to measure credit losses, and (iv) validating a systematic methodology to measure credit losses. The Company has not yet adopted ASU 2016-13 and the related updates and remains in the process of evaluating the impact of adoption of this new accounting guidance on ourits consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public entities will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2019. We adopted ASU No. 2018-13 beginning January 1, 2020 and the adoption of such ASU did not have a material impact on our consolidated financial statements.
In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (the “SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The guidance permits the use of the OIS rate based on the SOFR as a U.S. benchmark rate for purposes of applying hedge accounting.  The SOFR is a volume-weighted median interest rate that is calculated daily based on overnight transactions from the prior day’s activity in specified segments of the U.S. Treasury repo market. It has been selected as the preferred replacement for the U.S. dollar London Interbank Offered Rate (“LIBOR”), which will be phased out by the end of 2021. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2019. We adopted ASU No. 2018-16 beginning on January 1, 2020 and the adoption of such ASU did not have a material impact on our consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2020. Early adoption is permitted in any interim period after the issuance of the ASU. We adopted ASU No. 2019-12 beginning on January 1, 2020 and the adoption of such ASU did not have a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients for various agreements and
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

contracts that utilize the London Interbank Offered Rate (“LIBOR”) as the benchmark reference rate. To be eligible for the optional expedients under this guidance, modifications of contractual terms that change, or have the potential to change, the amount or timing of contractual cash flows must be related to replacement of a reference rate. As it relates to the Company, the relevant optional expedient for contract modifications provides that entities can account for these modifications as a continuation of the existing contract without additional analysis. The ASU is effective for all business entities for interim and annual periods beginning on March 12, 2020 and provides for temporary relief through December 31, 2022. We are currently in the process of evaluating the impact of the adoption of this new accounting guidance on our consolidated financial statements, but have not yet adopted the optional relief.
On April 10, 2020, the FASB issued a question-and-answer document (the “Q&A”) to address stakeholder questions on the application of the lease accounting guidance for lease concessions related to the effects of COVID-19. The lease modification guidance in Topic 842, Leases, (or Topic 840, Leases) would require the Company to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was made pursuant to the enforceable rights and obligations of the existing lease agreement (precluded from applying the lease modification accounting framework). However, the Q&A provides that the Company may bypass the lease by lease analysis if certain criteria are met, and instead elect to either consistently apply, or consistently not apply, the lease modification framework to groups of leases with similar characteristics and similar circumstances. As described below, theThe Company has elected not to apply the lease modification guidance to concessions related to the effects of COVID-19 that do not result in a substantial increase in ourthe Company’s rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than the total payments required by the original lease.
During the three and nine months ended September 30, 2020, the Company provided rental concessions to certain tenants in response to the impact of COVID-19. The Company’s rental concessions during the three and nine months ended September 30, 2020 primarily provided for a deferral of rental payments or the application of security deposits to rental payments and replenishment of such security deposits with no substantive changes to the consideration provided for in the original lease. Such changes affected the timing, but not the amount, of the rental payments. In accordance with the above, the Company is accounting for these deferrals as if no changes were made to the leases. The Q&A had no material impact on the Company’s consolidated financial statements as of and for the three and nine months ended September 30, 2020; however, its future impact on the Company is dependent upon the extent of lease concessions granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such concessions. Refer to Note 18 for a discussion regarding our lease concessions granted in connection with COVID-19.

3. INVESTMENTS IN REAL ESTATE
Investments in real estate consist of the following:following (in thousands):
September 30, 2020December 31, 2019
(in thousands) September 30, 2021December 31, 2020
LandLand$134,421 $134,421 Land$141,237 $139,397 
Land improvementsLand improvements2,603 2,713 Land improvements2,645 2,611 
Buildings and improvementsBuildings and improvements450,199 438,349 Buildings and improvements453,555 450,741 
Furniture, fixtures, and equipmentFurniture, fixtures, and equipment4,682 4,628 Furniture, fixtures, and equipment4,627 4,969 
Tenant improvementsTenant improvements33,562 35,667 Tenant improvements29,293 31,414 
Work in progressWork in progress8,578 13,484 Work in progress8,623 8,073 
Investments in real estateInvestments in real estate634,045 629,262 Investments in real estate639,980 637,205 
Accumulated depreciationAccumulated depreciation(129,704)(120,555)Accumulated depreciation(141,102)(131,165)
Net investments in real estateNet investments in real estate$504,341 $508,707 Net investments in real estate$498,878 $506,040 
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Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 20192021 (Unaudited)

– (Continued)
WeThe Company recorded depreciation expense of $4,366,000$4.3 million and $4,156,000$4.4 million for the three months ended September 30, 20202021 and 2019,2020, respectively, and $12,960,000$12.7 million and $17,908,000$13.0 million for the nine months ended September 30, 20202021 and 2019,2020, respectively.
2021 and 2020 Transactions—During the nine months ended September 30, 2021, the Company acquired from an unrelated third-party a 100% fee-simple interest in an office property located in Los Angeles, California for a purchase price of $2.9 million, which was accounted for as an asset acquisition. The fair valuepurchase price excludes transaction costs of real estate acquired is recorded to the acquired tangible assets, consisting primarily of land, land improvements, building$33,000 that were incurred and improvements, tenant improvements, furniture, fixtures, and equipment, and identified intangible assets and liabilities, consisting of the value of acquired above-market and below-market leases, in-place leases and ground leases, if any, based in each case on their respective fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market rate loans, are recorded based on the fair value of any loans assumedcapitalized in connection with acquiring the real estate.
2020 Transactionsthis acquisition. The property has 4,455 square feet of office space. There were 0no acquisitions or dispositions during the nine months ended September 30, 2020.
2019 Transactions—There were 0 acquisitions during the nine months ended September 30, 2019.
We sold 100% fee-simple interests in the following properties to unrelated third-parties during the nine months ended September 30, 2019. Transaction costs related to these sales were expensed as incurred.
PropertyAsset TypeDate of SaleSquare FeetSales PriceTransaction CostsGain on Sale
(in thousands)
March Oakland Properties,
Oakland, CA (1)
Office / Parking GarageMarch 1, 2019975,596 $512,016 $8,971 $289,779 
830 1st Street,
Washington, D.C.
OfficeMarch 1, 2019247,337 116,550 2,438 45,710 
260 Townsend Street,
San Francisco, CA
OfficeMarch 14, 201966,682 66,000 2,539 42,092 
1333 Broadway,
Oakland, CA
OfficeMay 16, 2019254,523 115,430 658 55,221 
Union Square Properties,
Washington, D.C. (2)
Office / LandJuly 30, 2019630,650 181,000 3,744 302 
$990,996 $18,350 $433,104 
(1)The “March Oakland Properties” consist of 1901 Harrison Street, 2100 Franklin Street, 2101 Webster Street, and 2353 Webster Street Parking Garage.
(2)The "Union Square Properties" consist of 999 North Capitol Street, 899 North Capitol Street and 901 North Capitol Street. Prior to the sale, we determined that the book values of such properties exceeded their estimated fair values and recognized 0 impairment charge for the three months ended September 30, 2019, and $69,000,000 for the nine months ended September 30, 2019 (Note 2). Our determination of the fair values of these properties was based on negotiations with the third-party buyer and the contract sales price. The gain on sale includes $113,000 of extinguishment of noncontrolling interests as a result of the sale.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

The results of operations of the properties we sold have been included in the consolidated statements of operations through each property’s respective disposition date. The following is the detail of the carrying amounts of assets and liabilities at the time of the sales of the properties that occurred during the nine months ended September 30, 2019:
(in thousands)
Assets
Investments in real estate, net$476,532 
Deferred rent receivable and charges, net55,297 
Other intangible assets, net316 
Other assets4,096 
Total assets$536,241 
Liabilities
Debt, net (1) (2)$318,072 
Total liabilities$318,072 
(1)Debt, net is presented net of deferred loan costs of $1,704,000 and accumulated amortization of $576,000.
(2)A mortgage loan with an outstanding principal balance of $28,200,000 was assumed by the buyer in connection with the sale of our property in San Francisco, California. A mortgage loan with an outstanding principal balance of $46,000,000 was prepaid in connection with the sale in March 2019 of our property in Washington, D.C. that was collateral for the loan. Mortgage loans with an aggregate outstanding principal balance of $205,500,000 were legally defeased in connection with the sale of the March Oakland Properties that were collateral for the loans. A mortgage loan with an outstanding principal balance of $39,500,000 was legally defeased in connection with the sale in May 2019 of our property in Oakland, California that was collateral for the loan.

4. LOANS RECEIVABLE
Loans receivable consist of the following:following (in thousands):
September 30, 2020December 31, 2019
(in thousands) September 30, 2021December 31, 2020
SBA 7(a) loans receivable, subject to credit riskSBA 7(a) loans receivable, subject to credit risk$31,629 $25,689 SBA 7(a) loans receivable, subject to credit risk$42,498 $32,226 
SBA 7(a) loans receivable, subject to loan-backed notesSBA 7(a) loans receivable, subject to loan-backed notes24,218 27,598 SBA 7(a) loans receivable, subject to loan-backed notes20,129 23,631 
SBA 7(a) loans receivable, paycheck protection program16,016 
SBA 7(a) loans receivable, Paycheck Protection ProgramSBA 7(a) loans receivable, Paycheck Protection Program7,622 14,484 
SBA 7(a) loans receivable, subject to secured borrowingsSBA 7(a) loans receivable, subject to secured borrowings8,888 12,644 SBA 7(a) loans receivable, subject to secured borrowings8,064 8,786 
SBA 7(a) loans receivable, held for saleSBA 7(a) loans receivable, held for sale8,563 1,601 SBA 7(a) loans receivable, held for sale15,995 4,009 
Loans receivableLoans receivable89,314 67,532 Loans receivable94,308 83,136 
Deferred capitalized costs832 1,145 
Deferred capitalized costs, netDeferred capitalized costs, net1,467 884 
Loan loss reservesLoan loss reserves(832)(598)Loan loss reserves(959)(885)
Loans receivable, netLoans receivable, net$89,314 $68,079 Loans receivable, net$94,816 $83,135 
SBA 7(a) Loans Receivable, Subject to Credit Risk—Represents the unguaranteed portions of loans originated under the SBA 7(a) Small Business Loan Program which were retained by the Company and the government guaranteed portions of such loans that have not yet been fully funded or sold.Company.
SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes—Represents the unguaranteed portions of loans originated under the SBA 7(a) Small Business Loan Program which were transferred to a trust and are held as collateral in connection with a securitization transaction. The proceeds received from the transfer are reflected as loan-backed notes payable (Note 6). These loans are subject to credit risk.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

SBA 7(a) Loans Receivable, Paycheck Protection ProgramEnacted in March 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) implemented the Paycheck Protection Program, a new SBA 7(a) loan program that provides small businesses with uncollateralized and unguaranteed loans at an interest rate of 1.00%. The loans will be fully forgiven, subject to certain limitations, when used by the borrower for payroll costs, interest on mortgages, rent, and utilities. For those loans that are forgiven, the SBA will remit 100% of the remaining outstanding principal plus accrued interest to us. For those loans whose borrowers do not meet the criteria required for forgiveness, repayment obligations commence after the applicable deferment period in equal installments over the remaining term to maturity. A substantial portion of the loans that we originated under the Paycheck Protection Program have a two-year term and originally had a deferment period of six months; however, as a result of amendments to the Paycheck Protection Program, these loans now are deferred for up to 16 months. All loans approved by the SBA after June 5, 2020 have a five-year term and deferment period of 16 months. The loans are fully guaranteed by the SBA provided that originating lenders follow the requirements set forth in the Paycheck Protection Program. Accordingly, there is no credit risk associated with these loans since the SBA has guaranteed payment of the principal and interest.Neither the government nor lenders charged borrowers any fees in connection with the Paycheck Protection Program loans; however, the SBA paid lenders a fee upon funding loans under the Paycheck Protection Program.
As a SBA 7(a) licensee, we are an authorized lender under the Paycheck Protection Program and haveCompany originated $16,016,000 of$26.4 million in loans under the programPPP with $7.6 million outstanding as of September 30, 2020. We expect2021. As of September 30, 2021, a significant portion of these loans have been either forgiven or repaid, and the Company expects a significant portion of the outstanding balance at September 30, 2021 will be forgiven andor repaid, either in part or in full, by the SBA, including both principal and accrued interest.
SBA 7(a) Loans Receivable, Subject to Secured Borrowings—Represents the government guaranteed portions of loans originated under the SBA 7(a) Small Business Loan 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 has guaranteed 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.
Other
As of September 30, 20202021 and December 31, 2019, 100.0%2020, the Company’s loans subject to credit risk were 99.8% and 99.6%99.1%, respectively, concentrated in the hospitality industry. As of September 30, 2021 and December 31, 2020, 99.9% and 98.8%, respectively, of ourthe Company’s loans subject to credit risk were current. We classifyThe Company classifies loans with negative characteristics in substandard categories ranging from special mention to doubtful. As of both September 30, 20202021 and December 31, 2019, $1,264,000 and $1,362,000, respectively,2020, $1.4 million of loans subject to credit risk were classified in substandard categories.
As of September 30, 2020 and December 31, 2019, our loans subject to credit risk were 99.0% and 98.7%, respectively, concentrated in the hospitality industry.
Enacted in March 2020, Section 1112 of the CARES Act (“Section 1112”) provided for subsidy loan payments on all loans originated under the SBA 7(a) Small Business Loan Program in ‘regular’ servicing, which subsidies were not required to be repaid by the borrowers. The subsidy payments were paid by the SBA and reflected the initial six months of payments, including scheduled principal and interest payments, for any new loan originated from the implementation of the CARES Act through September 27, 2020. The overwhelming majority of borrowers under our SBA 7(a) Small Business Loan Program qualified for relief under Section 1112. The relief ended for most of our borrowers effective September 30, 2020.
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Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 20192021 (Unaudited)

– (Continued)
5. OTHER INTANGIBLE ASSETS AND LIABILITIES
A schedule of ourthe Company’s intangible assets and liabilities and related accumulated amortization and accretion as of September 30, 20202021 and December 31, 20192020 is as follows:follows (in thousands):
 AssetsLiabilities
September 30, 2020Acquired Above-Market LeasesAcquired
In-Place
Leases
Trade Name and LicenseAcquired
Below-Market
Leases
 (in thousands)
Gross balance$37 $12,135 $2,957 $(2,368)
Accumulated amortization(13)(8,911)1,638 
$24 $3,224 $2,957 $(730)
Average useful life (in years)79Indefinite4
 AssetsLiabilities
December 31, 2019Acquired
Above-Market
Leases
Acquired
In-Place
Leases
Trade Name and LicenseAcquired
Below-Market
Leases
 (in thousands)
Gross balance$74 $13,653 $2,957 $(3,521)
Accumulated amortization(42)(9,382)2,239 
$32 $4,271 $2,957 $(1,282)
Average useful life (in years)58Indefinite4
September 30, 2021December 31, 2020
Intangible lease assets:
Acquired in-place leases, net of accumulated amortization of $8,786 and $9,228, respectively, with an average useful life of 9 and 8 years, respectively$2,510 $3,316 
Acquired above-market leases, net of accumulated amortization of $24 and $15, respectively, both with an average useful life of 6 years31 40 
Trade name and license2,957 2,957 
Total intangible lease assets, net$5,498 $6,313 
Intangible lease liabilities:
Acquired below-market leases, net of accumulated amortization of $1,063 and $1,786, respectively, with an average useful life of 5 and 4 years, respectively$309 $587 
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.
ForDuring the three and nine months ended September 30, 2021 and 2020, and 2019, wethe Company recognized amortization related to ourits intangible assets and liabilities as follows:follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in thousands)
Acquired above-market lease amortization$$17 $$59 
Acquired in-place lease amortization$303 $495 $1,047 $1,636 
Acquired below-market lease amortization$150 $376 $552 $1,310 

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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Acquired above-market lease amortization$$$$
Acquired in-place lease amortization$253 $303 $806 $1,047 
Acquired below-market lease amortization$79 $150 $278 $552 
A schedule of future amortization and accretion of acquired intangible assets and liabilities as of September 30, 2020,2021, is as follows:follows (in thousands):
AssetsLiabilities AssetsLiabilities
Years Ending December 31,Years Ending December 31,Acquired
Above-Market
Leases
Acquired
In-Place
Leases
Acquired
Below-Market
Leases
Years Ending December 31,Acquired
Above-Market
Leases
Acquired
In-Place
Leases
Acquired
Below-Market
Leases
(in thousands)
2020 (Three months ending December 31, 2020)$$302 $(149)
2021899 (347)
2021 (Three months ending December 31, 2021)2021 (Three months ending December 31, 2021)$$243 $(71)
20222022663 (234)202212 813 (236)
20232023375 202310 470 (2)
20242024375 2024374 — 
20252025171 — 
ThereafterThereafter610 Thereafter— 439 — 
$24 $3,224 $(730)$31 $2,510 $(309)
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial StatementsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
6. DEBT
The following table summarizes the debt balances as of September 30, 20202021 and December 31, 2019,2020, and
the debt activity for the Three and Nine Months Endednine months ended September 30, 2020 and 2019 (Unaudited)2021 (in thousands):
During the Nine Months Ended September 30, 2021
Balances as of December 31, 2020Debt Issuances & AssumptionsRepayments & ModificationsAccretion & (Amortization)Balances as of September 30, 2021
Mortgage Payable:
Outstanding Balance$97,100 $— $— $— $97,100 
Deferred loan costs — Mortgage Payable(147)— — 20 (127)
Total Mortgage Payable96,953 — — 20 96,973 
Secured Borrowings — Government Guaranteed Loans:
Outstanding Balance8,457 — (651)— 7,806 
Unamortized premiums457 — — (77)380 
Total Secured Borrowings — Government Guaranteed Loans8,914 — (651)(77)8,186 
Other Debt:
2018 revolving credit facility166,500 20,000 (111,500)— 75,000 
2020 unsecured revolving credit facility— — — — — 
Junior subordinated notes27,070 — — — 27,070 
SBA 7(a) loan-backed notes14,230 — (3,981)— 10,249 
Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility14,484 10,396 (17,278)— 7,602 
Deferred loan costs — other debt(2,155)— 125 771 (1,259)
Discount on junior subordinated notes(1,683)— — 68 (1,615)
Total Other Debt218,446 30,396 (132,634)839 117,047 
Total Debt, Net$324,313 $30,396 $(133,285)$782 $222,206 

Mortgage Payable
6. DEBT
Information on our debt is as follows:
 September 30, 2020December 31, 2019
 (in thousands)
Mortgage loan with a fixed interest rate of 4.14% per annum, with monthly payments of interest only, and a balance of $97,100,000 due on July 1, 2026. The loan is nonrecourse.$97,100 $97,100 
Deferred loan costs related to mortgage loans(154)(174)
Total Mortgage Payable96,946 96,926 
Secured borrowing principal on SBA 7(a) loans sold for a premium and excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.87% and 5.68% as of September 30, 2020 and December 31, 2019, respectively.5,772 7,845 
Secured borrowing principal on SBA 7(a) loans sold for excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.56% and 3.32% as of September 30, 2020 and December 31, 2019, respectively.2,780 4,307 
8,552 12,152 
Unamortized premiums466 629 
Total Secured Borrowings—Government Guaranteed Loans9,018 12,781 
2018 revolving credit facility166,500 153,000 
2020 unsecured revolving credit facility
Junior subordinated notes with a variable interest rate which resets quarterly based on the three-month LIBOR plus 3.25%, with quarterly interest only payments. Balance due at maturity on March 30, 2035. 27,070 27,070 
SBA 7(a) loan-backed notes with a variable interest rate which resets monthly based on the lesser of the one-month LIBOR plus 1.40% or the prime rate less 1.08%, with payments of interest and principal due monthly. Balance due at maturity in March 20, 2043.15,123 22,282 
Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility with a fixed interest rate of 0.35%.16,016 
224,709 202,352 
Deferred loan costs related to other debt(2,422)(2,867)
Discount on junior subordinated notes(1,705)(1,771)
Total Other Debt220,582 197,714 
Total Debt$326,546 $307,421 
Our—The mortgage payable is secured by a deed of trust on thea property and assignmentassignments of rents.rents receivable. As of September 30, 2021, the Company’s mortgage payable had a fixed interest rate of 4.14% per annum, with monthly payments of interest only, due on July 1, 2026. The junior subordinated notes may be redeemed at par at our option.loan is nonrecourse.
Secured borrowings—governmentBorrowings-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.
    SBA 7(a) loan-backed notes are secured by deeds of trust or mortgages.
Deferred loan costs, which represent legal and third-party fees incurred in connection with our borrowing activities, are capitalized and amortized to interest expense on a straight-line basis over the life of the related loan, approximating the effective interest method. Deferred loan costs of $3,466,000 and $4,535,000 are presented net of accumulated amortization of $890,000 and $1,494,000 as As of September 30, 20202021, the Company’s secured borrowings-government guaranteed loans included $5.1 million of loans sold for a premium and December 31, 2019, respectively, and areexcess spread, with a reduction to total debt.
In June 2016, we entered into 6 mortgage loan agreements with an aggregate principal amount of $392,000,000. A portion of the net proceeds from the loans was used to repay outstanding balances under our previous unsecured credit facility
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

and the remaining portion was used to repurchase shares of our Common Stock in a private repurchase in September 2016. On September 21, 2017, in connection with the sale of an office property in Los Angeles, California, 1 mortgage loan with an outstanding principal balance of $21,700,000, collateralized by such property, was assumed by the buyer. On March 1, 2019, additional mortgage loans with an aggregate outstanding principal balance of $205,500,000 at such time, were legally defeased in connection with the sale of the related properties. The cash outlay required for this defeasance in the net amount of $224,086,000 wasvariable rate, reset quarterly, based on the purchase priceprime rate with weighted average coupon rate of U.S. government securities that will generate sufficient cash flow to fund continued interest payments on the3.86%, and $2.7 million of loans from the effective date of this defeasance through the date on which we could repay the loans at par. Assold for an excess spread, with a result of this defeasance, we recognized a loss on early extinguishment of debt of $0 and $19,290,000 for the three and nine months ended September 30, 2019, respectively, which represented the sum of the difference between the purchase price of U.S. government securities of $224,086,000 and the aggregate outstanding principal balance of the mortgage loans of $205,500,000, the write-off of deferred loan costs of $637,000 and related accumulated amortization of $170,000, and transaction costs of $237,000. On March 14, 2019, in connection with the sale of an office property in San Francisco, California, 1 mortgage loan with an outstanding principal balance of $28,200,000 at such time was assumed by the buyer. As a result of this assumption, we recognized a loss on early extinguishment of debt of $0 and $178,000 for the three and nine months ended September 30, 2019, respectively, which represented the write-off of deferred loan costs of $243,000 and related accumulated amortization of $65,000. On May 16, 2019, 1 mortgage loan with an outstanding principal balance of $39,500,000 at such time, was legally defeased in connection with the sale of the related property. The cash outlay required for this defeasance in the net amount of $44,108,000 wasvariable rate, reset quarterly, based on the purchase price of U.S. government securities that will generate sufficient cash flow to fund continued interest payments on the loan from the effective date of this defeasance through the date on which we could repay the loan at par. As a result of this defeasance, we recognized a loss on early extinguishment of debt of $0 and $4,911,000 for the three and nine months ended September 30, 2019, respectively, the latter of which represented the sum of the difference between the purchase price of U.S. government securities of $44,108,000 and the outstanding principal balance of the mortgage loan of $39,500,000, the write-off of deferred loan costs of $287,000 and related accumulated amortization of $82,000, and transaction costs of $98,000.
On March 1, 2019, in connectionprime rate with the sale of an office property in Washington, D.C., we prepaid the related mortgage loan with an outstanding principal balance of $46,000,000 at such time, using proceeds from the sale. As a result, we recognized a loss on early extinguishment of debt of $0 and $5,603,000 for the three and nine months ended September 30, 2019, respectively, which represented a prepayment penalty of $5,325,000 and the write-off of deferred loan costs of $537,000 and related accumulated amortization of $259,000.
On May 30, 2018, we completed a securitization of the unguaranteed portion of certain of our SBA 7(a) loans receivable with the issuance of $38,200,000 of unguaranteed SBA 7(a) loan-backed notes. The securitization uses a trust formed for the benefit of the note holders (the “Trust”) which is considered a variable interest entity (“VIE”). Applying the consolidation requirements for VIEs under the accounting rules in ASC Topic 810, Consolidation, the Company determined that it is the primary beneficiary based on its power to direct activities through its role as servicer and its obligations to absorb losses and right to receive benefits. The SBA 7(a) loan-backed notes are collateralized solely 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, 2043, with monthly payments due as payments on the collateralized loans are received. Based on the anticipated repayments of our collateralized SBA 7(a) loans, at issuance, we estimated the weighted average lifecoupon rate of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%1.56%.    We reflect the SBA 7(a) loans receivable as assets on our consolidated balance sheets and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheets. The restricted cash on our consolidated balance sheets as of September 30, 2020 and December 31, 2019 included $1,113,000 and $3,306,000, respectively, of funds related to our SBA 7(a) loan-backed notes.
2018 Revolving Credit FacilityIn October 2018, CIM Commercial entered into a secured revolving credit facility with a bank syndicate that, as amended, allows CIM Commercial to borrow up to $209.5 million, subject to a borrowing base calculation (the “2018 revolving credit facility”). In September 2020, the 2018 revolving credit facility was amended (the “2018 Credit Facility Modification”) primarily in order to modify the calculation of the borrowing base to mitigateremedy the effect that COVID-19 has had on CIM Commercial’s ability to borrow under the facility. As modified, CIM Commercial can borrow up to a maximum of $209,500,000, subject to a borrowing base calculation.2018 revolving credit facility during the period from September 2, 2020 through August 14, 2021 (the “Deferral Period”). The 2018 revolving credit facility is secured by deeds of trust on certain properties. Outstanding advances under the 2018 revolving credit facility bear interest: (a)bears interest (i) during the Deferral Period (as defined below), which is currently in effect, at (i)(A) the base rate plus 1.05% or (ii)(B) LIBOR plus 2.05%
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
and (b) following(ii) after the Deferral Period, at (i)(A) the base rate plus 0.55% or (ii)(B) LIBOR plus 1.55%. As of September 30, 20202021 and December 31, 2019,2020, the variable interest rate was 2.21%2.13% and 3.29%2.20%, respectively. The interest rate on the first $120,000,000 of one-month LIBOR indexed variable rate borrowings on our 2018 revolving credit facility was effectively converted to a fixed rate of 3.11% through interest rate swaps until such swaps were terminated on March 11, 2019. The 2018 revolving credit facility is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes 2018 revolving credit facility is secured by deeds of trust on certain of the Company’s properties. The 2018 revolving credit facility contains customary covenants and is not subject to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
forany financial covenants (though the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

amount the Company may borrow under the 2018 revolving credit facility is determined by a borrowing base calculation). The 2018 revolving credit facility matures in October 2022 and provides for 1 one-year extension option under certain conditions. On October 30, 2018, we borrowed $170,000,000 on this facility to repay outstanding borrowings on our unsecured term loan facility. On December 28, 2018, we repaid $40,000,000 of outstanding borrowings on our 2018 revolving credit facility and we terminated 1 interest rate swap with a notional value of $50,000,000 (Note 11). On February 28, 2019 and March 11, 2019, we repaid $10,000,000 and $120,000,000, respectively, of outstanding borrowings on our 2018 revolving credit facility using cash on hand and net proceeds from sales of assets in the first quarter of 2019 (Note 3), and, in connection with the March 11, 2019 repayment, we terminated our 2 remaining interest rate swaps, which had an aggregate notional value of $120,000,000 (Note 11). As of September 30, 20202021 and December 31, 2019, $166,500,0002020, $75.0 million and $153,000,000,$166.5 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $28,000,000$91.0 million and $73,900,000,$28.0 million, respectively, was available for future borrowings. The 2018 revolving credit facility contains customary covenants and is not subject to any financial covenants (other than a liquid asset requirement during the Deferral Period as further described below), but is subject to a borrowing base calculation that determines the amount we can borrow. Under the terms of the 2018
2020 Unsecured Revolving Credit Facility Modification, the borrowing base calculation was modified for the period from September 2, 2020 through June 30, 2021 (the “Deferral Period”). The Deferral Period is also subject to (i) an increase in the applicable interest rate as described at the beginning of this paragraph, (ii) the addition of a reserve amount of $15,000,000 against our borrowing availability, which may be reduced by certain capital expenditures made in respect of our properties securing the 2018 Credit Facility, and (iii) the requirement that we maintain a minimum balance of “liquid assets” of $15,000,000, defined as a combination of (a) unencumbered cash and cash equivalents and (b) up to $5,000,000 of unfunded availability under the 2018 revolving credit facility.

In May 2020, to further enhance its liquidity position and maintain financial flexibility, CIM Commercial entered into an unsecured revolving credit facility with a bank (the “2020 unsecured revolving credit facility”) pursuant to which CIM Commercial can borrow up to a maximum of $10,000,000.$10.0 million. Outstanding advances under the 2020 unsecured revolving credit facility bear interest at the rate of 1.00%. CIM Commercial also pays a revolving credit facility fee of 1.12% with each advance under the 2020 unsecured revolving credit facility, which fee is subject to a cap of $112,000 in the aggregate. The 2020 unsecured revolving credit facility matures in May 2022. The 2020 unsecured revolving credit facility contains certain customary covenants including a maximum leverage ratio and a minimum fixed charge coverage ratio, as well as certain other conditions. The 2020 unsecured revolving credit facility matures in May 2022. As of September 30, 2020, $0 was2021, no amounts were outstanding under the 2020 unsecured revolving credit facility and $10,000,000$10.0 million was available for future borrowings.
Junior Subordinated Notes—The Company has junior subordinated notes with a variable interest rate which resets quarterly based on the three-month LIBOR plus 3.25%, 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—SBA 7(a) loan-backed notes are secured by deeds of trust or mortgages. On May 30, 2018, the Company completed a securitization of the unguaranteed portion of certain of its SBA 7(a) loans receivable with the issuance of $38.2 million of unguaranteed SBA 7(a) loan-backed notes. The SBA 7(a) loan-backed notes are collateralized solely by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of the Company’s SBA 7(a) loans receivable. The SBA 7(a) loan-backed notes mature on March 20, 2043, with monthly payments due as payments on the collateralized loans are received. Based on the anticipated repayments of the Company’s collateralized SBA 7(a) loans, at issuance, the Company estimated the weighted average life of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%. The Company reflects the SBA 7(a) loans receivable as assets on its consolidated balance sheets and the SBA 7(a) loan-backed notes as debt on its consolidated balance sheets. The restricted cash on the Company’s consolidated balance sheets included funds related to the Company’s SBA 7(a) loan-backed notes of $1.9 million and $1.2 million as of September 30, 2021 and December 31, 2020, respectively.
Paycheck Protection Program Liquidity FacilityIn June 2020, we borrowedthe Company commenced borrowing funds from the Federal Reserve through the Paycheck Protection ProgramPPP Liquidity Facility (the “PPPLF”). to finance all the loans the Company originated under the PPP. Advances under the PPPLF carry an interest rate of 0.35%, are made on a dollar-for-dollar basis based on the amount of loans originated under the Paycheck Protection ProgramPPP and are secured by loans made by usthe Company under the Paycheck Protection Program.PPP. The PPPLF contains customary covenants but is not subject to any financial covenants. The maturity date of PPPLF borrowings is the same as the maturity date of the loans pledged to secure the extension of credit, generally two years. At maturity, both principal and accrued interest are due. The maturity date of a PPPLF borrowing will be accelerated if, among other things, we havethe Company has been reimbursed by the SBA for a loan forgiveness (to the extent of the forgiveness), we havethe Company has received payment from the SBA representing exercise of the loan guarantee or we havethe Company has received payment from the underlying borrower (to the extent of the payment received). NoAs of September 30, 2021, $7.6 million was outstanding under the PPPLF. As the PPP has ended, no new extensions of credit willmay be made under the PPPLF after September 30, 2020 unlessPPPLF.
Deferred loan costs, which represent legal and third-party fees incurred in connection with the Federal Reserve BoardCompany’s borrowing activities, are capitalized and amortized to interest expense on a straight-line basis over the United States Departmentlife of the Treasury deciderelated loan, approximating the effective interest method. Deferred loan costs are presented net of accumulated amortization and are a reduction to extend the PPPLF. We borrowed money under the PPPLF to finance all the loans we originated under the Paycheck Protection Program. As of September 30, 2020, $16,016,000 was outstanding under the PPPLF.total debt.
As of September 30, 20202021 and December 31, 2019,2020, accrued interest and unused commitment fees payable of $576,000$529,000 and $650,000,$564,000, respectively, were included in accounts payable and accrued expenses.
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Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 20192021 (Unaudited)

– (Continued)
Future principal payments on ourthe Company’s debt (face value) as of September 30, 20202021 are as follows:follows (in thousands):
Years Ending December 31,Years Ending December 31,Mortgage PayableSecured Borrowings Principal (1)2018 Revolving Credit FacilityOther (1) (2)TotalYears Ending December 31,Mortgage Payable
Secured Borrowings Principal (1)
2018 Revolving Credit Facility
Other (1) (2)
Total
(in thousands)
2020 (Three months ending December 31, 2020)$$107 $$450 $557 
2021435 8,542 8,977 
2021 (Three months ending December 31, 2021)2021 (Three months ending December 31, 2021)$— $469 $— $1,206 $1,675 
20222022449 166,500 9,333 176,282 2022— 412 75,000 2,436 77,848 
20232023462 1,124 1,586 2023— 424 — 2,321 2,745 
20242024477 703 1,180 2024— 437 — 2,443 2,880 
20252025— 450 — 2,157 2,607 
ThereafterThereafter97,100 6,622 38,057 141,779 Thereafter97,100 5,614 — 34,358 137,072 
$97,100 $8,552 $166,500 $58,209 $330,361 $97,100 $7,806 $75,000 $44,921 $224,827 
______________________
(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. OurThe Company’s estimate of their repayment is based on scheduled payments on the underlying loans. OurThe Company’s estimate will differ from actual amounts to the extent we experiencethe Company experiences prepayments and or loan liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans.
(2)Represents the junior subordinated notes, SBA 7(a) loan-backed notes, and borrowed funds from the Federal Reserve through the PPPLF.

7. STOCK-BASED COMPENSATION PLANS
On April 3, 2015, ourthe Company’s board of directors (the “Board of Directors”) unanimously approved the CIM Commercial Trust Corporation 2015 Equity Incentive Plan (the "2015“2015 Equity Incentive Plan"Plan”), which was approved by ourthe Company’s stockholders. Under the 2015 Equity Incentive Plan, wethe Company granted awards of restricted shares of Common Stock to each of the independent members of the Board of Directors as follows:
Grant Date (1)Grant Date (1)Vesting DateRestricted Shares of Common Stock - IndividualRestricted Shares of Common Stock - AggregateGrant Date (1)Vesting DateRestricted Shares of Common Stock - IndividualRestricted Shares of Common Stock - Aggregate
May 2018May 20191,126 3,378 
May 2019May 2019May 2020889 3,556 May 2019May 2020889 3,556 
July 2019July 2019May 2020 (2)81 324 July 2019May 2020 (2)81 324 
May 2020May 2020(3)5,478 21,912 May 2020February 2021 (3)5,478 5,478 
May 2020May 2020May 20215,478 16,434 
May 2021May 2021(4)5,083 20,332 
______________________
(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. WeThe Company recorded compensation expense related to these restricted shares of Common Stock in the amount of $55,000 and $56,000$55,000 for the three months ended September 30, 20202021 and 2019,2020, respectively, and $167,000$165,000 and $138,000$167,000 for the nine months ended September 30, 20202021 and 2019,2020, respectively.
(2)These shares vested in May 2020 concurrent with the vesting of the restricted shares of Common Stock granted in May 2019.
(3)On February 11, 2021, the Company’s Board of Directors approved the immediate vesting of 5,478 shares that had been granted in May 2020 to a former independent member of the Board of Directors following his death.
(4)These shares will vest after one year of continuous service.
As of September 30, 2020,2021, there was $128,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized ratably over the remaining vesting period.

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Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 20192021 (Unaudited)

– (Continued)
8. EARNINGS PER SHARE (“EPS”)
The computations of basic EPS are based on ourthe Company’s weighted average shares outstanding. TheFor the three and nine months ended September 30, 2021, there was no difference in the diluted weighted average number of shares of Common Stock outstanding as compared the basic weighted average number of shares of Common Stock outstanding was 14,805,000 and 14,598,000 for the three months ended September 30, 2020 and 2019, respectively, and 14,729,000 and 14,598,000 for the nine months ended September 30, 2020 and 2019, respectively.outstanding. In order to calculate the diluted weighted average number of shares of Common Stock outstanding for the three and nine months ended September 30, 2020, the basic weighted average number of shares of Common Stock outstanding was increased by 0 and 108 shares, respectively, to reflect the dilutive effect of certain shares of ourthe Company’s Series A Preferred Stock. In order to calculate the diluted weighted average number of shares of Common Stock outstanding for the three and nine months ended September 30, 2019, the basic weighted average number of shares of Common Stock outstanding was increased by 1,000 and 1,227,000, respectively, to reflect the dilutive effect of certain shares of our Series A Preferred Stock. NaNNo shares of Series D Preferred Stock outstanding as of September 30, 20202021 had a dilutive effect and 0no shares of Series D Preferred Stock were outstanding as of September 30, 2019.2020. Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three and nine months ended September 30, 20202021 and 20192020 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 10). Outstanding shares of Series L Preferred Stock were not included in the computation of diluted EPS for the three and nine months ended September 30, 20202021 and 20192020 because such shares were not redeemable during such periods.
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 ourthe Company’s basic and diluted per-share amounts for net (loss) incomeloss attributable to common stockholders for the three and nine months ended September 30, 2021 and 2020 and 2019:(in thousands, except per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in thousands, except per share amounts)
Numerator:
Net (loss) income attributable to common stockholders$(9,678)$(1,622)$(24,606)$334,269 
Redeemable preferred stock dividends declared on dilutive shares(1)1,917 
Diluted net (loss) income attributable to common stockholders$(9,678)$(1,622)$(24,607)$336,186 
Denominator:
Basic weighted average shares of Common Stock outstanding14,805 14,598 14,729 14,598 
Effect of dilutive securities—contingently issuable shares1,227 
Diluted weighted average shares and common stock equivalents outstanding14,805 14,599 14,729 15,825 
Net (loss) income attributable to common stockholders per share:
Basic$(0.65)$(0.11)$(1.67)$22.90 
Diluted$(0.65)$(0.11)$(1.67)$21.24 

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Numerator:
Net loss attributable to common stockholders$(3,216)$(9,678)$(15,632)$(24,606)
Redeemable preferred stock dividends declared on dilutive shares— — — (1)
Diluted net loss attributable to common stockholders$(3,216)$(9,678)$(15,632)$(24,607)
Denominator:
Basic weighted average shares of Common Stock outstanding23,349 14,805 17,784 14,729 
Effect of dilutive securities—contingently issuable shares— — — 
Diluted weighted average shares and common stock equivalents outstanding23,350 14,805 17,784 14,729 
Net loss attributable to common stockholders per share:
Basic$(0.14)$(0.65)$(0.88)$(1.67)
Diluted$(0.14)$(0.65)$(0.88)$(1.67)
9. 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, 2021 and 2020 (dollar amounts in thousands):
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
 Preferred Stock
Series ASeries DSeries LTotal
 SharesAmountSharesAmountSharesAmountSharesAmount
Balances, December 31, 20192,837,094 $70,633 — $— 5,387,160 $152,834 8,224,254 $223,467 
Issuance of Series D Preferred Stock— — 5,980 150 — — 5,980 150 
Reclassification of Series A Preferred Stock to permanent equity304,274 7,588 — — — — 304,274 7,588 
Redemption of Series A Preferred Stock(2,452)(61)— — — — (2,452)(61)
Balances, March 31, 20203,138,916 $78,160 5,980 $150 5,387,160 $152,834 8,532,056 $231,144 
Issuance of Series D Preferred Stock— $— 920 $23 — $— 920 $23 
Reclassification of Series A Preferred Stock to permanent equity427,064 10,638 — — — — 427,064 10,638 
Redemption of Series A Preferred Stock(5,532)(138)— — — — (5,532)(138)
Balances, June 30, 20203,560,448 88,660 6,900 173 5,387,160 152,834 8,954,508 241,667 
Issuance of Series D Preferred Stock— $— 11,837 $290 — $— 11,837 $290 
Reclassification of Series A Preferred Stock to permanent equity482,374 11,786 — — — — 482,374 11,786 
Redemption of Series A Preferred Stock(2,393)(60)— — — — (2,393)(60)
Balances, September 30, 20204,040,429 $100,386 18,737 $463 5,387,160 $152,834 9,446,326 $253,683 
Balances, December 31, 20204,377,762 $108,729 19,145 $473 5,387,160 $152,834 9,784,067 $262,036 
Issuance of Series D Preferred Stock— — 4,045 99 — — 4,045 99 
Reclassification of Series A Preferred Stock to permanent equity366,991 9,144 — — — — 366,991 9,144 
Redemption of Series A Preferred Stock(29,462)(733)— — — — (29,462)(733)
Balances, March 31, 20214,715,291 $117,140 23,190 $572 5,387,160 $152,834 10,125,641 $270,546 
Issuance of Series D Preferred Stock— — 7,835 192 — — 7,835 192 
Reclassification of Series A Preferred Stock to permanent equity556,587 13,915 — — — — 556,587 13,915 
Redemption of Series A Preferred Stock(18,501)(460)— — — — (18,501)(460)
Balances, June 30, 20215,253,377 $130,595 31,025 $764 5,387,160 $152,834 10,671,562 $284,193 
Issuance of Series D Preferred Stock— — 25,832 632 — — 25,832 632 
Reclassification of Series A Preferred Stock to permanent equity593,300 15,132 — — — — 593,300 15,132 
Redemption of Series A Preferred Stock(25,564)(634)— — — — (25,564)(634)
Balances, September 30, 20215,821,113 $145,093 56,857 $1,396 5,387,160 $152,834 11,265,130 $299,323 
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
As of September 30, 2020, we2021, the Company had issued 5,896,536in registered public offerings 7,166,128 shares of Series A Preferred Stock, 4,603,287 Series A Preferred Warrants and 18,73756,857 shares of Series D Preferred Stock and received gross proceeds of $147,864,000$180.5 million ($146,651,000178.4 million of which was allocated to the Series A Preferred Stock, $761,000 of which was allocated to the Series A Preferred Warrants, and $452,000$1.4 million of which was allocated to the Series D Preferred Stock) and, additionally, had issued 106,518387,810 shares of Series A Preferred Stock as payment for services to the Administrator, for which $0 inno cash proceeds were received. In connection with such issuance, costs specifically identifiable to the offering of Series A Preferred Stock, Series A Preferred Warrants and Series D Preferred Stock, such as commissions, dealer manager fees and other offering fees and expenses, totaled $12,043,000
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

($11,889,000$15.1 million ($14.9 million of which was allocated to the Series A Preferred Stock, $142,000 of which was allocated to the Series A Preferred Warrants, and $12,000$35,000 of which was allocated to the Series D Preferred Stock). In addition, as of September 30, 2020,2021, non-issuance-specific costs related to this offering totaled $7,063,000.$7.9 million. As of September 30, 2020, we have2021, the Company had reclassified and allocated $1,152,000,$1.6 million, $5,000 and $4,000$7,000 from deferred charges to Series A Preferred Stock, Series A Preferred Warrants and Series D Preferred Stock, 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. As of September 30, 2020,2021, there were 5,915,8167,369,997 shares of Series A Preferred Stock outstanding, 4,603,287 Series A Preferred Warrants to purchase 1,194,159 shares of Common Stock outstanding, and 18,73756,857 shares of Series D Preferred Stock outstanding. As of September 30, 2020, 87,238 2021, 183,941 shares of Series A Preferred Stock and 0no shares of Series D Preferred Stock havehad been redeemed.
Series A Preferred StockWeThe Company conducted a continuous public offering of Series A Preferred Units from October 2016 through January 2020, where each Series A Preferred Unit consisted of one share of Series A Preferred Stock, par value $0.001 per share, of the Company (collectively, the “Series A Preferred Stock”) with an initial stated value of $25.00 per share, (the “Series A Preferred Stock Stated Value”), subject to adjustment, and one warrant (collectively, the “Series A Preferred Warrants”) to purchase 0.25 of a share of Common Stock (Note 10). ProceedsStock. Proceeds and expenses from the sale of the Series A Preferred Units were allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance.
Since February 2020, we havethe Company has been conducting a continuous public offering with respect to shares of ourthe Company’s Series A Preferred Stock, which, since such time, is no longer being issued as a unit with an accompanying Series A Preferred Warrant.
With respect to the payment of dividends, the Series A Preferred Stock ranks senior to our Series L Preferred Stock (as defined below) and our Common Stock and on parity with our Series D Preferred Stock (as defined below). With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series A Preferred Stock ranks on parity with our Series D Preferred Stock and Series L Preferred Stock, to the extent of the Series L Preferred Stock Stated Value (as defined below), and otherwise ranks senior to our Series L Preferred Stock and our Common Stock.
Our Series A Preferred Stock is redeemable at the option of the holder (the “Series A Preferred Stock Holder”) or CIM Commercial. The redemption schedule of the Series A Preferred Stock allows redemptions at the option of the Series A Preferred Stock Holder from the date of original issuance of any given shares of Series A Preferred Stock at the Series A Preferred Stock Stated Value, less a redemption fee applicable prior to the fifth anniversary of the issuance of such shares, plus accrued and unpaid dividends. CIM Commercial has the right to redeem the Series A Preferred Stock after the fifth anniversary of the issuance of such shares at the Series A Preferred Stock Stated Value, plus accrued and unpaid dividends. At the Company’s discretion, redemptions will be paid in cash or, on or after the first anniversary of the issuance of such shares of Series A Preferred Stock, an equal value of Common Stock based on the volume weighted average price of our Common Stock for the 20 trading days prior to the redemption.
Net proceeds from the issuance of shares of Series A Preferred Stock are initially recorded in temporary equity at an amount equal to the gross proceeds allocated to such shares of Series A Preferred Stock minus the costs specifically identifiable to the issuance of such shares and the non-issuance specific offering costs allocated to such shares. If the net proceeds from the issuance of shares of Series A Preferred Stock are less than the redemption value of such shares at the time they are 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. For the three and nine months ended September 30, 2021, the Company recorded redeemable preferred stock deemed dividends of $90,000 and $253,000, respectively, related to such adjustments. For the three and nine months ended September 30, 2020, wethe Company recorded redeemable preferred stock deemed dividends of $87,000 and $300,000, respectively, related to such adjustments and, for the three and nine months ended September 30, 2019, we recorded 0 redeemable preferred stock deemed dividends in our consolidated statements of operations.adjustments.
On the first anniversary of the issuance of a particular share of Series A Preferred Stock, we reclassifythe Company reclassifies such share of Series A Preferred Stock from temporary equity to permanent equity because 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, 2020, we have2021, the Company had reclassified an aggregate of $92,387,000$134.7 million in net proceeds from temporary equity to permanent equity.
Holders of Series A 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 of Series A Preferred Stock at an annual rate of 5.5% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter) (the “Series A
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Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Dividend”). Dividends on each share of Series A Preferred Stock begin accruing on, and are cumulative from, the date of issuance.
We expect to pay the Series A Dividend in arrears on a monthly basis in accordance with the foregoing provisions, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the Maryland General Corporation Law (the “MGCL”) or other factors make it imprudent to do so. The timing and amount of the Series A Dividend will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.
Cash dividends on our Series A Preferred Stock paid in respect of the nine months ended September 30, 2020 and 2019 consist of the following:
Declaration DatePayment DateNumber of SharesCash Dividends
(in thousands)
June 3, 2020October 15, 20205,809,298$673 
June 3, 2020September 15, 20205,696,822$652 
June 3, 2020August 17, 20205,466,743$629 
March 2, 2020July 15, 20205,324,109$594 
March 2, 2020June 15, 20205,033,203$563 
March 2, 2020May 15, 20204,853,969$554 
January 28, 2020April 15, 20204,827,633$547 
January 28, 2020March 16, 20204,684,453$530 
January 28, 2020February 18, 20204,581,353$516 
August 8, 2019October 15, 20194,091,980$1,318 
June 4, 2019July 15, 20193,601,721$1,150 
February 20, 2019April 15, 20193,149,924$1,010 
On September 2, 2020, we declared a quarterly cash dividend of $0.34375 per share of our Series A Preferred Stock, or portion thereof for issuances during the period from October 1, 2020 to December 31, 2020. As a result, $0.114583 per share will be paid on November 16, 2020 to holders of record of Series A Preferred Stock at the close of business on November 5, 2020, $0.114583 per share will be paid on December 15, 2020 to holders of record of Series A Preferred Stock at the close of business on December 5, 2020, and $0.114583 per share will be paid on January 15, 2021 to holders of record of Series A Preferred Stock at the close of business on January 5, 2021.
Series D Preferred Stock—Since February 2020, we hthe Company hasave been conducting a continuous public offering with respect to shares of our series D preferred stock (the “Series D Preferred Stock”), par value $25.00 per share (the “Seriesits Series D Preferred Stock, Stated Value”),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 is expected to be, and since June 29, 2020, has been, $24.50 per share through the end of the life of the offering. Shares of Series D Preferred Stock are recorded in permanent equity at the time of their issuance.
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, such as commissions, dealer manager fees, and other offering fees and expenses, totaling $15.9 million, a discount of $2.9 million, and non-issuance-specific costs of $2.5 million. These fees have been recorded as a reduction to the gross proceeds in permanent equity.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
Until the fifth anniversary of the date of original issuance of the Series L Preferred Stock, the Company is prohibited from issuing any shares of preferred stock ranking senior to or on parity with the Series L Preferred Stock with respect to the payment of dividends, other distributions, liquidation, and or dissolution or winding up of the Company unless the Minimum Fixed Charge Coverage Ratio, calculated in accordance with the Articles Supplementary describing the Series L Preferred Stock, is equal to or greater than 1.25:1.00. As of September 30, 2021 and December 31, 2020, the Company was in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.
Refer to Note 12 for a discussion of certain payments the Company has made in shares of Common Stock and in shares of Preferred Stock and may make in shares of Preferred Stock in lieu of cash payments in order to remain in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.
DividendsWith respect to the payment of dividends, the Series DA Preferred Stock ranks senior to ourthe Series L Preferred Stock (as defined below) and ourthe Common Stock, and on parity with ourthe Series D Preferred Stock. The Series L Preferred Stock ranks senior to the Common Stock (except with respect to and only to the extent of the Initial Dividend) and junior to the Series A Preferred Stock.Stock, Series D Preferred Stock and Common Stock (with respect to and only to the extent of the Initial Dividend). With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series DA Preferred Stock ranks on parity with ourthe Series AD Preferred Stock and Series L Preferred Stock, to the extent of the Series L Preferred Stock Stated Value, (as defined below), and otherwise ranks senior to ourthe Series L Preferred Stock and ourthe Common Stock.
Our With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series L Preferred Stock ranks senior to the Common Stock, both (i) to the extent of the Series L Preferred Stock Stated Value and (ii) following payment to holders of the Common Stock of an amount equal to any unpaid Initial Dividend, to the extent of any accrued and unpaid dividends on the Series L Preferred Stock, on parity with the Series A Preferred Stock and Series D Preferred Stock, is redeemable atto the optionextent of the holder (the “Series DSeries L Preferred Stock Holder”) or CIM Commercial. The redemption schedule ofStated Value and junior to the Series A Preferred Stock, Series D Preferred Stock allows redemptionsand Common Stock (to the extent of the Initial Dividend), in all instances with respect to any accrued and unpaid dividends on the Series L Preferred Stock.
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 the optionan annual rate of 5.50% of the Series D Preferred Stock Holder from the date of original issuance of any given shares of Series D Preferred Stock at the Series DA Preferred Stock Stated Value less a redemption fee applicable prior to(i.e., the fifth anniversaryequivalent of the issuance of such shares, plus accrued and unpaid dividends. CIM Commercial has the right to redeem the Series D Preferred Stock after the fifth anniversary of the issuance of such shares at the Series D Preferred Stock Stated Value, plus accrued and unpaid dividends. At the
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Company’s discretion, redemptions will be paid in cash or an equal value of Common Stock based on the volume weighted average price of our Common Stock for the 20 trading days prior to the redemption.
Shares of Series D Preferred Stock are recorded in permanent equity at the time of their issuance.
$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 ourthe Company’s Board of Directors, and declared by usthe 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 $0.35313 per share per quarter) (the “Series D Dividend”). Dividends on each share of Series A Preferred Stock and Series D Preferred Stock begin accruing on, and are cumulative from, the date of issuance.
We expectThe Company expects to pay the Series A Dividend and Series D Dividend in arrears on a monthly basis in accordance with the foregoing provisions, unless ourthe Company’s results of operations, our general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so. The timing and amount of the Series A Dividend and the Series D Dividend will be determined by ourthe Company’s Board of Directors, in its sole discretion, and may vary from time to time.
Cash dividends on our Series D Preferred Stock paid in respect of the nine months ended September 30, 2020 consist of the following:
Declaration DatePayment DateNumber of SharesCash Dividends
(in thousands)
June 3, 2020October 15, 202018,737$
June 3, 2020September 15, 202018,737$
June 3, 2020August 17, 20206,900$
March 2, 2020July 15, 20206,900$
March 2, 2020June 15, 20206,900$
March 2, 2020May 15, 20206,580$
March 2, 2020April 15, 20205,980$
March 2, 2020March 16, 20205,600$
On September 2, 2020, we declared a quarterly cash dividend of $0.353125 per share of our Series D Preferred Stock, or portion thereof for issuances during the period from October 1, 2020 to December 31, 2020. As a result, $0.117708 per share will be paid on November 16, 2020 to holders of record of Series D Preferred Stock at the close of business on November 5, 2020, $0.117708 per share will be paid on December 15, 2020 to holders of record of Series D Preferred Stock at the close of business on December 5, 2020, and $0.117708 per share will be paid on January 15, 2021 to holders of record of Series D Preferred Stock at the close of business on January 5, 2021.
Series L Preferred Stock—On November 21, 2017, we issued 8,080,740 sharesHolders of Series L Preferred Stock having an initial stated valueare entitled to receive, if, as and when authorized by the Company’s Board of $28.37 perDirectors, and declared by the Company out of legally available funds, cumulative cash dividends on each share (“Series L Preferred Stock Stated Value”), subject to adjustment. In November 2019, pursuant to a tender offer, we repurchased 2,693,580 shares of Series L Preferred Stock at a purchase pricean annual rate of $29.125.50% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share (of which $1.39, or $3,744,000 inper year). Dividends on each share of Series L Preferred Stock began accruing on, and are cumulative from, the aggregate, reflects the amountdate of accrued and unpaidissuance.
The Company expects to pay dividends on the Series L Preferred Stock as of November 20, 2019), as converted to and paid in ILS (the “Tender Offer”). The total cost to repurchasearrears on an annual basis in accordance with the tendered shares, including professional fees to completeforegoing provisions, unless the Tender Offer of $462,000 but excluding the dividends accrued in respect of such shares, was $75,155,000, which was primarily funded from borrowings under the 2018 revolving credit facility (Note 6). We recognized $5,873,000 of redeemable preferred stock redemptions in our consolidated statementCompany’s results of operations, forgeneral financing conditions, general economic conditions, applicable requirements of the year ended December 31, 2019 in connection with the Tender Offer. The shares of Series L Preferred Stock accepted for payment byMGCL or other factors make it imprudent to do so. If the Company were restoredfails to the status of authorized but unissued shares of preferred stock without designation astimely declare distributions or fails to class or series.
With respect to the payment of dividends,timely pay distributions on the Series L Preferred Stock, ranks seniorthe annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.00% per year, up to oura maximum rate of 8.50% per annum. However, prior to the payment of any distributions on Series L Preferred Stock in respect of a given year, the Company must first declare and pay dividends on the Common Stock (except within respect to and onlyof such year in an aggregate amount equal to the extentInitial Dividend announced by the Company’s Board of Directors at the end of the prior fiscal year. On December 22, 2020, the Company announced an Initial Dividend)Dividend on shares of its Common Stock for fiscal year 2021 in the aggregate amount of $4,448,223, of which $3,979,000 had been paid as of September 30, 2021.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
During the nine months ended September 30, 2021, the Company paid $7.0 million, $26,000 and junior to our$8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Common Stock (with respect to and only to the extent of the Initial Dividend). With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series L Preferred Stock, ranks senior to our Commonrespectively. During the nine months ended September 30, 2020, the Company paid $6.1 million, $4,000 and $8.4 million of cash dividends on the Series A Preferred Stock, both (i) to the extent of theSeries D Preferred Stock and Series L Preferred Stock, Stated Value and (ii) following payment to holders of our Common Stock of an amount equal to any unpaid Initial Dividend, to the extent of any accrued and unpaid dividends on the Series L Preferred Stock, on
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)respectively.

Redemptions
parity, to the extent of the Series L Preferred Stock Stated Value, with our—The Company’s Series A Preferred Stock and Series D Preferred Stock and junior, with respect to any accrued and unpaid dividends onare redeemable at the Series L Preferred Stock, to ouroption of the holder or CIM Commercial. The redemption schedule of the Series A Preferred Stock and Series D Preferred Stock allows redemptions at the option of the holder of Series A Preferred Stock or Series D Preferred Stock from the date of original issuance of any such shares at the 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. CIM Commercial 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. At the Company’s discretion, the redemption price will be paid in cash or in Common Stock (tobased on the extentvolume weighted average price of the Initial Dividend).Company’s Common Stock for the 20 trading days prior to the redemption; provided that the redemption price of any shares of Series A Preferred Stock redeemed prior to the first anniversary of the date of original issuance of such shares must be paid in cash.
From and after the fifth anniversary of the date of original issuance of the Series L Preferred Stock, each holder will have the right to require the Company to redeem, and the Company will also have the option to redeem (subject to certain conditions), such shares of Series L Preferred Stock at a redemption price equal to the Series L Preferred Stock Stated Value, plus, provided certain conditions are met, all accrued and unpaid distributions. Notwithstanding the foregoing, a holder of shares of ourthe Company’s Series L Preferred Stock may require usthe Company to redeem such shares at any time prior to the fifth anniversary of the date of original issuance of the Series L Preferred Stock if (1) we dothe Company does not declare and pay in full the distribution on the Series L Preferred Stock for any annual period prior to such fifth anniversary or (2) we dothe Company does not declare and pay all accrued and unpaid distributions on the Series L Preferred Stock for all past dividend periods prior to the applicable holder redemption date. The applicable redemption price payable upon redemption of any Series L Preferred Stock will be made, in the Company’s sole discretion, in the form of (A) cash in ILS at the then-current currency exchange rate determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, (B) in equal value through the issuance of shares of Common Stock, with the value of such Common Stock to be deemed the lower of (i) the NAV per share of ourthe Company’s Common Stock as most recently published by the Company as of the effective date of redemption and (ii) the volume-weighted average price of ourthe Company’s Common Stock, determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, or (C) in a combination of cash in ILS and ourthe Company’s Common Stock, based on the conversion mechanisms set forth in (A) and (B), respectively.
10. STOCKHOLDERS’ EQUITY
Dividends
Holders of Series L Preferredthe Company’s Common Stock are entitled to receive dividends, if, as and when authorized by ourthe Board of Directors and declared by usthe Company out of legally available funds, cumulativefunds. In determining the Company’s dividend policy, the Board of Directors considers many factors including the amount of cash dividends on each share of Series L Preferred Stock at an annual rate of 5.5% ofresources available for dividend distributions, capital spending plans, cash flow, the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year). Dividends on each share of Series L Preferred Stock began accruing on, and are cumulative from, the date of issuance.
We expect to pay dividends on the Series L Preferred Stock in arrears on an annual basis in accordance with the foregoing provisions, unless our results of operations, our general financing conditions, general economic conditions,Company’s financial position, applicable requirements of the MGCL, or other factors make it imprudent to do so. Ifany applicable contractual restrictions, and future growth in NAV and cash flow per share prospects. Consequently, the Company fails to timely declare distributions or fails to timely pay distributions on the Series L Preferred Stock, the annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.0% per year, up toon a maximum rate of 8.5% per annum. However, prior to the payment of any distributions on Series L Preferred Stock in respect of a given year, the Company must first declare and pay dividends on the Common Stock in respect of such year in an aggregate amount equal to the Initial Dividend announced by our Board of Directors at the end of the prior fiscal year. On December 20, 2019, our Board of Directors announced an Initial Dividend on shares of our Common Stock for fiscal year 2020 in the aggregate amount of $4,380,645, of which $3,319,274 had been paid as of September 30, 2020.
Accumulated cash dividends on our Series L Preferred Stock for the three and nine months ended September 30, 2020 and 2019, are included in the numerator for purposes of calculating basic and diluted net (loss) income attributable to common stockholders per share (Note 8), and consist of the following:
Accumulation Period
Start DateEnd DateNumber of SharesDividends Accumulated
(in thousands)
July 1, 2020September 30, 20205,387,160$2,101 
April 1, 2020June 30, 20205,387,160$2,101 
January 1, 2020March 31, 20205,387,160$2,101 
July 1, 2019September 30, 20198,080,740$3,152 
April 1, 2019June 30, 20198,080,740$3,152 
January 1, 2019March 31, 20198,080,740$3,152 
Until the fifth anniversary of the date of original issuance of our Series L Preferred Stock, we are prohibited from issuing any shares of preferred stock ranking senior to or on parity with the Series L Preferred Stock with respect to thequarterly basis
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 20192021 (Unaudited)

– (Continued)
payment of dividends, other distributions, liquidation, and or dissolution or winding up of the Company unless the minimum fixed charge coverage ratio, calculated in accordance with the Articles Supplementary describing the Series L Preferred Stock, is equaldoes not necessarily correlate directly to or greater than 1.25:1.00 (the “Series L Preferred Stock Minimum Fixed Charge Coverage Ratio”). As of September 30, 2020 and December 31, 2019, we were in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.
Refer to Note 13 for a discussion of certain payments the Company has made in shares of Common Stock and in shares of Preferred Stock and may make in shares of Preferred Stock in lieu of cash payments in order to remain in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio.

10. STOCKHOLDERS’ EQUITY
Dividends
any individual factor. Cash dividends per share of Common Stock paid in respect of the nine months ended September 30, 20202021 and 20192020 consist of the following:
Declaration DatePayment DateTypeCash Dividend Per Share of Common ShareStock
September 7, 2021September 29, 2021Regular Quarterly$0.075 
June 7, 2021June 30, 2021Regular Quarterly$0.075 
March 5, 2021March 30, 2021Regular Quarterly$0.075 
September 2, 2020September 29, 2020Regular Quarterly$0.075 
June 3, 2020June 29, 2020Regular Quarterly$0.075 
March 2, 2020March 25, 2020Regular Quarterly$0.075 
August 8, 2019
Rights Offering
During the nine months ended September 30, 2021, the Company conducted the Rights Offering pursuant to which the Company issued an aggregate of 8,521,589 shares of Common Stock at a subscription price of $9.25 per share for aggregate gross proceeds of $78.8 million. Offering costs of $2.0 million were incurred in connection with the Rights Offering and recorded as a reduction to additional paid-in capital.September 18, 2019Regular Quarterly$0.075 August 8, 2019August 30, 2019Special Cash$42.000 June 4, 2019June 27, 2019Regular Quarterly$0.375 February 20, 2019March 25, 2019Regular Quarterly$0.375 
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 (Note 9) and one Series A Preferred Warrant (Note 9) that allowed holders of Series A Preferred Warrantscould 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 ourthe 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 ourthe 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 of $42.00 per share of Common Stock ($613,294,000 in the aggregate) paid to stockholders of record at the close of business on August 19, 2019 (the “Special Dividend”)Special Dividend was adjusted to reflect the effect of the Special Dividend.
Proceeds and expenses from the sale of the Series A Preferred Units 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, 2020, we2021, the Company had issued 4,603,287 Series A Preferred Warrants to purchase 1,194,159 shares of Common Stock in connection with ourthe Company’s offering of Series A Preferred Units and allocated net proceeds of $614,000, after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.


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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

11. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Hedges of Interest Rate Risk
In order to manage financing costs and interest rate exposure related to the one-month LIBOR indexed variable rate borrowings, on August 13, 2015, we entered into 10 interest rate swap agreements with multiple counterparties totaling $385,000,000 of notional value. These swap agreements became effective on November 2, 2015. During the year ended December 31, 2017, we repaid $215,000,000 of outstanding one-month LIBOR indexed variable rate borrowings and we terminated 7 interest rate swaps with an aggregate notional value of $215,000,000, for which we received termination payments, net of fees, of $973,000.On December 28, 2018, we repaid $40,000,000 of outstanding one-month LIBOR indexed variable rate borrowings and we terminated 1 interest rate swap with a notional value of $50,000,000, for which we received a termination payment, net of fees, of $684,000. On March 11, 2019, we repaid $120,000,000 of outstanding one-month LIBOR indexed variable rate borrowings (Note 6) and we terminated our 2 remaining interest rate swaps with an aggregate notional value of $120,000,000, for which we received aggregate termination payments, net of fees, of $1,302,000. The fair value of our 2 remaining swaps at the time of termination was $1,421,000 resulting in a net loss of $0 and $119,000 for the three and nine months ended September 30, 2019, respectively, which was recorded as a net increase to interest expense on our consolidated statement of operations.
Each of our interest rate swap agreements initially met the criteria for cash flow hedge accounting treatment and we had designated the interest rate swap agreements as cash flow hedges of the risk of variability attributable to changes in the one-month LIBOR. Accordingly, the interest rate swaps were recorded on our consolidated balance sheets at fair value, and prior to August 1, 2018, the changes in the fair value of the swaps were recorded in OCI and reclassified to earnings as an adjustment to interest expense as interest became receivable or payable (Note 2). On July 31, 2018, we determined the hedged forecasted transaction was no longer probable of occurring so all subsequent changes in the fair value of our interest rate swaps were included in interest expense on our consolidated statements of operations. The balance in AOCI as of July 31, 2018 was reclassified to earnings as an adjustment to interest expense on our consolidated statements of operations as the originally designated forecasted transaction affected earnings. For the three and nine months ended September 30, 2019, $0 and $1,806,000, respectively, was reclassified from AOCI, the latter of which decreased interest expense on our consolidated statements of operations, and included a write off of $1,580,000 at the time our 2 remaining interest rate swaps were terminated. Beginning on August 1, 2018, changes in the fair value of the swaps were recorded in interest expense on our consolidated statements of operations. For the three and nine months ended September 30, 2019, $0 and $209,000, respectively, was included as an increase in interest expense on our consolidated statement of operations related to the change in the fair value of our interest rate swaps.
Impact of Hedges on AOCI and Consolidated Statements of Operations
The changes in the balance of each component of AOCI related to our interest rate swaps designated as cash flow hedges are as follows:
 Three Months Ended September 30,Nine Months Ended
September 30,
 2020201920202019
 (in thousands)
Accumulated other comprehensive income, at beginning of period$$$$1,806 
Other comprehensive income before reclassifications
Amounts reclassified to accumulated other comprehensive income (loss) (1)(1,806)
Net current period other comprehensive income (loss)(1,806)
Accumulated other comprehensive income, at end of period$$$$
(1)The amounts from AOCI were reclassified as a decrease to interest expense in our consolidated statement of operations for the nine months ended September 30, 2019.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

12. FAIR VALUE OF FINANCIAL INSTRUMENTS
We determineThe 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:
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.
The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on our consolidated balance sheets are as follows:
 September 30, 2020December 31, 2019 
 Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
Level
 (in thousands) 
Assets:     
SBA 7(a) loans receivable, subject to credit risk$31,911 $33,296 $26,149 $28,041 
SBA 7(a) loans receivable, subject to loan-backed notes24,232 26,001 27,595 30,076 
SBA 7(a) loans receivable, paycheck protection program15,504 16,016 
SBA 7(a) loans receivable, subject to secured borrowings8,925 9,018 12,682 12,780 
SBA 7(a) loans receivable, held for sale8,742 9,695 1,653 1,753 
Liabilities:     
Mortgage payable96,946 106,067 96,926 99,764 
Junior subordinated notes25,365 24,200 25,299 24,406 
Management’s estimation of the fair value of ourthe 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
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
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 ourthe Company’s financial instruments and we utilizethe 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 wethe 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 ourthe Company’s secured borrowings—government guaranteed loans, SBA 7(a) loan-backed notes, 2018 revolving credit facility and borrowed funds from the Federal Reserve through the PPPLF approximate their fair values, as the interest rates on these securities are variable and or approximate current market interest rates.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes The Company determines the fair value of mortgage notes payable and junior subordinated notes by performing discounted cash flow analyses using an appropriate market discount rate. The Company calculates the market discount rate for its mortgage notes payable by obtaining period-end treasury or swap rates, as applicable, for maturities that correspond to Consolidated Financial Statementsthe maturities of the Company’s debt and then adding an appropriate credit spread. These credit spreads take into account factors such as the Company’s credit standing, the maturity of the debt, whether the debt is secured or unsecured, and the loan-to-value ratios of the debt. When estimating the fair value of the Company’s mortgages payable as of September 30, 20202021 and December 31, 2019,2020, the Company used a rate of 3.22% and
for 3.38%, respectively. The rate used to estimate the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

SBA 7(a) Loans Receivable, Subject to Credit Risk—Loans receivable were initially recorded at estimated fair value at the Acquisition Date. Loans receivable originated subsequent to the Acquisition Date are recorded at cost upon origination and adjusted by net loan origination fees and discounts. In order to determine the estimated fair value of ourthe Company’s junior subordinated notes was 4.38% and 4.49% as of September 30, 2021 and December 31, 2020, respectively.
Loans Receivable—The Company determines the fair value of loans receivable we useby performing a present value techniqueanalysis for the anticipated future cash flows using certain assumptions. As of September 30, 2020, our assumptions includedan appropriate market discount rates ranging from 5.25% to 6.75% and prepayment rates ranging from 9.85% to 17.50%. As of December 31, 2019, our assumptions included discount rates ranging from 5.25% to 7.75% and prepayment rates ranging from 9.85% to 17.50%.
SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes—These loans receivable represent the unguaranteed portions of loans originated under the SBA 7(a) Small Business Loan Program which were transferred to a trust and are held as collateral in connection with a securitization transaction. The proceeds from the transfer have been recorded as SBA 7(a) loan-backed notes payable. In order to determine the estimated fair value of these loans receivable, we use a present value technique for the anticipated future cash flows using certain assumptions. As of September 30, 2020, our assumptions included discount rates ranging from 4.75% to 6.25% and prepayment rates ranging from 13.41% to 16.80%. As of December 31, 2019, our assumptions included discount rates ranging from 5.25% to 7.25% and prepayment rates ranging from 13.41% to 16.80%.
SBA 7(a) Loans Receivable, Paycheck Protection Program—These loans receivable represent the loans originated under the Paycheck Protection Program described in Note 4 above. For a borrower who does not meet the criteria required for forgiveness, the loan will convert to a loan with either a twenty-four month or sixty month term and an interest rate of 1.00%. The loans are not secured by any collateral or personal guarantees; however, the loans are fully guaranteed by the SBA provided that we follow the requirements set forth in the Paycheck Protection Program. As of September 30, 2020, we estimated the fair value of these loans receivable using a discount rate of 1.00%. There is no credit risk associated with these loans since the SBA has guaranteed payment of the principal.
SBA 7(a) Loans Receivable, Subject to Secured Borrowings—These loans receivable represent the government guaranteed portion of loans 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 has guaranteed payment of the principal.  In order to determine the estimated fair value of these loans receivable, we use a present value technique for the anticipated future cash flows taking into consideration the lack of credit risk. As of September 30, 2020, our assumptions included discount rates ranging from 5.75% to 6.00%risk and using an anticipated prepayment rates ranging from and 11.77% to 16.80%. As of December 31, 2019, our assumptions included discount rates ranging from 6.75% to 7.50% and prepayment rates ranging from 11.77% to 16.80%.
SBA 7(a) Loans Receivable, Held for Sale— These loans receivable represent 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.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, 2021December 31, 2020
Discount RatePrepayment RateDiscount RatePrepayment Rate
SBA 7(a) loans receivable, subject to credit risk6.50% - 8.25%4.00% - 17.50%6.50% - 8.25%4.00% - 17.50%
SBA 7(a) loans receivable, subject to loan-backed notes5.75% - 8.00%4.88% - 17.50%5.50% - 8.00%4.88% - 17.50%
SBA 7(a) loans receivable, paycheck protection program1.00%N/A1.00%N/A
SBA 7(a) loans receivable, subject to secured borrowings7.00% - 7.75%5.00% - 17.50%7.00% - 7.75%5.00% - 17.50%
Mortgage PayableOther 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 valuevalues due to their short-term maturities at September 30, 2021 and December 31, 2020. Due to the short-term maturities of our mortgage payable is estimated based on current interest rates available for debtthese instruments, with similar terms. The fair value of our mortgage payable is sensitive to fluctuations in interest rates. Discounted cash flow analysis is generally usedLevel 1 inputs are utilized to estimate the fair value of ourthese financial instruments.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
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, 2021December 31, 2020 
 Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
Level
Assets: 
SBA 7(a) loans receivable, subject to credit risk$42,839 $42,906 $32,509 $32,397 
SBA 7(a) loans receivable, subject to loan-backed notes$20,172 $21,693 $23,606 $24,850 
SBA 7(a) loans receivable, paycheck protection program$7,364 $7,622 $14,089 $14,484 
SBA 7(a) loans receivable, subject to secured borrowings$8,099 $8,186 $8,822 $8,914 
SBA 7(a) loans receivable, held for sale$16,342 $17,950 $4,109 $4,527 
Liabilities: 
Mortgages payable (1)
$97,100 $101,094 $97,100 $100,799 2, 3
Junior subordinated notes (1)
$27,070 $24,327 $27,070 $24,236 
______________________
(1)The carrying amounts for the mortgage payable using a rate of 2.44% and 3.67% as of September 30, 2020 and December 31, 2019, respectively.
Junior Subordinated Notes—The fair value of the junior subordinated notes is estimated based on current interest rates available for debt instruments with similar terms. Discounted cash flow analysis is generally used to estimaterepresents the fair value of our junior subordinated notes. The rate used was 4.48%principal outstanding amounts, excluding deferred loan costs and 6.16% as of September 30, 2020 and December 31, 2019, respectively.

discounts.
13.12. RELATED-PARTY TRANSACTIONS
Asset Management and Other Fees to Related Parties
In December 2015, Asset Management FeesCIM Urban and CIM Capital, LLC, (formerly CIM Investment Advisors, LLC), an affiliate of CIM REIT and CIM Group (“CIM Capital”), entered intohave an investment management agreement, pursuant to which CIM Urban engaged CIM Capital to provide certain services to CIM Urban (the “Investment Management Agreement”). On January 1, 2019, CIM Capital has assigned its duties under the Investment Management Agreement to its 4 wholly-owned subsidiaries: CIM Capital Securities Management, LLC, a securities manager, CIM Capital RE Debt Management, LLC, a debt manager,
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

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 Investment Advisors, LLC from December 10, 2015 to December 31, 2018 and to CIM Capital and its 4 wholly-owned subsidiaries on and after January 1, 2019.subsidiaries.
CIM Urban pays asset management fees to the Operator on a quarterly basis in arrears. The fee is calculated as a percentage of the daily average adjusted fair value of CIM Urban’s assets:assets (dollar amounts in thousands):
Daily Average Adjusted Fair
Value of CIM Urban’s Assets
Daily Average Adjusted Fair
Value of CIM Urban’s Assets
 Daily Average Adjusted Fair
Value of CIM Urban’s Assets
 
Quarterly Fee
Percentage
Quarterly Fee
Percentage
From Greater ofFrom Greater ofTo and IncludingFrom Greater ofTo and Including
(in thousands) 
$$500,000 0.2500%— $500,000 0.2500%
$500,000 $1,000,000 0.2375%500,000 $1,000,000 0.2375%
$1,000,000 $1,500,000 0.2250%1,000,000 $1,500,000 0.2250%
$1,500,000 $4,000,000 0.2125%1,500,000 $4,000,000 0.2125%
$4,000,000 $20,000,000 0.1000%4,000,000 $20,000,000 0.1000%
The Operator earnedAsset management fees are included in asset management and other fees to related parties in the accompanying consolidated statements of $2,387,000 and $2,424,000 for the three months ended September 30, 2020 and 2019, respectively, and $7,126,000 and $9,669,000 for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020 and December 31, 2019, asset management fees of $2,382,000 and $2,356,000, respectively, were due to the Operator. On April 10, 2020, inoperations.
In lieu of cash payment of the asset management fee, for the first quarter of 2020, the Company has issued to the Operator 203,349 shares of ourits Common Stock representing approximately 1.4% of the outstandingand shares of our Commonits Series A Preferred Stock. The Company has issued shares of its Series A Preferred Stock prior to such issuance. On July 8, 2020, in lieu of cashthe Operator as payment offor the quarterly asset management fee for the second quarterfirst three quarters of 2020, the Company issued to the Operator 95,245 shares of our Series A Preferred Stock, representing approximately 1.8% of the outstanding shares of our Series A Preferred Stock prior to such issuance. For the third quarter and fourth quarter of 2020, we will, subject2021. Subject to applicable laws and regulations under Nasdaq and the TASE and the agreement of the Operator, pay all of the asset management fees in respect of such quarters in shares of Series A Preferred Stock. Furthermore, it is likely that wethe Company will seek to pay some or part of the fourth quarter asset management fees for part of 2021 in shares of Series A Preferred Stock.
Property Management Fees and ReimbursementsCIM Management, Inc. and certain of its affiliates (collectively, the “CIM Management Entities”), all affiliates of CIM REIT and CIM Group, provide property management, leasing, and
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
development services to CIM Urban. TheProperty management fees earned by the CIM Management Entities earned propertyentities and onsite management fees, whichcosts incurred on behalf of CIM Urban are included in rental and other property operating expenses totaling $461,000 and $494,000 forin the three months ended September 30, 2020 and 2019, respectively, and $1,258,000 and $2,106,000 for the nine months ended September 30, 2020 and 2019, respectively. CIM Urban incurred $867,000 and $837,000 for the three months ended September 30, 2020 and 2019, respectively, and $2,451,000 and $3,873,000 for the nine months ended September 30, 2020 and 2019, respectively, reimbursable to CIM Management Entities for onsite management costs incurred on behalfaccompanying consolidated statements of CIM Urban, whichoperations. Leasing commissions earned are included in rental and other property operating expenses. The CIM Management Entities earned leasing commissions of $18,000 and $32,000 for the three months ended September 30, 2020 and 2019, respectively, and $101,000 and $610,000 for the nine months ended September 30, 2020 and 2019, respectively, which were capitalized to deferred charges. In addition,charges on the CIM Management Entities earned constructionaccompanying consolidated balance sheets. Construction management fees of $32,000 and $160,000 for the three months ended September 30, 2020 and 2019, respectively, and $309,000 and $329,000 for the nine months ended September 30, 2020 and 2019, respectively, which wereare capitalized to investments in real estate.estate on the accompanying consolidated balance sheets.
As of September 30, 2020Administrative Fees and December 31, 2019, fees payable and expense reimbursements due to the CIM Management Entities of $1,532,000 and $4,107,000, respectively, are included in due to related parties. Also included in due to related parties as of September 30, 2020 and December 31, 2019, were $301,000 and $97,000, respectively, due to the CIM Management Entities and certain of its affiliates.
On March 11, 2014, ExpensesCIM Commercial and its subsidiaries entered intohave 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 CIM Commercial and its subsidiaries. Pursuant to the Master Services Agreement, wethe Company appointed an affiliate of CIM Group as the administrator of Urban Partners GP, LLC. Under the Master Services Agreement, CIM Commercial paid a base service fee (the “Base Service Fee”) to the Administrator initially set at $1,000,000$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
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

was amended to replace the Base Service Fee with an incentive fee (the “Incentive Fee”) pursuant to which the Administrator will receive,receives, on a quarterly basis, 15.00% of CIM Commercial’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 CIM Commercial’s average adjusted common stockholders’ equity (i.e., common stockholders’ equity plus accumulated depreciation andand amortization) for such quarter. The amendment is effective as of April 1, 2020. The Administrator earned a Base Service Fee is included in asset management and other fees to related parties in the accompanying consolidated statements of $0 and $275,000 for the three months ended September 30, 2020 and 2019, respectively, and $282,000 and $827,000 for the nine months ended September 30, 2020 and 2019, respectively. The Administrator did not earn an Incentive Fee for the three months ended September 30, 2020. On July 8, 2020, the Company issued to the Administrator 11,273 shares of our Series A Preferred Stock, representing approximately 0.2% of the outstanding shares of our Series A Preferred Stock prior to such issuance, in lieu of cash as payment of the Base Service Fee for the first quarter of 2020.operations.
In addition, pursuant to the terms of the Master Services Agreement, the Administrator may receive compensation and or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered by the Base Service Fee or the Incentive Fee, as the case may be. During the nine months ended September 30, 20202021 and 2019,2020, such services performed by the Administrator and its affiliates included accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, and operational and on-going support in connection with the Company’s offering of Preferred Stock. 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 CIM Commercial and its subsidiaries). We expensed $639,000 and $630,000 for the three months ended September 30, 2020 and 2019, respectively, and $2,066,000 and $1,819,000 for the nine months ended September 30, 2020 and 2019, respectively,The expense for such services which areis included in expense reimbursements to related parties—corporate. Ascorporate in the accompanying consolidated statements of September 30, 2020 and December 31, 2019, $739,000 and $1,673,000 was due to the Administrator, respectively, for such services.operations.
On January 1, 2015, we entered intoLending Segment ExpensesThe Company has a Staffing and Reimbursement Agreement with CIM SBA Staffing, LLC (“CIM SBA”), an affiliate of CIM Group, and ourthe Company’s subsidiary, PMC Commercial Lending, LLC. The agreement provides that CIM SBA will provide personnel and resources to usthe Company and that wethe Company will reimburse CIM SBA for the costs and expenses of providing such personnel and resources. For the three months ended September 30, 2020 and 2019, we incurred expenses related toThe expense for such services subject to reimbursement by us under the agreement of $901,000 and $652,000, respectively, for lending costs which areis included in expense reimbursements to related parties—lending segment. Forsegment in the nine months ended September 30, 2020accompanying consolidated statements of operations.
Offering-Related FeesThe Company had an Amendment, Assignment and 2019, we incurred expenses related to such services of $2,581,000 and $1,840,000, respectively, for costs that are included in expense reimbursements to related parties—lending segment. In addition, we deferred personnel costs of $81,000 and $38,000 for the three months ended September 30, 2020 and 2019, respectively, and $118,000 and $82,000 for the nine months ended September 30, 2020 and 2019, respectively, associated with services provided for originating loans. As of September 30, 2020 and December 31, 2019, $2,274,000 and $1,029,000, respectively, was due to CIM SBA for costs and expenses of providing such personnel and resources.
On May 10, 2018, the Company entered into the wholesaling agreementAssumption Agreement (the “Wholesaling“Assignment Agreement”) with International Assets Advisors, LLC (“IAA”) and CCO Capital, LLC (“CCO Capital”). CCO Capital is a registered broker dealer and is under common control with the Operator and the Administrator. IAA was the exclusive dealer manager for the Company’s public offering of Series A Preferred Units until May 31, 2019. Under the Wholesaling Agreement, among other things, CCO Capital, in its capacity as the wholesaler for the offering, assisted IAA with the sale of Series A Preferred Units. In exchange for such services, IAA paid CCO Capital a fee equal to 2.75% of the selling price of each Series A Preferred Unit for which a sale was completed, reduced by any applicable fee reallowances payable to soliciting dealers pursuant to separate soliciting dealer agreements between IAA and soliciting dealers. The foregoing fee was reduced, and may have been exceeded, by a fixed monthly payment by CCO Capital to IAA for IAA’s services in connection with periodic closings and settlements for the offering.
On May 31, 2019, the Company, IAA and CCO Capital entered into an Amendment, Assignment and Assumption Agreement (the “Assignment Agreement”), pursuant to which CCO Capital assumed all of the rights and obligations of IAA under the dealer manager agreement, dated as of June 28, 2016, as amended, by and between the Company and IAA. As a result of the Assignment Agreement, CCO Capital became the exclusive dealer manager for the Company’s public offering of the Series A Preferred Units effective as of May 31, 2019. In connection with the executionThe Company’s offering of the Assignment Agreement,Series A Preferred Units ended at the Company terminated the Wholesaling Agreement effective asend of May 31, 2019.January 2020. On January 28, 2020, the Company entered into the Second Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital acts as the exclusive dealer manager for the Company’s public offering of its Series A Preferred Stock and Series D Preferred Stock. Thereunder, the Company agreed to pay CCO Capital, as the dealer manager for the offering, (1) an upfront dealer manager fee of up to 1.25% of the selling price of each share of Preferred Stock sold, (2) selling commissions of up to 5.50% of the selling price of each
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

share of Series A Preferred Stock sold (with no selling commissions payable in respect of shares of Series D Preferred Stock sold) and (3) a trailing dealer manager fee that accrues daily in an amount equal to 1/365th of 0.25% per annum of the selling price of each share of Preferred Stock sold.CCO Capital, in its sole discretion, may reallow to another broker-dealer authorized by it to sell shares in the offering a portion of the upfront dealer manager fee earned by it in respect of shares sold by such broker-dealer.
On April 9, 2020, the Company entered into Amendment No. 1 to the Second Amended and Restated Dealer Manager Agreement, pursuant to which the selling commissions were increased from up to 5.50% to up to 7.00% of the selling price of each share of Series A Preferred Stock sold thereafter. The Company has been informed that CCO Capital generally reallows 100% of the selling commissions on sales of Series A Preferred Stock and generally reallows substantially all of the upfront dealer manager fee on sales of Series A Preferred Stock and Series D Preferred Stock, to participating broker-dealers.
In connection
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
On September 22, 2021, the Company entered into Amendment No. 2 to the Second Amended and Restated Dealer Manager Agreement, pursuant to which the upfront dealer manager fee payable to the Dealer Manager was changed to up to 3.00% and the trailing dealer manager fee with respect to the offeringsale of theshares of Series A Preferred Stock sold in the Offering on or after September 9, 2021 was eliminated.
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,
 2021202020212020
Asset Management Fees:
Asset management fees (1)
$2,262 $2,387 $6,781 $7,126 
Property Management Fees and Reimbursements:
Property management fees$416 $461 $1,223 $1,258 
Onsite management and other cost reimbursement$385 $867 $1,949 $2,451 
Leasing commissions$59 $18 $107 $101 
Construction management fees$70 $32 $105 $309 
Administrative Fees and Expenses:
Base service fee (2)
$— $— $— $282 
Expense reimbursements to related parties - corporate$533 $639 $1,592 $2,066 
Lending Segment Expenses:
Expense reimbursements to related parties - lending segment$55 $901 $1,219 $2,581 
Offering-Related Fees:
Upfront dealer manager and trailing dealer manager fees$145 $313 $567 $902 
Non-issuance specific offering costs (3)
$13 $27 $77 $72 
______________________
(1)The Company issued to the Operator an aggregate of 203,349 shares of our Common Stock and 190,459 shares of our Series DA Preferred Stock, in lieu of cash payment of the asset management fees incurred during the nine months ended September 30, 2020. The Company issued to the Operator 89,338 shares of Series A Preferred Stock in lieu of cash payment of the asset management fees incurred during the nine months ended September 30, 2021.
(2)For the nine months ended September 30, 2020, the Company issued to the Administrator 11,273 shares of Series A Preferred Stock, in lieu of cash as payment of the Base Service Fee incurred for the first quarter of 2020.
(3)As of September 30, 20202021 and December 31, 2019, $1,271,0002020, $2.0 million and $621,000,$1.5 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, of which $444,000 and $169,000, respectively, was included in due to related parties.Capital. These non-issuance specific costs are allocated against the gross proceeds from the sale of the Series A Preferred Stock and the Series D Preferred Stock on a proratapro rata basis for each issuance as a percentage of the total offering. CCO Capital incurred non-issuance specific costs of $27,000 and $12,000 for the three months ended September 30, 2020 and 2019, respectively, and $72,000 and $19,000 for the nine months ended September 30, 2020 and 2019, respectively, which were allocated to the Series A Preferred Stock.
As of September 30, 20202021 and December 31, 2019, upfront dealer manager and trailing dealer manager fees of $391,000 and $0, respectively, were included in2020, due to related parties. CCO Capital earned upfront dealer manager and trailing dealer manager feesparties consisted of $305,000 and $337,000 for the three months ended following (in thousands):
 September 30, 2021December 31, 2020
Asset management fees$4,515 $2,386 
Property management fees and reimbursements538 1,662 
Expense reimbursements - corporate1,050 647 
Expense reimbursements - lending segment1,880 690 
Upfront dealer manager and trailing dealer manager fees679 493 
Non-issuance specific offering costs698 668 
Other amounts due to the CIM Management Entities and certain of its affiliates63 160 
Total due to related parties$9,423 $6,706 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019, respectively, and $890,000 and $860,000 for the nine months ended September 30, 2020 and 2019, respectively, which were allocated to the Series A Preferred Stock. CCO Capital earned upfront dealer manager and trailing dealer manager fees of $8,000 for the three months ended September 30, 2020, and $12,000 for the nine months ended September 30, 2020, which were allocated to the Series D Preferred Stock.2021 (Unaudited) – (Continued)
Other
OurDuring the year ended December 31, 2020, the Company’s President, Jan F. Salit, retired effective as of September 16, 2020.We had an employment agreement with Mr. Salit which, under certain circumstances, provided for severance payment equal to the annual base salary paid to Mr Salit. In connection with his retirement, the Company entered into an agreement with Mr. Salit pursuant to which, among other things, Mr. Salit received a $450,000 payment, representing one year of his base salary, upon the satisfaction of certain conditions specified therein, including the execution of an agreement with the Company that contains, among other things, mutual release and non-disparagement provisions. Related to this payment, $287,000 was borne by the Company based on the time that Mr. Salit devoted to the Company relative to other matters relating to CIM Group. As of September 30, 2020, $287,000 was due to CIM Group for the Company’s portion of the payment.
On October 1, 2015, an affiliate of CIM Group entered into a five-year lease renewal with respect to a property owned by the Company, whichCompany. The lease was amended to a month-to-month term in February 2019 and was terminated in October 2020. WeThe Company recorded rental and other property income related to this tenant of $29,000$0 and $28,000$29,000 for the three months ended September 30, 20202021 and 2019,2020, respectively, and $87,000$0 and $83,000$87,000 for the nine months ended September 30, 20202021 and 2019,2020, respectively.
On May 15, 2019, 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. The lease was amended on August 7, 2019 to reduce the rentable square feet to approximately 30,000 rentable square feet. For the three months ended September 30, 2020 and 2019, weThe Company recorded rental and other property income related to this tenant of $370,000 and $356,000, respectively, and $1,110,000 and $562,000$1.1 million for the three and nine months, respectively, ended on each of September 30, 20202021 and 2019, respectively.

2020.
14.13. COMMITMENTS AND CONTINGENCIES
Loan Commitments—Commitments to extend credit are agreements to lend to a customer providedwhen the terms established in the contract are met. OurThe Company’s outstanding commitments to fund loans were $5,864,000$24.4 million as of September 30, 2020,2021, the majority of which are for prime-based loans to be originated by ourthe Company’s subsidiary engaged in SBA 7(a) Small Business Loan
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

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, we havethe Company has certain obligations for the payment of tenant improvement allowances and lease commissions in connection with new leases and renewals. CIM Commercial had a total of $4,375,000$8.1 million in future obligations under leases to fund tenant improvements and other future construction obligations as of September 30, 2020.2021. As of September 30, 2020, $2,815,0002021, $2.5 million was funded to reserve accounts included in restricted cash on ourthe Company’s consolidated balance sheet for these tenant improvement obligations in connection with the mortgage loan agreement entered into in June 2016.
Employment AgreementsWe haveThe Company has an employment agreement with 1 of ourits 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 2 times and 1 time, respectively, the annual base salary paid to the officer.
LitigationWe areThe Company is not currently involved in any material pending or threatened legal proceedings nor, to ourthe Company’s knowledge, are any material legal proceedings currently threatened against us,the Company, other than routine litigation arising in the ordinary course of business. In the normal course of business, we arethe Company is periodically party to certain legal actions and proceedings involving matters that are generally incidental to ourthe 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 ourthe Company’s business, financial condition, results of operations, cash flow or ourthe Company’s ability to satisfy ourits debt service obligations or to maintain ourits level of distributions on our Common Stock or Preferred Stock.
In September 2018, wethe Company filed a lawsuit against the City and County of San Francisco seeking a refund of the $11,845,000$11.8 million in penalties, interest and legal fees paid by usthe Company for real property transfer tax allegedly due for a transaction in a prior year. WeThe Company disputed that such penalties, interest and legal fees were payable but, in order to contest the asserted tax obligations, wethe Company had to pay such amounts to the City and County of San Francisco in August 2017. We haveThe Company has been vigorously pursuing this litigation and intendintends to continue to do so.
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. While it is possible that a loss may be incurred, we arethe Company is unable to estimate a range of potential losses due to the complexity and current status of the lawsuit. However, we maintainthe Company maintains insurance coverage to mitigate the impact of adverse exposures in lawsuits of this nature and do not expect this
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021 (Unaudited) – (Continued)
lawsuit to have a material adverse effect on ourthe Company’s business, financial condition, results of operations, cash flow or ourthe Company ability to satisfy ourits debt service obligations or to maintain ourthe level of distributions on ourthe 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 Paycheck Protection ProgramPPP or the SBA 7(a) Small Business Loan Program, the SBA may seek recovery of the principal loss related to the deficiency from us.the Company. 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 usthe Company in the event that a loss is deemed to be attributable to technical deficiencies. Based on historical experience, we dothe Company does not expect that this contingency is probable to be asserted. However, if asserted, it could have a material adverse effect on ourthe Company’s business, financial condition, results of operations, cash flow or ourthe Company’s ability to satisfy ourits debt service obligations or to maintain ourits level of distributions on our Common Stock or Preferred Stock.
Environmental Matters—In connection with the ownership and operation of real estate properties, wethe Company may be potentially liable for costs and damages related to environmental matters, including asbestos-containing materials. We haveThe Company has not been notified by any governmental authority of any noncompliance, liability, or other claim in connection with any of the properties, and we arethe 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 ourthe Company’s business, financial condition, results of operations, cash flow or ourthe Company’s ability to satisfy ourits debt service obligations or to maintain ourits level of distributions on our Common Stock or Preferred Stock.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

15. FUTURE MINIMUM LEASE RENTALS14. LEASES
Future minimum rental revenue under long-term operating leases as of September 30, 2020,2021, excluding tenant reimbursements of certain costs, are as follows:follows (in thousands):
Years Ending December 31,Total
 (in thousands)
2020 (Three months ending December 31, 2020)$11,516 
202143,300 
202239,870 
202335,701 
202434,309 
Thereafter51,433 
$216,129 

Years Ending December 31,Total
2021 (Three months ending December 31, 2021)$11,286 
202243,934 
202341,201 
202438,697 
202522,759 
Thereafter42,256 
$200,133 
16. CONCENTRATIONS
Tenant Revenue Concentrations—Rental and other property income from Kaiser Foundation Health Plan, Incorporated (“Kaiser”), which occupied space in 2 of our Oakland, California properties, accounted for approximately 27.9% and 22.2% of our office segment revenues for the three months ended September 30, 2020 and 2019, respectively, and approximately 26.1% and 15.6% for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020 and December 31, 2019, $51,000 and $23,000, respectively, was due from Kaiser.
Rental and other property income from the U.S. General Services Administration and other government agencies (collectively, “Governmental Tenants”), which primarily occupied space in our properties located in Washington, D.C., which were sold during the year ended December 31, 2019, accounted for approximately 2.5% and 11.2% of our office segment revenues for the three months ended September 30, 2020 and 2019, respectively, and approximately 2.3% and 20.0% for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020 and December 31, 2019, $3,000 and $282,000, respectively, was due from Governmental Tenants.
Geographical Concentrations of Investments in Real Estate—As of both September 30, 2020 and December 31, 2019, we owned 8 office properties, 1 hotel property, 1 parking garage, and 1 development site, which is being used as a parking lot. These properties are located in 2 states and in Washington, D.C. as of September 30, 2019.
Our revenue concentrations from properties are as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
California88.6 %84.1 %90.0 %77.7 %
Texas11.4 7.4 9.8 5.1 
Washington, D.C.8.5 0.2 17.2 
100.0 %100.0 %100.0 %100.0 %

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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Our real estate investments concentrations from properties are as follows:
 September 30, 2020December 31, 2019
California93.9 %94.4 %
Texas6.1 5.6 
100.0 %100.0 %

17.15. SEGMENT DISCLOSURE
In accordance with ASC Topic 280, Segment Reporting, ourThe Company’s reportable segments during the three and nine months ended September 30, 20202021 and 20192020 consist of 2 types of commercial real estate properties, namely, office and hotel, as well as a segment for ourthe Company’s lending business. Management internally evaluates the operating performance and financial results of the segments based on net operating income. WeThe Company also havehas 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 ourthe Company’s audited consolidated financial statements for the year ended December 31, 20192020 included in our Annual Report onthe 2020 Form 10-K filed with the SEC on March 16, 2020.10-K.
For ourthe Company’s real estate segments, we definethe 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 ourthe Company’s lending segment, we definethe Company defines net operating income as interest income net of interest expense and general overhead expenses.
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Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 20192021 (Unaudited)

– (Continued)
The net operating income (loss) of ourthe Company’s segments for the three and nine months ended September 30, 20202021 and 20192020 is as follows:follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands) 2021202020212020
Office:Office: Office: 
RevenuesRevenues$13,529 $16,885 $42,189 $72,380 Revenues$12,998 $13,529 $39,881 $42,189 
Property expenses:Property expenses:    Property expenses:    
OperatingOperating6,026 7,205 17,338 29,677 Operating5,362 6,026 16,704 17,338 
General and administrativeGeneral and administrative61 41 397 397 General and administrative123 61 291 397 
Total property expensesTotal property expenses6,087 7,246 17,735 30,074 Total property expenses5,485 6,087 16,995 17,735 
Segment net operating income—officeSegment net operating income—office7,442 9,639 24,454 42,306 Segment net operating income—office7,513 7,442 22,886 24,454 
Hotel:Hotel:    Hotel:    
RevenuesRevenues1,762 8,511 11,129 29,430 Revenues5,478 1,762 10,833 11,129 
Property expenses:Property expenses:    Property expenses:    
OperatingOperating2,796 6,081 11,491 19,520 Operating4,596 2,796 10,659 11,491 
General and administrativeGeneral and administrative35 31 54 108 General and administrative35 106 54 
Total property expensesTotal property expenses2,831 6,112 11,545 19,628 Total property expenses4,601 2,831 10,765 11,545 
Segment net operating (loss) income—hotel(1,069)2,399 (416)9,802 
Segment net operating income (loss)—hotelSegment net operating income (loss)—hotel877 (1,069)68 (416)
Lending:Lending:Lending:
RevenuesRevenues1,981 2,411 5,963 8,312 Revenues5,773 1,981 15,086 5,963 
Lending expenses:Lending expenses:  Lending expenses:  
Interest expenseInterest expense170 365 650 1,483 Interest expense105 170 478 650 
Expense reimbursements to related parties901 652 2,581 1,840 
Expense reimbursements to related parties—lending segmentExpense reimbursements to related parties—lending segment55 901 1,219 2,581 
General and administrativeGeneral and administrative641 505 1,562 1,343 General and administrative744 641 1,367 1,562 
Total lending expensesTotal lending expenses1,712 1,522 4,793 4,666 Total lending expenses904 1,712 3,064 4,793 
Segment net operating income—lendingSegment net operating income—lending269 889 1,170 3,646 Segment net operating income—lending4,869 269 12,022 1,170 
Total segment net operating incomeTotal segment net operating income$6,642 $12,927 $25,208 $55,754 Total segment net operating income$13,259 $6,642 $34,976 $25,208 
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Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 20192021 (Unaudited)

– (Continued)
A reconciliation of our segment net operating income to net income attributable to the Company for the three and nine months ended September 30, 20202021 and 20192020 is as follows:follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands) 2021202020212020
Total segment net operating incomeTotal segment net operating income$6,642 $12,927 $25,208 $55,754 Total segment net operating income$13,259 $6,642 $34,976 $25,208 
Interest and other incomeInterest and other income62 1,408 98 3,226 Interest and other income— 62 98 
Asset management and other fees to related partiesAsset management and other fees to related parties(2,387)(2,699)(7,408)(10,496)Asset management and other fees to related parties(2,262)(2,387)(6,781)(7,408)
Expense reimbursements to related parties—corporateExpense reimbursements to related parties—corporate(639)(630)(2,066)(1,819)Expense reimbursements to related parties—corporate(533)(639)(1,592)(2,066)
Interest expenseInterest expense(2,473)(2,038)(8,056)(7,515)Interest expense(2,080)(2,473)(7,012)(8,056)
General and administrativeGeneral and administrative(999)(807)(3,125)(2,945)General and administrative(753)(999)(3,629)(3,125)
Transaction costs(340)(600)
Depreciation and amortizationDepreciation and amortization(5,273)(5,180)(15,728)(21,995)Depreciation and amortization(5,061)(5,273)(15,167)(15,728)
Loss on early extinguishment of debtLoss on early extinguishment of debt(281)(281)(29,982)Loss on early extinguishment of debt— (281)— (281)
Impairment of real estate(69,000)
Gain on sale of real estate302 433,104 
(Loss) income before benefit (provision) for income taxes(5,348)2,943 (11,358)347,732 
Benefit (provision) for income taxes18 (87)731 (686)
Net (loss) income(5,330)2,856 (10,627)347,046 
Net loss (income) attributable to noncontrolling interests(8)165 
Net (loss) income attributable to the Company$(5,323)$2,848 $(10,626)$347,211 
Income (loss) before provision for income taxesIncome (loss) before provision for income taxes2,570 (5,348)796 (11,358)
(Provision) benefit for income taxes(Provision) benefit for income taxes(946)18 (2,316)731 
Net income (loss)Net income (loss)1,624 (5,330)(1,520)(10,627)
Net (income) loss attributable to noncontrolling interestsNet (income) loss attributable to noncontrolling interests— 
Net income (loss) attributable to the CompanyNet income (loss) attributable to the Company$1,624 $(5,323)$(1,516)$(10,626)
The condensed assets for each of the segments as of September 30, 20202021 and December 31, 2019,2020, along with capital expenditures and loan originations for the nine months ended September 30, 20202021 and 2019,2020, are as follows:follows (in thousands):
September 30, 2020December 31, 2019
(in thousands) September 30, 2021December 31, 2020
Condensed assets:Condensed assets:  Condensed assets:  
OfficeOffice$468,858 $460,951 Office$450,284 $472,544 
HotelHotel101,234 104,029 Hotel100,687 100,285 
LendingLending103,577 82,140 Lending112,656 94,626 
Non-segment assetsNon-segment assets14,444 20,472 Non-segment assets11,393 18,162 
Total assetsTotal assets$688,113 $667,592 Total assets$675,020 $685,617 

 Nine Months Ended September 30,
 20212020
Capital expenditures(1) and loan originations:
  
Office$2,488 $7,793 
Hotel144 801 
Total capital expenditures2,632 8,594 
Loan originations119,479 48,179 
Total capital expenditures and loan originations$122,111 $56,773 


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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

 Nine Months Ended September 30,
 20202019
 (in thousands)
Capital expenditures (1):  
Office$7,793 $9,500 
Hotel801 1,846 
Total capital expenditures8,594 11,346 
Loan originations48,179 27,421 
Total capital expenditures and loan originations$56,773 $38,767 
______________________
(1)Represents additions and improvements to real estate investments, excluding acquisitions. Includes the activity for dispositions through their respective disposition dates.

33
18. COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. COVID-19 has spread worldwide, causing significant disruptions to the U.S. and world economies. On March 4, 2020 and March 13, 2020, a state of emergency was declared for the state of California and for the United States, respectively. In response to the issuance of U.S. federal guidelines to contain the spread of COVID-19, U.S. state and local jurisdictions, including those in which the Company operates, implemented various containment and or mitigation measures, including shelter-in-place orders and the temporary closure of non-essential businesses. COVID-19 has triggered a period of significant global economic slowdown, and the impact of COVID-19 on the U.S. economy will continue through the remainder of 2020 and into 2021.
The information provided in the two tables below provides insight into the effects of COVID-19 on our rent collections for the three months ended September 30, 2020 and for the month of October 2020. While we provided similar information for the previous two quarters, we undertake no obligation to provide updated rent collection, concession or allowance information in the future. The following information is for the three months ended September 30, 2020, is presented based on collections and agreements with tenants reached as of September 30, 2020, and is preliminary and unaudited:     
Tenant TypeRental and Other Property Income Billed to Tenants% Collected% Collected by Applying the Security Deposit% Deferred% Recorded as Bad Debt% Abated
Office and Retail (1)$14,250,689 95.5 %0.1 %0.2 %1.5 %%
Parking$1,157,579 34.9 %%%62.6 %%
(1)As of November 4, 2020, the Company collected an additional 1.4% of the $14,250,689 rental and other property income billed to its office and retail tenants for the three months ended September 30, 2020.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and December 31, 2019, and2021 (Unaudited) – (Continued)
for the Three and Nine Months Ended16. SUBSEQUENT EVENTS
The Company evaluated events subsequent to September 30, 20202021, and 2019 (Unaudited)concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated unaudited financial statements.

The following information is for the month of October 2020, is presented based on collections and agreements with tenants reached as of October 31, 2020, and is preliminary and unaudited:
Tenant TypeRental and Other Property Income Billed to Tenants% Collected% Collected by Applying the Security Deposit% Deferred% Recorded as Bad Debt (2)% Abated
Office and Retail (1)$4,333,864 92.8 %%%%%
Parking$351,202 19.2 %%%%%
(1)As of November 4, 2020, the Company collected an additional 0.2% of the $4,333,864 rental and other property income billed to its office and retail tenants for the month of October 2020.
(2)As of November 4, 2020, the estimate for the percentage recorded as bad debt has not yet been determined.
For the three and nine months ended September 30, 2020, we recorded bad debt expense related to COVID-19 of $1,361,000 and $1,856,000, respectively. Of the $1,361,000 of bad debt expense related to COVID-19 for the three months ended September 30, 2020, $422,000 was related to rental and other property income billed to tenants in prior quarters.
Additionally, the spread of COVID-19 in the United States and the resulting restrictions on travel, meetings and social gatherings that have been implemented from time to time have impacted, and are expected to continue to materially impact so long as they persist, the operations of our hotel in Sacramento, California. For the fourth quarter of 2019, the net operating income of our hotel constituted approximately 22% of our total segment net operating income. The following table sets forth the occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”) for our hotel in Sacramento, California for the specified periods:
Three Months Ended June 30,Three Months Ended September 30,October,
202020192020201920202019
Occupancy12.5 %81.7 %24.1 %77.2 %29.4 %86.3 %
ADR$124.49$173.08$120.97$148.06$121.48$162.39
RevPAR$15.61$141.42$29.16$114.33$35.67$140.07
Our lending division has also been adversely impacted by COVID-19. Loans originated and serviced under the SBA 7(a) Small Business Loan Program through September 30, 2020 consist primarily of loans to borrowers in the limited service hospitality sector. Currently, our borrowers are experiencing significant reductions in cash flow as the travel and leisure industry decline caused by COVID-19 has severely impacted limited service hospitality properties. The overwhelming majority of our borrowers received relief under the CARES Act through September 30, 2020. However, if no further relief is provided by Congress, we expect that borrowers under our SBA 7(a) Small Business Loan Program will continue to be materially and adversely affected by the economic impact of COVID-19, potentially leading to substantially higher delinquencies on our loans. As such, during the third quarter of 2020, we increased our loan loss reserves. Depending upon the length of continuation of market disruptions for the limited service hospitality industry, we may have additional increases in our loan loss reserves and ultimately an increase in loan losses, and such losses may be material.
We have taken steps to adapt to the difficult business environment in which we operate and to strengthen our business to position our business to thrive post COVID-19. These steps include (i) reducing our corporate overhead expenses by realigning certain support functions and reducing employee compensation at our Operator, including not appointing a replacement for our President who retired during the third quarter, (ii) focusing on appropriate cost-reduction measures at our properties, (iii) temporarily suspending the vast majority of activities related to the repositioning of our office building at 4750 Wilshire Boulevard in Los Angeles, California, and renovations at the Sheraton Grand Hotel in Sacramento, California, (iv) increasing liquidity by entering into the new 2020 unsecured revolving credit facility in May, accessing the PPPLF in June and entering into the 2018 Credit Facility Modification in September, and (v) amending our Master Services Agreement to eliminate the Base Service Fee as described in Note 13.
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CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements as of September 30, 2020 and December 31, 2019, and
for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

The extent to which COVID-19 will continue to impact the Company’s operations and those of its tenants and business partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the COVID-19 pandemic and actions taken to contain the pandemic or mitigate its impact and the extent to which federal, state and local governments provide relief or assistance to those affected by COVID-19 (including extending the CARES Act). The Company cannot predict the significance, extent or duration of any adverse impact of COVID-19 on its business, financial condition, results of operations, cash flow or its ability to satisfy its debt service obligations or to maintain its level of distributions on its Common Stock or Preferred Stock. However, the Company’s business, financial condition, results of operations, and liquidity have been adversely affected and will likely continue to be adversely affected for the remainder of 2020 and at least through the first half of 2021.
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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which are intended to be covered by the safe harbors created thereby. 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,” or “should” or the negative thereof or other variations or similar words or phrases. Such forward-looking statements include, among others, statements about CMCT’s plans and objectives relating to future growth and availability of funds, and the trading liquidity of CMCT’s Common Stock. Such forward-looking statements are based on particular assumptions that management of CMCT 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 CMCT’s 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 scope, severity and duration of the current pandemic of COVID-19, and actions taken to contain the pandemic or mitigate its impact, and the winding-down or termination of governmental assistance programs implemented to address the pandemic, (ii) the adverse effect of COVID-19 on the financial condition, results of operations, cash flows and performance of CMCT and its tenants and business partners, the real estate market and the global economy and financial markets, among others, (iii) the timing, form and operational effects of CMCT’s development activities, (iv) the ability of CMCT to raise in place rents to existing market rents and to maintain or increase occupancy levels, (v) fluctuations in market rents, including as a result of COVID-19, and (vi) general economic, market and other conditions. Additional important factors that could cause CMCT’s actual results to differ materially from CMCT’s expectations are discussed under the section “Risk Factors” in CMCT’sthe Company’s Annual Report on Form 10-K forfiled with the year ended December 31, 2019Securities and elsewhere in this Quarterly Report.Exchange Commission (“SEC”) on March 16, 2021 and amended on April 30, 2021 (the “2020 Form 10-K”). 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 CMCT’s 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 Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by CMCT or any other person that CMCT’s 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. CMCT does not undertake to update them to reflect changes that occur after the date they are made.
All references to our Common Stock and related share and per share amounts have been adjusted to give retroactive effect to the Reverse Stock Split, except as otherwise indicated.
The following discussion of our financial condition as of September 30, 20202021 and results of operations for the three and nine months ended September 30, 20202021 and 20192020 should be read in conjunction with our Annual Report onthe 2020 Form 10-K for the year ended December 31, 2019.10-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 our Annual Report onthe 2020 Form 10-K for the year ended December 31, 2019 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 CIM Commercial 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 9-month room revenue divided by the number of rooms occupied.
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 “RevPAR” represents revenue per available room. It is calculated as trailing 9-month room revenue divided by the number of available rooms.
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Executive Summary
Business Overview
CIM Commercial is a Maryland corporation and REIT. Our principal business is to acquire,We primarily own and operate Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States (including improvingStates. We, supported by the broad real estate capabilities of CIM Group, seek to focus on the acquisition, ownership, operation and developing such assets).development of creative office, multifamily, retail, parking, in-fill industrial and limited service hospitality real assets that generate consistent, positive cash flow in communities qualified by CIM Group. 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. We intend that no acquisition will exceed 10% of our gross asset value at the time of acquisition but management may ultimately determine to execute on more significant acquisitions.
We are operated by affiliates of CIM Group. CIM Group is a vertically-integratedcommunity-focused real estate and infrastructure owner, operator, lender and operator of real assets with multi-disciplinary expertise and in-house research, acquisition, credit analysis, development, finance, leasing, and onsite property management capabilities. CIM Group is headquartereddeveloper. Headquartered in Los Angeles, California andCA, CIM has offices in Atlanta, Georgia;
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Chicago, Illinois; Dallas, Texas; New York, New York; Orlando, Florida; Phoenix, Arizona;across the San Francisco Bay Area; the Washington D.C. Metro Area;United States and in Tokyo, Japan.
COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. Since then, COVID-19 has spread worldwide, causing significant disruptions to the U.S. and world economies. On March 4, 2020 and March 13, 2020, a state of emergency was declared for the state of California and for the United States, respectively. In response to the issuance of U.S. federal guidelines to contain the spread of COVID-19, U.S. state and local jurisdictions, including those in which the Company operates, implemented various containment and or mitigation measures, including shelter-in-place orders and the temporary closure of non-essential businesses. COVID-19 has triggered a period of significant global economic slowdown,slowdown. In the first half of 2021, the U.S. and world economy initially showed signs of recovery from the impact of COVID-19 as vaccination rates increased, virus caseloads declined and businesses, schools and public services began to reopen. However, the emergence of variant strains of COVID-19 and the concomitant disruption to the global supply chain have threatened to slow or reverse these trends in the fourth quarter of 2021 and beyond. As a result, there continues to be uncertainty regarding the continued impact of COVID-19 on the U.S. economy will continue through the remainder of 2020 and into 2021.
The economic downturn caused by COVID-19 has negatively affected and will likely continue to negatively affect the operations of our office portfolio to the extent of, among other things: (i) the inability of our tenants to pay rents, (ii) the deferral of rent payments by our tenants, (iii) tenants’ requests to modify terms of their leases in a way that will reduce the economic value of their leases, (iv) an increase in early lease terminations or a decrease in lease renewals and (v) our inability to re-lease vacant space in our office portfolio due to “shelter in place” or similar orders or a systemic shift in the demand for office space as a result of COVID-19.international economies.
The information provided in the two tablestable below provides insight into the effects of COVID-19 on our rent collections for the three months ended September 30, 2020 and2021 for the month of October 2020. While we provided similar information for the previous two quarters, we undertake no obligation to provide updated rent collection, concession or allowance information in the futurour parking tenantse. The following information is for. For the three months ended September 30, 2020, is2021, rent collections for our office and retail tenants were generally consistent with such rent collections prior to the effects of COVID-19. We undertake no obligation to provide rent collection, concession or allowance information for any future period. The information presented based on collections and agreements with tenants reached as of September 30, 2020, andbelow is preliminary and unaudited:unaudited, and we undertake no obligation to update such information other than as may be required by law:
Tenant TypeRental and Other Property Income Billed to Tenants% Collected% Collected by Applying the Security Deposit% Deferred% Recorded as Bad Debt% Abated
Office and Retail (1)$14,250,689 95.5 %0.1 %0.2 %1.5 %— %
Parking$1,157,579 34.9 %— %— %62.6 %— %
Parking Tenants (1)
Three Months Ended September 30, 2021
(1)As of November 4, 2020, the Company collected an additional 1.4% of the $14,250,689 rental and other property income billed to its office and retail tenants for the three months ended September 30, 2020.
The following information is for the month of October 2020, is presented based on collections and agreements with tenants reached as of October 31, 2020, and is preliminary and unaudited:
Tenant TypeRental and Other Property Income Billed to Tenants% Collected% Collected by Applying the Security Deposit% Deferred% Recorded as Bad Debt (2)% Abated
Office and Retail (1)$4,333,864 92.8 %— %— %— %— %
Parking$351,202 19.2 %— %— %— %— %
Rent Collected (2)
80.5 %
Recorded as Bad Debt— %
Uncollected Rent19.5 %
Total100.0 %
______________________
(1)As of November 4, 2020, the Company collected an additional 0.2% of the $4,333,864 rental and other property income billedThere have been no significant changes in parking tenant rent collections subsequent to its office and retail tenants for the month of October 2020.September 30, 2021.
(2)AsRent collected is calculated as the aggregate contractual rent collected for each month in the applicable period presented from the beginning of that month through November 4, 2020,2021, divided by the estimateaggregate contractual rent charged for the applicable period. Rent collection percentages are calculated based on contractual rents (excluding percentage recorded as bad debt has not yet been determined.
For the threerents and nine months ended September 30, 2020, we recorded bad debt expense related to COVID-19 of $1,361,000 and $1,856,000, respectively. Of the $1,361,000 of bad debt expense related to COVID-19 for the thrcontractually obligated reimbursements by our tenants).ee months ended September 30, 2020, $422,000 was related to rental and other property income billed to tenants in prior quarters.
Our rent collection rates may deteriorate the longer COVID-19 persists, which could lead to increased reserves and write-offs of both cash and deferred rent receivables. To the extent the Company receives requests from tenants to defer or abate their rent payments, the Company will evaluate each tenant’s rent relief request on an individual basis, considering a number of factors. No significant abatement or modifications have been reached for the three and nine months ended September
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30, 2020 or for October 2020, and the Company’s management believes that any such requests that will be granted with respect to October 2020 rental payments will not result in a significant impact to the Company’s results of operations. Not all tenant requests will be granted and the Company has not, and generally does not intend to, forego its contractual economic rights under its lease agreements. Rent collections, rent relief requests and relief to-date may not be indicative of collections or requests in any future period.
Additionally, the spread of COVID-19 in the United States and the resulting restrictions on travel, meetings and social gatherings that have been implemented from time to time have impacted, andand are expected to continue to materially impact so long as they persist, the operations of our hotel in Sacramento, California. For the fourth quarter of 2019,three months ended September 30, 2021, the hotel segment net operating income of our hotel constituted approximately 22% of our total segment net operating income. was $877,000. Based on current expectations, it is highly likelywe anticipate that the net operating income of our hotel will continue to be negative for the fourth quarter of 2020, and likely2021 will be lower as compared to pre-COVID-19 levels for at least the first half
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comparable periods. As a result, contributions by the hotel to our funds from operations during such periods will be significantly diminished. The following table sets forth the occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”) for our hotel in Sacramento, California for the specified periods:
Three Months Ended June 30,Three Months Ended September 30,October,
202020192020201920202019
Occupancy12.5 %81.7 %24.1 %77.2 %29.4 %86.3 %
ADR$124.49$173.08$120.97$148.06$121.48$162.39
RevPAR$15.61$141.42$29.16$114.33$35.67$140.07
Our lending division has also been adversely impacted by COVID-19. Loansloans originated and serviced under the SBA 7(a) Small Business Loan Program through September 30, 20202021 consist primarily of loans to borrowers in the limited service hospitality sector. Currently,Certain of our borrowers are experiencingexperienced significant reductions in cash flowflows as COVID-19 caused reductions in travel. However, the travel and leisure industry decline caused by COVID-19 has severely impacted limited service hospitality properties. The overwhelmingsubstantial majority of our borrowers received relief under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) during the year ended December 31, 2020 through subsidy in the form of six months of monthly loan payments made on the borrower’s behalf pursuant to Section 1112 of the CARES Act. Section 1112 of the CARES Act through September 30, 2020. However, if no further relief iswas extended and, beginning February 1, 2021, the CARES Act provided up to an additional five months of subsidy of scheduled principal and interest payments (up to $9,000 per month, per loan).
As a result of the potential negative impact on the cash flow of our borrowers caused by Congress, we expect that borrowers under our SBA 7(a) Small Business Loan Program will continue to be materially and adversely affected by the economic impact of COVID-19, potentially leading to substantially higher delinquencies on our loans. As such, during the third quarter of 2020, we increased our loan loss reserves. Depending uponreserves commencing with the lengthsecond half of continuation of market disruptions2020. Governmental support for the limited service hospitality industry is expected to substantially end by the end of 2021. As a result, certain of our borrowers may experience difficulty in repaying our loans and, accordingly, we may have additional increases inincrease our loan loss reserves and ultimately experience an increase in loan losses, and such losses may be material.losses.
The situation surrounding COVID-19 remains fluid, and we have been actively managing our response in collaboration with tenants, government officials and business partners and assessing the impact to our financial position and operating results, as well as the additional potential adverse developments in our business. We have taken steps to adapt to the difficult business environment in which we operate and to strengthen our business to position our business to thrive post COVID-19. These steps include (i) reducing our corporate overhead expenses by realigning certain support functions and reducing employee compensation at our Operator, including not appointing a replacement for our President who retired during the third quarter of 2020, (ii) focusing on appropriate cost-reduction measures at our properties, (iii) temporarily suspending the vast majority of activities related to the repositioning of our office building at 4750 Wilshire Boulevard in Los Angeles, California, and renovations at the Sheraton Grand Hotel in Sacramento, California, (iv) raising capital in June 2021 through the Rights Offering pursuant to which we received gross proceeds of $78.8 million before issuance costs of $2.0 million, (v) increasing liquidity by entering into the new 2020 unsecured revolving credit facility in May 2020, accessing the PPPLF(beginning in June 2020) funds through the Federal Reserve through the Paycheck Protection Program Liquidity Facility (the “PPPLF”) established for lenders who originate loans pursuant to the Paycheck Protection Program (the “PPP”) and entering into the 2018 Credit Facility Modification (as defined below) in September 2020, and (v)(vi) amending our Master Services Agreement to eliminate the Base Service Fee. as described in Note 12 to the consolidated financial statements included in this Quarterly Report on Form 10-Q.
The extent to which COVID-19 will continue to impact the Company’sour operations and those of itsour tenants and business partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the COVID-19 pandemic and actions taken to contain the pandemic or mitigate its impact, the distribution and acceptance of vaccines and their impact on the timing and speed of economic recovery, the spread of new variants of COVID-19 and concerns regarding additional surges of COVID-19 as a result thereof, the impacts on the U.S. and international economies and the extent to which federal, state and local governments provide relief or assistance to those affected by COVID-19 (including extending the CARES Act). The CompanyCOVID-19. We cannot predict the significance, extent or duration of any adverse impact of COVID-19 on itsour business, financial condition, results of operations, cash flow or itsour ability to satisfy its debt service obligations or to maintain its level of distributions on its Common Stock or Preferred Stock. However, the Company’sour business, financial condition, results of operations, and liquidity have been adversely affected and will likely continue to be adversely affected for the remainder of 2020 and at least through the first half of 2021.
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Properties
As of September 30, 2020,2021, our real estate portfolio consisted of 1113 assets, all of which were fee-simple properties. As of September 30, 2020,2021, our eightten office properties, and one development site which is being used as a parking lot, totaling approximately 1.3 million rentable square feet, were 79.5%77.7% occupied, (during the nine months ended September 30, 2020, we completed theour one development ofsite was being used as a former surface parking lot, at 3601 S Congress Avenue into approximately 44,000 square feet of additional office space, which was 0% occupied as of September 30, 2020 and is included in the occupancy percentage as of September 30, 2020), andour one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $51.37$61.67 for the nine months ended September 30, 2020.2021.
Strategy
Our strategyCIM Commercial is principally focused on the acquisition ofa Maryland corporation and REIT. We primarily own and operate Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States. We, supported by the broad real estate capabilities of CIM Group, seek to focus on the acquisition, ownership, operation and development of creative office, multifamily, retail, parking, infill industrial and limited service hospitality real assets that generate consistent, positive cash flow in communities throughout the United States (including improvingthat are qualified by CIM Group as described below. These communities are located in areas that include traditional downtown areas and developingsuburban 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 assets)areas creates positive externalities, which enhance the value of real estate assets in the area. We believe that these assets
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will provide greater returns than similar assets in other markets, as a mannerresult of the population growth, public commitment and significant private investment that characterize these areas. Our investments in real estate assets may take different forms, including direct equity or preferred investments, engaging in 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 that meet our strategy. We intend that no investment will exceed 10% of our gross asset value at the time of investment but management may ultimately determine to execute on more significant acquisitions.
As a matter of prudent management, we regularly evaluate each asset within our portfolio as well as our strategies. Such review may result in dispositions when, among other things, an asset no longer fits our overall objectives or strategies, we believe the proceeds generated from the sale of an asset can be redeployed in one or more assets that will prudently growgenerate better returns, or the market value of such asset is equal to or exceeds our NAVview of its intrinsic value. We currently have a portfolio of attractive assets with significant same store growth opportunity, and, cash flow per sharein the event we execute on any opportunities to dispose of Common Stock.some of those assets at attractive prices we will seek to redeploy proceeds in the same profile of assets described in the preceding paragraph.
Our strategy is centered around CIM Group’s community qualification process. We believe this strategy provides usGroup Operations
CIM Group believes that a vast majority of the risks associated with a significant competitive advantage when makingacquiring real estate acquisitions. The qualification process generally takesare 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 and is a critical component of CIM Group’s evaluation. As part of the community qualification process,evaluating communities prior to making any acquisitions. The distinct districts that CIM Group examines the characteristics of a marketidentifies through this process as targets for acquisitions are referred to determine whether the district possesses certain characteristics prior to the extensive efforts CIM Group’s investment professionals undertake when reviewing potential acquisitions in its qualified communities (“Qualifiedas “Qualified Communities”). Qualified Communities generally fall into one of two categories: (i) transitional metropolitan districts that have dedicated resources to become vibrant metropolitan communities and (ii) well-established, thriving metropolitan areas (typically major central business districts). Qualified Communities are distinct districts whichtypically 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, alsowhich 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 a vast majoritythe critical mass of redevelopment in such Qualified Communities creates positive externalities, which enhance the risks associated with acquiringvalue of real estate are mitigated by accumulating local market knowledge ofassets in the community where the asset is located.area. CIM Group typically spends significant timetargets acquisitions of diverse types of real estate assets, including retail, residential, office, parking, hotel, signage and resources qualifying targeted communities prior to making any acquisitions.mixed-use through CIM Group’s extensive network and its current opportunistic activities. Since 1994, CIM Group has identified 135 Qualified Communities and has deployed capital in 75 of these communities. Although we may not deploy capital exclusively in Qualified Communities, it is expected that most of our assets will be identified through this systematic process.
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 Realreal assets management committee (the “Real Assets Management CommitteeCommittee”) reviews and approves strategic plans for each asset, including financial, leasing, marketing, property positioning and disposition plans. The Real Assets Management Committee reviews and approves the annual business plan for each property, including its capital and operating budget. 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 disposition activities.
CIM Group’s Investments and Development teams are separate groups that work very closely together on transactions requiring development expertise. While the Investments team is 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 opportunistic assets. 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. The Investments and Development teams interact as a cohesive team when sourcing, underwriting, acquiring, executing and managing the business plan of an opportunistic acquisition.
We seek to utilize the CIM Group platform to acquire, improve and or develop real estate assets within CIM Group’s Qualified Communities. 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. Over time, we
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seek to expandFinancing Strategy
We may finance our real estate assets in communities targeted by CIM Group, supported by CIM Group’s broad real estate capabilities, as partfuture activities through one or more of our plan to prudently grow NAV and cash flow per sharethe following methods: (i) offerings of shares of Common Stock. As a matterStock, Preferred Stock or other equity and or debt securities of prudent management, we also regularly evaluate each asset within our portfoliothe Company; (ii) credit facilities and term loans; (iii) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (iv) the sale of existing assets; and or (v) cash flows from operations.
We issued to the Operator an aggregate of 203,349 shares of our strategies. Such review may resultCommon Stock and 287,199 shares of our Series A Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”), as payment, in dispositions when anlieu of cash, for all asset no longer fits our overall objectives or strategies, or when our viewmanagement fees owed to the Operator in respect of fees incurred during the year ended December 31, 2020, and 89,338 shares of Series A Preferred Stock as payment in lieu of cash, for the asset management fee for the three months ended March 31, 2021. Additionally, we issued to the Administrator 11,273 shares of Series A Preferred Stock, in lieu of cash as payment of the market valueBase Service Fee (as defined below) in respect of the three months ended March 31, 2020. All of such asset is equalsecurities were issued pursuant to or exceeds its intrinsic value.
Whilethe exemption from registration contained in Section 4(a)(2) of the Securities Act. Additionally, we are principally focused on Classhave issued shares of Series A and creative office assets in vibrant and improving metropolitan communities throughoutPreferred Stock to the United States (including improving and developing such assets), we may also participate more actively in other CIM Group real estate strategies and product types, including, but not limited to, multi-family residential and or real estate debt, in order to broaden our participation in CIM Group’s platform and capabilitiesOperator as payment for the benefitquarterly asset management fees for the second and third quarters of all classes2021 and it is likely that the we will seek to pay some or part of stockholders. This may include, without limitation, engagingthe fourth quarter asset management fees in real estate development activities as well as investing in other product types directly, side-by-side with one or more fundsshares of CIM Group.Series A Preferred Stock.

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:
As of September 30, As of September 30,
20202019 20212020
Occupancy (1)Occupancy (1)79.5 %87.2 %Occupancy (1)77.7 %79.5 %
Annualized rent per occupied square foot (1)(2)Annualized rent per occupied square foot (1)(2)$50.39 $47.96 Annualized rent per occupied square foot (1)(2)$52.50 $50.39 
______________________
(1)We sold eight office properties, one development site, and one parking garage during the nine months ended September 30, 2019 (the “2019 Asset Sales”). Excluding these properties, the occupancy and annualized rent per occupied square foot were 87.2% and $47.96, respectively, as of September 30, 2019. During the nine months ended September 30, 2020, we completed the development of a former surface parking lot at 3601 S Congress Avenue into approximately 44,000 square feet of additional office space, which was 0% occupiedThe information presented in this table represents historical information as of September 30, 2020 and was included in the occupancy percentage as of September 30, 2020.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 twelve. This amount reflects total cash rent before abatements. Total abatements, representing lease incentives in the form of free rent, for the twelve12 months ended September 30, 20202021 and 20192020 were approximately $1,793,000$1.3 million and $1,768,000,$1.8 million, respectively. 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.
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Over the next four quarters, we expect to see expiring cash rents as set forth in the table below:
For the Three Months Ended For the Three Months Ended
December 31,
2020
March 31,
2021
June 30,
2021
September 30,
2021
December 31,
2021
March 31, 2022June 30, 2022September 30, 2022
Expiring Cash Rents:Expiring Cash Rents:    Expiring Cash Rents:    
Expiring square feet (1)Expiring square feet (1)67,631 23,495 26,923 16,006 Expiring square feet (1)24,109 23,073 12,979 56,078 
Expiring rent per square foot (2)Expiring rent per square foot (2)$47.09 $72.78 $47.62 $41.80 Expiring rent per square foot (2)$63.59 $55.87 $64.10 $42.58 
______________________
(1)Month-to-month tenants occupying a total of 15,0414,938 square feet are included in the expiring leases in the first quarter listed.
(2)Represents gross monthly baseannualized rent, as of September 30, 2020,2021, under leases expiring during the periods above, 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. Annualized rent for certain office properties includes rent attributable to retail.above.
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During the three and nine months ended September 30, 2020,2021, we executed leases with terms longer than 12 months totaling 9,75932,646 and 45,23661,514 square feet, respectively. The table below sets forth information on certain of our executed leases during the three and nine months ended September 30, 2020,2021, 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, 202038,159$35.79 $35.53 
Nine months ended September 30, 20201039,916$53.46 $44.48 
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, 2021520,203$53.13 $58.05 
Nine months ended September 30, 20211140,000$50.08 $53.02 
______________________
(1)Based on the number of tenants that signed leases.
(2)Cash rents represent gross monthly base rent, multiplied by twelve.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.
Fluctuations in submarkets, buildings and terms of leases may 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, such as COVID-19, 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.
Tenants accounting for over 10% of revenues
Rental and other property income from Kaiser, which occupied space in two of our Oakland, California properties, accounted for approximately 27.9% and 22.2% of our office segment revenues for the three months ended September 30, 2020 and 2019, respectively, and approximately 26.1% and 15.6% for the nine months ended September 30, 2020 and 2019, respectively.
Rental and other property income from Governmental Tenants, which primarily occupied space in our properties located in Washington, D.C., which were sold during the year ended December 31, 2019, accounted for approximately 2.5% and 11.2% of our office segment revenues for the three months ended September 30, 2020 and 2019, respectively, and approximately 2.3% and 20.0% for the nine months ended September 30, 2020 and 2019, respectively.
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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,
For the Nine Months
Ended September 30,
20202019 20212020
OccupancyOccupancy34.1 %80.3 %Occupancy48.2 %34.1 %
ADRADR$150.55 $164.32 ADR$128.06 $150.55 
RevPARRevPAR$51.37 $131.97 RevPAR$61.67 $51.37 
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. Additionally, our operating results have been and will be adversely affected by the continued effects of COVID-19. In addition, the hotel industry is cyclical and demand generally follows, on a lagged basis, key macroeconomic factors, such as those resulting from COVID-19. For information regarding the effects of COVID-19 on our hotel and its renovations, see “—COVID-19” above.factors.
Lending Segment
Through our SBAloans originated under the SBA’s 7(a) Small BusinessGuaranteed Loan 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.
    Enacted in March 2020, Section 1112 provided for subsidy loan payments on all loans originated under the SBA 7(a) Small Business Loan Program in ‘regular’ servicing, which subsidies were not required to be repaid by the borrowers. The subsidy payments were paid by the SBA and reflected the initial six months of payments, including scheduled principal and interest payments, for any new loan originated from the implementation of the CARES Act through September 27, 2020. The overwhelming majority of borrowers under our SBA 7(a) Small Business Loan Program qualified for relief under Section 1112. The relief ended for most of our borrowers effective September 30, 2020.
As an In addition, as a SBA 7(a) licensee, we areoriginated loans as an authorized lender under the Paycheck Protection Program andPPP, which was enacted during the nine monthsyear ended September 30,December 31, 2020 weand completed during 2021.
The PPP provides lenders who originated $16,016,000 of loans under the program allwith a 100% guaranty of which was still outstanding as of both November 4, 2020repayment (provided certain conditions are met) and September 30, 2020, respectively.
The Paycheck Protection Program provides small businesses with uncollateralized and unguaranteed loans at an interest rate of 1.00%, with repayment deferred for a period of six months following origination. The loans. Loans originated under the PPP will be fully forgiven, subject to certain limitations, when used by the borrower for payroll costs, interest on mortgages, rent, and utilities. For those loans that are forgiven, the SBA will remit 100% of the remaining outstanding principal plus accrued interest to us. For those loans whose borrowers do not meet the criteria required for forgiveness, repayment obligations commence after the applicable deferment period in equal installments over the remaining term to maturity. A substantial portion of the loans that we originated under the Paycheck Protection Program have a two-year term and originally had a deferment period of six months; however, as a result of amendments to the Paycheck Protection Program, these loans now are deferred for up to 16 months. All loans approved by the SBA after June 5, 2020 have a five-year term and deferment period of 16 months.
For information regarding the effects of COVID-19 on our lending segment, see “—COVID-19” above.
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for forgiveness, the borrower is required to repay the remaining obligation. Upon a borrower default of any remaining balance due, if any, the SBA will remit the balance due to us. The loans that we originated under the PPP have a two-year term if originated prior to June 5, 2020 and have a five-year term if originated after June 5, 2020. We obtained all funds to originate loans under the PPP from the Federal Reserve on a basis that correlated to the outstanding principal balance due from our borrowers pursuant to the PPP on a dollar-for-dollar basis with a cost of funds of 0.35%.
Property Concentration
As of September 30, 2021, we had certain tenant and geographic concentrations in our property holdings. Kaiser, which occupied office space in one of our Oakland, California properties, accounted for 30.9% of our annualized rental income for the three months ended September 30, 2021. No other tenant accounted for greater than 10.0% of our annualized rental income for the three months ended September 30, 2021. In addition, eight of our office properties were located in California, which accounted for 83.1% of our annualized rental income for the three months ended September 30, 2021.
2021 Results of Operations
Comparison of the Three Months Ended September 30, 20202021 to the Three Months Ended September 30, 20192020
Net Income (Loss) Incomeand FFO
Three Months Ended September 30,Change Three Months Ended September 30,Change
20202019$% 20212020$%
(dollars in thousands) (dollars in thousands)
Total revenuesTotal revenues$17,334 $29,215 $(11,881)(40.7)%Total revenues$24,249 $17,334 $6,915 39.9 %
Total expensesTotal expenses$22,682 $26,574 $(3,892)(14.6)%Total expenses$21,679 $22,682 $(1,003)(4.4)%
Gain on sale of real estate$— $302 $(302)(100.0)%
Net (loss) income$(5,330)$2,856 $(8,186)(286.6)%
Net income (loss)Net income (loss)$1,624 $(5,330)$6,954 (130.5)%
Net income (loss) income decreasedincreased to $(5,330,000),$1.6 million, or by $8,186,000,$7.0 million, for the three months ended September 30, 2020,2021, compared to a net incomeloss of $2,856,000$5.3 million for the three months ended September 30, 2019.2020. The decreaseincrease is primarily attributable to a decreasean increase of $6,285,000$6.6 million in our segment net operating income, (primarilyprimarily as a result of the adverse impact of COVID-19), a decrease of $1,346,000increases in interesthotel and other income not allocated to ourlending segment net operating segments, an increase of $435,000 in interest expense not allocated to our operating segments, and a gain on sale of real estate of $302,000 recognized during the three months ended September 30, 2019, partially offset by a decrease of $340,000 in transaction costs and a decrease of $312,000 of in asset management and other fees to related parties.
Funds from Operations (“FFO”)income.
We believe that FFO 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 declared or accumulated, redeemable preferred stock deemed dividends, and redeemable preferred stock redemptions, 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.
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The following table sets forth a reconciliation of net loss attributable to common stockholders to FFO attributable to common stockholders:stockholders (in thousands):
 Three Months Ended
September 30,
 20202019
 (in thousands)
Net loss attributable to common stockholders (1)$(9,678)$(1,622)
Depreciation and amortization5,273 5,180 
Gain on sale of depreciable assets— (302)
FFO attributable to common stockholders (1)$(4,405)$3,256 
(1)In connection with the 2018 Credit Facility Modification entered into in September 2020, we recognized a $281,000 loss on early extinguishment of debt related to the write off of certain unamortized loan costs resulting from such debt modification. Such loss on early extinguishment of debt is included in, and has the effect of reducing, net income attributable to common stockholders and FFO attributable to common stockholders, because loss on early extinguishment of debt is not an adjustment prescribed by NAREIT.
 Three Months Ended September 30,
 20212020
Net loss attributable to common stockholders$(3,216)$(9,678)
Depreciation and amortization5,061 5,273 
FFO attributable to common stockholders$1,845 $(4,405)
FFO attributable to common stockholders was $(4,405,000)$1.8 million for the three months ended September 30, 2020, a decrease2021, an increase of $7,661,000$6.3 million compared to $3,256,000a loss of $4.4 million for the three months ended September 30, 2019.2020. The decreaseincrease in FFO is primarily attributable to a decreasean increase of $6,285,000$6.6 million in our segment net operating income, (primarilyprimarily as a result of the adverse impact of COVID-19), a decrease of $1,346,000increases in interesthotel and other income not allocated to ourlending segment net operating segments, and an increase of $435,000 in interest expense not allocated to our operating segments, partially offset by a decrease of $340,000 in transaction costs and a decrease of $312,000 of in asset management and other fees to related parties.income.
Summary Segment Results
During the three months ended September 30, 20202021 and 2019,2020, CIM Commercial operated in three segments: office and hotel properties and lending. Set forth and described below are summary segment results for our operating segments.segments (dollar amounts in thousands).
Three Months Ended September 30,Change
20202019$% Three Months Ended September 30,Change
(dollars in thousands) 20212020$%
Revenues:Revenues:    Revenues:    
OfficeOffice$13,529 $16,885 $(3,356)(19.9)%Office$12,998 $13,529 $(531)(3.9)%
HotelHotel$1,762 $8,511 $(6,749)(79.3)%Hotel$5,478 $1,762 $3,716 210.9 %
LendingLending$1,981 $2,411 $(430)(17.8)%Lending$5,773 $1,981 $3,792 191.4 %
Expenses:Expenses:    Expenses:    
OfficeOffice$6,087 $7,246 $(1,159)(16.0)%Office$5,485 $6,087 $(602)(9.9)%
HotelHotel$2,831 $6,112 $(3,281)(53.7)%Hotel$4,601 $2,831 $1,770 62.5 %
LendingLending$1,712 $1,522 $190 12.5 %Lending$904 $1,712 $(808)(47.2)%
Non-Segment Revenue and Expenses:Non-Segment Revenue and Expenses:
Interest and other incomeInterest and other income$— $62 $(62)(100.0)%
Asset management and other fees to related partiesAsset management and other fees to related parties$(2,262)$(2,387)$125 (5.2)%
Expense reimbursements to related parties - corporateExpense reimbursements to related parties - corporate$(533)$(639)$106 (16.6)%
Interest expenseInterest expense$(2,080)$(2,473)$393 (15.9)%
General and administrativeGeneral and administrative$(753)$(999)$246 (24.6)%
Depreciation and amortizationDepreciation and amortization$(5,061)$(5,273)$212 (4.0)%
Loss on early extinguishment of debtLoss on early extinguishment of debt$— $(281)$281 100.0 %
(Provision) benefit for income taxes(Provision) benefit for income taxes$(946)$18 $(964)(5,355.6)%
Revenues
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue decreased to $13,529,000,$13.0 million, or by 19.9%3.9%, for the three months ended September 30, 20202021 compared to $16,885,000$13.5 million for the three months ended September 30, 2019. 2020. The decrease is primarily due to the sale of two office properties in Washington, D.C., which was consummated in July 2019, and lower revenues at an office property in Beverly Hills, California due to a decreasereduction in occupancylease termination fee income as compared to the third quarter of 2019. Additionally, the economic downturn caused by COVID-19 three months ended September 30, 2020.has negatively affected and will continue to negatively affect the operations of our office portfolio for the fiscal year ending December 31, 2020 and at least through the first half of 2021 as described in “—COVID-19” above.
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Hotel Revenue: Hotel revenue decreasedincreased to $1,762,000,$5.5 million, or by 79.3%210.9%, for the three months ended September 30, 2020,2021, compared to $8,511,000$1.8 million for the three months ended September 30, 2019,2020, primarily due to a decreasean increase in occupancy, average daily rate, and food, beverage, and other sundry hotel services during the third quarter of 20202021 as compared to the third
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quarter of 2019 2020 as a result of the easing of government restrictions associated with COVID-19. The However, the outbreak of COVID-19 (see “—COVID-19” above),will likely continue to negatively affect the temporary closureoperations of the nearby Sacramento Convention Center until its expected reopening in early 2021, and renovations of the guest rooms, food and beverage amenities, public areas, meeting rooms and other amenitiesour hotel at the hotel during 2020, to the extent such renovations are resumed, are expected to cause hotel revenue to decline materially duringleast through the remainder of 20202021, as compared to pre-COVID levels for the fourth quarter of 2019.comparable periods, as described in “—COVID-19” above.
Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue decreasedincreased to $1,981,000,$5.8 million, or by 17.8%191.4%, for the three months ended September 30, 2020,2021, compared to $2,411,000$2.0 million for the three months ended September 30, 2019.2020. The decreaseincrease is primarily due to an increase in premium income from the sale of the guaranteed portion of our SBA 7(a) loans, which benefited from an increase in the SBA guaranty support from a decreasemaximum of 75% per loan to 90% per loan, a reduction in fees charged in the secondary market and higher market premiums. In addition, there was an increase in interest income resulting from a decreasean increase in the prime rate.
Interest and Other Income: Interest and other income represents revenue generated outside of our reportable segments. Interest and other income decreased to $62,000 for the three months ended September 30, 2020, compared to $1,408,000 for the three months ended September 30, 2019. The decrease primarily relates to interest earnedaverage outstanding lending portfolio during the three months ended September 30, 2019 on2021 compared to the proceeds from certainthree months ended September 30, 2020. As a result of the 2019 Asset Sales.conclusion of the enhanced government support provided by the CARES Act, the SBA guaranty support has now reverted back to 75% from 90% and the reduction of fees charged in the secondary market ended as of October 1, 2021. This will likely cause future loan originations to decline and the premiums achieved on sales of the guaranteed portion of our SBA 7(a) loans to decrease, in each case possibly by a material amount.
Expenses
Office Expenses: Office expenses decreased to $6,087,000,$5.5 million, or by 16.0%9.9%, for the three months ended September 30, 2020,2021, compared to $7,246,000$6.1 million for the three months ended September 30, 2019.2020. The decrease is primarily due to tax refunds related to prior tax years and adjustments to payroll allocation reimbursements related to certain properties, both of which reduced office expenses for three months ended September 30, 2021, partially offset by increased expenses related to a new office property purchased in Austin, Texas during the salefourth quarter of two office properties in Washington, D.C., which was consummated in July 2019.2020.
Hotel Expenses: Hotel expenses decreasedincreased to $2,831,000,$4.6 million, or by 53.7%62.5%, for the three months ended September 30, 2020,2021, compared to $6,112,000$2.8 million for the three months ended September 30, 2019,2020, primarily as a result of decreasedincreased occupancy at the hotel dueas compared to COVID-19.the third quarter of 2020. The outbreak of COVID-19 (see “—COVID-19” above) is expected to cause hotel expenses to decrease duringremain lower through the remainder of 20202021 as compared to pre-COVID-19 levels for the fourth quarter of 2019.comparable period.
Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related party. Lending expenses increaseddecreased to $1,712,000,$904,000, or by 12.5%47.2%, for the three months ended September 30, 2020,2021, compared to $1,522,000$1.7 million for the three months ended September 30, 2019, primarily2020. The decrease was due to additions to our general reserves (included in general and administrative expenses) as a result of COVID-19 and an increase in costsallocated expenses incurred and expense reimbursements as a result ofduring the allocation of $230,000three months ended September 30, 2020 related to the lending segment for a portion of theone-time retirement payment made to our former President who retired effective September 16, 2020, partially offset bypresident, a decrease in interest expense asallocated executive time resulting in a result ofreduction in allocated payroll during the three months ended September 30, 2021, a reduction in the outstanding balancesprovision for loan losses of our SBA 7(a) loan-backed notes$379,000 due to an increase in the general reserve made during the three months ended September 30, 2020 and secured borrowings.a reduction in interest expense of $189,000.
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 $2,387,000$2.3 million for the three months ended September 30, 2020,2021, a decrease of $312,000,5.2%, compared to $2,699,000$2.4 million for the three months ended September 30, 2019. Asset management fees totaled $2,387,000 for the three months ended September 30, 2020, compared to $2,424,000 for the three months ended September 30, 2019. Asset management fees are calculated based on a percentage of the daily average adjusted fair value of CIM Urban’s assets, which are appraised in the fourth quarter of each year.
CIM Commercial also paid a Base Service Fee to the Administrator, a related party, which totaled $275,000 for the three months ended September 30, 2019. On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with the Incentive Fee. The amendment is effective as of April 1, 2020. The Administrator did not earn an Incentive Fee for the three months ended September 30, 2020. Based on the expected performance of the Company for the remainder of 2020, we will pay no Incentive Fee in 2020; it is also very likely that we will not pay any Incentive Fee in 2021.
Expense Reimbursements to Related PartiesCorporate: The Administrator received compensation and or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered by the Base Service Fee or the Incentive Fee, as the case may be. For the three months ended September 30, 2020 and 2019, we expensed $639,000 and $630,000 for such services, respectively.
Interest Expense: Interest expense, which has not been allocated to our operating segments, was $2,473,000 for the three months ended September 30, 2020, an increase of $435,000 compared to $2,038,000 for the three months ended September 30, 2019. The increase is primarily due to a higher average outstanding principal balance on our 2018 revolving credit facility during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, as well as an increase in interest expense on our 2018 revolving credit facility resulting from the 2018 Credit Facility Modification.
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General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $999,000 for the three months ended September 30, 2020, an increase of $192,000 compared to $807,000 for the three months ended September 30, 2019. The increase is primarily due to a non-recurring reduction to general and administrative expenses that occurred during the three months ended September 30, 2019.
Transaction Costs: Transaction costs totaled $0 for the three months ended September 30, 2020 and $340,000 for the three months ended September 30, 2019.
Depreciation and Amortization Expense: Depreciation and amortization expense was $5,273,000 for the three months ended September 30, 2020, an increase of $93,000 compared to $5,180,000 for the three months ended September 30, 2019.
Loss on Early Extinguishment of Debt: Loss on early extinguishment of debt was $281,000 for the three months ended September 30, 2020, compared to $0 for the three months ended September 30, 2019. The loss on early extinguishment of debt was related to the write off of a portion of the deferred financing costs for the 2018 Credit Facility as a result of the reduction in total borrowing capacity in connection with the 2018 Credit Agreement Modification.
Gain on sale of real estate: There was no gain on sale of real estate for the three months ended September 30, 2020 and $302,000 for the three months ended September 30, 2019. We recognized a gain on sale of real estate of $302,000 in connection with the sale of two office properties and one development site in Washington, D.C, which was consummated in July 2019.
(Benefit) Provision for Income Taxes: (Benefit) provision for income taxes was $(18,000) for the three months ended September 30, 2020 and $87,000 for the three months ended September 30, 2019. The decrease is due to a decrease in taxable income at our taxable REIT subsidiaries (“TRSs”) during the three months ended September 30, 2020 resulting primarily from the effects of COVID-19 on our hotel in Sacramento, California.
Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019
Net (Loss) Income
 Nine Months Ended September 30,Change
 20202019$%
 (dollars in thousands)
Total revenues$59,379 $113,348 $(53,969)(47.6)%
Total expenses$70,737 $198,720 $(127,983)(64.4)%
Gain on sale of real estate$— $433,104 $(433,104)(100.0)%
Net (loss) income$(10,627)$347,046 $(357,673)(103.1)%
Net (loss) income decreased to $(10,627,000), or by $(357,673,000), for the nine months ended September 30, 2020, compared to net income of $347,046,000 for the nine months ended September 30, 2019. The decrease is primarily attributable to the gain on sale of real estate of $433,104,000 recognized during the nine months ended September 30, 2019 as well as a decrease of $30,546,000 in segment net operating income (primarily as a result of both the 2019 Asset Sales and the adverse impact of COVID-19), partially offset by $69,000,000 in impairment of real estate recognized during the nine months ended September 30, 2019, and a $29,982,000 loss on early extinguishment of debt recognized during the nine months ended September 30, 2019.

FFO
We believe that FFO 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 declared or accumulated, redeemable preferred stock deemed dividends, and redeemable preferred stock redemptions, 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 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
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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 reconciliation of net (loss) income attributable to common stockholders to FFO attributable to common stockholders:
 Nine Months Ended
September 30,
 20202019
 (in thousands)
Net (loss) income attributable to common stockholders (1)$(24,606)$334,269 
Depreciation and amortization15,728 21,995 
Impairment of real estate— 69,000 
Gain on sale of depreciable assets— (433,104)
FFO attributable to common stockholders (1)$(8,878)$(7,840)
(1)In connection with the 2018 Credit Facility Modification entered into in September 2020, we recognized a $281,000 loss on early extinguishment of debt related to the write off of certain unamortized loan costs resulting from such debt modification. In connection with the sale of certain properties during the nine months ended September 30, 2019, we recognized a $29,982,000 loss on early extinguishment of debt related to the legal defeasance and prepayment of mortgage loans collateralized by such properties. Such losses on early extinguishment of debt are included in, and have the effect of reducing, net income attributable to common stockholders and FFO attributable to common stockholders, because loss on early extinguishment of debt is not an adjustment prescribed by NAREIT.
FFO attributable to common stockholders was $(8,878,000) for the nine months ended September 30, 2020, a decrease of $(1,038,000) compared to $(7,840,000) for the nine months ended September 30, 2019. The decrease in FFO was primarily attributable to a decrease of $30,546,000 in segment net operating income (primarily as a result of both the 2019 Asset Sales and the adverse impact of COVID-19), a decrease of $3,128,000 in interest and other income not allocated to our operating segments, an increase of $247,000 in expense reimbursements to related parties—corporate, an increase of $679,000 in redeemable preferred stock dividends declared or accumulated, and an increase of $541,000 in interest expense not allocated to our operating segments, partially offset by a decrease of $29,701,000 in loss on early extinguishment of debt, a decrease of $3,088,000 in asset management and other fees to related parties not allocated to our operating segments, and a decrease of $1,417,000 in provision for income taxes.
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Summary Segment Results
During the nine months ended September 30, 2020 and 2019, CIM Commercial operated in three segments: office and hotel properties and lending. Set forth and described below are summary segment results for our operating segments.
 Nine Months Ended September 30,Change
 20202019$%
 (dollars in thousands)
Revenues:    
Office$42,189 $72,380 $(30,191)(41.7)%
Hotel$11,129 $29,430 $(18,301)(62.2)%
Lending$5,963 $8,312 $(2,349)(28.3)%
Expenses:    
Office$17,735 $30,074 $(12,339)(41.0)%
Hotel$11,545 $19,628 $(8,083)(41.2)%
Lending$4,793 $4,666 $127 2.7 %
Revenues
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue decreased to $42,189,000, or by 41.7%, for the nine months ended September 30, 2020 compared to $72,380,000 for the nine months ended September 30, 2019. The decrease is primarily due to the 2019 Asset Sales, lower revenues at an office property in Los Angeles, California, and lower revenues at an office property in Beverly Hills, California due to a decrease in occupancy as compared to the prior year. Additionally, the economic downturn caused by COVID-19 has negatively affected and will continue to negatively affect the operations of our office portfolio for the fiscal year ending December 31, 2020 and at least through the first half of 2021 as described in “—COVID-19” above.
Hotel Revenue: Hotel revenue decreased to $11,129,000, or by 62.2%, for the nine months ended September 30, 2020, compared to $29,430,000 for the nine months ended September 30, 2019, primarily due to decreases in occupancy, average daily rate, and food, beverage, and other sundry hotel services during the period starting in March 2020 through September 2020 as compared to the same period in the prior year as a result of COVID-19 (see “—COVID-19” above). The outbreak of COVID-19, the temporary closure of the nearby Sacramento Convention Center until its expected reopening in early 2021, and renovations of the guest rooms, food and beverage amenities, public areas, meeting rooms and other amenities at the hotel during 2020, to the extent such renovations are resumed, are expected to cause hotel revenue to decline materially during the remainder of 2020 as compared to the fourth quarter of 2019.
Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue decreased to $5,963,000, or by 28.3%, for the nine months ended September 30, 2020, compared to $8,312,000 for the nine months ended September 30, 2019. The decrease is primarily due to a decrease in premium income from the sale of the guaranteed portion of our SBA 7(a) loans and a decrease in interest income resulting from a decrease in the prime rate.
Interest and Other Income: Interest and other income represents revenue generated outside of our reportable segments. Interest and other income decreased to $98,000 for the nine months ended September 30, 2020, compared to $3,226,000 for the nine months ended September 30, 2019. The decrease primarily relates to interest earned during the nine months ended September 30, 2019 on the proceeds from certain of the 2019 Asset Sales.
Expenses
Office Expenses: Office expenses decreased to $17,735,000, or by 41.0%, for the nine months ended September 30, 2020, compared to $30,074,000 for the nine months ended September 30, 2019. The decrease is primarily due to the 2019 Asset Sales.
Hotel Expenses: Hotel expenses decreased to $11,545,000, or by 41.2%, for the nine months ended September 30, 2020, compared to $19,628,000 for the nine months ended September 30, 2019, primarily as a result of decreased occupancy at the hotel during the period starting March 2020 through September 2020 as compared to the same period in the prior year as a result of COVID-19. The outbreak of COVID-19 (see “—COVID-19” above) is expected to cause hotel expenses to decrease during the remainder of 2020 as compared to the fourth quarter of 2019.
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Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related party. Lending expenses increased to $4,793,000, or by 2.7%, for the nine months ended September 30, 2020, compared to $4,666,000 for the nine months ended September 30, 2019, primarily due to an increase in costs incurred and expense reimbursements to related parties due to an increase in allocated expenses related to the development of the loan origination platform for the Paycheck Protection Program and assistance with origination of SBA 7(a) loans under the Paycheck Protection Program, additions to our general reserves (included in general and administrative expenses) as a result of COVID-19, an increase in costs incurred and expense reimbursements as a result of the allocation of $230,000 to the lending segment for a portion of the payment made to our former President who retired effective September 16, 2020, and an increase in general and administrative expense related to an increase in loan loss reserves, partially offset by decrease in interest expense as a result of a reduction in the outstanding balances of our SBA 7(a) loan-backed notes and secured borrowings.
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 $7,408,000 for the nine months ended September 30, 2020, a decrease of $3,088,000, compared to $10,496,000 for the nine months ended September 30, 2019. Asset management fees totaled $7,126,000 for the nine months ended September 30, 2020, compared to $9,669,000 for the nine months ended September 30, 2019. Asset management fees are calculated based on a percentage of the daily average adjusted fair value of CIM Urban’s assets, which are appraised in the fourth quarter of each year. The lower fees reflect a decrease in the adjusted fair value of CIM Urban’s assets as compared to the third quarter of 2020 due to the 2019 Asset Sales,lower appraised values of our same store properties, partially offset by the purchase of an office property and incremental capital expenditures incurred in the first nine months of 2020.
CIM Commercial also paid a Base Service Feesubsequent to the Administrator, a related party, which totaled $282,000 for the ninethree months ended September 30, 2020 compared to $827,000 for the nine months ended September 30, 2019. 2020.
On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with the Incentive Fee. The amendment isbecame effective as of April 1, 2020. The Administrator did not earn an Incentive Fee for the three months ended September 30, 2020.2021. Based on our performance for the nine months ended September 30, 2021 and our expected performance of the Company for the remainder of 2020, we will pay no Incentive Fee in 2020;2021, it is also very likely that we will not pay any Incentive Fee in 2021.
Expense Reimbursements to Related PartiesCorporate: The Administrator receivedreceives compensation and or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered by the Incentive Fee. Expense reimbursements to related parties-corporate were $533,000 for the three months ended September 30, 2021, a decrease of 16.6%, compared to $639,000 for the three months ended September 30, 2020. The decrease was primarily due to reductions in allocated payroll.
Interest Expense: Interest expense, which has not been allocated to our operating segments, was $2.1 million for the three months ended September 30, 2021, a decrease of 15.9% compared to $2.5 million for the three months ended September 30, 2020. The decrease is primarily due to a lower average outstanding principal balance on our 2018 Revolving Credit Facility compared to the three months ended September 30, 2020.
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General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $753,000 for the three months ended September 30, 2021, a decrease of 24.6% compared to $999,000 for the three months ended September 30, 2020. The decrease is primarily due to a decrease in accounting and consulting fees.
Depreciation and Amortization Expense: Depreciation and amortization expense was $5.1 million for the three months ended September 30, 2021, a decrease of $212,000 compared to $5.3 million for the three months ended September 30, 2020.
(Provision) Benefit for Income Taxes: Provision for income taxes was $946,000 for the three months ended September 30, 2021 as compared to a benefit for income taxes of $18,000 for the three months ended September 30, 2020. The change in provision for income taxes is due to an increase in taxable income at our taxable REIT subsidiaries during the three months ended September 30, 2021 related to the operating results of our lending division.
Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020
Net Loss
 Nine Months Ended September 30,Change
 20212020$%
 (dollars in thousands)
Total revenues$65,801 $59,379 $6,422 10.8 %
Total expenses$65,005 $70,737 $(5,732)(8.1)%
Net loss$(1,520)$(10,627)$9,107 (85.7)%
Net loss decreased to $1.5 million, or by $9.1 million, for the nine months ended September 30, 2021, compared to net loss of $10.6 million for the nine months ended September 30, 2020. The decrease is primarily attributable to an increase of $9.8 million in total segment net operating income, primarily due to an increase in lending segment net operating income.
FFO
The following table sets forth a reconciliation of net loss attributable to common stockholders to FFO attributable to common stockholders (in thousands):
Nine Months Ended September 30,
20212020
Net loss attributable to common stockholders$(15,632)$(24,606)
Depreciation and amortization15,167 15,728 
FFO attributable to common stockholders$(465)$(8,878)
FFO attributable to common stockholders was $(465,000) for the nine months ended September 30, 2021, an increase of $8.4 million compared to $(8.9) million for the nine months ended September 30, 2020. The increase in FFO is primarily attributable to an increase of $9.8 million in total segment net operating income, primarily due to an increase in lending segment net operating income.
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Summary Segment Results
During the nine months ended September 30, 2021 and 2020, CIM Commercial operated in three segments: office and hotel properties and lending. Set forth and described below are summary segment results for our operating segments (dollar amounts in thousands).
 Nine Months Ended September 30,Change
 20212020$%
Revenues:    
Office$39,881 $42,189 $(2,308)(5.5)%
Hotel$10,833 $11,129 $(296)(2.7)%
Lending$15,086 $5,963 $9,123 153.0 %
Expenses:    
Office$16,995 $17,735 $(740)(4.2)%
Hotel$10,765 $11,545 $(780)(6.8)%
Lending$3,064 $4,793 $(1,729)(36.1)%
Non-Segment Revenue and Expenses:
Interest and other income$$98 $(97)(99.0)%
Asset management and other fees to related parties$(6,781)$(7,408)$627 (8.5)%
Expense reimbursements to related parties - corporate$(1,592)$(2,066)$474 (22.9)%
Interest expense$(7,012)$(8,056)$1,044 (13.0)%
General and administrative$(3,629)$(3,125)$(504)16.1 %
Depreciation and amortization$(15,167)$(15,728)$561 (3.6)%
(Provision) benefit for income taxes$(2,316)$731 $(3,047)(416.8)%
Revenues
Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties. Office revenue decreased to $39.9 million, or by 5.5%, for the nine months ended September 30, 2021 compared to $42.2 million for the nine months ended September 30, 2020. The decrease is primarily due to lower revenues at an office property in Los Angeles, California, and lower revenues at an office property in Beverly Hills, California due to decreases in occupancy as compared to the nine months ended September 30, 2020, partially offset by an increase in revenues related to an office property in Austin, Texas that was purchased in November 2020.
Hotel Revenue: Hotel revenue decreased to $10.8 million, or by 2.7%, for the nine months ended September 30, 2021, compared to $11.1 million for the nine months ended September 30, 2020, primarily due to decreases in occupancy, average daily rate, and food, beverage, and other sundry hotel services during the period from March 2020 through September 2021 as a result of COVID-19 (see “—COVID-19” above). The outbreak of COVID-19 will likely continue to negatively affect the operations of our hotel at least through the remainder of 2021 as described in “—COVID-19” above.
Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income. Lending revenue increased to $15.1 million, or by 153.0%, for the nine months ended September 30, 2021, compared to $6.0 million for the nine months ended September 30, 2020. The increase is primarily due to an increase in premium income from the sale of the guaranteed portion of our SBA 7(a) loans, which benefited from an increase in the SBA guaranty support from a maximum of 75% per loan to 90% per loan, a reduction in fees charged in the secondary market and higher market premiums. In addition, there was an increase in interest income resulting from an increase in our average outstanding lending portfolio during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. As a result of the conclusion of the enhanced government support provided by the CARES Act, the SBA guaranty support has now reverted back to 75% from 90% and the reduction of fess charged in the secondary market ended as of October 1, 2021. This will likely cause future loan originations to decline and the premiums achieved on sales of the guaranteed portion of our SBA 7(a) loans to decrease, in each case possibly by a material amount.
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Expenses
Office Expenses: Office expenses decreased to $17.0 million, or by 4.2%, for the nine months ended September 30, 2021 and September 30, 2020. The decrease is primarily due to tax refunds related to prior tax years and adjustments to payroll allocation reimbursements related to certain properties, both of which reduced office expenses for nine months ended September 30, 2021.
Hotel Expenses: Hotel expenses decreased to $10.8 million, or by 6.8%, for the nine months ended September 30, 2021, compared to $11.5 million for the nine months ended September 30, 2020, primarily as a result of decreased occupancy at the hotel during the period from March 2020 through September 2021 as a result of COVID-19. The outbreak of COVID-19 is expected to cause hotel expenses to remain lower through the remainder of 2021 as compared to pre-COVID-19 levels for the comparable period.
Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related party. Lending expenses decreased to $3.1 million, or by 36.1%, for the nine months ended September 30, 2021, compared to $4.8 million for the nine months ended September 30, 2020. The decrease was due to an increase in allocated expenses incurred during the nine months ended September 30, 2020 related to the one-time retirement payment to our former president, a decrease in allocated executive time resulting in a reduction in allocated payroll during the nine months ended September 30, 2021, a reduction in the provision for loan losses of $293,000 due to an increase in the general reserve made during the nine months ended September 30, 2020 and a reduction in interest expense of $297,000.
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 $6.8 million for the nine months ended September 30, 2021, a decrease of 8.5%, compared to $7.4 million for the nine months ended September 30, 2020. Asset management fees totaled $6.8 million for the nine months ended September 30, 2021, compared to $7.1 million for the nine months ended September 30, 2020. Asset management fees are calculated based on a percentage of the daily average adjusted fair value of CIM Urban’s assets, which are appraised in the fourth quarter of each year. The lower fees reflect a decrease in the adjusted fair value of CIM Urban’s assets as compared to the second quarter of 2020 due to lower appraised values of our same store properties, partially offset by the purchase of an office property and incremental capital expenditures incurred subsequent to September 30, 2020.
CIM Commercial also paid a Base Service Fee to the Administrator, a related party, which totaled $0 for the nine months ended September 30, 2021 compared to $282,000 for the nine months ended September 30, 2020. On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with the Incentive Fee. The amendment was effective as of April 1, 2020. Based on our performance for the nine months ended September 30, 2021 and our expected performance for the remainder of 2021, it is very likely that we will not pay any Incentive Fee in 2021.
Expense Reimbursements to Related PartiesCorporate: The Administrator receives compensation and or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered by the Base Service Fee or the Incentive Fee, as the case may be. ForExpense reimbursements to related parties-corporate were $1.6 million for the nine months ended September 30, 2020 and 2019, we expensed $2,066,000 and $1,819,0002021, a decrease of 22.9%, compared to $2.1 million for such services, respectively.the nine months ended September 30, 2020. The decrease was primarily due to reductions in allocated payroll.
Interest Expense: Interest expense, which has not been allocated to our operating segments, was $8,056,000$7.0 million for the nine months ended September 30, 2020, an increase2021, a decrease of $541,00013.0% compared to $7,515,000$8.1 million for the nine months ended September 30, 2019.2020. The increasedecrease is primarily due to a higherlower average outstanding principal balance on our 2018 revolving credit facility during the nine months ended September 30, 20202021 compared to the nine months ended September 30, 2019, as well as2020, partially offset by an increase in interest expense on our revolving credit facility resulting from the 2018 Credit Facility Modification partially offset by a decrease in the LIBOR component of our interest rates and the legal defeasance of mortgage loans with an aggregate outstanding principal balance of $205,500,000 in connection with the sale of three office properties and a parking garage in Oakland, California, the prepayment of a $46,000,000 mortgage loan in connection with the sale of an office property in Washington, D.C., and the assumption of a $28,200,000 mortgage loan by the buyer of an office property in San Francisco, California, all of which were consummated in March 2019, and the legal defeasance of a mortgage loan with an outstanding principal balance of $39,500,000 in connection with the sale of an office property in Oakland, California, which was consummated in May 2019.effect from September 2020 through August 2021.
General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $3,125,000$3.6 million for the nine months ended September 30, 2020,2021, an increase of $180,00016.1% compared to $2,945,000$3.1 million for the nine months ended September 30, 2019.2020. The increase is primarily due to a non-recurring reductionan increase in legal fees as compared to general and administrative expenses that occurred during the nine months ended September 30, 2019.
Transaction Costs: Transaction costs totaled $0 for the nine months ended September 30, 2020 and $600,000 for the nine months ended September 30, 2019.2020.
Depreciation and Amortization Expense: Depreciation and amortization expense was $15,728,000$15.2 million for the nine months ended September 30, 2020,2021, a decrease of $6,267,0003.6% compared to $21,995,000$15.7 million for the nine months ended September 30, 2019. The decrease is primarily due to the 2019 Asset Sales, and the impairment of two office properties and one development site in Washington, D.C., which decreased the carrying amounts of such properties and the depreciation thereon until such properties were held for sale in late June 2019 and sold in late July 2019.2020.
Loss on Early Extinguishment of Debt:(Provision) Benefit for Income Taxes: Loss on early extinguishment of debtProvision for income taxes was $281,000$2.3 million for the nine months ended September 30, 2020,2021 compared to $29,982,000a benefit for income taxes of $731,000 for the nine months ended September 30, 2019.2020. The loss on early extinguishment of debt of $281,000 for the nine months ended September 30, 2020 was related to the write off of a portion of
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increase in provision for income taxes is due to an increase in taxable income at our taxable REIT subsidiaries during the deferred financing costs fornine months ended September 30, 2021 related to the 2018 Credit Facility as a resultoperating results of our lending division.
Cash Flow Analysis
Our cash flows from operating activities are primarily dependent upon the reduction in total borrowing capacity in connection withreal estate assets owned, occupancy level of our real estate assets, the 2018 Credit Agreement Modification. In March 2019, we legally defeased mortgage loans with an aggregate outstanding principal balancerental rates achieved through our leases, the occupancy and ADR of $205,500,000 in connection withour hotel, the salecollectability of three office propertiesrent and a parking garage in Oakland, California, we prepaid a $46,000,000 mortgagerecoveries from our tenants, and loan in connection with the salerelated activity, many of an office property in Washington, D.C., and a $28,200,000 mortgage loan was assumedwhich were negatively impacted by the buyereffects of an office propertyCOVID-19 during the nine months ended September 30, 2021 and September 30, 2020. Our cash flows from operating activities are also impacted by fluctuations in San Francisco, California. In May 2019, one mortgage loan, with an outstanding principal balance of $39,500,000 at such time, was legally defeased in connection with the sale of the related property. The loss on early extinguishment of debtoperating expenses and other general and administrative costs. Net cash provided by operating activities increased by $6.7 million for the nine months ended September 30, 2019 consists2021, as compared to the same period in 2020. The increase was primarily due to an increase of $65.2 million in proceeds from the costssale of guaranteed loans, offset by an increase of $70.7 million in loans funded, an increase of $8.1 million resulting from a lower level of working capital used compared to the prior period, and a $6.4 million decrease in net loss adjusted for depreciation and amortization expense and write-offs of uncollectible receivables.
Our cash flows from investing activities are primarily related to property acquisitions and sales, expenditures for development or repositioning of properties, capital expenditures and cash flows associated with the aforementioned legal defeasances, repayment, and assumption of mortgage loans the write-off of unamortized deferred loan costs, and, with regards to the legal defeasances, the difference between the purchase price of the U.S. government securities and the outstanding principal balance of the mortgage loans that were legally defeased.
Impairment of Real Estate:  Impairment of real estate was $0originated at our lending segment. Net cash used in investing activities decreased by $26.2 million for the nine months ended September 30, 20202021, as compared to the same period in 2020. The decrease was primarily due to a decrease of $8.5 million in cash used to fund additions to investments in real estate and $69,000,000real estate acquisitions, and a $17.8 million increase of principal collected on loans net of loans funded during the nine months ended September 30, 2021.
Our cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash used in financing activities increased by $56.4 million for the nine months ended September 30, 2019. In connection with our negotiation2021, as compared to the same period in 2020. The change was primarily due to an increase of $121.8 million in debt repayments, net of proceeds from incremental borrowings, and a decrease of $11.1 million from net proceeds from the issuance of Preferred Stock and warrants, partially offset by an agreement with an unrelated third-party forincrease of $78.3 million from the salenet proceeds from the issuance of 100% fee-simple interests in two office properties and one development site in Washington, D.C., which sale was consummated in July 2019, we determined that the book value of such properties exceeded their estimated fair value and recognized impairment charges totaling $69,000,000 during the nine months ended September 30, 2019. Our determination of the fair values of such properties was based on negotiations with the third-party buyer and the contract sales price.
Gain on sale of real estate: Gain on sale of real estate was $0 for the nine months ended September 30, 2020 and $433,104,000 for the nine months ended September 30, 2019. We recognized a gain on sale of real estate of $289,779,000Common Stock in connection with the sale of three office properties and a parking garage in Oakland, California, $45,710,000 in connection with the sale of an office property in Washington, D.C., and $42,092,000 in connection with the sale of an office property in San Francisco, California, all of which were consummated in March 2019, and a gain on sale of real estate of $302,000 in connection with the sale of an office property in Oakland, California, which was consummated in May 2019.Rights Offering.
(Benefit) Provision for Income Taxes: (Benefit) provision for income taxes was $(731,000) for the nine months ended September 30, 2020 and $686,000 for the nine months ended September 30, 2019. The decrease is due to a decrease in taxable income at our TRSs during the nine months ended September 30, 2020 resulting primarily from the effects of COVID-19 on our hotel in Sacramento, California.
Liquidity and Capital Resources.
Liquidity NeedsGeneral
We currently have substantial cashOn a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, interest and principal on hand,current and any future debt financings, SBA 7(a) loan originations, and paying distributions on our Preferred Stock and Common Stock. We may finance our future activities through one or more of the following methods: (i) offerings of shares of Common Stock, preferred stock, senior unsecured securities, andPreferred Stock or other equity and or debt securities;securities of the Company; (ii) credit facilities and term loans; (iii) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (iv) the sale of existing assets; and or (v) cash flows from operations. With respect to the $75.0 million outstanding under the 2018 revolving credit facility that is scheduled to mature in October 2022, we expect to extend its maturity to October 2023, subject to satisfying certain conditions, and/or refinance such indebtedness. Based on our projected performance and current capital market conditions, we expect that we can implement either or both options.
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, (including, without limitation, (i) a repositioning of an existing office building at 4750 Wilshire Boulevard in Los Angeles, California, which repositioning is expected to cost approximately $14,500,000, of which $2,037,000 had been paid as of September 30, 2020, provided, however, the vast majority of such repositioning has been temporarily suspended due to COVID-19, and (ii) renovations of the guest rooms, food and beverage amenities, public areas, meeting rooms and other amenities at the Sheraton Grand Hotel in Sacramento, California, which renovations are expected to cost approximately $26,300,000, of which $2,246,000 had been paid as of September 30, 2020, provided, however, the vast majority of such renovations have been temporarily suspended due to COVID-19), capital expenditures, 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 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 $24.4 million as of September 30, 2021, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending. The majority of these commitments have government guarantees of 90% (although 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.
We may not have sufficient funds on hand or may not be able to obtain additional financing to cover all of theseour long-term cash requirements. The nature of our business, and the requirements imposed by REIT rules that we distribute a substantial majority of our REIT taxable income on an annual basis in the form of dividends, may cause us to have substantial liquidity needs over the long-term. WeWhile we will seek to satisfy our long-term liquiditysuch needs through one or more of the methods described in the immediately preceding paragraph. However,first
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paragraph of this section, our ability to use any of these methods aretake such actions is highly uncertain and cannot be predicted, and could be affected by various risks and uncertainties, including, but not limited to, the effects of COVID-19 and other risks detailed in “Risk Factors” in Part II,I, Item 1A of this Quarterly Report onthe 2020 Form 10-Q.
10-K. If we cannot obtain additional funding for our long-term liquidity needs, and depending on the impact of COVID-19 on the revenues and expenses of our operating segments, 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
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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.
SourcesCash 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 UsesADR of Fundsour hotel, the collectability of rent and recoveries from our tenants, and loan related activity, many of which were negatively impacted by the effects of COVID-19 during the nine months ended September 30, 2021 and September 30, 2020. 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 increased by $6.7 million for the nine months ended September 30, 2021, as compared to the same period in 2020. The increase was primarily due to an increase of $65.2 million in proceeds from the sale of guaranteed loans, offset by an increase of $70.7 million in loans funded, an increase of $8.1 million resulting from a lower level of working capital used compared to the prior period, and a $6.4 million decrease in net loss adjusted for depreciation and amortization expense and write-offs of uncollectible receivables.
MortgagesOur cash flows from investing activities are primarily related to property acquisitions and sales, expenditures for 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 $26.2 million for the nine months ended September 30, 2021, as compared to the same period in 2020. The decrease was primarily due to a decrease of $8.5 million in cash used to fund additions to investments in real estate and real estate acquisitions, and a $17.8 million increase of principal collected on loans net of loans funded during the nine months ended September 30, 2021.
In June 2016, we entered into six mortgage loan agreements withOur cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash used in financing activities increased by $56.4 million for the nine months ended September 30, 2021, as compared to the same period in 2020. The change was primarily due to an aggregate principal amountincrease of $392,000,000. In 2017$121.8 million in debt repayments, net of proceeds from incremental borrowings, and 2019,a decrease of $11.1 million from net proceeds from the issuance of Preferred Stock and warrants, partially offset by an increase of $78.3 million from the net proceeds from the issuance of Common Stock in connection with the salesRights Offering.
Liquidity and Capital Resources
General
On a short-term basis, our principal demands for funds will be for the acquisition of certain officeassets, development or repositioning of properties, $294,900,000or re-leasing of space in aggregateexisting properties, capital expenditures, interest and principal on current and any future debt financings, SBA 7(a) loan originations, and paying distributions on our Preferred Stock and Common Stock. We may finance our future activities through one or more of these loans was defeasedthe following methods: (i) offerings of shares of Common Stock, Preferred Stock or assumed byother equity and or debt securities of the respective buyers in connection withCompany; (ii) credit facilities and term loans; (iii) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (iv) the sale of existing assets; and or (v) cash flows from operations. With respect to the properties that were collateral for such loans.
Revolving Credit Facilities
In October 2018, CIM Commercial entered into the 2018 revolving credit facility with a bank syndicate. In September 2020, the 2018 revolving credit facility was amended (the “2018 Credit Facility Modification”) primarily in order to modify the calculation of the borrowing base to mitigate the effect that COVID-19 has had on CIM Commercial’s ability to borrow under the facility. As modified, CIM Commercial can borrow up to a maximum of $209,500,000, subject to a borrowing base calculation. The 2018 revolving credit facility is secured by deeds of trust on certain properties. Outstanding advances under the 2018 revolving credit facility bear interest (a) during the Deferral Period (as defined below), which is currently in effect, at (i) the base rate plus 1.05% or (ii) LIBOR plus 2.05% and (b) following the Deferral Period, at (i) the base rate plus 0.55% or (ii) LIBOR plus 1.55%. As of September 30, 2020and December 31, 2019, the variable interest rate was 2.21% and 3.29%, respectively. The 2018 revolving credit facility is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions. The 2018 revolving credit facility contains customary covenants and is not subject to any financial covenants, but is subject to a borrowing base calculation that determines the amount we can borrow. Under the terms of the 2018 Credit Facility Modification, the borrowing base calculation was modified for the period from September 2, 2020 through June 30, 2021 (the “Deferral Period”). The Deferral Period is also subject to (i) an increase in the applicable interest rate as described at the beginning of this paragraph, (ii) the addition of a reserve amount of $15,000,000 against our borrowing availability, which may be reduced by certain capital expenditures made in respect of our properties securing the 2018 Credit Facility, and (iii) the requirement that we maintain a minimum balance of “liquid assets” of $15,000,000, defined as a combination of (a) unencumbered cash and cash equivalents and (b) up to $5,000,000 unfunded availability under the 2018 revolving credit facility. As of November 4, 2020, September 30, 2020, and December 31, 2019, $166,500,000, $166,500,000 and $153,000,000, respectively, was$75.0 million outstanding under the 2018 revolving credit facility and approximately $28,000,000, $28,000,000, and $73,900,000, respectively, was available for future borrowings.
In May 2020,that is scheduled to further enhancemature in October 2022, we expect to extend its liquidity position and maintain financial flexibility, CIM Commercial entered into the 2020 unsecured revolving credit facility with a bank pursuantmaturity to which CIM Commercial can borrow up to a maximum of $10,000,000. Outstanding advances under the 2020 unsecured revolving credit facility bear interest at the rate of 1.00%. CIM Commercial also pays a revolving credit facility fee of 1.12% with each advance under the 2020 unsecured revolving credit facility, which fee isOctober 2023, subject to satisfying certain conditions, and/or refinance such indebtedness. Based on our projected performance and current capital market conditions, we expect that we can implement either or both options.
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, 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 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 $24.4 million as of September 30, 2021, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending. The majority of these commitments have government guarantees of 90% (although 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 capliquid 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.
We may not have sufficient funds on hand or may not be able to obtain additional financing to cover all of $112,000our long-term cash requirements. The nature of our business, and the requirements imposed by REIT rules that we distribute a substantial majority of our REIT taxable income on an annual basis in the aggregate. The 2020 unsecured revolving credit facility matures in May 2022. The 2020 unsecured revolving credit facility contains certain customary covenants including a maximum leverage ratio and a minimum fixed charge coverage ratio, as well as certain other conditions. Asform of both November 4, 2020 and September 30, 2020, $0 was outstanding underdividends, may cause us to have substantial liquidity needs over the 2020 unsecured revolving credit facility and $10,000,000 was available for future borrowings.
In June 2020,long-term. While we borrowed funds from the Federal Reservewill seek to satisfy such needs through the PPPLF. Advances under the PPPLF carry an interest rate of 0.35%, are made on a dollar-for-dollar basis based on the amount of loans originated under the Paycheck Protection Program and are secured by loans made by us under the Paycheck Protection Program. The PPPLF contains customary covenants but is not subject to any financial covenants. The maturity date of PPPLF borrowings is the same as the maturity dateone or more of the loans pledged to securemethods described in the extension of credit, generally two years. At maturity, both principal and accrued interest are due. The maturity date of a PPPLF borrowing will be accelerated if, among other things, we have been reimbursed by the SBA for a loan forgiveness (to the extent of the forgiveness), we have received payment from the SBA representing exercise of the loan guarantee or we have received payment from the underlying borrower (to the extent of the payment received). No new extensions of credit will be made under the PPPLF after September 30, 2020 unless the Federal Reserve Board and the United States Department of the Treasury decide to extend the PPPLF. We borrowed money under the PPPLF to finance all the loans we originated under the Paycheck Protection Program. As of both November 4, 2020 and September 30, 2020, $16,016,000 was outstanding under the PPPLF.first
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Other Financing Activity
On May 30, 2018, we completed a securitizationparagraph of this section, 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 effects of COVID-19 and other risks detailed in “Risk Factors” in Part I, Item 1A of the unguaranteed portion2020 Form 10-K. 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 certainoperations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of our SBA 7(a) loans receivable with the issuance of $38,200,000 of unguaranteed SBA 7(a) loan-backed notes. The SBA 7(a) loan-backed notes mature on March 20, 2043, with monthly payments due as payments on the collateralized loans are received. Based on the anticipated repayments of our collateralized SBA 7(a) loans, at issuance, we estimated the weighted average life of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%. The outstanding balance of SBA 7(a) loan-backed notes on November 4, 2020, September 30, 2020, and December 31, 2019, was $14,941,000, $15,123,000 and $22,282,000, respectively.
Securities Offerings
We conducted a continuous public offering of Series A Preferred Units from October 2016 through January 2020, where each Series A Preferred Unit consisted of one share of Series A Preferred Stock and one Series A Preferred Warrant to purchase 0.25 of a share of Common Stock. Since February 2020, we have been conducting a continuous public offering of up to approximately $785,000,000 of our Series A Preferred Stock and Series D Preferred Stock. Since such time, our Series A Preferred Stock is no longer being issued as a unit with an accompanying Series A Preferred Warrant. Each share of Series A Preferred Stock and Series D Preferred Stock has a stated value of $25.00 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 is expected to be, and since June 29, 2020, has been, $24.50 per share through the end of the life of the offering. Holders of 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 at an annual rate of 5.5% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter) and 5.65% of the Series D Preferred Stock Stated Value (i.e., the equivalent of $0.35313 per share per quarter), respectively. As of September 30, 2020, we had issued 5,896,536 shares of Series A Preferred Stock, 4,603,287 Series A Preferred Warrants, and 18,737 shares of Series D Preferred Stock and received net proceeds of $134,660,000 ($133,610,000 of which was allocated to the Series A Preferred Stock, $614,000 of which was allocated to the Series A Preferred Warrants, and $436,000 of which was allocated to the Series D Preferred Stock) after commissions, fees, and allocated costs and, additionally, had issued 106,518 shares of Series A Preferred Stock as payment for services to the Administrator, for which $0 in cash proceeds were received. As of September 30, 2020, there were 5,915,816 shares of Series A Preferred Stock, 4,603,287 Series A Preferred Warrants to purchase 1,194,159 shares of Common Stock, and 18,737 shares of Series D Preferred Stock outstanding. As of September 30, 2020, 87,238 shares of Series A Preferred Stock and no shares of Series D Preferred Stock had been redeemed.
On November 21, 2017, we issued 8,080,740 shares of Series L Preferred Stock having an initial stated value of $28.37 per share, subject to adjustment. In November 2019, pursuant to a tender offer, we repurchased 2,693,580 shares of Series L Preferred Stock. Holders of Series L 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 of Series L Preferred Stock at an annual rate of 5.5% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year). If the Company fails to timely declare distributions or fails to timely pay distributions on the Series L Preferred Stock, the annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.0% per year, up to a maximum rate of 8.5% per annum. However, prior to the payment of any distributions on Series L Preferred Stock in respect of a given year, the Company must first declare and pay dividends on the Common Stock in respect of such year in an aggregate amount equal to the Initial Dividend announced by our Board of Directors at the end of the prior fiscal year. On December 20, 2019, our Board of Directors announced an Initial Dividend on shares of our Common Stock for fiscal year 2020 in the aggregate amount of $4,380,645, of which $3,319,274 had been paid as of September 30, 2020.
On March 16, 2020, the Company established an ATM program through which it may, from time to time in its discretion, offer and sell shares of Common Stock having an aggregate offering price of up to $25,000,000 through an investment banking firm acting as the sales agent. Sales of Common Stock under the ATM program may be made directly on or through Nasdaq, among other methods. The Company intends to use the net proceeds from shares sold under the ATM program, if any, for general corporate purposes, acquisitions of shares of our preferred stock, whether through one or more tender offers, share repurchases or otherwise, and acquisitions consistent with our acquisition and asset management strategies. As of November 4, 2020, no sales of Common Stock have been made under the ATM program. The Company will determine whether to utilize the ATM program based on, among other things, its funding needs, the pace of its offering of Preferred Stock, the market price of its Common Stock, the costs of other funding alternatives and the return on potential acquisitions or redevelopments for which the proceeds of the offering may be used.Stock.
If current conditions continue for an extended period of time, raising capital may be more challenging than under conditions prior to COVID-19.
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Available Borrowings and Cash Balances
We have typically financed our capital needs through offerings of shares of Preferred Stock, long-term secured mortgages, unsecured term loan facilities, unsecured or secured short-term credit facilities, and cash flows from operations. As of September 30, 2020 and December 31, 2019, we had total indebtedness of $326,546,000 and $307,421,000, respectively. As of November 4, 2020, September 30, 2020 and December 31, 2019, $166,500,000, $166,500,000 and $153,000,000, respectively, was outstanding under our 2018 revolving credit facility and approximately $28,000,000, $28,000,000 and $73,900,000, respectively, was available for future borrowings. As of both November 4, 2020 and September 30, 2020, $0 was outstanding under the 2020 unsecured revolving credit facility and $10,000,000 was available for future borrowings. Our cash and cash equivalents and restricted cash totaled $41,988,000 and $35,947,000 as of September 30, 2020 and December 31, 2019, respectively.
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 RevPARoccupancy and ADR of our hotel, the collectability of rent and recoveries from our tenants, and loan related activity, many of which have beenwere negatively impacted by the effects of COVID-19 during the nine months ended September 30, 2020.2021 and September 30, 2020. 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 totaled $7,169,000increased by $6.7 million for the nine months ended September 30, 20202021, as compared to $32,563,000 for the nine months ended September 30, 2019.same period in 2020. The decreaseincrease was primarily due to a $29,537,000 decrease in net (loss) income adjusted for the gain on salean increase of real estate, depreciation and amortization expense, impairment of real estate, and loss on early extinguishment of debt and a decrease of $12,557,000$65.2 million in proceeds from the sale of guaranteed loans, partially offset by an increase of $17,196,000$70.7 million in loans funded, an increase of $8.1 million resulting from a lower level of working capital used compared to the prior period, an increaseand a $6.4 million decrease in net loss adjusted for depreciation and amortization expense and write-offs of $3,556,000 in loans funded, and an increase of $1,123,000 in principal collected on loans subject to secured borrowings.uncollectible receivables.
Our cash flows from investing activities are primarily related to property acquisitions and sales, expenditures for 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 $26.2 million for the nine months ended September 30, 2020 was $31,894,0002021, as compared to net cash provided by investing activities of $920,501,000 in the correspondingsame period in 2019.2020. The decrease was primarily due to $941,032,000 of cash generated from the sale of real estate during the nine months ended September 30, 2019, and a $17,202,000 increase in loans funded during the nine months ended September 30, 2020. This was partially offset by a decrease of $6,736,000$8.5 million in cash used to fund additions to investments in real estate and real estate acquisitions, and a $17.8 million increase of principal collected on loans net of loans funded during the nine months ended September 30, 2020.2021.
Our cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash providedused in financing activities increased by financing activities$56.4 million for the nine months ended September 30, 2020 was $30,766,0002021, as compared to net cash used in financing activities of $1,006,191,000 in the correspondingsame period in 2019.2020. The decreasechange was primarily due to the $613,294,000 paymentan increase of special cash dividends for the nine months ended September 30, 2019. The source$121.8 million in debt repayments, net of funds used to pay dividends of $17,783,000 for the nine months ended September 30, 2020, which include an annual Series L dividend of $8,406,000 paid in January 2020, and dividends of $642,434,000 for the nine months ended September 30, 2019, which include an annual Series L dividend of $14,045,000 paid in January 2019, were, in both of the aforementioned periods, cash provided by operating activities and cash on hand at the beginning of the respective periods. We had net debt borrowings inclusive of securedproceeds from incremental borrowings, and SBA 7(a) loan-backed notesa decrease of $11.1 million from net proceeds from the lending business,issuance of $18,757,000 forPreferred Stock and warrants, partially offset by an increase of $78.3 million from the nine months ended September 30, 2020, compared with net debt paymentsproceeds from the issuance of $117,602,000 for the nine months ended September 30, 2019. Additionally, for the nine months ended September 30, 2019, we had an outflow of $268,194,000 for investments in marketable securitiesCommon Stock in connection with the legal defeasanceRights Offering.
Liquidity and Capital Resources
General
On a short-term basis, our principal demands for funds will be for the acquisition of certain mortgage loansassets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, interest and an outflowprincipal on current and any future debt financings, SBA 7(a) loan originations, and paying distributions on our Preferred Stock and Common Stock. We may finance our future activities through one or more of $5,660,000 for prepayment penaltiesthe following methods: (i) offerings of shares of Common Stock, Preferred Stock or other equity and other payments relatedor debt securities of the Company; (ii) credit facilities and term loans; (iii) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (iv) the sale of existing assets; and or (v) cash flows from operations. With respect to the early extinguishment$75.0 million outstanding under the 2018 revolving credit facility that is scheduled to mature in October 2022, we expect to extend its maturity to October 2023, subject to satisfying certain conditions, and/or refinance such indebtedness. Based on our projected performance and current capital market conditions, we expect that we can implement either or both options.
Our long-term liquidity needs will consist primarily of debtfunds necessary for acquisitions of assets, development or repositioning of properties, or re-leasing of space in connection withexisting properties, capital expenditures, 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 and or redemption of our Preferred Stock (if we choose, or are required, to pay the 2019 Asset Sales.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 $24.4 million as of September 30, 2021, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending. The majority of these commitments have government guarantees of 90% (although 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.
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. The nature of our business, and the requirements imposed by REIT rules that we distribute a substantial majority of our REIT taxable income on an annual basis in the form of dividends, may cause us to have substantial liquidity needs over the long-term. While we will seek to satisfy such needs through one or more of the methods described in the first
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Summarized Contractual Obligations, Commitmentsparagraph of this section, our ability to take such actions is highly uncertain and Contingenciescannot be predicted, and could be affected by various risks and uncertainties, including, but not limited to, the effects of COVID-19 and other risks detailed in “Risk Factors” in Part I, Item 1A of the 2020 Form 10-K. 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.
The following summarizes our contractual obligationsSources and Uses of Funds
Mortgages
We have one mortgage loan agreement with an outstanding balance of $97.1 million as of September 30, 2020:2021.
Payments Due by Period
Contractual ObligationsTotal20202021 - 20222023 - 2024Thereafter
(in thousands)
Debt:
Mortgage payable$97,100 $— $— $— $97,100 
2018 revolving credit facility166,500 — 166,500 — — 
Secured borrowings (1)8,552 107 884 939 6,622 
Other (1) (2)58,209 450 17,875 1,827 38,057 
Interest and fees:
Debt (3)48,910 2,362 18,024 10,909 17,615 
Other Contractual Obligations:
Borrower advances3,614 3,614 — — — 
Loan commitments5,864 5,864 — — — 
Tenant improvements4,375 859 1,059 2,457 — 
Total contractual obligations$393,124 $13,256 $204,342 $16,132 $159,394 
Revolving Credit Facilities
In October 2018, we entered into the 2018 revolving credit facility that, as amended, allows us to borrow up to $209.5 million, subject to a borrowing base calculation. As of September 30, 2021 and December 31, 2020, the variable interest rate was 2.13% and 2.20%, respectively. The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option 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 November 4, 2021, September 30, 2021, and December 31, 2020, $75.0 million, $75.0 million and $166.5 million, respectively, was outstanding under the 2018 revolving credit facility and approximately $91.0 million, $91.0 million, and $28.0 million, respectively, was available for future borrowings.
(1)Secured borrowings, borrowedIn May 2020, to further enhance our liquidity position and maintain financial flexibility, we entered into the 2020 unsecured revolving credit facility pursuant to which we can borrow up to a maximum of $10.0 million. Outstanding advances under the 2020 unsecured revolving credit facility bear interest at the rate of 1.00%. The 2020 unsecured revolving credit facility matures in May 2022. As of both November 4, 2021 and September 30, 2021, no amounts were outstanding under the 2020 unsecured revolving credit facility and $10.0 million was available for future borrowings.
In June 2020, we commenced borrowing funds from the Federal Reserve through the PPPLF. Advances under the PPPLF carry an interest rate of 0.35%, are made on a dollar-for-dollar basis based on the amount of loans originated under the PPP and are secured by loans made by us under the PPP. The PPPLF contains customary covenants but is not subject to any financial covenants. The maturity date of PPPLF borrowings is the same as the maturity date of the loans pledged to secure the extension of credit, generally two years. At maturity, both principal payments onand accrued interest are due. The maturity date of a PPPLF borrowing will be accelerated if, among other things, we have been reimbursed by the SBA for a loan forgiveness (to the extent of the forgiveness), we have received payment from the SBA representing exercise of the loan guarantee or we have received payment from the underlying borrower (to the extent of the payment received). We borrowed money under the PPPLF to finance all the loans we originated under the PPP. As of November 4, 2021 and September 30, 2021, $6.8 million and $7.6 million, respectively, was outstanding under the PPPLF. As the PPP has ended, no new extensions of credit may be made under the PPPLF.
Other Financing Activity
On May 30, 2018, we completed a securitization of the unguaranteed portion of certain of our SBA 7(a) loans receivable with the issuance of $38.2 million of unguaranteed SBA 7(a) loan-backed notes. The SBA 7(a) loan-backed notes (which are included in Other) are generally dependent upon cash flows received from the underlying loans. Our estimate of their repayment is basedmature on scheduledMarch 20, 2043, with monthly payments due as payments on the underlying loans. Our estimate will differ from actual amountscollateralized loans are received. Based on the anticipated repayments of our collateralized SBA 7(a) loans, at issuance, we estimated the weighted average life of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the extent we experience prepaymentslower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%. The outstanding balance of SBA 7(a) loan-backed notes on November 4, 2021, September 30, 2021, and or loan liquidations or charge-offs. No paymentDecember 31, 2020, was $9.2 million, $10.2 million and $14.2 million, respectively.
We have junior subordinated notes with a variable interest rate that resets quarterly based on the three-month LIBOR plus 3.25%, with quarterly interest‑only payments. The junior subordinated balance is due unless payments are received from the borrowersat maturity on the underlying loans.
(2)RepresentsMarch 30, 2035. The junior subordinated notes may be redeemed at par at our option. The aggregate principal balance of the junior subordinated notes SBA 7(a) loan-backed notes, and borrowed funds from the Federal Reserve through the PPPLF.
(3)Excludes premiums and discounts. For the mortgage payable, borrowed funds from the Federal Reserve through the PPPLF and junior subordinated notes, the interest expense is calculated based on the effective interest rate on the related debtwas $27.1 million as of September 30, 2020. For2021.
As a SBA 7(a) licensee, we were an authorized lender under the PPP and originated $26.4 million loans under the program. As of November 4, 2021 and September 30, 2021, we had $6.8 million and $7.6 million, respectively, outstanding in
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PPP loans. We expect a significant portion of these loans will be forgiven and repaid, either in part or in full, by the SBA, including both principal and accrued interest.
Securities Offerings
We conducted a continuous public offering of Series A Preferred Units from October 2016 through January 2020, where each Series A Preferred Unit consisted of one share of Series A Preferred Stock and one Series A Preferred Warrant. During the tenure of the offering, we issued 4,603,287 Series A Preferred Units and received 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 2018 revolving credit facility,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 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 was adjusted to reflect the effect of the Special Dividend. As of September 30, 2021, there were 4,603,287 Series A Preferred Warrants to purchase 1,194,159 shares of Common Stock outstanding.
Since February 2020, we have conducted a continuous public offering of up to approximately $785.0 million of our Series A Preferred Stock and Series D Preferred Stock. We intend to use the balance outstandingnet proceeds from the offering for general corporate purposes, acquisitions of shares of our Common Stock and Preferred Stock, whether through one or more tender offers, share repurchases or otherwise, and acquisitions consistent with our acquisition and asset management strategies. As of September 30, 2021, we had issued 7,166,128 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $163.3 million after commissions, fees and allocated costs.
On March 16, 2020, we established an “at the applicable ratesmarket” (“ATM”) program through which we may, from time to time in effectour discretion, offer and sell shares of Common Stock having an aggregate offering price of up to $25.0 million through an investment banking firm acting as the sales agent. Sales of Common Stock under the ATM program may be made directly on or through Nasdaq, among other methods. We intend to use the net proceeds from shares sold under the ATM program, if any, for general corporate purposes, acquisitions of shares of our Preferred Stock, whether through one or more tender offers, share repurchases or otherwise, and acquisitions consistent with our acquisition and asset management strategies. As of November 4, 2021, no sales of Common Stock have been made under the ATM program.
During the nine months ended September 30, 2021, we conducted the Rights Offering pursuant to which we issued an aggregate of 8,521,589 shares of Common Stock at a subscription price of $9.25 per share for aggregate gross proceeds of $78.8 million before issuance costs of $2.0 million.
Dividends and Redemptions
Holders of Series A Preferred Stock, Series D Preferred Stock and Series L 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 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), 5.65% of the Series D Preferred Stock Stated Value (i.e., the equivalent of $0.35313 per share per quarter), and 5.50% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year), respectively. However, if we fail to timely declare distributions or fail to timely pay any distribution on the Series L Preferred Stock, the annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.00% per year, up to a maximum annual rate of 8.50% of the Series L Preferred Stock Stated Value. Dividends on each share of Preferred Stock begin accruing on, and are cumulative from, the date of issuance. Prior to the payment of any distributions on Series L Preferred Stock in respect of a given year, we must first declare and pay dividends on the Common Stock in respect of such year in an aggregate amount equal to the Initial Dividend announced by our Board of Directors at the end of the prior fiscal year. On December 22, 2020, we announced an Initial Dividend on shares of our Common Stock for fiscal year 2021 in the aggregate amount of $4,448,223, of which $3,979,000 had been paid as of September 30, 2020,2021.
We expect to calculate interest expensepay dividends on the Series A Preferred Stock and Series D Preferred Stock in arrears on a monthly basis, and on the Series L Preferred Stock in arrears on a yearly 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.
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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.
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 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 unused commitment fees. For our secured borrowings relatedholder of such share may require us to our government guaranteed loans, we useredeem, such share at a redemption price equal to 100% of the variable ratestated value of such share, plus any accrued but unpaid dividends in effectrespect 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. During the three months ended September 30, 2020.2021, we redeemed 27,564 shares of Series A Preferred Stock and no shares of Series D Preferred Stock or Series L Preferred Stock.
Off-Balance Sheet Arrangements
As of September 30, 2020,2021, 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.
Dividends
Series A Preferred StockHolders of Series A 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 of Series A Preferred Stock at an annual rate of 5.5% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter). Dividends on each share of Series A Preferred Stock begin accruing on, and are cumulative from, the date of issuance.
We expect to pay dividends on the Series A Preferred Stock in arrears on a monthly basis in accordance with the foregoing provisions, 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 payment of dividends on the Series A Preferred Stock will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.
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Cash dividends on our Series A Preferred Stock paid in respect of the nine months ended September 30, 2020 consist of the following:
Declaration DatePayment DateNumber of SharesCash Dividends
(in thousands)
June 3, 2020October 15, 20205,809,298$673 
June 3, 2020September 15, 20205,696,822$652 
June 3, 2020August 17, 20205,466,743$629 
March 2, 2020July 15, 20205,324,109$594 
March 2, 2020June 15, 20205,033,203$563 
March 2, 2020May 15, 20204,853,969$554 
January 28, 2020April 15, 20204,827,633$547 
January 28, 2020March 16, 20204,684,453$530 
January 28, 2020February 18, 20204,581,353$516 
On September 2, 2020, we declared a quarterly cash dividend of $0.34375 per share of our Series A Preferred Stock, or portion thereof for issuances during the period from October 1, 2020 to December 31, 2020. As a result, $0.114583 per share will be paid on November 16, 2020 to holders of record of Series A Preferred Stock at the close of business on November 5, 2020, $0.114583 per share will be paid on December 15, 2020 to holders of record of Series A Preferred Stock at the close of business on December 5, 2020, and $0.114583 per share will be paid on January 15, 2021 to holders of record of Series A Preferred Stock at the close of business on January 5, 2021.
Series D Preferred StockHolders of 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 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 $0.35313 per share per quarter) (the “Series D Dividend”). Dividends on each share of Series D Preferred Stock begin accruing on, and are cumulative from, the date of issuance.
We expect to pay the Series D Dividend in arrears on a monthly basis in accordance with the foregoing provisions, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so. The timing and amount of the Series D Dividend will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.
Cash dividends on our Series D Preferred Stock paid in respect of the nine months ended September 30, 2020 consist of the following:
Declaration DatePayment DateNumber of SharesCash Dividends
(in thousands)
June 3, 2020October 15, 202018,737$
June 3, 2020September 15, 202018,737$
June 3, 2020August 17, 20206,900$
March 2, 2020July 15, 20206,900$
March 2, 2020June 15, 20206,900$
March 2, 2020May 15, 20206,580$
March 2, 2020April 15, 20205,980$
March 2, 2020March 16, 20205,600$
On September 2, 2020, we declared a quarterly cash dividend of $0.353125 per share of our Series D Preferred Stock, or portion thereof for issuances during the period from October 1, 2020 to December 31, 2020. As a result, $0.117708 per share will be paid on November 16, 2020 to holders of record of Series D Preferred Stock at the close of business on November 5, 2020, $0.117708 per share will be paid on December 15, 2020 to holders of record of Series D Preferred Stock at the close of business on December 5, 2020, and $0.117708 per share will be paid on January 15, 2021 to holders of record of Series D Preferred Stock at the close of business on January 5, 2021.
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Series L Preferred StockHolders of Series L 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 of Series L Preferred Stock at an annual rate of 5.5% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year). Dividends on each share of Series L Preferred Stock began accruing on, and are cumulative from, the date of issuance.
We expect to pay dividends on the Series L Preferred Stock in arrears on an annual basis in accordance with the foregoing provisions, 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. If the Company fails to timely declare distributions or fails to timely pay distributions on the Series L Preferred Stock, the annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.0% per year, up to a maximum rate of 8.5% per annum. However, prior to the payment of any distributions on Series L Preferred Stock in respect of a given year, the Company must first declare and pay dividends on the Common Stock in respect of such year in an aggregate amount equal to the Initial Dividend announced by our Board of Directors at the end of the prior fiscal year. On December 20, 2019, our Board of Directors announced an Initial Dividend on shares of our Common Stock for fiscal year 2020 in the aggregate amount of $4,380,645, of which $3,319,274 had been paid as of September 30, 2020.
Accumulated cash dividends on our Series L Preferred Stock for the nine months ended September 30, 2020 are included in the numerator for purposes of calculating basic and diluted net (loss) income attributable to common stockholders per share and consist of the following:
Accumulation Period
Start DateEnd DateNumber of SharesDividends Accumulated
(in thousands)
July 1, 2020September 30, 20205,387,160$2,101 
April 1, 2020June 30, 20205,387,160$2,101 
January 1, 2020March 31, 20205,387,160$2,101 
Common StockHolders 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, 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.
Cash dividends per share of Common Stock declared during the nine months ended September 30, 2020 consist of the following:
Declaration DatePayment DateTypeCash Dividend Per Common Share
September 2, 2020September 29, 2020Regular Quarterly$0.075 
June 3, 2020June 29, 2020Regular Quarterly$0.075 
March 2, 2020March 25, 2020Regular Quarterly$0.075 
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Item 3.
Quantitative and Qualitative Disclosures About Market Risk

The fair value of our mortgage payable is sensitive to fluctuations in interest rates. Discounted cash flow analysis is generally used to estimate the fair value of our mortgage payable, using a rate of 2.44%3.22% and 3.67%3.38% as of September 30, 20202021 and December 31, 2019,2020, respectively. As of September 30, 20202021 and December 31, 2019,2020, our mortgage payable had a book value of $96,946,000 and $96,926,000, respectively,$97.1 million, and a fair value of $106,067,000$101.1 million and $99,764,000,$100.8 million, respectively.
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, 20202021 and December 31, 20192020 (excluding premiums, discounts, and deferred loan costs), $113,116,000$104.7 million (or 34.2%46.6%) and $97,100,000$111.6 million (or 31.2%34.0%) of our debt, respectively, was fixed rate borrowings, and $217,245,000$120.1 million (or 65.8%53.4%) and $214,504,000$216.3 million (or 68.8%66.0%), respectively, was floating rate borrowings. Based on the level of floating rate debt outstanding as of September 30, 20202021 and December 31, 2019,2020, a 12.550 basis point change in LIBOR would result in an annual impact to our earnings of approximately $272,000$601,000 and $268,000,$1.1 million, respectively. We calculate interest rate sensitivity by multiplying the amount of floating rate debt by the respective change in rate. The sensitivity analysis does not take into consideration possible changes in the balances or fair value of our floating rate debt.

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, 2020,2021, 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 the Companyus in such reports is accumulated and
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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, 20202021 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 for the risk factor set forth below, thereThere have been no material changes to the risk factors disclosed in “Risk Factors”"Risk Factors" in Part I, Item 1A of our Annual Report onthe 2020 Form 10-K for the year ended December 31, 2019 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
The outbreak of the novel coronavirus (COVID-19) has negatively affected and will likely continue to negatively affect our business, financial condition, results of operations and cash flows.
The spread of COVID-19 in the United States and the resulting restrictions on and cancellations of travel, meetings and social gatherings has impacted, and is expected to continue to materially impact so long as the breakout persists, the operations of our hotel in Sacramento, California. For the fourth quarter of 2019, the net operating income of our hotel constituted approximately 22% of our total segment net operating income. Based on current expectations, it is highly likely that the net operating income of our hotel will continue to be negative for the fourth quarter of 2020, and likely for at least the first half of 2021. As a result, contributions by the hotel to our funds from operations during such periods are expected to be significantly diminished.
Loans originated by us through September 30, 2020 under the SBA 7(a) Guaranteed Loan Program consist primarily of loans to borrowers in the limited service hospitality sector. Currently, our borrowers are experiencing significant reductions in cash flow as the travel and leisure industry decline caused by COVID-19 has severely impacted limited service hospitality properties. The overwhelming majority of our borrowers received relief under the CARES Act through September 30, 2020. However, if no further relief is provided by Congress, we expect that borrowers under our SBA 7(a) Small Business Loan Program will continue to be materially and adversely affected by the economic impact of COVID-19, potentially leading to substantially higher delinquencies on our loans. As such, during the third quarter of 2020, we increased our loan loss reserves. Depending upon the length of continuation of market disruptions for the limited service hospitality industry, we may continue to have additional increases in our loan loss reserves and ultimately an increase in loan losses, and such losses may be material.
The economic downturn caused by COVID-19 has negatively affected and will likely continue to negatively affect the operations of our office portfolio to the extent of, among other things: (i) the inability of our tenants to pay rents, (ii) the deferral of rent payments by our tenants, (iii) tenants’ requests to modify terms of their leases in a way that will reduce the economic value of their leases, (iv) an increase in early lease terminations or a decrease in lease renewals and (v) our inability to re-lease vacant space in our office portfolio due to “shelter in place” or similar orders or a systemic shift in the demand for office space as a result of COVID-19.
COVID-19, or any future pandemic, could also have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:
a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action;
reduced economic activity severely impacting our tenants' businesses, financial condition and liquidity or causing one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations;
difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which may affect our access to capital
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necessary to fund business operations or address maturing liabilities on a timely basis or our tenants' ability to fund their business operations and meet their obligations to us;
any impairment in value of our tangible or intangible assets that could be recorded as a result of weaker economic conditions;
a general decline in business activity and demand for real estate transactions, which could adversely affect our ability or desire to grow our portfolio of properties; and
negative impacts to the credit quality of our tenants and any related increase in our allowance for doubtful accounts or actual collections.
The extent to which COVID-19 will continue to impact the Company’s operations and those of its tenants and business partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of COVID-19, the actions taken to contain COVID-19 or mitigate its impact, and the direct and indirect economic effects of COVID-19 and the related containment measures. Management will continue to monitor the impact to the Company’s business, financial condition, results of operations, cash flow, and occupancy. Accordingly, the Company cannot predict the significance, extent or duration of any adverse impact of COVID-19 on its business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain its level of distributions on our Common Stock or Preferred Stock for the fiscal year ending December 31, 2020. Nevertheless, COVID-19 presents material uncertainty and risk with respect to the Company's financial condition, results of operations, cash flows and performance. Moreover, many risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 should be interpreted as heightened as a result of the impact of COVID-19.
Real estate-related taxes may increase, and if these increases are not passed on to tenants, our income will be reduced.
In California, pursuant to an existing state law commonly referred to as Proposition 13, all or portions of a property are reassessed to market value only at the time of “change in ownership” or completion of “new construction,” and thereafter, annual property tax increases are limited to 2% of previously assessed values. As a result, Proposition 13 generally results in significant below-market assessed values over time. Recently, Proposition 15 was introduced into the ballot in California for the November 3, 2020 election to partially repeal Proposition 13. At the time of this report, it was unclear if Proposition 15 would pass. If Proposition 15 is passed, the Constitution of California would be amended to require owners of commercial and industrial properties with a combined value of greater than $3 million to be taxed based on the fair market value of their properties. This in turn means that property taxes for our properties in California could increase substantially. Some of our leases allow us to pass through real estate taxes to our tenants and thus we do not expect potential increases to property taxes as a result of tax reassessments to significantly impact our operating results. However, we cannot be certain that we will be able to continue to negotiate pass-through provisions related to property taxes in leases in the future, or that higher pass-through property taxes will not lead to lower base rents in the long run as a result of tenants not being able to absorb higher overall occupancy costs. Thus, the passage of Proposition 15 could lead to a decrease in our income from rentals over time. If our operating expenses increase without a corresponding increase in revenues, our profitability could diminish. In addition, increased costs could lead our current or prospective tenants to seek space outside of the state of California, which could significantly hinder our ability to increase our rents or to maintain existing occupancy levels. Proposition 15 may significantly increase occupancy costs for tenants and may adversely impact their financial condition, ability to make rental payments, and ability to renew lease agreements, which in turn 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.

10-K.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
On April 10, 2020, the Company issued to the Operator 203,349 shares of our Common Stock, representing approximately 1.4% of the outstanding shares of our Common Stock prior to such issuance, as payment, in lieu of cash, for the $2,359,000 of asset management fees owed to the Operator for the first quarter of 2020. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. On July 8, 2020, in lieu of cash payment of the asset management fee for the second quarter of 2020, the Company issued to the Operator 95,245 shares of its Series A Preferred Stock, representing approximately 1.8% of the outstanding shares of our Series A Preferred Stock prior to such issuance. On July 8, 2020, the Company issued to the Administrator 11,273 shares of our Series A Preferred Stock, representing approximately 0.2% of the outstanding shares of our Series A Preferred Stock prior to such issuance, in lieu of cash as payment of the Base Service Fee for the first quarter of 2020.None.

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Item 3.    Defaults Upon Senior Securities
None.

Item 4.    Mine Safety Disclosures
Not applicable.

Item 5.    Other Information
None.

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Item 6.    Exhibits
Exhibit NumberExhibit Description
3.1
10.1
*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.SCHXBRL 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.
  CIM COMMERCIAL TRUST CORPORATION
Dated: November 9, 20202021 By: 
/s/ DAVID THOMPSON
David Thompson
Chief Executive Officer
Dated: November 9, 20202021 By: 
/s/ NATHAN D. DEBACKER
Nathan D. DeBacker
Chief Financial Officer

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