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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
   
Form 10-Q
   
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2020
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission file number 000-54939
   
COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
(Exact name of registrant as specified in its charter)
   
 
Maryland27-3148022
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
  
23252398 East Camelback Road, Suite 11004th Floor
Phoenix, Arizona 85016
(602) 778-8700
(Address of principal executive offices; zip code)(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report) 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
NoneNoneNone
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  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨ Accelerated filer¨ 
Non-accelerated filer
(Do not check if a smaller reporting company)
x
       
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  x
As of November 9, 2017,May 4, 2020, there were approximately 310.8309.8 million shares of common stock, par value $0.01 per share, of Cole Credit PropertyCIM Real Estate Finance Trust, IV, Inc. outstanding.
 
 

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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
INDEX
 
  
PART I — FINANCIAL INFORMATION
 
  
Item 1. Financial Statements
 
  
Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2020 and December 31, 20162019
3
  
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017March 31, 2020 and 20162019
4
  
Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2017March 31, 2020 and 20162019
5
  
Condensed Consolidated StatementStatements of Stockholders’ Equity for the ninethree months ended September 30, 2017March 31, 2020 and 2019
6
  
Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2020 and 20162019
7
  
Notes to Condensed Consolidated Financial Statements
8
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
2930
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
4041
  
Item 4. Controls and Procedures
4042
  
PART II — OTHER INFORMATION
 
  
Item 1. Legal Proceedings
4244
  
Item 1A. Risk Factors
4244
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
4245
  
Item 3. Defaults Upon Senior Securities
4346
  
Item 4. Mine Safety Disclosures
4346
  
Item 5. Other Information
4346
  
Item 6. Exhibits
4447
  
Signature
4548

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PART I — FINANCIAL INFORMATION
Item 1.Financial Statements
COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share amounts) (Unaudited)
September 30, 2017 December 31, 2016March 31, 2020 December 31, 2019
ASSETS      
Investment in real estate assets:   
Real estate assets:   
Land$1,193,043
 $1,156,417
$746,665
 $700,210
Buildings, fixtures and improvements3,364,812
 3,214,212
2,015,734
 1,830,101
Intangible lease assets587,189
 553,149
328,049
 313,127
Total real estate investments, at cost5,145,044
 4,923,778
Total real estate assets, at cost3,090,448
 2,843,438
Less: accumulated depreciation and amortization(490,178) (389,768)(422,371) (374,103)
Total real estate investments, net4,654,866
 4,534,010
Total real estate assets, net2,668,077
 2,469,335
Loans held-for-investment and related receivables, net627,380
 301,630
Less: Allowance for credit losses(19,779) —
Total loans held-for-investment and related receivables, net607,601
 301,630
Cash and cash equivalents4,231
 9,754
240,872
 466,024
Restricted cash11,002
 8,040
4,204
 7,331
Rents and tenant receivables, net68,916
 65,446
Due from affiliates4
 58
Prepaid expenses, derivative assets, revenue bonds and other assets9,638
 5,513
Rents and tenant receivables57,893
 58,374
Prepaid expenses and other assets11,954
 11,731
Deferred costs, net3,270
 1,514
2,125
 2,301
Assets held for sale1,594
 —
7,966
 351,897
Total assets$4,753,521
 $4,624,335
$3,600,692
 $3,668,623
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Notes payable and credit facility, net$2,454,282
 $2,246,259
Accounts payable and accrued expenses32,989
 25,310
Credit facilities and notes payable, net$1,608,628
 $1,604,860
Accrued expenses and accounts payable22,886
 22,038
Due to affiliates3,784
 5,333
12,609
 14,458
Intangible lease liabilities, net47,607
 49,075
20,161
 20,523
Distributions payable16,001
 16,498
16,463
 16,510
Deferred rental income, derivative liabilities and other liabilities14,890
 15,091
Derivative liabilities, deferred rental income and other liabilities21,739
 19,448
Total liabilities2,569,553
 2,357,566
1,702,486
 1,697,837
Commitments and contingencies
 

 
Redeemable common stock and noncontrolling interest187,056
 188,938
Redeemable common stock180,555
 180,838
STOCKHOLDERS’ EQUITY      
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding—
 —
—
 —
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 311,637,622 and 311,817,004 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively3,116
 3,118
Common stock, $0.01 par value per share; 490,000,000 shares authorized, 311,174,986 and 311,207,725 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively3,112
 3,112
Capital in excess of par value2,607,301
 2,607,304
2,606,965
 2,606,925
Accumulated distributions in excess of earnings(613,163) (531,567)(878,690) (816,181)
Accumulated other comprehensive loss(342) (1,024)(13,736) (3,908)
Total stockholders’ equity1,996,912
 2,077,831
1,717,651
 1,789,948
Total liabilities, redeemable common stock, noncontrolling interest and stockholders’ equity$4,753,521
 $4,624,335
Total liabilities, redeemable common stock and stockholders’ equity$3,600,692
 $3,668,623
The accompanying notes are an integral part of these condensed consolidated financial statements.


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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share amounts) (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2017 2016 2017 20162020 2019
Revenues:          
Rental income$94,103
 $89,370
 $278,354
 $265,341
Tenant reimbursement income12,921
 12,426
 37,954
 37,599
Rental and other property income$68,436
 $104,762
Interest income5,571
 4,498
Total revenues107,024
 101,796
 316,308
 302,940
74,007
 109,260
Operating expenses:         

General and administrative3,270
 3,246
 10,301
 9,735
3,682
 3,447
Property operating7,345
 5,738
 20,881
 16,603
6,865
 9,317
Real estate tax9,276
 8,612
 27,646
 25,939
6,978
 9,418
Advisory fees and expenses11,149
 10,587
 32,863
 31,100
Acquisition-related110
 1,417
 1,520
 3,592
Management and advisory fees and expenses11,090
 10,019
Transaction-related252
 191
Depreciation and amortization36,461
 33,452
 106,145
 100,399
20,823
 31,992
Impairment1,658
 1,430
 1,658
 1,430
11,676
 20,073
Provision for credit losses17,777
 —
Total operating expenses69,269
 64,482
 201,014
 188,798
79,143
 84,457
Gain on disposition of real estate, net13,110
 9,940
Operating income37,755
 37,314
 115,294
 114,142
7,974
 34,743
Other income (expense):       
Other expense:   
Interest expense and other, net(23,335) (20,473) (67,968) (58,416)(15,767) (25,892)
Loss recognized on equity interest re-measured to fair value—
 (652) —
 (652)
Income before real estate dispositions14,420
 16,189
 47,326
 55,074
Gain on dispositions of real estate, net15,349
 1,939
 16,801
 2,053
Net income29,769
 18,128
 64,127
 57,127
Loss on extinguishment of debt(4,382) —
Total other expense(20,149) (25,892)
Net (loss) income(12,175) 8,851
Net income allocated to noncontrolling interest33
 32
 99
 99
—
 34
Net income attributable to the Company$29,736
 $18,096
 $64,028
 $57,028
Net (loss) income attributable to the Company$(12,175) $8,817
Weighted average number of common shares outstanding:          
Basic and diluted311,649,032
 311,558,083
 311,698,622
 311,871,727
311,248,421
 311,393,554
Net income per common share:          
Basic and diluted$0.10
 $0.06
 $0.21
 $0.18
$(0.04) $0.03
Distributions declared per common share$0.16
 $0.16
 $0.47
 $0.47
The accompanying notes are an integral part of these condensed consolidated financial statements.


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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
 (in thousands) (Unaudited)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income$29,769
 $18,128
 $64,127
 $57,127
Other comprehensive income (loss)       
Unrealized gain (loss) on interest rate swaps99
 3,751
 (2,175) (13,535)
Amount of loss reclassified from other comprehensive income into income as interest expense447
 2,181
 2,857
 6,768
Total other comprehensive income (loss)546
 5,932
 682
 (6,767)
        
Comprehensive income30,315
 24,060
 64,809
 50,360
Comprehensive income allocated to noncontrolling interest33
 32
 99
 99
Comprehensive income attributable to the Company$30,282
 $24,028
 $64,710
 $50,261
 Three Months Ended March 31,
 2020 2019
Net (loss) income$(12,175) $8,851
Other comprehensive loss   
Unrealized loss on interest rate swaps(10,805) (3,844)
Amount of loss (gain) reclassified from other comprehensive income into income as interest expense and other, net977
 (1,477)
Total other comprehensive loss(9,828) (5,321)
    
Comprehensive (loss) income(22,003) 3,530
Comprehensive income allocated to noncontrolling interest—
 34
Comprehensive (loss) income attributable to the Company$(22,003) $3,496
The accompanying notes are an integral part of these condensed consolidated financial statements.


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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF STOCKHOLDERS’ EQUITY
 (in thousands, except share amounts) (Unaudited)
 Common Stock 
Capital in Excess
of Par Value
 
Accumulated
Distributions in Excess of Earnings
 Accumulated
Other Comprehensive Income (Loss)		 
Total
Stockholders’
Equity
 
Number of
Shares
 Par Value 
Balance, January 1, 2017311,817,004
 $3,118
 $2,607,304
 $(531,567) $(1,024) $2,077,831
Issuance of common stock7,665,673
 76
 76,775
 —
 —
 76,851
Distributions to investors—
 —
 —
 (145,624) —
 (145,624)
Redemptions of common stock(7,845,055) (78) (78,545) —
 —
 (78,623)
Changes in redeemable common stock—
 —
 1,767
 —
 —
 1,767
Comprehensive income—
 —
 —
 64,028
 682
 64,710
Balance, September 30, 2017311,637,622
 $3,116
 $2,607,301
 $(613,163) $(342) $1,996,912
 Common Stock 
Capital in Excess
of Par Value
 
Accumulated
Distributions in Excess of Earnings
 Accumulated
Other Comprehensive Loss		 
Total
Stockholders’
Equity
 
Number of
Shares
 Par Value 
Balance as of January 1, 2020311,207,725
 $3,112
 $2,606,925
 $(816,181) $(3,908) $1,789,948
Cumulative effect of accounting changes—
 —
 —
 (2,002) —
 (2,002)
Issuance of common stock2,223,298
 22
 19,209
 —
 —
 19,231
Equity-based compensation—
 —
 40
 —
 —
 40
Distributions declared on common stock — $0.15 per common share—
 —
 —
 (48,332) —
 (48,332)
Redemptions of common stock(2,256,037) (22) (19,492) —
 —
 (19,514)
Changes in redeemable common stock—
 —
 283
 —
 —
 283
Comprehensive income (loss)—
 —
 —
 (12,175) (9,828) (22,003)
Balance as of March 31, 2020311,174,986
 $3,112
 $2,606,965
 $(878,690) $(13,736) $1,717,651
 Common Stock 
Capital in Excess
of Par Value
 
Accumulated
Distributions in Excess of Earnings
 Accumulated
Other Comprehensive Income		 
Total
Stockholders’
Equity
 
Number of
Shares
 Par Value 
Balance as of January 1, 2019311,381,396
 $3,114
 $2,607,330
 $(804,617) $11,023
 $1,816,850
Issuance of common stock2,267,609
 22
 21,225
 —
 —
 21,247
Equity-based compensation—
 —
 32
 —
 —
 32
Distributions declared on common stock — $0.15 per common share—
 —
 —
 (47,963) —
 (47,963)
Redemptions of common stock(2,318,505) (23) (21,701) —
 —
 (21,724)
Changes in redeemable common stock—
 —
 (67) —
 —
 (67)
Comprehensive income (loss)—
 —
 —
 8,817
 (5,321) 3,496
Balance as of March 31, 2019311,330,500
 $3,113
 $2,606,819
 $(843,763) $5,702
 $1,771,871
The accompanying notes are an integral part of these condensed consolidated financial statements.


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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands) (Unaudited)
 Nine Months Ended September 30,
 2017 2016
Cash flows from operating activities:   
Net income$64,127
 $57,127
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization, net104,220
 99,555
Amortization of deferred financing costs3,958
 4,190
Amortization of fair value adjustment of mortgage notes payable assumed(64) (63)
Straight-line rental income(7,651) (8,888)
Bad debt expense1,637
 (1)
Equity in income of unconsolidated joint venture—
 (615)
Return on investment from unconsolidated joint venture—
 615
Impairment of real estate assets1,658
 1,430
Fair value adjustment to contingent consideration(337) (2,672)
Ineffectiveness of interest rate swaps(80) —
Write-off of deferred financing costs896
 —
Gain on disposition of real estate assets, net(16,801) (2,053)
Loss recognized on equity interest re-measured to fair value—
 652
Changes in assets and liabilities:   
Rents and tenant receivables1,667
 139
Prepaid expenses and other assets(1,443) (618)
Accounts payable and accrued expenses7,819
 8,237
Deferred rental income and other liabilities47
 (1,404)
Due from affiliates54
 47
Due to affiliates(1,549) (161)
Net cash provided by operating activities158,158
 155,517
Cash flows from investing activities:   
Investment in real estate assets and capital expenditures(309,412) (197,038)
Investment in revenue bonds(2,081) —
Return of investment in unconsolidated joint venture—
 1,033
Acquisition of unconsolidated joint venture partner's interest—
 (1,626)
Proceeds from disposition of real estate assets97,154
 25,947
Payment of property escrow deposits(11,416) (5,404)
Refund of property escrow deposits11,666
 6,404
Change in restricted cash(2,962) (1,714)
Net cash used in investing activities(217,051) (172,398)
Cash flows from financing activities:   
Redemptions of common stock(78,623) (83,517)
Offering costs related to DRIP Offerings—
 (66)
Distributions to investors(69,270) (64,068)
Proceeds from notes payable and credit facility1,514,706
 441,420
Repayments of credit facility and notes payable(1,300,001) (279,315)
Payment of loan deposits(1,064) (3,378)
Refund of loan deposits1,064
 3,378
Deferred financing costs paid(13,228) (3,341)
Distributions to noncontrolling interest(214) (199)
Earnout liability paid—
 (1,866)
Net cash provided by financing activities53,370
 9,048
Net decrease in cash and cash equivalents(5,523) (7,833)
Cash and cash equivalents, beginning of period9,754
 26,316
Cash and cash equivalents, end of period$4,231
 $18,483
 Three Months Ended March 31,
 2020 2019
Cash flows from operating activities:   
Net (loss) income$(12,175) $8,851
Adjustments to reconcile net (loss) income to net cash provided by operating activities:   
Depreciation and amortization, net20,530
 31,481
Amortization of deferred financing costs1,042
 1,317
Amortization of fair value adjustment of mortgage notes payable assumed(23) (22)
Amortization and accretion on deferred loan fees(560) (758)
Amortization of premiums and discounts of broadly syndicated loans, net(21) —
Capitalized interest income(539) (2,643)
Equity-based compensation40
 32
Straight-line rental income, net261
 (1,176)
Gain on disposition of real estate assets, net(13,110) (9,940)
Amortization of gain on swap termination(5) (5)
Impairment of real estate assets11,676
 20,073
Provision for credit losses17,777
 —
Write-off of deferred financing costs177
 —
Changes in assets and liabilities:   
Rents and tenant receivables(238) (120)
Prepaid expenses and other assets(484) (4,867)
Accounts payable and accrued expenses1,918
 1,921
Deferred rental income and other liabilities(7,271) (4,617)
Due to affiliates(1,849) (80)
Net cash provided by operating activities17,146
 39,447
Cash flows from investing activities:   
Investment in broadly syndicated loans(330,678) —
Investment in real estate assets and capital expenditures(1,534) (1,550)
Origination and acquisition of loans held-for-investment, net(866) —
Principal payments received on loans held-for-investment6,853
 7,961
Origination and exit fees received on loans held-for-investment61
 80
Net proceeds from disposition of real estate assets126,645
 120,652
Proceeds from the settlement of insurance claims—
 4
Net cash (used in) provided by investing activities(199,519) 127,147
Cash flows from financing activities:   
Redemptions of common stock(19,514) (21,724)
Distributions to stockholders(29,148) (26,716)
Proceeds from credit facilities and notes payable100,000
 27,500
Repayments of credit facilities and notes payable(97,129) (139,126)
Deferred financing costs paid(115) —
Distributions to noncontrolling interest—
 (72)
Net cash used in financing activities(45,906) (160,138)
Net (decrease) increase in cash and cash equivalents and restricted cash(228,279) 6,456
Cash and cash equivalents and restricted cash, beginning of period473,355
 19,674
Cash and cash equivalents and restricted cash, end of period$245,076
 $26,130
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:   
Cash and cash equivalents$240,872
 $16,202
Restricted cash4,204
 9,928
Total cash and cash equivalents and restricted cash$245,076
 $26,130
The accompanying notes are an integral part of these condensed consolidated financial statements.

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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017March 31, 2020 (Unaudited)
NOTE 1 — ORGANIZATION AND BUSINESS
CIM Real Estate Finance Trust, Inc. (formerly known as Cole Credit Property Trust IV, Inc.) (the “Company”) is a non-exchange traded real estate investment trust (“REIT”) formed as a Maryland corporation incorporated on July 27, 2010, that elected to be taxed, and currently qualifies, as a real estate investment trust (“REIT”)REIT for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2012. The Company operates a diversified portfolio of core commercial real estate assets primarily consisting of net leased properties located throughout the United States. As of March 31, 2020, the Company owned 384 properties, comprising 18.4 million rentable square feet of commercial space located in 42 states. As of March 31, 2020, the rentable square feet at these properties was 94.6% leased, including month-to-month agreements, if any. As of March 31, 2020, there were two properties identified as held for sale. See Note 4 — Real Estate Assets for a discussion of the held for sale properties as of March 31, 2020. The Company intends to pursue a more diversified investment strategy across the capital structure by balancing the Company’s existing core of commercial real estate assets leased to creditworthy tenants under long-term net leases with a portfolio of commercial mortgage loans and other credit investments in which the Company’s sponsor and its affiliates have expertise. As of March 31, 2020, the Company’s loan portfolio consisted of 124 loans with a net book value of $607.6 million.
Substantially all of the Company’s business is conducted through CIM Real Estate Finance Operating Partnership, LP, a Delaware limited partnership, of which the Company is the sole general partner of, and owns, directly or indirectly, 100% of the partnership interests in Cole Operating Partnership IV, LP, a Delaware limited partnership. interests.
The Company is externally managed by Cole REIT Advisors IV,CIM Real Estate Finance Management, LLC, (“CR IV Advisors”), a Delaware limited liability company and(“CMFT Management”), which is an affiliate of CIM Group, LLC (“CIM”). CIM is a community-focused real estate and infrastructure owner, operator, developer and lender with multi-disciplinary expertise, including in acquisitions, management, development, leasing, research and capital markets. CIM is headquartered in Los Angeles, California and has offices in Oakland, California; Bethesda, Maryland; Dallas, Texas; New York, New York; Chicago, Illinois; and Phoenix, Arizona.
CCO Group, LLC owns and controls CMFT Management, the Company’s sponsor, Coleadvisor, and is the indirect owner of CCO Capital,®, which is a trade name used to refer to a group of affiliated entities directly or indirectly controlled by VEREIT, Inc. LLC (“VEREIT”CCO Capital”), a widely-held public company whose shares of common stock are listed on the New York Stock Exchange (NYSE: VER). VEREIT indirectly owns and/or controls the Company’s external advisor, CR IV Advisors, the Company’s dealer manager, for the Offering (as defined below), Cole Capital Corporation (“CCC”), the Company’s property manager,and CREI Advisors, LLC (“CREI Advisors”), the Company’s property manager. CCO Group, LLC and its subsidiaries (collectively, “CCO Group”) serve as the Company’s sponsor and as a sponsor to Cole Capital. Credit Property Trust V, Inc. (“CCPT V”), Cole Office & Industrial REIT (CCIT II), Inc. (“CCIT II”), Cole Office & Industrial REIT (CCIT III), Inc. (“CCIT III”) and CIM Income NAV, Inc. (“CIM Income NAV”).
On January 26, 2012, pursuant to a Registration Statement on Form S-11 (Registration No. 333-169533) (the “Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”), the Company commenced its initial public offering on a “best efforts” basis of up to a maximum of $2.975 billion in shares of common stock (the “Offering”). On November 25, 2013, the Company reallocated $400.0 million in shares from the distribution reinvestment plan (the “DRIP”) portion of the Offering to the primary portion of the Offering, and on February 18, 2014, the Company reallocated an additional $23.0 million in shares from the DRIP portion of the Offering to the primary portion of the Offering. As a result of these reallocations, the Offering offered up to a maximum of approximately 292.3 million shares of common stock at a price of $10.00 per share in the primary portion of the Offering and up to approximately 5.5 million additional shares pursuant to the DRIP portion of the Offering under which the Company’s stockholders could have elected to have distributions reinvested in additional shares of common stock at a price of $9.50 per share.
The Company ceased issuing shares in the Offering on April 4, 2014. At the completion of the Offering, a total of approximately 297.4 million shares of common stock had been issued, including approximately 292.3 million shares of common stock sold to the public pursuant to the primary portion of the Offering and approximately 5.1 million shares of common stock issued pursuant to the DRIPdistribution reinvestment plan (“DRIP”) portion of the Offering. The remaining approximately 404,000 unsold shares from the Offering were deregistered.
The Company registered $247.0 million of shares of common stock under the DRIP pursuant to a Registration Statement filed on Form S-3 (Registration No. 333-192958) (the “Initial DRIP Offering”), which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 19, 2013 and automatically became effective with the SEC upon filing. The Company ceased issuing shares under the Initial DRIP Offering effective as of June 30, 2016. At the completion of the Initial DRIP Offering, a total of approximately $241.7 million of shares of common stock had been issued. The remaining $5.3 million of unsold shares from the Initial DRIP Offering were deregistered.
The Company registered an additional $600.0 million of shares of common stock under the DRIP pursuant to a Registration Statement filed on Form S-3 (Registration No. 333-212832) (the “Secondary DRIP Offering,” and together with the Initial DRIP Offering, the “DRIP Offerings,” and the DRIP Offerings collectively with the Offering, the “Offerings”), which was filed with the SEC on August 2, 2016 and automatically became effective with the SEC upon filing. The Company began to issue shares under the Secondary DRIP Offering on August 2, 2016 and will continue to issue shares under the Secondary DRIP Offering.
On September 27, 2015, the Company announced that itsThe Company’s board of directors (the “Board”) had establishedestablishes an updated estimated per share net asset value (“NAV”) of the Company’s common stock as of August 31, 2015, of $9.70 per shareon at least an annual basis for purposes of assisting broker-dealers that participated in the Offering in meeting their customer account statement reporting obligations under National Association of Securities Dealers ConductFinancial Industry Regulatory Authority Rule 2340. On November 10, 2016, the Board established an updated estimated per share net asset value (“NAV”)2231. Distributions are reinvested in shares of the Company’s common stock under the DRIP at the estimated per share NAV as determined by the Board. Additionally, the estimated per share NAV as determined by the Board serves as the per share NAV for purposes of September 30, 2016, of $9.92 per share.the share redemption program. On March 24, 2017,25, 2020, the Board established an updated estimated per share NAV of the Company’s

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common stock, asusing a valuation date of December 31, 2016,2019, of $10.08$7.77 per share. In determiningCommencing on March 30, 2020, distributions are reinvested in shares of the estimatedCompany’s common stock under the DRIP at a price of $7.77 per share. The Board previously established a per share NAVsNAV as of August 31, 2015, September 30, 2016, December 31, 2016, December 31, 2017 and December 31, 2016, the Board considered information and analysis, including valuation materials that were provided by a third-party valuation expert, information provided by CR IV Advisors, and the estimated per share NAV recommendation made by the valuation committee of the Board, which committee is comprised entirely of independent directors.2018. The Company’s estimated per share NAVs are not audited or reviewed by its independent registered public accounting firm.

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Prior The Company intends to October 1, 2015, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.50 per share. From October 1, 2015 to November 13, 2016, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.70 per share, the estimated value per share as of August 31, 2015, as determined by the Board. From November 14, 2016 to March 27, 2017, distributions were reinvested in shares of the Company’s common stock under the DRIP at a price of $9.92 per share, thepublish an updated estimated per share NAV as of September 30, 2016, as determined byon a quarterly, rather than an annual, basis going forward, until such time that the Board. Commencing on March 28, 2017, distributions are reinvested in sharesCompany has greater visibility into the impact of the current novel coronavirus (“COVID-19”) pandemic on the Company’s common stock under the DRIP at a price of $10.08 per share, the estimated per share NAV as of December 31, 2016, as determined by the Board.
As of September 30, 2017, the Company had issued approximately 336.8 million shares of its common stock in the Offerings, including 38.5 million shares issued in the DRIP Offerings, for gross offering proceeds of $3.3 billion before organization and offering costs, selling commissions and dealer manager fees of $306.0 million. As of September 30, 2017, the Company owned 908 properties, which includes nine properties owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”), comprising 26.8 million rentable square feet of commercial space located in 45 states. As of September 30, 2017, the rentable square feet at these properties was 97.5% leased, including month-to-month agreements, if any.property valuations.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies presented below is designed to assist in understanding the Company’s condensed consolidated financial statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”), in all material respects, and have been consistently applied in preparing the accompanying condensed consolidated financial statements.
Principles of Consolidation and Basis of Presentation
The condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the SEC regarding interim financial reporting, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements for the interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Results for these interim periods are not necessarily indicative of full year results.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 20162019, and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 20162019. The condensed consolidated financial statements should also be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q.
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and the Consolidated Joint Venture in which the Company has a controlling financial interest.subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
The Company evaluates its relationships and investments to determine if it has variable interests. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. If the Company determines that it has a variable interest in an entity, it evaluates whether such interest is in a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company consolidates any VIEs when it is determined to be the primary beneficiary of the VIE’s operations.

For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a VIE.

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A VIE must be consolidated by its primary beneficiary, which is generally defined as the party who has a controlling financial interest in the VIE. The Company qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates any VIEs when the Company is determined to be the primary beneficiary of the VIE, and the difference between consolidating the VIE and accounting for it using the equity method could be material to the Company’s consolidated financial statements. The Company continually evaluates the need to consolidate any VIEs based on standards set forth in GAAP as described above.
As of September 30, 2017 and December 31, 2016, the Company determined that it had a controlling interest in the Consolidated Joint Venture and therefore met the GAAP requirements for consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Real Estate InvestmentsAssets
Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the costs of acquisition, including acquisition-related fees and certain acquisition-related expenses, construction and any tenant improvements, major improvements and betterments that extend the useful life of the real estate assets and leasing costs. All repairs and maintenance costs are expensed as incurred. In April 2017, the Company early adopted Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company’s acquisitions qualify as asset acquisitions, and as such, acquisition-related fees and certain acquisition-related expenses related to these asset acquisitions are capitalized. Prior to the adoption of ASU 2017-01, all acquisition-related fees and expenses were expensed as incurred, and all of the Company’s acquisitions were accounted for as business combinations.
The Company considers the period of future benefit of each respective asset to determine the appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows:
Buildings40 years
Site improvements15 years
Tenant improvementsLesser of useful life or lease term
Intangible lease assetsLease term
Recoverability of Real Estate Assets
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. Impairment indicators that the Company considers include, but are not limited to,to: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, rental concessions and other factors,factors; a significant decrease in a property’s revenues due to lease terminations, vacancies,terminations; vacancies; co-tenancy clauses,clauses; reduced lease ratesrates; changes in anticipated holding periods; or other circumstances. When indicators of potential impairment are present, the Company assesses the recoverability of the assets by determining whether the carrying amount of the assets will be recovered through the undiscounted future cash flows expected from the use of the assets and their eventual disposition. In the

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event that such expected undiscounted future cash flows do not exceed the carrying amount, the Company will adjust the real estate assets to their respective fair values and recognize an impairment loss. Generally, fair value is determined using a discounted cash flow analysis and recent comparable sales transactions. AsDuring the three months ended March 31, 2020, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of $1.7$11.7 million related to one propertysix properties due to revised cash flow estimates as a result of delinquent rental paymentsmarket conditions and one property due to a tenant bankruptcy. The Company’s impairment assessment as of March 31, 2020 was based on the most current information available to the Company, including expected holding periods. If the Company’s expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future. The Company cannot provide any assurance that additional material impairment charges with respect to the Company’s real estate assets will not occur during 2020 or in future periods, particularly in light of the ninenegative economic impacts caused by the COVID-19 pandemic. If the effects of the COVID-19 pandemic cause economic and market conditions to continue to deteriorate or if the Company’s expected holding periods for assets change, subsequent tests for impairment could result in additional impairment charges in the future. As of March 31, 2020, we have not identified any further impairments resulting from COVID-19 related impacts, including as a result of tenant requests for rent relief. The Company intends to hold its assets for the long-term; therefore, a temporary change in cash flows due to COVID-19 related impacts alone would not be an indicator of impairment. However, we have yet to see the long-term effects of COVID-19 on the economy and the extent to which it may impact our tenants in the future. Indications of a tenant’s inability to continue as a going concern, changes in our view or strategy relative to a tenant’s business or industry as a result of the economic impacts of COVID-19, or changes in our long-term hold strategies, could be indicative of an impairment triggering event. Accordingly, the Company will continue to monitor circumstances and events in future periods to determine whether additional impairment charges are warranted. During the three months ended September 30, 2017. As part of the Company’s quarterly impairment review procedures,March 31, 2019, the Company recorded impairment charges of $1.4$20.1 million related to one property leased to a tenant that filed for bankruptcy during the nine months ended September 30, 2016.seven properties with revised expected holding periods. The assumptions and uncertainties utilized in the evaluation of the impairment of real estate

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assets are discussed in detail in Note 3 — Fair Value Measurements. See also Note 4 — Real Estate InvestmentsAssets for further discussion regarding real estate investment activity.
Assets Held for Sale
When a real estate asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the assets related to the property and estimate theits fair value, net of selling costs. If, in management’s opinion, the fair value, net of selling costs, of the asset is less than the carrying amount of the asset, an adjustment to the carrying amount would beis then recorded to reflect the estimated fair value of the property, net of selling costs. DuringThe Company previously expected to sell a substantial portion of its anchored-shopping center portfolio and certain single-tenant properties within the ninenext 24 months, ended September 30, 2017,subject to market conditions. In light of current market conditions brought on by the COVID-19 pandemic, the Company identified one propertycannot provide assurance that these properties will be sold within a 24-month period. As a result, the Company placed 15 properties with a carrying value of $228.4 million that were previously classified as held for sale which was sold subsequent to September 30, 2017, as discussedback in Note 14 — Subsequent Events. There were no assetsservice during the three months ended March 31, 2020. As of March 31, 2020, the Company identified two properties with a carrying value of $8.0 million as held for sale. The Company has mortgage notes payable of $5.0 million that are related to the held for sale asproperties, which the Company expects to repay in connection with the disposition of the underlying held for sale properties. As of December 31, 2016.2019, the Company identified 29 properties with a carrying value of $351.9 million as held for sale.
Disposition of Real Estate Assets
Gains and losses from dispositions are recognized once the various criteria relating to the terms of sale and any subsequent involvement by the Company with the asset sold are met. A discontinued operation includes only the disposal of a component of an entity and represents a strategic shift that has (or will have) a major effect on an entity’s financial results. The disposition of the Company’s individual properties during the three months ended March 31, 2020 and 2019 did not qualify for discontinued operations presentation, and, thus, the results of the properties that were sold will remain in operating income, and any associated gains or losses from the disposition are included in gain on disposition of real estate, net. See Note 4 — Real Estate Assets for a discussion of the disposition of individual properties during the three months ended March 31, 2020.
Allocation of Purchase Price of Real Estate Assets
Upon the acquisition of real properties, the Company allocates the purchase price including acquisition-related fees and certain acquisition-related expenses after the adoption of ASU 2017-01, to acquired tangible assets, consisting of land, buildings and improvements, and to identified intangible assets and liabilities, consisting of the value of above- and below-market leases and the value of in-place leases and other intangibles, based in each case on their respectiverelative fair values. The Company utilizes independent appraisals to assist in the determination of the fair values of the tangible assets of an acquired property (which includes land and buildings). The information in the appraisal, along with any additional information available to the Company’s management, is used in estimating the amount of the purchase price that is allocated to land. Other information in the appraisal, such as building value and market rents, may be used by the Company’s management in estimating

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the allocation of purchase price to the building and to intangible lease assets and liabilities. The appraisal firm has no involvement in management’s allocation decisions other than providing this market information.
The determination of the fair values of the real estate assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The use of alternative estimates may result in a different allocation of the Company’s purchase price, which could materially impact the Company’s results of operations.
Investment in Held-to-Maturity Securities
The Company has investments classified as held-to-maturity securities, which consist of revenue bonds acquired in connection with the purchase of an anchored shopping center. The bonds have a 9.0% interest rateAcquisition-related fees and mature on November 1, 2044. As of September 30, 2017, the Company classified these investments as held-to-maturity as the Company has the intent and ability to hold the securities to maturity. These investments are initially recognized in prepaidcertain acquisition-related expenses derivative assets, revenue bonds and other assets on the condensed consolidated balance sheets and are subsequently measured using amortized cost.
The Company’s investments in revenue bonds are reviewed for impairment, including the evaluation of changes in events or circumstances that may indicate that the carrying amount of the investment may not be recoverable. Realization is dependent on a number of factors, including investment performance, market conditions and payment structure. The Company will record an impairment charge if it is determined that a decline in the value of the investment below its carrying amount is other than temporary, recovery of its cost basis is uncertain, and/or it is uncertain if the investment will be held to maturity. The analysis of determining whether the impairment of a security is deemed to be other-than-temporary requires significant judgments and assumptions. The use of alternative judgments and assumptions could result in a different conclusion.
Redeemable Noncontrolling Interest in Consolidated Joint Venture
On June 27, 2014, the Company completed the formation of the Consolidated Joint Venture. Pursuant to the joint venture agreement, the joint venture partner has a right to exercise an option (the “Option”), which became effective on June 27, 2016, whereby the Company will be required to purchase the ownership interest of the joint venture partner at fair market value. As of September 30, 2017, the Option has not been exercised. The Company determined it had a controlling interest in the Consolidated Joint Venture and, therefore, met the GAAP requirements for consolidation. The Company recorded net income of $99,000 and paid distributions of $214,000 related to the noncontrolling interest during the nine months ended September 30, 2017. The Company recorded the noncontrolling interest of $2.4 millionasset acquisitions are capitalized and allocated to tangible and intangible assets and liabilities, as temporary equity in the mezzanine section of the condensed consolidated balance sheets, due to the ability to exercise the Option being outside the control of the Company.

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described above.
Restricted Cash
The Company had $11.0$4.2 million and $8.0$7.3 million in restricted cash as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. Included in restricted cash was $3.9$1.6 million and $4.0$3.1 million held by lenders in lockbox accounts, as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. As part of certain debt agreements, rents from certain encumbered properties are deposited directly into a lockbox account, from which the monthly debt service payment is disbursed to the lender and the excess is disbursed to the Company. Also included in restricted cash was $7.1$2.6 million and $4.0$4.2 million held by lenders in escrow accounts for real estate taxes and other lender reserves for certain properties, in accordance with the associated lender’s loan agreement, as of September 30, 2017March 31, 2020 and December 31, 20162019, respectively.
Loans Held-for-Investment
The Company has acquired, and may continue to acquire, loans related to real estate assets. Additionally, the Company may acquire and originate credit investments, including commercial mortgage loans, mezzanine loans, preferred equity, and other loans and securities related to commercial real estate assets, as well as corporate loan opportunities that are consistent with the Company’s investment strategy and objectives. The Company intends to hold the loans held-for-investment for the foreseeable future or until maturity. Loans held-for-investment are carried on the Company’s condensed consolidated balance sheets at amortized cost, net of any allowance for credit losses. Discounts or premiums, origination fees and exit fees are amortized as a component of interest income using the effective interest method over the life of the respective loans. Loan acquisition fees paid to CMFT Management or its affiliates are expensed as incurred and are included in transaction-related expenses on the accompanying condensed consolidated statements of operations.
Interest earned is either received in cash or capitalized to loans held-for-investment and related receivables, net in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each loan agreement. For the three months ended March 31, 2020, the Company recorded $5.6 million in interest income, of which $539,000 was capitalized to loans held-for-investment and related receivables, net.
Accrual of interest income is suspended on nonaccrual loans. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status. Interest collected is recognized on a cash basis by crediting income when received. Loans may be restored to accrual status when all principal and interest are current and full repayment of the remaining contractual principal and interest are reasonably assured. As of March 31, 2020, the Company’s eight mezzanine loans with a net book value of $140.1 million were nonaccrual loans. During the three months ended March 31, 2020, the Company recorded $565,000 in interest income related to the nonaccrual loans.
Allowance for Credit Losses
The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), respectively.as further described in “Recent Accounting Pronouncements,” on January 1, 2020. The allowance for credit losses required under ASU 2016-13 reflects the Company’s current estimate of potential credit losses related to the Company’s loans held-for-investment included in the condensed consolidated balance sheets. The initial allowance for credit losses recorded on January 1, 2020 is reflected as a direct charge to retained earnings on the Company’s condensed consolidated statements of stockholders’ equity; however subsequent changes to the allowance for credit losses are recognized through net income on the Company’s condensed consolidated statements of operations. While ASU 2016-13 does not require any particular method for determining the allowance for credit losses, it does specify the allowance should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan. In addition, other than a few narrow exceptions, ASU 2016-13 requires that all financial instruments subject to the credit loss model have some amount of loss reserve to reflect the GAAP

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principal underlying the credit loss model that all loans, debt securities, and similar assets have some inherent risk of loss, regardless of credit quality, subordinate capital, or other mitigating factors.
The Company has elected to use a discounted cash flow model to estimate the allowance for credit losses. This model requires the Company to develop cash flows which project estimated credit losses over the life of the lease or loan and discount these cash flows at the asset’s effective interest rate. The Company then records an allowance for credit losses equal to the difference between the amortized cost basis of the asset and the present value of the expected cash flows. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that the Company determines foreclosure is not probable, the Company applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. For the Company’s broadly syndicated loans, the Company uses a probability of default and loss given default method using underlying third-party CMBS/CRE loan database with historical loan losses from 1998 to 2019. The Company may use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data.
The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost. Prior to adoption, the Company had no allowance for credit losses on its condensed consolidated balance sheets. The Company recorded a cumulative-effective adjustment to the opening retained earnings in its condensed consolidated statement of stockholders’ equity as of January 1, 2020 of $2.0 million.
Leases
The Company has lease agreements with lease and non-lease components. The Company has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as rental and other property income. Non-lease components included in rental and other property income include certain tenant reimbursements for maintenance services (including common-area maintenance services or “CAM”), real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. As a lessor, the Company has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. The Company is not a party to any material leases where it is the lessee.
Significant judgments and assumptions are inherent in not only determining if a contract contains a lease, but also the lease classification, terms, payments, and, if needed, discount rates. Judgments include the nature of any options, including if they will be exercised, evaluation of implicit discount rates and the assessment and consideration of “fixed” payments for straight-line rent revenue calculations.
The Company has an investment in a real estate property that is subject to a ground lease, for which a lease liability and right of use (“ROU”) asset of $2.5 million was recorded as of March 31, 2020. See Note 14 — Leases for a further discussion regarding this ground lease.
Lease costs represent the initial direct costs incurred in the origination, negotiation and processing of a lease agreement. Such costs include outside broker commissions and other independent third-party costs and are amortized over the life of the lease on a straight-line basis. Costs related to salaries and benefits, supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are expensed as incurred. Upon successful lease execution, leasing commissions are capitalized.
Revenue Recognition
Certain properties haveRevenue from leasing activities
Rental and other property income is primarily derived from fixed contractual payments from operating leases where minimum rental payments increase duringand, therefore, is generally recognized on a straight-line basis over the term of the lease. The Company records rental income forlease, which typically begins the full termdate the tenant takes control of each lease on a straight-line basis when earned and collectability is reasonably assured.the space. When the Company acquires a property, the terms of existing leases are considered to commence as of the acquisition date for the purpose of this calculation. Variable rental and other property income consists primarily of tenant reimbursements for recoverable real estate taxes and operating expenses which are included in rental and other property income

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in the period when such costs are incurred, with offsetting expenses in real estate taxes and property operating expenses, respectively, within the condensed consolidated statements of operations. The Company defers the recognition of contingentvariable rental and other property income, such as percentage rents, until the specific target that triggers the contingent rental income is achieved. Expected reimbursements from tenants for recoverable real estate taxes and operating expenses are included in tenant reimbursement income in the period when such costs are incurred.
The Company continually reviews whether collection of lease-related receivables, related to rent, including any straight-line rent, and current and future operating expense reimbursements from tenants and determinesare probable. The determination of whether collectability by takingis 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. InUpon the eventdetermination that the collectability of a receivable is uncertain,not probable, the Company will record an increasea reduction to rental and other property income for amounts previously recorded and a decrease in the allowance for uncollectible accounts. Asoutstanding receivable. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of September 30, 2017the collectability of lease-related receivables is based on the best information available to management. The Company does not use a general reserve approach and December 31, 2016,lease-related receivables are adjusted and taken against rental and other property income only when collectability becomes not probable.
Revenue from lending activities
Interest income from our loans held-for-investment is comprised of interest earned on loans and the Company had an allowance for uncollectible accountsaccretion and amortization of $1.4 millionnet loan origination fees and $221,000, respectively.discounts. Interest income on loans is accrued as earned, with the accrual of interest suspended when the related loan becomes a nonaccrual loan. Interest income on the Company’s broadly syndicated loans is accrued as earned beginning on the settlement date.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by various standard setting bodies that may have an impact on the Company’s accounting and reporting. Except as otherwise stated below, the Company is currently evaluating the effect that certain of these new accounting requirements may have on the Company’s accounting and related reporting and disclosures in the Company’s condensed consolidated financial statements:statements.
In May 2014,June 2016, the Financial Accounting Standards Board (“FASB”(the “FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”),2016-13, which supersedes the revenue recognition requirements in Revenue Recognition, Accounting Standards Codification  (“ASC”) (Topic 605) and will require an entity to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For public business entities, the guidance should be applied to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company plans to use the modified retrospective approach to adopt ASU 2014-09. In accordance with the Company’s plan for the adoption of ASU 2014-09, the Company’s implementation team has identified the Company’s revenue streams, performed an in-depth review of the Company’s revenue contracts and identified the related performance obligations and is evaluating the impact on the Company’s consolidated financial statements and internal accounting processes and controls. Oncewas subsequently amended by ASU No. 2016-02,2018-19, Leases (Topic 842) (“ASU 2016-02”), which, as discussed below, sets forth principles for the recognition, measurement, presentation and disclosure of leases, goes into effect, ASU 2014-09 may applyCodification Improvements to non-lease components in the lease agreements.Topic 326,
In February 2016, the FASB issued ASU 2016-02, which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than 12 months, with the result being the recognition of a right of use asset and a lease liability and the disclosure of key information about the entity’s leasing arrangements. The lessor accounting model under ASU 2016-02 is similar to current guidance; however it limits the capitalization of initial direct leasing costs, such as internally generated costs. ASU 2016-02 retains a distinction between finance leases (i.e., capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. A modified retrospective approach is required for existing

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leases that have not expired upon adoption and provides for certain practical expedients. The Company’s implementation team has developed an inventory of all leases and is identifying any non-lease components in the lease agreements and is evaluating the impact to the Company, both as lessor and lessee, and its consolidated financial statements. Upon the adoption of ASU 2016-02, the Company will record certain expenses paid directly by a tenant that protect the Company’s interests in its properties, such as insurance and real estate taxes, and the related operating expense reimbursement revenue, with no impact on net income. Based upon a preliminary analysis, the Company does not expect the accounting for leases pursuant to which the Company is the lessor to materially change as a result of the adoption of ASU 2016-02. The Company does not expect the accounting for one ground lease pursuant to which the Company is the lessee to have a material impact on its consolidated financial statements.
ASU No. 2016-01, Financial Instruments (Subtopic 825-10)- Credit Losses — The amendments(“ASU 2018-19”), in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income (loss) the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the consolidated balance sheets or the accompanying notes to the consolidated financial statements. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
In June 2016,November 2018. Subsequently, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“2019-04, ASU 2016-13”).No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-02 to provide additional guidance on the credit losses standard. ASU 2016-13 isand the related updates are intended to improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment,held-for-investment, held-to-maturity debt securities, trade and other receivables, 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 amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable 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 Topic 326. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASU No. 2016-02, Leases (Topic 842) (“ASC 842”). ASU 2016-13 isand ASU 2018-19 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted forThe Company adopted ASU 2016-13 during the first quarter of fiscal years, and interim periods within those years, beginning after December 15, 2018. year 2020.
In August 2016,2018, the FASB issued ASU No. 2016-15,2018-13, Statement of Cash Flows(Topic 230): Classification of Certain Cash Receipts and Cash PaymentsChanges to the Disclosure Requirements for Fair Value Measurement (“ASU 2016-15”2018-13”), which is intended to address diversity in practice related to how certain cash receipts. This ASU amends and cash payments are presented and classified inremoves several disclosure requirements including the statement of cash flows.valuation processes for Level 3 fair value measurements. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted,2018-13 also modifies some disclosure requirements and requires retrospective adoption unless it is impracticableadditional disclosures for changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and requires the range and weighted average of significant unobservable inputs used to apply,develop Level 3 fair value measurements. The provisions of ASU 2018-13 are effective January 1, 2020 using a prospective transition method for amendments effecting changes in which case it isunrealized gains and losses, significant unobservable inputs used to develop Level 3 fair value measurements and narrative description on uncertainty of measurements. The remaining provisions of ASU 2018-13 are to be applied prospectively as of the earliest date practicable.retrospectively, and early adoption is permitted. The Company plans to adoptadopted ASU 2016-152018-13 during the fourthfirst quarter of fiscal year 20172020, and has determinedconcluded that this standardthere is relevant to its presentation of debt prepayment and debt extinguishment costs and contingent consideration payments made after a business combination.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. In accordance with ASU 2016-18, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of ASU 2016-18 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt ASU 2016-18 during the fourth quarter of 2017 and apply the standard retrospectively for all periods presented. The Company does not expect it will have ano material impact on its condensed consolidated financial statements.
In February 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), which clarifies the following: (1) nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty; (2) an entity should allocate consideration to each distinct asset by applying the guidance in Topic 606 on allocating the transaction price to performance obligations; and (3) entities are required to derecognize a distinct nonfinancial asset or distinct in substance nonfinancial asset in a partial sale transaction when it (a) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with Subtopic 810 and (b) transfers control of the asset in accordance with Topic 606. The adoption of this standard may result in higher gains on the sale of partial real estate interests, including contributions of

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nonfinancial assets to a joint venture or other noncontrolling investee, due to recognizing the full gain when the derecognition criteria are met and recording the retained noncontrolling interest at its fair value. ASU 2017-05 is effective for annual periods, and interim periods therein, beginning after December 15, 2017. Early adoption is permitted.
In August 2017,October 2018, the FASB issued ASU No. 2017-12,2018-16, Derivatives and Hedging (Topic 815): Targeted Improvements toInclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting for Hedging Activities Purposes(“ (“ASU 2017-12”2018-16”). The targeted amendments in this ASU help simplify certain aspectspermit the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting and resultpurposes or another acceptable benchmark interest rate. The SOFR is a volume-weighted median interest rate that is calculated daily based on overnight transactions from the prior day’s activity in a more accurate portrayalspecified segments of the economics of an entity’s risk management activities in its financial statements. This ASU applies toU.S. Treasury repo market. It has been selected as the Company’s interest rate swaps designated as cash flow hedges. Upon adoption of this ASU, all changes inpreferred replacement for the fair value of highly effective cash flow hedgesU.S. dollar London Interbank Offered Rate (“LIBOR”), which will be recorded in accumulated other comprehensive income rather than recognized directly in earnings. Under current U.S. GAAP,phased out by the ineffective portionend of the change in fair value of cash flow hedges is recognized directly in earnings. This eliminates the requirement to separately measure and disclose ineffectiveness for qualifying cash flow hedges.2021. ASU 2017-122018-16 is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2018-16 is required to be adopted on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after the date of adoption. The Company currently uses LIBOR as its benchmark interest rate in the Company’s interest rate swaps associated with the Company’s LIBOR-based variable rate borrowings. The Company has not entered into any new or redesignated hedging relationships on or after the date of adoption of ASU 2018-16. The Company has evaluated the effect of this new benchmark interest rate option, and does not believe this ASU will have a material impact on its condensed consolidated financial statements.
In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The guidance changes the guidance for determining whether a decision-making fee is a variable interest. Under the new ASU, indirect interests held through related parties under common control will now be considered on a proportional basis when determining whether fees paid to decision makers and service providers are variable interests. Such indirect interests were previously treated the same as direct interests. This ASU is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The ASU is required to be adopted using a modified retrospective approach with early adoption permitted. The Company plans to adoptadopted ASU 2017-122018-17 during the first quarter of fiscal year 20182020, and does not expecthas concluded that it will have athere is no material impact on its condensed consolidated financial statements.
In April 2020, the FASB issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Due to the business disruptions and challenges severely affecting the global economy caused by COVID-19, many lessors may be required to provide rent deferrals and other lease concessions to lessees. While the lease modification guidance in ASC 842 addresses routine changes to lease terms resulting from negotiations between the lessee and the lessor, this guidance did not contemplate concessions being so rapidly executed to address the sudden liquidity constraints of some lessees arising from COVID-19 related impacts. Under existing lease guidance, the Company would have 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 under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The future impact of the Lease Modification Q&A 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.
NOTE 3 — FAIR VALUE MEASUREMENTS
GAAP defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. GAAP emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows:
Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs).

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Level 3 — Unobservable inputs, which are only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability.
The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities:
NotesCredit facilities and notes payable and credit facility — The fair value is estimated by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs. These financial instruments are valued using Level 2 inputs. As of September 30, 2017,March 31, 2020, the estimated fair value of the Company’s debt was $2.48$1.62 billion, compared to thea carrying value of $2.47$1.61 billion. The estimated fair value of the Company’s debt as of December 31, 20162019 was $2.25$1.60 billion, compared to thea carrying value of $2.26$1.61 billion.
Derivative instruments — The Company’s derivative instruments are comprised of interest rate swaps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of September 30, 2017March 31, 2020 and December 31, 2016,2019, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not

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significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Contingent consideration arrangementsLoans held-for-investment — The contingent consideration arrangementsCompany’s loans held-for-investment are carriedrecorded at fair valuecost upon origination and are valued using Level 3 inputs.adjusted by net loan origination fees and discounts. The Company estimates the fair value of additionalits CRE loans held-for-investment by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration paid in connection with the acquisition of properties subject to contingent consideration arrangements is determined based on key assumptions, including, but not limited to, rental rates, discount rates and the estimated timing and probability of successfully leasing vacant space subsequent to the Company’s acquisition of certain properties. 
Revenue bonds —The fair value estimates of the Company’s revenue bonds are based on assumptions that management believes market participants would use in pricing, using widely accepted valuation techniques including discounted cash flow analysis. This analysis reflects the contractual terms of the bonds, including the period to maturity, and uses unobservable market-based inputs, including discount rates ranging from 7.75% to 9.0%.credit risk. As a result, the Company has determined that its revenue bondsCRE loans held-for-investment are classified in Level 3 of the fair value hierarchy. The Company’s broadly syndicated loans are classified as Level 2 or Level 3 depending on the number of market quotations or indicative prices from pricing services that are available, and whether the depth of the market is sufficient to transact at those prices in amounts approximating the Company’s investment position at the measurement date. As of September 30, 2017,March 31, 2020, $206.5 million and $90.8 million of the Company’s broadly syndicated loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of March 31, 2020, the estimated fair value of the Company’s revenue bondsloans held-for-investment was $2.1$579.7 million, compared to its carrying value of $607.6 million. As of December 31, 2019, the estimated fair value of the Company’s loans held-for-investment was $302.0 million, compared to its carrying value of $301.6 million.
Other financial instruments — The Company considers the carrying values of its cash and cash equivalents, restricted cash, tenant receivables, accounts payable and accrued expenses, other liabilities, due to affiliates and distributions payable in order to approximate their fair values because of the short period of time between their origination and their expected realization as well as their highly-liquid nature. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments.
Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liable for, upon disposition of the financial assets and liabilities. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, there have been no transferstransfers of financial assets or liabilities between fair value hierarchy levels.
Items Measured at Fair Value on a Recurring Basis
In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of September 30, 2017March 31, 2020 and December 31, 20162019 (in thousands):
 Balance as of
September 30, 2017		 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Financial assets:       
Interest rate swaps$3,178
 $—
 $3,178
 $—
Total financial assets$3,178
 $—
 $3,178
 $—
Financial liabilities:       
Interest rate swaps$(3,440) $—
 $(3,440) $—
Total financial liabilities$(3,440) $—
 $(3,440) $—
        
  
Balance as of
December 31, 2016		 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Financial assets:       
Interest rate swaps$2,327
 $—
 $2,327
 $—
Total financial assets$2,327
 $—
 $2,327
 $—
Financial liabilities:       
Interest rate swaps$(3,351) $—
 $(3,351) $—
Contingent consideration(337) —
 —
 (337)
Total financial liabilities$(3,688) $—
 $(3,351) $(337)

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September 30, 2017March 31, 2020 (Unaudited) – (Continued)


The following are reconciliations of the changes in financial assets and liabilities with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, 2017 and 2016 (in thousands):
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning Balance, December 31, 2016 $(337)
Purchases and fair value adjustments:  
Purchases 2,081
Fair value adjustments 337
Ending Balance, September 30, 2017 $2,081
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning Balance, December 31, 2015 $(4,538)
Purchases and fair value adjustments:  
Purchases (332)
Fair value adjustments 2,672
Payments made 1,866
Ending Balance, September 30, 2016 $(332)
 Balance as of
March 31, 2020		 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Financial liabilities:       
Interest rate swaps$(13,743) $—
 $(13,743) $—
Total financial liabilities$(13,743) $—
 $(13,743) $—
        
  
Balance as of
December 31, 2019		 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Financial assets:       
Interest rate swaps$261
 $—
 $261
 $—
Total financial assets$261
 $—
 $261
 $—
Financial liability:       
Interest rate swap$(4,181) $—
 $(4,181) $—
Total financial liability$(4,181) $—
 $(4,181) $—
Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges)

Certain financial and nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The Company’s process for identifying and recording impairment related to real estate assets and intangible assets is discussed in Note 2 — Summary of Significant Accounting Policies.
As discussed in Note 4 — Real Estate Investments,Assets, during the ninethree months ended September 30, 2017,March 31, 2020, real estate assets related to one property totaling approximately 5,000 square feetseven properties were deemed to be impaired and itstheir carrying value wasvalues were reduced to an estimated fair value of $1.0$52.6 million, resulting in impairment charges of $1.7$11.7 million. During the ninethree months ended September 30, 2016,March 31, 2019, real estate assets related to one property totaling approximately 7,000 square feetseven properties were deemed to be impaired and itstheir carrying value wasvalues were reduced to an estimated fair value of $1.4$118.9 million, resulting in impairment charges of $1.4$20.1 million. The Company estimates fair values using Level 3 inputs and using a combined income and market approach, specifically using discounted cash flow analysis and recent comparable sales transactions. The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgment and to make certain key assumptions, including, but not limited to, the following: (1) terminal capitalization;capitalization rates; (2) discount rates; (3) the number of years the property will be held; (4) property operating expenses; and (5) re-leasing assumptions, including the number of months to re-lease, market rental income and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and the future performance and sustainability of the Company’s tenants.
For the Company’s impairment tests for the real estate assets during the three months ended March 31, 2020, the Company used a range of discount rates from 7.9% to 9.7% and terminal capitalization rates from 7.4% to 9.2%. The following table presents the impairment charges by asset class recorded during the ninethree months ended September 30, 2017March 31, 2020 and 20162019 (in thousands):
 Nine Months Ended September 30, Three Months Ended
 2017 2016 March 31, 2020 March 31, 2019
Asset class impaired:        
Land 375
 $502
 $2,925
 $2,527
Buildings, fixtures and improvements 887
 713
 8,264
 17,107
Intangible lease assets 396
 215
 497
 482
Intangible lease liabilities (10) (43)
Total impairment loss $1,658
 $1,430
 $11,676
 $20,073
NOTE 4 — REAL ESTATE ASSETS
Property Acquisitions
During the three months ended March 31, 2020 and 2019, the Company did not acquire any properties.

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NOTE 4 — REAL ESTATE INVESTMENTS
20172020 Property AcquisitionsDispositions and Real Estate Assets Held for Sale
During the ninethree months ended September 30, 2017, the Company acquired 40 commercial properties for an aggregate purchase price of $300.5 million (the “2017 Acquisitions”), of which 36 were determined to be asset acquisitions and four were accounted for as business combinations as they were acquired prior to the adoption of ASU 2017-01 in April 2017. The Company funded the 2017 Acquisitions with net cash provided by operations and available borrowings.
The following table summarizes the consideration transferred for the properties purchased during the nine months ended September 30, 2017 (in thousands):
 2017 Acquisitions
Investments in real estate: 
Purchase price of asset acquisitions$245,138
Purchase price of business combinations55,386
Total purchase price of real estate investments acquired (1)
$300,524
______________________
(1)The weighted average amortization period for the 2017 Acquisitions is 16.6 years for acquired in-place leases and other intangibles, 13.6 years for acquired above-market leases and 8.5 years for acquired intangible lease liabilities.
During the nine months ended September 30, 2017, the Company acquired a 100% interest in 36 commercial properties for an aggregate purchase price of $245.1 million, which were accounted for as asset acquisitions (the “2017 Asset Acquisitions”). The aggregate purchase price includes $5.9 million of external acquisition-related expenses that were capitalized in accordance with ASU 2017-01. Prior to the adoption of ASU 2017-01, costs related to property acquisitions were expensed as incurred. The following table summarizes the purchase price allocation for the 2017 Asset Acquisitions purchased during the nine months ended September 30, 2017 (in thousands):
 2017 Asset Acquisitions
Land$32,583
Buildings, fixtures and improvements173,681
Acquired in-place leases and other intangibles36,733
Acquired above-market leases3,624
Revenue bonds2,081
Intangible lease liabilities(3,564)
Total purchase price$245,138
During the nine months ended September 30, 2017, the Company acquired a 100% interest in four commercial properties for an aggregate purchase price of $55.4 million, which were accounted for as business combinations (the “2017 Business Combination Acquisitions”). The purchase price allocation for each of the Company’s 2017 Business Combination Acquisitions is preliminary and subject to change as the Company finalizes the allocations, which the Company expects will be prior to the end of the current fiscal year. The Company preliminarily allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the preliminary purchase price allocations for the 2017 Business Combination Acquisitions purchased during the nine months ended September 30, 2017 (in thousands):
 2017 Business Combination Acquisitions
Land$9,873
Buildings, fixtures and improvements41,186
Acquired in-place leases and other intangibles5,974
Acquired above-market leases988
Intangible lease liabilities(2,635)
Total purchase price$55,386

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 (Unaudited) – (Continued)


The Company recorded revenue for the three and nine months ended September 30, 2017 of $1.3 million and $3.6 million, respectively, and net income of $491,000 and $163,000 for the three and nine months ended September 30, 2017, respectively, related to the 2017 Business Combination Acquisitions. In addition, the Company recorded $1.3 million of acquisition-related expenses for the nine months ended September 30, 2017, which is included in acquisition-related expenses on the condensed consolidated statements of operations.
The following information summarizes selected financial information of the Company as if all of the 2017 Business Combination Acquisitions were completed on January 1, 2016 for each period presented below. The table below presents the Company’s estimated revenue and net income, on a pro forma basis, for the three and nine months ended September 30, 2017 and 2016, respectively (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Pro forma basis:       
Revenue$107,024
 $103,140
 $316,619
 $306,864
Net income$29,736
 $18,374
 $65,114
 $56,740
The pro forma information for the nine months ended September 30, 2017 was adjusted to exclude $1.3 million of acquisition-related fees and expenses recorded during such periods related to the 2017 Business Combination Acquisitions. Accordingly, these expenses were instead recognized in the pro forma information for the nine months ended September 30, 2016.
The pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of 2016, nor does it purport to represent the results of future operations.
2017 Property Dispositions
During the nine months ended September 30, 2017,March 31, 2020, the Company disposed of 1412 properties, consisting of nine retail properties and three anchored shopping centers, for an aggregate gross sales price of $98.6$129.0 million, resulting in proceeds of $64.1$126.6 million after closing costs and the repayment of the $33.0 million variable rate debt secured by one of the disposed propertiesdisposition fees due to CMFT Management or its affiliates, and a gain of $16.8$13.1 million. No disposition fees were paid to CR IV Advisors or its affiliates in connection with the sale of the properties and theThe Company has no continuing involvement with these properties. The gain on sale of real estate is included in gain on disposition of real estate, net in the condensed consolidated statements of operations. The disposition of these properties did not qualify to be reported as discontinued operations since the disposition did not represent a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the operating results of these disposed properties are reflected in the Company’s results from continuing operations for all periods presented through their respective date of disposition.
2017As of March 31, 2020, there were two properties classified as held for sale with a carrying value of $8.0 million included in assets held for sale in the accompanying condensed consolidated balance sheets. The Company has mortgage notes payable of $5.0 million that are related to the held for sale properties, which the Company expects to repay in connection with the disposition of the underlying held for sale properties.
2020 Impairment of a Property
The Company performs quarterly impairment review procedures, primarily through continuous monitoring of events and changes in circumstances that could indicate that the carrying value of certain of its real estate assets may not be recoverable. See Note 2 — Summary of Significant Accounting Policies for a discussion of the Company’s accounting policies regarding impairment of real estate assets.
During the ninethree months ended September 30, 2017, one propertyMarch 31, 2020, seven properties totaling approximately 414,000 square feet with a carrying value of $2.7$64.3 million waswere deemed to be impaired and itstheir carrying value wasvalues were reduced to an estimated fair value of $1.0$52.6 million, resulting in impairment charges of $1.7$11.7 million, which were recorded in the condensed consolidated statements of operations. See Note 3 — Fair Value Measurements for a further discussion regarding these impairment charges.
2019 Property Dispositions
During the three months ended March 31, 2019, the Company disposed of 34 properties, consisting of 31 retail properties and three anchored shopping centers, excluding a related outparcel of land, for an aggregate gross sales price of $124.3 million, resulting in proceeds of $120.7 million after closing costs and disposition fees due to CMFT Management or its affiliates, and a gain of $9.9 million. The Company has no continuing involvement with these properties. The gain on sale of real estate is included in gain on disposition of real estate, net in the condensed consolidated statements of operations. The disposition of these properties did not qualify to be reported as discontinued operations since the disposition did not represent a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the operating results of these disposed properties are reflected in the Company’s results from continuing operations for all periods presented through their respective date of disposition.
2019 Impairment
During the three months ended March 31, 2019, seven properties totaling approximately 1.1 million square feet with a carrying value of $139.0 million were deemed to be impaired and their carrying values were reduced to an estimated fair value of $118.9 million, resulting in impairment charges of $20.1 million, which were recorded in the condensed consolidated statements of operations. See Note 3 — Fair Value Measurements for a further discussion regarding these impairment charges.

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COLE CREDIT PROPERTY TRUST IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 (Unaudited) – (Continued)


2016 Property Acquisitions
During the nine months ended September 30, 2016, the Company acquired 14 commercial properties for an aggregate purchase price of $197.0 million (the “2016 Acquisitions”). The 2016 Acquisitions were accounted for as business combinations. The Company funded the 2016 Acquisitions with net proceeds from the Initial DRIP Offering, net cash provided by operations and available borrowings. The Company allocated the purchase price of these properties to the fair value of the assets acquired and liabilities assumed. The following table summarizes the purchase price allocations for the 2016 Acquisitions (in thousands):
 2016 Acquisitions
Land$45,741
Buildings, fixtures and improvements134,375
Acquired in-place leases and other intangibles (1)
16,807
Acquired above-market leases (2)
3,398
Intangible lease liabilities (3)
(3,295)
Total purchase price$197,026

(1)The weighted average amortization period for acquired in-place leases and other intangibles was 7.2 years for the 2016 Acquisitions.
(2)The weighted average amortization period for acquired above-market leases was 5.2 years for the 2016 Acquisitions.
(3)
The weighted average amortization period for acquired intangible lease liabilities was 6.1 years for the 2016 Acquisitions.
The Company recorded revenue for the three and nine months ended September 30, 2016 of $3.4 million and $5.3 million, respectively, and a net loss for the three and nine months ended September 30, 2016 of $313,000 and $2.1 million, respectively, related to the 2016 Acquisitions.
The following information summarizes selected financial information of the Company as if all of the 2016 Acquisitions were completed on January 1, 2015 for each period presented below. The table below presents the Company’s estimated revenue and net income, on a pro forma basis, for the three and nine months ended September 30, 2016 and 2015, respectively (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2016 2015 2016 2015
Pro forma basis:       
Revenue$103,315
 $98,982
 $311,312
 $284,660
Net income$17,973
 $18,728
 $58,777
 $51,839
The pro forma information for the three and nine months ended September 30, 2016 was adjusted to exclude $1.4 million and $3.6 million, respectively, of acquisition-related fees and expenses recorded during the three and nine months ended September 30, 2016. Accordingly, these costs were instead recognized in the pro forma information for the three and nine months ended September 30, 2015.
The pro forma information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred at the beginning of 2015, nor does it purport to represent the results of future operations.
2016 Property Dispositions
During the nine months ended September 30, 2016, the Company disposed of three retail properties and one anchored shopping center for an aggregate gross sales price of $26.6 million, resulting in proceeds of $25.9 million after closing costs and a gain of $2.1 million. No disposition fees were paid to CR IV Advisors or its affiliates in connection with the sale of the properties and the Company has no continuing involvement with these properties. The gain on sale of real estate is included in gain on disposition of real estate, net in the consolidated statements of operations.

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COLE CREDIT PROPERTY TRUST IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 (Unaudited) – (Continued)


2016 Impairment of a Property
During the nine months ended September 30, 2016, one property with a carrying value of $2.8 million was deemed to be impaired and its carrying value was reduced to an estimated fair value of $1.4 million, resulting in impairment charges of $1.4 million, which were recorded in the condensed consolidated statements of operations.
2016 Unconsolidated Joint Venture
During the nine months ended September 30, 2016, the Company acquired the partner’s (the “Unconsolidated Joint Venture Partner”) approximately 10% interest in a multi-tenant property comprising 176,000 rentable square feet of commercial space (the “Unconsolidated Joint Venture”). The Company has determined that this transaction qualified as a business combination to be accounted for under the acquisition method. Accordingly, the assets and liabilities of this transaction were recorded in the Company’s condensed consolidated balance sheets at their estimated fair value as of the acquisition date. The fair value of the assets acquired, liabilities assumed and equity interests were estimated using significant assumptions consistent with the Company’s policy concerning the allocation of the purchase price of real estate assets, including current market rental rates, rental growth rates, capitalization and discount rates, interest rates and other variables. The results of this transaction are included in the Company’s condensed consolidated statements of operations beginning September 22, 2016.
The following table summarizes the transaction related to the business combination, including the preliminary amounts recognized for assets acquired and liabilities assumed, as indicated (in thousands):
 September 22, 2016
Carrying value of the Company’s equity interest before business combination (1)
$18,952
Fair value of amounts recognized for assets acquired and liabilities assumed: 
Land4,685
Buildings, fixtures and improvements11,615
Acquired in-place leases and other intangibles1,340
Acquired above-market leases1,168
Intangible lease liabilities(618)
Other assets and liabilities110
Total net assets18,300
Loss recognized on equity interest re-measured to fair value$(652)

(1)    Includes $1.6 million of cash paid to the Unconsolidated Joint Venture Partner.
Consolidated Joint Venture
As of September 30, 2017, the Company had an interest in a Consolidated Joint Venture that owns and manages nine properties, with total assets of $52.7 million, which included $52.1 million of real estate assets, net of accumulated depreciation and amortization of $4.8 million, and total liabilities of $769,000. The Consolidated Joint Venture does not have any debt outstanding as of September 30, 2017. The Company has the ability to control operating and financial policies of the Consolidated Joint Venture. There are restrictions on the use of these assets as the Company would generally be required to obtain the partner’s (the “Consolidated Joint Venture Partner”) approval in accordance with the joint venture agreement for any major transactions. The Company and the Consolidated Joint Venture Partner are subject to the provisions of the joint venture agreement, which includes provisions for when additional contributions may be required to fund certain cash shortfalls.

2017
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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017March 31, 2020 (Unaudited) – (Continued)


NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES
Intangible lease assets and liabilities consisted of the following as of September 30, 2017March 31, 2020 and December 31, 20162019 (in thousands, except weighted average life remaining):
  September 30, 2017 December 31, 2016
In-place leases and other intangibles, net of accumulated amortization of $155,772 and $125,620, respectively (with a weighted average life remaining of 10.6 and 10.7 years, respectively)   
$363,977
 $364,038
Acquired above-market leases, net of accumulated amortization of $23,888 and $18,723, respectively   
 (with a weighted average life remaining of 8.8 and 8.9 years, respectively)43,552
 44,768
  $407,529
 $408,806
 March 31, 2020 December 31, 2019
Intangible lease assets:   
In-place leases and other intangibles, net of accumulated amortization of $124,103 and $111,670, respectively (with a weighted average life remaining of 10.0 years and 10.4 years, respectively)   
$164,232
 $164,724
Acquired above-market leases, net of accumulated amortization of $22,040 and $19,310, respectively (with a weighted average life remaining of 7.5 years and 7.9 years, respectively)   
17,674
 17,423
Total intangible lease assets, net$181,906
 $182,147
Intangible lease liabilities:   
Acquired below-market leases, net of accumulated amortization of $30,237 and $25,800, respectively (with a weighted average life remaining of 7.0 years and 7.3 years, respectively)   
$20,161
 $20,523
Amortization of the above-market leases is recorded as a reduction to rental revenue,and other property income, and amortization expense for the in-place leases and other intangibles is included in depreciation and amortization in the accompanying condensed consolidated statements of operations. Amortization of below-market leases is recorded as an increase to rental and other property income in the accompanying condensed consolidated statements of operations. The following table summarizes the amortization expense related to the intangible lease assets and liabilities for the three and nine months ended September 30, 2017March 31, 2020 and September 30, 20162019 (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2017 2016 2017 20162020 2019
In-place lease and other intangible amortization$12,567
 $11,055
 $35,402
 $34,486
$5,940
 $9,474
Above-market lease amortization$1,877
 $1,705
 $5,498
 $4,901
$908
 $1,290
Below-market lease amortization$1,399
 $1,816
As of September 30, 2017,March 31, 2020, the estimated amortization expense relating to the intangible lease assets for each of the five succeeding fiscal yearsand liabilities is as follows (in thousands):
  Amortization Expense
  
In-Place Leases and
Other Intangibles
 Above-Market Leases
Remainder of 2017 $10,923
 $1,774
2018 $42,289
 $6,397
2019 $38,454
 $5,299
2020 $36,120
 $4,724
2021 $32,685
 $4,100
  Amortization
  
In-Place Leases and
Other Intangibles
 Above-Market Leases Below-Market Leases
Remainder of 2020 $16,565
 $2,151
 $3,763
2021 19,541
 2,330
 3,129
2022 18,088
 2,138
 2,609
2023 16,021
 1,868
 2,198
2024 14,211
 1,410
 1,650
Thereafter 79,806
 7,777
 6,812
Total $164,232
 $17,674
 $20,161

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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 (Unaudited) – (Continued)


NOTE 6 — LOANS HELD-FOR-INVESTMENT
The Company’s loans held-for-investment consisted of the following as of March 31, 2020 and December 31, 2019 (dollar amounts in thousands):
  As of March 31, As of December 31,
  2020 2019
Mezzanine loans $140,061
 $146,060
Senior loans 153,870
 152,820
Total CRE loans-held-for-investment and related receivables, net 293,931
 298,880
Broadly syndicated loans 333,449
 2,750
Loans-held-for-investment and related receivables, net 627,380
 301,630
     
Less: Allowance for credit losses (19,779) —
Total loans-held-for-investment and related receivables, net $607,601
 $301,630
During the three months ended March 31, 2020, the Company acquired 112 broadly syndicated loans with a net book value of $330.7 million. As of March 31, 2020, the Company’s broadly syndicated loans consisted of 113 loans with a net book value of $333.4 million with a weighted average years to maturity of 5.2 years and a weighted average interest rate of 4.5%. As of March 31, 2020, the Company had $55.6 million of unsettled broadly syndicated loan purchases included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.
As of March 31, 2020, the Company had $15.4 million of unfunded commitments related to Commercial Real Estate (“CRE”) loans held-for-investment, the funding of which is subject to the satisfaction of borrower milestones. These commitments are not reflected in the accompanying condensed consolidated balance sheet. During the year ended December 31, 2019, the borrower on the Company’s eight mezzanine loans, which represent approximately 3.9% of total assets as of March 31, 2020, became delinquent on certain required reserve payments. During the three months ended March 31, 2020, the borrower remained delinquent on the required reserve payments and became delinquent on principal and interest; as a result, the Company recorded an allowance for credit losses on its mezzanine loans of $14.5 million, which is the difference between the fair value of the collateral and the amortized cost basis of the loans. The mezzanine loans are secured by condominium properties in New York. See further discussion below on the Company’s allowance for credit losses.
The following table details overall statistics for the Company’s CRE loans held-for-investment as of March 31, 2020 and December 31, 2019 (dollar amounts in thousands):
 As of March 31, As of December 31,
 2020 2019
Number of loans11
 11
Principal balance (1)
$291,909
 $297,357
Net book value$278,581
 $298,880
Weighted-average interest rate (1)
9.2% 8.9%
Weighted-average maximum years to maturity (2)
2.7
 2.9

(1)As of March 31, 2020, 100% of the Company’s loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR.
(2)Maximum maturity date assumes all extension options are exercised by the borrower; however, the Company’s loans may be repaid prior to such date.

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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 (Unaudited) – (Continued)


Activity relating to the Company’s loans held-for-investment portfolio was as follows (dollar amounts in thousands):
  Principal Balance 
Deferred Fees / Other Items (1)
 Loan Fees Receivable Net Book Value
Balance, December 31, 2019 $300,135
 $(6,047) $7,542
 $301,630
Loan originations and acquisitions 332,497
 (2) 2
 332,497
Principal repayments received (6,853) —
 —
 (6,853)
Capitalized interest (2)
 539
 —
 —
 539
Deferred fees and other items —
 (941) (73) (1,014)
Accretion and amortization of fees and other items —
 581
 —
 581
Allowance for credit losses —
 (19,779) —
 (19,779)
Balance, March 31, 2020 $626,318
 $(26,188) $7,471
 $607,601

(1)Other items primarily consist of purchase discounts or premiums, accretion of exit fees and deferred origination expenses.
(2)Represents accrued interest on loans whose terms do not require a current cash payment of interest.
Allowance for Credit Losses
The allowance for credit losses reflects the Company’s current estimate of potential credit losses related to the loans held-for-investment included in our condensed consolidated balance sheets. Refer to Note 2 — Summary of Significant Accounting Policies for further discussion of the Company’s allowance for credit losses.
The following table presents the activity in our allowance for credit losses by loan type for the three months ended March 31, 2020 (dollar amounts in thousands):


 Mezzanine Loans Senior Loans Broadly Syndicated Loans Total
Allowance for credit losses as of December 31, 2019 $—
 $—
 $—
 $—
Transition adjustment on January 1, 2020 1,494
 468
 40
 2,002
Provision for credit losses 13,047
 341
 4,389
 17,777
Allowance for credit losses as of March 31, 2020 $14,541
 $809
 $4,429
 $19,779
The Company’s initial allowance for credit losses against the loans held-for-investment of $2.0 million recorded on January 1, 2020 is reflected as a direct charge to retained earnings on the Company’s condensed consolidated statements of stockholders’ equity; however subsequent changes to the allowance for credit losses are recognized through net income on the Company’s condensed consolidated statements of operations. During the three months ended March 31, 2020, the Company recorded a $17.8 million increase in allowance for credit losses related to its loans held-for-investment, bringing the total allowance for credit losses to $19.8 million as of March 31, 2020.
NOTE 67 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In the normal course of business, the Company uses certain types of derivative instruments for the purpose of managing or hedging its interest rate risk. As of September 30, 2017,March 31, 2020, the Company had 12three executed interest rate swap agreements. The following table summarizes the terms of the Company’s 11executed interest rate swap agreements designated as hedging instruments effective as of September 30, 2017March 31, 2020 and December 31, 20162019 (dollar amounts in thousands):
  
 Outstanding Notional
 
 
 
Fair Value of Assets and (Liabilities)

Balance Sheet
Amount as of
Interest
Effective
Maturity
September 30,
December 31,

Location
September 30, 2017
Rates (1)

Dates
Dates
2017
2016
Interest Rate SwapsPrepaid expenses, derivative assets, revenue bonds and other assets
$690,066

2.55% to 3.91%
6/30/2015 to 9/1/2016
8/15/2018 to 7/1/2021
$3,178

$2,327
Interest Rate SwapsDeferred rental income, derivative liabilities and other liabilities
$338,737

3.46% to 4.75%
6/24/2013 to 8/23/2013
6/24/2018 to 8/24/2020
$(923)
$(3,351)
  
 Outstanding Notional
 
 
 
Fair Value of Liabilities as of

Balance Sheet
Amount as of
Interest
Effective
Maturity
March 31,
December 31,

Location
March 31, 2020
Rates (1)

Dates
Dates
2020
2019 (2)
Interest Rate SwapsDerivative liabilities, deferred rental income and other liabilities
$871,666

2.55% to 4.02%
3/14/2016 to 8/15/2018
3/15/2021 to 7/1/2021
$(13,743)
$(4,181)

(1)The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread as of September 30, 2017.March 31, 2020.

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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017March 31, 2020 (Unaudited) – (Continued)


During the nine months ended September 30, 2017, the Company entered into one interest rate swap agreement associated with a $811.7 million notional amount, effective on August 15, 2018. The following table summarizes the terms of this interest rate swap agreement designated as a hedging instrument as of September 30, 2017 and December 31, 2016 (dollar amounts in thousands):
    Outstanding Notional       Fair Value of Liability
 Balance Sheet Amount as of Interest Effective Maturity September 30, December 31,
 Location September 30, 2017 
Rate (1)
 Date Date 2017 2016
Interest Rate SwapDeferred rental income, derivative liabilities and other liabilities $811,666
 3.77% 8/15/2018 3/15/2021 $(2,517) $—

(1)(2)The
As of December 31, 2019, the Company had two interest rate consistsswap agreements in an asset position with a notional amount of $60.0 million and a fair value of $261,000 included in prepaid expenses and other assets on the underlying index swapped to a fixed rate and the applicable interest rate spread as of September 30, 2017.condensed consolidated balance sheets.
Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 3 — Fair Value Measurements. The notional amount under the interest rate swap agreements is an indication of the extent of the Company’s involvement in each instrument, but does not represent exposure to credit, interest rate or market risks.
Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company designated the interest rate swaps as cash flow hedges in order to hedge the variability of the anticipated cash flows on its variable rate debt. The change in fair value of the effective portion of the derivative instruments that are designated as hedges is recorded in other comprehensive income (loss),loss, with a portion of the amount subsequently reclassified to interest expense as interest payments are made on the Company’s variable rate debt. For the three months ended September 30, 2017 and 2016,March 31, 2020, the amountsamount of loss reclassified were $447,000 and $2.2 million, respectively, and forfrom other comprehensive loss as an increase to interest expense was $977,000. For the ninethree months ended September 30, 2017 and 2016,March 31, 2019, the amountsamount of gain reclassified were $2.9 million and $6.8 million, respectively.from other comprehensive loss as a decrease to interest expense was $1.5 million. During the next 12 months, the Company estimates that an additional $180,000$13.7 million will be reclassified from other comprehensive income (loss)loss as an increase to interest expense.
Any ineffective portion The Company includes cash flows from interest rate swap agreements in net cash flows provided by operating activities on its condensed consolidated statements of cash flows, as the change in fair value of the derivativeCompany’s accounting policy is to present cash flows from hedging instruments is recorded in interest expense. During the nine months ended September 30, 2017, $79,000 of the change in the fair valuesame category in its condensed consolidated statements of cash flows as the interest rate swaps was considered ineffective. There were no portions ofcategory for cash flows from the change in the fair value of the interest rate swaps that were considered ineffective during the nine months ended September 30, 2016.hedged items.
The Company has agreements with each of its derivative counterparties that contain provisions whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its derivative obligations, resulting in an acceleration of payment. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value, inclusive of interest payments and accrued interest, of $3.7$14.2 million at September 30, 2017March 31, 2020. In addition, the Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. The Company records credit risk valuation adjustments on its interest rate swaps based on the credit quality of the Company and the respective counterparty. There were no termination events or events of default related to the interest rate swaps as of September 30, 2017.March 31, 2020.
NOTE 78 — CREDIT FACILITIES AND NOTES PAYABLE AND CREDIT FACILITY
As of September 30, 2017March 31, 2020, the Company had $2.5$1.6 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of 4.52.3 years and a weighted average interest rate of 3.5%3.8%. The weighted average years to maturity is computed using the scheduled repayment date as specified in each loan agreement where applicable. The weighted average interest rate is computed using the interest rate in effect until the scheduled repayment date. Should a loan not be repaid by its scheduled repayment date, the applicable interest rate will increase as specified in the respective loan agreement.
The following table summarizes the debt balances as of September 30, 2017March 31, 2020 and December 31, 2016,2019, and the debt activity for the ninethree months endedSeptember 30, 2017March 31, 2020 (in thousands):

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COLE CREDIT PROPERTY TRUST IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 (Unaudited) – (Continued)


   During the Nine Months Ended September 30, 2017  
 Balance as of December 31, 2016 
Debt Issuances & Assumptions (1)
 Repayments and Modifications Accretion and (Amortization) Balance as of
September 30, 2017
Fixed rate debt$1,164,622
 $53,206
 $(335) $—
 $1,217,493
Variable rate debt53,500
 —
 (33,000) —
 20,500
Credit facility1,039,666
 1,461,500
 (1,266,666) —
 1,234,500
Total debt2,257,788
 1,514,706
 (1,300,001) —
 2,472,493
Net premiums (2)
506
 —
 —
 (65) 441
Deferred costs (3)
(12,035) (10,078) 717
(4)2,744
 (18,652)
Total debt, net$2,246,259
 $1,504,628
 $(1,299,284) $2,679
 $2,454,282
   During the Three Months Ended March 31, 2020  
 Balance as of December 31, 2019 
Debt Issuances & Assumptions (1)
 
Repayments & Modifications (2)
 Accretion and (Amortization) Balance as of
March 31, 2020
Fixed rate debt$726,261
 $—
 $(97,129) $—
 $629,132
Credit facilities885,000
 100,000
 —
 —
 985,000
Total debt1,611,261
 100,000
 (97,129) —
 1,614,132
Net premiums (3)
241
 —
 —
 (23) 218
Deferred costs – credit facility (4)
(3,933) —
 —
 445
 (3,488)
Deferred costs – fixed rate debt(2,709) —
 177
(5 
) 
298
 (2,234)
Total debt, net$1,604,860
 $100,000
 $(96,952) $720
 $1,608,628

(1)Includes deferred financing costs incurred during the period.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 (Unaudited) – (Continued)


(2)Net premiums onIn connection with the repayment of certain mortgage notes, payable were recorded upon the assumptionCompany recognized a loss on extinguishment of debt of $4.4 million during the respective debt instruments. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective debt instruments using the effective-interest method.three months ended March 31, 2020.
(3) Net premiums on mortgage notes payable were recorded upon the assumption of the respective debt instruments. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective debt instruments using the effective-interest method.
(3)(4)Deferred costs relaterelated to mortgage notes payable and the term portion of the Credit Facility (as defined below).
(4)(5)Includes $503,000 ofRepresents deferred financing costs of the term portion of the Credit Facility written off during the period resulting from debt repayments prior to the Second Amended and Restated Credit Agreement, as defined below.respective maturity dates.
Notes Payable
As of September 30, 2017March 31, 2020, the fixed rate debt outstanding of $1.2 billion$629.1 million included $217.1$60.0 million of variable rate debt that is fixed through interest rate swap agreements, which has the effect of fixing the variable interest rates per annum through the maturity date of the variable rate debt. The fixed rate debt has interest rates ranging from 2.6% to 5.0% per annum. The fixed rate debt outstanding matures on various dates from June 2018April 1, 2020 through October 2025.May 10, 2024. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt outstanding was $2.2$1.1 billion as of September 30, 2017.March 31, 2020. Each of the mortgage notes payable comprising the fixed rate debt is secured by the respective properties on which the debt was placed. AsSubsequent to March 31, 2020, the Company repaid $68.2 million of September 30, 2017, the variable rate debt outstanding of $20.5 million had a weighted average interest rate of 4.5%. The variable rate debt outstanding maturesmortgage notes that matured on February 26,various dates from April 1, 2020 to May 1, 2020. With respect to the Company’s $24.2remaining $85.5 million of debt maturing within the next year,12 months following the date these financial statements are issued, the Company expects to usebelieves cash on hand, proceeds from real estate asset dispositions, net cash provided by operations, borrowings available under the Credit Facility or enterthe entry into new financing arrangements will be sufficient in order to meet its debt obligations. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the variable rate debt outstanding was $40.8 million as of September 30, 2017.
During the nine months ended September 30, 2017, theCredit Facilities
The Company entered intohas a second amended and restated unsecured credit agreement (the “Second Amended and Restated Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent (“JPMorgan Chase”), and the other lenders party thereto that provides for borrowings of up to $1.40$1.24 billion as of March 31, 2020, which includesincluded a $1.05 billion$885.0 million unsecured term loan (the “Term Loan”) and up to $350.0 million in unsecured revolving loans (the “Revolving Loans” and, collectively with the Term Loan, the “Credit Facility”). The Term Loan matures on March 15, 2022 and the Revolving Loans mature on March 15, 2021;2021; however, the Company has the right to extend the maturity date of the Revolving Loans to March 15, 2022.
Depending upon the type of loan specified and overall leverage ratio, the Credit Facility bears interest at (i) the one-month, two-month, three-month or six-month London Interbank Offered Rate (“LIBOR”)LIBOR multiplied by the statutory reserve rate (the “Eurodollar Rate”) plus an interest rate spread ranging from 1.65% to 2.25% or (ii) a base rate, ranging from 0.65% to 1.25%, plus the greater of: (a) JPMorgan Chase’s Prime Rate; (b) the Federal Funds Effective Rate (as defined in the Second Amended and Restated Credit Agreement) plus 0.50%; or (c) the one-month LIBOR multiplied by the statutory reserve rate plus 1.00%. As of September 30, 2017,March 31, 2020, there were no amounts outstanding under the Revolving Loans outstanding totaled $184.5 million at a weighted average interest rate of 3.0%.Loans. As of September 30, 2017,March 31, 2020, the Term Loan outstanding totaled $1.05 billion, $811.7$885.0 million,$811.7 million of which is subject to interest rate swap agreements (the “Swapped Term Loan”). The interest rate swap agreements had the effect of fixing the Eurodollar Rate per annum of the Swapped Term Loan. As of September 30, 2017, the weighted averageLoan at an all-in rate for the Swapped Term Loan was 3.2%of 4.0%. As of September 30, 2017,March 31, 2020, the Company had $1.23 billion$885.0 million outstanding under the Credit Facility at a weighted average interest rate of 3.1%3.9% and $164.9$349.4 million in unused capacity, subject to borrowing availability. The Company had available borrowings of $64.5 million as of March 31, 2020.
The Second Amended and Restated Credit Agreement contains provisions with respect to covenants, events of default and remedies customary for facilities of this nature. In particular, the Second Amended and Restated Credit Agreement requires the Company to maintain a minimum consolidated net worth greater than or equal to the sum of (i) $2.0$2.0 billion plus (ii) 75% of the equity issued minus (iii) the aggregate amount of any redemptions or similar transaction from the date of the Second Amended

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 (Unaudited) – (Continued)


and Restated Credit Agreement, a leverage ratio less than or equal to 60%, a fixed charge coverage ratio greater than 1.50, an unsecured debt to unencumbered asset value ratio equal to or less than 60%, an unsecured debt service coverage ratio greater than 1.75, a secured debt ratio equal to or less than 40% and the amount of secured debt that is recourse debt at no greater than 15% of total asset value. The Company believes it was in compliance with the financial covenants under the Second Amended and Restated Credit Agreement, as well as the financial covenants under the Company’s various fixed and variable rate debt agreements, as of September 30, 2017.March 31, 2020, with the exception of one mortgage note where the Company failed to meet the debt service coverage ratio covenant under the mortgage at March 31, 2020. Pursuant to the loan agreement, non-compliance with the debt service coverage ratio covenant triggers a cash sweep of the underlying property’s operating cash flow. As of March 31, 2020, a cash sweep of the underlying property’s operating cash flow had not been initiated.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 (Unaudited) – (Continued)


On December 31, 2019 (the “Closing Date”), CMFT Corporate Credit Securities, LLC, an indirect wholly-owned, bankruptcy-remote subsidiary of the Company, entered into a revolving credit and security agreement (the “Credit and Security Agreement”) with the lenders from time to time parties thereto, Citibank, N.A. (“Citibank”), as administrative agent, CMFT Securities Investments, LLC, a wholly-owned subsidiary of the Company, as equityholder and as collateral manager, Citibank (acting through its Agency & Trust division), as both a collateral agent and as a collateral custodian, and Virtus Group, LP, as collateral administrator. The Credit and Security Agreement provides for borrowings in an aggregate principal amount up to $500.0 million (the “Credit Securities Revolver”), which may be increased from time to time pursuant to the Credit and Security Agreement. As of March 31, 2020, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $100.0 million at a weighted average interest rate of 2.6%.
Borrowings under the Credit and Security Agreement will bear interest equal to the three-month LIBOR for the relevant interest period, plus an applicable rate. The applicable rate is 1.70% per annum during the reinvestment period and 2.00% per annum during the amortization period (and, in each case, an additional 2.00% per annum following an event of default under the Credit and Security Agreement). The reinvestment period begins on the Closing Date and concludes on the earlier of (i) the date that is three years after the Closing Date, (ii) the final maturity date and (iii) the date on which the total assets under management of the Company and its wholly-owned subsidiaries is less than $1.25 billion (the “Reinvestment Period”). The final maturity date is the earliest to occur of: (i) the date that the Credit Securities Revolver is paid down and (ii) the second anniversary after the Reinvestment Period concludes. Borrowings under the Credit and Security Agreement are secured by substantially all of the assets held by CMFT Corporate Credit Securities, LLC, which shall primarily consist of broadly-syndicated senior secured loans subject to certain eligibility criteria under the Credit and Security Facility.
Maturities
The following table summarizes the scheduled aggregate principal repayments for the Company’s outstanding debt subsequent to September 30, 2017 for each of the five succeeding fiscal years and the period thereafterMarch 31, 2020 (in thousands):
  Principal Repayments
Remainder of 2017$116
201824,211
201949,799
2020333,215
2021285,102
Thereafter1,780,050
Total$2,472,493
 Principal Repayments
Remainder of 2020$115,548
202197,701
2022913,963
2023319,155
2024167,765
Thereafter—
Total$1,614,132
NOTE 89 — INTANGIBLE LEASE LIABILITIESSUPPLEMENTAL CASH FLOW DISCLOSURES
Intangible lease liabilities of the Company consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands, except weighted average life):
 September 30, 2017 December 31, 2016
Acquired below-market liabilities, net of accumulated amortization of $29,396 and $23,241, respectively (with a weighted average life remaining of 7.6 and 7.8 years, respectively)
   
$47,607
 $49,075
Amortization of below-market leases is recorded as an increase to rental revenue in the accompanying condensed consolidated statements of operations. The following table summarizes the amortization of intangible lease liabilitiesSupplemental cash flow disclosures for the three and nine months ended September 30, 2017March 31, 2020 and September 30, 2016 (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Amortization of below-market leases$2,898
 $2,012
 $7,469
 $5,788
As of September 30, 2017, the estimated amortization of the intangible lease liabilities for each of the five succeeding fiscal years is2019 are as follows (in thousands):
  Amortization of Below-Market Leases
Remainder of 2017 $2,329
2018 $8,372
2019 $7,508
2020 $6,703
2021 $4,573
 Three Months Ended March 31,
 2020 2019
Supplemental Disclosures of Non-Cash Investing and Financing Activities:   
Distributions declared and unpaid$16,463
 $16,518
Accrued capital expenditures$87
 $13
Accrued deferred financing costs$8
 $—
Interest income capitalized to loans held-for-investment$539
 $2,643
Common stock issued through distribution reinvestment plan$19,231
 $21,247
Change in fair value of interest rate swaps$(9,823) $(5,316)
Supplemental Cash Flow Disclosures:   
Interest paid$15,665
 $24,536
Cash paid for taxes$138
 $94

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017March 31, 2020 (Unaudited) – (Continued)


NOTE 9 — SUPPLEMENTAL CASH FLOW DISCLOSURES
Supplemental cash flow disclosures for the nine months endedSeptember 30, 2017 and 2016 are as follows (in thousands):
 Nine Months Ended September 30,
 2017 2016
Supplemental Disclosures of Non-Cash Investing and Financing Activities:   
Distributions declared and unpaid$16,001
 $15,969
Accrued capital expenditures$535
 $1,115
Accrued deferred financing costs$—
 $4
Common stock issued through distribution reinvestment plan$76,851
 $82,383
Change in fair value of interest rate swaps$682
 $(6,767)
Contingent consideration recorded upon property acquisitions$—
 $332
Consolidation of real estate joint venture$—
 $18,300
Supplemental Cash Flow Disclosures:   
Interest paid$63,045
 $54,401
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Litigation
In the ordinary course of business, the Company may become subject to litigation and claims. The Company is not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or of which the Company’s properties are the subject.
Unfunded Commitments
As of March 31, 2020, the Company had $15.4 million of unfunded commitments related to its existing CRE loans held-for-investment. These commitments are not reflected in the accompanying condensed consolidated balance sheet.
Unsettled Broadly Syndicated Loans
As of March 31, 2020, the Company had $55.6 million of unsettled broadly syndicated loan acquisitions included in cash and cash equivalents in the accompanying condensed consolidated balance sheet, of which $38.6 million settled subsequent to March 31, 2020.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. In addition, the Company may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property and/or another third party is responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify the Company against future remediation costs. The Company also carries environmental liability insurance on its properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which the Company may be liable. The Company is not aware of any environmental matters which it believes are reasonably likely to have a material effect on its results of operations, financial condition or liquidity.
NOTE 11 — RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS
The Company has incurred commissions, fees and expenses payable to CR IV AdvisorsCMFT Management and certain of its affiliates in connection with the Offerings and the acquisition, management and disposition of its assets. On August 20, 2019, the Company and CMFT Management entered into an Amended and Restated Management Agreement (the “Management Agreement”), which amended and restated that certain Advisory Agreement between the parties dated January 24, 2012, as amended (the “Prior Advisory Agreement”). Following the effective date of the Management Agreement, CMFT Management is no longer entitled to receive the advisory fee, acquisition fees, subordinated performance fee, or disposition fees pursuant to the Prior Advisory Agreement, as described below; provided, however, that for the Company’s properties under contract to be sold or specifically identified in a broker agreement as being marketed for sale as of the effective date of the Management Agreement, CMFT Management may be entitled to receive a disposition fee in accordance with the terms of the Prior Advisory Agreement. In addition, CMFT Management generally shall continue to be entitled to reimbursement for costs and expenses to the extent incurred on behalf of the Company in accordance with the Management Agreement; provided, however, that the limits on reimbursement for organization and offering expenses, acquisition expenses and operating expenses as defined and provided in the Prior Advisory Agreement shall no longer be applicable. 
Management fees
Pursuant to the Management Agreement, beginning on August 20, 2019, the Company pays CMFT Management a management fee, payable quarterly in arrears, equal to the greater of (a) $250,000 per annum ($62,500 per quarter) and (b) 1.50% per annum (0.375% per quarter) of the Company’s Equity (as defined in the Management Agreement).

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 (Unaudited) – (Continued)


Incentive compensation
Pursuant to the Management Agreement, beginning on August 20, 2019, CMFT Management is entitled to receive incentive compensation, payable with respect to each quarter, which is generally equal to the excess of (a) the product of (i) 20% and (ii) the excess of (A) Core Earnings (as defined in the Management Agreement) of the Company for the previous 12-month period, over (B) the product of (1) the Company’s Consolidated Equity (as defined in the Management Agreement) in the previous 12-month period, and (2) 7% per annum, over (b) the sum of any incentive compensation paid to CMFT Management with respect to the first three calendar quarters of such previous 12-month period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable). During the three months ended March 31, 2020 and 2019, noincentive compensation fees were incurred.
Acquisition fees and expenses
ThePursuant to the Prior Advisory Agreement, through August 20, 2019, the Company pays CR IV Advisorspaid CMFT Management or its affiliates acquisition fees of up to 2.0% of: (1) the contract purchase price of each property or asset the Company acquires;acquired; (2) the amount paid in respect of the development, construction or improvement of each asset the Company acquires;acquired; (3) the purchase price of any loan the Company acquires;acquired; and (4) the principal amount of any loan the Company originates.originated. In addition, the Company reimburses CR IV Advisorsreimbursed CMFT Management or its affiliates for acquisition-related expenses incurred in the process of acquiring properties, so long as the total acquisition fees and expenses relating to the transaction do not exceed 6.0% of the contract purchase price, unless otherwise approved by a majority of the Board, including a majority of the Company’s independent directors, as commercially competitive, fair and reasonable to the Company. Other transaction-related expenses, such as advisor reimbursements for disposition activities, are expensed as incurred and are included in transaction-related expenses on the condensed consolidated statements of operations.
Advisory fees and expenses
ThePursuant to the Prior Advisory Agreement, through August 20, 2019, the Company pays CR IV Advisorspaid CMFT Management a monthly advisory fee based upon the Company’s monthly average invested assets, which, effective January 1, 2017, is2019, was based on the estimated market value of such assets used to determine the Company’s estimated per share NAV as of December 31, 2016,2018, as discussed in Note 1 — Organization and Business, and for those assets

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 (Unaudited) – (Continued)


acquired subsequent to December 31, 2016, is2018, was based on the purchase price. The monthly advisory fee iswas equal to the following amounts: (1) an annualized rate of 0.75% paid on the Company’s average invested assets that are between $0 and $2.0 billion; (2) an annualized rate of 0.70% paid on the Company’s average invested assets that are between $2.0 billion and $4.0 billion; and (3) an annualized rate of 0.65% paid on the Company’s average invested assets that are over $4.0 billion.
Operating expenses
The Company reimburses CR IV AdvisorsCMFT Management or its affiliates for certain expenses CR IV AdvisorsCMFT Management or its affiliates paid or incurred in connection with the services provided to the Company,Company. Through August 20, 2019, such reimbursements were subject to the limitation that the Company willwould not reimburse CR IV AdvisorsCMFT Management or its affiliates for any amount by which the operating expenses (including the advisory fee) at the end of the four preceding fiscal quarters exceedexceeded the greater of: (1) 2.0% of average invested assets, or (2) 25.0% of net income excluding any additions to reserves for depreciation bad debts or other similar non-cash reserves and excluding any gain from the sale of assets for that period. Pursuant to the Management Agreement, beginning on August 20, 2019, such limits are no longer applicable. The Company will not reimburse CR IV AdvisorsCMFT Management or its affiliates for the salaries and benefits paid to personnel in connection with thewho provide services for which CR IV Advisors receives acquisition fees, andto the Company will not reimburse CR IV Advisors for salaries and benefits paid toincluding the Company’s executive officers.officers and any portfolio management, acquisitions or investment professionals.
Disposition fees
If CR IV AdvisorsPursuant to the Prior Advisory Agreement, through August 20, 2019, if CMFT Management or its affiliates provideprovided a substantial amount of services (as determined by a majority of the Company’s independent directors) in connection with the sale of one or more properties (or the Company’s entire portfolio), the Company will pay CR IV Advisorspaid CMFT Management or its affiliates a disposition fee in an amount equal to up to one-half of the real estate or brokerage commission paid by the Company to third parties on the sale of such property, not to exceed 1.0% of the contract price of the property sold; provided, however, in no event maywould the total disposition fees paid to CR IV Advisors,CMFT Management, its affiliates and unaffiliated third parties exceed the lesser of the customary competitive real estate commission or an amount equal to 6.0% of the contract sales price. DuringFor the three and nine months ended September 30, 2017 and 2016, noCompany’s properties under contract to be sold or specifically identified in a broker agreement as being marketed for sale as of August 20, 2019, CMFT Management may be entitled to receive a disposition fees were incurred for any such services provided by CR IV Advisors or its affiliates.fee in accordance with the terms of the Prior Advisory Agreement.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 (Unaudited) – (Continued)


Subordinated performance fees
IfPursuant to the Prior Advisory Agreement, through August 20, 2019, if the Company iswas sold or its assets arewere liquidated, CR IV Advisors will beCMFT Management was entitled to receive a subordinated performance fee equal to 15.0% of the net sale proceeds remaining after investors havestockholders received, from regular distributions plus special distributions paid from proceeds of such sale, a return of their net capital invested and an 8.0% annual cumulative, non-compounded return. Alternatively through August 20, 2019, if the Company’s shares arewere listed on a national securities exchange, CR IV Advisors will beCMFT Management was entitled to a subordinated performance fee equal to 15.0% of the amount by which the market value of the Company’s outstanding stock plus all distributions paid by the Company prior to listing, exceedsexceeded the sum of the total amount of capital raised from investorsstockholders and the amount of distributions necessary to generate an 8.0% annual cumulative, non-compounded return to investors.stockholders. As an additional alternative, upon termination of the advisory agreement, CR IV Advisors may bePrior Advisory Agreement, CMFT Management was entitled to a subordinated performance fee similar to the fee to which CR IV AdvisorsCMFT Management would have been entitled had the portfolio been liquidated (based on an independent appraised value of the portfolio) on the date of termination. During the three and nine months ended September 30, 2017March 31, 2020 and 2016, 2019, nosubordinated performance fees were incurred related to any such events.
The Company recorded fees and expense reimbursements as shown in the table below for services provided by CR IV AdvisorsCMFT Management or its affiliates related to the services described above during the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2017 2016 2017 20162020 2019
       
Management fees and expenses$11,090
 $—
Acquisition fees and expenses$2,338
 $2,087
 $6,336
 $4,442
$127
 $186
Disposition fees$341
 $801
Advisory fees and expenses$11,149
 $10,587
 $32,863
 $31,100
$—
 $10,019
Operating expenses$1,072
 $1,121
 $3,495
 $3,135
$810
 $974
Of the amounts shown above, $3.8$12.6 million and $5.5$5.1 million had been incurred, but not yet paid, for services provided by CR IV AdvisorsCMFT Management or its affiliates in connection with the acquisition, disposition and operationsoperating activities during the ninethree months ended September 30, 2017 March 31, 2020 and 2016,2019, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 (Unaudited) – (Continued)


Due to/fromto Affiliates
As of September 30, 2017March 31, 2020 and December 31, 2016, $3.82019, $12.6 million and $5.3$14.5 million, respectively, had been incurred primarily for advisory andmanagement fees, operating expenses and disposition fees by CR IV AdvisorsCMFT Management or its affiliates, but had not yet been reimbursed by the Company. These amounts were included in due to affiliates in the condensed consolidated balance sheets for such periods.
As of September 30, 2017 and December 31, 2016, $4,000 and $58,000, respectively, were due from CR IV Advisors or its affiliates related to amounts received by affiliates of the advisor which were due to the Company.
NOTE 12 — ECONOMIC DEPENDENCY
Under various agreements, the Company has engaged and may in the future engage CR IV AdvisorsCMFT Management or its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investorstockholder relations. As a result of these relationships, the Company is dependent upon CR IV AdvisorsCMFT Management or its affiliates. In the event that these companies are unable to provide the Company with these services, the Company would be required to find alternative providers of these services.
NOTE 13 — OPERATINGSTOCKHOLDERS’ EQUITY
Equity-Based Compensation
On August 10, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “Plan”), under which 400,000 of the Company’s common shares were reserved for issuance and share awards of approximately 367,500 are available for future grant as of March 31, 2020.
As of March 31, 2020, the Company has granted awards of approximately 6,500 restricted shares to each of the independent members of the Board (approximately 32,500 restricted shares in aggregate) under the Plan. As of March 31, 2020,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 (Unaudited) – (Continued)


14,000 of the restricted shares had vested based on one year of continuous service. The remaining 18,500 restricted shares issued had not vested or been forfeited as of March 31, 2020. The fair value of the Company’s share awards is determined using the Company’s NAV per share on the date of grant. Compensation expense related to these restricted shares is recognized over the vesting period. The Company recorded compensation expense of $40,000 and $32,000 for the three months ended March 31, 2020 and 2019, respectively, related to these restricted shares which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. As of March 31, 2020, there was $80,000 of total unrecognized compensation expense related to shares, which will be recognized ratably over the remaining period of service prior to October 2020.
NOTE 14 — LEASES
The Company’s real estate assets are leased to tenants under operating leases for which the terms, expirations and expirationsextension options vary. The Company’s operating leases do not convey to the lessee the right to purchase the underlying asset upon expiration of the lease period. To determine whether a contract contains a lease, the Company reviews contracts to determine if the agreement conveys the right to control the use of an asset. The Company accounts for lease and non-lease components as a single, combined operating lease component. Non-lease components primarily consist of maintenance services, including CAM, real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. Non-lease components are considered to be variable rental and other property income and are recognized in the period incurred.
As of September 30, 2017,March 31, 2020, the leases had a weighted-average remaining term of 9.88.5 years. Certain leases include provisions to extend the lease agreements, options for early termination after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other negotiated terms and conditions. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
As of September 30, 2017,March 31, 2020, the future minimum rental income from the Company’s investment in real estate assets under non-cancelable operating leases, assuming no exercise of renewal options for the succeeding five fiscal years and thereafter, was as follows (in thousands):
  Future Minimum Rental Income
Remainder of 2017$92,490
2018358,539
2019343,351
2020330,829
2021314,676
Thereafter2,242,089
Total$3,681,974
 Future Minimum Rental Income
Remainder of 2020$167,817
2021212,996
2022201,032
2023182,434
2024162,681
Thereafter1,046,488
Total$1,973,448
A certain amount of the Company’s rental and other property income is from tenants with leases which are subject to contingent rent provisions. These contingent rents are subject to the tenant achieving periodic revenues in excess of specified levels. For the three months ended March 31, 2020 and 2019, the amount of the contingent rent earned by the Company was not significant.
Rental and other property income during the three months ended March 31, 2020 and 2019 consisted of the following (in thousands):
 Three Months Ended March 31,
 2020 2019
Fixed rental and other property income (1)
$56,673
 $89,765
Variable rental and other property income  (2)
$11,763
 $14,997
Total rental and other property income$68,436
 $104,762

(1)Consists primarily of fixed contractual payments from operating leases with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above- and below-market leases.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020 (Unaudited) – (Continued)


(2)Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses, and percentage rent, net of bad debt expense.
The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 13.4 years. Upon initial adoption of ASC 842, the Company recognized a lease liability (in deferred rental income and other liabilities) and a related ROU asset (in prepaid expenses, derivative assets and other assets) of $2.7 million in the condensed consolidated balance sheets. The lease liability and ROU asset were initially measured at the present value of the future minimum lease payments using a discount rate of 4.3%. This reflects the Company’s incremental borrowing rate, which was calculated based on the interest rate the Company would incur to borrow on a fully collateralized basis over a term similar to the lease.
The Company recognized $63,000 of ground lease expense during the three months ended March 31, 2020, of which $61,000 was paid in cash during the period it was recognized. As of March 31, 2020, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $188,000 for the remainder of 2020, $250,000 annually for 2021 through 2025, and $1.9 million thereafter through the maturity date of the lease in August 2033.
NOTE 1415 — SUBSEQUENT EVENTS
COVID-19 Update
The following events occurred subsequentglobal outbreak of COVID-19 continues to September 30, 2017:adversely impact commercial activity and has contributed to significant volatility in financial markets. The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of the Company’s business. The extent to which this pandemic could affect the Company’s financial condition, liquidity, and results of operations is difficult to predict and depends on evolving factors, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. The magnitude of the outbreak will depend on factors beyond the Company’s control including actions taken by local, state and federal agencies, non-governmental organizations, the medical community, the Company’s tenants, and others. Due to these uncertainties, the Company is unable to predict the impact that the COVID-19 pandemic will have on the Company’s financial condition, results of operations and cash flows in future periods or the impact that COVID-19 will have on the Company’s tenants and other business partners; however, any material effect on these parties could adversely impact the Company. From late March through May 8, 2020, the Company received several short term rent relief requests, most often in the form of rent deferral requests, or requests for further discussion from tenants, totaling approximately $8.7 million of monthly base rent. The Company has not reached any agreements with any of its tenants in regard to rental relief.
Redemption of Shares of Common Stock
Subsequent to September 30, 2017,March 31, 2020, the Company redeemed approximatelyapproximately 2.5 million shares pursuant to the Company’s share redemption program for $25.0$19.0 million (at an average price per share of $10.08)$7.77). Management, in its discretion, limited the amount of shares redeemed for the three months ended September 30, 2017March 31, 2020 to an amount equal to the net proceeds the Company received from the sale of shares issued in the DRIP Offerings during the respective period. The remaining redemption requests received during the three months ended March 31, 2020 totaling approximately 9.821.3 million shares went unfulfilled.
Investment in Real Estate AssetsNotes Payable
Subsequent to September 30, 2017,March 31, 2020, the Company acquired one commercial real estate propertyrepaid $68.2 million of mortgage notes that matured on various dates from April 1, 2020 to May 1, 2020.
Credit Facilities
Subsequent to March 31, 2020, the Company borrowed $110.0 million on the Revolving Loans to increase cash liquidity and $36.5 million under the Credit Securities Revolver. The Credit Securities Revolver bears interest equal to the three-month LIBOR for a purchase pricethe relevant interest period, plus an applicable rate of $3.2 million. The Company has not completed its initial purchase price allocation with respect to this property1.70% per annum during the Reinvestment Period and therefore cannot provide similar disclosures to those included2.00% per annum during the amortization period, as discussed in Note 48 — Real Estate Investments in these condensed consolidated financial statements for this property.Credit Facilities and Notes Payable.
Broadly Syndicated Loans
Subsequent to March 31, 2020, the Company settled acquisitions of broadly syndicated loans totaling $41.9 million.

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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017March 31, 2020 (Unaudited) – (Continued)


Property DispositionSecond Amended and Restated Distribution Reinvestment Plan
As of September 30, 2017, one property was classified as held for sale, as discussed in Note 2 — Summary of Significant Accounting Policies. Subsequent to September 30, 2017,March 31, 2020, the Board approved and adopted a Second Amended and Restated Distribution Reinvestment Plan (the “Amended DRIP”). The Amended DRIP is effective as of May 15, 2020. The Amended DRIP amends and restates the Company’s Amended and Restated Distribution Reinvestment Plan (the “Plan”) and, among other changes, (i) provides that the Plan may be suspended at any time by majority vote of the Board without prior notice to Plan participants if the Board believes such action is in the best interest of the Company disposedand its stockholders, and (ii) clarifies that the Company may provide notice of this propertyany amendment, supplement, suspension or termination of the Plan by including such information in a Current Report on Form 8-K or in its annual or quarterly reports filed with the SEC or in a separate mailing to Plan participants.
Amended Share Redemption Program
Subsequent to March 31, 2020, the Board approved and adopted an Amended and Restated Share Redemption Program (the “Amended Share Redemption Program”). The Amended Share Redemption Program is effective as of June 1, 2020. The Amended Share Redemption Program amends and restates the Company’s Share Redemption Program (the “Program”) and, among other changes, replaces the requirement for advance notice of any modification, suspension or termination of the Program with a gross sales priceprovision that the Board may amend the terms of, $1.9 million, resultingsuspend or terminate the Amended Share Redemption Program at any time in proceedsits sole discretion if it believes that such action is in the best interest of $1.9 million after closing coststhe Company and its stockholders, and that any material modifications or suspension of the Amended Share Redemption Program will be disclosed to stockholders as promptly as practicable in the Company’s reports filed with the SEC and via its website. The Amended Share Redemption Program also clarifies the types of stockholders whose share redemption requests are eligible to qualify for the special treatment that may be afforded in event of the death of a gainstockholder, as well as the process for such redemptions, and extends the time during which notice of $242,000. No disposition fees were paid to CR IV Advisors or its affiliatesany stockholder death must be given in connection with the sale of the property and the Company has no continuing involvement with this property.any such redemption requests, from 270 days to 12 months. 
Sale of Cole Capital
On November 13, 2017 the parent of the Company’s sponsor entered into a purchase and sale agreement to sell its ownership interest in the Company’s sponsor. The completion of this sale is subject to the receipt of regulatory approvals and other customary closing conditions and is expected to occur at the end of the fourth quarter of 2017 or during the first quarter of 2018.



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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. Certain risks may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a complete discussion of such risk factors, see Item 1A — Risk Factors of this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2019. 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 condensed consolidated financial statements contained therein, and the terms “we,” “us,” “our” and the “Company” refer to CIM Real Estate Finance Trust, Inc. (formerly known as Cole Credit Property Trust IV, Inc.)
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect our expectations and projections about our future results, performance, prospects and opportunities. We have attempted to identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” or similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, those discussed below. In addition, 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, (ii) the potential adverse effect of COVID-19 on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets, among others, and (iii) general economic, market and other conditions. We intend for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or new information, future events or otherwise, except as may be required to satisfy our obligations under federal securities law. The forward-looking statements should be read in light of the risk factors identified in Item 1A — Risk Factors of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2016.2019.
The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from those presented in our forward-looking statements:
We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.
We are subject to risks associated with tenant, geographic and industry concentrations with respect to our properties.
Our properties, intangible assets and other assets may be subject to impairment charges.
We could be subject to unexpected costs or unexpected liabilities that may arise from potential dispositions of properties.dispositions.
We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties, and we may suffer delays or be unable to acquire, dispose of, or lease properties on advantageous terms.
We could beare subject to risks associated with bankruptcies or insolvencies of tenants or from tenant defaults generally.
We have substantial indebtedness, which may affect our ability to pay distributions and expose us to interest rate fluctuation risk and the risk of default under our debt obligations.
We may be affected byare subject to risks associated with the incurrence of additional secured or unsecured debt.
We may not be able to maintain profitability.
We may not generate cash flows sufficient to pay our distributions to stockholders or meet our debt service obligations.
Our continued compliance with debt covenants depends on many factors and could be impacted by current or future economic conditions associated with COVID-19.
We may be affected by risks resulting from losses in excess of insured limits.
We may fail to remain qualified as a REIT for U.S. federal income tax purposes.
Our advisor hasWe may be unable to successfully reposition our portfolio or list our shares on a national securities exchange in the right to terminate the advisory agreement upon 60 days’ written notice without causetimeframe we expect or penalty.at all.

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Definitions
We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings:
The phrase “annualized rental income” refers to the straight-line rental revenue under our leases on operating properties owned as of the respective reporting date, which includes the effect of rent escalations and any tenant concessions, such as free rent, and excludes any bad debt allowances and any contingent rent, such as percentage rent. Management uses annualized rental income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized rental income is not indicative of future performance.
Under a “net lease,” the tenant occupying the leased property (usually as a single tenant) does so in much the same manner as if the tenant were the owner of the property. There are various forms of net leases, most typically classified as triple-net or double-net. Triple-net leases typically require theThe tenant to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs). Double-net leases typically require that the tenant pay all operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance), but excludes some or all major repairs (e.g., roof, structure and parking lot). Accordingly, the owner receives the rent “net” of these expenses, rendering the cash flow associated with the lease predictable for the term of the lease. Under a net lease, the tenant generally agrees to lease the property for a significant term and agrees that it will either have no ability or only limited ability to terminate the lease or abate rent prior to the expiration of the term of the lease as a result of real estate driven events such as casualty, condemnation or failure by the landlord to fulfill its obligations under the lease. There are various forms of net leases, most typically classified as either triple-net or double-net. Triple-net leases typically require the tenant to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs, including roof, structure and parking lot). Double-net leases typically hold the landlord responsible for the capital expenditures for the roof and structure, while the tenant is responsible for all lease payments and remaining operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance).
Overview
We were formed on July 27, 2010, and we elected to be taxed, and currently qualify, as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2012. We commenced our principal operations on April 13, 2012, when we satisfied the conditions of our escrow agreement regarding the minimum offering and issued approximately 308,000 shares of our common stock. We have no paid employees and are externally advised and managed by CR IV Advisors. VEREITCMFT Management. CIM indirectly owns and/or controls CMFT Management; our external advisor, CR IV Advisors, the dealer manager, for the Offering, CCC,CCO Capital; our property manager, CREI Advisors,Advisors; and our sponsor, Cole Capital.CCO Group.
We ceased issuing shares in our Offering on April 4, 2014 and in the Initial DRIP Offering effective as of June 30, 2016, but will continue to issue shares of common stock under the Secondary DRIP Offering until acertain liquidity event occurs,events occur, such as the listing of our shares on a national securities exchange or the sale of our company, or the Secondary DRIP Offering is otherwise terminated by the Board. We expect that property acquisitions in 20172020 and future periods will be funded by proceeds from financing of the acquired properties, cash flows from operations and the strategic sale of properties and other investments.
On September 27, 2015, the Board established an estimated value of our common stock, as of August 31, 2015, of $9.70 per share for purposes of assisting broker-dealers that participated in the Offering in meeting their customer account statement reporting obligations under National Association of Securities Dealers Conduct Rule 2340. On November 10, 2016, the Board established an updated estimated per share NAV of our common stock, as of September 30, 2016, of $9.92 per share. On March 24, 2017, the Board established an updated estimated per share NAV of our common stock, as of December 31, 2016, of $10.08 per share.asset acquisitions.
Our operating results and cash flows are primarily influenced by rental and other property income from our commercial properties, interest expense on our indebtedness and acquisition and operating expenses. Rental and other property income accounted for 88% of our total revenue for both the three and nine months ended September 30, 2017 and 2016. As 97.5%94.6% of our rentable square feet was under lease, including any month-to-month agreements, as of September 30, 2017March 31, 2020, with a weighted average remaining lease term of 9.88.5 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors. CR IV Advisorsfactors, including due to circumstances related to the outbreak of the COVID-19 pandemic. CMFT Management regularly monitors the creditworthiness of our tenants by reviewing each tenant’s financial results, any available credit rating agency reports when available, on the tenant or guarantor, the operating history of the property with such tenant, the tenant’s market share and track record within its industry segment, the general health and outlook of the tenant’s industry segment and other information for changes and possible trends. If CR IV AdvisorsCMFT Management identifies significant changes or trends that may adversely affect the creditworthiness of a tenant, it will gather a more in-depth knowledge of the tenant’s financial condition and, if necessary, attempt to mitigate the tenant credit risk by evaluating the possible sale of the property or identifying a possible replacement tenant should the current tenant fail to perform on the lease.

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TableWe have primarily acquired core commercial real estate assets principally consisting of Contents


Operating Highlights and Key Performance Indicators
2017 Activity
Acquired 40 commercial properties for an aggregate purchase price of $300.5 million.
Disposed of 14 retail properties for an aggregate sales price of $98.6 million.
Entered intolocated throughout the Second Amended and Restated Credit Agreement that increased the allowable borrowings and extended the maturity dates associated with the original amended and restated unsecured credit facility.
Total debt increased by $214.7 million, from $2.26 billion to $2.47 billion.
Portfolio Information
United States. As of September 30, 2017,March 31, 2020, we owned 908384 properties, located in 45 states, the grosscomprising 18.4 million rentable square feet of which was 97.5% leased, including any month-to-month agreements,commercial space located in 42 states.
In April of 2019, we announced our intention to pursue a more diversified investment strategy across the capital structure, ultimately transitioning to a mortgage REIT, by balancing our existing portfolio of core commercial real estate assets with our future investments in a portfolio of commercial mortgage loans and other real estate-related credit investments that we would originate, acquire, finance and manage.
As of March 31, 2020, our loan portfolio consisted of 124 loans with a weighted average lease term remainingnet book value of 9.8 years. During the nine months ended September 30, 2017, we disposed of 14 properties for an aggregate sales price of $98.6$607.6 million. As of September 30, 2017, no single tenant accounted for greater than 10% of our 2017 annualized rental income. As of September 30, 2017,March 31, 2020, we had certain geographic$55.6 million of unsettled broadly syndicated loan purchases included in cash and industry concentrations in our property holdings. In particular, as of September 30, 2017, 77 of our properties were located in California, which accounted for 10% of our 2017 annualized rental income. In addition, we had tenantscash equivalents in the discount store and pharmacy industries, which accounted for 14% and 10%, respectively, of our 2017 annualized rental income.
The following table shows the property statistics of our real estate assets, which exclude uncompleted development projects and any properties owned through unconsolidated joint ventures, as of September 30, 2017 and 2016:
  September 30,
  2017 2016
Number of commercial properties908
 882
Rentable square feet (in thousands) (1)
26,837
 26,454
Percentage of rentable square feet leased97.5% 98.5%
Percentage of investment-grade tenants (2)
34.0% 36.2%
     
     
(1) Includes square feet of the buildings on land parcels subject to ground leases.  
(2) Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC (“Standard & Poor’s”) or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”). The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable.
The following table summarizes our real estate investment activity during the three and nine months ended September 30, 2017 and 2016:
  
  Three Months Ended September 30, Nine Months Ended September 30,
   2017 2016 2017 2016
Commercial properties acquired (1)
 13
 6
 40
 14
Purchase price of acquired properties (in thousands) $113,857
 $97,086
 $300,524
 $197,026
Rentable square feet (in thousands) (2)
 516
 592
 1,352
 1,175

(1) Excludes a property owned through the Unconsolidated Joint Venture that wasaccompanying consolidated during the nine months ended September 30, 2016.
(2) Includes square feet of buildings on land parcels subject to ground leases.

balance sheet.

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ResultsPursuant to our strategy, during the three months ended March 31, 2020, we disposed of Operations12 properties, encompassing 721,000 gross rentable square feet. As of March 31, 2020, our portfolio consisted of 325 retail properties, 56 anchored shopping centers and three industrial properties representing 33 industry sectors. See Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the disposition of individual properties during the three months ended March 31, 2020.
COVID-19
We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business. The following table provides summary information aboutglobal spread of COVID-19 has created significant uncertainty and economic disruption, both in the near-term and potentially longer-term and has negatively impacted almost every industry directly or indirectly, including industries in which we and our tenants operate.
The extent to which this pandemic could affect our financial condition, liquidity, and results of operations foris difficult to predict and depends on evolving factors, including the threescope, severity and nine months ended September 30, 2017duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and 2016 (in thousands):
  Three Months Ended September 30, 2017 vs. 2016 Increase (Decrease) Nine Months Ended September 30, 2017 vs. 2016 Increase (Decrease)
  2017 2016  2017 2016 
Total revenues $107,024
 $101,796
 $5,228
 $316,308
 $302,940
 $13,368
General and administrative expenses $3,270
 $3,246
 $24
 $10,301
 $9,735
 $566
Property operating expenses $7,345
 $5,738
 $1,607
 $20,881
 $16,603
 $4,278
Real estate tax expenses $9,276
 $8,612
 $664
 $27,646
 $25,939
 $1,707
Advisory fees and expenses $11,149
 $10,587
 $562
 $32,863
 $31,100
 $1,763
Acquisition-related expenses $110
 $1,417
 $(1,307) $1,520
 $3,592
 $(2,072)
Depreciation and amortization $36,461
 $33,452
 $3,009
 $106,145
 $100,399
 $5,746
Operating income $37,755
 $37,314
 $441
 $115,294
 $114,142
 $1,152
Interest expense and other, net $23,335
 $20,473
 $2,862
 $67,968
 $58,416
 $9,552
Net income attributable to the Company $29,736
 $18,096
 $11,640
 $64,028
 $57,028
 $7,000
Revenue
Our revenues consist primarilythe direct and indirect economic effects of rentalthe pandemic and containment measures, among others. The magnitude of the outbreak will depend on factors beyond our control including actions taken by local, state and federal agencies, non-governmental organizations, the medical community, our tenants, and others. Due to these uncertainties, we are unable to predict the impact that the COVID-19 pandemic will have on our financial condition, results of operation and cash flows in future periods or the impact that COVID-19 will have on our tenants and other property incomebusiness partners; however, any material effect on these parties could adversely impact us.
As of May 8, 2020, the Company had received April 2020 base rent payments from net leased commercial properties. We also incur certain operating expenses that areapproximately 67.3% of its portfolio. In addition, the Company received several short-term rent relief requests, most often in the form of rent deferral requests, or requests for further discussion from tenants, totaling approximately $8.7 million of monthly base rent. In most cases where April 2020 base rent has not been paid, we have offered tenants temporary rent deferrals subject to reimbursement byfurther negotiation. Not all tenant requests will ultimately result in modification agreements, nor is the Company forgoing its contractual rights under its lease agreements. April collections and rent relief requests to-date may not be indicative of collections or requests in any future period. No abatement or modifications have been reached as of May 8, 2020.
We are actively managing our response to COVID-19 in collaboration with our tenants which results in tenant reimbursement income.
The increase in revenue of $5.2 million and $13.4 million during the threebusiness partners and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016, was primarily due to the acquisition of 41 rental income-producing properties subsequent to September 30, 2016. Rental income from net leased commercial properties accounted for 88% of our total revenue for both the three and nine months ended September 30, 2017 and 2016. We also incurred certain operating expenses subject to reimbursement by our tenants, which resulted in $12.9 million and $38.0 million of tenant reimbursement income during the three and nine months ended September 30, 2017, respectively, compared to $12.4 million and $37.6 million, respectively, during the same periods in 2016.
General and Administrative Expenses
The primary general and administrative expense items are operating expense reimbursementsassessing potential impacts to our advisor, escrowfinancial position and trustee fees, state franchise and income taxes, office expenses and accounting fees.
The increase in general and administrative expenses of $24,000 and $566,000 during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016, was primarily due to increases in operating expense reimbursements to our advisor during the three and nine months ended September 30, 2017, primarily as a result of the acquisition of 41 additional rental income-producing properties subsequent to September 30, 2016.
Property Operating Expenses
Property operating expenses such as property repairs, maintenance and property-related insurance include both reimbursable and non-reimbursable property expenses. We are reimbursed by tenants for certain property operating expenses in accordance with the respective lease agreements.
The increase in property operating expenses of $1.6 million and $4.3 million during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016, was primarily due to the acquisition and management of 41 additional rental income-producing properties subsequent to September 30, 2016,results, as well as recognizingpotential adverse developments in our business. We intend to publish an updated estimated per share NAV on a fullquarterly, rather than an annual, basis going forward, until such time that we have greater visibility into the impact of the COVID-19 pandemic on our property valuations. Further, in order to manage the financial health of the Company, our Board is making its determinations with respect to the declaration of distributions on a monthly, instead of quarterly basis, and has approved and adopted an Amended DRIP and an Amended Share Redemption Program that, among other changes, provides that the Amended DRIP and the Amended Share Redemption Program may be suspended at any time by majority vote of the Board without prior notice if the Board believes such action is in the best interest of the Company and its stockholders. Subsequent to March 31, 2020, we borrowed $110.0 million on Revolving Loans in order to increase liquidity during this period of economic uncertainty. For further information regarding the impact of COVID-19 on the Company, see Part II, Item 1A titled “Risk Factors.”
Operating Highlights and Key Performance Indicators
2020 Activity
Acquired 112 broadly syndicated loans with a net book value of $330.7 million.
Disposed of 12 properties, consisting of nine retail properties and three anchored shopping centers, for an aggregate sales price of $129.0 million.
Increased total debt by $2.9 million.
Borrowed $110.0 million on the Revolving Loans to increase cash liquidity subsequent to March 31, 2020.
Portfolio Information
As of March 31, 2020, we owned 384 properties located in 42 states, the gross rentable square feet of which was 94.6% leased, including any month-to-month agreements, with a weighted average lease term remaining of 8.5 years. As of March 31, 2020, no single tenant accounted for greater than 10% of our 2020 annualized rental income. As of March 31, 2020, we had certain geographic and industry concentrations in our property operating expenses on sixholdings. In particular, 49 of our properties were located in California and 1422 of our properties acquired duringwere located in Georgia, which accounted for 12% and 11%, respectively, of our 2020 annualized rental income. In addition, we had tenants in the threesporting goods and nine months ended September 30, 2016, respectively.home and garden industries, which accounted for 14% and 12%, respectively, of our 2020 annualized rental income.

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Real Estate Tax Expenses
The increase infollowing table shows the property statistics of our real estate tax expensesassets as of $664,000March 31, 2020 and $1.7 million during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016, was primarily due to the acquisition of 41 additional rental income-producing properties subsequent to September 30, 2016, as well as recognizing a full period of real estate tax expenses on six and 14 properties acquired during the three and nine months ended September 30, 2016, respectively.2019:
Advisory Fees and Expenses
Pursuant to the advisory agreement with CR IV Advisors and based upon the amount of our current invested assets, we are required to pay to CR IV Advisors a monthly advisory fee equal to one-twelfth of 0.75% of the average invested assets up to $2.0 billion, one-twelfth of 0.70% of the average invested assets over $2.0 billion up to $4.0 billion and one-twelfth of 0.65% of assets over $4.0 billion. Additionally, we may be required to reimburse certain expenses incurred by CR IV Advisors in providing such advisory services, subject to limitations as set forth in the advisory agreement.
 As of March 31,
 2020 2019
Number of commercial properties384
 857
Rentable square feet (in thousands) (1)
18,381
 25,637
Percentage of rentable square feet leased94.6% 95.7%
Percentage of investment-grade tenants (2)
38.6% 38.4%

(1)Includes square feet of buildings on land parcels subject to ground leases.
(2)Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC (“Standard & Poor’s”) or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”). The ratings may reflect those assigned by Standard & Poor’s or Moody’s to the lease guarantor or the parent company, as applicable. The weighted average credit rating is weighted based on annualized rental income and is for only those tenants rated by Standard & Poor’s.
The increase in advisory fees and expenses of $562,000 during the three months ended September 30, 2017, as compared to the same period in 2016, was due to an increase in our average invested assets to $5.6 billion over the three months ended September 30, 2017, compared to $5.2 billion over the three months ended September 30, 2016.
The increase in advisory fees and expenses of $1.8 million during the nine months ended September 30, 2017, as compared to the same period in 2016, was due to an increase in our average invested assets to $5.5 billion over the nine months ended September 30, 2017, compared to $5.2 billion over the nine months ended September 30, 2016.
Acquisition-Related Expenses
We reimburse CR IV Advisors or its affiliates for acquisition-related expenses incurred in the process of acquiring a property or the origination or acquisition of a loan, so long as the total acquisition fees and expenses relating to the transaction do not exceed 6.0% of the contract purchase price, unless otherwise approved by a majority of our board of directors, including a majority of our independent directors, as commercially competitive, fair and reasonable to us. In April 2017, we early adopted ASU 2017-01, which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Beginning in April 2017, our acquisitions qualify as asset acquisitions, and as such, acquisition-related fees and certain acquisition-related expenses related to these asset acquisitions are capitalized. Prior to the adoption of ASU 2017-01 in April 2017, costs related to property acquisitions, including acquisition fees described below, were expensed as incurred, and all of our acquisitions were accounted for as business combinations. Prior to April 2017, acquisition-related expenses primarily consisted of legal, deed transfer and other costs related to real estate purchase transactions, including costs incurred for deals that were not consummated. We also pay CR IV Advisors or its affiliates acquisition fees of up to 2.0% of: (1) the contract purchase price of each property or asset we acquire; (2) the amount paid in respect of the development, construction or improvement of each asset we acquire; (3) the purchase price of any loan we acquire; and (4) the principal amount of any loan we originate.
The decrease in acquisition-related expenses of $1.3 million during the three months ended September 30, 2017, as compared to the same period in 2016, was primarily due to the early adoption of ASU 2017-01, and as such, acquisition costs related to asset acquisitions were capitalized during the three months ended September 30, 2017. During the three months ended September 30, 2016, acquisition-related costs relatedMarch 31, 2020 and 2019, the Company did not acquire any properties.
Results of Operations
Overview
We are not aware of any material trends or uncertainties, other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 and this Quarterly Report on Form 10-Q, the effects of the recent outbreak of COVID-19, and national economic conditions affecting real estate in general, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties. Currently, we are unable to predict the impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows in future property acquisitions were expensed as incurred.
The decrease in acquisition-related expenses of $2.1 million during the nine months ended September 30, 2017, as compared to the same period in 2016, was primarilyperiods due to the acquisition of four commercial properties prior to the adoption of ASU 2017-01, for an aggregate purchase price of $55.4 million during the nine months ended September 30, 2017, compared to the acquisition of fourteen commercial properties for an aggregate purchase price of $197.0 million during the nine months ended September 30, 2016. During the nine months ended September 30, 2016, acquisition-related costs related to property acquisitions were expensed as incurred.
Depreciation and Amortization
The increase in depreciation and amortization expenses of $3.0 million and $5.7 million during the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016, was primarily due to the acquisition of 41 additional rental income-producing properties subsequent to September 30, 2016, as well as recognizing a full period of depreciation and amortization expenses on six and 14 properties acquired during the three and nine months ended September 30, 2016, respectively.

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Interest Expense and Other, Net
Interest expense and other, net also includes amortization of deferred financing costs.
The increase in interest expense and other, net of $2.9 million during the three months endedSeptember 30, 2017, as compared to the same period in 2016, was primarily due to an increase in the average aggregate amount of debt outstanding to $2.5 billion during the three months ended September 30, 2017 from $2.2 billion during the three months ended September 30, 2016.
The increase in interest expense and other, net of $9.6 million during the nine months ended September 30, 2017, as compared to the same period in 2016, was primarily due to an increase in the average aggregate amount of debt outstanding to $2.4 billion during the nine months ended September 30, 2017 from $2.2 billion during the nine months ended September 30, 2016.numerous uncertainties.
Same Store PropertiesAnalysis
Our results of operations are influenced by the timing of acquisitions and the operating performance of our real estate assets. We review our stabilized operating results, measured by contract rental revenue,net operating income, from properties that we owned for the entirety of both the current and prior year reporting periods, referred to as “same store” properties. Contract rental revenueproperties, and we believe that the presentation of operating results for same store properties provides useful information to stockholders. Net operating income is a supplemental non-GAAP financial measure of a real estate companies’company’s operating performance. Contract rental revenueNet operating income is considered by management to be a helpful supplemental performance measure, as it enables management to evaluate the impact of occupancy, rents, leasing activity, and other controllable property operating results at our real estate properties, and it provides a consistent method for the comparison of our properties. We define net operating income as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and other non-property related revenue and expense items such as (a) general and administrative expenses, (b) advisory fees, (c) transaction-related expenses and (d) interest income. Our net operating income may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income (loss). In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment.
“Non-same store” properties, as reflected in
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Comparison of the table below, includes properties acquired on or after July 1, 2016Three Months Ended March 31, 2020 and any properties under development or redevelopment. As shown in the table below, contract rental revenue on the 860 same store properties for the three months ended September 30, 2017 decreased $686,000 to $83.0 million, compared to $83.7 million for the three months ended September 30, 2017. The same store properties were 97.4% occupied as of September 30, 2017 and 98.5% occupied as of September 30, 2016. 2019
The following table shows the contract rental revenue from properties owned for both of the entire three months ended September 30, 2017 and 2016, along with a reconciliation to rentalreconciles net income, calculated in accordance with GAAP, to net operating income (dollar amounts in thousands):
   Number of Properties Three Months Ended September 30, Increase (Decrease)
   2017 2016 $ Change % Change
Rental income – as reported   $94,103
 $89,370
 $4,733
 5 %
Less: Amortization (1)
   1,008
 289
 719
 249 %
Less: Straight-line rental income   2,912
 2,984
 (72) (2)%
Total contract rental revenue   90,183
 86,097
 4,086
 5 %
           
Less: “Non-same store” properties 48 6,231
 837
 5,394
 644 %
Less: Disposed properties (2)
 19 959
 1,581
 (622) (39)%
“Same store” properties 860 $82,993
 $83,679
 $(686) (0.8)%
 For the Three Months Ended March 31,
 2020 2019 Change
Net income$(12,175) $8,851
 $(21,026)
Loss on extinguishment of debt4,382
 —
 4,382
Interest expense and other, net15,767
 25,892
 (10,125)
Operating income7,974
 34,743
 (26,769)
      
Gain on disposition of real estate, net(13,110) (9,940) (3,170)
Provision for credit losses17,777
 —
 17,777
Impairment11,676
 20,073
 (8,397)
Depreciation and amortization20,823
 31,992
 (11,169)
Transaction-related252
 191
 61
Management and advisory fees and expenses11,090
 10,019
 1,071
General and administrative3,682
 3,447
 235
Interest income(5,571) (4,498) (1,073)
Net operating income$54,593
 $86,027
 $(31,434)

(1) Includes amortizationA total of above-381 properties were acquired before January 1, 2019 and below-market lease intangibles and deferred lease incentives.
(2) We disposed of fiverepresent our “same store” properties during the year ended December 31, 2016 and 14 properties during the ninethree months ended September 30, 2017.
“Non-sameMarch 31, 2020 and 2019. “Non-same store” properties, as reflected infor purposes of the table below, includes properties acquired or disposed of on or after January 1, 2016 and any properties under development or redevelopment. As shown in the table below, contract rental revenue on the 851 same store properties for the nine months ended September 30, 2017 decreased $1.4 million to $244.0 million, compared to $245.4 million for the nine months ended September 30, 2016. The same store properties were 97.4% occupied as of September 30, 2017 and 98.6% occupied as of September 30, 2016.2019. The following table showsdetails the contract rental revenue fromcomponents of net operating income broken out between same store and non-same store properties owned for both of the entire nine months ended September 30, 2017 and 2016, along with a reconciliation to rental income, calculated in accordance with GAAP (dollar amounts in thousands):
 Total Same Store Non-Same Store
 For the Three Months Ended March 31, For the Three Months Ended March 31, For the Three Months Ended March 31,
 2020 2019 Change 2020 2019 Change 2020 2019 Change
Rental and other property income$68,436
 $104,762
 $(36,326) $66,741
 $67,028
 $(287) $1,695
 $37,734
 $(36,039)
                  
Property operating expenses6,865
 9,317
 (2,452) 6,581
 6,730
 (149) 284
 2,587
 (2,303)
Real estate tax expenses6,978
 9,418
 (2,440) 6,794
 6,590
 204
 184
 2,828
 (2,644)
Total property operating expenses13,843
 18,735
 (4,892) 13,375
 13,320
 55
 468
 5,415
 (4,947)
                  
Net operating income$54,593
 $86,027
 $(31,434) $53,366
 $53,708
 $(342) $1,227
 $32,319
 $(31,092)
Loss on Extinguishment of Debt
The increase in loss on extinguishment of debt of $4.4 million for the three months ended March 31, 2020, as compared to the same period in 2019, was due to the termination of certain mortgage notes in connection with the disposition of the underlying properties during the three months ended March 31, 2020.
Interest Expense and Other, Net
Interest expense and other, net also includes amortization of deferred financing costs.
The decrease in interest expense and other, net, of $10.1 million for the three months ended March 31, 2020, as compared to the same period in 2019, was primarily due to a decrease in the average aggregate amount of debt outstanding from $2.5 billion as of March 31, 2019 to $1.6 billion as of March 31, 2020 as a result of debt repayments in connection with the disposition of the underlying properties. In addition, the weighted average interest rate decreased from 4.1% as of March 31, 2019 to 3.8% as of March 31, 2020.

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Gain on Disposition of Real Estate, Net
   Number of Properties Nine Months Ended September 30, Increase (Decrease)
   2017 2016 $ Change % Change
Rental income – as reported   $278,354
 $265,341
 $13,013
 5 %
Less: Amortization (1)
   1,926
 844
 1,082
 128 %
Less: Straight-line rental income   7,651
 8,888
 (1,237) (14)%
Total contract rental revenue   268,777
 255,609
 13,168
 5 %
           
Less: “Non-same store” properties 57 21,172
 4,798
 16,374
 341 %
Less: Disposed properties (2)
 19 3,588
 5,380
 (1,792) (33)%
“Same store” properties 851 $244,017
 $245,431
 $(1,414) (0.6)%
The increase in gain on disposition of real estate, net, of $3.2 million during the three months ended March 31, 2020, as compared to the same period in 2019, was primarily due to the disposition of 12 properties for a gain of $13.1 million during the three months ended March 31, 2020 compared to the disposition of 34 properties for a gain of $9.9 million during the three months ended March 31, 2019.

Impairment
(1) IncludesImpairments decreased $8.4 million during the three months ended March 31, 2020, as compared to the same period in 2019, due to seven properties that were deemed to be impaired, resulting in impairment charges of $11.7 million during the three months ended March 31, 2020, compared to seven properties that were deemed to be impaired, resulting in impairment charges of $20.1 million during the three months ended March 31, 2019.
Depreciation and Amortization
The decrease in depreciation and amortization of above- and below-market lease intangibles and deferred lease incentives.
(2) We disposed of five properties$11.2 million during the yearthree months ended DecemberMarch 31, 20162020, as compared to the same period in 2019, was primarily due to the disposition of 475 properties subsequent to March 31, 2019, offset by recognizing a full period of depreciation and 14 propertiesamortization expenses on the one property acquired in 2019.
Transaction-Related Expenses
Through August 20, 2019, we paid CMFT Management or its affiliates acquisition fees of up to 2.0% of: (1) the contract purchase price of each property or asset we acquired; (2) the amount paid in respect of the development, construction or improvement of each asset we acquired; (3) the purchase price of any loan we acquired; and (4) the principal amount of any loan we originated. We also reimbursed CMFT Management or its affiliates for transaction-related expenses incurred in the process of acquiring a property or the origination or acquisition of a loan, so long as the total acquisition fees and expenses relating to the transaction did not exceed 6.0% of the contract purchase price, unless otherwise approved by a majority of our Board, including a majority of our independent directors, as commercially competitive, fair and reasonable to us. Other transaction-related expenses, such as advisor reimbursements for disposition activities, are expensed as incurred.
Transaction-related expenses remained generally consistent during the ninethree months ended September 30, 2017.March 31, 2020, as compared to the same period in 2019.
Management and Advisory Fees and Expenses
Pursuant to the Prior Advisory Agreement with CMFT Management and based upon the amount of our current invested assets, through August 20, 2019, we were required to pay to CMFT Management a monthly advisory fee equal to one-twelfth of 0.75% of the average invested assets up to $2.0 billion, one-twelfth of 0.70% of the average invested assets over $2.0 billion up to $4.0 billion and one-twelfth of 0.65% of the average invested assets over $4.0 billion. Beginning on August 20, 2019, we pay CMFT Management a management fee pursuant to the Management Agreement, payable quarterly in arrears, equal to the greater of (a) $250,000 per annum ($62,500 per quarter) and (b) 1.50% per annum (0.375% per quarter) of the Company’s Equity (as defined in the Management Agreement). Additionally, we may be required to reimburse certain expenses incurred by CMFT Management in providing advisory services, subject to limitations as set forth in the Management Agreement (as discussed in Note 11 — Related-Party Transactions and Arrangements).
The increase in management and advisory fees and expenses of $1.1 million during the three months ended March 31, 2020, as compared to the same period in 2019, was primarily due to the management fee we began paying CMFT Management beginning on August 20, 2019. During the three months ended March 31, 2020, we incurred management fees of $11.1 million.
General and Administrative Expenses
The primary general and administrative expense items are certain expense reimbursements to our advisor, escrow and trustee fees, state franchise and income taxes, office expenses and accounting fees.
The increase in general and administrative expenses of $235,000 for the three months ended March 31, 2020, compared to the same period in 2019, was primarily due to an increase in operating expense reimbursements to our advisor.
Interest income
The increase in interest income of $1.1 million for the three months ended March 31, 2020, compared to the same period in 2019, was due to the origination and acquisition of seven CRE loans held-for-investment and 113 broadly syndicated loans subsequent to March 31, 2019.

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Net Operating Income
Same store property net operating income decreased $342,000 during the three months ended March 31, 2020, as compared to the same period in 2019. Decreased occupancy at 16 anchored shopping centers and five retail properties accounted for $847,000 of the net decrease in net operating income for the three months ended March 31, 2020. Overall same store occupancy was 94.6% as of March 31, 2020, compared to 94.7% as of March 31, 2019.
Non-same store property net operating income decreased $31.1 million during the three months ended 2020, as compared to the same period in 2019. The decrease is primarily due to the disposition of 475 properties subsequent to March 31, 2019.
Distributions
TheOn a quarterly basis, our Board authorizedauthorizes a daily distribution based on 365 days infor the calendar year,succeeding quarter. Our Board authorized the following daily distribution amounts per share for the periods indicated below:
Period CommencingPeriod EndingDaily Distribution Amount
April 14, 2012December 31, 2012$0.001707848
January 1, 2013December 31, 2015$0.001712523
January 1, 2016December 31, 2016$0.001706776
January 1, 2017December 31, 2019$0.001711452
January 1, 2020March 31, 2020$0.001706776
As of $0.001711452March 31, 2020, we had distributions payable of $16.5 million. On April 29, 2020, our Board approved the declaration of a distribution for April 2020 at a rate of $0.013 per share, for stockholders of record as of April 30, 2020. Given the close of business on each dayimpact of the period commencingCOVID-19 pandemic, our Board has decided to make a determination as to the amount and timing of distributions on January 1, 2017a monthly, instead of a quarterly, basis until such time that we have greater visibility into the impact that the COVID-19 pandemic will have on our tenants’ ability to continue to pay rent on their leases on a timely basis or at all, the degree to which federal, state or local governmental authorities grant rent relief or other relief or amnesty programs applicable to our tenants, our ability to access the capital markets, and ending on the United States and worldwide financial markets and economy.
The following table presents distributions and sources of distributions for the periods indicated below (dollar amounts in thousands):
 Three Months Ended March 31,
 2020 2019
 Amount Percent Amount Percent
Distributions paid in cash$29,148
 60% $26,716
 56%
Distributions reinvested19,231
 40% 21,247
 44%
Total distributions$48,379
 100% $47,963
 100%
Sources of distributions:       
Net cash provided by operating activities (1) (2)
$26,770
 55% $47,963
 100%
Proceeds from the issuance of common stock8,308
(3) 
17% —
 —%
Proceeds from the issuance of debt13,301
(4) 
28% —
 —%
Total sources$48,379
 100% $47,963
 100%

(1)Net cash provided by operating activities for the three months ended March 31, 2020 and 2019 was $17.1 million and $39.4 million, respectively.
(2)Our distributions covered by cash flows from operating activities for the three months ended March 31, 2020 and 2019 include cash flows from operating activities in excess of distributions from prior periods of $9.6 million and $8.5 million, respectively.
(3)In accordance with GAAP, certain real estate acquisition-related fees and expenses, such as expenses and fees incurred in connection with property acquisitions accounted for as business combinations, are expensed, and therefore reduce net cash flows from operating activities. Therefore, for consistency, proceeds from the issuance of common stock used as a source of distributions for the three months ended March 31, 2020 include the amount by which real estate acquisition-related fees and expenses have reduced net cash flows from operating activities in those prior periods.

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(4) Net proceeds on the credit facilities and notes payable for the three months ended March 31, 2018. As of September 30, 2017, we had2020 was $2.9 million. Our distributions payable of $16.0 million.
During the nine months endedSeptember 30, 2017 and 2016, we paid distributions of $146.1 million and $146.5 million, respectively, including $76.9 million and $82.4 million, respectively, throughcovered by proceeds from the issuance of shares pursuant to the DRIP Offerings. Net cash provided by operating activitiesdebt for the ninethree months endedSeptember 30, 2017 was $158.2 million March 31, 2020 include net proceeds on the credit facilities and reflected a reduction for real-estate acquisition-related expenses incurrednotes payable from prior periods of $1.5 million in accordance with GAAP. For the nine months ended September 30, 2016, net cash provided by operating activities was $155.5 million and reflected a reduction for real estate acquisition-related expenses incurred of $3.6 million in accordance with GAAP. Our distributions paid during the nine months ended September 30, 2017 and 2016, including shares issued pursuant to the DRIP Offerings, were fully funded by net cash provided by operating activities.$10.4 million.
Share Redemptions
Our share redemption program permits our stockholders to sell their shares of common stock back to us, subject to certain conditions and limitations. We will not redeem in excess of 5.0% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being paid. Funding for the redemption of shares will be limited to the cumulative net proceeds we receive from the sale of shares under the Secondary DRIP Offering, net of shares redeemed to date. In addition, we will generally limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we receive from the sale of shares in the respective quarter under the Secondary DRIP Offering. Any of the foregoing limits might prevent us from accommodating all redemption requests made in any fiscal quarter or in any 12-month period. We received redemption requests of approximately 9.821.3 million shares for $98.7$165.8 million in excess of the net proceeds we received from the issuance of shares under the Secondary DRIP Offering during the three months ended September 30, 2017.March 31, 2020. Management, in its discretion, limited the amount of shares redeemed for the three months ended September 30, 2017March 31, 2020 to an amount equal to net proceeds we received from the sale of shares issued pursuant to the Secondary DRIP Offering during the respective period. During the ninethree months ended September 30, 2017,March 31, 2020, we received valid redemption requests under our share redemption program totaling approximately 30.723.8 million shares, of which we redeemed approximately 5.1 million shares as of September 30, 2017 for $51.5 million (at an average redemption price of $10.08 per share) and approximately 2.5 million shares subsequent to September 30, 2017March 31, 2020 for $25.0$19.0 million at an average redemption price of $10.08$7.77 per share. The remaining redemption requests relating to approximately 23.121.3 million shares went unfulfilled. A valid redemption request is one that complies with the applicable requirements and guidelines of our current share redemption program.program then in effect. The share redemptions were funded with proceeds from the Secondary DRIP Offering.

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Liquidity and Capital Resources
General
We are continuing to closely monitor the outbreak of COVID-19 and its impact on our business, tenants, operating partners and the economy as a whole. The magnitude and duration of the pandemic and its impact on our operations and liquidity is uncertain as of the filing date of our report. However, if the outbreak continues on its current trajectory, such impacts could be material.
We expect to utilize fundsproceeds from real estate dispositions, cash flowflows from operations and future proceeds from secured or unsecured financing to complete future property acquisitions and for general corporate uses. The sources of our operating cash flows will primarily be provided by the rental and other property income received from current and future leased properties.
Our Credit Facility provides for borrowings of up to $1.40$1.24 billion, which includes a $1.05 billion$885.0 million unsecured Term Loan and up to $350.0 million in unsecured Revolving Loans. As of September 30, 2017,March 31, 2020, we had $164.9$349.4 million in unused capacity under the Credit Facility, subject to borrowing availability. We had available borrowings of $64.5 million as of March 31, 2020. As of September 30, 2017,March 31, 2020, we also had cash and cash equivalents of $4.2$240.9 million, which included $55.6 million of unsettled investment security purchases. Our Credit Securities Revolver provides for borrowings in an aggregate principal amount up to $500.0 million, which may be increased from time to time pursuant to the Credit and Security Agreement. As of March 31, 2020, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $100.0 million.
Subject to potential credit losses in the remainder of 2020 due to customers that default on their leases, file bankruptcy and/or otherwise experience significant financial difficulty as a result of COVID-19, we expect to meet our short-term liquidity requirements through available cash, cash provided by property operations, proceeds from the DRIP Offering and borrowings from the Credit Facility or other sources. Subsequent to March 31, 2020, we borrowed $110.0 million on the Revolving Loans to increase cash liquidity. Additionally, given the impact of COVID-19, our Board has decided to make a determination as to the amount and timing of distributions on a monthly, instead of a quarterly, basis until such time that we have greater visibility into the impact that the COVID-19 pandemic will have on our property valuations. Subsequent to March 31, 2020, our Board approved and adopted an Amended DRIP and an Amended Share Redemption Program that, among other changes, respectively provide that the Amended DRIP and the Amended Share Redemption Program may be suspended at any time by majority vote of the Board without prior notice if the Board believes such action is in the best interest of the Company and its stockholders. See Note 15 — Subsequent Events to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion on the Amended DRIP and Amended Share Redemption Program.
As of March 31, 2020, we believe that we were in compliance with the financial covenants of the Credit Agreement, as well as the financial covenants under our various fixed and variable rate debt agreements, with the exception of one mortgage notes, as further discussed in Note 8 — Credit Facilities and Notes Payable. However, our continued compliance with these

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debt covenants depends on many factors, including rent collections, which is impacted by the current and future economic conditions related to COVID-19.
Short-term Liquidity and Capital Resources
On a short-term basis, our principal demands for funds will be for the acquisition of investment securities, real estate and real estate-related investmentsassets and the payment of acquisition-related fees and expenses, operating expenses, distributions, redemptions and interest and principal on current and any future debt financings, including principal repayments of $24.2$115.7 million within the next 12 months.months, $68.2 million of which was repaid subsequent to March 31, 2020. We expect to meet our short-term liquidity requirements through cash proceeds from real estate asset dispositions, net cash provided by operations and proceeds from the Secondary DRIP Offering, as well as secured or unsecured borrowings from banks and other lenders to finance our future acquisitions.acquisitions and loan originations. Operating cash flows are expected to increase as additional properties are added to our portfolio. With respect to our debt maturing within the next year, we expect to use borrowings available under the Credit Facility or to enter into new financing arrangements in order to meet our debt obligations.complete future acquisitions. We believe that the resources stated above will be sufficient to satisfy our operating requirements for the foreseeable future, and we do not anticipate a need to raise funds from sources other than those described above within the next 12 months. Management intends to use the proceeds from the sale of its disposition of properties to, among other things, acquire additional high-quality net-lease properties and credit investments in furtherance of our investment objectives and for other general corporate purposes.
Long-term Liquidity and Capital Resources
On a long-term basis, our principal demands for funds will be for the acquisition of investment securities, real estate and real estate-related investmentsassets and the payment of tenant improvements, acquisition-related fees and expenses, operating expenses, distributions and redemptions to stockholders and interest and principal on any current and future indebtedness. Generally, we expect to meet our long-term liquidity requirements through proceeds from cash flowflows from operations, borrowings on the Credit Facility, proceeds from secured or unsecured borrowings from banks and other lenders, and proceeds raised pursuant to the Secondary DRIP Offering.
We expect that substantially all net cash flows from operations will be used to pay distributions to our stockholders after certain capital expenditures, including tenant improvements and leasing commissions, are paid; however, we have used, and may continue to use, other sources to fund distributions, as necessary, including borrowings on the Credit Facility and/or future borrowings on our unencumbered assets. To the extent that cash flows from operations are lower due to fewer properties being acquired or lower than expected returns on the properties, distributions paid to our stockholders may be lower. We expect that substantially all net cash flows from the Offerings or debt financings will be used to fund acquisitions, loan originations, certain capital expenditures, repayments of outstanding debt or distributions and redemptions to our stockholders.

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Contractual Obligations
As of September 30, 2017,March 31, 2020, we had $2.5 billion of debt outstanding with a carrying value of $1.6 billion and a weighted average interest rate of 3.5%3.8%. See Note 78 — Credit Facilities and Notes Payable and Credit Facility to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for certain terms of our debt outstanding.
Our contractual obligations as of September 30, 2017March 31, 2020 were as follows (in thousands):
 
  
Payments due by period (1)
 
  
Total 
Less Than 1
Year
 1-3 Years 3-5 Years 
More Than
5 Years
Principal payments — fixed rate debt (2)
$1,217,493
 $24,205
 $311,935
 $192,398
 $688,955
Interest payments — fixed rate debt (3)
228,085
 47,646
 88,178
 61,891
 30,370
Principal payments — variable rate debt20,500
 —
 20,500
 —
 —
Interest payments — variable rate debt (4)
2,220
 923
 1,297
 —
 —
Principal payments — credit facility1,234,500
 —
 —
 1,234,500
 —
Interest payments — credit facility (5)
166,680
 38,658
 77,423
 50,599
 —
Total$2,869,478
 $111,432
 $499,333
 $1,539,388
 $719,325
 
Payments due by period (1)
 Total 
Less Than 1
Year
 1-3 Years 3-5 Years 
More Than
5 Years
Principal payments — fixed rate debt$629,132
 $115,687
 $127,119
 $386,326
 $—
Interest payments — fixed rate debt (2)
57,822
 20,191
 32,637
 4,994
 —
Principal payments — credit facilities (3)
985,000
 —
 885,000
 100,000
 —
Interest payments — credit facilities (4)
80,078
 37,165
 38,347
 4,566
 —
Total$1,752,032
 $173,043
 $1,083,103
 $495,886
 $—

(1)The table does not include amounts due to CR IV AdvisorsCMFT Management or its affiliates pursuant to our advisory agreementManagement Agreement because such amounts are not fixed and determinable.
(2)Principal payment amounts reflect actual payments based on the face amount of notes payable secured by our wholly-owned properties, which excludes the fair value adjustment, net of amortization, of mortgage notes assumed of $441,000$218,000 as of September 30, 2017.March 31, 2020.
(3)
As of September 30, 2017,March 31, 2020, the Term Loan outstanding totaled $885.0 million, $811.7 million of which is subject to interest rate swap agreements. As of March 31, 2020, the weighted average all-in interest rate for the Swapped Term Loan was 4.0%.

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The remaining $73.3 million outstanding under the Credit Facility had a weighted average interest rate of 3.0% as of March 31, 2020. As of March 31, 2020, the amounts outstanding under the Credit Securities Revolver totaled $100.0 million and had a weighted average interest rate of 2.6% as of March 31, 2020.
(4)
As of March 31, 2020, we had $217.1$60.0 million of variable rate debt effectively fixed through the use of interest rate swap agreements. We used the effective interest rates fixed under our interest rate swap agreements to calculate the debt payment obligations in future periods.
(4)As of September 30, 2017, we had variable rate debt outstanding of $20.5 million with a weighted average interest rate of 4.5%. We used the weighted average interest rate to calculate the debt payment obligations in future periods.
(5)As of September 30, 2017, the Term Loan outstanding totaled $1.05 billion, $811.7 million of which is subject to interest rate swap agreements. As of September 30, 2017 the weighted average all-in interest rate for the Swapped Term Loan was 3.2%. The remaining $422.8 million outstanding under the Credit Facility had a weighted average interest rate of 3.0% as of September 30, 2017.
We expect to incur additional borrowings in the future to acquire additional properties and make other real estate-related investments.assets. There is no limitation on the amount we may borrow against any single improved property. Our borrowings will not exceed 75%Consistent with CMFT Management’s approach toward the moderate use of the cost ofleverage, our gross assets (or 300% of net assets) as of the date of any borrowing, which is the maximum level of indebtedness permitted under the North American Securities Administrators Association Statement of Policy Regarding Real Estate Investment Trusts; however, we may exceed that limit if approved by a majority of our independent directors and disclosed to our stockholders in the next quarterly report along with justification for such excess borrowing. The Board has adopted a policy to further limit our borrowings to 60% of the greater of cost (before deducting depreciation or other non-cash reserves) or fair market value of our gross assets, unless excess borrowing is approved by a majority of ourthe independent directors and disclosed to our stockholders in the next quarterly report along with thea justification for such excess borrowing. Our advisor has set a target leverageAs of March 31, 2020, our ratio of 40%debt to 50%total gross assets net of the greatergross intangible lease liabilities was 43.9% and our ratio of cost (before deducting depreciation or other non-cash reserves) ordebt to the fair market value of our gross assets.assets net of gross intangible lease liabilities was 43.2%. Fair market value is based on the estimated market value of our real estate assets as of December 31, 20162019 that were used to determine our estimated per share NAV, and for those assets acquired from January 1, 20172020 through September 30, 2017March 31, 2020 is based on the purchase price. As of September 30, 2017, our ratio of debt to the cost (before deducting depreciation or other non-cash reserves) of our gross assets was 48.8% and our ratio of debt to the fair market value of our gross assets was 44.1%.
Our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage, and we therefore believe that the presentation of net debt provides useful information to investors.stockholders. Net debt is a non-GAAP measure used to show our outstanding principal debt balance, excluding certain GAAP adjustments, such as premiums or discounts, financing and issuance costs, and related accumulated amortization, less all cash and cash equivalents. As of September 30, 2017,March 31, 2020, our net debt leverage ratio, which is the ratio of net debt to total gross real estate and related assets net of gross intangible lease liabilities, was 48.7%37.4%. The following table provides a reconciliation of the notes payable and credit facility, net balance, as reported on our condensed consolidated balance sheet, to net debt as of September 30, 2017March 31, 2020 (dollar amounts in thousands):

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 Balance as of
 
Balance as of
September 30, 2017
 March 31, 2020
Notes payable and credit facility, net $2,454,282
 $1,608,628
Deferred costs and net premiums (1)
 18,211
 5,504
Less: Cash and cash equivalents (4,231) (240,872)
Net debt $2,468,262
 $1,373,260
  
Gross real estate assets, net (2)
 $5,069,802
Gross real estate and related assets, net (2)
 $3,675,681
Net debt leverage ratio 48.7% 37.4%
______________________
(1) Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility.
(2) Net of gross intangible lease liabilities. Includes gross assets held for sale and loans held-for-investment principal balance of $626.3 million.
Cash Flow Analysis
Operating Activities. During the nine months ended September 30, 2017, netNet cash provided by operating activities increased $2.7decreased by $22.3 million to $158.2 million,for the three months ended March 31, 2020, as compared to $155.5 million of net cash provided by operating activities for the nine months endedSeptember 30, 2016.same period in 2019. The change was primarily due to the acquisition of 41 additional rental income-producing properties subsequent to September 30, 2016, resulting in an increase inlower net income after non-cash adjustments for depreciation and amortization, net, of $11.7 million. Additionally, net cash provided by operating activities increased due to an increase in a contingent consideration fair value adjustmentthe disposition of $2.3 million, an increase in bad debt expense of $1.6 million, a decrease in straight-line rental income of $1.2 million and a net increase in working capital accounts of $355,000, offset by an increase in gain on dispositions of real estate assets, net, of $14.7 million.475 properties subsequent to March 31, 2019. See “— Results of Operations” for a more complete discussion of the factors impacting our operating performance.
Investing Activities. Net cash used in investing activities increased $44.7 million to $217.1by $326.7 million for the ninethree months endedSeptember 30, 2017, March 31, 2020, as compared to $172.4 million for the nine months endedSeptember 30, 2016.same period in 2019. The increase was primarily due to the acquisitioninvestment in 113 broadly syndicated loans totaling $330.7 million, offset by an increase in proceeds from the disposition of 40 commercial properties for an aggregate purchase pricereal estate assets of $300.5$6.0 million during the ninethree months ended September 30, 2017,March 31, 2020, compared to the acquisition of 14 commercial properties for an aggregate purchase price of $197.0 million during the nine months ended September 30, 2016, as well as a decreasesame period in the change in restricted cash of $1.2 million, offset by the disposal of 14 properties for an aggregate gross sales price of $98.6 million during the nine months ended September 30, 2017 compared to the disposal of four properties for an aggregate gross sales price of $26.6 million during the nine months ended September 30, 2016.2019.
Financing Activities. During the nine months ended September 30, 2017, netNet cash provided byused in financing activities was $53.4 million, compared to net cash provideddecreased by financing activities of $9.0$114.2 million for the ninethree months endedSeptember 30, 2016. March 31, 2020, as compared to the same period in 2019. The change was primarily due to an increase in net borrowingsproceeds on the credit facilities and notes payable andof $2.9 million during the three months ended March 31, 2020, compared to net repayments on the Credit Facility and notes payable of $52.6$111.6 million offset by an increase in deferred financing costs paid of $9.9 million and an increase in distributions to investors of $5.2 million.during the three months ended March 31, 2019.

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Election as a REIT
We elected to be taxed, and currently qualify, as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2012. To maintain our qualification as a REIT, we must continue to meet certain requirements relating to our organization, sources of income, nature of assets, distributions of income to our stockholders and recordkeeping. As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders so long as we distribute at least 90% of our annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains).
If we fail to maintain our qualification as a REIT for any reason in a taxable year and applicable relief provisions do not apply, we will be subject to tax including any applicable alternative minimum tax, on our taxable income at regular corporate rates. We will not be able to deduct distributions paid to our stockholders in any year in which we fail to maintain our qualification as a REIT. We also will be disqualified for the four taxable years following the year during which qualification was lost, unless we are entitled to relief under specific statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we are organized and operate in such a manner as to maintain our qualification as a REIT for federal income tax purposes. No provision for federal income taxes has been made in our accompanying condensed consolidated financial statements. We are subject to certain state and local

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taxes related to the operations of properties in certain locations, which have been provided for in our accompanying condensed consolidated financial statements.
Critical Accounting Policies and Estimates
Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. We believe the following critical accounting policies govern the significant judgments and estimates used in the preparation of our financial statements, which should be read in conjunction with the more complete discussion of our accounting policies and procedures included in Note 2 — Summary of Significant Accounting Policies to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016.2019. We consider our critical accounting policies to be the following:
Recoverability of Real Estate Assets; and
Allocation of Purchase Price of Real Estate Assets.
A complete description of such policies and our considerations is contained in our Annual Report on Form 10-K for the year ended December 31, 2016.2019. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements as of and for the periodyear ended December 31, 20162019 and related notes thereto.
We continually monitor events and changes in circumstances that could indicate that the carrying amounts of our real estate assets may not be recoverable. Impairment indicators that we consider include, but are not limited to: bankruptcy or other credit concerns of a property’s major tenant, such as a history of late payments, rental concessions and other factors, all of which are heightened concerns as a result of the economic impact caused by the COVID-19 outbreak; a significant decrease in a property’s revenues due to lease terminations; vacancies; co-tenancy clauses; reduced lease rates; changes in anticipated holding periods; or other circumstances. We continue to evaluate our portfolio to determine if anticipated holding periods for certain properties may materially differ from the initial intended holding periods for such properties, which could result in an impairment charge in the future.
Related-Party Transactions and Agreements
We have entered into agreements with CR IV AdvisorsCMFT Management or its affiliates whereby we agree to pay certain fees to, or reimburse certain expenses of, CR IV AdvisorsCMFT Management or its affiliates such as acquisition and advisory fees and expenses, organization and offering costs, leasing fees and reimbursement of certain operating costs. See Note 11 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the various related-party transactions, agreements and fees.

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Conflicts of Interest
AffiliatesRichard S. Ressler, the chairman of CR IV Advisorsour Board, chief executive officer and president, who is also a founder and principal of CIM and is an officer/director of certain of its affiliates, is the chairman of the board, chief executive officer and president of CCIT III and CIM Income NAV, a director of CCIT II and vice president of CMFT Management. One of our directors, Avraham Shemesh, who is also a founder and principal of CIM and is an officer/director of certain of its affiliates, serves as the chairman of the board of CCIT II and CCPT V and as a director of CCIT III and CIM Income NAV, and is president and treasurer of CMFT Management. One of our directors, Elaine Y. Wong, who is a principal of CIM, also serves as a director of CCIT II, CCPT V and CIM Income NAV. One of our independent directors, W. Brian Kretzmer, also serves as an independent director of CCIT III and CIM Income NAV. Another one of our independent directors, Howard A. Silver, also serves as an independent director of CCIT III. Nathan D. DeBacker, our chief financial officer and treasurer, who is also an officer of other real estate programs sponsored by CCO Group, is a vice president of CMFT Management and is an officer of certain of its affiliates. In addition, affiliates of CMFT Management act as an advisor to CCPT V, CCIT II, CCIT III and our chief financial officer and one of our directors act as executive officers and/or a director of, Cole Credit Property Trust V, Inc., Cole Office & Industrial REIT (CCIT II), Inc., Cole Real EstateCIM Income Strategy (Daily NAV), Inc., Cole Office & Industrial REIT (CCIT III), Inc., and/or other real estate offerings in registration,NAV, all of which are or intend to be public, non-listed REITs offered, distributed and/sponsored or managedoperated by affiliates of CR IV Advisors.CCO Group. As such, there aremay be conflicts of interest where CR IV AdvisorsCMFT Management or its affiliates, while serving in the capacity as sponsor, general partner, officer, director, key personnel and/or advisor for VEREITCIM or another real estate program sponsored or operated by Cole Capital,CIM or CCO Group, including other real estate offerings in registration, may be in conflict with us in connection with providing services to other real estate-related programs related to property acquisitions, property dispositions, and property management, among others. The compensation arrangements between affiliates of CR IV Advisors and VEREITCMFT Management and these other real estate programs sponsored or operated by Cole CapitalCCO Group could influence the advice provided to us. See Part I, Item 1. Business — Conflicts of Interest in our Annual Report on Form 10-K for the year ended December 31, 2016.2019.
Off-Balance Sheet Arrangements
As of September 30, 2017March 31, 2020 and December 31, 2016,2019, we had no material off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity or capital resources.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk
Market Risk
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to variable-rate borrowings. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We do not intend to hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.
Interest Rate Risk
As of September 30, 2017,March 31, 2020, we had variable rate debt of $443.3$173.3 million, excluding any debt subject to interest rate swap agreements, and therefore, we are exposed to interest rate changes in LIBOR. As of September 30, 2017,March 31, 2020, an increase or decrease of 50 basis points in interest rates would result in an increase or decrease in interest expense of $2.2 million$867,000 per year.
As of September 30, 2017,March 31, 2020, we had 12three interest rate swap agreements outstanding, which mature on various dates from June 2018March 2021 through July 2021, with an aggregate notional amount of $1.0 billion$871.7 million and an aggregate fair value of the net derivative liability of $262,000.$13.7 million. The fair value of these interest rate swap agreements is dependent upon existing market interest rates and swap spreads. As of September 30, 2017,March 31, 2020, an increase of 50 basis points in interest rates would result in a changechange of $15.7$4.1 million to the fair value of the net derivative liability, resulting in a net derivative assetliability of $15.4$9.6 million. A decrease of 50 basis points in interest rates would result in a $16.0$4.1 million change to the fair value of the net derivative liability, resulting in a net derivative liability of $16.2$17.8 million.
As the information presented above includes only those exposures that existed as of September 30, 2017,March 31, 2020, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

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These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs and assume no other changes in our capital structure.
In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to U.S. dollar LIBOR in derivatives and other financial contracts. We are not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.
We have interest rate swap agreements maturing on various dates from March 2021 through July 2021, as further discussed above, that are indexed to LIBOR. As such, we are monitoring and evaluating the related risks, which include interest on loans or amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans, or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.
If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.
While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.
Credit Risk
Concentrations of credit risk arise when a number of tenants are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to us, to be similarly affected by changes in economic conditions. We are subject to tenant, geographic and industry concentrations. Any downturn of the economic conditions in one or more of these tenants, states or industries could result in a material reduction of our cash flows or material losses to us.
The factors considered in determining the credit risk of our tenants include, but are not limited to: payment history; credit status and change in status (credit ratings for public companies are used as a primary metric); change in tenant space needs (i.e., expansion/downsize); tenant financial performance; economic conditions in a specific geographic region; and industry specific credit considerations. We believe that the credit risk of our portfolio is reduced by the high quality of our existing tenant base, reviews of prospective tenants’ risk profiles prior to lease execution and consistent monitoring of our portfolio to identify potential problem tenants and mitigation options.
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives.

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As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of September 30, 2017March 31, 2020 was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of September 30, 2017,March 31, 2020, were effective at a reasonable assurance level.

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Changes in Internal Control Over Financial Reporting
No change occurred in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended September 30, 2017March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
Item 1.Legal Proceedings
In the ordinary course of business, we may become subject to litigation or claims. We are not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or to which our properties are the subject.
Item 1A.Risk Factors
Except as set forth below, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016.2019.
Pandemics or other health crises may adversely affect our business and/or operations, our tenants’ financial condition and the profitability of our properties.
Our business and/or operations and the businesses of our tenants could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic or other health crisis, such as the recent outbreak of COVID-19.
The risk, or public perception of the risk, of the COVID-19 outbreak and the associated “shelter-in-place” or “stay-at-home” orders or other quarantine mandates or public health guidance issued by local, state or federal authorities has adversely affected foot traffic to a number of our tenants’ businesses and our tenants’ ability to adequately staff their businesses. Such events have adversely impacted those tenants’ sales and/or have caused the temporary closure or slowdown of certain of our tenants’ businesses, particularly non-essential tenants, which have severely disrupted their operations and could have a material adverse effect on our business, financial condition and results of operations. Similarly, the potential effects of quarantined employees of office tenants may adversely impact their businesses and affect their ability to pay rent on a timely basis.
The extent to which COVID-19 will impact our operations and those of our tenants 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 our business, financial condition, results of operations, cash flow, and occupancy. Accordingly, we cannot predict the significance, extent or duration of any adverse impact of COVID-19 on our business, financial condition, results of operations or cash flows for the fiscal year ending December 31, 2020. Moreover, certain risk factors set forth in the 2019 Annual Report should be interpreted as heightened risks as a result of the impact of COVID-19.
The declaration, amount and payment of future cash distributions on our common stock are subject to uncertainty due to current market conditions.
All distributions will be declared at the discretion of our Board and will depend on our earnings, our financial condition, REIT distribution requirements, and other factors as our Board may deem relevant from time to time. The economic impacts resulting from the COVID-19 pandemic could adversely affect our ability to pay distributions. Our Board is under no obligation or requirement to declare future distributions and will continue to assess our common stock distribution rate on an ongoing basis, as market conditions and our financial position continue to evolve. We cannot assure you that we will achieve results that will allow us to pay distributions on our common stock or that the level of distributions will be maintained to increased.
We have paid, and may continue to pay, some of our distributions from sources other than cash flows from operations, including borrowings and proceeds from asset sales, or the sale of our securities in the Offerings or future offerings, which may reduce the amount of capital we ultimately investdeploy in our real estate operations and may negatively impact the value of our stockholders’ investmentcommon stock. Additionally, distributions at any point in time may not reflect the current performance of our common stock.properties or our current operating cash flows.
To the extent that cash flowflows from operations hashave been or isare insufficient to fully cover our distributions to our stockholders, we have paid, and may continue to pay, some of our distributions from sources other than cash flowflows from operations. Such sources may include borrowings, proceeds from asset sales or the sale of our securities in the Offerings or future offerings.securities. We have no limits on the amounts we may use to pay distributions from sources other than cash flowflows from operations. The payment of distributions from sources other than cash provided by operating activities mayreduce the amount of proceeds available for investmentacquisitions and operations or cause us to incur additional interest expense as a result of borrowed funds, and may cause investorssubsequent holders of our common stock to experience dilution. This may negatively impact the value of our stockholders’ investmentcommon stock.
Because the amount we pay in distributions may exceed our common stock.
During the nine months ended September 30, 2017, we paid distributions of $146.1 million, including $76.9 million through the issuance of shares pursuant to the Secondary DRIP Offering. Net cash provided by operating activities for the nine months ended September 30, 2017 was $158.2 millionearnings and reflected a reduction for real-estate acquisition-related expenses incurred of $1.5 million in accordance with GAAP. Our distributions for the nine months ended September 30, 2017, including shares issued pursuant to the Secondary DRIP Offering, were fully funded by net cash provided by operating activities.
During the year ended December 31, 2016, we paid distributions of $194.9 million, including $109.2 million through the issuance of shares pursuant to the DRIP Offerings. Net cash provided by operating activities for the year ended December 31, 2016 was $193.7 million and reflected a reduction for real estate acquisition-related fees and expenses incurred of $4.2 million, in accordance with GAAP. The distributions paid during the year ended December 31, 2016 were covered byour cash flows from operations, distributions may not reflect the current performance of $193.7 million,our properties or 99%,our current operating cash flows. To the extent distributions exceed cash flows from operations, distributions may be treated as a return of our stockholders’ investment and could reduce their basis

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in our common stock. A reduction in a stockholder’s basis in our common stock could result in the stockholder recognizing more gain upon the disposition of his or her shares, which, in turn, could result in greater taxable income to such stockholder. The following table presents distributions and the source of distributions for the periods indicated below (dollar amounts in thousands):
 
Three Months Ended
March 31, 2020
 
Year Ended
December 31, 2019
 Amount Percent Amount Percent
Distributions paid in cash$29,148
 60% $112,083
 58%
Distributions reinvested19,231
 40% 82,388
 42%
Total distributions$48,379
 100% $194,471
 100%
Sources of distributions:       
Net cash provided by operating activities (1) (2)
$26,770
 55% $194,471
 100%
Proceeds from the issuance of common stock8,308
(3) 
17% —
 —%
Proceeds from the issuance of debt13,301
(4) 
28% —
 —%
Total sources$48,379
 100% $194,471
 100%

(1)Net cash provided by operating activities for the three months ended March 31, 2020 and the year ended December 31, 2019 was $17.1 million and $188.6 million, respectively.
(2)Our distributions covered by cash flows from operating activities for the three months ended March 31, 2020 and the year ended December 31, 2019 include cash flows from operating activities in excess of distributions from prior periods of $9.6 million and $5.9 million, respectively.
(3)In accordance with GAAP, certain real estate acquisition-related fees and expenses, such as expenses and fees incurred in connection with property acquisitions accounted for as business combinations, are expensed, and therefore reduce net cash flows from operating activities. Therefore, for consistency, proceeds from the issuance of common stock used as a source of distributions for the three months ended March 31, 2020 include the amount by which real estate acquisition-related fees and expenses have reduced net cash flows from operating activities in those prior periods.
(4) Net proceeds on the credit facilities and notes payable for the three months ended March 31, 2020 was $2.9 million. Our distributions covered by proceeds from the issuance of debt for the three months ended March 31, 2020 include net proceeds on the credit facilities and notes payable from prior periods of $1.2 million, or 1%.$10.4 million.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
We registered $247.0 million of shares of common stock under the Initial DRIP Offering, which was filed with the SEC on December 19, 2013 and automatically became effective with the SEC upon filing. We ceased issuing shares under the Initial DRIP Offering effective as of June 30, 2016.
In addition, we registered $600.0 million of shares of common stock under the Secondary DRIP Offering, which was filed with the SEC on August 2, 2016 and automatically became effective with the SEC upon filing. We will continue to issue shares of common stock in the Secondary DRIP Offering.
As of September 30, 2017, we had issued approximately 336.8 million shares of our common stock in the Offerings for gross proceeds of $3.3 billion, out of which we paid $256.5 million in selling commissions and dealer manager fees and $49.5 million in organization and offering costs to CR IV Advisors or its affiliates. With the net offering proceeds and indebtedness, we have acquired $5.2 billion in real estate and related assets and incurred acquisition costs of $141.6 million, including $108.5 million in acquisition fees and expense reimbursements to CR IV Advisors.
Our share redemption program permits our stockholders to sell their shares of common stock back to us, subject to significant conditions and limitations. Under our share redemption program, we will not redeem in excess of 5.0% of the weighted average number of shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which the redemptions are being paid. Funding for the redemption of shares will be limited to the cumulative net proceeds we receive from the sale of shares under the Secondary DRIP Offering, net of shares redeemed to date. In addition, generally we will limit quarterly redemptions to approximately 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter for which the redemptions are being paid, and to the net proceeds we receive from the sale of shares in the respective quarter under the Secondary DRIP Offering. Any of the foregoing limits might prevent us from accommodatingaccommodating all redemption requests made in any fiscal quarter or in any 12-month period. We received

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redemption requests of approximately 9.8approximately 21.3 million shares for $98.7$165.8 million in excessin excess of the net proceeds we received from the issuance of shares under the Secondary DRIP Offering during the three months ended September 30, 2017.March 31, 2020. Management, in its discretion, limited the amount of shares redeemed for the three months ended September 30, 2017March 31, 2020 to shares received from the Secondary DRIP Offering during the period. The estimated per share NAV of $10.08$7.77 determined by the Board as of December 31, 20162019 serves as the most recent estimated value for purposes of the share redemption program, effective March 28, 2017,30, 2020, until such time as the Board determines a new estimated per share NAV.
In general, we redeem shares on a quarterly basis. During the three months ended September 30, 2017,March 31, 2020, we redeemed shares, including those redeemable due to death, as follows:

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Period 
Total Number
of Shares
Redeemed
 
Average Price
Paid per Share
 
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
 
Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
July 1, 2017 - July 31, 2017 2,489
 $10.08
 2,489
 (1)
August 1, 2017 - August 31, 2017 2,539,426
 $10.08
 2,539,426
 (1)
September 1, 2017 - September 30, 2017 2,874
 $10.08
 2,874
 (1)
Total 2,544,789
   2,544,789
 (1)
Period 
Total Number
of Shares
Redeemed
 
Average Price
Paid per Share
 
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
 
Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
January 1, 2020 - January 31, 2020 —
 $—
 

 (1)
February 1, 2020 - February 29, 2020 2,255,723
 $8.65
 2,255,723
 (1)
March 1, 2020 - March 31, 2020 314
 $8.65
 314
 (1)
Total 2,256,037
   2,256,037
 (1)

(1)A description of the maximum number of shares that may be purchased under our share redemption program is included in the narrative preceding this table.
Unregistered Sales of Equity Securities
None.
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
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017March 31, 2020 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.Description
3.1
First Articles of Amendment and Restatement of Cole Credit PropertyCIM Real Estate Finance Trust, IV, Inc. (Incorporated by reference to Exhibit 3.4 to the Company’s Pre-Effective Amendment No. 5 to Form S-11 (File No. 333-169533), filed January 24, 2012).
3.2
Certificate of Correction to the First Articles of Amendment and Restatement of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.6 to the Company’s Pre-Effective Amendment No. 5 to Form S-11 (File No. 333-169533), filed January 24, 2012).
3.3
Articles of Amendment to First Articles of Amendment and Restatement of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 333-169533), filed February 27, 2012).
3.4
Certificate of Correction to First Articles of Amendment and Restatement, dated January 25, 2013 (Incorporated by reference to Exhibit 3.6 to the Company’s Annual Report on Form 10-K (File No. 333-169533), filed effective as of March 29, 2013).
3.5
Second Articles of Amendment to First Articles of Amendment and Restatement of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-54939), filed June 2, 2014)August 20, 2019).
3.63.2
Amended and Restated Bylaws of Cole Credit PropertyCIM Real Estate Finance Trust, IV, Inc. (Incorporated by reference to Exhibit 3.5 to the Company’s Pre-Effective Amendment No. 5 to Form S-11 (File No. 333-169533), filed January 24, 2012).
3.7
First Amendment to the Bylaws of Cole Credit Property Trust IV, Inc. (Incorporated by reference to Exhibit 3.13.2 to the Company’s Current Report on Form 8-K (File No. 333-169533)000-54939), filed June 27, 2012)August 20, 2019).
4.1
Second Amended and Restated Distribution Reinvestment Plan (Incorporated by reference to Exhibit 4.94.1 to the Company’s Registration StatementCurrent Report on Form S-38-K (File No. 333-212832)000-54939), filed August 2, 2016)May 1, 2020).
31.1*
Certifications of the Principal Executive Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certifications of the Principal Financial Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certifications of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*XBRL Instance Document.
101.SCH*XBRL Taxonomy Extension Schema Document.
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document.
     
*Filed herewith.
**In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  
Cole Credit PropertyCIM Real Estate Finance Trust, IV, Inc.
(Registrant)
 
By: /s/ Nathan D. DeBacker
Name: Nathan D. DeBacker
Title: 
Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: November 13, 2017May 14, 2020


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