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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172022
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 1100
Phoenix, Arizona 850164th Floor
(602) 778-8700
Phoenix,Arizona85016
(Address of principal executive offices; zipoffices)(Zip code)
(602)778-8700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each 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, 2017,8, 2022, there were approximately 310.8436.9 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
 
Condensed Consolidated Balance Sheets as of SeptemberSeptember 30, 20172022 and December 31, 20162021
3
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 20172022 and 20162021
4
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 20172022 and 20162021
5
Condensed Consolidated StatementStatements of Stockholders’ Equity for the three and nine months ended September 30, 20172022 and 2021
6
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 20172022 and 20162021
78
Notes to Condensed Consolidated Financial Statements
810
2946
4063
4064
4266
4266
4266
4366
4366
4366
4467
4568

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PART I — FINANCIAL INFORMATION
Item 1.Financial Statements
COLE CREDIT PROPERTYItem 1.    Financial Statements
CIM REAL ESTATE FINANCE TRUST, IV, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share amounts) (Unaudited)
September 30, 2017 December 31, 2016September 30, 2022December 31, 2021
ASSETS   ASSETS
Investment in real estate assets:   
Real estate assets:Real estate assets:
Land$1,193,043
 $1,156,417
Land$585,100 $655,273 
Buildings, fixtures and improvements3,364,812
 3,214,212
Buildings, fixtures and improvements1,479,525 1,706,902 
Intangible lease assets587,189
 553,149
Intangible lease assets279,806 314,832 
Total real estate investments, at cost5,145,044
 4,923,778
Condominium developmentsCondominium developments153,569 171,080 
Total real estate assets, at costTotal real estate assets, at cost2,498,000 2,848,087 
Less: accumulated depreciation and amortization(490,178) (389,768)Less: accumulated depreciation and amortization(258,216)(235,481)
Total real estate investments, net4,654,866
 4,534,010
Total real estate assets, netTotal real estate assets, net2,239,784 2,612,606 
Investment in unconsolidated entitiesInvestment in unconsolidated entities132,375 109,547 
Real estate-related securities ($470,121 and $41,981 held at fair value as of September 30, 2022 and December 31, 2021, respectively)Real estate-related securities ($470,121 and $41,981 held at fair value as of September 30, 2022 and December 31, 2021, respectively)470,121 105,471 
Loans held-for-investment and related receivables, netLoans held-for-investment and related receivables, net4,022,726 2,624,101 
Less: Current expected credit lossesLess: Current expected credit losses(29,584)(15,201)
Total loans held-for-investment and related receivables, netTotal loans held-for-investment and related receivables, net3,993,142 2,608,900 
Cash and cash equivalents4,231
 9,754
Cash and cash equivalents124,836 107,381 
Restricted cash11,002
 8,040
Restricted cash62,941 36,792 
Rents and tenant receivables, net68,916
 65,446
Rents and tenant receivables, net32,957 58,948 
Due from affiliates4
 58
Prepaid expenses, derivative assets, revenue bonds and other assets9,638
 5,513
Prepaid expenses, derivative assets and other assetsPrepaid expenses, derivative assets and other assets52,410 16,279 
Deferred costs, net3,270
 1,514
Deferred costs, net16,212 7,214 
Assets held for sale1,594
 —
Assets held for sale— 1,299,638 
Total assets$4,753,521
 $4,624,335
Total assets$7,124,778 $6,962,776 
LIABILITIES AND STOCKHOLDERS’ EQUITY   LIABILITIES AND STOCKHOLDERS’ EQUITY
Notes payable and credit facility, net$2,454,282
 $2,246,259
Accounts payable and accrued expenses32,989
 25,310
Repurchase facilities, notes payable and credit facilities, netRepurchase facilities, notes payable and credit facilities, net$4,358,187 $4,143,205 
Accrued expenses and accounts payableAccrued expenses and accounts payable29,390 45,872 
Due to affiliates3,784
 5,333
Due to affiliates14,556 14,594 
Intangible lease liabilities, net47,607
 49,075
Intangible lease liabilities, net19,512 24,896 
Distributions payable16,001
 16,498
Distributions payable13,337 13,252 
Deferred rental income, derivative liabilities and other liabilities14,890
 15,091
Deferred rental income, derivative liabilities and other liabilities8,436 21,282 
Total liabilities2,569,553
 2,357,566
Total liabilities4,443,418 4,263,101 
Commitments and contingencies
 
Redeemable common stock and noncontrolling interest187,056
 188,938
Commitments and contingencies (Note 11)Commitments and contingencies (Note 11)
Redeemable common stockRedeemable common stock169,748 170,714 
STOCKHOLDERS’ EQUITY   STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding—
 —
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, 437,262,738 and 437,373,981 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectivelyCommon stock, $0.01 par value per share; 490,000,000 shares authorized, 437,262,738 and 437,373,981 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively4,373 4,374 
Capital in excess of par value2,607,301
 2,607,304
Capital in excess of par value3,529,404 3,529,126 
Accumulated distributions in excess of earnings(613,163) (531,567)Accumulated distributions in excess of earnings(1,000,420)(1,008,561)
Accumulated other comprehensive loss(342) (1,024)
Accumulated other comprehensive (loss) incomeAccumulated other comprehensive (loss) income(21,737)2,949 
Total stockholders’ equity1,996,912
 2,077,831
Total stockholders’ equity2,511,620 2,527,888 
Total liabilities, redeemable common stock, noncontrolling interest and stockholders’ equity$4,753,521
 $4,624,335
Non-controlling interestsNon-controlling interests(8)1,073 
Total equityTotal equity2,511,612 2,528,961 
Total liabilities, redeemable common stock, non-controlling interests and stockholders’ equityTotal liabilities, redeemable common stock, non-controlling interests and stockholders’ equity$7,124,778 $6,962,776 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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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 September 30,Nine Months Ended September 30,
2017 2016 2017 2016 2022202120222021
Revenues:       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 incomeRental and other property income$43,559 $70,794 $170,803 $223,026 
Interest incomeInterest income66,222 19,755 142,669 48,168 
Total revenues107,024
 101,796
 316,308
 302,940
Total revenues109,781 90,549 313,472 271,194 
Operating expenses:       Operating expenses:
General and administrative3,270
 3,246
 10,301
 9,735
General and administrative3,435 3,076 10,590 11,109 
Property operating7,345
 5,738
 20,881
 16,603
Property operating4,432 11,157 17,408 32,632 
Real estate tax9,276
 8,612
 27,646
 25,939
Real estate tax1,793 7,591 10,530 27,516 
Advisory fees and expenses11,149
 10,587
 32,863
 31,100
Acquisition-related110
 1,417
 1,520
 3,592
Expense reimbursements to related partiesExpense reimbursements to related parties3,428 2,516 10,899 8,387 
Management feesManagement fees12,915 11,703 39,613 35,035 
Transaction-relatedTransaction-related9 6 462 37 
Depreciation and amortization36,461
 33,452
 106,145
 100,399
Depreciation and amortization16,948 22,801 54,104 73,186 
Impairment1,658
 1,430
 1,658
 1,430
Real estate impairmentReal estate impairment527 891 19,814 5,268 
Increase (decrease) in provision for credit lossesIncrease (decrease) in provision for credit losses5,664 (1,792)15,315 (1,101)
Total operating expenses69,269
 64,482
 201,014
 188,798
Total operating expenses49,151 57,949 178,735 192,069 
Gain on disposition of real estate and condominium developments, netGain on disposition of real estate and condominium developments, net4,454 34,033 118,135 80,502 
Merger-related expenses, netMerger-related expenses, net— (398)— (398)
Operating income37,755
 37,314
 115,294
 114,142
Operating income65,084 66,235 252,872 159,229 
Other income (expense):       
Other expense:Other expense:
Gain on investment in unconsolidated entitiesGain on investment in unconsolidated entities2,195 — 8,858 — 
Unrealized loss on equity securityUnrealized loss on equity security(9,030)— (15,440)— 
Interest expense and other, net(23,335) (20,473) (67,968) (58,416)Interest expense and other, net(39,366)(20,381)(98,453)(56,863)
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
Loss on extinguishment of debtLoss on extinguishment of debt(3,344)(3,251)(19,584)(4,729)
Total other expenseTotal other expense(49,545)(23,632)(124,619)(61,592)
Net income29,769
 18,128
 64,127
 57,127
Net income$15,539 $42,603 $128,253 $97,637 
Net income allocated to noncontrolling interest33
 32
 99
 99
Net income allocated to noncontrolling interest129 — 66 — 
Net income attributable to the Company$29,736
 $18,096
 $64,028
 $57,028
Net income attributable to the Company$15,410 $42,603 $128,187 $97,637 
Weighted average number of common shares outstanding:       Weighted average number of common shares outstanding:
Basic and diluted311,649,032
 311,558,083
 311,698,622
 311,871,727
Basic and diluted437,298,345 362,705,253 437,339,348 362,387,909 
Net income per common share:       Net income per common share:
Basic and diluted$0.10
 $0.06
 $0.21
 $0.18
Basic and diluted$0.04 $0.12 $0.29 $0.27 
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 INCOME
 (in thousands) (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 2016 2022202120222021
Net income$29,769
 $18,128
 $64,127
 $57,127
Net income$15,539 $42,603 $128,253 $97,637 
Other comprehensive income (loss)       
Other comprehensive (loss) incomeOther comprehensive (loss) income
Unrealized (loss) gain on real estate-related securitiesUnrealized (loss) gain on real estate-related securities(8,709)(813)(24,496)1,239 
Reclassification adjustment for realized gain included in income as other incomeReclassification adjustment for realized gain included in income as other income— — — (648)
Unrealized gain (loss) on interest rate swaps99
 3,751
 (2,175) (13,535)Unrealized gain (loss) on interest rate swaps78 (84)2,361 (13)
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)
Amount of (gain) loss reclassified from other comprehensive (loss) income into income as interest expense and other, netAmount of (gain) loss reclassified from other comprehensive (loss) income into income as interest expense and other, net(2,613)(170)(2,551)3,033 
Total other comprehensive (loss) incomeTotal other comprehensive (loss) income(11,244)(1,067)(24,686)3,611 
       
Comprehensive income30,315
 24,060
 64,809
 50,360
Comprehensive income4,295 41,536 103,567 101,248 
Comprehensive income allocated to noncontrolling interest33
 32
 99
 99
Comprehensive income attributable to noncontrolling interestComprehensive income attributable to noncontrolling interest129 — 66 — 
Comprehensive income attributable to the Company$30,282
 $24,028
 $64,710
 $50,261
Comprehensive income attributable to the Company$4,166 $41,536 $103,501 $101,248 
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 StockCapital in  Excess
of Par Value		Accumulated
Distributions in Excess of Earnings		Accumulated Other Comprehensive Income (Loss)Total
Stockholders’
Equity		Non-Controlling InterestsTotal Equity
 Number of
Shares		Par Value
Balance as of January 1, 2022437,373,981 $4,374 $3,529,126 $(1,008,561)$2,949 $2,527,888 $1,073 $2,528,961 
Issuance of common stock1,329,825 13 9,561 — — 9,574 — 9,574 
Equity-based compensation— — 37 — — 37 — 37 
Distributions declared on common stock — $0.09 per common share— — — (40,018)— (40,018)— (40,018)
Redemptions of common stock(1,345,814)(13)(9,676)— — (9,689)— (9,689)
Changes in redeemable common stock— — 115 — — 115 — 115 
Distributions to non-controlling interests— — — — — — (14)(14)
Comprehensive income (loss)— — — 39,092 (3,397)35,695 9 35,704 
Balance as of March 31, 2022437,357,992 $4,374 $3,529,163 $(1,009,487)$(448)$2,523,602 $1,068 $2,524,670 
Issuance of common stock1,325,282 13 9,529 — — 9,542 — 9,542 
Equity-based compensation22,892 — 120 — — 120 — 120 
Distributions declared on common stock — $0.09 per common share— — — (40,018)— (40,018)— (40,018)
Redemptions of common stock(1,395,095)(14)(10,030)— — (10,044)— (10,044)
Changes in redeemable common stock— — 503 — — 503 — 503 
Distributions to non-controlling interests— — — — — — (16)(16)
Comprehensive income (loss)— — — 73,685 (10,045)63,640 (72)63,568 
Balance as of June 30, 2022437,311,071 $4,373 $3,529,285 $(975,820)$(10,493)$2,547,345 $980 $2,548,325 
Issuance of common stock1,326,177 13 9,535 — — 9,548 — 9,548 
Equity-based compensation— — 120 — — 120 — 120 
Distributions declared on common stock — $0.09 per common share— — — (40,010)— (40,010)— (40,010)
Redemptions of common stock(1,374,510)(13)(9,884)— — (9,897)— (9,897)
Changes in redeemable common stock— — 348 — — 348 — 348 
Distributions to non-controlling interests— — — — — — (1,117)(1,117)
Comprehensive income (loss)— — — 15,410 (11,244)4,166 129 4,295 
Balance as of September 30, 2022437,262,738 $4,373 $3,529,404 $(1,000,420)$(21,737)$2,511,620 $(8)$2,511,612 












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 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
CIM REAL ESTATE FINANCE TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 (in thousands, except share amounts) (Unaudited) — Continued
 Common StockCapital in  Excess
of Par Value		Accumulated
Distributions in Excess of Earnings		Accumulated
Other Comprehensive (Loss) Income		Total
Stockholders’
Equity		Non-Controlling InterestsTotal Equity
 Number of
Shares		Par Value
Balance as of January 1, 2021362,001,968 $3,620 $3,157,859 $(961,006)$(2,047)$2,198,426 $— $2,198,426 
Equity-based compensation— — 40 — — 40 — 40 
Distributions declared on common stock — $0.09 per common share— — — (32,906)— (32,906)— (32,906)
Comprehensive (loss) income— — — (2,753)3,377 624 — 624 
Balance as of March 31, 2021362,001,968 $3,620 $3,157,899 $(996,665)$1,330 $2,166,184 $— $2,166,184 
Issuance of common stock917,769 9 6,651 — — 6,660 — 6,660 
Equity-based compensation4,104 — 49 — — 49 — 49 
Distributions declared on common stock — $0.09 per common share— — — (32,948)— (32,948)— (32,948)
Changes in redeemable common stock— — (173,628)— — (173,628)— (173,628)
Comprehensive income— — — 57,787 1,301 59,088 — 59,088 
Balance as of June 30, 2021362,923,841 $3,629 $2,990,971 $(971,826)$2,631 $2,025,405 $— $2,025,405 
Issuance of common stock1,334,145 13 9,591 — — 9,604 — 9,604 
Equity-based compensation— — 62 — — 62 — 62 
Distributions declared on common stock — $0.09 per common share— — — (32,967)— (32,967)— (32,967)
Redemptions of common stock(1,712,796)(17)(12,315)— — (12,332)— (12,332)
Changes in redeemable common stock— — 2,999 — — 2,999 — 2,999 
Comprehensive income (loss)— — — 42,603 (1,067)41,536 — 41,536 
Balance as of September 30, 2021362,545,190 $3,625 $2,991,308 $(962,190)$1,564 $2,034,307 $— $2,034,307 
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,
20222021
Cash flows from operating activities:
Net income$128,253 $97,637 
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization, net54,155 71,535 
Amortization of deferred financing costs9,130 6,616 
Amortization of fair value adjustment of mortgage notes payable assumed— (149)
Amortization and accretion on deferred loan fees(7,337)(1,945)
Amortization of premiums and discounts on credit investments(2,762)(6,368)
Capitalized interest income on real estate-related securities and loans held-for-investment(888)(703)
Equity-based compensation277 151 
Straight-line rental income(4,855)(4,398)
Write-offs for uncollectible lease-related receivables(1,088)109 
Gain on disposition of real estate assets and condominium developments, net(118,135)(80,502)
Loss (gain) on sale of credit investments, net464 (902)
Gain on investment in unconsolidated entities(8,858)— 
Gain on sale of marketable security(22)— 
Unrealized loss on equity security15,462 — 
Amortization of fair value adjustment and gain on interest rate swaps(2,417)(2,887)
(Gain) loss on interest rate caps(4,252)171 
Impairment of real estate assets19,814 5,268 
Increase (decrease) in provision for credit losses15,315 (1,101)
Write-off of deferred financing costs8,092 2,951 
Return on investment in unconsolidated entities4,217 — 
Changes in assets and liabilities:
Rents and tenant receivables, net66,914 18,228 
Prepaid expenses and other assets(32,224)(10,247)
Accrued expenses and accounts payable(3,466)7,040 
Deferred rental income and other liabilities(10,380)(3,387)
Due to affiliates(38)401 
Net cash provided by operating activities125,371 97,518 
Cash flows from investing activities:
Investment in unconsolidated entities(79,475)— 
Return of investment in unconsolidated entities625 — 
Investment in real estate-related securities(433,219)(171,880)
Investment in liquid senior loans(160,928)(266,978)
Investment in real estate assets and capital expenditures(16,524)(23,391)
Investment in corporate senior loans(74,801)— 
Origination and acquisition of loans held-for-investment(1,310,406)(720,134)
Origination and exit fees received on loans held-for-investment13,977 7,320 
Principal payments received on loans held-for-investment156,920 285,104 
Principal payments received on real estate-related securities16,157 31 
Net proceeds from sale of real estate-related securities132 27,625 
Net proceeds from disposition of real estate assets and condominium developments1,278,609 459,705 
Net proceeds from sale of liquid senior loans52,868 55,224 
Redemption of investment in unconsolidated entities60,663 — 
Proceeds from the settlement of insurance claims619 58 
Net cash used in investing activities$(494,783)$(347,316)

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 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
CIM REAL ESTATE FINANCE TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands) (Unaudited) — Continued

Nine Months Ended September 30,
20222021
Cash flows from financing activities:
Redemptions of common stock$(29,630)$(12,332)
Distributions to stockholders(91,297)(82,541)
Proceeds from borrowings2,303,006 2,217,489 
Repayments of borrowings, and prepayment penalties(1,748,868)(1,633,426)
Termination of interest rate swaps(239)(6,401)
Payment of loan deposits— (650)
Refund of loan deposits— 565 
Distributions to non-controlling interests(1,147)— 
Deferred financing costs paid(18,809)(34,712)
Net cash provided by financing activities413,016 447,992 
Net increase in cash and cash equivalents and restricted cash43,604 198,194 
Cash and cash equivalents and restricted cash, beginning of period144,173 128,408 
Cash and cash equivalents and restricted cash, end of period$187,777 $326,602 
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents$124,836 $289,840 
Restricted cash62,941 36,762 
Total cash and cash equivalents and restricted cash$187,777 $326,602 
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Distributions declared and unpaid$13,337 $10,985 
Accrued capital expenditures$1,590 $1,374 
Accrued deferred financing costs$1,868 $40 
Real estate acquired via foreclosure$— $191,990 
Foreclosure of assets securing the mezzanine loans$— $(79,968)
Mortgage notes payable assumed in connection with foreclosure of assets securing the mezzanine loans$— $102,553 
Mortgage notes payable assumed by buyer in connection with disposition of real estate assets$(356,477)$(31,801)
Equity security received in connection with disposition of real estate assets$(53,388)$— 
Change in interest income capitalized to loans held-for-investment$— $(9,469)
Common stock issued through distribution reinvestment plan$28,664 $16,264 
Change in fair value of derivative instruments$2,252 $5,907 
Change in fair value of real estate-related securities$(24,497)$591 
Conversion of preferred units to loans held-for-investment$68,242 $— 
Supplemental Cash Flow Disclosures:
Interest paid$79,201 $52,200 
Cash paid for taxes$1,318 $1,851 

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, 20172022 (Unaudited)
NOTE 1 — ORGANIZATION AND BUSINESS
Cole Credit PropertyCIM Real Estate Finance 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,operates its business to qualify, 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 short duration senior secured loans, core commercial real estate primarily consisting of net leased properties located throughout the United States, and other credit investments. As of September 30, 2022, the Company owned 384 properties, comprised of 11.0 million rentable square feet of commercial space located in 44 states. As of September 30, 2022, the rentable square feet at these properties was 99.3% leased, including month-to-month agreements, if any. As of September 30, 2022, the Company’s loan portfolio consisted of 346 loans with a net book value of $4.0 billion, and investments in real estate-related securities of $470.1 million. As of September 30, 2022, the Company owned condominium developments with a net book value of $153.6 million.
A majority 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, lender and developer. CIM is headquartered in Los Angeles, CA, with offices in Atlanta, GA, Bethesda, MD, Chicago, IL, Dallas, TX, New York, NY, Orlando, FL, Phoenix, AZ and Tokyo, Japan. CIM also maintains additional offices across the Unites States, as well as in Korea, Hong Kong and the United Kingdom to support its platform.
CCO Group, LLC is a subsidiary of CIM and owns and controls CMFT Management, the Company’s sponsor, Colemanager, 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”), and the Company’s sponsor, Cole Capital. property manager. CCO Group, LLC and its subsidiaries (collectively, “CCO Group”) serve as the Company’s sponsor. The Company relies upon CIM Capital IC Management, LLC, the Company’s investment advisor (the “Investment Advisor”), to provide substantially all of the Company’s day-to-day management with respect to investments in securities and certain other investments.
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”“Initial 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 Initial Offering on April 4, 2014. At the completion of the Initial 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 Initial Offering and approximately 5.1 million shares of common stock issued pursuant to the DRIPdistribution reinvestment plan (“DRIP”) portion of the Initial Offering. The remaining approximately 404,000 unsold shares from the Initial Offering were deregistered.
The Company registered $247.0 million of shares of common stock under the DRIP (the “Initial DRIP Offering”) 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 Initial Offering, the “Offerings”) pursuant to a Registration Statement on Form S-3 (Registration No. 333-212832), 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 continuecontinues 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 established an estimated value of the Company’s 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 establishedestablishes an updated estimated per share net asset value (“NAV”) of the Company’s common stock on at least an annual basis for purposes of assisting broker-dealers that participated in the Initial Offering in meeting their customer account reporting obligations under Financial Industry Regulatory Authority Rule 2231.
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

Distributions are reinvested in shares of the Company’s common stock for participants in 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 the share redemption program. As of September 30, 2016, of $9.92 per share. On March 24, 2017,2022, the Board established an updated estimated per share NAV of the Company’s common stock was $7.20, which was established by the Board on May 25, 2021 using a valuation date of March 31, 2021. Commencing on May 26, 2021, $7.20 served as of December 31, 2016, of $10.08 per share. In determining the estimated per share NAVsNAV under the DRIP. The Board previously established a per share NAV as of August 31, 2015, September 30, 2016, and December 31, 2016, the Board considered informationDecember 31, 2017, December 31, 2018, December 31, 2019, March 31, 2020, 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.June 30, 2020. The Company’s estimated per share NAVs are not audited or reviewed by its independent registered public accounting firm.

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


Prior 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, the estimated per share NAV as of September 30, 2016, as determined by the Board. Commencing on March 28, 2017, distributions are reinvested in shares of 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.
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, 2016,2021, and related notes thereto, set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2021. 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. IfIn determining whether the Company determines that it has a variable interestcontrolling interests in an entity it evaluatesand the requirement to consolidate the accounts in that entity, the Company analyzes its credit and real estate investments in accordance with standards set forth in GAAP to determine whether such interest is in athey are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary. The Company’s judgment with respect to its level of influence or control over an entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk forand whether 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 a VIE involves consideration of various factors, including the VIE’s operations.

For legal entities being evaluated for consolidation,form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions. The Company’s ability to correctly assess its influence or control over an entity affects the presentation of these credit and real estate investments on the Company’s condensed consolidated financial statements. During the nine months ended September 30, 2022, the Company must first determine whether the interests thatdisposed of two properties previously owned through a consolidated joint venture arrangement (the “Consolidated Joint Venture”) and therefore determined it holds and fees it receives qualify as variable interestsno longer had a controlling financial interest in the entity. A variable interest is an investment or other interest that will absorb portionsConsolidated Joint Venture as 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.September 30, 2022. See Note 4 — Real Estate Assets for additional information.


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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20172022 (Unaudited) – (Continued)



Reclassifications
A VIE must be consolidated by its primary beneficiary, which is generally defined as the party who has a controlling financial interestCertain amounts 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 limitedCompany’s prior period condensed consolidated financial statements have been reclassified to conform to the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses fromcurrent period presentation. Other than as shown below, these reclassifications had no effect on previously reported totals or right to receive benefits of the VIE that could potentially be significantsubtotals. The reclassifications have been made to the VIE. The Company consolidates any VIEs when the Company is determined to be the primary beneficiarycondensed consolidated balance sheet as of the VIE,December 31, 2021, and the difference between consolidating the VIE and accounting for it using the equity method could be material to the Company’scondensed consolidated financial statements. The Company continually evaluatesstatement of cash flows for the need to consolidate any VIEs based on standards set forth in GAAP as described above.
As ofnine months ended 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.2021 as follows (in thousands):
As of December 31, 2021
As previously reportedReclassificationsAs Revised
Condensed Consolidated Balance Sheets
Rents and tenant receivables, net$61,468 $(2,520)$58,948 
Prepaid expenses and other assets$13,759 $2,520 $16,279 
Nine Months Ended September 30, 2021
As previously reportedReclassificationsAs Revised
Condensed Consolidated Statements of Cash Flows
Rents and tenant receivables, net$15,889 $2,339 $18,228 
Prepaid expenses and other assets$(7,908)$(2,339)$(10,247)
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, rentallease 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 rates or other circumstances.rates; changes in anticipated holding periods; and significant increases to budgeted costs for units under development. 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 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 nine months ended September 30, 2022, as part of the Company’s quarterly impairment review procedures, the Company recorded impairment charges of $1.7$11.9 million related to one property as a result19 properties, all of delinquent rental paymentswhich was due to sales prices that were less than their respective carrying values. Additionally, during the nine months ended September 30, 2017. As part2022, certain condominium units
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $7.9 million. The Company’s impairment assessment as of September 30, 2022 was based on the most current information available to the Company, including expected holding periods. If the Company’s quarterlyexpected holding periods for assets change, subsequent tests for impairment review procedures,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 2022 or in future periods. During the nine months ended September 30, 2021, the Company recorded impairment charges of $1.4$5.3 million related to one property leased11 properties, of which impairment at seven properties was due to a tenantsales prices that filed for bankruptcy during the nine months ended September 30, 2016.were less than their respective carrying values and impairment at four properties was due to vacancy. The assumptions and uncertainties utilized in the evaluation of the impairment of real estate

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


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. During the nine months endedAs of September 30, 2017, the Company identified one property as held for sale, which was sold subsequent to September 30, 2017, as discussed in Note 14 — Subsequent Events. There2022, there were no assets identified as held for sale assale. As of December 31, 2016.2021, in connection with the Purchase and Sale Agreement (as defined in Note 4 — Real Estate Assets), the Company identified 81 properties with a carrying value of $1.3 billion as held for sale, all of which were disposed of during the nine months ended September 30, 2022.
Dispositions 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 Company’s dispositions during the nine months ended September 30, 2022 and 2021 did not qualify for discontinued operations presentation and thus, the results of the properties and condominiums that were sold will remain in operating income, and any associated gains or losses from the dispositions are included in gain on disposition of real estate and condominium developments, net. See Note 4 — Real Estate Assets for a discussion of the disposition of individual properties and condominiums during the nine months ended September 30, 2022.
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 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.
Certain acquisition-related expenses related to asset acquisitions are capitalized and allocated to tangible and intangible assets and liabilities, as described above. Acquisition-related manager expense reimbursements are expensed as incurred and are included in expense reimbursements to related parties in the accompanying condensed consolidated statements of operations. Other acquisition-related expenses continue to be expensed as incurred and are included in transaction-related expenses in the accompanying condensed consolidated statements of operations.
Investment in Held-to-Maturity SecuritiesUnconsolidated Entities
On March 31, 2022, the Company fully redeemed its $60.7 million investment in CIM UII Onshore, L. P. (“CIM UII Onshore”). Prior to redemption, the Company had less than 5% ownership of CIM UII Onshore and accounted for its
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and subsequently adjusted for the Company’s share of equity in CIM UII Onshore’s earnings and distributions. Prior to redemption, the Company recorded its share of CIM UII Onshore’s profits or losses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations. The Company has investments classifiedrecorded its share of CIM UII Onshore’s gain, totaling $5.2 million during the nine months ended September 30, 2022, in the condensed consolidated statements of operations. During the nine months ended September 30, 2022, the Company received distributions of $531,000 related to its investment in CIM UII Onshore, all of which was recognized as held-to-maturity securities,a return on investment. As of December 31, 2021, the Company’s investment in CIM UII Onshore had a carrying value of $56.0 million.
CMFT MT JV Holdings, LLC, an indirect wholly-owned subsidiary of the Company, is engaged in an unconsolidated joint venture arrangement through CIM NP JV Holdings, LLC (“NP JV Holdings”) (the “Unconsolidated Joint Venture”), of which consistit owns 50% of revenue bonds acquiredthe outstanding equity. Through the Unconsolidated Joint Venture, which holds approximately 91% of the membership interest in connection withNewPoint JV, LLC (the “NewPoint JV”) pursuant to the purchaseterms of the Operating Agreement entered into between the Unconsolidated Joint Venture and NewPoint Bridge Lending, LLC, the Company indirectly owns approximately 45% of the outstanding equity of the NewPoint JV on a fully diluted basis. The Company accounts for its investment under the equity method. The equity method of accounting requires the investment to be initially recorded at cost, including transaction costs incurred to finalize the investment, and is subsequently adjusted for the Company’s share of equity in NP JV Holdings’ earnings and distributions, including unrealized gains and losses as a result of changes in fair value of the NewPoint JV. The Company records its share of NP JV Holdings’ profits or losses on a quarterly basis as an anchored shopping center.adjustment to the carrying value of the investment on the Company’s condensed consolidated balance sheet and such share is recognized as a profit or loss on the condensed consolidated statements of operations. The bonds haveCompany recorded a 9.0% interest rate and mature on November 1, 2044.gain totaling $3.7 million, which represented its share of NP JV Holdings’ gain, during the nine months ended September 30, 2022 in the condensed consolidated statements of operations. During the nine months ended September 30, 2022, the Company contributed an additional $79.5 million in NP JV Holdings. As of September 30, 2017,2022, 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 recognizedCompany’s aggregate investment in prepaid expenses, derivative assets, revenue bonds and other assetsNP JV Holdings of $132.4 million is included in investment in unconsolidated entities 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.sheets. The Company will record an impairment charge if it is determined that a declinereceived $4.3 million in distributions related to its investment in NP JV Holdings during 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.nine months ended September 30, 2022.
Redeemable Noncontrolling Interest in Consolidated Joint Venture
On June 27, 2014,From December 2021 to July 2022, 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 duringDuring the nine months ended September 30, 2017. The2022, the Company recorded net income of $66,000 and paid distributions of $1.1 million to the noncontrolling interestinterest.
During the nine months ended September 30, 2022, the Company disposed of $2.4 millionthe underlying properties previously owned through the Consolidated Joint Venture, as temporary equityfurther discussed in Note 4 — Real Estate Assets. Therefore, the Company determined it no longer had a controlling financial interest in the mezzanine sectionConsolidated Joint Venture as 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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2022.
Restricted Cash
The Company had $11.0$62.9 million and $8.0$36.8 million in restricted cash as of September 30, 20172022 and December 31, 2016,2021, respectively. Included in restricted cash was $3.9$6.7 million and $4.0$7.8 million held by lenders in lockbox accounts, as of September 30, 20172022 and December 31, 2016,2021, 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$56.2 million and $4.0$29.0 million of construction reserves, amounts 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, 20172022 and December 31, 2016,2021, respectively.
Revenue RecognitionReal Estate-Related Securities
Certain properties have leases where minimum rental payments increaseReal estate-related securities consists primarily of the Company’s investments in commercial mortgage-backed securities (“CMBS”) and equity securities. The Company determines the appropriate classification for real estate-related securities at the time of purchase and reevaluates such designation as of each balance sheet date.
As of September 30, 2022, the Company classified its investments in CMBS as available-for-sale as the Company is not actively trading the securities; however, the Company may sell them prior to their maturity. These investments are carried at their estimated fair value with unrealized gains and losses reported in other comprehensive (loss) income. During the nine
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months ended September 30, 2022, the Company invested $433.2 million in CMBS. As of September 30, 2022, the Company had investments in 16 CMBS with an estimated aggregate fair value of $432.2 million.
In addition, the Company had an investment in an equity security with an estimated aggregate fair value of $37.9 million as of September 30, 2022, which is comprised of RTL Common Stock (as defined in Note 4 — Real Estate Assets) received as consideration in connection with the Purchase and Sale Agreement. These investments are carried at their estimated fair value with unrealized gains and losses reported on the condensed consolidated statements of operations. During the nine months ended September 30, 2022, the Company recorded $2.7 million of dividend income on RTL Common Stock, which is included in interest expense and other, net on the condensed consolidated statements of operations. The Company also recorded $15.5 million of unrealized loss on RTL Common Stock during the termnine months ended September 30, 2022, which is included in unrealized loss on equity security in the condensed consolidated statements of operations.
The Company monitors its available-for-sale securities for changes in fair value. A loss is recognized when the lease.Company determines that a decline in the estimated fair value of a security below its amortized cost has resulted from a credit loss or other factors. The Company records rentalimpairments related to credit losses through current expected credit losses. However, the allowance is limited by the amount that the fair value is less than the amortized cost basis. The Company considers many factors in determining whether a credit loss exists, including, but not limited to, the extent to which the fair value is less than the amortized cost basis, recent events specific to the security, industry or geographic area, the payment structure of the security, the failure of the issuer of the security to make scheduled interest or principal payments, and external credit ratings and recent changes in such ratings. The analysis of determining whether a credit loss exists requires significant judgments and assumptions. The use of alternative judgments and assumptions could result in a different conclusion. During the nine months ended September 30, 2022 and 2021, the Company did not record current expected credit losses related to CMBS.
The amortized cost of real estate-related securities is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method and is recorded in the accompanying condensed consolidated statements of operations in interest income. Upon the sale of a security, the realized net gain or loss is computed on the specific identification method.
Interest earned is either received in cash or capitalized to real estate-related securities in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each security agreement. During the three and nine months ended September 30, 2022, the Company capitalized $280,000 and $826,000, respectively, of interest income to real estate-related securities. During the three and nine months ended September 30, 2021, the Company capitalized $268,000 and $703,000, respectively, of interest income to real estate-related securities.
Loans Held-for-Investment
The Company’s loans held-for-investment include loans related to real estate assets, as well as credit investments, including commercial mortgage loans 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 full termforeseeable future or until maturity. Loans held-for-investment are carried on the Company’s condensed consolidated balance sheets at amortized cost, net of each leaseany current expected 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, or on a straight-line basis when it approximates the effective interest method. Upon the sale of a loan, the realized net gain or loss is computed on the specific identification method.
Interest earned is either received in cash or capitalized to loans held-for-investment and collectabilityrelated receivables, net in the Company’s condensed consolidated balance sheets. Interest is capitalized when certain conditions are met as specified in each loan agreement. During the nine months ended September 30, 2022, the Company capitalized $62,000 of interest income to loans held-for-investment.
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 September 30, 2022, the Company did not have nonaccrual loans.
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Current Expected Credit Losses
The Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), on January 1, 2020. Current expected credit losses (“CECL”) 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. Changes to current expected 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 current expected credit losses, it does specify current expected credit losses 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 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 estimates the current expected credit loss for its first mortgage loans primarily using the Weighted Average Remaining Maturity method, which has been identified as an acceptable method for estimating CECL reserves in the Financial Accounting Standards Board (“FASB”) Staff Q&A Topic 326, No. 1. This method requires the Company to reference historic loan loss data across a comparable data set and apply such loss rate to each loan investment over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe. 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 less costs to sell 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 liquid senior loans and corporate senior loans, the Company uses a probability of default and loss given default method using a comparable data set. 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.
Quarterly, the Company evaluates the risk of all loans and assigns a risk rating based on a variety of factors, grouped as follows: (i) loan and credit structure, including the as-is loan-to-value (“LTV”) ratio and structural features; (ii) quality and stability of real estate value and operating cash flow, including debt yield, dynamics of the geography, property type and local market, physical condition, stability of cash flow, leasing velocity and quality and diversity of tenancy; (iii) performance against underwritten business plan; and (iv) quality, experience and financial condition of sponsor, borrower and guarantor(s).
Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows:
1-Outperform — Most satisfactory asset quality and liquidity, good leverage capacity. A “1” rating maintains predictable and strong cash flows from operations. The trends and outlook for the credit's operations, balance sheet, and industry are neutral to favorable. Collateral, if appropriate, exceeds performance metrics;
2-Meets or Exceeds Expectations — Acceptable asset quality, moderate excess liquidity, modest leverage capacity. A “2” rating could have some financial/non-financial weaknesses which are offset by strengths; however, the credit demonstrates an ample current cash flow from operations. The trends and outlook for the credit's operations, balance sheet, and industry are generally positive or neutral. Collateral performance, if appropriate, meets or exceeds substantially all performance metrics included in original or current underwriting / business plan;
3-Satisfactory — Acceptable asset quality, somewhat strained liquidity, minimal leverage capacity. A “3” rating is at times characterized by acceptable cash flows from operations. The trends and conditions of the credit's operations and balance sheet are neutral. Collateral performance, if appropriate, meets or is on track to meet underwriting; business plan can reasonably be achieved;
4-Underperformance — The debt investment possesses credit deficiencies or potential weaknesses which deserve management’s close and continued attention. The portfolio company’s operations and/or balance sheet have demonstrated an adverse trend or deterioration which, while serious, has not reached the point where the liquidation of debt is jeopardized. These weaknesses are generally considered correctable by the borrower in the
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normal course of business but may weaken the asset or inadequately protect the Company’s credit position if not checked or corrected. Collateral performance, if appropriate, falls short of original underwriting, material differences exist from business plan, or both; technical milestones have been missed; defaults may exist, or may soon occur absent material improvement; and
5-Default/Possibility of Loss — The debt investment is protected inadequately by the current enterprise value or paying capacity of the obligor or of the collateral, if any. The underlying company’s operations have well-defined weaknesses based upon objective evidence, such as recurring or significant decreases in revenues and cash flows. Major variance from business plan; loan covenants or technical milestones have been breached; timely exit from loan via sale or refinancing is questionable; risk of principal loss. Collateral performance, if appropriate, is significantly worse than underwriting.
The Company generally assigns a risk rating of “3” to all newly originated or acquired loans held-for-investment during a most recent quarter, except in the case of specific circumstances warranting an exception.
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.
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.
Development Activities
Project costs and expenses, including interest incurred, associated with the development, construction and lease-up of a real estate project are capitalized as construction in progress. During the nine months ended September 30, 2022 and 2021, the Company capitalized $10.9 million and $5.9 million, respectively, of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets. Included in the amounts capitalized during the nine months ended September 30, 2022 and 2021 was $1.1 million and $1.4 million, respectively, of capitalized interest expense.
Revenue Recognition
Revenue from leasing activities
Rental and other property income is primarily derived from fixed contractual payments from operating leases, and therefore, is generally recognized on a straight-line basis over the term of the lease, which typically begins the date the tenant takes control of 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 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.
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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 allowanceoutstanding receivable. Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of lease-related receivables is based on the best information available at the time of estimate. The Company does not use a general reserve approach and 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 the Company’s loans held-for-investment and real estate-related securities is comprised of interest earned on loans and the accretion and amortization of net loan origination fees and discounts. Interest income on loans is accrued as earned, with the accrual of interest suspended when the related loan becomes a nonaccrual loan. Interest income on the Company’s liquid senior loans is accrued as earned beginning on the settlement date.
Reportable Segments
The Company’s segment information reflects how the chief operating decision makers review information for uncollectible accounts. As of September 30, 2017operational decision-making purposes. The Company has two reportable segments:
Credit — engages primarily in acquiring and December 31, 2016,originating loans, either directly or through co-investments in joint ventures, related to real estate assets. The Company may acquire first and second lien mortgage loans, mezzanine loans, bridge loans, wraparound mortgage loans, construction mortgage loans on real property and loans on leasehold interest mortgages. This segment also includes investments in real estate-related securities, liquid senior loans and corporate senior loans.
Real estate — engages primarily in acquiring and managing income-producing retail properties that are primarily single-tenant properties, which are leased to creditworthy tenants under long-term net leases. The commercial properties are geographically diversified throughout the Company had an allowanceUnited States and have similar economic characteristics.
See Note 16 — Segment Reporting for uncollectible accounts of $1.4 million and $221,000, respectively.a further discussion regarding these segments.
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, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), 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. Once ASU No. 2016-02, 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 apply to non-lease components in the lease agreements.
In February 2016,January 2021, 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 No. 2021-01, Reference Rate Reform (Topic 848) (“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.2021-01”). The amendments in ASU 2016-022021-01 clarify that certain optional expedients and exceptions for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of the discontinuation of the use of the London Interbank Offered Rate (“LIBOR”) as a benchmark interest rate due to reference rate reform. ASU 2021-01 is effective immediately for all entities with the option to apply retrospectively as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, and can be applied prospectively to any new contract modifications made on or after January 7, 2021. The Company currently uses LIBOR and SOFR as its benchmark interest rate for its derivative instruments. The Company has evaluated the impact of this ASU’s adoption, and has determined that this ASU will not have a material impact on its condensed consolidated financial statements.
In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this update clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new disclosure requirements related to such equity securities. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years,2023, with early adoption permitted. A modified retrospective approachThe Company is required for existing

currently evaluating the impact of this guidance on its condensed consolidated financial statements.
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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) — The amendments 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, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 is 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-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 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. 
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows(Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which is intended to address diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. 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, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively as of the earliest date practicable. The Company plans to adopt ASU 2016-15 during the fourth quarter of fiscal year 2017 and has determined that this standard 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 a material impact on its 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, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The targeted amendments in this ASU help simplify certain aspects of hedge accounting and result in a more accurate portrayal of the economics of an entity’s risk management activities in its financial statements. This ASU applies to the Company’s interest rate swaps designated as cash flow hedges. Upon adoption of this ASU, all changes in the fair value of highly effective cash flow hedges will be recorded in accumulated other comprehensive income rather than recognized directly in earnings. Under current U.S. GAAP, the ineffective portion 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. ASU 2017-12 is effective for public entities for fiscal years beginning after December 15, 2018, 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 adopt ASU 2017-12 during the first quarter of fiscal year 2018 and does not expect that it will have a material impact on its consolidated financial statements.
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).
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:
NotesReal estate-related securities — The Company generally determines the fair value of its real estate-related securities by utilizing broker-dealer quotations, reported trades or valuation estimates from pricing models to determine the reported price. Pricing models for real estate-related securities are generally discounted cash flow models that usually consider the attributes applicable to a particular class of security (e.g., credit rating, seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available. Depending upon the significance of the fair value inputs used in determining these fair values, these securities are valued using Level 1, Level 2 or Level 3 inputs. As of September 30, 2022, the Company concluded that $401.1 million of its CMBS fell under Level 2 and $31.1 million of its CMBS fell under Level 3.
The Company’s equity security investment is valued using Level 1 inputs. The estimated fair value of the Company’s equity security is based on quoted market prices that are readily and regularly available in an active market.
Credit 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, 2017,2022, the estimated fair value of the Company’s debt was $2.48$4.27 billion, compared to thea carrying value of $2.47$4.38 billion. The estimated fair value of the Company’s debt as of December 31, 20162021 was $2.25$4.11 billion, compared to thea carrying value of $2.26$4.17 billion.
Derivative instruments — The Company’s derivative instruments are comprised of interest rate swaps.caps. All derivative instruments are carried at fair value and are valued using Level 2 inputs. The fair value of these instruments is determined using interest rate market pricing models. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the respective counterparties.
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, 20172022 and December 31, 2016,2021, 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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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 arrangements
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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Loans 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 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 —credit risk. 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%. As a result, the Company has determined that its revenue bondscommercial real estate (“CRE”) loans held-for-investment and corporate senior loans are classified in Level 3 of the fair value hierarchy. The Company’s liquid senior 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, 2017,2022, $471.5 million and $189.8 million of the Company’s liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of December 31, 2021, $560.4 million and $94.1 million of the Company’s liquid senior loans were classified in Level 2 and Level 3 of the fair value hierarchy, respectively. As of September 30, 2022, the estimated fair value of the Company’s revenue bondsloans held-for-investment and related receivables, net was $2.1 million.$4.0 billion, which approximated carrying value. As of December 31, 2021, the estimated fair value of the Company’s loans held-for-investment was $2.63 billion, compared to their carrying value of $2.61 billion.
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, 2017The Company evaluates its hierarchy disclosures each quarter and December 31, 2016, there have been no transfers of financial assetsdepending on various factors, it is possible that an asset or liabilitiesliability may be classified differently from quarter to quarter. The Company does not expect that changes in classifications between fair value hierarchy levels.levels will be frequent.
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, 20172022 and December 31, 20162021 (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)
Balance as of
September 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Financial assets:
CMBS$432,195 $— $401,050 $31,145 
Equity security37,926 37,926 — — 
Interest rate caps4,705 — 4,705 — 
Total financial assets$474,826 $37,926 $405,755 $31,145 

  
Balance as of
December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Financial assets:
CMBS$41,871 $— $— $41,871 
Preferred units63,490 — — 63,490 
Marketable security110 110 — — 
Interest rate caps179 — 179 — 
Total financial assets$105,650 $110 $179 $105,361 
Financial liabilities:
Interest rate swaps$(2,466)$— $(2,466)$— 
Total financial liabilities$(2,466)$— $(2,466)$— 
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September 30, 20172022 (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 20162022 (in thousands):
Level 3
Beginning Balance, January 1, 2022$105,361 
Total gains and losses:
Unrealized loss included in other comprehensive (loss) income, net(12,487)
Purchases and payments received:
Conversion of preferred units (1)
(68,243)
Purchases4,752 
Discounts, net936 
Capitalized interest income826 
Ending Balance, September 30, 2022$31,145 
____________________________________
  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)
(1)    Reflects the Company’s investment in preferred units which matured during the nine months ended September 30, 2022 and was redeemed in exchange for an investment in a first mortgage loan. Refer to Note 8 — Loans Held-For-Investment for further discussion.
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 nine months ended September 30, 2017,2022, real estate assets related to one property totaling approximately 5,000 square feet19 properties were deemed to be impaired and itstheir carrying value wasvalues were reduced to an estimated fair value of $1.0$114.1 million, resulting in impairment charges of $1.7$11.9 million. Additionally, during the nine months ended September 30, 2022, certain condominium units were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $7.9 million. During the nine months ended September 30, 2016,2021, real estate assets related to one property totaling approximately 7,000 square feet11 properties were deemed to be impaired and itstheir carrying value wasvalues were reduced to an estimated fair value of $1.4$43.1 million, resulting in impairment charges of $1.4$5.3 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. The Company determined that the selling prices used to determine the fair values were Level 2 inputs.
The following summarizes the ranges of discount rates and terminal capitalization rates used for the Company’s impairment test for the real estate assets during the nine months ended September 30, 2022 and 2021:
Nine Months Ended September 30,
20222021
Discount RateTerminal Capitalization RateDiscount RateTerminal Capitalization Rate
8.0% – 9.7%7.5% – 9.2%8.0% – 9.7%7.5% – 9.2%
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

The following table presents the impairment charges by asset class recorded during the nine months ended September 30, 20172022 and 20162021 (in thousands):
Nine Months Ended September 30,
20222021
Asset class impaired:
Land$2,041 $997 
Buildings, fixtures and improvements8,793 4,138 
Intangible lease assets1,039 263 
Intangible lease liabilities(4)(130)
Condominium developments7,945 — 
Total impairment loss$19,814 $5,268 
NOTE 4 — REAL ESTATE ASSETS
  Nine Months Ended September 30,
  2017 2016
Asset class impaired:    
Land 375
 $502
Buildings, fixtures and improvements 887
 713
Intangible lease assets 396
 215
Total impairment loss $1,658
 $1,430
2022 Property Acquisitions

During the nine months ended September 30, 2022, the Company did not acquire any properties.
2022 Condominium Development Project
During the nine months ended September 30, 2022, the Company capitalized $10.9 million of expenses associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.
2022 Condominium Dispositions
During the nine months ended September 30, 2022, the Company disposed of condominium units for an aggregate sales price of $24.2 million, resulting in proceeds of $22.0 million after closing costs and a gain of $3.1 million. The Company has no continuing involvement that would preclude sale treatment with these condominium units. The gain on sale of condominium units is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.
2022 Property Dispositions
On December 20, 2021, certain subsidiaries of the Company entered into an Agreement of Purchase and Sale, as amended (the “Purchase and Sale Agreement”), with American Finance Trust, Inc. (now known as The Necessity Retail REIT, Inc.) (NASDAQ: RTL) (“RTL”), American Finance Operating Partnership, L.P. (now known as The Necessity Retail REIT Operating Partnership, L.P.) (“RTL OP”), and certain of their subsidiaries (collectively, the “Purchaser”) to sell to the Purchaser 79 shopping centers and two single-tenant properties encompassing approximately 9.5 million gross rentable square feet of commercial space across 27 states for total consideration of $1.32 billion (the “Purchase Price”). The Purchase Price included the Purchaser’s option to seek the assumption of certain existing debt, and Purchaser’s issuance of up to $53.4 million in value of RTL’s Class A common stock, par value $0.01 per share (“RTL Common Stock”), or Class A units in RTL OP (“RTL OP Units”), subject to certain limits described more fully in the Purchase and Sale Agreement.
During the nine months ended September 30, 2022, the Company disposed of 130 properties, including 65 retail properties, 56 anchored shopping centers, six industrial properties and three office buildings, and an outparcel of land for an aggregate gross sales price of $1.71 billion, resulting in proceeds of $1.67 billion after closing costs and a gain of $115.0 million. Included in this amount of properties disposed were the two properties previously owned through the Consolidated Joint Venture. The sale of 81 of these properties closed pursuant to the Purchase and Sale Agreement for total consideration of $1.33 billion, which consisted of $1.28 billion in cash proceeds and $53.4 million of RTL Common Stock, which shares are subject to certain registration rights as described in the Purchase and Sale Agreement. Such shares are included in real estate-related securities in the condensed consolidated balance sheets. During the nine months ended September 30, 2022, the Company recognized earnout income of $68.7 million related to the disposition of properties pursuant to the Purchase and Sale Agreement, and recorded a related receivable of $20.3 million, which is included in prepaid expenses and other assets in the condensed consolidated balance sheets as of September 30, 2022. The Company has no continuing involvement that would preclude sale
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20172022 (Unaudited) – (Continued)



NOTE 4 — REAL ESTATE INVESTMENTS
2017 Property Acquisitions
During the nine 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, the Company disposed of 14 retail properties for an aggregate gross sales price of $98.6 million, resulting in proceeds of $64.1 million after closing costs and the repayment of the $33.0 million variable rate debt secured by one of the disposed properties and a gain of $16.8 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 involvementtreatment with these properties. The gain on sale of real estate, including the earnout income, is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.
20172022 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 nine months ended September 30, 2017, one property2022, 19 properties totaling approximately 832,000 square feet with a carrying value of $2.7$126.0 million waswere deemed to be impaired and itstheir carrying value wasvalues were reduced to an estimated fair value of $1.0$114.1 million, resulting in impairment charges of $1.7$11.9 million, which were recorded in the condensed consolidated statements of operations. Additionally, during the nine months ended September 30, 2022, certain condominium units were deemed to be impaired and their carrying values were reduced to their estimated fair value, resulting in impairment charges of $7.9 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.

2021 Property Acquisitions
During the nine months ended September 30, 2021, the Company did not acquire any properties.
2021 Assets Acquired Via Foreclosure
During the nine months ended September 30, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its eight mezzanine loans, including 75 condominium units and 21 rental units across four buildings, including certain units that are under development. No land was acquired in connection with the foreclosure.
The following table summarizes the purchase price allocation for the real estate acquired via foreclosure (in thousands):
As of September 30, 2021
Buildings, fixtures and improvements$192,182 
Acquired in-place leases and other intangibles134 
Intangible lease liabilities(326)
Total purchase price$191,990 
In connection with the foreclosure, the Company assumed $102.6 million of mortgage notes payable related to the assets, as further discussed in Note 10 — Repurchase Facilities, Credit Facilities and Notes Payable.
2021 Condominium Development Project
During the nine months ended September 30, 2021, the Company capitalized $5.9 million of expenses as construction in progress associated with the development of condominiums acquired via foreclosure, which is included in condominium developments in the accompanying condensed consolidated balance sheets.
2021 Condominium Dispositions
During the nine months ended September 30, 2021, the Company disposed of condominium units for an aggregate sales price of $28.6 million, resulting in proceeds of $26.5 million after closing costs and a gain of $4.9 million. The Company has no continuing involvement that would preclude sale treatment with these condominium units. The gain on sale of condominium units is included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.
2021 Property Dispositions and Real Estate Assets Held for Sale
During the nine months ended September 30, 2021, the Company disposed of 113 retail properties, for an aggregate gross sales price of $484.4 million, resulting in proceeds of $470.2 million after closing costs and a gain of $75.6 million. The Company has no continuing involvement that would preclude sale treatment with these properties.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20172022 (Unaudited) – (Continued)



2016 Property Acquisitions
During the nine months endedAs of September 30, 2016,2021, there was one property classified as held for sale with a carrying value of $1.3 million included in assets held for sale in the accompanying condensed consolidated balance sheets. Subsequent to September 30, 2021, the Company acquired 14 commercial properties for an aggregate purchase pricedisposed 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):this property.
 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 Dispositions2021 Impairment
During the nine months ended September 30, 2016, the Company disposed of three retail2021, 11 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 propertytotaling approximately 260,000 square feet with a carrying value of $2.8$48.4 million waswere deemed to be impaired and itstheir carrying value wasvalues were reduced to an estimated fair value of $1.4$43.1 million, resulting in impairment charges of $1.4$5.3 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.
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.

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


NOTE 5 — INTANGIBLE LEASE ASSETS AND LIABILITIES
Intangible lease assets and liabilities consisted of the following as of September 30, 20172022 and December 31, 20162021 (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
September 30, 2022December 31, 2021
Intangible lease assets:
In-place leases and other intangibles, net of accumulated amortization of $82,454 and $73,923, respectively (with a weighted average life remaining of 11.3 years and 11.4 years, respectively)
$182,337 $224,931 
Acquired above-market leases, net of accumulated amortization of $4,000 and $3,204, respectively (with a weighted average life remaining of 13.0 years and 13.3 years, respectively)
11,015 12,774 
Total intangible lease assets, net$193,352 $237,705 
Intangible lease liabilities:
Acquired below-market leases, net of accumulated amortization of $5,117 and $9,043, respectively (with a weighted average life remaining of 12.7 years and 11.5 years, respectively)
$19,512 $24,896 
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, 20172022 and September 30, 20162021 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
In-place lease and other intangible amortization$5,866 $6,865 $18,978 $22,066 
Above-market lease amortization$272 $590 $893 $1,839 
Below-market lease amortization$469 $1,240 $1,532 $4,083 
24
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
In-place lease and other intangible amortization$12,567
 $11,055
 $35,402
 $34,486
Above-market lease amortization$1,877
 $1,705
 $5,498
 $4,901
Table of Contents
CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

As of September 30, 2017,2022, 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
In-Place Leases and
Other Intangibles		Above-Market LeasesBelow-Market Leases
Remainder of 2022$5,723 $272 $458 
202322,067 1,081 1,802 
202420,664 975 1,675 
202517,702 916 1,603 
202615,947 871 1,595 
Thereafter100,234 6,900 12,379 
Total$182,337 $11,015 $19,512 
  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
NOTE 6 — INVESTMENT IN UNCONSOLIDATED ENTITIES
On December 16, 2021, as a result of the merger with CIM Income NAV, Inc. (“CIM Income NAV”) (the “CIM Income NAV Merger”), the Company acquired a limited partnership interest in CIM UII Onshore. CIM UII Onshore’s sole purpose is to invest all of its assets in CIM Urban Income Investments, L.P. (“CIM Urban Income”), which is a private institutional fund that acquires, owns and operates substantially stabilized, diversified real estate and real estate-related assets in urban markets primarily located throughout North America.
During the nine months ended September 30, 2022, the Company recognized an equity method net gain of $5.2 million related to its investment in CIM UII Onshore. The Company recognized distributions of $531,000 related to its investment in CIM UII Onshore during the nine months ended September 30, 2022, all of which was recognized as a return on investment. On March 31, 2022, the Company fully redeemed its $60.7 million investment in CIM UII Onshore, which represented less than 5% ownership of CIM UII Onshore and approximated fair value.
Additionally, during the year ended December 31, 2021, the Company entered into the Unconsolidated Joint Venture, of which the Company owns 50% of the outstanding equity. The Unconsolidated Joint Venture holds approximately 91% of the membership interest in the NewPoint JV. Through the Unconsolidated Joint Venture, the Company has a 45% interest in the NewPoint JV and accounts for its investment under the equity method. The primary purpose of the NewPoint JV is to source, underwrite, close and service on an ongoing basis multifamily bridge loans, participation interests, and other debt instruments such as loans. As of September 30, 2022, the carrying value of the Company’s investment in NP JV Holdings was $132.4 million, which approximates fair value and is included in investment in unconsolidated entities on the condensed consolidated balance sheets. The Company received $4.3 million in distributions related to its investment in NP JV Holdings during the nine months ended September 30, 2022, $3.7 million of which was recognized as a return on investment and $625,000 of which was recognized as a return of investment and reduced the invested capital and the carrying amount.
NOTE 7 — REAL ESTATE-RELATED SECURITIES
As of September 30, 2022, the Company had real estate-related securities with an aggregate estimated fair value of $470.1 million, which included 16 CMBS investments and an investment in a publicly-traded equity security. The CMBS mature on various dates from July 2023 through June 2058 and have interest rates ranging from 6.5% to 10.2% as of September 30, 2022, with one CMBS earning a zero coupon rate. The following is a summary of the Company’s real estate-related securities as of September 30, 2022 (in thousands):
Real Estate-Related Securities
Amortized Cost BasisUnrealized LossFair Value
CMBS$453,894 $(21,699)$432,195 
Equity security53,388 (15,462)37,926 
Total real estate-related securities$507,282 $(37,161)$470,121 
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

The following table provides the activity for the real estate-related securities during the nine months ended September 30, 2022 (in thousands):
Amortized Cost BasisUnrealized Gain (Loss)Fair Value
Real estate-related securities as of January 1, 2022$102,674 $2,797 $105,471 
Face value of real estate-related securities acquired507,915 — 507,915 
Investment in preferred units, net (1)
(63,490)— (63,490)
Premiums and discounts on purchase of real estate-related securities, net of acquisition costs(26,060)— (26,060)
Amortization of discount on real estate-related securities1,684 — 1,684 
Realized gain on sale of real estate-related securities(110)(22)(132)
Capitalized interest income on real estate-related securities826 — 826 
Principal payments received on real estate-related securities(16,157)— (16,157)
Unrealized loss on real estate-related securities— (39,936)(39,936)
Real estate-related securities as of September 30, 2022$507,282 $(37,161)$470,121 
____________________________________
(1)    Included in this balance is $68.2 million of the Company’s investment in preferred units which were redeemed during the nine months ended September 30, 2022 in exchange for an investment in a first mortgage loan, as further discussed in Note 8 — Loans Held-For-Investment.
During the nine months ended September 30, 2022, the Company invested $433.2 million in CMBS. During the same period, the Company sold one marketable security with an aggregate carrying value of $110,000 resulting in net proceeds of $132,000 and a gain of $22,000. The Company also received $53.4 million in an equity security during the nine months ended September 30, 2022 as consideration in connection with the Purchase and Sale Agreement. Unrealized gains and losses on CMBS are recorded in other comprehensive (loss) income, with a portion of the amount subsequently reclassified into interest expense and other, net in the accompanying condensed consolidated statements of operations as securities are sold and gains and losses are recognized. Unrealized gains and losses on the equity security are reported on the condensed consolidated statements of operations. During the nine months ended September 30, 2022, the Company recorded $39.9 million of unrealized loss on its real estate-related securities, $24.5 million of which is included in other comprehensive (loss) income in the accompanying condensed consolidated statements of comprehensive income. The remaining $15.4 million of unrealized loss on the Company’s equity security is included in unrealized loss on equity security in the accompanying condensed consolidated statements of operations.
The scheduled maturities of the Company’s CMBS as of September 30, 2022 are as follows (in thousands):
CMBS
Amortized Cost Estimated Fair Value
Due within one year$— $— 
Due after one year through five years413,059 401,050 
Due after five years through ten years— — 
Due after ten years40,835 31,145 
Total$453,894 $432,195 
Actual maturities of real estate-related securities can differ from contractual maturities because borrowers on certain corporate credit securities may have the right to prepay their respective debt obligations at any time. In addition, factors such as prepayments and interest rates may affect the yields on such securities.
In estimating credit losses related to real estate-related securities, management considers a variety of factors, including, but not limited to, the extent to which the fair value is less than the amortized cost basis, recent events specific to the security, industry or geographic area, the payment structure of the security, the failure of the issuer of the security to make scheduled interest or principal payments, and external credit ratings and recent changes in such ratings. As of September 30, 2022, the Company had no credit losses related to real estate-related securities.
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

NOTE 8 — LOANS HELD-FOR-INVESTMENT
The Company’s loans held-for-investment consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):
As of September 30,As of December 31,
20222021
First mortgage loans (1)
$3,259,744 $1,968,585 
Total CRE loans held-for-investment and related receivables, net3,259,744 1,968,585 
Liquid senior loans705,750 655,516 
Corporate senior loans57,232 — 
Loans held-for-investment and related receivables, net$4,022,726 $2,624,101 
Less: Current expected credit losses$(29,584)$(15,201)
Total loans held-for-investment and related receivable, net$3,993,142 $2,608,900 

(1)    As of September 30, 2022, first mortgage loans included $20.1 million of contiguous mezzanine loan components that, as a whole, have expected credit quality similar to that of a first mortgage loan.
The following table details overall statistics for the Company’s loans held-for-investment as of September 30, 2022 and December 31, 2021 (dollar amounts in thousands):
CRE Loans (1) (2)
Liquid Senior LoansCorporate Senior Loans
September 30, 2022December 31, 2021September 30, 2022December 31, 2021September 30, 2022December 31, 2021
Number of loans29 22 313 295 4 — 
Principal balance$3,283,523 $1,985,722 $711,947 $659,007 $58,031 $— 
Net book value$3,244,737 $1,958,655 $691,981 $650,245 $56,424 $— 
Weighted-average interest rate5.9 %3.3 %6.7 %3.7 %9.2 %— %
Weighted-average maximum years to maturity
3.94.34.95.14.80.0
Unfunded loan commitments (3)
$338,539 $209,368 $1,886 $1,562 $4,324 $— 

(1)As of September 30, 2022, 100% of the Company’s CRE loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR and the Secured Overnight Financing Rate (“SOFR”).
(2)Maximum maturity date assumes all extension options are exercised by the borrowers; however, the Company’s CRE loans may be repaid prior to such date.
(3)Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying condensed consolidated balance sheets. This balance does not include unsettled liquid senior loan purchases of $6.3 million that are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

Activity relating to the Company’s loans held-for-investment portfolio was as follows (in thousands):
CRE LoansLiquid Senior LoansCorporate Senior LoansTotal Loan Portfolio
Balance, January 1, 2022$1,958,655 $650,245 $— $2,608,900 
Loan originations and acquisitions (1)
1,378,649 164,325 75,851 1,618,825 
Sale of loans— (53,332)— (53,332)
Principal repayments received(80,911)(58,189)(17,820)(156,920)
Capitalized interest62 — — 62 
Deferred fees and other items (2)
(13,978)(3,397)(1,050)(18,425)
Accretion and amortization of fees and other items7,337 827 251 8,415 
Current expected credit losses(5,077)(8,498)(808)(14,383)
Balance, September 30, 2022$3,244,737 $691,981 $56,424 $3,993,142 

(1)The Company’s investment in preferred units, which was previously recorded in real estate-related securities on the accompanying condensed consolidated balance sheets, was redeemed during the nine months ended September 30, 2022 in exchange for an investment in a first mortgage loan. The converted investment in preferred units of $68.2 million is included in the CRE loans balance with an all-in-rate of 9.4% and an initial maturity date of October 9, 2023.
(2)Other items primarily consist of purchase discounts or premiums and deferred origination expenses.
Current Expected Credit Losses
Current expected credit losses reflect the Company’s current estimate of potential credit losses related to the loans held-for-investment included in the Company’s condensed consolidated balance sheets. Refer to Note 2 — Summary of Significant Accounting Policies for further discussion of the Company’s current expected credit losses.
The following table presents the activity in the Company’s current expected credit losses by loan type for the nine months ended September 30, 2022 (in thousands):
First Mortgage Loans
Unfunded First Mortgage Loans (1)
Liquid Senior Loans
Unfunded or Unsettled Liquid Senior Loans (1)
Corporate Senior Loans
Unfunded Corporate Senior Loans (1)
Total
Current expected credit losses as of January 1, 2022$9,930 $— $5,271 $— $— $— $15,201 
Provision for credit losses1,312 360 2,581 400 56 — 4,709 
Current expected credit losses as of March 31, 2022$11,242 $360 $7,852 $400 $56 $— $19,910 
Provision for (reversal of) credit losses1,832 170 2,338 (96)615 83 4,942 
Current expected credit losses as of June 30, 2022$13,074 $530 $10,190 $304 $671 $83 $24,852 
Provision for (reversal of) credit losses1,933 121 3,579 (85)137 (21)5,664 
Current expected credit losses as of September 30, 2022$15,007 $651 $13,769 $219 $808 $62 $30,516 

(1)Current expected losses for unfunded or unsettled loan commitments are included in accrued expenses and accounts payable in the condensed consolidated balance sheets.
Changes to current expected credit losses are recognized through net income on the Company’s condensed consolidated statements of operations.
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

Troubled Debt Restructuring
An individual financial instrument is classified as a troubled debt restructuring when there is a reasonable expectation that the financial instrument’s contractual terms will be modified in a manner that grants concessions to the borrower who is experiencing financial difficulties. Concessions could include term extensions, payment deferrals, interest rate reductions, principal forgiveness, forbearance, or other actions designed to maximize the Company’s collection on the financial instrument. Current expected credit losses for financial instruments that are troubled debt restructurings are determined individually.
The Company also classifies a financial instrument as a troubled debt restructuring when receivables from third parties, real estate, or other assets are transferred from the debtor to the creditor in order to fully or partially satisfy a debt, such as in the event of a foreclosure or repossession. During the year ended December 31, 2019, the borrower on the Company’s eight mezzanine loans became delinquent on certain required reserve payments. Throughout 2020, the borrower remained delinquent on the required reserve payments and became delinquent on principal and interest. As a result, the Company classified the loans as a troubled debt restructuring and commenced foreclosure proceedings during the year ended December 31, 2020. Upon completing foreclosure in January 2021, the Company took control of the assets which previously secured the loans, including 75 condominium units and 21 rental units across four buildings. As a result of the foreclosure, the Company recorded a $58.0 million decrease to its provision for credit losses related to its mezzanine loans during the three months ended March 31, 2021.
Risk Ratings
As further described in Note 2 — Summary of Significant Accounting Policies, the Company evaluates its loans held-for-investment portfolio on a quarterly basis. Each quarter, the Company assesses the risk factors of each loan, and assigns a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, loan and credit structure, current LTV ratio, debt yield, collateral performance, and the quality and condition of the sponsor, borrower, and guarantor(s). Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 — Summary of Significant Accounting Policies.
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

The Company’s primary credit quality indicator is its risk ratings, which are further discussed above. The following table presents the net book value of the Company’s loans held-for-investment portfolio as of September 30, 2022 by year of origination, loan type, and risk rating (dollar amounts in thousands):
Amortized Cost of Loans Held-For-Investment by Year of Origination (1)
As of September 30, 2022
Number of Loans2022202120202019Total
First mortgage loans by internal risk rating:
1—$— $— $— $— $— 
2—— — — — — 
3291,238,852 1,819,168 152,458 49,266 3,259,744 
4—— — — — — 
5—— — — — — 
Total first mortgage loans291,238,852 1,819,168 152,458 49,266 3,259,744 
Liquid senior loans by internal risk rating:
1—— — — — — 
22— — 5,312 — 5,312 
3305132,470 338,755 213,813 3,017 688,055 
463,298 — 9,085 — 12,383 
5—— — — — — 
Total liquid senior loans313135,768 338,755 228,210 3,017 705,750 
Corporate senior loans by internal risk rating:
1—— — — — — 
2—— — — — — 
3457,232 — — — 57,232 
4—— — — — — 
5—— — — — — 
Total corporate senior loans457,232 — — — 57,232 
Less: Current expected credit losses(29,584)
Total loans held-for-investment and related receivables, net346$3,993,142 
Weighted Average Risk Rating (2)
3.0 

(1)    Date loan was originated or acquired by the Company. Origination dates are subsequently updated to reflect material loan modifications.
(2)    Weighted average risk rating calculated based on carrying value at period end.
NOTE 9 — 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. During the nine months ended September 30, 2022, two of the Company’s interest rate swap agreements matured, four of the Company’s interest rate cap agreements matured, the Company terminated three interest rate swap agreements prior to the maturity dates, and the Company entered into one interest rate cap agreement. As of September 30, 2017,2022, the Company had 12 executedtwo non-designated interest rate swapcap agreements. The following table summarizes the terms of the Company’s 11 interest rate swap agreements designated as hedging instruments effective as of September 30, 2017 and December 31, 2016 (dollar amounts in thousands):
30
  
 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)

(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.

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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20172022 (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 thisthe Company’s interest rate swap agreement designated as a hedging instrumentcap agreements as of September 30, 20172022 and December 31, 20162021 (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) $—
   Outstanding Notional   Fair Value of Assets (Liabilities) as of
Balance SheetAmount as ofInterestEffectiveMaturitySeptember 30,December 31,
LocationSeptember 30, 2022
Rates (1)
DatesDates20222021
Interest Rate CapsPrepaid expenses, derivative assets and other assets$712,000 7.51% to 7.78%7/15/2021 to 9/13/20227/15/2023 to 10/9/2023$4,705 $179 
Interest Rate SwapDeferred rental income, derivative liabilities and other liabilities$—  —%—

—$— $(2,466)

(1)The interest rate consists of the underlying index swapped to a fixed rate and the applicable interest rate spread as of September 30, 2017.
(1)The interest rate consists of the underlying index capped to a fixed rate as of September 30, 2022.
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 agreementsderivative instruments 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 thehas interest rate caps that are used to manage exposure to interest rate movements, but do not meet the requirements to be designated as hedging instruments. The change in fair value of the derivative instruments that are not designated as hedges is recorded directly to earnings in interest expense and other, net on the accompanying condensed consolidated statements of operations. During the nine months ended September 30, 2022, the Company had interest rate swaps designated 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 (loss) income, (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 and nine months ended September 30, 2017 and 2016,2022, the amountsamount of gain reclassified were $447,000 and $2.2from other comprehensive (loss) income as a decrease to interest expense was $2.6 million respectively, and for both periods. For the three months ended September 30, 2021, the amount of gain reclassified from other comprehensive (loss) income as a decrease to interest expense was $170,000. For the nine months ended September 30, 20172021, the amount of loss reclassified from other comprehensive (loss) income as an increase to interest expense was $3.0 million. The total unrealized loss on interest rate swaps of $20,000 as of September 30, 2022, and 2016, the amounts reclassified were $2.9 million and $6.8 million, respectively.total unrealized gain on interest rate swaps of $152,000 as of December 31, 2021, respectively, is included in accumulated other comprehensive (loss) income in the accompanying condensed consolidated statements of stockholders’ equity. During the next 12 months, the Company estimates that an additional $180,000$20,000 will be reclassified from other comprehensive (loss) income (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 of $3.7 million at September 30, 2017.and accrued interest. 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 swapsderivative instruments 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 swapsderivative instruments as of September 30, 2017.2022.
NOTE 710 — REPURCHASE FACILITIES, CREDIT FACILITIES AND NOTES PAYABLE AND CREDIT FACILITY
As of September 30, 2017,2022, the Company had $2.5$4.4 billion of debt outstanding, including net deferred financing costs, with a weighted average years to maturity of 4.53.3 years and a weighted average interest rate of 3.5%4.5%. 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.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

The following table summarizes the debt balances as of September 30, 2022 and December 31, 2021, and the debt activity for the nine months ended September 30, 2022 (in thousands):
During the Nine Months Ended September 30, 2022
 Balance as of December 31, 2021
Debt Issuances & Assumptions (1)
Repayments & Modifications (2)
Accretion & (Amortization)Balance as of
September 30, 2022
Notes payable – fixed rate debt$471,967 $— $(435,320)(4)$— $36,647 
Notes payable – variable rate debt70,268 470,860 (70,268)— 470,860 
First lien mortgage loan650,000 — (515,993)— 134,007 
ABS mortgage notes770,775 — (5,805)— 764,970 
Credit facilities910,000 767,000 (985,500)— 691,500 
Repurchase facilities1,298,414 1,065,146 (80,967)— 2,282,593 
Total debt4,171,424 2,303,006 (2,093,853)— 4,380,577 
Deferred costs – credit facility (3)
(143)(999)89 321 (732)
Deferred costs – fixed rate debt and first lien mortgage loan(11,678)— 7,648 2,422 (1,608)
Deferred costs – variable rate debt(271)(6,141)— 647 (5,765)
Deferred costs – ABS mortgage notes(16,127)— 382 1,460 (14,285)
Total debt, net$4,143,205 $2,295,866 $(2,085,734)$4,850 $4,358,187 

(1)Includes deferred financing costs incurred during the period.
(2)In connection with the repayment of certain mortgage notes, the Company recognized a loss on extinguishment of debt of $19.6 million during the nine months ended September 30, 2022.
(3)Deferred costs related to the term portion of the CIM Income NAV Credit Facility and the CMFT Credit Facility (both defined below).
(4)Includes mortgage notes of $356.5 million that were assumed by buyer in connection with disposition of real estate assets.
Notes Payable
As of September 30, 2022, the Company had fixed rate debt outstanding of $36.6 million. The fixed rate debt has interest rates ranging from 4.1% to 4.5% per annum. The fixed rate debt outstanding matures on various dates from December 2024 through February 2025. Should a loan not be repaid by its scheduled repayment date, the applicable interest rate willmay increase as specified in the respective loan agreement. The following table summarizes the debt balances as of September 30, 2017 and December 31, 2016, and the debt activity for the nine months endedSeptember 30, 2017 (in thousands):

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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   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

(1)Includes deferred financing costs incurred during the period.
(2)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)Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility (as defined below).
(4)Includes $503,000 of deferred financing costs of the term portion of the Credit Facility written off during the period resulting from the Second Amended and Restated Credit Agreement, as defined below.
As of September 30, 2017, the fixed rate debt outstanding of $1.2 billion included $217.1 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 2018 through October 2025. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the fixed rate debt outstanding was $2.2 billion$59.4 million as of September 30, 2017.2022. Each of the mortgage notes payable comprising the fixed rate debt is secured by the respective properties on which the debt was placed.
As of September 30, 2017,2022, the Company had $470.9 million of variable rate debt outstanding, which included $421.5 million of $20.5borrowings financed through a note on note financing arrangement with Massachusetts Mutual Life Insurance Company (the “Mass Mutual Financing”). In addition, upon completing foreclosure proceedings to take control of the assets which previously secured the Company’s mezzanine loans in January 2021, the Company assumed $102.6 million in variable rate debt related to the underlying properties (the “Assumed Variable Rate Debt”). During the nine months endedSeptember 30, 2022, the Company refinanced the Assumed Variable Rate Debt and paid down the outstanding balance. The amended borrowing agreement related to the refinanced Assumed Variable Rate Debt provides for borrowings up to $62.0 million. As of September 30, 2022, the amount outstanding on the refinanced Assumed Variable Rate Debt totaled $49.4 million. The Company’s outstanding variable rate debt had a weighted average interest rate of 4.5%. The variable rate debt outstanding5.3% as of September 30, 2022, and matures on February 26, 2020. With respectvarious dates from October 2024 to January 2028.
First Lien Mortgage Loan
On July 15, 2021, JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan Chase”), and DBR Investments Co. Limited originated a $650.0 million first lien mortgage loan (the “Mortgage Loan”) to 114 single purpose entities (the “Borrowers”), each of which is an affiliate of the Company and is managed on a day-to-day basis by affiliates of CIM. As of September 30, 2022, the Mortgage Loan is secured by, among other things, cross-collateralized and cross-defaulted first priority mortgages, deeds of trust, security agreements or other similar security instruments on the Borrowers’ fee simple interests in 51
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September 30, 2022 (Unaudited) – (Continued)

properties, comprised of 50 single-tenant retail properties and one office property. As of September 30, 2022, the aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the notes was $332.1 million. Amounts outstanding on the Mortgage Loan totaled $134.0 million with a weighted average interest rate of 7.5% as of September 30, 2022. The Mortgage Loan is a floating-rate, interest-only, non-recourse loan with a two-year initial term ending on August 9, 2023, with three one-year extension options, subject to certain conditions.
ABS Mortgage Notes
On July 28, 2021, the Company issued $774.0 million aggregate principal amount of asset backed securities (“ABS”) mortgage notes, Series 2021-1 (the “Class A Notes”) in six classes, as shown below:
Class of NotesInitial Principal BalanceNote RateAnticipated Repayment DateRated Final Payment Date
Credit Rating (1)
A-1 (AAA)$146,400,000 2.09%July 2028July 2051AAA (sf)
A-2 (AAA)$219,600,000 2.57%July 2031July 2051AAA (sf)
A-3 (AA)$39,200,000 2.51%July 2028July 2051AA (sf)
A-4 (AA)$58,800,000 3.04%July 2031July 2051AA (sf)
A-5 (A)$124,000,000 2.91%July 2028July 2051A (sf)
A-6 (A)$186,000,000 3.44%July 2031July 2051A (sf)
____________________________________
(1)Reflects credit rating from Standard & Poor’s Financial Services LLC (“Standard & Poor’s”).
The collateral pool for the Class A Notes is comprised of 168 of the Company’s $24.2 million of debt maturing withindouble- and triple-net leased single tenant properties, together with the next year, the Company expects to use borrowings available under the Credit Facility or enter into new financing arrangements in order to meet its debt obligations.related leases and certain other rights and interests. The aggregate balance of gross real estate assets, net of gross intangible lease liabilities, securing the variable rate debt outstandingClass A Notes was $40.8 million as$977.3 million. As of September 30, 2017.2022, amounts outstanding on the Class A Notes totaled $765.0 million with a weighted average interest rate of 2.8%. The Company may prepay the Class A Notes in full on or after the payment date beginning in July 2026 for the Class A-1 (AAA) Notes, the Class A-3 (AA) Notes and the Class A-5 (A) Notes, and on or after the payment date in July 2028 for the Class A-2 (AAA) Notes, the Class A-4 (AA) Notes and the Class A-6 (A) Notes.
During the nine months ended September 30, 2017,Credit Facilities
CMFT SCF Borrower, LLC, an indirect wholly owned subsidiary of the Company entered into(the “CMFT Borrowing Sub”), has a second amended and restated unsecured credit agreement (the “Second Amended and Restated Credit“Credit Agreement”) with the lenders from time to time parties thereto, JPMorgan Chase, Bank, N.A. as administrative agent, (“JPMorgan Chase”)letter of credit issuer and syndication agent, and PNC Bank, N.A., and the other lenders party thereto thatas syndication agent, which provides for borrowings in the initial amount of up to $1.40 billion,$300.0 million (the “CMFT Credit Facility”), which includes a $1.05 billion unsecured$100.0 million term loan facility (the “Term“CMFT Term Loan”) and the ability to borrow up to $350.0$200.0 million in unsecured revolving loans (the “Revolving“CMFT Revolving Loans” and collectively,) under a revolving credit facility (the “CMFT Revolving Facility”) with thea $30.0 million letter of credit subfacility. The CMFT Term Loan the “Credit Facility”). The Term Loan matures on March 15, 2022 and the CMFT Revolving LoansFacility both mature on MarchJuly 15, 2021; however,2025.
Borrowings under the Company has the right to extend the maturity date of the Revolving Loans to March 15, 2022.
DependingCredit Agreement bear interest at rates 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”) multiplied by the statutory reserveCMFT Borrowing Sub, the interest period, and the Company’s adjusted leverage ratio. For alternate base rate (the “Eurodollar Rate”(“ABR”) plus anloans, the interest rate spread ranging from 1.65%will be equal 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;prime rate (as defined in the Credit Agreement), (b) the Federal Funds EffectiveNYFRB Rate (as defined in the Second Amended and Restated Credit Agreement) plus 0.50%; or, and (c) the one-month LIBOR multiplied byAdjusted Term SOFR Rate (as defined in the statutory reserveCredit Agreement) plus 1.0% for the interest period plus the applicable rate. For term benchmark (“Term Benchmark”) loans and risk-free rate plus 1.00%. As of September 30, 2017,(“RFR”) loans, the Revolving Loans outstanding totaled $184.5 million at a weighted average interest rate of 3.0%. As of September 30, 2017,is based on the Adjusted Term Loan outstanding totaled $1.05 billion, $811.7 million of whichSOFR Rate or Adjusted Daily Simple SOFR (as defined in the Credit Agreement), respectively, for the applicable interest period plus the applicable rate. The applicable rate is subjectbased upon the adjusted leverage ratio, and for ABR Loans, ranges from 0.50% at an adjusted leverage ratio below 2.50:1.00 to interest1.375% at an adjusted leverage ratio greater than 3.50:1.00. For Term Benchmark loans and RFR loans, the applicable rate swap agreements (the “Swapped Term Loan”). The interest rate swap agreements hadis 1.00% higher than for ABR loans at each adjusted leverage ratio range.
In connection with the effect of fixing the Eurodollar Rate per annumCMFT Credit Facility, certain subsidiaries of the Swapped Term Loan. AsCompany, including the CMFT Borrowing Sub, entered into a collateral assignment of September 30, 2017, the weighted average all-in rate for the Swapped Term Loan was 3.2%. Asequity interest and security agreement, by which certain subsidiaries of September 30, 2017, the Company, had $1.23 billion outstandingincluding the CMFT Borrowing Sub, pledged equity interests in certain property-owning subsidiaries as collateral to secure on a first priority basis the obligations under the CMFT Credit Facility at a weighted average interest rateFacility. The Company and certain subsidiaries of 3.1% and $164.9 million in unused capacity, subject to borrowing availability.
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 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, 20172022 (Unaudited) – (Continued)



also entered into a guaranty with the lenders, under which the Company and certain subsidiaries agreed to guarantee the CMFT Borrowing Sub’ obligations under the Credit Agreement.
As of September 30, 2022, the CMFT Term Loan and RestatedCMFT Revolving Loans outstanding totaled $100.0 million and $50.0 million, respectively. As of September 30, 2022, the Company had $150.0 million outstanding under the CMFT Credit Facility at a weighted average interest rate of 4.5% and $150.0 million in unused capacity, subject to borrowing availability. The Company had available borrowings of $150.0 million as of September 30, 2022.
The Company had a credit agreement (the “CIM Income NAV Credit Agreement”) with JPMorgan Chase, as administrative agent, and the lender parties thereto, that provided for borrowings of up to $425.0 million (the “CIM Income NAV Credit Facility”). The CIM Income NAV Credit Facility was set to mature on September 6, 2022. During the nine months endedSeptember 30, 2022, the Company paid down the $212.5 million outstanding balance under the CIM Income NAV Credit Facility with proceeds from the closing of the CMFT Credit Facility and terminated the CIM Income NAV Credit Facility.
CMFT Corporate Credit Securities, LLC, an indirect wholly-owned, bankruptcy-remote subsidiary of the Company, has a revolving credit and security agreement (the “Third Amended 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 (“CMFT Securities”), 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 Third Amended Credit and Security Agreement provides for available borrowings under the revolving credit facility to an aggregate principal amount up to $550.0 million (the “Credit Securities Revolver”). The Credit Securities Revolver may be increased from time to time pursuant to the Third Amended Credit and Security Agreement. As of September 30, 2022, the amounts borrowed and outstanding under the Credit Securities Revolver totaled $541.5 million at a leverage ratioweighted average interest rate of 5.2%.
Borrowings under the Third Amended Credit and Security Agreement will bear interest equal to the one-month Term SOFR (as defined in the Third Amended Credit and Security Agreement) for the relevant interest period, plus an applicable rate. The applicable rate is dependent on the type of loan being financed, which includes broadly syndicated, private and middle market loans meeting certain criteria as set forth in the Third Amended Credit and Security Agreement and ranges from 1.90% to 2.75% per annum during the first two years of the reinvestment period and 2.00% to 2.85% during the last year of the reinvestment period and 2.10% to 2.95% per annum during the amortization period (and, in each case, an additional 2.00% per annum following an event of default under the Third Amended Credit and Security Agreement). The reinvestment period began on December 31, 2019 (the “Closing Date”) and concludes on the earlier of (i) the date that is three years after June 23, 2022, the date the third amendment became effective, (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 or equal$1.25 billion (the “Reinvestment Period”). The final maturity date is the earliest to 60%, a fixed charge coverage ratio greater than 1.50, an unsecured debtoccur 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 Third Amended Credit and Security Agreement are secured by substantially all of the assets held by CMFT Corporate Credit Securities, LLC, which shall primarily consist of liquid senior secured loans subject 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%certain eligibility criteria under the Third Amended Credit and the amount of secured debt that is recourse debt at no greater than 15% of total asset value. Security Agreement.
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, 2017.2022.
Repurchase Facilities
As of September 30, 2022, indirect wholly-owned subsidiaries of the Company (collectively, the “CMFT Lending Subs”), had Master Repurchase Agreements with Citibank, Barclays Bank PLC (“Barclays”), Wells Fargo Bank, N.A. (“Wells Fargo”), Deutsche Bank AG (“Deutsche Bank”), and J.P. Morgan Securities LLC (“J.P. Morgan”) (collectively, the “Repurchase Agreements”) to provide financing primarily through each bank’s purchase of the Company’s CRE mortgage loans and CMBS and future funding advances (the “Repurchase Facilities”).
The following table is a summary of the Repurchase Facilities as of September 30, 2022 (dollar amounts in thousands):
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

Repurchase FacilityDate of Agreement
Maturity Date(1)
Maximum Facility Size(2)
Weighted Average Interest RateCarrying Value of Loans Financed under Repurchase FacilityAmount Financed
Citibank6/4/20208/17/2024$400,000 4.6%(3)$460,573 $333,532 
Barclays9/21/20209/21/20241,250,000 4.7%(3)1,171,039 915,452 
Wells Fargo5/20/20218/30/2025750,000 4.4%(3)887,423 693,616 
Deutsche Bank10/8/202110/8/2023300,000 5.1%(4)189,365 144,520 
J.P. Morgan6/1/202210/7/2022(5)(5)4.1%(6)351,647 195,473 
Total$2,700,000 $3,060,047 $2,282,593 

(1)The repurchase facilities with Citibank and Barclays are set to mature in August 2024 and September 2024, with up to two one-year extension options. The repurchase facility with Wells Fargo was set to mature on May 19, 2024, with up to two one-year extension options. During the nine months ended September 30, 2022, the Company extended the initial facility termination date to August 30, 2025 under the Third Amendment to the Master Repurchase Agreement with Wells Fargo. The repurchase facility with Deutsche Bank (“Deutsche Bank Repurchase Facility”) was set to mature on October 8, 2022, with four one-year extension options, all of which are subject to certain conditions set forth in the Repurchase Agreements. During the nine months ended September 30, 2022, the Company exercised the Deutsche Bank Repurchase Facility’s first extension option, extending the date of maturity to October 8, 2023. Subsequent to September 30, 2022, the Company extended the current maturity date under the repurchase facility with Barclays (the “Barclays Repurchase Facility”), extending the maturity date to September 22, 2025, as discussed in Note 17 — Subsequent Events.
(2)During the nine months endedSeptember 30, 2022, the Company increased the Barclays Repurchase Facility and the repurchase facility with Wells Fargo (the “Wells Fargo Repurchase Facility”) to provide up to $1.25 billion and $750.0 million, respectively, in financing.
(3)Advances under the Repurchase Agreements accrue interest at per annum rates based on the one-month LIBOR, Term SOFR (as such term is defined in the applicable Repurchase Agreement), 30-day SOFR average, or the daily compounded SOFR plus a spread ranging from 1.25% to 2.15% to be determined on a case-by-case basis between Citibank, Barclays or Wells Fargo and the CMFT Lending Subs.
(4)Under the Amended and Restated Master Repurchase Agreement with Deutsche Bank, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by Deutsche Bank, and the interest rate used for certain existing advances under the existing Deutsche Bank Repurchase Facility may be converted from the one-month LIBOR to one-month SOFR plus a spread ranging from 1.90% to 2.75%.
(5)Facilities under the repurchase facility with J.P. Morgan (“J.P. Morgan Repurchase Facility”) carry a rolling term which is reset monthly. Such facilities carry no maximum facility size.
(6)Under the Master Repurchase Agreement with J.P. Morgan, advances under the repurchase agreement may be made based on one-month Term SOFR plus a spread designated by J.P. Morgan, which as of September 30, 2022, ranges from 1.10% to 1.35%.
The Repurchase Agreements provide for simultaneous agreements by Citibank, Barclays, Wells Fargo, Deutsche Bank and J.P. Morgan to re-sell such purchased CRE mortgage loans and CMBS back to CMFT Lending Subs at a certain future date or upon demand.
In connection with certain of the Repurchase Agreements, the Company (as the guarantor) entered into guaranties with Citibank, Barclays, Wells Fargo, and Deutsche Bank (the “Guaranties”), under which the Company agreed to guarantee up to 25% of the CMFT Lending Subs’ obligations under certain Repurchase Agreements.
The Repurchase Agreements and the Guaranties contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guaranties contain financial covenants that require the Company to maintain: (i) minimum liquidity of not less than the lower of (a) $50.0 million and (b) the greater of (A) $10.0 million and (B) 5% of the Company’s recourse indebtedness, as defined in the Guaranties; (ii) minimum consolidated net worth greater than or equal to $1.0 billion plus (a) 75% of the equity issued by the Company following the respective closing dates of the Repurchase Agreements (the “Repurchase Closing Dates”) minus (b) the aggregate amount of any redemptions or similar transaction by the Company from the Repurchase Closing Dates; (iii) maximum leverage ratio of total indebtedness to total equity less than or equal to 80%; and (iv) minimum interest coverage ratio of EBITDA (as defined in the Guaranties) to interest expense equal to or greater than 1.40. The Company believes it was in compliance with the financial covenants under the Repurchase Agreements as of September 30, 2022.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

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 thereafter2022 (in thousands):
Principal Repayments
Remainder of 2022$197,518 
2023283,490 
20241,863,177 
2025856,378 
2026— 
Thereafter1,180,014 
Total$4,380,577 
  Principal Repayments
Remainder of 2017$116
201824,211
201949,799
2020333,215
2021285,102
Thereafter1,780,050
Total$2,472,493
NOTE 8 — INTANGIBLE LEASE LIABILITIES
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 liabilities for the three and nine months ended September 30, 2017 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 is 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 (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 1011 — 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 September 30, 2022, the Company had $344.7 million of unfunded loan commitments related to its existing CRE loans held-for-investment, corporate senior loans, and liquid senior loans, and $79.5 million of unfunded commitments related to the NewPoint JV. These commitments are not reflected in the accompanying condensed consolidated balance sheet.
As of September 30, 2022, the Company had $6.3 million of unsettled liquid senior loan acquisitions, $5.8 million of which settled subsequent to September 30, 2022. Unsettled acquisitions are included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.
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 1112 — 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.
AcquisitionManagement and investment advisory fees and expenses
The Company pays CR IV Advisors or its affiliates acquisition fees of up to 2.0% of: (1) the contract purchase price of each property or asset the Company acquires; (2) the amount paidCMFT Management a management fee, payable quarterly in respect of the development, construction or improvement of each asset the Company acquires; (3) the purchase price of any loan the Company acquires; and (4) the principal amount of any loan the Company originates. In addition, the Company reimburses CR IV Advisors or its affiliates for acquisition-related expenses incurred in the process of acquiring properties, so long as the total acquisition fees and expenses relatingarrears, equal to the transaction do not exceed 6.0%greater of the contract purchase price, unless otherwise approved by a majority of the Board, including a majority(a) $250,000 per annum ($62,500 per quarter) and (b) 1.50% per annum (0.375% per quarter) of the Company’s independent directors, as commercially competitive, fair and reasonable toEquity (as defined in the Company.
Advisory fees and expenses
The Company pays CR IV Advisors a monthly advisory fee based upon the Company’s monthly average invested assets, which, effective January 1, 2017, is based on the estimated market value of such assets used to determine the Company’s estimated per share NAV as of December 31, 2016, as discussed in Note 1 — Organization and Business, and for those assets

Management Agreement).
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20172022 (Unaudited) – (Continued)



acquired subsequentCMFT Securities has an investment advisory and management agreement dated December 6, 2019 (the “Investment Advisory and Management Agreement”) with the Investment Advisor. CMFT Securities was formed for the purpose of holding any securities investments and certain other investments made by the Company. The Investment Advisor, a wholly-owned subsidiary of CIM, is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Pursuant to December 31, 2016, is based on the purchase price. The monthlyInvestment Advisory and Management Agreement, the Investment Advisor manages the day-to-day business affairs of CMFT Securities and its investments in corporate credit and real estate-related securities (collectively, the “Managed Assets”), subject to the supervision of the Board. In connection with the services provided by the Investment Advisor, CMFT Securities pays the Investment Advisor an investment advisory fee (the “Investment Advisory Fee”), payable quarterly in arrears, equal to 1.50% per annum (0.375% per quarter) of CMFT Securities’ Equity (as defined in the Investment Advisory and Management Agreement). Because the Managed Assets are excluded from the calculation of management fees payable by the Company to CMFT Management pursuant to the Management Agreement, the total management and advisory fees payable by the Company to its external advisors are not increased as a result of the Investment Advisory and Management Agreement.
In addition, the Investment Advisor has a sub-advisory agreement dated December 6, 2019 (the “Sub-Advisory Agreement”) with OFS Capital Management, LLC (the “Sub-Advisor”) to act as an investment sub-advisor to CMFT Securities. The Sub-Advisor is registered as an investment adviser under the Advisers Act and is an affiliate of the Investment Advisor. The Sub-Advisor principally provides investment management services with respect to the corporate credit-related securities held by CMFT Securities and its subsidiaries. The Sub-Advisor may allocate a portion of these corporate credit-related securities to its other clients, including affiliates of CIM. On a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee and incentive compensation attributable to the assets for which Sub-Advisor has provided investment management services payable to the Investment Advisor as sub-advisory fees.
Incentive compensation
CMFT Management is entitled to receive incentive compensation, payable with respect to each quarter, which is generally equal to the following amounts: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) an annualized rate of 0.75% paid on the Company’s average invested assetsConsolidated 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 and nine months ended September 30, 2022 and 2021, no incentive compensation fees were incurred.
In addition, the Investment Advisor is eligible to receive a portion of the incentive compensation payable to CMFT Management pursuant to the Management Agreement. In the event that are between $0the incentive compensation is earned and $2.0 billion; (2) an annualized ratepayable with respect to any quarter, CMFT Management calculates the portion of 0.70% paid on the Company’s average invested assetsincentive compensation that are between $2.0 billionwas attributable to the Managed Assets and $4.0 billion; and (3) an annualized rate of 0.65% paid onpayable to the Company’s average invested assets that are over $4.0 billion.Investment Advisor.
Operating expensesExpense reimbursements to related parties
The Company reimburses CR IV AdvisorsCMFT Management, the Investment Advisor or itstheir affiliates for certain expenses CR IV Advisors or its affiliates paid or incurred in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse CR IV Advisors or its affiliates for any amount by which the operating expenses (including the advisory fee) at the end of the four preceding fiscal quarters exceed 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.Company. The Company will not reimburse CR IV AdvisorsCMFT Management, the Investment Advisor, or itstheir 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 toexcluding the Company’s executive officers.
Disposition fees
If CR IV Advisorsofficers and any portfolio management, acquisitions or its affiliates provide 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 Advisors 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 may the total disposition fees paid to CR IV Advisors, 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. During the three and nine months ended September 30, 2017 and 2016, no disposition fees were incurred for any such services provided by CR IV Advisors or its affiliates.
Subordinated performance fees
If the Company is sold or its assets are liquidated, CR IV Advisors will be entitled to receive a subordinated performance fee equal to 15.0% of the net sale proceeds remaining after investors have 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, if the Company’s shares are listed on a national securities exchange, CR IV Advisors will be 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, exceeds the sum of the total amount of capital raised from investors and the amount of distributions necessary to generate an 8.0% annual cumulative, non-compounded return to investors. As an additional alternative, upon termination of the advisory agreement, CR IV Advisors may be entitled to a subordinated performance fee similar to the fee to which CR IV Advisors 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, 2017 and 2016, no subordinated performance fees were incurred related to any such events.investment professionals.
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,
 2022202120222021
Management fees$12,915 $11,703 $39,613 $35,035 
Expense reimbursements to related parties (1)
$3,428 $2,516 $10,899 

$8,387 
____________________________________
(1)During the nine months endedSeptember 30, 2022, the Company paid $984,000 of expense reimbursements attributable to earnout leasing costs under the Purchase and Sale Agreement, which are included in gain on disposition of real estate and condominium developments, net in the condensed consolidated statements of operations.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
        
Acquisition fees and expenses$2,338
 $2,087
 $6,336
 $4,442
Advisory fees and expenses$11,149
 $10,587
 $32,863
 $31,100
Operating expenses$1,072
 $1,121
 $3,495
 $3,135
Due to Affiliates
Of the amounts shown above, $3.8$14.6 million and $5.5$15.1 million had been incurred, but not yet paid, for services provided by CR IV AdvisorsCMFT Management or its affiliates in connection with the acquisitionmanagement and operationsoperating activities during the nine months ended September 30, 20172022 and 2016,2021, respectively, and such amounts were recorded as liabilities of the Company as of such dates.

Development Management Agreements
On January 7, 2021, the Company completed foreclosure proceedings to take control of the assets which previously secured its mezzanine loans, including 75 condominium units and 21 rental units across four buildings in New York. Upon foreclosure, and with the approval of the valuation, compensation and affiliate transactions committee of the Board, CIM NY Management, LLC, an affiliate of the Company’s manager, CMFT Management, entered into a Development Management Agreement with the indirect wholly owned subsidiaries of the Company that own each of the four buildings (the “Building Owners”), wherein CIM NY Management, LLC will act as project manager in overseeing the development and construction of property improvements in accordance with each respective Development Management Agreement (the “Development Services”). In consideration for the Development Services, CIM NY Management, LLC will receive a development management fee from the Building Owners equal to 4% of the aggregate gross project costs expended during the term of the Development Management Agreement, subject to the conditions in each respective Development Management Agreement. During the nine months ended September 30, 2022 and 2021, the Company recorded $337,000 and $85,000, respectively, in development management fees. Additionally, CIM NY Management, LLC is reimbursed by the Building Owners for expenses incurred in connection with the Development Services, including services provided that are incidental to but not part of the Development Services. The Development Management Agreement shall remain in effect until the project completion date, and is terminable by either party with fifteen days prior notice to the other party, with or without cause.
Affiliated Investments
In September 2021, the Company co-invested $68.4 million in preferred units and $138.8 million in a mortgage loan to a third-party for the purchase of a multi-family, office and retail building in Fort Lauderdale, Florida with CIM Real Assets & Credit Fund, a fund that is advised by affiliates of CMFT Management (“CIM RACR”). During the nine months ended September 30, 2022, the Company and CIM RACR upsized their investment in the preferred units with an additional $4.8 million and $364,000, respectively, and upsized their investment in the mortgage loan with an additional $6.4 million and $490,000, respectively. The Company subsequently redeemed its investment in the preferred units during the nine months ended September 30, 2022 in exchange for an investment in a first mortgage loan. As a result of the upsize and the conversion of preferred units, as of September 30, 2022, the Company had $203.6 million invested in the mortgage loan.
In October 2021, the Company invested in a $130.0 million first mortgage loan, with an initial advance of $119.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management. As of September 30, 2022, $122.4 million of the first mortgage loan was outstanding. An affiliate of CMFT Management serves as the property manager for this property and has entered into a subordination agreement with the Company in connection with the loan.
In November 2021, the Company entered into the Unconsolidated Joint Venture (the “MT-FT JV”) with CMMT Holdings, LLC, a fund that is advised by an affiliate of CMFT Management, for the purposes of investing in the NewPoint JV. The Company owns 50% of the equity interests of the MT-FT JV and has committed to fund capital to the MT-FT JV up to $212.5 million, of which $133.0 million has been funded. For more information on the NewPoint JV, see Note 2 — Summary of Significant Accounting Policies.
In December 2021, the Company invested in a $155.0 million first mortgage loan, with an initial advance of $154.0 million, to a third-party, the proceeds of which were used to finance the acquisition of a property from a fund that is advised by an affiliate of CMFT Management. As of September 30, 2022, $154.0 million of the first mortgage loan was outstanding.
During the nine months ended September 30, 2022, the Company invested in a $147.0 million first mortgage loan, with an initial advance of $143.0 million, to a third-party, which was previously funded by a fund that is advised by an affiliate of CMFT Management. As of September 30, 2022, $144.7 million of the first mortgage loan was outstanding.
As a result of the CIM Income NAV Merger, the Company had an investment in CIM UII Onshore, a fund that is advised by an affiliate of CMFT Management, which was fully redeemed for $60.7 million during the nine months ended September 30, 2022. See Note 2 — Summary of Significant Accounting Policies for more information on the CIM UII Onshore investment.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20172022 (Unaudited) – (Continued)



Due to/from Affiliates
During the nine months ended September 30, 2022, the Company and CIM RACR co-invested $75.9 million and $14.7 million, respectively, in five corporate senior loans to a third-party. As of September 30, 2017 and December 31, 2016, $3.82022, $58.0 million and $5.3 million, respectively, had been incurred primarily for advisory and operating expenses by CR IV Advisors or its affiliates, but had not yet been reimbursed byof 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 affiliatescorporate senior loans was outstanding. The Sub-Advisor provided investment management services related to amounts received by affiliates of the advisor which were duethese corporate senior loans pursuant to the Company.Sub-Advisory Agreement.
NOTE 1213 — 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 1314 — OPERATINGSTOCKHOLDERS’ EQUITY
Equity-Based Compensation
On August 10, 2018, the Board approved the adoption of the Company’s 2018 Equity Incentive Plan (the “2018 Plan”), under which 400,000 of the Company’s shares of common stock were reserved for issuance. On April 27, 2022, the Board and the compensation committee of the Board approved the Amended and Restated CIM Real Estate Finance Trust, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Plan was approved by the Company’s stockholders at the Company’s 2022 Annual Meeting of Stockholders held on July 12, 2022. The 2022 Plan superseded and replaced the 2018 Plan. Awards that are granted on or after the effective date of the 2022 Plan are subject to the terms and provisions of the 2022 Plan. The total number of shares of Company common stock reserved and available for issuance under the 2022 Plan at any time during the term of the 2022 Plan are 250,000 shares, which is a reduction from 400,000 shares authorized for issuance under the 2018 Plan, and awards of approximately 250,000 shares of common stock were available for future grant at September 30, 2022. Under the 2022 Plan, the Board or the compensation committee of the Board has the authority to grant certain awards to employees, non-employee directors, and consultants or advisors of the Company, including stock option awards, restricted stock awards or deferred stock awards, which awards will further align such persons’ interests with the interests of the Company’s stockholders. The Board or the compensation committee of the Board also has the authority to determine the terms of any award granted pursuant to the 2022 Plan, including vesting schedules, restrictions and acceleration of any restrictions. The 2022 Plan may be amended or terminated by the Board or the compensation committee of the Board at any time, subject to the right of the Company’s stockholders to approve certain amendments.
As of September 30, 2022, the Company has granted awards of approximately 116,000 restricted shares in the aggregate to the independent members of the Board under the 2018 Plan. As of September 30, 2022, 73,000 of the restricted shares had vested based on one year of continuous service, and on October 1, 2022, 43,000 of the restricted shares vested based on one year of continuous service. The fair value of the Company’s share awards is determined using the Company’s per share NAV on the date of grant. Compensation expense related to the restricted shares is recognized over the vesting period. The Company recorded compensation expense of $120,000 and $277,000 for the three and nine months ended September 30, 2022, respectively, and $62,000 and $151,000 for the three and nine months ended September 30, 2021, respectively, related to the restricted shares, which is included in general and administrative expenses in the accompanying condensed consolidated statements of operations. All compensation expense related to these restricted shares was recognized ratably over the period of service prior to September 30, 2022. On October 1, 2022, as part of the annual retainers paid to the independent members of the Board and pursuant to the 2022 Plan, the independent members of the Board were each granted 11,111 restricted shares. The restricted shares will vest on October 1, 2023.
NOTE 15 — 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.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

As of September 30, 2017,2022, the Company’s leases had a weighted-average remaining term of 9.810.7 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, 2017,2022, 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 2022$38,611 
2023153,721 
2024151,924 
2025148,037 
2026143,815 
Thereafter1,104,039 
Total$1,740,147 
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 and nine months ended September 30, 2022 and 2021, the amount of the contingent rent earned by the Company was not significant.
Rental and other property income during the three and nine months ended September 30, 2022 and 2021 consisted of the following (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Fixed rental and other property income (1)
$40,875 $60,031 $153,522 $190,632 
Variable rental and other property income (2)
2,684 10,763 17,281 32,394 
Total rental and other property income$43,559 $70,794 $170,803 $223,026 

(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, and is net of uncollectible lease-related receivables.
(2)Consists primarily of tenant reimbursements for recoverable real estate taxes and property operating expenses, and percentage rent.
The Company has one property subject to a non-cancelable operating ground lease with a remaining term of 10.9 years, with a lease liability (in deferred rental income, derivative liabilities and other liabilities) and a related right-of-use (“ROU”) asset (in prepaid expenses, derivative assets and other assets) of $2.2 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 and $188,000 of ground lease expense during the three and nine months ended September 30, 2022, of which $61,000 and $182,000 was paid in cash during the period it was recognized. As of September 30, 2022, the Company’s scheduled future minimum rental payments related to its operating ground lease is approximately $63,000 for the remainder of 2022, $250,000 annually for 2023 through 2027, and $1.4 million thereafter through the maturity date of the lease in August 2033.
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  Future Minimum Rental Income
Remainder of 2017$92,490
2018358,539
2019343,351
2020330,829
2021314,676
Thereafter2,242,089
Total$3,681,974
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

NOTE 1416 — SEGMENT REPORTING
The Company has two reportable segments: real estate and credit. Corporate/other represents all corporate level and unallocated items and includes the Company’s other asset management activities and operating expenses. There were no changes in the structure of the Company’s internal organization that prompted the change in reportable segments. Prior period amounts have been revised to conform to the current year presentation shown below.
The following tables present segment reporting for the three and nine months ended September 30, 2022 and 2021(in thousands):
Real EstateCredit
Corporate/Other (1)
Company Total
Three Months Ended September 30, 2022
Rental and other property income$43,465 $— $94 $43,559 
Interest income— 66,222 — 66,222 
Total revenues43,465 66,222 94 109,781 
General and administrative215 77 3,143 3,435 
Property operating2,109 — 2,323 4,432 
Real estate tax1,385 — 408 1,793 
Expense reimbursements to related parties— — 3,428 3,428 
Management fees4,849 8,066 — 12,915 
Transaction-related2 — 7 9 
Depreciation and amortization16,948 — — 16,948 
Real estate impairment527 — — 527 
Increase in provision for credit losses— 5,664 — 5,664 
Total operating expenses26,035 13,807 9,309 49,151 
Gain (loss) on disposition of real estate and condominium developments, net4,604 — (150)4,454 
Operating income (loss)22,034 52,415 (9,365)65,084 
Other expense:
Gain on investment in unconsolidated entities— 2,195 — 2,195 
Unrealized (loss) on equity security— (9,030)— (9,030)
Interest expense and other, net(4,517)(32,152)(2,697)(39,366)
(Loss) gain on extinguishment of debt(5,615)— 2,271 (3,344)
Segment net income (loss)$11,902 $13,428 $(9,791)$15,539 
Net income allocated to noncontrolling interest129 — — 129 
Segment net income (loss) attributable to the Company11,773 13,428 (9,791)15,410 
Total assets as of September 30, 2022$2,189,724 $4,725,858 $209,196 $7,124,778 
__________________________________
(1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

Real EstateCredit
Corporate/Other (1) (2)
Company Total
Nine Months Ended September 30, 2022
Rental and other property income$170,509 $— $294 $170,803 
Interest income— 142,669 — 142,669 
Total revenues170,509 142,669 294 313,472 
General and administrative494 246 9,850 10,590 
Property operating13,403 — 4,005 17,408 
Real estate tax9,251 — 1,279 10,530 
Expense reimbursements to related parties— — 10,899 10,899 
Management fees17,176 22,437 — 39,613 
Transaction-related439 — 23 462 
Depreciation and amortization54,104 — — 54,104 
Real estate impairment11,869 — 7,945 19,814 
Increase in provision for credit losses— 15,315 — 15,315 
Total operating expenses106,736 37,998 34,001 178,735 
Gain on disposition of real estate and condominium developments, net115,050 — 3,085 118,135 
Operating income (loss)178,823 104,671 (30,622)252,872 
Other expense:
Gain on investment in unconsolidated entities— 3,686 5,172 8,858 
Unrealized (loss) gain on equity security— (15,462)22 (15,440)
Interest expense and other, net(27,527)(61,332)(9,594)(98,453)
Loss on extinguishment of debt(18,609)— (975)(19,584)
Segment net income (loss)$132,687 $31,563 $(35,997)$128,253 
Net income allocated to noncontrolling interest66 — — 66 
Segment net income (loss) attributable to the Company132,621 31,563 (35,997)128,187 
Total assets as of September 30, 2022$2,189,724 $4,725,858 $209,196 $7,124,778 

(1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
(2)Includes the Company’s investment in CIM UII Onshore.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)


Real EstateCredit
Corporate/Other (1)
Company Total
Three Months Ended September 30, 2021
Rental and other property income$70,694 $— $100 $70,794 
Interest income— 19,755 — 19,755 
Total revenues70,694 19,755 100 90,549 
General and administrative86 265 2,725 3,076 
Property operating7,555 — 3,602 11,157 
Real estate tax7,325 — 266 7,591 
Expense reimbursements to related parties— — 2,516 2,516 
Management fees8,713 2,990 — 11,703 
Transaction-related6 — — 6 
Depreciation and amortization22,801 — — 22,801 
Real estate impairment891 — — 891 
Decrease in provision for credit losses— (1,792)— (1,792)
Total operating expenses47,377 1,463 9,109 57,949 
Gain on disposition of real estate and condominium developments, net30,657 — 3,376 34,033 
Merger-related expenses, net— — (398)(398)
Operating income (loss)53,974 18,292 (6,031)66,235 
Other expense:
Interest expense and other, net(12,820)(5,117)(2,444)(20,381)
Loss on extinguishment of debt(249)— (3,002)(3,251)
Segment net income (loss)$40,905 $13,175 $(11,477)$42,603 
Total assets as of September 30, 2021$2,947,031 $1,866,913 $266,915 $5,080,859 

(1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 (Unaudited) – (Continued)

Real EstateCredit
Corporate/Other (1)
Company Total
Nine Months Ended September 30, 2021
Rental and other property income$222,691 $— $335 $223,026 
Interest income— 48,168 — 48,168 
Total revenues222,691 48,168 335 271,194 
General and administrative204 978 9,927 11,109 
Property operating22,297 — 10,335 32,632 
Real estate tax22,390 — 5,126 27,516 
Expense reimbursements to related parties— — 8,387 8,387 
Management fees26,577 8,458 — 35,035 
Transaction-related37 — — 37 
Depreciation and amortization73,186 — — 73,186 
Real estate impairment5,268 — — 5,268 
Decrease in provision for credit losses— (1,101)— (1,101)
Total operating expenses149,959 8,335 33,775 192,069 
Gain on disposition of real estate and condominium developments, net75,633 — 4,869 80,502 
Merger-related expenses, net— — (398)(398)
Operating income (loss)148,365 39,833 (28,969)159,229 
Other expense:
Interest expense and other, net(20,649)(12,005)(24,209)(56,863)
Loss on extinguishment of debt(1,621)— (3,108)(4,729)
Segment net income (loss)$126,095 $27,828 $(56,286)$97,637 
Total assets as of September 30, 2021$2,947,031 $1,866,913 $266,915 $5,080,859 

(1)Includes condominium and rental units acquired via foreclosure during the year ended December 31, 2021.
NOTE 17 — SUBSEQUENT EVENTS
The following events occurred subsequent to September 30, 2017:
RedemptionRedemptions of Shares of Common Stock
Subsequent to September 30, 2017,2022, the Company redeemed approximately 2.51.3 million shares pursuant to the Company’s share redemption program for $25.0$9.6 million (at an averagea redemption price of $7.20 per share of $10.08)share). Management, in its discretion, limited the amount of shares redeemed forThe remaining redemption requests received during the three months ended September 30, 2017 to shares issued in the DRIP Offerings during the respective period. The remaining redemption requests2022 totaling approximately 9.823.9 million shares went unfulfilled.
Investment in Real Estate Assetsand Disposition Activity
Subsequent to September 30, 2017,2022, the Company acquiredCompany’s investment and disposition activity included the following:
•Disposed of one commercial real estate property and condominium units for a purchasean aggregate gross sales price of $3.2 million. $14.1 million, resulting in net proceeds of $12.8 million after closing costs and a net gain of approximately $627,000.
•Purchased $55.0 million in CMBS.
•Settled $6.3 million of liquid senior loan purchases, $5.8 million of which were traded as of September 30, 2022, and sold $3.3 million of liquid senior loans.
•The Company has not completed its initial purchase price allocation with respectextension option was exercised on two of the Company’s first mortgage loans for $101.4 million that were initially set to this property and therefore cannot provide similar disclosuresmature on November 7, 2022, extending the date of maturity to those included in Note 4 — Real Estate Investments in these condensed consolidated financial statements for this property.

November 7, 2023.
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COLE CREDIT PROPERTYCIM REAL ESTATE FINANCE TRUST, IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20172022 (Unaudited) – (Continued)



Financing Activity
Property Disposition
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, the Company disposed of this property for a gross sales price of $1.9 million, resulting in proceeds of $1.9 million after closing costs and a gain of $242,000. No disposition fees were paid to CR IV Advisors or its affiliates in connection with the sale of the property and the Company has no continuing involvement with this property.
Sale of Cole Capital
On November 13, 2017 the parent of2022, the Company’s sponsor entered into a purchasefinancing activity included the following:
•Extended the Barclays Repurchase Facility’s initial maturity date which was set to mature on September 21, 2024, to September 22, 2025.
•Borrowed $35.0 million under the CMFT Credit Facility.
•Financed CMBS under the J.P. Morgan Repurchase Facility for $31.3 million and sale agreement to sell its ownership interest inrepaid $5.3 million of borrowings under the Company’s sponsor. The completionJ.P. Morgan Repurchase Facility.
•Increased borrowings on first mortgage loans under the Deutsche Bank Repurchase Facility for $1.7 million.
•Repaid $10.8 million of this sale is subject toborrowings under 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.Mortgage Loan.



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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, 2016.2021. 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 Cole Credit PropertyCIM Real Estate Finance 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 the COVID-19 pandemic 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, 2016.2021.
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 investments and properties.
•Our properties, intangible assets and other assets, as well as the property securing our loans or other investments, 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 our borrowers and tenants and from borrower or from tenant defaults generally.
•Our credit and real estate investments subject us to the political, economic, capital markets and other conditions in the United States, including with respect to the effects of the COVID-19 pandemic and other events that impact the United States.
•We are subject to fluctuations in interest rates which could reduce our ability to generate income on our credit investments.
•We are subject to an increase in inflation that could increase our credit and real estate portfolio related costs at a higher rate than our rental income and other revenue and adversely impact demand for rental space and future extensions of our tenants’ leases.
•We are subject to competition from entities engaged in lending which may impact the availability of origination and acquisition opportunities acceptable to us.
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•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, including those associated with the COVID-19 pandemic.
•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 has•We 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.

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at all.
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 are primarily focused on originating, acquiring, financing and managing shorter duration senior secured loans, other related credit investments and core commercial real estate. Our investment strategy allows us to adapt over time in order to respond to evolving market conditions and to capitalize on investment opportunities that may arise at different points in the economic and real estate investment cycle. We are continuing our strategy as a credit focused REIT, balancing our existing core of necessity commercial real estate assets leased to creditworthy tenants under long-term net leases with a portfolio of commercial mortgage loans and other credit investments. Assuming the successful repositioning of our portfolio and subject to market conditions, we then expect to pursue a listing of our common stock on a national securities exchange, though we can provide no assurances that a listing will happen on that timeframe or at all.
We were formed on July 27, 2010, and we elected to be taxed, and currentlyconduct our operations to 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.purposes. We have no paid employees and are externally advised and managed by CR IV Advisors. VEREIT indirectly owns and/or controlsCMFT Management and, with respect to investments in securities and certain other of our external advisor, CR IV Advisors,investments, our Investment Advisor, each of which is an affiliate of CIM, a community-focused real estate and infrastructure owner, operator, lender and developer.
As of September 30, 2022, our loan portfolio consisted of 346 loans with a net book value of $4.0 billion, and investments in real estate-related securities of $470.1 million.
As of September 30, 2022, we owned 384 properties, which consisted of 367 retail properties, nine office properties, and eight industrial properties, representing 25 industry sectors and comprising 11.0 million rentable square feet of commercial space located in 44 states, with a net book value of $2.2 billion. As of September 30, 2022, we owned condominium developments with a net book value of $153.6 million.
In furtherance of our strategy, during the dealer managernine months ended September 30, 2022, we disposed of 130 properties and an outparcel of land, including the two properties previously owned through the Consolidated Joint Venture, encompassing 11.7
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million gross rentable square feet. On December 20, 2021, certain subsidiaries of the Company entered into the Purchase and Sale Agreement to sell 79 shopping centers and two single-tenant properties, for the Offering, CCC, our property manager, CREI Advisors, and our sponsor, Cole Capital.
We ceased issuing shares in our Offering on April 4, 2014 andwhich we were to receive, in the Initial DRIP Offering effective as of Juneaggregate, approximately $1.32 billion in total consideration at closing. During the nine months ended September 30, 2016, but will continue to issue shares of common stock under the Secondary DRIP Offering until a liquidity event occurs, such as the listing of our shares on a national securities exchange or2022, the sale of our company, or the Secondary DRIP Offering is otherwise terminated by81 properties closed under the Board. We expect that property acquisitionsPurchase and Sale Agreement for total consideration of $1.33 billion, as further discussed in 2017 and future periods will be funded by proceeds from financing ofNote 4 — Real Estate Assets to 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 participatedcondensed consolidated financial statements 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.this Quarterly Report on Form 10-Q.
Our operating results and cash flows are primarily influenced by interest income from our credit investments, rental and other property income from our commercial properties, interest expense on our indebtedness and acquisitioninvestment and operating expenses. RentalCMFT Management reviews our investment portfolios and other property income accounted for 88%is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our total revenue for both the three and nine months ended September 30, 2017 and 2016. As 97.5%rights as necessary. In addition, as 99.3% of our rentable square feet was under lease, including any month-to-month agreements, as of September 30, 20172022, with a weighted average remaining lease term of 9.810.7 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 COVID-19. Our manager 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 Advisorsour manager 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.

COVID-19
We are closely monitoring the negative impacts that the COVID-19 pandemic and the efforts to mitigate its spread are having on the economy, our tenants and our business. The extent to which the COVID-19 pandemic continues to impact our operations and those of our tenants will depend on future developments, including, among other factors, the duration, spread and resurgences of the virus, including certain variants thereof, along with related travel advisories and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, the pace, scope and efficacy of vaccination programs, and general uncertainty as to the impact of COVID-19, including related variants, on the global economy.
Macroeconomic Environment
This year has been characterized by steep declines and significant volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth and geopolitical uncertainty. Inflation across many key economies reached generational highs, prompting central banks to take monetary policy tightening actions that have, and will likely continue to create headwinds to economic growth. The ongoing war between Russia and Ukraine is also contributing to mounting inflationary pressure.
Inflation has caused the Federal Reserve to continue raising interest rates, which has created further uncertainty for the economy and for our borrowers and tenants. Although the majority of our business model is such that rising interest rates will, all else being equal, correlate to increases in our net income, increases in interest rates may adversely affect our existing borrowers, tenants and owned property values. Additionally, rising rates and increasing costs may dampen consumer spending and slow corporate profit growth, which may negatively impact the collateral underlying certain of our loans. While there is debate among economists as to whether such factors, coupled with economic contraction in the U.S. in 2022, indicate that the U.S. has entered, or in the near term will enter, a recession, it remains difficult to predict the full impact of recent changes and any future changes in interest rates or inflation.
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Operating Highlights and Key Performance Indicators
2017 Activity from January 1, 2022 through September 30, 2022
Acquired 40 commercial propertiesOperating Results:
•Net income attributable to the Company of $128.2 million, or $0.29 per share.
•Declared aggregate distributions of $0.27 per share.
Credit Portfolio Activity:
•Invested $1.3 billion in first mortgage loans and received principal repayments on loans held-for-investment of $156.9 million.
•Invested $160.9 million in liquid senior loans and sold liquid senior loans for an aggregate purchasegross sales price of $300.5$53.7 million.
•Invested $433.2 million in CMBS and sold one marketable security for an aggregate gross sales price of $132,000.
•Converted $68.2 million of preferred units into a CRE loan upon maturity.
•Invested $74.8 million in corporate senior loans.
Real Estate Portfolio Activity:
•Disposed of 14 retail130 properties and an outparcel of land, including the two properties previously owned through the Consolidated Joint Venture, for an aggregate sales price of $98.6$1.71 billion.
•Disposed of condominium units for an aggregate sales price of $24.2 million.
Financing Activity:
•Increased total debt by $209.2 million.
•Entered into a new repurchase agreement and increased maximum financing amounts on two existing repurchase facilities to provide up to $1.25 billion and $750.0 million, respectively, to finance a portfolio of existing and future commercial real estate mortgage loans and CMBS.
•Entered into a new credit agreement that provides for borrowings of up to $300.0 million, which includes a $100.0 million term loan facility and the Second Amendedability to borrow up to $200.0 million in revolving loans under a revolving credit facility with a $30.0 million letter of credit subfacility.
•Paid down the $212.5 million outstanding balance under the CIM Income NAV Credit Facility and Restatedterminated the CIM Income NAV Credit Agreement that increasedFacility.
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Portfolio Information
The following table shows the allowable borrowingscarrying value of our portfolio by investment type as of September 30, 2022 and extended2021 (dollar amounts in thousands):
 As of September 30,
20222021
Asset CountCarrying ValueAsset CountCarrying Value
Loan Held-For-Investment
First mortgage loans29$3,259,744 48.7 %11$890,804 19.2 %
Liquid senior loans313705,750 10.6 %262571,488 12.3 %
Corporate senior loans457,232 0.9 %—— — %
Less: Current expected credit losses(29,584)(0.4)%(11,219)(0.2)%
Total loans held-for-investment and related receivable, net3463,993,142 59.8 %2731,451,073 31.2 %
Real Estate-Related Securities
CMBS and equity security17470,121 7.0 %15121,757 2.6 %
Preferred units—— — %163,490 1.4 %
Real Estate
Total real estate assets and intangible lease liabilities, net3842,220,272 33.2 %4033,011,599 64.8 %
Total Investment Portfolio747$6,683,535 100.0 %692$4,647,919 100.0 %
Credit Portfolio Information
The following table details overall statistics for our credit portfolio as of September 30, 2022 (dollar amounts in thousands):
CRE Loans (1)
Liquid Senior LoansCMBS and Equity SecurityCorporate Senior Loans
Number of investments (3)
29 313 17 4 
Principal balance$3,283,523 $711,947 $551,738 $58,031 
Net book value$3,244,737 $691,981 $470,121 $56,424 
Unfunded loan commitments$338,539 $1,886 $— $4,324 
Weighted-average interest rate5.9 %6.7 %7.4 %9.2 %
Weighted-average maximum years to maturity (2)
3.94.94.3 4.8

(1)As of September 30, 2022, 100% of our loans by principal balance earned a floating rate of interest, primarily indexed to U.S. dollar LIBOR and SOFR.
(2)Maximum maturity date assumes all extension options are exercised by the maturity dates associated withborrower; however, our CRE loans may be repaid prior to such date.
(3)Table does not include our investment in the original amended and restated unsecured credit facility.Unconsolidated Joint Venture, which had a carrying value of $132.4 million as of September 30, 2022.
Total debt increased by $214.7 million, from $2.26 billion to $2.47 billion.
Real Estate Portfolio Information
As of September 30, 2017,2022, we owned 908384 properties located in 4544 states, the gross rentable square feet of which was 97.5%99.3% leased, including any month-to-month agreements, with a weighted average lease term remaining of 9.810.7 years. During the nine months ended September 30, 2017, we disposed of 14 properties for an aggregate sales price of $98.6 million. As of September 30, 2017,2022, no single tenant accounted for greater than 10% of our 20172022 annualized rental income. As of September 30, 2017,2022, we had certain geographic and industry concentrations in our property holdings. In particular, as of September 30, 2017, 77 of ourwe had properties were located in California,Ohio, which accounted for 10%12% of our 20172022 annualized rental income. In addition, we had tenants in the discounthealth and personal care stores, sporting goods, hobby and musical instrument stores, and grocery store and pharmacy industries, which accounted for 14%13%, 10% and 10%, respectively, of our 20172022 annualized rental income. During the nine months ended September 30, 2022, we disposed of 130 properties and an outparcel of land, including the two properties previously
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owned through the Consolidated Joint Venture, for an aggregate gross sales price of $1.71 billion. Additionally, during the nine months ended September 30, 2022, we sold condominium units for an aggregate gross sales price of $24.2 million.
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, 20172022 and 2016:2021:
  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
 As of September 30,
 20222021
Number of commercial properties384403
Rentable square feet (in thousands) (1)
11,04317,623
Percentage of rentable square feet leased99.3 %94.2 %
Percentage of investment-grade tenants (2)
39.3 %36.9 %

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


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ResultsBBB- or higher by Standard & Poor’s or a credit rating of Operations
Baa3 or higher by Moody’s Investor Service, Inc. (“Moody’s”). The following table provides summary information about our results of operations for the three and nine months ended September 30, 2017 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 primarily of rental and other property income from net leased commercial properties. We also incur certain operating expenses that are subject to reimbursementratings may reflect those assigned by our tenants, which results in tenant reimbursement income.
The increase in revenue of $5.2 million and $13.4 million during the three and nine months ended September 30, 2017, respectively, as comparedStandard & Poor’s or Moody’s 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 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 $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, as well as recognizing a full period of property operating expenses on six and 14 properties acquired during the three and nine months ended September 30, 2016, respectively.

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Real Estate Tax Expenses
The increase in real estate tax expenses of $664,000 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.
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.
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 propertyguarantor or the origination or acquisition of a loan, so longparent company, as the total acquisition feesapplicable. The weighted average credit rating is weighted based on annualized rental income and expenses relating to the transaction do not exceed 6.0% of the contract purchase price, unless otherwise approvedis for only those tenants rated 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.Standard & Poor’s.
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 related to 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 primarily 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 related2022 and 2021, 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, 2021 and this Quarterly Report on Form 10-Q, the effects of the COVID-19 pandemic, and national economic conditions affecting real estate in general that may reasonably be expected to property acquisitions were expensed as incurred.
Depreciationhave a material impact on our results from the acquisition, management and Amortization
The increaseoperation 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 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 samefuture 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) expense reimbursements to related parties, (c) management fees, (d) transaction-related expenses, (e) real estate impairment, (f) increase in provision for credit losses, (g) gain on disposition of real estate and condominium developments, net, (h) merger-related expenses, net and (i) interest income. Our calculation of net operating income may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income. In determining the same store property pool, we include all properties that were owned for the entirety of both the current and prior reporting periods, except for properties during the current or prior year that were under development or redevelopment.
“Non-same store” properties, as reflected in
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Comparison of the table below, includes properties acquired on or after July 1, 2016 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 endedThree Months Ended September 30, 2017 decreased $686,0002022 and 2021
The following table reconciles net income, calculated in accordance with GAAP, to $83.0 million, comparednet operating income (in thousands):
For the Three Months Ended September 30,
20222021Change
Net income$15,539 $42,603 $(27,064)
Loss on extinguishment of debt3,344 3,251 93 
Interest expense and other, net39,366 20,381 18,985 
Unrealized loss on equity security9,030 — 9,030 
Gain on investment in unconsolidated entities(2,195)— (2,195)
Operating income65,084 66,235 (1,151)
Merger-related expenses, net— 398 (398)
Gain on disposition of real estate and condominium developments, net(4,454)(34,033)29,579 
Increase (decrease) in provision for credit losses5,664 (1,792)7,456 
Real estate impairment527 891 (364)
Depreciation and amortization16,948 22,801 (5,853)
Transaction-related expenses9 6 3 
Management fees12,915 11,703 1,212 
Expense reimbursements to related parties3,428 2,516 912 
General and administrative expenses3,435 3,076 359 
Interest income(66,222)(19,755)(46,467)
Net operating income$37,334 $52,046 $(14,712)
Our operating segments include credit and real estate. Refer to $83.7Note 16 — Segment Reporting to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion of our operating segments.
Credit Segment
Interest Income
The increase in interest income of $46.5 million for the three months ended September 30, 2017. The2022, as compared to the same store properties were 97.4% occupiedperiod in 2021, was due to an increase in the overall size of our investment portfolio. As of September 30, 2022, we held $4.5 billion in credit investments compared to $1.6 billion in credit investments as of September 30, 2017 and 98.5% occupied as2021.
Increase (Decrease) in Provision for Credit Losses
The increase in provision for credit losses of September 30, 2016. The following table shows$7.5 million during the contract rental revenue from properties owned for both of the entire three months ended September 30, 20172022, as compared to the same period in 2021, was primarily due to the increased number of loan investments entered into during the three months ended September 30, 2022, as compared to the same period in 2021.
Real Estate Segment
A total of 302 properties were acquired before July 1, 2021 and 2016, alongrepresent our “same store” properties during the three months ended September 30, 2022 and 2021. “Non-same store” properties, for purposes of the table below, includes properties acquired or disposed of on or after July 1, 2021.
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The following table details the components of net operating income broken out between same store and non-same store properties (in thousands):
TotalSame StoreNon-Same Store
For the Three Months Ended September 30,For the Three Months Ended September 30,For the Three Months Ended September 30,
20222021Change20222021Change20222021Change
Rental and other property income$43,559 $70,794 $(27,235)$29,354 $29,822 $(468)$14,205 $40,972 $(26,767)
Property operating expenses4,432 11,157 (6,725)739 872 (133)3,693 10,285 (6,592)
Real estate tax expenses1,793 7,591 (5,798)900 1,001 (101)893 6,590 (5,697)
Total property operating expenses6,225 18,748 (12,523)1,639 1,873 (234)4,586 16,875 (12,289)
Net operating income$37,334 $52,046 $(14,712)$27,715 $27,949 $(234)$9,619 $24,097 $(14,478)
Loss on Extinguishment of Debt
The increase in loss on extinguishment of debt of $93,000 for the three months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the increase in terminations of certain mortgage notes in connection with the disposition of the underlying properties during the three months ended September 30, 2022, as compared to the same period in 2021.
Gain on Investment in Unconsolidated Entities
The increase in gain on investment in unconsolidated entities of $2.2 million for the three months ended September 30, 2022, as compared to the same period in 2021, was due to the Company’s investment in NP JV Holdings, which was not invested in by the Company during the three months ended September 30, 2021.
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 $19.0 million for the three months ended September 30, 2022, as compared to the same period in 2021, was primarily due to an increase in the three-month average aggregate amount of debt outstanding from $2.8 billion as of September 30, 2021 to $4.3 billion as of September 30, 2022, primarily as a reconciliationresult of entering into and upsizing additional repurchase agreements subsequent to rentalSeptember 30, 2021, coupled with an increase in the Company’s weighted average interest rate from 2.8% as of September 30, 2021 to 4.5% as of September 30, 2022.
Merger-Related Expenses, Net
The decrease in merger-related expenses, net of $398,000 for the three months ended September 30, 2022, as compared to the same period in 2021, was due to expenses incurred related to the CIM Income NAV Merger during the three months ended September 30, 2021. No such expenses were incurred during the three months ended September 30, 2022.
Gain on Disposition of Real Estate and Condominium Developments, Net
The decrease in gain on disposition of real estate and condominium developments, net, of $29.6 million during the three months ended September 30, 2022, as compared to the same period in 2021, was due to the disposition of 18 properties, an outparcel of land and condominium units for a gain of $4.5 million during the three months ended September 30, 2022, compared to the disposition of 66 properties, an outparcel of land and condominium units for a gain of $34.0 million during the three months ended September 30, 2021.
Real Estate Impairment
The decrease in real estate impairments of $364,000 during the three months ended September 30, 2022, as compared to the same period in 2021, was due to one property that was deemed to be impaired, resulting in impairment charges of $527,000 during the three months ended September 30, 2022, compared to six properties that were deemed to be impaired, resulting in impairment charges of $891,000 during the three months ended September 30, 2021.
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Depreciation and Amortization
The decrease in depreciation and amortization of $5.9 million during the three months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the disposition of 134 properties subsequent to September 30, 2021, partially offset by the acquisition of 115 properties through the CIM Income NAV Merger that closed in December 2021.
Transaction-Related Expenses
Transaction-related expenses remained generally consistent during the three months ended September 30, 2022, as compared to the same period in 2021.
Management Fees
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). Furthermore, as discussed in Note 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, pursuant to the Investment Advisory and Management Agreement, for management of investments in the Managed Assets (as defined in the Investment Advisory and Management Agreement), CMFT Securities pays the Investment Advisor the Investment Advisory Fee, payable quarterly in arrears, equal to 1.50% per annum (0.375% per quarter) of CMFT Securities’ Equity (as defined in the Investment Advisory and Management Agreement). Because the Managed Assets are excluded from the calculation of management fees payable by the Company to CMFT Management pursuant to the Management Agreement, the total management and advisory fees payable by the Company to its external advisors are not increased as a result of the Investment Advisory and Management Agreement. In addition, pursuant to the Sub-Advisory Agreement, in connection with providing investment management services with respect to the corporate credit-related securities held by CMFT Securities, on a quarterly basis, the Investment Advisor designates 50% of the sum of the Investment Advisory Fee payable to the Investment Advisor as sub-advisory fees.
The increase in management fees of $1.2 million during the three months ended September 30, 2022, as compared to the same period in 2021, was primarily due to increased equity from the issuance of common stock in connection with the CIM Income NAV Merger that closed in December 2021.
Expense Reimbursements to Related Parties
Pursuant to the Investment Advisory and Management Agreement, CMFT Securities reimburses the Investment Advisor for costs and expenses incurred by the Investment Advisor on its behalf. Additionally, we may be required to reimburse certain expenses incurred by CMFT Management in providing management services, subject to limitations as set forth in the Management Agreement (as discussed in Note 12 — Related-Party Transactions and Arrangements to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q).
The increase in expense reimbursements to related parties of $912,000 during the three months ended September 30, 2022, as compared to the same period in 2021, was primarily due to increased operating expense reimbursements due to CMFT Management, primarily as a result of increased allocated payroll resulting from increased portfolio activity.
General and Administrative Expenses
The primary general and administrative expense items are legal and accounting fees, banking fees and transfer agency and board of directors costs.
General and administrative expenses remained generally consistent during the three months ended September 30, 2022, as compared to the same period in 2021.
Net Operating Income
Same store property net operating income remained relatively consistent during the three months ended September 30, 2022, as compared to the same period in 2021.
Non-same store property net operating income decreased $14.5 million during the three months ended September 30, 2022, as compared to the same period in 2021. The decrease was primarily due to the disposition of 134 properties subsequent to September 30, 2021, partially offset by an increase in net operating income due to the acquisition of 115 properties in connection with the CIM Income NAV Merger that closed in December 2021.
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Comparison of the Nine Months Ended September 30, 2022 and 2021
The following table reconciles net income, calculated in accordance with GAAP, (dollar amounts into net operating income (in thousands):
For the Nine Months Ended September 30,
20222021Change
Net income$128,253 $97,637 $30,616 
Loss on extinguishment of debt19,584 4,729 14,855 
Interest expense and other, net98,453 56,863 41,590 
Unrealized loss on equity security15,440 — 15,440 
Gain on investment in unconsolidated entities(8,858)— (8,858)
Operating income252,872 159,229 93,643 
Merger-related expenses, net— 398 (398)
Gain on disposition of real estate and condominium developments, net(118,135)(80,502)(37,633)
Increase (decrease) in provision for credit losses15,315 (1,101)16,416 
Real estate impairment19,814 5,268 14,546 
Depreciation and amortization54,104 73,186 (19,082)
Transaction-related expenses462 37 425 
Management fees39,613 35,035 4,578 
Expense reimbursements to related parties10,899 8,387 2,512 
General and administrative expenses10,590 11,109 (519)
Interest income(142,669)(48,168)(94,501)
Net operating income$142,865 $162,878 $(20,013)
   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)%
Credit Segment

(1) Includes amortizationInterest Income
The increase in interest income of above- and below-market lease intangibles and deferred lease incentives.$94.5 million for the nine months ended September 30, 2022, as compared to the same period in 2021, was due to an increase in the overall size of our investment portfolio. As of September 30, 2022, we held $4.5 billion in credit investments compared to $1.6 billion in credit investments as of September 30, 2021.
(2) We disposedIncrease (Decrease) in Provision for Credit Losses
The increase in provision for credit losses of five properties$16.4 million during the yearnine months ended December 31, 2016September 30, 2022, as compared to the same period in 2021, was primarily due to the increased number of loan investments entered into during the nine months ended September 30, 2022, as compared to the same period in 2021.
Real Estate Segment
A total of 302 properties were acquired before January 1, 2021 and 14represent our “same store” properties during the nine months ended September 30, 2017.
“Non-same2022 and 2021. “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 in2021.
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The following table details the table below, contract rental revenue on the 851components of net operating income broken out between same store and non-same store properties for the nine months ended September 30, 2017 decreased $1.4 million to $244.0 million, compared to $245.4(in thousands):
TotalSame StoreNon-Same Store
For the Nine Months Ended September 30,For the Nine Months Ended September 30,For the Nine Months Ended September 30,
20222021Change20222021Change20222021Change
Rental and other property income$170,803 $223,026 $(52,223)$88,639 $88,066 $573 $82,164 $134,960 $(52,796)
Property operating expenses17,408 32,632 (15,224)2,269 2,485 (216)15,139 30,147 (15,008)
Real estate tax expenses10,530 27,516 (16,986)2,969 3,211 (242)7,561 24,305 (16,744)
Total property operating expenses27,938 60,148 (32,210)5,238 5,696 (458)22,700 54,452 (31,752)
Net operating income$142,865 $162,878 $(20,013)$83,401 $82,370 $1,031 $59,464 $80,508 $(21,044)
Loss on Extinguishment of Debt
The increase in loss on extinguishment of debt of $14.9 million for the nine months ended September 30, 2016. The2022, as compared to the same store properties were 97.4% occupied asperiod in 2021, was primarily due to the increased terminations of September 30, 2017 and 98.6% occupied as of September 30, 2016. The following table showscertain mortgage notes in connection with the contract rental revenue from properties owned for bothdisposition 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):

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   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)%

(1) Includes amortization of above- and below-market lease intangibles and deferred lease incentives.
(2) We disposed of five properties during the year ended December 31, 2016 and 14underlying properties during the nine months ended September 30, 2017.2022, as compared to the same period in 2021.
Gain on Investment in Unconsolidated Entities
The increase in gain on investment in unconsolidated entities of $8.9 million for the nine months ended September 30, 2022, as compared to the same period in 2021, was due to the Company’s investment in CIM UII Onshore and NP JV Holdings, neither of which were invested in by the Company during the nine months ended September 30, 2021.
Interest Expense and Other, Net
The increase in interest expense and other, net, of $41.6 million for the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to an increase in the nine-month average aggregate amount of debt outstanding from $2.5 billion as of September 30, 2021 to $4.2 billion as of September 30, 2022 as a result of entering into and upsizing additional repurchase agreements and assuming the CIM Income NAV Credit Facility as part of the CIM Income NAV Merger subsequent to September 30, 2021, coupled with an increase in the Company’s weighted average interest rate from 2.8% as of September 30, 2021 to 4.5% as of September 30, 2022.
Merger-Related Expenses, Net
The decrease in merger-related expenses, net of $398,000 for the nine months ended September 30, 2022, as compared to the same period in 2021, was due to expenses incurred related to the CIM Income NAV Merger during the nine months ended September 30, 2021. No such expenses were incurred during the nine months ended September 30, 2022.
Gain on Disposition of Real Estate and Condominium Developments, Net
The increase in gain on disposition of real estate and condominium developments, net, of $37.6 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the disposition of 130 properties and one outparcel of land, including the two properties previously owned through the Consolidated Joint Venture, for a gain of $115.0 million and the disposition of condominium units for a gain of $3.1 million during the nine months ended September 30, 2022, compared to the disposition of 113 properties and an outparcel of land for a gain of $75.6 million and the disposition of condominium units for a gain of $4.9 million during the nine months ended September 30, 2021.
Real Estate Impairment
The increase in impairments of $14.5 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was due to 19 properties and certain condominium units that were deemed to be impaired, resulting in impairment charges of $19.8 million during the nine months ended September 30, 2022, compared to 11 properties that were deemed to be impaired, resulting in impairment charges of $5.3 million during the nine months ended September 30, 2021.
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Depreciation and Amortization
The decrease in depreciation and amortization of $19.1 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to the disposition of 134 properties subsequent to September 30, 2021, partially offset by the acquisition of 115 properties through the CIM Income NAV Merger that closed in December 2021.
Transaction-Related Expenses
The increase in transaction-related expenses of $425,000 during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to escrow holdbacks that were deemed uncollectible as of September 30, 2022 and were therefore written off. No such write-offs occurred during the same period in 2021.
Management Fees
The increase in management fees of $4.6 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to increased equity from the issuance of common stock in connection with the CIM Income NAV Merger that closed in December 2021.
Expense Reimbursements to Related Parties
The increase in expense reimbursements to related parties of $2.5 million during the nine months ended September 30, 2022, as compared to the same period in 2021, was primarily due to increased operating expense reimbursements due to CMFT Management, primarily as a result of increased allocated payroll resulting from increased portfolio activity.
General and Administrative Expenses
The decrease in general and administrative expenses of $519,000 for the nine months ended September 30, 2022, compared to the same period in 2021, was primarily due to increased legal expenses incurred during the nine months ended September 30, 2021 related to the foreclosure completed in January 2021 to take control of the assets which previously secured the Company’s mezzanine loans, as discussed in Note 8 — Loans Held-For-Investment to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q. The overall decrease was partially offset by increased expenses related to the assumption of the CIM Income NAV Credit Facility in connection with the CIM Income NAV Merger completed in December 2021.
Net Operating Income
Same store property net operating income increased $1.0 million during the nine months ended September 30, 2022, as compared to the same period in 2021. The increase was partially due to amended lease agreements, coupled with an increase in same store occupancy to 98.9% as of September 30, 2022 from 98.8% as of September 30, 2021.
Non-same store property net operating income decreased $21.0 million during the nine months ended September 30, 2022, as compared to the same period in 2021. The decrease was primarily due to the disposition of 134 properties subsequent to September 30, 2021, partially offset by an increase in net operating income due to the acquisition of 115 properties in connection with the CIM Income NAV Merger that closed in December 2021.
Distributions
ThePrior to April 1, 2020, on a quarterly basis, our Board authorized a daily distribution based on 365 days infor the calendar year, of $0.001711452succeeding quarter. Our Board authorized the following daily distribution amounts per share for stockholdersthe 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
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On April 20, 2020, our Board 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 had greater visibility into the impact that the COVID-19 pandemic would 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 on the United States and worldwide financial markets and economy. On March 25, 2021, the Board resumed declaring distributions on a quarterly basis, which are paid out on a monthly basis.
Since April 2020, our Board authorized the following monthly distribution amounts per share, payable to stockholders as of the close of business on each day ofrecord date for the period commencing on January 1, 2017 and ending on March 31, 2018. applicable month, for the periods indicated below:
Period CommencingPeriod EndingMonthly Distribution Amount
April 2020May 2020$0.0130
June 2020June 2020$0.0161
July 2020July 2020$0.0304
August 2020December 2021$0.0303
January 2022September 2022$0.0305
October 2022December 2022$0.0339
January 2023March 2023$0.0350
As of September 30, 2017,2022, we had distributions payable of $16.0$13.3 million.
DuringThe following table presents distributions and source of distributions for 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, through the issuance of shares pursuant to the DRIP Offerings. periods indicated below (dollar amounts in thousands):
Nine Months Ended September 30,
20222021
AmountPercentAmountPercent
Distributions paid in cash$91,297 76 %$82,541 84 %
Distributions reinvested28,664 24 %16,264 16 %
Total distributions$119,961 100 %$98,805 100 %
Sources of distributions:
Net cash provided by operating activities (1)
$119,961 100 %$97,518 99 %
Proceeds from the issuance of debt (2)
— — %1,287 1 %
Total sources$119,961 100 %$98,805 100 %

(1)Net cash provided by operating activities for the nine months endedSeptember 30, 20172022 and 2021 was $158.2$125.4 million and reflected a reduction$97.5 million, respectively.
(2)Net proceeds on the repurchase facilities, credit facilities and notes payable for real-estate acquisition-related expenses incurred of $1.5 million in accordance with GAAP. For the nine months ended September 30, 2016, net cash provided by operating activities2021 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.$584.1 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 limit the number of shares redeemed pursuant to our share redemption program as follows: (1) we will not redeem in excess of 5.0%5% 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. Fundingpaid; and (2) funding for the redemption of shares will be limited, among other things, to the cumulative net proceeds we receive from the sale of shares under the Secondaryour DRIP, Offering, net of shares redeemed to date. In addition,an effort to accommodate redemption requests throughout the calendar year, 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 receivedwill determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable payment date. If we cannot purchase all shares presented for redemption requests of approximately 9.8 million shares for $98.7 million in excess of the net proceeds we receivedany fiscal quarter, based upon insufficient cash available from the issuancesale of shares under our DRIP and/or the Secondarylimit on the number of shares we may redeem during any quarter or year, we will give priority to the redemption of deceased stockholders’ shares. While deceased
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stockholders’ shares will be included in calculating the maximum number of shares that may be redeemed in any annual or quarterly period, they will not be subject to the annual or quarterly percentage caps; therefore, if the volume of requests to redeem deceased stockholders’ shares in a particular quarter were large enough to cause the annual or quarterly percentage caps to be exceeded, even if no other redemption requests were processed, the redemptions of deceased stockholders’ shares would be completed in full, assuming sufficient proceeds from the sale of shares under our DRIP, Offering during the three months ended September 30, 2017. Management, in its discretion, limited the amountnet of shares redeemed to date, were available. If sufficient proceeds from the sale of shares under our DRIP, net of shares redeemed to date, were not available to pay all such redemptions in full, the requests to redeem deceased stockholders’ shares would be honored on a pro rata basis. We next will give priority to requests for full redemption of accounts with a balance of 250 shares or less at the three months ended September 30, 2017time we receive the request, in order to reduce the expense of maintaining small accounts. Thereafter, we will honor the remaining redemption requests on a pro rata basis. Following such quarterly redemption period, if a stockholder would like to resubmit the unsatisfied portion of the prior request for redemption, such stockholder must submit a new request for redemption of such shares issued pursuantprior to the Secondary DRIP Offering duringlast day of the respective period.new quarter. Unfulfilled requests for redemption will not be carried over automatically to subsequent redemption periods. In addition, our management reserves the right, in its sole discretion at any time, and from time to time, to reject any request for redemption for any reason. Our Board may choose to amend the terms of, suspend or terminate our share redemption program at any time in its sole discretion if it believes that such action is in the best interest of us and our stockholders. Any material modifications or suspension of the share redemption program will be disclosed to our stockholders as promptly as practicable in our reports filed with the SEC and via our website. During the nine months ended September 30, 2017,2022, we received valid redemption requests under our share redemption program totaling approximately 30.774.8 million shares, of which we redeemed approximately 5.12.8 million shares as of September 30, 20172022 for $51.5$19.9 million (at an average redemption price of $10.08$7.20 per share) and approximately 2.51.3 million shares subsequent to September 30, 20172022 for $25.0$9.6 million at an average(at a redemption price of $10.08$7.20 per share.share). The remaining redemption requests relating to approximately 23.170.8 million shares went unfulfilled. A valid redemption request is one that complies with the applicable requirements and guidelines of our currentthe share redemption program.program then in effect. The share redemptions were funded with proceeds from the Secondary DRIP Offering.Offering and available borrowings.

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Liquidity and Capital Resources
General
We expect to utilize fundsproceeds from real estate dispositions, sales proceeds and principal payments received on credit investments, cash flowflows from operations and future proceeds from secured or unsecured financing to complete future property acquisitions and loan originations, repayment of certain indebtedness and for general corporate uses. The sources of our operating cash flows will primarily be provided by interest income from our portfolio of credit investments and the rental and other property income received from current and future leased properties.
Sources of Liquidity
Our Credit Facility provides for borrowingsprimary sources of up to $1.40 billion, which includes a $1.05 billion unsecured Term Loan and up to $350.0 million in unsecured Revolving Loans. As of September 30, 2017, we had $164.9 million in unused capacity under the Credit Facility, subject to borrowing availability. As of September 30, 2017, we also hadliquidity include cash and cash equivalents and available borrowings under our debt facilities, which are set forth in the following table:
September 30, 2022December 31, 2021
Cash and cash equivalents$124,836 $107,381 
Unused borrowing capacity (1)
575,907 549,811 
$700,743 $657,192 

(1)Subject to borrowing availability.
See Note 10 — Repurchase Facilities, Credit Facilities and Notes Payable to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional details regarding our repurchase facilities, notes payable and credit facilities. The following table details our outstanding financing arrangements and borrowing capacity as of $4.2 million.September 30, 2022 (in thousands):
Short-term
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Portfolio Financing Outstanding Principal Balance
Maximum Capacity (1)
Notes payable – fixed rate debt$36,647 $36,647 
Notes payable – variable rate debt470,860 470,860 
First lien mortgage loan134,007 134,007 
ABS mortgage notes764,970 764,970 
Credit facilities691,500 850,000 
Repurchase facilities2,282,593 2,700,000 (2)
Total portfolio financing$4,380,577 $4,956,484 

(1)Subject to borrowing availability.
(2)Facilities under the Master Repurchase Agreement with J.P. Morgan carry no maximum facility size.
Liquidity and Capital Resources
On a short-term basis, ourOur principal demands for funds will be for the acquisition or origination of credit investments and real estate, and real estate-related investments and the payment of tenant improvements, 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$336.4 million within the next 12 months. Wemonths, $195.5 million of which has a rolling term that resets monthly, as further discussed in Note 17 — Subsequent Events to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
Generally, 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. 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. We believe that the resources stated above will be sufficient to satisfy our operating requirements for the foreseeable future,acquisitions and we do not anticipate a need to raise funds from sources other than those described above within the next 12 months.
Long-term Liquidity and Capital Resources
On a long-term basis, our principal demands for funds will be for the acquisition of real estate and real estate-related investments 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 flow 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.
loan originations. 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. Operating cash flows are expected to increase as we complete future acquisitions. We expect that substantially all net cash flows from the OfferingsSecondary DRIP Offering 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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Table 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 disposition of Contents


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.
Contractual Obligations
As of September 30, 2017,2022, we had $2.5 billion of debt outstanding with a carrying value of $4.4 billion and a weighted average interest rate of 3.5%4.5%. See Note 710 — Repurchase Facilities, 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.
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Our contractual obligations as of September 30, 20172022 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)
TotalLess Than 1
Year		1-3 Years3-5 YearsMore Than
5 Years
Principal payments — fixed rate debt$36,647 $443 $36,204 $— $— 
Interest payments — fixed rate debt3,537 1,591 1,946 — — 
Principal payments — variable rate debt470,860 — 49,366 175,710 245,784 
Interest payments — variable rate debt (2)
113,857 24,972 46,267 41,289 1,329 
Principal payments — first lien mortgage loan134,007 134,007 — — — 
Interest payments — first lien mortgage loan (2)
8,630 8,630 — — — 
Principal payments — ABS mortgage notes764,970 6,450 — — 758,520 
Interest payments — ABS mortgage notes (2)
163,355 21,179 42,227 42,227 57,722 
Principal payments — credit facilities691,500 — 691,500 — — 
Interest payments — credit facilities (2)
81,735 34,655 47,080 — — 
Principal payments — repurchase facilities2,282,593 195,473 2,087,120 — — 
Interest payments — repurchase facilities (2)
209,479 95,751 113,728 — — 
Total$4,961,170 $523,151 $3,115,438 $259,226 $1,063,355 

(1)The table does not include amounts due to CR IV Advisors or its affiliates pursuant to our advisory 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 as of September 30, 2017.
(3)As of September 30, 2017, we had $217.1 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.
(1)The table does not include amounts due to CMFT Management or its affiliates pursuant to our Management Agreement because such amounts are not fixed and determinable. The table also does not include $344.7 million of unfunded commitments related to our existing CRE loans held-for-investment, corporate senior loans held-for-investment and liquid senior loans and $79.5 million of unfunded commitments related to the NewPoint JV, which are subject to the satisfaction of borrower milestones. In addition, the table does not include  $6.3 million of unsettled liquid senior loan acquisitions, which is included in cash and cash equivalents in the accompanying condensed consolidated balance sheet.
(2)Interest payments on the variable rate debt, first lien mortgage loan, ABS mortgage notes, credit facilities and repurchase facilities have been calculated based on outstanding balances as of September 30, 2022 through their respective maturity dates. This is only an estimate as actual amounts borrowed and interest rates could vary over time.
We expect to incur additional borrowings in the future to acquire additional properties and make other real estate-relatedcredit investments. There is no limitation on the amount we may borrow against any single improved property. Our borrowings will not exceed 75%As of the costSeptember 30, 2022, our ratio of ourdebt to total gross assets (or 300%net of net assets) asgross intangible lease liabilities was 61.0% and our ratio 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 discloseddebt 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 majoritynet of our independent directors and disclosed to our stockholders in the next quarterly report along with the justification for such excess borrowing. Our advisor has set a target leverage ratio of 40% to 50% of the greater of cost (before deducting depreciation or other non-cash reserves) or fairgross intangible lease liabilities was 61.1%. Fair market value of our gross assets. Fair market valuefirst mortgage loans is based on the estimated market value as of September 30, 2022. Fair market value of the remaining credit investments is based on the market value as of September 30, 2022. Fair market value of our real estate assets is based on the estimated market value as of DecemberMarch 31, 20162021 that werewas used to determine our estimated per share NAV, and for those assets acquired from JanuaryApril 1, 20172021 through September 30, 20172022 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. 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, our net debt leverage ratio, which is the ratio of net debt to total gross real estate assets net of gross intangible lease liabilities, was 48.7%. 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, 2017 (dollar amounts in thousands):

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Balance as of
September 30, 2017
Notes payable and credit facility, net $2,454,282
Deferred costs and net premiums (1)
 18,211
Less: Cash and cash equivalents (4,231)
Net debt $2,468,262
   
Gross real estate assets, net (2)
 $5,069,802
Net debt leverage ratio 48.7%
______________________
(1) Deferred costs relate to mortgage notes payable and the term portion of the Credit Facility.
(2) Net of gross intangible lease liabilities.
Cash Flow Analysis
Operating Activities. During the nine months ended September 30, 2017, net Net cash provided by operating activities increased $2.7by $27.9 million to $158.2 million,for the nine months ended September 30, 2022, as compared to $155.5 million of net cash provided by operating activities for the nine months endedSeptember 30, 2016.same period in 2021. The changeincrease was primarily due to net increases in credit investments of $2.8 billion driving higher interest income and the acquisition of 41 additional rental income-producing115 properties in connection with the CIM Income NAV Merger, partially offset by the disposition of 134 properties subsequent to September 30, 2016, resulting in an increase in 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 adjustment 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.2021. 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$147.5 million to $217.1 million for the nine months endedSeptember 30, 2017, compared to $172.4 million for the nine months endedSeptember 30, 2016. The increase was primarily due to the acquisition of 40 commercial properties for an aggregate purchase price of $300.5 million during the nine months ended September 30, 2017,2022, as compared to the acquisitionsame period in 2021. The change was primarily due to an increase in the net investment in loans held-for-investment of 14 commercial properties$682.9 million and an increase in the net investment of real estate-related securities of $272.7 million, partially offset by an increase in proceeds from disposition of real estate assets of $818.9 million.
Financing Activities. Net cash provided by financing activities decreased $35.0 million for an aggregate purchase price of $197.0 million during the nine months ended September 30, 2016,2022, as well as a decrease 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.
Financing Activities. During the nine months ended September 30, 2017, net cash provided by financing activities was $53.4 million, compared to net cash provided by financing activities of $9.0 million for the nine months endedSeptember 30, 2016.same period in 2021. The change was primarily due to an increase in net borrowingsrepayments on the repurchase facilities, notes payable and credit facilities of $29.9 million, coupled with an increase in redemptions of common stock of $17.3 million due to the Credit Facilityreinstatement of $52.6 million,the share redemption program on April 1, 2021. The change was
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partially offset by an increase indecreased deferred financing costs paid as a result of $9.9 million and an increasea reduced amount of debt agreements entered into compared to the same period in distributions to investors of $5.2 million.2021.
Election as a REIT
We elected to be taxed, and currentlyoperate our business to 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 Significant Accounting 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, 2016.2021. We consider our critical accounting policies to be the following:
•Recoverability of Real Estate Assets; and
•Allocation of Purchase Price of Real Estate Assets.Assets; and
•Current Expected Credit Losses.
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, 2016.2021. 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, 20162021 and related notes thereto.
Related-Party Transactions and Agreements
We have entered into agreements with CR IV Advisors or its affiliatesCMFT Management and our Investment Advisor whereby we agree to pay certain fees to, or reimburse certain expenses of, CR IV AdvisorsCMFT Management, the Investment Advisor or its affiliates such astheir affiliates. In addition, we have invested in, and may continue to invest in, certain co-investments with funds that are advised by an affiliate of CMFT Management. We may also originate loans to third parties that use the proceeds to finance the acquisition and advisory fees and expenses, organization and offering costs, leasing fees and reimbursement of certain operating costs.real estate from funds that are advised by an affiliate of CMFT Management. See Note 1112 — Related-Party Transactions and Arrangementsto 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 Advisors act asour Board, chief executive officer and president, who is also a founder and principal of CIM and is an advisor to,officer/director of certain of its affiliates, is the vice president of our manager. 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, is the president and treasurer of our manager. Additionally, two of our directors, Jason Schreiber and Emily Vande Krol, are employees of CIM. Nathan D. DeBacker, our chief financial officer and onetreasurer, is a vice president of our directors act as executive officers and/or a directormanager and is an officer of Cole Credit Property Trust V, Inc., Cole Office & Industrial REIT (CCIT II), Inc., Cole Real Estate Income Strategy (Daily NAV), Inc., Cole Office & Industrial REIT (CCIT III), Inc., and/or other real estate offerings in registration, allcertain of which are or intend to be public, non-listed REITs offered, distributed and/or managed by affiliates of CR IV Advisors.its affiliates. 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, including other real estate offerings in registration,affiliates of our manager, 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 Capitalaffiliates of our manager 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, 2016.2021.
Off-Balance Sheet Arrangements
As of September 30, 2017Item 3.Quantitative and December 31, 2016, 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.Qualitative Disclosures About Market Risk

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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
Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our investments and the related financing obligations. In general, we seek to match the interest rate characteristics of our investments with the interest rate characteristics of any related financing obligations such as repurchase agreements, bank credit facilities, term loans, revolving facilities and securitizations.
As of September 30, 2017,2022, we had an aggregate of $3.4 billion of variable rate debt, of $443.3 million, excluding any debt subject to interest rate swap agreements and interest rate cap agreements, and therefore, we are exposed to interest rate changes in LIBOR.LIBOR and SOFR. As of September 30, 2017,2022, an increase or decrease of 50 basis points in interest rates would result in an increase or decrease in interest expense of $2.2$17.0 million per year.
As of September 30, 2017,2022, we had 12two interest rate swapcap agreements outstanding, which mature on varioushad maturity dates ranging from June 2018July 2023 through July 2021,October 2023, with an aggregate notional amount of $1.0 billion$712.0 million and an aggregate fair value of the net derivative liabilityasset of $262,000.$4.7 million. The fair value of these interest rate swapcap agreements is dependent upon existing market interest rates and swap spreads. As of September 30, 2017,2022, an increase of 50 basis points in interest rates would result in a change of $15.7$2.4 million to the fair value of the net derivative liability,asset, resulting in a net derivative asset of $15.4$7.1 million. A decrease of 50 basis points in interest rates would result in a $16.0$1.9 million change to the fair value of the net derivative liability,asset, resulting in a net derivative liabilityasset of $16.2$2.8 million.
As the information presented above includes only those exposures that existed as of September 30, 2017,2022, 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.
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 its intent 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 SOFR as its preferred alternative to U.S. dollar LIBOR in derivatives and other financial contracts. On December 31, 2021, the FCA ceased publishing one week
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and two-month LIBOR, and the FCA intends to cease publishing all remaining LIBOR after June 30, 2023. This announcement has several implications, including setting the spread that may be used to automatically convert contracts from LIBOR to SOFR. The Company anticipates that LIBOR will continue to be available at least until June 30, 2023. 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.
As of September 30, 2022, we have interest rate cap agreements maturing on various dates from July 2023 through October 2023, 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 reference rate may be challenging, especially if we cannot agree with the respective counterparty about how to make the transition.
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 at least the end of June 30, 2023, 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.
Alternative rates and other market changes related to the replacement of LIBOR, including the introduction of financial products and changes in market practices, may lead to risk modeling and valuation challenges, such as adjusting interest rate accrual calculations and building a term structure for an alternative rate.
The introduction of an alternative rate also may create additional basis risk and increased volatility as alternative rates are phased in and utilized in parallel with LIBOR.
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, including the impact of the COVID-19 pandemic (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.
Our loans and investments are also subject to credit risk. The performance and value of our loans and investments depend upon the owners’ ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our manager reviews our investment portfolios and in certain instances is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.
Item 4.Controls and Procedures
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, 20172022 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, 2017,2022, were effective at a reasonable assurance level.
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 endedSeptember 30, 20172022 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
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 or our subsidiaries are a party or to which our properties are the subject.
Item 1A.Risk Factors
Except as set forth below, thereItem 1A.Risk Factors
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, 2016.2021.
We have paid,
Item 2.Unregistered Sales of Equity Securities and may continue to pay, someUse 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 invest in real estate and may negatively impact the value of our stockholders’ investment in our common stock.Proceeds
To the extent that cash flow from operations has been or is 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 flow from operations. Such sources may include borrowings, proceeds from asset sales or the sale of our securities in the Offerings or future offerings. We have no limits on the amounts we may pay from sources other than cash flow from operations. The payment of distributions from sources other than cash provided by operating activities mayreduce the amount of proceeds available for investment and operations or cause us to incur additional interest expense as a result of borrowed funds, and may cause investors to experience dilution. This may negatively impact the value of our stockholders’ investment in 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 million 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 by cash flows from operations of $193.7 million, or 99%, and proceeds from the issuance of notes payable of $1.2 million, or 1%.
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 significantcertain conditions and limitations. UnderWe will limit the number of shares redeemed pursuant to our share redemption program as follows: (1) we will not redeem in excess of 5.0%5% 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. Fundingpaid; and (2) funding for the redemption of shares will be limited, among other things, to the cumulative net proceeds we receive from the sale of shares under the Secondaryour DRIP, Offering, net of shares redeemed to date. In addition, generallyan effort to accommodate redemption requests throughout the calendar year, 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 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 9.8 million shares for $98.7 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. Management, in its discretion, limited2022, the amount of shares redeemed for the three months ended September 30, 2017 to shares received from the Secondary DRIP Offering during the period. The estimated per share NAV of $10.08was $7.20, which was determined by the Board ason May 25, 2021 using a valuation date of DecemberMarch 31, 2016 serves as the most recent estimated value for purposes of the share redemption program, effective March 28, 2017, until such time as the Board determines a new estimated per share NAV.2021.
In general, we redeem shares on a quarterly basis. Shares are redeemed with a trade date no later than the end of the month following the end of each fiscal quarter. Any redemption capacity that is not used as a result of the withdrawal or rejection of redemption requests may be used to satisfy the redemption requests of other stockholders received for that fiscal quarter, and such redemption payments may be made at a later time than when that quarter’s redemption payments are made. During the three months ended September 30, 2017,2022, we redeemed shares, including those redeemable due to death, as follows:
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 (1)
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, 2022 - July 31, 2022— $— — (2)
August 1, 2022 - August 31, 20221,346,138 $7.20 1,346,138 (2)
September 1, 2022 - September 30, 202228,372 $7.20 28,372 (2)
Total1,374,510 1,374,510 (2)

(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.
(1)Redemptions are included in the month of payment, which is made one business day following the trade date.
(2)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
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
Item 5.Other Information
None.

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Item 6.Exhibits
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, 20172022 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.Description
Exhibit No.Description
3.1
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
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
4.2
31.1*4.3
10.1
10.2
10.3
10.4
31.1*
31.2*
32.1**
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.
104*Cover Page Interactive Data File (formatted as InLine XBRL and contained in Exhibit 101).
*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, 201714, 2022



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