CIM REAL ESTATE FINANCE TRUST INC

Previous wording

As of June 30, 2024, our loan portfolio consisted of 210 loans with a net book value of $3.8 billion, and 21 investments in CMBS and equity securities of $404.4 million. The Company conducts and expects to continue to conduct its commercial real estate lending business through CLR, a Maryland statutory trust and subsidiary of the Company which we expect to be taxed as a REIT for U.S. federal income tax purposes. As of June 30, 2024, CLR holds a diversified portfolio of approximately $1.5 billion of the Company’s senior secured mortgage loans and commercial mortgage-backed securities.

Current wording

As of September 30, 2024, our loan portfolio consisted of 71 loans with a net book value of $3.5 billion, and 22 investments in real estate-related securities and other of $389.6 million. The Company conducts and expects to continue to conduct its commercial real estate lending business through CLR, a Maryland statutory trust and subsidiary of the Company which we expect to be taxed as a REIT for U.S. federal income tax purposes. As of September 30, 2024, CLR holds a diversified portfolio of approximately $1.4 billion of the Company’s senior secured mortgage loans and commercial mortgage-backed securities.

Previous wording

As of June 30, 2024, we owned 190 properties, which consisted of 178 retail properties, seven office properties, and five industrial properties, representing 17 industry sectors and comprising approximately 6.0 million rentable square feet of commercial space located in 36 states, with a net book value of $1.0 billion. As of June 30, 2024, we owned condominium developments with a net book value of $70.0 million.

Current wording

As of September 30, 2024, we owned 191 properties, which consisted of 180 retail properties, seven office properties, and four industrial properties, representing 16 industry sectors and comprising approximately 6.0 million rentable square feet of commercial space located in 36 states, with a net book value of $1.0 billion. As of September 30, 2024, we owned condominium developments with a net book value of $61.4 million.

Previous wording

During the six months ended June 30, 2024, we disposed of two properties encompassing approximately 182,000 gross rentable square feet, as further discussed in Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Current wording

During the nine months ended September 30, 2024, we disposed of three properties encompassing approximately 260,000 gross rentable square feet, as further discussed in Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Previous wording

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 credit investments and related expenses. In general, our business model is such that rising interest rates will correlate to increases in our net income, while declining interest rates will correlate to decreases in our net income. As of June 30, 2024, 99.2% of our CMBS and loans held-for-investment by net book value earned a floating rate of interest, indexed to SOFR, and were financed with liabilities that pay interest at floating rates, which resulted in an amount of net equity that is positively correlated to rising interest rates, subject to the impact of interest rate floors on certain of our floating rate loans. CMFT Management reviews our investment portfolio and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. In addition, as 100.0% of our rentable square feet was under lease, including any month-to-month agreements, as of June 30, 2024, with a weighted average remaining lease term of 10.5 years, we believe our exposure to changes in commercial rental rates on our portfolio is substantially mitigated, except for vacancies caused by tenant bankruptcies or other factors. Our manager regularly monitors the creditworthiness of our tenants by reviewing each tenant’s financial results, any available credit rating agency reports 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 our 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.

Current wording

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 credit investments and related expenses. In general, our business model is such that rising interest rates will correlate to increases in our net income, while declining interest rates will correlate to decreases in our net income. As of September 30, 2024, 99.1% of our CMBS and loans held-for-investment by net book value earned a floating rate of interest, indexed to SOFR, and were financed with liabilities that pay interest at floating rates, which resulted in an amount of net equity that is positively correlated to rising interest rates, subject to the impact of interest rate floors on certain of our floating rate loans. CMFT Management reviews our investment portfolio and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. In addition, as 100.0% of our rentable square feet was under lease, including any month-to-month agreements, as of September 30, 2024, with a weighted average remaining lease term of 10.7 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. Our manager regularly monitors the creditworthiness of our tenants by reviewing each tenant’s financial results, any available credit rating agency reports 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 our 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.

Previous wording

Thesix months ended June 30, 2024 have been characterized by a mix of positive and challenging developments leading to continued volatility in global markets. Investor concerns over inflation, higher interest rates, slowing economic growth, political and regulatory uncertainty and geopolitical conditions have persisted.

Current wording

Thenine months ended September 30, 2024 have been characterized by a mix of positive and challenging developments leading to continued volatility in global markets. Investor concerns over inflation, higher interest rates, slowing economic growth, political and regulatory uncertainty and geopolitical conditions have persisted.

Previous wording

Continued inflation caused the Federal Reserve to raise interest rates in 2022 and 2023. Although the majority of our business model is such that elevated 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. The Federal Reserve has indicated that it may decrease interest rates in 2024. In a period of declining interest rates, our interest income on floating-rate investments may generally decrease, subject to the impact of interest rate floors in our investment portfolio

Current wording

Continued inflation caused the Federal Reserve to raise interest rates in 2022 and 2023. Although the majority of our business model is such that elevated 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. The Federal Reserve has begun to, and has indicated that it may continue to, decrease interest rates in 2024. In a period of declining interest rates, our interest income on floating-rate investments may generally decrease, subject to the impact of interest rate floors in our investment portfolio.

Previous wording

•Declared aggregate distributions of $0.23 per share.

Current wording

•Declared aggregate distributions of $0.34 per share.

Previous wording

•Funded $34.3 million in existing first mortgage loans.

Current wording

•Funded $57.7 million in existing first mortgage loans.

Previous wording

•Invested $7.2 million in liquid corporate senior loans and sold liquid corporate senior loans for an aggregate gross sales price of $120.0 million.

Current wording

•Invested $65.1 million in liquid corporate senior loans and sold liquid corporate senior loans for an aggregate gross sales price of $447.0 million, including $265.4 million as part of the Master Participation Agreement.

Previous wording

•Invested $12.4 million in corporate senior loans.

Current wording

•Invested $49.0 million in corporate senior loans.

Previous wording

•Received principal repayments on loans held-for-investment of $136.6 million.

Current wording

•Received principal repayments on loans held-for-investment of $310.4 million.

Previous wording

•Received repayments on CMBS of $96.2 million.

Current wording

•Received repayments on CMBS of $98.7 million.

Previous wording

•Funded an additional $26.8 million in NP JV Holdings.

Current wording

•Funded an additional $28.2 million in NP JV Holdings.

Previous wording

•Disposed of two properties for an aggregate sales price of $53.9 million.

Current wording

•Disposed of three properties for an aggregate sales price of $60.8 million.

Previous wording

•Disposed of eight condominium units for an aggregate sales price of $27.1 million.

Current wording

•Disposed of 11 condominium units for an aggregate sales price of $37.4 million.

Previous wording

•Decreased total debt by $148.2 million.

Current wording

•Decreased total debt by $664.8 million.

Previous wording

(1)Table does not include our investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q), which had a carrying value of $152.3 million as of June 30, 2024.

Current wording

(1)Table does not include our investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q), which had a carrying value of $154.6 million as of September 30, 2024.

Previous wording

(1)As of June 30, 2024, 100% of our loans by principal balance earned a floating rate of interest, primarily indexed to SOFR.

Current wording

(1)As of September 30, 2024, 94.4% of our loans by principal balance earned a floating rate of interest, primarily indexed to SOFR.

Previous wording

(3)Table does not include our investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q), which had a carrying value of $152.3 million as of June 30, 2024.

Current wording

(3)Table does not include our investment in the Unconsolidated Joint Venture (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q), which had a carrying value of $154.6 million as of September 30, 2024.

Previous wording

As of June 30, 2024, we owned 190 properties located in 36 states, the gross rentable square feet of which was 100.0% leased, including any month-to-month agreements, with a weighted average lease term remaining of 10.5 years. As of June 30, 2024, we had certain tenant, geographic and industry concentrations in our property holdings. As of June 30, 2024, one of the Company’s tenants, CVS, accounted for 10% of our 2024 annualized rental income across 33 properties. As of June 30, 2024, we had properties located in Ohio, which accounted for 17% of our 2024 annualized rental income. In addition, we had tenants in the health and personal care stores, manufacturing, and sporting goods, hobby, and musical instrument retailers industries, which accounted for 15%, 12%, and 12%, respectively, of our 2024 annualized rental income. During the six months ended June 30, 2024, we disposed of two properties for an aggregate gross sales price of $53.9 million as well as eight condominium units for a gross sales price of $27.1 million.

Current wording

As of September 30, 2024, we owned 191 properties located in 36 states, the gross rentable square feet of which was 100.0% leased, including any month-to-month agreements, with a weighted average lease term remaining of 10.7 years. As of September 30, 2024, we had certain tenant, geographic and industry concentrations in our property holdings. As of September 30, 2024, one of the Company’s tenants, CVS, accounted for 10% of our 2024 annualized rental income across 33 properties. As of September 30, 2024, we had properties located in Ohio, which accounted for 16% of our 2024 annualized rental income. In addition, we had tenants in the health and personal care stores, manufacturing, and sporting goods, hobby, and musical instrument retailers industries, which accounted for 14%, 12%, and 11%, respectively, of our 2024 annualized rental income. During the nine months ended September 30, 2024, we disposed of three properties for an aggregate gross sales price of $60.8 million as well as 11 condominium units for a gross sales price of $37.4 million.

Previous wording

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such as inflation and increasing interest rates, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties and credit investments other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q.

Current wording

We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such as inflation and high interest rates, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties and credit investments other than those listed in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report on Form 10-Q.

Previous wording

The following table compares our summarized results of operations for the three and six months ended June 30, 2024 and 2023 by operating segment (amounts in thousands):

Current wording

The following table compares our summarized results of operations for the three and nine months ended September 30, 2024 and 2023 by operating segment (amounts in thousands):

Previous wording

Our Credit segment revenues decreased $16.7 million for the three months ended June 30, 2024, as compared to the same period in 2023. The decrease was primarily due to the suspension of interest income on three of our risk-rated 5 first mortgage loans with a carrying value of $436.1 million that were placed on nonaccrual status subsequent to June 30, 2023, as well as a decrease in the overall size of our investment portfolio during the three months ended June 30, 2024 as compared to the same period in 2023. As of June 30, 2024, we held credit investments with an outstanding principal balance of $4.8 billion compared to credit investments with an outstanding principal balance of $5.0 billion as of June 30, 2023.

Current wording

Our Credit segment revenues decreased $15.3 million for the three months ended September 30, 2024, as compared to the same period in 2023. The decrease was primarily due to the suspension of interest income on three of our risk-rated 5 first mortgage loans with a carrying value of $372.2 million that were placed on nonaccrual status and were past due on their interest payments as of September 30, 2024, as well as a decrease in the overall size of our investment portfolio during the three months ended September 30, 2024 as compared to the same period in 2023. As of September 30, 2024, we held credit investments with an outstanding principal balance of $4.5 billion compared to credit investments with an outstanding principal balance of $5.0 billion as of September 30, 2023.

Previous wording

Expenses for our Credit segment consist primarily of interest expense, management fees, increases (decreases) to our provision for credit losses, and general and administrative expenses. The increase in our Credit segment expenses of $169.5 million for the three months ended June 30, 2024, as compared to the same period in 2023, was primarily due to a $167.3 million increase in the provision for credit losses during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to the asset-specific credit loss provision of $197.1 million on funded and unfunded commitments recognized on eight of the Company’s first mortgage loan investments during the three months ended June 30,

Current wording

Expenses for our Credit segment consist primarily of interest expense, management fees, increases (decreases) to our provision for credit losses, and general and administrative expenses. The decrease in our Credit segment expenses of $31.6 million for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a $25.7 million decrease in the provision for credit losses during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily driven by a net decrease in the asset-specific credit loss provision of $20.9 million on funded and unfunded commitments recognized during the three months ended September 30, 2024. The decrease was further driven by a $5.5 million decrease in interest expense primarily due to decreased outstanding borrowings used to fund credit investments, as well as a decrease in average index rates during the three months ended September 30, 2024 as compared to the same period in 2023.

Previous wording

Other income for our Credit segment consists of gain on investment in unconsolidated entities, unrealized (loss) gain on equity securities, along with dividend income from our equity securities. The decrease in our Credit segment other income of $9.4 million during the three months ended June 30, 2024, as compared to the same period in 2023, was primarily due to recognizing a $4.2 million unrealized loss on equity securities during the three months ended June 30, 2024, as compared to a $3.1 million unrealized gain on equity securities for the same period in 2023. The change was further driven by a $3.1 million decrease in gain on investment in unconsolidated entities during the three months ended June 30, 2024, as compared to the same period in 2023.

Current wording

Other income for our Credit segment consists of gain on investment in unconsolidated entities, unrealized gain (loss) on equity securities, loss on debt extinguishment, along with dividend income from our equity securities. The increase in our Credit segment other income of $939,000 during the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a $4.5 million unrealized gain on equity securities during the three months ended September 30, 2024, as compared to a $2.1 million unrealized loss on equity securities for the same period in 2023. The increase was further driven by a $1.5 million increase in gain on investment in unconsolidated entities during the three months ended September 30, 2024, as compared to the same period in 2023. The increase was partially offset by the recognition of $3.7 million of other expense, net during the three months ended September 30, 2024 as compared to $2.4 million of other income, net during the three months ended September 30, 2023, primarily related to the recognition of a $7.0 million loss on sale of liquid corporate senior loans during the three months ended September 30, 2024, as compared to a $402,000 gain on sale of liquid corporate senior loans during the same period in 2023, partially offset by a $1.4 million increase in interest income generated by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets, during the three months ended September 30, 2024 as compared to the same period in 2023.

Previous wording

The decrease in our Real Estate segment revenues of $2.1 million for the three months ended June 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of five properties subsequent to June 30, 2023. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Current wording

The decrease in our Real Estate segment revenues of $2.2 million for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of five properties subsequent to September 30, 2023. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Previous wording

The increase in our Real Estate segment expenses of $51.9 million for the three months ended June 30, 2024, as compared to the same period in 2023, was primarily due to an increase in impairment charges of $51.5 million for the three months ended June 30, 2024, as compared to the same period in 2023, as there were no properties deemed to be impaired during the three months ended June 30, 2023, compared to seven properties that were deemed to be impaired during the three months ended June 30, 2024, due to sales prices or revised cash flow estimates that were less than their respective carrying values. The increase was partially offset by the disposition of five properties subsequent to June 30, 2023. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Current wording

The decrease in our Real Estate segment expenses of $9.9 million for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a decrease in impairment charges of $6.7 million for the three months ended September 30, 2024, as compared to the same period in 2023, as there were $9,000 of impairment charges related to the disposition of a property during the three months ended September 30, 2024, compared to four properties that were deemed to be impaired during the three months ended September 30, 2023, due to sales prices or revised cash flow estimates that were less than their respective carrying values, resulting in impairment charges of $6.8 million. The decrease was further driven by the disposition of five properties subsequent to September 30, 2023. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Previous wording

Other (expense) income for our Real Estate segment primarily consists of gain on disposition of real estate and condominium developments, net, loss on extinguishment of debt and other income, net. The decrease in our Real Estate segment other income of $38.3 million for the six months ended June 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of two properties resulting in no gain or loss during the six months ended June 30, 2024, compared to the disposition of 185 properties resulting in a net gain of $43.8 million during the six months ended June 30, 2023. The decrease was partially offset due to $4.2 million of unrealized loss on interest rate caps included in other income, net on the condensed consolidated statements of operations for the six months ended June 30, 2023.

Current wording

Other income for our Real Estate segment primarily consists of gain on disposition of real estate and condominium developments, net, and other income. The decrease in our Real Estate segment other income of $4.8 million for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of one property resulting in no gain or loss during the three months ended September 30, 2024, compared to the disposition of one property resulting in a net gain of $5.3 million during the three months ended September 30, 2023. The decrease was partially offset due to $428,000 of unrealized loss on interest rate caps included in other income on the condensed consolidated statements of operations for the three months ended September 30, 2023.

Previous wording

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, decreased $22,000 during the three months ended June 30, 2024 as compared to the same period in 2023, primarily due to one-time credits issued to rental tenants during the three months ended June 30, 2024 in relation to overpayments of rent.

Current wording

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, did not meaningfully change during the three months ended September 30, 2024 as compared to the same period in 2023.

Previous wording

Our corporate expenses consist primarily of general and administrative expenses, expense reimbursements to related parties, interest expense, net related to our credit facilities, and property operating expenses related to our condominium and rental units acquired via foreclosure. The increase in corporate expenses of $6.5 million during the three months ended June 30, 2024 as compared to the same period in 2023, was partially due to $5.5 million in impairment charges related to condominium units during the three months ended June 30, 2024. The increase was further driven by an increase of $1.7 million in general and administrative expenses during the three months ended June 30, 2024 as compared to the same period in 2023, primarily in connection with restricted stock unit related expenses recorded during the three months ended June 30, 2024.

Current wording

Our corporate expenses consist primarily of general and administrative expenses, expense reimbursements to related parties, interest expense, net related to our credit facilities, and property operating expenses related to our condominium and rental units acquired via foreclosure. The increase in corporate expenses of $1.7 million during the three months ended September 30, 2024 as compared to the same period in 2023, was partially due to an increase of $3.3 million in impairment charges related to condominium units during the during the three months ended September 30, 2024 as compared to the same period in 2023. The increase was further driven by an increase of $2.1 million in general and administrative expenses during the three months ended September 30, 2024 as compared to the same period in 2023, primarily in connection with restricted stock unit related expenses recorded during the three months ended September 30, 2024. The increase was partially offset by a decrease in property operating expenses of $3.3 million, primarily driven by decreased condominium-related legal expenses during the three months ended September 30, 2024 as compared to the same period in 2023. The increase was further offset by a decrease in interest expense, net of $788,000 during the three months ended September 30, 2024 as compared to the same period in 2023, driven by the paydown and termination of the variable rate debt assumed by the Company upon completing the January 2021 foreclosure of assets which previously secured the Company's mezzanine loans (the “Assumed Variable Rate Debt”) during the three months ended September 30, 2023.

Previous wording

June 30, 2023, driven by the partial paydown of the Assumed Variable Rate Debt during the three months ended June 30, 2023. The increase was further driven by the disposition of four condominium units resulting in a net gain of $2.5 million during the three months ended June 30, 2024, compared to the disposition of nine condominium units for a gain of $2.3 million for the three months ended June 30, 2023. The increase was partially offset by a decrease in other income, net of $828,000 primarily due to a decrease in interest income generated by decreased short-term liquid investments included in cash and cash equivalents on the condensed consolidated balance sheets during the three months ended June 30, 2024, as compared to the same period in 2023.

Current wording

The decrease in corporate other income of $21,000 during the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a decrease in other income, net of $1.7 million primarily due to a decrease in interest income generated by decreased short-term liquid investments included in cash and cash equivalents on the condensed consolidated balance sheets during the three months ended September 30, 2024, as compared to the same period in 2023. The decrease was partially offset by $1.1 million in loss on extinguishment of debt recognized during the three months ended September 30, 2023, driven by the paydown and termination of the Assumed Variable Rate Debt during the three months ended September 30, 2023. The decrease was further offset by the disposition of three condominium units resulting in a net gain of $1.2 million during the three months ended September 30, 2024, compared to the disposition of four condominium units for a gain of $636,000 for the three months ended September 30, 2023.

Previous wording

Our Credit segment revenues decreased $15.0 million for the six months ended June 30, 2024, as compared to the same period in 2023. The decrease was primarily due to the suspension of interest income on three of our risk-rated 5 first mortgage loans with a carrying value of $436.1 million that were placed on nonaccrual status subsequent to June 30, 2023, as well as a decrease in the overall size of our investment portfolio during the six months ended June 30, 2024 as compared to the same period in 2023. As of June 30, 2024, we held credit investments with an outstanding principal balance of $4.8 billion compared to credit investments with an outstanding principal balance of $5.0 billion as of June 30, 2023.

Current wording

Our Credit segment revenues decreased $30.3 million for the nine months ended September 30, 2024, as compared to the same period in 2023. The decrease was primarily due to the suspension of interest income on three of our risk-rated 5 first mortgage loans with a carrying value of $372.2 million that were placed on nonaccrual status and were past due on their interest payments as of September 30, 2024, as well as a decrease in the overall size of our investment portfolio during the nine months ended September 30, 2024 as compared to the same period in 2023. As of September 30, 2024, we held credit investments with an outstanding principal balance of $4.5 billion compared to credit investments with an outstanding principal balance of $5.0 billion as of September 30, 2023.

Previous wording

Expenses for our Credit segment consist primarily of interest expense, management fees, increases (decreases) to our provision for credit losses, and general and administrative expenses. The increase in our Credit segment expenses of $242.8 million for the six months ended June 30, 2024, as compared to the same period in 2023, was primarily due to a $232.9 million increase in the provision for credit losses during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to the asset-specific credit loss provision of $274.4 million on funded and unfunded commitments recognized on eight of the Company’s first mortgage loan investments during the six months ended June 30, 2024, as a result of the increased risk of potential principal loss and as collateral performance was deemed to be worse than underwriting. The increase was further driven by a $7.8 million increase in interest expense primarily due to higher average index rates during 2024.

Current wording

Expenses for our Credit segment consist primarily of interest expense, management fees, increases (decreases) to our provision for credit losses, and general and administrative expenses. The increase in our Credit segment expenses of $211.2 million for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to a $207.2 million increase in the provision for credit losses during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to the asset-specific credit loss provision of $253.5 million on funded and unfunded commitments recognized on eight of the Company’s first mortgage loan investments during the nine months ended September 30, 2024, as a result of the increased risk of potential principal loss and as collateral performance was deemed to be worse than underwriting.

Previous wording

Other (expense) income for our Credit segment consists of gain on investment in unconsolidated entities, unrealized (loss) gain on equity securities, along with dividend income from our equity securities. The decrease in our Credit segment other (expense) income of $19.4 million during the six months ended June 30, 2024, as compared to the same period in 2023, was primarily due to recognizing a $15.6 million unrealized loss on equity securities during the six months ended June 30, 2024, as compared to a $5.4 million unrealized gain on equity securities for the same period in 2023. The change was partially offset by a $1.4 million increase in other income, net during the six months ended June 30, 2024, as compared to the same period in 2023, primarily related to increased interest income generated by short-term liquid investments included in cash and cash equivalents on the condensed consolidated balance sheets.

Current wording

Other (expense) income for our Credit segment consists of gain on investment in unconsolidated entities, unrealized gain (loss) on equity securities, and loss on extinguishment of debt, along with dividend income from our equity securities. The decrease in our Credit segment other (expense) income of $18.5 million during the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to recognizing an $11.2 million unrealized loss on equity securities during the nine months ended September 30, 2024, as compared to a $3.3 million unrealized gain on equity securities for the same period in 2023. The change was further driven by a $4.8 million decrease in other income, net during the nine months ended September 30, 2024, as compared to the same period in 2023, which primarily related to an $8.2 million increase in loss on sale of liquid corporate senior loans during the nine months ended September 30, 2024, as compared to the same period in 2023, partially offset by a $3.7 million increase in interest income generated by by short-term liquid investments in cash and cash equivalents on the condensed consolidated balance sheets.

Previous wording

The decrease in our Real Estate segment revenues of $16.4 million for the six months ended June 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of five properties subsequent to June 30, 2023. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Current wording

The decrease in our Real Estate segment revenues of $18.5 million for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of 186 properties during the nine months ended September 30, 2023. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Previous wording

The increase in our Real Estate segment expenses of $37.0 million for the six months ended June 30, 2024, as compared to the same period in 2023, was primarily due to the increase in impairment charges of $46.7 million, as there were seven properties deemed to be impaired during the six months ended June 30, 2024, due to sales prices or revised cash flow estimates that were less than their respective carrying values, resulting in impairment charges of $51.5 million, compared to one property that was deemed to be impaired during the six months ended June 30, 2023, due to sales prices or revised cash flow estimates that was less than its respective carrying value, resulting in impairment charges of $4.8 million. The increase was partially offset by the disposition of five properties subsequent to June 30, 2023. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Current wording

The increase in our Real Estate segment expenses of $27.2 million for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the increase in impairment charges of $39.9 million, as there were seven properties deemed to be impaired during the nine months ended September 30, 2024, due to sales prices or revised cash flow estimates that were less than their respective carrying values, resulting in impairment charges of $51.5 million, compared to five properties that were deemed to be impaired during the nine months ended September 30, 2023, due to sales prices or revised cash flow estimates that were less than their respective carrying values, resulting in impairment charges of $11.6 million. The increase was partially offset by the disposition of five properties subsequent to September 30, 2023. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.

Previous wording

Other income for our Real Estate segment primarily consists of gain on disposition of real estate and condominium developments, net, loss on extinguishment of debt and other income, net. The decrease in our Real Estate segment other income of $21.8 million for the three months ended June 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of two properties resulting in no gain or loss during the three months ended June 30, 2024, compared to the disposition of 33 properties resulting in a net gain of $24.3 million during the three months ended June 30, 2023. The decrease was partially offset due to $2.4 million of unrealized loss on interest rate caps included in other income, net on the condensed consolidated statements of operations for the three months ended June 30, 2023.

Current wording

Other income for our Real Estate segment primarily consists of gain on disposition of real estate and condominium developments, net, loss on extinguishment of debt and other (expense) income, net. The decrease in our Real Estate segment other income of $43.1 million for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the disposition of three properties resulting in no gain or loss during the nine months ended September 30, 2024, compared to the disposition of 186 properties resulting in a net gain of $49.2 million during the nine months ended September 30, 2023. The decrease was partially offset by $4.6 million of unrealized loss on interest rate caps included in other (expense) income, net on the condensed consolidated statements of operations for the nine months ended September 30, 2023.

Previous wording

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, increased $29,000 during the six months ended June 30, 2024 as compared to the same period in 2023, primarily due to rental credits issued to tenants during the six months ended June 30, 2023 in relation to ongoing onsite condominium and rental unit construction.

Current wording

Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, did not meaningfully change during the nine months ended September 30, 2024, as compared to the same period in 2023.

Previous wording

Our corporate expenses consist primarily of general and administrative expenses, expense reimbursements to related parties, interest expense, net related to our credit facilities, and property operating expenses related to our condominium and rental units acquired via foreclosure. The increase in corporate expenses of $6.0 million during the six months ended June 30, 2024 as compared to the same period in 2023, was partially due to $5.5 million in impairment charges related to condominium units during the six months ended June 30, 2024. There were no impairments related to condominium units during the six months ended June 30, 2023. The increase was further driven by an increase of general and administrative expenses of $3.8 million, primarily in connection with restricted stock unit expenses recorded during the six months ended June 30, 2024 as well as a $1.8 million increase in property operating expenses during the six months ended June 30, 2024 as compared to the same period in 2023, primarily driven by increased condominium-related legal fees during the six months ended June 30, 2024 as compared to the same period in 2023. The increase was partially offset by a $4.4 million decrease in interest expense, net driven by the pay down and termination of the credit agreement with JPMorgan Chase Bank, N.A. and PNC Bank, N.A. (the “CMFT Credit Facility”) during the six months ended June 30, 2023 and the paydown and termination of the Assumed Variable Rate Debt subsequent to June 30, 2023.

Current wording

Our corporate expenses consist primarily of general and administrative expenses, expense reimbursements to related parties, interest expense, net related to our credit facilities, and property operating expenses related to our condominium and rental units acquired via foreclosure. The increase in corporate expenses of $7.7 million during the nine months ended September 30, 2024 as compared to the same period in 2023, was primarily due to an $8.8 million increase in impairment charges related to condominium units during the nine months ended September 30, 2024, as compared to the same period in 2023, as well as an increase in general and administrative expenses of $5.9 million, primarily in connection with restricted stock unit expenses recorded during the nine months ended September 30, 2024. The increase was partially offset by a $5.2 million decrease in interest expense, net driven by the pay down and termination of the credit agreement with JPMorgan Chase Bank, N.A. and PNC Bank, N.A. (the “CMFT Credit Facility”) and the paydown and termination of the Assumed Variable Rate Debt during the nine months ended September 30, 2023. The increase was further offset by a $1.5 million decrease in property operating expenses, primarily driven by decreased litigation expenses during the nine months ended September 30, 2024, as compared to the same period in 2023.

Previous wording

The increase in corporate other income of $4.4 million during the six months ended June 30, 2024 as compared to the same period in 2023, was primarily due to $3.3 million in loss on extinguishment of debt recognized during the six months ended June 30, 2023 driven by the paydown and termination of the CMFT Credit Facility and the partial paydown of the Assumed Variable Rate Debt during the six months ended June 30, 2023. The increase was further driven by the disposition of eight condominium units resulting in a net gain of $3.3 million during the six months ended June 30, 2024, compared to the disposition of 10 condominium units resulting in a net gain of $2.3 million during the six months ended June 30, 2023.

Current wording

The increase in corporate other income of $4.4 million during the nine months ended September 30, 2024 as compared to the same period in 2023, was primarily due to $4.4 million in loss on extinguishment of debt recognized during the nine months ended September 30, 2023 driven by the paydown and termination of the CMFT Credit Facility and the Assumed Variable Rate Debt during the nine months ended September 30, 2023. The increase was further driven by the disposition of 11 condominium units resulting in a net gain of $4.5 million during the nine months ended September 30, 2024, compared to the disposition of 14 condominium units resulting in a net gain of $3.0 million during the nine months ended September 30, 2023. The increase was partially offset by a decrease in other income, net of $1.6 million primarily due to a decrease in interest income generated by decreased short-term liquid investments included in cash and cash equivalents on the condensed consolidated balance sheets during the nine months ended September 30, 2024, as compared to the same period in 2023.