10q10k10q10k.net

What changed in Creative Media & Community Trust Corp's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Creative Media & Community Trust Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+368 added−364 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-31)

Top changes in Creative Media & Community Trust Corp's 2023 10-K

368 paragraphs added · 364 removed · 304 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

38 edited+3 added−2 removed103 unchanged
Biggest changeRegulatory Matters Environmental Matters Environmental laws regulate, and impose liability for, the release of hazardous or toxic substances into the environment. Under some of these laws, an owner or operator of real estate may be liable for costs related to soil or 5 Table of Contents groundwater contamination on or migrating to or from its property.
Biggest changeUnder some of these laws, an owner or operator of real estate may be liable for costs related to soil or groundwater contamination on or migrating to or from its property. In addition, persons who arrange for the disposal or treatment of hazardous or toxic substances may be liable for the costs of cleaning up contamination at the disposal site.
CIM Group believes that its community perspective gives it a significant competitive advantage in attracting tenants to its retail, office and mixed-use properties and creating synergies between the different tenant types. • Local Market Leadership with North American Footprint —CIM Group maintains local market knowledge and relationships, along with a diversified North American presence, through its 135 Qualified Communities 4 Table of Contents (thus, CIM Group has the flexibility to deploy capital in its Qualified Communities only when the market environment meets CIM Group’s underwriting standards).
CIM Group believes that its community perspective gives it a significant competitive 4 Table of Contents advantage in attracting tenants to its retail, office and mixed-use properties and creating synergies between the different tenant types. • Local Market Leadership with North American Footprint —CIM Group maintains local market knowledge and relationships, along with a diversified North American presence, through its 135 Qualified Communities (thus, CIM Group has the flexibility to deploy capital in its Qualified Communities only when the market environment meets CIM Group’s underwriting standards).
CIM Group has generated strong risk-adjusted returns across multiple market cycles by focusing on improved asset and community performance, and capitalizing on market inefficiencies and distressed situations. 6 Table of Contents CIM Urban Partnership Agreement Our subsidiary, CIM Urban Partners, L.P. (“CIM Urban”), is governed by CIM Urban’s partnership agreement (as amended and restated, the “CIM Urban Partnership Agreement”).
CIM Group has generated strong risk-adjusted returns 6 Table of Contents across multiple market cycles by focusing on improved asset and community performance and capitalizing on market inefficiencies and distressed situations. CIM Urban Partnership Agreement Our subsidiary, CIM Urban Partners, L.P. (“CIM Urban”), is governed by CIM Urban’s partnership agreement (as amended and restated, the “CIM Urban Partnership Agreement”).
On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with an incentive fee (the “Prior Incentive Fee”) pursuant to which the Administrator was entitled to receive, on a quarterly basis, 15.00% of our quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of our average adjusted common stockholders’ equity 7 Table of Contents (i.e., common stockholders’ equity plus accumulated depreciation and amortization) for such quarter.
On May 11, 2020, the Master Services 7 Table of Contents Agreement was amended to replace the Base Service Fee with an incentive fee (the “Prior Incentive Fee”) pursuant to which the Administrator was entitled to receive, on a quarterly basis, 15.00% of our quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of our average adjusted common stockholders’ equity (i.e., common stockholders’ equity plus accumulated depreciation and amortization) for such quarter.
The Administrator’s compensation for such services is based on the salaries and benefits of the employees of the Administrator and or its affiliates who performed such services (allocated based on the percentage of time spent on the affairs us and our subsidiaries).
The Administrator’s compensation for such services is based on the salaries and benefits of the employees of the Administrator and or its affiliates who performed such services (allocated based on the percentage of time spent on the affairs of us and our subsidiaries).
For any quarter following an Excess Quarter, the Company (upon the direction of the independent members of the Board) may, at its option and upon written notice to Administrator, elect to calculate all fees due to the Administrator and the Operator in accordance with the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver, from and after such Excess Quarter.
For any quarter following an Excess Quarter, the Company (upon the direction of the independent members of the Board of Directors) may, at its option and upon written notice to Administrator, elect to calculate all fees due to the Administrator and the Operator in accordance with the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver, from and after such Excess Quarter.
These loans are anticipated to be concentrated in industries in which we previously had positive experiences, including convenience store, RV park and single purpose building owner-occupied restaurant operations and may include owner-occupied industrial operations/warehouse buildings. Seasonality Our revenues and expenses for our hotel property are subject to seasonality during the year.
These loans are anticipated to be primarily concentrated in industries in which we previously had positive experiences, including convenience store, RV park and single purpose building owner-occupied restaurant operations and may include owner-occupied industrial operations/warehouse buildings. Seasonality Our revenues and expenses for our hotel property are subject to seasonality during the year.
“Assets owned and operated” represents the aggregate assets owned and operated by CIM on behalf of partners (including where CIM contributes capital alongside for its own account) and co-investors, whether or not CIM has discretion, in each case without duplication.
“Assets owned and operated” (“AOO”) represents the aggregate assets owned and operated by CIM on behalf of partners (including where CIM contributes capital alongside for its own account) and co-investors, whether or not CIM has discretion, in each case without duplication.
The code of ethics, which we call our Code of Business Conduct and Ethics, is available on our corporate website, www.creativemediacommunity.com, in the section entitled “Shareholders—Corporate Overview—Corporate Governance.” In the event that we make changes in, or provide waivers from, the provisions of such code of ethics that the SEC requires us to disclose, we intend to disclose these events on our corporate website in such section.
The code of ethics, which we call our Code of Business Conduct and Ethics, is available on our corporate website, www.creativemediacommunity.com, in the section entitled “Investors—Overview—Corporate Governance.” In the event that we make changes in, or provide waivers from, the provisions of such code of ethics that the SEC requires us to disclose, we intend to disclose these events on our corporate website in such section.
Human Capital We are operated by affiliates of CIM Group and, as of December 31, 2022, only have five employees. Four of such employees are in our lending segment while one employee spends a substantial portion of the time that he devotes to us on matters relating to the lending segment.
Human Capital We are operated by affiliates of CIM Group and, as of December 31, 2023, only have five employees. Four of such employees are in our lending segment while one employee spends a substantial portion of the time that he devotes to us on matters relating to the lending segment.
Prior to 2022, the fee was calculated as a percentage of the daily average adjusted fair value of CIM Urban’s assets as described in Note 13 to our consolidated financial statements included in this Annual Report on Form 10-K.
Prior to 2022, the fee was calculated as a percentage of the daily average adjusted fair value of CIM Urban’s assets as described in Note 14 to our consolidated financial statements included in this Annual Report on Form 10-K.
In addition, pursuant to the Third Amended and Restated Dealer Manager Agreement, no longer solicit or make any offers for the sale of shares of Series A Preferred Stock or Series D Preferred Stock. Lending Segment Through our loans originated under the SBA 7(a) Program, we are a national lender that primarily originates loans to small businesses.
In addition, pursuant to the Third Amended and Restated Dealer Manager Agreement, CCO Capital will no longer solicit or make any offers for the sale of shares of Series A Preferred Stock or Series D Preferred Stock. Lending Segment Through our loans originated under the SBA 7(a) Program, we are a national lender that primarily originates loans to small businesses.
We believe this is a compelling model that is expected to contribute to strong returns on invested capital while reducing risk by reducing our capital outlay. 2 Table of Contents We intend to dispose of assets that do not fit into our strategy over time and opportunistically (i.e., we do not have any specific time frame with respect to such dispositions).
We believe this is a compelling model that is expected to contribute to strong returns on invested capital while reducing risk by reducing our capital outlay. We intend to dispose of assets that do not fit into our strategy over time and opportunistically (i.e., we do not have any specific time frame with respect to such dispositions).
It has been CIM Group’s practice to grow talent within the company to promotion to principal, rather than to hire from the outside. As a result, CIM has an extremely high retention rate of senior investment team members who tend to have a long tenure, strong internal network and a track record of success within the organization.
It has been CIM Group’s practice to grow talent within the company to promotion to principal, rather than to hire from the outside. As a result, CIM has a strong retention rate of senior investment team members who tend to have a long tenure, strong internal network and a track record of success within the organization.
Available Information The public can access free of charge through the “Shareholders” section of our corporate website, www.creativemediacommunity.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8‑K, and amendments to those reports filed with or furnished to the Securities and Exchange Commission (the “SEC”) as soon as reasonably practicable after such material is filed with or furnished to the SEC.
Available Information The public can access free of charge through the “Investors—Financials—SEC Filings” section of our corporate website, www.creativemediacommunity.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8‑K, and amendments to those reports filed with or furnished to the Securities and Exchange Commission (the “SEC”) as soon as reasonably practicable after such material is filed with or furnished to the SEC.
The maximum loan amount for an SBA 7(a) loan is $5.0 million. Key eligibility factors are based on what the business does to generate its income, its credit history, and where the business operates. We work with potential borrowers to identify the type of loan that would be appropriate for each such borrower’s needs.
The maximum loan amount for an SBA 7(a) loan is $5.0 million. Key eligibility factors are based on what the business does to generate its income, its credit history, its liquidity, its size standards and where it operates. We work with potential borrowers to identify the type of loan that would be appropriate for each such borrower’s needs.
Under this approach, we co-invest with one or more third parties on an asset-level by raising capital from such third parties, maintain an economic interest in the asset and, in some cases, earn a management fee and a percentage of the profits.
Under this approach, we co-invest with one or more third parties on an asset-level basis by raising capital from such third parties, maintain an economic 2 Table of Contents interest in the asset and, in some cases, earn a management fee and a percentage of the profits.
Strategy We are a Maryland corporation and REIT. Our portfolio of investments currently consists of premier multifamily, Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States. We also own one hotel in northern California and a lending platform that originates loans under the Small Business Administration (“SBA”) 7(a) loan program.
Our portfolio of investments currently consists of premier multifamily, Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States. We also own one hotel in northern California and a lending platform that originates loans under the Small Business Administration (“SBA”) 7(a) loan program.
On June 16, 2022, the Company entered into the Third Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital acts as the exclusive dealer manager for the Company’s public offering of its Series A1 Preferred Stock.
On June 16, 2022, the Company entered into the Third Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital has been acting as the exclusive dealer manager for the Company’s public offering of its Series A1 Preferred Stock.
Financing Strategy We may finance our future activities through one or more of the following methods: (i) offerings of shares of our common stock, par value $0.001 per share (“Common Stock”), preferred stock or other equity and or debt securities of the Company; (ii) credit facilities and term loans; (iii) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral, including the securitization of portions of our loan portfolio; (iv) the sale of existing assets; (v) partnering with co-investors; and or (vi) cash flows from operations.
Financing Strategy We may finance our future activities through one or more of the following methods: (i) offerings of shares of our common stock, par value $0.001 per share (“Common Stock”), preferred stock or other equity and or debt securities of the Company; (ii) issuances of interests in our operating partnership in exchange for properties, (iii) credit facilities and term loans; (iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral, including the securitization of portions of our loan portfolio; (v) the sale of existing assets; (vi) partnering with co-investors; and/or (vii) cash flows from operations.
Tenant Concentration Kaiser Foundation Health Plan, Incorporated (“Kaiser”), which occupied office space in one of our Oakland, California properties accounted for 29.8% of our annualized rental income for the year ended December 31, 2022. No other tenant accounted for greater than 10.0% of our annualized rental income for the year ended December 31, 2022.
Tenant Concentration Kaiser Foundation Health Plan, Incorporated (“Kaiser”), which occupied office space in one of our Oakland, California properties accounted for 28.7% of our annualized rental income for the year ended December 31, 2023. No other tenant accounted for greater than 10.0% of our annualized rental income for the year ended December 31, 2023.
Our current reportable segments during the years ended December 31, 2022 and 2021 consist of two types of commercial real estate properties, namely office and hotel, as well as a segment for our lending business.
Our current reportable segments during the years ended December 31, 2023 and 2022 consist of three types of commercial real estate properties, namely office, hotel and multifamily, as well as a segment for our lending business.
Overview and History of CIM Group CIM Group was founded in 1994 by Shaul Kuba, Richard Ressler and Avraham Shemesh and has approximately $32.6 billion of assets owned and operated across its vehicles as of September 30, 2022.
Overview and History of CIM Group CIM Group was founded in 1994 by Shaul Kuba, Richard Ressler and Avraham Shemesh and has approximately $30.7 billion of assets owned and operated across its vehicles as of September 30, 2023.
Item 1. Business Business Overview Creative Media & Community Trust Corporation (formerly known as CIM Commercial Trust Corporation) and its subsidiaries (which may be referred to in this Annual Report on Form 10-K as “we,” “us,” “our,” “our company” or the “Company”) are operated by affiliates of CIM Group, L.P. (“CIM Group” or “CIM”).
Item 1. Business Business Overview Creative Media & Community Trust Corporation and its subsidiaries (which may be referred to in this Annual Report on Form 10-K as “we,” “us,” “our,” “our company” or the “Company”) are operated by affiliates of CIM Group Management, LLC (collectively, “CIM Group” or “CIM”).
CIM Group is vertically-integrated and organized into the following functional groups: Real Asset Services (which includes Development, Onsite Property Management, Commercial Leasing and Hospitality Services), Real Asset Management (which includes Investments, Portfolio Oversight, Capital Markets, Partner & Co-Investor Relations) and Shared Services (which includes Human Resources, Compliance, Operations, Legal and Finance).
CIM Group is vertically-integrated and organized into the following functional groups: Real Asset Services (which includes Development, Onsite Property Management, 3 Table of Contents Commercial Leasing and Hospitality Services), Real Asset Management (which includes Investments, Portfolio Oversight, Capital Markets, Partner & Co-Investor Relations - Strategy Solutions and Distribution) and Shared Services (which includes Human Resources, Compliance, Operations, Finance, Legal & Risk Management).
We identify loan origination opportunities through personal contacts, internet referrals, attendance at trade shows and meetings, direct mailings, advertisements in trade publications and other marketing methods. We also generate loans through referrals from real estate and loan brokers, franchise representatives, existing borrowers, lawyers and accountants.
We identify loan origination opportunities through personal contacts, internet referrals, attendance at trade shows and meetings, direct mailings, advertisements in trade publications and other marketing methods. We also generate loans through referrals from real estate and loan brokers, franchise representatives, existing borrowers, lawyers and accountants. The SBA 7(a) Loan Program is the SBA’s most common loan program.
In addition to developing a core team of principals and other senior level executives, CIM Group has proactively managed its growth through career development and mentoring at both the mid and junior staffing levels, and has hired ahead of its needs, thus ensuring appropriate management and staffing.
Department heads have been with CIM Group on average 15 or more years. In addition to developing a core team of principals and other senior level executives, CIM Group has proactively managed its growth through career development and mentoring at both the mid and junior staffing levels, and has hired ahead of its needs, thus ensuring appropriate management and staffing.
We believe that the critical mass of redevelopment in such areas enhances the value of real estate assets in the area. We believe that these assets will provide greater returns than similar assets in other markets, as a result of the population growth, public commitment and significant private investment that characterize these areas.
We believe that these assets will provide greater returns than similar assets in other markets, as a result of the population growth, public commitment and significant private investment that characterize these areas.
CIM is a vertically-integrated community-focused real estate and infrastructure owner, operator, lender and developer. CIM is headquartered in Los Angeles, CA, with offices in Atlanta, GA, Chicago, IL, Dallas, TX, London, UK, New York, NY, Orlando, FL, Phoenix, AZ, and Tokyo, Japan.
CIM is a vertically-integrated community-focused real estate and infrastructure owner, operator, lender and developer. CIM is headquartered in Los Angeles, CA, with offices in Atlanta, GA, Chicago, IL, Dallas, TX, London, UK, New York, NY, Orlando, FL, Phoenix, AZ, and Tokyo, Japan. CIM also maintains additional offices across the United States and in South Korea to support its platform.
As of December 31, 2022, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 81.7% occupied and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $126.19 for the year ended December 31, 2022.
As of December 31, 2023, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 83.8% occupied; our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $145.80 for the year ended December 31, 2023 and our three multifamily properties were 79.3% occupied.
In addition to reviewing specific property-level conditions and recommendations, the Real Assets Management Committee reviews real estate and related capital market conditions, considers current market trends and monitors fund strategies and portfolio composition.
In addition to reviewing specific property-level conditions and recommendations, the Real Assets Management Committee reviews real estate and related capital market conditions, considers current market trends and monitors fund strategies and portfolio composition. See “Item 1C—Cybersecurity” for information on our cybersecurity risk management, strategy and governance.
CIM also maintains additional offices across the United States, as well as in Korea and Hong Kong to support its platform. See the sections “Overview and History of CIM Group”, “CIM Urban Partnership Agreement” and “Investment Management Agreement” in “Item 1—Business” of this Annual Report on Form 10-K. Creative Media & Community Trust Corporation is a Maryland corporation and REIT.
See the sections “Overview and History of CIM Group”, “CIM Urban Partnership Agreement” and “Investment Management Agreement” in “Item 1—Business” of this Annual Report on Form 10-K. Creative Media & Community Trust Corporation is a Maryland corporation and REIT.
The Real Assets Management Committee acts by a majority vote of the members of the Real Assets Management Committee at any meeting at which a quorum (majority of members) is present. The size, composition, and policies of the Real Assets Management Committee may change from time to time.
The Real Assets Management Committee acts by a majority vote of the members of the Real Assets Management Committee at any meeting at which a quorum (majority of members) is present.
CIM also has an internal audit team that sits within the Operations department. 3 Table of Contents To support CIM Group’s organic growth and related platforms, CIM Group has invested substantial time and resources in building a strong and integrated team of over 1,000 employees and more than 600 professionals as of December 31, 2022.
CIM also has an internal audit team. To support CIM Group’s organic growth and related platforms, CIM Group has invested substantial time and resources in building a strong and integrated team of over 1,000 employees and more than 600 professionals as of December 31, 2023. Each of the CIM Group’s vertically-integrated departments is managed by a senior level executive.
In addition, persons who arrange for the disposal or treatment of hazardous or toxic substances may be liable for the costs of cleaning up contamination at the disposal site. These laws often impose liability regardless of whether the person knew of, or was responsible for, the presence of the hazardous or toxic substances that caused the contamination.
These laws often impose liability regardless of whether the person knew of, or was responsible for, the presence of the hazardous or toxic substances that caused the contamination.
As of December 31, 2022, our real estate portfolio consisted of 19 assets, all of which were fee-simple properties, including one office property which we own through our investment in an unconsolidated joint venture (the “Unconsolidated Joint Venture”).
As of December 31, 2023, our real estate portfolio consisted of 27 assets, all of which were fee-simple properties, and five of which we own through investments in unconsolidated joint ventures (the “Unconsolidated Joint Ventures”).
All of our real estate assets are and will generally be located in communities qualified by CIM Group as described further below. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth.
These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth. We believe that the critical mass of redevelopment in such areas creates positive externalities, which enhance the value of real estate assets in the area.
Additionally, as of December 31, 2022, we had four development sites (with one being used as a parking lot). For the year ended December 31, 2022, our office portfolio contributed approximately 54.8% of revenue from our three segments on a combined basis, while our hotel segment contributed approximately 34.6%, and our lending segment contributed approximately 10.6%.
For the year ended December 31, 2023, our office portfolio contributed approximately 46.4% of revenue from our four segments on a combined basis, our hotel segment contributed approximately 34.6%, our multifamily segment contributed approximately 9.4% and our lending segment contributed approximately 9.6%. Strategy We are a Maryland corporation and REIT.
Removed
Each of the CIM Group’s vertically-integrated departments is managed by a senior level executive. Department heads have been with CIM Group on average 15 or more years.
Added
We seek to apply the expertise of CIM Group to the acquisition, development and operation of premier multifamily properties and creative office assets that cater to rapidly growing industries such as technology, media and entertainment. All of our real estate assets are and will generally be located in communities qualified by CIM Group as described further below.
Removed
In addition, as an SBA 7(a) licensee, we originated loans as an authorized lender under the Paycheck Protection Program (“PPP”). Originations under the PPP have ended and we had no remaining PPP loans outstanding as of December 31, 2022. The SBA 7(a) Loan Program is the SBA’s most common loan program.
Added
Additionally, as of December 31, 2023, we had nine development sites (three of which were being used as parking lots).
Added
The size, composition, and policies of the Real Assets Management Committee may change from time to time. 5 Table of Contents Regulatory Matters Environmental Matters Environmental laws regulate, and impose liability for, the release of hazardous or toxic substances into the environment.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

146 edited+20 added−35 removed452 unchanged
Biggest changeThe outbreak of a highly infectious, contagious or widespread disease, such as COVID-19, can (and has) result in reductions in travel and adversely affect demand for hotels. • We may be unable to renew leases or release apartment units as leases expire, or the terms of renewals or new leases may be less favorable than current leases. • Income from our long-term leases at our office properties is an important source of our cash flow from operations and is subject to risks related to increases in expenses and inflation. 11 Table of Contents • Real estate-related taxes may increase, and if these increases are not passed on to tenants, our income will be reduced. • We face risks associated with development, redevelopment, repositioning or construction of real estate projects. • Inflation may adversely affect our real estate operations. • Supply chain disruption and increase costs in labor and materials may adversely affect our real estate operations. • Our real estate business is subject to risks from climate change.
Biggest changeWe are dependent on the California real estate market and economy, and are therefore susceptible to risks of events in the California market that could adversely affect our business, such as adverse market conditions, changes in local laws or regulations and natural disasters. • Tenant concentration increases the risk that cash flow could be interrupted. • If a major tenant declares bankruptcy, we may be unable to collect balances due under relevant leases, which could have a material adverse effect on our financial condition and ability to pay distributions on our Common Stock or Preferred Stock. • We may be unable to renew leases or lease vacant office space. • A significant portion of our net operating income is expected to come from our hotel and, as a result, our operating performance is subject to the cyclical nature of the lodging industry. • The outbreak of a highly infectious, contagious or widespread disease, such as COVID-19, can result (and has resulted) in reductions in travel and adversely affect demand for our hotel. 11 Table of Contents • We may be unable to renew leases or release apartment units as leases expire, or the terms of renewals or new leases may be less favorable than current leases. • Income from our long-term leases at our office properties is an important source of our cash flow from operations and is subject to risks related to increases in expenses and inflation. • Real estate-related taxes may increase, and if these increases are not passed on to tenants, our income will be reduced. • We face risks associated with development, redevelopment, repositioning or construction of real estate projects. • Inflation may adversely affect our real estate operations. • Supply chain disruption and increased costs in labor and materials may adversely affect our real estate operations. • Our real estate business is subject to risks from climate change.
To the extent that climate change impacts changes in weather patterns, our markets could experience increases in extreme weather. For example, many of our properties are located in areas have been impacted by drought and, as such, face the risk of increased water costs and potential fines and/or penalties for high consumption.
To the extent that climate change impacts changes in weather patterns, our markets could experience increases in extreme weather. For example, many of our properties are located in areas that have been impacted by drought and, as such, face the risk of increased water costs and potential fines and/or penalties for high consumption.
The factors described above could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
The factors described above could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
Our Common Stock ranks, with respect to rights upon liquidation, dissolution or winding up of the Company, junior to the Preferred Stock.
Our Common Stock ranks, with respect to rights upon liquidation, dissolution or winding-up of the Company, junior to our Preferred Stock.
Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Preferred Stock are entitled to receive a liquidation preference equal to the applicable stated values of such shares, plus all accrued but unpaid dividends on such shares, prior and in preference to any distribution to the holders of shares of our Common Stock.
Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company, the holders of shares of Preferred Stock are entitled to receive a liquidation preference equal to the applicable stated values of such shares, plus all accrued but unpaid dividends on such shares, prior and in preference to any distribution on our Common Stock.
The redemption price of shares of Preferred Stock may be paid, in our sole discretion, in cash in U.S. dollars (“USD”) or in equal value through the issuance of shares of Common Stock, based on the volume‑weighted average price of our Common Stock for the 20 trading days prior to the redemption.
The redemption price of shares of our Preferred Stock may be paid, in our sole discretion, in cash in U.S. dollars (“USD”) or in equal value through the issuance of shares of Common Stock, based on the volume‑weighted average price of our Common Stock for the 20 trading days prior to the redemption.
These events include, but are not limited to: • adverse changes in economic and socioeconomic conditions (including as a result of the emergence of any new pandemic); • vacancies or our inability to rent space on favorable terms; • adverse changes in financial conditions of buyers, sellers and tenants of properties; • inability to collect rent from tenants; • competition from real estate investors with significant capital, including but not limited to real estate operating companies, publicly-traded REITs and institutional investment funds; • reductions in the level of demand for office and hotel space and changes in the relative popularity of properties; • increases in the supply of office and hotel space; • fluctuations in interest rates and the availability of credit, which could adversely affect our ability, or the ability of buyers and tenants of properties, to obtain financing on favorable terms or at all; • dependence on third parties to provide leasing, brokerage, onsite property management and other services with respect to certain of our assets; • increases in expenses, including insurance costs, labor costs, utility prices, real estate assessments and other taxes and costs of compliance with laws, regulations and governmental policies, and our inability to pass on some or all of these increases to our tenants; and • changes in, and changes in enforcement of, laws, regulations and governmental policies, including, without limitation, health, safety, environmental, zoning, real estate tax, federal and state laws, governmental fiscal policies and the ADA.
These events include, but are not limited to: • adverse changes in economic and socioeconomic conditions (including as a result of the emergence of any pandemic); • vacancies or our inability to rent space on favorable terms; • adverse changes in financial conditions of buyers, sellers and tenants of properties; • inability to collect rent from tenants; • competition from real estate investors with significant capital, including but not limited to real estate operating companies, publicly-traded REITs and institutional investment funds; • reductions in the level of demand for office and hotel space and changes in the relative popularity of properties; • increases in the supply of office and hotel space; • fluctuations in interest rates and the availability of credit, which could adversely affect our ability, or the ability of buyers and tenants of properties, to obtain financing on favorable terms or at all; • dependence on third parties to provide leasing, brokerage, onsite property management and other services with respect to certain of our assets; • increases in expenses, including insurance costs, labor costs, utility prices, real estate assessments and other taxes and costs of compliance with laws, regulations and governmental policies, and our inability to pass on some or all of these increases to our tenants; and • changes in, and changes in enforcement of, laws, regulations and governmental policies, including, without limitation, health, safety, environmental, zoning, real estate tax, federal and state laws, governmental fiscal policies and the ADA.
The occurrence of a cyber incident may result in disrupted operations, misstated or unreliable financial data, misappropriation of assets, compromise or corruption of confidential information collected in the course of conducting our business, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation, regulatory enforcement, damage to our tenant and stockholder relationships, material harm to our financial condition, cash flows and the market price of our securities or other adverse effects.
The occurrence of a cybersecurity incident may result in disrupted operations, misstated or unreliable financial data, misappropriation of assets, compromise or corruption of confidential information collected in the course of conducting our business, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation, regulatory enforcement, damage to our tenant and stockholder relationships, material harm to our financial condition, cash flows and the market price of our securities or other adverse effects.
Co-investments involve risks generally not otherwise present with an investment in other real estate assets, such as the following: • the risk that a co-owner may at any time have economic or business interests or goals that are or become inconsistent with our business interests or goals; • the risk that a co-owner may be in a position to take action contrary to our instructions or requests or contrary to our policies, objectives or status as a REIT; • the possibility that an individual co-owner might become insolvent or bankrupt, or otherwise default under the applicable mortgage loan financing documents, which may constitute an event of default under all of the applicable mortgage loan financing documents, result in a foreclosure and the loss of all or a substantial portion of the investment made by the co-owner, or allow the bankruptcy court to reject the agreements entered into by the co-owners owning interests in the property; • the possibility that a co-owner might not have adequate liquid assets to make cash advances that may be required in order to fund operations, maintenance and other expenses related to the property, which could result in the loss of current or prospective tenants and may otherwise adversely affect the operation and maintenance of the property, and could cause a default under the applicable mortgage loan financing documents and may result in late charges, penalties and interest, and may lead to the exercise of foreclosure and other remedies by the lender; • the risk that a co-owner could breach agreements related to the property, which may cause a default under, and possibly result in personal liability in connection with, any mortgage loan financing documents applicable to the property result in a foreclosure or otherwise adversely affect the property and the co-investment; • the risk that we could have limited control and rights, with management decisions made entirely by a third party; and • the possibility that we will not have the right to sell the property at a time that otherwise could result in the property being sold for its maximum value.
Co-investments involve risks generally not otherwise present with an investment in other real estate assets, such as the following: • the risk that a co-owner may at any time have economic or business interests or goals that are or become inconsistent with our business interests or goals; • the risk that a co-owner may be in a position to take action contrary to our instructions or requests or contrary to our policies, objectives or status as a REIT; • the possibility that an individual co-owner might become insolvent or bankrupt, or otherwise default under the applicable mortgage loan financing documents, which may constitute an event of default under all of the applicable mortgage loan financing documents, result in a foreclosure and the loss of all or a substantial portion of the investment made by the co-owner, or allow the bankruptcy court to reject the agreements entered into by the co-owners owning interests in the property; • the possibility that a co-owner might not have adequate liquid assets to make cash advances that may be required in order to fund operations, maintenance and other expenses related to the property, which could result in the loss of current or prospective tenants and may otherwise adversely affect the operation and maintenance of the property, and could cause a default under the applicable mortgage loan financing documents and may result in late charges, penalties and interest, and may lead to the exercise of foreclosure and other remedies by the lender; 31 Table of Contents • the risk that a co-owner could breach agreements related to the property, which may cause a default under, and possibly result in personal liability in connection with, any mortgage loan financing documents applicable to the property or result in a foreclosure or otherwise adversely affect the property and the co-investment; • the risk that we could have limited control and rights, with management decisions made entirely by a third party; and • the possibility that we will not have the right to sell the property at a time that otherwise could result in the property being sold for its maximum value.
In addition, we have undrawn capacities under our credit facility and certain of our mortgages. Any such loss of funds on deposit, lack of access to funds held at banks or inability to borrow from any of our lenders could adversely impact our short-term liquidity and ability to meet our operating expenses or working capital needs.
In addition, we have undrawn capacities under our 2022 Credit Facility and certain of our mortgages. Any such loss of funds on deposit, lack of access to funds held at banks or inability to borrow from any of our lenders could adversely impact our short-term liquidity and ability to meet our operating expenses or working capital needs.
We must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time we acquire the property. If our projections are inaccurate or we may pay too much for a property, our return on our assets could suffer.
We must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time we acquire the property. If our projections are inaccurate or we pay too much for a property, our return on our assets could suffer.
Risks Related to Debt Financing • We have incurred significant indebtedness and may incur significant additional indebtedness on a consolidated basis. • We intend to rely in part on external sources of capital to fund future capital needs and, if we encounter difficulty in obtaining such capital, we may not be able to meet maturing obligations or make additional acquisitions. • Further increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay distributions to our stockholders. • We may not be able to generate sufficient cash flow to meet our debt service obligations. • Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions on our Common Stock or Preferred Stock.
Risks Related to Debt Financing • We have incurred significant indebtedness and may incur significant additional indebtedness on a consolidated basis. • We intend to rely in part on external sources of capital to fund future capital needs and, if we encounter difficulty in obtaining such capital, we may not be able to meet maturing obligations or make additional acquisitions. • Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay distributions on our Common Stock or Preferred Stock. • We may not be able to generate sufficient cash flow to meet our debt service obligations. • Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions on our Common Stock or Preferred Stock.
Any factors that negatively impact the hospitality industry, including the outbreak of pandemic, recessions, severe weather events (such as hurricanes, blizzards, floods, etc.), depressed commercial real estate markets, travel restrictions, bankruptcies or other political or geopolitical events or the introduction of new concepts and products such as Airbnb®, Homeaway® and VRBO®, could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
Any factors that negatively impact the hospitality industry, including the outbreak of pandemics, recessions, severe weather events (such as hurricanes, blizzards, floods, etc.), depressed commercial real estate markets, travel restrictions, bankruptcies or other political or geopolitical events or the introduction of new concepts and products such as Airbnb®, Homeaway® and VRBO®, could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
The incurrence of substantial outstanding indebtedness, and the limitations imposed by our debt agreements, could have significant other adverse consequences, including the following: • our cash flows may be insufficient to meet our required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our liquidity for acquisitions or operations; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our existing indebtedness; • we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms; • we may violate restrictive covenants in our debt documents, which would entitle the lenders to accelerate our debt obligations; • we may default on our obligations and the lenders or mortgagees may foreclose on our properties and take possession of any collateral that secures their loans; and • our default under any of our indebtedness with cross-default provisions could result in a default on other indebtedness.
The incurrence of substantial outstanding indebtedness, and the limitations imposed by our debt agreements, could have significant other adverse consequences, including the following: • our cash flows may be insufficient to meet our required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our liquidity for acquisitions or operations; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our existing indebtedness; • we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms; 32 Table of Contents • we may violate restrictive covenants in our debt documents, which would entitle the lenders to accelerate our debt obligations; • we may default on our obligations and the lenders or mortgagees may foreclose on our properties and take possession of any collateral that secures their loans; and • our default under any of our indebtedness with cross-default provisions could result in a default on other indebtedness.
Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and or damage to our business relationships, all of which could negatively impact our financial results.
Cybersecurity risks and cybersecurity incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and or damage to our business relationships, all of which could negatively impact our financial results.
Any future pandemic could also have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors: • a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action; • reduced economic activity severely impacting our tenants' businesses, financial condition and liquidity or causing one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; • difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis or our tenants' ability to fund their business operations and meet their obligations to us; • any impairment in value of our tangible or intangible assets that could be recorded as a result of weaker economic conditions; • a general decline in business activity and demand for real estate transactions, which could adversely affect our ability or desire to grow our portfolio of properties; and • negative impacts to the credit quality of our tenants and any related impact to tenant rent collections.
Pandemics could have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors: • a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action; • reduced economic activity severely impacting our tenants' businesses, financial condition and liquidity or causing one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; • difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis or our tenants' ability to fund their business operations and meet their obligations to us; • any impairment in value of our tangible or intangible assets that could be recorded as a result of weaker economic conditions; • a general decline in business activity and demand for real estate transactions, which could adversely affect our ability or desire to grow our portfolio of properties; and • negative impacts to the credit quality of our tenants and any related impact to tenant rent collections.
Title 3, Subtitle 8, of the MGCL permits the Board of Directors of a Maryland corporation with at least three independent directors and a class of stock registered under the Securities Exchange Act of 1934, as amended (such as the Company), without stockholder approval and notwithstanding any contrary provision in its charter or bylaws, to implement certain takeover defenses, including: (i) a classified board; (ii) a two-thirds vote requirement to remove a director; (iii) limiting the filling of any vacancy on the Board of Directors to only a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum; (iv) providing the board with the sole power to fix the number of directors; and (v) requiring the holders of up to a majority of voting stock to call a special meeting of stockholders.
Title 3, Subtitle 8, of the MGCL permits the Board of Directors of a Maryland corporation with at least three independent directors and a class of stock registered under the Exchange Act (such as the Company), without stockholder approval and notwithstanding any contrary provision in its charter or bylaws, to implement certain takeover defenses, including: (i) a classified board; (ii) a two-thirds vote requirement to remove a director; (iii) limiting the filling of any vacancy on the Board of Directors to only a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum; (iv) providing the board with the sole power to fix the number of directors; and (v) requiring the holders of up to a majority of voting stock to call a special meeting of stockholders.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusions, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusions, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
If the class of shares of capital stock sold or exchanged is not “regularly traded,” gain arising from such sale or exchange would not be subject to U.S. taxation under FIRPTA as a sale of a USRPI if: (A) on the date the shares were acquired by the non-U.S. stockholder, such shares did not have a fair market value greater than the fair market value on that date of 5% of the “regularly traded” class 41 Table of Contents of our outstanding shares of capital stock with the lowest fair market value, and (B) the test in clause (A) is also satisfied as of the date of any subsequent acquisition by such non-U.S. stockholder of additional shares of the same non-“regularly traded” class of our capital stock, including all such shares owned as of such date by such non-U.S. stockholder.
If the class of shares of capital stock sold or exchanged is not “regularly traded,” gain arising from such sale or exchange would not be subject to U.S. taxation under FIRPTA as a sale of a USRPI if: (A) on the date the shares were acquired by the non-U.S. stockholder, such shares did not have a fair market value greater than the fair market value on that date of 5% of the “regularly traded” class of our outstanding shares of capital stock with the lowest fair market value, and (B) the test in clause (A) is also satisfied as of the date of any subsequent acquisition by such non-U.S. stockholder of additional shares of the same non-“regularly traded” class of our capital stock, including all such shares owned as of such date by such non-U.S. stockholder.
However, because our capital stock is and will be freely transferable (other than restrictions on ownership and transfer that are intended to, among other purposes, assist us in maintaining our qualification as a REIT for federal income tax purposes as described in the risk factor “The share transfer and ownership restrictions applicable to REITs and contained in our charter may inhibit market activity in our shares of stock and restrict our business combination opportunities”), no assurance can be given that we are or will be a domestically-controlled qualified investment entity.
However, because our capital stock is and will be freely transferable (other than restrictions on ownership and transfer that are intended to, among other purposes, assist us in maintaining our qualification as a REIT for federal income tax purposes as described in the 40 Table of Contents risk factor “The share transfer and ownership restrictions applicable to REITs and contained in our charter may inhibit market activity in our shares of stock and restrict our business combination opportunities”), no assurance can be given that we are or will be a domestically-controlled qualified investment entity.
We could suffer from delays in deploying capital, particularly if the capital we raise (including in our current equity offerings described in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Sources and Uses of Funds”) outpaces our Operator’s ability to identify acquisitions and or close on them.
We could suffer from delays in deploying capital, particularly if the capital we raise (including in our current equity offering described in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Sources and Uses of Funds”) outpaces our Operator’s ability to identify acquisitions and or close on them.
In the event we enter into joint venture or other co-investments with CIM, its affiliates or vehicles managed or operated by CIM, the Administrator may have a conflict of interest when determining when and whether to buy or sell a particular property, or to make or dispose of another real estate-related asset.
In the event we enter into joint ventures or other co-investments with CIM, its affiliates or vehicles managed or operated by CIM, the Administrator may have a conflict of interest when determining when and whether to buy or sell a particular property, or to make or dispose of another real estate-related asset.
Risks Related to Our Lending Operations • Our lending operations expose us to a high degree of risk associated with real estate. • Our loans secured by real estate and our real estate owned (“REO”) properties, if any, are typically illiquid and their values may decrease. • Our lending operations have an industry concentration, which may negatively impact our financial condition and results of operations.
Risks Related to Our Lending Operations • Our lending operations expose us to a high degree of risk associated with real estate. • Our loans secured by real estate and our real estate owned (“REO”) properties, are typically illiquid and their values may decrease. • Our lending operations have an industry concentration, which may negatively impact our financial condition and results of operations.
Ineffective internal controls could also cause holders of our securities to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our securities. The outbreak of a future pandemic could negatively affected and will likely continue to negatively affect our business, financial condition, results of operations and cash flows.
Ineffective internal controls could also cause holders of our securities to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our securities. The outbreak of a pandemic could negatively affect and will likely continue to negatively affect our business, financial condition, results of operations and cash flows.
If our Board of Directors approved in advance the transaction that would otherwise give rise to the acquirer attaining such status of an “interested stockholder”, the acquirer would not become an interested stockholder and, as a result, it could enter into a business combination with us.
If our Board of Directors approved in advance the transaction that would otherwise give rise to the acquirer attaining such status of an “interested stockholder,” the acquirer would not become an interested stockholder and, as a result, it could enter into a business combination with us.
A cyber incident involving our Operator’s or Administrator’s IT networks and related systems could materially adversely impact our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
A cybersecurity incident involving our Operator’s or Administrator’s IT networks and related systems could materially adversely impact our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
These persons also may have a conflict in structuring the terms of the relationship between us and any affiliated co-venturer or co-owner, as well as conflicts of interests in managing the joint venture, which may result in the co-venturer or co-owner receiving benefits greater than the benefits that we receive.
These persons also may have a conflict in structuring the terms of the relationship between us and any affiliated co-venturer or co-owner, as well as conflicts of interest in managing the joint venture, which may result in the co-venturer or co-owner receiving benefits greater than the benefits that we receive.
Unless exempted by the Board of Directors, for as long as we continue to qualify as a REIT, our charter prohibits, among other limitations on ownership and transfer of shares of our stock, any person from beneficially or constructively owning (applying certain attribution rules under the Code) more than 6.25% (in value or in number of shares, whichever is more restrictive) of the aggregate of our outstanding shares of capital stock and more than 6.25% (in value or in number of shares, whichever is more restrictive) of our Common Stock.
Unless exempted by the Board of Directors, for as long as we continue to qualify as a REIT, our charter prohibits, among other limitations on ownership and transfer of shares of our stock, any person from 41 Table of Contents beneficially or constructively owning (applying certain attribution rules under the Code) more than 6.25% (in value or in number of shares, whichever is more restrictive) of the aggregate of our outstanding shares of capital stock and more than 6.25% (in value or in number of shares, whichever is more restrictive) of our Common Stock.
Risk Factors This section sets forth certain factors that make an investment in our Company speculative or risky, including the following: Risks Related to Our Business • Uninsured losses or losses in excess of our insurance coverage could materially adversely affect our financial condition and cash flows, and there can be no assurance as to future costs and the scope of coverage that may be available under insurance policies. • Cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and or damage to our business relationships, all of which could negatively impact our financial results 10 Table of Contents Risks Related to Conflicts of Interest • Neither the Master Services Agreement nor the Investment Management Agreement may be terminated by us (except in limited circumstances for cause in the case of the Master Services Agreement) and the Master Services Agreement may be assigned by the Administrator in certain circumstances without our consent, either or both of which may have a material adverse effect on us. • The Administrator and Operator are entitled to receive fees for the services they provide regardless of our performance, which may reduce their incentive to devote time and resources to our portfolio. • The Operator may undertake transactions that are motivated, in whole or in part, by a desire to increase its compensation. • Each of the Administrator and Operator provides services to us under broad mandates, and our Board of Directors may not necessarily be involved in each acquisition, disposition or financing decision made by the Administrator or Operator. • Certain of our directors and executive officers may face conflicts of interest related to positions they hold with the Operator, the Administrator, CIM Group and their affiliates, which could result in decisions that are not in the best interest of our stockholders. • The business of CIM Urban is managed by Urban GP Administrator and we agreed in the Master Services Agreement to appoint an affiliate of CIM Group as the manager of the general partner of CIM Urban.
Risk Factors This section sets forth certain factors that make an investment in our Company speculative or risky, including the following: Risks Related to Our Business • Uninsured losses or losses in excess of our insurance coverage could materially adversely affect our financial condition and cash flows, and there can be no assurance as to future costs and the scope of coverage that may be available under insurance policies. • Cybersecurity risks and cybersecurity incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and or damage to our business relationships, all of which could negatively impact our financial results. 10 Table of Contents Risks Related to Conflicts of Interest • Neither the Master Services Agreement nor the Investment Management Agreement may be terminated by us (except in limited circumstances for cause in the case of the Master Services Agreement) and the Master Services Agreement may be assigned by the Administrator in certain circumstances without our consent, either or both of which may have a material adverse effect on us. • The Administrator and Operator are entitled to receive fees for the services they provide regardless of our performance, which may reduce their incentive to devote time and resources to our portfolio. • The Operator may undertake transactions that are motivated, in whole or in part, by a desire to increase its compensation. • Each of the Administrator and Operator provides services to us under broad mandates, and our Board of Directors may not necessarily be involved in each acquisition, disposition or financing decision made by the Administrator or Operator. • Certain of our directors and executive officers may face conflicts of interest related to positions they hold with the Operator, the Administrator, CIM Group and their affiliates, which could result in decisions that are not in the best interest of our stockholders. • The business of CIM Urban is managed by Urban GP Administrator and we agreed in the Master Services Agreement to appoint an affiliate of CIM Group as the manager of the general partner of CIM Urban, and the general partner of CIM Urban may only be removed from such position under limited circumstances as provided in the CIM Urban Partnership Agreement.
In the event that a tenant occupying a significant portion of one or more of our properties or whose rental income represents a significant portion of the rental revenue at such property or properties were to experience financial weakness or file bankruptcy, it could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
In the event that a tenant occupying a significant portion of one or more of our properties or whose rental income represents a significant portion of the rental revenue at such property or properties were to experience financial weakness or file bankruptcy, it could have a material adverse effect on our 22 Table of Contents business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
The ownership percentage in the Company of a holder may become diluted if we issue new shares of Common Stock or other securities, and issuances of additional preferred stock or other securities by us may further subordinate the rights of the holders of our Preferred Stock or Common Stock (which holders of Preferred Stock may become upon receipt of redemption payments in shares of Common Stock).
A stockholder’s ownership percentage in the Company may become diluted if we issue new shares of Common Stock or other securities, and issuances of additional preferred stock or other securities by us may further subordinate the rights of the holders of our Preferred Stock or Common Stock (which holders of Preferred Stock may become upon receipt of redemption payments in shares of Common Stock).
Our Operator and Administrator have implemented processes, procedures and internal controls to help mitigate cyber incidents, but these measures do not guarantee that a cyber incident involving our Operator or Administrator will not occur or that attempted security breaches or disruptions would not be successful or damaging.
Our Operator and Administrator have implemented processes, procedures and internal controls to help mitigate cybersecurity incidents, but these measures do not guarantee that a cybersecurity incident involving our Operator or Administrator will not occur or that attempted security breaches or disruptions would not be successful or damaging.
Any failure to maintain effective internal controls, or implement any necessary improvements in a timely manner, could have a material adverse effect on our business, financial condition, 14 Table of Contents results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock, or cause us to not meet our reporting obligations, which could affect our ability to maintain our listing of Common Stock on Nasdaq and the TASE.
Any failure to maintain effective internal controls, or implement any necessary improvements in a timely manner, could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock, or cause us to not meet our reporting obligations, which could affect our ability to maintain our listing of Common Stock on Nasdaq and the TASE.
We face cybersecurity risks and risks associated with security breaches or disruptions, such as cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, social engineering and phishing schemes or persons inside our organization, the Operator and or Administrator.
We face cybersecurity risks and risks associated with security breaches or disruptions, such as cyberattacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, social engineering and phishing schemes or persons inside our organization, the Operator and or Administrator.
The capital and credit markets have experienced volatility and disruption as a result of the sharp rise in interest rate as a result of the Federal Reserve’s attempt to combat inflation. We believe that such volatility and disruption are likely to continue into the foreseeable future.
The capital and credit markets have experienced volatility and disruption as a result of the sharp rise in interest rates as a result of the Federal Reserve’s attempt to combat inflation. We believe that such volatility and disruption are likely to continue into the foreseeable future.
We are susceptible to adverse developments in the California economic and regulatory environments (such as business layoffs or 21 Table of Contents downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes, costs of complying with governmental regulations or increased regulation and other factors) as well as natural disasters that occur in these areas (such as earthquakes, floods, fires and other events).
We are susceptible to adverse developments in the California economic and regulatory environments (such as business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes, costs of complying with governmental regulations or increased regulation and other factors) as well as natural disasters that occur in these areas (such as earthquakes, floods, fires and other events).
In addition, if our existing indebtedness matures or otherwise becomes payable during a period of rising interest rates, we could be required to liquidate one or more of our assets at times that may prevent realization of the maximum return on such assets. 33 Table of Contents We may not be able to generate sufficient cash flow to meet our debt service obligations.
In addition, if our existing indebtedness matures or otherwise becomes payable during a period of rising interest rates, we could be required to liquidate one or more of our assets at times that may prevent realization of the maximum return on such assets. We may not be able to generate sufficient cash flow to meet our debt service obligations.
The decisions of the Administrator and the Operator could therefore result in losses or returns that are substantially below our expectations, which 16 Table of Contents could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
The decisions of the Administrator and the Operator could therefore result in losses or returns that are substantially below our expectations, which could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
Risks Related to Our Organizational Structure • Provisions of our charter and bylaws and the Maryland General Corporation Law (the “MGCL”) may deter takeover attempts, which may limit the opportunity of our stockholders to sell their shares at a favorable price. • The power of the Board of Directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders. • The MGCL or our charter may limit the ability of our stockholders or us to recover on a claim against a director or officer who negligently causes us to incur losses. • The liability of the Administrator and the Operator to us under the Master Services Agreement and the Investment Management Agreement, respectively, is limited and we and CIM Urban have agreed to indemnify the Administrator and the Operator, respectively, against certain liabilities.
Risks Related to Our Organizational Structure • Provisions of our charter and bylaws and the MGCL may deter takeover attempts, which may limit the opportunity of our stockholders to sell their shares at a favorable price. • The power of the Board of Directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders. • The MGCL or our charter may limit the ability of our stockholders or us to recover on a claim against a director or officer who negligently causes us to incur losses. • The liability of the Administrator and the Operator to us under the Master Services Agreement and the Investment Management Agreement, respectively, is limited and we and CIM Urban have agreed to indemnify the Administrator and the Operator, respectively, against certain liabilities.
We cannot guarantee that the competitive pressures we face will not have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock. 38 Table of Contents We may be subject to lender liability claims.
We cannot guarantee that the competitive pressures we face will not have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock. We may be subject to lender liability claims.
Also, to the extent publicly traded companies in the United States would be required in the future to prepare financial statements in accordance with International Financial Reporting Standards instead of the current GAAP, this change in accounting standards could materially affect our financial condition or results of operations. Item 1B. Unresolved Staff Comments None. 48 Table of Contents
Also, to the extent publicly traded companies in the United States would be required in the future to prepare financial statements in accordance with International Financial Reporting Standards instead of the current GAAP, this change in accounting standards could materially affect our financial condition or results of operations. Item 1B. Unresolved Staff Comments None.
If we incur substantial costs to comply with the ADA or any other regulatory requirements, our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock could be materially adversely affected.
If we incur substantial costs to comply with the ADA or any other regulatory requirements, our business, financial condition, results of operations, cash flow or our 30 Table of Contents ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock could be materially adversely affected.
The values of our assets and liabilities, and therefore our NAV, are likely to fluctuate over time based on changes in value, investment activities, capital activities, indebtedness levels, and other various activities. General Risk Factors We may be unable to pay or maintain cash distributions or increase distributions to stockholders over time.
The values of our assets and liabilities, and therefore our NAV, are likely to fluctuate over time based on changes in value, investment activities, capital activities, indebtedness levels, and other various activities. 46 Table of Contents General Risk Factors We may be unable to pay or maintain cash distributions or increase distributions to stockholders over time.
For a discussion of the broad discretion that may be exercised by the Operator in our business, see “—Each of the Administrator and Operator provides services to us under broad mandates, and our Board of Directors may not necessarily be involved in each acquisition, disposition or financing decision made by the Administrator or Operator” below.
For a discussion of the broad discretion that may be exercised by the Operator in our business, see “—Each of the Administrator and Operator provides services to us under broad mandates, and our Board of Directors may not necessarily be involved in each acquisition, disposition or financing decision made by the Administrator or Operator” below. 16 Table of Contents Each of the Administrator and Operator provides services to us under broad mandates, and our Board of Directors may not necessarily be involved in each acquisition, disposition or financing decision made by the Administrator or Operator.
A TRS 39 Table of Contents generally will pay income tax at regular corporate rates on any taxable income that it earns. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation.
A TRS generally will pay income tax at regular corporate rates on any taxable income that it earns. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation.
If we ever create and issue additional preferred stock or equity or debt securities convertible into preferred stock with a distribution preference over our Preferred Stock or Common Stock, payment of any distribution preferences of such new outstanding preferred stock would reduce the amount of funds available for the payment of distributions on our Preferred Stock and Common Stock, as applicable.
If we ever create and issue additional preferred stock or equity or debt securities convertible into preferred stock with a distribution preference over our Preferred Stock or 45 Table of Contents Common Stock, payment of any distribution preferences of such new outstanding preferred stock would reduce the amount of funds available for the payment of distributions on our Preferred Stock and Common Stock, as applicable.
In conjunction with the bankruptcy process, the terms of the loan agreements may be modified. Typically, delays in the foreclosure process will have a negative impact on our results of operations and or financial condition due to direct and 37 Table of Contents indirect costs incurred and possible deterioration of the value of the collateral.
In conjunction with the bankruptcy process, the terms of the loan agreements may be modified. Typically, delays in the foreclosure process will have a negative impact on our results of operations and/or financial condition due to direct and indirect costs incurred and possible deterioration of the value of the collateral.
During periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases.
During periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of 21 Table of Contents defaults under existing leases.
Our future debt agreements may restrict our ability to pay distributions to preferred stockholders or to redeem shares of preferred stock in the event of a default under such debt agreements or in other circumstances.
Our future debt agreements may restrict our ability to pay distributions on our Preferred Stock or to redeem shares of preferred stock in the event of a default under such debt agreements or in other circumstances.
If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential 28 Table of Contents tenants and may not be able to replace them, and we may be pressured to reduce our rental rates below those we currently charge or to offer more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants when our tenants’ leases expire.
If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and may not be able to replace them, and we may be pressured to reduce our rental rates below those we currently charge or to offer more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants when our tenants’ leases expire.
Fair value is determined, without 18 Table of Contents regard to the absence of voting rights for the control shares, as of the date of any meeting of stockholders at which the voting rights of the shares are considered and not approved or, if no meeting is held, as of the date of the last control share acquisition by the acquiror.
Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of any meeting of stockholders at which the voting rights of the shares are considered and not approved or, if no meeting is held, as of the date of the last control share acquisition by the acquiror.
Any of these results would have a significant, negative impact on the value of our securities. 34 Table of Contents We may in the future enter into hedging transactions that could expose us to contingent liabilities in the future and materially adversely impact our financial condition and results of operations.
Any of these results would have a significant, negative impact on the value of our securities. We may in the future enter into hedging transactions that could expose us to contingent liabilities in the future and materially adversely impact our financial condition and results of operations.
The judgment regarding the existence and magnitude of impairment indicators is based on factors such as market conditions, tenant performance and lease structure. For example, the early termination of, or 25 Table of Contents default under, a lease by a tenant may lead to an impairment charge.
The judgment regarding the existence and magnitude of impairment indicators is based on factors such as market conditions, tenant performance and lease structure. For example, the early termination of, or default under, a lease by a tenant may lead to an impairment charge.
As of December 31, 2022, we have $56.2 million outstanding under the 2022 credit facility and $27.1 million outstanding under our junior subordinated notes, all of which bear interest at a variable rate. We have not hedged our interest rate with respect to variable rate indebtedness.
As of December 31, 2023, we have $153.2 million outstanding under the 2022 credit facility and $27.1 million outstanding under our junior subordinated notes, all of which bear interest at a variable rate. We have not hedged our interest rate with respect to variable rate indebtedness.
These restrictions may impair the ability of stockholders to receive shares of our Common Stock upon exercise of the Series A Preferred Warrants and, if the Company elects to pay the redemption price in shares of Common Stock, upon redemption of the Preferred Stock. The terms of our Preferred Stock do not contain any financial covenants.
These restrictions may impair the ability of stockholders to receive shares of our Common Stock upon exercise of the Series A Preferred Warrants and, if the Company elects to pay the redemption price in shares of Common Stock, upon redemption of the Preferred Stock. 44 Table of Contents The terms of our Preferred Stock do not contain any financial covenants.
In making this determination, our Board of Directors will consider all relevant factors, including the amount of cash 44 Table of Contents resources available for distributions, capital spending plans, cash flow, financial position, applicable requirements of the MGCL and any applicable contractual restrictions.
In making this determination, our Board of Directors will consider all relevant factors, including the amount of cash resources available for distributions, capital spending plans, cash flow, financial position, applicable requirements of the MGCL and any applicable contractual restrictions.
Moreover, the aggregate liability of any such entities and persons pursuant to the Master Services Agreement is capped at the aggregate amount of the Base Service Fee and any 20 Table of Contents transaction fees previously paid to the Administrator in the two most recent calendar years.
Moreover, the aggregate liability of any such entities and persons pursuant to the Master Services Agreement is capped at the aggregate amount of the Base Service Fee and any transaction fees previously paid to the Administrator in the two most recent calendar years.
The loss of PLP status could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
The loss of PLP status could have a material adverse effect on our business, 37 Table of Contents financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
Even if 22 Table of Contents a lease is assumed and brought current, we still run the risk that a tenant could condition lease assumption on a restructuring of certain terms, including rent, that would have an adverse impact on us.
Even if a lease is assumed and brought current, we still run the risk that a tenant could condition lease assumption on a restructuring of certain terms, including rent, that would have an adverse impact on us.
The presence of, or contamination resulting from, any of these substances, or the failure to properly remediate them, may adversely affect our ability to sell or rent our property, to borrow using the property as collateral or create lender’s liability for us.
The presence of, or contamination resulting from, any of these substances, or the failure to properly remediate them, may adversely affect our ability to sell or rent our property, to borrow 29 Table of Contents using the property as collateral or create lender’s liability for us.
As a result, our charter provides our Board of Directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation, without the vote of our stockholders.
As a result, our charter provides our Board of Directors with the power, under 39 Table of Contents certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation, without the vote of our stockholders.
If a major tenant declares bankruptcy, we may be unable to collect balances due under relevant leases, which could have a material adverse effect on our financial condition and ability to pay distributions to our stockholders. The bankruptcy or insolvency of our tenants may adversely affect the income produced by our properties.
If a major tenant declares bankruptcy, we may be unable to collect balances due under relevant leases, which could have a material adverse effect on our financial condition and ability to pay distributions on our Common Stock or Preferred Stock. The bankruptcy or insolvency of our tenants may adversely affect the income produced by our properties.
In addition, depending on the terms and pricing of any 46 Table of Contents future offerings and the value of our assets, such investors may experience dilution in the book value and fair market value of, and the amount of distributions paid on, their shares of Common Stock, if any.
In addition, depending on the terms and pricing of any future offerings and the value of our assets, such investors may experience dilution in the book value and fair market value of, and the amount of distributions paid on, their shares of Common Stock, if any.
Even if the terms of any joint venture or other co-investments between us and CIM, its affiliates or vehicle operated or managed by CIM grants us the right of first refusal to buy such properties, we may not have sufficient funds or borrowing capacity to exercise our right of first refusal under these circumstances.
Even if the terms of any joint venture or other co-investments between us and CIM, its affiliates or vehicles operated or managed by CIM grant us the right of first refusal to buy such properties, we may not have sufficient funds or borrowing capacity to exercise our right of first refusal under these circumstances.
These required payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan. If the mortgage loan has an adjustable interest rate, the amount of our scheduled payments also may increase at a time of rising interest rates.
These required payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan. If the mortgage loan has an adjustable interest rate, the amount of our scheduled payments also may increase at a time of rising 34 Table of Contents interest rates.
Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can only provide reasonable, not absolute, assurance that the objectives of the system are met.
Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can only provide reasonable, not 14 Table of Contents absolute, assurance that the objectives of the system are met.
While we are principally focused on Class A and creative office assets in vibrant and improving metropolitan communities throughout the United States (including improving and developing such assets), we may also participate more actively in other CIM Group real estate strategies and product types, including, but not limited to, multi-family residential and or real estate debt, in order to broaden our participation in CIM Group’s platform and capabilities for the benefit of all classes of stockholders.
While we are principally focused on Class A and creative office assets in vibrant and improving metropolitan communities throughout the United States (including improving and developing such assets), we may also participate more 19 Table of Contents actively in other CIM Group real estate strategies and product types, including, but not limited to, multifamily residential and/or real estate debt, in order to broaden our participation in CIM Group’s platform and capabilities for the benefit of all classes of stockholders.
The aggregate value of our TRS stock and securities was less than 20% of the value of our total assets (including our TRS stock and securities) as of December 31, 2022.
The aggregate value of our TRS stock and securities was less than 20% of the value of our total assets (including our TRS stock and securities) as of December 31, 2023.
Such delays, which may be caused by a number of factors, including competition in the market for the same real estate opportunities, may adversely affect our ability to pay distributions to our stockholders and or the value of their overall returns on investment in our securities.
Such delays, which may be caused by a number of factors, including competition in the market for the same real estate opportunities, may adversely affect our ability to pay distributions on our Common Stock or Preferred Stock and/or the value of their overall returns on investment in our securities.
Unless required by 29 Table of Contents applicable law, we may decide not to further investigate, remedy or ameliorate the liabilities disclosed in the Phase I assessments. Further, these or other environmental studies may not identify all potential environmental liabilities or accurately assess whether we will incur material environmental liabilities in the future.
Unless required by applicable law, we may decide not to further investigate, remedy or ameliorate the liabilities disclosed in the Phase I assessments. Further, these or other environmental studies may not identify all potential environmental liabilities or accurately assess whether we will incur material environmental liabilities in the future.
As a result, these operators are subject to risks associated with the hospitality industry, including the outbreak of pandemic, recessions, severe weather events, depressed commercial real estate markets, travel restrictions, bankruptcies or other political or geopolitical events. Our SBA 7(a) loans that have real estate as collateral are subject to risks of delinquency and foreclosure.
As a 36 Table of Contents result, these operators are subject to risks associated with the hospitality industry, including the outbreak of pandemics, recessions, severe weather events, depressed commercial real estate markets, travel restrictions, bankruptcies or other political or geopolitical events. Our SBA 7(a) loans that have real estate as collateral are subject to risks of delinquency and foreclosure.
We may incur construction costs for a development project that exceed our original estimates due to increases in interest rates, which is the economic environment that we expect to continue to face in 2023, increased materials, labor, leasing or other costs, material shortages or supply chain delays, all of which are more likely in the current inflationary environment, or unanticipated technical difficulties, which could make completion of the project less profitable because market rents may not increase sufficiently to compensate for the increase in construction costs.
We may incur construction costs for a development project that exceed our original estimates due to continuing high interest rates, which is the economic environment that we expect to continue to face in 2024, increased materials, labor, leasing or other costs, material shortages or supply chain delays, all of which are more likely in the current inflationary environment, or unanticipated technical difficulties, 28 Table of Contents which could make completion of the project less profitable because market rents may not increase sufficiently to compensate for the increase in construction costs.
In addition, there can be no assurance that the Operator will follow its acquisition process in relation to the identification and acquisition or origination of prospective assets. As a result, the nature of the composition of our assets could change without the consent of our stockholders.
Our Operator may change these and other policies without a vote of our stockholders. In addition, there can be no assurance that the Operator will follow its acquisition process in relation to the identification and acquisition or origination of prospective assets. As a result, the nature of the composition of our assets could change without the consent of our stockholders.
As a result, we may have to enter into short-term borrowings in certain quarters in order to make distributions to our stockholders, and we can provide no assurances that such borrowings will be available on favorable terms, if at all.
As a result, we may have to enter into short-term borrowings in certain quarters in order to make distributions on our Common Stock or Preferred Stock, and we can provide no assurances that such borrowings will be available on favorable terms, if at all.
We cannot assure our stockholders that we will have funds available to correct such defects or to make such improvements. We may be unable to secure funds for our future long-term liquidity needs.
We cannot assure our stockholders that we will have funds available to correct such defects or to make such improvements. 26 Table of Contents We may be unable to secure funds for our future long-term liquidity needs.
Any federal, state or local taxes we pay will reduce our cash available for distribution to our stockholders. Moreover, as discussed above, our TRSs are generally subject to corporate income taxes and excise taxes in certain cases.
Any federal, state or local taxes we pay will reduce our cash available for distribution on our Common Stock or Preferred Stock. Moreover, as discussed above, our TRSs are generally subject to corporate income taxes and excise taxes in certain cases.
We may not always be in a position to pay distributions to our stockholders and the amount of any distributions we do make may not increase over time. In addition, our actual results may differ significantly from the assumptions used by our Board of Directors in establishing our distribution policy.
We may not always be in a position to pay distributions on our Common Stock or Preferred Stock and the amount of any distributions we do make may not increase over time. In addition, our actual results may differ significantly from the assumptions used by our Board of Directors in establishing our distribution policy.
The war between Russia and Ukraine and the resulting economic sanctions imposed by many countries on Russia have led to disruption, instability and volatility in global markets and industries and are expected to have a negative impact on the global economy.
The conflict between Russia and Ukraine, and the resulting economic sanctions imposed by many countries on Russia, and conflicts in the Middle East have led to disruption, instability and volatility in global markets and industries and are expected to have a negative impact on the global economy.
Increased payments and substantial principal or balloon payments will reduce the funds available for distribution to our stockholders because cash otherwise available for distribution will be required to pay principal and interest associated with these mortgage loans.
Increased payments and substantial principal or balloon payments will reduce the funds available for distribution on our Common Stock or Preferred Stock because cash otherwise available for distribution will be required to pay principal and interest associated with these mortgage loans.
Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders. We may finance some of our property acquisitions using interest-only mortgage indebtedness. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan.
Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution on our Common Stock or Preferred Stock. We may finance some of our property acquisitions using interest-only mortgage indebtedness. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan.

… 121 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

18 edited+14 added−3 removed0 unchanged
Biggest changeOffice Portfolio Detail by Classification, Address, Market, and Submarket as of December 31, 2022 Classification / Market / Address Sub-Market Rentable Square Feet % Occupied % Leased (1) Annualized Rent (in thousands) Annualized Rent Per Occupied Square Foot Consolidated Office Portfolio Oakland, CA 1 Kaiser Plaza Lake Merritt 537,811 84.5 % 84.5 % $ 22,936 $ 50.47 San Francisco, CA 1130 Howard Street South of Market 21,194 61.1 % 61.1 % 1,215 93.87 Los Angeles, CA 11620 Wilshire Boulevard West Los Angeles 196,225 71.8 % 77.2 % 7,102 50.41 11600 Wilshire Boulevard West Los Angeles 57,737 85.3 % 85.3 % 2,867 58.19 9460 Wilshire Boulevard Beverly Hills 97,655 69.3 % 91.0 % 7,351 108.58 4750 Wilshire Boulevard (2) Mid-Wilshire 30,335 100.0 % 100.0 % 1,573 51.85 8944 Lindblade Street (3) West Los Angeles 7,980 100.0 % 100.0 % 538 67.42 8960 & 8966 Washington Boulevard (3) West Los Angeles 24,448 100.0 % 100.0 % 1,442 58.98 1037 N Sycamore Avenue Hollywood 5,031 100.0 % 100.0 % 281 55.85 Austin, TX 3601 S Congress Avenue (4) South 228,198 86.4 % 86.4 % 9,630 48.84 1021 E 7th Street East 11,180 100.0 % 100.0 % 634 56.71 1007 E 7th Street (5) East 1,352 100.0 % 100.0 % 46 34.02 Total Consolidated Office Portfolio 1,219,146 82.2 % 84.9 % 55,615 55.50 Unconsolidated Office Portfolio Los Angeles, CA 1910 Sunset Boulevard - 44% (6) Echo Park 100,506 74.8 % 80.4 % 3,403 45.26 Total Unconsolidated Office Portfolio 100,506 74.8 % 80.4 % 3,403 45.26 Total Office Portfolio 1,319,652 81.7 % 84.5 % 59,018 54.75 Total Office Portfolio - CMCT Share of Annualized Rent 57,112 Development Pipeline Properties Oakland, CA 2 Kaiser Plaza (7) Lake Merritt N/A N/A N/A N/A N/A Los Angeles, CA 3101 S.
Biggest changeOffice Portfolio Detail by Classification, Address, Market, and Submarket as of December 31, 2023 Classification / Market / Address Sub-Market Rentable Square Feet % Occupied % Leased (1) Annualized Rent (in thousands) Annualized Rent Per Occupied Square Foot Consolidated Office Portfolio Oakland, CA 1 Kaiser Plaza Lake Merritt 537,339 83.2 % 83.2 % $ 23,068 $ 51.59 San Francisco, CA 1130 Howard Street South of Market 21,194 61.1 % 61.1 % 1,235 95.41 Los Angeles, CA 11620 Wilshire Boulevard West Los Angeles 196,928 78.8 % 79.9 % 7,854 50.61 11600 Wilshire Boulevard West Los Angeles 56,881 88.1 % 88.1 % 3,058 61.02 9460 Wilshire Boulevard Beverly Hills 97,655 93.7 % 93.7 % 10,093 110.33 8944 Lindblade Street (2) West Los Angeles 7,980 100.0 % 100.0 % 550 68.92 8960 & 8966 Washington Boulevard (2) West Los Angeles 24,448 100.0 % 100.0 % 1,480 60.54 1037 N Sycamore Avenue Hollywood 5,031 100.0 % 100.0 % 293 58.24 Austin, TX 3601 S Congress Avenue (3) South 228,545 80.6 % 82.0 % 9,196 49.92 1021 E 7th Street (4) East 11,180 100.0 % 100.0 % 602 53.85 1007 E 7th Street (5) East 1,352 100.0 % 100.0 % 69 51.04 Total Consolidated Office Portfolio 1,188,533 83.4 % 83.8 % 57,498 58.01 Unconsolidated Office Portfolio Los Angeles, CA 4750 Wilshire Boulevard - 20% (6) Mid-Wilshire 30,335 100.0 % 100.0 % 1,619 53.37 1910 Sunset Boulevard - 44% (7) Echo Park 107,524 83.4 % 86.1 % 4,407 49.13 Total Unconsolidated Office Portfolio 137,859 87.1 % 89.2 % 6,026 50.19 Total Office Portfolio 1,326,392 83.8 % 84.4 % 63,524 57.17 Total Office Portfolio - CMCT Share of Annualized Rent 59,768 Development Pipeline Properties Oakland, CA 2 Kaiser Plaza (8) Lake Merritt N/A N/A N/A N/A N/A Los Angeles, CA 4750 Wilshire Boulevard (Backlot) (9) Mid-Wilshire N/A N/A N/A N/A N/A 1015 Mansfield - 29% (10) Hollywood N/A N/A N/A N/A N/A Total Development Pipeline Properties N/A N/A N/A N/A N/A Total Office and Development Portfolio 1,326,392 83.8 % 84.4 % $ 63,524 $ 57.17 (1) Based on leases signed as of December 31, 2023. 50 Table of Contents (2) The three buildings making up 8960 & 8966 Washington Boulevard and 8944 Lindblade Street were formerly known as Lindblade Media Center.
(6) CMCT and a CIM-managed separate account purchased the property in February 2022 through a joint venture. CMCT owns approximately 44% of the property. The amounts shown in the table represent 100% of the property. (7) 2 Kaiser Plaza Parking Lot is a 44,642 square foot parcel of land currently being used as a surface parking lot.
(7) CMCT and a CIM-managed separate account purchased the property in February 2022 through a joint venture. CMCT owns approximately 44% of the property. The amounts shown in the table represent 100% of the property. (8) 2 Kaiser Plaza Parking Lot is a 44,642 square foot parcel of land currently being used as a surface parking lot.
(1) From and after February 28, 2023 with respect to the 283,081 rentable square feet expiring in 2025, and February 28, 2025 with respect to the 83,696 rentable square feet expiring in 2027, the tenant has the right to terminate all or any portions of its lease with us, effective as of any date specified by the tenant in a written notice given to us at least 15 months prior to the termination, in each case in exchange for a termination penalty.
With respect to the 83,696 rentable square feet that will expire in 2027, from and after February 28, 2025, the tenant has the right to terminate all or any portions of its lease with us, effective as of any date specified by the tenant in a written notice given to us at least 15 months prior to the termination, in exchange for a termination penalty.
Western Avenue (8) Jefferson Park N/A N/A N/A N/A N/A 3022 S. Western Avenue (8) Jefferson Park N/A N/A N/A N/A N/A 3109 S.
Western Avenue (3) Jefferson Park N/A N/A N/A N/A 3022 S. Western Avenue (3) Jefferson Park N/A N/A N/A N/A 3109 S.
(9) The Company intends to redevelop approximately seven commercial units totaling 5,635 rentable square feet and six parking stalls starting in 2024.
(4) The Company intends to redevelop approximately seven commercial units totaling 5,635 rentable square feet and six parking stalls starting in 2024. (5) The Company owns approximately 44% of the property.
Hotel Portfolio Summary as of December 31, 2022 Revenue Per % Available Property Market Rooms Occupied (1) Room Sheraton Grand Hotel (2) Sacramento, CA 503 73.0 % $ 126.19 Total Hotel (1 Property) 503 73.0 % $ 126.19 Other Ancillary Property within Hotel Portfolio Rentable Annualized Square % % Rent (Parking Feet Occupied Leased and Retail) Property Market (Retail) (Retail) (Retail) (3) (in thousands) Sheraton Grand Hotel Parking Garage & Retail Sacramento, CA 9,453 81.0 % 81.0 % $ 538 Total Ancillary Property (1 Property) 9,453 81.0 % 81.0 % $ 538 (1) Represents trailing 12-month occupancy as of December 31, 2022, calculated as the number of occupied rooms divided by the number of available rooms.
Hotel Portfolio Summary as of December 31, 2023 Revenue Per % Available Property Market Rooms Occupied (1) Room Sheraton Grand Hotel (2) Sacramento, CA 503 75.1 % $ 145.80 Total Hotel (1 Property) 503 75.1 % $ 145.80 Other Ancillary Property within Hotel Portfolio Rentable Annualized Square % % Rent (Parking Feet Occupied Leased and Retail) Property Market (Retail) (Retail) (Retail) (3) (in thousands) Sheraton Grand Hotel Parking Garage & Retail (4) Sacramento, CA 9,453 69.3 % 69.3 % $ 567 Total Ancillary Property (1 Property) 9,453 69.3 % 69.3 % $ 567 (1) Represents trailing 12-month occupancy as of December 31, 2023, calculated as the number of occupied rooms divided by the number of available rooms.
As of December 31, 2022, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 81.7% occupied, and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $126.19 for the year ended December 31, 2022.
As of December 31, 2023, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 83.8% occupied, and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $145.80 for the year ended December 31, 2023, and our three multifamily properties were 79.3% occupied.
(2) The Sheraton Grand Hotel is part of the Sheraton franchise and is managed by Sheraton Operating Corporation, a subsidiary of Marriott International, Inc.
(2) The Sheraton Grand Hotel is part of the Sheraton franchise and is managed by Sheraton Operating Corporation, a subsidiary of Marriott International, Inc. (3) Based on leases commenced as of December 31, 2023.
(2) In connection with the 4750 Wilshire Project (as defined later), the Company is no longer classifying approximately 110,000 square feet of vacant space at its property at 4750 Wilshire Boulevard in Los Angeles, California as rentable office square footage as of December 31, 2022. The vacant space will be redeveloped and converted from office space into for-lease multifamily units.
(6) In connection with the 4750 Wilshire Project (as defined below), the Company is no longer classifying approximately 110,000 square feet of vacant space at its property at 4750 Wilshire Boulevard in Los Angeles, California as rentable office square footage as of December 31, 2023.
(1) Includes 16,662 square feet of month-to-month leases as of December 31, 2022.
(1) Includes 8,286 square feet of month-to-month leases as of December 31, 2023.
(3) The three buildings making up 8960 & 8966 Washington Boulevard and 8944 Lindblade Street were formerly known as Lindblade Media Center. (4) 3601 S Congress Avenue consists of twelve buildings. (5) The property is located on a land site of approximately 7,450 square feet. The Company intends to complete pre-development and entitlement work to provide optionality for future development.
(3) 3601 S Congress Avenue consists of twelve buildings. The Company is evaluating different development options including multifamily development. (4) The Company is evaluating different development options including multifamily development. (5) The property is located on a land site of approximately 7,450 square feet. The Company intends to complete pre-development and entitlement work to provide optionality for future multifamily development.
Property Indebtedness as of December 31, 2022 Outstanding Balance Due Principal At Maturity Balance Interest Maturity Date Property (in thousands) Rate Date (in thousands) 1 Kaiser Plaza $ 97,100 4.14% 7/1/2026 $ 97,100 1910 Sunset Boulevard (2) 23,925 SOFR + 2.95% 9/13/2025 23,925 Total $ 121,025 $ 121,025 (1) Loan is generally not prepayable prior to April 1, 2026.
Property Indebtedness as of December 31, 2023 Outstanding Balance Due Principal At Maturity Balance Interest Maturity Date Property (in thousands) Rate Date (in thousands) 1 Kaiser Plaza (1) $ 97,100 4.14% 7/1/2026 $ 97,100 Channel House 87,000 SOFR + 3.36% 7/7/2025 87,000 1150 Clay 66,600 6.25% 6/7/2024 66,600 1910 Sunset Boulevard (2) 23,925 SOFR + 2.95% 9/13/2025 23,925 4750 Wilshire Boulevard (3) 18,353 SOFR + 3.11% 4/1/2026 18,353 1902 Park Avenue (4) 9,580 SOFR + 2.86% 3/1/2026 9,580 Total $ 302,558 $ 302,558 (1) Loan is generally not prepayable prior to April 1, 2026.
Item 2. Properties As of December 31, 2022, our real estate portfolio consisted of 19 assets, all of which were fee-simple properties, including one office property which we own through our investment in an unconsolidated joint venture (the “Unconsolidated Joint Venture”).
Item 2. Properties As of December 31, 2023, our real estate portfolio consisted of 27 assets, all of which were fee-simple properties and five of which we own through investments in Unconsolidated Joint Ventures.
Lindblade Media Center - / - / - 2025 1,979 3.4 % 32,428 2.5 % Total for Top Five Tenants 28,339 48.1 % 498,057 37.8 % All Other Tenants 30,679 51.9 % 579,913 43.9 % Vacant — — % 241,682 18.3 % Total Office Portfolio $ 59,018 100.0 % 1,319,652 100.0 % Note: Represents 100% of the consolidated and unconsolidated office portfolios, regardless of our ownership percentage.
Lindblade Media Center - / - / - 2025 2,030 3.2 % 32,428 2.4 % Total for Top Five Tenants 29,647 46.6 % 498,057 37.5 % All Other Tenants 33,877 53.4 % 613,034 46.3 % Vacant — — % 215,301 16.2 % Total Office Portfolio $ 63,524 100.0 % 1,326,392 100.0 % Note: Represents 100% of the consolidated and unconsolidated office portfolios, regardless of our ownership percentage.
Additionally, as of December 31, 2022, we had four development sites (with one being used as a parking lot).
Additionally, as of December 31, 2023, we had nine development sites (three of which were being used as parking lots).
(3) Based on leases commenced as of December 31, 2022. 50 Table of Contents Office Portfolio—Top 5 Tenants by Annualized Rental Revenue as of December 31, 2022 Credit Rating % of (S&P / Annualized % of Rentable Rentable Moody’s / Lease Rent Annualized Square Square Tenant Property Fitch) Expiration (in thousands) Rent Feet Feet Kaiser Foundation Health Plan, Inc. 1 Kaiser Plaza AA- / - / AA- 2025 - 2027 (1) $ 17,610 29.8 % 366,777 27.8 % MUFG Union Bank, N.A. 9460 Wilshire Boulevard AA- / Aa2 / AA- 2029 3,927 6.7 % 27,569 2.1 % F45 Training Holdings, Inc. 3601 S Congress Avenue - / - / - 2030 2,427 4.1 % 44,171 3.3 % 3 Arts Entertainment, Inc. 9460 Wilshire Boulevard - / - / - 2026 2,396 4.1 % 27,112 2.1 % Westwood One, Inc.
(4) The Company is evaluating the property for potential future development options including multifamily development over the existing parking garage. 52 Table of Contents Office Portfolio—Top 5 Tenants by Annualized Rental Revenue as of December 31, 2023 Credit Rating % of (S&P / Annualized % of Rentable Rentable Moody’s / Lease Rent Annualized Square Square Tenant Property Fitch) Expiration (in thousands) Rent Feet Feet Kaiser Foundation Health Plan, Inc. 1 Kaiser Plaza AA- / - / AA- 2024, 2025, 2027 (1) $ 18,250 28.7 % 366,777 27.7 % U.S.
Office Portfolio—Diversification by Industry as of December 31, 2022 Annualized % of Rentable Rent Annualized Square % of Rentable Industry (in thousands) Rent Feet Square Feet Health Care and Social Assistance $ 23,711 40.1 % 469,924 35.7 % Professional, Scientific, and Technical Services 8,791 14.8 % 142,532 10.8 % Finance and Insurance 5,649 9.5 % 58,959 4.5 % Arts, Entertainment, and Recreation 5,584 9.4 % 87,506 6.6 % Real Estate and Rental and Leasing 3,792 6.4 % 74,439 5.6 % Public Administration 2,281 3.9 % 50,073 3.8 % Retail Trade 2,157 3.7 % 46,571 3.5 % Information 1,757 3.0 % 34,313 2.6 % Other Services (except Public Administration) 1,525 2.6 % 31,966 2.4 % Administrative and Support and Waste Management and Remediation Services 744 1.3 % 12,585 1.0 % Other 3,027 5.3 % 69,102 5.2 % Vacant — — % 241,682 18.3 % Total Office $ 59,018 100.0 % 1,319,652 100.0 % Note: Represents 100% of the consolidated and unconsolidated office portfolios, regardless of our ownership percentage. 51 Table of Contents Office Portfolio—Lease Expiration as of December 31, 2022 Square Feet % of Square Annualized % of Annualized Annualized Rent Year of Lease of Expiring Feet Rent Rent Per Occupied Expiration Leases Expiring (in thousands) Expiring Square Foot 2023 (1) 120,565 11.2 % 6,427 10.9 % 53.31 2024 98,306 9.1 % 4,859 8.2 % 49.43 2025 440,772 40.9 % 21,923 37.1 % 49.74 2026 97,285 9.0 % 5,834 9.9 % 59.97 2027 133,533 12.4 % 7,085 12.1 % 53.06 2028 25,699 2.4 % 1,903 3.2 % 74.05 2029 38,935 3.6 % 4,612 7.8 % 118.45 2030 77,938 7.2 % 4,216 7.1 % 54.09 2031 19,092 1.8 % 804 1.4 % 42.11 Thereafter 25,845 2.4 % 1,355 2.3 % 52.43 Total Occupied 1,077,970 100.0 % $ 59,018 100.0 % $ 54.75 Vacant 241,682 Total Office 1,319,652 Note: Represents 100% of the consolidated and unconsolidated office portfolios, regardless of our ownership percentage.
Office Portfolio—Diversification by Industry as of December 31, 2023 Annualized % of Rentable Rent Annualized Square % of Rentable Industry (in thousands) Rent Feet Square Feet Health Care and Social Assistance $ 25,288 39.8 % 484,497 36.6 % Professional, Scientific, and Technical Services 9,673 15.2 % 158,296 11.9 % Arts, Entertainment, and Recreation 6,132 9.7 % 88,457 6.7 % Finance and Insurance 5,946 9.4 % 61,736 4.7 % Real Estate and Rental and Leasing 4,097 6.4 % 78,478 5.9 % Other Services (except Public Administration) 3,545 5.6 % 51,813 3.9 % Public Administration 2,359 3.7 % 50,073 3.8 % Retail Trade 1,930 3.0 % 42,555 3.2 % Information 1,849 2.9 % 34,313 2.6 % Other 2,705 4.3 % 60,873 4.5 % Vacant — — % 215,301 16.2 % Total Office $ 63,524 100.0 % 1,326,392 100.0 % Note: Represents 100% of the consolidated and unconsolidated office portfolios, regardless of our ownership percentage. 53 Table of Contents Office Portfolio—Lease Expiration as of December 31, 2023 Square Feet % of Square Annualized % of Annualized Annualized Rent Year of Lease of Expiring Feet Rent Rent Per Occupied Expiration Leases Expiring (in thousands) Expiring Square Foot 2024 (1) 206,236 18.6 % 10,330 16.3 % 50.09 2025 330,042 29.7 % 17,774 28.0 % 53.85 2026 126,183 11.4 % 7,874 12.4 % 62.40 2027 164,257 14.8 % 8,860 13.9 % 53.94 2028 55,837 5.0 % 3,165 5.0 % 56.68 2029 53,985 4.9 % 5,624 8.9 % 104.18 2030 91,757 8.3 % 4,721 7.4 % 51.45 2031 26,409 2.4 % 1,177 1.9 % 44.57 2032 25,845 2.3 % 1,427 2.2 % 55.21 Thereafter 30,540 2.6 % 2,572 4.0 % 84.22 Total Occupied 1,111,091 100.0 % $ 63,524 100.0 % $ 57.17 Vacant 215,301 Total Office 1,326,392 Note: Represents 100% of the consolidated and unconsolidated office portfolios, regardless of our ownership percentage.
We are entitled to develop an office building with a maximum of 800,000 rentable square feet. Alternatively, we are also evaluating a multifamily development, which can be constructed by right. (8) The Company intends to develop a total of approximately 160 residential units across both properties.
We are entitled to develop an office building with a maximum of 800,000 rentable square feet. Alternatively, we are also evaluating a multifamily development. (9) The Company owns 100% of the 4750 Wilshire Boulevard backlot land parcel. The site is being evaluated for potential multifamily development and currently is being utilized as a surface parking lot.
Removed
Western Avenue (9) Jefferson Park N/A N/A N/A N/A N/A Total Development Pipeline Properties N/A N/A N/A N/A N/A Total Office and Development Portfolio 1,319,652 81.7 % 84.5 % $ 59,018 $ 54.75 49 Table of Contents (1) Based on leases signed as of December 31, 2022.
Added
Our Unconsolidated Joint Ventures contain two office properties (one of which is being partially converted into multifamily units), one multifamily site currently under development, one multifamily property and one commercial development site.
Removed
In each case, the amount of such termination penalty is dependent on a variety of factors, including but not limited to the date of the termination notice, the amount of the square feet to be terminated and the location within the building of the space to be terminated.
Added
We sold 80% of our interest in 4750 Wilshire Boulevard to three co-investors (the “4750 Wilshire JV Partners”) in February 2023 with our remaining 20% interest now invested in a newly-formed joint venture with the JV Partners. The 4750 Wilshire Project is in the process of converting two out of the building’s three floors into 68 for-lease multifamily units.
Removed
(2) CMCT and a CIM-managed separate account purchased the property in February 2022 through a joint venture. CMCT owns approximately 44% of the property.
Added
(10) The Company owns approximately 29% of the property. The amounts shown in the table represent 100% of the property. The property has a site area of approximately 44,141 square feet and currently contains a parking garage which is being leased to a third party.
Added
The site is being evaluated for different development options, including creative office space or other commercial space.
Added
Classification / Market / Address Sub-Market Units % Occupied Annualized Rent (in thousands) Monthly Rent Per Occupied Unit (1) Consolidated Multifamily Portfolio Oakland, CA Channel House Jack London District 333 71.8 % $ 9,192 $ 3,205 1150 Clay Downtown 288 85.4 % $ 7,980 $ 2,703 Total Consolidated Multifamily Portfolio 621 78.1 % $ 17,172 $ 2,951 Unconsolidated Multifamily Portfolio Los Angeles, CA 1902 Park Avenue - 50% (2) Echo Park 75 89.3 % $ 1,407 $ 1,749 Total Unconsolidated Multifamily Portfolio 75 89.3 % $ 1,407 $ 1,749 Total Multifamily Portfolio 696 79.3 % $ 18,579 $ 2,805 Total Multifamily Portfolio - CMCT Share of Annualized Rent 17,876 Development Pipeline Properties Los Angeles, CA 3101 S.
Added
Western Avenue (4) Jefferson Park N/A N/A N/A N/A 1915 Park Avenue - 44% (5) Echo Park N/A N/A N/A N/A Oakland, CA F3 Land Site (6) Jack London District N/A N/A N/A N/A 466 Water Street Land Site (7) Jack London District N/A N/A N/A N/A Total Multifamily and Development Portfolio 696 79.3 % $ 18,579 $ 2,805 51 Table of Contents (1) Represents gross monthly base rent under leases commenced as of December 31, 2023, divided by occupied units.
Added
(2) The Company owns 50% of the property. The amounts shown in the table represent 100% of the property. The property is a 75-unit four-story building. (3) The Company intends to develop a total of approximately 160 residential units across both properties.
Added
The 1910 Sunset JV plans to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the 1910 Sunset Boulevard office building, for which the 1910 Sunset JV has received all necessary entitlements. (6) Currently being utilized as a parking lot. The Company is evaluating future development options, including hotel development.
Added
(7) The Company is evaluating the property for potential future multifamily development.
Added
Bank, N.A. 9460 Wilshire Boulevard A+ / Aa3 / A+ 2029 4,027 6.3 % 27,569 2.1 % 3 Arts Entertainment, Inc. 9460 Wilshire Boulevard - / - / - 2026 2,848 4.5 % 27,112 2.0 % F45 Training Holdings, Inc. 3601 S Congress Avenue - / - / - 2030 2,492 3.9 % 44,171 3.3 % Westwood One, Inc.
Added
(1) We have commenced lease negotiations with the tenant to sign a long-term lease for 236,692 of the existing 366,777 rentable square feet. There can be no guarantee that a lease extension will be executed.
Added
Taking into account the early termination right exercised by the tenant in 2023, 130,085 rentable square feet will expire on July 31, 2024, 152,966 rentable square feet will expire on February 28, 2025 and 83,696 rentable square feet will expire on February 28, 2027.
Added
(2) CMCT owns 44.2% of the property through its investment in an Unconsolidated Joint Venture. The outstanding principal balance shown here represents 100% of the Unconsolidated Joint Venture’s balance. (3) CMCT owns 20.0% of the property through its investment in an Unconsolidated Joint Venture. The outstanding principal balance shown here represents 100% of the Unconsolidated Joint Venture’s balance.
Added
(4) CMCT owns 50.0% of the property through its investment in an Unconsolidated Joint Venture. The outstanding principal balance shown here represents 100% of the Unconsolidated Joint Venture’s balance.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed2 unchanged
Biggest changeWhile the outcome of these legal actions and proceedings cannot be predicted with certainty, in management’s opinion, the resolution of these legal proceedings and actions will not have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
Biggest changeWhile the outcome of these legal actions and proceedings cannot be predicted with certainty, in management’s opinion, the resolution of these legal proceedings and actions will not have a material adverse effect on our business, financial condition, results of 54 Table of Contents operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
Item 4. Mine Safety Disclosures Not applicable. 52 Table of Contents PART II
Item 4. Mine Safety Disclosures Not applicable. 55 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−1 removed5 unchanged
Biggest changeThe payment for the Series L Redemption was made on January 25, 2023 as well as the accrued and unpaid dividends on the redeemed shares of Series L Preferred Stock through December 31, 2022 of $1.56 per share (or $4.6 million accrued and unpaid dividends in the aggregate).
Biggest changeIn January 2023, the Company completed such previously-announced redemption of all outstanding shares of its Series L Preferred Stock in cash at its stated value of $28.37 per share (plus accrued and unpaid dividends of $1.56 per share, or $4.6 million in the aggregate).
Shares of Series A1 Preferred Stock may be redeemed at our option or at the option of the holder for a redemption price payable in cash or shares of Common Stock as described in Note 10 to the consolidated financial statements included in this Annual Report on Form 10-K.
Shares of Series A1 Preferred Stock may be redeemed at our option or at the option of the holder for a redemption price payable in cash or shares of Common Stock as described in Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K.
Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2022 with respect to shares of our Common Stock, either under options or in respect of restricted stock awards that may be issued under existing equity compensation plans, all of which have been approved by our stockholders.
Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2023 with respect to shares of our Common Stock, either under options or in respect of restricted stock awards that may be issued under existing equity compensation plans, all of which have been approved by our stockholders.
Plan Category Number of shares of Common Stock to be issued upon exercise of outstanding options Weighted average exercise price of outstanding options Number of shares of Common Stock remaining available for future issuances under equity compensation plans (all in restricted shares of Common Stock) Equity incentive plan — N/A 18,786 Recent Sales of Unregistered Securities and Use of Proceeds On December 20, 2022, we issued to the Operator an aggregate of 36,663 shares of our Series A1 Preferred Stock as payment, in lieu of cash, for $916,575 of asset management fees owed to the Operator under the Investment Management Agreement for the third quarter of 2022.
Plan Category Number of shares of Common Stock to be issued upon exercise of outstanding options Weighted average exercise price of outstanding options Number of shares of Common Stock remaining available for future issuances under equity compensation plans (all in restricted shares of Common Stock) Equity incentive plan — N/A 369,898 Recent Sales of Unregistered Securities and Use of Proceeds On December 20, 2022, we issued to the Operator an aggregate of 36,663 shares of our Series A1 Preferred Stock as payment, in lieu of cash, for $916,575 of asset management fees owed to the Operator under the Investment Management Agreement for the third quarter of 2022.
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Marketplace Designation, Sales Price Information and Holders Shares of our Common Stock trade on Nasdaq, under the ticker symbol “CMCT”, and on the TASE, under the ticker symbol “CMCT-L.” On March 22, 2023, there were approximately 357 holders of record of our Common Stock, excluding stockholders whose shares were held by brokerage firms, depositories and other institutional firms in “street name” for their customers.
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Marketplace Designation, Sales Price Information and Holders Shares of our Common Stock trade on Nasdaq, under the ticker symbol “CMCT”, and on the TASE, under the ticker symbol “CMCT.” On March 21, 2024, there were approximately 335 holders of record of our Common Stock, excluding stockholders whose shares were held by brokerage firms, depositories and other institutional firms in “street name” for their customers.
The closing price of our Common Stock on March 22, 2023 was $4.30 as reported on Nasdaq. Approximately 57.3% of shares of our Common Stock as of March 22, 2023 were held by stockholders that are not our affiliates.
The closing price of our Common Stock on March 21, 2024 was $3.71 as reported on Nasdaq. Approximately 54.3% of our Common Stock as of March 21, 2024 was held by stockholders that are not our affiliates.
On December 23, 2022, the Company announced it would redeem all remaining outstanding shares of its Series L Preferred Stock in cash on January 25, 2023 at its stated value of $28.37 per share. The total cost to complete the Series L Redemption, including transaction costs of $93,000 (or $0.03 per share), was $83.8 million.
The total cost to complete the Series L Redemption, including transaction costs of $93,000 (or $0.03 per share), was $83.8 million. Item 6. Reserved
Removed
No additional dividends will be owed on the redeemed shares of Series L Preferred Stock subsequent to December 31, 2022. Item 6. Reserved 53 Table of Contents
Added
In December 2022, the Company announced the redemption of all outstanding shares of its Series L Preferred Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

90 edited+23 added−19 removed53 unchanged
Biggest changeYear Ended December 31, Change 2022 2021 $ % (dollars in thousands) Revenues: Office $ 55,928 $ 53,289 $ 2,639 5.0 % Hotel $ 35,213 $ 17,849 $ 17,364 97.3 % Lending $ 10,765 $ 19,787 $ (9,022) (45.6) % Expenses: Office $ 26,762 $ 23,778 $ 2,984 12.5 % Hotel $ 24,099 $ 15,969 $ 8,130 50.9 % Lending $ 4,385 $ 4,117 $ 268 6.5 % Income From Unconsolidated Entity Office $ 164 $ — $ 164 — Non-Segment Revenue and Expenses: Interest and other income $ — $ 1 $ (1) — Asset management and other fees to related parties $ (3,570) $ (9,030) $ 5,460 (60.5) % Expense reimbursements to related parties—corporate $ (1,925) $ (2,050) $ 125 (6.1) % Interest expense $ (9,052) $ (9,005) $ (47) 0.5 % General and administrative $ (4,630) $ (4,581) $ (49) 1.1 % Transaction costs $ (223) $ (143) $ (80) 55.9 % Depreciation and amortization $ (20,348) $ (20,112) $ (236) 1.2 % Provision for income taxes $ (1,131) $ (2,992) $ 1,861 (62.2) % Revenues Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties.
Biggest changeYear Ended December 31, Change 2023 2022 $ % (dollars in thousands) Revenues: Office $ 55,033 $ 55,928 $ (895) (1.6) % Hotel $ 41,096 $ 35,213 $ 5,883 16.7 % Multifamily $ 11,224 $ — $ 11,224 N/A Lending $ 11,458 $ 10,765 $ 693 6.4 % Expenses: Office $ 26,075 $ 26,762 $ (687) (2.6) % Hotel $ 27,992 $ 24,099 $ 3,893 16.2 % Multifamily $ 9,464 $ — $ 9,464 N/A Lending $ 7,899 $ 4,385 $ 3,514 80.1 % (Loss) Income From Unconsolidated Entities Office $ (582) $ 164 $ (746) N/A Multifamily $ 155 $ — $ 155 N/A Non-Segment Revenue and Expenses: Interest and other income $ 447 $ — $ 447 N/A Asset management and other fees to related parties $ (2,627) $ (3,570) $ 943 (26.4) % Expense reimbursements to related parties—corporate $ (2,342) $ (1,925) $ (417) 21.7 % Interest expense $ (31,406) $ (9,052) $ (22,354) NM* General and administrative $ (5,453) $ (4,630) $ (823) 17.8 % Transaction costs $ (4,421) $ (223) $ (4,198) NM* Depreciation and amortization $ (52,484) $ (20,348) $ (32,136) NM* Gain on sale of real estate $ 1,104 $ — $ 1,104 N/A Provision for income taxes $ (1,228) $ (1,131) $ (97) 8.6 % ______________________ (*) Percentage changes in excess of 100% are deemed to be not meaningful (“NM”) Revenues Office Revenue: Office revenue includes rental revenue, expense reimbursements and lease termination income from office properties.
In December 2022, we completed a refinancing of our 2018 Credit Facility, which was set to mature in October 2023, replacing it with the a new facility (the “2022 Credit Facility”).
In December 2022, we completed a refinancing of our 2018 credit facility, which was set to mature in October 2023, replacing it with a new facility (the “2022 Credit Facility”).
The timing and amount of dividends declared and paid on our Preferred Stock will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.
The timing and amount of dividends declared and paid on our Preferred Stock will be determined by our Board of Directors, in its sole discretion, and may vary from time to time.
Consequently, the dividend rate on a quarterly basis does not necessarily correlate directly to any individual factor.
Consequently, the dividend rate on a quarterly basis does not necessarily correlate directly to any individual factor.
While we will seek to satisfy such needs through one or more of the methods described in the first paragraph of this section, our ability to take such actions is highly uncertain and cannot be predicted, and could be affected by various risks and uncertainties, including, but not limited to, the risks detailed in “Risk Factors” in “Item 1A—Risk Factors” of this Annual Report on Form 10-K.
While we will seek to satisfy such needs through one or more of the methods described in the first paragraph of this section, our ability to take such actions is highly uncertain and cannot be predicted, and could be affected by various risks and uncertainties, including, but not limited to, the risks detailed in “Item 1A—Risk Factors” of this Annual Report on Form 10-K.
Holders of Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends as follows: 64 Table of Contents Annual Rate of Dividend (as a % of stated value) Series A1 Preferred Stock (1) 6.00% Series A Preferred Stock 5.50% Series D Preferred Stock 5.65% Series L Preferred Stock 5.50% (1) The terms of the Series A1 Preferred Stock provide for cumulative cash dividends (if, as and when authorized by the Board of Directors) on each share of Series A1 Preferred Stock at a quarterly rate of the greater of (i) an annual rate of 6.00% of the Series A1 Stated Value, divided by four (4) and (ii) the Federal Funds (Effective) Rate on the dividend determination date, plus 2.50%, of the Series A1 Stated Value, divided by four (4), up to a maximum of 2.50% of the Series A1 Stated Value per quarter.
Holders of Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends as follows: Annual Rate of Dividend (as a % of stated value) Series A1 Preferred Stock (1) 6.00% Series A Preferred Stock 5.50% Series D Preferred Stock 5.65% Series L Preferred Stock 5.50% (1) The terms of the Series A1 Preferred Stock provide for cumulative cash dividends (if, as and when authorized by the Board of Directors) on each share of Series A1 Preferred Stock at a quarterly rate of the greater of (i) an annual rate of 6.00% of the Series A1 Stated Value, divided by four (4) and (ii) the Federal Funds (Effective) Rate on the dividend determination date, plus 2.50%, of the Series A1 Stated Value, divided by four (4), up to a maximum of 2.50% of the Series A1 Stated Value per quarter.
FINRA Estimated Per Share Value We have prepared an estimate of the per share value of each of our Series A Preferred Stock, Series A1 Preferred Stock and Series D Preferred Stock as of December 31, 2022 in order to assist broker-dealers that are participating in our public offering of Series A1 Preferred Stock and broker-dealers that participated in our public offering of Series A Preferred Stock and Series D Preferred Stock in meeting their obligations under applicable FINRA rules.
FINRA Estimated Per Share Value We have prepared an estimate of the per share value of each of our Series A Preferred Stock, Series A1 Preferred Stock and Series D Preferred Stock as of December 31, 2023 in order to assist broker-dealers that are participating in our public offering of Series A1 Preferred Stock and broker-dealers that participated in our public offering of Series A Preferred Stock and Series D Preferred Stock in meeting their obligations under applicable FINRA rules.
Specifically, we divided (i) the fair values of our investments in real estate and certain lending assets and the carrying amounts of our other assets less the carrying amounts of our liabilities, in each case as of December 31, 2022, by (ii) the number of shares of Series A Preferred Stock, Series A1 Preferred Stock and Series D Preferred Stock outstanding as of that date.
Specifically, we divided (i) the fair values of our investments in real estate and certain lending assets and the carrying amounts of our other assets less the carrying amounts of our liabilities, in each case as of December 31, 2023, by (ii) the number of shares of Series A Preferred Stock, Series A1 Preferred Stock and Series D Preferred Stock outstanding as of that date.
(2) Represents gross monthly base rent, as of December 31, 2022, under leases expiring during the periods above, multiplied by twelve. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.
(2) Represents gross monthly base rent, as of December 31, 2023, under leases expiring during the periods above, multiplied by twelve. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.
In determining our dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, our financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects.
In determining the Company’s dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, the Company’s financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects.
The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at our option. The aggregate principal balance of the junior subordinated notes was $27.1 million as of December 31, 2022.
The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at our option. The aggregate principal balance of the junior subordinated notes was $27.1 million as of December 31, 2023.
This estimate utilizes the fair values of our investments in real estate and certain lending assets as well as the carrying amounts of our other assets and liabilities, in each case as of December 31, 2022 (the “Calculated Assets and Liabilities”).
This estimate utilizes the fair values of our investments in real estate and certain lending assets as well as the carrying amounts of our other assets and liabilities, in each case as of December 31, 2023 (the “Calculated Assets and Liabilities”).
However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the reverse stock split in 2019 (the “Reverse Stock Split”) was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of our Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant issued prior to the special dividend in 2019 was adjusted to reflect the effect of the Special Dividend.
However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the reverse stock split in 2019 (the “Reverse Stock Split”) was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of our Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant 65 Table of Contents issued prior to the special dividend in 2019 was adjusted to reflect the effect of the Special Dividend.
The lower fees also reflect a decrease in the adjusted fair value of the Company’s assets in the year ended December 31, 2022 as compared to the year ended December 31, 2021 due to a decrease in the aggregate fair value of the Company’s investments in real estate resulting from valuation changes at the end of 2021 and 2022.
The lower fees reflect a decrease in the adjusted fair value of the Company’s assets in the year ended December 31, 2023 as compared to the year ended December 31, 2022 due to a decrease in the aggregate fair value of the Company’s investments in real estate resulting from valuation changes at the end of 2022 and 2023.
We reflect the SBA 7(a) loans receivable as assets on our consolidated balance sheet and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheet. We have junior subordinated notes with a variable interest rate that resets quarterly based on the three-month LIBOR plus 3.25%, with quarterly interest‑only payments.
We reflect the SBA 7(a) loans receivable as assets on our consolidated balance sheet and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheet. We have junior subordinated notes with a variable interest rate that resets quarterly based on the three-month SOFR plus 3.51%, with quarterly interest‑only payments.
All of these commitments have government guarantees of 75% (as the government guarantee has now reverted to 75% from 90%) and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans.
A majority of these commitments have government guarantees of 75% (as the government guarantee has now reverted to 75%) and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans.
Accordingly, although the estimated value of the Series A Preferred Stock, Series A1 Preferred Stock and Series D Preferred Stock, calculated based on the Calculated Assets and Liabilities as described above, exceeded the Maximum Value, we determined that the estimated value of each of the Series A Preferred Stock, the Series A1 Preferred Stock and Series D Preferred Stock, as of December 31, 2022, was equal to $25.00 per share, plus accrued and unpaid dividends.
Accordingly, although the estimated value of the Series A Preferred Stock, Series A1 Preferred Stock and Series D Preferred Stock, calculated based on the Calculated Assets and Liabilities as described above, 67 Table of Contents exceeded the Maximum Value, we determined that the estimated value of each of the Series A Preferred Stock, the Series A1 Preferred Stock and Series D Preferred Stock, as of December 31, 2023, was equal to $25.00 per share, plus accrued and unpaid dividends.
As of December 31, 2022, the variable interest rate was 6.93%. The 2022 Credit Facility Revolver is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The 2022 Credit Facility is guaranteed by the Company and the Company is subject to certain financial maintenance covenants.
As of December 31, 2023, the variable interest rate was 7.96%. The 2022 Credit Facility Revolver is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The 2022 Credit Facility is guaranteed by the Company and the Company is subject to certain financial maintenance covenants.
We may finance our future activities through one or more of the following methods: (i) offerings of shares of Common Stock, preferred stock or other equity and or debt securities of the Company; (ii) credit facilities and term loans; (iii) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (iv) the sale of existing assets; (v) partnering with co-investors; and or (vi) cash flows from operations.
We may finance our future activities through one or more of the following methods: (i) offerings of shares of Common Stock, preferred stock or other equity and/or debt securities of the Company; (ii) issuance of interests in our operating partnership in exchange for properties; (iii) credit facilities and term loans; (iv) the addition of senior recourse or non-recourse debt using target acquisitions as well as existing assets as collateral; (v) the sale of existing assets; (vi) partnering with co-investors; and/or (vii) cash flows from operations.
Additionally as of December 31, 2021, there were 5,387,160 shares of Series L Preferred Stock outstanding, all of which had been either repurchased during 2022 or reclassified to a liability on our consolidated balance sheet as of December 31, 2022 in connection with the Series L Redemption.
Additionally as of December 31, 2023, there were no shares of Series L Preferred Stock outstanding, all of which had been either repurchased during 2022 or reclassified to a liability on our consolidated balance sheet as of December 31, 2023 in connection with the Series L Redemption.
Holders of our Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by us out of legally available funds.
Holders of the Company’s Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by the Company out of legally available funds.
Our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs. Net cash provided by operating activities decreased by $13.9 million for the year ended December 31, 2022, as compared to the same period in 2021.
Our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs. Net cash provided by operating activities decreased by $20.4 million for the year ended December 31, 2023, as compared to the same period in 2022.
In connection with the Series L Repurchase, we recognized redeemable preferred stock redemptions of $4.8 million on our consolidated statement of operations for the year ended December 31, 2022.
In connection with the Series L Repurchase, we recognized redeemable preferred stock redemptions of $4.8 million on our consolidated statement of operations for the year ended December 31, 2022. In December 2022, we announced the redemption of all outstanding shares of our Series L Preferred Stock.
Additionally, our outstanding commitments to fund loans were $19.9 million as of December 31, 2022, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending.
Additionally, our outstanding commitments to fund loans were $12.6 million as of December 31, 2023, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending.
(3) Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by twelve. This amount reflects total cash rent before abatements. Total abatements, representing lease incentives in the form of free rent, for the years ended December 31, 2022 and 2021 were $2.8 million and $1.5 million, respectively.
(3) Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by twelve. This amount reflects total cash rent before abatements. Total abatements, representing lease incentives in the form of free 57 Table of Contents rent, for the years ended December 31, 2023 and 2022 were $3.0 million and $2.8 million, respectively.
The table below sets forth information on certain of our executed leases during the year ended December 31, 2022, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party: New Cash Expiring Cash Number of Rentable Rents per Square Rents per Square Leases (1) Square Feet Foot (2) Foot (2) Twelve Months Ended December 31, 2022 29 106,695 $ 43.44 $ 45.13 (1) Based on the number of tenants that signed leases.
The table below sets forth information on certain of our executed leases during the year ended December 31, 2023, excluding space that was vacant for more than one year, month-to-month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party: New Cash Expiring Cash Number of Rentable Rents per Square Rents per Square Leases (1) Square Feet Foot (2) Foot (2) Twelve Months Ended December 31, 2023 31 106,454 $ 48.82 $ 49.71 (1) Based on the number of tenants that signed leases.
The annual rate of dividend of the Series A1 Preferred Stock during the first quarter of 2023 is 6.33%. Dividends on each share of Preferred Stock begin accruing on, and are cumulative from, the date of issuance.
The annual rate of dividend of the Series A1 Preferred Stock during the first quarter of 2024 is 7.83%. Dividends on each share of Preferred Stock begin accruing on, and are cumulative from, the date of issuance.
For a discussion of recently issued accounting literature, see Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K. 63 Table of Contents Recoverability of Investments in Real Estate As described in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K, investments in real estate are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of Investments in Real Estate As described in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K, investments in real estate are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Our cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash provided by financing activities for the year ended December 31, 2022 was $13.7 million compared to cash used in financing activities of $43.6 million for the year ended December 31, 2021.
Our cash flows from financing activities are generally impacted by borrowings and capital activities. Net cash provided by financing activities for the year ended December 31, 2023 was $63.4 million compared to cash provided by financing activities of $13.7 million for the year ended December 31, 2022.
The total cost of the 4750 Wilshire Project is expected to be approximately $31.0 million, which will be financed by a combination of equity contributions from us and co-investors as well as a mortgage loan from a third-party lender. In connection with the Co-Investment, we have commitments to receive cash proceeds from co-investors, enhancing our liquidity.
The total cost of the 4750 Wilshire Project is expected to be approximately $31.0 million, which will be financed by a combination of equity contributions from us and co-investors as well as a mortgage loan from a third-party lender. In connection with the 4750 Wilshire JV, we received cash sales proceeds from our joint venture partners.
We primarily acquire, develop, own and operate both premier multifamily properties situated in vibrant communities throughout the United States and Class A and creative office real assets in markets with similar business and employment characteristics to our multifamily investments.
Executive Summary Business Overview Creative Media & Community Trust Corporation is a Maryland corporation and REIT. We primarily acquire, develop, own and operate both premier multifamily properties situated in vibrant communities throughout the United States and Class A and creative office real assets in markets with similar business and employment characteristics to our multifamily investments.
Asset Management and Other Fees to Related Parties: Asset management fees and other fees to related parties, which have not been allocated to our operating segments decreased by 60.5% to $3.6 million for the year ended December 31, 2022 compared to $9.0 million for the year ended December 31, 2021.
Asset Management and Other Fees to Related Parties: Asset management fees and other fees to related parties, which have not been allocated to our operating segments decreased by 26.4% to $2.6 million for the year ended December 31, 2023 compared to $3.6 million for the year ended December 31, 2022.
During the year ended December 31, 2022, we executed leases with terms longer than 12 months totaling 157,102 square feet.
During the year ended December 31, 2023, we executed leases with terms longer than 12 months totaling 140,670 square feet.
No additional dividends will be owed on the redeemed shares of Series L Preferred Stock subsequent to December 31, 2022. 60 Table of Contents Our long-term liquidity needs will consist primarily of funds necessary for acquisitions of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, paying interest and principal on debt financings, refinancing of indebtedness, SBA 7(a) loan originations, paying distributions on our Preferred Stock or any other preferred stock we may issue, any future repurchase of Common Stock and or redemption of our Preferred Stock (if we choose, or are required, to pay the redemption price in cash instead of in shares of our Common Stock) and distributions on our Common Stock.
Our long-term liquidity needs will consist primarily of funds necessary for acquisitions of assets, development or repositioning (pre-construction costs) of properties (as further described below), or re-leasing of space in existing properties, capital expenditures, paying interest and principal on debt financings, refinancing of indebtedness, SBA 7(a) loan originations, paying distributions on our Preferred Stock or any other preferred stock we may issue, any future repurchase of Common Stock and/or redemption of our Preferred Stock (if we choose, or are required, to pay the redemption price in cash instead of in shares of our Common Stock) and distributions on our Common Stock.
Interest Expense: Interest expense, which has not been allocated to our operating segments, remained consistent at $9.1 million for the year ended December 31, 2022 compared to $9.0 million for the year ended December 31, 2021.
Interest Expense: Interest expense, which has not been allocated to our operating segments, increased to $31.4 million for the year ended December 31, 2023 compared to $9.1 million for the year ended December 31, 2022.
As of December 31, 2022, there were 3,316,118 Series A Preferred Warrants to purchase 858,208 shares of Common Stock outstanding. From February 2020 through June 2022, we conducted a continuous public offering of our Series A Preferred Stock and Series D Preferred Stock.
As of December 31, 2023, there were 1,749,732 Series A Preferred Warrants to purchase 449,382 shares of Common Stock outstanding. From February 2020 through June 2022, we conducted a continuous public offering of our Series A Preferred Stock and Series D Preferred Stock.
Net cash used in investing activities increased by $9.6 million to $22.3 million for the year ended December 31, 2022 compared to $12.7 million for the year ended December 31, 2021.
Net cash used in investing activities increased by $66.4 million to $88.7 million for the year ended December 31, 2023 compared to $22.3 million for the year ended December 31, 2022.
If we cannot obtain funding for our long-term liquidity needs, our assets may generate lower cash flows or decline in value, or both, which may cause us to sell assets at a time when we would not otherwise do so which could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
If we cannot obtain funding for our long-term liquidity needs, our assets may generate lower cash flows or decline in value, or both, which may cause us to sell assets at a time when we would not otherwise do so which could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock. 64 Table of Contents Sources and Uses of Funds Mortgages We have mortgage loan agreements with outstanding balances of $250.7 million as of December 31, 2023 in the aggregate.
Off Balance Sheet Arrangements As of December 31, 2022, we did not have any off-balance sheet arrangements. Critical Accounting Policies and Estimates and Recently Issued Accounting Pronouncements The discussion and analysis of our historical financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
Critical Accounting Policies and Estimates and Recently Issued Accounting Pronouncements The discussion and analysis of our historical financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
FFO attributable to common stockholders was $(5.4) million for the year ended December 31, 2022, a decrease of $5.6 million compared to $133,000 for the year ended December 31, 2021.
FFO attributable to common stockholders was $(26.4) million for the year ended December 31, 2023, a decrease of $21.0 million compared to $(5.4) million for the year ended December 31, 2022.
The following table sets forth a historical reconciliation of net income (loss) attributable to common stockholders to FFO attributable to holders of common stockholders: Year Ended December 31, 2022 2021 (in thousands) Net loss attributable to common stockholders (1) $ (25,785) $ (19,979) Depreciation and amortization 20,348 20,112 FFO attributable to common stockholders (1) $ (5,437) $ 133 (1) During the years ended December 31, 2022 and 2021, we recognized $13.1 million and $113,000, respectively, of redeemable preferred stock redemptions on our consolidated statements of operations and $19,000 and $253,000 respectively, of redeemable preferred stock deemed dividends on our consolidated statements of operations.
The following table sets forth a historical reconciliation of net (loss) attributable to common stockholders to FFO attributable to holders of common stockholders: Year Ended December 31, 2023 2022 (in thousands) Net loss attributable to common stockholders (1) $ (75,727) $ (25,785) Depreciation and amortization 52,484 20,348 Noncontrolling interests’ proportionate share of depreciation and amortization (2,090) — Gain on sale of real estate (1,104) — FFO attributable to common stockholders (1) $ (26,437) $ (5,437) (1) During the years ended December 31, 2023 and 2022, we recognized $1.5 million and $13.1 million, respectively, of redeemable preferred stock redemptions on our consolidated statements of operations and $0 and $19,000 respectively, of redeemable preferred stock deemed dividends on our consolidated statements of operations.
As of March 22, 2023 and December 31, 61 Table of Contents 2022 , $113.2 million and $56.2 million, respectively, was outstanding under the 2022 Credit Facility and approximately $93.0 million and $150.0 million, respectively, was available for future borrowings.
As of March 21, 2024, December 31, 2023, and December 31, 2022, $158.2 million, $153.2 million, and $56.2 million, respectively, was outstanding under the 2022 Credit Facility and approximately $48.0 million and $53.0 million, and $150.0 million, respectively, was available for future borrowings.
The SBA 7(a) loan-backed notes bear interest at a per annum rate equal to the lesser of (i) 30-Day average compounded SOFR plus 2.90% and (ii) prime rate minus 0.35%. The annual interest rate for the first interest payment date shall be 7.40%.
The SBA 7(a) loan-backed notes bear interest at a per annum rate equal to the lesser of (i) 30-Day average compounded SOFR plus 2.90% and (ii) prime rate minus 0.35%. As of December 31, 2023, the variable interest rate was 8.15%.
During the year ended December 31, 2022, we redeemed 561,248 shares of Series A Preferred Stock, 9,930 shares of Series A1 Preferred Stock, and 8,000 of Series D Preferred Stock. On September 15, 2022, we repurchased 2,435,284 shares of our Series L Preferred Stock in a privately negotiated transaction (the “Series L Repurchase”).
As of December 31, 2023, we redeemed 1,388,499 shares of Series A Preferred Stock, 95,026 shares of Series A1 Preferred Stock, and 8,410 of Series D Preferred Stock. On September 15, 2022, we repurchased 2,435,284 shares of our Series L Preferred Stock in a privately negotiated transaction (the “Series L Repurchase”).
CIM also maintains additional offices across the United States, as well as in Korea and Hong Kong to support its platform. Properties As of December 31, 2022, our real estate portfolio consisted of 19 assets, all of which were fee-simple properties, including one office property which we own through our investment in an unconsolidated joint venture (the “Unconsolidated Joint Venture”).
CIM also maintains additional offices across the United States and in South Korea to support its platform. Properties As of December 31, 2023, our real estate portfolio consisted of 27 assets, all of which were fee-simple properties and five of which we own through investments in Unconsolidated Joint Ventures.
Lending revenue decreased by 45.6% to $10.8 million for the year ended December 31, 2022 compared to $19.8 million for the year ended December 31, 2021.
Lending revenue increased by 6.4% to $11.5 million for the year ended December 31, 2023 compared to $10.8 million for the year ended December 31, 2022.
As of December 31, 2022, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 81.7% occupied and our one hotel with an ancillary parking garage, which has a total of 503 rooms, had RevPAR of $126.19 for the year ended December 31, 2022.
As of December 31, 2023, our 13 office properties, totaling approximately 1.3 million rentable square feet, were 83.8% occupied and our one 503-room hotel with an ancillary parking garage, had RevPAR of $145.80 for the year ended December 31, 2023 and our three multifamily properties were 79.3% occupied.
General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $4.6 million for the year ended December 31, 2022, consistent with $4.6 million for the year ended December 31, 2021.
General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $5.5 million for the year ended December 31, 2023, compared to $4.6 million for the year ended 62 Table of Contents December 31, 2022, an increase of 17.8%.
We work with potential borrowers to identity the type of loan that would be appropriate for each such borrower’s needs. Our SBA 7(a) term loans have monthly repayment terms of principal and interest and are originated with variable interest rates based on the prime rate. Most of our SBA 7(a) loans have maturities of approximately 25 years.
Our SBA 7(a) term loans have monthly repayment terms of principal and interest and are originated with variable interest rates based on the prime rate. Most of our SBA 7(a) loans have maturities of approximately 25 years.
These loans are anticipated to be concentrated in industries in which we previously had positive experience, including convenience store, RV park and single purpose building owner-occupied restaurant operations and may include owner-occupied industrial operations/warehouse buildings. 2022 Results of Operations Net Income (Loss) and FFO Year Ended December 31, Change 2022 2021 $ % (dollars in thousands) Total revenues $ 101,906 $ 90,926 $ 10,980 12.1 % Total expenses $ 94,994 $ 88,785 $ 6,209 7.0 % Net income (loss) $ 5,945 $ (851) $ 6,796 — Net income increased to $5.9 million, or by $6.8 million, for the year ended December 31, 2022, compared to a net loss of $851,000 for the year ended December 31, 2021.
These loans are anticipated to be primarily concentrated in industries in which we previously had positive experience, including convenience store, RV park and single purpose building owner-occupied restaurant operations and may include owner-occupied industrial operations/warehouse buildings. 2023 Results of Operations Net (Loss) Income and FFO Year Ended December 31, Change 2023 2022 $ % (dollars in thousands) Total revenues $ 119,258 $ 101,906 $ 17,352 17.0 % Total expenses $ 170,163 $ 94,994 $ 75,169 79.1 % Net (loss) income $ (51,456) $ 5,945 $ (57,401) N/A The Company had a net loss of $51.5 million for the year ended December 31, 2023, representing a decrease of $57.4 million compared to net income of $5.9 million for the year ended December 31, 2022.
The decrease is primarily due to a decrease in taxable income at our taxable REIT subsidiaries, as a result of operations of the lending division during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The increase is primarily due to higher taxable income at our taxable REIT subsidiaries during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Additionally, holders of our Series L Preferred Stock were entitled to receive cumulative cash dividends on each share of 5.50% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year). 62 Table of Contents We expect to pay dividends on the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock in arrears on a monthly basis, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so.
We expect to pay dividends on the Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock in arrears on a monthly basis, unless our results of operations, our general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so.
Rental Rate Trends Office Statistics: The following table sets forth occupancy rates and annualized rent per occupied square foot across our office portfolio as of the specified periods (includes 100% of our property partially owned through the Unconsolidated Joint Venture): As of December 31, 2022 2021 Occupancy (1)(2) 81.7 % 77.7 % Annualized rent per occupied square foot (1)(3) $ 54.75 $ 52.57 (1) The information presented in this table represents historical information as of the date indicated without giving effect to any property sales occurring thereafter. 54 Table of Contents (2) In connection with the 4750 Wilshire Project (as defined later), the Company is no longer classifying approximately 110,000 square feet of vacant space at its property at 4750 Wilshire Boulevard in Los Angeles, California as rentable office square footage as of December 31, 2022.
Rental Rate Trends Office Statistics: The following table sets forth occupancy rates and annualized rent per occupied square foot across our office portfolio as of the specified periods (includes 100% of our properties partially owned through Unconsolidated Joint Ventures): As of December 31, 2023 2022 Occupancy (1)(2) 83.8 % 77.7 % Annualized rent per occupied square foot (1)(3) $ 57.17 $ 52.57 (1) The information presented in this table represents historical information as of the date indicated without giving effect to any property sales occurring thereafter.
Liquidity and Capital Resources General On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties, or re-leasing of space in existing properties, capital expenditures, paying interest and principal on current and any future debt financings, SBA 7(a) loan originations, paying distributions on our Preferred Stock and Common Stock and making redemption payments on our Preferred Stock.
Liquidity and Capital Resources General On a short-term basis, our principal demands for funds will be for the acquisition of assets, development or repositioning of properties (as further described below) (including pre-construction costs such as obtaining entitlements and 63 Table of Contents permits and architectural work), or re-leasing of space in existing properties, capital expenditures, paying interest and principal on current and any future debt financings, SBA 7(a) loan originations, paying distributions on our Preferred Stock and Common Stock and making redemption payments on our Preferred Stock (of which $49.8 million could be redeemed without any redemption fee as of December 31, 2023 in cash and/or in shares of Common Stock in our sole discretion).
On December 23, 2022, the Company announced it would redeem all remaining outstanding shares of its Series L Preferred Stock in cash on January 25, 2023 at its stated value of $28.37. The total cost to complete the Series L Redemption, including transaction costs of $93,000 (or $0.03 per share), was $83.8 million.
In January 2023, the Company completed the previously-announced redemption of all outstanding shares of its Series L Preferred Stock in cash at its stated value of $28.37 (plus accrued and unpaid dividend of $1.56 per share, or $4.6 million in the aggregate). The total cost to complete the Series L Redemption, including transaction costs, was $83.8 million.
Over the next four quarters, we expect to see expiring cash rents as set forth in the table below (includes 100% of our property partially owned through the Unconsolidated Joint Venture): For the Three Months Ended March 31, June 30, September 30, December 31, 2023 2023 2023 2023 Expiring Cash Rents: Expiring square feet (1) 40,698 34,895 22,033 22,939 Expiring rent per square foot (2) $ 56.44 $ 54.39 $ 52.69 $ 46.69 (1) Month-to-month tenants occupying a total of 16,662 square feet are included in the expiring leases in the first quarter listed.
Over the next four quarters, we expect to see expiring cash rents as set forth in the table below (includes 100% of our properties partially owned through Unconsolidated Joint Ventures): For the Three Months Ended March 31, June 30, September 30, December 31, 2024 2024 2024 2024 Expiring Cash Rents: Expiring square feet (1) 33,236 25,456 142,333 5,211 Expiring rent per square foot (2) $ 60.03 $ 47.42 $ 47.89 $ 59.68 (1) Month-to-month tenants occupying a total of 8,286 square feet are included in the expiring leases in the first quarter listed.
Hotel Expenses: Hotel expenses increased by 50.9% to $24.1 million for the year ended December 31, 2022 compared to $16.0 million for the year ended December 31, 2021, primarily as a result of increased occupancy at the hotel due to the hospitality industry continuing to recover from the impact of COVID-19.
Hotel Expenses: Hotel expenses increased by 16.2% to $28.0 million for the year ended December 31, 2023 compared to $24.1 million for the year ended December 31, 2022, as a result of increased occupancy at the hotel. Multifamily Expenses: Multifamily expenses were $9.5 million for the year ended December 31, 2023.
Further, we expect to earn management fees from co-investors in connection with their co-investment in the 4750 Wilshire Project. We may not have sufficient funds on hand or may not be able to obtain additional financing to cover all of our long-term cash requirements.
We may not have sufficient funds on hand or may not be able to obtain additional financing to cover all of our long-term cash requirements.
You should read the following discussion in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. Executive Summary Business Overview Creative Media & Community Trust Corporation (formerly known as CIM Commercial Trust Corporation) is a Maryland corporation and REIT.
You should read the following discussion in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. Further, we are evaluating renovation of certain areas of our hotel in California and development of our development sites.
Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. Further, we are evaluating development of our development sites. To the extent we decide to proceed with development work on any of our development sites (in addition to those discussed below), we will have increased liquidity needs.
Dividends As of December 31, 2022, there were 5,966,077 and 5,956,147 shares of Series A1 Preferred Stock issued and outstanding, respectively, 8,820,338 and 8,259,090 shares of Series A Preferred Stock issued and outstanding, respectively, 56,857 and 48,857 shares of Series D Preferred Stock issued and outstanding, respectively, and 22,737,853 shares of Common Stock issued and outstanding.
Dividends As of December 31, 2023, there were 10,473,369 and 10,378,343 shares of Series A1 Preferred Stock issued and outstanding, respectively, 8,820,338 and 7,431,839 shares of Series A Preferred Stock issued and outstanding, respectively, 56,857 and 48,447 shares of Series D Preferred Stock issued and outstanding, respectively, and 22,786,741 shares of Common Stock issued and outstanding.
We believe the following critical accounting policy, among others, affects our more significant estimates and assumptions used in preparing our consolidated financial statements.
We believe the following critical accounting policy, among others, affects our more significant estimates and assumptions used in preparing our consolidated financial statements. For a discussion of recently issued accounting literature, see Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K.
Overview The following discussion focuses on recent developments expected to have material current and future impacts on the results of our business, trends and uncertainties within our industry and business model that may impact our financial results, our recent results of operations, and our liquidity and capital resources.
For cautions about relying on such forward-looking statements, please see “Forward-Looking Statements” at the beginning of this report immediately prior to “Item 1 —Business” in this Annual Report on Form 10-K. 56 Table of Contents Overview The following discussion focuses on recent developments expected to have material current and future impacts on the results of our business, trends and uncertainties within our industry and business model that may impact our financial results, our recent results of operations, and our liquidity and capital resources.
The decrease in FFO was primarily attributable to an increase in redeemable preferred stock redemptions of $13.0 million (primarily resulting from $12.7 million recognized in connection with the Series L Repurchase and Series L Redemption during the year ended December 31, 2022) and a decrease in lending segment net operating income of $9.3 million, partially offset by an increase of $9.2 million in hotel segment net operating income, a decrease of $5.5 million in asset management and other fees to related parties and a decrease of $1.9 million in provision for income taxes. 57 Table of Contents Summary Segment Results During the years ended December 31, 2022 and 2021, we operated in three segments: office and hotel properties and lending.
These were partially offset by a decrease in the consolidated statement of operations impact of redeemable preferred stock redemptions of $11.6 million (primarily resulting from $12.7 million recognized in connection with the Series L Repurchase and Series L Redemption during the year ended December 31, 2022). 60 Table of Contents Summary Segment Results During the years ended December 31, 2023 and 2022, we operated in four segments: office, hotel and multifamily properties and lending.
The decrease is primarily due to lower premium income as a result of lower loan sale volume and a reduction in the market premium achieved during the year ended December 31, 2022, compared to the year ended December 31, 2021.
The increase is due to increased interest income from higher interest rates, partially offset by decreased premium income as a result of lower loan sale volume during the year ended December 31, 2023, compared to the year ended December 31, 2022.
Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties. Lending expenses increased by 6.5% to $4.4 million for the year ended December 31, 2022 compared to $4.1 million for the year ended December 31, 2021.
As our multifamily properties were acquired during the year ended December 31, 2023, there were no comparable expenses for the nine months ended December 31, 2022. Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties.
The increase in cash used in investing activities was primarily due to our $12.4 million investment in the Unconsolidated Joint Venture, net of distributions, an increase in capital expenditures of $4.8 million and an increase in real estate acquisitions of $7.9 million.
The increase in cash used in investing activities was primarily due to a $85.9 million increase in acquisitions of real estate, a $10.3 million decrease in distributions from Unconsolidated Joint Ventures, a $5.7 million decrease in principal collected on loans, and a $4.5 million increase in capital expenditures compared to the same period in 2022.
Hotel Revenue: Hotel revenue increased by 97.3% to $35.2 million for the year ended December 31, 2022 compared to $17.8 million for the year ended December 31, 2021.
Provision for Income Taxes: Provision for income taxes increased by 8.6% to $1.2 million for the year ended December 31, 2023 compared to $1.1 million for the year ended December 31, 2022.
Additionally, decreased demand and other negative trends or unforeseeable events that impair our ability to timely renew or re lease space could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock. 55 Table of Contents Hotel Statistics: The following table sets forth the occupancy, ADR and RevPAR for our hotel in Sacramento, California for the specified periods: For the Year Ended December 31, 2022 2021 Occupancy 73.0 % 53.6 % ADR $ 172.95 $ 136.51 RevPAR $ 126.19 $ 73.23 Seasonality Our revenues and expenses for our hotel property are subject to seasonality during the year.
Additionally, decreased demand and other negative trends or unforeseeable events that impair our ability to timely renew or re lease space could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
We intend to use the net proceeds from the offerings for general corporate purposes as described under “—Liquidity and Capital Resources—General.” As of December 31, 2022, we had issued 5,766,077 shares of Series A1 Preferred Stock, 8,251,657 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $318.2 million after commissions, fees and allocated costs.
As of December 31, 2023, we had issued 10,273,369 shares of Series A1 Preferred Stock, 8,251,657 shares of Series A Preferred Stock and 56,857 shares of Series D Preferred Stock and received aggregate net proceeds of $420.0 million after commissions, fees and allocated costs.
This is due to lower average outstanding principal balances on our 2018 and 2022 revolving credit facilities during the year ended December 31, 2022 compared to the year ended December 31, 2021, offset by increases in the LIBOR and SOFR components of interest rates on our variable-rate debt for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The increase was attributable to two variable-rate mortgages assumed in connection with our multifamily acquisitions during the first quarter of 2023, higher outstanding principal balances on our 2022 Credit Facility Revolver (as defined below) for the year ended December 31, 2023 compared to our 2018 revolving line of credit facility for the year ended December 31, 2022, and increases in the SOFR components of interest rates on our variable-rate debt for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Additionally, as of December 31, 2022, we had four development sites (with one being used as a parking lot).
Additionally, as of December 31, 2023, we had nine development sites (three of which were being used as parking lots).
We believe that funds from operations (“FFO”), a non-GAAP measure, is a widely recognized and appropriate measure of the performance of a REIT and that it is frequently used by securities analysts, investors and other interested parties 56 Table of Contents in the evaluation of REITs, many of which present FFO when reporting their results.
The decrease was primarily due to an increase of $32.1 million in depreciation and amortization expense (primarily due to an increase in acquired in-place lease intangible assets amortization at multifamily properties located in Oakland, California acquired during the first quarter of 2023 and which were fully amortized as of December 31, 2023) and an increase in interest expense not allocated to our operating segments of $22.4 million. 59 Table of Contents Funds from Operations We believe that funds from operations (“FFO”), a non-GAAP measure, is a widely recognized and appropriate measure of the performance of a REIT and that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.
Expense Reimbursements to Related Parties—Corporate : The Administrator receives reimbursement for performing certain services for the Company and its subsidiaries. Expense reimbursements to related parties—corporate decreased by 6.1% to $1.9 million for the year ended December 31, 2022 compared to $2.1 million for the year ended December 31, 2021, primarily due to reductions in allocated payroll.
Expense reimbursements to related parties—corporate increased by 21.7% to $2.3 million for the year ended December 31, 2023 compared to $1.9 million for the year ended December 31, 2022, primarily due to increases in allocated payroll from transactions that occurred during the year ended December 31, 2023.
Income From Unconsolidated Entity: Income from our unconsolidated entity included in office segment net operating income was $164,000 for the year ended December 31, 2022. As our investment in the Unconsolidated Joint Venture was made in February 2022, there was no comparable income for the year ended December 31, 2021.
Income (Loss) From Unconsolidated Office Entities: Income from our office Unconsolidated Joint Ventures included in office segment net operating income decreased to a loss of $582,000 for the year ended December 31, 2023 compared to income of $164,000 for the year ended December 31, 2022.
Sources and Uses of Funds Mortgages We have one mortgage loan agreement with an outstanding balance of $97.1 million as of December 31, 2022. Revolving Credit Facilities In October 2018, we entered into the 2018 Revolving Credit Facility that, as amended, allowed us to borrow up to $209.5 million, subject to a borrowing base calculation.
Revolving Credit Facilities In October 2018, we entered into our 2018 revolving credit facility that, as amended, allowed us to borrow up to $209.5 million, subject to a borrowing base calculation. Our 2018 revolving credit facility was secured by properties in the Company’s real estate portfolio: eight office properties and one hotel property.
The SBA 7(a) Loan Program is the SBA’s most common loan program. The maximum loan amount for an SBA 7(a) loan is $5.0 million. Key eligibility factors are based on what the business does to generate its income, its credit history, the liquidity of the borrower, size standards and where the business operates.
Key eligibility factors are based on what the business does to generate its income, its credit history, the liquidity of the borrower, size standards and where the business operates. We work with potential borrowers to identify the type of loan that would be appropriate for each such borrower’s needs.
The payment for the Series L Redemption was made on January 25, 2023 as well as the accrued and unpaid dividends on the redeemed shares of Series L Preferred Stock through December 31, 2022 of $1.56 per share (or $4.6 million accrued and unpaid dividends in the aggregate) and was funded by a combination of proceeds from the sale of our Series A1 Preferred Stock, draws on our 2022 Credit Facility, and cash on hand.
The redemption was funded by a combination of proceeds from the sale of our Series A1 Preferred Stock, draws on our 2022 Credit Facility, and cash on hand.
Office revenue increased by 5.0% to $55.9 million for the year ended December 31, 2022 compared to $53.3 million for the year ended December 31, 2021.
Depreciation and Amortization Expense: Depreciation and amortization expense increased to $52.5 million for the year ended December 31, 2023 compared to $20.3 million for the year ended December 31, 2022.
As announced on December 23, 2022, the we redeemed all remaining outstanding shares of our Series L Preferred Stock in cash on January 25, 2023 at its stated value of $28.37 (the “Series L Redemption). The total cost to complete the Series L Redemption, including transaction costs of $93,000 (or $0.03 per share), was $83.8 million.
In January 2023, we completed such previously-announced redemption of all outstanding shares of our Series L Preferred Stock in cash at its stated value of $28.37 per share (plus accrued and unpaid dividend of $1.56 per share, or $4.6 million in the aggregate) (the “Series L Redemption”).

… 52 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+3 added−0 removed2 unchanged
Biggest changeAs of December 31, 2022 and 2021 (excluding premiums, discounts, and deferred loan costs), $97.1 million (or 52.1%) and $102.1 million (or 50.2%) of our debt, respectively, was fixed rate mortgage loans, and $89.3 million (or 47.9%) and $101.4 million (or 49.8%), respectively, was floating rate borrowings.
Biggest changeAs of December 31, 2023 and 2022 (including our variable rate mortgage payable subject to an interest rate cap agreement and excluding premiums, discounts, and deferred loan costs), $250.7 million (or 52.7%) and $97.1 million (or 52.1%) of our debt, respectively, was fixed rate borrowings.
Item 8. Financial Statements and Supplementary Data The information required by this Item is incorporated herein by reference to the Financial Statements and Auditors’ Report beginning on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Financial Statements and Supplementary Data The information required by this Item is incorporated herein by reference to the Financial Statements and Auditors’ Report beginning on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Based on the level of floating rate debt outstanding as of December 31, 2022 and 2021, a 50 basis point change in LIBOR and SOFR would result in an annual impact to our earnings of approximately $446,000 and $507,000, respectively. We calculate interest rate sensitivity by multiplying the amount of floating rate debt by the respective change in rate.
Based on the level of floating rate debt outstanding as of December 31, 2023 and 2022, a 50 basis point change in SOFR would result in an annual impact to our earnings of approximately $1.1 million and $446,000, respectively. We calculate interest rate sensitivity by multiplying the amount of floating rate debt by the respective change in rate.
Added
As of December 31, 2023 and 2022 (excluding our variable rate mortgage payable subject to an interest rate cap agreement as well as premiums, discounts and deferred loan costs), $224.7 million (or 47.3%) and $89.3 million (or 47.9%), respectively, was floating rate borrowings.
Added
As of December 31, 2023, we had one interest rate cap agreement outstanding with an aggregate notional amount of $87.0 million and an aggregate fair value of the net derivative assets of $491,000.
Added
As of December 31, 2023, an increase or decrease of 50 basis points in interest rates would not result in a significant change to the fair value of the derivative asset. 68 Table of Contents Item 8.

Other CMCT 10-K year-over-year comparisons