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What changed in Creative Media & Community Trust Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Creative Media & Community Trust Corp's 2023 and 2024 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 2024 report.

+379 added−334 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-29)

Top changes in Creative Media & Community Trust Corp's 2024 10-K

379 paragraphs added · 334 removed · 277 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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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.
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 groundwater contamination on or migrating to or from its property.
If we do incur material environmental liabilities in the future, 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 (as defined in “Item 1A—Risk Factors”) could be materially adversely affected.
If we do incur material environmental liabilities in the future, 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 Preferred Stock (as defined in “Item 1A—Risk Factors”) could be materially adversely affected.
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.
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 (i.e., common stockholders’ equity plus accumulated depreciation and amortization) for such quarter.
Incentive Fee: An incentive fee (the “Revised Incentive Fee”) is payable quarterly in arrears to the Administrator with respect to the quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of the Company’s “Adjusted Common Equity” (as defined below) for such quarter (“Excess Core FFO”) as follows: (i) no Revised Incentive Fee in any quarter in which the Excess Core FFO is $0; (ii) 100% of any Excess Core FFO up to an amount equal to the product of (x) the average of the Adjusted Common Equity as of the first and last day of the applicable quarter and (y) 0.4375%; and (iii) 20% of any Excess Core FFO thereafter.
Incentive Fee: An incentive fee (the “Revised Incentive Fee”) is payable quarterly in arrears to the Administrator with respect to the quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of the Company’s “Adjusted Common Equity” (as defined below) for such quarter (“Excess Core FFO”) as follows: (i) no Revised Incentive Fee in any quarter in which the Excess Core FFO is $0; (ii) 100% of any 8 Table of Contents Excess Core FFO up to an amount equal to the product of (x) the average of the Adjusted Common Equity as of the first and last day of the applicable quarter and (y) 0.4375%; and (iii) 20% of any Excess Core FFO thereafter.
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.
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. Seasonality Our revenues and expenses for our hotel property are subject to seasonality during the year.
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.
Human Capital We are operated by affiliates of CIM Group and, as of December 31, 2024, 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.
Such services performed by the Administrator and its affiliates may include accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, operational and on-going support in connection with our registered public offering of our Series A Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) and Series D Preferred Stock, par value $0.001 per share (“Series D Preferred Stock” and, together with the Series A Preferred Stock and Series L Preferred Stock, “Preferred Stock”).
Such services performed by the Administrator and its affiliates may include accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, operational and ongoing support in connection with our registered public offering of our Series A Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) and Series D Preferred Stock, par value $0.001 per share (“Series D Preferred Stock” and, together with the Series A Preferred Stock and Series L Preferred Stock, “Preferred Stock”).
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.
Our current reportable segments during the years ended December 31, 2024 and 2023 consist of three types of commercial real estate properties, namely office, hotel and multifamily, as well as a segment for our lending business.
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 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 (thus, CIM Group has the flexibility to deploy capital in its Qualified Communities only when the market environment meets CIM Group’s underwriting standards).
Master Services Agreement CIM Service Provider, LLC, an affiliate of CIM Group (the “Administrator”) provides, or arranges for other service providers to provide, management and administration services (the “Base Services”) to us and our subsidiaries under the terms of a master services agreement, dated as of March 11, 2014, as amended on May 11, 2020 (the “Master Services Agreement”).
Master Services Agreement CIM Service Provider, LLC, an affiliate of CIM Group (the “Administrator”) provides, or arranges for other service providers to provide, management and administration services (the “Base Services”) to us and our subsidiaries under the terms 7 Table of Contents of a master services agreement, dated as of March 11, 2014, as amended on May 11, 2020 (the “Master Services Agreement”).
Additionally, there is a growing trend towards developing mixed-use real estate properties in metropolitan markets which requires a diversified platform to successfully execute. • Community-Based Tenanting —CIM Group’s strategy focuses on the entire community and the best use of assets in that community.
Additionally, there is a growing trend 4 Table of Contents towards developing mixed-use real estate properties in metropolitan markets which requires a diversified platform to successfully execute. • Community-Based Tenanting —CIM Group’s strategy focuses on the entire community and the best use of assets in that community.
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.
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 interest in the asset and, in some cases, earn a management fee and a percentage of the profits.
“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.
“Assets owned and operated” (“AOO”) 6 Table of Contents 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.
Most of our SBA 7(a) loans have maturities of approximately 25 years. 9 Table of Contents While we have focused on originating real estate loans almost exclusively to the limited service and mid-scale hospitality industry, we intend to increase our efforts to originate other real estate collateralized loans.
Most of our SBA 7(a) loans have maturities of approximately 25 years. While we have focused on originating real estate loans almost exclusively to the limited service and mid-scale hospitality industry, we intend to increase our efforts to originate other real estate collateralized loans.
Each opportunity is typically overseen by a dedicated Investment team, including an oversight Principal, one Investment lead (vice president level and above), one associate vice president and one associate from the Investments team. The team is assembled based on the expertise needed for the particular transaction.
Each opportunity is typically overseen by a dedicated Investment team, including an oversight Principal, one Senior Investment Professional (vice president level and above), one associate vice president and one associate from the Investments team. The team is assembled based on the expertise needed for the particular transaction.
Risk Management As part of its risk management strategy, CIM Group continually evaluates our assets and actively manages the risks involved in our business strategies.
Risk Management As part of its risk management strategy, CIM Group periodically evaluates our assets and actively manages the risks involved in our business strategies.
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”).
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. 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’s competitive advantages include: Vertically-Integrated Organization and Team CIM Group is managed by its senior management team, which includes all of its principals and its three founders, Shaul Kuba, Richard Ressler and Avraham Shemesh.
CIM Group’s competitive advantages include: 3 Table of Contents Vertically-Integrated Organization and Team CIM Group is managed by its senior management team, which includes all of its principals and its three founders, Shaul Kuba, Richard Ressler and Avraham Shemesh.
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.
In addition to reviewing specific property-level conditions and recommendations, the Real Assets Management Committee reviews real estate and related capital market 5 Table of Contents 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.
Additionally, as of December 31, 2023, we had nine development sites (three of which were being used as parking lots).
Additionally, as of December 31, 2024, we had nine development sites (three of which were being used as parking lots).
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.
Overview and History of CIM Group CIM Group was founded in 1994 by Shaul Kuba, Richard Ressler and Avraham Shemesh and has approximately $30.2 billion of assets owned and operated across its vehicles as of September 30, 2024.
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.
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, 2024. Each of the CIM Group’s vertically-integrated departments is managed by a senior level executive.
Revised Incentive Fees payable for any partial quarter will be appropriately prorated. 8 Table of Contents “Adjusted Common Equity” means Common Equity plus Excluded Depreciation and Amortization. “Common Equity” means Total Stockholders’ Equity minus Excluded Equity.
Revised Incentive Fees payable for any partial quarter will be appropriately prorated. “Adjusted Common Equity” means Common Equity plus Excluded Depreciation and Amortization. “Common Equity” means Total Stockholders’ Equity minus Excluded Equity.
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”).
As of December 31, 2024, 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.
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.
Property Concentration Kaiser Foundation Health Plan, Incorporated, which occupied space in one of our Oakland, California properties, accounted for 22.9% of our annualized rental income for the year ended December 31, 2024. No other tenant accounted for greater than 10.0% of our annualized rental income for the year ended December 31, 2024.
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.
For the year ended December 31, 2024, our office portfolio contributed approximately 43.8% of revenue from our four segments on a combined basis, our hotel segment contributed approximately 31.8%, our multifamily segment contributed approximately 15.7% and our lending segment contributed approximately 8.7%. Strategy We are a Maryland corporation and REIT.
The Real Assets Management Committee is comprised of CIM’s founding principals, Chief Compliance Officer, the Head of Portfolio Oversight and is chaired by Richard Ressler. The Real Assets Management Committee meets monthly to review updates across the various strategies.
The Real Assets Management Committee is comprised of CIM’s founding principals, Mukya Porter (Principal, Chief Compliance Officer), Robert Dupree (Principal, Co-Head of Investments), Jason Schreiber (Principal, Co-Head of Investments) and is chaired by Richard Ressler. The Real Assets Management Committee meets monthly to review updates across the various strategies.
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 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 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.
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.
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.
Financing Strategy We will seek to satisfy our long-term liquidity needs 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) 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; (v) the sale of existing assets; and/or (vi) cash flows from operations.
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.
As of December 31, 2024, our 12 office properties, totaling approximately 1.3 million rentable square feet, were 70.6% occupied; our one hotel with an ancillary parking garage, which has a total of 505 rooms, had RevPAR of $135.90 for the year ended December 31, 2024 and our four multifamily properties were 81.7% occupied.
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).
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, Capital Markets, Global Client Group) and Shared Services (which includes Human Resources, Compliance, Operations, Finance, Legal & Risk Management). CIM also has an internal audit team.
Our investments in multifamily and creative office assets may take different forms, including direct equity or preferred investments, real estate development activities, side-by-side investments or co-investments with vehicles managed or owned by CIM Group and/or originating loans that are secured directly or indirectly by properties primarily located in qualified communities (“Qualified Communities”) that meet our strategy.
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. 2 Table of Contents Our investments in multifamily and creative office assets may take different forms, including direct equity or preferred investments, real estate development activities, side-by-side investments or co-investments with vehicles managed or owned by CIM Group and/or originating loans that are secured directly or indirectly by properties primarily located in qualified communities (“Qualified Communities”) that meet our strategy.
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.
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.
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.
We work with potential borrowers to identify the type 9 Table of Contents 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.
We also seek to acquire, develop and operate creative office assets that cater to rapidly growing industries such as technology, media and entertainment in markets with similar business and employment characteristics to our multifamily investments. All of our multifamily and creative office assets are and will generally be located in communities qualified by CIM Group as described further below.
While we may acquire, develop and operate creative office assets that cater to rapidly growing industries such as technology, media and entertainment in markets with similar business and employment characteristics to our multifamily investments, we intend to increase our focus towards premier multifamily properties.
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.
CIM is a vertically-integrated community-focused real estate and infrastructure owner, operator, lender and developer. CIM Group is headquartered in Los Angeles, California and has offices in Atlanta, Georgia, Chicago, Illinois, Dallas, Texas, New York, New York, Orlando, Florida, Phoenix, Arizona, London, U.K. and Tokyo, Japan. CIM also maintains additional offices with distribution staff and JV partnerships.
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.
All of our multifamily and creative office 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.
Removed
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.
Added
Our Unconsolidated Joint Ventures contain one office property, one multifamily site currently under development, two multifamily properties (one of which has been partially converted from office into multifamily units and is now classified as a multifamily property) and one commercial development site.
Removed
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.
Added
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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

108 edited+29 added−13 removed497 unchanged
Biggest changeRisk 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.
Biggest changeRisks 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.
We 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.
We 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. 11 Table of Contents • 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. • 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.
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.
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; 31 Table of Contents • 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 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.
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.
The incurrence of substantial outstanding indebtedness, and the limitations imposed by our debt agreements, could have significant other adverse consequences, including the following: 32 Table of Contents • 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.
Unless full cumulative dividends on shares of our Preferred Stock for all past dividend periods have been declared and paid (or set apart for payment), we will not declare or pay dividends with respect to any shares of our Common Stock for any period.
Unless full cumulative dividends on shares of our Preferred Stock for all past dividend periods have been declared and paid (or set apart for payment), we will not declare or pay dividends with respect to any shares of our Common Stock for any period.
Proposition ULA may reduce the proceeds that we will receive when we sell our Los Angeles properties. In the November 8, 2022 general election, voters approved City of Los Angeles Proposition ULA. Effective April 1, 2023, the measure increases transfer tax rates in the City of Los Angeles on real estate sales valued at $5 million or more.
Proposition ULA may reduce the proceeds that we will receive when we sell our Los Angeles properties. In the November 8, 2022 general election, voters approved City of Los Angeles Proposition ULA. Effective April 1, 2023, the measure increases transfer tax rates in the City of Los Angeles on real estate sales valued at $5.2 million or more.
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.
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 21 Table of Contents • 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.
We will seek to satisfy our long-term liquidity needs 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; and/or (vi) cash flows from operations.
We will seek to satisfy our long-term liquidity needs 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) 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; (v) the sale of existing assets; and/or (vi) cash flows from operations.
Under applicable Maryland law, a corporation may redeem, or pay distributions on, stock as long as, after giving effect to the redemption or distribution, the corporation is able to pay its debts as they become due in the usual course (the equity solvency test) and its total assets exceed the sum of its total liabilities plus, unless its charter permits otherwise, the amount that would be needed, if the corporation were to be dissolved at the time of the redemption or distribution, to satisfy the preferential rights upon dissolution of stockholders when preferential rights on dissolution are superior to those whose stock is being redeemed or on which the distributions are being paid (the balance sheet solvency test).
Under applicable Maryland law, a corporation may redeem, or pay distributions on, stock as long as, after giving effect to the redemption or distribution, the corporation is able to pay its debts as they become due in the usual course (the equity solvency test) and its total assets exceed the sum of its total liabilities plus, unless its charter permits otherwise, the amount that would be needed, if the corporation were to be dissolved at the time of the redemption or distribution, to satisfy the preferential 44 Table of Contents rights upon dissolution of stockholders when preferential rights on dissolution are superior to those whose stock is being redeemed or on which the distributions are being paid (the balance sheet solvency test).
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.
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.
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.
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, which could make completion of the project less profitable because market rents may not increase sufficiently to compensate for the increase in construction costs.
As a result, 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. Inflation may adversely affect our real estate operations. Inflation may remain high in 2024 relative to historical levels.
As a result, 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. Inflation may adversely affect our real estate operations. Inflation may remain high in 2025 relative to historical levels.
In recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or our other creditors or stockholders.
In recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the 38 Table of Contents borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or our other creditors or stockholders.
Specifically, the new rate is 4% for properties valued at $5 million or more and 5.5% for properties valued at more than $10 million. As many of our properties are located in the City of Los Angeles, Proposition ULA may reduce the amount of proceeds that we will receive when we sell our Los Angeles properties.
Specifically, the new rate is 4% for properties valued at $5.2 million or more and 5.5% for properties valued at more than $10.3 million. As many of our properties are located in the City of Los Angeles, Proposition ULA may reduce the amount of proceeds that we will receive when we sell our Los Angeles properties.
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.
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, 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.
Risks Related to Our Common Stock and Preferred Stock • We may issue shares of our Common Stock at prices below the then-current NAV per share of our Common Stock, which could materially reduce our NAV per share of our Common Stock. • The existing mechanism for the dual‑listing of securities on Nasdaq and the TASE may be eliminated or otherwise altered such that we may be subject to additional regulatory burden and additional costs. • Our NAV is an estimate of the fair value of our assets and may not necessarily reflect realizable value.
Risks Related to Our Common Stock and Preferred Stock • We may issue shares of our Common Stock at prices below the then-current NAV per share of our Common Stock, which could materially reduce our NAV per share of our Common Stock. • The existing mechanism for the dual‑listing of securities on Nasdaq and the TASE may be eliminated or otherwise altered such that we may be subject to additional regulatory burden and additional costs. • Our NAV is an estimate of the fair value of our assets and may not necessarily reflect realizable value. • We may not be able to maintain a listing of our Common Stock on Nasdaq.
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.
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.
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.
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.
The dual‑listing of our Common Stock may result in price variations of our securities between the two exchanges due to a number of factors. First, trading in our securities on these markets takes place in different currencies (USD on Nasdaq and ILS on the TASE).
Our Common Stock is listed on Nasdaq and the TASE. The dual‑listing of our Common Stock may result in price variations of our securities between the two exchanges due to a number of factors. First, trading in our securities on these markets takes place in different currencies (USD on Nasdaq and ILS on the TASE).
We have incurred indebtedness, and in the future may incur additional indebtedness, that bears interest at a variable rate. A continued high interest rate environment, which is the economic environment that the Company expects to face in 2024, will result in increases in the variable rate component of our indebtedness.
We have incurred indebtedness, and in the future may incur additional indebtedness, that bears interest at a variable rate. A continued high interest rate environment, which is the economic environment that the Company expects to face in 2025, will result in increases in the variable rate component of our indebtedness.
We have experienced in the past, and may in the future, impairment charges to our properties. We have in the past, and may in the future, take impairment charges with respect to certain of our properties. We routinely evaluate our assets for impairment indicators (we recorded no impairment of long-lived assets for the years ended December 31, 2023 and 2022).
We have experienced in the past, and may in the future, impairment charges to our properties. We have in the past, and may in the future, take impairment charges with respect to certain of our properties. We routinely evaluate our assets for impairment indicators (we recorded no impairment of long-lived assets for the years ended December 31, 2024 and 2023).
High interest rates may make it difficult for us to finance or refinance assets, which could reduce the number of properties we can acquire and the amount of cash distributions we can make. Interest rates may remain high in 2024 relative to historical levels.
High interest rates may make it difficult for us to finance or refinance assets, which could reduce the number of properties we can acquire and the amount of cash distributions we can make. Interest rates may remain high in 2025 relative to historical levels.
Control shares are voting shares of stock that, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power: • one-tenth or more but less than one-third; • one-third or more but less than a majority; or • a majority or more of all voting power.
Control shares are voting shares of stock that, if aggregated with all other shares of stock owned by the acquiror or in respect of which 18 Table of Contents the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power: • one-tenth or more but less than one-third; • one-third or more but less than a majority; or • a majority or more of all voting power.
Our Board of Directors is authorized, without stockholder approval, to cause us to issue additional shares of Common Stock or to raise capital through the issuance of shares of preferred stock and equity or debt securities convertible into Common Stock, preferred stock, options, warrants and other rights, on such terms and for such consideration as our Board of Directors in its sole discretion may determine.
Our Board of Directors is authorized, without stockholder approval, to cause us to issue additional shares of Common Stock or to raise capital through the issuance of shares of preferred stock and equity or debt securities convertible into Common Stock, preferred stock, options, warrants and other rights, on such terms and for such consideration as our Board of Directors in 45 Table of Contents its sole discretion may determine.
Together, these limitations are referred to as the “ownership limit.” Stock acquired or held in violation of the ownership limit will be transferred automatically to a trust for the benefit of a designated charitable beneficiary, and the intended acquirer of the stock in violation of the ownership limit will not be entitled to vote those shares of stock or to receive the economic benefits of owning shares of our stock in excess of the ownership limit.
Together, these limitations are referred to as the “ownership limit.” Stock acquired or held in violation of the ownership limit will be transferred automatically to a trust for the benefit of a designated charitable beneficiary, and the intended acquirer of the stock in violation of the ownership limit will not be entitled to vote those shares of stock or to receive the economic benefits of owning shares of our 19 Table of Contents stock in excess of the ownership limit.
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.
As a 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.
Increased use of technology may reduce the need for business-related travel. The increased use of teleconference and video-conference technology by businesses could result in decreased business travel as companies increase the use of technologies that allow multiple parties from different locations to participate at meetings without traveling to a centralized meeting location.
Increased use of technology may reduce the need for business-related travel. The increased use of teleconference and video-conference technology by businesses could result in decreased business travel as companies increase the use of technologies that allow multiple parties from different locations to participate at 24 Table of Contents meetings without traveling to a centralized meeting location.
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.
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.
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.
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.
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.
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.
Our properties are subject to increases in tax rates, utility costs, insurance costs, repairs and maintenance costs, administrative costs and other operating and ownership expenses. Our property leases may not require the tenants to pay all or a portion of these expenses, in which event we may be responsible for these costs.
Our properties are subject to increases in tax rates, utility costs, insurance costs, repairs and maintenance costs, administrative costs and other operating and ownership expenses. Our property leases may not require the tenants to pay all or a portion of these expenses, in which event we may be responsible for these 27 Table of Contents costs.
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.
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.
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.
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.
The information in this section should be read in conjunction with Part II, “Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes in Part II, “Item 8—Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
The information in this section should be read in 12 Table of Contents conjunction with Part II, “Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes in Part II, “Item 8—Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
While we select policy specifications and insured limits that we believe are appropriate and adequate given the relative risk of loss, the cost of the coverage, and industry practice, there can be no assurance that we will not experience a loss that is uninsured or that exceeds policy limits.
While we select policy specifications and insured limits that 13 Table of Contents we believe are appropriate and adequate given the relative risk of loss, the cost of the coverage, and industry practice, there can be no assurance that we will not experience a loss that is uninsured or that exceeds policy limits.
Higher costs of capital also could negatively impact our operating cash flow and returns on our assets. 33 Table of Contents 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.
Higher costs of capital also could negatively impact our operating cash flow and returns on our assets. 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.
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.
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.
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.
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 could have a material 36 Table of Contents 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.
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 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.
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.
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.
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.
Ratings only reflect the views of the rating agency or agencies issuing the ratings and such ratings could be revised downward, placed on negative outlook or withdrawn entirely at the discretion of the issuing rating agency if, in its judgment, circumstances so warrant.
Ratings only reflect the views of the rating agency or agencies issuing the ratings and such ratings could be revised downward, placed on negative outlook or withdrawn entirely at the discretion of the issuing rating agency if, in its 42 Table of Contents judgment, circumstances so warrant.
The ultimate performance and value of our loans are subject to risks associated with the ownership and operation of the properties which collateralize our loans, including the property owner’s ability to operate the property with sufficient cash flow to meet debt service requirements.
The ultimate performance and value of our loans are subject to risks associated with the ownership and operation of the properties which collateralize our 35 Table of Contents loans, including the property owner’s ability to operate the property with sufficient cash flow to meet debt service requirements.
The remainder of our investment in securities (other than government securities, qualified real estate assets and stock of a TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
The remainder of our investment in securities (other than government securities, qualified real estate assets and stock 40 Table of Contents of a TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
Accordingly, the extent to which our stockholders will receive cash distributions and realize potential appreciation on our real estate assets will depend upon fluctuating market conditions. Furthermore, we may be required to expend funds to correct defects or to make improvements before a property can be sold.
Accordingly, the extent to 26 Table of Contents which our stockholders will receive cash distributions and realize potential appreciation on our real estate assets will depend upon fluctuating market conditions. Furthermore, we may be required to expend funds to correct defects or to make improvements before a property can be sold.
Our inability to use debt to finance or refinance our assets could reduce the number of assets we can acquire, which could reduce our operating cash flow and the amount of cash distributions we can make on our Common Stock or Preferred Stock.
Our inability to use debt 33 Table of Contents to finance or refinance our assets could reduce the number of assets we can acquire, which could reduce our operating cash flow and the amount of cash distributions we can make on our Common Stock or Preferred Stock.
Thus, we may be required to pay the Operator incentive compensation for a fiscal quarter even if we incur a net loss for that quarter as determined in accordance with GAAP. The Operator may undertake transactions that are motivated, in whole or in part, by a desire to increase its compensation.
Thus, we may be required to pay the Operator incentive compensation for a fiscal quarter even if we incur a net loss for that quarter as determined in accordance with GAAP. 16 Table of Contents The Operator may undertake transactions that are motivated, in whole or in part, by a desire to increase its compensation.
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.
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, 2024.
We may be unable to obtain, or face delays in obtaining, required zoning, land-use, building, occupancy, and other governmental permits and authorizations, which could result in increased costs and could require us to abandon or substantially alter our plan for a project.
We may be unable to obtain, or face delays 28 Table of Contents in obtaining, required zoning, land-use, building, occupancy, and other governmental permits and authorizations, which could result in increased costs and could require us to abandon or substantially alter our plan for a project.
The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. Our TRSs are subject to normal corporate income taxes.
The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. 39 Table of Contents Our TRSs are subject to normal corporate income taxes.
Our lending operations have an industry concentration, which may negatively impact our financial condition and results of operations. A majority of our revenue from the lending operations is generated from loans collateralized by hospitality properties. As of December 31, 2023, all of our loans subject to credit risk were concentrated in the hospitality industry.
Our lending operations have an industry concentration, which may negatively impact our financial condition and results of operations. A majority of our revenue from the lending operations is generated from loans collateralized by hospitality properties. As of December 31, 2024, our loans are primarily subject to credit risk were concentrated in the hospitality industry.
We are obligated to pay the Administrator the Revised Incentive Fee (see “Item 1—Business—Master Services Agreement”) and market rate transaction fees for transactional and other services that the Administrator elects to 15 Table of Contents provide to us.
We are obligated to pay the Administrator the Revised Incentive Fee (see “Item 1—Business—Master Services Agreement”) and market rate transaction fees for transactional and other services that the Administrator elects to provide to us.
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.
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.
If our future earnings or cash distributions are less than expected, the market prices of our Common Stock could decline. 42 Table of Contents Interest rates may remain high in 2024 relative to historical levels, which may result in a decline in the market price of our Common Stock.
If our future earnings or cash distributions are less than expected, the market prices of our Common Stock could decline. Interest rates may remain high in 2025 relative to historical levels, which may result in a decline in the market price of our Common Stock.
Industry overbuilding and the introduction of new concepts and products such as Airbnb®, Homeaway® and VRBO® have the potential to further exacerbate the negative impact of an economic recession. Room rates and occupancy, and thus RevPAR, tend to increase when demand growth exceeds supply growth.
Industry overbuilding and the introduction of new concepts and products have the potential to further exacerbate the negative impact of an economic recession. Room rates and occupancy, and thus RevPAR, tend to increase when demand growth exceeds supply growth.
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.
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.
If we fail to qualify as a REIT, we could face serious tax consequences that could substantially reduce our funds available for payment of distributions on our Common Stock or Preferred Stock for each of the years involved because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates; • we also could be subject to increased state and local taxes; and • unless we are entitled to relief under statutory provisions, we could not elect to be subject to be taxed as a REIT for four taxable years following the year during which we are disqualified. 38 Table of Contents Any such corporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions on our Common Stock or Preferred Stock.
If we fail to qualify as a REIT, we could face serious tax consequences that could substantially reduce our funds available for payment of distributions on our Common Stock or Preferred Stock for each of the years involved because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates; • we also could be subject to increased state and local taxes; and • unless we are entitled to relief under statutory provisions, we could not elect to be subject to be taxed as a REIT for four taxable years following the year during which we are disqualified.
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.
As of December 31, 2024, we have $15.0 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.
If we cannot complete real estate transactions on favorable terms, or operate acquired assets to meet our goals or expectations, 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 cannot complete real estate transactions on favorable terms, or operate acquired assets to meet our goals or expectations, 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. 25 Table of Contents We may be unable to successfully expand our operations into new markets.
As a result of the factors described above, defaults on SBA 7(a) Program loans 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.
As a result of the factors described above, defaults on SBA 7(a) Program loans 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. 37 Table of Contents Curtailment of our ability to utilize the SBA 7(a) Program by the federal government could adversely affect our results of operations.
Our third-party manager is responsible for hiring and maintaining the labor force at our hotel. As owner of our hotel, we are responsible for and subject to many of the costs and risks generally associated with the hotel labor force, particularly with respect to unionized labor.
We are subject to risks associated with the employment of hotel personnel, particularly with respect to unionized labor. Our third-party manager is responsible for hiring and maintaining the labor force at our hotel.
The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. Therefore, the amount of property taxes we pay in the future may increase substantially.
We will be required to pay some state and local taxes on our properties. The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. Therefore, the amount of property taxes we pay in the future may increase substantially.
A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions. 18 Table of Contents A person who has made or proposes to make a control share acquisition may compel the Board of Directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares.
A person who has made or proposes to make a control share acquisition may compel the Board of Directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares.
To the extent that such technologies play an increased role in day-to-day business and the necessity for business-related travel decreases, hotel room demand may decrease, which could adversely affect 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. 24 Table of Contents We are subject to risks associated with the employment of hotel personnel, particularly with respect to unionized labor.
To the extent that such technologies play an increased role in day-to-day business and the necessity for business-related travel decreases, hotel room demand may decrease, which could adversely affect 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 are unable to lease properties on terms that require the tenants to pay all or some of the properties’ operating expenses, if our tenants fail to pay these expenses as required or if expenses we are required to pay exceed our expectations, we could have less funds available for future acquisitions or cash available for distributions on our Common Stock or Preferred Stock. 27 Table of Contents The market environment may adversely affect our operating results, financial condition and ability to pay distributions on our Common Stock or Preferred Stock.
If we are unable to lease properties on terms that require the tenants to pay all or some of the properties’ operating expenses, if our tenants fail to pay these expenses as required or if expenses we are required to pay exceed our expectations, we could have less funds available for future acquisitions or cash available for distributions on our Common Stock or Preferred Stock.
The performance and value of the properties collateralizing our loans may be adversely affected by: • changes in national or regional economic conditions; • changes in real estate market conditions due to changes in national, regional or local economic conditions or property market characteristics; • competition from other properties; • changes in interest rates and the condition of the debt and equity capital markets; • the ongoing need for capital repairs and improvements; • increases in real estate tax rates and other operating expenses (including utilities); • adverse changes in governmental rules and fiscal policies; acts of God, including earthquakes, hurricanes, fires and other natural disasters; pandemic outbreaks and other global health emergencies; disruptive global political events, including terrorist activity and war (including the conflict between Russia and Ukraine and conflicts in the Middle East, which has led to disruption, instability and volatility in global markets and industries); or a decrease in the availability of or an increase in the cost of insurance; • adverse changes in zoning laws; • the impact of environmental legislation and compliance with environmental laws; and • other factors that are beyond our control or the control of the commercial property owners . 35 Table of Contents In the event that any of the properties underlying our loans experience any of the foregoing events or occurrences, the value of, and return on, such loans may be negatively impacted, which in turn could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
The performance and value of the properties collateralizing our loans may be adversely affected by: • changes in national or regional economic conditions; • changes in real estate market conditions due to changes in national, regional or local economic conditions or property market characteristics; • competition from other properties; • changes in interest rates and the condition of the debt and equity capital markets; • the ongoing need for capital repairs and improvements; • increases in real estate tax rates and other operating expenses (including utilities); • adverse changes in governmental rules and fiscal policies; acts of God, including earthquakes, hurricanes, fires and other natural disasters; pandemic outbreaks and other global health emergencies; disruptive global political events, including terrorist activity and war (including the conflict between Russia and Ukraine and conflicts in the Middle East, which has led to disruption, instability and volatility in global markets and industries); or a decrease in the availability of or an increase in the cost of insurance; • adverse changes in zoning laws; • the impact of environmental legislation and compliance with environmental laws; and • other factors that are beyond our control or the control of the commercial property owners .
In addition, losses in a TRS generally will not provide any tax benefit, except for being carried forward against future taxable income of such TRS. Our property taxes could increase due to property tax rate changes or reassessment, which would impact our cash flows. We will be required to pay some state and local taxes on our properties.
In addition, losses in a TRS generally will not provide any tax benefit, except for being carried forward against future taxable income of such TRS. 41 Table of Contents Our property taxes could increase due to property tax rate changes or reassessment, which would impact our cash flows.
Moreover, we may only remove the Urban GP Administrator as the manager of CIM Urban GP for “cause” (as defined in the Master Services Agreement). Removal for “cause” also requires the approval of the holders of at least 66 2/3% of 17 Table of Contents our outstanding shares of Common Stock.
Moreover, we may only remove the Urban GP Administrator as the manager of CIM Urban GP for “cause” (as defined in the Master Services Agreement). Removal for “cause” also requires the approval of the holders of at least 66 2/3% of our outstanding shares of Common Stock. Upon removal, a replacement manager will be appointed by the independent directors.
Control shares do not include shares the acquiror is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation.
Control shares do not include shares the acquiror is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions.
We cannot assure you that we will be able to consistently generate sufficient available cash flow to fund distributions on our Preferred Stock and Common Stock, nor can we assure you that sufficient cash will be available to make distributions on our Preferred Stock and Common Stock (in each case, even to the extent of the Initial Dividend).
We cannot assure you that we will be able to consistently generate sufficient available cash flow to fund distributions on our Preferred Stock and Common Stock, nor can we assure you that sufficient cash will be available to make distributions on our Preferred Stock and Common Stock.
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 .
We do not have the ability to affect the outcome of these negotiations. 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 .
In addition to these risks, we may not possess the same level of familiarity with the dynamics and market conditions of certain new markets that we may enter, which could adversely affect our ability to expand into those markets.
In addition to these risks, we may not possess the same level of familiarity with the dynamics and market conditions of certain new markets that we may enter, which could adversely affect our ability to expand into those markets. We may be unable to build a significant market share or achieve a desired return on our assets in new markets.
As of December 31, 2023, 15.6% of the rentable square footage of our office portfolio was available for lease, and 18.6% of the occupied square footage of such office properties was scheduled to expire in 2024.
As of December 31, 2024, 29.0% of the rentable square footage of our office portfolio was available for lease, and 11.9% of the occupied square footage of such office properties was scheduled to expire in 2025.
These adverse weather conditions and natural disasters could cause significant damage to the properties in our portfolio, the risk of which is enhanced by the concentration of our properties, by aggregate net operating income and square feet, in California.
These adverse weather conditions and natural disasters could cause significant damage to the properties in our portfolio, the risk of which is enhanced by the concentration of our properties, by aggregate net operating income and square feet, in California. Our insurance may not be adequate to cover business interruption or losses resulting from adverse weather or natural disasters.
We have paid, and may in the future pay, some or all of our distributions on our Common Stock or Preferred Stock from sources other than cash flow from operations, including borrowings, proceeds from asset sales or the sale of our securities, which may reduce the amount of capital we ultimately deploy in our real estate operations and may negatively impact the value of our Common Stock.
There also is a risk that we may not have sufficient cash flow from operations to fund distributions required to qualify as a REIT or maintain our REIT status. 47 Table of Contents We have paid, and may in the future pay, some or all of our distributions on our Common Stock or Preferred Stock from sources other than cash flow from operations, including borrowings, proceeds from asset sales or the sale of our securities, which may reduce the amount of capital we ultimately deploy in our real estate operations and may negatively impact the value of our Common Stock.
All of these factors could have a material adverse effect on our business, financial condition, results of operations, cash flow our or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
This may result in us having to expend significant funds, 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.
From and after the fifth anniversary of the date of original issuance of any share of our Preferred Stock, we have the right (but not the obligation) to redeem such share at a redemption price equal to 100% of the stated value of such share, plus any accrued but unpaid dividends in respect of such share as of the effective date of the redemption. 43 Table of Contents We may suffer from delays in deploying capital, which could adversely affect our ability to pay distributions on our Common Stock and Preferred Stock and the value of our securities.
From and after the fifth anniversary of the date of original issuance of any share of our Preferred Stock, we have the right (but not the obligation) to redeem such share at a redemption price equal to 100% of the stated value of such share, plus any accrued but unpaid dividends in respect of such share as of the effective date of the redemption.
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 .
Their loyalties to other affiliated entities could result in actions or inactions that are detrimental to our business, strategy and opportunities. 17 Table of Contents 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 addition, certain significant expenditures generally do not change in response to economic or other conditions, including debt service obligations, real estate taxes, and operating and maintenance costs.
In addition, certain significant expenditures generally do not change in response to economic or other conditions, including debt service obligations, real estate taxes, and operating and maintenance costs. This combination of variable revenue and relatively fixed expenditures may result, under certain market conditions, in reduced earnings.
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.
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis oversight includes briefing and a report by the CTO or CIM Group’s Head of Operations, as well as a discussion of any cybersecurity breaches detected by CIM Group and a summary of, among other things, the current cybersecurity threat landscape, defensibility measures implemented by CIM Group, the health of CIM Group’s information security system, 48 Table of Contents effectiveness of CIM Group’s cybersecurity controls and recoverability and business continuity testing.
Biggest changeThis oversight includes briefing and a report by the CTO or CIM Group’s Head of Transformation, as well as a discussion of any cybersecurity breaches detected by CIM Group and a summary of, among other things, the current cybersecurity threat landscape, defensibility measures implemented by CIM Group, the health of CIM Group’s information security system, effectiveness of CIM Group’s cybersecurity controls and recoverability and business continuity testing.
In 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced undetected cybersecurity incidents.
In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced undetected cybersecurity incidents.
The Committee and Subcommittee each conduct both regular quarterly and as-needed meetings throughout the year during which members of the CIM Group’s IT Department provide updates and report on meaningful cybersecurity risks, threats, incidents and vulnerabilities in accordance with the Committee’s and the Subcommittee’s respective reporting frameworks, as well as related priorities, mitigation and remediation activities, financial and employee resource levels, regulatory compliance, technology trends and third-party provider risks.
The Committee and Subcommittee each conduct both regular quarterly and as-needed meetings throughout the year during which members of the CIM Group’s IT Department provide updates and report on meaningful cybersecurity risks, threats, incidents and vulnerabilities in accordance with the Committee’s and the Subcommittee’s respective reporting frameworks, as well as related priorities, mitigation and remediation activities, financial and employee resource levels, 49 Table of Contents regulatory compliance, technology trends and third-party provider risks.
Pursuant to the Company’s cybersecurity policy, the Audit Committee will be promptly notified of any material cybersecurity incident required to be disclosed under Item 1.05 on a Current Report on Form 8-K and shall oversee the Company’s response to such matter . 49 Table of Contents
Pursuant to the Company’s cybersecurity policy, the Audit Committee will be promptly notified of any material cybersecurity incident required to be disclosed under Item 1.05 on a Current Report on Form 8-K and shall oversee the Company’s response to such matter. 50 Table of Contents
The team responsible for developing and implementing our cybersecurity program collectively holds an MS in Cybersecurity and Information Assurance and have multiple cybersecurity certifications, including CRISC, CISM, CISA, NCSP-NIST, CISSP, CASP+, CySA+ and Security+. The Committee has established a Cybersecurity Subcomittee (the “Subcommittee”).
The team responsible for developing and implementing our cybersecurity program collectively holds an MS in Cybersecurity and Information Assurance and have multiple cybersecurity certifications, including CRISC, CISM, CISA, NCSP-NIST, CISSP, CASP+, CySA+ and Security+. The Committee has established a Cybersecurity Subcommittee (the “Subcommittee”).
CIM Group’s controls leverage the National Institute of Standards and Technology Cybersecurity 47 Table of Contents Framework. CIM Group also utilizes industry and government associations, the results from regular internal and third-party audits and other similar resources to inform its cybersecurity processes and to allocate resources.
CIM Group’s controls leverage the National Institute of Standards and Technology Cybersecurity Framework. CIM Group also utilizes industry and government associations, the results from regular internal and third-party audits and other similar resources to inform its cybersecurity processes and to allocate resources.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOffice 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.
Biggest changeOffice Portfolio—Diversification by Industry as of December 31, 2024 Annualized % of Rentable Rent Annualized Square % of Rentable Industry (in thousands) Rent Feet Square Feet Health Care and Social Assistance $ 19,216 34.6 % 343,954 26.6 % Professional, Scientific, and Technical Services 9,311 16.8 % 151,465 11.7 % Finance and Insurance 6,439 11.6 % 65,599 5.1 % Arts, Entertainment, and Recreation 6,280 11.3 % 88,457 6.8 % Other Services (except Public Administration) 3,986 7.2 % 51,885 4.0 % Real Estate and Rental and Leasing 2,098 3.8 % 41,667 3.2 % Information 1,944 3.5 % 34,313 2.6 % Public Administration 1,741 3.1 % 35,046 2.7 % Retail Trade 1,728 3.1 % 38,184 2.9 % Other 2,709 5.0 % 66,278 5.0 % Vacant — — % 381,904 29.4 % Total Office $ 55,452 100.0 % 1,298,752 100.0 % Note: Represents 100% of the consolidated and unconsolidated office portfolios, regardless of our ownership percentage. 54 Table of Contents Office Portfolio—Lease Expiration as of December 31, 2024 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 2025 (1) 110,325 11.9 % 6,934 12.6 % 62.85 2026 134,844 14.7 % 8,393 15.1 % 62.24 2027 (2) 75,989 8.3 % 4,440 8.0 % 58.43 2028 338,520 36.9 % 18,457 33.3 % 54.52 2029 (3) 61,979 6.8 % 6,148 11.1 % 99.19 2030 (4) 103,485 11.3 % 4,627 8.3 % 44.71 2031 26,409 2.9 % 1,240 2.2 % 46.95 2032 (5) 26,777 2.9 % 1,551 2.8 % 57.92 2034 12,383 1.4 % 714 1.3 % 57.66 Thereafter (6) 26,137 2.9 % 2,948 5.3 % 112.79 Total Occupied 916,848 100.0 % $ 55,452 100.0 % $ 60.48 Vacant 381,904 Total Office 1,298,752 Note: Represents 100% of the consolidated and unconsolidated office portfolios, regardless of our ownership percentage.
(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.
(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.
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.
Item 2. Properties As of December 31, 2024, 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.
Additionally, as of December 31, 2023, we had nine development sites (three of which were being used as parking lots).
Additionally, as of December 31, 2024, we had nine development sites (three of which were being used as parking lots).
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.
Western Avenue (4) Jefferson Park N/A N/A N/A N/A 3022 S. Western Avenue (4) Jefferson Park N/A N/A N/A N/A 3109 S.
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.
Hotel Portfolio Summary as of December 31, 2024 Revenue Per % Available Property Market Rooms Occupied (1) Room Sheraton Grand Hotel (2) Sacramento, CA 505 67.2 % $ 135.90 Total Hotel (1 Property) 505 67.2 % $ 135.90 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 68.9 % 68.9 % $ 567 Total Ancillary Property (1 Property) 9,453 68.9 % 68.9 % $ 567 (1) Represents trailing 12-month occupancy as of December 31, 2024, calculated as the number of occupied rooms divided by the number of available rooms.
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.
Our Unconsolidated Joint Ventures contain one office property, one multifamily site currently under development, two multifamily properties (one of which has been partially converted from office into multifamily units and is now being classified as a multifamily property) and one commercial development site.
(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.
(4) The Company is evaluating the property for potential future development options including multifamily development over the existing parking garage. 53 Table of Contents Office Portfolio—Top 5 Tenants by Annualized Rental Revenue as of December 31, 2024 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- 2028 $ 12,694 22.9 % 236,692 18.2 % U.S.
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.
As of December 31, 2024, our 12 office properties, totaling approximately 1.3 million rentable square feet, were 70.6% occupied, and our one hotel with an ancillary parking garage, which has a total of 505 rooms, had RevPAR of $135.90 for the year ended December 31, 2024, and our four multifamily properties were 81.7% occupied.
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.
Western Avenue (5) Jefferson Park N/A N/A N/A N/A 4750 Wilshire Boulevard (Backlot) (6) Mid-Wilshire N/A N/A N/A N/A 1915 Park Avenue - 44% (7) Echo Park N/A N/A N/A N/A Oakland, CA F3 Land Site (8) Jack London District N/A N/A N/A N/A 466 Water Street Land Site (9) Jack London District N/A N/A N/A N/A Total Multifamily and Development Portfolio 764 81.7 % $ 18,478 $ 2,468 (1) Represents gross monthly base rent under leases commenced as of December 31, 2024, divided by occupied units. 52 Table of Contents (2) The Company owns 25.5% of the property.
Office 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.
Office Portfolio Detail by Classification, Address, Market, and Submarket as of December 31, 2024 Classification / Market / Address Sub-Market Rentable Square Feet % Occupied % Leased (1) Annualized Rent (in thousands) Annualized Rent Per Occupied Square Foot (9) Consolidated Office Portfolio Oakland, CA 1 Kaiser Plaza Lake Merritt 537,339 55.9 % 55.9 % $ 16,627 $ 55.34 San Francisco, CA 1130 Howard Street South of Market 21,194 61.1 % 61.1 % 1,205 93.09 Los Angeles, CA 11620 Wilshire Boulevard West Los Angeles 196,928 78.9 % 80.3 % 7,857 50.57 11600 Wilshire Boulevard West Los Angeles 56,881 73.4 % 73.4 % 2,588 62.02 9460 Wilshire Boulevard Beverly Hills 97,655 91.6 % 91.6 % 10,901 121.88 8944 Lindblade Street (2) West Los Angeles 7,980 100.0 % 100.0 % 578 72.43 8960 & 8966 Washington Boulevard (2) West Los Angeles 24,448 100.0 % 100.0 % 1,559 63.77 1037 N Sycamore Avenue Hollywood 5,031 100.0 % 100.0 % 336 66.79 Austin, TX 3601 S Congress Avenue (3) South 231,240 78.1 % 78.1 % 8,709 48.23 1021 E 7th Street (4) East 11,180 100.0 % 100.0 % 664 59.39 1007 E 7th Street (5) East 1,352 — % — % — — Total Consolidated Office Portfolio 1,191,228 69.6 % 69.8 % 51,024 61.54 Unconsolidated Office Portfolio Los Angeles, CA 1910 Sunset Boulevard - 44% (6) Echo Park 107,524 81.6 % 84.0 % 4,428 50.48 Total Unconsolidated Office Portfolio 107,524 81.6 % 84.0 % 4,428 50.48 Total Office Portfolio 1,298,752 70.6 % 71.0 % 55,452 60.48 Total Office Portfolio - CMCT Share of Annualized Rent $ 52,979 Development Pipeline Properties Oakland, CA 2 Kaiser Plaza (7) Lake Merritt N/A N/A N/A N/A N/A Los Angeles, CA 1015 Mansfield - 29% (8) 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 1,298,752 70.6 % 71.0 % $ 55,452 $ 60.48 (1) Based on leases signed as of December 31, 2024. 51 Table of Contents (2) The three buildings making up 8960 & 8966 Washington Boulevard and 8944 Lindblade Street were formerly known as Lindblade Media Center.
(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.
(2) CMCT owns 44.2% of these properties through its investment the 1910 Sunset JV. The outstanding principal balance shown here represents 100% of the 1910 Sunset JV’s balance. (3) CMCT owns 20.0% of the property through its investment in the 4750 Wilshire JV. The outstanding principal balance shown here represents 100% of the 4750 Wilshire JV’s balance.
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.
The amounts shown in the table represent 100% of the property. The property is a 75-unit four-story building. (3) 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 JV”).
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.
(6) Includes 7,980 square feet (approximately 0.9% of total portfolio occupied square footage) of leases with tenant-controlled early termination options to terminate prior to 2035. 55 Table of Contents Property Indebtedness as of December 31, 2024 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 67,000 6.25% 6/7/2025 67,000 Sheraton Grand Hotel 84,346 SOFR + 4.35% 1/1/2027 84,346 9460 Wilshire Boulevard, 11620 Wilshire Boulevard, 11600 Wilshire Boulevard 105,000 7.41% 1/11/2030 105,000 1910 Sunset Boulevard (2) 23,925 SOFR + 2.95% 9/13/2025 23,925 1915 Park Avenue (2) 658 SOFR + 3.00% 12/21/2026 658 4750 Wilshire Boulevard (3) 36,864 SOFR + 3.11% 4/1/2026 36,864 Total $ 501,893 $ 501,893 (1) Loan is generally not prepayable prior to April 1, 2026.
(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.
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. (8) The Company owns approximately 29% 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.
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.
Multifamily Portfolio Detail by Classification, Address, Market, and Submarket as of December 31, 2024 Classification / Market / Address Sub-Market Units % Occupied Annualized Rent (in thousands) Monthly Rent Per Occupied Unit (1) (10) Consolidated Multifamily Portfolio Oakland, CA Channel House Jack London District 333 89.5 % $ 9,373 $ 2,621 1150 Clay Downtown 288 85.1 % $ 7,172 $ 2,439 Total Consolidated Multifamily Portfolio 621 87.4 % $ 16,545 $ 2,539 Unconsolidated Multifamily Portfolio Los Angeles, CA 1902 Park Avenue - 25.5% (2) Echo Park 75 88.0 % $ 1,482 $ 1,871 701 S Hudson - 20% (3) Mid-Wilshire 68 22.1 % $ 451 $ 2,507 Total Unconsolidated Multifamily Portfolio 143 56.6 % $ 1,933 $ 1,988 Total Multifamily Portfolio 764 81.7 % $ 18,478 $ 2,468 Total Multifamily Portfolio - CMCT Share of Annualized Rent $ 17,013 Development Pipeline Properties Los Angeles, CA 3101 S.
The site is being evaluated for different development options, including creative office space or other commercial space.
The site is being evaluated for different development options, including creative office space or other commercial space. (9) Giving effect to abatements, net annualized rent per occupied square foot for the total portfolio was $59.93.
(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.
There is no planned start date for such development. (5) The Company intends to redevelop approximately seven commercial units totaling 5,635 rentable square feet and six parking stalls. There is no planned start date for such redevelopment. (6) The Company owns 100% of the 4750 Wilshire Boulevard backlot land parcel.
(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) The Sheraton Grand Hotel is part of the Sheraton franchise and is managed by Sheraton Operating Corporation, a subsidiary of Marriott International, Inc. The renovation of the Sheraton Grand Hotel’s guest rooms and corridors is substantially completed (the “Rooms Renovation Project”) with a total cost of approximately $20.9 million.
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.
The 1910 Sunset JV has begun construction to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building (the “1915 Park Project”).
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.
Bank, N.A. 9460 Wilshire Boulevard A+ / Aa3 / A+ 2029 4,167 7.5 % 27,569 2.1 % 3 Arts Entertainment, Inc. 9460 Wilshire Boulevard - / - / - 2026 3,037 5.5 % 27,112 2.1 % F45 Training Holdings, Inc. 3601 S Congress Avenue - / - / - 2030 2,418 4.4 % 44,171 3.4 % O'Gara Coach Company, L.L.C. 9460 Wilshire Boulevard - / - / - 2043 2,370 4.3 % 18,157 1.4 % Total for Top Five Tenants 24,686 44.6 % 353,701 27.2 % All Other Tenants 30,766 55.4 % 563,147 43.4 % Vacant — — % 381,904 29.4 % Total Office Portfolio $ 55,452 100.0 % 1,298,752 100.0 % 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. (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.
The site is being evaluated for potential multifamily development and currently is being utilized as a surface parking lot. (7) The Company owns approximately 44% of the property through a joint venture partnership (the “1910 Sunset JV”).
Removed
(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.
Added
By September 2024, the 4750 Wilshire JV had substantially completed its conversion of two of the three floors of 4750 Wilshire Boulevard from office-use into 68 for-lease multifamily units (the “4750 Wilshire Project”), with the first floor of 4750 Wilshire continuing to function as 30,335 square feet of office space.
Removed
(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
Following the substantial completion of the 4750 Wilshire Project, the Company has reclassified its investment in the 4750 Wilshire JV as a multifamily investment. The 4750 Wilshire JV refers to the multifamily portion of the building as “701 S Hudson”. (4) The Company intends to develop a total of approximately 160 residential units across both properties.
Removed
(7) The Company is evaluating the property for potential future multifamily development.
Added
The 1915 Park Project is expected to be completed by the third quarter of 2025 and to cost approximately $14.7 million (excluding the land acquisition cost), the Company’s share of which is expected to be $6.5 million. (8) Currently being utilized as a parking lot. The Company is evaluating future development options, including hotel development.
Removed
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.
Added
(9) The Company is evaluating the property for potential future multifamily development. (10) Net of rent concessions granted in the specified period, monthly rent per occupied unit for the total portfolio was $2,319.
Removed
(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
The Company is currently working on designs for the renovation of Sheraton Grand Hotel’s lobbies and common areas (the “Lobby Renovation Project”). The Company has not approved a budget for the Lobby Renovation Project but intends to complete the project in 2025. (3) Based on leases commenced as of December 31, 2024.
Removed
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
(1) Includes 4,371 square feet of month-to-month leases as of December 31, 2024. (2) Includes 6,524 square feet (approximately 0.7% of total portfolio occupied square footage) of leases with tenant-controlled early termination options to terminate prior to 2027.
Removed
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.
Added
(3) Includes 3,572 square feet (approximately 0.4% of total portfolio occupied square footage) of leases with tenant-controlled early termination options to terminate prior to 2029. (4) Includes 2,313 square feet (approximately 0.3% of total portfolio occupied square footage) of leases with tenant-controlled early termination options to terminate prior to 2030 .
Removed
(1) Includes 8,286 square feet of month-to-month leases as of December 31, 2023.
Added
(5) Includes 25,845 square feet (approximately 2.8% of total portfolio occupied square footage) of leases with tenant-controlled early termination options to terminate prior to 2032.
Removed
(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 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.
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.
Item 4. Mine Safety Disclosures Not applicable. 55 Table of Contents PART II
Item 4. Mine Safety Disclosures Not applicable. 56 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+5 added−0 removed8 unchanged
Biggest changeThe 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
Biggest changeThe total cost to complete the Series L Redemption, including transaction costs of $93,000 (or $0.03 per share), was $83.8 million. During the quarter ended September 30, 2024, we redeemed, at the option of the Company, 2,589,606 shares of Series A1 Preferred Stock in shares of Common Stock, resulting in issuance of 3,297,298 shares of Common Stock.
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.
Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of December 31, 2024 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 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.
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 262,058 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.” 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.
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 February 25, 2025, there were approximately 304 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 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.
The closing price of our Common Stock on February 25, 2025 was $0.70 as reported on Nasdaq. Approximately 90.3% of our Common Stock as of February 25, 2025 was held by stockholders that are not our affiliates.
Added
During the quarter ended September 30, 2024 and December 31, 2024, we redeemed 1,010 and 180,902 shares of Series A1 Preferred Stock in shares of Common Stock at the option of the holders, respectively, resulting in issuance of 2,590 and 1,517,599 shares of Common Stock, respectively.
Added
During the quarter ended September 30, 2024, we redeemed, at the option of the Company, 2,150,076 shares of Series A Preferred Stock in shares of Common Stock, resulting in issuance of 2,733,230 shares of Common Stock.
Added
During the quarter ended December 31, 2024, we redeemed 214,713 shares of Series A1 Preferred Stock in shares of Common Stock at the option of the holders resulting in issuance of 1,645,869 shares of Common Stock.
Added
For each of these 57 Table of Contents issuances, the number of shares of Common Stock issued was based on volume-weighted average price (calculated in accordance with our charter) of the Common Stock as of each applicable redemption date.
Added
Shares of Series A1 Preferred Stock, Series A Preferred Stock and Series D 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, at our election, as described in Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K.

Item 7. Management's Discussion & Analysis

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

90 edited+58 added−33 removed43 unchanged
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.
Biggest changeYear Ended December 31, Change 2024 2023 $ % (dollars in thousands) Revenues: Office $ 54,283 $ 55,033 $ (750) (1.4) % Hotel $ 39,407 $ 41,096 $ (1,689) (4.1) % Multifamily $ 19,515 $ 11,224 $ 8,291 73.9 % Lending $ 10,756 $ 11,458 $ (702) (6.1) % Expenses: Office $ 27,327 $ 26,075 $ 1,252 4.8 % Hotel $ 27,955 $ 27,992 $ (37) (0.1) % Multifamily $ 13,715 $ 9,464 $ 4,251 44.9 % Lending $ 7,556 $ 7,899 $ (343) (4.3) % Income (Loss) From Unconsolidated Entities Office $ 462 $ (582) $ 1,044 NM* Multifamily $ (1,268) $ 155 $ (1,423) NM* Non-Segment Revenue and Expenses: Interest and other income $ 551 $ 447 $ 104 23.3 % Asset management and other fees to related parties $ (1,797) $ (2,627) $ 830 (31.6) % Expense reimbursements to related parties—corporate $ (2,281) $ (2,342) $ 61 (2.6) % Interest expense $ (33,589) $ (31,406) $ (2,183) 7.0 % General and administrative $ (4,267) $ (5,453) $ 1,186 (21.7) % Transaction costs $ (1,382) $ (4,421) $ 3,039 (68.7) % Depreciation and amortization $ (27,373) $ (52,484) $ 25,111 (47.8) % Loss on early extinguishment of debt $ (1,416) $ — $ (1,416) NM* Gain on sale of real estate $ — $ 1,104 $ (1,104) (100.0) % Provision for income taxes $ (798) $ (1,228) $ 430 (35.0) % ______________________ (*) 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.
From the date of issuance until the fifth anniversary of the date of issuance, holders of Series A Preferred Stock and Series D Preferred Stock may require us to redeem such shares at a discount to the Series A1 Preferred Stock, Series A Preferred Stated Value and Series D Preferred Stated Value, respectively.
From the date of issuance until the fifth anniversary of the date of issuance, holders of Series A1 Preferred Stock, Series A Preferred Stock and Series D Preferred Stock may require us to redeem such shares at a discount to the Series A1 Preferred Stock, Series A Preferred Stated Value and Series D Preferred Stated Value, respectively.
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.
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.
Dividends on Common Stock 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 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.
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% 70 Table of Contents (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, 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.
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, 2024 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, 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.
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, 2024, 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.
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.
Additionally as of December 31, 2024, 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, 2024 in connection with the Series L Redemption.
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.
While we will seek to satisfy such needs through one or more of the methods described in this Annual Report on Form 10-K, 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.
Gain on Sale of Real Estate: Gain on sale of real estate of $1.1 million for the year ended December 31, 2023 was related to the sale of 80% of our interest in an office property in Los Angeles, California. There were no dispositions during the year ended December 31, 2022.
Gain on Sale of Real Estate: Gain on sale of real estate of $1.1 million for the year ended December 31, 2023 was related to the sale of 80% of our interest in an office property in Los Angeles, California. There were no dispositions during the year ended December 31, 2024.
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.
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, 2024.
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”).
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, 2024 (the “Calculated Assets and Liabilities”).
(2) Cash rents represent gross monthly base rent, 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) Cash rents represent gross monthly base rent, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.
The 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.
The annual rate of dividend of the Series A1 Preferred Stock during the first quarter of 2025 is 7.83%. Dividends on each share of Preferred Stock begin accruing on, and are cumulative from, the date of issuance.
However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the reverse stock split 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.
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.
If the undiscounted cash flows are less than the carrying amount of the assets, an impairment is recognized to the extent the carrying amount of the assets exceeds the estimated fair value of the assets. Assets held for sale are reported at the lower of the asset’s carrying amount or fair value, less cost to sell.
If the undiscounted cash flows are less than the carrying amount of the assets, an impairment is recognized to the extent the carrying amount of the assets exceeds the estimated 69 Table of Contents fair value of the assets. Assets held for sale are reported at the lower of the asset’s carrying amount or fair value, less cost to sell.
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.
As of December 31, 2024, the variable interest rate was 7.29%. 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.
(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.
(2) Represents gross monthly base rent, as of December 31, 2024, under leases expiring during the periods above, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.
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 : The Administrator receives compensation and/or reimbursement for performing certain services for the Company and its subsidiaries.
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.
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.
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.
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) 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; (v) the sale of existing assets; and/or (vi) cash flows from operations.
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.
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, 2024, was equal to $25.00 per share, plus accrued and unpaid dividends.
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.
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, 2024 was $13.9 million, compared to cash provided by financing activities of $63.4 million for the year ended December 31, 2023.
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.
Net cash used in investing activities decreased by $66.4 million to $22.3 million for the year ended December 31, 2024, compared to $88.7 million for the year ended December 31, 2023.
In December 2022, the Company refinanced its 2018 credit facility and replaced it with a new 2022 Credit Facility, entered into with a bank syndicate, that includes a $56.2 million term loan (the “2022 Credit Facility Term Loan”) as well as a revolver allowing the Company to borrow up to $150.0 million (the “2022 Credit Facility Revolver”), both of which are collectively subject to a borrowing base calculation.
Revolving Credit Facilities In December 2022, the Company refinanced its 2018 credit facility and replaced it with a new 2022 credit facility (the 2022 Credit Facility”), entered into with a bank syndicate, that included a $56.2 million term loan (the “2022 Credit Facility Term Loan”) as well as a revolver that originally allowed the Company to borrow up to $150.0 million (the “2022 Credit Facility Revolver”), both of which are collectively subject to a borrowing base calculation.
Multifamily Statistics: The following table sets forth occupancy rates and the monthly rent per occupied unit across our multifamily portfolio for the specified periods (includes 100% of our property partially owned through an Unconsolidated Joint Venture): As of December 31, 2023 2022 Occupancy 79.3 % N/A Monthly rent per occupied unit (1) $ 2,805 N/A ______________________ (1) Represents gross monthly base rent under leases commenced as of the specified period, divided by occupied units.
Multifamily Statistics: The following table sets forth occupancy rates and the monthly rent per occupied unit across our multifamily portfolio for the specified periods (includes 100% of our properties partially owned through an Unconsolidated Joint Venture): As of December 31, 2024 2023 Occupancy 81.7 % 79.3 % Monthly rent per occupied unit (1) $ 2,468 $ 2,805 ______________________ (1) Represents gross monthly base rent under leases commenced as of the specified period, divided by occupied units.
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.
Additionally, our outstanding commitments to fund loans were $9.5 million as of December 31, 2024, substantially all of which reflect prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Small Business Loan Program lending.
The 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%.
The 67 Table of Contents 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, 2024, the variable interest rate was 7.40%.
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.
Income (Loss) From Unconsolidated Office Entities: Income from our office Unconsolidated Joint Ventures included in office segment net operating income increased to income of $462,000 for the year ended December 31, 2024, compared to a loss of $582,000 for the year ended December 31, 2023.
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.
Our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs. Net cash provided by operating activities increased by $5.0 million for the year ended December 31, 2024 as compared to the same period in 2023.
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 table below sets forth information on certain of our executed leases during the year ended December 31, 2024, 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, 2024 26 260,796 $ 52.74 $ 53.92 (1) Based on the number of tenants that signed leases.
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.
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, 2024 2023 (in thousands) Net loss attributable to common stockholders (1) $ (73,343) $ (75,727) Depreciation and amortization 27,373 52,484 Noncontrolling interests’ proportionate share of depreciation and amortization (306) (2,090) Gain on sale of real estate — (1,104) FFO attributable to common stockholders (1) $ (46,276) $ (26,437) (1) During the years ended December 31, 2024 and 2023, we recognized $17.7 million and $1.5 million, respectively, of redeemable preferred stock redemptions on our consolidated statements of operations and $755,000 and $0 respectively, of redeemable preferred stock deemed dividends on our consolidated statements of operations.
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.
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 to $1.8 million for the year ended December 31, 2024, compared to $2.6 million for the year ended December 31, 2023.
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).
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 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.
During the year ended December 31, 2023, we executed leases with terms longer than 12 months totaling 140,670 square feet.
During the year ended December 31, 2024, we executed leases with terms longer than 12 months totaling 269,811 square feet.
The increase is 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 (which were fully amortized as of December 31, 2023), as well as incremental increases to fixed asset depreciation expense related to such acquired properties.
The decrease was primarily due to a decrease in acquired in-place lease intangible assets amortization at multifamily properties located in Oakland, California acquired during the first quarter of 2023, which were fully amortized as of December 31, 2023, partially offset by incremental increases to fixed asset depreciation expense related to the acquired properties.
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.
As of December 31, 2024, there were 118,911 Series A Preferred Warrants to purchase 29,728 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.
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.
If we cannot obtain funding for our long-term liquidity needs, our assets may generate lower cash flows or decline in value, or both, which may cause us to sell assets at a time when we would not otherwise do so which could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock.
The increase of $49.8 million was primarily due to $56.5 million of net proceeds from our 2022 Credit Facility and mortgages during the year ended December 31, 2023 compared to $16.5 million of net paydowns during the year ended December 31, 2022, the issuance of unguaranteed SBA 7(a) loan-backed notes of approximately $54.1 million, and a $72.1 million decrease of cash used in the repurchase of Series L Preferred Stock and Common Stock during the year ended December 31, 2023 compared to the same period in 2022.
The decrease of $49.5 million was primarily due to a $62.8 million decrease in net proceeds from issuance of preferred stock during the year ended December 31, 2024 compared to the prior period, the issuance of unguaranteed SBA 7(a) loan-backed notes of approximately $54.1 million during the year ended December 31, 2023, and $38.0 million of net proceeds from our 2022 Credit Facility and mortgages for the year ended December 31, 2024, compared to $56.5 million for the year ended December 31, 2023.
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.
As of December 31, 2024, we had issued 12,040,878 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 $459.1 million after commissions, fees and allocated costs.
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.
Additionally, as of December 31, 2024, we had nine development sites (three of which were being used as parking lots). 58 Table of Contents 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, 2024 2023 Occupancy (1) 70.6 % 83.8 % Annualized rent per occupied square foot (1)(2) $ 60.48 $ 57.17 (1) The information presented in this table represents historical information as of the date indicated without giving effect to any property sales occurring thereafter.
The decrease was primarily due to a decrease in net income adjusted for depreciation and amortization expense and other non-cash items of $25.7 million and a $2.0 million increase resulting from a lower level of net working capital used, partially offset by a $1.5 million increase in net proceeds from the sale of loans, and a $1.2 million increase in return on investment from Unconsolidated Joint Ventures compared to the same period in 2022.
The increase was primarily due to a $4.1 million increase resulting from a lower level of net working capital used and a reduction in net loss adjusted for depreciation and amortization expense and other non-cash items of $3.7 million, partially offset by a $2.8 million decrease in net proceeds from the sale of loans, compared to the same period in 2023.
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.
Lending revenue decreased to $10.8 million for the year ended December 31, 2024, compared to $11.5 million for the year ended December 31, 2023.
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.
As of February 25, 2025, December 31, 2024, and December 31, 2023, $15.0 million, $15.0 million, and $153.2 million, respectively, was outstanding under the 2022 Credit Facility and $0 and $0, and $53.0 million, respectively, was available for future borrowings.
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.
Depreciation and Amortization Expense: Depreciation and amortization expense decreased to $27.4 million for the year ended December 31, 2024, compared to $52.5 million for the year ended December 31, 2023.
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.
Therefore, we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates. 59 Table of Contents 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.
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.
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. 60 Table of Contents 2024 Results of Operations Net Loss and FFO Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Total revenues $ 124,512 $ 119,258 $ 5,254 4.4 % Total expenses $ 148,658 $ 170,163 $ (21,505) (12.6) % Net loss $ (25,750) $ (51,456) $ 25,706 (50.0) % The Company had a net loss of $25.8 million for the year ended December 31, 2024, representing a decrease of $25.7 million compared to a net loss of $51.5 million for the year ended December 31, 2023.
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.
As of December 31, 2024, our 12 office properties, totaling approximately 1.3 million rentable square feet, were 70.6% occupied and our one 505-room hotel with an ancillary parking garage, had RevPAR of $135.90 for the year ended December 31, 2024 and our four multifamily properties were 81.7% occupied.
The 2022 Credit Facility is secured by properties in the Company’s real estate portfolio: six office properties and one hotel property (as well as the hotel’s adjacent parking garage and retail property). The 2022 Credit Facility bears interest at (A) the base rate plus 1.50% or (B) SOFR plus 2.60%.
At the time the 2022 Credit Facility was entered into, it was collateralized by six of the Company’s office properties, as well as the Company’s hotel property and adjacent parking garage (the “Hotel Properties”). The 2022 Credit Facility bears interest at (A) the base rate plus 1.50% or (B) SOFR plus 2.60%.
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.
We work with potential borrowers to identify 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.
Generally, our hotel revenues are greater in the first and second quarters than the third and fourth quarters. This seasonality can be expected to cause quarterly fluctuations in revenues, segment net operating income, net income and cash provided by operating activities. In addition, the hotel industry is cyclical and demand generally follows, on a lagged basis, key macroeconomic factors.
Seasonality Our revenues and expenses for our hotel property are subject to seasonality during the year. Generally, our hotel revenues are greater in the first and second quarters than the third and fourth quarters. This seasonality can be expected to cause quarterly fluctuations in revenues, segment net operating income, net income and cash provided by operating activities.
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.
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, 2025 2025 2025 2025 Expiring Cash Rents: Expiring square feet (1) 44,273 29,537 32,658 3,857 Expiring rent per square foot (2) $ 61.41 $ 73.47 $ 57.11 $ 46.67 (1) Month-to-month tenants occupying a total of 4,371 square feet are included in the expiring leases in the first quarter listed.
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.
Properties As of December 31, 2024, 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.
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. Off Balance Sheet Arrangements As of December 31, 2024, we did not have any off-balance sheet arrangements.
The decrease in FFO was primarily attributable to an increase in interest expense not allocated to our operating segments of $22.4 million and an increase in redeemable preferred stock dividends of $7.2 million.
The decrease in FFO was primarily attributable to an increase in redeemable preferred stock redemptions of $16.2 million, an increase in redeemable preferred stock dividends of $4.0 million, an increase in interest expense not allocated to our operating segments of $2.2 million and a loss on extinguishment of debt of $1.4 million, these were partially offset by a decrease in transaction costs of $3.0 million.
The redemption price in respect of any share of Preferred Stock, whether redeemed at our option or at the option of a holder, may be paid in cash or in shares of Common Stock in our sole discretion.
The redemption price in respect of any share of Preferred Stock, whether redeemed at our option or at the option of a holder, may be paid in cash or in shares of Common Stock in our sole discretion. 68 Table of Contents Through December 31, 2024, we redeemed 4,694,975 shares of Series A Preferred Stock, 2,954,599 shares of Series A1 Preferred Stock, and 8,410 of Series D Preferred Stock.
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.
Provision for Income Taxes: Provision for income taxes decreased to $798,000 for the year ended December 31, 2024, compared to $1.2 million for the year ended December 31, 2023. The decrease is primarily due to lower taxable income at our taxable REIT subsidiaries during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
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.
A majority of these commitments have government guarantees of 75% and we believe that we will be able to sell the guaranteed portion of these loans in a liquid secondary market upon fully funding these loans. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements.
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.
Lending Expenses: Lending expenses represent expenses from our lending subsidiaries, including interest expense, general and administrative expenses and fees to related parties. Lending expenses decreased to $7.6 million for the year ended December 31, 2024, compared to $7.9 million for the year ended December 31, 2023.
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.
The decrease was primarily due to a decrease in premium income and a decrease in interest income as a result of lower loan originations and loan sale volume during the year ended December 31, 2024, compared to the year ended December 31, 2023.
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 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.
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.
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.
Expense reimbursements to related parties—corporate were $2.3 million for the year ended December 31, 2024, consistent with $2.3 million for the year ended December 31, 2023. 63 Table of Contents Interest Expense: Interest expense, which has not been allocated to our operating segments, increased to $33.6 million for the year ended December 31, 2024, compared to $31.4 million for the year ended December 31, 2023.
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.
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.
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%.
General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were $4.3 million for the year ended December 31, 2024, compared to $5.5 million for the year ended December 31, 2023. The decrease was primarily due to decreases in legal fees and consulting services.
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.
Hotel Expenses: Hotel expenses were $28.0 million for the year ended December 31, 2024, consistent with $28.0 million for the year ended December 31, 2023. Multifamily Expenses: Multifamily expenses increased to $13.7 million for the year ended December 31, 2024, compared to $9.5 million for the year ended December 31, 2023.
Such amounts are included in, and have the effect of increasing the net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT.
Such amounts are included in, and have the effect of increasing the net loss attributable to common stockholders and FFO attributable to common stockholders because redeemable preferred stock redemptions are not an adjustment prescribed by NAREIT. 61 Table of Contents FFO attributable to common stockholders, which is a non-GAAP measure, was $(46.3) million for the year ended December 31, 2024, a decrease of $19.8 million compared to $(26.4) million for the year ended December 31, 2023.
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.
The decrease in cash used in investing activities was primarily due to a $96.7 million decrease in acquisitions of real estate and a decrease in cash outlays of $12.0 million related to our investments in the Unconsolidated Joint Ventures, compared to the same period in 2023.
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 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.
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.
Dividends As of December 31, 2024, there were 12,240,878 and 9,286,279 shares of Series A1 Preferred Stock issued and outstanding, respectively, 8,820,338 and 4,125,363 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 11,654,506 shares of Common Stock issued and outstanding.
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. The maximum loan amount for an SBA 7(a) loan is $5.0 million.
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.
Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail.
(2) Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by 12. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail.
Partially offsetting net cash used in investing activities are $33.3 million in proceeds from the sale of 80% of our interest in 4750 Wilshire to an Unconsolidated Joint Venture during the year ended December 31, 2023 and a decrease in cash outlays of $8.4 million related to our investments in the Unconsolidated Joint Ventures compared to the same period in 2022.
Partially offsetting the decrease in net cash used in investing activities are $32.2 million in proceeds from the sale of a property to the 4750 Wilshire JV during the year ended December 31, 2023 and a $9.9 million increase in capital expenditures during the year ended December 31, 2024.
The increase is due to an increase in occupancy and average daily rate during 2023 as compared to the prior year. Multifamily Revenue: Multifamily revenue was $11.2 million for the year ended December 31, 2023.
Hotel Revenue: Hotel revenue decreased to $39.4 million for the year ended December 31, 2024, compared to $41.1 million for the year ended December 31, 2023. The decrease is due to a decrease in occupancy during 2024 as compared to the prior year.
The aforementioned amounts of increasing net cash provided by financing activities were partially offset by an increase in $97.6 million of redemption of preferred stock during the year ended December 31, 2023, a $44.8 million decrease in net proceeds from issuance of Preferred Stock, as well as a $5.2 million increase in preferred dividend payments.
The aforementioned amounts decreasing 64 Table of Contents net cash provided by financing activities were partially offset by a decrease of $80.8 million in cash redemptions of preferred stock and a decrease in preferred dividend cash payments of $3.9 million during the year ended December 31, 2024 compared to the prior period.
Office revenue decreased by 1.6% to $55.0 million for the year ended December 31, 2023 compared to $55.9 million for the year ended December 31, 2022. The decrease is primarily due to the disposition of an 80% interest in an office property in Los Angeles, California in February 2023.
Office revenue decreased to $54.3 million for the year ended December 31, 2024 from $55.0 million for the year ended December 31, 2023. The decrease is primarily due to a decrease in rental revenues at an office property in Oakland, California due to lower occupancy.
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.
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.
These were partially offset by an unrealized gain on the value of real estate related to another one of our office Unconsolidated Joint Ventures recognized during the year ended December 31, 2023. Income From Unconsolidated Multifamily Entity: The income from our Unconsolidated Joint Venture included in multifamily segment net operating income was $155,000 for the year ended December 31, 2023.
(Loss) Income From Unconsolidated Multifamily Entity: The income from our Unconsolidated Joint Venture included in multifamily segment net operating income decreased to a loss of $1.3 million for the year ended December 31, 2024, compared to income of $155,000 for the year ended December 31, 2023.
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.
Expenses Office Expenses: Office expenses increased to $27.3 million for the year ended December 31, 2024, compared to $26.1 million for the year ended December 31, 2023.
As our multifamily properties were acquired during the year ended December 31, 2023, there was no comparable revenue for the year ended December 31, 2022. 61 Table of Contents Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income.
The increase is primarily due to higher occupancy and increased rent per occupied unit, net of rent concessions, at our consolidated multifamily properties during the year ended December 31, 2024. Lending Revenue: Lending revenue represents revenue from our lending subsidiaries, including interest income on loans and other loan related fee income.
The decrease was primarily due to an unrealized loss on the value of real estate at one of our office Unconsolidated Joint Ventures recognized during the year ended December 31, 2023 and an increase in mortgage interest expense at both of our office Unconsolidated Joint Ventures during the year ended December 31, 2023.
The increase is due to changes in the valuation of investments in real estate at our unconsolidated office entities, which recognized a net unrealized gain during the year ended December 31, 2024, compared to a net unrealized loss for the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs 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.
Biggest changeAs of December 31, 2024, 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. 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.
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.
Based on the level of floating rate debt outstanding as of December 31, 2024 and 2023, a 50 basis point change in SOFR would result in an annual impact to our earnings of approximately $356,000 and $1.1 million, respectively. We calculate interest rate sensitivity by multiplying the amount of floating rate debt by the respective change in rate.
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.
As of December 31, 2024 and 2023 (excluding our variable rate mortgages payable subject to interest rate cap agreements as well as premiums, discounts and deferred loan costs), $71.3 million (or 13.9%) and $224.7 million (or 47.3%), respectively, was floating rate borrowings.
As 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.
As of December 31, 2024 and 2023 (including our variable rate mortgages payable subject to interest rate cap agreements and excluding premiums, discounts, and deferred loan costs), $440.4 million (or 86.1%) and $250.7 million (or 52.7%) of our debt, respectively, was fixed rate borrowings.
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.
As of December 31, 2024, we had two interest rate cap agreements outstanding with an aggregate notional amount of $171.3 million and an aggregate fair value of the net derivative assets of $107,000.
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.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

Other CMCT 10-K year-over-year comparisons