CMRF 10-K & 10-Q changes, risk factors and insider trading
Cim Group, Inc. · OTC · Real Estate Investment Trusts · CIK 1498547 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our approach to artificial intelligence (“AI”) may not be successful and could adversely affect our business.”
Largest changes
“Our approach to artificial intelligence (“AI”) may not be successful and could adversely affect our business.”see in full comparison
“We have incorporated and may continue to incorporate the use of AI within our business, and these solutions and features may become more important to our operations over time. Our research and development of AI remains ongoing. There can be no assurance that we will realize the desired or anticipated benefits or cost-efficiency objectives of, and we may fail to properly implement, such technology. AI presents risks, challenges and unintended consequences that could affect our adoption and use of this technology. …”see in full comparison
Our share redemption program allows our stockholders to sell shares of our common stock to us in limited circumstances, subject to numerous restrictions.see in full comparisonSubjectOur ability tofundsprovidebeingliquidityavailable, we generally limit the number of shares redeemed pursuant tothrough our share redemption programtoisnolimitedmoreandthanis primarily funded with net DRIP proceeds. Our redemption program is capped at 5% of the weighted average number of shares outstandingduringannuallythe trailing 12 months prior(intended tothe end of the fiscal quarter for which the redemption is being paid. In addition, we intend to limit quarterly redemptions to approximatelyapproximate 1.25% of the weighted average number of shares outstandingduring the trailing 12-month period ending on the last day of the fiscal quarter, and funding for redemptions for eachper quarter).generallyAsisalimited to the net proceeds we receive from the sale of shares in the respective quarter under the DRIP. Any of the foregoing limits might prevent us from accommodating allresult, redemption requestsmadeare often pro-rated and unsatisfied requests do not carry over, and inany2025fiscalrequestsquarterto redeem approximately 173.1 million shares went unfulfilled. If we reduce orinsuspendanyDRIP12-monthsalesperiod.orDuringif redemption requests exceed thepastcaps32orquarters,availableexcludingDRIPthoseproceeds,whenwethemaysuspensionfurtheroflimittheorshare redemption program was in effect, quarterly redemptions were honored on a pro rata basis, asreject requests forredemptionredemption.exceededTheretheisquarterlynoredemptionpubliclimitsmarketdescribedforabove.our shares, and we cannot guarantee a future liquidity event. The Board may amend the terms of, suspend, or terminate our share redemption program without stockholder approval at any time if it believes that such action is in the best interest of our stockholders, and our management may reject any request for redemption. These restrictions severely limit our stockholders’ ability to sell their shares should they require liquidity and limit our stockholders’ ability to recover the amount they invested or the fair market value of their shares.
“In addition, the Tax Cuts and Jobs Act made significant changes to the U.S. federal income tax rules for taxation of individuals and businesses, generally effective for taxable years beginning after December 31, 2017, including a number of provisions of the Code that affect the taxation of REITs and their stockholders. …”see in full comparison
Since we may incur leverage to make investments, our income depends, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. Inflation remained high insee in full comparison2024.2025. During the 12 months ended December2024,2025, the consumer price index rose2.9%.2.7%. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised the federal funds rate, which led to increases in interest rates in the credit market. Although the Federal Reserve began lowering the federal funds rate in the second half of2024,2024 andthere are expectations thatin theFederallatterReservepartwillofcontinue lowering2025, the federal funds rate remains well above pre-2022 levels, and any increase in2025, these expectationsinflation maynot materialize andcause the Federal Reservemaytoincreaseagainrates inraise thefuturefederalinfundsan effort to combat inflation.rate. Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates. In a rising interest rate environment, any leverage that we incur may bear a higher interest rate than may currently be available. There may not, however, be a corresponding increase in our revenues. Any reduction in the rate of return on new investments relative to the rate of return on current investments, and any reduction in the rate of return on current investments, which could adversely impact our income, reducing our ability to service the interest obligations on, and to repay the principal of, our indebtedness.
We have incurred indebtedness, and in the future may incur additional indebtedness, that bears interest at a variable rate. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised the federal funds rate, which led to increases in interest rates in the credit market. The Federal Reserve began lowering the federal funds rate in the second half ofsee in full comparison2024,2024 andwhile there are expectations thatin theFederallatterReservepartwillofcontinue2025;loweringhowever, the federal funds rate remains well above pre-2022 levels, and any increase in2025, these expectationsinflation maynot materialize andcause the Federal Reservemaytoincreaseagainrates inraise thefuturefederalinfundsanrateeffort to combat inflation.. Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates. To the extent that we incur variable rate debt and do not hedge our exposure thereunder, increases in interest rates would increase the amounts payable under such indebtedness, which could reduce our operating cash flows and our ability to pay distributions to our stockholders. In addition, if our existing indebtedness matures or otherwise becomes payable during a period of rising interest rates, we could be required to liquidate one or more of our assets at times that may prevent realization of the maximum return on such assets.
Full comparison: every changed paragraph (14)
Our share redemption program allows our stockholders to sell shares of our common stock to us in limited circumstances, subject to numerous restrictions. SubjectOur ability to fundsprovide beingliquidity available, we generally limit the number of shares redeemed pursuant tothrough our share redemption program tois nolimited moreand thanis primarily funded with net DRIP proceeds. Our redemption program is capped at 5% of the weighted average number of shares outstanding duringannually the trailing 12 months prior(intended to the end of the fiscal quarter for which the redemption is being paid. In addition, we intend to limit quarterly redemptions to approximatelyapproximate 1.25% of the weighted average number of shares outstanding during the trailing 12-month period ending on the last day of the fiscal quarter, and funding for redemptions for eachper quarter). generallyAs isa limited to the net proceeds we receive from the sale of shares in the respective quarter under the DRIP. Any of the foregoing limits might prevent us from accommodating allresult, redemption requests madeare often pro-rated and unsatisfied requests do not carry over, and in any2025 fiscalrequests quarterto redeem approximately 173.1 million shares went unfulfilled. If we reduce or insuspend anyDRIP 12-monthsales period.or Duringif redemption requests exceed the pastcaps 32or quarters,available excludingDRIP thoseproceeds, whenwe themay suspensionfurther oflimit theor share redemption program was in effect, quarterly redemptions were honored on a pro rata basis, asreject requests for redemptionredemption. exceededThere theis quarterlyno redemptionpublic limitsmarket describedfor above.our shares, and we cannot guarantee a future liquidity event. The Board may amend the terms of, suspend, or terminate our share redemption program without stockholder approval at any time if it believes that such action is in the best interest of our stockholders, and our management may reject any request for redemption. These restrictions severely limit our stockholders’ ability to sell their shares should they require liquidity and limit our stockholders’ ability to recover the amount they invested or the fair market value of their shares.
Furthermore, our manager monitors our portfolio, but it may be difficult to reflect changing market conditions or material events that may impact the value of our portfolio between valuations, or to obtain timely or complete information regarding any such events. Therefore, the estimated per share NAV published before the announcement of an extraordinary event may differ significantly from our actual per share NAV until such time as sufficient information is available and analyzed, the financial impact is fully evaluated, and the appropriate adjustment is made to our estimated per share NAV, as determined by our Board. Any resulting disparity may be to the detriment of an acquiror of our common stock or a stockholder requesting share redemptions pursuant to our share redemption program. The Board last established an updated estimated per share NAV of the Company’s shares as of January 31, 2024 on February 29, 2024. The Board established an updated estimated per share NAV of the Company’s shares effective on March 28,27, 2025,2026, using a valuation date as of December 31, 2024.2025.
In the future, we may undertake a listing of our common stock on an exchange, an otheranother liquidity event or other action that may involve internalizing our management functions. If our Board determines that it is in our best interest to internalize our management functions, we may negotiate to acquire our manager’s assets and personnel. At this time, we cannot be sure of the form or amount of consideration or other terms relating to any such acquisition. Such consideration could take many forms, including cash payments, promissory notes and shares of our common stock. The payment of such consideration could result in dilution of our stockholders’ interests and could reduce the net income per share attributable to their investment.
Our approach to artificial intelligence (“AI”) may not be successful and could adversely affect our business.
We have incorporated and may continue to incorporate the use of AI within our business, and these solutions and features may become more important to our operations over time. Our research and development of AI remains ongoing. There can be no assurance that we will realize the desired or anticipated benefits or cost-efficiency objectives of, and we may fail to properly implement, such technology. AI presents risks, challenges and unintended consequences that could affect our adoption and use of this technology. Our competitors or other third parties may incorporate AI in their business operations more quickly or more successfully than we do, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, the complex and rapidly evolving landscape around AI may expose us to claims, demands and proceedings by private parties and regulatory authorities and subject us to legal liability as well as reputational harm. Future regulations could impose restrictions on the use of these technologies or require us to implement costly compliance measures. Finally, public perception of new technologies (including AI), such as concerns about data privacy and algorithmic bias, could affect customer acceptance of technology-driven services, which could harm our reputation and business.
Since we may incur leverage to make investments, our income depends, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. Inflation remained high in 2024.2025. During the 12 months ended December 2024,2025, the consumer price index rose 2.9%.2.7%. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised the federal funds rate, which led to increases in interest rates in the credit market. Although the Federal Reserve began lowering the federal funds rate in the second half of 2024,2024 and there are expectations thatin the Federallatter Reservepart willof continue lowering2025, the federal funds rate remains well above pre-2022 levels, and any increase in 2025, these expectationsinflation may not materialize andcause the Federal Reserve mayto increaseagain rates inraise the futurefederal infunds an effort to combat inflation.rate. Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates. In a rising interest rate environment, any leverage that we incur may bear a higher interest rate than may currently be available. There may not, however, be a corresponding increase in our revenues. Any reduction in the rate of return on new investments relative to the rate of return on current investments, and any reduction in the rate of return on current investments, which could adversely impact our income, reducing our ability to service the interest obligations on, and to repay the principal of, our indebtedness.
Although the Federal Reserve began lowering the federal funds rate in the second half of 2024,2024 and there are expectations thatin the Federallatter Reservepart willof continue lowering2025, the federal funds rate remains well above pre-2022 levels, and any increase in 2025, these expectationsinflation may not materialize andcause the Federal Reserve mayto increaseagain rates inraise the futurefederal infunds anrate effort to combat inflation.. If interest rates remain at an elevated level because of the Federal Reserve’s attempt to combat inflation, it could hinder our ability to obtain new debt financing or refinance our maturing debt on favorable terms or at all or to raise debt and equity capital. Our access to capital will depend upon a number of factors, including:
We have incurred indebtedness, and in the future may incur additional indebtedness, that bears interest at a variable rate. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised the federal funds rate, which led to increases in interest rates in the credit market. The Federal Reserve began lowering the federal funds rate in the second half of 2024,2024 and while there are expectations thatin the Federallatter Reservepart willof continue2025; loweringhowever, the federal funds rate remains well above pre-2022 levels, and any increase in 2025, these expectationsinflation may not materialize andcause the Federal Reserve mayto increaseagain rates inraise the futurefederal infunds anrate effort to combat inflation.. Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates. To the extent that we incur variable rate debt and do not hedge our exposure thereunder, increases in interest rates would increase the amounts payable under such indebtedness, which could reduce our operating cash flows and our ability to pay distributions to our stockholders. In addition, if our existing indebtedness matures or otherwise becomes payable during a period of rising interest rates, we could be required to liquidate one or more of our assets at times that may prevent realization of the maximum return on such assets.
Currently, the maximum tax rate applicable to qualified dividend income payable to certain non-corporate U.S. shareholders is 20%. Dividends payable by REITs, however, generally are not eligible for the reduced rate. Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause certain non-corporate investors to perceive investments in REITs to be relatively less attractive than investments in the shares of common stock of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock. However, commencing with taxable years beginning on or after January 1, 2018 and continuing through 2025,2018, individual taxpayers may be entitled to claim a deduction in determining their taxable income of 20% of ordinary REIT dividends (dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us), which temporarily reduces the effective tax rate on such dividends. Stockholders are urged to consult with their tax advisors regarding the effect of this change on effective tax rates with respect to REIT dividends.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA made significant changes to the U.S. federal income tax laws in various areas. Among the notable changes, the OBBBA permanently extended certain provisions that were enacted in the Tax Cuts and Jobs Act of 2017, most of which were set to expire after December 31, 2025. As a result of such extensions, individuals and other non-corporate taxpayers will continue to be entitled to a 20% deduction for certain “qualified REIT dividends” for taxable years after 2025, subject to certain requirements, and the maximum U.S. federal income tax rate on ordinary income for individuals and other non-corporate taxpayers will continue to be 37% after 2025 (before application of the 3.8% Medicare tax on “net investment income”). In addition, the OBBBA also increased the percentage limit under the REIT asset test applicable to securities of one or more taxable REIT subsidiaries from 20% to 25% for 2026 and subsequent taxable years. You are urged to consult with your own tax advisor to determine the effects of the OBBBA and the ownership and disposition of shares of our common stock on your individual tax situation, including any state, local, or non-U.S. tax consequences.
In addition, the Tax Cuts and Jobs Act made significant changes to the U.S. federal income tax rules for taxation of individuals and businesses, generally effective for taxable years beginning after December 31, 2017, including a number of provisions of the Code that affect the taxation of REITs and their stockholders. Among the changes made by the Tax Cuts and Jobs Act are permanently reducing the generally applicable corporate tax rate, generally reducing the tax rate applicable to individuals and other noncorporate taxpayers for tax years beginning after December 31, 2017 and before January 1, 2026, eliminating or modifying certain previously allowed deductions (including substantially limiting interest deductibility and, for individuals, the deduction for non-business state and local taxes), and, for taxable years beginning after December 31, 2017 and before January 1, 2026, providing for preferential rates of taxation through a deduction of up to 20% (subject to certain limitations) on most ordinary REIT dividends and certain trade or business income of non-corporate taxpayers. The Tax Cuts and Jobs Act also imposes new limitations on the deduction of net operating losses and requires us to recognize income for tax purposes no later than when we take it into account on our financial statements, which may result in us having to make additional taxable distributions to our stockholders in order to comply with REIT distribution requirements or avoid taxes on retained income and gains. The Tax Cuts and Jobs Act also made numerous large and small changes to the tax rules that do not affect the REIT qualification rules directly but may otherwise affect us or our stockholders. While the changes in the Tax Cuts and Jobs Act generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Code may have unanticipated effects on us or our stockholders. In addition, the Coronavirus Aid, Relief, and Economic Security Act made technical corrections, or temporary modifications, to certain provisions of the Tax Cuts and Jobs Act. Additional changes to tax laws were enacted as part of the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”). Many of the material provisions of the Inflation Reduction Act exempt REITs.
We urge our stockholders to consult with their own tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on holding our common stock.
Even if we maintain our status as a REIT, we may become subject to U.S. federal income taxes and related state and local taxes. For example, as discussed above, net income from the sale of properties that are “dealer” properties sold by a REIT (a “prohibited transaction” under the Code) will be subject to a 100% excise tax. We may not make sufficient distributions to avoid excise taxes applicable to REITs. Similarly, if we were to fail a gross income test (and did not lose our REIT status because such failure was due to reasonable cause and not willful neglect) we would be subject to tax on the income that does not meet the gross income test requirements. We also may decide to retain net capital gain we earn from the sale or other disposition of our investments and pay income tax directly on such income. In that event, our stockholders wouldcould be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. We also may be subject to state and local taxes on our income or property, including franchise, payroll, mortgage recording and transfer taxes, either directly or at the level of our operating partnership or at the level of the other entities through which we indirectly own our assets, such as our taxable REIT subsidiaries, which are subject to full U.S. federal, state, local and foreign corporate-level income taxes. Any taxes we pay directly or indirectly will reduce our cash available for distribution to our stockholders.
To maintain our qualification as a REIT, we must ensure that we meet the REIT gross income tests annually and that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and certain kinds of mortgage-related securities. The remainder of our investment in securities (other than qualified real estate assets and government securities) generally cannot include more than 10% of the voting securities (other than securities that qualify for the straight debt safe harbor) of any one issuer or more than 10% of the value of the outstanding securities of more than any one issuer unless we and such issuer jointly elect for such issuer to be treated as a “taxable REIT subsidiary” under the Code (“TRS”). Debt will generally meet the “straight debt” safe harbor if the debt is a written unconditional promise to pay on demand or on a specified date a certain sum of money, the debt is not convertible, directly or indirectly, into shares of common stock, and the interest rate and the interest payment dates of the debt are not contingent on the profits, the borrower’s discretion, or similar factors. Additionally, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25% (20% prior to January 1, 2026) of the value of our assets may be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must dispose of a portion of our assets within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions in order to avoid losing our REIT qualification and suffering adverse tax consequences. In order to satisfy these requirements and maintain our qualification as a REIT, we may be forced to liquidate assets from our portfolio or not make otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.
Management's Discussion & Analysis (MD&A)
New heading “Net Interest Income (amounts in thousands):”
New heading “Current Expected Credit Losses”
Removed heading “Real Estate Segment”
Largest changes
“•For collateral-dependent loans where foreclosure of the collateral is deemed probable, expected credit losses are measured as the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. …”see in full comparison
Expenses for our Credit segment consist primarily of interest expense, increases (decreases) to our provision for credit losses, management fees, and general and administrative expenses. Thesee in full comparisonincreasedecrease in our Credit segment expenses of$191.5$342.1 million for the year ended December 31,2024,2025, as compared to the year ended December 31,2023,2024, was primarily due to a$208.5$272.0 millionincreasedecrease in the provision for credit losses, primarily due tothe asset-specific credit loss provision on funded and unfunded commitments recognized on seven of the Company’ssix first mortgageloan investments and the increase in provision for credit loss related to two CMBS positionsloans thatwaswererecognized duemoved to adeclineriskinratingtheofunderlying collateral value5 during the year ended December 31,2024.2024, compared to no downgrades to a risk rating of 5 during the year ended December 31, 2025. The decrease was further driven by a $65.2 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments during the year ended December 31, 2025.
“•Invested $65.4 million in liquid corporate senior loans and sold liquid corporate senior loans for an aggregate gross sales price of $452.9 million, including $265.4 million as part of the Master Participation Agreement (as defined in Note 13 — Related-Party Transactions and Arrangements to the consolidated financial statements in this Annual Report on Form 10-K). The liquid corporate senior loans served as the initial positions for the formation of a CLO, in which we invested $27.6 million in a CLO subordinated note.”see in full comparison
Full comparison: every changed paragraph (56)
As of December 31, 2024,2025, we owned 187202 commercial real estate properties, which consisted of 176187 retail properties, seveneight office properties, and fourseven industrial properties, representing 1622 industry sectors and comprising approximately 5.86.7 million rentable square feet of commercial space located in 3637 states, with a net book value of $983.3$1.1 million.billion. As of December 31, 2024,2025, we owned condominium developments with a net book value of $64.9$12.0 million.
During the year ended December 31, 2024,2025, we disposed of sevenfive properties encompassing 430,000402,000 gross rentable square feet, and 1116 condominium units for total consideration of $128.0$181.1 million, as further discussed in Note 4 — Real Estate Assets to the consolidated financial statements in this Annual Report on Form 10-K.
The year 20242025 was characterized by a mix of positive and challenging developments leading to continued volatility in global markets. Investor concerns over inflation, highercontinued high interest rates, slowing economic growth, uncertainty around the impacts of imposed tariffs, political and regulatory uncertainty and geopolitical conditions have persisted.
Heightened inflation caused the Federal Reserve to raise interest rates in 2022 and 2023. Although the majority of our business model is such that elevated interest rates will, all else being equal, correlate to increases in our net income, increases in interest rates may adversely affect the ability of our existing borrowers to pay debt service, tenants and property values of our own portfolio and the assets that serve as collateral for our loans. The Federal Reserve began to decrease interest rates in the second half of 2024 and hasin indicatedSeptember, thatNovember, itand mayDecember continue2025, tohowever decreasethe timing, direction and extent of any future interest ratesrate inchanges 2025.remains uncertain. In a period of declining interest rates, our interest income on floating-rate investments may generally decrease, subject to the impact of interest rate floors in our investment portfolio.
•Net lossincome attributable to the Company of $292.3$52.4 million, or $0.67$0.12 per share.
•Originated $609.9 million of first mortgage loans, $55.0 million of which was a result of a loan modification that was accounted for as a new loan for GAAP purposes.
•Originated $77.1 million of first mortgage loans.
•Invested $65.4 million in liquid corporate senior loans and sold liquid corporate senior loans for an aggregate gross sales price of $452.9 million, including $265.4 million as part of the Master Participation Agreement (as defined in Note 13 — Related-Party Transactions and Arrangements to the consolidated financial statements in this Annual Report on Form 10-K). The liquid corporate senior loans served as the initial positions for the formation of a CLO, in which we invested $27.6 million in a CLO subordinated note.
•Invested $78.7 million in corporate senior loans.
•Received principal repayments on loans held-for-investment of $479.2 million.
•Invested $24.9$1.3 million in CMBS,liquid receivedcorporate principalsenior repayments on CMBS of $107.4 millionloans and sold CMBSliquid corporate senior loans for an aggregate gross sales price of $31.1$5.1 million.
•Invested $125.6 million in corporate senior loans.
•Received principal repayments on loans held-for-investment of $562.0 million.
•Invested $26.7 million in CMBS, received principal repayments on CMBS of $128.8 million and sold CMBS for an aggregate gross sales price of $75.6 million.
•FundedReceived anproceeds additionalfrom $58.7the repayment of portfolio investments on the CLO subordinated note of $6.1 million in NP JV Holdings (as defined insee Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements in this Annual Report on Form 10-K for additional details).
•Funded an additional $26.5 million in NP JV Holdings (as defined in Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements in this Annual Report on Form 10-K).
•Acquired two18 properties for an aggregate purchase price of $44.1$58.1 million.
•Took control of assets securing two risk-rated 5 first mortgage loans, comprised of two office buildings, through deeds-in-lieu of foreclosure with an aggregate fair value of $151.0 million. During the year ended December 31, 2025, the Company disposed of one of the properties acquired via deed-in-lieu of foreclosure for an aggregate sales price of $91.3 million.
•Disposed of sevenfour additional net lease properties for an aggregate sales price of $90.6$15.8 million.
(4)Unfunded loan commitments are subject to the satisfaction of borrower milestones and are not reflected in the accompanying consolidated balance sheets.
(45)The weighted-average interest rate for variable rate investments is based on the relevant fixed rate or floating benchmark plus a spread. Excludes loans on nonaccrual status.
(6)Does not include the CLO subordinated note. As of December 31, 2025, the CLO subordinated note had an initial maturity date of July 2037 and an estimated effective yield of 15.4%.
(7)Does not include positions in maturity default.
As of December 31, 2024,2025, we owned 187202 commercial real estate properties located in 3637 states, the gross rentable square feet of which was 100.0%96.5% leased, including any month-to-month agreements, with a weighted average lease term remaining of 10.510.1 years. During the year ended December 31, 2024,2025, we disposed of sevenfive properties for an aggregate gross sales price of $90.6$107.1 million. Additionally, during the year ended December 31, 2024,2025, we sold 1116 condominium units for an aggregate gross sales price of $37.4$74.0 million.
The following table summarizes our real estate acquisition activity during the yearyears ended December 31, 2024.2025 Noand properties were acquired during the year ended December 31, 2023.2024:
(1)Excludes two properties acquired through deeds-in-lieu of foreclosure, with an aggregate fair value at the time of acquisition of $151.0 million and 794,000 of rentable square feet, as further discussed in Note 4 — Real Estate Assets to the consolidated financial statements in this Annual Report on Form 10-K.
We are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate in general, such as inflation and heightened interest rates and uncertainty around the impositionimpacts of imposed tariffs and other changes to trade policy in the U.S. and other jurisdictions, that may reasonably be expected to have a material impact on our results from the acquisition, management and operation of properties and credit investments other than those listed in Part I, Item 1A. Risk Factors.
Credit Segment
The decrease in our Credit segment revenues of $63.5$85.7 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to the suspension of interest income on three of our risk-rated 5 first mortgage loans with a carrying value of $373.8 million that were placed on nonaccrual status and were past due on their interest payments as of December 31, 2024, as well as a decrease in the overall size of our investment portfolio and a decline in interest rates during the year ended December 31, 2024.2025. As of December 31, 2024,2025, we held credit investments with an outstanding principal balance of $4.4$4.2 billion compared to credit investments with an outstanding principal of $5.1$4.4 billion as of December 31, 2023.2024.
Expenses for our Credit segment consist primarily of interest expense, increases (decreases) to our provision for credit losses, management fees, and general and administrative expenses. The increasedecrease in our Credit segment expenses of $191.5$342.1 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to a $208.5$272.0 million increasedecrease in the provision for credit losses, primarily due to the asset-specific credit loss provision on funded and unfunded commitments recognized on seven of the Company’ssix first mortgage loan investments and the increase in provision for credit loss related to two CMBS positionsloans that waswere recognized duemoved to a declinerisk inrating theof underlying collateral value5 during the year ended December 31, 2024.2024, compared to no downgrades to a risk rating of 5 during the year ended December 31, 2025. The decrease was further driven by a $65.2 million decrease in interest expense, primarily due to decreased outstanding borrowings used to fund credit investments during the year ended December 31, 2025.
Net Interest Income (amounts in thousands):
For the year ended December 31, 2025, net interest income for our Credit segment decreased $20.5 million. While decreases in average outstanding balances were the primary drivers of the declines in both interest income and interest expense, net interest income was adversely impacted by a larger decline in weighted average interest rates earned on credit investments relative to the decline in weighted average borrowing rates. Although interest expense declined due to lower borrowing rates and a meaningful reduction in average outstanding borrowings used to fund our credit investments, these impacts only partially offset the decline in interest income.
Other Income (Expense)
Other income (expense) for our Credit segment consists of gain on investment in unconsolidated entities, unrealized gain (loss) gain on equity securities, and loss on extinguishment of debt, along with dividend income from our equity securities.securities owned. Our credit segment had other income of $18.5 million during the year ended December 31, 2025, as compared to other expense of $10.0 million during the year ended December 31, 2024. The decreaseincrease in our Credit segmentSegment other income (expense) of $7.6$28.5 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to an unrealized gain on equity securities of $5.7 million during the year ended December 31, 2025 as compared to an unrealized loss on equity securities of $15.9 million during the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to a $25.2 million decrease in other (expense) income, net,largely driven by the change in market value of our investment in an equity security of a $36.4public millioncompany. decreaseThe increase was further driven by other income of $3.9 million, consisting of $756,000 in loss on sale of CMBS and liquid corporate senior loans, during the year ended December 31, 2024,2025, as compared to theother sameexpense periodof in$6.8 2023,million, partiallyconsisting offsetof by a $13.7$17.3 million increase in loss on sale of CMBS and liquid corporate senior loans during the year ended December 31, 2024, as compared to the same period in 2023.2024. The decrease in otherthe expenseloss on sale of CMBS and liquid corporate senior loans was furtherslightly drivenoffset by a $1.9decrease in interest income of $4.4 million. The increase in other income (expense) was partially offset by a $4.5 million increasedecrease in gain on investment in unconsolidated entities and a decrease of $1.2 million$676,000 in loss on extinguishment of debt during the year ended December 31, 2024,2025, as compared to the same period in 2023. The decrease in other expense was partially offset by a $15.9 million unrealized loss on equity securities during the year ended December 31, 2024, compared to a $4.8 million unrealized gain on equity securities during the year ended December 31, 2023.2024.
Real Estate Segment
The decreaseincrease in our Real Estate segment revenues of $21.5$18.1 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to the dispositionaddition of seven20 properties subsequent to December 31, 2023 and the disposition of 188 properties during the year ended December 31, 2023.2024. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.
The increasedecrease in our Real Estate segment expenses of $16.9$30.8 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to ana increasedecrease in impairment charges of $31.8$42.4 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, as tenfour properties were deemed to be impaired during the year ended December 31, 2024, due to sales prices or revised cash flow estimates that were less than their respective carrying values,2025, resulting in impairment charges of $52.2$9.9 million, as compared to sixten properties that were deemed to be impaired during the year ended December 31, 2023,2024, resulting in impairment charges of $20.4$52.2 million. The increasedecrease in Real Estate segment expenses was partially offset by thean dispositionincrease in depreciation and amortization expense of seven$4.4 million and an increase in property operating expenses of $4.8 million driven by the addition of 20 properties subsequent to December 31, 2023.2024. Refer to “Same Store Analysis” below for a further discussion of net operating income at our “same store properties”.
Other income for our Real Estate segment primarily consists of gain on disposition of real estate, loss on extinguishment of debtestate and other income. The decrease in our Real Estate segment other income of $41.9 million$551,000 for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to the disposition of five properties resulting in a net gain of $1.5 million during the year ended December 31, 2025, compared to the disposition of seven properties resulting in a net gain of $1.9 million during the year ended December 31, 2024, compared to the disposition of 188 properties resulting in a net gain of $44.4 million during the year ended December 31, 2023.2024.
Our corporate revenues, which consist primarily of rental income from our condominium and rental units acquired via foreclosure, diddecreased not meaningfully change$319,000 during the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024, The Company disposed of 16 condominium units during the year ended December 31, 2025 and two units remained as of December 31, 2025.
Our corporate expenses consist primarily of general and administrative expenses, expense reimbursements to related parties, interest expense, net related to our credit facilities, and property operating expenses and impairment on our condominium and rental units acquired via foreclosure. The decrease in corporate expenses of $6.3$10.5 million during the year ended December 31, 20242025 as compared to the year ended December 31, 2023,2024, was partially due to a $5.6 million decrease inno impairment charges related to condominium units during the year ended December 31, 2024,2025, as compared to the$9.1 year ended December 31, 2023, and a decrease in interest expense, net of $4.3 million, driven by the pay down and termination of the credit agreement with JPMorgan Chase Bank, N.A. and PNC Bank, N.A. (the “CMFT Credit Facility”) and the paydown and termination of the variable rate debt assumed by the Company upon completing the January 2021 foreclosure of assets which previously secured the Company's mezzanine loans (the “Assumed Variable Rate Debt”)million during the year ended December 31, 2023.2024. The decrease was further driven by adecreases $3.4of $2.1 million decreaseand $537,000 in transaction-relatedproperty expensesoperating drivenexpense byand areal estate tax settlementexpense, respectively, related to the Company’sdisposition of 16 condominium units during the year ended December 31, 2023. In addition, we saw a decrease in property operating expenses of $1.9 million, primarily driven by decreased condominium-related legal expenses during the year ended December 31, 2024 as compared to the year ended December 31, 2023.2025. The decrease was partially offset by an increase in general and administrative expenses of $8.9$1.5 million, primarily in connection with restricted stock unit related expenses recorded during the year ended December 31, 20242025, as well as an increaseincreases in professional and escrow and trustee fees and a non-recurring increase in taxes.fees.
The increase in corporate other income of $911,000$1.2 million during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily driven by athe decreasedisposition of $4.416 condominium units resulting in a net gain of $6.6 million in loss on extinguishment of debt during the year ended December 31, 2024, as2025, compared to the year ended December 31, 2023, primarily in connection with the paydown and termination of the CMFT Credit Facility and the refinanced Assumed Variable Rate Debt. The increase was further driven by the disposition of 11 condominium units resulting in a net gain of $4.8 million during year ended December 31, 2024, compared to the disposition of 18 condominium units resulting in a net gain of $3.6 million during the year ended December 31, 2023.2024. The increase was partially offset by a decrease in other (expense) income, netincome of $4.7 million$736,000 primarily due to a decrease in interest income generated by decreased short-term liquid investments included in cash and cash equivalents on the consolidated balance sheets during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024.
The following table reconciles our Real Estate segment net income (loss) income,, calculated in accordance with GAAP, to net operating income (in thousands):
Non-same store property net operating income decreasedincreased $19.8$11.7 million during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The decreaseincrease was primarily due to the dispositionacquisition of seven20 properties, including two properties acquired through deeds-in-lieu of foreclosure, for an aggregate fair value at the time of acquisition of $209.1 million subsequent to December 31, 20232024, inpartially additionoffset toby the disposition of 188five properties duringfor thean yearaggregate endedgross sales price of $107.1 million subsequent to December 31, 2023.2024.
(2)Our distributions covered by cash flows for the year ended December 31, 2024 include cash flows from operating activities in excess of distributions from prior periods of $16.5 million and $35.4 million.million for the years ending December 31, 2025 and 2024, respectively. We have paid, and may continue to pay, some of our distributions from sources other than cash flows from operations, including proceeds from asset sales, proceeds from loan repayments, and borrowings. Distributions at any point in time may not reflect the current performance of our assets or our current operating cash flows.
During the year ended December 31, 2025, we received valid redemption requests under our share redemption program totaling approximately 179.5 million shares, of which we redeemed approximately 4.9 million shares as of December 31, 2025 for $25.8 million (at an average redemption price of $5.23 per share) and approximately 1.5 million shares subsequent to December 31, 2025 for $7.9 million (at an average redemption price of $5.22 per share). The remaining redemption requests relating to approximately 173.0 million shares went unfulfilled. During the year ended December 31, 2024, we received valid redemption requests under our share redemption program totaling approximately 151.9 million shares, of which we redeemed approximately 5.6 million shares as of December 31, 2024 for $33.9 million (at an average redemption price of $6.09 per share) and approximately 1.8 million shares subsequent to December 31, 2024 for $11.1 million (at an average redemption price of $6.09 per share). The remaining redemption requests relating to approximately 144.5 million shares went unfulfilled.
During the year ended December 31, 2024, we received valid redemption requests under our share redemption program totaling approximately 151.9 million shares, of which we redeemed approximately 5.6 million shares as of December 31, 2024 for $33.9 million (at an average redemption price of $6.09 per share) and approximately 1.8 million shares subsequent to December 31, 2024 for $11.1 million (at an average redemption price of $6.09 per share). The remaining redemption requests relating to approximately 144.5 million shares went unfulfilled. During the year ended December 31, 2023, we received valid redemption requests under our share redemption program totaling approximately 110.2 million shares, of which we redeemed approximately 5.2 million shares as of December 31, 2023 for $33.9 million (at an average redemption price of $6.57 per share) and approximately 1.7 million shares subsequent to December 31, 2023 for $11.0 million (at an average redemption price of $6.31 per share). The remaining redemption requests relating to approximately 103.3 million shares went unfulfilled.
(1)Variance driven by late quarter timing of CMBS sales and debt pay downs primarily in connection with the amended and restated Master Repurchase Agreement with Barclays Bank PLC (as described in further detail in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K).
(21)Variance driven by late quarter timing of CMBS sales and debt pay downs, primarily in connection with the Master Repurchase agreementAgreement with Wells Fargo Bank, N.A and the amended and restated Master Repurchase Agreement with Barclays Bank PLC (as described in further detail in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K).
(2)Variance driven by late quarter timing of the origination of six first mortgage loans funded, primarily in connection with the Master Repurchase Agreements with Wells Fargo and Citibank (as described in further detail in Note 10 — Repurchase Facilities, Notes Payable and Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K).
(2)Comprised of our unfunded loan commitments to provide additional CRE loan, corporate senior loan and liquid corporate senior loan financing as of December 31, 2024.2025. The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date or the final maturity date; however, we may be obligated to fund these commitments earlier than such date. This table does not include $33.9$60.3 million of unfunded commitments related to the NewPoint JV (as defined in Note 2 — Summary of Significant Accounting Policies — Investment in Unconsolidated Entities to the consolidated financial statements in this Annual Report on Form 10-K). In addition, the table does not include $1.2 million of unsettled liquid corporate senior loan acquisitions, which is included in cash and cash equivalents on the accompanying consolidated balance sheet.
Operating Activities. Net cash provided by operating activities decreased by $62.5$25.2 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The decrease was primarily due to a decrease in interest income of $85.7 million, driven by a net decrease in credit investments of $717.8$194.6 million,million andduring decreasedthe interestyear incomeended asDecember 31, 2025. The decrease in credit investments was a result of oura threenet decrease of $182.8 million in real estate-related securities and other, a net decrease of $106.0 million in first mortgage loans, partially related to the Company taking possession of the underlying assets of two first mortgage loans thatthrough weredeeds-in-lieu placedof on nonaccrual statusforeclosure, and werea pastnet due on their interest payments asdecrease of December$15.3 31,million 2024,in alongliquid withcorporate senior loans. The decrease in credit investments was partially offset by an increase in corporate senior loans of $109.5 million. The decrease was further driven by a decline in interest rates during the year ended December 31, 2025 as compared to the year ended December 31, 2024. The deceasechange was furtherpartially offset by an increase in rental and other property income, driven by the dispositionsnet acquisition of seven15 properties subsequent to December 31, 2023.2024. See “— Results of Operations” for a more complete discussion of the factors impacting our operating performance.
Investing Activities. For the year ended December 31, 2024,2025, net cash provided by investing activities increaseddecreased by $161.1$609.9 million, as compared to the year ended December 31, 2023.2024. The changedecrease was primarily due to a $200.9 million net investment in loans held-for-investment during the year ended December 31, 2025, as compared to $627.3 million ofin net proceeds from loans held-for-investment during the year ended December 31, 2024,2024. asThe compareddecrease towas partially offset by an increase in net proceeds received from the $342.4disposition of real estate-related securities and other of $97.9 million net investment in loans held-for-sale during the year ended December 31, 2023.2025, as compared to the year ended December 31, 2024. The changedecrease was further drivenoffset by $85.9$33.5 million ofin net proceeds fromon realthe estate-relatedinvestment securitiesin andunconsolidated otherentities during the year ended December 31, 2024,2025, as compared to thea $26.3$54.6 million net investment in realunconsolidated estate-related securities and otherentities during the year ended December 31, 2023.2024. TheIn changeaddition, the decrease was offset by aan decreaseincrease in net proceeds from real estate assets and condominium units of $892.3$30.6 million, as the Company disposed of seven properties and 11 condominium units during the year ended December 31, 2024,2025, as compared to 188 properties and 18 condominium units disposed of during the sameyear periodended inDecember 2023.31, 2024.
Financing Activities. For the year ended December 31, 2024,2025, net cash used in financing activities increaseddecreased by $257.9$714.6 million.million, as compared to the year ended December 31, 2024. The change was primarily due to a decrease in net repayments on the repurchase facilities, notes payable and credit facilities of $756.5$676.1 million during the year ended December 31, 2024,2025, as compared to net repayments on the repurchase facilities, notes payable and credit facilities of $505.8 million during the year ended December 31, 2023.2024. The change was further driven by a decrease in distributions to shareholders of $32.7 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Current Expected Credit Losses
•For collateral-dependent loans where foreclosure of the collateral is deemed probable, expected credit losses are measured as the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans where foreclosure is not considered probable, we apply a practical expedient to estimate expected losses based upon the difference between the collateral’s fair value (reduced by certain adjustments such as estimated costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. A loan is determined to be collateral-dependent if (i) the borrower or sponsor is experiencing financial difficulty, and (ii) repayment is expected to be provided through the sale of the underlying collateral. This assessment requires the use of significant judgment and is subject to uncertainty. In evaluating whether a borrower is experiencing financial difficulty, we consider various factors including, but not limited to, the sufficiency of the borrower’s operating cash flows to meet current and future debt service requirements, the borrower’s ability to refinance the loan, market liquidity conditions, and other circumstances that may affect the borrower’s ability to satisfy its contractual obligations under the loan agreement.
In connection with our acquisition of real estate assets,assets or after taking control of real assets through deeds-in-lieu of foreclosure, we allocate the purchase price to the tangible and intangible assets and liabilities acquired based on their respective relative fair values. Tangible assets consist of land, buildings, fixtures and tenant improvements. Intangible assets consist of above- and below-market lease values and the value of in-place leases. Our purchase price allocations are developed utilizing third-party appraisal reports, industry standards and management experience. The risks and uncertainties involved in applying the principles related to purchase price allocations include, but are not limited to, the following:
What changed in the latest 10-Q
Risk Factors
New heading “Risk Factor Summary”
New heading “Risks Related to Our Company”
New heading “Risks Related to Regulation”
New heading “Risks Related to Our Funds and our Fund Business”
New heading “Risks Associated with Credit Assets”
New heading “Risks Associated with Real Estate Assets”
New heading “Risks Associated with Debt Financing”
New heading “Risks Related to our Corporate Structure and our Common Stock”
New heading “U.S. Federal Income and Other Tax Risks”
New heading “Risks Related to Our Company”
New heading “Difficult market and political conditions may adversely affect our businesses in many ways, including by reducing the value or hampering the performance of our assets or those in our funds, managed accounts, and co-investment vehicles (individually, a “Fund” and collectively, the “Funds”) or reducing the ability of our Funds or us to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition.”
New heading “We are exposed to risks associated with changes in interest rates.”
New heading “Inflation has impacted and may in the future adversely affect our business, results of operations and financial condition of our businesses, our Funds and our Funds’ assets.”
New heading “Inflation and rising interest rates may adversely affect our financial condition and results of operations.”
New heading “Operational risks may disrupt our businesses, result in losses or limit our growth.”
New heading “Hedging strategies may adversely affect the returns on our cash flow and financial condition and Funds’ assets.”
New heading “Our strategies to manage risk may be ineffective.”
New heading “Our future success depends to a significant degree upon certain of our executive officers, senior professionals and key personnel. If we lose or are unable to attract and retain key personnel, our ability to achieve our financial and strategic objectives could be delayed or hindered.”
New heading “Growth of our businesses may place significant demands on our administrative, operational and financial resources.”
New heading “If we are unable to consummate or successfully integrate new businesses and strategies, acquisitions or joint ventures, we may not be able to implement our growth strategy successfully.”
New heading “Cybersecurity risks and cyber incidents may adversely affect our business in the event we or our transfer agent or any other party that provides us with essential services experiences cyber incidents.”
New heading “Our approach to artificial intelligence (“AI”) may not be successful and could adversely affect our business.”
New heading “If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results.”
New heading “Changes in accounting standards may adversely impact our financial condition and/or results of operations.”
New heading “The overturning of the Chevron doctrine could have an unfavorable impact on us.”
New heading “We may not be able to maintain sufficient insurance to cover us for potential litigation or other risks.”
New heading “Climate change and related transition and physical risks could adversely affect our operations and those of our portfolio companies and increase costs (including insurance costs).”
New heading “The long-term macroeconomic effects of the COVID-19 pandemic and any future pandemic or epidemic could have a material adverse impact on our financial performance and results of operations.”
New heading “Risks Related to Regulation”
New heading “Extensive regulation affects our activities, increases the cost of doing business and creates the potential for significant liabilities and penalties that could adversely affect our businesses and results of operations.”
New heading “Changes in relevant data protection laws could necessitate changes to the steps companies take for the purposes of complying with such laws and the way in which companies transfer personal data.”
New heading “Employee misconduct and failure to comply with applicable laws, obligations and standards could harm us by impairing our ability to attract and retain clients and subjecting us to significant legal liability, regulatory scrutiny and reputational harm.”
New heading “The publicly-traded and open-ended vehicles that we manage are subject to regulatory complexities that limit the way in which they do business and may subject them to a higher level of regulatory scrutiny.”
New heading “Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our businesses.”
New heading “Increased regulatory scrutiny and uncertainty with respect to expense allocation may expose us to additional risk.”
New heading “Increasing scrutiny from stakeholders and regulators with respect to sustainability matters could impact our businesses’ or our Funds’ portfolio companies’ reputation, the cost of our or their operations, or result in clients ceasing to allocate their capital to us, all of which could adversely affect our business and results of operations.”
New heading “Failure to comply with regulations related to financial crimes, fraud and other deceptive practices or other misconduct at our Funds’ portfolio companies, properties or projects could subject us to liability and reputational damage and also harm our businesses.”
New heading “Risks Related to Our Funds and our Funds Business”
New heading “The historical returns attributable to our Funds are not indicative of the future results of our Funds or of our future results or of any returns expected on an investment in our common stock.”
New heading “Valuation methodologies for certain assets can be subject to significant subjectivity, and our value of an asset may differ materially from the value ultimately realized.”
New heading “The valuation process for the portfolio holdings of our registered Funds that we manage may create a conflict of interest.”
New heading “Market values of debt instruments and publicly-traded securities that our Funds hold as assets may be volatile.”
New heading “Our Funds may be unable to deploy capital at a steady and consistent pace, which could have an adverse effect on our results of operations and future fundraising.”
New heading “Dependence on significant leverage by our Funds subjects us to volatility and contractions in the debt financing markets could adversely affect our ability to achieve attractive rates of return on those assets.”
New heading “We and certain of our Funds acquire assets that are high risk, illiquid or subject to restrictions on transfer and we may fail to realize any profits from these activities ever or for a considerable period of time or lose certain or all of the equity capital used to acquire the asset.”
New heading “Government policies regarding certain regulations, such as antitrust law, or restrictions on foreign ownership of certain of our Funds’ portfolio companies or assets can also make it more difficult for us to deploy capital in certain jurisdictions and limit our Funds’ exit opportunities.”
New heading “If we were to manage a Fund subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code, our businesses could be adversely affected if certain of our other Funds fail to satisfy an exception under the U.S. Department of Labor’s “plan assets” regulation.”
New heading “Contingent liabilities could harm Fund performance.”
New heading “Our failure to comply with asset guidelines set by our clients and/or clients could result in damage awards against us or a reduction in AOO, either of which would cause our earnings to decline and adversely affect our business.”
New heading “Clients in certain of our Funds with commitment-based structures may not satisfy their contractual obligation to fund capital calls when requested by us, which could adversely affect a Fund’s operations and performance.”
New heading “Certain of our Funds may hold assets and interests that we do not control, and some of these assets and interests may rank junior to preferred equity and debt in a company’s capital structure.”
New heading “We may need to pay “clawback” or “contingent repayment” obligations if and when they are triggered under the governing agreements with our Funds.”
New heading “We derive a substantial portion of our revenues from Funds pursuant to agreements that may be terminated.”
New heading “Clients in certain of our Funds, including our open-ended Funds, may redeem their interests in these Funds. Clients in many of our Funds have the right to remove the general partner of the Fund and to terminate the commitment period under certain circumstances. These events would lead to a decrease in our revenues, which could be substantial.”
New heading “Our Funds may be forced to dispose of assets at a disadvantageous time. Furthermore, we may have to waive management fees for certain of our Funds in certain circumstances.”
New heading “Our real estate Funds are subject to the risks inherent in the ownership and operation of real assets and the construction and development of real assets.”
New heading “Our Funds focused on assets in the power, infrastructure and energy sector are subject to significant market volatility and potential increased environmental risks and liabilities inherent in the ownership of real assets. As such, the performance of assets in the energy sector is subject to a high degree of business and market risk.”
New heading “The infrastructure assets of our Funds may expose them to increased risks and liabilities.”
New heading “Our credit Funds are subject to the risks inherent in the private credit industry.”
New heading “Our Funds depend in large part on our ability to raise capital from clients. If we were unable to raise such capital, we would be unable to collect management fees or deploy such capital into assets, which would materially reduce our revenues and cash flow and adversely affect our financial condition.”
New heading “Our failure to appropriately address conflicts of interest could damage our reputation and adversely affect our businesses”
New heading “Conflicts of interest may arise in our allocation of opportunities.”
New heading “The real assets management business is intensely competitive.”
New heading “Poor performance of our Funds, or a failure or slowdown in deployment, would cause a decline in our revenue and results of operations and could adversely affect our ability to raise capital for future Funds.”
New heading “We may not be able to maintain our current fee structure as a result of industry pressure from Fund clients to reduce fees, which could have an adverse effect on our profit margins and results of operations.”
New heading “A portion of our revenue, earnings and cash flow is variable, which may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause the price of shares of our common stock to decline.”
New heading “We are subject to risks in using custodians, counterparties, administrators and other agents.”
New heading “We may enter into new lines of business and expand into new management strategies, geographic markets, strategic partnerships and businesses, each of which may result in additional risks, expenses and uncertainties in our businesses.”
New heading “If we are unable to consummate or successfully integrate new businesses and strategies, acquisitions or joint ventures, we may not be able to implement our growth strategy successfully.”
New heading “Our financial support in respect of certain assets, or our inability to provide support, may cause our AOO, revenue and earnings to decline.”
New heading “We may be subject to litigation risks and may face liabilities and damage to our professional reputation.”
New heading “Events which harm our reputation or brand may impact our ability to attract and retain clients and raise new capital.”
New heading “Risks Associated with Credit Assets”
New heading “We and certain of our Funds are subject to risks related to our mortgage, bridge and mezzanine loans which could adversely affect our return on our loan assets.”
New heading “We and certain of our Funds are subject to risks relating to real estate-related securities, including CMBS.”
New heading “Mezzanine loans, preferred equity and other assets that are subordinated or otherwise junior in an issuer’s capital structure involve greater risks of loss than first mortgage loans.”
New heading “Bridge loans involve a greater risk of loss than traditional mortgage loans on stabilized properties.”
New heading “Loans expose us or certain of our Funds to risks associated with debt-oriented real estate interests generally.”
New heading “Commercial real estate-related assets that are secured, directly or indirectly, by real property are subject to delinquency, foreclosure and loss, which could result in losses to us. We may find it necessary or desirable to foreclose on such loans or CMBS, and the foreclosure process may be lengthy and expensive.”
New heading “Our control over certain loans and assets may be limited.”
New heading “Secured debt agreements impose, and additional lending facilities may impose, restrictive covenants, which may restrict our flexibility for ourself or on behalf of our Funds to determine our operating policies and strategy.”
New heading “We or certain of our Funds are subject to additional risks associated with assets in the form of loan participation interests.”
New heading “If our the loans do not comply with applicable laws, we may be subject to penalties, which could materially and adversely affect us.”
New heading “Assets in non-conforming and non-investment grade rated loans or securities involve increased risk of loss.”
New heading “Any credit ratings assigned to our credit assets are subject to ongoing evaluations and revisions and we cannot assure you that those ratings will not be downgraded.”
New heading “Commercial construction loans may involve increased lending risks.”
New heading “Risks Associated with Real Estate Assets”
New heading “Adverse economic, regulatory and geographic conditions that have an impact on the real estate market in general may prevent us, our businesses’ or our Funds from being profitable or from realizing growth in the value of real estate properties, and could have a significant negative impact on us.”
New heading “The real estate asset portfolios of us and certain of our Funds are dependent on single-tenant leases for a substantial portion of the revenue derived from this portfolio and, accordingly, if we are unable to renew leases, lease vacant space, including vacant space resulting from tenant defaults, or re-lease space as leases expire on favorable terms or at all, our financial condition could be adversely affected.”
New heading “We may become subject to geographic and industry concentrations that make us more susceptible to adverse events with respect to certain geographic areas or industries.”
New heading “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 dividends to our stockholders.”
New heading “If a sale-leaseback transaction is re-characterized in a tenant’s bankruptcy proceeding, our financial condition could be adversely affected.”
New heading “Interest-only indebtedness may increase our risk of default and ultimately may reduce our Funds available for dividends to our stockholders.”
New heading “We or certain of our Funds have assumed, and in the future may assume, liabilities in connection with property acquisitions, including unknown liabilities.”
New heading “Challenging economic conditions could adversely affect vacancy rates, which could have an adverse impact on us or the applicable Fund and could adversely affect our financial condition, results of operations or cash flows.”
New heading “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.”
New heading “We may be unable to secure funds for future leasing commissions, tenant improvements or capital needs, which could adversely impact our ability to pay cash distributions to our stockholders.”
New heading “Properties may be subject to impairment charges.”
New heading “We may have obtained only limited warranties when any given property was purchased and, as a result, have limited recourse in the event our due diligence did not identify issues that lower the value of the property.”
New heading “We may be unable to sell a property if or when we decide to do so, including as a result of uncertain market conditions.”
New heading “Properties where the underlying tenant has a below investment-grade credit rating, as determined by major credit rating agencies, or has an unrated tenant may have a greater risk of default.”
New heading “Increased operating expenses could reduce cash flows from operations and funds available to acquire properties or make distributions.”
New heading “Real estate-related taxes may increase, and if these increases are not passed on to tenants, income to us or the applicable Fund will be reduced.”
New heading “Covenants, conditions and restrictions may restrict our ability to operate a property.”
New heading “Our operating results may be negatively affected by potential development and construction delays and the resultant increased costs and risks.”
New heading “Competition with third parties in acquiring, leasing or selling properties and other assets may impact our profitability or that of the applicable Fund and the return on the asset.”
New heading “Our properties face competition that may affect tenants’ ability to pay rent.”
New heading “Participation in a co-ownership arrangement entails risks that otherwise may not be present in other real estate assets.”
New heading “We are subject to risks that affect the retail real estate environment generally.”
New heading “Downturns in the retail industry likely will have a direct adverse impact on our revenues and cash flow.”
New heading “If we sell properties by providing financing to purchasers, defaults by the purchasers would adversely affect cash flows.”
New heading “Net leases may require us to pay property-related expenses that are not the obligations of our tenants.”
New heading “Our real estate business is subject to risks from climate change.”
New heading “Compliance with the Americans with Disabilities Act of 1990, as amended, and fire, safety and other regulations may require us to make unanticipated expenditures that could significantly reduce the cash available for dividends on our common stock.”
New heading “We have incurred mortgage indebtedness and other borrowings, which may increase business risks.”
New heading “The real assets that we or our Funds own may increase the risk of liability under environmental laws.”
New heading “Risks Associated with Debt Financing”
New heading “We and certain of our Funds may acquire interests in companies that are highly leveraged, which may increase the risk of loss associated with those assets.”
New heading “High interest rates may make it difficult for us to finance or refinance assets, which could reduce the amount of cash dividends we can make.”
New heading “Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay dividends to our stockholders.”
New heading “We may not be able to generate sufficient cash flows to meet our debt service obligations.”
New heading “Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make dividends to our stockholders.”
New heading “Risks Related to our Corporate Structure and our Common Stock”
New heading “There is no public trading market for our common stock, and there may never be one.”
New heading “Our stockholders are limited in their ability to sell their shares pursuant to our share redemption program and may have to hold their shares for an indefinite period of time.”
New heading “Our published estimated per share value of common stock is an estimate as of a given point in time and likely will not represent the amount of net proceeds that would result if we were liquidated or dissolved or completed a merger or other sale.”
New heading “It may be difficult to accurately reflect material events that may impact the estimated value per share of our common stock between valuations and, accordingly, we may issue shares in our DRIP or redeem shares at too high or too low of a price.”
New heading “Our ability to pay dividends to the holders of our common stock may be limited by our holding company structure, applicable provisions of Maryland law and contractual restrictions or obligations.”
New heading “Due to the percentage of voting power concentrated in our Special Voting Preferred Shares, holders of our shares of common stock will generally have no influence over matters on which our stockholders vote and limited ability to influence decisions regarding our business.”
New heading “CMGH is entitled to a potential earnout issuance of additional CMFH Class A LP Units and Special Voting Preferred Shares based on the achievement of certain financial metrics over an earnout period, and the issuance of such securities would dilute the economic ownership and voting power of the holders of shares of common stock.”
New heading “Potential conflicts of interest may arise among CMGH and its controlling persons, on the one hand, and the holders of our common stock, on the other hand.”
New heading “Our charter includes a provision that may discourage a person, including a stockholder, from launching a tender offer for our shares.”
New heading “Our rights and the rights of our stockholders to recover claims against our officers and directors are limited, which could reduce our stockholders’ and our recovery against them if they cause us to incur losses.”
New heading “Our stockholders’ interest in us will be diluted if we issue additional shares.”
New heading “U.S. Federal Income and Other Tax Risks”
New heading “If a stockholder that is an employee benefit plan, individual retirement account (“IRA”), annuity described in Sections 403(a) or (b) of the Code, Archer Medical Savings Account, health savings account, Coverdell education savings account, or other arrangement that is subject to the Employee Retirement Income Securities Act (“ERISA”) or Section 4975 of the Code (referred to generally as “Benefit Plans and IRAs”) fails to meet the fiduciary and other standards under ERISA or the Code as a result of an investment in shares of our common stock, such stockholder could be subject to civil and criminal, if the failure is willful, penalties.”
New heading “Specific rules apply to foreign, governmental and church plans.”
New heading “Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities may adversely affect our effective tax rate, tax liability and financial condition and results.”
New heading “Applicable U.S. and foreign tax law, regulations, or treaties, and changes in such tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely affect our effective tax rate, tax liability, financial condition and results, ability to raise funds from certain foreign clients, increase our compliance or withholding tax costs and conflict with our contractual obligations.”
New heading “Our transition from taxation as a REIT to taxation as a corporation will increase our tax liability and may reduce our earnings, cash flow and the amount of cash available for dividends to our stockholders.”
New heading “We may be unable to realize all or a portion of our deferred tax assets or other anticipated tax benefits, which could increase our tax expense and adversely affect our financial condition and results of operations.”
New heading “Certain Non-U.S. persons may be subject to U.S. federal income tax on gain realized on the taxable disposition of our common stock.”
New heading “We may incur additional tax liabilities if we failed to qualify as a REIT for any taxable year before we ceased to qualify as a REIT.”
New heading “We will be required to pay the TRA Recipients for most of the benefits relating to our use of attributes we receive from exchanges of CMFH Class A LP Units and related transactions. In certain circumstances, payments to the TRA Recipients may be accelerated and/or could significantly exceed the actual tax benefits we realize.”
New heading “Tax consequences to the direct and indirect holders of CMFH Class A LP Units or to general partners in our Funds may give rise to conflicts of interests.”
New heading “There may be potential conflicts in the tax treatment of performance allocations.”
New heading “Limitations on the amount of interest expense that we may deduct could materially increase our tax liability and negatively affect an investment in our common stock.”
Largest changes
“Global financial markets have experienced heightened volatility in recent periods, including as a result of economic and political events in or affecting the world’s major economies, such as the ongoing war between Russia and Ukraine and conflicts in the Middle East. Sanctions imposed by the U.S. and other countries, including on Iran and in connection with hostilities between Russia and Ukraine and the tensions between China and Taiwan, have caused additional financial market volatility and affected the global economy. …”see in full comparison
“Certain of our or our Funds’ tenants may not be rated or do not have an investment-grade credit rating from a major ratings agency or are not affiliates of companies having an investment-grade credit rating. Properties with such tenants may have a greater risk of default and bankruptcy than properties leased exclusively to investment-grade tenants. …”see in full comparison
“Our real estate assets have historically included retail real estate. As such, we and certain of our Funds are subject to certain risks that can affect the ability of our retail properties to generate sufficient revenue to meet operating and other expenses, including debt service and to make capital expenditures. We face continuing challenges because of changing consumer preferences and because the conditions in the economy affect employment growth and cause fluctuations and variations in retail sales and in business and consumer confidence and consumer spending on retail goods. …”see in full comparison
“We and certain of our Funds have acquired debt instruments relating to real estate-related assets. Such assets are subject to the risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and interests. …”see in full comparison
“As we have a significant number of public pension plans that are partners and/or co-investors in or with our Funds and/or portfolio companies, these rules could impose significant economic sanctions on our businesses if we or one of the other persons covered by the rules make any such contribution or payment, whether or not material or with an intent to secure a commitment from a public pension plan. …”see in full comparison
“As fiduciaries and stewards of our client’s capital, we value and depend on the trust they place in us. Reputation is a significant factor that increases our competitive risk. …”see in full comparison
Full comparison: every changed paragraph (587)
Risk Factor Summary
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face, and stockholders should carefully consider the following summary, together with the full risk factors contained below in this “Risk Factors” section and all the other information included in this Quarterly Report on Form 10-Q, in evaluating the Company and our business. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected, and stockholders may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Risks Related to Our Company
•Market and political conditions, interest rates and inflation may reduce asset values, limit capital raising or deployment, and make hedging strategies ineffective or reduce returns.
•Operational, cybersecurity, vendor and third-party service risks, and artificial intelligence use may disrupt our businesses, cause losses or limit growth.
•Loss of key personnel, unmanaged growth, acquisitions or joint ventures, weak internal controls, or accounting changes could impair operations and financial reporting.
•Legal and regulatory changes, insurance limits, climate change and pandemics could disrupt operations, increase costs and harm financial performance.
Risks Related to Regulation
•Extensive regulation and employee misconduct or noncompliance may increase costs and expose us to liability, penalties, regulatory scrutiny and reputational harm.
•Publicly traded and open-ended vehicles face regulatory complexities that may limit their activities and increase scrutiny.
Risks Related to Our Funds and our Fund Business
•Historical Fund returns may not continue; asset values, deployment pace, leverage, illiquidity, fundraising challenges and conflicts could reduce results, revenues and cash flow.
•Regulatory limits on Fund assets, contingent liabilities, client-asset rules, unfunded capital calls and noncontrolled holdings could restrict assets, harm performance and reduce AOO.
•Real estate, power, infrastructure, energy and credit Funds face market, operational, environmental and industry-specific risks.
•Revenue variability, reliance on custodians, counterparties and other agents, new businesses and litigation could harm results, operations and our professional reputation.
Risks Associated with Credit Assets
•Mortgage, bridge, mezzanine, construction, CMBS and other credit assets face delinquency, foreclosure, default and loss; limited control and restrictive agreements may magnify losses.
•Credit-rating downgrades or withdrawals could reduce asset values and cause losses.
Risks Associated with Real Estate Assets
•Economic, regulatory and geographic conditions, tenant bankruptcies, vacancies, concentration, uninsured losses, impairments and property limitations could reduce cash flow, profitability and values.
•Debt, liabilities, expenses, taxes, restrictions, development delays, competition, co-ownership, retail exposure, climate change and legal requirements could increase costs, defaults and liabilities and reduce distributions.
Risks Associated with Debt Financing
•Leverage, mortgage debt and other borrowings increase loss and default risk; high or rising interest rates may hinder financing, increase payments and reduce dividends.
•Insufficient cash flow to service debt and lender covenants could limit dividends.
Risks Related to our Corporate Structure and our Common Stock
•No public trading market, limited redemptions, uncertain per-share values, and holding-company, Maryland-law or contractual restrictions could limit stockholder liquidity and dividends.
•CMGH voting power, potential earnout and conflicts could dilute common stockholders; charter provisions, limited claims and future issuances could further restrict influence or dilute interests.
U.S. Federal Income and Other Tax Risks
•Benefit Plans and IRAs may trigger penalties or distribution limits; non-U.S. persons may owe U.S. tax on gains if we are a U.S. real property holding corporation.
•Tax-law changes, deduction limits, deferred tax assets, our REIT-to-corporate transition and prior REIT qualification issues could increase tax liability and reduce earnings, cash flow and dividends.
•Tax Receivable Agreement payments could accelerate or exceed actual benefits; unit exchanges, performance allocations and tax-law changes could create conflicts or liabilities.
Risks Related to Our Company
Difficult market and political conditions may adversely affect our businesses in many ways, including by reducing the value or hampering the performance of our assets or those in our funds, managed accounts, and co-investment vehicles (individually, a “Fund” and collectively, the “Funds”) or reducing the ability of our Funds or us to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition.
Our businesses are materially affected by conditions in the global financial markets and economic and political conditions throughout the world that are outside our control. These conditions may affect the value and liquidity of assets, and we may not be able to or may choose not to manage our exposure to these conditions. This could in turn materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition.
Global financial markets have experienced heightened volatility in recent periods, including as a result of economic and political events in or affecting the world’s major economies, such as the ongoing war between Russia and Ukraine and conflicts in the Middle East. Sanctions imposed by the U.S. and other countries, including on Iran and in connection with hostilities between Russia and Ukraine and the tensions between China and Taiwan, have caused additional financial market volatility and affected the global economy. Concerns over future increases in inflation, economic recession, as well as interest rate volatility and fluctuations in oil and gas prices resulting from global production and demand levels, as well as geopolitical tension, have exacerbated market volatility. Market volatility has been further exacerbated by social unrest, changes regarding immigration and work permit policies and other political and security concerns both in the U.S. and across various international regions. Because of interrelationships within the global financial markets, if these issues do not abate, worsen or spread, our businesses may be adversely affected.
Changes in trade policies, including the imposition of new tariffs or increases in existing tariffs between the U.S., Mexico, Canada, China or other countries, or reactionary measures in response thereto, including retaliatory tariffs, legal challenges, or currency manipulation, could adversely affect the market conditions in which we operate. These factors may affect the value of our or our Funds’ assets and the level and volatility of credit and securities prices, and we, our Funds and our Funds’ portfolio assets may not be able to successfully manage our exposure to these conditions.
In addition, numerous structural dynamics and persistent market trends have exacerbated volatility and market uncertainty. Concerns over significant volatility in the commodities markets, sluggish economic expansion in foreign economies, including continued concerns over growth prospects in China and emerging markets, growing debt loads for certain countries, uncertainty about the consequences of the U.S. and other governments withdrawing monetary stimulus measures, government agency closures, prolonged government shutdowns and speculation about a possible recession all highlight the fact that economic conditions remain unpredictable and volatile. U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns or a recession in the U.S. In recent periods, geopolitical tensions, including between the U.S. and China and including in the Middle East, have escalated. Further escalation of such tensions and the related imposition of sanctions or other trade barriers may negatively impact the rate of global growth. Moreover, there is a risk of both sector-specific and broad-based volatility, corrections and/or downturns in the commodities, equity, credit and other markets. Any of the foregoing could have a significant impact on the markets in which we operate and a material adverse impact on our business prospects and financial condition. Further, while weak economic environments have often provided attractive opportunities and strong relative asset performance, we tend to realize value from our assets in times of economic expansion, when opportunities to sell may be greater. Thus, we depend on the cyclicality of the market to sustain our businesses and generate attractive risk-adjusted returns over extended periods.
Conditions in the global financial markets and the global economy may result in adverse consequences for us and our businesses, any of which could adversely affect our assets or the businesses of our Funds, restrict our or such Funds’ activities, impede our or such Funds’ ability to effectively achieve their objectives and result in lower returns than we anticipated at the time certain of our assets were acquired. More specifically, these economic conditions could adversely affect our operating results by causing:
•decreases in the market value of assets held by us or some of our Funds;
•increases in vacancies, tenant defaults and bankruptcies and other adverse developments at real estate properties;
•increased illiquidity in the markets for our assets or those of our Funds, which could adversely affect transaction volumes and the pace of realization on assets or otherwise restrict the ability to realize value from assets, thereby adversely affecting the ability to generate performance or other income;
•our AOO to decrease, thereby lowering a portion of our management fees payable by our Funds to the extent they are based on market values;
•adverse changes in the value or operating performance of certain assets, including investments in other owner-operators of real assets, which are exposed to real-asset market conditions in the jurisdictions in which such other owner-operators operate; and
•increases in costs or reduced availability of financial instruments that finance us and our Funds.
We are exposed to risks associated with changes in interest rates.
General interest rate fluctuations may have a substantial negative impact on our and our Funds’ assets and opportunities and, accordingly, may have a material adverse effect on our objectives and our results of operations. Because we, our Funds or our Funds’ assets borrow money and may issue debt securities or preferred stock to acquire assets, results of operations are dependent upon the difference between the rate at which funds are borrowed or the related instruments pay interest or dividends and the rate at which such funds are deployed. If market rates decrease, we may earn less interest income from loans made during such lower rate environment. We have in the past and from time to time may in the future enter into certain hedging transactions, such as interest rate swap agreements to mitigate our exposure to adverse fluctuations in interest rates. There can be no assurance that a significant change in market interest rates will not have a material adverse effect on our results of operations.
Inflation has impacted and may in the future adversely affect our business, results of operations and financial condition of our businesses, our Funds and our Funds’ assets.
Certain of our businesses, our Funds and our Funds’ assets are in industries that have been impacted by inflation. Although U.S. inflation rates have fluctuated in recent periods, they remain well above the historic levels over the past several decades. Ongoing inflationary pressures have increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and the results of our and our Funds’ assets. If increases in the costs of operations cannot be passed along to customers or other end-users, it could adversely affect our operating results. In addition, any projected future decreases in the operating results of our or our Funds’ assets could adversely impact the fair value of those assets. Any decreases in the fair value of our or our Fund’s assets could result in future realized or unrealized losses. For further information on the potential impact of inflation on our businesses, see “—Risks Related to Our Company—Inflation and rising interest rates may adversely affect our financial condition and results of operations” and “—Risks Associated with Debt Financing—Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay dividends to our stockholders.”
Inflation and rising interest rates may adversely affect our financial condition and results of operations.
Since we or our Funds have incurred leverage to acquire assets, our income depends, in part, upon the difference between the rate at which funds are borrowed and the rate at which those funds are deployed. Inflation remained high in 2025 and through the first six months of 2026. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised the federal funds rate, which led to increases in interest rates in the credit market. Although the Federal Reserve began lowering the federal funds rate in the second half of 2024 and in the latter part of 2025, the federal funds rate remains well above pre-2022 levels, and any increase in or continued elevated inflation may cause the Federal Reserve to maintain the federal funds rate at existing levels or again raise the rate. Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates. In a rising interest rate environment, any leverage that we or a Fund incur may bear a higher interest rate than may currently be available. There may not, however, be a corresponding increase in revenues. Any reduction in the rate of return on assets could adversely impact our income, reducing the ability to service the interest obligations on, and to repay the principal of, indebtedness.
An increase in inflation could have an adverse impact on our floating rate mortgages, credit facilities and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue. Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ revenues and, in turn, their demand for space and future extensions of their leases and by extension, have an adverse impact on our borrowers. For further information on the potential impact of inflation on our businesses, see “—Risks Related to Our Company—Inflation has impacted and may in the future adversely affect our business, results of operations and financial condition of our businesses, our Funds and our Funds’ assets” and “—Risks Associated with Debt Financing—Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay dividends to our stockholders.”
Operational risks may disrupt our businesses, result in losses or limit our growth.
We operate in a business that is highly dependent on information systems and technology. Our information systems and technology may not continue to be able to accommodate our growth, and the cost of maintaining our information systems and technology may increase from its current level, including due to existing and anticipated regulations. Such a failure to accommodate growth, or an increase in costs related to our information systems and technology, could have a material adverse effect on our business and results of operations.
Furthermore, while we have offices and personnel located worldwide, a substantial portion of our personnel are located in Los Angeles. An earthquake, wildfire or other disaster or a disruption in the infrastructure that supports our businesses, including a disruption involving electronic communications, our internal human resources systems or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters or other office locations, could materially disrupt our operations and adversely affect our business and financial results. Although we have disaster recovery programs in place, these may not be sufficient to mitigate the harm that may result from such a disaster or disruption. In addition, insurance and other safeguards might only partially reimburse us for our losses, if at all We also rely on a concentrated set of vendors and third-party service providers for certain aspects of our businesses, including for certain information systems, technology and administration of our Funds and compliance matters, such as accounting, client services, operations, banking, software development and maintenance and legal and regulatory compliance. Our ability to conduct our business may be adversely affected if one or more key vendors or third-party service providers fails to meet our expectations or if we otherwise become unable to procure their services on commercially reasonable terms. In addition, certain vendors and third-party service providers are vulnerable to disruption from severe weather events, natural disasters, public health crises, cybersecurity incidents or similar services and other disruptions, and may be subject to financial distress, regulatory sanctions, labor shortages, system failures or other operational issues. Operational risks could increase as third-party service providers increasingly offer mobile and cloud-based software services rather than software services that can be operated within our own data centers, as certain aspects of the security of such technologies may be complex, unpredictable or beyond our control, and any failure by mobile technology or cloud service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt our operations and result in misappropriation, corruption or loss of confidential, proprietary or personal information. In addition, our counterparties’ information systems, technology or accounts may be the target of cyber-attacks. See “—Risks Related to Our Company—Cybersecurity risks and cyber incidents may adversely affect our business in the event we or our transfer agent or any other party that provides us with essential services experiences cyber incidents.” Any interruption or deterioration in the performance of these third parties or the service providers of our counterparties or failures or vulnerabilities of their respective information systems or technology could impair the quality of our businesses’ operations, require us to transition to alternative providers, which could involve significant time, costs and operational risks, and could impact our reputation, adversely affect our businesses and limit our ability to grow.
Finally, there continues to be significant evolution and developments in the use of artificial intelligence and machine learning technologies, including generative artificial intelligence and large language models. We cannot fully determine the impact of such evolving technology to our business at this time.
Hedging strategies may adversely affect the returns on our cash flow and financial condition and Funds’ assets.
When managing our exposure to market risks, we may (on our own behalf or on behalf of our Funds) from time to time use forward contracts, options, swaps, caps, collars, floors, foreign currency forward contracts, currency swap agreements, currency option contracts, among other strategies. Currency fluctuations in particular can have a substantial effect on our cash flow and financial condition. The success of any hedging or other derivative transactions generally will depend on our ability to correctly predict market or foreign exchange changes, the degree of correlation between price movements of a derivative instrument and the position being hedged, the creditworthiness of the counterparty and other factors. As a result, while we may enter into a transaction to reduce our exposure to market or foreign exchange risks, the transaction may result in poorer overall performance than if it had not been executed. Such transactions may also limit the opportunity for gain if the value of a hedged position increases.
While such hedging arrangements may reduce certain risks, such arrangements themselves may entail certain other risks. These arrangements may require the posting of cash collateral at a time when we or a Fund has insufficient cash or illiquid assets such that the posting of the cash is either impossible or requires the sale of assets at prices that do not reflect their underlying value. Moreover, these hedging arrangements may generate significant transaction costs, including potential tax costs, that reduce the returns generated.
Our strategies to manage risk may be ineffective.
Our strategies to manage risk may be ineffective. Such risks include market risk, liquidity risk, operational risk and reputational risk. Management of these risks can be very complex. These strategies may fail under some circumstances, particularly if we are confronted with risks that we have underestimated or not identified, including those related to difficult market or geopolitical conditions.
Management's Discussion & Analysis (MD&A)
New heading “Asset Management”
New heading “Strategic Holdings”
New heading “The Transactions”
New heading “Continuing Transaction-Related Arrangements”
New heading “Business Environment”
New heading “Key Business Metrics”
New heading “Assets Owned and Operated (AOO):”
New heading “Key Segment and Non-GAAP Performance Measures”
New heading “Asset Management Segment Earnings”
New heading “Strategic Holdings Segment Earnings”
New heading “Fee-Related Revenues”
New heading “Fee-Related Earnings”
New heading “Reconciliation of Non-GAAP Financial Measures”
New heading “Summary Segment Results”
New heading “Asset Management Segment Results”
New heading “Fee-related earnings”
New heading “Fee-related revenues”
New heading “Strategic Holdings Segment Results”
New heading “Non-Segment Items”
New heading “Liquidity Needs”
New heading “Asset Management Segment Liquidity”
New heading “Strategic Holdings Segment Liquidity and Financing”
New heading “Corporate Financing Arrangements”
New heading “Dividends, Redemptions and Distribution Reinvestment Plan”
New heading “Transaction Accounting and Valuation of Acquired Assets and Liabilities”
New heading “Fair Value Measurement of Investments and Earnout Liability”
New heading “Revenue Recognition”
New heading “Recently Issued Accounting Pronouncements”
Removed heading “Macroeconomic Environment”
Removed heading “Operating Highlights and Key Performance Indicators”
Removed heading “Activity from January 1, 2026 through March 31, 2026”
Removed heading “Portfolio Information”
Removed heading “Credit Portfolio Information”
Removed heading “Real Estate Portfolio Information”
Removed heading “Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025”
Removed heading “Net Interest Income (amounts in thousands):”
Removed heading “Real Estate Segment”
Removed heading “Corporate and Other”
Removed heading “Same Store Analysis”
Removed heading “Comparison of the Three Months Ended March 31, 2026 and 2025”
Removed heading “Share Redemptions”
Removed heading “Variance between Average and Quarter-End Repurchase Facility Borrowings Outstanding”
Removed heading “Capital Resources”
Removed heading “Election as a REIT”
Removed heading “Conflicts of Interest”
Largest changes
“Our results of operations are influenced by the timing of acquisitions and the operating performance of our real estate assets. We review our stabilized operating results, measured by net operating income, from properties that we owned for the entirety of both the current and prior year reporting periods, referred to as “same store” properties, and we believe that the presentation of operating results for same store properties provides useful information to stockholders. Net operating income is a supplemental non-GAAP financial measure of a real estate company’s operating performance. …”see in full comparison
“The three months ended March 31, 2026 have been characterized by a mix of positive and challenging developments leading to continued volatility in global markets. Investor concerns over inflation, continued high interest rates, slowing economic growth, uncertainty around the impacts of imposed tariffs, political and regulatory uncertainty and geopolitical conditions have persisted.”see in full comparison
“Strategic Holdings Segment Liquidity and Financing”see in full comparison
“Our operating results and cash flows are primarily influenced by interest income from our credit investments, rental and other property income from our commercial properties, interest expense on our indebtedness and credit investments and other operating expenses. In general, our business model is such that rising interest rates will correlate to increases in our net income, while declining interest rates will correlate to decreases in our net income. …”see in full comparison
“•We have substantial indebtedness, which may affect our ability to pay distributions and expose us to interest rate fluctuation risk and the risk of default under our debt obligations.”see in full comparison
Full comparison: every changed paragraph (282)
The following discussion and analysis of the financial condition and results of operations of CIM Group, Inc. (the “Company”) should be read together with the unaudited condensed combined and consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q is the first quarterly report following the completion of the Transactions on June 24, 2026, following which the registrant changed its name from CIM Real Estate Finance Trust, Inc. (“CMFT”) to CIM Group, Inc. Capitalized terms used herein, but not otherwise defined, shall have the meanings ascribed to those terms in “Item 1 - Financial Statements,” including the notes to the condensed combined and consolidated financial statements contained therein, in this “Part I - Financial Information” of this Quarterly Report on Form 10-Q.
For periods presented prior to the closing of the Transactions, the historical financial information reflects the historical activity of the accounting acquirer, consisting of the combined operations of the Contributed Entities, and excludes the historical activity of CMFT prior to the Transactions. The internal transaction analysis concluded that, following the reverse acquisition, reports filed after closing should present comparative historical periods as if the accounting acquirer were the continuing reporting entity.
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to CIM Group, Inc. and its consolidated subsidiaries. References in this Quarterly Report on Form 10-Q to our “clients” may include our partners, co-investors, stockholders, advisory clients, funds, managed accounts, and co-investment vehicles, as well as borrowers, tenants, and others to whom we provide services as part of our businesses of directly managing real estate, infrastructure, and credit.
The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. Certain risks may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a complete discussion of such risk factors, see Item 1A — Risk Factors of this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in “Part I — Financial Information” of this Quarterly Report on Form 10-Q, including the notes to the condensed consolidated financial statements contained therein, and the terms “we,” “us,” “our” and the “Company” refer to CIM Real Estate Finance Trust, Inc.
This Quarterly Report on Form 10-Q includes “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that reflect our expectations and projections about our future results, performance, prospects and opportunities. We have attempted to identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” or similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, those discussed below. In addition, these risks and uncertainties include those associated with general economic, market and other conditions. We intend for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or new information, future events or otherwise, except as may be required to satisfy our obligations under federal securities law. The forward-looking statements should be read in light of the risk factors identified in “Part II - Other Information, Item 1A — Risk Factors” of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025.10-Q.
The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from those presented in our forward-looking statements:
•We are subject to risks associated with bankruptcies or insolvencies of our borrowers and tenants and from borrower or tenant defaults generally.
•Our credit and real estate investments subject us to domestic and international political, economic, capital markets and other conditions and events, including ongoing geopolitical tensions in the Middle East.
•We are subject to fluctuations in interest rates which could reduce our ability to generate income on our credit investments.
•We are subject to risks associated with global trade disruption, significant introduction of trade barriers and bilateral trade frictions, including due to tariffs and other changes to trade policy in the U.S. and other jurisdictions, together with any downturns in the global economy resulting therefrom.
•We are subject to an increase in inflation that could increase our credit and real estate portfolio related costs at a higher rate than our rental income and other revenue and adversely impact demand for rental space and future extensions of our tenants’ leases.
•We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as significant disruptions of CIM Group’s information technology (“IT”) networks and related systems.
•We are subject to competition from entities engaged in lending which may impact the availability of origination and acquisition opportunities acceptable to us.
•We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.
•We are subject to risks associated with tenant, geographic and industry concentrations with respect to our investments and properties.
•Our properties, intangible assets and other assets, as well as the property securing our loans or other investments, may be subject to impairment charges.
•We could be subject to unexpected costs or unexpected liabilities that may arise from dispositions.
•We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties and we may suffer delays or be unable to acquire, dispose of, or lease properties on advantageous terms.
•We have substantial indebtedness, which may affect our ability to pay distributions and expose us to interest rate fluctuation risk and the risk of default under our debt obligations.
•We are subject to risks associated with the incurrence of additional secured or unsecured debt.
•We may not be able to maintain profitability.
•We may not generate cash flows sufficient to pay our distributions to stockholders or meet our debt service obligations.
•Our continued compliance with debt covenants depends on many factors and could be impacted by current or future economic conditions.
•We may be affected by risks resulting from losses in excess of insured limits.
•We may fail to remain qualified as a REIT for U.S. federal income tax purposes or revoke our REIT election.
•We could be subject to a material tax liability if our sales of properties are treated as prohibited transactions.
•We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability or reduce our operating flexibility.
•We may be unable to list our shares on a national securities exchange in a particular timeframe or at all.
•If we, our operating partnership and any other subsidiaries do not maintain exemptions from registration under the Investment Company Act of 1940, as amended, we will be subject to significant regulations and restrictions on our business and investments, which could materially and adversely impact us.
Definitions
We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings:
The phrase “annualized rental income” refers to the straight-line rental revenue under our leases on operating properties owned as of the respective reporting date, which includes the effect of rent escalations and any tenant concessions, such as free rent, and excludes any contingent rent, such as percentage rent. Management uses annualized rental income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized rental income is not indicative of future performance.
Under a “net lease,” the tenant occupying the leased property (usually as a single tenant) does so in much the same manner as if the tenant were the owner of the property. The tenant generally agrees that it will either have no ability or only limited ability to terminate the lease or abate rent prior to the expiration of the term of the lease as a result of real estate driven events such as casualty, condemnation or failure by the landlord to fulfill its obligations under the lease. There are various forms of net leases, most typically classified as either triple-net or double-net. Triple-net leases typically require the tenant to pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs, including roof, structure and parking lot). Double-net leases typically hold the landlord responsible for the capital expenditures for the roof and structure, while the tenant is responsible for all lease payments and remaining operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance).
Our Business
On June 24, 2026 (the “Transaction Date”), the Company completed the Transactions pursuant to which the real assets management business and portfolio of investments conducted through the Contributed Entities were acquired by CMFT to form the combined Company. For accounting purposes, the Transactions are treated as a reverse acquisition in which the accounting acquirer consists of the Contributed Entities and the historical financial statements presented for periods prior to completion of the Transactions represent the historical financial results of the Contributed Entities.
CIM Group, Inc. is a diversified real assets management and real asset investment platform. Through its integrated operating model, the Company deploys capital on behalf of funds, partners and co-investors while also deploying its own principal capital across a range of real asset, credit and other investment strategies. The Company generates earnings from real assets management activities, including management fees, incentive fees, performance allocations, transaction-related revenues and other service revenues, as well as from returns generated on its strategic holdings.
The Company operates through two reportable segments, Asset Management and Strategic Holdings. These segments reflect how management evaluates the business, allocates capital and assesses operating performance.
Asset Management
Our Asset Management segment represents our primary operating business and provides real assets management, development, property management, leasing, servicing, capital markets and other real asset services to Funds and other entities managed or sponsored by the Company or its affiliates. Our Asset Management segment generates revenues primarily from management fees, incentive fees, performance allocations and other service revenues earned from managed vehicles. Management evaluates the recurring earnings profile of the Asset Management segment primarily through Fee-Related Earnings (“FRE”), a measure that reflects management fee and other recurring revenues, or Fee-Related Revenues (“FRR”) less compensation and operating expenses associated with managing the platform. FRE is intended to provide clients with insight into the core profitability of the Company’s real assets management operations before the effects of investment-related and other non-recurring activities.
The Company’s integrated platform provides sourcing, real assets management, property operations, development, leasing, fundraising, accounting, legal, treasury and other support services to vehicles and strategic partners. The Company manages assets on behalf of institutional clients, high-net-worth clients and its own balance sheet and leverages its vertically integrated operating capabilities to seek to create value throughout investment cycles.
Strategic Holdings
The Strategic Holdings segment includes the Company’s balance sheet investments and investment activities, including interests in managed Funds, direct investments, real estate holdings, infrastructure assets and certain legacy CMFT investments and lending activities. The segment principally reflects the performance of the Company's proprietary capital investments and strategic investment portfolio.
The segment includes investments carried at fair value and under the equity method, interests in Funds and other investment vehicles, investments in real estate and infrastructure assets, and certain real estate credit investments and lending activities from the legacy CMFT business.
The Transactions
In connection with the Transactions, the Company reorganized its ownership structure through CMFH, to which CMGH contributed all of the issued and outstanding equity interests of the Contributed Entities. As consideration, CMGH received 907,376,073.663 newly issued CMFH Class A LP Units and 907,376,073.663 shares of newly created Special Voting Preferred Shares, representing 67.5% of the economic and voting ownership of the combined company immediately following the closing of the Transactions.
The remaining 32.5% of the economic and voting ownership of the combined company is owned by the Company’s pre-transaction stockholders through (i) their continued ownership of the issued and outstanding shares of the Company and (ii) the Company’s retaining 436,884,776.208 CMFH Class B LP Units representing 32.5% economic ownership of CMFH.
The Transactions resulted in the businesses of the Contributed Entities becoming the operating business of the public company now known as CIM Group, Inc. The Transactions were accounted for as a reverse acquisition under U.S. GAAP, with the Contributed Entities deemed to be the accounting acquirer and legacy CMFT deemed to be the accounting acquiree. Following the Transactions, the combined company operates as a diversified real assets management and investment platform.
As a result of the reverse acquisition accounting, the Company’s consolidated financial statements for periods prior to the closing date of the Transactions reflect the historical financial results, financial position and cash flows of the Contributed Entities, rather than those of CMFT. Accordingly, historical-period information presented in this Quarterly Report is not directly comparable to results for periods subsequent to the completion of the Transactions because post-Transactions results include the acquired CMFT operations, assets and liabilities from the Transaction Date forward.
Management evaluates the business and allocates resources following the Transactions through two reportable segments: Asset Management and Strategic Holdings. The Asset Management segment primarily reflects the historical operations of CIM Group Management, LLC, which generates revenues from management fees, incentive fees, performance allocations and related service revenues earned from managed vehicles and affiliated entities. The Strategic Holdings segment primarily reflects the Company's proprietary investment activities, including historical investments held by CIM Group Investments, LLC together with the assets, liabilities and operations acquired from CMFT.
The Transactions significantly changed the nature, scale and composition of the Company's business, revenues, assets and earnings profile. Prior to the Transactions, CMFT operated primarily as a real estate credit-focused REIT with investments concentrated in senior secured mortgage loans, net-leased real estate and other credit investments. Following the Transactions, the Company generates earnings from both a real assets management platform and a portfolio of strategic investments, resulting in a more diversified business model and revenue base.
Investors should therefore consider the impact of the Transactions when comparing current-period results to historical periods, as such comparisons may not be meaningful due to differences in reporting entities, business activities, asset composition, revenue sources and segment structure before and after the Transactions.
Continuing Transaction-Related Arrangements
In connection with the Transactions, the Company and CMFH entered into several continuing arrangements with CMGH that may materially affect the Company’s future results, liquidity and capital structure. CMGH may receive additional CMFH Class A LP Units and an equivalent number of Special Voting Preferred Shares based on the achievement of cumulative fee-related revenue thresholds during the period from January 1, 2026 through December 31, 2028, which could increase CMGH’s economic and voting ownership of the combined company by up to approximately 3.75%. The related earnout liability is remeasured at fair value each reporting period, with changes in fair value recognized in earnings, and had an estimated fair value of $407.5 million as of June 30, 2026. If earnout units are issued, CMFH also will be required to make a special cash distribution to CMGH for certain distributions attributable to those units following the end of the earnout period.
Subject to applicable law, CMFH also is required during the three-year period following the closing to make distributions intended to be sufficient to permit the Company to pay common-stock dividends of an aggregate $0.06 per share per quarter for the first four full fiscal quarters following the closing, $0.07 per share for the next four fiscal quarters and $0.095 per share for the following four fiscal quarters. CMFH’s obligation may be waived, in whole or in part, by a majority of the independent members of the Board, and the declaration and payment of Company dividends remain subject to applicable law and the authority and applicable duties of the Board.
In addition, the Company is required to use commercially reasonable efforts to initiate a national securities exchange listing process within 24 months following the closing and to complete a listing within five years. Before a listing, the Company also is required to pursue additional third-party capital under which at least 50% of net proceeds would be reserved for redemptions or repurchases of common shares held by unaffiliated stockholders. If a listing is not completed within five years, the Company must evaluate and pursue a recapitalization or, in certain circumstances, another strategic transaction intended to provide stockholder liquidity. These commitments do not assure that any listing or other liquidity transaction will occur or provide liquidity at a particular time or value.
We are a non-traded REIT that seeks to attain attractive risk-adjusted returns and create long term value for our stockholders by investing in a diversified portfolio of senior secured mortgage loans, creditworthy long-term net-leased property investments and other senior loan and liquid credit investments. Our investment strategy allows us to adapt over time in order to respond to evolving market conditions and to capitalize on investment opportunities that may arise at different points in the economic and real estate investment cycle. Subject to market conditions, we expect to pursue a listing of our common stock on a national securities exchange at such time as our Board determines that such a listing would be in the best interests of our stockholders, though we can provide no assurance that a listing will happen in a particular timeframe or at all.
We were formed on July 27, 2010, and we elected to be taxed, and conduct our operations to qualify, as a REIT for U.S. federal income tax purposes. We are externally managed by CMFT Management and, with respect to investments in securities and certain other investments of ours, our Investment Advisor, each of which is an affiliate of CIM Group, a vertically-integrated community-focused real estate and infrastructure owner, operator, lender and developer.
As of March 31, 2026, our loan portfolio consisted of 77 loans with a net book value of $3.1 billion, and 14 investments in real estate-related securities and other of $167.6 million. The Company conducts and expects to continue to conduct its commercial real estate lending business through CLR, a Maryland statutory trust and subsidiary of the Company which we expect to be taxed as a REIT for U.S. federal income tax purposes. As of March 31, 2026, CLR holds a diversified portfolio of approximately $1.5 billion which includes first mortgage loans with a net book value of $1.3 billion, CMBS with an estimated fair value of $63.5 million, and an investment in the Unconsolidated Joint Venture with a carrying value of $115.5 million.
As of March 31, 2026, we owned 199 commercial real estate properties, which consisted of 184 retail properties, eight office properties, and seven industrial properties, representing 22 industry sectors and comprising approximately 6.6 million rentable square feet of commercial space located in 36 states, with a net book value of $1.0 billion. As of March 31, 2026, we owned condominium developments with a net book value of $12.0 million.
During the three months ended March 31, 2026, we disposed of three properties encompassing approximately 87,000 gross rentable square feet, as further discussed in Note 4 — Real Estate Assets to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
CMRF insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 526,808 shares, about $2.7M) and open-market sales in 1 filing (1 insider, 1 trade date, 21,417 shares, about $110.1K). Net open-market shares: 505,391 (purchases minus sales); net value about $2.6M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-01 | Silver Howard A |
Grant/award | 19,455 | — | — |
| 2026-10-01 | Duncan Thomas Patrick |
Grant/award | 19,455 | — | — |
| 2026-10-01 | Kretzmer W Brian |
Grant/award | 19,455 | — | — |
| 2026-09-04 | Schreiber Jason K |
Open-market sale | 21,417 | $5.14 | $110.1K |
| 2026-09-04 | Ressler Richard S |
Open-market purchase | 526,808 | $5.14 | $2.7M |
| 2026-06-30 | Thompson David Andrew |
Option exercise | 6,635 | — | — |
| 2026-06-30 | Ressler Richard S |
Option exercise | 177,400 | — | — |
| 2026-06-30 | Ressler Richard S |
Other | 177,400 | — | — |
| 2026-06-24 | Ressler Richard S |
Disposition to issuer | 911,041 | — | — |
| 2026-06-24 | Ressler Richard S |
Disposition to issuer | 341,364 | — | — |
| 2026-06-24 | Ressler Richard S |
Disposition to issuer | 20,000 | — | — |
| 2026-06-24 | Ressler Richard S |
Grant/award | 907,376,074 | — | — |
| 2026-04-15 | Ressler Richard S |
Option exercise | 358,042 | — | — |
| 2026-04-15 | Ressler Richard S |
Other | 358,042 | — | — |
| 2026-04-15 | Debacker Nathan David |
Option exercise | 6,386 | — | — |
| 2026-04-15 | Schreiber Jason K |
Option exercise | 19,157 | — | — |
Well-known investors holding CMRF (13F)
None of the 59 investors we track reported a position in their latest 13F.