CIM REAL ESTATE FINANCE TRUST, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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, 2021. Capitalized terms used
herein, but not otherwise defined, shall have the meaning ascribed to those
terms in "Part I - Financial Information" of this Quarterly Report on Form 10-Q,
including the notes to the condensed consolidated financial statements contained
therein, and the terms "we," "us," "our" and the "Company" refer to CIM Real
Estate Finance Trust, Inc.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes "forward-looking statements" (within
the meaning of the federal securities laws, Section 27A of the Securities Act of
1933, as amended (the "Securities Act"), and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) that reflect our
expectations and projections about our future results, performance, prospects
and opportunities. We have attempted to identify these forward-looking
statements by the use of words such as "may," "will," "seek," "expects,"
"anticipates," "believes," "targets," "intends," "should," "estimates," "could,"
"continue," "assume," "projects," "plans" or similar expressions. These
forward-looking statements are based on information currently available to us
and are subject to a number of known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by these forward-looking statements. These factors include,
among other things, those discussed below. In addition, these risks and
uncertainties include those associated with (i) the scope, severity and duration
of the current pandemic of COVID-19 and actions taken to contain the pandemic or
mitigate its impact, (ii) the potential adverse effect of the COVID-19 pandemic
on the financial condition, results of operations, cash flows and performance of
the Company and its tenants, the real estate market and the global economy and
financial markets, among others, and (iii) general economic, market and other
conditions. We intend for all such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained in Section
27A of the Securities Act and Section 21E of the Exchange Act, as applicable by
law. We do not undertake to publicly update or revise any forward-looking
statements, whether as a result of changes in underlying assumptions or new
information, future events or otherwise, except as may be required to satisfy
our obligations under federal securities law. The forward-looking statements
should be read in light of the risk factors identified in Item 1A - Risk Factors
of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the
year ended December 31, 2021.

The following are some, but not all, of the assumptions, risks, uncertainties
and other factors that could cause our actual results to differ materially from
those presented in our forward-looking statements:

•We may be unable to renew leases, lease vacant space or re-lease space as
leases expire on favorable terms or at all.

•We are subject to risks associated with tenant, geographic and industry
concentrations with respect to our investments and properties.

•Our properties, intangible assets and other assets, as well as the property
securing our loans or other investments, may be subject to impairment charges.

•We could be subject to unexpected costs or unexpected liabilities that may
arise from 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 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 the political, economic,
capital markets and other conditions in the United States, including with
respect to the effects of the COVID-19 pandemic and other events that impact the
United States.

•We are subject to fluctuations in interest rates which could reduce our ability
to generate income on our credit investments.


•We are subject to an increase in inflation that could increase our credit and
real estate portfolio related costs at a higher rate than our rental income and
other revenue and adversely impact demand for rental space and future extensions
of our tenants' leases.

•We are subject to competition from entities engaged in lending which may impact
the availability of origination and acquisition opportunities acceptable to us.

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•We have substantial indebtedness, which may affect our ability to pay
distributions and expose us to interest rate fluctuation risk and the risk of
default under our debt obligations.

•We 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, including those associated
with the COVID-19 pandemic.

•We may be affected by risks resulting from losses in excess of insured limits.

•We may fail to remain qualified as a REIT for U.S. federal income tax purposes.

•We may be unable to successfully reposition our portfolio or list our shares on
a national securities exchange in the timeframe we expect or at all.

Definitions

We use certain defined terms throughout this Quarterly Report on Form 10-Q that
have the following meanings:


The phrase "annualized rental income" refers to the straight-line rental revenue
under our leases on operating properties owned as of the respective reporting
date, which includes the effect of rent escalations and any tenant concessions,
such as free rent, and excludes any 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).

Overview


We are primarily focused on originating, acquiring, financing and managing
shorter duration senior secured loans, other related credit investments and core
commercial real estate. Our investment strategy allows us to adapt over time in
order to respond to evolving market conditions and to capitalize on investment
opportunities that may arise at different points in the economic and real estate
investment cycle. We are continuing our strategy as a credit focused REIT,
balancing our existing core of necessity commercial real estate assets leased to
creditworthy tenants under long-term net leases with a portfolio of commercial
mortgage loans and other credit investments. Assuming the successful
repositioning of our portfolio and subject to market conditions, we then expect
to pursue a listing of our common stock on a national securities exchange,
though we can provide no assurances that a listing will happen on that timeframe
or at all.

We were formed on July 27, 2010, and we elected to be taxed, and conduct our
operations to qualify, as a REIT for U.S. federal income tax purposes. We have
no paid employees and are externally managed by CMFT Management and, with
respect to investments in securities and certain other of our investments, our
Investment Advisor, each of which is an affiliate of CIM, a community-focused
real estate and infrastructure owner, operator, lender and developer.

As of September 30, 2022, our loan portfolio consisted of 346 loans with a net
book value of $4.0 billion, and investments in real estate-related securities of
$470.1 million.

As of September 30, 2022, we owned 384 properties, which consisted of 367 retail
properties, nine office properties, and eight industrial properties,
representing 25 industry sectors and comprising 11.0 million rentable square
feet of commercial space located in 44 states, with a net book value of $2.2
billion. As of September 30, 2022, we owned condominium developments with a net
book value of $153.6 million.

In furtherance of our strategy, during the nine months ended September 30, 2022,
we disposed of 130 properties and an outparcel of land, including the two
properties previously owned through the Consolidated Joint Venture, encompassing
11.7
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million gross rentable square feet. On December 20, 2021, certain subsidiaries
of the Company entered into the Purchase and Sale Agreement to sell 79 shopping
centers and two single-tenant properties, for which we were to receive, in the
aggregate, approximately $1.32 billion in total consideration at closing. During
the nine months ended September 30, 2022, the sale of the 81 properties closed
under the Purchase and Sale Agreement for total consideration of $1.33 billion,
as further discussed in Note 4 - Real Estate Assets to the condensed
consolidated financial statements in this Quarterly Report on Form 10-Q.

Our operating results and cash flows are primarily influenced by interest income
from our credit investments, rental and other property income from our
commercial properties, interest expense on our indebtedness and investment and
operating expenses. CMFT Management reviews our investment portfolios and is in
regular contact with our borrowers, monitoring performance of the collateral and
enforcing our rights as necessary. In addition, as 99.3% of our rentable square
feet was under lease, including any month-to-month agreements, as of
September 30, 2022, with a weighted average remaining lease term of 10.7 years,
we believe our exposure to changes in commercial rental rates on our portfolio
is substantially mitigated, except for vacancies caused by tenant bankruptcies
or other factors, including due to circumstances related to COVID-19. Our
manager regularly monitors the creditworthiness of our tenants by reviewing each
tenant's financial results, any available credit rating agency reports on the
tenant or guarantor, the operating history of the property with such tenant, the
tenant's market share and track record within its industry segment, the general
health and outlook of the tenant's industry segment and other information for
changes and possible trends. If our manager identifies significant changes or
trends that may adversely affect the creditworthiness of a tenant, it will
gather a more in-depth knowledge of the tenant's financial condition and, if
necessary, attempt to mitigate the tenant credit risk by evaluating the possible
sale of the property or identifying a possible replacement tenant should the
current tenant fail to perform on the lease.

COVID-19


We are closely monitoring the negative impacts that the COVID-19 pandemic and
the efforts to mitigate its spread are having on the economy, our tenants and
our business. The extent to which the COVID-19 pandemic continues to impact our
operations and those of our tenants will depend on future developments,
including, among other factors, the duration, spread and resurgences of the
virus, including certain variants thereof, along with related travel advisories
and restrictions, the recovery time of the disrupted supply chains and
industries, the impact of labor market interruptions, the impact of government
interventions, the pace, scope and efficacy of vaccination programs, and general
uncertainty as to the impact of COVID-19, including related variants, on the
global economy.

Macroeconomic Environment

This year has been characterized by steep declines and significant volatility in
global markets, driven by investor concerns over inflation, rising interest
rates, slowing economic growth and geopolitical uncertainty. Inflation across
many key economies reached generational highs, prompting central banks to take
monetary policy tightening actions that have, and will likely continue to create
headwinds to economic growth. The ongoing war between Russia and Ukraine is also
contributing to mounting inflationary pressure.

Inflation has caused the Federal Reserve to continue raising interest rates,
which has created further uncertainty for the economy and for our borrowers and
tenants. Although the majority of our business model is such that rising
interest rates will, all else being equal, correlate to increases in our net
income, increases in interest rates may adversely affect our existing borrowers,
tenants and owned property values. Additionally, rising rates and increasing
costs may dampen consumer spending and slow corporate profit growth, which may
negatively impact the collateral underlying certain of our loans. While there is
debate among economists as to whether such factors, coupled with economic
contraction in the U.S. in 2022, indicate that the U.S. has entered, or in the
near term will enter, a recession, it remains difficult to predict the full
impact of recent changes and any future changes in interest rates or inflation.
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Operating Highlights and Key Performance Indicators

Activity from January 1, 2022 through September 30, 2022

Operating Results:

•Net income attributable to the Company of $128.2 million, or $0.29 per share.

•Declared aggregate distributions of $0.27 per share.

Credit Portfolio Activity:

•Invested $1.3 billion in first mortgage loans and received principal repayments
on loans held-for-investment of $156.9 million.

•Invested $160.9 million in liquid senior loans and sold liquid senior loans for
an aggregate gross sales price of $53.7 million.

•Invested $433.2 million in CMBS and sold one marketable security for an
aggregate gross sales price of $132,000.

•Converted $68.2 million of preferred units into a CRE loan upon maturity.

•Invested $74.8 million in corporate senior loans.

Real Estate Portfolio Activity:

•Disposed of 130 properties and an outparcel of land, including the two
properties previously owned through the Consolidated Joint Venture, for an
aggregate sales price of $1.71 billion.

•Disposed of condominium units for an aggregate sales price of $24.2 million.

Financing Activity:

•Increased total debt by $209.2 million.


•Entered into a new repurchase agreement and increased maximum financing amounts
on two existing repurchase facilities to provide up to $1.25 billion and $750.0
million, respectively, to finance a portfolio of existing and future commercial
real estate mortgage loans and CMBS.

•Entered into a new credit agreement that provides for borrowings of up to
$300.0 million, which includes a $100.0 million term loan facility and the
ability to borrow up to $200.0 million in revolving loans under a revolving
credit facility with a $30.0 million letter of credit subfacility.

•Paid down the $212.5 million outstanding balance under the CIM Income NAV
Credit Facility and terminated the CIM Income NAV Credit Facility.

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Portfolio Information

The following table shows the carrying value of our portfolio by investment type
as of September 30, 2022 and 2021 (dollar amounts in thousands):

                                                                                                       As of September 30,
                                                                              2022                                                             2021
                                                     Asset Count           Carrying Value                             Asset Count           Carrying Value
Loan Held-For-Investment

First mortgage loans                                     29              $     3,259,744              48.7  %             11              $       890,804              19.2  %
Liquid senior loans                                      313                     705,750              10.6  %             262                     571,488              12.3  %
Corporate senior loans                                    4                       57,232               0.9  %              -                            -                 -  %
Less: Current expected credit losses                                             (29,584)             (0.4) %                                     (11,219)             (0.2) %
Total loans held-for-investment and related
receivable, net                                          346                   3,993,142              59.8  %             273                   1,451,073              31.2  %
Real Estate-Related Securities
CMBS and equity security                                 17                      470,121               7.0  %             15                      121,757               2.6  %
Preferred units                                           -                            -                 -  %              1                       63,490               1.4  %
Real Estate
Total real estate assets and intangible
lease liabilities, net                                   384                   2,220,272              33.2  %             403                   3,011,599              64.8  %
Total Investment Portfolio                               747             $     6,683,535             100.0  %             692             $     4,647,919             100.0  %


Credit Portfolio Information

The following table details overall statistics for our credit portfolio as of
September 30, 2022 (dollar amounts in thousands):

Liquid Senior CMBS and Equity Corporate

                                                    CRE Loans (1)            Loans               Security            Senior Loans
Number of investments (3)                                    29                  313                    17                     4
Principal balance                                  $  3,283,523          $   711,947          $    551,738          $     58,031
Net book value                                     $  3,244,737          $ 

691,981 $ 470,121 $ 56,424
Unfunded loan commitments

                          $    338,539          $  

1,886 $ – $ 4,324
Weighted-average interest rate

                              5.9  %               6.7  %                7.4  %                9.2  %
Weighted-average maximum years to
maturity (2)                                                   3.9                  4.9                4.3                      4.8


____________________________________

(1)As of September 30, 2022, 100% of our loans by principal balance earned a
floating rate of interest, primarily indexed to U.S. dollar LIBOR and SOFR.

(2)Maximum maturity date assumes all extension options are exercised by the
borrower; however, our CRE loans may be repaid prior to such date.

(3)Table does not include our investment in the Unconsolidated Joint Venture,
which had a carrying value of $132.4 million as of September 30, 2022.

Real Estate Portfolio Information


As of September 30, 2022, we owned 384 properties located in 44 states, the
gross rentable square feet of which was 99.3% leased, including any
month-to-month agreements, with a weighted average lease term remaining of 10.7
years. As of September 30, 2022, no single tenant accounted for greater than 10%
of our 2022 annualized rental income. As of September 30, 2022, we had certain
geographic and industry concentrations in our property holdings. In particular,
we had properties located in Ohio, which accounted for 12% of our 2022
annualized rental income. In addition, we had tenants in the health and personal
care stores, sporting goods, hobby and musical instrument stores, and grocery
store industries, which accounted for 13%, 10% and 10%, respectively, of our
2022 annualized rental income. During the nine months ended September 30, 2022,
we disposed of 130 properties and an outparcel of land, including the two
properties previously
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owned through the Consolidated Joint Venture, for an aggregate gross sales price
of $1.71 billion. Additionally, during the nine months ended September 30, 2022,
we sold condominium units for an aggregate gross sales price of $24.2 million.

The following table shows the property statistics of our real estate assets as
of September 30, 2022 and 2021:


                                                             As of 

September 30,

                                                               2022              2021
       Number of commercial properties                                  384         403
       Rentable square feet (in thousands) (1)                       11,043      17,623
       Percentage of rentable square feet leased                    99.3  %     94.2  %
       Percentage of investment-grade tenants (2)                   39.3  %     36.9  %

____________________________________

(1) Includes square feet of buildings on land parcels subject to ground
leases.


(2)   Investment-grade tenants are those with a credit rating of BBB- or higher
by Standard & Poor's or a credit rating of Baa3 or higher by Moody's Investor
Service, Inc. ("Moody's"). The ratings may reflect those assigned by Standard &
Poor's or Moody's to the lease guarantor or the parent company, as applicable.
The weighted average credit rating is weighted based on annualized rental income
and is for only those tenants rated by Standard & Poor's.

During the nine months ended September 30, 2022 and 2021, the Company did not
acquire any properties.


Results of Operations

Overview

We are not aware of any material trends or uncertainties, other than those
listed in the risk factors set forth in our Annual Report on Form 10-K for the
year ended December 31, 2021 and this Quarterly Report on Form 10-Q, the effects
of the COVID-19 pandemic, and national economic conditions affecting real estate
in general that may reasonably be expected to have a material impact on our
results from the acquisition, management and operation of properties. Currently,
we are unable to predict the impact that the COVID-19 pandemic will have on our
financial condition, results of operations and cash flows in future periods due
to numerous uncertainties.

Same Store Analysis

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. Net operating income is
considered by management to be a helpful supplemental performance measure, as it
enables management to evaluate the impact of occupancy, rents, leasing activity
and other controllable property operating results at our real estate properties,
and it provides a consistent method for the comparison of our properties. We
define net operating income as operating revenues less operating expenses, which
exclude (i) depreciation and amortization, (ii) interest expense and other
non-property related revenue and expense items such as (a) general and
administrative expenses, (b) expense reimbursements to related parties, (c)
management fees, (d) transaction-related expenses, (e) real estate impairment,
(f) increase in provision for credit losses, (g) gain on disposition of real
estate and condominium developments, net, (h) merger-related expenses, net and
(i) interest income. Our calculation of net operating income may not be
comparable to that of other REITs and should not be considered to be more
relevant or accurate in evaluating our operating performance than the current
GAAP methodology used in calculating net income. In determining the same store
property pool, we include all properties that were owned for the entirety of
both the current and prior reporting periods, except for properties during the
current or prior year that were under development or redevelopment.
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Comparison of the Three Months Ended September 30, 2022 and 2021

The following table reconciles net income, calculated in accordance with GAAP,
to net operating income (in thousands):


                                                             For the Three 

Months Ended September 30,

                                                          2022                   2021                Change
Net income                                          $       15,539          $    42,603          $   (27,064)
Loss on extinguishment of debt                               3,344                3,251                   93
Interest expense and other, net                             39,366               20,381               18,985
Unrealized loss on equity security                           9,030                    -                9,030
Gain on investment in unconsolidated entities               (2,195)                   -               (2,195)
Operating income                                            65,084               66,235               (1,151)

Merger-related expenses, net                                     -                  398                 (398)

Gain on disposition of real estate and condominium
developments, net

                                           (4,454)             (34,033)              29,579
Increase (decrease) in provision for credit losses           5,664               (1,792)               7,456
Real estate impairment                                         527                  891                 (364)
Depreciation and amortization                               16,948               22,801               (5,853)
Transaction-related expenses                                     9                    6                    3
Management fees                                             12,915               11,703                1,212
Expense reimbursements to related parties                    3,428                2,516                  912
General and administrative expenses                          3,435                3,076                  359
Interest income                                            (66,222)             (19,755)             (46,467)
Net operating income                                $       37,334          $    52,046          $   (14,712)

Our operating segments include credit and real estate. Refer to Note 16 –
Segment Reporting to our condensed consolidated financial statements in this
Quarterly Report on Form 10-Q for further discussion of our operating segments.


Credit Segment

Interest Income

The increase in interest income of $46.5 million for the three months ended
September 30, 2022, as compared to the same period in 2021, was due to an
increase in the overall size of our investment portfolio. As of September 30,
2022, we held $4.5 billion in credit investments compared to $1.6 billion in
credit investments as of September 30, 2021.

Increase (Decrease) in Provision for Credit Losses


The increase in provision for credit losses of $7.5 million during the three
months ended September 30, 2022, as compared to the same period in 2021, was
primarily due to the increased number of loan investments entered into during
the three months ended September 30, 2022, as compared to the same period in
2021.

Real Estate Segment

A total of 302 properties were acquired before July 1, 2021 and represent our
"same store" properties during the three months ended September 30, 2022 and
2021. "Non-same store" properties, for purposes of the table below, includes
properties acquired or disposed of on or after July 1, 2021.
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The following table details the components of net operating income broken out
between same store and non-same store properties (in thousands):

                                               Total                                                  Same Store                                             Non-Same Store
                              For the Three Months Ended September 30,                 For the Three Months Ended September 30,                 For the

Three Months Ended September 30,

                             2022                 2021              Change              2022              2021            Change               2022                 2021              Change

Rental and other
property income        $       43,559          $ 70,794          $ (27,235)         $  29,354          $ 29,822          $ (468)         $       14,205          $ 40,972          $ (26,767)

Property operating
expenses                        4,432            11,157             (6,725)               739               872            (133)                  3,693            10,285             (6,592)
Real estate tax
expenses                        1,793             7,591             (5,798)               900             1,001            (101)                    893             6,590             (5,697)
Total property
operating expenses              6,225            18,748            (12,523)             1,639             1,873            (234)                  4,586            16,875            (12,289)

Net operating income   $       37,334          $ 52,046          $ (14,712)         $  27,715          $ 27,949          $ (234)         $        9,619          $ 24,097          $ (14,478)

Loss on Extinguishment of Debt


The increase in loss on extinguishment of debt of $93,000 for the three months
ended September 30, 2022, as compared to the same period in 2021, was primarily
due to the increase in terminations of certain mortgage notes in connection with
the disposition of the underlying properties during the three months ended
September 30, 2022, as compared to the same period in 2021.

Gain on Investment in Unconsolidated Entities


The increase in gain on investment in unconsolidated entities of $2.2 million
for the three months ended September 30, 2022, as compared to the same period in
2021, was due to the Company's investment in NP JV Holdings, which was not
invested in by the Company during the three months ended September 30, 2021.

Interest Expense and Other, Net

Interest expense and other, net also includes amortization of deferred financing
costs.


The increase in interest expense and other, net, of $19.0 million for the three
months ended September 30, 2022, as compared to the same period in 2021, was
primarily due to an increase in the three-month average aggregate amount of debt
outstanding from $2.8 billion as of September 30, 2021 to $4.3 billion as of
September 30, 2022, primarily as a result of entering into and upsizing
additional repurchase agreements subsequent to September 30, 2021, coupled with
an increase in the Company's weighted average interest rate from 2.8% as of
September 30, 2021 to 4.5% as of September 30, 2022.

Merger-Related Expenses, Net


The decrease in merger-related expenses, net of $398,000 for the three months
ended September 30, 2022, as compared to the same period in 2021, was due to
expenses incurred related to the CIM Income NAV Merger during the three months
ended September 30, 2021. No such expenses were incurred during the three months
ended September 30, 2022.

Gain on Disposition of Real Estate and Condominium Developments, Net


The decrease in gain on disposition of real estate and condominium developments,
net, of $29.6 million during the three months ended September 30, 2022, as
compared to the same period in 2021, was due to the disposition of
18 properties, an outparcel of land and condominium units for a gain of $4.5
million during the three months ended September 30, 2022, compared to the
disposition of 66 properties, an outparcel of land and condominium units for a
gain of $34.0 million during the three months ended September 30, 2021.

Real Estate Impairment


The decrease in real estate impairments of $364,000 during the three months
ended September 30, 2022, as compared to the same period in 2021, was due to one
property that was deemed to be impaired, resulting in impairment charges of
$527,000 during the three months ended September 30, 2022, compared to six
properties that were deemed to be impaired, resulting in impairment charges of
$891,000 during the three months ended September 30, 2021.
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Depreciation and Amortization

The decrease in depreciation and amortization of $5.9 million during the three
months ended September 30, 2022, as compared to the same period in 2021,
was primarily due to the disposition of 134 properties subsequent to
September 30, 2021, partially offset by the acquisition of 115 properties
through the CIM Income NAV Merger that closed in December 2021.

Transaction-Related Expenses

Transaction-related expenses remained generally consistent during the three
months ended September 30, 2022, as compared to the same period in 2021.

Management Fees


We pay CMFT Management a management fee pursuant to the Management Agreement,
payable quarterly in arrears, equal to the greater of (a) $250,000 per annum
($62,500 per quarter) and (b) 1.50% per annum (0.375% per quarter) of the
Company's Equity (as defined in the Management Agreement). Furthermore, as
discussed in Note 12 - Related-Party Transactions and Arrangements to our
condensed consolidated financial statements in this Quarterly Report on Form
10-Q, pursuant to the Investment Advisory and Management Agreement, for
management of investments in the Managed Assets (as defined in the Investment
Advisory and Management Agreement), CMFT Securities pays the Investment Advisor
the Investment Advisory Fee, payable quarterly in arrears, equal to 1.50% per
annum (0.375% per quarter) of CMFT Securities' Equity (as defined in the
Investment Advisory and Management Agreement). Because the Managed Assets are
excluded from the calculation of management fees payable by the Company to CMFT
Management pursuant to the Management Agreement, the total management and
advisory fees payable by the Company to its external advisors are not increased
as a result of the Investment Advisory and Management Agreement. In addition,
pursuant to the Sub-Advisory Agreement, in connection with providing investment
management services with respect to the corporate credit-related securities held
by CMFT Securities, on a quarterly basis, the Investment Advisor designates 50%
of the sum of the Investment Advisory Fee payable to the Investment Advisor as
sub-advisory fees.

The increase in management fees of $1.2 million during the three months ended
September 30, 2022, as compared to the same period in 2021, was primarily due to
increased equity from the issuance of common stock in connection with the CIM
Income NAV Merger that closed in December 2021.

Expense Reimbursements to Related Parties


Pursuant to the Investment Advisory and Management Agreement, CMFT Securities
reimburses the Investment Advisor for costs and expenses incurred by the
Investment Advisor on its behalf. Additionally, we may be required to reimburse
certain expenses incurred by CMFT Management in providing management services,
subject to limitations as set forth in the Management Agreement (as discussed
in Note 12 - Related-Party Transactions and Arrangements to our condensed
consolidated financial statements in this Quarterly Report on Form 10-Q).

The increase in expense reimbursements to related parties of $912,000 during the
three months ended September 30, 2022, as compared to the same period in 2021,
was primarily due to increased operating expense reimbursements due to CMFT
Management, primarily as a result of increased allocated payroll resulting from
increased portfolio activity.

General and Administrative Expenses

The primary general and administrative expense items are legal and accounting
fees, banking fees and transfer agency and board of directors costs.

General and administrative expenses remained generally consistent during the
three months ended September 30, 2022, as compared to the same period in 2021.

Net Operating Income


Same store property net operating income remained relatively consistent during
the three months ended September 30, 2022, as compared to the same period in
2021.

Non-same store property net operating income decreased $14.5 million during the
three months ended September 30, 2022, as compared to the same period in 2021.
The decrease was primarily due to the disposition of 134 properties subsequent
to September 30, 2021, partially offset by an increase in net operating income
due to the acquisition of 115 properties in connection with the CIM Income NAV
Merger that closed in December 2021.
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Comparison of the Nine Months Ended September 30, 2022 and 2021

The following table reconciles net income, calculated in accordance with GAAP,
to net operating income (in thousands):


                                                              For the Nine 

Months Ended September 30,

                                                          2022                   2021                Change
Net income                                          $      128,253          $    97,637          $    30,616
Loss on extinguishment of debt                              19,584                4,729               14,855
Interest expense and other, net                             98,453               56,863               41,590
Unrealized loss on equity security                          15,440                    -               15,440
Gain on investment in unconsolidated entities               (8,858)                   -               (8,858)
Operating income                                           252,872              159,229               93,643

Merger-related expenses, net                                     -                  398                 (398)

Gain on disposition of real estate and condominium
developments, net

                                         (118,135)             (80,502)             (37,633)

Increase (decrease) in provision for credit losses 15,315

      (1,101)              16,416
Real estate impairment                                      19,814                5,268               14,546
Depreciation and amortization                               54,104               73,186              (19,082)
Transaction-related expenses                                   462                   37                  425
Management fees                                             39,613               35,035                4,578
Expense reimbursements to related parties                   10,899                8,387                2,512
General and administrative expenses                         10,590               11,109                 (519)
Interest income                                           (142,669)             (48,168)             (94,501)
Net operating income                                $      142,865          $   162,878          $   (20,013)


Credit Segment

Interest Income

The increase in interest income of $94.5 million for the nine months ended
September 30, 2022, as compared to the same period in 2021, was due to an
increase in the overall size of our investment portfolio. As of September 30,
2022, we held $4.5 billion in credit investments compared to $1.6 billion in
credit investments as of September 30, 2021.

Increase (Decrease) in Provision for Credit Losses


The increase in provision for credit losses of $16.4 million during the nine
months ended September 30, 2022, as compared to the same period in 2021, was
primarily due to the increased number of loan investments entered into during
the nine months ended September 30, 2022, as compared to the same period in
2021.

Real Estate Segment


A total of 302 properties were acquired before January 1, 2021 and represent our
"same store" properties during the nine months ended September 30, 2022 and
2021. "Non-same store" properties, for purposes of the table below, includes
properties acquired or disposed of on or after January 1, 2021.
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The following table details the components of net operating income broken out
between same store and non-same store properties (in thousands):

                                                 Total                                                     Same Store                                                Non-Same Store
                                For the Nine Months Ended September 30,                     For the Nine Months Ended September 30,                    

For the Nine Months Ended September 30,

                              2022                  2021              Change                2022                 2021             Change               2022                 2021              Change

Rental and other
property income         $      170,803          $ 223,026          $ (52,223)         $       88,639          $ 88,066          $   573          $      82,164          $ 134,960          $ (52,796)

Property operating
expenses                        17,408             32,632            (15,224)                  2,269             2,485             (216)                15,139             30,147            (15,008)
Real estate tax
expenses                        10,530             27,516            (16,986)                  2,969             3,211             (242)                 7,561             24,305            (16,744)
Total property
operating expenses              27,938             60,148            (32,210)                  5,238             5,696             (458)                22,700             54,452            (31,752)

Net operating income    $      142,865          $ 162,878          $ (20,013)         $       83,401          $ 82,370          $ 1,031          $      59,464          $  80,508          $ (21,044)

Loss on Extinguishment of Debt


The increase in loss on extinguishment of debt of $14.9 million for the nine
months ended September 30, 2022, as compared to the same period in 2021, was
primarily due to the increased terminations of certain mortgage notes in
connection with the disposition of the underlying properties during the nine
months ended September 30, 2022, as compared to the same period in 2021.

Gain on Investment in Unconsolidated Entities


The increase in gain on investment in unconsolidated entities of $8.9 million
for the nine months ended September 30, 2022, as compared to the same period in
2021, was due to the Company's investment in CIM UII Onshore and NP JV Holdings,
neither of which were invested in by the Company during the nine months ended
September 30, 2021.

Interest Expense and Other, Net


The increase in interest expense and other, net, of $41.6 million for the nine
months ended September 30, 2022, as compared to the same period in 2021, was
primarily due to an increase in the nine-month average aggregate amount of debt
outstanding from $2.5 billion as of September 30, 2021 to $4.2 billion as of
September 30, 2022 as a result of entering into and upsizing additional
repurchase agreements and assuming the CIM Income NAV Credit Facility as part of
the CIM Income NAV Merger subsequent to September 30, 2021, coupled with an
increase in the Company's weighted average interest rate from 2.8% as of
September 30, 2021 to 4.5% as of September 30, 2022.

Merger-Related Expenses, Net


The decrease in merger-related expenses, net of $398,000 for the nine months
ended September 30, 2022, as compared to the same period in 2021, was due to
expenses incurred related to the CIM Income NAV Merger during the nine months
ended September 30, 2021. No such expenses were incurred during the nine months
ended September 30, 2022.

Gain on Disposition of Real Estate and Condominium Developments, Net


The increase in gain on disposition of real estate and condominium developments,
net, of $37.6 million during the nine months ended September 30, 2022, as
compared to the same period in 2021, was primarily due to the disposition
of 130 properties and one outparcel of land, including the two properties
previously owned through the Consolidated Joint Venture, for a gain of $115.0
million and the disposition of condominium units for a gain of $3.1 million
during the nine months ended September 30, 2022, compared to the disposition
of 113 properties and an outparcel of land for a gain of $75.6 million and the
disposition of condominium units for a gain of $4.9 million during the nine
months ended September 30, 2021.

Real Estate Impairment


The increase in impairments of $14.5 million during the nine months ended
September 30, 2022, as compared to the same period in 2021, was due to 19
properties and certain condominium units that were deemed to be impaired,
resulting in impairment charges of $19.8 million during the nine months ended
September 30, 2022, compared to 11 properties that were deemed to be impaired,
resulting in impairment charges of $5.3 million during the nine months ended
September 30, 2021.
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Depreciation and Amortization

The decrease in depreciation and amortization of $19.1 million during the nine
months ended September 30, 2022, as compared to the same period in 2021,
was primarily due to the disposition of 134 properties subsequent to
September 30, 2021, partially offset by the acquisition of 115 properties
through the CIM Income NAV Merger that closed in December 2021.

Transaction-Related Expenses


The increase in transaction-related expenses of $425,000 during the nine months
ended September 30, 2022, as compared to the same period in 2021, was primarily
due to escrow holdbacks that were deemed uncollectible as of September 30, 2022
and were therefore written off. No such write-offs occurred during the same
period in 2021.

Management Fees


The increase in management fees of $4.6 million during the nine months ended
September 30, 2022, as compared to the same period in 2021, was primarily due to
increased equity from the issuance of common stock in connection with the CIM
Income NAV Merger that closed in December 2021.

Expense Reimbursements to Related Parties


The increase in expense reimbursements to related parties of $2.5 million during
the nine months ended September 30, 2022, as compared to the same period in
2021, was primarily due to increased operating expense reimbursements due to
CMFT Management, primarily as a result of increased allocated payroll resulting
from increased portfolio activity.

General and Administrative Expenses


The decrease in general and administrative expenses of $519,000 for the nine
months ended September 30, 2022, compared to the same period in 2021, was
primarily due to increased legal expenses incurred during the nine months ended
September 30, 2021 related to the foreclosure completed in January 2021 to take
control of the assets which previously secured the Company's mezzanine loans, as
discussed in Note 8 - Loans Held-For-Investment to our condensed consolidated
financial statements in this Quarterly Report on Form 10-Q. The overall decrease
was partially offset by increased expenses related to the assumption of the CIM
Income NAV Credit Facility in connection with the CIM Income NAV Merger
completed in December 2021.

Net Operating Income


Same store property net operating income increased $1.0 million during the nine
months ended September 30, 2022, as compared to the same period in 2021. The
increase was partially due to amended lease agreements, coupled with an increase
in same store occupancy to 98.9% as of September 30, 2022 from 98.8% as of
September 30, 2021.

Non-same store property net operating income decreased $21.0 million during the
nine months ended September 30, 2022, as compared to the same period in 2021.
The decrease was primarily due to the disposition of 134 properties subsequent
to September 30, 2021, partially offset by an increase in net operating income
due to the acquisition of 115 properties in connection with the CIM Income NAV
Merger that closed in December 2021.

Distributions

Prior to April 1, 2020, on a quarterly basis, our Board authorized a daily
distribution for the succeeding quarter. Our Board authorized the following
daily distribution amounts per share for the periods indicated below:

          Period Commencing         Period Ending         Daily Distribution Amount
            April 14, 2012        December 31, 2012             $0.001707848
           January 1, 2013        December 31, 2015             $0.001712523
           January 1, 2016        December 31, 2016             $0.001706776
           January 1, 2017        December 31, 2019             $0.001711452
           January 1, 2020         March 31, 2020               $0.001706776


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On April 20, 2020, our Board decided to make a determination as to the amount
and timing of distributions on a monthly, instead of a quarterly, basis until
such time that we had greater visibility into the impact that the COVID-19
pandemic would have on our tenants' ability to continue to pay rent on their
leases on a timely basis or at all, the degree to which federal, state or local
governmental authorities grant rent relief or other relief or amnesty programs
applicable to our tenants, our ability to access the capital markets, and on the
United States and worldwide financial markets and economy. On March 25, 2021,
the Board resumed declaring distributions on a quarterly basis, which are paid
out on a monthly basis.

Since April 2020, our Board authorized the following monthly distribution
amounts per share, payable to stockholders as of the record date for the
applicable month, for the periods indicated below:

           Period Commencing        Period Ending       Monthly Distribution Amount
               April 2020             May 2020                    $0.0130
               June 2020              June 2020                   $0.0161
               July 2020              July 2020                   $0.0304
              August 2020           December 2021                 $0.0303
              January 2022         September 2022                 $0.0305
              October 2022          December 2022                 $0.0339
              January 2023           March 2023                   $0.0350

As of September 30, 2022, we had distributions payable of $13.3 million.

The following table presents distributions and source of distributions for the
periods indicated below (dollar amounts in thousands):

Nine Months Ended September 30,

                                                                   2022                                     2021
                                                       Amount               Percent             Amount              Percent
Distributions paid in cash                          $   91,297                    76  %       $ 82,541                    84  %
Distributions reinvested                                28,664                    24  %         16,264                    16  %
Total distributions                                 $  119,961                   100  %       $ 98,805                   100  %
Sources of distributions:
Net cash provided by operating activities (1)       $  119,961                   100  %       $ 97,518                    99  %
Proceeds from the issuance of debt (2)                       -                     -  %          1,287                     1  %

Total sources                                       $  119,961                   100  %       $ 98,805                   100  %

____________________________________

(1)Net cash provided by operating activities for the nine months ended
September 30, 2022 and 2021 was $125.4 million and $97.5 million, respectively.

(2)Net proceeds on the repurchase facilities, credit facilities and notes
payable for the nine months ended September 30, 2021 was $584.1 million.

Share Redemptions


Our share redemption program permits our stockholders to sell their shares of
common stock back to us, subject to certain conditions and limitations. We will
limit the number of shares redeemed pursuant to our share redemption program as
follows: (1) we will not redeem in excess of 5% of the weighted average number
of shares outstanding during the trailing 12 months prior to the end of the
fiscal quarter for which the redemptions are being paid; and (2) funding for the
redemption of shares will be limited, among other things, to the net proceeds we
receive from the sale of shares under our DRIP, net of shares redeemed to date.
In an effort to accommodate redemption requests throughout the calendar year, we
will generally limit quarterly redemptions to approximately 1.25% of the
weighted average number of shares outstanding during the trailing 12-month
period ending on the last day of the fiscal quarter for which the redemptions
are being paid, and to the net proceeds we receive from the sale of shares in
the respective quarter under the Secondary DRIP Offering. Any of the foregoing
limits might prevent us from accommodating all redemption requests made in any
fiscal quarter or in any 12-month period. We will determine whether we have
sufficient funds and/or shares available as soon as practicable after the end of
each fiscal quarter, but in any event prior to the applicable payment date. If
we cannot purchase all shares presented for redemption in any fiscal quarter,
based upon insufficient cash available from the sale of shares under our DRIP
and/or the limit on the number of shares we may redeem during any quarter or
year, we will give priority to the redemption of deceased stockholders' shares.
While deceased
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stockholders' shares will be included in calculating the maximum number of
shares that may be redeemed in any annual or quarterly period, they will not be
subject to the annual or quarterly percentage caps; therefore, if the volume of
requests to redeem deceased stockholders' shares in a particular quarter were
large enough to cause the annual or quarterly percentage caps to be exceeded,
even if no other redemption requests were processed, the redemptions of deceased
stockholders' shares would be completed in full, assuming sufficient proceeds
from the sale of shares under our DRIP, net of shares redeemed to date, were
available. If sufficient proceeds from the sale of shares under our DRIP, net of
shares redeemed to date, were not available to pay all such redemptions in full,
the requests to redeem deceased stockholders' shares would be honored on a pro
rata basis. We next will give priority to requests for full redemption of
accounts with a balance of 250 shares or less at the time we receive the
request, in order to reduce the expense of maintaining small accounts.
Thereafter, we will honor the remaining redemption requests on a pro rata basis.
Following such quarterly redemption period, if a stockholder would like to
resubmit the unsatisfied portion of the prior request for redemption, such
stockholder must submit a new request for redemption of such shares prior to the
last day of the new quarter. Unfulfilled requests for redemption will not be
carried over automatically to subsequent redemption periods. In addition, our
management reserves the right, in its sole discretion at any time, and from time
to time, to reject any request for redemption for any reason. Our Board may
choose to amend the terms of, suspend or terminate our share redemption program
at any time in its sole discretion if it believes that such action is in the
best interest of us and our stockholders. Any material modifications or
suspension of the share redemption program will be disclosed to our stockholders
as promptly as practicable in our reports filed with the SEC and via our
website. During the nine months ended September 30, 2022, we received valid
redemption requests under our share redemption program totaling approximately
74.8 million shares, of which we redeemed approximately 2.8 million shares as of
September 30, 2022 for $19.9 million (at an average redemption price of $7.20
per share) and approximately 1.3 million shares subsequent to September 30, 2022
for $9.6 million (at a redemption price of $7.20 per share). The remaining
redemption requests relating to approximately 70.8 million shares went
unfulfilled. A valid redemption request is one that complies with the applicable
requirements and guidelines of the share redemption program then in effect. The
share redemptions were funded with proceeds from the Secondary DRIP Offering and
available borrowings.

Liquidity and Capital Resources

General


We expect to utilize proceeds from real estate dispositions, sales proceeds and
principal payments received on credit investments, cash flows from operations
and future proceeds from secured or unsecured financing to complete future
acquisitions and loan originations, repayment of certain indebtedness and for
general corporate uses. The sources of our operating cash flows will primarily
be provided by interest income from our portfolio of credit investments and the
rental and other property income received from current and future leased
properties.

Sources of Liquidity


Our primary sources of liquidity include cash and cash equivalents and available
borrowings under our debt facilities, which are set forth in the following
table:

                                 September 30, 2022      December 31, 2021
Cash and cash equivalents       $          124,836      $          107,381
Unused borrowing capacity (1)              575,907                 549,811
                                $          700,743      $          657,192

____________________________________

(1)Subject to borrowing availability.


See Note 10 - Repurchase Facilities, Credit Facilities and Notes Payable to our
condensed consolidated financial statements in this Quarterly Report on Form
10-Q for additional details regarding our repurchase facilities, notes payable
and credit facilities. The following table details our outstanding financing
arrangements and borrowing capacity as of September 30, 2022 (in thousands):
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                                                                 Portfolio
                                                                 Financing
                                                                Outstanding           Maximum Capacity
                                                             Principal Balance              (1)
Notes payable - fixed rate debt                              $        36,647          $      36,647
Notes payable - variable rate debt                                   470,860                470,860
First lien mortgage loan                                             134,007                134,007
ABS mortgage notes                                                   764,970                764,970
Credit facilities                                                    691,500                850,000
Repurchase facilities                                              2,282,593              2,700,000     (2)
Total portfolio financing                                    $     

4,380,577 $ 4,956,484

____________________________________

(1)Subject to borrowing availability.

(2)Facilities under the Master Repurchase Agreement with J.P. Morgan carry no
maximum facility size.

Liquidity and Capital Resources


Our principal demands for funds will be for the acquisition or origination of
credit investments and real estate, and the payment of tenant improvements,
acquisition-related expenses, operating expenses, distributions, redemptions and
interest and principal on current and any future debt financings, including
principal repayments of $336.4 million within the next 12 months, $195.5 million
of which has a rolling term that resets monthly, as further discussed in Note 17
- Subsequent Events to our condensed consolidated financial statements in this
Quarterly Report on Form 10-Q.

Generally, we expect to meet our liquidity requirements through cash proceeds
from real estate asset dispositions, net cash provided by operations and
proceeds from the Secondary DRIP Offering, as well as secured or unsecured
borrowings from banks and other lenders to finance our future acquisitions and
loan originations. We expect that substantially all net cash flows from
operations will be used to pay distributions to our stockholders after certain
capital expenditures, including tenant improvements and leasing commissions, are
paid; however, we have used, and may continue to use, other sources to fund
distributions, as necessary, including borrowings on our unencumbered assets. To
the extent that cash flows from operations are lower, distributions paid to our
stockholders may be lower. Operating cash flows are expected to increase as we
complete future acquisitions. We expect that substantially all net cash flows
from the Secondary DRIP Offering or debt financings will be used to fund
acquisitions, loan originations, certain capital expenditures, repayments of
outstanding debt or distributions and redemptions to our stockholders. We
believe that the resources stated above will be sufficient to satisfy our
operating requirements for the foreseeable future, and we do not anticipate a
need to raise funds from sources other than those described above within the
next 12 months. Management intends to use the proceeds from the disposition of
properties to, among other things, acquire additional high-quality net-lease
properties and credit investments in furtherance of our investment objectives
and for other general corporate purposes.

Contractual Obligations


As of September 30, 2022, we had debt outstanding with a carrying value of $4.4
billion and a weighted average interest rate of 4.5%. See Note 10 - Repurchase
Facilities, Credit Facilities and Notes Payable to our condensed consolidated
financial statements in this Quarterly Report on Form 10-Q for certain terms of
our debt outstanding.
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Our contractual obligations as of September 30, 2022 were as follows (in
thousands):

                                                                         Payments due by period (1)
                                                             Less Than 1                                                   More Than
                                          Total                 Year               1-3 Years           3-5 Years            5 Years

Principal payments – fixed rate debt $ 36,647 $ 443

$ 36,204 $ – $ –
Interest payments – fixed rate debt 3,537

                 1,591                1,946                  -                    -
Principal payments - variable rate
debt                                      470,860                     -               49,366            175,710              245,784
Interest payments - variable rate
debt (2)                                  113,857                24,972               46,267             41,289                1,329
Principal payments - first lien
mortgage loan                             134,007               134,007                    -                  -                    -
Interest payments - first lien
mortgage loan (2)                           8,630                 8,630                    -                  -                    -
Principal payments - ABS mortgage
notes                                     764,970                 6,450                    -                  -              758,520
Interest payments - ABS mortgage
notes (2)                                 163,355                21,179               42,227             42,227               57,722
Principal payments - credit
facilities                                691,500                     -              691,500                  -                    -
Interest payments - credit facilities
(2)                                        81,735                34,655               47,080                  -                    -
Principal payments - repurchase
facilities                              2,282,593               195,473            2,087,120                  -                    -
Interest payments - repurchase
facilities (2)                            209,479                95,751              113,728                  -                    -
Total                                 $ 4,961,170          $    523,151          $ 3,115,438          $ 259,226          $ 1,063,355

____________________________________


(1)The table does not include amounts due to CMFT Management or its affiliates
pursuant to our Management Agreement because such amounts are not fixed and
determinable. The table also does not include $344.7 million of unfunded
commitments related to our existing CRE loans held-for-investment, corporate
senior loans held-for-investment and liquid senior loans and $79.5 million of
unfunded commitments related to the NewPoint JV, which are subject to the
satisfaction of borrower milestones. In addition, the table does not include
$6.3 million of unsettled liquid senior loan acquisitions, which is included in
cash and cash equivalents in the accompanying condensed consolidated balance
sheet.

(2)Interest payments on the variable rate debt, first lien mortgage loan, ABS
mortgage notes, credit facilities and repurchase facilities have been calculated
based on outstanding balances as of September 30, 2022 through their respective
maturity dates. This is only an estimate as actual amounts borrowed and interest
rates could vary over time.

We expect to incur additional borrowings in the future to acquire additional
properties and credit investments. There is no limitation on the amount we may
borrow against any single improved property. As of September 30, 2022, our ratio
of debt to total gross assets net of gross intangible lease liabilities was
61.0% and our ratio of debt to the fair market value of our gross assets net of
gross intangible lease liabilities was 61.1%. Fair market value of our first
mortgage loans is based on the estimated market value as of September 30, 2022.
Fair market value of the remaining credit investments is based on the market
value as of September 30, 2022. Fair market value of our real estate assets is
based on the estimated market value as of March 31, 2021 that was used to
determine our estimated per share NAV, and for those assets acquired from April
1, 2021 through September 30, 2022 is based on the purchase price.

Cash Flow Analysis


Operating Activities. Net cash provided by operating activities increased by
$27.9 million for the nine months ended September 30, 2022, as compared to the
same period in 2021. The increase was primarily due to net increases in credit
investments of $2.8 billion driving higher interest income and the acquisition
of 115 properties in connection with the CIM Income NAV Merger, partially offset
by the disposition of 134 properties subsequent to September 30, 2021. See "-
Results of Operations" for a more complete discussion of the factors impacting
our operating performance.

Investing Activities. Net cash used in investing activities increased $147.5
million for the nine months ended September 30, 2022, as compared to the same
period in 2021. The change was primarily due to an increase in the net
investment in loans held-for-investment of $682.9 million and an increase in the
net investment of real estate-related securities of $272.7 million, partially
offset by an increase in proceeds from disposition of real estate assets of
$818.9 million.

Financing Activities. Net cash provided by financing activities decreased $35.0
million for the nine months ended September 30, 2022, as compared to the same
period in 2021. The change was primarily due to an increase in net repayments on
the repurchase facilities, notes payable and credit facilities of $29.9 million,
coupled with an increase in redemptions of common stock of $17.3 million due to
the reinstatement of the share redemption program on April 1, 2021. The change
was
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partially offset by decreased deferred financing costs paid as a result of a
reduced amount of debt agreements entered into compared to the same period in
2021.

Election as a REIT

We elected to be taxed, and operate our business to qualify, as a REIT for
federal income tax purposes commencing with our taxable year ended December 31,
2012. To maintain our qualification as a REIT, we must continue to meet certain
requirements relating to our organization, sources of income, nature of assets,
distributions of income to our stockholders and recordkeeping. As a REIT, we
generally are not subject to federal income tax on taxable income that we
distribute to our stockholders so long as we distribute at least 90% of our
annual taxable income (computed without regard to the dividends paid deduction
and excluding net capital gains).

If we fail to maintain our qualification as a REIT for any reason in a taxable
year and applicable relief provisions do not apply, we will be subject to tax on
our taxable income at regular corporate rates. We will not be able to deduct
distributions paid to our stockholders in any year in which we fail to maintain
our qualification as a REIT. We also will be disqualified for the four taxable
years following the year during which qualification was lost, unless we are
entitled to relief under specific statutory provisions. Such an event could
materially adversely affect our net income and net cash available for
distribution to stockholders. However, we believe that we are organized and
operate in such a manner as to maintain our qualification as a REIT for federal
income tax purposes. No provision for federal income taxes has been made in our
accompanying condensed consolidated financial statements. We are subject to
certain state and local taxes related to the operations of properties in certain
locations, which have been provided for in our accompanying condensed
consolidated financial statements.

Critical Accounting Policies and Significant Accounting Estimates


Our accounting policies have been established to conform with GAAP. The
preparation of financial statements in conformity with GAAP requires us to use
judgment in the application of accounting policies, including making estimates
and assumptions. These judgments affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Management believes that we have made these estimates and
assumptions in an appropriate manner and in a way that accurately reflects our
financial condition. We continually test and evaluate these estimates and
assumptions using our historical knowledge of the business, as well as other
factors, to ensure that they are reasonable for reporting purposes. However,
actual results may differ from these estimates and assumptions. If our judgment
or interpretation of the facts and circumstances relating to various
transactions had been different, it is possible that different accounting
policies would have been applied, thus resulting in a different presentation of
the financial statements. Additionally, other companies may utilize different
estimates that may impact comparability of our results of operations to those of
companies in similar businesses. We believe the following critical accounting
policies govern the significant judgments and estimates used in the preparation
of our financial statements, which should be read in conjunction with the more
complete discussion of our accounting policies and procedures included in Note 2
- Summary of Significant Accounting Policies to our audited consolidated
financial statements in our Annual Report on Form 10-K for the year ended
December 31, 2021. We consider our critical accounting policies to be the
following:

•Recoverability of Real Estate Assets;

•Allocation of Purchase Price of Real Estate Assets; and

•Current Expected Credit Losses.


A complete description of such policies and our considerations is contained in
our Annual Report on Form 10-K for the year ended December 31, 2021. The
information included in this Quarterly Report on Form 10-Q should be read in
conjunction with our audited consolidated financial statements as of and for the
year ended December 31, 2021 and related notes thereto.

Related-Party Transactions and Agreements


We have entered into agreements with CMFT Management and our Investment Advisor
whereby we agree to pay certain fees to, or reimburse certain expenses of, CMFT
Management, the Investment Advisor or their affiliates. In addition, we have
invested in, and may continue to invest in, certain co-investments with funds
that are advised by an affiliate of CMFT Management. We may also originate loans
to third parties that use the proceeds to finance the acquisition of real estate
from funds that are advised by an affiliate of CMFT Management. See Note 12 -
Related-Party Transactions and Arrangements to our condensed consolidated
financial statements in this Quarterly Report on Form 10-Q for a discussion of
the various related-party transactions, agreements and fees.
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Conflicts of Interest


Richard S. Ressler, the chairman of our Board, chief executive officer and
president, who is also a founder and principal of CIM and is an officer/director
of certain of its affiliates, is the vice president of our manager. One of our
directors, Avraham Shemesh, who is also a founder and principal of CIM and is an
officer/director of certain of its affiliates, is the president and treasurer of
our manager. Additionally, two of our directors, Jason Schreiber and Emily Vande
Krol, are employees of CIM. Nathan D. DeBacker, our chief financial officer and
treasurer, is a vice president of our manager and is an officer of certain of
its affiliates. As such, there may be conflicts of interest where CMFT
Management or its affiliates, while serving in the capacity as sponsor, general
partner, officer, director, key personnel and/or advisor for CIM or another
program sponsored or operated by affiliates of our manager, may be in conflict
with us in connection with providing services to other real estate-related
programs related to property acquisitions, property dispositions, and property
management, among others. The compensation arrangements between affiliates of
CMFT Management and these other real estate programs sponsored or operated by
affiliates of our manager could influence the advice provided to us. See Part I,
Item 1. Business - Conflicts of Interest in our Annual Report on Form 10-K for
the year ended December 31, 2021.

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