0000908311-24-000019.txt : 20240515 0000908311-24-000019.hdr.sgml : 20240515 20240515165929 ACCESSION NUMBER: 0000908311-24-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 117 CONFORMED PERIOD OF REPORT: 20240331 FILED AS OF DATE: 20240515 DATE AS OF CHANGE: 20240515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Creative Media & Community Trust Corp CENTRAL INDEX KEY: 0000908311 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] ORGANIZATION NAME: 05 Real Estate & Construction IRS NUMBER: 756446078 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13610 FILM NUMBER: 24952265 BUSINESS ADDRESS: STREET 1: 17950 PRESTON RD STREET 2: SUITE 600 CITY: DALLAS STATE: TX ZIP: 75252 BUSINESS PHONE: 972-349-3200 MAIL ADDRESS: STREET 1: 17950 PRESTON RD STREET 2: SUITE 600 CITY: DALLAS STATE: TX ZIP: 75252 FORMER COMPANY: FORMER CONFORMED NAME: CIM Commercial Trust Corp DATE OF NAME CHANGE: 20140429 FORMER COMPANY: FORMER CONFORMED NAME: PMC COMMERCIAL TRUST /TX DATE OF NAME CHANGE: 19950111 10-Q 1 cmct-20240331.htm 10-Q cmct-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
     FORM
10-Q
(Mark One):  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                             to                            
Commission File Number 1-13610
CREATIVE MEDIA & COMMUNITY TRUST CORPORATION
(Exact name of registrant as specified in its charter)
Maryland75-6446078
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
5956 Sherry Lane,Suite 700,Dallas,Texas75225
(Address of Principal Executive Offices)(Zip Code)
(972)
349-3200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report) 
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, $0.001 Par ValueCMCT
Nasdaq Global Market
Common Stock, $0.001 Par ValueCMCT
Tel Aviv Stock Exchange
(Title of each class)(Trading symbol)(Name of each exchange on which registered)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerNon-accelerated filer
Smaller reporting company Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 
As of May 9, 2024, the Registrant had outstanding 22,786,741 shares of common stock, par value $0.001 per share.


CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
INDEX
   PAGE NO.
PART I.Financial Information
Financial Statements
 
 
 
 
 
PART II.Other Information



PART I
Financial Information
Item 1.
Financial Statements
CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share amounts) (Unaudited)
 March 31, 2024December 31, 2023
ASSETS  
Investments in real estate, net$700,618 $704,762 
Investments in unconsolidated entities 33,709 33,505 
Cash and cash equivalents21,307 19,290 
Restricted cash24,335 24,938 
Loans receivable, net (Note 5)56,229 57,005 
Accounts receivable, net6,030 5,347 
Deferred rent receivable and charges, net27,793 28,222 
Other intangible assets, net3,852 3,948 
Other assets13,630 14,183 
TOTAL ASSETS$887,503 $891,200 
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY  
LIABILITIES:  
Debt, net$472,813 $471,561 
Accounts payable and accrued expenses25,639 26,426 
Due to related parties3,333 3,463 
Other liabilities13,639 12,981 
Total liabilities515,424 514,431 
COMMITMENTS AND CONTINGENCIES (Note 15)
EQUITY:  
Series A cumulative redeemable preferred stock, $0.001 par value; 34,211,995 and 34,611,501 shares authorized as of March 31, 2024 and December 31, 2023, respectively; 8,820,338 and 7,042,333 shares issued and outstanding, respectively, as of March 31, 2024 and 8,820,338 and 7,431,839 shares issued and outstanding, respectively, as of December 31, 2023; liquidation preference of $25.00 per share, subject to adjustment
176,007 185,704 
Series A1 cumulative redeemable preferred stock, $0.001 par value; 27,880,928 and 27,904,974 shares authorized as of March 31, 2024 and December 31, 2023, respectively; 11,327,248 and 11,208,176 shares issued and outstanding, respectively, as of March 31, 2024 and 10,473,369 and 10,378,343 shares issued and outstanding, respectively, as of December 31, 2023; liquidation preference of $25.00 per share, subject to adjustment
277,585 256,935 
Series D cumulative redeemable preferred stock, $0.001 par value; 26,991,590 shares authorized as of March 31, 2024 and December 31, 2023; 56,857 and 48,447 shares issued and outstanding, respectively, as of March 31, 2024 and 56,857 and 48,447 shares issued and outstanding, respectively, as of December 31, 2023; liquidation preference of $25.00 per share, subject to adjustment
1,190 1,190 
Common stock, $0.001 par value; 900,000,000 shares authorized; 22,786,741 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
23 23 
Additional paid-in capital851,234 852,476 
Distributions in excess of earnings(936,151)(921,925)
Total stockholders’ equity369,888 374,403 
Non-controlling interests2,191 2,366 
Total equity372,079 376,769 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY$887,503 $891,200 
The accompanying notes are an integral part of these consolidated financial statements.
1

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)
 Three Months Ended March 31,
 20242023
REVENUES:  
Rental and other property income$18,773 $14,886 
Hotel income11,264 10,923 
Interest and other income3,961 3,103 
Total Revenues33,998 28,912 
EXPENSES:  
Rental and other property operating17,981 15,225 
Asset management and other fees to related parties          394 720 
Expense reimbursements to related parties—corporate605 528 
Expense reimbursements to related parties—lending segment563 608 
Interest8,977 6,236 
General and administrative1,619 1,925 
Transaction-related costs690 3,360 
Depreciation and amortization6,478 9,502 
Total Expenses37,307 38,104 
(Loss) income from unconsolidated entities(326)768 
Gain on sale of real estate (Note 3) 1,104 
LOSS BEFORE PROVISION FOR INCOME TAXES(3,635)(7,320)
Provision for income taxes270 256 
NET LOSS(3,905)(7,576)
Net loss attributable to non-controlling interests175 625 
NET LOSS ATTRIBUTABLE TO THE COMPANY(3,730)(6,951)
Redeemable preferred stock dividends declared or accumulated (Note 11)(7,759)(5,391)
Redeemable preferred stock redemptions (Note 11)(806)(373)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS$(12,295)$(12,715)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE:  
Basic$(0.54)$(0.56)
Diluted$(0.54)$(0.56)
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:  
Basic22,738 22,707 
Diluted22,738 22,707 
   The accompanying notes are an integral part of these consolidated financial statements.
2

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Equity
(In thousands, except share and per share amounts) (Unaudited)
 Three Months Ended March 31, 2024
Common StockPreferred Stock
 SharesPar
Value
SharesPar
Value
Additional
Paid-in
Capital
Distributions
in Excess of Earnings
Total Stockholders’ EquityNon-controlling
Interests
Total Equity
Balances, December 31, 202322,786,741 $23 17,858,629 $443,829 $852,476 $(921,925)$374,403 $2,366 $376,769 
Stock-based compensation expense
— — — — 55 — 55 — 55 
Common dividends ($0.085 per share)
— — — — — (1,937)(1,937)— (1,937)
Issuance of Series A1 Preferred Stock— — 853,879 21,246 (2,180)— 19,066 — 19,066 
Redemption of Series A1 Preferred Stock— — (24,046)(595)52 (24)(567)— (567)
Dividends to holders of Series A1 Preferred Stock ($0.48938 per share)
— — — — — (5,251)(5,251)— (5,251)
Dividends to holders of Series D Preferred Stock ($0.35313 per share)
— — — — — (17)(17)— (17)
Redemption of Series A Preferred Stock— — (389,506)(9,698)831 (776)(9,643)— (9,643)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)
— — — — — (2,491)(2,491)— (2,491)
Net loss— — — — — (3,730)(3,730)(175)(3,905)
Balances, March 31, 202422,786,741 $23 18,298,956 $454,782 $851,234 $(936,151)$369,888 $2,191 $372,079 
    

 Three Months Ended March 31, 2023
Common StockPreferred Stock
 SharesPar
Value
SharesPar
Value
Additional
Paid-in
Capital
Distributions
in Excess of Earnings
Total Stockholders’ EquityNon-controlling
Interests
Total Equity
Balances, December 31, 202222,737,853 $23 13,570,353 $337,762 $861,721 $(837,846)$361,660 $373 $362,033 
Cumulative-effect adjustment upon adoption of ASU 2016-13— — — — — (619)(619)— (619)
Acquisition of non-controlling interests
— — — — — — — 5,002 5,002 
Stock-based compensation expense
— — — — 55 — 55 — 55 
Common dividends ($0.085 per share)
— — — — — (1,933)(1,933)— (1,933)
Issuance of Series A1 Preferred Stock— — 1,032,433 25,569 (2,291)— 23,278 — 23,278 
Redemption of Series A1 Preferred Stock— — (12,870)(319)28 (11)(302)— (302)
Dividends to holders of Series A1 Preferred Stock ($0.39563 per share)
— — — — — (2,559)(2,559)— (2,559)
Dividends to holders of Series D Preferred Stock ($0.35313 per share)
— — — — — (17)(17)— (17)
Reclassification of Series A Preferred stock to permanent equity— — 389,325 9,699 (887)— 8,812 — 8,812 
Redemption of Series A Preferred Stock— — (189,753)(4,723)403 (362)(4,682)— (4,682)
Dividends to holders of Series A Preferred Stock ($0.34375 per share)
— — — — — (2,810)(2,810)— (2,810)
Net loss— — — — — (6,951)(6,951)(625)(7,576)
Balances, March 31, 202322,737,853 $23 14,789,488 $367,988 $859,029 $(853,108)$373,932 $4,750 $378,682 
The accompanying notes are an integral part of these consolidated financial statements.
3

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 Three Months Ended
March 31,
 20242023
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net loss$(3,905)$(7,576)
Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation and amortization, net6,567 9,604 
Gain on sale of real estate (1,104)
Amortization of deferred debt origination costs624 395 
Amortization of premiums and discounts on debt(14)(1)
Unrealized premium adjustment196 265 
Amortization of deferred costs and accretion of fees on loans receivable, net(8)(99)
Write-offs of uncollectible receivables411 13 
(Gain) loss on interest rate caps(55)339 
Deferred income taxes13 (11)
Stock-based compensation55 55 
Income (loss) from unconsolidated entities326 (768)
Loans funded, held for sale to secondary market(5,799)(7,849)
Proceeds from sale of guaranteed loans5,471 6,271 
Principal collected on loans subject to secured borrowings560 605 
Commitment fees remitted and other operating activity(160)(150)
Changes in operating assets and liabilities:  
Accounts receivable(1,130)(4,163)
Other assets(793)(5,424)
Accounts payable and accrued expenses(986)14,007 
Deferred leasing costs(285)(246)
Other liabilities658 (2,119)
Due to related parties(130)722 
Net cash provided by operating activities1,616 2,766 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Capital expenditures(1,690)(4,816)
Acquisition of real estate (96,731)
Proceeds from sale of real estate, net1,096 16,714 
Investment in unconsolidated entity(530)(6,626)
Loans funded(1,934)(2,932)
Principal collected on loans2,665 3,323 
Net cash used in investing activities(393)(91,068)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Payment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes(3,615)(108,203)
Proceeds from revolving credit facilities, term notes and mortgages5,000 212,000 
Proceeds from SBA 7(a) loan-backed notes 54,141 
Payment of principal on secured borrowings(560)(607)
Payment of deferred preferred stock offering costs(372)(283)
Payment of deferred debt origination costs (2,400)
Payment of common dividends(1,937)(1,933)
Net proceeds from issuance of Preferred Stock19,549 23,644 
Payment of preferred stock dividends(7,651)(9,820)
Redemption of Preferred Stock(10,223)(88,884)
Net cash provided by financing activities191 77,655 
(Continued)
4

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
(In thousands) (Unaudited)
 Three Months Ended
March 31,
 20242023
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH1,414 (10,647)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:  
Beginning of period44,228 57,480 
End of period$45,642 $46,833 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$21,307 $22,491 
Restricted cash24,335 24,342 
Total cash and cash equivalents and restricted cash$45,642 $46,833 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:  
Cash paid during the period for interest$8,636 $4,093 
Federal income taxes paid$16 $ 
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:  
Accrued capital expenditures, tenant improvements and real estate developments$1,514 $3,494 
Proceeds from the sale of real estate committed but not yet received$ $17,657 
Other amounts due from Unconsolidated Joint Venture partners included in other assets$1,445 $1,445 
Non-cash contributions to Unconsolidated Joint Venture$ $8,600 
Accrued preferred stock offering costs $247 $101 
Accrual of dividends payable to common stockholders$1,937 $1,933 
Accrual of dividends payable to preferred stockholders$2,610 $1,832 
Preferred stock offering costs offset against redeemable preferred stock$513 $403 
Reclassification of Series A Preferred Stock from temporary equity to permanent equity$ $8,812 
Mortgage notes assumed in connection with our acquisition of real estate$ $181,318 
Accrued redeemable preferred stock fees$246 $413 
Acquisition of non-controlling interests$ $5,002 
The accompanying notes are an integral part of these consolidated financial statements.
5

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited)

1. ORGANIZATION AND OPERATIONS
Creative Media & Community Trust Corporation (formerly known as CIM Commercial Trust Corporation) (the “Company”), is a Maryland corporation and real estate investment trust (“REIT”). The Company primarily acquires, develops, owns and operates both premier multifamily properties situated in vibrant communities throughout the United States and Class A and creative office real assets in markets with similar business and employment characteristics to its multifamily investments. The Company also owns one hotel in northern California and a lending platform that originates loans under the Small Business Administration (“SBA”) 7(a) loan program. The Company seeks to apply the expertise of CIM Group Management, LLC (“CIM Group”) and its affiliates to the acquisition, development and operation of premier multifamily properties and creative office assets that cater to rapidly growing industries such as technology, media and entertainment in vibrant and emerging communities throughout the United States.
The Company’s common stock, $0.001 par value per share (“Common Stock”), is currently traded on the Nasdaq Global Market (“Nasdaq”) under the ticker symbol “CMCT”, and on the Tel Aviv Stock Exchange (the “TASE”) under the ticker symbol “CMCT.” The Company has authorized for issuance 900,000,000 shares of common stock and 100,000,000 shares of preferred stock (“Preferred Stock”).
Commencing in June 2022, the Company conducted a public offering with respect to shares of its Series A1 Preferred Stock, par value $0.001 per share with an initial stated value of $25.00 per share, subject to adjustment (Note 11). The Company has filed a Registration Statement on Form S-11 in respect of such offering and anticipates continuing the offering upon effectiveness of such Registration Statement on Form S-11. Nothing contained in this Quarterly Report on Form 10-Q is or shall be deemed to be an offer to sell any securities of the Company, or the solicitation of any offer to buy any securities of
the Company, in any jurisdiction, which may only be made pursuant to appropriate offering documentation.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For more information regarding the Company’s significant accounting policies and estimates, please refer to “Basis of Presentation and Summary of Significant Accounting Policies” contained in Note 2 to the Company’s consolidated financial statements for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 29, 2024.
Interim Financial Information—The accompanying interim consolidated financial statements of the Company have been prepared by the Company’s management in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying financial information reflects all adjustments which are, in the opinion of the Company’s management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The accompanying interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto, included in the 2023 Form 10-K.
Principles of Consolidation—The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In determining whether the Company has controlling interests in an entity and the requirement to consolidate the accounts in that entity, the Company analyzes its investments in real estate in accordance with standards set forth in GAAP to determine whether they are variable interest entities (“VIEs”), and if so, whether the Company is the primary beneficiary. The Company’s judgment with respect to its level of influence or control over an entity and whether the Company is the primary beneficiary of a VIE involves consideration of various factors, including the form of the Company’s ownership interest, the Company’s voting interest, the size of the Company’s investment (including loans), and the Company’s ability to participate in major policy-making decisions. The Company’s ability to correctly assess its influence or control over an entity affects the presentation of these investments in real estate on the Company’s consolidated financial statements. As of March 31, 2024, the Company has determined that the trust formed for the benefit of the note holders (the “Trust”) for the securitization of the unguaranteed portion of certain of the Company’s SBA 7(a) loans receivable is considered a VIE. Applying the consolidation requirements for VIEs, the Company determined that it is the primary beneficiary based on its power to direct activities through its role as servicer and its obligations to absorb losses and right to receive benefits. In addition, as of March 31, 2024, the Company has determined that its
6

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
Unconsolidated Joint Ventures (as defined below) are considered VIEs. Applying the consolidation requirements for VIEs, the Company determined that it is not the primary beneficiary based on its lack of power to direct activities and its obligations to absorb losses and right to receive benefits. Therefore, the Unconsolidated Joint Ventures do not qualify for consolidation. The Company accounts for its investments in Unconsolidated Joint Ventures as equity method investments.
Investments in Real Estate—Investments in real estate are stated at depreciated cost. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:
Buildings and improvements
15 - 40 years
Furniture, fixtures, and equipment
3 - 5 years
Tenant improvementsLesser of useful life or lease term
The fair value of real estate acquired is recorded to acquired tangible assets, consisting primarily of land, land improvements, building and improvements, tenant improvements, furniture, fixtures, and equipment, and identified intangible assets and liabilities, consisting of the value of acquired above-market and below-market leases, in-place leases and ground leases, if any, based in each case on their respective fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market rate loans, are recorded based on the fair value of any loans assumed in connection with acquiring the real estate.
Capitalized Project Costs
The Company capitalizes project costs, including pre-construction costs, interest expense, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, or construction of a project, while activities are ongoing to prepare an asset for its intended use. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. Ordinary repairs and maintenance are expensed as incurred.
Recoverability of Investments in Real Estate—The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. Investments in real estate are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If, and when, such events or changes in circumstances are present, the recoverability of assets to be held and used requires significant judgment and estimates and is measured by a comparison of the carrying amount to the future undiscounted cash flows expected to be generated by the assets and their eventual disposition. If the undiscounted cash flows are less than the carrying amount of the assets, an impairment is recognized to the extent the carrying amount of the assets exceeds the estimated fair value of the assets. The process for evaluating real estate impairment requires management to make significant assumptions related to certain inputs, including rental rates, lease-up period, occupancy, estimated holding periods, capital expenditures, growth rates, market discount rates and terminal capitalization rates. These inputs require a subjective evaluation based on the specific property and market. Changes in the assumptions could have a significant impact on either the fair value, the amount of impairment charge, if any, or both. Any asset held for sale is reported at the lower of the asset’s carrying amount or fair value, less costs to sell. When an asset is identified by the Company as held for sale, the Company will cease recording depreciation and amortization of the asset. The Company did not recognize any impairment of long-lived assets during the three months ended March 31, 2024 and 2023 (Note 3).
Investments in Unconsolidated Entities—The Company accounts for its investments in the unconsolidated joint ventures (the “Unconsolidated Joint Ventures”) under the equity method, as the Company has the ability to exercise significant influence over the investments. The Unconsolidated Joint Ventures record their assets and liabilities at fair value. As such, the Company records its share of the Unconsolidated Joint Ventures’ unrealized gains or losses as well as its share of the revenues and expenses on a quarterly basis as an adjustment to the carrying value of the investment on the Company’s consolidated balance sheet and such share is recognized within the Company’s income from unconsolidated entities on the consolidated statements of operations.
Derivative Financial Instruments—As part of risk management and operational strategies, from time to time, we may enter into derivative contracts with various counterparties. All derivatives are recognized on the balance sheet at their estimated fair value. On the date that we enter into a derivative contract, we designate the derivative as a fair value hedge, a cash flow hedge, a foreign currency fair value or cash flow hedge, a hedge of a net investment in a foreign operation, or a trading or non-hedging instrument.
7

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company has interest rate caps that are used to manage exposure to interest rate movements, but do not meet the requirements to be designated as hedging instruments. The change in fair value of the derivative instruments that are not designated as hedges is recorded directly to earnings as interest expense on the accompanying consolidated statements of operations. See Note 8 for further disclosures about our derivative financial instruments and hedging activities.
Revenue Recognition—At the inception of a revenue-producing contract, the Company determines if a contract qualifies as a lease and if not, then as a customer contract. Based on this determination, the appropriate treatment in accordance with GAAP is applied to the contract, including its revenue recognition.
Revenue from leasing activities
The Company operates as a lessor of both office and multifamily real estate assets. When the Company enters into a contract or amends an existing contract, the Company evaluates if the contracts meet the definition of a lease using the following criteria:
One party (lessor) must hold an identified asset;
The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of the contract; and
The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract.
The Company determined that the Company’s contracts with its tenants explicitly identify the premises and that any substitution rights to relocate tenants to other premises within the same building stated in the contract are not substantive. Additionally, so long as payments are made timely under such contracts, the Company’s tenants have the right to obtain substantially all the economic benefits from the use of the identified asset and can direct how and for what purpose the premises are used to conduct their operations. Therefore, the contracts with the Company’s tenants constitute leases.
All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases when collectability is probable and the tenant has taken possession or controls the physical use of the leased asset. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is recorded as deferred rent. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is considered the owner of the improvements, any tenant improvement allowance that is funded is treated as an incentive. Lease incentives paid to tenants are included in other assets and amortized as a reduction to rental revenue on a straight-line basis over the term of the related lease. As of March 31, 2024 and December 31, 2023, lease incentives of $3.9 million and $3.9 million, respectively, are presented net of accumulated amortization of $3.4 million and $3.3 million, respectively.
Reimbursements from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes, insurance, and other recoverable costs, are recognized as revenue and are included in rental and other property income in the period the expenses are incurred, with the corresponding expenses included in rental and other property operating expense. Tenant reimbursements are recognized and presented on a gross basis when the Company is primarily responsible for fulfilling the promise to provide the specified good or service and control that specified good or service before it is transferred to the tenant. The Company has elected not to separate lease and non-lease components as the pattern of revenue recognition does not differ for the two components, and the non-lease component is not the primary component in the Company’s leases.
In addition to minimum rents, certain leases, including the Company’s parking leases with third-party operators, provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums. Percentage rent is recognized once lessees’ specified sales targets have been met.
8

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
For the three months ended March 31, 2024 and 2023, the Company recognized rental income as follows (in thousands):
Three Months Ended March 31,
20242023
Rental and other property income
Fixed lease payments (1)
$16,348 $12,474 
Variable lease payments (2)
2,425 2,412 
Rental and other property income$18,773 $14,886 
______________________
(1)Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above-market leases, below-market leases and lease incentives.
(2)Variable lease payments include expense reimbursements billed to tenants and percentage rent, net of bad debt expense from the Company’s operating leases plus cash payments from tenants deemed not probable of collection.
Collectability of Lease-Related Receivables
The Company continually reviews whether collection of lease-related receivables, including any straight-line rent, and current and future operating expense reimbursements from tenants is probable. The determination of whether collectability is probable takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon the determination that the collectability of a receivable is not probable, the Company will record a reduction to rental and other property income and a decrease in the outstanding receivable. Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of lease-related receivables is based on the best information available at the time of estimate. The Company does not use a general reserve approach. As of March 31, 2024 and December 31, 2023, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $1.2 million and $868,000, respectively, across all operating leases.
Revenue from lending activities
Interest income included in interest and other income is comprised of interest earned on loans and the Company’s short-term investments and the accretion of loan discounts. Interest income on loans is accrued as earned with the accrual of interest suspended when the related loan becomes a Non-Accrual Loan (as defined below).
Revenue from hotel activities
The Company recognizes revenue from hotel activities separate from its leasing activities. At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. Various performance obligations of hotel revenues can be categorized as follows:
cancellable and noncancelable room revenues from reservations and
ancillary services including facility usage and food or beverage.
Cancellable reservations represent a single performance obligation of providing lodging services at the hotel. The Company satisfies its performance obligation and recognizes revenues associated with these reservations over time as services are rendered to the customer. The Company satisfies its performance obligation and recognizes revenues associated with noncancelable reservations at the earlier of (i) the date on which the customer cancels the reservation or (ii) over time as services are rendered to the customer.
Ancillary services include facilities usage and providing food and beverage. The Company satisfies its performance obligation and recognizes revenues associated with these services at a point in time when the good or service is delivered to the customer.
9

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
At inception of a contract with a customer for hotel goods and services, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate.
The Company presents hotel revenues net of sales, occupancy, and other taxes.
Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 17 (in thousands):
Three Months Ended March 31,
20242023
Hotel properties
Hotel income$11,264 $10,923 
Rental and other property income490 490 
Interest and other income100 79 
Hotel revenues$11,854 $11,492 
Tenant recoveries outside of the lease agreements
Tenant recoveries outside of the lease agreements are related to construction projects in which the Company’s tenants have agreed to fully reimburse the Company for all costs related to construction. These services include architectural, permit expediter and construction services. At inception of the contract with the customer, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate. While these individual services are distinct, in the context of the arrangement with the customer, all of these services are bundled together and represent a single package of construction services requested by the customer. The Company satisfies its performance obligation and recognizes revenues associated with these services over time as the construction is completed. No such amounts were recognized for tenant recoveries outside of the lease agreements for each of the three months ended March 31, 2024 and 2023. As of March 31, 2024, there were no remaining performance obligations associated with tenant recoveries outside of the lease agreements.
Loans Receivable—The Company’s loans receivable are carried at their unamortized principal balance less
unamortized acquisition discounts and premiums, retained loan discounts and reserves for expected credit losses. Acquisition discounts or premiums, origination fees and retained loan discounts are amortized as a component of interest and other income using the effective interest method over the expected life of the respective loans, or on a straight-line basis when it approximates the effective interest method. All loans were originated pursuant to programs sponsored by the Small Business Administration (the “SBA”) under the SBA 7(a) Small Business Loan Program (the “SBA 7(a) Program”).
Pursuant to the SBA 7(a) Program, the Company sells the portion of the loan that is guaranteed by the SBA. Upon sale of the SBA guaranteed portion of the loans, which are accounted for as sales, the unguaranteed portion of the loan retained by the Company is recorded at fair value and a discount is recorded as a reduction in basis of the retained portion of the loan. Unamortized retained loan discounts were $8.3 million and $8.4 million as of March 31, 2024 and December 31, 2023, respectively.
A loan receivable is generally classified as non-accrual (a “Non-Accrual Loan”) if (i) it is past due as to payment of principal or interest for a period of 60 days or more, (ii) any portion of the loan is classified as doubtful or is charged-off or (iii) the repayment in full of the principal and/or interest is in doubt. Generally, loans are charged-off when management determines that the Company will be unable to collect any remaining amounts due under the loan agreement, either through liquidation of collateral or other means. Interest income, included in interest and other income, on a Non-Accrual Loan is recognized on the cost recovery basis.
Current Expected Credit LossesOn January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses, and subsequent amendments (“ASU 2016-13”). The current expected credit losses (“CECL”) required under ASU 2016-13 reflects the Company’s current estimate of potential credit losses related to the Company’s loans receivable included in the consolidated balance sheets. The initial expected credit losses recorded on January 1, 2023 is reflected as a direct charge to distributions in excess of earnings on the Company’s consolidated statements of equity; however, subsequent changes to CECL are recognized through net income on the Company’s consolidated statements of operations. While ASU 2016-13 does not require any particular method for determining CECL, it does specify the allowance should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan. In addition, other than a
10

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
few narrow exceptions, ASU 2016-13 requires that all financial instruments subject to the credit loss model have some amount of loss reserve to reflect the GAAP principal underlying the credit loss model that all loans, debt securities, and similar assets have some inherent risk of loss, regardless of credit quality, subordinate capital, or other mitigating factors.
The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost. The Company recorded a cumulative-effective adjustment to the opening distributions in excess of earnings in its consolidated statement of equity as of January 1, 2023 of $619,000. This represents a total CECL reserve transition adjustment of approximately $783,000, net of a $164,000 deferred tax asset. As of March 31, 2024 and December 31, 2023, the Company had a total CECL of $1.6 million and $1.7 million, respectively.
The Company estimates CECL for its loans primarily using its historical experience with loan write-offs, historical charge-offs from third-party firms, and the weighted average remaining maturity method, which has been identified as an acceptable method for estimating CECL reserves in the Financial Accounting Standards Board (“FASB”) Staff Q&A Topic 326, No. 1. This method requires the Company to reference historical loan loss data across a comparable data set and apply such loss rate to each loan investment over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe. The Company considers loans that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral less costs to sell and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans with respect to which the Company determines foreclosure is not probable, the Company applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. The Company may use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral and availability of relevant historical market loan loss data.
Quarterly, the Company evaluates the risk of all loans receivable and assigns a risk rating based on a variety of factors, which are grouped as follows: (i) loan and credit structure, including the as-is loan-to-value (“LTV”) ratio and structural features; (ii) quality and stability of real estate value and operating cash flow, including debt yield, dynamics of the geography, local market, physical condition and stability of cash flow; and (iii) quality, experience and financial condition of the borrower.
Based on a 5-point scale, the Company’s loans receivable are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows:
1-Acceptable — These are assets of high quality;

2-Other Assets Especially Mentioned (“OAEM”) — These are assets that are generally profitable but exhibit potential weakness or weaknesses, including, but not limited to, no significant pay history as detailed below for loans originated generally within the last year. Such weaknesses could result in deterioration if not corrected;

3-Substandard — These assets generally have a well-defined weakness or weaknesses which could hinder collection efforts;

4-Doubtful — These assets have weakness or weaknesses similar to substandard loans; however, the weakness or weaknesses are so extreme that significant loss potential exists in all cases and

5-Loss — Assets assigned this classification have no value and thus have been or are in the process of being charged off.

The Company generally assigns a risk rating of “2” to all newly originated loans (generally within one year of origination) due to lack of management experience and/or lack of adequate historical debt coverage at the origination date. These loans likely will be classified to acceptable within two years of origination.
Deferred Rent Receivable and Charges—Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 11) deferred financing costs and other deferred costs. Deferred leasing costs, which represent lease commissions and other direct costs associated with the acquisition of tenants, are capitalized and amortized on a straight-line basis over the terms of the related leases. Deferred offering costs represent direct costs incurred in connection with the Company’s offerings of Series A1 Preferred Stock (as defined below), Series A Preferred Stock (as defined below), and, after January 2020, Series A Preferred Stock (as defined below) and Series D Preferred Stock (as defined below), excluding
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
costs specifically identifiable to a closing, such as commissions, dealer-manager fees, and other offering fees and expenses. Generally, for a specific issuance of securities, issuance-specific offering costs are recorded as a reduction of proceeds raised on the issuance date and offering costs incurred but not directly related to a specifically identifiable closing of a security are deferred. Deferred offering costs are first allocated to each issuance of a security on a pro-rata basis equal to the ratio of the number of securities issued in a given issuance to the maximum number of securities that are expected to be issued in the related offering. In the case of the Series A Preferred Stock issued prior to February 2020, the issuance-specific offering costs and the deferred offering costs allocated to such issuance were further allocated to the Series A Preferred Stock and Series A Preferred Warrants issued in such issuance based on the relative fair value of the instruments on the date of issuance. The deferred offering costs allocated to the Series A Preferred Stock and Series A Preferred Warrants are reductions to temporary equity and permanent equity, respectively. Deferred financing costs related to the securing of a revolving line of credit are presented as an asset and amortized ratably over the term of the line of credit arrangement. As such, the Company’s current and corresponding prior period total deferred costs, net in the accompanying consolidated balance sheets relate only to the revolving loan portion of the credit facilities.
As of March 31, 2024 and December 31, 2023, deferred rent receivable and charges consist of the following (in thousands):
 March 31, 2024December 31, 2023
Deferred rent receivable$14,783 $14,757 
Deferred leasing costs, net of accumulated amortization of $10,810 and $10,483, respectively
6,360 6,613 
Deferred offering costs4,906 4,925 
Deferred financing costs, net of accumulated amortization of $947 and $764, respectively
1,253 1,436 
Other deferred costs491 491 
Deferred rent receivable and charges, net$27,793 $28,222 

Redeemable Preferred Stock—Beginning on the date of original issuance of any given shares of Series A1 Preferred Stock, par value $0.001 per share (“Series A1 Preferred Stock”), with an initial stated value of $25.00 per share, subject to adjustment (the “Series A1 Preferred Stock Stated Value”), Series A Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) with an initial stated value of $25.00 per share, subject to adjustment (the “Series A Preferred Stock Stated Value”), or Series D Preferred Stock, par value $0.001 per share (“Series D Preferred Stock”), with an initial stated value of $25.00 per share, subject to adjustment (the “Series D Preferred Stock Stated Value”), the holder of such shares has the right to require the Company to redeem such shares, subject to certain limitations as discussed in Note 11. The Company records the activity related to the Series A1 Preferred Stock, Series A Preferred Warrants and Series D Preferred Stock in permanent equity. In the event a holder of Series A Preferred Stock requests redemption of such shares and such redemption takes place prior to the first anniversary of the date of original issuance, the Company is required to pay such redemption in cash. As a result, the Company recorded issuances of Series A Preferred Stock in temporary equity.
Non-controlling Interests—Non-controlling interests represent the interests in various properties owned by third parties.
Restricted Cash—The Company’s mortgage loan and hotel management agreements provide for depositing cash into restricted accounts reserved for capital expenditures, free rent, tenant improvement and leasing commission obligations. Restricted cash also includes cash required to be segregated in connection with certain of the Company’s loans receivable and with its SBA 7(a) loan-backed notes.
Use of Estimates—The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases such estimates on historical experience, information available at the time, and assumptions the Company believes to be reasonable under the circumstances at such time. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements—In August 2023, the FASB issued ASU No. 2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 applies to the formation of a joint venture and requires a joint venture to initially measure all contributions received
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
upon its formation at fair value. The guidance is intended to reduce diversity in practice and provide users of joint venture financial statements with more decision-useful information. The amendments are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. The Company does not believe the adoption of ASU 2023-05 will have a material impact on its consolidated financial statements and disclosures.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 enhances the disclosures required for reportable segments on an annual and interim basis. ASU 2023-07 is effective on a retrospective basis for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements and disclosures.
3. INVESTMENTS IN REAL ESTATE
Investments in real estate consist of the following (in thousands):
 March 31, 2024December 31, 2023
Land$175,682 $175,715 
Land improvements5,863 5,862 
Buildings and improvements633,963 633,299 
Furniture, fixtures, and equipment11,573 11,627 
Tenant improvements26,596 26,460 
Work in progress16,635 15,915 
Investments in real estate870,312 868,878 
Accumulated depreciation(169,694)(164,116)
Net investments in real estate$700,618 $704,762 
For the three months ended March 31, 2024 and 2023, the Company recorded depreciation expense of $5.8 million and $4.8 million, respectively.
2024 Transactions—There were no acquisitions or dispositions during the three months ended March 31, 2024.
2023 TransactionsDuring the three months ended March 31, 2023, the Company acquired an interest in the following properties from subsidiaries indirectly wholly-owned by a fund that is managed by affiliates of CIM Group. The purchases were accounted for as asset acquisitions.
AssetDate ofInterest Purchase
PropertyTypeAcquisitionUnitsAcquiredPrice
(in thousands)
Channel House
Multifamily(1)
January 31, 202333389.4 %$134,615 
F3 Land Site
Multifamily (1)
January 31, 2023N/A89.4 %$250 
466 Water Street Land Site
Multifamily (1)
January 31, 2023N/A89.4 %$2,500 
1150 Clay
Multifamily (2)
March 28, 202328898.1 %$145,500 
(1)Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of these properties totaled $37,000, which are not included in the purchase prices above. The building at Channel House also includes approximately 1,864 square feet of retail space. The F3 Land Site is currently being utilized as a surface parking lot and being evaluated for future development options including hotel development but there are no formal plans in place to begin development as of March 31, 2024.
(2)Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $149,000, which are not included in the purchase price above. The building also includes approximately 3,968 square feet of retail space.
In addition, please see “Investments in Unconsolidated Entities” (Note 4) for information on the Company’s real estate acquisitions through its investments in Unconsolidated Joint Ventures.
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
The Company sold an interest in the following property during the three months ended March 31, 2023.
AssetDate ofInterestSalesGain on
PropertyTypeSaleSoldPrice Sale
(in thousands)
4750 Wilshire Boulevard (1)
Office / MultifamilyFebruary 17, 202380.0 %$34,400 $1,104 
(1)The Company sold 80% of its interest in 4750 Wilshire Boulevard (excluding a vacant land parcel which was not included in the sale) to co-investors with whom the Company formed the 4750 Wilshire JV (defined in Note 4). At the acquisition date, the Company received net proceeds of $16.7 million and recorded a receivable of $17.7 million, all of which has been collected as of March 31, 2024. Additionally, as of March 31, 2024, the Company has a receivable of $1.4 million due from the 4750 Wilshire JV included in other assets on the Company’s consolidated balance sheet related to development costs incurred by the Company at 4750 Wilshire Boulevard prior to the sale of 80% of its interest in the property to the 4750 Wilshire JV. The Company owns a 20% interest in the 4750 Wilshire JV and accounts for its investment as an equity method investment as of March 31, 2023.
The results of operations of the properties the Company acquired have been included in the consolidated statements of operations from the dates of acquisition. The following table summarizes the purchase price allocation of the aforementioned acquisitions during the three months ended March 31, 2024 and 2023.
Three Months Ended March 31,
20242023
(in thousands)
Land$ $36,613 
Land improvements 4,523 
Buildings and improvements 206,717 
Furniture, fixtures, and equipment 8,140 
Acquired in-place leases (1) 27,210 
Acquired above-market leases (2) 71 
Acquired below-market leases (3) (223)
Net assets acquired$ $283,051 
(1)The amortization period for the in-place leases acquired during the three months ended March 31, 2023 was approximately 6 months at the date of acquisition.
(2)The amortization period for the above-market leases acquired during the three months ended March 31, 2023 was approximately 7 months at the date of acquisition.
(3)The amortization period for the below-market leases acquired during the three months ended March 31, 2023 was approximately 5 months at the date of acquisition.
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
4. INVESTMENT IN UNCONSOLIDATED ENTITIES
The following table details the Company’s equity method investments in its Unconsolidated Joint Ventures. See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (dollars in thousands):
Carrying Value
PropertyAsset TypeLocationAcquisition DateOwnership InterestMarch 31, 2024December 31, 2023
1910 Sunset Boulevard (1)
Office / Multifamily (Development)
Los Angeles, CAFebruary 11, 202244.2%$11,739 $12,040 
4750 Wilshire Boulevard (2)
Office / Multifamily (Development)
Los Angeles, CAFebruary 17, 202320.0%9,950 9,119 
1902 Park Avenue (3)
MultifamilyLos Angeles, CAFebruary 28, 202350.0%6,739 7,082 
1015 N Mansfield Avenue (4)
Office (Development)
Los Angeles, CAOctober 10, 202328.8%5,281 5,264 
Total investments in unconsolidated entities$33,709 $33,505 
______________________
(1)1910 Sunset Boulevard is an office building with 104,764 square feet of office space and 2,760 square feet of retail space. The 1910 Sunset JV (defined below) has plans to begin a development program to renovate and modernize the building’s creative office space but the 1910 Sunset JV has not yet finalized the formal development plan for the property. The 1910 Sunset JV has begun the 1915 Park Project (defined below) to build multifamily units on the 1915 Park Avenue land parcel adjacent to the office building.
(2)4750 Wilshire Boulevard is a three-story office building with 30,335 square feet of office space located on the first floor. The remainder of the building is being converted into for-lease multifamily units.
(3)1902 Park Avenue is a 75-unit four-story multifamily building.
(4)1015 N Mansfield Avenue is an office building with a 44,141 square foot site area and a parking garage. The site is being evaluated for different development options, including creative office or other commercial space. As of March 31, 2024, this property was in pre-development phase and the Company has not finalized the formal development plan for the property.
1910 Sunset Boulevard— In February 2022, the Company invested in an Unconsolidated Joint Venture (the “1910 Sunset JV”) with a CIM-managed separate account (the “1910 Sunset JV Partner) to purchase an office property located at 1910 Sunset Boulevard in Los Angeles, California along with an adjacent vacant land parcel located at 1915 Park Avenue, for a gross purchase price of approximately $51.0 million, of which the Company initially contributed approximately $22.4 million and the 1910 Sunset JV Partner initially contributed the remaining balance. In September 2022, the 1910 Sunset JV obtained financing through a mortgage loan of $23.9 million secured by the office property (the “1910 Sunset Mortgage Loan”). The Company provided a limited guarantee to the lender under the 1910 Sunset Mortgage Loan.
The 1910 Sunset JV plans to begin a development program to renovate and modernize the building’s creative office space but the 1910 Sunset JV has not yet finalized the formal development plan for the property. Additionally, the 1910 Sunset JV has begun construction to build 36 multifamily units on the 1915 Park Avenue land parcel adjacent to the office building (the “1915 Park Project”). The 1915 Park Project is expected to be completed by the third quarter of 2025 and to cost approximately $19.3 million (the Company’s share of which will be $8.5 million). The 1910 Sunset JV plans to finance the project through a combination of cash from operations at its office property, additional equity contributions from existing investors, and proceeds from a mortgage loan from a third-party lender (which is in-place but currently has no outstanding borrowings and is subject to additional equity contribution requirements which have not yet been met). As of March 31, 2024, the 1910 Sunset JV had incurred total costs of $2.3 million in connection with the 1915 Park Project.
The Company recorded a loss of $301,000 and $61,000 related to its investment in the 1910 Sunset JV during the three months ended March 31, 2024 and March 31, 2023, respectively. The Company’s investment in the 1910 Sunset JV was $11.7 million and its ownership percentage remained unchanged as of March 31, 2024.
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CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
4750 Wilshire Boulevard— In February 2023, three co-investors (the “4750 Wilshire JV Partners”) acquired an 80% interest in a property owned by a subsidiary of the Company located at 4750 Wilshire Boulevard in Los Angeles, California (“4750 Wilshire”) for a gross sales price of $34.4 million (excluding transaction costs). The Company retained a 20% interest in 4750 Wilshire through an Unconsolidated Joint Venture arrangement between the Company and the 4750 Wilshire JV Partners (the “4750 Wilshire JV”). The 4750 Wilshire JV is converting two of the three floors of 4750 Wilshire from office-use into 68 for-lease multifamily units (the 4750 Wilshire Project), with the first floor of 4750 Wilshire continuing to function as 30,335 square feet of office space. The 4750 Wilshire Project is expected to be completed by the fourth quarter of 2024 and the total cost of the conversion is expected to be approximately $31.0 million (the Company’s share of which will be $6.2 million), which will be financed by a combination of equity contributions from the 4750 Wilshire JV Partners and a third-party construction loan, secured by 4750 Wilshire, which closed in March 2023 and that allows for total draws of $38.5 million (the “4750 Wilshire Construction Loan”). The Company provided a limited guarantee to the lender under the 4750 Wilshire Construction Loan. As of March 31, 2024, total costs of $17.3 million had been incurred by the 4750 Wilshire JV in connection with the 4750 Wilshire Project.
Pursuant to the co-investment agreement, the 4750 Wilshire JV pays an on-going management fee to the Company. In addition, the Company may earn incentive fees based on the performance of 4750 Wilshire after the conversion.
The Company recorded income of $401,000 and a loss of $3,000 related to its investment in the 4750 Wilshire JV during the three months ended March 31, 2024 and March 31, 2023, respectively, in the consolidated statements of operations. The Company’s investment in the 4750 Wilshire JV was $10.0 million and its ownership percentage remained unchanged at 20% as of March 31, 2024.
1902 Park Avenue— In February 2023, the Company and a CIM-managed interval fund (the “1902 Park JV Partner) purchased a multifamily property in the Echo Park neighborhood of Los Angeles, California for a gross purchase price of $19.1 million (excluding transaction costs) (the “1902 Park JV”). The Company owns 50% of the 1902 Park JV. In connection with the closing of this transaction in February 2023, the 1902 Park JV obtained financing through a mortgage loan of $9.6 million secured by the multifamily property (the “1902 Park Mortgage Loan”). The Company provided a limited guarantee to the lender under the 1902 Park Mortgage Loan.
The Company recorded a loss of $443,000 and income of $832,000 related to its investment in the 1902 Park JV during the three months ended March 31, 2024 and March 31, 2023, respectively, in the consolidated statements of operations. The Company’s investment in the 1902 Park JV was $6.7 million as of March 31, 2024.
1015 N Mansfield Avenue— In October, 2023, the Company and a co-investor affiliated with CIM Group (the “1015 N Mansfield JV Partner”) acquired from an unrelated third party a 100% fee-simple interest in a plot of land located in the Sycamore media district of Los Angeles, California for a gross purchase price of $18.0 million (excluding transaction costs) (the “1015 N Mansfield JV”). The property has a site area of approximately 44,141 square feet and contains a parking garage that has been leased to a third-party tenant. The site is being evaluated for different creative office or other commercial space development options and was in pre-development phase as the Company has not finalized the formal development plan for the property.The Company owns 28.8% of the 1015 N Mansfield JV.
The Company recorded income of $17,000 related to its investment in the 1015 N Mansfield JV during the three months ended March 31, 2024 in the consolidated statements of operations. The Company’s investment in the 1015 N Mansfield JV was $5.3 million as of March 31, 2024.
16

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
5. LOANS RECEIVABLE
Loans receivable consist of the following (in thousands):
 March 31, 2024December 31, 2023
SBA 7(a) loans receivable, subject to credit risk$12,102 $10,393 
SBA 7(a) loans receivable, subject to loan-backed notes41,736 43,983 
SBA 7(a) loans receivable, subject to secured borrowings2,508 3,105 
SBA 7(a) loans receivable, held for sale402 74 
Loans receivable56,748 57,555 
Deferred capitalized costs, net1,125 1,130 
Current expected credit losses(1,644)(1,680)
Loans receivable, net$56,229 $57,005 
SBA 7(a) Loans Receivable, Subject to Credit Risk—Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were retained by the Company.
SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes—Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were transferred to a trust and are held as collateral in connection with a securitization transaction. The proceeds received from the transfer were reflected as loan-backed notes payable (Note 7). These loans are subject to credit risk.
SBA 7(a) Loans Receivable, Subject to Secured Borrowings—Represents the government guaranteed portions of loans originated under the SBA 7(a) Program which were sold with the proceeds received from the sale reflected as secured borrowings—government guaranteed loans. There is no credit risk associated with these loans since the SBA guarantees payment of the principal.
SBA 7(a) Loans Receivable, Held for Sale— Represents the government guaranteed portion of loans held for sale at the end of the period or that had been sold but in respect of which proceeds had not been received as of the end of the period.
Current Expected Credit Losses
CECL reflects the Company’s current estimate of potential credit losses related to loans receivable included in the Company’s consolidated balance sheets as of March 31, 2024 pursuant to ASU 2016-13 as implemented effective January 1, 2023. Refer to Note 2 for further discussion of CECL.
The following table presents the activity in the Company’s CECL for the three months ended March 31, 2024 and March 31, 2023 (dollar amounts in thousands):
Loans Receivable
Current expected credit losses as of December 31, 2023
$1,680 
Net adjustment to reserve for expected credit losses
(36)
Current expected credit losses as of March 31, 2024$1,644 
Allowance for credit losses as of December 31, 2022
$1,106 
Transition adjustment on January 1, 2023783 
Net adjustment to reserve for expected credit losses51 
Current expected credit losses as of March 31, 2023$1,940 
The net adjustments to the reserve for expected credit losses are recognized through net income on the Company’s consolidated statements of operations. During the three months ended March 31, 2024 and March 31, 2023, the Company recorded a decrease of $36,000 and an increase of $51,000, respectively, in its CECL related to its loans receivable, which was recorded in general and administrative expenses in the consolidated statement of operations.
17

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
Risk Ratings
As further described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, the Company evaluates its loans receivable portfolio on a quarterly basis. Each quarter, the Company assesses the risk factors of each loan and assigns a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, loan and credit structure, current LTV ratio, debt yield, collateral performance and the quality and condition of the sponsor, borrower and guarantor(s). Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies.
The Company’s primary credit quality indicator is its risk ratings, which are further discussed above. The following table presents the net book value of the Company’s loans receivable portfolio as of March 31, 2024 by year of origination, loan type and risk rating (dollar amounts in thousands):
Amortized Cost of Loans Receivable by Year of Origination
As of March 31, 2024
Number of Loans20242023202220212020Prior Total
Loans by internal risk rating:
1106$1,170 $9,195 $3,814 $7,133 $3,223 $11,701 $36,236 
259476 809 4,298 3,431 2,106 6,240 $17,360 
32  242    $242 
4       
5       
Total167$1,646 $10,004 $8,354 $10,564 $5,329 $17,941 $53,838 
Plus: SBA 7(a) loans receivable, subject to secured borrowings (1)
2,508 
Plus: Deferred capitalized costs, net1,125 
Less: Current expected credit losses
(1,644)
Less: Held for sale guaranteed portion402 
Total loans receivable, net$56,229 
Weighted average risk rating1.4
____________________
(1)The Company does not assign a risk rating to its SBA 7(a) loans receivable that are subject to secured borrowings or the government guaranteed portion of loans held for sale. The Company has determined there is no credit risk associated with these loans since the SBA has guaranteed payment of the principal.
Other
As of March 31, 2024 and December 31, 2023, 100.0% of the Company’s loans subject to credit risk were concentrated in the hospitality industry. As of March 31, 2024 and December 31, 2023, 97.8% and 99.3%, respectively, of the Company’s loans subject to credit risk were current. The Company classifies loans with negative characteristics in substandard categories ranging from special mention to doubtful. As of March 31, 2024 and December 31, 2023, $1.6 million and $1.3 million, respectively, of loans subject to credit risk were classified in substandard categories.
18

CREATIVE MEDIA & COMMUNITY TRUST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2024 (Unaudited) – (Continued)
6. OTHER INTANGIBLE ASSETS AND LIABILITIES
A schedule of the Company’s intangible assets and liabilities and related accumulated amortization and accretion as of March 31, 2024 and December 31, 2023 is as follows (in thousands):
March 31, 2024December 31, 2023
Intangible assets:
Acquired in-place leases, net of accumulated amortization of $4,915 and $4,821, respectively, both with an average useful life of 6 years, respectively.
$890 $984 
Acquired above-market leases, net of accumulated amortization of $32 and $30, respectively, both with an average useful life of 7 years, respectively
5 7 
Trade name and license2,957 2,957 
Total intangible assets, net$3,852 $3,948 
Amortization of the acquired above-market leases is recorded as a reduction to rental and other property income, and amortization of the acquired in-place leases is included in depreciation and amortization in the accompanying consolidated statements of operations. Amortization of the acquired below-market leases is recorded as an increase to rental and other property income in the accompanying consolidated statements of operations.
During the three months ended March 31, 2024 and 2023, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):
Three Months Ended March 31,
20242023
Acquired above-market lease amortization$2 $24 
Acquired in-place lease amortization$94 $4,127 
Acquired below-market lease amortization$ $9 
A schedule of future amortization and accretion of acquired intangible assets and liabilities as of March 31, 2024, is as follows (in thousands):