DEBT

12 Months Ended

Dec. 31, 2020

6. DEBT

The following table summarizes the debt balances as of December 31, 2020 and 2019, and the debt activity for the year ended December 31, 2020 (in thousands):


			During the Year Ended December 31, 2020
	Balances as of December 31, 2019		Debt Issuances & Assumptions		Repayments & Modifications		Accretion & (Amortization)		Balances as of December 31, 2020
Mortgage Payable:
Outstanding Balance	$	97,100	$	—	$	—	$	—	$	97,100
Deferred loan costs — Mortgage Payable	(174)		—		—		27		(147)
Total Mortgage Payable	96,926		—		—		27		96,953
Secured Borrowings – Government Guaranteed Loans:
Outstanding Balance	12,152		—		(3,695)		—		8,457
Unamortized premiums	629		—		—		(172)		457
Total Secured Borrowings—Government Guaranteed Loans	12,781		—		(3,695)		(172)		8,914
Other Debt:
2018 revolving credit facility	153,000		61,500		(48,000)		—		166,500
2020 unsecured revolving credit facility	—		—		—		—		—
Junior subordinated notes	27,070		—		—		—		27,070
SBA 7(a) loan-backed notes	22,282		—		(8,052)		—		14,230
Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility	—		16,016		(1,532)		—		14,484
Deferred loan costs — other debt (1)	(2,867)		(734)		281		1,165		(2,155)
Discount on junior subordinated notes	(1,771)		—		—		88		(1,683)
Total Other Debt	197,714		76,782		(57,303)		1,253		218,446
Total Debt, Net	$	307,421	$	76,782	$	(60,998)	$	1,108	$	324,313

(1)In connection with unamortized loan costs related to a debt modification, the Company recognized a loss on extinguishment of debt of $281,000 during the year ended December 31, 2020.

Mortgages Payable—The mortgages payable are secured by deeds of trust on certain of the properties and assignments of rents. As of December 31, 2020, the Company’s mortgages payable had a fixed interest rate of 4.14% per annum, with monthly payments of interest only, due on July 1, 2026. The loan is nonrecourse.

Secured Borrowings—Government Guaranteed Loans—Secured borrowings—government guaranteed loans represent sold loans which are treated as secured borrowings because the loan sales did not meet the derecognition criteria provided for in ASC 860-30, Secured Borrowing and Collateral. These loans included cash premiums that are amortized as a reduction to interest expense over the life of the loan using the effective interest method and are fully amortized when the underlying loan is repaid in full. As of December 31, 2020, the Company had secured borrowing principal on SBA 7(a) loans sold for a premium and excess spread of $5.7 million, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.87%, and secured borrowing principal on SBA 7(a) loans sold for excess spread of $2.7 million, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 1.56%.

2018 Revolving Credit Facility—In October 2018, CIM Commercial entered into a secured revolving credit facility with a bank syndicate that, as amended, allows CIM Commercial to borrow up to $209.5 million, subject to a borrowing base calculation (the “2018 revolving credit facility”). In September 2020, the 2018 revolving credit facility was amended (the “2018 Credit Facility Modification”) to remedy the effect that COVID-19 had on CIM Commercial’s ability to borrow under the 2018 revolving credit facility during the period from September 2, 2020 through June 30, 2021 (the “Deferral Period”). The 2018 revolving credit facility bears interest (i) during the Deferral Period at (A) the base rate plus 1.05% or (B) LIBOR plus 2.05% and (ii) after the Deferral Period, at (A) the base rate plus 0.55% or (B) LIBOR plus 1.55%. As of December 31, 2020 and 2019, the variable interest rate was 2.20% and 3.29%, respectively. The 2018 revolving credit facility is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The 2018 revolving credit facility is secured by deeds of trust on certain of our properties. During the Deferral Period, our borrowing capacity is subject to a $15.0 million reserve, which may be reduced by certain capital expenditures made in respect of our properties securing the 2018 revolving credit facility, and the requirement that we maintain a minimum balance of “liquid assets” of $15.0 million, which are defined as (1) unencumbered cash and cash equivalents and (2) up to $5.0 million unfunded availability under the 2018 revolving credit facility. Other than as described in the preceding sentence, the 2018 revolving credit facility contains customary covenants and is not subject to any financial covenants (though the amount we may borrow under the 2018 revolving credit facility is determined by a borrowing base calculation). The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions. As of December 31, 2020 and 2019, $166.5 million and $153.0 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $28.0 million and $73.9 million, respectively, was available for future borrowings.

2020 Revolving Credit Facility—In May 2020, to further enhance its liquidity position and maintain financial flexibility, CIM Commercial entered into an unsecured revolving credit facility with a bank (the “2020 unsecured revolving credit facility”) pursuant to which CIM Commercial can borrow up to a maximum of $10.0 million. Outstanding advances under the 2020 unsecured revolving credit facility bear interest at the rate of 1.00%. CIM Commercial also pays a revolving credit facility fee of 1.12% with each advance under the 2020 unsecured revolving credit facility, which fee is subject to a cap of $112,000 in the aggregate. The 2020 unsecured revolving credit facility contains certain customary covenants including a maximum leverage ratio and a minimum fixed charge coverage ratio, as well as certain other conditions. The 2020 unsecured revolving credit facility matures in May 2022. As of December 31, 2020, $0 was outstanding under the 2020 unsecured revolving credit facility and $10.0 million was available for future borrowings.

Junior Subordinated Notes—The Company has junior subordinated notes with a variable interest rate which resets quarterly based on the three-month LIBOR plus 3.25%, with quarterly interest only payments. The junior subordinated balance is due at maturity on March 30, 2035. The junior subordinated notes may be redeemed at par at our option.

SBA 7(a) Loan-Backed Notes—SBA 7(a) loan-backed notes are secured by deeds of trust or mortgages. On May 30, 2018, we completed a securitization of the unguaranteed portion of certain of our SBA 7(a) loans receivable with the issuance of $38.2 million of unguaranteed SBA 7(a) loan-backed notes. The SBA 7(a) loan-backed notes are collateralized solely by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of our SBA 7(a) loans receivable. The SBA 7(a) loan-backed notes mature on March 20, 2043, with monthly payments due as payments on the collateralized loans are received. Based on the anticipated repayments of our collateralized SBA 7(a) loans, at issuance, we estimated the weighted average life of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%. We reflect the SBA 7(a) loans receivable as assets on our consolidated balance sheets and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheets. The restricted cash on our consolidated balance sheets as of December 31, 2020 and 2019 included $1.2 million and $3.3 million, respectively, of funds related to our SBA 7(a) loan-backed notes.

Paycheck Protection Program Liquidity Facility—In June 2020, we borrowed funds from the Federal Reserve through the PPP Liquidity Facility (the “PPPLF”). Advances under the PPPLF carry an interest rate of 0.35%, are made on a dollar-for-dollar basis based on the amount of loans originated under the PPP and are secured by loans made by us under the PPP. The PPPLF contains customary covenants but is not subject to any financial covenants. The maturity date of PPPLF borrowings is the same as the maturity date of the loans pledged to secure the extension of credit, generally two years. At maturity, both principal and accrued interest are due. The maturity date of a PPPLF borrowing will be accelerated if, among other things, we have been reimbursed by the SBA for a loan forgiveness (to the extent of the forgiveness), we have received payment from the SBA representing exercise of the loan guarantee or we have received payment from the underlying borrower (to the extent of the payment received). No new extensions of credit will be made under the PPPLF after June 30, 2021 unless the Federal Reserve Board and the United States Department of the Treasury decide to extend the PPPLF. We borrowed money

under the PPPLF to finance all the loans we originated under the PPP. As of December 31, 2020, $14.5 million was outstanding under the PPPLF.

Deferred loan costs, which represent legal and third-party fees incurred in connection with our borrowing activities, are capitalized and amortized to interest expense on a straight-line basis over the life of the related loan, approximating the effective interest method. Deferred loan costs are presented in the above table net of accumulated amortization and are a reduction to total debt.

As of December 31, 2020 and 2019, accrued interest and unused commitment fees payable of $564,000 and $650,000, respectively, are included in accounts payable and accrued expenses.

Future principal payments on our debt (face value) as of December 31, 2020 are as follows:


Years Ending December 31,	Mortgages Payable		Secured Borrowings Principal (1)		2018 Revolving Credit Facility		Other (1) (2)		Total
	(in thousands)
2021	$	—	$	583	$	—	$	1,692	$	2,275
2022	—		441		166,500		7,735		174,676
2023	—		455		—		8,498		8,953
2024	—		468		—		1,058		1,526
2025	—		483		—		662		1,145
Thereafter	97,100		6,027		—		36,139		139,266
	$	97,100	$	8,457	$	166,500	$	55,784	$	327,841

(1)Principal payments on secured borrowings and SBA 7(a) loan-backed notes, which are included in Other, are generally dependent upon cash flows received from the underlying loans. Our estimate of their repayment is based on scheduled payments on the underlying loans. Our estimate will differ from actual amounts to the extent we experience prepayments and or loan liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans.

(2)Represents the junior subordinated notes, SBA 7(a) loan-backed notes, and borrowed funds from the Federal Reserve through the PPPLF.