FORM |
(Mark One): | ||||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended | ||||||||
OR | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
(Registrant’s telephone number, including area code) |
Securities Registered Pursuant to Section 12(b) of the Act: | ||||||||||||||
Tel Aviv Stock Exchange | ||||||||||||||
Tel Aviv Stock Exchange | ||||||||||||||
(Title of each class) | (Trading symbol) | (Name of each exchange on which registered) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | ☒ | |||||||||||||
Smaller reporting company | Emerging growth company |
PAGE NO. | |||||||||||
PART I. | Financial Information | ||||||||||
Financial Statements | |||||||||||
PART II. | Other Information | ||||||||||
March 31, 2022 | December 31, 2021 | |||||||||||||
ASSETS | ||||||||||||||
Investments in real estate, net | $ | $ | ||||||||||||
Investment in unconsolidated entity - at fair value | ||||||||||||||
Cash and cash equivalents | ||||||||||||||
Restricted cash | ||||||||||||||
Loans receivable, net | ||||||||||||||
Accounts receivable, net | ||||||||||||||
Deferred rent receivable and charges, net | ||||||||||||||
Other intangible assets, net | ||||||||||||||
Other assets | ||||||||||||||
TOTAL ASSETS | $ | $ | ||||||||||||
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY | ||||||||||||||
LIABILITIES: | ||||||||||||||
Debt, net | $ | $ | ||||||||||||
Accounts payable and accrued expenses | ||||||||||||||
Intangible liabilities, net | ||||||||||||||
Due to related parties | ||||||||||||||
Other liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
COMMITMENTS AND CONTINGENCIES (Note 14) | ||||||||||||||
REDEEMABLE PREFERRED STOCK: Series A cumulative redeemable preferred stock, $ | ||||||||||||||
EQUITY: | ||||||||||||||
Series A cumulative redeemable preferred stock, $ | ||||||||||||||
Series D cumulative redeemable preferred stock, $ | ||||||||||||||
Series L cumulative redeemable preferred stock, $ | ||||||||||||||
Common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Distributions in excess of earnings | ( | ( | ||||||||||||
Total stockholders’ equity | ||||||||||||||
Noncontrolling interests | ||||||||||||||
Total equity | ||||||||||||||
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
REVENUES: | ||||||||||||||
Rental and other property income | $ | $ | ||||||||||||
Interest and other income | ||||||||||||||
Total Revenues | ||||||||||||||
EXPENSES: | ||||||||||||||
Rental and other property operating | ||||||||||||||
Asset management and other fees to related parties | ||||||||||||||
Expense reimbursements to related parties—corporate | ||||||||||||||
Expense reimbursements to related parties—lending segment | ||||||||||||||
Interest | ||||||||||||||
General and administrative | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Total Expenses | ||||||||||||||
Income from unconsolidated entity | ||||||||||||||
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | ( | |||||||||||||
Provision for income taxes | ||||||||||||||
NET INCOME (LOSS) | ( | |||||||||||||
Net (income) loss attributable to noncontrolling interests | ( | |||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | ( | |||||||||||||
Redeemable preferred stock dividends declared or accumulated (Note 10) | ( | ( | ||||||||||||
Redeemable preferred stock deemed dividends (Note 10) | ( | ( | ||||||||||||
Redeemable preferred stock redemptions (Note 10) | ( | ( | ||||||||||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | ( | $ | ( | ||||||||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE: | ||||||||||||||
Basic | $ | ( | $ | ( | ||||||||||
Diluted | $ | ( | $ | ( | ||||||||||
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: | ||||||||||||||
Basic | ||||||||||||||
Diluted |
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | Additional Paid-in Capital | Distributions in Excess of Earnings | Total Stockholders’ Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2021 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividends ($ | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends to holders of Series A Preferred Stock ($ | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends to holders of Series D Preferred Stock ($ | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Reclassification of Series A Preferred stock to Perm Equity | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable preferred stock accretion | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | — | — | ( | ( | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2022 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | Additional Paid-in Capital | Distributions in Excess of Earnings | Total Stockholders’ Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2020 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividends ($ | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends to holders of Series A Preferred Stock ($ | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D Preferred Stock | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends to holders of Series D Preferred Stock ($ | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Reclassification of Series A Preferred Stock to permanent equity | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable preferred stock accretion | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | — | — | ( | ( | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2021 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
Net income (loss) | $ | $ | ( | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization, net | ||||||||||||||
Amortization of deferred debt origination costs | ||||||||||||||
Amortization of premiums and discounts on debt | ( | |||||||||||||
Unrealized premium adjustment | ||||||||||||||
Amortization of deferred costs and accretion of fees on loans receivable, net | ( | ( | ||||||||||||
(Recoveries) write-offs of uncollectible receivables | ||||||||||||||
Deferred income taxes | ( | |||||||||||||
Stock-based compensation | ||||||||||||||
Income from unconsolidated entity | ( | |||||||||||||
Loans funded, held for sale to secondary market | ( | ( | ||||||||||||
Proceeds from sale of guaranteed loans | ||||||||||||||
Principal collected on loans subject to secured borrowings | ||||||||||||||
Commitment fees remitted and other operating activity | ( | ( | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable | ( | |||||||||||||
Other assets | ( | ( | ||||||||||||
Accounts payable and accrued expenses | ( | ( | ||||||||||||
Deferred leasing costs | ( | ( | ||||||||||||
Other liabilities | ||||||||||||||
Due to related parties | ||||||||||||||
Net cash provided by operating activities | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
Capital expenditures | ( | ( | ||||||||||||
Acquisition of real estate | ( | |||||||||||||
Investment in unconsolidated entity | ( | |||||||||||||
Loans funded | ( | ( | ||||||||||||
Principal collected on loans | ||||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
Payment of revolving credit facilities, mortgages payable, term notes and principal on SBA 7(a) loan-backed notes | ( | ( | ||||||||||||
Proceeds from revolving credit facilities and term notes | ||||||||||||||
Payment of principal on secured borrowings | ( | ( | ||||||||||||
Payment of deferred preferred stock offering costs | ( | ( | ||||||||||||
Payment of deferred costs | ( | |||||||||||||
Payment of common dividends | ( | ( | ||||||||||||
Net proceeds from issuance of Preferred Stock | ||||||||||||||
Payment of preferred stock dividends | ( | ( | ||||||||||||
Redemption of Preferred Stock | ( | ( | ||||||||||||
Noncontrolling interests’ distributions | ( | |||||||||||||
Net cash provided by (used in) financing activities | ( | |||||||||||||
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | ( | |||||||||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | ||||||||||||||
Beginning of period | ||||||||||||||
End of period | $ | $ | ||||||||||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Total cash and cash equivalents and restricted cash | $ | $ | ||||||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||||
Cash paid during the period for interest | $ | $ | ||||||||||||
Federal income taxes paid | $ | $ | ||||||||||||
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||
Accrued capital expenditures, tenant improvements and real estate developments | $ | $ | ||||||||||||
Accrued preferred stock offering costs | $ | $ | ||||||||||||
Accrual of dividends payable to preferred stockholders | $ | $ | ||||||||||||
Preferred stock offering costs offset against redeemable preferred stock | $ | $ | ||||||||||||
Reclassification of Series A Preferred Stock from temporary equity to permanent equity | $ | $ | ||||||||||||
Accrued deferred costs | $ | $ | ||||||||||||
Redeemable preferred stock deemed dividends | $ | $ | ||||||||||||
Accrued redeemable preferred stock fees | $ | $ | ||||||||||||
Equity-based payment for management fees | $ | $ | ||||||||||||
Buildings and improvements | ||||||||
Furniture, fixtures, and equipment | ||||||||
Tenant improvements | Lesser of useful life or lease term |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Rental and other property income | ||||||||||||||
Fixed lease payments (1) | $ | $ | ||||||||||||
Variable lease payments (2) | ||||||||||||||
Rental and other property income | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Hotel properties | ||||||||||||||
Hotel income | $ | $ | ||||||||||||
Rental and other property income | ||||||||||||||
Interest and other income | ||||||||||||||
Hotel revenues | $ | $ |
March 31, 2022 | December 31, 2021 | |||||||||||||
Deferred rent receivable | $ | $ | ||||||||||||
Deferred leasing costs, net of accumulated amortization of $ | ||||||||||||||
Deferred offering costs | ||||||||||||||
Other deferred costs | ||||||||||||||
Deferred rent receivable and charges, net | $ | $ |
March 31, 2022 | December 31, 2021 | |||||||||||||
Land | $ | $ | ||||||||||||
Land improvements | ||||||||||||||
Buildings and improvements | ||||||||||||||
Furniture, fixtures, and equipment | ||||||||||||||
Tenant improvements | ||||||||||||||
Work in progress | ||||||||||||||
Investments in real estate | ||||||||||||||
Accumulated depreciation | ( | ( | ||||||||||||
Net investments in real estate | $ | $ |
Asset | Date of | Purchase | ||||||||||||||||||||||||
Property | Type | Acquisition | Square Feet | Price (1) | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
3101 S Western Avenue, Los Angeles, CA (2) | Multifamily (2) | February 11, 2022 | $ |
(in thousands) | |||||
Land | $ | ||||
Land improvements | |||||
Net assets acquired | $ |
Carrying Value | ||||||||||||||||||||||||||||||||||||||
Property | Asset Type | Location | Date of Acquisition | Ownership Interest | March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||
1910 Sunset Blvd (1) | Office | Los Angeles, CA | February 11, 2022 | $ | $ | |||||||||||||||||||||||||||||||||
March 31, 2022 | December 31, 2021 | |||||||||||||
SBA 7(a) loans receivable, subject to credit risk | $ | $ | ||||||||||||
SBA 7(a) loans receivable, subject to loan-backed notes | ||||||||||||||
SBA 7(a) loans receivable, Paycheck Protection Program | ||||||||||||||
SBA 7(a) loans receivable, subject to secured borrowings | ||||||||||||||
SBA 7(a) loans receivable, held for sale | ||||||||||||||
Loans receivable | ||||||||||||||
Deferred capitalized costs, net | ||||||||||||||
Loan loss reserves | ( | ( | ||||||||||||
Loans receivable, net | $ | $ |
March 31, 2022 | December 31, 2021 | ||||||||||
Intangible assets: | |||||||||||
Acquired in-place leases, net of accumulated amortization of $ | $ | $ | |||||||||
Acquired above-market leases, net of accumulated amortization of $ | |||||||||||
Trade name and license | |||||||||||
Total intangible lease assets, net | $ | $ | |||||||||
Intangible lease liabilities: | |||||||||||
Acquired below-market leases, net of accumulated amortization of $ | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Acquired above-market lease amortization | $ | $ | ||||||||||||
Acquired in-place lease amortization | $ | $ | ||||||||||||
Acquired below-market lease amortization | $ | $ |
Assets | Liabilities | |||||||||||||||||||
Years Ending December 31, | Acquired Above-Market Leases | Acquired In-Place Leases | Acquired Below-Market Leases | |||||||||||||||||
2022 (Nine months ending December 31, 2022) | $ | $ | $ | ( | ||||||||||||||||
2023 | ( | |||||||||||||||||||
2024 | ||||||||||||||||||||
2025 | ||||||||||||||||||||
2026 | ||||||||||||||||||||
Thereafter | ||||||||||||||||||||
$ | $ | $ | ( |
During the Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||||
Balances as of December 31, 2021 | Debt Issuances & Assumptions | Repayments | Accretion & (Amortization) | Balances as of March 31, 2022 | ||||||||||||||||||||||||||||
Mortgage Payable: | ||||||||||||||||||||||||||||||||
Outstanding Balance | $ | $ | — | $ | — | $ | — | $ | ||||||||||||||||||||||||
Deferred debt origination costs — Mortgage Payable | ( | — | — | ( | ||||||||||||||||||||||||||||
Total Mortgage Payable | — | — | ||||||||||||||||||||||||||||||
Secured Borrowings — Government Guaranteed Loans: | ||||||||||||||||||||||||||||||||
Outstanding Balance | — | ( | — | |||||||||||||||||||||||||||||
Unamortized premiums | — | — | ( | |||||||||||||||||||||||||||||
Total Secured Borrowings — Government Guaranteed Loans | — | ( | ( | |||||||||||||||||||||||||||||
Other Debt: | ||||||||||||||||||||||||||||||||
2018 revolving credit facility | ( | — | ||||||||||||||||||||||||||||||
2020 unsecured revolving credit facility | — | — | — | — | — | |||||||||||||||||||||||||||
Junior subordinated notes | — | — | — | |||||||||||||||||||||||||||||
SBA 7(a) loan-backed notes | — | ( | — | |||||||||||||||||||||||||||||
Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility | — | ( | — | |||||||||||||||||||||||||||||
Deferred debt origination costs — other | ( | — | — | ( | ||||||||||||||||||||||||||||
Discount on junior subordinated notes | ( | — | — | ( | ||||||||||||||||||||||||||||
Total Other Debt | ( | |||||||||||||||||||||||||||||||
Total Debt, Net | $ | $ | $ | ( | $ | $ |
Years Ending December 31, | Mortgage Payable | Secured Borrowings Principal (1) | 2018 Revolving Credit Facility | Other (1) (2) | Total | |||||||||||||||||||||||||||
2022 (Nine months ending December 31, 2022) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
2023 | ||||||||||||||||||||||||||||||||
2024 | ||||||||||||||||||||||||||||||||
2025 | ||||||||||||||||||||||||||||||||
2026 | ||||||||||||||||||||||||||||||||
Thereafter | ||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ |
Grant Date (1) | Vesting Date | Restricted Shares of Common Stock - Individual | Restricted Shares of Common Stock - Aggregate | |||||||||||||||||
May 2020 | February 2021 (2) | |||||||||||||||||||
May 2020 | May 2021 | |||||||||||||||||||
May 2021 | (3) |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Numerator: | |||||||||||
Net loss attributable to common stockholders | $ | ( | $ | ( | |||||||
Redeemable preferred stock dividends declared on dilutive shares | ( | ||||||||||
Diluted net loss attributable to common stockholders | $ | ( | $ | ( | |||||||
Denominator: | |||||||||||
Basic weighted average shares of Common Stock outstanding | |||||||||||
Effect of dilutive securities—contingently issuable shares | |||||||||||
Diluted weighted average shares and common stock equivalents outstanding | |||||||||||
Net loss attributable to common stockholders per share: | |||||||||||
Basic | $ | ( | $ | ( | |||||||
Diluted | $ | ( | $ | ( |
Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Series A | Series D | Series L | Total | ||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D Preferred Stock | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Reclassification of Series A Preferred Stock to permanent equity | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | ( | ( | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D Preferred Stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Reclassification of Series A Preferred stock to Perm Equity | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | ( | ( | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2022 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Declaration Date | Payment Date | Type | Cash Dividend Per Share of Common Stock | |||||||||||||||||
March 8, 2022 | April 1, 2022 | Regular Quarterly | $ | |||||||||||||||||
March 5, 2021 | March 30, 2021 | Regular Quarterly | $ |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Discount Rate | Prepayment Rate | Discount Rate | Prepayment Rate | ||||||||||||||||||||
SBA 7(a) loans receivable, subject to credit risk | |||||||||||||||||||||||
SBA 7(a) loans receivable, subject to loan-backed notes | |||||||||||||||||||||||
SBA 7(a) loans receivable, paycheck protection program | N/A | N/A | |||||||||||||||||||||
SBA 7(a) loans receivable, subject to secured borrowings |
March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | Level | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
SBA 7(a) loans receivable, subject to credit risk | $ | $ | $ | $ | 3 | |||||||||||||||||||||||||||
SBA 7(a) loans receivable, subject to loan-backed notes | $ | $ | $ | $ | 3 | |||||||||||||||||||||||||||
SBA 7(a) loans receivable, paycheck protection program | $ | $ | $ | $ | 3 | |||||||||||||||||||||||||||
SBA 7(a) loans receivable, subject to secured borrowings | $ | $ | $ | $ | 3 | |||||||||||||||||||||||||||
SBA 7(a) loans receivable, held for sale | $ | $ | $ | $ | 3 | |||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Mortgages payable (1) | $ | $ | $ | $ | 2, 3 | |||||||||||||||||||||||||||
Junior subordinated notes (1) | $ | $ | $ | $ | 3 |
Estimated Fair Value | ||||||||||||||||||||
March 31, 2022 | December 31, 2021 | Level | ||||||||||||||||||
Assets: | ||||||||||||||||||||
Investment in unconsolidated entity (1) | $ | $ | 3 |
Investment in Unconsolidated Entity | ||||||||
Balance as of December 31, 2021 | $ | |||||||
Purchases | ||||||||
Income from unconsolidated entity | ||||||||
Balance as of March 31, 2022 | $ |
Daily Average Adjusted Fair Value of CIM Urban’s Assets | ||||||||||||||
Quarterly Fee Percentage | ||||||||||||||
From Greater of | To and Including | |||||||||||||
$ | $ | |||||||||||||
$ | $ | |||||||||||||
$ | $ | |||||||||||||
$ | $ | |||||||||||||
$ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Asset Management Fees: | ||||||||||||||
Asset management fees (1) | $ | $ | ||||||||||||
Property Management Fees and Reimbursements: | ||||||||||||||
Property management fees | $ | $ | ||||||||||||
Onsite management and other cost reimbursement | $ | $ | ||||||||||||
Leasing commissions | $ | $ | ||||||||||||
Construction management fees | $ | $ | ||||||||||||
Administrative Fees and Expenses: | ||||||||||||||
Expense reimbursements to related parties - corporate | $ | $ | ||||||||||||
Lending Segment Expenses: | ||||||||||||||
Expense reimbursements to related parties - lending segment(2) | $ | $ | ||||||||||||
Offering-Related Fees: | ||||||||||||||
Upfront dealer manager and trailing dealer manager fees(3) | $ | $ | ||||||||||||
Non-issuance specific offering costs (4) | $ | $ |
March 31, 2022 | December 31, 2021 | |||||||||||||
Asset management fees | $ | $ | ||||||||||||
Property management fees and reimbursements | ||||||||||||||
Expense reimbursements - corporate | ||||||||||||||
Expense reimbursements - lending segment | ||||||||||||||
Upfront dealer manager and trailing dealer manager fees | ||||||||||||||
Non-issuance specific offering costs | ||||||||||||||
Other amounts due to the CIM Management Entities and certain of its affiliates | ||||||||||||||
Total due to related parties | $ | $ |
Years Ending December 31, | Total | |||||||
2022 (Nine months ending December 31, 2022) | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
Thereafter | ||||||||
$ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Office: | ||||||||||||||
Revenues | $ | $ | ||||||||||||
Property expenses: | ||||||||||||||
Operating | ||||||||||||||
General and administrative | ||||||||||||||
Total property expenses | ||||||||||||||
Income from unconsolidated entity | ||||||||||||||
Segment net operating income—office | ||||||||||||||
Hotel: | ||||||||||||||
Revenues | ||||||||||||||
Property expenses: | ||||||||||||||
Operating | ||||||||||||||
General and administrative | ||||||||||||||
Total property expenses | ||||||||||||||
Segment net operating income (loss)—hotel | ( | |||||||||||||
Lending: | ||||||||||||||
Revenues | ||||||||||||||
Lending expenses: | ||||||||||||||
Interest expense | ||||||||||||||
Expense reimbursements to related parties—lending segment | ||||||||||||||
General and administrative | ||||||||||||||
Total lending expenses | ||||||||||||||
Segment net operating income—lending | ||||||||||||||
Total segment net operating income | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Total segment net operating income | $ | $ | ||||||||||||
Interest and other income | ||||||||||||||
Asset management and other fees to related parties | ( | ( | ||||||||||||
Expense reimbursements to related parties—corporate | ( | ( | ||||||||||||
Interest expense | ( | ( | ||||||||||||
General and administrative | ( | ( | ||||||||||||
Depreciation and amortization | ( | ( | ||||||||||||
Income (loss) before provision for income taxes | ( | |||||||||||||
Provision for income taxes | ( | ( | ||||||||||||
Net income (loss) | ( | |||||||||||||
Net (income) loss attributable to noncontrolling interests | ( | |||||||||||||
Net income (loss) attributable to the Company | $ | $ | ( |
March 31, 2022 | December 31, 2021 | |||||||||||||
Condensed assets: | ||||||||||||||
Office | $ | $ | ||||||||||||
Hotel | ||||||||||||||
Lending | ||||||||||||||
Non-segment assets | ||||||||||||||
Total assets | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Capital expenditures(1) and loan originations: | ||||||||||||||
Office | $ | $ | ||||||||||||
Hotel | ||||||||||||||
Total capital expenditures | ||||||||||||||
Loan originations | ||||||||||||||
Total capital expenditures and loan originations | $ | $ |
As of March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Occupancy (1) | 78.9 | % | 78.7 | % | ||||||||||
Annualized rent per occupied square foot (1)(2) | $ | 53.05 | $ | 51.88 |
For the Three Months Ended | ||||||||||||||||||||||||||
June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | |||||||||||||||||||||||
Expiring Cash Rents: | ||||||||||||||||||||||||||
Expiring square feet (1) | 50,166 | 56,717 | 56,726 | 30,673 | ||||||||||||||||||||||
Expiring rent per square foot (2) | $ | 49.06 | $ | 45.77 | $ | 43.01 | $ | 51.67 |
Number of Leases (1) | Rentable Square Feet | New Cash Rents per Square Foot (2) | Expiring Cash Rents per Square Foot (2) | |||||||||||||||||||||||
Three months ended March 31, 2022 | 7 | 14,971 | $ | 61.58 | $ | 62.14 | ||||||||||||||||||||
For the Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Occupancy | 69.2 | % | 29.8 | % | ||||||||||
ADR | $ | 173.14 | $ | 116.21 | ||||||||||
RevPAR | $ | 119.78 | $ | 34.60 |
Three Months Ended March 31, | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Total revenues | $ | 24,782 | $ | 18,879 | $ | 5,903 | 31.3 | % | ||||||||||||||||||
Total expenses | $ | 22,293 | $ | 22,176 | $ | 117 | 0.5 | % | ||||||||||||||||||
Net income (loss) | $ | 2,302 | $ | (3,671) | $ | 5,973 | (162.7) | % |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net loss attributable to common stockholders(1) | $ | (2,811) | $ | (8,206) | ||||||||||
Depreciation and amortization | 5,004 | 5,037 | ||||||||||||
FFO attributable to common stockholders(1) | $ | 2,193 | $ | (3,169) |
Three Months Ended March 31, | Change | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Office | $ | 14,105 | $ | 13,527 | $ | 578 | 4.3 | % | ||||||||||||||||||
Hotel | $ | 7,793 | $ | 1,878 | $ | 5,915 | 315.0 | % | ||||||||||||||||||
Lending | $ | 2,884 | $ | 3,474 | $ | (590) | (17.0) | % | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||
Office | $ | 6,211 | $ | 5,740 | $ | 471 | 8.2 | % | ||||||||||||||||||
Hotel | $ | 5,399 | $ | 2,685 | $ | 2,714 | 101.1 | % | ||||||||||||||||||
Lending | $ | 1,136 | $ | 1,368 | $ | (232) | (17.0) | % | ||||||||||||||||||
Income From Unconsolidated Entity | ||||||||||||||||||||||||||
Office | $ | 120 | $ | — | $ | 120 | 100.0 | % | ||||||||||||||||||
Non-Segment Revenue and Expenses: | ||||||||||||||||||||||||||
Asset management and other fees to related parties | $ | (921) | $ | (2,259) | $ | 1,338 | (59.2) | % | ||||||||||||||||||
Expense reimbursements to related parties - corporate | $ | (422) | $ | (605) | $ | 183 | (30.2) | % | ||||||||||||||||||
Interest expense | $ | (2,063) | $ | (2,441) | $ | 378 | (15.5) | % | ||||||||||||||||||
General and administrative | $ | (1,137) | $ | (2,041) | $ | 904 | (44.3) | % | ||||||||||||||||||
Depreciation and amortization | $ | (5,004) | $ | (5,037) | $ | 33 | (0.7) | % | ||||||||||||||||||
Provision for income taxes | $ | (307) | $ | (374) | $ | 67 | (17.9) | % |
Exhibit Number | Exhibit Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
*31.1 | ||||||||
*31.2 | ||||||||
*32.1 | ||||||||
*32.2 | ||||||||
*101.INS | XBRL Instance Document — the instance document does not appear in the interactive data files because its XBRL on the Interactive Data File because its XBRL tags are embedded within the inline XBRL document | |||||||
*101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
*101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
*101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
*101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
*101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
*104 | Cover page Interactive Data File, formatted in inline XBRL (included in Exhibit 101). |
CREATIVE MEDIA & COMMUNITY TRUST CORPORATION | ||||||||||||||
Dated: May 10, 2022 | By: | /s/ DAVID THOMPSON David Thompson Chief Executive Officer | ||||||||||||
Dated: May 10, 2022 | By: | /s/ NATHAN D. DEBACKER Nathan D. DeBacker Chief Financial Officer |
Date: May 10, 2022 | /s/ DAVID THOMPSON David Thompson Chief Executive Officer |
Date: May 10, 2022 | /s/ NATHAN D. DEBACKER Nathan D. DeBacker Chief Financial Officer |
/s/ DAVID THOMPSON David Thompson Chief Executive Officer May 10, 2022 |
/s/ NATHAN D. DEBACKER Nathan D. DeBacker Chief Financial Officer May 10, 2022 |
Consolidated Statements of Equity - USD ($) $ in Thousands |
Total |
Total Stockholders’ Equity |
Common Stock |
Preferred Stock |
Additional Paid-in Capital |
Distributions in Excess of Earnings |
Non-controlling Interests |
Series A Preferred Stock |
Series A Preferred Stock
Total Stockholders’ Equity
|
Series A Preferred Stock
Preferred Stock
|
Series A Preferred Stock
Additional Paid-in Capital
|
Series A Preferred Stock
Distributions in Excess of Earnings
|
Series D Preferred Stock |
Series D Preferred Stock
Total Stockholders’ Equity
|
Series D Preferred Stock
Preferred Stock
|
Series D Preferred Stock
Additional Paid-in Capital
|
Series D Preferred Stock
Distributions in Excess of Earnings
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance (in shares) at Dec. 31, 2020 | 14,827,410 | 9,784,067 | 4,377,762 | 19,145 | |||||||||||||
Beginning balance at Dec. 31, 2020 | $ 278,114 | $ 277,659 | $ 15 | $ 262,036 | $ 794,127 | $ (778,519) | $ 455 | $ 108,729 | $ 473 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Distributions to noncontrolling interests | (114) | (114) | |||||||||||||||
Stock based compensation expense | 60 | 60 | 60 | ||||||||||||||
Common dividends | (1,112) | (1,112) | (1,112) | ||||||||||||||
Dividends to holders of Preferred Stock | $ (2,350) | $ (2,350) | $ (2,350) | $ (9) | $ (9) | $ (9) | |||||||||||
Issuance of Series D Preferred Stock (in shares) | 4,045 | ||||||||||||||||
Issuance of Series D Preferred Stock | 96 | 96 | $ 99 | $ (3) | |||||||||||||
Reclassification of Series A Preferred Stock to permanent equity (in shares) | 366,991 | ||||||||||||||||
Reclassification of Series A Preferred stock to Perm Equity | 8,243 | 8,243 | 8,243 | $ 9,144 | $ (901) | ||||||||||||
Redeemable preferred stock accretion | (57) | (57) | (57) | ||||||||||||||
Redemption of Series A Preferred Stock (in shares) | (29,462) | ||||||||||||||||
Redemption of Series A Preferred Stock | (685) | (685) | $ (733) | 61 | (13) | ||||||||||||
Net income (loss) | (3,671) | (3,670) | (3,670) | (1) | |||||||||||||
Ending balance (in shares) at Mar. 31, 2021 | 14,827,410 | 10,125,641 | 4,715,291 | 23,190 | |||||||||||||
Ending balance at Mar. 31, 2021 | 278,515 | 278,175 | $ 15 | $ 270,546 | 793,344 | (785,730) | 340 | $ 117,140 | $ 572 | ||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 23,369,331 | 11,715,354 | 6,271,337 | 56,857 | |||||||||||||
Beginning balance at Dec. 31, 2021 | 373,549 | 373,204 | $ 24 | $ 310,661 | 866,746 | (804,227) | 345 | $ 156,431 | $ 1,396 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Stock based compensation expense | 55 | 55 | 55 | ||||||||||||||
Common dividends | (1,986) | (1,986) | (1,986) | ||||||||||||||
Dividends to holders of Preferred Stock | (2,896) | (2,896) | (2,896) | $ (21) | $ (21) | $ (21) | |||||||||||
Issuance of Series D Preferred Stock (in shares) | 0 | ||||||||||||||||
Issuance of Series D Preferred Stock | $ 0 | ||||||||||||||||
Reclassification of Series A Preferred Stock to permanent equity (in shares) | 329,921 | ||||||||||||||||
Reclassification of Series A Preferred stock to Perm Equity | 7,667 | 7,667 | 7,667 | $ 8,304 | (637) | ||||||||||||
Redeemable preferred stock accretion | (15) | (15) | (15) | ||||||||||||||
Redemption of Series A Preferred Stock (in shares) | (49,341) | ||||||||||||||||
Redemption of Series A Preferred Stock | $ (1,195) | $ (1,195) | $ (1,228) | $ 108 | $ (75) | ||||||||||||
Net income (loss) | 2,302 | 2,297 | 2,297 | 5 | |||||||||||||
Ending balance (in shares) at Mar. 31, 2022 | 23,369,331 | 11,995,934 | 6,551,917 | 56,857 | |||||||||||||
Ending balance at Mar. 31, 2022 | $ 377,460 | $ 377,110 | $ 24 | $ 317,737 | $ 866,272 | $ (806,923) | $ 350 | $ 163,507 | $ 1,396 |
Consolidated Statements of Equity (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Common dividends paid (in usd per share) | $ 0.085 | $ 0.075 |
Series A Preferred Stock | ||
Preferred dividends paid, per share amount (in usd per share) | 0.34375 | 0.34375 |
Series D Preferred Stock | ||
Preferred dividends paid, per share amount (in usd per share) | $ 0.35313 | $ 0.35313 |
ORGANIZATION AND OPERATIONS |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND OPERATIONS | 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 owns and operates Class A and creative office real assets in vibrant and improving metropolitan communities throughout the United States. 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 acquire, operate and develop premier multifamily 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 seeks to apply the expertise of CIM Group, L.P. (“CIM Group”) to the acquisition, development and operation of top-tier multifamily properties situated in dynamic markets with similar business and employment characteristics to its creative office investments. 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-L.” The Company’s Series L preferred stock, $0.001 par value per share (“Series L Preferred Stock”), is currently traded on Nasdaq and on the TASE, in each case under the ticker symbol “CMCTP.” The Company has authorized for issuance 900,000,000 shares of common stock and 100,000,000 shares of preferred stock (“Preferred Stock”). The Company filed Articles of Amendment (the “Reverse Stock Split Amendment”) to effectuate a one-for-three reverse stock split of the Company’s Common Stock, effective on September 3, 2019 (the “Reverse Stock Split”). Pursuant to the Reverse Stock Split Amendment, every three shares of Common Stock issued and outstanding immediately prior to the effective time of the Reverse Stock Split were converted into one share of Common Stock, par value $0.003 per share. In connection with the Reverse Split Amendment, the Company filed Articles of Amendment to revert the par value of the Common Stock issued and outstanding from $0.003 per share to $0.001 per share, effective as of September 3, 2019, following the effective time of the Reverse Split Amendment. All Common Stock and per share of Common Stock amounts set forth in this Quarterly Report on Form 10-Q have been adjusted to give retroactive effect to the Reverse Stock Split, unless otherwise stated. The Company conducted a continuous public offering of Series A Preferred Units from October 2016 through January 2020, where each Series A Preferred Unit consisted of one share of Series A Preferred Stock, par value $0.001 per share, of the Company (collectively, the “Series A Preferred Stock”) with an initial stated value of $25.00 per share, subject to adjustment (the “Series A Preferred Stock Stated Value”), and one warrant (collectively, the “Series A Preferred Warrants”) to purchase 0.25 of a share of Common Stock, subject to adjustment (Note 11). Proceeds and expenses from the sale of the Series A Preferred Units were allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance. Since February 2020, the Company has been conducting a continuous public offering of Series A Preferred Stock and Series D preferred stock, par value $0.001 per share (the “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 selling price of the Series A Preferred Stock in the offering has been, and is expected to continue to be, $25.00 per share and the selling price of the Series D Preferred Stock was $25.00 per share for all sales that occurred from the beginning of the offering to and including June 28, 2020 and is expected to be, and since June 29, 2020, has been, $24.50 per share through the end of the life of the offering.
|
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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, 2021, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2022. 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 given, among other things, the uncertain impact of the novel coronavirus (“COVID-19”) on the Company’s operations during the remainder of the year. 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 2021 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, 2022, 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. 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:
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, 2022 and 2021 (Note 3). Investment in Unconsolidated Entity—In February 2022, the Company invested in an unconsolidated joint venture arrangement (the “Unconsolidated Joint Venture”) with a CIM-managed separate account (the “CM JV Partner”) to purchase an office property in Los Angeles, California for approximately $51.0 million, gross of proration amounts, of which the Company initially contributed approximately $22.4 million and the CIM JV Partner initially contributed the remaining balance. The Company accounts for its approximately 44% investment in the Unconsolidated Joint Venture under the equity method, as it has the ability to exercise significant influence over the investment. The Company has elected the fair value option (“FVO”) for its equity method investment and therefore reports this investment at fair value. As such, the Company records its share of the Unconsolidated Joint Venture’s profits or losses 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 as a profit or loss on the consolidated statements of operations. The Company recorded income of $120,000 related to its investment in the Unconsolidated Joint Venture during the three months ended March 31, 2022 in the consolidated statements of operations. 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 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, 2022 and December 31, 2021, lease incentives of $4.0 million and $4.0 million, respectively, are presented net of accumulated amortization of $2.8 million and $2.7 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. For the three months ended March 31, 2022 and 2021, the Company recognized rental income as follows (in thousands):
______________________ (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, 2022 and December 31, 2021, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $416,000 and $579,000, 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. 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 16 (in thousands):
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, 2022 and 2021. As of March 31, 2022, 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 loan loss reserves. 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 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”). The programs consist of loans originated under the SBA 7(a) Small Business Loan Program (the “SBA 7(a) Program”) and, commencing with the quarter ended June 30, 2020, the Paycheck Protection Program (the “PPP”). 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 $9.8 million and $9.6 million as of March 31, 2022 and December 31, 2021, respectively. At the closing of the merger in 2014 between CIM Urban REIT, LLC (“CIM REIT”), an affiliate of CIM Group, and certain of its subsidiaries and PMC Commercial Trust, the predecessor to the Company, the carrying value of the Company’s loans was adjusted to estimated fair market value and acquisition discounts of $33.9 million were recorded, which are being accreted to interest and other income using the effective interest method. Acquisition discounts of $330,000 and $381,000 remained as of March 31, 2022 and December 31, 2021, 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. Loan Loss Reserves—On a quarterly basis, and more frequently if indicators exist, the Company evaluates the collectability of its loans receivable. The Company’s evaluation of collectability involves significant judgment, estimates, and a review of the ability of the borrower to make principal and interest payments, the underlying collateral and the borrowers’ business models and future operations. For the three months ended March 31, 2022 and 2021, the Company recorded a net impairment losses of $0 and 92,000, respectively, on its loans receivable. There were no material loans receivable subject to credit risk which were considered to be impaired as of March 31, 2022 or December 31, 2021. The Company considers a loan to be impaired when the Company does not expect to collect all of the contractual interest and principal payments as scheduled in the loan agreements. The Company also establishes a general loan loss reserve when available information indicates that it is probable a loss has occurred based on the carrying value of the portfolio and the amount of the loss can be reasonably estimated. Significant judgment is required in determining the general loan loss reserve, including estimates of the likelihood of default and the estimated fair value of the collateral. The general loan loss reserve includes those loans, which may have negative characteristics which have not yet become known to the Company. In addition to the reserves established on loans not considered impaired that have been evaluated under a specific evaluation, the Company establishes the general loan loss reserve using a consistent methodology to determine a loss percentage to be applied to loan balances. These loss percentages are based on many factors, primarily cumulative and recent loss history and general economic conditions. As of March 31, 2022 and December 31, 2021, the Company had loan loss reserves of $980,000 and $943,000, respectively. Deferred Rent Receivable and Charges—Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 10) 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 A Preferred Units, and, after January 2020, Series A Preferred Stock and Series D Preferred Stock, excluding 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 Units, which were 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. As of March 31, 2022 and December 31, 2021, deferred rent receivable and charges consist of the following (in thousands):
Redeemable Preferred Stock—Beginning on the date of original issuance of any given shares of Series A Preferred Stock or Series D Preferred Stock, and from and after the fifth anniversary date of the original issuance of the Series L Preferred Stock, the holder of such shares has the right to require the Company to redeem such shares, subject to certain limitations as discussed in Note 10. The Company records the activity related to the Series A Preferred Warrants, Series D Preferred Stock and Series L 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 records issuances of Series A Preferred Stock in temporary equity. On the first anniversary of the date of original issuance of a particular share of Series A Preferred Stock, the Company reclassifies such share of Series A Preferred Stock from temporary equity to permanent equity because the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. Noncontrolling Interests—Noncontrolling 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. 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 and at such time, including the impact of extraordinary events such as COVID-19. Actual results could differ from those estimates. Recently Issued Accounting Pronouncements—In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was subsequently amended by ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses (“ASU 2018-19”) in November 2018. Subsequently, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-02 to provide additional guidance on the credit losses standard. ASU 2016-13 and the related updates improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held-for-investment, held-to-maturity debt securities, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2018-19 clarified that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASU No. 2016-02, Leases (Topic 842). For smaller reporting companies, public entities that are not SEC filers, and entities that are not public business entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2022. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. The Company has been evaluating the impact of adoption of ASU 2016-13 on its consolidated financial statements and expects to adopt ASU 2016-13 and the related updates beginning on January 1, 2023. On April 10, 2020, the FASB issued a question-and-answer document (the “Q&A”) to address stakeholder questions on the application of the lease accounting guidance for lease concessions related to the effects of COVID-19. The lease modification guidance in Topic 842, Leases, (or Topic 840, Leases) would require the Company to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was made pursuant to the enforceable rights and obligations of the existing lease agreement (precluded from applying the lease modification accounting framework). However, the Q&A provides that the Company may bypass the lease by lease analysis if certain criteria are met, and instead elect to either consistently apply, or consistently not apply, the lease modification framework to groups of leases with similar characteristics and similar circumstances. As described below, the Company has elected not to apply the lease modification guidance to concessions related to the effects of COVID-19 that do not result in a substantial increase in the Company’s rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than the total payments required by the original lease.
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INVESTMENTS IN REAL ESTATE |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN REAL ESTATE | 3. INVESTMENTS IN REAL ESTATE Investments in real estate consist of the following (in thousands):
For the three months ended March 31, 2022 and 2021, the Company recorded depreciation expense of $4.2 million and $4.2 million. 2022 Transactions—During the three months ended March 31, 2022, the Company acquired a 100% fee-simple interest in the following property from an unrelated third-party. The purchase was accounted for as an asset acquisition. Please see “Investments in Unconsolidated Entities” (Note 4) below for information on the Company’s acquisition of an approximate 44% interest in an office property in February 2022.
(1)Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $14,000, which are not included in the purchase price above. (2)The property is located on a land site of approximately 11,300 square feet. The Company intends to entitle the property and develop approximately 45 residential units. There were no dispositions during the three months ended March 31, 2022. 2021 Transactions— There were no acquisitions or dispositions for the three months ended March 31, 2021. The results of operations of the property the Company acquired have been included in the consolidated statements of operations from the date of acquisition. The purchase price of the acquisition completed during the three months ended March 31, 2022 was less than 10% of the Company’s total assets as of the respective most recent annual consolidated financial statements filed at or prior to the date of acquisition. The following table summarizes the purchase price allocation of the aforementioned acquisition during the three months ended March 31, 2022.
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INVESTMENTS IN UNCONSOLIDATED ENTITIES |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 4. INVESTMENTS IN UNCONSOLIDATED ENTITIES The following table details the Company’s equity method investments in unconsolidated entities. Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies for more details (dollars in thousands):
(1)1910 Sunset Blvd is an office building with 97,564 square feet of office space and 2,760 square feet of retail space. The Unconsolidated Joint Venture plans to undertake a capital improvement program to renovate and modernize the building into creative office space as well as a limited number of multifamily units. The Company did not receive any distributions from the Unconsolidated Joint Venture during the three months ended March 31, 2022.
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LOANS RECEIVABLE |
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LOANS RECEIVABLE | 5. LOANS RECEIVABLE Loans receivable consist of the following (in thousands):
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 are reflected as loan-backed notes payable (Note 7). These loans are subject to credit risk. SBA 7(a) Loans Receivable, Paycheck Protection Program—As an SBA 7(a) licensee, the Company originated loans under the PPP. As of March 31, 2022, a significant portion of these loans have been either forgiven or repaid, and the Company expects that all of the outstanding PPP loans will be forgiven, either in part or in full, by the SBA or be repaid by the borrower, including both principal and accrued interest. 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 has guaranteed 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. Other As of March 31, 2022 and December 31, 2021, the Company’s loans subject to credit risk were 99.9% and 99.8%, respectively, concentrated in the hospitality industry. As of March 31, 2022 and December 31, 2021, 100.0% and 100.0%, 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, 2022 and December 31, 2021, $1.0 million and $1.1 million, respectively, of loans subject to credit risk were classified in substandard categories.
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OTHER INTANGIBLE ASSETS AND LIABILITIES |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER INTANGIBLE ASSETS AND LIABILITIES | 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, 2022 and December 31, 2021 is as follows (in thousands):
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, 2022 and 2021, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):
A schedule of future amortization and accretion of acquired intangible assets and liabilities as of March 31, 2022, is as follows (in thousands):
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | 7. DEBT The following table summarizes the debt balances as of March 31, 2022 and December 31, 2021, and the debt activity for the three months ended March 31, 2022 (in thousands):
Mortgage Payable—The mortgage payable is secured by a deed of trust on a property and assignments of rents receivable. As of March 31, 2022, the Company’s mortgage 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 March 31, 2022, the Company’s secured borrowings-government guaranteed loans included $3.7 million of loans sold for a premium and excess spread, with a variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.88%, and $2.6 million of loans sold for an excess spread, 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, the Company entered into a secured revolving credit facility with a bank syndicate that, as amended, allows the Company 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 the Company’s ability to borrow under the 2018 revolving credit facility during the period from September 2, 2020 through August 14, 2021 (the “Deferral Period”). The 2018 revolving credit facility bore interest during the Deferral Period at (A) the base rate plus 1.05% or (B) LIBOR plus 2.05% and (ii) bears interest after the Deferral Period, at (A) the base rate plus 0.55% or (B) LIBOR plus 1.55%. As of March 31, 2022 and December 31, 2021, the variable interest rate was 2.49% and 2.15%, 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 the Company’s properties. The 2018 revolving credit facility contains customary covenants and is not subject to any financial covenants (though the amount the Company 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, including providing notice of the election and paying an extension fee of 0.15% of each lender’s commitment being extended on the effective date of such extension. The Company expects to extend its maturity to October 2023, subject to satisfying such conditions, and/or refinance such indebtedness. As of March 31, 2022 and December 31, 2021, $90.0 million and $60.0 million, respectively, was outstanding under the 2018 revolving credit facility, and approximately $106.2 million and $117.6 million, respectively, was available for future borrowings. 2020 Unsecured Revolving Credit Facility—In May 2020, the Company entered into an unsecured revolving credit facility with a bank (the “2020 unsecured revolving credit facility”) pursuant to which the Company 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%. The Company 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 matured on May 1, 2022. As of March 31, 2022, no amounts were 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 the Company’s option. SBA 7(a) Loan-Backed Notes—On May 30, 2018, the Company completed a securitization of the unguaranteed portion of certain of its 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 secured by deeds of trust or mortgages and are collateralized solely by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of the Company’s 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 the Company’s collateralized SBA 7(a) loans, at issuance, the Company estimated the weighted average remaining 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%. As of March 31, 2022 and December 31, 2021, the variable interest rate was 1.56% and 1.49%, respectively. The Company reflects the SBA 7(a) loans receivable as assets on its consolidated balance sheets and the SBA 7(a) loan-backed notes as debt on its consolidated balance sheets. The restricted cash on the Company’s consolidated balance sheets included funds related to the Company’s SBA 7(a) loan-backed notes of $2.0 million and $1.9 million as of March 31, 2022 and December 31, 2021, respectively. Paycheck Protection Program Liquidity Facility—In June 2020, the Company commenced borrowing funds from the Federal Reserve through the PPP Liquidity Facility (the “PPPLF”) to finance all the loans the Company originated under the PPP. 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 the Company 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, the Company has been reimbursed by the SBA for a loan forgiveness (to the extent of the forgiveness), the Company has received payment from the SBA representing exercise of the loan guarantee or the Company has received payment from the underlying borrower (to the extent of the payment received). As of March 31, 2022 and December 31, 2021, $3.7 million and $5.0 million, respectively, was outstanding under the PPPLF. As the PPP has ended, no new extensions of credit may be made under the PPPLF. Deferred debt issuance costs, which represent legal and third-party fees incurred in connection with the Company’s 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 debt issuance costs are presented net of accumulated amortization and are a reduction to total debt. As of March 31, 2022 and December 31, 2021, accrued interest and unused commitment fees payable of $473,000 and $467,000, respectively, were included in accounts payable and accrued expenses. Future principal payments on the Company’s debt (face value) as of March 31, 2022 are as follows (in thousands):
______________________ (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. The Company’s estimate of their repayment is based on scheduled payments on the underlying loans. The Company’s estimate will differ from actual amounts to the extent the Company experiences 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.
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STOCK-BASED COMPENSATION PLANS |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION PLANS | 8. STOCK-BASED COMPENSATION PLANS On April 3, 2015, the Company’s board of directors (the “Board of Directors”) unanimously approved the Company’s 2015 Equity Incentive Plan (the “2015 Equity Incentive Plan”), which was approved by the Company’s stockholders. Under the 2015 Equity Incentive Plan, the Company granted awards of restricted shares of Common Stock to each of the independent members of the Board of Directors as follows:
______________________ (1)Compensation expense related to these restricted shares of Common Stock is recognized over the vesting period, and generally vests based on one year of continuous service. The Company recorded compensation expense related to these restricted shares of Common Stock in the amount of $55,000 and $60,000 for the three months ended March 31, 2022 and 2021, respectively. (2)On February 11, 2021, the Company’s Board of Directors approved the immediate vesting of 5,478 shares that had been granted in May 2020 to a former independent member of the Board of Directors following his death. (3)These shares will vest after one year of continuous service, other than the shares granted to Mr. Frank Golay, Jr., a former independent director of the Company, which vested on May 2, 2022. Mr. Golay retired from the Board on May 2, 2022 and, in recognition of his service to the Company, the Board accelerated the vesting of Mr. Golay’s shares. As of March 31, 2022, there was $18,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized ratably over the remaining vesting period.
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EARNINGS PER SHARE (''EPS'') |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE ("EPS") | 9. EARNINGS PER SHARE ("EPS") The computations of basic EPS are based on the Company’s weighted average shares outstanding. In order to calculate the diluted weighted average number of shares of Common Stock outstanding for the three months ended March 31, 2022, the basic weighted average number of shares of Common Stock outstanding was increased by 2,477 shares to reflect the dilutive effect of certain shares of the Company’s Series A Preferred Stock, while no shares of Series A Preferred Stock outstanding as of March 31, 2021 were included in the computation of diluted EPS because they had no dilutive effect. No shares of Series D Preferred Stock outstanding as of March 31, 2022 or 2021 were included in the computation of diluted EPS because they had no dilutive effect. Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three months ended March 31, 2022 and 2021 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 11). Outstanding shares of Series L Preferred Stock were not included in the computation of diluted EPS for the three months ended March 31, 2022 and 2021 because such shares were not redeemable during such periods. EPS for the year-to-date period may differ from the sum of quarterly EPS amounts due to the required method for computing EPS in the respective periods. In addition, EPS is calculated independently for each component and may not be additive due to rounding. The following table reconciles the numerator and denominator used in computing the Company’s basic and diluted per-share amounts for net loss attributable to common stockholders for the three months ended March 31, 2022 and 2021 (in thousands, except per share amounts):
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REDEEMABLE PREFERRED STOCK | 10. REDEEMABLE PREFERRED STOCK The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three months ended March 31, 2022 and 2021 (dollar amounts in thousands):
As of March 31, 2022, the Company had issued in registered public offerings 7,949,521 shares of Series A Preferred Stock, 4,603,287 Series A Preferred Warrants and 56,857 shares of Series D Preferred Stock and received gross proceeds of $200.1 million ($197.9 million of which was allocated to the Series A Preferred Stock, $761,000 of which was allocated to the Series A Preferred Warrants, and $1.4 million of which was allocated to the Series D Preferred Stock) and, additionally, had issued 568,681 shares of Series A Preferred Stock as payment for services to the Administrator, for which no cash proceeds were received. In connection with such issuance, costs specifically identifiable to the offering of Series A Preferred Stock, Series A Preferred Warrants and Series D Preferred Stock, such as commissions, dealer manager fees and other offering fees and expenses, totaled $16.6 million ($16.4 million of which was allocated to the Series A Preferred Stock, $142,000 of which was allocated to the Series A Preferred Warrants, and $35,000 of which was allocated to the Series D Preferred Stock). In addition, as of March 31, 2022, non-issuance-specific costs related to this offering totaled $8.2 million. As of March 31, 2022, the Company had reclassified and allocated $1.8 million, $5,000 and $13,000 from deferred charges to Series A Preferred Stock, Series A Preferred Warrants and Series D Preferred Stock, respectively, as a reduction to the gross proceeds received. Such reclassification was based on the cumulative number of securities issued relative to the maximum number of securities expected to be issued under the offering. As of March 31, 2022, there were 8,245,566 shares of Series A Preferred Stock outstanding, 4,458,589 Series A Preferred Warrants to purchase 1,156,393 shares of Common Stock outstanding, and 56,857 shares of Series D Preferred Stock outstanding. As of March 31, 2022, 272,636 shares of Series A Preferred Stock and no shares of Series D Preferred Stock had been redeemed. Series A Preferred Stock—The Company conducted a continuous public offering of Series A Preferred Units from October 2016 through January 2020, where each Series A Preferred Unit consisted of one share of Series A Preferred Stock, par value $0.001 per share, of the Company with an initial stated value of $25.00 per share, subject to adjustment, and one warrant to purchase 0.25 of a share of Common Stock. Proceeds and expenses from the sale of the Series A Preferred Units were allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance. Since February 2020, the Company has been conducting a continuous public offering with respect to shares of the Company’s Series A Preferred Stock, which, since such time, is no longer being issued as a unit with an accompanying Series A Preferred Warrant. Net proceeds from the issuance of shares of Series A Preferred Stock are initially recorded in temporary equity at an amount equal to the gross proceeds allocated to such shares of Series A Preferred Stock minus the costs specifically identifiable to the issuance of such shares and the non-issuance specific offering costs allocated to such shares. If the net proceeds from the issuance of shares of Series A Preferred Stock are less than the redemption value of such shares at the time they are issued, or if the redemption value of such shares subsequently becomes greater than the carrying value of such shares, an adjustment is recorded to increase the carrying amount of such shares to their redemption value as of the balance sheet date. Such adjustment is considered a deemed dividend for purposes of calculating basic and diluted EPS. For the three months ended March 31, 2022 and 2021, the Company recorded redeemable preferred stock deemed dividends of $15,000 and $57,000, respectively, related to such adjustments. On the first anniversary of the issuance of a particular share of Series A Preferred Stock, the Company reclassifies such share of Series A Preferred Stock from temporary equity to permanent equity because the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. As of March 31, 2022, the Company had reclassified an aggregate of $153.9 million in net proceeds from temporary equity to permanent equity. Series D Preferred Stock—Since February 2020, the Company has been conducting a continuous public offering with respect to shares of its Series D Preferred Stock, par value $0.001 per share, subject to adjustment. The selling price of the Series D Preferred Stock was $25.00 per share for all sales that occurred from the beginning of the offering to and including June 28, 2020 and is expected to be, and since June 29, 2020, has been, $24.50 per share through the end of the life of the offering. Shares of Series D Preferred Stock are recorded in permanent equity at the time of their issuance. Series L Preferred Stock—On November 21, 2017, the Company issued 8,080,740 shares of Series L Preferred Stock having an initial stated value of $28.37 per share (“Series L Preferred Stock Stated Value”), subject to adjustment. The Company received gross proceeds of $229.3 million from the sale of the Series L Preferred Stock, which was reduced by issuance-specific offering costs, such as commissions, dealer manager fees, and other offering fees and expenses, totaling $15.9 million, a discount of $2.9 million, and non-issuance-specific costs of $2.5 million. These fees have been recorded as a reduction to the gross proceeds in permanent equity. Until the fifth anniversary of the date of original issuance of the Series L Preferred Stock, the Company is prohibited from issuing any shares of preferred stock ranking senior to or on parity with the Series L Preferred Stock with respect to the payment of dividends, other distributions, liquidation, and or dissolution or winding up of the Company unless the Minimum Fixed Charge Coverage Ratio, calculated in accordance with the Articles Supplementary describing the Series L Preferred Stock, is equal to or greater than 1.25:1.00. As of March 31, 2022 and December 31, 2021, the Company was in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio. Refer to Note 13 for a discussion of certain payments the Company has made in shares of Common Stock and in shares of Preferred Stock and may make in shares of Preferred Stock in lieu of cash payments in order to remain in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio. Dividends—With respect to the payment of dividends, the Series A Preferred Stock ranks senior to the Series L Preferred Stock and the Common Stock, and on parity with the Series D Preferred Stock. The Series L Preferred Stock ranks senior to the Common Stock (except with respect to and only to the extent of the Initial Dividend) and junior to the Series A Preferred Stock, Series D Preferred Stock and Common Stock (with respect to and only to the extent of the Initial Dividend). With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series A Preferred Stock ranks on parity with the Series D Preferred Stock and Series L Preferred Stock, to the extent of the Series L Preferred Stock Stated Value, and otherwise ranks senior to the Series L Preferred Stock and the Common Stock. With respect to the distribution of amounts upon liquidation, dissolution or winding-up, the Series L Preferred Stock ranks senior to the Common Stock, both (i) to the extent of the Series L Preferred Stock Stated Value and (ii) following payment to holders of the Common Stock of an amount equal to any unpaid Initial Dividend, to the extent of any accrued and unpaid dividends on the Series L Preferred Stock, on parity with the Series A Preferred Stock and Series D Preferred Stock, to the extent of the Series L Preferred Stock Stated Value and junior to the Series A Preferred Stock, Series D Preferred Stock and Common Stock (to the extent of the Initial Dividend), in all instances with respect to any accrued and unpaid dividends on the Series L Preferred Stock. Holders of Series A Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends on each share of Series A Preferred Stock at an annual rate of 5.50% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter) (the “Series A Dividend”). Holders of Series D Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends on each share of Series D Preferred Stock at an annual rate of 5.65% of the Series D Preferred Stock Stated Value (i.e., the equivalent of $0.35313 per share per quarter) (the “Series D Dividend”). Dividends on each share of Series A Preferred Stock and Series D Preferred Stock begin accruing on, and are cumulative from, the date of issuance. The Company expects to pay the Series A Dividend and Series D Dividend in arrears on a monthly basis in accordance with the foregoing provisions, unless the Company’s results of operations, general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so. The timing and amount of the Series A Dividend and the Series D Dividend will be determined by the Company’s Board of Directors, in its sole discretion, and may vary from time to time. Holders of Series L Preferred Stock are entitled to receive, if, as and when authorized by the Company’s Board of Directors, and declared by the Company out of legally available funds, cumulative cash dividends on each share of Series L Preferred Stock at an annual rate of 5.50% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year). Dividends on each share of Series L Preferred Stock began accruing on, and are cumulative from, the date of issuance. The Company expects to pay dividends on the Series L Preferred Stock in arrears on an annual basis in accordance with the foregoing provisions, unless the Company’s results of operations, general financing conditions, general economic conditions, applicable requirements of the MGCL or other factors make it imprudent to do so. If the Company fails to timely declare distributions or fails to timely pay distributions on the Series L Preferred Stock, the annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.00% per year, up to a maximum rate of 8.50% per annum. However, prior to the payment of any distributions on Series L Preferred Stock in respect of a given year, the Company must first declare and pay dividends on the Common Stock in respect of such year in an aggregate amount equal to the Initial Dividend announced by the Company’s Board of Directors at the end of the prior fiscal year. On December 29, 2021, the Company announced an Initial Dividend on shares of its Common Stock for fiscal year 2022 in the aggregate amount of $7,010,799, of which $1,986,000 had been paid as of March 31, 2022. During the three months ended March 31, 2022, the Company paid $2.7 million, $20,000 and $8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively. During the three months ended March 31, 2021, the Company paid $2.2 million, $7,000 and $8.4 million of cash dividends on the Series A Preferred Stock, Series D Preferred Stock and Series L Preferred Stock, respectively. Redemptions—The Company’s Series A Preferred Stock and Series D Preferred Stock are redeemable at the option of the holder or the Company. The redemption schedule of the Series A Preferred Stock and Series D Preferred Stock allows redemptions at the option of the holder of Series A Preferred Stock or Series D Preferred Stock from the date of original issuance of any such shares at the Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, less a redemption fee applicable prior to the fifth anniversary of the issuance of such shares, plus accrued and unpaid dividends. The Company has the right to redeem the Series A Preferred Stock or Series D Preferred Stock after the fifth anniversary of the date of original issuance of such shares at the Series A Preferred Stock Stated Value or Series D Preferred Stock Stated Value, respectively, plus accrued and unpaid dividends. At the Company’s discretion, the redemption price will be paid in cash or in Common Stock based on the volume weighted average price of the Company’s Common Stock for the 20 trading days prior to the redemption; provided that the redemption price of any shares of Series A Preferred Stock redeemed prior to the first anniversary of the date of original issuance of such shares must be paid in cash. From and after the fifth anniversary of the date of original issuance of the Series L Preferred Stock, each holder will have the right to require the Company to redeem, and the Company will also have the option to redeem (subject to certain conditions), such shares of Series L Preferred Stock at a redemption price equal to the Series L Preferred Stock Stated Value, plus, provided certain conditions are met, all accrued and unpaid distributions. Notwithstanding the foregoing, a holder of shares of the Company’s Series L Preferred Stock may require the Company to redeem such shares at any time prior to the fifth anniversary of the date of original issuance of the Series L Preferred Stock if (1) the Company does not declare and pay in full the distribution on the Series L Preferred Stock for any annual period prior to such fifth anniversary or (2) the Company does not declare and pay all accrued and unpaid distributions on the Series L Preferred Stock for all past dividend periods prior to the applicable holder redemption date. The applicable redemption price payable upon redemption of any Series L Preferred Stock will be made, in the Company’s sole discretion, in the form of (A) cash in ILS at the then-current currency exchange rate determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, (B) in equal value through the issuance of shares of Common Stock, with the value of such Common Stock to be deemed the lower of (i) the NAV per share of the Company’s Common Stock as most recently published by the Company as of the effective date of redemption and (ii) the volume-weighted average price of the Company’s Common Stock, determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, or (C) in a combination of cash in ILS and the Company’s Common Stock, based on the conversion mechanisms set forth in (A) and (B), respectively.
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STOCKHOLDERS' EQUITY | 11. STOCKHOLDERS’ EQUITY Dividends Holders of the Company’s Common Stock are entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by the Company out of legally available funds. In determining the Company’s dividend policy, the Board of Directors considers many factors including the amount of cash resources available for dividend distributions, capital spending plans, cash flow, the Company’s financial position, applicable requirements of the MGCL, any applicable contractual restrictions, and future growth in NAV and cash flow per share prospects. Consequently, the dividend rate on a quarterly basis does not necessarily correlate directly to any individual factor. Cash dividends per share of Common Stock declared in respect of the three months ended March 31, 2022 and 2021 consist of the following:
Series A Preferred Warrants Prior to February 2020, the Series A Preferred Stock was sold as a unit that included one share of Series A Preferred Stock and one Series A Preferred Warrant that could be exercised to purchase 0.25 of a share of Common Stock. The Series A Preferred Warrants are exercisable beginning on the first anniversary of the date of their original issuance until and including the fifth anniversary of the date of such issuance. At the time of issuance, the exercise price of each Series A Preferred Warrant was at a 15.0% premium to the per share estimated NAV of the Company’s Common Stock then most recently published and designated as the applicable NAV. However, in accordance with the terms of the Series A Preferred Warrants, the exercise price of each Series A Preferred Warrant issued prior to the Reverse Stock Split was automatically adjusted to reflect the effect of the Reverse Stock Split and, in the discretion of the Company’s Board of Directors, the exercise price and the number of shares issuable upon exercise of each Series A Preferred Warrant issued prior to the Special Dividend was adjusted to reflect the effect of the Special Dividend. Proceeds and expenses from the sale of the Series A Preferred Units were allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance. As of March 31, 2022, the Company had 4,458,589 Series A Preferred Warrants outstanding to purchase 1,156,393 shares of Common Stock in connection with the Company’s offering of Series A Preferred Units and allocated net proceeds of $606,000, after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity.
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company determines the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The hierarchy for inputs used in measuring fair value is as follows: Level 1 Inputs—Quoted prices in active markets for identical assets or liabilities Level 2 Inputs—Observable inputs other than quoted prices in active markets for identical assets and liabilities Level 3 Inputs—Unobservable inputs In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Management’s estimation of the fair value of the Company’s financial instruments is based on a Level 3 valuation in the fair value hierarchy established for disclosure of how a company values its financial instruments. In general, quoted market prices from active markets for the identical financial instrument (Level 1 inputs), if available, should be used to value a financial instrument. If quoted prices are not available for the identical financial instrument, then a determination should be made if Level 2 inputs are available. Level 2 inputs include quoted prices for similar financial instruments in active markets for identical or similar financial instruments in markets that are not active (i.e., markets in which there are few transactions for the financial instruments, the prices are not current, price quotations vary substantially, or in which little information is released publicly). There is limited reliable market information for the Company’s financial instruments and the Company utilizes other methodologies based on unobservable inputs for valuation purposes since there are no Level 1 or Level 2 inputs available. Accordingly, Level 3 inputs are used to measure fair value. In general, estimates of fair value may differ from the carrying amounts of the financial assets and liabilities primarily as a result of the effects of discounting future cash flows. Considerable judgment is required to interpret market data and develop estimates of fair value. Accordingly, the estimates presented are made at a point in time and may not be indicative of the amounts the Company could realize in a current market exchange. The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities. Investment in Unconsolidated Entity—The Company has elected the FVO for its equity method investment and, therefore, reports this investment at fair value. To determine the fair value of the assets and liabilities of its equity method investment, the Company utilizes a discounted cash flow methodology, taking into consideration various factors including discount rate and exit capitalization rate. After the fair value of the assets and liabilities are determined, the Company applies its ownership interest to the net asset value and reflects this amount as its equity method investment at fair value on the consolidated balance sheet. The inputs used in determining the Company’s equity method investments carried at fair value are considered Level 3. As the investment in the Unconsolidated Joint Venture was made in February 2022, the Company carried the investment at cost as of March 31, 2022 as it believes this approximates fair value. Debt—The carrying amounts of the Company’s secured borrowings—government guaranteed loans, SBA 7(a) loan-backed notes, 2018 Revolving Credit Facility and borrowed funds from the Federal Reserve through the PPPLF approximate their fair values, as the interest rates on these securities are variable and approximate current market interest rates. The Company determines the fair value of mortgage notes payable and junior subordinated notes by performing discounted cash flow analyses using an appropriate market discount rate. The Company calculates the market discount rate for its mortgage notes payable by obtaining period-end treasury or swap rates, as applicable, for maturities that correspond to the maturities of the Company’s debt and then adding an appropriate credit spread. These credit spreads take into account factors such as the Company’s credit standing, the maturity of the debt, whether the debt is secured or unsecured, and the loan-to-value ratios of the debt. When estimating the fair value of the Company’s mortgages payable as of March 31, 2022 and December 31, 2021, the Company used a rate of 4.42% and 3.22%, respectively. The rate used to estimate the fair value of the Company’s junior subordinated notes was 5.21% and 4.46% as of March 31, 2022 and December 31, 2021, respectively. Loans Receivable—The Company determines the fair value of loans receivable by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk and using an anticipated prepayment rate. The value of the government guaranteed portions of loans held for sale is based primarily on the anticipated proceeds to be received upon sale. The following summarizes the ranges of discount rates and prepayment rates used to arrive at the estimated fair values of the Company’s loans receivable:
Other Financial Instruments—The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to their short-term maturities at March 31, 2022 and December 31, 2021. Due to the short-term maturities of these instruments, Level 1 inputs are utilized to estimate the fair value of these financial instruments. The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on the Company’s consolidated balance sheets are as follows (dollar amounts in thousands):
______________________ (1)The carrying amounts for the mortgage payable and junior subordinated notes represents the principal outstanding amounts, excluding deferred debt issuance costs and discounts. The estimated fair values of those financial instruments which are recorded at fair value on a recurring basis on the Company’s consolidated balance sheets are as follows (dollar amounts in thousands):
______________________ (1)Represents the Company’s equity-method investment in 1910 Sunset Blvd which was acquired in February 2022 and was carried at cost as of March 31, 2022. The following table details the Company’s share of the Unconsolidated Joint Venture measured at fair value on a recurring basis using Level 3 inputs ($ in thousands):
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RELATED-PARTY TRANSACTIONS |
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RELATED-PARTY TRANSACTIONS | 13. RELATED-PARTY TRANSACTIONS Asset Management and Other Fees to Related Parties Asset Management Fees; Administrative Fees and Expenses—CIM Urban and CIM Capital, LLC, an affiliate of CIM REIT and CIM Group (“CIM Capital”), have an investment management agreement, pursuant to which CIM Urban engaged CIM Capital to provide certain services to CIM Urban (the “Investment Management Agreement”). CIM Capital has assigned its duties under the Investment Management Agreement to its four wholly-owned subsidiaries: CIM Capital Securities Management, LLC, a securities manager, CIM Capital RE Debt Management, LLC, a debt manager, CIM Capital Controlled Company Management, LLC, a controlled company manager, and CIM Capital Real Property Management, LLC, a real property manager. The “Operator” refers to CIM Capital and its four wholly-owned subsidiaries. The Company and its subsidiaries have a master services agreement (the “Master Services Agreement”) with CIM Service Provider, LLC (the “Administrator”), an affiliate of CIM Group, pursuant to which the Administrator provides, or arranges for other service providers to provide, management and administration services to the Company and its subsidiaries. Pursuant to the Master Services Agreement, the Company appointed an affiliate of CIM Group as the administrator of Urban Partners GP, LLC. On January 5, 2022, the Company and certain of its subsidiaries entered into a Fee Waiver (the “Fee Waiver”) with the Operator and the Administrator with respect to fees that are payable to them. The Fee Waiver is effective retroactively to January 1, 2022 (the “Effective Date”). Pursuant to the Fee Waiver, the Administrator agreed to voluntarily waive any fees in excess of those set forth in the Fee Waiver, to the extent it would otherwise have been entitled to such additional compensation under the Master Service Agreement, and the Operator agreed to voluntarily waive any fees in excess of those set forth in the Fee Waiver, to the extent it would otherwise have been entitled to such additional compensation under the Investment Management Agreement. 1.Base Fee: A base asset management fee (the “Base Fee”) is payable quarterly in arrears to the Operator in an amount equal to an annual rate of 1% (or 0.25% per quarter) of the average of the “Net Asset Value Attributable to Common Stockholders” as of the first and last day of the applicable quarter. Net Asset Value Attributable to Common stockholders is defined as (a) the sum of the Company’s (1) investments in real estate at fair value, (2) cash, (3) loans receivable at fair value and (4) the book value of the other assets of the Company, excluding deferred costs and net of other liabilities at book value, less (b) the Company’s (i) debt at face value, (ii) outstanding preferred stock at stated value, and (iii) non-controlling interests at book value; provided, that, non-controlling interests in any UPREIT operating partnership relating to the Company shall not be excluded. Subject to applicable laws and regulations under Nasdaq and the TASE and the agreement of the Operator, the Company will pay the Base Fee owed with respect to the first quarter of 2022 in shares of its Series A Preferred Stock and it is likely that the Company will pay some or part of the remainder of the Base Fees incurred during the year ended December 31, 2022 in shares of Series A Preferred Stock. 2.Incentive Fee: An incentive fee (the “Revised Incentive Fee”) is payable quarterly in arrears to the Administrator with respect to the quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of the Company’s “Adjusted Common Equity” (as defined below) for such quarter (“Excess Core FFO”) as follows: (i) no Incentive Fee in any quarter in which the Excess Core FFO is $0; (ii) 100% of any Excess Core FFO up to an amount equal to the product of (x) the average of the Adjusted Common Equity as of the first and last day of the applicable quarter and (y) 0.4375%; and (iii) 20% of any Excess Core FFO thereafter. Revised Incentive Fees payable for any partial quarter will be appropriately prorated. “Adjusted Common Equity” means Common Equity plus Excluded Depreciation and Amortization. “Common Equity” means Total Stockholders’ Equity minus Excluded Equity. “Total Stockholders’ Equity” means the amount reflected as total stockholders’ equity in accordance with GAAP on the consolidated balance sheet of the Company and its subsidiaries as of the last day of a given quarter. “Excluded Equity” means the sum of all preferred securities of the Company and its subsidiaries classified as permanent equity in accordance with GAAP on the consolidated balance sheet of the Company and its subsidiaries as of the last day of a given quarter. “Excluded Depreciation and Amortization” means, for a given quarter, the amount of all accumulated depreciation and amortization of (i) the Company and its subsidiaries and (ii) to the extent allocable to the Company and its subsidiaries, the unconsolidated affiliates, in each case as of the last day of such quarter that corresponds to the periodic depreciation and amortization expense calculated in each case in accordance with GAAP that is a permitted add back to net income calculated in accordance with GAAP when calculating funds from operations. 3.Capital Gains Fee: A capital gains fee (the “Capital Gains Fee”) is payable quarterly in arrears to the Administrator in an amount equal to (i) 15% of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses (in each case since the Effective Date), minus (ii) the aggregate capital gains fees paid since the Effective Date. Realized capital gains and realized capital losses are calculated by subtracting from the sales price of a property: (a) any costs incurred to sell such property, and (b) the current gross value of the property (meaning the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements thereon paid for by the Company). Following the end of each quarter, the Administrator will deliver to the Company (i) a calculation of the cumulative fees earned by the Operator and the Administrator under the methodology prescribed by the Fee Waiver (the “Fee Waiver Methodology”) from the Effective Date through the end of such quarter and (ii) a calculation of the cumulative fees that would have been earned, in the absence of the Fee Waiver, by the Operator and the Administrator during such period under the Master Services Agreement and the Investment Management Agreement, without giving effect to the Fee Waiver (the “Prior Methodology”). If, in respect of any quarter, the aggregate fees that are payable under the Fee Waiver Methodology exceed the aggregate fees that would have been payable under the Prior Methodology for the equivalent period, such quarter is deemed an “Excess Quarter”. For any quarter following an Excess Quarter, the Company (upon the direction of the independent members of the Board) may, at its option and upon written notice to Administrator, elect to calculate all fees due to the Administrator and the Operator in accordance with the Prior Methodology from and after such Excess Quarter. Any election by the Company to adopt the Prior Methodology is irrevocable, and all fees due to the Administrator and the Operator from and after such election will be calculated in accordance with the Prior Methodology. Pursuant to the Investment Management Agreement, the asset management fee prior to January 1, 2022 (the “Prior Asset Management Fee”) was calculated as a percentage of the daily average adjusted fair value of CIM Urban’s assets as follows (dollar amounts in thousands):
In lieu of cash payment of the Prior Asset Management Fee, the Company has issued to the Operator shares of its Series A Preferred Stock. Subject to applicable laws and regulations under Nasdaq and the TASE and the agreement of the Operator, the Company will issue shares of its Series A Preferred Stock to the Operator as payment for the quarterly Prior Asset Management Fee for the quarter ended December 31, 2021. Under the Master Services Agreement, for fiscal quarters prior to April 1,2020, the Company paid a base service fee (the “Base Service Fee”) to the Administrator initially set at $1.0 million per year (subject to an annual escalation by a specified inflation factor beginning on January 1, 2015), payable quarterly in arrears. On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with an incentive fee (the “Prior Incentive Fee”) pursuant to which the Administrator was entitled to receive, on a quarterly basis, 15.00% of the Company’s quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of the Company’s average Adjusted Common Equity (defined above) for such quarter. The amendment was effective as of April 1, 2020 and was further modified by the Fee Waiver described above. In addition, pursuant to the terms of the Master Services Agreement, the Administrator may receive compensation and or reimbursement for performing certain services for the Company and its subsidiaries that are not covered by the Base Service Fee or the Prior Incentive Fee, as the case may be. During the three months ended March 31, 2022 and 2021, such services performed by the Administrator and its affiliates included accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, operational and on-going support in connection with the Company’s offering of Preferred Stock. The Administrator’s compensation is based on the salaries and benefits of the employees of the Administrator and or its affiliates who performed these services (allocated based on the percentage of time spent on the affairs of the Company and its subsidiaries). The expense for such services is included in expense reimbursements to related parties—corporate in the accompanying consolidated statements of operations. Property Management Fees and Reimbursements—CIM Management, Inc. and certain of its affiliates (collectively, the “CIM Management Entities”), all affiliates of CIM REIT and CIM Group, provide property management, leasing, and development services to CIM Urban. Property management fees earned by the CIM Management entities and onsite management costs incurred on behalf of CIM Urban are included in rental and other property operating expenses in the accompanying consolidated statements of operations. Leasing commissions earned are capitalized to deferred charges on the accompanying consolidated balance sheets. Construction management fees are capitalized to investments in real estate on the accompanying consolidated balance sheets. Lending Segment Expenses—The Company has a Staffing and Reimbursement Agreement with CIM SBA Staffing, LLC (“CIM SBA”), an affiliate of CIM Group, and the Company’s subsidiary, PMC Commercial Lending, LLC. The agreement provides that CIM SBA will provide personnel and resources to the Company and that the Company will reimburse CIM SBA for the costs and expenses of providing such personnel and resources. The expense for such services is included in expense reimbursements to related parties—lending segment in the accompanying consolidated statements of operations. Offering-Related Fees—CCO Capital, LLC (“CCO Capital”) became the exclusive dealer manager for the Company’s public offering of the Series A Preferred Units effective as of May 31, 2019. CCO Capital is a registered broker dealer and is under common control with the Operator and the Administrator. The Company’s offering of the Series A Preferred Units ended at the end of January 2020. On January 28, 2020, the Company entered into the Second Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital acts as the exclusive dealer manager for the Company’s public offering of its Series A Preferred Stock and Series D Preferred Stock. Thereunder, the Company agreed to compensate CCO Capital, as the dealer manager for the offering, as follows: (1) an upfront dealer manager fee of up to 1.25% of the selling price of each share of Preferred Stock sold, (2) selling commissions of up to 5.50% of the selling price of each share of Series A Preferred Stock sold (with no selling commissions payable in respect of shares of Series D Preferred Stock sold) and (3) a trailing dealer manager fee that accrues daily in an amount equal to 1/365th of 0.25% per annum of the selling price of each share of Preferred Stock sold. CCO Capital, in its sole discretion, may reallow to another broker-dealer authorized by it to sell shares in the offering a portion of the upfront dealer manager fee earned by it in respect of shares sold by such broker-dealer. On April 9, 2020, the Company entered into Amendment No. 1 to the Second Amended and Restated Dealer Manager Agreement, pursuant to which the selling commissions were increased from up to 5.50% to up to 7.00% of the selling price of each share of Series A Preferred Stock sold thereafter. The Company has been informed that CCO Capital generally reallows 100% of the selling commissions on sales of Series A Preferred Stock and generally reallows substantially all of the upfront dealer manager fee on sales of Series A Preferred Stock and Series D Preferred Stock, to participating broker-dealers. On September 22, 2021, the Company entered into Amendment No. 2 to the Second Amended and Restated Dealer Manager Agreement, pursuant to which the upfront dealer manager fee payable to the Dealer Manager was changed to up to 3.00% and the trailing dealer manager fee with respect to the sale of shares of Series A Preferred Stock sold in the Offering on or after September 9, 2021 was eliminated. The Company recorded fees and expense reimbursements as shown in the table below for services provided by related parties related to the services described above during the periods indicated (in thousands):
______________________ (1)The Company issued to the Operator 89,338 shares of Series A Preferred Stock in lieu of cash payment of the asset management fees incurred during the three months ended March 31, 2021. (2)Expense reimbursements to related parties - lending segment do not include personnel costs capitalized to deferred loan origination costs of $81,000 and $62,000 for the three months ended March 31, 2022 and 2021, respectively. (3)Represents fees earned by CCO Capital and allocated to Series A Preferred Stock and Series D Preferred Stock. (4)As of March 31, 2022 and March 31, 2021, $2.2 million and $1.7 million, respectively, was included in deferred costs as reimbursable expenses incurred pursuant to the Master Services Agreement and the then applicable dealer manager agreement with CCO Capital. These non-issuance specific costs are allocated against the gross proceeds from the sale of the Series A Preferred Stock and the Series D Preferred Stock on a pro rata basis for each issuance as a percentage of the total offering. As of March 31, 2022 and December 31, 2021, due to related parties consisted of the following (in thousands):
Affiliate Investments In February 2022, the Company invested with a CIM-managed separate account (the “CIM JV Partner”) in the Unconsolidated Joint Venture which purchased an office property in Los Angeles, California for approximately $51.0 million, gross of proration amounts, of which the Company initially contributed approximately $22.4 million and the CIM JV Partner initially contributed the remaining balance. See Note 2 and Note 4 for more information. Other On May 15, 2019, CIM Group entered into an approximately 11-year lease for approximately 32,000 rentable square feet with respect to a property owned by the Company. The lease was amended on August 7, 2019 to reduce the rentable square feet to approximately 30,000 rentable square feet. For the three months ended March 31, 2022 and 2021, the Company recorded rental and other property income related to this tenant of $370,000 and $370,000, respectively.
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COMMITMENTS AND CONTINGENCIES |
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Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 14. COMMITMENTS AND CONTINGENCIES Loan Commitments—Commitments to extend credit are agreements to lend to a customer when the terms established in the contract are met. The Company’s outstanding commitments to fund loans were $16.4 million as of March 31, 2022, the majority of which are for prime-based loans to be originated by the Company’s subsidiary engaged in SBA 7(a) Small Business Loan Program lending, the government guaranteed portion of which is intended to be sold. Commitments generally have fixed expiration dates. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. General—In connection with the ownership and operation of real estate properties, the Company has certain obligations for the payment of tenant improvement allowances and lease commissions in connection with new leases and renewals. The Company had a total of $6.7 million in future obligations under leases to fund tenant improvements and other future construction obligations as of March 31, 2022. As of March 31, 2022, $2.5 million was funded to reserve accounts included in restricted cash on the Company’s consolidated balance sheet for these tenant improvement obligations in connection with the mortgage loan agreement entered into in June 2016. Employment Agreements—The Company has an employment agreement with one of its officers. Under certain circumstances, this employment agreement provides for (1) severance payment equal to the annual base salary paid to the officer and (2) death and disability payments in an amount equal to two times and one time, respectively, the annual base salary paid to the officer. Litigation—The Company is not currently involved in any material pending or threatened legal proceedings nor, to the Company’s knowledge, are any material legal proceedings currently threatened against the Company, other than routine litigation arising in the ordinary course of business. In the normal course of business, the Company is periodically party to certain legal actions and proceedings involving matters that are generally incidental to the Company’s business. While the outcome of these legal actions and proceedings cannot be predicted with certainty, in management’s opinion, the resolution of these legal proceedings and actions will not have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company’s ability to satisfy its debt service obligations or to maintain its level of distributions on Common Stock or Preferred Stock. In September 2018, the Company filed a lawsuit against the City and County of San Francisco seeking a refund of the $11.8 million in penalties, interest and legal fees paid by the Company for real property transfer tax allegedly due for a transaction in a prior year. The Company disputed that such penalties, interest and legal fees were payable but, in order to contest the asserted tax obligations, the Company had to pay such amounts to the City and County of San Francisco in August 2017. The Company has been vigorously pursuing this litigation and intends to continue to do so. A subsidiary of the Company is a defendant in a lawsuit in connection with injuries sustained by a third-party contractor at a property previously owned by such subsidiary. While it is possible that a loss may be incurred, the Company is unable to estimate a range of potential losses due to the complexity and current status of the lawsuit. However, the Company maintains insurance coverage to mitigate the impact of adverse exposures in lawsuits of this nature and do not expect this lawsuit to have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company ability to satisfy its debt service obligations or to maintain the level of distributions on the Company’s Common Stock or Preferred Stock. SBA Related—If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced under the PPP or the SBA 7(a) Small Business Loan Program, the SBA may seek recovery of the principal loss related to the deficiency from the Company. As of March 31, 2022, the Company serviced an aggregate of $266.5 million of the guaranteed portion of SBA 7(a) loans. With respect to the guaranteed portion of SBA loans that have been sold, the SBA will first honor its guarantee and then seek compensation from the Company in the event that a loss is deemed to be attributable to technical deficiencies. Based on historical experience, the Company does not expect that this contingency is probable to be asserted. However, if asserted, it could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company’s ability to satisfy its debt service obligations or to maintain its level of distributions on Common Stock or Preferred Stock. Environmental Matters—In connection with the ownership and operation of real estate properties, the Company may be potentially liable for costs and damages related to environmental matters, including asbestos-containing materials. The Company has not been notified by any governmental authority of any noncompliance, liability, or other claim in connection with any of the properties, and the Company is not aware of any other environmental condition with respect to any of the properties that management believes will have a material adverse effect on the Company’s business, financial condition, results of operations, cash flow or the Company’s ability to satisfy its debt service obligations or to maintain its level of distributions on Common Stock or Preferred Stock.
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LEASES |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | 15. LEASES Future minimum rental revenue under long-term operating leases as of March 31, 2022, excluding tenant reimbursements of certain costs, are as follows (excludes unconsolidated properties, in thousands):
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SEGMENT DISCLOSURE |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT DISCLOSURE | 16. SEGMENT DISCLOSURE The Company’s reportable segments during the three months ended March 31, 2022 and 2021 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for the Company’s lending business. Management internally evaluates the operating performance and financial results of the segments based on net operating income. The Company also has certain general and administrative level activities, including public company expenses, legal, accounting, and tax preparation that are not considered separate operating segments. The reportable segments are accounted for on the same basis of accounting as described in the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2021 included in the 2021 Form 10-K. For the Company’s real estate segments, the Company defines net operating income (loss) as rental and other property income and expense reimbursements less property related expenses, and excludes non-property income and expenses, interest expense, depreciation and amortization, corporate related general and administrative expenses, gain (loss) on sale of real estate, gain (loss) on early extinguishment of debt, impairment of real estate, transaction costs, and provision (benefit) for income taxes. For the Company’s lending segment, the Company defines net operating income as interest income net of interest expense and general overhead expenses. The net operating income (loss) of the Company’s segments for the three months ended March 31, 2022 and 2021 is as follows (in thousands):
A reconciliation of segment net operating income to net income attributable to the Company for the three months ended March 31, 2022 and 2021 is as follows (in thousands):
The condensed assets for each of the segments as of March 31, 2022 and December 31, 2021, along with capital expenditures and loan originations for the three months ended March 31, 2022 and 2021, are as follows (in thousands):
______________________ (1)Represents additions and improvements to real estate investments, excluding acquisitions. Includes the activity for dispositions through their respective disposition dates.
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SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS The Company evaluated events subsequent to March 31, 2022, and concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated unaudited financial statements.
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Interim Financial Information | 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 given, among other things, the uncertain impact of the novel coronavirus (“COVID-19”) on the Company’s operations during the remainder of the year. 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 2021 Form 10-K. | ||||||||||||||||||||||||||||||||||||
Principles of Consolidation | 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, 2022, 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. | ||||||||||||||||||||||||||||||||||||
Investments in Real Estate | 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:
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.
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Recoverability of Investments in Real Estate | 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. | ||||||||||||||||||||||||||||||||||||
Investment in Unconsolidated Entity | Investment in Unconsolidated Entity—In February 2022, the Company invested in an unconsolidated joint venture arrangement (the “Unconsolidated Joint Venture”) with a CIM-managed separate account (the “CM JV Partner”) to purchase an office property in Los Angeles, California for approximately $51.0 million, gross of proration amounts, of which the Company initially contributed approximately $22.4 million and the CIM JV Partner initially contributed the remaining balance. The Company accounts for its approximately 44% investment in the Unconsolidated Joint Venture under the equity method, as it has the ability to exercise significant influence over the investment. The Company has elected the fair value option (“FVO”) for its equity method investment and therefore reports this investment at fair value. As such, the Company records its share of the Unconsolidated Joint Venture’s profits or losses 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 as a profit or loss on the consolidated statements of operations. The Company recorded income of $120,000 related to its investment in the Unconsolidated Joint Venture during the three months ended March 31, 2022 in the consolidated statements of operations. | ||||||||||||||||||||||||||||||||||||
Revenue Recognition | 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 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, 2022 and December 31, 2021, lease incentives of $4.0 million and $4.0 million, respectively, are presented net of accumulated amortization of $2.8 million and $2.7 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. 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, 2022 and December 31, 2021, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $416,000 and $579,000, 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. 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. Tenant recoveries outside of the lease agreementsTenant 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.
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Loans Receivable | Loans Receivable—The Company’s loans receivable are carried at their unamortized principal balance less unamortized acquisition discounts and premiums, retained loan discounts and loan loss reserves. 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 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”). The programs consist of loans originated under the SBA 7(a) Small Business Loan Program (the “SBA 7(a) Program”) and, commencing with the quarter ended June 30, 2020, the Paycheck Protection Program (the “PPP”). 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 $9.8 million and $9.6 million as of March 31, 2022 and December 31, 2021, respectively. At the closing of the merger in 2014 between CIM Urban REIT, LLC (“CIM REIT”), an affiliate of CIM Group, and certain of its subsidiaries and PMC Commercial Trust, the predecessor to the Company, the carrying value of the Company’s loans was adjusted to estimated fair market value and acquisition discounts of $33.9 million were recorded, which are being accreted to interest and other income using the effective interest method. Acquisition discounts of $330,000 and $381,000 remained as of March 31, 2022 and December 31, 2021, 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.
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Loan Loss Reserves | Loan Loss Reserves—On a quarterly basis, and more frequently if indicators exist, the Company evaluates the collectability of its loans receivable. The Company’s evaluation of collectability involves significant judgment, estimates, and a review of the ability of the borrower to make principal and interest payments, the underlying collateral and the borrowers’ business models and future operations. For the three months ended March 31, 2022 and 2021, the Company recorded a net impairment losses of $0 and 92,000, respectively, on its loans receivable. There were no material loans receivable subject to credit risk which were considered to be impaired as of March 31, 2022 or December 31, 2021. The Company considers a loan to be impaired when the Company does not expect to collect all of the contractual interest and principal payments as scheduled in the loan agreements. The Company also establishes a general loan loss reserve when available information indicates that it is probable a loss has occurred based on the carrying value of the portfolio and the amount of the loss can be reasonably estimated. Significant judgment is required in determining the general loan loss reserve, including estimates of the likelihood of default and the estimated fair value of the collateral. The general loan loss reserve includes those loans, which may have negative characteristics which have not yet become known to the Company. In addition to the reserves established on loans not considered impaired that have been evaluated under a specific evaluation, the Company establishes the general loan loss reserve using a consistent methodology to determine a loss percentage to be applied to loan balances. These loss percentages are based on many factors, primarily cumulative and recent loss history and general economic conditions. | ||||||||||||||||||||||||||||||||||||
Deferred Rent Receivable and Charges | Deferred Rent Receivable and Charges—Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 10) 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 A Preferred Units, and, after January 2020, Series A Preferred Stock and Series D Preferred Stock, excluding 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 Units, which were 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. | ||||||||||||||||||||||||||||||||||||
Redeemable Preferred Stock | Redeemable Preferred Stock—Beginning on the date of original issuance of any given shares of Series A Preferred Stock or Series D Preferred Stock, and from and after the fifth anniversary date of the original issuance of the Series L Preferred Stock, the holder of such shares has the right to require the Company to redeem such shares, subject to certain limitations as discussed in Note 10. The Company records the activity related to the Series A Preferred Warrants, Series D Preferred Stock and Series L 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 records issuances of Series A Preferred Stock in temporary equity. On the first anniversary of the date of original issuance of a particular share of Series A Preferred Stock, the Company reclassifies such share of Series A Preferred Stock from temporary equity to permanent equity because the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. | ||||||||||||||||||||||||||||||||||||
Noncontrolling Interests | Noncontrolling Interests—Noncontrolling interests represent the interests in various properties owned by third-parties. | ||||||||||||||||||||||||||||||||||||
Restricted Cash | 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. | ||||||||||||||||||||||||||||||||||||
Use of Estimates | 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 and at such time, including the impact of extraordinary events such as COVID-19. Actual results could differ from those estimates. | ||||||||||||||||||||||||||||||||||||
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements—In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was subsequently amended by ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses (“ASU 2018-19”) in November 2018. Subsequently, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-02 to provide additional guidance on the credit losses standard. ASU 2016-13 and the related updates improve financial reporting requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held-for-investment, held-to-maturity debt securities, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology under current GAAP. ASU 2018-19 clarified that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASU No. 2016-02, Leases (Topic 842). For smaller reporting companies, public entities that are not SEC filers, and entities that are not public business entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2022. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. The Company has been evaluating the impact of adoption of ASU 2016-13 on its consolidated financial statements and expects to adopt ASU 2016-13 and the related updates beginning on January 1, 2023. On April 10, 2020, the FASB issued a question-and-answer document (the “Q&A”) to address stakeholder questions on the application of the lease accounting guidance for lease concessions related to the effects of COVID-19. The lease modification guidance in Topic 842, Leases, (or Topic 840, Leases) would require the Company to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was made pursuant to the enforceable rights and obligations of the existing lease agreement (precluded from applying the lease modification accounting framework). However, the Q&A provides that the Company may bypass the lease by lease analysis if certain criteria are met, and instead elect to either consistently apply, or consistently not apply, the lease modification framework to groups of leases with similar characteristics and similar circumstances. As described below, the Company has elected not to apply the lease modification guidance to concessions related to the effects of COVID-19 that do not result in a substantial increase in the Company’s rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than the total payments required by the original lease.
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Fair Value of Financial Instruments | The Company determines the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The hierarchy for inputs used in measuring fair value is as follows: Level 1 Inputs—Quoted prices in active markets for identical assets or liabilities Level 2 Inputs—Observable inputs other than quoted prices in active markets for identical assets and liabilities Level 3 Inputs—Unobservable inputs In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Management’s estimation of the fair value of the Company’s financial instruments is based on a Level 3 valuation in the fair value hierarchy established for disclosure of how a company values its financial instruments. In general, quoted market prices from active markets for the identical financial instrument (Level 1 inputs), if available, should be used to value a financial instrument. If quoted prices are not available for the identical financial instrument, then a determination should be made if Level 2 inputs are available. Level 2 inputs include quoted prices for similar financial instruments in active markets for identical or similar financial instruments in markets that are not active (i.e., markets in which there are few transactions for the financial instruments, the prices are not current, price quotations vary substantially, or in which little information is released publicly). There is limited reliable market information for the Company’s financial instruments and the Company utilizes other methodologies based on unobservable inputs for valuation purposes since there are no Level 1 or Level 2 inputs available. Accordingly, Level 3 inputs are used to measure fair value. In general, estimates of fair value may differ from the carrying amounts of the financial assets and liabilities primarily as a result of the effects of discounting future cash flows. Considerable judgment is required to interpret market data and develop estimates of fair value. Accordingly, the estimates presented are made at a point in time and may not be indicative of the amounts the Company could realize in a current market exchange.
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Useful Lives of Investments in Real Estate | Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:
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Schedule of Recognized Rental Income | For the three months ended March 31, 2022 and 2021, the Company recognized rental income as follows (in thousands):
______________________ (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.
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Schedule of Reconciliation of Hotel Revenue | Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 16 (in thousands):
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Schedule of Deferred Rent Receivables and Charges, Net | As of March 31, 2022 and December 31, 2021, deferred rent receivable and charges consist of the following (in thousands):
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INVESTMENTS IN REAL ESTATE (Tables) |
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investments in Real Estate | Investments in real estate consist of the following (in thousands):
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Schedule Of Asset Acquisition | During the three months ended March 31, 2022, the Company acquired a 100% fee-simple interest in the following property from an unrelated third-party. The purchase was accounted for as an asset acquisition. Please see “Investments in Unconsolidated Entities” (Note 4) below for information on the Company’s acquisition of an approximate 44% interest in an office property in February 2022.
(1)Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $14,000, which are not included in the purchase price above. (2)The property is located on a land site of approximately 11,300 square feet. The Company intends to entitle the property and develop approximately 45 residential units.
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Schedule of the Fair Value of the Assets Acquired and Liabilities Assumed | The following table summarizes the purchase price allocation of the aforementioned acquisition during the three months ended March 31, 2022.
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INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Investments in Unconsolidated Entities | The following table details the Company’s equity method investments in unconsolidated entities. Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies for more details (dollars in thousands):
(1)1910 Sunset Blvd is an office building with 97,564 square feet of office space and 2,760 square feet of retail space. The Unconsolidated Joint Venture plans to undertake a capital improvement program to renovate and modernize the building into creative office space as well as a limited number of multifamily units.
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LOANS RECEIVABLE (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Receivable, Net | Loans receivable consist of the following (in thousands):
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OTHER INTANGIBLE ASSETS AND LIABILITIES (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Liabilities and Related Accumulated Amortization and Accretion | A schedule of the Company’s intangible assets and liabilities and related accumulated amortization and accretion as of March 31, 2022 and December 31, 2021 is as follows (in thousands):
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Schedule of Amortization of Acquired Leases | During the three months ended March 31, 2022 and 2021, the Company recognized amortization related to its intangible assets and liabilities as follows (in thousands):
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Schedule of Future Amortization and Accretion of Acquired Intangible Assets and Liabilities | A schedule of future amortization and accretion of acquired intangible assets and liabilities as of March 31, 2022, is as follows (in thousands):
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DEBT (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Activity | The following table summarizes the debt balances as of March 31, 2022 and December 31, 2021, and the debt activity for the three months ended March 31, 2022 (in thousands):
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Schedule of Future Principal Payments on Debt | Future principal payments on the Company’s debt (face value) as of March 31, 2022 are as follows (in thousands):
______________________ (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. The Company’s estimate of their repayment is based on scheduled payments on the underlying loans. The Company’s estimate will differ from actual amounts to the extent the Company experiences 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.
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STOCK-BASED COMPENSATION PLANS (Tables) |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Granted Awards of Restricted Shares of Common Stock to each Independent Members of the Board of Directors |
______________________ (1)Compensation expense related to these restricted shares of Common Stock is recognized over the vesting period, and generally vests based on one year of continuous service. The Company recorded compensation expense related to these restricted shares of Common Stock in the amount of $55,000 and $60,000 for the three months ended March 31, 2022 and 2021, respectively. (2)On February 11, 2021, the Company’s Board of Directors approved the immediate vesting of 5,478 shares that had been granted in May 2020 to a former independent member of the Board of Directors following his death. (3)These shares will vest after one year of continuous service, other than the shares granted to Mr. Frank Golay, Jr., a former independent director of the Company, which vested on May 2, 2022. Mr. Golay retired from the Board on May 2, 2022 and, in recognition of his service to the Company, the Board accelerated the vesting of Mr. Golay’s shares.
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EARNINGS PER SHARE ("EPS") (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of the Numerator and Denominator Used in Computing Basic and Diluted Per Share Computations | The following table reconciles the numerator and denominator used in computing the Company’s basic and diluted per-share amounts for net loss attributable to common stockholders for the three months ended March 31, 2022 and 2021 (in thousands, except per share amounts):
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REDEEMABLE PREFERRED STOCK (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Issuances, Reclassifications and Redemptions for each class of Preferred Stock in Permanent Equity | The table below provides information regarding the issuances, reclassifications and redemptions of each class of the Company’s preferred stock in permanent equity during the three months ended March 31, 2022 and 2021 (dollar amounts in thousands):
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STOCKHOLDERS' EQUITY (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Dividends Paid | Cash dividends per share of Common Stock declared in respect of the three months ended March 31, 2022 and 2021 consist of the following:
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurement Inputs | The following summarizes the ranges of discount rates and prepayment rates used to arrive at the estimated fair values of the Company’s loans receivable:
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Schedule of Fair Values of Financial Instrument Not Recorded at Fair Value on a Recurring Basis | The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on the Company’s consolidated balance sheets are as follows (dollar amounts in thousands):
______________________ (1)The carrying amounts for the mortgage payable and junior subordinated notes represents the principal outstanding amounts, excluding deferred debt issuance costs and discounts.
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Schedule of Fair Value, Assets Measured on Recurring Basis | The estimated fair values of those financial instruments which are recorded at fair value on a recurring basis on the Company’s consolidated balance sheets are as follows (dollar amounts in thousands):
______________________ (1)Represents the Company’s equity-method investment in 1910 Sunset Blvd which was acquired in February 2022 and was carried at cost as of March 31, 2022.
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Schedule of Fair Value on a Recurring Basis | The following table details the Company’s share of the Unconsolidated Joint Venture measured at fair value on a recurring basis using Level 3 inputs ($ in thousands):
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RELATED-PARTY TRANSACTIONS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Asset Management Fees Calculation | Pursuant to the Investment Management Agreement, the asset management fee prior to January 1, 2022 (the “Prior Asset Management Fee”) was calculated as a percentage of the daily average adjusted fair value of CIM Urban’s assets as follows (dollar amounts in thousands):
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Schedule of Related Party Transactions | The Company recorded fees and expense reimbursements as shown in the table below for services provided by related parties related to the services described above during the periods indicated (in thousands):
______________________ (1)The Company issued to the Operator 89,338 shares of Series A Preferred Stock in lieu of cash payment of the asset management fees incurred during the three months ended March 31, 2021. (2)Expense reimbursements to related parties - lending segment do not include personnel costs capitalized to deferred loan origination costs of $81,000 and $62,000 for the three months ended March 31, 2022 and 2021, respectively. (3)Represents fees earned by CCO Capital and allocated to Series A Preferred Stock and Series D Preferred Stock. (4)As of March 31, 2022 and March 31, 2021, $2.2 million and $1.7 million, respectively, was included in deferred costs as reimbursable expenses incurred pursuant to the Master Services Agreement and the then applicable dealer manager agreement with CCO Capital. These non-issuance specific costs are allocated against the gross proceeds from the sale of the Series A Preferred Stock and the Series D Preferred Stock on a pro rata basis for each issuance as a percentage of the total offering.As of March 31, 2022 and December 31, 2021, due to related parties consisted of the following (in thousands):
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LEASES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Revenue Under Long-Term Operating Leases | Future minimum rental revenue under long-term operating leases as of March 31, 2022, excluding tenant reimbursements of certain costs, are as follows (excludes unconsolidated properties, in thousands):
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SEGMENT DISCLOSURE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Net Operating Income (Loss) | The net operating income (loss) of the Company’s segments for the three months ended March 31, 2022 and 2021 is as follows (in thousands):
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Schedule of Reconciliation of Segment Net Operating Income to Net Income Attributable to the Company | A reconciliation of segment net operating income to net income attributable to the Company for the three months ended March 31, 2022 and 2021 is as follows (in thousands):
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Schedule of Segment Condensed Assets | The condensed assets for each of the segments as of March 31, 2022 and December 31, 2021, along with capital expenditures and loan originations for the three months ended March 31, 2022 and 2021, are as follows (in thousands):
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Schedule of Segment Capital Expenditures and Loan Originations |
______________________ (1)Represents additions and improvements to real estate investments, excluding acquisitions. Includes the activity for dispositions through their respective disposition dates.
|
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Accounting Policies [Abstract] | |||
Lease incentives | $ 4,000,000 | $ 4,000,000 | |
Lease incentives, accumulated amortization | 2,800,000 | 2,700,000 | |
Allowance for uncollectible accounts receivable | 416,000 | $ 579,000 | |
Tenant recoveries outside of lease agreements | 0 | $ 0 | |
Remaining performance obligations | $ 0 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recognized Rental Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Accounting Policies [Abstract] | ||
Fixed lease payments | $ 11,623 | $ 12,444 |
Variable lease payments | 2,473 | 905 |
Rental and other property income | $ 14,096 | $ 13,349 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Hotel Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Disaggregation of Revenue [Line Items] | ||
Hotel income | $ 7,404 | $ 1,732 |
Rental and other property income | 14,096 | 13,349 |
Interest and other income | 3,282 | 3,798 |
Total Revenues | 24,782 | 18,879 |
Hotel properties | ||
Disaggregation of Revenue [Line Items] | ||
Hotel income | 7,404 | 1,732 |
Rental and other property income | 374 | 131 |
Interest and other income | 15 | 15 |
Total Revenues | $ 7,793 | $ 1,878 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Mar. 11, 2014 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Unamortized retained loan discounts | $ 9,800 | $ 9,600 | ||
Loan receivable, nonaccrual, past due period (more than) | 60 days | |||
Loans receivable, impairment and (recovery) recorded | $ 0 | $ 92 | ||
Loan loss reserves | 980 | 943 | ||
PMC Commercial | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Acquisition discount | $ 330 | $ 381 | $ 33,900 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Rent Receivable and Charges (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Accounting Policies [Abstract] | ||
Deferred rent receivable | $ 20,702 | $ 20,870 |
Deferred leasing costs, net of accumulated amortization of $9,228 and $8,971, respectively | 8,205 | 8,453 |
Deferred offering costs | 6,360 | 6,281 |
Other deferred costs | 491 | 491 |
Deferred rent receivable and charges, net | 35,758 | 36,095 |
Deferred leasing costs, accumulated amortization | $ 9,228 | $ 8,971 |
INVESTMENTS IN REAL ESTATE - Net Investments in Real Estate (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Real Estate [Abstract] | ||
Land | $ 143,508 | $ 141,236 |
Land improvements | 2,648 | 2,644 |
Buildings and improvements | 454,695 | 454,431 |
Furniture, fixtures, and equipment | 4,405 | 4,398 |
Tenant improvements | 29,508 | 29,733 |
Work in progress | 11,191 | 10,260 |
Investments in real estate | 645,955 | 642,702 |
Accumulated depreciation | (148,511) | (144,718) |
Net investments in real estate | $ 497,444 | $ 497,984 |
INVESTMENTS IN REAL ESTATE - Narrative (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022
USD ($)
property
|
Mar. 31, 2021
USD ($)
property
|
Feb. 28, 2022 |
|
Asset Acquisition [Line Items] | |||
Depreciation expense | $ | $ 4.2 | $ 4.2 | |
Number of property dispositions | 0 | 0 | |
Number of property acquisitions | 0 | ||
1910 Sunset Blvd | |||
Asset Acquisition [Line Items] | |||
Ownership Interest | 44.00% | 44.00% | |
3101 S Western Avenue, Los Angeles, CA | |||
Asset Acquisition [Line Items] | |||
Percentage of ownership acquired | 100.00% |
INVESTMENTS IN REAL ESTATE - Acquisitions (Details) - 3101 S Western Avenue, Los Angeles, CA $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
ft²
residential_unit
| |
Business Acquisition [Line Items] | |
Square Feet | ft² | 3,752 |
Purchase price | $ | $ 2,260 |
Transaction costs, capitalized | $ | $ 14 |
Area of land | ft² | 11,300 |
Number of residential units | residential_unit | 45 |
INVESTMENTS IN REAL ESTATE - Net Assets Acquired (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Net assets acquired | $ 2,274 |
Land | |
Business Acquisition [Line Items] | |
Property, plant, and equipment | 2,271 |
Land improvements | |
Business Acquisition [Line Items] | |
Property, plant, and equipment | $ 3 |
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022
USD ($)
ft²
|
Feb. 28, 2022 |
Dec. 31, 2021
USD ($)
|
|
Schedule of Equity Method Investments [Line Items] | |||
Investment in unconsolidated entity | $ 22,528,000 | $ 0 | |
Distributions of earnings from unconsolidated entity | $ 0 | ||
1910 Sunset Blvd | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership Interest | 44.00% | 44.00% | |
Investment in unconsolidated entity | $ 22,528,000 | $ 0 | |
1910 Sunset Blvd | Office Building | |||
Schedule of Equity Method Investments [Line Items] | |||
Property area | ft² | 97,564 | ||
1910 Sunset Blvd | Retail Site | |||
Schedule of Equity Method Investments [Line Items] | |||
Property area | ft² | 2,760 |
LOANS RECEIVABLE - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans receivable, net | $ 79,404 | $ 73,543 |
SBA 7(a) loans receivable, paycheck protection program | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans, percent current | 100.00% | 100.00% |
SBA 7(a) loans receivable, paycheck protection program | Substandard | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans receivable, net | $ 1,000 | $ 1,100 |
Accounts Receivable | Customer Concentration Risk | Hospitality Industry | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk | 99.90% | 99.80% |
OTHER INTANGIBLE ASSETS AND LIABILITIES - Amortization of Acquired Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Acquired below-market lease amortization | $ 69 | $ 115 |
Acquired above-market leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired leases amortization | 3 | 3 |
Acquired In-Place Leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired leases amortization | $ 238 | $ 296 |
OTHER INTANGIBLE ASSETS AND LIABILITIES - Future Amortization and Accretion of Acquisition Related Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Future amortization of acquisition related intangible assets | ||
Net | $ 5,010 | $ 5,251 |
Future accretion of acquisition related intangible liabilities | ||
Net | (168) | (237) |
Acquired Below-Market Leases | ||
Future accretion of acquisition related intangible liabilities | ||
2022 (Nine months ending December 31, 2022) | (166) | |
2023 | (2) | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
Thereafter | 0 | |
Net | (168) | (237) |
Acquired Above-Market Leases | ||
Future amortization of acquisition related intangible assets | ||
2022 (Nine months ending December 31, 2022) | 9 | |
2023 | 9 | |
2024 | 5 | |
2025 | 2 | |
2026 | 0 | |
Thereafter | 0 | |
Net | 25 | 28 |
Acquired In-Place Leases | ||
Future amortization of acquisition related intangible assets | ||
2022 (Nine months ending December 31, 2022) | 574 | |
2023 | 469 | |
2024 | 374 | |
2025 | 171 | |
2026 | 123 | |
Thereafter | 317 | |
Net | $ 2,028 | $ 2,266 |
DEBT - Mortgage Payable and Secured Borrowings Government Guaranteed Loans Narrative (Details) $ in Millions |
Mar. 31, 2022
USD ($)
|
---|---|
Mortgage Payble | |
Debt Instrument [Line Items] | |
Fixed interest rate | 4.14% |
Secured borrowing principal on SBA 7(a) loans sold for a premium and excess spread | |
Debt Instrument [Line Items] | |
Excess spread | $ 3.7 |
Weighted average rate | 3.88% |
Secured borrowing principal on SBA 7(a) loans sold for excess spread | |
Debt Instrument [Line Items] | |
Excess spread | $ 2.6 |
Weighted average rate | 1.56% |
DEBT - Junior Subordinated Notes and SBA 7(a) Loan-Backed Notes Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
May 30, 2018 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Mar. 31, 2021 |
|
Debt Instrument [Line Items] | ||||
Restricted cash | $ 13,568 | $ 11,340 | $ 9,891 | |
Junior subordinated notes | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin | 3.25% | |||
SBA 7(a) loan-backed notes | ||||
Debt Instrument [Line Items] | ||||
Proceeds from SBA 7(a) loan-backed notes | $ 38,200 | |||
Weighted average life of notes | 2 years | |||
Effective interest rate | 1.56% | 1.49% | ||
Restricted cash | $ 2,000 | $ 1,900 | ||
SBA 7(a) loan-backed notes | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin | 1.40% | |||
SBA 7(a) loan-backed notes | Prime Rate | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin | (1.08%) |
DEBT - Paycheck Protection Program Liquidity Facility Narrative (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Jun. 30, 2020 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Accrued interest and unused commitment fee payable | $ 473 | $ 467 | |
Revolving Credit Facility | Paycheck Protection Program Liquidity Facility, CARES Act | Line of Credit | |||
Debt Instrument [Line Items] | |||
Fixed interest rate | 0.35% | ||
Debt outstanding | $ 3,700 | $ 5,000 |
DEBT - Future Principal Payments (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
2022 (Nine months ending December 31, 2022) | $ 92,167 |
2023 | 1,579 |
2024 | 1,602 |
2025 | 1,686 |
2026 | 97,939 |
Thereafter | 35,327 |
Total Debt | 230,300 |
Mortgage Payable | |
Debt Instrument [Line Items] | |
2022 (Nine months ending December 31, 2022) | 0 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 97,100 |
Thereafter | 0 |
Total Debt | 97,100 |
Secured Borrowings Principal | |
Debt Instrument [Line Items] | |
2022 (Nine months ending December 31, 2022) | 370 |
2023 | 381 |
2024 | 392 |
2025 | 403 |
2026 | 415 |
Thereafter | 4,336 |
Total Debt | 6,297 |
Line of Credit | 2018 Revolving Credit Facility | |
Debt Instrument [Line Items] | |
2022 (Nine months ending December 31, 2022) | 90,000 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
Thereafter | 0 |
Total Debt | 90,000 |
Other | |
Debt Instrument [Line Items] | |
2022 (Nine months ending December 31, 2022) | 1,797 |
2023 | 1,198 |
2024 | 1,210 |
2025 | 1,283 |
2026 | 424 |
Thereafter | 30,991 |
Total Debt | $ 36,903 |
EARNINGS PER SHARE ('EPS") - Narrative (Details) - shares |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Effect of dilutive share (in shares) | 2,477 | 0 | |
Series A Preferred Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Effect of dilutive share (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 1,693,649 | 0 | 1,631,965 |
Series D Preferred Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Effect of dilutive share (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 56,857 | 56,857 |
EARNINGS PER SHARE (''EPS'') - Reconciliation of the Numerator and Denominator Used in Computing Basic and Diluted Per Share Computations (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Numerator: | ||
Net loss attributable to common stockholders | $ (2,811) | $ (8,206) |
Redeemable preferred stock dividends declared on dilutive shares | (1) | 0 |
Diluted net loss attributable to common stockholders | $ (2,812) | $ (8,206) |
Denominator: | ||
Basic weighted average shares of common stock outstanding (in shares) | 23,349,000 | 14,808,000 |
Effect of dilutive securities—contingently issuable shares (in shares) | 2,477 | 0 |
Diluted weighted average shares and common stock equivalents outstanding (in shares) | 23,351,000 | 14,808,000 |
Net loss attributable to common stockholders per share: | ||
Basic (in usd per share) | $ (0.12) | $ (0.55) |
Diluted (in usd per share) | $ (0.12) | $ (0.55) |
REDEEMABLE PREFERRED STOCK - Series D Preferred Stock Narrative (Details) - Series D Preferred Stock - $ / shares |
Mar. 31, 2022 |
Dec. 31, 2021 |
Jun. 29, 2020 |
Jun. 28, 2020 |
Feb. 29, 2020 |
---|---|---|---|---|---|
Class of Stock [Line Items] | |||||
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||
Continuous Public Offering | |||||
Class of Stock [Line Items] | |||||
Purchase price (in usd per share) | $ 24.50 | $ 25.00 | $ 25.00 |
REDEEMABLE PREFERRED STOCK - Series L Preferred Stock Narrative (Details) - Series L Preferred Stock - USD ($) $ / shares in Units, $ in Millions |
Nov. 21, 2017 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|
Class of Stock [Line Items] | |||
Preferred stock, shares issued (in shares) | 8,080,740 | 8,080,740 | 5,387,160 |
Preferred stock, liquidation preference per share (in usd per share) | $ 28.37 | $ 28.37 | |
Gross proceeds from sale of preferred stock | $ 229.3 | ||
Offering costs | 15.9 | ||
Discount on shares issued | 2.9 | ||
Offering costs, non-issuance specific | $ 2.5 | ||
Minimum fixed charge coverage ratio | 125.00% | ||
Registration Statement | |||
Class of Stock [Line Items] | |||
Preferred stock, liquidation preference per share (in usd per share) | $ 28.37 |
REDEEMABLE PREFERRED STOCK - Redemptions Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2022
day
| |
Series A Preferred Stock | |
Class of Stock [Line Items] | |
Preferred stock redemption, trading days prior to redemption (in days) | 20 |
STOCKHOLDERS' EQUITY - Cash Dividends Paid (Details) - $ / shares |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Apr. 01, 2022 |
Mar. 08, 2022 |
Mar. 30, 2021 |
Mar. 05, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Dividends Payable [Line Items] | ||||||
Cash Dividend Per Share of Common Stock (in usd per share) | $ 0.085 | $ 0.075 | ||||
Common Stock | ||||||
Dividends Payable [Line Items] | ||||||
Cash Dividend Per Share of Common Stock (in usd per share) | $ 0.085 | $ 0.075 | ||||
Cash Dividend Per Share of Common Stock (in usd per share) | $ 0.075 | |||||
Common Stock | Subsequent Event | ||||||
Dividends Payable [Line Items] | ||||||
Cash Dividend Per Share of Common Stock (in usd per share) | $ 0.085 |
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Jan. 31, 2020 |
|
Series A Preferred Warrants | ||
Subsidiary, Sale of Stock [Line Items] | ||
Warrants issued (in shares) | 4,458,589 | |
Number of securities called by warrants or rights (in shares) | 1,156,393 | |
Net proceeds from issuance of warrants | $ 606 | |
Registration Statement | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of warrants included in preferred stock unit (in shares) | 1 | |
Warrant right to purchase a share of common stock (in shares) | 0.25 | |
Premium of the exercise price of the warrant as a percent to net asset value of common stock | 15.00% | |
Registration Statement | Series A Preferred Stock | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of shares included in preferred stock unit (in shares) | 1 |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Narrative (Details) - Measurement Input, Discount Rate - Valuation Technique, Discounted Cash Flow |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Mortgage Payble | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input for debt | 0.0442 | 0.0322 |
Junior Subordinated Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input for debt | 0.0521 | 0.0446 |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in unconsolidated entity | $ 22,528 | $ 0 |
Level 3 | Fair Value, Measurements, Recurring | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investment in unconsolidated entity | $ 22,528 | $ 0 |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair Value on a Recurring Basis Using Level 3 Inputs (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Investment in Unconsolidated Entity | |
Balance as of December 31, 2021 | $ 0 |
Purchases | 22,408 |
Income from unconsolidated entity | 120 |
Balance as of March 31, 2022 | $ 22,528 |
RELATED-PARTY TRANSACTIONS - Affiliate Investments and Other Narrative (Details) ft² in Thousands, $ in Thousands |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Feb. 28, 2022
USD ($)
|
Mar. 31, 2022
USD ($)
|
Mar. 31, 2021
USD ($)
|
Aug. 07, 2019
ft²
|
May 15, 2019
ft²
|
|
Related Party Transaction [Line Items] | |||||
Payments to acquire equity method investment | $ 22,408 | $ 0 | |||
1910 Sunset Blvd | |||||
Related Party Transaction [Line Items] | |||||
Payments to acquire equity method investment | $ 22,400 | ||||
Corporate Joint Venture | 1910 Sunset Blvd | |||||
Related Party Transaction [Line Items] | |||||
Payments to acquire equity method investment | $ 51,000 | ||||
CIM Group | Eleven Year Lease | |||||
Related Party Transaction [Line Items] | |||||
Lease, term of contract with related party | 11 years | ||||
Square Feet | ft² | 30 | 32 | |||
Rental and other property income from related party | $ 370 | $ 370 |
LEASES - Future Minimum Rental Revenue under Long-Term Operating Leases (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Leases [Abstract] | |
2022 (Nine months ending December 31, 2022) | $ 33,549 |
2023 | 42,628 |
2024 | 40,847 |
2025 | 24,808 |
2026 | 18,060 |
Thereafter | 34,517 |
Total | $ 194,409 |
SEGMENT DISCLOSURE - Narrative (Details) - property |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Segment Reporting [Abstract] | ||
Number of types of commercial real estate properties | 2 | 2 |
SEGMENT DISCLOSURE - Assets and Capital Expenditures and Loan Originations (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Segment Reporting Information [Line Items] | |||
Total assets | $ 688,265 | $ 660,866 | |
Total capital expenditures | 1,400 | $ 320 | |
Loan originations | 22,776 | 25,593 | |
Total capital expenditures and loan originations | 24,176 | 25,913 | |
Office | |||
Segment Reporting Information [Line Items] | |||
Total capital expenditures | 1,392 | 292 | |
Hotel | |||
Segment Reporting Information [Line Items] | |||
Total capital expenditures | 8 | $ 28 | |
Operating Segments | Office | |||
Segment Reporting Information [Line Items] | |||
Total assets | 472,820 | 449,843 | |
Operating Segments | Hotel | |||
Segment Reporting Information [Line Items] | |||
Total assets | 101,149 | 101,308 | |
Operating Segments | Lending | |||
Segment Reporting Information [Line Items] | |||
Total assets | 96,836 | 96,729 | |
Non-segment assets | |||
Segment Reporting Information [Line Items] | |||
Total assets | $ 17,460 | $ 12,986 |
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