DEBT

Information on our debt is as follows:



	December 31,
	2018			2017
	(in thousands)
Mortgage loans with a fixed interest rate of 4.14% per annum, with monthly payments of interest only, and balances totaling $342,100,000 due on July 1, 2026. The loans are nonrecourse. In December 2018, one loan with an outstanding principal balance of $28,200,000 was reclassified to liabilities associated with assets held for sale (Note 3). On March 1, 2019, mortgage loans with an aggregate outstanding principal balance of $205,500,000 were defeased in connection with the sale of the properties that were collateral for the loans.	$	342,100		$	370,300
Mortgage loan with a fixed interest rate of 4.50% per annum, with monthly payments of interest only for 10 years, and payments of interest and principal starting in February 2022. The loan had a $42,008,000 balance due on January 5, 2027. The loan was nonrecourse. On March 1, 2019, the mortgage loan was repaid in connection with the property that was collateral for the loan.	46,000			46,000
	388,100			416,300
Deferred loan costs related to mortgage loans	(1,177		)	(1,540		)
Total Mortgages Payable	386,923			414,760
Secured borrowing principal on SBA 7(a) loans sold for a premium and excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 5.89% and 4.85% at December 31, 2018 and 2017, respectively.	11,283			16,812
Secured borrowing principal on SBA 7(a) loans sold for excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.57% and 2.60% at December 31, 2018 and 2017, respectively.	4,482			3,879
	15,765			20,691
Unamortized premiums	940			1,466
Total Secured Borrowings—Government Guaranteed Loans	16,705			22,157
Revolving credit facility	130,000			—
SBA 7(a) loan-backed notes with a variable interest rate which resets monthly based on the lesser of the one-month LIBOR plus 1.40% or the prime rate less 1.08%, with payments of interest and principal due monthly. Balance due at maturity in March 20, 2043.	33,769			—
Junior subordinated notes with a variable interest rate which resets quarterly based on the three-month LIBOR (as defined below) plus 3.25%, with quarterly interest only payments. Balance due at maturity on March 30, 2035.	27,070			27,070
Unsecured term loan facility (terminated and repaid on October 30, 2018)	—			170,000
	190,839			197,070
Deferred loan costs related to other debt	(3,941		)	(1,198		)
Discount on junior subordinated notes	(1,855		)	(1,937		)
Total Other Debt	185,043			193,935
Total Debt	$	588,671		$	630,852

The mortgages payable are secured by deeds of trust on certain of the properties and assignments of rents. The junior subordinated notes may be redeemed at par at our option.

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.

SBA 7(a) loan-backed notes are secured by deeds of trust or mortgages.

Deferred loan costs, which represent legal and third-party fees incurred in connection with our borrowing activities, are capitalized and amortized to interest expense on a straight-line basis over the life of the related loan, approximating the effective interest method. Deferred loan costs of $5,994,000 and $3,843,000 are presented net of accumulated amortization of $876,000 and $1,105,000 at December 31, 2018 and 2017, respectively, and are a reduction to total debt.

In September 2014, CIM Commercial entered into an $850,000,000 unsecured credit facility with a bank syndicate which consisted of a $450,000,000 revolver, a $325,000,000 term loan and a $75,000,000 delayed-draw term loan. Outstanding advances under the revolver bore interest at (i) the base rate plus 0.20% to 1.00% or (ii) LIBOR plus 1.20% to 2.00%, depending on the maximum consolidated leverage ratio. Outstanding advances under the term loans bore interest at (i) the base rate plus 0.15% to 0.95% or (ii) LIBOR plus 1.15% to 1.95%, depending on the maximum consolidated leverage ratio. At December 31, 2017, $0 was outstanding under the unsecured credit facility. Our unsecured credit facility matured on September 30, 2018.

In May 2015, CIM Commercial entered into an unsecured term loan facility with a bank syndicate pursuant to which CIM Commercial could borrow up to a maximum of $385,000,000. Outstanding advances under the term loan facility bore interest at (i) the base rate plus 0.60% to 1.25% or (ii) LIBOR plus 1.60% to 2.25%, depending on the maximum consolidated leverage ratio. The term loan facility had a maturity date in May 2022. On November 2, 2015, $385,000,000 was drawn under the term loan facility. Proceeds from the term loan facility were used to repay balances outstanding under our unsecured credit facility. On August 3, 2017, we repaid $65,000,000 of outstanding borrowings on our unsecured term loan facility. In connection with such paydown, we wrote off deferred loan costs of $601,000 and related accumulated amortization of $193,000, a proportionate amount to the borrowings being repaid. Additionally, on November 29, 2017, we repaid $150,000,000 of outstanding borrowings on our unsecured term loan facility. In connection with such paydown, we wrote off deferred loan costs of $1,387,000 and related accumulated amortization of $512,000, a proportionate amount to the borrowings being repaid. At December 31, 2017, $170,000,000 was outstanding under the term loan facility and the variable interest rate was 2.96%. The interest rate of the term loan facility was effectively converted to a fixed rate of 3.16% through interest rate swaps that converted the interest rate on the first $170,000,000 of our one-month LIBOR indexed variable rate borrowings to a fixed rate. On October 30, 2018, we repaid and terminated the $170,000,000 of outstanding borrowings on our unsecured term loan facility using proceeds from our new revolving credit facility (as described below). In connection with such paydown and termination, we wrote off the remaining deferred loan costs of $1,872,000 and related accumulated amortization of $1,064,000.

In June 2016, we entered into six mortgage loan agreements with an aggregate principal amount of $392,000,000. A portion of the net proceeds from the loans was used to repay outstanding balances under our unsecured credit facility and the remaining portion was used to repurchase shares of our Common Stock in a private repurchase in September 2016. On September 21, 2017, in connection with the sale of an office property in Los Angeles, California, such mortgage loan with an outstanding principal balance of $21,700,000, collateralized by such property, was assumed by the buyer. On March 1, 2019, such mortgage loans that had an aggregate outstanding principal balance of $205,500,000 at such time, were defeased in connection with the sale of the related properties. On March 14, 2019, in connection with the sale of an office property in San Francisco, California, such mortgage loan with an outstanding principal balance of $28,200,000 at such time, was assumed by the buyer.

On May 30, 2018, we completed a securitization of the unguaranteed portion of certain of our SBA 7(a) loans receivable with the issuance of $38,200,000 of unguaranteed SBA 7(a) loan-backed notes. The securitization uses a trust formed for the benefit of the note holders (the "Trust") which is considered a variable interest entity ("VIE"). Applying the consolidation requirements for VIEs under the accounting rules in ASC Topic 810, Consolidation, 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. The SBA 7(a) loan-backed notes are collateralized solely by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of our SBA 7(a) loans receivable. The SBA 7(a) loan-backed notes mature on March 20, 2043, with monthly payments due as payments on the collateralized loans are received. Based on the anticipated repayments of our collateralized SBA 7(a) loans, we estimate the weighted average life of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%. We reflect the SBA 7(a) loans receivable as assets on our consolidated balance sheet and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheet. The Company has restricted cash of $3,174,000 held in trust for the benefit of the Trust included in restricted cash on our consolidated balance sheet.

In October 2018, CIM Commercial entered into a revolving credit facility with a bank syndicate pursuant to which CIM Commercial can borrow up to a maximum of $250,000,000, subject to a borrowing base calculation. The revolving credit facility is secured by deeds of trust on certain properties. Outstanding advances under the revolving credit facility bear interest at (i) the base rate plus 0.55% or (ii) LIBOR plus 1.55%. At December 31, 2018, the variable interest rate was 4.07%. The interest rate on $120,000,000 of one-month LIBOR indexed variable rate borrowings was effectively converted to a fixed rate of 3.11% through interest rate swaps. The 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 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions. We expect the revolving credit facility to remain in place following the Program to Unlock Embedded Value in Our Portfolio and Improve Trading Liquidity of Our Common Stock. On October 30, 2018, we borrowed $170,000,000 on this facility to repay outstanding borrowings on our unsecured term loan facility. On December 28, 2018, we repaid $40,000,000 of outstanding borrowings on our revolving credit facility and we terminated one interest rate swap with a notional value of $50,000,000 (Note 13). Such swap was in the money at the time of its termination and we received a payment, net of fees, of $684,000, which is included in interest expense on our consolidated statement of operations for the year ended December 31, 2018. At December 31, 2018, $130,000,000 was outstanding under the revolving credit facility and approximately $91,000,000 was available for future borrowings. Subsequent to December 31, 2018, we repaid the $130,000,000 of outstanding borrowings on our revolving credit facility using cash on hand and net proceeds from the 2019 asset sales (Note 3), and we terminated our two remaining interest rate swaps, which had an aggregate notional value of $120,000,000 (Note 13).

At December 31, 2018 and 2017, we were in compliance with all of our respective financial covenants under the unsecured credit and term loan facilities. The revolving credit facility is only subject to a borrowing base calculation that determines the amount that we can borrow.

On March 28, 2017, in connection with the sale of an office property in San Francisco, California, we paid off a mortgage with an outstanding balance of $25,331,000 using proceeds from the sale. Additionally, we paid a prepayment penalty of $1,508,000 in connection with the prepayment of this mortgage (Note 3).

On May 30, 2017, in connection with the sale of two multifamily properties, both located in Dallas, Texas, we paid off two mortgages with an aggregate outstanding principal balance of $15,448,000 using proceeds from the sales. Additionally, we paid aggregate prepayment penalties of $1,901,000 in connection with the prepayment of these mortgages (Note 3).

On June 23, 2017, in connection with the sale of a multifamily property in Dallas, Texas, we paid off a mortgage with an outstanding principal balance of $23,333,000 using proceeds from the sale. Additionally, we paid a prepayment penalty of $2,812,000 in connection with the prepayment of this mortgage (Note 3).

On December 15, 2017, in connection with the sale of a multifamily property in Houston, Texas, a mortgage with an outstanding principal balance of $28,560,000, collateralized by such property, was assumed by the buyer.

On March 1, 2019, in connection with the sale of an office property in Washington, D.C., we paid off the related mortgage loan with an outstanding principal balance of $46,000,000 at such time, using proceeds from the sale. Additionally, we paid a prepayment penalty of $5,326,000 in connection with the prepayment of this mortgage.

At December 31, 2018 and 2017, accrued interest and unused commitment fees payable of $1,574,000 and $2,098,000, respectively, are included in accounts payable and accrued expenses.

Future principal payments on our debt (face value) at December 31, 2018 are as follows:



Years Ending December 31,	Mortgages Payable (1)		Secured Borrowings Principal (2)		Other (2) (3)		Total
	(in thousands)
2019	$	—	$	574	$	2,327	$	2,901
2020	—		604		2,382		2,986
2021	—		636		2,445		3,081
2022	679		669		132,510		133,858
2023	773		704		2,583		4,060
Thereafter	386,648		12,578		48,592		447,818
	$	388,100	$	15,765	$	190,839	$	594,704


(1)	Excludes the future principal payments for 260 Townsend Street's mortgage, which is classified as liabilities associated with assets held for sale on our consolidated balance sheet at December 31, 2018 (Note 3).

(2)

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


(3)	Represents the junior subordinated notes, SBA 7(a) loan-backed notes, and revolving credit facility.