CIM REAL ESTATE FINANCE TRUST, INC. Item 2.01 Completion of Acquisition or Disposition of Assets.
As previously reported, onDecember 29, 2022 , certain subsidiaries (collectively, the "Seller") ofCIM Real Estate Finance Trust, Inc. (the "Company" or "CMFT") entered into an Agreement of Purchase and Sale, as amended (the "Purchase and Sale Agreement"), with certain subsidiaries of Realty Income Corporation (NYSE: O) (the "Purchaser"). The Purchaser is not affiliated with the Seller. Under the terms of the Purchase and Sale Agreement, the Seller agreed to sell to the Purchaser 185 single-tenant net lease properties encompassing approximately 4.6 million gross rentable square feet of commercial space across 34 states for total consideration of$894.0 million (the "Purchase Price"), to be paid in cash. The sale of 151 properties under contract for sale pursuant to the Purchase and Sale Agreement closed onMarch 22, 2023 for total consideration of$779.0 million . The sale of the remaining properties pursuant to the Purchase and Sale Agreement is expected to close during the second quarter of 2023, although no assurance can be made that the Company will complete the sale of the remaining properties within that timeframe, or at all. After the total repayment and defeasance of approximately$369.4 million of debt and$4.2 million of transaction costs, the Company will redeploy the net sale proceeds into investments in senior secured loans and credit leases, consistent with its core business strategy as a credit-focused real estate investment trust. Item 9.01 Financial Statements and Exhibits. Explanatory Note Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company is providing the pro forma financial information required by Item 9.01 related to the sale of 151 properties onMarch 22, 2023 (the "Initial Closing"), and the proposed sale of the remaining properties, which is expected to close during the second quarter of 2023 (the "Proposed Closing"), although no assurance can be made that the Company will complete the sale of the remaining properties within that timeframe, or at all. The accompanying unaudited pro forma condensed consolidated balance sheet of the Company as ofSeptember 30, 2022 is presented as if the Initial Closing and the Proposed Closing had occurred onSeptember 30, 2022 . The accompanying unaudited pro forma condensed consolidated statements of operations of the Company for the nine months endedSeptember 30, 2022 and for the year endedDecember 31, 2021 are presented as if the Initial Closing and the Proposed Closing had occurred onJanuary 1, 2021 . The accompanying unaudited pro forma condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the pro forma financial position and results of operations of the Company as of and for the periods indicated; however, the accompanying unaudited pro forma condensed consolidated financial statements are not intended to be indicative of the financial position or results of operations that would have actually occurred nor do they purport to represent the financial position or results of operations for future periods. The retrospectively adjusted financial position and results of operations for the indicated periods when reported in the post-sale periodic reports may differ from the pro forma financial statements presented herein. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated financial statements and notes accompanying the Company's Quarterly Report on Form 10-Q for the nine months endedSeptember 30, 2022 and the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 . The unaudited pro forma condensed consolidated statements of operations do not include the impact of any strategies that management may have considered in order to efficiently manage the Company's operations had the sale occurred onJanuary 1, 2021 . Pro forma adjustments have not been made in the accompanying pro forma condensed consolidated statements of operations of the Company for the estimated gain on disposition resulting from the sale, for any reimbursements or payments resulting from the sale, or for the use of proceeds resulting from the sale. 2 -------------------------------------------------------------------------------- Financial Statements and Exhibits (b) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet as of
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Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended
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Pro Forma Condensed Consolidated Statement of Operations for the Year Ended
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Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
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(c) Shell Company Transactions
None
(d) Exhibits
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CIM REAL ESTATE FINANCE TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 2022
(in thousands, except share and per share amounts) (Unaudited)
Disposition Transaction Accounting
Adjustments
Proposed
As Reported Initial Closing Closing Pro - Forma
(a) (b) (b)
ASSETS
Real estate assets:
Land $ 585,100 $ (221,287) $ (17,716) $ 346,097
Buildings, fixtures and improvements 1,479,525 (542,479) (51,672)
885,374
Intangible lease assets 279,806 (98,472) (13,336)
167,998
Condominium developments 153,569 - -
153,569
Total real estate assets, at cost 2,498,000 (862,238) (82,724)
1,553,038
Less: accumulated depreciation and amortization (258,216) 103,999 12,604
(141,613)
Total real estate assets, net 2,239,784 (758,239) (70,120)
1,411,425
Investments in unconsolidated entities 132,375 - -
132,375
Real estate-related securities ($470,121 held at fair value) 470,121 - -
470,121
Loans held-for-investment and related receivables, net 4,022,726 - -
4,022,726
Less: Current expected credit losses (29,584) - -
(29,584)
Total loans held-for-investment and related receivables, net 3,993,142 - - 3,993,142 Cash and cash equivalents 124,836 401,586 (c) 84,411 (d) 610,833 Restricted cash 62,941 (321) - 62,620 Rents and tenant receivables, net 32,957 (11,400) (3,581)
17,976
Prepaid expenses, derivative assets and other assets 52,410 (287) (54) 52,069 Deferred costs, net 16,212 - (11) 16,201 Total assets$ 7,124,778 $ (368,661) $ 10,645 $ 6,766,762 LIABILITIES AND STOCKHOLDERS' EQUITY Repurchase facilities, notes payable and credit facilities, net$ 4,358,187 $ (369,442) (e) $ - $
3,988,745
Accrued expenses and accounts payable 29,390 (2,585) (63) 26,742 Due to affiliates 14,556 - - 14,556 Intangible lease liabilities, net 19,512 (3,785) (834) 14,893 Distributions payable 13,337 - - 13,337 Deferred rental income, derivative liabilities and other liabilities 8,436 (2,540) (91) 5,805 Total liabilities 4,443,418 (378,352) (988) 4,064,078 Commitments and contingencies Redeemable common stock 169,748 - - 169,748 STOCKHOLDERS' EQUITY Preferred stock,$0.01 par value per share - - - - Common stock,$0.01 par value per share 4,373 - -
4,373
Capital in excess of par value 3,529,404 - -
3,529,404
Accumulated distributions in excess of earnings (1,000,420) 9,691 (f) 11,633 (f)
(979,096)
Accumulated other comprehensive loss (21,737) - - (21,737) Total stockholders' equity 2,511,620 9,691 11,633 2,532,944 Non-controlling interests (8) - - (8) Total equity$ 2,511,612 $ 9,691 $ 11,633 $ 2,532,936 Total liabilities, redeemable common stock, non-controlling interests and stockholders' equity$ 7,124,778 $ (368,661) $ 10,645 $ 6,766,762
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
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CIM REAL ESTATE FINANCE TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2022
(in thousands, except share and per share amounts) (Unaudited)
Disposition Transaction Accounting
Adjustments
Nine Months
Ended
Nine Months Ended September 30,
September 30, 2022 Proposed 2022
As Reported Initial Closing Closing Pro - Forma
(a) (b) (b)Revenues:
Rental and other property income $ 170,803$ (45,230) $ (5,063) $ 120,510 Interest income 142,669 - - 142,669 Total revenues 313,472 (45,230) (5,063) 263,179 Operating expenses: General and administrative 10,590 (19) (2) 10,569 Property operating 17,408 (1,223) (197) 15,988 Real estate tax 10,530 (2,095) (168) 8,267 Expense reimbursements to related parties 10,899 - - 10,899 Management fees 39,613 (507) (c) (85) (c) 39,021 Transaction-related 462 (1) - 461 Depreciation and amortization 54,104 (18,714) (1,778) 33,612 Real estate impairment 19,814 (62) - 19,752 Increase in provision for credit losses 15,315 - - 15,315 Total operating expenses 178,735 (22,621) (2,230) 153,884 Gain on disposition of real estate and condominium developments, net 118,135 - - 118,135 Operating income 252,872 (22,609) (2,833) 227,430 Other expense: Gain on investment in unconsolidated entities 8,858 - -
8,858
Unrealized loss on equity security (15,440) - -
(15,440)
Interest expense and other, net (98,453) 7,864 (d) 293
(90,296)
Loss on extinguishment of debt (19,584) 193 (e) - (19,391) Total other expense (124,619) 8,057 293 (116,269) Net income 128,253 (14,552) (2,540) 111,161 Net income allocated to noncontrolling interest 66 - - 66 Net income attributable to the Company $ 128,187$ (14,552) $ (2,540) $
111,095
Weighted average number of common shares outstanding: Basic and diluted 437,339,348 - - 437,339,348 Net income per common share: Basic and diluted $ 0.29 $ - $ -$ 0.25
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
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CIM REAL ESTATE FINANCE TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2021
(in thousands, except share and per share amounts) (Unaudited)
Disposition Transaction Accounting
Adjustments
Year Ended Year Ended
December 31, 2021 Initial Proposed December 31, 2021
As Reported Closing Closing Pro - Forma
(a) (b) (b)Revenues:
Rental and other property income $ 295,164$ (43,096) $ (6,425) $ 245,643 Interest income 70,561 - - 70,561 Total revenues 365,725 (43,096) (6,425) 316,204 Operating expenses: General and administrative 15,078 (17) - 15,061 Property operating 47,559 (1,162) (288) 46,109 Real estate tax 34,943 (2,015) (223) 32,705 Expense reimbursements to related parties 11,624 - - 11,624 Management fees 47,020 (522) (c) (96) (c) 46,402 Transaction-related 315 (6) - 309 Depreciation and amortization 95,190 (16,236) (2,363)
76,591
Real estate impairment 18,078 - -
18,078
Increase in provision for credit losses 2,881 - -
2,881
Total operating expenses 272,688 (19,958) (2,970)
249,760
Gain on disposition of real estate and condominium developments, net 83,045 - -
83,045
Merger-related expenses, net (1,404) - - (1,404) Operating income 174,678 (23,138) (3,455) 148,085 Other expense: Gain on investment in unconsolidated entities 606 - -
606
Interest expense and other, net (83,899) 4,698 (d) 140
(79,061)
Loss on extinguishment of debt (4,895) - -
(4,895)
Total other expenses (88,188) 4,698 140 (83,350) Net income 86,490 (18,440) (3,315) 64,735 Net income allocated to noncontrolling interest - - -
-
Net income attributable to the Company $ 86,490$ (18,440) $ (3,315) $
64,735
Weighted average number of common shares outstanding: Basic and diluted 365,726,453 - -
365,726,453
Net income per common share: Basic and diluted $ 0.24 $ - $ - $ 0.18
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)TRANSACTION ACCOUNTING ADJUSTMENTS
The transaction accounting adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed consolidated financial information:
Adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of
(a)Reflects the Company's historical unaudited condensed consolidated balance sheet as ofSeptember 30, 2022 , which was included in the Company's Quarterly Report on Form 10-Q, as filed with theSecurities and Exchange Commission (the "SEC") onNovember 14, 2022 .
(b)Reflects the Company's property-level historical financial position related
to the properties involved in each of the Initial Closing and the Proposed
Closing as of
Cash and cash equivalents
(c)Reflects the$779.0 million in total consideration received under the Initial Closing, less certain other amounts including, but not limited to, the following: the repayment of$105.8 million on the secured first lien mortgage loan, the legal defeasance of a$23.7 million mortgage note in connection with the disposition of the underlying properties, the repayment of$240.0 million on the credit facility, and$3.7 million in certain transaction costs.
(d)Reflects the
Repurchase facilities, notes payable and credit facilities, net
(e)Reflects certain amounts repaid under the Initial Closing as discussed in (c) above, including, but not limited to, the following: the repayment on the secured first lien mortgage loan, the legal defeasance of a mortgage note in connection with the disposition of the underlying properties and the repayment of the credit facility. Also reflects the adjustment of the deferred financing costs related to such debt.
Accumulated distributions in excess of earnings
(f)Reflects the estimated net increase in equity resulting from the Initial Closing and the Proposed Closing.
Adjustments to the Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the Nine Months Ended
(a)Reflects the historical unaudited condensed consolidated statements of operations for the nine months endedSeptember 30, 2022 and the year endedDecember 31, 2021 , which were included in the Quarterly Report on Form 10-Q, as filed with theSEC onNovember 14, 2022 , and the Annual Report on Form 10-K, as filed with theSEC onMarch 31, 2022 , respectively.
(b)Reflects the Company's property-level historical results of operations
related to the properties involved in the Initial Closing and the Proposed
Closing for the nine months ended
Management fees
(c)Reflects adjustments to CMFT's management fee during the periods presented, which has been pro-rated based on average equity under management pursuant to the Company's Amended and Restated Management Agreement withCIM Real Estate Finance Management, LLC , the Company's external manager, as if the Initial Closing and the Proposed Closing had occurredJanuary 1, 2021 .
Interest expense and other, net
(d)Reflects reduced interest expense as a result of certain debt repayments
related to the properties involved in the Initial Closing, including, but not
limited to, the following: the repayment on the secured first lien mortgage
loan, the legal defeasance of a mortgage note in connection with the disposition
of the underlying properties and the repayment of the credit facility. For
certain terms of CMFT's debt outstanding, see Note 9 - Repurchase Facilities,
Credit Facilities, and Notes Payable to the condensed consolidated financial
statements in the Company's Quarterly Report on Form 10-Q for the nine
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CIM REAL ESTATE FINANCE TRUST, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
months ended
Loss on extinguishment of debt
(e)Reflects a reduced loss on extinguishment of debt during the nine months
ended
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