The following excerpt is from the company's SEC filing.
CONSOLIDATED STATEMENTS OF OPERATIONS 18 2016 2015 2016 2015 REVENUES: Rental and other property income $ 57,414 $ 62,623 $ 181,886 $ 189,192 Expense reimbursements 3,884 3,336 10,128 9,780 Interest and other income 3,034 2,501 9,295 7,974 64,332 68,460 201,309 206,946 EXPENSES: Rental and other property operating 31,723 33,361 95,300 99,055 Asset management and other fees to related parties 8,496 8,399 25,503 24,776 Interest 10,276 5,781 24,386 17,191 General and administrative 2,226 2,029 6,299 7,250 Transaction costs 53 237 320 1,038 Depreciation and amortization 17,724 17,873 54,262 54,567 70,498 67,680 206,070 203,877 Gain on sale of real estate 14,927 - 39,666 - INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES 8,761 780 34,905 3,069 Prov ision for income taxes 379 179 1,040 654 NET INCOME FROM CONTINUING OPERATIONS 8,382 601 33,865 2,415 DISCONTINUED OPERATIONS: Income from operations of assets held for sale 703 4,640 3,061 10,540 NET INCOME FROM DISCONTINUED OPERATIONS 703 4,640 3,061 10,540 NET INCOME 9,085 5,241 36,926 12,955 Net loss (income) attributable to noncontrolling interests 3 1 (9) (5) NET INCOME ATTRIBUTABLE TO STOCKHOLDERS $ 9,088 $ 5,242 $ 36,917 $ 12,950 BASIC AND DILUTED INCOME PER SHARE1: Continuing operations $ 0.10 $ 0.01 $ 0.36 $ 0.02 Discontinued operations $ 0.01 $ 0.05 $ 0.03 $ 0.11 Net income $ 0.10 $ 0.05 $ 0.39 $ 0.13 WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 87,045 97,590 93,772 97,587 Diluted 87,045 97,590 93,772 97,587 Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except per share amounts) (Unaudited) CIM COMMERCIAL EPS for the year-to-date period may differ from the sum of quarterly EPS amounts due to the required method of computing EPS in the respective periods. In addition, EPS are calculated independently for each component and may not be additive due to rounding.
FUNDS FROM OPERATIONS 19 CIM COMMERCIAL We believe that FFO is a widely recognized and appropriate measure of the performance of a REIT and that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO represents net income (loss), computed in accordance with GAAP, excluding gains (or losses) from sales of real estate, real estate depreciation and amortization, and adjustments for non-controlling interests. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("NAREIT"). Like any metric, FFO should not be used as the only measure of our performance because it excludes depreciation and amortization and captures neither the changes in the value of our real estate properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our operating results. Other REITs may not calculate FFO in accordance with the standards established by the NAREIT; accordingly, our FFO may not be comparable to those other REITs' FFO. Therefore, FFO should be considered only as a supplement to net income as a measure of our performance and should not be used as a supplement to or substitute measure for cash flow from operating activities computed in accordance with GAAP. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. FFO for the year-to-date period may differ from the sum of quarterly FFO amounts due to the method of computing FFO in the respective periods. In addition, the per share adjustments to net income attributable to stockholders per share are calculated independently for each adjustment and may not be additive due to rounding. 2016 2015 2016 2015 FUNDS FROM OPERATIONS (FFO) Net income attributable to stockholders 9,088$ 5,242$ 36,917$ 12,950$ Depreciation and amortization 17,724 17,873 54,262 54,567 Gain on sale of depreciable assets (14,927) - (39,666) - Net (loss) income attributable to noncontrolling interests (3) (1) 9 5 FFO $ 11,882 $ 23,114 $ 51,522 $ 67,522 BASIC AND DILUTED FFO PER SHARE: Net income attributable to stockholders 0.10$ 0.05$ 0.39$ 0.13$ Depreciation and amortization 0.20 0.18 0.58 0.56 Gain on sale of depreciable assets (0.17) - (0.42) - Net (loss) income attributable to noncontrolling interests - - - - FFO PER SHARE $ 0.14 $ 0.24 $ 0.55 $ 0.69 WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 87,045 97,590 93,772 97,587 Diluted 87,045 97,590 93,772 97,587 (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except per share amounts)
CONSOLIDATED BALANCE SHEETS 20 September 30, 2016 December 31, 2015 ASSETS Investments in real estate, net $ 1,615,415 $ 1,691,711 Cash and cash equivalents 133,846 139,101 Restricted cash 40,039 8,086 Accounts receivable, net 10,629 11,164 Deferred rent receivable and charges, net 104,539 97,225 Other intangible assets, net 18,071 20,310 Other assets 89,832 102,401 Assets held for sale, net 43,690 22,062 TOTAL ASSETS $ 2,056,061 $ 2,092,060 LIABILITIES AND EQUITY LIABILITIES: Debt $ 969,189 $ 693,956 Accounts payable and accrued expenses 42,089 42,121 Intangible liabilities, net 4,194 6,086 Due to related parties 9,664 9,472 Other liabilities 40,791 32,826 Liabilities associated with assets held for sale 11,945 10,252 Total liabilities 1,077,872 794,713 EQUITY: Common stock 84 98 Additional paid‑in capital 1,566,018 1,820,451 Accumulated other comprehensive income (loss) (9,617) (2,519) Distributions in excess of earnings (579,206) (521,620) Total stockholders’ equity 977,279 1,296,410 Noncontrolling interests 910 937 Total equity 978,189 1,297,347 TOTAL LIABILITIES AND EQUITY $ 2,056,061 $ 2,092,060 (in thousands) (Unaudited) CIM COMMERCIAL
DEBT SUMMARY1 21 As of September 30, 2016 Oustanding Principal Balance2 Interest Rate Maturity Date (In thousands) 211 Main Street $ 26,924 6.65% 07/15/2018 4649 Cole Avenue 23,671 5.39% 03/01/2021 3636 McKinney Avenue 9,408 5.39% 03/01/2021 3839 McKinney Avenue 6,240 5.39% 03/01/2021 4200 Scotland Street 29,314 5.18% 06/05/2021 1 Kaiser Plaza 97,100 4.14% 07/01/2026 2101 Webster Street 83,000 4.14% 07/01/2026 2100 Franklin Street 80,000 4.14% 07/01/2026 1901 Harrison Street 42,500 4.14% 07/01/2026 1333 Broadway 39,500 4.14% 07/01/2026 260 Townsend Street 28,200 4.14% 07/01/2026 7083 Hollywood Boulevard 21,700 4.14% 07/01/2026 830 1st Street 46,000 4.50% 01/05/2027 MORTGAGES PAYABLE 533,557 4.45% Unsecured Credit Facility3 - Variable 09/30/20174 Unsecured Term Loan Facility5 385,000 LIBOR + 1.60%6 05/08/2022 Junior Subordinated Notes 27,070 LIBOR + 3.25% 03/30/2035 OTHER 412,070 TOTAL DEBT 945,627$ 1 Excludes $38.2 million of secured borrowings-government guaranteed loans, which 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. 2 Excludes premiums, discounts and debt issuance costs. 3 At September 30, 2016, the interest rates applicable to the components of CIM Commercial's Unsecured Credit Facility were based on LIBOR plus an applicable spread determined by CIM Commercial's maximum leverage ratio, as defined. In June 2016, all outstanding borrowings under the Unsecured Credit Facility were repaid. At September 30, 2016, $0 was outstanding under the credit facility and $200 million was available for future borrowings, as we permanently reduced the revolving credit commitment under the credit facility to $200 million. 4 The credit facility was set to mature in September 2016 and prior to maturity, we exercised the first of two one year extension options through September 2017. 5 The Unsecured Term Loan Facility ranks pari passu with CIM Commercial's Unsecured Credit Facility; covenants under the Unsecured Term Loan Facility are substantially the same as those in the Unsecured Credit Facility. At September 30, 2016, the interest rate was based on LIBOR plus an applicable spread determined by CIM Commercial's maximum leverage ratio, as defined in the credit agreement. With some exceptions, any prepayment of the Unsecured Term Loan Facility prior to May 2017 will be subject to a prepayment fee up to 2% of the outstanding principal amount. 6 The interest rate of the loan has been effectively converted to a fixed rate of 3.16% until May 8, 2020 through interest rate swaps. CIM COMMERCIAL
NET OPERATING INCOME RECONCILIATIONS 22 CIM Commercial internally evaluates the operating performance and financial results of its segments based on segment net operating income which is defined 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, transaction costs and provision for income taxes. We also evaluate the operating performance and financial results of our operating segments using cash basis NOI. We define cash basis NOI as segment NOI adjusted to exclude the effect of the straight lining of rents, acquired above/below market lease amortization, and other adjustments required by GAAP. Segment NOI and cash basis NOI are not a measure of operating results or cash flows from operating activities as measured by GAAP and should not be considered an alternative to income from continuing operations, or to cash flows as a measure of liquidity, or as an indication of our performance or of our ability to pay dividends. All companies may not calculate segment NOI or cash basis NOI in the same manner. We consider segment NOI and cash basis NOI to be useful performance measures to investors and management because, when compared across periods, they reflect the revenues and expenses directly associated with owning and operating our properties and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective not immediately apparent from income from continuing operations. Additionally, we believe that cash basis NOI is helpful to investors because it eliminates straight line rent and other non- cash adjustments to revenue and expenses. Below and on the next page is a reconciliation of our cash basis Net Operating Income (“cash NOI") to segment net operating income and net income for the nine months ended September 30, 2016 and 2015 and the twelve months ended December 31, 2015. Office Multifamily Hotel Lending Total Cash NOI 74,396$ 6,331$ 12,429$ 3,824$ 96,980$ Deferred rent and amortization of intangible assets, liabilities and lease inducements 4,387 (126) 2 - 4,263 Straight line rent, below-market ground lease and amortization of intangible assets (937) (414) - - (1,351) Segment net operating income 77,846 5,791 12,431 3,824 99,892 Asset management and other fees to related parties (22,824) Interest expense (24,080) General and administrative (3,167) Transaction costs (320) Depreciation and amortization (54,262) Gain on sale of real estate 39,666 Income from continuing operations before prov ision for income taxes 34,905 Prov ision for income txaes (1,040) Net income from continuing operations 33,865 Discontinued operations Income from operations of assets held for sale 3,061 Net income from discontinued operations 3,061 Net income 36,926 Net income attributable to noncontrolling interests (9) Net income attributable to stockholders 36,917$ Nine Months Ended September 30, 2016 (in thousands)
NET OPERATING INCOME RECONCILIATIONS 23 As CIM Commercial’s year end is December 31, and CIM Commercial does not present TTM cash and segment NOI ended September 30, 2016 in its GAAP reporting, CIM Commercial reconciled the TTM cash and segment NOI using the NOI reconciliations above and on the prior page. Please note that segment and cash NOI has been reconciled to the net income attributable to stockholders for all periods presented above and on the prior page: Office Multifamily Hotel Total Cash NOI - Nine Months Ended September 30, 2016 74,396$ 6,331$ 12,429$ 93,156$ Cash NOI - Twelve Months Ended December 31, 2015 102,792 6,758 19,458 129,008 Cash NOI - Nine Months Ended September 30, 2015 (77,636) (5,120) (15,319) (98,075) TTM Cash NOI 99,552$ 7,969$ 16,568$ 124,089$ Office Multifamily Hotel Total Segment NOI - Nine Months Ended September 30, 2016 77,846$ 5,791$ 12,431$ 96,068$ Segment NOI - Twelve Months Ended December 31, 2015 107,485 6,553 19,462 133,500 Segment NOI - Nine Months Ended September 30, 2015 (80,191) (4,733) (15,320) (100,244) TTM Segment NOI 105,140$ 7,611$ 16,573$ 129,324$ (in thousands) (in thousands) Twelve Months Ended September 30, 2016 Office Multifamily Hotel Lending Total Office Multifamily Hotel Total Cash NOI 77,636$ 5,120$ 15,319$ 2,068$ 100,143$ 102,792$ 6,758$ 19,458$ 129,008$ Deferred rent and amortization of intangible assets, liabilities and lease inducements 4,035 27 1 4,063 6,485 346 4 6,835 Bad debt expense (510) (510) (510) - - (510) Straight line rent, below-market ground lease and amortization of intangible assets (970) (414) (1,384) (1,282) (551) - (1,833) Segment net operating income 80,191 4,733 15,320 2,068 102,312 107,485 6,553 19,462 133,500 Asset management and other fees to related parties (21,955) (29,319) Interest expense (16,540) (22,785) General and administrative (5,143) (6,621) Transaction costs (1,038) (1,382) Depreciation and amortization (54,567) (72,361) Gain on sale of real estate - 3,092 Income from continuing operations 3,069 4,124 Prov ision for income txaes (654) - Net income from continuing operations 2,415 4,124 Discontinued operations Income from operations of assets held for sale 10,540 15,128 Gain on disposition of assets held for sale - 5,151 Net income from discontinued operations 10,540 20,279 Net income 12,955 24,403 Net income attributable to noncontrolling interests (5) (11) Net income attributable to stockholders 12,950$ 24,392$ (in thousands) Twelve Months Ended December 31, 2015Nine Months Ended September 30, 2015 (in thousands)
IMPORTANT DISCLOSURES Assets and Equity Under Management Assets Under Management (“AUM”), or Gross AUM, represents (i)(a) for real assets, the aggregate total gross assets (GAV) at fair value, including the shares of such assets owned by joint venture partners and co-investments, of all of CIM’s advised accounts (each an “Account” and collectively, the “Accounts”) or (b) for operating companies, the aggregate GAV less debt, including the shares of such assets owned by joint venture partners and co-investments, of all of the Accounts (not in duplication of the assets described in (i)(a)), plus (ii) the aggregate unfunded commitments of the Accounts, as of September 30, 2016 (“Report Date”). The GAV is calculated in accordance with U.S. generally accepted accounting principles on a fair value basis (the “Book Value”) and generally represents the investment’s third-party appraised value as of the Report Date, or as of December 31, 2015 plus capital expenditures through the Report Date, as adjusted further by the result of any partial realizations and quarterly valuation adjustments based upon management’s estimate of fair value, in each case through the Report Date other than as described below with respect to CIM REIT. The only investment currently held by CIM REIT consists of shares in CIM Commercial Trust Corporation, a publicly traded company; the Book Value of CIM REIT is determined by assuming the underlying assets of CMCT are liquidated based upon management’s estimate of fair value. CIM does not presently view the price of CMCT’s publicly- traded shares to be a meaningful indication of the fair value of the CIM REIT’s interest in CMCT due to the fact that the publicly-traded shares of CMCT represent less than 3% of the outstanding shares of CMCT and are thinly-traded. Equity Under Management (“EUM”), or Net AUM, represents (i) the aggregate NAV of the Accounts (as described below), plus (ii) the aggregate unfunded commitments of the Accounts. The NAV of each Account is based upon the aggregate amounts that would be distributable (prior to incentive fee allocations) to such Account assuming a “hypothetical liquidation” of the Account on the date of determination, assuming that: (x) investments are sold at their Book Value (as defined above); (y) debts are paid and other assets are collected; and (z) appropriate adjustments and/or allocations between equity investors are made in accordance with applicable documents, in each case as determined in accordance with applicable accounting guidance. Net Asset Value We have established an estimated NAV per share of Common Stock of $23.20. The determination of estimated NAV involves a number of subjective assumptions, estimates and judgments that may not be accurate or complete. Further, different firms using different property-specific, general real estate, capital markets, economic and other assumptions, estimates and judgments could derive an estimated NAV that could be significantly different from our estimated NAV. Additionally, our estimated NAV does not give effect to changes in value, investment activities, capital activities, indebtedness levels, and other various activities occurring after December 31, 2015 that would have an impact on our estimated NAV (other than the tender offer as described in CIM Commercial’s S-11/A filed with the Securities and Exchange Commission on September 21, 2016). 24
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