CMCT PORTFOLIO DISTRICT OF COLUMBIA

CMCT GEOGRAPHY NORTHERN CALIFORNIA Wardman Park 1 Kaiser Plaza Argohne

Harvard Village Park East 1333 Broadway u st NW 1901 Hamison 2100 Franklin 101 Webster 60 Townsend CityVista 1999 N Capitol Sheraton Grand Hotel K SI NW 899 N Capitol CT OF COLUMBIA 830 1ª St 800 N Capitol 830 1ª Street Waterview 899 North Capitol 999 North Capitol N CAL FORNIA 11600 & 11620 Wilshire 370 L'Enfant MAP KEY L'Enfant Plaza 4750 Wilshire Boulevard CMCT Subject Investment O CIM Investments Lindblade Media Center CIM Realized Investments O Metro Stops 3601 S Congress Avenue |||| Metro Lines

Managed by CIM Group www.cimgroup.com

DISTR

CMCT PORTFOLIO SOUTHERN CALIFORNIA CMCT GEOGRAPH® NORTHERN CALIFORNIA 1 Kaiser Plaza 1333 Broadway 1901 Hamison 2100 Franklin 2101 Webster Sheraton Grand Hotel 830 1ª Street 899 North Capitol 99 North Capito 11600 IN CAL FOR inta Monic 1600 & 11620 Wilshir 4750 Wilshire Boulevard Lindblade Media Center TEXA 3601 S Congress Avenue

Managed by CIM Group www.cimgroup.com

A ST ST I T I ST ST ST ST ST ST ST FOR STATE THE STORE THE STATE OF THE STORE FOR THE STATE OF THE STATE OF THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR TH

CMCT
	PORTFOLIO 4750 WILSHIRE
INDEX CMCT GEOGRAPHY
NORTHERN CALIFORNIA 1 Kaiser Plaza
1333 Broadway		4750
1901 Hamison 2100 Franklin
2101 Webster
260 Townsend
Sheraton Grand Hotel
DISTRICT OF COLUMBIA
830 1ª Street
899 North Capitol
999 North Capitol
SOUTHERN CALFORNIA
11600 & 11620 Wilshire
4750 Wilshire Boulevard
Lindblade Media Center
TEXAS
3601 S Congress Avenue
Managed by CIM Group www.cimgroup.com

Free Writing Prospectus Filed Pursuant to Rule 433 Dated October 25, 2017 Registration Statement No. 333-218019

FREE WRITING PROSPECTUS

CIM Commercial Trust Corporation (the "Company" of "CMCT") has filed a registration statement (including a prospectus) on Form S-1 (No. 333-21809) with the U.S. Seurities and Exchange Commission (the "SEC") and with the "ISA") for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statements the Company has filed with the SEC and the ISA for move complete information about the Company and the offerings. You may get these by visiting the Company's website at http://investors.commercial.com/index.com/index.com/index.com/index.com/index.com/ Partners Underwriting Ltd will arrange for a prospectus to be sent to you if you request it by calling 972-3-5141290 or toll free at 1-83-300-3008.

You nay also access the prospectus for free on the SEC website at www.se.gov/Archives/edgar/data/908311/00010474917006540/2233623re-11a.htm and on the Magna website at www.magna.isa.gov.il under the Company's name.

FWP 1 a17-22821_9fwp.htm FWP

IMPORTANT DISCLOSURES

FREE WRITING PROSPECTUS

CM Commercial Tust Corporation ("CM Comnercial", he "CMC") has fled a registration statement (including a prospectus) on Fram \$ 1 (No. 33-21809) with the U.S. Security and Ecchange Connision (the "SC") and with the "(A") for the ofteing to wich his connunication relates, Belon you invest, you should read the propects in that registiation statist the Company has lied with the SEC and the SA lor nove complete information about the Company and the offering. You may get thee by visiting the Company's website at thip;//investors.commeccal.com/new.clm. Allemally, Levri Partner Underwriting Ltd will arrange for a prospectus to be sent to you it you request it by calling 972-3-5141290 or toll-free at 1-833-300-3008.

You may also access the propects for fee on the SEC webite at www.se.gov/achives/edgr/dol/0001/0001/0001/00/202020-110.htm and on the Magna website at www.magna.isa.gov.il under the Company's name

FORWARD-LOOKING STATEMENTS

The information set forth herein contains." You can idently these stolements by the foct that they do not relote sticity to historial or current fock of dicus the business and affair of CMCT on a propective bosis as "nay," "will" "project" "might," "might," "might," "pricipate" "hight," "pricipate" "hirend"," "prilicipate" "h "could," "estimale," "continue" "pursue," or "her negative or other words or expessions of similar meaning, may identify lowerd-looking statements.

CMCT boses these forward-looking statements on it has nade in light of its experience, as well as its perception of expected fruite developments and oher fach that it beleves are opcopials. The forward-ooling shomens are neesing the juden on he judgent of Clar. Ton invor of Char an new c subject to risks, uncertainties and other foclor, in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

As you read and consider the information to not place under eliance on these forward-looking stotements are not guarantes of performance or results and specifies of the eloward-looking statements involve risk, uncentainlies and ossumptions. In ight of these risk and uncertaines, there can be no assurance that the results contemplated by the faward-looking statements contained herein will in fact fram in to fire, and it is not posible for QMC to or can CMC asses the impact of each such factor of he extent to wrich any factor, at actor, at actor, at actor, an combination of facto couse results to differ materially from those containent. CMC undertates no obligation to publicly update or release any revisions to hase or revisions to hese or wardlooking statements to reflect events a circumstances after the occurrence of unanticipated events, except as required by low.

Terms & Features Summary

Credit rating by S&P Maalot (October 2017) - Issuer: ilAA- 1 Series L Preferred Stock: ilA-1

Coupon: Annual dividend of 5.50% (Payments will begin January 2019, subject to the payment to ordinary of the Initial Dividend, if any)

Minimum price: ILS 987.50 per Unit (Unit consists of 10 shares of Series L)

Early commitment fee: 2.50%

CMC

Linkage to the U.S. dollar

Cumulative dividends

In the event dividends are in arrears, until full payment of the deferred dividends:

· Investors have right of early redemption (available for exercise each quarter)
· Annual step-up in the dividend rate of 1.00% (up to a maximum annual rate of 8.50%)
· The company will not be able to authorize a dividend/distribution to its ordinary shares
· The company will not be able to exercise its redemption option
· The company (including its affiliates) will not be permitted to purchase Series L Preferred Stock on any stock exchange

Perpetual

Redemption option for the company and the investor at any time, commencing after the fifth anniversary following the issuance date

· Redemptions may be paid in cash, ordinary shares or a combination of both at the sole discretion of the company (See further explanation on pages 5-6 regarding the mechanism for determining the number of ordinary shares received in the event the company redeems in stock)
· The Series L Preferred Stock is expected to be dual-listed for trading on NASDAQ and TASE, in each case prior to the date of issuance. The ordinary shares are listed for trading on NASDAQ and is expected to be listed on TASE

Do not confer voting rights

.............................................................................................................................................................................. The rating reliects only the view of the agency providing the rating as of October 26, 2017, and is subject to revision or any final no any maced onlines on ne gener process and series and and and while and the mind and the register on the registerior documents worlded to the teach one the registerior doc

SCHEMATIC OUTLINE

CMC7

Upon redemption, the investor will receive an amount, in cash or stock, greater than or equal to the stated value of the Series L Preferred Stock1

At scrimerican II bit Mal Mala Marcanonial Maria Mani Mani Mani Manden Mich and Prich Antending Mich and Promethon Livention Livin Mich on Mich and Creating Comments in Mich

The mechanism for determining the price of ordinary shares for purposes of the redemption payment may allow investors to benefit from an upside potential

Volume-weighted-overage ardinary shares norket price on NASDAQ and TASE in the Isst 20 trading dops preceding the end of the examplion's mode

2 The most recently Net Asset Value per share of common stock published by the company prior to the redemption date.

The nor real not real valle common on the colper price on in reserved for any of the registration of the registration documents scontribution the registration documents submi

ર્

IMC

Comparison to select characteristics of typical preferred securities issued by the local banks in Israel

Feature	Preferred securities issued by the local banks in Israel]	Series L Preferred Stock being offered2
Voting rights	Do not confer voting rights	Do not confer voting rights
Unpaid coupons	Non cumulative - "recovery" after write-off is only in respect of the principal	Cumulative; Annual step-up in the coupon rate by 1.00% (up to a rate of 8.50%, and returning to 5.50% upon payment)3
Redemption option	For the issuer only, after five years, (if the option is not utilized - final redemption after additional five years)	For both the issuer and investors, commencing after five years (paid in cash and/or in ordinary shares at the option of the Company)
Investors' right for early redemption	Only in the case of liquidation / receivership / creditors' arrangement pursuant to section 350 of the Israeli corporate law, and subject to the approval of the banks' regulator	Possible in the event that regular coupon payments are in arrears (each quarterinvestors can choose to exercise the option) 4
Potential principal write-off	In certain circumstances, a partial / full write-off is possible lexcept for bank Leumi - in lieu of write-off, conversion to ordinary shares)	None
Conversion price (in the event of conversion to ordinary shares)	Relevant only to bank Leumi- a minimum price was set in advance	No minimum price; Conversion in the case of redemption at the lower of the market value and NAV most recently published by the Company (see further explanation on the previous page)

(1) Contingent Capital Securities (CoCos)

I Presents a summary of select terms of typical Contingent Capital Securities (CoCos) issued by the local banks in Israel

Presents summary of select tems. The full tems of the Series Stock being offered by CMC are provided in the registration documents submitted to the SEC and the SA CMCT does not undertake to update the summary of terms in this document.

I II the Company lois to pay dividend on the Series I Sock for a given your in full on the opplicable proment dote (or foils to declare such dividend), the onnual rate of fhe divided will needs by 1.0% ellering your i of he lolen in the d 6.5% per new .8.5% per morn inch increase thriend role will rever to 5.0% ellerie as of January 1 of such year.

The redemplion price received by the investor will be an amount equal to the Series L Preferred Stock, plus, provided certain conditions are softiled, accued and unpaid dividends.

Free Writing Prospectus Filed Pursuant to Rule 433 Dated October 25, 2017 Registration Statement No. 333-218019

FREE WRITING PROSPECTUS

CIM Commercial Trust Corporation (the "Company" or "CMCT") has filed a registration statement (including a prospectus) on Form S-11 (No. 333-218019) with the U.S. Securites and Exchange Commission (the "SEC") and with the Israel Securities Authority (the "ISA") for the offering to which this communication relates. Before you invest, you should read the prospective statement and other documents the Company has filed with the SEC and the ISA for more complete information about the offerings. You may get these documents for free by visiting the Company's website at http://investors.com/index.cfm. Alternatively, Leumi Partners Underwriting Ltd will arrange for a prospectus to be sent to you if you request it by calling 972-3-5141290 or toll free at 1-833-300-3008.

You may also access the prospectus for free on the SEC website at www.sec.gov at https://www.se.gov/Archives/edgardata908311/000104746917006540/a2233623zs-11a.htm and on the Magna.isa.gov.il under the Company's name.

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CIM COMMERCIAL TRUST CORPORATION PUBLIC OFFERING OF SERIES L PREFERRED STOCK

Issuer Credit Rating Maalot S&P Global IL: AA-1 Preferred Shares Credit Rating Maalot S&P Global IL: A-1 Following the Offering, CMCT, Currently Listed On NASDAQ, Will Also Be Listed on TASE

CLASSIFIED INVESTORS TENDER OFFER

The date for the early bidding tender process for classified investors will be 14 November, 2017.

1 The rating reflects only the view of the agency providing the rating as of October 26, 2017 and is subject to revision or withdrawal at any time

לאומי פרטנרס חתמים בע"מ, מרכז עזריאלי 5 (המגדל המרובע), קומה 36, דרך מנחם בגין 132 תל אביב 67025 5141275-03 : 075 5141290-03 www.leumipartners.comError! No document variable supplied.

IMPORTANT DISCLOSURES

Free Writing Prospectus

CIM Commercial Trust Corporation (the "Company" or "CMCT") has filed a registration statement (including a prospectus) on Form S-11 (No. 333-218019) with the U.S. Securities and Exchange Commission (the "SEC") and with the Israel Securities Authority (the "ISA") for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed with the SEC and the ISA for more complete information about the Company and the offerings. You may get these documents for free by visiting the Company's website at http://investors.cimcommercial.com/index.cfm. Alternatively, Leumi Partners Underwriting Ltd will arrange for a prospectus to be sent to you if you request it by calling 972-3-5141290 or toll-free at 1-833-300-3008.

You may also access the prospectus for free on the SEC website at www.sec.gov at https://www.sec.gov/Archives/edgar/data/908311/000104746917006540/a2233623zs-11a.htm and on the Magna website at www.magna.isa.gov.il under the Company's name.

Forward-Looking Statements

The information set forth herein contains "forward-looking statements." You can identify these statements by the fact that they do not relate strictly to historical or current facts or they discuss the business and affairs of the Company on a prospective basis. Further, statements that include words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or "should" or the negative or other words or expressions of similar meaning, may identify forward-looking statements.

CMCT bases these forward-looking statements on particular assumptions that it has made in light of its experience as well as its perception of expected future developments and other factors that it believes are appropriate under the circumstances. These forward-looking statements are necessarily estimates reflecting the judgment of CMCT and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, including those set forth in CMCT's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

As you read and consider the information herein, you are cautioned to not place undue reliance on these forward-looking statements. These statements are not guarantees of performance or results and speak only as of the date hereof. These forward-looking statements involve risks, uncertainties and assumptions. In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained herein will in fact transpire. New factors emerge from time to time, and it is not possible for CMCT to predict all of them. Nor can CMCT assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. CMCT undertakes no oblicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

לאומי פרטנרס חתמים בע"מ, מרכז עזריאלי 5 (המגדל המרובע), קומה 36, דרך מנחם בגין 132 תל אביב 67025 5141275-03 : 5141290-03 www.leumipartners.com

CIM GROUP

· Established in 1994 as a partner for investors seeking urban infrastructure and real estate investments in communities qualified by CIM
· CIM Group has \$18.1 billion of assets under management and \$11.3 billion of equity under management1
· Integrated, full-service investment manager with multi-disciplinary expertise and in-house research, acquisition, investment, development, finance, leasing and management capabilities
· Since inception, CIM Group has owned or currently has under development:1
16.6 million square feet of office space
6.8 million square feet of retail space
21,000 residential units
8,600 hotel rooms
· 640+ employees (15 principals including all of its founders; 360+ professionals)2
· Headquartered in Los Angeles, with offices in the San Francisco Bay Area, New York, NY, Washington, D.C. Metro Area and Dallas, TX
· CMCT's manager, an affiliate of CIM Group, has a 20+ year proven track record of investing in both stabilized and opportunistic real estate assets in funds with low leverage

CIM COMMERCIAL TRUST (CMCT)

· A public real estate investment trust (REIT) listed on NASDAQ since 2014
· Assets fair value: \$1.6B3A, estimated net asset value: \$1.3B5
· Benefits from CIM Group's large-scale platform deal sourcing, capital markets and operational expertise
· Class A and creative office investments in gateway markets:
- High barrier-to-entry sub-markets where CIM Group anticipates outsized rent growth
- San Francisco Bay Area, Washington, D.C., Los Angeles and Austin, TX
· 19 properties with 3.3 million office rentable square feet20 and 503 hotel rooms
- Office occupancy: 93%6
- Highly-rated and diversified tenant base
· Same-store embedded growth opportunity:
- Increasing below-market leases to market and regular base rent escalations
Targeting same-store office NOI CAGR of 5-7% through 20217
· Prudent and flexible capital structure:

1 As of June 30, 2017. See "Assets and Equity Under Management" under "Important Disclosures" on page 8.

Estimated NAV as of his influsted for the property sales described in footnote 3 and the 565.0M debt pay down made in August 2017. Estimated W.V includes the lending segment. See page 8 for cakulation of estimated NAV. Please see "important Disclosures" on page 8

לאומי פרטנרס חתמים בע"מ, מרכז עזריאלי 5 (המגדל המרובע), קומה 36, דרך מנחם בגין 132 תל אביב 67025 5141275-03 : 03 5141290-03 www.leumipartners.comError! No document variable supplied.

² As of September 30, 2017.

As of June 30, 2017. Cliff Commercial owned the 30, 2017; however, they were excluded from the above presentation as they were seld or are under contract for sale as of October 24, 2017: 7083 Hollywood Boulevard, 370 L'Enlint Promenato, 200 North Capitel Street and 47 E 34th Street. Excludes the lending segment.

Includes ancillary properties; two parking garages and two development sites, one of which is being used as a parting to . 361 South Congress Aversea and Lindblade Media Center are each counted as one property but consist of 10 and 3 buildings, respectively.

As of Jane 30, 2017. CM Commercial owned the Boxing properties at June 30, 2017; however, they were excluded from the above presentation as they were ld as of October 24, 2017: 7083 Hollywood Boulevard, 370 L'Enfant Promenade and 800 North Capitol Street.

⁷ Additional 1%-2% CAGR potential from development of alres. Reflects cash and segment NOL CIM Commercial owned the following geoper in a lune 30, 2017; however, they were excluded from the above presentation as they were sold as of October 24, 2017: 7033 Hollywood Boulevard, 370 L'Enlant Promenade, 800 North Capitol Street.

Overall leverage is "37%1
100% of debt matures after 2021, 58% in 2026 and thereafter12
55% of debt is fixed rate; another 42% of debt is effectively fixed rate until May 2020 through interest rate swaps1,2
Unsecured term loan maturing in 2022 bears interest at a spread of 160 bps over LIBOR (total rate of 3.16% as of October 24, 2017; LIBOR fixed via swaps at 1.56% until 2020)3
Unutilized revolving credit facility4
Unencumbered real estate asset pool fair value of \$674M, approximately 43% of total fair value of investments in real estate5
Target capital structure: 45% common equity, 25% preferred equity and 30% debt

TARGET CAPITAL STRUCTURE CURRENT CAPITAL STRUCTURE1 Preferred Equity, Common Equily; Common Equity,

63% Preferred Equity: Debt; 37% Debt 30%

As of Jane 30, 2017. Excludes premiums, discussion of the spance costs and secured horrowings on government guaranteed loans. Excludes debt on 4200 Scotland street (\$28.9M) and 7033160399000 Bodevard (\$22.7M), which were bird for sale at hine 30, 2017. Debt is also adjusted debt pay do n made in August 2017.

לאומי פרטנרס חתמים בע"מ, מרכז עזריאלי 5 (המגדל המרובע), קומה 36, דרך מנחם בגין 132 תל אביב 67025 5141275-03 פק: 5141290-03 www.leumipartners.comError! No document variable supplied.

¹ As of June 30, 2017, utilizing the Estimated NAV: See "Net Asset Value" under "Important Disclosures" on page 8.

³ The term loan facility bears interest at LIBOR plass to 2.25%, depending on the maximum consolidated liverage ratio as calculated under the terms of the term loan facility.

⁴ Outstanding abrances under the revolving credit fracility will be as rate plus 0.20% to 1.00% or (iji LBOR plus 1.20% to 2.00%, depending on n consolidated leverage ratio as calculated under the terms of the revolving credit facility.

S As of June 30, 2017. CM Commercial owned the love 3, 2017; however, they were exduded from the above presentation as they were nder contract for sale as of October 24, 2017: 7083 Hollywood Beskevard, 370 L'Enfant Promenade, 800 North Capited Street and 47 £ 34th Street. Excludes the lending segment.

SERIES L PREFERRED STOCK - THE OFFERING

ISSUER	CIM Commercial Trust Corporation
SERIES L PAR VALUE	\$0.001 per share
SERIES L STATED VALUE	100 ILS per share, which will be converted to USD at the Initial Exchange Rate2
SERIES L PREFERRED STOCK UNIT	Consists of 10 shares of Series L Preferred Stock
ANNUAL DIVIDEND RATE (CUMULATIVE)	5.50% (annual step-up of 1.00% up to a maximum rate of 8.50% if an annual dividend payment is missed, subject to return to 5.50% upon payment)
SERIES L PREFERRED DISTRIBUTION PAYMENT DATES	January of each year, beginning in 2019
MINIMUM UNIT PRICE	ILS 987.50
EARLY COMMITMENT FEE	2.50%
EXCHANGE LISTING	We expect that our Series L Preferred Stock will be listed on NASDAQ and the TASE prior to the Date of Issuance. No assurance can be given that a trading market will develop.3

SERIES L PREFERRED STOCK - DIVIDENDS

Annual dividend: 5.50%
- Payments will begin in January 2019
Any deferred dividends are cumulative
· If at any time distributions on the Series L Preferred Stock are in arrears for any reason:
- CMCT will not be able to authorize a dividend/distribution to its common holders
- CMCT will not be able to exercise its Series L redemption rights
- CMCT and its affiliates will not be permitted to purchase Series L on any stock exchange
- Any holder may redeem any of its shares of Series L for the Series L Stated Value®
- Annual step up in dividend rate of 1.00%, up to a maximum of 8.50%, for the following year, subject to return to 5.50% upon payment.2

לאומי פרטנרס חתמים בע"מ, מרכז עזריאלי 5 (המגדל המרובע), קומה 36, דרך מנחם בגין 132 תל אביב 67025 5141275-03 207 5141290-03 www.leumipartners.comError! No document variable supplied.

¹ The Initial Exchange Rate will be the weighted average of the \$5050 exchange rates of all the transactions through which the net proceeds from the offering that are not used to pay expenses denominated in ILS are converted to USD on the Date of Issuance.

ny fals to pay the Series L Prefered Distribution for a given year in Full on the Series L Preferred Distribution Payment Date (or fails to declare such 2 If the Co Series L. Preferred Distribution), the annual rate of the Series Clessillestion will increase by 1.00 percent [1.00%) ellective begining larnury to the wing year, up to a maximum dividend rate of 8.50%) per annum. Suchincreased annual atte of the Series L Preferred Distribution will continue follow until the next year thereafter in which the Series LPrefered Distribution for all past dividend periods has been paid in full as of January 31 of such year, in which care the dividend rate will revert to 5.50 per annum effective as of Jamas; 1 6 such year.
3 Applications for Esting the Common Stock on the TASE and the Series LPreferred St

See "Series L. Preferred Stock - Redemplon Rights" on page 7 for certain respect to the redemption right of holders. The portion of the redemption payment relating to the Series L Stated Value will be equal to the Series L Stated Value as converted from USD to ILS,

⁵

SERIES L PREFERED STOCK - SUBORDINATION AND SENIORITY

· Series L Stated Value is senior to Common Stock
- Unpaid and accrued distributions on the Series L Preferred Stock are junior to the Initial Dividend with respect to the payment of distributions including upon liquidation
· Series L Stated Value is on par with the Series A Preferred Stock upon liquidation
- Unpaid and accrued distributions on the Series L Preferred Stock are junior to the Series A Preferred Stock with respect to payment of distributions including upon liquidation
· Series L ranks junior to CMCT's debt obligations upon liquidation

SERIES L PREFERRED STOCK - OTHER FEATURES

No voting rights
. No participation rights

SERIES L PREFERRED STOCK - DUAL-LISTED ON NASDAQ AND THE TASE1

· Common Stock will be dual-listed for trading on NASDAQ and the TASE
· Series L Preferred Stock will be dual-listed for trading on NASDAQ and the TASE

¹ Applications for listing the Common Stock on the Series LPreferred Stock on NASDAQ and the TASE are pending approval.

SERIES L PREFERRED STOCK - REDEMPTION RIGHTS

· Each holder and CMCT has the right to redeem shares of Series L Preferred Stock on a quarterly basis beginning 5 years following the closing day of the offering of the Series L
· Each holder may redeem shares of the Series L Preferred Stock prior to such 5-year period if CMCT missed payments of its annual dividend
· Payment upon redemption
- 100% of the Series L Stated Value, as converted from USD to ILS
- Plus any accrued dividends, and subject to exceptions in the event of redemption by the holder2
· Redemptions may be paid in cash, Common Stock or a combination of both at the sole discretion of CMCT
. Redemption price in shares of Common Stock:
- Holder will receive a number of shares of Common Stock equal to the redemption price, based on the value that is the lower of (i) the 20-day volume-weighted-average Common Stock market price (the "VWAP") and (ii) the most recently published net asset value per share of Common Stock ("NAV")
- If Common Stock is trading above NAV, Series L investors will be paid a premium to the Series L Stated Value since the number of shares of Common Stock received will be based on NAV per share (which is below the market value of Common Stock)
- On the contrary, if CMCT is trading below or at NAV, Series L investors will receive shares of Common Stock equal to the Series L Stated Value based on the VWAP

¹ Three conditions must be saislied: {} {MCT must declare a dividend on its Commen Stock (fl ary) prior to the beginning of the year (the "gift in (2) st dedare and pay (or set apart for payment) full cumulative dividends equal to the amount of all accumulated, accrued and unpaid dividends on th Series A Prelected Stock for all past dividered periods and (3) CMCT must pay dividends on Common equal to or greater than the product of [0] the Initial Dividend multiplied by (ii) a fraction of which is the number of quarters that have passed since the year (including the current quarter) and the denominator of which is 4.

IMPORTANT DISCLOSURES

Assets and Equity Under Management

Assets Under Management ("AUM") represents (i)(a) for real assets ("SAL") at fair valve, including the shares of such asses of such asses of such assets owned by joint venture partners and co-investments, of all of CM's advised account" and collectively, the "Account") or (b) for operating companies, the aggregate GAV less debt, including the shares of such as sets owned by joint venture partners, of all of the Accounts (not in duplication of the assets described in i, plus (i) the aggrepte unlunded commitments of the Accounts, as of lune 30, 2017 ("Report Date"). The GAV is calculated in accordance with U.S. generally accounting principles on a fair value basis (the "Book Value") and generally resessments third party appraired value as of the Report Date, or as of June 30, 2017, as adjusted further by the result of any partial tealizations and quarterly valuzion adjustments based upon management's estimate of fair value, in each case through the Report Date other than as described below with respect to CM KET. The onlyinestment. currently held by CM RET consists of shares in CMCT; the Book Value of CM RET is determined by assuming the underlying as sets of CMCT are liquidated based upon management's estimate of fair value. CM does not presently view the pice of CMCT's publicly-traded shares to be a meanings( indication of the fair value of CM RET's interest in CMCT don to the that the public shares of CMCT epresent less than 3% of the outstanding shares of CMCT and are thirly-traded. Equity Under Management ("LIM") represents (i) the aggregate net asset while of the aggregate uniunded commitments of the Accounts. The net asset vale of each Account on the aggrepte anount that .(x) investments are sold at their Book haves (y) debtrain assuming asses are collected; and (i) appropriate adjor allocations between equity investors are made in accordance with agglicable documents, in each case as determined in accordance with applicable accounting guidance.

Net Asset Value

The estimated Net Asset Value ("WV") contained herein is CMC"s pro forma NNV given effect to certain transactions that have not been completed. Accordingly, the MV contained herein is different than the S-11 and must rot be treated as "Spoticable MV" for purposes of CMCT's Series A Preferred Stock offering,

The determination of estimated NAV involves a numptions, estimates and judgments that may not be accurate or complete. Futher, @flerent firms using different peoper al real estate, copital markets, economic and other assumptions, estimates and judgments could delive an estmated MN that could be significantly different from our estimated MN does not give effect to charges in value, investment activities, capital activities a vels and other various activities occuring after June 30, 2017 that would have an impact on our estimated NNV, other than the sale of assets that were sold or are under 24, 2017 (7003 Nollywood Bookevad, 800 North Capitol Street, 370 L'Enlant Promenade, 4200 Scotland Street and 47 E 34% Street) and the \$65M of unsecured debt pay down made in August 2017.

The estimated NAV per share of \$22.26 was calculated by CM treesiment Advisors, LC, relying in part on appraisals of our real estate investments and the assess of our lending segment. The table sets forth the material tens includion of our estimated NAV. We engaged varies third party appraisal firms to perform appraisals of our real estate investments and the enginent as of December 31, 2016. Except for two multifamily properties and thee office properties that were sold or are under as of October 24, 2017, the fair values of our investment in real estate were based on appraish obtained as of December 31, 2016 plus caps additions, at cost, incared thereafter. The fair subes of our two multifamily properties and thee office properties were based on actual proceeds received when the sold, or expected proceeds to be received, based on purchase and sale agreements entered into with uncelated third paties. The fair values of the assets of our lending segment were based on an appraisal obtained as actisity, at cost, incurred thereafter.

The December 31, 2016 appraisals were performed in accordance with standards set for the American institute of Certified Public Accountants. Each of our appraisals was presented by personnel who are with the code of profesional ethiss and the standards of professional conduct set forth by the certification programs of the professional appraisal organizations of which they are members.

	(\$ in Thousands, expect for shares and per shore armounts
Investments in real estate - at for value Loans receivable - at fair value Debt 1 Cash and other assets net of other lightles Noncontrolling interests		\$	(Unquolled 1,585,823 72000 (757.231 29,795 (1,047
Redeemable Series A Preferred Stock		17,050
Estimated NAV of portfolio			922370
	Estimated NAV of assets sold or under contract for sale as of
October 24, 20171			367,040
Estimated NAV available to common shareholders			1,289,410
Shares of Common Stock outstanding			57.875.848
Estimated NAV per share of Common Stock			22.28
	LEUMI PARTNERS
	UNDERWRITERS
	Guy Peled

	03-5141290

1 Debt as of June 30, 2017. Excludes secured borns, which are included with cash and other assess net of other abilities. n 4200 Scotland Street (\$20.9M) and 7083 Hollywood Boulevard (\$21.7M), which were held for sale at June 30, 2017, and are included with the Estimated NAV of assets sold or under contract for sale as of Occober 24, 2017. Debt is also adjusted for \$65.00 of unsecured delt pay down made in August nated NAV of assets sold or under contract for sale as of October 24, 2017 represents the actual net proceeds from the sale of 7033 Hollywood Boulevard, 800 N Capitol, 47 E 34th Street and 370 L'Enlant Premented net proceeds from the sale of 4200 Scribind Street.

לאומי פרטנרס חתמים בע"מ, מרכז עזריאלי 5 (המגדל המחבע), קומה 36, דרך מנחם בגין 132 תל אביב 67025 5141275-03 : 075 5141290-03 www.leumipartners.comError! No document variable supplied.

Free Writing Prospectus Filed Pursuant to Rule 433 Dated November 6, 2017 Registration Statement No. 333-218019

FREE WRITING PROSPECTUS

CIM Commercial Trust Corporation (the "Company" or "CMCT") has filed a registration statement (including a prospectus) on Form S-11 (No. 333-218019) with the U.S. Securities and Exchange Commission (the "SEC") and with the Israel Securities Authority (the "ISA") for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed with the SEC and the ISA for more complete information about the Company and the offerings. You may get these documents for free by visiting the Company's website at http://investors.cimcommercial.com/index.cfm. Alternatively, Leumi Partners Underwriting Ltd will arrange for a prospectus to be sent to you request it by calling 972-3-5141290 or toll-free at 1-833-300-3008.

10-Q 1 cmct0930201710q.htm 10-Q Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-O

(Mark One):

风

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

ロ

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number 1-13610

CIM COMMERCIAL TRUST CORPORATION

(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of
incorporation or organization)

17950 Preston Road, Suite 600, Dallas, TX 75252

(Address of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ሬ NO □

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). YES 区 NO □

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer □	Accelerated filer □	Non-accelerated filer □
maller reporting company 区	Emerging growth company	(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

75-6446078 (I.R.S. Employer

Identification No.) (972) 349-3200

(Registrant's telephone number)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES □ NO 図

As of November 3, 2017, the Registrant had outstanding 57,875,848 shares of common stock, par value \$0.001 per share.

INDEX

			PAGE NO.
PART 1.		Financial Information
	ltem 1.	Financial Statements
		Consolidated Balance Sheets-September 30, 2017 and December 31, 2016 (Unaudited)	2
		Consolidated Statements of Operations-Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)	3
		Consolidated Statements of Comprehensive Income-Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)	4
		Consolidated Statements of Equity-Nine Months Ended September 30, 2017 and 2016 (Unaudited)	5
		Consolidated Statements of Cash Flows-Nine Months Ended September 30, 2017 and 2016 (Unaudited)	6
		Notes to Consolidated Financial Statements (Unaudited)	8
	ltem 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
		ltem 3.	56
	ltem 4.	Controls and Procedures	56

	A

PART II. Other Information

ltem 1.	Legal Proceedings	57
ltem 1A.	Risk Factors	57
ltem 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
ltem 3.	Defaults Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item ל.	Other Information	57
ltem 6.	Exhibits	28

PART I Financial Information

Item 1. Financial Statements

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share and per share data)

		September 30, 2017	December 31, 2016
			(Unaudited)
ASSETS
Investments in real estate, net	ಕಿ	941,237	સ્ત્ર	1,606,942
Cash and cash equivalents		252,955		144,449
Restricted cash		25,375		32,160
Accounts receivable, net		15,899		13,086
Deferred rent receivable and charges, net		86,994		116,354
Other intangible assets, net		5,345		17,623
Other assets		89,602		92,270
Assets held for sale, net		173,897
TOTAL ASSETS	ಕಿ	1,591,304	ક્તિ	2,022,884
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
LIABILITIES:
Debt, net	ಕಿ	780,016	S	967,886
Accounts payable and accrued expenses		23.720		39,155
Intangible liabilities, net		907		3,576
Due to related parties		8.668		10,196
Other liabilities		16,170		34,056
Liabilities associated with assets held for sale, net		36,948
Total liabilities		866,429		1,054,869
COMMITMENTS AND CONTINGENCIES (Note 16)
REDEEMABLE PREFERRED STOCK: Series A, \$0.001 par value; 36,000,000 shares authorized; 568,921 and 61,435 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively; liquidation preference of \$25.00 per share		12,976		1,426
EQUITY:
Common stock, \$0.001 par value; 900,000,000 shares authorized; 57,875,848 and 84,048,081 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		રેજે		84
Additional paid-in capital		1,077,217		1,566,073
Accumulated other comprehensive income (loss)		936		(509)
Distributions in excess of earnings		(367,197)		(599,971)
Total stockholders' equity		711,014		965,677
Noncontrolling interests		885		912
Total equity		711,899		966,589
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY	ಲ್ಲಿ ಮ	1,591,304	ક્તિ	2,022,884

The accompanying notes are an integral part of these consolidated financial statements.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
		2017		2016		2017		2016
				(Unaudited)
REVENUES:
Rental and other property income	ಲ್ಲಿ ಮಾ	45,048	ಕಾ	57,414	ದಿ	161,813	ಲ್ಲಿಕ	181,886
Expense reimbursements		4,717		3,884		10,273		10,128
Interest and other income		5,619		3,034		11,546		9,295
		55,384		64,332		183,632		201,309
EXPENSES:
Rental and other property operating		26,058		31,723		76,267		95,300
Asset management and other fees to related parties		6,896		8,496		23,459		25,503
Interest		9,359		10,276		28,645		24,386
General and administrative		1,342		2,226		4,668		6,299
Transaction costs (Note 16)		242		ਦੇ ਤੇ		11,870		320
Depreciation and amortization		13,472		17,724		45,464		54,262
Impairment of real estate (Note 3)						13,100
		57,369		70,498		203,473		206,070
Gain on sale of real estate (Note 3)		74,715		14,927		378,732		39,666
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES		72,730		8,761		358,891		34,905
Provision for income taxes		339		379		1,193		1,040
NET INCOME FROM CONTINUING OPERATIONS		72,391		8,382		357,698		33,865
DISCONTINUED OPERATIONS:
Income from operations of assets held for sale (Note 7)				703				3,061
NET INCOME FROM DISCONTINUED OPERATIONS				703				3,061
NET INCOME		72,391		9.085		357.698		36,926
Net loss (income) attributable to noncontrolling interests		4		3		(10)		(d)
NET INCOME ATTRIBUTABLE TO THE COMPANY		72,395		9,088		357,688		36,917
Redeemable preferred stock dividends (Note 11)		(138)				(241)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	S	72,257	S	ﺔ 10888	ದಿ	357,447	ಕಿ	36,917
BASIC AND DILUTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE:
Continuing operations	ಕಿತ	1.25	ಲ್ಲಾ	0.10	S	4.86	સ્ત્ર	0.36
Discontinued operations	સ્ત્ર		ਵਿੱਚ	0.01	સ્ત્ર		સ્ત્ર	0.03
Net income	ಲ್ಲಿ	1.25	ತಿ	0.10	S	4.86	સ્ત્ર	0.39
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic		57,876		87,045		73,503		93,772
Diluted		57,876		87,045		73,503		93,772

The accompanying notes are an integral part of these consolidated financial statements.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In thousands)

	Three Months Ended September 30,			Nine Months Ended September 30,
	2017		2016		2017		2016
	(Unaudited)
NET INCOME	સ્ત્ર	72,391	ಕಾ	9.085	ಳ	357,698	ಕಾ	36,926
Other comprehensive income (loss): cash flow hedges		333		3,272		1,445		(7,098)
COMPREHENSIVE INCOME		72,724		12,357		359,143		29,828
Comprehensive loss (income) attributable to noncontrolling interests	3 ব				(10) (9)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	များမှာ	72.728	ಳಿ	12,360		\$ 359.133	ea	29,819

The accompanying notes are an integral part of these consolidated financial statements.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Equity (In thousands, except share and per share data)

	Nine Months Ended September 30, 2017
	Common Stock Outstanding	Common Stock Par Value	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Distributions in Excess of Earnings	Noncontrolling Interests	Total Equity
				(Unaudited)
Balances, December 31, 2016 Distributions to noncontrolling	84,048,081	S 84	\$ 1,566,073	S (200)	ಕೆ (599,971)	ಕೆ 912	966,589 A
interests						(37)	(37)
Stock-based compensation expense	9.585		116				116
Share repurchase	(26,181,818)	(26)	(489,027)		(86,947)		(576,000)
Special cash dividends paid to certain common stockholders (\$2.26 per share) (Note 12)					(4,872)		(4,872)
Common dividends (\$0.46875 per share)					(32,854)		(32,854)
Issuance of Warrants			રેરે				રેરે
Dividends to holders of Series A Preferred Stock (\$1.03125 per share)					(241)		(241)
Other comprehensive income (loss)				1,445			1,445
Net income					357,688	10	357,698
Balances, September 30, 2017	57,875,848	સ્ત્ર રેજ	\$1.077,217	ಳಿ 936	ಲಿತ (367,197)	ಲ್ಲಿ ಅ 885	ങ 711,899

	Nine Months Ended September 30, 2016
	Common Stock Outstanding		Common Stock Par Value	Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Distributions in Excess of Earnings		Noncontrolling Interests	Total Equity
						(Unaudited)
Balances, December 31, 2015 Distributions to noncontrolling interests	97,589,598	es	98	\$ 1,820,451	S	(2,519)	8	(521,620)	ಕ	937 (36)	\$ 1,297,347 (36)
Stock-based compensation expense Issuance of shares pursuant to employment agreements	10,176 76,423			114							114
Share repurchases Common dividends (\$0.65625 per share)	(13,628,116)		(14)	(254,547)				(35,573) (58,930)			(290,134) (58,930)
Other comprehensive income (loss)						(7,098)					(7,098)
Net income								36,917		9	36,926
Balances, September 30, 2016	84,048,081	S	84	\$ 1,566,018	S	(9,617)	S	(579,206)	A	910	\$ 978,189

The accompanying notes are an integral part of these consolidated financial statements.

https://www.sec.gov/Archives/edgar/data/908311/000162828017011245/cmct0930201710q.htm

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands)

	Nine Months Ended September 30,
		2017		2016
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	ಲ್ಲಾ	357,698	ಕಾ	36,926
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred rent and amortization of intangible assets, liabilities and lease inducements		(2,528)		(4,263)
Depreciation and amortization		45,464		54,262
Transfer of right to collect supplemental real estate tax reimbursements		(5,097)
Gain on sale of real estate		(378,732)		(39,666)
Impairment of real estate		13,100
Straight line rent, below-market ground lease and amortization of intangible assets		1,079		1,326
Straight line lease termination income		(2,041)
Amortization of deferred loan costs		1,691		2,508
Amortization of premiums and discounts on debt		(586)		(773)
Unrealized premium adjustment		1,747		1,240
Amortization and accretion on loans receivable, net		270		(912)
Bad debt expense (recovery)		411		(36)
Deferred income taxes		l		138
Stock-based compensation		116		114
Loans funded, held for sale to secondary market		(37,149)		(27,653)
Proceeds from sale of guaranteed loans		36,701		30,152
Principal collected on loans subject to secured borrowings		6,966		3,520
Other operating activity		(1,079)		634
Changes in operating assets and liabilities:
Accounts receivable and interest receivable		(1,414)		181
Other assets		(665)		(419)
Accounts payable and accrued expenses		(8,559)		(237)
Deferred leasing costs		(5,979)		(8,114)
Other liabilities		(3,031)		1,122
Due to related parties		(1,205)		192
Net cash provided by operating activities		17,179		50,242
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investments in real estate		(19,075)		(27,051)
Proceeds from sale of real estate property, net		851,629		94,568
Loans funded		(12,383)		(51,156)
Principal collected on loans		7,686		31,979
Restricted cash		6,785		(33,037)
Other investing activity		ਰੇਤੇ		1,101
Net cash provided by investing activities		834,735		16,404

(Continued)

11/12/2017 Table of Contents

Document

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued) (In thousands)

	Nine Months Ended September 30,
		2017		2016
		(Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payment of) proceeds from mortgages payable		(65,722)		388,766
Payment of unsecured revolving lines of credit, revolving credit facilities and term notes		(65,000)		(107,000)
Payment of principal on secured borrowings		(6,966)		(13,600)
Proceeds from secured borrowings				9,956
Payment of deferred preferred stock offering costs		(1,462)		(733)
Payment of deferred loan costs		(304)		(1,363)
Payment of common dividends		(32,854)		(58,930)
Payment of special cash dividends		(4,872)
Repurchase of Common Stock		(576,000)		(289,886)
Payment of borrowing costs		(8)
Net proceeds from issuance of Warrants		રેરે
Net proceeds from issuance of Series A Preferred Stock		11,594
Payment of preferred stock dividends		(112)
Noncontrolling interests' distributions		(37)		(36)
Net cash used in financing activities		(741,688)		(72,826)
Change in cash balances included in assets held for sale		(1,720)		925
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		108,506		(5,255)
CASH AND CASH EQUIVALENTS:
Beginning of period		144,449		139,101
End of period	હત	252,955	ಕೆ	133,846
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest	સ્ત્ર	28,104	S	22,651
Federal income taxes paid	S	1,090	S	500
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Additions to investments in real estate included in accounts payable and accrued expenses	S	8,689	S	6,229
Net increase (decrease) in fair value of derivatives applied to other comprehensive income (loss)	S	1,445		(7,098)
Reduction of loans receivable and secured borrowings due to the SBA's repurchase of the guaranteed portion of a loan	S	534	ಕಾ	2,663
Additions to deferred loan costs included in accounts payable and accrued expenses	S		ಕಿತ	626
Expenses related to repurchase of common stock included in accounts payable and accrued expenses	S		ਦੇ ਰੋ	248
Additions to preferred stock offering costs included in accounts payable and accrued expenses	es	1,148	ಕಾ	1,135
Accrual of dividends payable to preferred stockholders	S	138	ಕಾ
Preferred stock offering costs offset against redeemable preferred stock	S	44	S

The accompanying notes are an integral part of these consolidated financial statements.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

1. ORGANIZATION AND OPERATIONS

CIM Commercial Trust Corporation ("CIM Commercial" or the "Company"), a Maryland corporation and real estate investment trust ("REIT"), or together with its wholly-owned subsidiaries ("we," "our") primarily invests in, owns, and operates Class A and creative office investments in vibrant and improving urban communities throughout the United States. These communities are located in areas that include traditional downtown main streets, which have high barriers to entry, high population density, improving demographic trends and a propensity for growth. We were originally organized in 1993 as PMC Commercial Trust ("PMC Commercial"), a Texas real estate investment trust.

On July 8, 2013, PMC Commercial entered into a merger agreement (the "Merger Agreement") with CIM Urban REIT, LLC ("CIM REIT"), an affiliate of CIM Group" or "CIM"), and subsidiaries of the respective parties. CIM REIT was a private commercial REIT and was the owner of CIM Urban "). The transaction (the "Merger") was completed on March 11, 2014 (the "Acquisition Date"). As a result of the Merger and related transactions, CIM Urban became our wholly-owned subsidiary.

Our common stock, \$0.001 par value per share ("Common Stock"), is currently traded on the NASDAQ Global Market under the ticker symbol "CMCT." We have authorized for issuance 900,000,000 shares of common stock and 100,000,000 shares of preferred stock.

CIM Commercial has qualified and intends to continue to qualify as a REIT, as defined in the Internal Revenue Code of 1986, as amended.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For more information regarding our significant accounting policies and estimates, please refer to "Basis of Presentation and Summary of Significant Accounting Policies" contained in Note 3 to our consolidated financial statements for the year ended December 31, 2016, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 16, 2017.

Interim Financial Information-The accompanying interim consolidated financial statements of CIM Commercial have been prepared by our management in 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 our management, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. Our accompanying interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto, included in our Annual Report on Form 10-K filed with the SEC on March 16, 2017.

Principles of Consolidation—The consolidated financial statements include the accounts of CIM Commercial and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Investments in Real Estate-Real estate acquisitions are recorded at cost as of the acquisition date. Costs related to the acquisition of properties are expensed as incurred. Investments in real estated at depreciated cost. Depreciation and amortization are recorded on a straight line basis over the estimated useful lives as follows:

Buildings and improvements Furniture, fixtures, and equipment Tenant improvements

15 - 40 years 3 - 5 years Shorter of the useful lives or the terms of the related leases

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.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

Investments in real estate are evaluated for impairment on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverability of assets to be held and used is measured by a comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset. If such assets are considered to be impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the estimated fair value of the asset group identified for step two of the impairment testing under GAAP is based on either the income approach with market discount rate, terminal capitalization rate and rental rate assumptions being most critical, or on the sales comparison approach to similar properties. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. We recognized no impairment of long-lived assets during each of the three months ended September 30, 2017 and 2016, respectively, and \$13,100,000 and \$0 impairment of long-lived assets during the nine months ended September 30, 2017 and 2016, respectively (Note 3).

Derivative Financial Instruments-As part of our risk management and operational strategies, from time to time, we may enter into derivative contracts with various counterparties. All derivatives are recognized on the balance sheet at their estimated fair value. On the date that we enter into a derivative contract, we designate the derivative as a fair value hedge, a cash flow hedge, a foreign currency fair value or cash flow hedge, a hedge of a net investment in a foreign or a trading or non-hedging instrument.

Changes in the estimated fair value of a derivative that is designated and qualifies as a cash flow hedge, to the extent that the hedge is effective, are initially recorded in other comprehensive income ("OCI"), and are subsequently reclassified into earnings as a component of interest expense when the variability of cash flows of the hedged transaction affects earnings (e.g., when periodic settlements of a variable-rate asset or liability are recorded in earnings). Any hedge ineffectiveness (which represents the amount by which the changes in the estimated fair value of the from the variability in the cash flows of the forecasted transaction) is recognized in current-period earnings as a component of interest expense. When an interest rate swap designated as a cash flow hedge no longer qualifies for hedge accounting, we recognize changes in estimated fair value of the hedge previously defer comprehensive income ("AOC"), along with any changes in estimated fair value occurring thereafter, through earnings. We classify cash flows from interest rate swap agreements as net cash provided from operating activities on the consolidated statements of cash flows as our accounting policy is to present the cash flows from the hedging instruments in the same category in the consolidated statements of cash flows as the category for the cash flows from the hedged items. See Note our derivative financial instruments and hedging activities.

Loans Receivable-Our loans receivable in other assets are carried at their unamortized principal balance less unamortized acquisition discounts and premiums, retained loan loss reserves. For loans originated under the Small Business Administration's ("SBA") 7(a) Guaranteed Loan Program ("SBA 7(a) Program"), we sell 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 us is value basis and a discount (the "Retained Loan Discount") is recorded as a reduction in basis of the retained portion of the loan.

At the Acquisition Date, the carrying value of our loans was adjusted to estimated fair market value and acquisition discounts of \$33,907,000 were recorded, which are being accreted to interest and other income using the est method. We sold substantially all of our commercial mortgage loans with unamortized acquisition discounts of \$15,951,000 to an unrelated third party in December 2015 (Note 7). Acquisition discounts of \$1,455,000 remained as of September 30, 2017, which have not yet been accreted to income.

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 we will be unable to collect any remaining amounts due under the through liquidation of collateral or other means. Interest income, included in interest and other income or discontinued operations, on a Non-Accrual Loan is recognized on either the cash basis or the cost recovery basis.

On a quarterly basis, and more frequently if indicators exist, we evaluate the collectability of our loans receivable. Our evaluation of collectability involves judgment, estimates, and a review of the borrower to make principal and interest payments, the underlying collateral and the borrowers' business models and future operations in accordance with Accounting

11/12/2017

Document

Standards Codification ("ASC") 450-20, Contingencies—Loss Contingencies, and ASC 310-10, Receivables. For the three and nine months ended September 30, 2017, we recorded a net impairment of \$137,000 and \$149,000 on our loans

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11/12/2017

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

obligate either party to pursue any transaction of a definitive agreement or they provide the potential buyer with the ability to terminate without penalty or any material deposit, subject to certain specified contingencies, such as completion of due diligence at the discretion of such buyer. We do not classify assets that are subject to such non-binding agreements as held for sale.

We classify assets as held for sale, if material, when they meet the necessary criteria, which include: a) management commits to and actively embarks upon a plan to sell the assets, b) the assets to be sold are available for immediate sale in their present condition, c) the sale is expected to be completed within one year under terms usual and customary for such sales and d) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be withdrawn. We generally believe that we meet these criteria when for sale has been approved by our board of directors (the "Board of Directors"), there are no known significant contingencies related to the sale is is probable that the sale will be completed within one year.

Assets held for sale are recorded at the lower of cost or estimated fair value less cost to sell. In addition, if we were to determine that the asset disposal associated with assets held for sale or disposed of represents a strategic shift, the revenues, expenses and net gain (loss) on dispositions would be recorded in discontinued operations for all periods presented through the date of the applicable disposition.

We have assessed the sale of four of our multifamily properties and our agreement to sell our remaining multifamily property (Note 3) in accordance with ASC 205-20, Discontinued Operations. In our assessment, we considered, among other factors, the materiality of the revenue, net operating income, and total assets of our multifamily segment during the three and nine months ended September 30, 2017 and for the years ended December 31, 2016 and 2015. Based on our qualitative and quantitative assessment, we concluded the disposals do not represent a strategic shift that will have a major effect on our operations and financial results and they should not be classified as discontinued operations on our consolidated financial statements.

Consolidation Considerations for Our Investments in Real Estate-ASC 810-10, Consolidation, addresses how a business enterprise should evaluate whether it has a controlling interest in an entity through means other that would require the entity to be consolidated. We analyze our investments in real estate in accordance with this accounting standard to determine whether they are variable interest entities, and if so, whether we are the primary beneficiary. Our judgment with respect to our level of influence or control over an entity and whether we are the primary of a variable interest entity involves consideration of various factors, including the form of our ownership interest, the size of our investment (including loans), and our ability to participate in major policy-making decisions. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments on our consolidated financial statements.

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 assess and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements-In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which is designed to improve the recognition and measurement of financial instruments through targeted changes to existing GAAP. The ASU requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the option; (iii) present financial assets and financial liabilities by measurent category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price; and (v) assess a valuation allowance on deferred to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. In addition, the ASU provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The ASU also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. For public business entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption by public entities to financial statements that have not yet been issued is permitted only for the provision related to instrument-specific credit risk. We are currently in the process of evaluating the impact of adoption of this new accounting guidance on our consolidated financial statements.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which is intended to improve financial reporting about leasing transactions. Under the new guidance, a lessee will be required to recognize assess and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lesse primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires a lessee to recognize only capital leases on the balance sheet, the new ASU will require a lessee to recognize both types of leases on the balance sheet. The lessor accounting will remain largely unchanged from current GAAP. However, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. For public entities, the ASU is effective for annual reporting periods (including interim reporting periods) beginning after December 15, 2018.

We are currently conducting an evaluation of the impact of the guidance on our consolidated financial statements. We currently believe that the adoption of the standard will not significantly change the accounting for operating leases on our consolidated balance sheet where we are the lesses will be accounted for in a similar method to existing standards with the underlying leased asset being recognized as a real estate asset. We currently expect that certain non-lease components may need to be accounted for separately from the lease components, with the lease components continuing to be recognized on a straight-line basis over the term of the lease and certain non-lease components (such as certain expense reimbursements) being accounted for under the new recognition guidance in ASU 2014-09. We expect to adopt the guidance on a modified retrospective basis.

In March 2016, the FASB issued ASU No. 2016-09, Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions, including accounting for income taxes, classification of excess tax benefits on the statement of cash flows, forfetures, minimum statutory tax withholding requirements, and classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. In addition, the ASU eliminated certain guidance in ACC 718, which was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. For public entities, the ASU became effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments to extend credit held by a reporting entity. The amendments in the ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable information to inform credit loss estimates. For public entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2019. Early adoption is permitted for annual reporting periods (including interim reporting periods) beginning after December 15, 2018. We are currently in the process of evaluating the impact of adoption of this new accounting guidance on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain cash payments are to be presented and classified in the statement of cash flows. For public entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is permitted. We are currently in the process of evaluating the impact of adoption of this new accounting guidance on our consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total cash equivalents, and amounts generally described as restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash equivalents when reconciling the beginning-of-period and endof-period total amounts shown on the statement of cash flows. The amendments in this update do not provide a definition of restricted cash or restricted cash equivalents. For public entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is permitted. We are currently in the process of evaluating the impact of adoption of this new accounting guidance on our consolidated financial statements.

11/12/2017

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Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

On May 30, 2017, we sold a 100% fee-simple interest in 3636 McKinney Avenue and 3839 McKinney Avenue, both located in Dallas, Texas, to an unrelated third party. Transaction with these sales totaled \$2,258,000 and included prepayment penalties of \$1,901,000 incurred in connection with the properties' mortgages (Note 8).

On June 8, 2017, we sold a 100% fee-simple interest in 200 S College Street located in Charlotte, North Carolina to an unrelated third party. Transaction costs expensed in connection with this sale totaled \$833,000.

On June 20, 2017, we sold a 100% fee-simple interest in 980 9th Street, both located in Sacramento, California, to an unrelated third party. Transaction costs expensed in connection with these sales totaled \$1,119,000.

On June 23, 2017, we sold a 100% fee-simple interest in 4649 Cole Avenue located in Dallas, Texas to an unrelated third party. Transaction costs expensed in connection with this sale totaled \$3,311,000 and included a prepayment penalty of \$2,812,000 incurred in connection with the prepayment of the property's mortgage (Note 8).

On August 31, 2017, we sold a 100% leasehold interest in 800 N Capitol Street located in Washington, D.C. to an unrelated third party. Transaction costs expensed in connection with this sale totaled \$2,388,000.

On September 21, 2017, we sold a 100% fee-simple interest in 7083 Hollywood Boulevard located in Los Angeles, California to an unrelated third party. Transaction costs expensed in connection with this sale totaled \$584,000. A morrgage collateralized by this property was assumed by the buyer in connection with our sale of this property (Note 8).

On September 26, 2017, we sold a 100% fee-simple interest in 47 E 34th Street located in New York to an unrelated third party. Transaction costs expensed in connection with this sale totaled \$3,157,000.

The results of operations of the aforementioned properties have been included in the consolidated statements of operations through their respective disposition dates.

Property	Asset Type	Date of Sale	Square Feet Units		Sales Price		Gain on Sale
					(in thousands)
211 Main Street, San Francisco, CA	Office	March 28, 2017	417,266	A	292,882	A	187,734
3636 McKinney Avenue, Dallas, TX	Multifamily	May 30, 2017	103	સ્ત્ર	20,000	S	5,488
3839 McKinney Avenue, Dallas, TX	Multifamily	May 30, 2017	75	સ્ત્ર	14,100	S	4,224
200 S College Street, Charlotte, NC	Office	June 8, 2017	567,865	A	148,500	S	45,906
980 9th Street and 1010 8th Street, Sacramento, CA	Office & Parking Garage	June 20, 2017	485,926	A	120,500	ಕಿ	34,559
4649 Cole Avenue, Dallas, TX	Multifamily	June 23, 2017	334	S	64,000	S	25,836
800 N Capitol Street, Washington, D.C. 7083 Hollywood Boulevard, Los	Office	August 31, 2017	311,593	A	119,750	S	34,759
Angeles, CA	Office	September 21, 2017	82,193	સ્ત્ર	42,300	S	23,670
47 E 34th Street, New York, NY	Multifamily	September 26, 2017	110	સ્ત્ર	80,000	S	16,556

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

The following is the detail of the carrying amount of assets and liabilities at the time of the properties in 2017:

		(in thousands)
Assets
Investments in real estate, net	ਦਰ	469,816
Deferred rent receivable and charges, net		29,954
Other intangible assets, net		11,283
Other assets		38
Total assets	S	511,091
Liabilities
Debt, net (1)	ಕಿ	86,477
Other liabilities		14,029
Intangible liabilities, net		1,800
Total liabilities		102,306

(1)

There were no acquisitions during the nine months ended September 30, 2016.

On February 2, 2016, we sold a 100% fee-simple interest in the Courtyard Oakland, California to an unrelated third party.

On July 19, 2016, we sold a 100% fee-simple interest in the LAX Holiday Inn located in Los Angeles, California to an unrelated third party.

The results of operations of the aforementioned properties have been included in the consolidated statements of operations through their respective disposition dates.

Property	Asset Type	Date of Sale	Rooms	Sales Price
					(in thousands)
Courtyard Oakland, Oakland, CA	Hotel	February 2, 2016	162	es	43.800 \$ \$	24.739
LAX Holiday Inn, Los Angeles, CA	Hotel	July 19, 2016	405	မခ	52,500 \$	14.927

We have entered into a purchase and sale agreement with an unrelated third party for the sale of a multifamily property located at 4200 Scotland Street in Houston, Texas. The contracted sales price for this property is \$64,025,000. In comection with the disposition, \$28,715,000 of the outstanding balance of the mortgages payable as of September 30, 2017 will be assumed by the buyer. The purchase and sale agreement was entered into and became subject to a non-refundable deposit prior to September 30, 2017. Therefore, the property has been classified as held for sale as of September 30, 2017. We expect the closing of this transaction to occur during the fourth quarter of 2017.

In addition, on October 17, 2017, we sold a 100% fee-simple interest in 370 L'Enfant Promenade located in Washington, D.C. to an unrelated third party for \$126,680,000 and recognized a gain of approximately \$2,000,000. As of June 30, 2017, based on negotiations with the buyer, we determined the book value of 370 L'Enfant Promenade exceeded its estimated fair value less costs to sell, and as such, an impairment charge of \$0 and \$13,000,000 was recognized during the three and nine months ended September 30, 2017, respectively. The purchase and sale agreement was entered into and became subject to a non-refundable deposit prior to September 30, 2017. Therefore, the property has been classified as held for sale as of September 30, 2017.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

The following is the detail of the carrying amounts of assets and liabilities of the properties that are classified as held for sale on our consolidated balance sheet as of September 30, 2017:

		(in thousands)
Assets
Investments in real estate, net (1)	ಳಿ	167,361
Cash and cash equivalents		1,720
Accounts receivable, net		ਦੇ ਤੋਂ ਤੇ
Deferred rent receivable and charges, net		4,105
Other assets		168
Total assets held for sale, net		173,897
Liabilities
Debt, net (2)	ತಿ	28,618
Accounts payable and accrued expenses		6,980
Due to related parties		323
Other liabilities		1,027
Total liabilities associated with assets held for sale, net		36,948

(1) Investments in real estate of \$217,304,000 are presented net of accumulated depreciation of \$49,943,000.

(2) deferred loan costs of \$264,000 and accumulated amortization of \$167,000.

4. INVESTMENTS IN REAL ESTATE

Investments in real estate consist of the following:

		September 30, 2017		December 31, 2016
			(in thousands)
Land	S	213,495	ਦੇ ਤੇ	343,564
Land improvements		17.746		26,177
Buildings and improvements		835,215		1,475,415
Furniture, fixtures, and equipment		3,273		4.955
Tenant improvements		127,824		159,677
Work in progress		8.223		11,706
Investments in real estate		1,205,776		2,021,494
Accumulated depreciation		(264,539)		(414,552)
Net investments in real estate	સ્ત્ર	941,237	S	1,606,942

We recorded depreciation expense of \$11,311,000 and \$15,402,000 for the three months ended September 30, 2017 and 2016, respectively, and \$38,665,000 and \$47,105,000 for the nine months ended September 30, 2017 and 2016, respectively.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

5. OTHER INTANCIBLE ASSETS

A schedule of our intangible assets and liabilities and related accumulated amortization and accretion as of September 30, 2017 and December 31, 2016 is as follows:

	Assets					Liabilities
September 30, 2017	Acquired In-Place Leases		Trade Name and License		Acquired Below- Market Leases
				(in thousands)
Gross balance	ನಿ	10,008	ಲ್ಲಿಕಾ	2,957	ક	(5,073)
Accumulated amortization		(7,620)				4,166
	0	2,388	C	2,957	- D	(907)
Average useful life (in years)		10		Indefinite

	Assets											Liabilities
December 31, 2016		Acquired Above- Market Leases		Acquired In-Place Leases		Tax Abatement (1)		Acquired Below- Market Ground Lease (2)		Trade Name and License		Acquired Below- Market Leases
			(in thousands)
Gross balance	S	215	S	11,551	S	4,273	S	11,685	S	2,957	ਦੇ ਰ	(18,893)
Accumulated amortization		(180)		(8,443)		(2,873)		(1,562)				15,317
	S	35	S	3,108	S	1,400	S	10,123	S	2,957	D	(3,576)
Average useful life (in years)		8		10		8		84		Indefinite		8

(1) (Note 3).

(2) ended September 30, 2017 (Note 3).

The amortization of the acquired above-market leases which decreased rental and other property income was \$0 and \$17,000 for the three months ended September 30, 2017 and 2016, respectively, and \$3,000 for the nine months ended September 30, 2017 and 2016, respectively. The acquired in-place leases included in depreciation and amortization expense was \$212,000 and \$330,000 for the three months ended September 30, 2017 and 2016, respectively, and \$623,000 and \$1,078,000 for the nine months ended September 30, 2017 and 2016, respectively. Included in depreciation and amortization expense was franchise affiliation fee amortization of \$0 and \$0 for the three months ended September 30, 2017 and 2016, respectively, and \$0 and \$33,000 for the nine months ended September 30, 2017 and 2016, respectively. Tax abatement amortization of \$0 and \$138,000 for the three months ended September 30, 2017 and 2016, respectively, and \$276,000 and \$414,000 for the nine months ended September 30, 2017 and 2016, respectively, was included in rental and other property operating expenses. The amortization of the acquired below-market ground lease of \$23,000 for the three months ended September 30, 2017 and 2016, respectively, and \$93,000 for the nine months ended September 30, 2017 and 2016, respectively, was included in rental and other property operating expenses. The amortization of the acquired below-market leases included in rental and other property income was \$231,000 for three months ended September 30, 2017 and 2016, respectively, and \$869,000 for the nine months ended September 30, 2017 and 2016, respectively,

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

A schedule of future amortization and accretion of acquisition related intangible assets and liabilities as of September 30, 2017, is as follows:

		Assets
Years Ending December 31,	Acquired In-Place Leases	Acquired Below-Market Leases
			(in thousands)
2017 (Three months ending December 31, 2017)	સ્ત્ર	। 85	ಿಕ	(197)
2018		718		(510)
2019		459		(200)
2020		202
2021		202
Thereafter		622
	ಕಾ	2,388		(907)

6. OTHER ASSETS

Other assets consist of the following:

	September 30, 2017		December 31, 2016
	(in thousands)
SBA 7(a) loans, subject to credit risk	ಕಾ	49.925	ಕೆ	43.623
SBA 7(a) loans, subject to secured borrowings		21,989		29,524
Other assets		17,688		19,123
		89.602		92,270

SBA 7(a) Loans, Subject to Credit Risk-Represents the non-government guaranteed retained portion of loans originated under the SBA 7(a) Program and the government guaranteed portion of loans that have not yet been fully funded or sold.

SBA 7(a) Loans, Subject to Secured Borrowings-Represents the government guaranteed portion of loans 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.

At September 30, 2017 and December 31, 2016, 99.0% and 99.7%, respectively, of our loans subject to credit risk were current with the remainder (\$494,000 and \$249,000, respectively) greater than 29 days delinquent. We classify loans with negative characteristics in substandard categories ranging from special mention to doubtful. At September 31, 2016, \$494,000 and \$804,000, respectively, of loans subject to credit risk were classified in substandard categories.

At September 30, 2017 and December 31, 2016, our loans subject to credit risk were 95.9% and 94.6%, respectively, concentrated in the hospitality industry.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

7. DISCONTINUED OPERATIONS

We had reflected the lending segment, which was acquired on the Acquisition Date as disclosed in Note 1, as held for sale commencing in 2014, based on a plan approved by the Board of Directors to sell the lending segment that, when completed, would have resulted in the deconsolidation of the lending segment, which at that time was focused on small business lending in the hospitality industry. In July 2015, to maximize value, we modified our strategy of selling the lending segment as a whole to a strategy of soliciting buyers for components of the business, including our commercial mortgage loans and the SBA 7(a) lending platform. This change in the sale methodology resulted in the need to extend the period to complete the sale of the lending segment beyond one year. In connection with our plan, we expensed transaction costs of \$14,000 and \$34,000 as incurred during the three and nine months ended September 30, 2016, respectively.

On December 17, 2015, pursuant to the modified plan, we sold substantially all of our commercial mortgage loans with a carrying value of \$77,121,000 to an unrelated third party and recognized a gain of \$5,151,000. In September 2016, we discontinued our efforts to sell the SBA 7(a) lending platform, and the activities related to the SBA 7(a) lending plaform have been reclassified to continuing operations for all periods presented.

On December 29, 2016, we sold our commercial real estate lending subsidiary, which was classified as held for sale and had a carrying value of \$27,587,000, which was equal to management's estimate of fair value, to a fund managed by an affiliate of CIM Group. We did not recognize any gain or loss in connection. Management's estimate of fair value was determined with assistance from an independent third party valuation firm.

The following is the detail of income from operations of assets held for sale classified as discontinued operations on the consolidated statements of operations for the three and nine months ended September 30, 2016:

	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
	(in thousands)
Revenue-Interest and other income	S	1,198	S	4,729
Expenses:
Interest expense		3 રેરી રે		1,231
Fees to related party		137		417
General and administrative		3		20
Total expenses		495		1,668
Income from operations of assets held for sale		703	ਰੰ	3,061

During the nine months ended September 30, 2017, we sold four of our five multifamily properties to unrelated third parties and we entered into a purchase and sale agreement subject to a non-refundable deposit with an unrelated third party for the remaining multifamily property, which has been classified as held for sale on our consolidated balance sheet as of September 30, 2017. We expect the closing of this sales transaction to occur during the fourth quarter of 2017.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

8. DEBT

Information on our debt is as follows:

	September 30, 2017	December 31, 2016
		(in thousands)
Mortgage loans with a fixed interest rate of 4.14% per annum, with monthly payments of interest only, and balances totaling \$370,300,000 due on July 1, 2026. The loans are nonrecourse. In September 2017, one loan with an outstanding principal balance of \$21,700,000 was assumed by the buyer in connection with the sale of the property that was collateral for the loan (Note 3).	ತಿ 370,300	S 392,000
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 has a \$42,008,000 balance due on January 5, 2027. The loan is nonrecourse.	46,000	46,000
Mortgage loans with a fixed interest rate of 5.39% per annum, with monthly payments of principal and interest, and balances totaling \$35,695,000 due on March 1, 2021. The loans were nonrecourse. The loans were repaid in May and June 2017 in connection with the sale of the properties that were collateral for
the loans.		39,134
Mortgage loan with a fixed interest rate of 5.18% per annum, with monthly payments of principal and interest, and a balance of \$26,232,000 due on June 5, 2021. The loan is nonrecourse. The loan was reclassified to liabilities associated with assets held for sale at September 30, 2017 (Note 3).		29,167
Mortgage loan with a fixed interest rate of 6.65% per annum, with monthly payments of principal and interest. The loan had a 25-year amortization schedule with a \$21,136,000 balance due on July 15, 2018. The loan was nonrecourse. The loan was repaid in March 2017 in connection with the sale of the property that was collateral for the loan.		26,136
	416,300	532,437
Deferred loan costs related to mortgage loans	(1,582)	(2,366)
Premiums and discounts on assumed mortgages, net		722
Total Mortgages Payable	414,718	530,793
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 5.19% and 4.13% at September 30, 2017 and December 31, 2016, respectively.	17,015	23.122
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 2.60% and 1.83% at September 30, 2017 and December 31, 2016, respectively.	3,918	4,777
	20,933	27,899
Unamortized premiums	1,490	2,077
Total Secured Borrowings-Government Guaranteed Loans	22,423	29,976
Unsecured term loan facility	320,000	385,000
Junior subordinated notes with a variable interest rate which resets quarterly based on the 90-day LIBOR plus 3.25%, with quarterly interest only payments. Balance due at maturity on March 30, 2035.	27,070	27,070
Unsecured credit facility
	347,070	412,070
Deferred loan costs related to unsecured term loan and credit facilities	(2,238)	(2,938)
Discount on junior subordinated notes	(1,957)	(2,015)

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Total Other		342,875	407,117
Total Debt		780,016	967.886

The mortgages payable are secured by deeds of trust on certain of the properties and assignments of rents.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

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 effective interest method and are fully amortized when the underlying loan is repaid in full.

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-life of the related loan, approximating the effective interest method. Deferred loan costs of \$5,53,000 and \$7,122,000 are presented net of accumulated amortization of \$1,713,000 and \$1,818,000 at September 30, 2017 and December 31, 2016, 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 consisting of a \$450,000,000 revolver, a \$325,000,000 term loan and a \$75,000,000 delayed-draw term loan. CIM Commercial is subject to certain financial maintenance covenants and a minimum property ownership condition. Outstanding advances under the revolver bear interest at (i) the base rate plus 0.20% 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% or 0.95% or (ii) LIBOR plus 1.15% to 1.95%, depending on the maximum consolidated leverage ratio. The revolver is also subject to an unused commitment fee of 0.15% depending on the amount of aggregate unused commitments. The delayed-draw term loan was also subject to an unused line fee of 0.25%. Proceeds from the unsecured credit facility were used to repay mortgage loans and outstanding balances under our prior unsecured credit facilities, for acquisitions, short-term funding of a Common Stock tender offer in June 2016, short-term funding of a private repurchase of Common Stock in June 2017, and general corporate purposes. In June 2016, we entered into six mortgage loan agreegate 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 September 2016. The June 2017 borrowing used to fund the private share repaid using proceeds from subsequent asset sales. 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 and we permanently reduced the revolving credit commitment under the credit facility to \$200,000,000. In August 2017, ve exercised the second of two one year extension options through September 2018 and, in connection with such exercise, we paid an extension fee of \$300,000. At September 31, 2016, \$0 was outstanding under the credit facility. The unused capacity on the unsecured credit facility, based on covenant restrictions at September 31, 2016, was approximately \$21,000,000 and \$200,000,000,000, respectively.

In May 2015, CIM Commercial entered into an unsecured term loan facility with a bank syndicate pursuant to which CIM Commercial can borrow up to a maximum of \$385,000,000. The term loan facility ranks pari passu with ClM Commercial's unsecured credit facility described above; covenants under the term loan facility are substantially the same as those in the unsecured credit facility. Outstanding advances under the term loan facility bear 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 unused portion of the term loan facility was also subject to an unused fee of 0.20%. The term loan facility matures 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. At September 31, 2016, the variable interest rate on this unsecured term loan facility was 2.84% and 2.22%, respectively. 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 (Note 13). 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, and we terminated three interest rate swaps with an aggregate notional value of \$65,000,000 (Note 13). Costs incurred to terminate such swaps totaled \$38,000 and are reflected in interest expense for the three and nine months ended September 30, 2017 and December 31, 2016, \$320,000,000 and \$385,000,000, respectively, was outstanding under the term loan facility.

At September 30, 2017 and December 31, 2016, we were in compliance with all of our respective financial covenants under the unsecured credit and term loan facilities

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).

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

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 \$23,33,000 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 September 21, 2017, in connection with the sale of an office property in Los Angeles, California, a mortgage with an outstanding principal balance of \$21,700,000, collateralized by such property, was assumed by the buyer.

As of September 30, 2017, one mortgage loan is included in liabilities associated with assets held for sale on our consolidated balance sheet. The mortgage loan is nonrecourse, is secured by a multifamily property located at 4200 Scotland Street in Houston, Texas, and has an outstanding principal balance of \$28,715,000 at September 30, 2017 with a fixed interest rate of 5.18% per annum, requiring monthly payments of principal and interest, with a maturity date of June 5, 2021 (Note 3).

At September 30, 2017 and December 31, 2016, accrued interest and unused commitment fees payable of \$2,569,000 and \$3,133,000, respectively, are included in accounts payable and accrued expenses.

Future principal payments on our debt (face value) at September 30, 2017 are as follows:

Years Ending December 31,	Secured Borrowings Principal (1)		Mortgages Payable (2)		Other (3)			Total
				(in thousands)
2017 (Three months ending December 31, 2017)	ಕ	181	S		S		S	181
2018		745						745
2019		776						776
2020		809						809
2021		844						844
Thereafter		17,578		416,300		347,070		780,948
	S	20,933	S	416,300	S	347,070	S	784,303

(1) repayment is based on scheduled principal payments on the underlying loans. Our estimate will differ from actual amounts to the extent we experience prepayments and/or loan liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans.
(2) with assets held for sale on our consolidated balance sheet at September 30, 2017 (Note 3).
(3)

9. STOCK-BASED COMPENSATION PLANS

In April 2015, we granted awards of 2,000 restricted shares of Common Stock to each of the independent members of the Board of Directors (6,000 in aggregate) under the 2015 Equity Incentive Plan, which fully vested in April 2016 based on one year of continuous service. In May 2016, we granted awards of 3,392 restricted shares of Common Stock to each of the independent members of the Board of Directors (10,176 in aggregate) under the 2015 Equity Incentive Plan, which fully vested in May 2017 based on one year of continuous service. In addition, in June 2017, we granted awards of 3,195 restricted shares of Common Stock to each of the independent members of the Board of Directors (9,585 in aggregate) under the 2015 Equity Incentive Plan, which will vest over one year of continuous service. Compensation expense related to these restricted shares of Common Stock is

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recognized over the vesting period. We recorded compensation expense of \$38,000 for the three months ended September 30, 2017 and 2016, respectively, and \$107,000 for the nine months ended September 30, 2017 and 2016, respectively, related to these restricted shares of Common Stock.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

We issued to two of our executive officers an aggregate of 2,000 restricted shares of Common Stock on May 6, 2014, which were fully vested in May 2016, and an aggregate of 2,000 restricted shares of Common Stock on March 6, 2015, which were fully vested in March 2017. The restricted shares of Common Stock vested based on two years of continuous service with one-third of the shares of Common Stock vesting immediately upon issuance and one-third vesting at the end of the next two years from the date of issuance. Compensation expense related to these restricted shares of Common Stock was recognized over the vesting period. We recognized compensation expense of \$0 and \$1,000 for three months ended September 30, 2017 and 2016, respectively, and \$1,000 and \$7,000 for the nine months ended September 30, 2017 and 2016, respectively, related to these restricted shares of Common Stock

As of September 30, 2017, there was \$99,000 of total unrecognized compensation expense related to shares of Common Stock which will be recognized over the next year.

10. EARNINGS PER SHARE ("EPS")

The computations of basic EPS are based on our weighted average shares outstanding. The basic weighted average shares of Common Stock outstanding were 57,876,000 and 87,045,000 for the three months ended September 30, 2017 and 2016, respectively, and 73,503,000 and 93,772,000 for the nine months ended September 30, 2017 and 2016, respectively. We had no dilutive securities outstanding for each of the three and nine months ended September 30, 2017 and 2016. Outstanding shares of Series A Preferred Stock and Warrants were not included in the computation of diluted EPS for the three and nine months ended September 30, 2017 because their impact was deemed to be anti-dilutive. No shares of Series A Preferred Stock or Warrants were outstanding during the three and nine months ended September 30, 2016.

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 our basic and diluted per-share amounts for net income available to common stockholders for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(in thousands, except per share amounts)
Numerator:
Net income from continuing operations	ಕಾ	72,391	S	8,382	A	357,698	ਦੇ ਰ	33,865
Net loss (income) attributable to noncontrolling interests		ব		3		(10)		(d)
Redeemable preferred stock dividends		(138)				(241)
Numerator for basic and diluted net income from continuing operations available to common stockholders		72,257		8,385		357,447		33,856
Net income from discontinued operations				703				3,061
Numerator for basic and diluted net income available to common stockholders	S	72,257	S	9,088	ಳ	357,447	ਦੇ ਰ	36,917
Denominator:
Basic weighted average shares outstanding		57,876		87,045		73,503		93.772
Effect of dilutive securities-contingently issuable shares and stock options
Diluted weighted average shares and common stock equivalents outstanding		57,876		87,045		73,503		93,772
Basic and diluted net income available to common stockholders per share:
Continuing operations	S	1.25	ಕೆ	0.10	ಕಾ	4.86	S	0.36

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Discontinued operations	es	- S - 0.01 S -	- \$ 0.03
Net income		1.25 S S S	0.39

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

11. REDEEMABLE PREFERRED STOCK

We have an effective registration statement with the Securities and Exchange Commission ("SEC") with respect to the offer and sale of up to \$900,000,000 of units (collectively, the "Units"), with each unit consisting of (i) 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 ("Stated Value") and (ii) one warrant (collectively, the "Warrants") to purchase 0.25 of a share of Common Stock (Note 12). The registration statement allows us to sell up to a maximum of 36,000,000 Units. Our Series A Preferred Stock ranks senior to our Common Stock with respect to payment of dividends of amounts upon liquidation, dissolution or winding up. Proceeds and expenses from the sale of the Units are allocated to the Series A Preferred Stock and Warrants using their relative fair values on the date of issuance.

Our Series A Preferred Stock is redeemable at the option of the "Holder") or CIM Commercial. The redemption schedule of the Series A Preferred Stock allows redemptions at the Holder from the date of original issuance of any given shares of Series A Preferred Stock through the second year at Stated Value, plus accrued and unpaid dividends, subject to the payment of a 13.0% redemption fee. After year two, the redemption fee decreases to 10.0% and after year five there is no redemption fee. Also, CIM Commercial has the right to redeem the Series A Preferred Stock after year five at Stated Value, plus accrued and unpaid dividends. At the Company's discretion, redemptions will be paid in cash or, on or after the first anniversary of the issuance of such shares of Series A Preferred Stock, an equal value of Common Stock based on the volume weighted average price of our Common Stock for the 20 trading days prior to the redemption. As of September 30, 2017, no shares of Series A Preferred Stock have been redeemed.

As of September 30, 2017, we had issued 568,921 Units and received gross proceeds of \$14,223,000 (of which \$14,129,000 was allocated to the Series A Preferred Stock in temporary equity and the remaining \$94,000 were allocated to the Warrants in permanent equity). In connection with such issuance, costs specifically identifiable to the offering of Units, such as commissions, dealer manager fees and other registration fees, totaled \$1,106,000 of which were allocated to the Series A Preferred Stock in temporary equity and the remaining \$34,000 were allocated to the Warrants in permanent equity). In addition, as of September 30, 2017, non issuance specific costs related to this offering totaled \$3,020,000. As of September 30, 2017, we have reclassified \$47,000 and a de minimis amount from deferred rent receivable and charges to temporary equity and stockholders' equity, respectively, as a reduction to the gross proceeds received. Such reclassification was based on the number of Units issued during the period relative to the maximum number of Units expected to be issued under the offering.

Holders of Series A Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends on each share of Series A Preferred Stock at annual rate of 5.5% of the Stated Value (i.e., the equivalent of \$0.34375 per share per quarter). Dividends on each share of Series A Preferred Stock will begin accruing on, and will be cumulative from, the date of issuance. Cash dividends declared on our Series A Prefered Stock for the nine months ended September 30, 2017 consist of the following:

				Aggregate
Declaration Date	Payment Date	Number of Shares		Dividends Declared
				(in thousands)
September 7, 2017	October 16, 2017	568.921	ક્ષ્ઠ	138
June 12, 2017	July 17, 2017	308.775	દ	72
March 8, 2017	April 17, 2017	144.698 \$		31

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

12. STOCKHOLDERS' EQUITY

Dividends

Dividends per share of Common Stock declared during the nine months ended September 30, 2017 and 2016 consist of the following:

Declaration Date	Payment Date	Type	Dividend Per Common Share
September 7, 2017	September 25, 2017	Regular Quarterly	ക	0.12500
June 12, 2017	June 27, 2017	Special Cash	ಕಾ	1.98000
June 12, 2017	June 27, 2017	Regular Quarterly	ಕಾ	0.12500
April 5, 2017	April 24, 2017	Special Cash	ಕಾ	0.28000
March 8, 2017	March 27, 2017	Regular Quarterly	ea	0.21875
September 12, 2016	September 28, 2016	Regular Quarterly	ea	0.21875
June 10, 2016	June 28, 2016	Regular Quarterly	ಲ್ಲಿಕ	0.21875
March 8, 2016	March 29, 2016	Regular Quarterly	ನಾ	0.21875

On June 12, 2017, we declared a special cash dividend of \$1.98 per share of Common Stock, or \$4,271,000 in the aggregate, that was paid on June 27, 2017 to stockholders of record on June 20, 2017. This special cash dividend allowed common stockholders that did not participate in the June 12, 2017 private repurchase to receive the economic benefit of such repurchase. Urban Partners II, LLC ("Urban II"), a fund managed by an affiliate of CIM Group, the Manager and Advisor of CIM Commercial (each as defined in Note 15), and an affiliate of CIM RET and CIM Urban, waived its right to receive this special cash dividend.

In addition, on April 5, 2017, we declared a special cash dividend of \$0.28 per share of Common Stock, or \$601,000 in the aggregate, that was paid on April 24, 2017 to stockholders of record on April 17, 2017. This special cash dividend allowed common stockholders that did not participate in the September 14, 2016 private repurchase to receive the economic benefit of such repurchase. Urban II waived its right to receive this special cash dividend.

Share Repurchases

On June 12, 2017, we repurchased, in a privately negotiated transaction, canceled and retired 26,181,818 shares of Common Stock from Urban II. The aggregate purchase price was \$576,000,000, or \$22.00 per share. We funded the repurchase using available cash from asset sales and short-term borrowings on our unsecured credit facility. As a result of the repurchase, our stockholders' equity was reduced by the amount we paid for the repurchased shares and the related expenses. The Company paid a special cash dividend, as described above, on June 27, 2017 that allowed stockholders that did not participate in the June 12, 2017 private repurchase to receive the economic benefit of such repurchase.

On September 14, 2016, we repurchased, in a privately negotiated transaction, canceled and retired 3,628,116 shares of Common Stock from Urban II. The aggregate purchase price was \$79,819,000, or \$22.00 per share. We funded the repurchase using proceeds from the six mortgage loans obtained in June 2016. As a result of the repurchase, our stockholders' equity was reduced by the amount we paid for the repurchased shares and the related expenses. The Company paid a special cash dividend, as described above, on April 24, 2017 that allowed stockholders that did not participate in the September 14, 2016 private repurchase to receive the economic benefit of such repurchase.

In addition, on May 16, 2016, we commenced a cash tender offer to purchase up to 10,000,000 shares of our Common Stock at a price of \$21.00 per share. The tender offer expired on June 13, 2016. The tender offer was oversubscribed and, pursuant to the terms of the tender offer, shares of Common Stock were accepted on a pro rata basis. In connection with the tender offer, we repurchased, canceled and retired 10,000,000 shares of our Common Stock for an aggregate purchase price of \$210,000,000, excluding fees and expenses related to the were \$301,000. Based on the actual total number of shares tendered, Urban II received \$208,140,000 of the aggregate purchase price paid. We funded the tender offer using available cash from asset sales and borrowings on our unsecured credit facility. The purchased shares represented

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

approximately 10.24% of our then-outstanding shares of Common Stock. As a result of the repurchase, our stockholders' equity was reduced by the amount we paid for the repurchased shares and the related expenses.

Warrants

Each Unit consists of (i) one share of Series A Preferred Stock (ii) one Warrant (Note 11) which allows the holder to purchase 0.25 of a share of Common Stock. The Warrants are exercisable beginning on the first anniversary of the date of their original issuance until and including the fifth anniversary of the exercise price of each Warrant is at a 15.0% premium to the per share estimated net asset value of our Common Stock (as most recently published by us at the time of each issuance).

Proceeds and expenses from the sale of the Units are allocated to the Series A Preferred Stock and Warrants using their relative fair values on the date of issuance. As of September 30, 2017, we had issued 568,921 Warrants in connection with our offering of Units and allocated net proceeds of \$60,000, after specifically identifiable offering costs and allocated general offering costs, to the Warrants in permanent equity.

13. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Hedges of Interest Rate Risk

In order to manage financing costs and interest rate exposure related to our unsecured term loan facility (Note 8), on August 13, 2015, we entered into interest rate swap agreements with multiple counterparties. These swap agreements became effective on November 2, 2015. Each of our interest rate swap agreements meets the criteria for cash flow hedge accounting treatment and we have designated the interest rate swap agreements as cash flow hedges of the risk of variability attributable to changes in the one-month LIBOR on the term loan facility. Accordingly, the interest rate swaps are recorded on the consolidated balance sheets at fair value and the changes in the swaps are recorded in OCI and reclassified to earnings as an adjustment to interest expense as interest becomes receivable (Note 2). We do not expect any significant losses from counterparty defaults related to our swap agreements.

Summary of Derivatives

The following table sets forth the key terms of our interest rate swap contracts:

Number of Interest Total Notional Rate Swaps(1)(2)	Amount	Fixed Rates	Floating Rate Index	Effective Date	Expiration Date
	(in thousands)
	320.000	1.559% - 1.565%	One-Month LIBOR	11/2/2015	5/8/2020

(1) See Note 14 for our fair value disclosures.

(2) Our interest rate swaps are not subject to master netting arrangements.

These swaps hedge the future cash flows of interest payments on our unsecured term loan facility by fixing the rate until May 8, 2020 at a weighted average rate of 1.563% plus the credit spread, which was 1.60% at September 30, 2017 and December 31, 2016, or an all-in rate of 3.16%.

Credit-Risk-Related Contingent Features

Each of our interest rate swap agreements contains a provision under which we could also be declared in default under such agreements if we default on the term loan facility. As of September 31, 2016, there have been no events of default under our interest rate swap agreements.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

Impact of Hedges on AOCI and Consolidated Statements of Operations

The changes in the balance of each component of AOCI related to our interest rate swaps designated as cash flow hedges are as follows:

	Three Months Ended September 30,			30,
	2017		2016		2017			2016
				(in thousands)
Accumulated other comprehensive income (loss), at beginning of period		603	S	(12,889)	S	(209)	ಕಾ	(2,519)
Other comprehensive income (loss) before reclassifications		40		2,221		(149)		(10,347)
Amounts reclassified from accumulated other comprehensive income (loss) (1)		293		1,051		1,594		3,249
Net current period other comprehensive income (loss)		333		3,272		1,445		(7,098)
Accumulated other comprehensive income (loss), at end of period	S	936	S	(9,617)	S	936	S	(9,617)

(1)

Future Reclassifications from AOCI

We estimate that \$1,064,000 related to our derivatives designated as cash flow hedges will be reclassified out of AOCI as an increase to interest expense during the next twelve months.

In July 2017, we determined that we would repay \$65,000,000 of outstanding borrowings under our unsecured term loan facility in August 2017. On August 3, 2017, such repayment occurred and we terminated three interest rate swaps with an aggregate notional value of \$65,000,000. In connection we reclassified \$8,000 related to the associated interest rate swaps from accumulated other comprehensive interest expense on our consolidated statements of operations for the three and nine months ended September 30, 2017. In addition, we incurred a termination fee of \$38,000, which is included in interest expense on our consolidated statements of operations for the three and nine months ended September 30, 2017.

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

We determine 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 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.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

Our derivative financial instruments (Note 13) are measured at fair value on a recurring basis and are presented on our consolidated balance sheets at fair value, on a gross basis, excluding accrued interest. The table of our derivative financial instruments as well as their classification on our consolidated balance sheets:

	September 30, 2017			Level	Balance Sheet Location
		(in thousands)
Assets (Liabilities):
Interest rate swaps	S	936 \$	(509)	2	Other assets (Other liabilities)

Interest Rate Swaps-We estimate the fair value of our interest rate swaps by calculating the credit-adjusted present value of the expected future cash flows of each swap. The calculation incorporates the contractual terms of the derivatives, observable market interest rates which we consider to be Level 2 inputs, and credit risk adjustments, if any, to reflect the counterparty's as well as our own nonperformance risk.

The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on our consolidated balance sheets are as follows:

	September 30, 2017			December 31, 2016
	Estimated Carrying Fair Value Amount			Carrying Amount		Estimated Fair Value	Level
	(in thousands)
Assets:
Loans receivable subject to credit risk	ಕೆ	49.925	સ્ત્ર	49,768	ಲ್ಲಿಕ	43,623	ਦੇ ਦੇ	43,621	3
SBA 7(a) loans receivable, subject to secured borrowings		21,989		22,424		29,524		29,976	3
Other loans receivable		429		3 રેન્દ્ર		2,593		2,550	3
Liabilities:
Mortgages payable (1)		414,718		411,016		530,793		516,892	ತ
Junior subordinated notes		25,113		25,508		25,055		25,173	ತ

(1) has been classified as liabilities associated with assets held for sale on our consolidated balance sheet at September 30, 2017 (Notes 3 and 8).

Management's estimation of the fair value of our financial instruments other than our interest rate swaps 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 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 price quotations vary substantially, or in which little information is released publicly). There is limited reliable market information for our financial instruments other than our interest rate swaps and we utilize other methodologies based on unobservable inputs for valuation purposes since there are no 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 we could realize in a current market exchange.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

The carrying amounts of our secured borrowings and unsecured credit and term loan facilities approximate their fair values, as the interest rates on these securities are variable and approximate current market interest rates.

Loans Receivable Subject to Credit Risk and Other Loans Receivable were initially recorded at estimated fair value at the Acquisition Date. Loans receivable originated subsequent to the Acquisition Date are recorded at cost upon origination and adjusted by net loan origination fees and discounts. In order to determine the estimated fair value of our loans receivable, we use a present value technique for the anticipated future cash flows using certain assumptions. At September 30, 2017, our assumptions included discount rates ranging from 8.75% to 13.75% and prepayment rates ranging from 5.80% to 20.00%. At December 31, 2016, our assumptions included discount rates ranging from 8.25% to 13.25% and prepayment rates ranging from 5.80% to 20.00%.

SBA 7(a) Loans Receivable, Subject to Secured Borrowings-These loans receivable represent the government guaranteed portion of loans which were sold with the proceeds received from the sale reflected as secured borrowingsgovernment guaranteed loans. There is no credit risk associated with these loans since the SBA has guaranteed payment of the principal. In order to determine the estimated fair value of these loans receivable, we use a present value tor the anticipated future cash flows taking into consideration the lack of credit risk and using a range of prepayment rates from 15.50% to 20.00% and 6.70% to 20.00% at September 30, 2017 and December 31, 2016, respectively.

Mortgages Payable-The fair values of mortgages payable are estimated based on current interest rates available for debt instruments with similar terms. The fair value of our mortgages payable is sensitive to fluctuations in interest rates. Discounted cash flow analysis is generally used to estimate the fair value of our mortgages payable, using rates ranging from 4.18% to 4.38% and 4.60% to 4.72% at September 30, 2017 and December 31, 2016, respectively.

Junior Subordinated Notes-The fair value of the junior subordinated notes is estimated based on current interest rates available for debt instruments with similar terms. Discounted cash flow analysis is generally used to estimate the fair value of our junior subordinated notes. The rate used was 5.08% and 4.83% at September 31, 2016, respectively,

15. RELATED-PARTY TRANSACTIONS

In May 2005, CIM Urban and CIM Urban REIT Management, L.P., each an affiliate of CIM REIT and CIM Group, entered into an Investment Agreement, pursuant to which CIM Urban engaged CIM Urban REIT Management, L.P. to provide investment advisory services to CIM Urban. CIM Investment Advisors, LLC, an affiliate of CIM Group, registered with the SEC as an investment adviser and, in connection with such registration, CIM Urban entered into a new Investment Management Agreement with CIM Investment Advisors, LLC, in December 2015, on terms substantially similar to those in the previous Investment Agreement, pursuant to which CIM Urban engaged CIM Investment Advisors, LLC to provide investment advisory services, and the previous Investment Agreement was terminated. "Advisor" refers to CIM Urban REIT Management, L.P. prior to December 10, 2015 and to CIM Investment Advisors, LLC on and after December 10, 2015.

CIM Urban pays asset management fees to the Advisor on a quarterly basis in arrears. The fee is calculated as a percentage of the daily average adjusted fair value of CIM Urban's investments, as follows:

Daily Average Adjusted Fair Value of CIM Urban's Investments		Quarterly Fee
	From Greater of	To and Including	Percentage
	(in thousands)
S	S	500,000	0.2500%
	500.000	1,000,000	0.2375%
	1,000,000	1,500,000	0.2250%
	1,500,000	4,000,000	0.2125%
	4,000,000	20,000,000	0.1000%

The Advisor earned asset management fees of \$4,971,000 and \$6,589,000 for the three months ended September 30, 2017 and 2016, respectively, and \$19,305,000 for the nine months ended September 30, 2017 and 2016,

https://www.sec.gov/Archives/edgar/data/908311/000162828017011245/cmct0930201710q.htm

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

respectively. At September 30, 2017 and December 31, 2016, asset management fees of \$4,798,000, respectively, were due to the Advisor.

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. The CIM Management Entities earned property management fees, which are included in rental and other property operating S1,229,000 and \$1,443,000 for the three months ended September 30, 2017 and 2016, respectively, and \$3,967,000 for the nine months ended September 30, 2017 and 2016, respectively. CIM Urban also reimbursed the CIM Management Entities \$2,018,000 and \$2,301,000 during the three months ended September 30, 2017 and 2016, respectively, and \$6,704,000 and \$6,308,000 during the nine months ended September 30, 2017 and 2016, respectively, for the cost of on-site personnel incurred on behalf of CIM Urban, which is included in rental and other property operating expenses. The CIM Management Entities earned leasing commissions of \$437,000 for the three months ended September 30, 2017 and 2016, respectively, and \$808,000 and \$1,151,000 for the nine months ended September 30, 2017 and 2016, respectively, which were capitalized to deferred charges. In addition, the CIM Management Entities earned construction management fees of \$233,000 and \$119,000 for the three months ended September 30, 2017 and 2016, respectively, and \$508,000 and \$787,000 for the nine months ended September 30, 2017 and 2016, respectively, which were capitalized to investments in real estate.

At September 30, 2017 and December 31, 2016, fees payable and expense reimbursements due to the CIM Management Entities of \$2,639,000 and \$2,027,000, respectively, are included in due to related parties. Also included in due to related parties as of September 30, 2017 and December 31, 2016, was \$23,000 and \$214,000, respectively, due from the CIM Management Entities and related parties.

On the Acquisition Date, pursuant to the Merger Agreement, CIM Commercial and its subsidiaries entered into the Master Services Agreement (the "Master Services Agreement") with CIM Service Provider, LLC (the "Manager"), an affiliate of CIM Croup, pursuant to which the Manager agrees to provide or arrange for other service providers to provide management and administration services to CIM Commercial and its subsidiaries following the Master Services Agreement, we appointed an affiliate of CIM Group as the manager of Urban Partners GP, LLC. Under the Master Services Agreement, CIM Commercial pays a base service fee (the "Base Service Fee") to the Manager initially set at \$1,000,000 per year (subject to an annual escalation by a specified inflation factor beginning on January 1, 2015), payable quarterly in arrears. The Manager earned a Base Service Fee of \$265,000 and \$259,000 for the three months ended September 30, 2017 and 2016, respectively, and \$795,000 and \$784,000 for the nine months ended September 30, 2017 and 2016, respectively, In addition, pursuant to the terms of the Master Services Agreement, the Manager may receive compensation and/or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered under the Base Service Fee. During the nine months ended September 30, 2017 and 2016, such services performed by the Manager included accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources and corporate communications. The Managers compensation is based on the salaries of the employees of the Manager and/or its affiliates who performed these services (allocated based on the percentage of time spent on the affairs of CIM Commercial and its subsidiaries). We expensed \$735,000 and \$676,000 for the three months ended September 30, 2017 and 2016, respectively, and \$2,402,000 for the nine months ended September 30, 2017 and 2016, respectively, for such services which are included in asset management and other fees to related parties. At September 30, 2017 and December 31, 2016, \$1,786,000 was due to the Manager, respectively, for such services.

On January 1, 2015, we entered into a Staffing and Reimbursement with CIM SBA Staffing, LLC ("CIM SBA"), an affiliate of CIM Group and our subsidiary, PMC Commercial Lending, LLC. The Agreement provides that CIM SBA will provide personnel and resources to us and that we will reimburse CIM SBA for the costs of providing such personnel and resources. For the three months ended September 30, 2017 and 2016, we incurred expenses related to services subject to reimbursement by us under this agreement of \$845,000, respectively, which are included in asset management and other fees to related parties for lending segment costs included in continuing operations, \$80,000 and \$107,000, respectively, for corporate services, which are included in asset management and other fees to related parties, and \$0 and \$137,000, respectively, which are included in discontinued operations; for the nine months ended September 30, 2017 and 2016, we incurred expenses related to such services of \$2,473,000 and \$2,679,000, respectively, which are included in asset management and other fees to related parties for lending segment costs included in continuing operations, \$319,000 and \$333,000, respectively, for corporate services, which are included in asset management and other fees to related parties, and \$0 and \$417,000, respectively, which are included in discontinued operations. In addition, we deferred personnel costs of \$154,000 and \$40,000 for three months ended September 30, 2017 and 2016, respectively, and \$189,000 for the nine months ended September 30, 2017 and 2016, respectively, associated with services provided for originating loans.

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

On October 1, 2015, an affiliate of CIM Group entered into a 5-year lease renewal with respect to a property owned by the Company. We recorded rental and other property income related to this tenant of \$27,000 for each of the three months ended September 30, 2017 and 2016 and \$81,000 for each of the nine months ended September 30, 2017 and 2016.

On May 16, 2016, we commenced a cash tender offer to purchase up to 10,000,000 shares of our Common Stock at a price of \$21.00 per share. In connection with the tender offer, we repurchased, canceled and retired 10,000,000 shares of our Common Stock for an aggregate purchase price of \$210,000,000, excluding fees and expenses related to the tender offer, which were \$301,000. Based on the actual total number of shares tendered, Urban II received \$208,140,000 of the aggregate purchase price paid (Note 12).

On September 14, 2016, we repurchased in a privately negotiated transaction 3,628,116 shares of Common Stock from Urban II and retired them on the same date. The aggregate purchase price was \$79,819,000, or \$22.00 per share (Note 12).

In addition, on June 12, 2017, we repurchased, in a privately negotiated transaction, canceled and retired 26,181,818 shares of Common Stock from Urban II. The aggregate purchase price was \$576,000,000, or \$22.00 per share (Note 12).

16. COMMITMENTS AND CONTINGENCIES

Loan Commitments-Commitments to extend credit are agreements to lend to a customer provided the terms established in the contract are met. Our outstanding loan commitments to fund loans were \$20,864,000 at September 30, 2017 and are for prime-based loans to be originated by our subsidiary engaged in SBA 7(a) 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, we have certain obligations for the payment of tenant improvement allowances and lease commissions in connection with new leases and renewals. CIM Commercial had a total of \$20,799,000, including \$2,445,000 related to assets held for sale, in future obligations under leases to fund tenant improvements and other future construction obligations at September 30, 2017, \$11,102,000 was funded to reserve accounts included in restricted cash on our consolidated balance sheet for these tenant improvement obligations in connection with the mortgage loan agreements entered into in June 2016.

Employment Agreements-We have employment agreements with two of our officers. Pursuant to these employment agreements, we issued an aggregate of 76,423 shares of Common Stock under the 2015 Equity Incentive Plan as retention bonuses to these officers in January 2016 (as each executive was not entitled to any disability, death or such date). These shares vested immediately. We accrued associated payroll taxes of \$444,000 at December 31, 2015, which were paid in January 2016, and recorded no compensation expense during the three and nine months ended September 30, 2016 related to these retention bonuses. In addition, under certain circumstances, each of these employment surrently 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 officers. At September 30, 2017, there was no unrecognized compensation expense related to these awards.

Litigation-We are not currently involved in any material pending or threatened legal proceedings nor, to our knowledge, are any material legal proceedings currently threatened against us, other than routine intigation arising in the ordinary course of business. In the normal course of business, we are periodically party to certain legal actions and proceedings involving matters that are generally incidental to our 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 will not have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations, to maintain our level of Common Stock or Series A Preferred Stock dividend distributions or to engage in further repurchases of Common Stock

In April 2017, the City and County of San Francisco filed suit against certain of our subsidiaries and us claiming past due real property transfer tax relating to a transaction in a prior year. In June 2017, we filed a demurrer against the City and County of San Francisco. The demurrer was denied in July 2017. We filed a writ to appeal the denial of the demurrer in early August 2017. The writ was denied in August 2017 and, in order to contest the asserted tax obligations, we paid the City and County of San Francisco \$11,845,000 in penalties, interest and legal fees in late August 2017, which are reflected in transaction costs on

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our consolidated statements of operations for the nine months ended September 30, 2017, including \$253,000 recorded in transaction costs for the three months ended September 30, 2017. Due to the early stage of the suit and the

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

uncertainty and risks inherent in litigation, we cannot determine the amount, if any, of the previously assessed and currently expensed tax obligations that will be recovered through the appeal process. We believe that we have defenses to, and intend to continue to vigorously contest, the asserted tax obligations.

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 SBA may seek recovery of the principal loss related to the deficiency from us. 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 us in the event that a loss is deemed to be attributable to technical deficiencies. Based on historical experience, we do not expect that this contingency is probable to be asserted. However, if asserted, it could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations, to maintain our level of Common Stock or Series A Preferred Stock dividend distributions or to engage in further repurchases of Common Stock.

Environmental Matters-In connection with the ownership and operation of real estate properties, we may be potentially liable for costs and damages related to environmental matters, including asbestos-containing materials. We have not been notified by any governmental authority of any noncompliance, liability, or other claim in connection with any of the properties, and we are not aware of any other environmental condition with respect to any of the properties that management believes will have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations, to maintain our level of Common Stock or Series A Preferred Stock dividend or to engage in further repurchases of Common Stock.

Rent Expense-Rent expense under a ground lease for a property that was sold in August 2017, which includes straightline rent and amortization of acquired below-market ground lease, was \$292,000 for the three months ended September 30, 2017 and 2016, respectively, and \$1,168,000 and \$1,314,000 for the nine months ended September 30, 2017 and 2016, respectively. We record rent expense on a straight-line rent liability of \$13,289,000 is included in other liabilities in the accompanying consolidated balance sheet as of December 31, 2016.

We lease office space in Dallas, Texas under a lease which expires in May 2018. We recorded rent expense of \$54,000 and \$57,000 for the three months ended September 30, 2017 and \$166,000 and \$166,000 and \$171,000 for the nine months ended September 30, 2017 and 2016, respectively.

Scheduled future noncancelable minimum lease payments at September 30, 2017 are as follows:

Years Ending December 31,	(in thousands)
2017 (Three months ending December 31, 2017)	ಳ 62
2018	104
2019
2020
2021
Thereafter
	166

32 Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

17. FUTURE MINIMUM LEASE RENTALS

Future minimum rental revenue under long-term operating leases at September 30, 2017, excluding tenant reimbursements of certain costs, are as follows:

Years Ending December 31,		Governmental Tenants (1)		Other Tenants (1)		Total
				(in thousands)
2017 (Three months ending December 31, 2017)	સ્ત્ર	9.092	S	20,066	ಕೆ.	29,158
2018		36,347		80,181		116,528
2019		35,129		78,628		113,757
2020		32,939		70,397		103,336
2021		22,416		59,505		81,921
Thereafter		51,379		191,290		242,669
		187,302		500,067		687,369

(1) consolidated balance sheet at September 30, 2017 (Note 3).

18. CONCENTRATIONS

Tenant Revenue Concentrations-Rental revenue, excluding tenant reimbursements of certain costs, from the U.S. General Services Administration and other governmental Tenants"), which primatily occupy properties located in Washington, D.C., accounted for approximately 23.2% and 20.6% of our rental and other property income for the three months ended September 30, 2017 and 2016, respectively, and 21.2% and 19.9% for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017 and December 31, 2016, \$8,924,000 and \$8,339,000, respectively, was due from Governmental Tenants (Note 17).

Geographical Concentrations of Investments in Real Estate-As of September 30, 2017 and December 31, 2016, we owned 15 and 20 office properties, respectively, one and five multifamily properties, respectively, one hotel property, two and three parking garages, respectively, and two development sites, one of which is being used as a parking lot. These properties are located in two and four states, respectively, and Washington, D.C.

Our revenue concentrations from properties are as follows:

		Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
California	63.0%	61.7%	62.4%	63.9%
Washington, D.C.	29.0	21.9	24.2	21.2
Texas	5.7	8.6	7.3	8.2
New York	2.3	1.9	2.2	1.9
North Carolina		રે તે	3.9	4.8
	100.0%	100.0%	100.0%	100.0%

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

Our real estate investments concentrations from properties are as follows:

	September 30, 2017	December 31, 2016
California	55.7%	50.8%
Washington, D.C. (1)	38.3	32.3
Texas (1)	6.0	7.7
North Carolina		5.5
New York		3.7
	100.0%	100.0%

(1) consolidated balance sheet at September 30, 2017 (Note 3).

19. SEGMENT DISCLOSURE

In accordance with ASC Topic 280, Segment Reporting, our reportable segments consist of three types of commercial real estate properties, namely, office, hotel and multifamily, as well as a segment for our lending business that is included in our continuing operations. The lending business that is held for sale for the three and nine months ended September 30, 2016 is not included in our reportable segment internally evaluates the operating performance and financial results of the segments based on net operating income. We also have 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 our audited financial statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2017.

We evaluate the performance of our real estate segments based on 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, corporate related general and administrative expenses, gain (loss) on sale of real estate, impairment of real estate, transaction costs, and provision for income taxes. For the lending segment, we define net operating income as interest income net of interest expense and general overhead expenses.

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

The net operating income of our segments included in continuing operations for the three and nine months ended September 30, 2017 and 2016 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017			2016		2017		2016
				(in thousands)
Office:
Revenues	ಕಿತ	41,427	ક્તિ	47,584	સ્ત્ર	134,434	સ્ત્ર	139,403
Property expenses:
Operating		18,761		22,351		50,318		60,768
General and administrative		106		344		788		789
Total property expenses		18,867		22,695		51,106		61,557
Segment net operating income-office		22,560		24,889		83,328		77,846
Hotel:
Revenues		8,406		9,139		29,528		38,918
Property expenses:
Operating		5,943		6,479		18,968		25,865
General and administrative		30		229		69		622
Total property expenses		5,973		6,708		19,037		26,487
Segment net operating income-hotel		2,433		2,431		10,491		12,431
Multifamily:
Revenues		2,683		5,068		12,400		15,298
Property expenses:
Operating		1,354		2,893		6,981		8,667
General and administrative		36		485		378		840
Total property expenses		1,390		3,378		7,359		9,507
Segment net operating income-multifamily		1,293		1,690		5,041		5,791
Lending:
Revenues		2,868		2,541		7,270		7,690
Lending expenses:
Interest expense		116		124		203		306
Fees to related party		845		૪૯૨		2,473		2,679
General and administrative		294		283		971		881
Total lending expenses		1,255		1,272		3,647		3,866
Segment net operating income-lending		1,613		1,269		3,623		3,824
Total segment net operating income	ಲ್ಲಿ ಮಾ	27,899	ತಿ	30,279	સ્ત્ર	102,483	ಕಾ	99,892

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

A reconciliation of our segment net operating income attributable to the Company for the three and nine months ended September 30, 2017 and 2016 is as follows:

	Three Months Ended September 30.			Nine Months Ended September 30.
		2017		2016		2017		2016
				(in thousands)
Total segment net operating income	ಕ್ಕಿ	27,899	S	30,279	ಿಕ	102,483	ಕಾ	99,892
Asset management and other fees to related parties		(6,051)		(7,631)		(20,986)		(22,824)
Interest expense		(9,243)		(10,152)		(28,442)		(24,080)
General and administrative		(876)		(885)		(2,462)		(3,167)
Transaction costs		(242)		(53)		(11,870)		(320)
Depreciation and amortization		(13,472)		(17,724)		(45,464)		(54,262)
Impairment of real estate						(13,100)
Gain on sale of real estate		74,715		14,927		378,732		39,666
Income from continuing operations before provision for income taxes		72,730		8,761		358,891		34,905
Provision for income taxes		(339)		(379)		(1,193)		(1,040)
Net income from continuing operations		72,391		8,382		357,698		33,865
Discontinued operations:
Income from operations of assets held for sale				703				3,061
Net income from discontinued operations				703				3,061
Net income		72,391		9,085		357,698		36,926
Net loss (income) attributable to noncontrolling interests		4		3		(10)		(d)
Net income attributable to the Company	S	72,395	ತಿ	9,088	S	357,688	S	36,917

The condensed assets for each of the segments as of September 30, 2017 and December 31, 2016, along with capital expenditures and loan originations for the nine months ended September 30, 2017 and 2016, are as follows:

		September 30, 2017	December 31, 2016
		(in thousands)
Condensed assets:
Office (1)	S	1,135,614	સ્ત્ર	1,568,702
Hotel		111,899		115,955
Multifamily (1)		45.774		170,159
Lending assets		88,293		91,191
Non-segment assets		209,724		76,877
Total assets		1,591,304	S	2,022,884

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

	Nine Months Ended September 30,
		2017	2016
	(in thousands)
Capital expenditures (2):
Office	સ્ત્ર	22,632	ક	24,115
Hotel		267		619
Multifamily		338		449
Total capital expenditures		23,237		25,183
Loan originations		49,532		78.809
Total capital expenditures and loan originations (3)		72,769	C	103,992

(1) consolidated balance sheet at September 30, 2017 (Note 3).

(2)

(3)

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), which are intended to be covered by the safe harbors created thereby. Such forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "micipate," "anticipate," "seek," "plan," "estimate," "could," "continue," "pursue," or "should" or the negative thereof or other words or phrases. These statements include the plans and objectives of management for future operations, but not limited to, plans and objectives relating to fiture growth and availability of funds. The forward-looking statements included herein are based on current expectations and there can be no assurance that these expectations will be attaing to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-2 will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Readers are cautioned not to place undue reliance on forward-looking statements Forward-looking statements speak only as of the do not undertake to update them to reflect changes that occur after the date they are made.

The following discussion of our financial condition at September 30, 2017 and results of operations for the three and nine months ended September 30, 2017 and 2016 should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016. For a more detailed description of the risks affecting our financial condition and results of operations, see "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.

Executive Summary

Business Overview

CIM Commercial is a Maryland corporation and REIT. Our principal business is to invest in, own, and operate Class A and creative office investments in vibrant and improving urban communities throughout the United States. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, improving demographic trends and a propensity for growth. We believe that the critical mass of redevelopment in such areas creates positive externalities, which enhance the value of substantially stabilized assets in the area. We believe that these assets will provide greater returns than similar assets in other markets as a result of the improving demographics, public commitment, and significant private investment that characterize these areas.

Our two primary goals are (a) consistently growing our net asset value ("NAV") and cash flows per share of Common Stock through our principal business and (b) providity to our common stockholders at prices reflecting our NAV and cash flow prospects. In that regard, in June 2016 we completed a tender offer for 10,000,000 shares of Common Stock at a price of \$21.00 per share of Common Stock; in September 2016, we repurchased in a privately negotiated transaction, 3.628,116 shares of our Common Stock at \$22.00 per share from Urban II; and in June 2017, we repurchased in a privately negotiated transaction, 26,181,818 shares of our Common Stock at \$22.00 per share from Urban II. Additionally, in April 2017, we declared and paid a special cash dividend of \$0.28 per share of Common Stockholders that did not participate in the September 2016 private repurchase and, in June 2017, we declared and paid a special cash dividend of Common Stock, or \$4,271,000, to the common stockholders that not participate in the June 2017 private repurchase. These special cash dividends allowed such common stockholders that did not participate in the September 2016 and June 2017 private repurchases to receive the economic benefits of such repurchases. In furtherance of our two primary goals, we anticipate additional share repurchases and/or special dividends in the future.

We are managed by affiliates of CIM Group. Our wholly-owned subsidiary, CIM Urban, is party to an Investment Management Agreement with CIM Investment Advisors, LLC, an affiliate of CIM Group, pursuant to which CIM Investment Advisors, LLC provides investment advisory services to CIM Urban. In addition, we are party to a Master Services Agreement with the Manager, an affiliate of CIM Group, pursuant to which the Manager agrees to provide or arrange for other service providers to provide management and administration service") to us and all of our direct and indirect subsidiaries. CIM Group is a vertically-integrated, full-service investment manager with multidisciplinary expertise and in-house research, acquisition, investment, development, finance, leasing, and management capabilities. CIM Group is

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headquartered in Los Angeles, California and has offices in Oakland, California; Bethesda, Maryland; Dallas, Texas; and New York, New York.

Properties

As of September 30, 2017, our real estate portfolio consisted of 18 office properties (including one parking garage and two development sites, one of which is being used as a parking lot) totaling approximately 3.7 million rentable square feet, one multifamily property comprised of 308 units, and one hotel with 503 rooms.

During the three months ended September 30, 2017, we sold two office properties and one multifamily property and we entered into a purchase and sale agreement that was subject to a nonrefundable deposit for one office property, which is classified as held for sale on our consolidated balance sheet as of September 30, 2017, and was sold in October 2017, along with our one remaining multifamily property that was classified as held for sale as of September 30, 2017.

Strategy

Our investment strategy is to continue to primarily invest in Class A and creative office investments in vibrant and improving urban communities throughout the United States in a manner that will allow us to increase our NAV and cash flows per share of Common Stock. Our investment strategy is centered around CIM's community qualification process. We believe this strategy provides us with a significant competitive advantage when making urban real estate investments. The qualification process generally takes between six months and is a critical component of CIM's investment evaluation. CIM examines the characteristics of a market to determine whe district justifies the extensive efforts CIM undertakes in reviewing and making potential investments in its qualified communities ("Qualified Communities"). Qualified Communities generally fall into one of two categories: (i) transitional urban districts that have dedicated resources to become vibrant urban communities and (ii) wellestablished, thriving urban areas (typically major central business districts). Qualified Communities are distincts which have dedicated resources to become or are currently vibrant communities where people can live, work, shop and be entertainedall within walking distance or close proximity to public transportation. These areas also generally have high population density, improving demographic trends and a propensity for growth. CIM believes that a vast majority of the risks associated with making real asset investments are mitigated by accumulating local market knowledge of the community where the investment lies. CIM typically spends significant time and resources qualifying targeted investment communities prior to making any acquisitions. Since 1994, CIM Group has qualified 110 communities and has deployed capital in 67 of these Qualified Communities. Although we may not invest exclusively in Qualified Communities, it is expected that most of our investments will be identified through this systematic process. Our investments may also include side-by-side investments in one or more CIM Group-managed funds as well as a side-by-side or direct in a CIM Group-managed debt fund that principally originates loans secured directly or indirectly by commercial real estate properties. Furthermore, as part of our investment strategy, we may invest in or originate loans that are secured directly by properties primarily located in Qualified Communities that meet our investment strategy. Such loans may include limited and/or non-recourse junior (mezzanine, B-note or 2ªª lien) and senior construction loans that meet our inited and/or non-recourse junior (mezzanine, B-note or 2ªª lien) and senior acquisition, bridge or repositioning loans.

CIM seeks to maximize the value of its investments through active asset management. CIM has extensive in-house research, acquisition, investment, development, financing, leasing and property management capabilities, which leverage its deep understanding of urban communities to position properties for multiple uses and to maximize operating income. As a fully integrated owner and operator, CIM's asset managemented by its in-house property management capabilities. Property managers prepare annual capital and monthly operating reports, monitor results and oversee vendor services, maintenance and capital improvement schedules. In addition, they ensure that revenue objectives are met, lease terms are followed, receivables are collected, preventative maintenance programs are implemented, vendors are evaluated and expenses are controlled. CIM's asset management committee reviews and approves strategic plans for each investment, including financial, leasing, marketing, property position plans. In addition, the asset management committee reviews and approves the annual business plan for each property, including its capital and operating budget. CIM's organizational structure provides for investment and asset management continuity through multi-disciplinary teams responsible for an asset from the time of the original investment recommendation of the implementation of the assets business plan, and any disposition activities.

As a matter of prudent management, we also regularly evaluate each investment within our portfolio as well as our strategies. Such review may result in dispositions when an investment no longer fits our overall objectives or investment strategies or when our view of the market value of such investment is equal to or exceeds its intrinsic value. As a result of such review, we sold an office property in Santa Ana, California in November 2015; a hotel in Oakland, California in February 2016; a hotel in Los Angeles, California in July 2016; an office property in San Francisco, California in March 2017; two multifamily properties in Dallas, Texas in May 2017; an office property in Charlotte, North Carolina in June 2017; an office property and a parking garage in Sacramento, California in June 2017; a multifamily property in Dallas, Texas in June 2017; an office property

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in Washington, D.C. in August 2017; an office property in Los Angeles, California in September 2017; a multifamily property in New York, New York in September 2017; and an office property in Washington, D.C. in October 2017. In addition, we have entered into a purchase and sale agreement with an unrelated third party for the sale of a multifamily property in Houston, Texas, which is expected to close during the fourth quarter of 2017. Such review may result in additional dispositions from time to time. We are considering using a substantial portion of the net proceeds of such dispositions to provide liquidity to our common stockholders in 2017 at prices reflecting our NAV and cash flow prospects.

Rental Rate Trends

Office Statistics: The following table sets forth occupancy rates and annualized rent per occupied square foot across our office portfolio as of the specified periods:

		As of September 30,
		2017	2016
Occupancy (1)		88.2%	84.6%
Annualized rent per occupied square foot (1) (2)	S	41.27	36.85

(1) classified as held for sale as of September 30, 2017 (Note 3). Excluding these properties, the occupancy and annualized rent per occupied square foot were 94.2% and \$40.54 as of September 30, 2017 and 93.0% and \$38.90 as of September 30, 2016. No office properties were sold during the last three months of 2016.

(2) amount reflects total cash rent before abatements for the twelve months ended September 30, 2017 and 2016 were approximately \$3,161,000 and \$4,064,000, respectively. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail.

Over the next four quarters, we expect to see expiring cash rents as set forth in the table below:

	For the Three Months Ended
		December 31, 2017	March 31. 2018	June 30, 2018	September 30, 2018
Expiring Cash Rents (1):
Expiring square feet (2)		55,520	131.585	12.999	48.082
Expiring rent per square foot (3)	e	25.71 S	34.20 \$	38.19 \$	37.57

(1) consolidated balance sheet at September 30, 2017.

(2) listed.

(3) by twelve. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.

During the three and nine months ended September 30, 2017, we executed leases with terms longer than 12 months totaling 175,965 and 369,951 square feet, respectively. The table below sets forth information on certain of our executed leases during the three and nine months ended September 30, 2017, excluding space that was vacant for more than one year:

	Number of Leases (1) (2)	Rentable Square Feet (2)	New Cash Rents per Square Foot (2) (3)		Expiring Cash Rents per Square Foot (2) (3)
Three months ended September 30, 2017 (3)	13	141.305	ಳ	48.29	ಕೆ	40.13
Nine months ended September 30, 2017 (3)	39	242,487	ಳು	48.50		40.37

(1) Based on the number of tenants.

(2) Excludes leases for which the space was vacant for longer than one year, month leases, leases with an original term of less than 12 months, related party leases, and space where the previous tenant was a related party.

(3) abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent.

Fluctuations in submarkets, buildings and terms of the leases cause large variations in these numbers and make predicting the changes in rent in any specific period difficult. Our rental and occupancy rates are impacted by general economic conditions, including the pace of regional and economic growth, and access to capital. Therefore, we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current market rates. Additionally, decreased demand and other negative trents or unforeseeable events that impair our ability to timely renew or re-lease space could have further negative effects on our future financial condition, results of operations and cash flows.

Multifamily Statistics: The following table sets forth occupancy rates and the monthly rent per occupied unit across our multifamily portfolio for the specified periods:

	As of September 30,
	2017		2016
Occupancy (1)	96.1%		95.1%
Monthly rent per occupied unit (1) (2)	1.585	S	1.929

(1) held for sale on our consolidated balance sheet as of September 30, Excluding the sold properties, the occupancy and monthly rent per occupied unit as of September 30, 2016 were 96.4% and \$1,681, respectively. No multifamily properties were sold during the last three months of 2016.
(2) amount reflects total cash rent before concessions.

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Hotel Statistics: The following table sets forth the occupancy, average daily rate ("ADR") and revenue per available room ("RevPAR") for the hotel portfolio for the specified periods:

		For the Nine Months Ended September 30,
		2017		2016
Occupancy (1)		83.3%		80.3%
ADR (1)	ಳ	159.14	ಳ	141.60
RevPAR (1)	ಳ	132.55	ಳು	113.74

(1) Excluding the hotel properties that were sold in 2016, occupancy, ADR, and RevPAR for the nine months ended September 30, 2016 were 80.1%, \$151.55, and \$121.36, respectively.

Lending Segment

In order to allow CIM Commercial to increase its focus on Class A and creative office investments, our Board of Directors approved a plan in December 2014 for the lending segment that, when completed, would have resulted in the deconsolidation of the lending segment, which at time was focused on small business lending in the hostry. In July 2015, to maximize value, we modified our strategy of selling the lending segment as a whole to a strategy of soliciting buyers for components of the busing our commercial mortgage loans and the SBA 7(a) lending platform. This change in the sale methodology resulted in the neriod to complete the sale of the remainder of the lending segment beyond one year. On December 17, 2015, pursuant to the modified plan, we sold substantially all of our commercial mortgage loans with a carrying value of \$77,121,000 to an unrelated third party and recognized a gain of \$5,151,000. In September 2016, we discontinued our efforts to sell the SBA 7(a) lending platform, and the activities related to the SBA 7(a) lending platform have been reclassified to continuing operations for all periods presented. On December 29, 2016, we sold our commercial real estate lending subsidiary, which was classified as held for sale and had a carrying value of \$27,587,000, which was equal to management's estimate of fair value, to a fund managed by an affiliate of CIM Group. We did not recognize any gain or loss in connection with the transaction. Management's estimate of fair value was determined with assistance from an independent third party valuation firm.

Through our SBA 7(a) lending platform, we are a national lender that primarily originates loans to small businesses. We identify loan origination opportunities through personal contacts, internet referrals, attendance at trade shows and meetings, direct mailings, advertisements in trade publications and other marketing methods. We also generate loans through referrals from real estate and loan brokers, franchise representatives, existing borrowers, lawyers and accountants.

Results of Operations

Comparison of the Three Months Ended September 30, 2017 to the Three Months Ended September 30, 2016

Net Income

	Three Months Ended September 30,				Change
		2017		2016		ક	0/0
		(dollars in thousands)
Total revenues	ക	55,384	ಕಿ	64,332	ਦਿੱਤ	(8,948)	(13.9)%
Total expenses		57,369		70,498		(13,129)	(18.6)%
Gain on sale of real estate		74.715		14.927		59,788
Net income from discontinued operations				703		(703)
Net income		72,391		9,085		63,306

Net income increased to \$72,391,000, or by \$63,306,000, for the three months ended September 30, 2017, compared to \$9,085,000 for the three months ended September 30, 2016. The increase is primarily attributable to an increase in the gain on sale of real estate of \$59,788,000, as well as a decrease of \$4,252,000 in depreciation expense, a decrease of \$ 1,580,000 in asset management and other fees to related parties and a decrease of \$909,000 in interest expense, partially

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offset by a decrease of \$2,380,000 in net operating segments in continuing segments in continuing operations and a decrease of \$703,000 in income from discontinued operations.

Funds from Operations ("FFO")

We believe that FFO is a widely recognized and appropriate measure of a REIT and that it is frequently used by securities analysts, investors and other in the evaluation of REITs, many of which present FFO when reporting their results. FFO represents net income (loss) available to common stockholders, computed in accordance with GAAP, excluding gains (or losses) from sales of real estate, and real estate, and real estate depreciation and amortization. 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 liquidive of funds available to fund our cash needs, including our ability to pay dividends.

The following table sets forth a reconciliation of net income available to common stockholders to FFO available to common stockholders:

		Three Months Ended September 30,
		2017 2016 (in thousands)

Net income available to common stockholders	ಕೆ	72,257	S	9,088
Depreciation and amortization		13,472		17,724
Impairment of real estate
Gain on sale of depreciable assets		(74,715)		(14,927)
FFO available to common stockholders		11,014	S	11,885

FFO available to common stockholders was \$11,014,000 for the three months ended September 30, 2017, a decrease of \$871,000 compared to \$11,885,000 for the three months ended September 30, 2016. The decrease in FFO was primarily attributable to a decrease of \$2,380,000 in net operating segments in continuing operations and a decrease of \$703,000 in income from discontinued operations, partially offset by a decrease of \$1,580,000 in asset management and other fees to related parties and a decrease of \$909,000 in interest expense.

Summary Segment Results

CIM Commercial operates in four segments: office, hotel, multifamily properties and lending. Set forth and described below are summary segment results for our four segments included in continuing operations.

		Three Months Ended September 30,			Change
		2017		2016		S	%
		(dollars in thousands)
Revenues:
Office	S	41,427	ಕಾ	47,584	સ્ત્ર	(6,157)	(12.9)%
Hotel		8,406		9,139		(733)	(8.0)%
Multifamily		2,683		5,068		(2,385)	(47.1)%
Lending		2,868		2,541		327	12.9 %
Expenses:
Office		18,867		22,695		(3,828)	(16.9)%
Hotel		5,973		6,708		(735)	(11.0)%
Multifamily		1,390		3,378		(1,988)	(58.9)%
Lending		1,255		1,272		(17)	(1.3)%

Revenues

Office Revenue: Office revenue includes rental revenue from office properties, expense reimbursements and lease termination income. Office revenue decreased to \$41.427,000, or by 12.9%, for the three months ended September 30, 2017 compared to \$47,584,000 for the three months ended September 30, 2016. The decrease is primarily due to the sale of an office property in San Francisco, California in March 2017, the sale of an office property in Charlotte, North Carolina in June 2017, and the sale of an office property and parage in Sacramento, California in June 2017, partially offset by an increase in expense reimbursements revenue at one of our Washington, D.C. properties sold in August 2017, and an increase in lease termination income at one of our California properties due to recognition of fees in connection with the early termination of a large tenant effective in December 2017, which space has been subsequently leased. In addition to the aforementioned sales, the sale of an office property in Los Angeles, California in September 2017 and the sale of an office property in Washington, D.C. in October 2017, which is held for sale at September 30, 2017, are expected to cause office revenue to decline materially for the remainder of 2017

Hotel Revenue: Hotel revenue decreased to \$8,406,000, or by 8.0%, for the three months ended September 30, 2017 compared to \$9,139,000 for the three months ended September 30, 2016. The decrease is primarily due to the sale of a hotel property in Los Angeles, California in July 2016, partially offset by revenue increases at the remaining hotel property due to RevPAR growth resulting from increases in rates and occupancy.

Multifamily Revenue: Multifamily revenue decreased to \$2,683,000, or by 47.1%, for the three months ended September 30, 2017 compared to \$5,068,000 for the three months ended September 30, 2016. The decrease is primarily due to the sale of the three multifamily properties located in Dallas, Texas in May and June 2017. The sale of the three multifamily properties in Dallas, Texas, the sale of the multifamily property in New York, New York in September 2017, and the sale of the multifamily property in Houston, Texas, which is held for sale at September 30, 2017, are expected to cause multifamily revenue to decline materially for the remainder of 2017. However, the magnitude of any such decrease cannot be predicted as it will depend on a number of factors such as the timing of the disposition of the multifamily property held for sale at September 30, 2017.

Expenses

Office Expenses: Office expenses decreased to \$18,867,000, or by 16.9%, for the three months ended September 30, 2017 compared to \$22,695,000 for the three months ended September 30, 2016. The decrease is primarily due to the sale of an office property in San Francisco, California in March 2017, the sale of an office property in Charlotte, North Carolina in June 2017, the sale of an office property and parage in Sacramento, California in June 2017, and a decrease in real estate taxes at certain of our California properties due to supplemental tax assessments received during the third quarter of 2016, partially offset by an increase in certain other tenant reimbursable expenses at one of our Washington, D.C. properties sold in August 2017. In addition to the aforementioned sales, the sale of an office property in Los Angeles, California in September 2017 and the sale of an office property in Washington, D.C. in October 2017, which is held for sale at September 30, 2017, are expected to cause office expenses to decline materially for the remainder of 2017.

Hotel Expenses: Hotel expenses decreased to \$5.973.000. or by 11.0%. for the three months ended September 30. 2017 compared to \$6,708,000 for the three months ended September 30, 2016. The decrease is primarily due to the sale of a hotel property in Los Angeles, California in July 2016.

Multifamily Expenses: Multifamily expenses decreased to \$1,390,000, or by 58.9%, for the three months ended September 30, 2017 compared to \$3,378,000 for the three months ended September 30, 2016. The decrease is primarily due to the sale of the three properties located in Dallas, Texas in May and June 2017, as well as a decrease in legal fees at the New York property sold in September 2017. The sale of the three multifamily properties in Dallas, Texas, the multifamily property in New York, New York in September 2017, and the sale of the multifamily property in Houston, Texas, which is held for sale at September 30, 2017, are expected to cause multifamily expenses to decline materially for the remainder of 2017. However, the magnitude of any such decrease cannot be predicted as it will depend on a number of factors such as the timing of the disposition of the multifamily property held for sale at September 30, 2017.

Asset Management and Other Fees to Related Parties: Asset management fees totaled \$4,971,000 for the three months ended September 30, 2017 compared to \$6,589,000 for the three months ended September 30, 2016. Asset management fees are calculated based on a percentage of the daily average adjusted fair value of CIM Urban's investments, which are appraised in the fourth quarter of each year. The lower fees reflect a decrease in the adjusted fair value of CIM Urban's investments due to the sale of a hotel property in February 2016, the sale of a hotel property in July 2016, the sale of an office property in March 2017, the sale of two multifamily properties in May 2017, the sale of two office properties, a parking garage, and one multifamily property in June 2017, the sale of an office property in August 2017, and the sale of an office property and a multifamily property in September 2017, offset by net increases in the fair value of CIM Urban's real estate investments based on the December 31, 2016 appraised values and incremental expenditures incurred in the first nine months of 2017. CIM Commercial also pays a Base Service Fee to the Manager, a related party, which totaled \$265,000 for the three months ended September 30, 2017 compared to \$259,000 for the three months ended September 30, 2016. In addition, the Manager received compensation and/or reimbursent for performing certain services for CIM Commercial and its subsidiaries that are not covered under the Base Service Fee. For the three months ended September 30, 2017 and 2016, we expensed \$735,000 for such services, respectively. For the three months ended September 30, 2017 and 2016, we also expensed \$80,000 and \$107,000, respectively, related to corporate services subject to reimbursement by us under the CIM SBA Staffing and Reimbursement. Asset management tees are expected to decline materially for the remainder of 2017 as a result of our completed sales, the disposition of assets held for sale at September 30, 2017, and any additional share repurchases that may occur during the remainder of 2017.

Interest Expense: Interest expense, which is not allocated to our operating segments, was \$9,243,000 for the three months ended September 30, 2017, a decrease of \$909,000 compared to \$10,152,000 in the corresponding period in 2016. The decrease is primarily due to the payoff of a \$25.331.000 mortgage in March 2017 in connection with the sale of an office property in San Francisco, California, the payoff of mortgages with a combined balance of \$38,781,000 in connection with the sale of our three multifamily properties in Dallas, Texas in May and June 2017, and a decrease in interest expense, including the impact of interest rate swaps, under the unsecured credit and term loan facilities, mainly due to lower average outstanding balances under the unsecured credit and term loan facilities, partially offset by an increase in loan fee amortization, resulting from a write-off of the outstanding deferred loan costs in connection with the repayment of \$65,000,000 of outstanding borrowings on our unsecured term loan facility in August 2017. Our interest expected to decrease for the remainder of 2017 due to the payoffs and buyer assumptions of loans in connection with our sales of real estate, the repayment of \$65,000,000 of outstanding borrowings on our unsecured term loan facility, and the expected assumption of a \$28,715,000 mortgage loan by the buyer of our multifamily property held for sale at September 30, 2017. However, the magnitude of any

such decrease cannot be predicted as it will depend on a number of our revolving credit facility and the timing of the disposition of our multifamily property held for sale at September 30, 2017.

General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were \$876,000 for the three months ended September 30, 2017, a decrease of \$885,000 in the corresponding period in 2016.

Transaction Costs: Transaction costs totaling \$242,000 for the three months ended September 30, 2017 represent a \$189,000 increase from \$5,000 for the three months ended September 30, 2016, mainly due to an additional \$253,000 in penalties and interest, expensed in the third quarter of 2017 in connection with a payment made in August 2017, related to a suit filed by the City and County of San Francisco claiming past due real property transfer tax relating to a transaction in a prior year (Note 16). The Company believes that it has defenses to, and intends to vigorously contest, the asserted tax obligations.

Depreciation and Amortization Expense: Depreciation and amortization expense was \$13,472,000 for the three months ended September 30, 2017, a decrease of \$4,252,000 compared to \$17,724,000 for the three months ended September 30, 2016. The decrease is primarily due to the sale of an office property in San Francisco, California that was held for sale starting in mid-February 2017 and sold in March 2017, the sale of three multifamily properties in Dallas, Texas that were held for sale in May 2017 and sold in May and June 2017, the sale of two office properties and a parking garage in Sacramento, California and Charlotte, North Carolina, which were held for sale in June 2017, the sale of an office property in Los Angeles, California that was held for sale in September 2017, a multifamily property in Houston, Texas that was held for sale in July 2017, the sale of a multifamily property in New York that was held for sale in July 2017 and sold in September 2017, the sale of two office properties in Washington, D.C., that were held for sale in August 2017 and sold in August and October 2017, and the acceleration of tenant improvement depreciation and lease commission in connection with the early termination of a large tenant at one of our California properties effective in December 2017, partially offset by an increase in the depreciation expense associated with additional capital expenditures. Dexpected to decline materially for the remainder of 2017 as a result of our completed sales and the disposition of assets held for sale at September 30, 2017.

Provision for Income Taxes: Provision for income taxes was \$339,000 for the three months ended September 30, 2017, a decrease of \$40,000 compared to \$379,000 for the three months ended September 30, 2016.

Discontinued Operations

Net Income from Discontinued Operations: Net income from discontinued operations represents revenues and expenses from the part of our lending segment that is included in discontinued operations, including interest income on loans and other loan related fee income, offset by expenses, which include general and administrative expenses, fees to related party, and direct interest expense. Net income from discontinued operations was \$0 for the three months ended September 30, 2017, a decrease of \$703,000 compared to \$703,000 for the three months ended September 30, 2016. The decrease is due to the sale of our commercial real estate lending subsidiary in December 2016.

Comparison of the Nine Months Ended September 30, 2017 to the Nine Months Ended September 30, 2016

Net Income

	Nine Months Ended September 30,				Change
		2017		2016		ક	%
		(dollars in thousands)
Total revenues	ಕಾ	183,632	ಲ್ಲಿ	201,309	રે	(17,677)	(8.8)%
Total expenses		203,473		206,070		(2,597)	(1.3)%
Gain on sale of real estate		378,732		39.666		339,066
Net income from discontinued operations				3.061		(3,061)
Net income		357,698		36,926		320,772

Net income increased to \$357,698,000, or by \$320,772,000, for the nine months ended September 30, 2017, compared to S36.926,000 for the nine months ended September 30, 2016. The increase is primarily attributable to an increase in the gain on sale of real estate of \$339,066,000, as well as a decrease of \$8,798,000 in depreciation expense, an increase of \$2,591,000 in net operating income of our operating segments in continuing operations and a decrease of

\$1,838,000 in asset management and other fees to related parties, partially offset by an increase of \$13,100,000 in impairment of real estate, an increase of \$11,550,000 in transaction costs, an increase of \$4,362,000 in interest expense, and a decrease of \$3,061,000 in income from discontinued operations.

Funds from Operations ("FFO")

We believe that FFO is a widely recognized and appropriate measure 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) available to common stockholders, computed in accordance with GAAP, excluding gains (or losses) from sales of real estate, and real estate, and real estate depreciation and amortization. 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 fund our cash needs, including our ability to pay dividends.

The following table sets forth a reconciliation of net income available to common stockholders to FFO available to common stockholders:

		Nine Months Ended September 30,
		2017		2016
		(in thousands)
Net income available to common stockholders	ಕ	357,447	S	36,917
Depreciation and amortization		45,464		54,262
Impairment of real estate		13,100
Gain on sale of depreciable assets		(378,732)		(39,666)
FFO available to common stockholders		37,279	D	51,513

FFO available to common stockholders was \$37,279,000 for the nine months ended September 30, 2017, a decrease of \$14,234,000 compared to \$51,513,000 for the nine months ended September 30, 2016. The decrease in FFO was primarily attributable to an increase of \$11.550.000 in transaction costs, an increase of \$4.362,000 in interest expense of \$3,061,000 in income from discontinued operations, partially offset by an increase of \$2,591,000 in net operating income of our operating segments in continuing operations and a decrease of \$1,838,000 in asset management and other fees to related parties.

Summary Segment Results

		Nine Months Ended September 30,			Change
		2017		2016		S	%
		(dollars in thousands)
Revenues:
Office	ਦਿੱਤੇ	134,434	ಲ್ಲಾ	139,403	ಕಾ	(4,969)	(3.6)%
Hotel		29,528		38,918		(9,390)	(24.1)%
Multifamily		12,400		15,298		(2,898)	(18.9)%
Lending		7,270		7,690		(420)	(5.5)%
Expenses:
Office		51,106		61,557		(10,451)	(17.0)%
Hotel		19,037		26,487		(7,450)	(28.1)%
Multifamily		7,359		9,507		(2,148)	(22.6)%
Lending		3,647		3,866		(219)	(5.7)%

Revenues

Office Revenue: Office revenue includes rental revenue from office properties, expense reimbursements and lease termination income. Office revenue decreased to \$134,434,000, or by 3.6%, for the nine months ended September 30, 2017 compared to \$139,403,000 for the nine months ended September 30, 2016. The decrease is primarily due to the sale of an office property in San Francisco, California in March 2017, the sale of an office property in Charlotte, North Carolina in June 2017, the sale of an office property and parking garage in Sacramento, California in June 2017, a decrease at one of our Washington, D.C. properties sold in October 2017 due to the expiration of a lease with a large tenant in January 2016, partially offset by an increase in expense reimbursements revenue at one of our Washington, D.C. properties sold in August 2017, an increase in lease termination income at one of our California properties due to recognition of fees in connection with the early termination of a large tenant effective in December 2017, which space has been subsequently leased and an increase at certain of our California and Washington, D.C. properties due to increases in both occupancy and rental rates. In addition to the sales, the sale of an office property in Los Angeles, California in September 2017 and an office property in Washington, D.C. in October 2017, which is held for sale at September 30, 2017, are expected to cause office materially for the remainder of 2017.

Hotel Revenue: Hotel revenue decreased to \$29,528,000, or by 24.1%, for the months ended September 30, 2017 compared to \$38,918,000 for the nine months ended September 30, 2016. The decrease is primarily due to the sale of two hotel properties in February and July 2016, partially offset by revenue increases at the remaining hotel property due to RevPAR growth resulting from increases in rates and occupancy.

Multifamily Revenue: Multifamily revenue decreased to \$12,400,000, or by 18.9%, for the nine months ended September 30, 2017 compared to \$15,298,000 for the nine months ended September 30, 2016. The decrease is primarily due to the sale of the three multifamily properties located in Dallas, Texas in May and June 2017, and a decrease at the Houston, Texas property as a result of decreased rents. The three multifamily properties in Dallas, Texas, the sale of the multifamily property in New York in September 2017, and the sale of the multifamily property in Houston, Texas, which is held for sale at September 30, 2017, are expected to cause multifamily revenue to decline materially for the remainder of 2017. However, the magnitude of any such decrease cannot be predicted as it will depend on a number of factors such as the timing of the disposition of the multifamily property held for sale at September 30, 2017.

Lending Revenue: Lending revenue represents revenue from our lending subsidiaries included in continuing operations, including interest income on loans and other loan related fee income. Lending revenue decreased to \$7,270,000, or by 5.5%, for the nine months ended September 30, 2017 compared to \$7,690,000 for the nine months ended September 30, 2016. The decrease is primarily due to lower revenue during the nine months ended September 30, 2017 as a result of recognition of accretion for discounts related to decreased prepayments on our loans, partially offset by an increase in premium income from the sale of the guaranteed portion of our SBA 7(a) loans and a break-up fee related to a potential loan that was received during the nine months ended September 30, 2017.

Document

Expenses

Office Expenses: Office expenses decreased to \$51,106,000, or by 17.0%, for the nine months ended September 30, 2017 compared to \$61,557,000 for the nine months ended September 30, 2016. The decrease is primarily due to reduced real estate taxes for the nine months ended September 30, 2017 as a result of our transfer of the right to collect supplemental real estate tax reimbursements related to an office property in San Francisco, California in March 2017, the same office property in San Francisco, California in March 2017, the sale of an office property and parking garage in Sacramento, California in June 2017, a decrease in real estate taxes for the months ended September 30, 2017 at our office property in Charlotte, North Carolina, the sale of the same office property in Charlotte, North Carolina in June 2017, a decrease in real estate taxes at certain of our California properties due to supplemental tax assessments received during the nine months ended September 30, 2016, partially offset by an increase in certain other tenant reimbursable expenses at one of our Washington, D.C. properties sold in August 2017. In addition to the aforementioned sales, the sale of an office property in Los Angeles, California in September 2017 and the sale of an office property in Washington, D.C. in October 2017, which is held for sale at September 30, 2017, are expected to cause office expenses to decline materially for the remainder of 2017.

Hotel Expenses: Hotel expenses decreased to \$19,037,000, or by 28.1%, for the nine months ended September 30, 2017 compared to \$26,487,000 for the nine months ended September 30, 2016. The decrease is primarily due to the sale of two hotel properties in February and July 2016.

Multifamily Expenses: Multifamily expenses decreased to \$7.359.000. or by 22.6%. for the nine months ended September 30, 2017 compared to \$9,507,000 for the nine months ended September 30, 2016. The decrease is primarily due to the sale of the three multifamily properties located in Dallas, Texas in May and June 2017, as well as a decrease in legal fees at our New York property sold in September 2017. The sale of the three multifamily properties in Dallas, Texas, the sale of the multifamily property in New York in September 2017, and the sale of the multifamily property in Houston, Texas, which is held for sale at September 30, 2017, are expected to cause multifamily expenses to decline materially for the remainder of 2017. However, the magnitude of any such decrease cannot be predicted as it will depend on a number of factors such as the timing of the disposition of the multifamily property held for sale at September 30, 2017.

Lending Expenses: Lending expenses represent expenses from our lending subsidiaries included in continuing operations, including general and administrative expenses and fees to related to the operation of the lending business. Lending expenses decreased to \$3,647,000, or by 5.7%, for the nine months ended September 30, 2017 compared to \$3,866,000 for the nine months ended September 30, 2016, primarily due to a decrease in fees to related party and reductions in general and administrative costs associated with assets acquired in liquidation, partially offiset by the recognition for loan losses during the nine months ended September 30, 2017 compared to a recovery of loan losses during the nine months ended September 30, 2016.

Asset Management and Other Fees to Related Parties: Asset management fees totaled \$17,515,000 for the nine months ended September 30, 2017 compared to \$19,305,000 for the nine months ended September 30, 2016. Asset management fees are calculated based on a percentage of the daily average adjusted fair value of CIM Urban's investments, which are appraised in the fourth quarter of each year. The lower fees reflect a decrease in the adjusted fair value of CIM Urban's investments due to the sale of a hotel property in February 2016, the sale of a hotel property in July 2016, the sale of an office property in March 2017, the sale of two multifamily properties in May 2017, the sale of two office properties, a parking garage, and one multifamily property in June 2017, the sale of an office property in August 2017, and the sale of an office property in September 2017, offset by net increases in the fair value of CIM Urban's real estate investments based on the December 31, 2016 appraised values as well as incremental expenditures incurred in the first nine months of 2017. CIM Commercial also pays a Base Service Fee to the Manager, a related party, which totaled \$795,000 for the nine months ended September 30, 2017 compared to \$784,000 for the nine months ended September 30, 2016. In addition, the Manager received compensation and/or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered under the Base Service Fee. For the nine months ended September 30, 2017 and 2016, we expensed \$2,357,000 and \$2,402,000 for such services, respectively. For the nine months ended September 30, 2017 and 2016, we also expensed \$319,000 and \$33,000, respectively, related to corporate services subject to reimbursement by us under the CIM SBA Staffing and Reimbursement. Asset management fees are expected to decline materially for the remainder of 2017 as a result of our completed sales, the disposition of assets held for sale at September 30, 2017, and any additional share repurchases that may occur during the remainder of 2017.

Interest Expense: Interest expense, which is not allocated to our operating segments, was \$28.442,000 for the nine months ended September 30, 2017, an increase of \$4,362,000 compared to \$24,080,000 in the corresponding period in 2016. The increase is primarily due to interest expense on our \$392,000,000 mortgage loans entered into in June 2016, partially offset by a decrease in interest expense due to the payoff of a \$25,331,000 mortgage in March 2017 in connection with the sale of an office property in San Francisco, California, the payoff of mortgages with a combined balance of \$38,781,000 in connection with the sale of our three multifamily properties in Dallas, Texas in May and June 2017, and a decrease in interest expense,

including the impact of interest rate swaps, and loan amortization expense under the unsecured credit and term loan facilities, mainly due to lower average outstanding loan balances under the unsecured credities. Our interest expense is expected to decrease for the remainder of 2017 due to the payoffs and buyer assumptions of loans in connection with our sales of real estate, the repayment of \$65,000,000 of outstanding borrowings on our unsecured term loan facility, and the expected assumption of a \$28,715,000 mortgage loan by the buyer of our multifamily property held for sale at September 30, 2017. However, the magnitude of any such decrease cannot be predicted as it will depend on a number of factors such as usage of our revolving credit facility and the timing of the disposition of our multifamily property held for sale at September 30, 2017.

General and Administrative Expenses: General and administrative expenses, which have not been allocated to our operating segments, were \$2,462,000 for the months ended September 30, 2017, a decrease of \$705,000 compared to \$3,167,000 in the corresponding period in 2016. The decrease in other consulting, professional fees, and shareholder services expenses.

Transaction Costs: Transaction costs totaling \$11,870,000 for the nine months ended September 30, 2017 represent a \$11,550,000 increase from \$320,000 for the nine months ended September 30, 2016, mainly due to the \$11,845,000 payment made in August 2017 in connection with a suit filed by the City and County of San Francisco claiming past due real property transfer tax relating to a transaction in a prior year (Note 16). The Company believes that it has defenses to, and intends to continue to vigorously contest, the asserted tax obligations. The nine months ended September 30, 2016 primarily consist of abandoned project costs.

Depreciation and Amortization Expense: Depreciation and amortization expense was \$45,464,000 for the nine months ended September 30, 2017, a decrease of \$8,798,000 compared to \$54,262,000 for the nine months ended September 30, 2016. The decrease is primarily due to the sale of a hotel property in July 2016, the sale of an office property in San Francisco, California that was held for sale starting in mid-February 2017 and sold in March 2017, the sale of three multifamily properties in Dallas, Texas that were held for sale in May 2017 and sold in May and June 2017, the sale of two office properties and a parking garage in Sacramento, California and Charlotte, North Carolina that were held for sale in April 2017 and sold in June 2017, the sale of an office property in Los Angeles, California that was held for sale in May 2017 and sold in September 2017, a multifamily property in Houston, Texas that was held for sale in July 2017, the sale of a multifamily property in New York that was held for sale in July 2017 and sold in September 2017, the sale of two office properties in Washington, D.C. that were held for sale in August 2017 and sold in August and October 2017, and the acceleration of tenant improvement depreciation and lease commission amortization in connection with the early termination of a large tenant at one of our California properties effective in December 2017, partially offset by an increase in the depreciation expense associated with additional capital on expense is expected to decline materially for the remainder of 2017 as a result of our completed sales and the disposition of assess held for sale at September 30, 2017.

Impairment of Real Estate: Impairment of real estate was \$13,100,000 for the nine months ended September 30, 2017 and \$0 for the nine months ended September 30, 2016. In August 2017, we negotiated an agreement with an unrelated third party for the sale of an office property, which was sold in October 2017. We determined the book value of this property exceeded its estimated fair value less costs to sell, an impairment charge of \$13,100,000 was recognized for the nine months ended September 30, 2017. Our determination of fair value was based on negotiations with the third party buyer.

Provision for Income Taxes: Provision for income taxes was \$1,193,000 for the nine months ended September 30, 2017, an increase of \$153,000 compared to \$1,040,000 for the nine months ended September 30, 2016, due to an increase in taxable income at one of our taxable REIT subsidiaries.

Discontinued Operations

Net Income from Discontinued Operations: Net income from discontinued operations represents revenues and expenses from the part of our lending segment that is included in discontinued operations, including interest income on loans and other loan related fee income, offset by expenses, which include general and administrative expenses, fees to related party, and direct interest expense. Net income from discontinued operations was \$0 for the months ended September 30, 2017, a decrease of \$3,061,000 compared to \$3,061,000 for the nine months ended September 30, 2016. The decrease is due to the sale of our commercial real estate lending subsidiary in December 2016.

Liquidity and Capital Resources

AI assistant

Creative Media & Community Trust Corporation — Capital/Financing Update 2017

6737_rns_2017-11-12_96d82ce2-a0dc-4e60-b888-2110a668f289.pdf

CMCT PORTFOLIO DISTRICT OF COLUMBIA

CMCT GEOGRAPHY NORTHERN CALIFORNIA Wardman Park 1 Kaiser Plaza Argohne

Managed by CIM Group www.cimgroup.com

FREE WRITING PROSPECTUS

FWP 1 a17-22821_9fwp.htm FWP

IMPORTANT DISCLOSURES

FREE WRITING PROSPECTUS

FORWARD-LOOKING STATEMENTS

Terms & Features Summary

Perpetual

Do not confer voting rights

SCHEMATIC OUTLINE

Upon redemption, the investor will receive an amount, in cash or stock, greater than or equal to the stated value of the Series L Preferred Stock1

The mechanism for determining the price of ordinary shares for purposes of the redemption payment may allow investors to benefit from an upside potential

IMC

Comparison to select characteristics of typical preferred securities issued by the local banks in Israel

FREE WRITING PROSPECTUS

CIM COMMERCIAL TRUST CORPORATION PUBLIC OFFERING OF SERIES L PREFERRED STOCK

Issuer Credit Rating Maalot S&P Global IL: AA-1 Preferred Shares Credit Rating Maalot S&P Global IL: A-1 Following the Offering, CMCT, Currently Listed On NASDAQ, Will Also Be Listed on TASE

CLASSIFIED INVESTORS TENDER OFFER

IMPORTANT DISCLOSURES

Free Writing Prospectus

Forward-Looking Statements

CIM GROUP

CIM COMMERCIAL TRUST (CMCT)

TARGET CAPITAL STRUCTURE CURRENT CAPITAL STRUCTURE1 Preferred Equity, Common Equily; Common Equity,

SERIES L PREFERRED STOCK - THE OFFERING

SERIES L PREFERRED STOCK - DIVIDENDS

SERIES L PREFERED STOCK - SUBORDINATION AND SENIORITY

SERIES L PREFERRED STOCK - OTHER FEATURES

SERIES L PREFERRED STOCK - DUAL-LISTED ON NASDAQ AND THE TASE1

SERIES L PREFERRED STOCK - REDEMPTION RIGHTS

IMPORTANT DISCLOSURES

Assets and Equity Under Management

Net Asset Value

FREE WRITING PROSPECTUS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

FORM 10-O

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

CIM COMMERCIAL TRUST CORPORATION

INDEX

PART II. Other Information

PART I Financial Information

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share and per share data)

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share data)

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In thousands)

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Equity (In thousands, except share and per share data)

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands)

11/12/2017 Table of Contents

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued) (In thousands)

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

1. ORGANIZATION AND OPERATIONS

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

11/12/2017

Document

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Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

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Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

4. INVESTMENTS IN REAL ESTATE

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

5. OTHER INTANCIBLE ASSETS

CIM COMMERCIAL TRUST CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

6. OTHER ASSETS

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

7. DISCONTINUED OPERATIONS

Notes to Consolidated Financial Statements as of September 30, 2017 and December 31, 2016, and for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)

8. DEBT

Creative Media & Community Trust Corporation Capital/Financing Update 2017