Creative Media & Community Trust (CMCT) risk factors, FY2025 10-K

Risks Related to Real Estate Assets

1. 01the California market that could adversely affect our business, such as adverse market conditions, changes in local laws or regulations and natural disastersNew
2. 24Our operating performance is subject to risks associated with the real estate industry
3. 25Capital and credit market conditions may adversely affect demand for our properties and the overall availability and cost of credit
4. 26Tenant concentration increases the risk that cash flow could be interrupted23% rewritten
5. 27If a major tenant declares bankruptcy, we may be unable to collect balances due under relevant leases, which could have a material adverse effect on our financial condition and ability to pay distributions on our Preferred Stock or any renewed distributions on our Common Stock
6. 28We have assumed, and in the future may assume, liabilities in connection with our property acquisitions, including unknown liabilities
7. 29We may be adversely affected by trends in the office real estate industry
8. 30We may be unable to renew leases or lease vacant office space27% rewritten
9. 31A significant portion of our net operating income is expected to come from our hotel and, as a result, our operating performance is subject to the cyclical nature of the lodging industry
10. 32The outbreak of a highly infectious, contagious or widespread disease, such as COVID-19, can result (and has resulted) in reductions in travel and adversely affect demand for our hotel
11. 33The seasonality of the lodging industry may cause quarterly fluctuations in our revenues
12. 34The increasing use of online travel intermediaries by consumers may adversely affect our profitability
13. 35Increased use of technology may reduce the need for business-related travel
14. 36We are subject to risks associated with the employment of hotel personnel, particularly with respect to unionized labor
15. 37We may be unable to renew leases or release apartment units as leases expire, or the terms of renewals or new leases may be less favorable than current leases
16. 38We may be unable to deploy capital in a way that grows our business and, even if consummated, we may fail to successfully integrate and operate acquired properties
17. 39We may be unable to successfully expand our operations into new markets
18. 40We have experienced in the past, and may in the future, impairment charges to our properties
19. 41We may obtain only limited warranties when we purchase a property and typically have only limited recourse in the event our due diligence did not identify any issues that lower the value of our property
20. 42We may be unable to sell a property if or when we decide to do so, including as a result of uncertain market conditions or high inflation
21. 43We may be unable to secure funds for our future long-term liquidity needs
22. 44Income from our long-term leases at our office properties is an important source of our cash flow from operations and is subject to risks related to increases in expenses and inflation
23. 45We may finance properties with lock-out provisions, which may prohibit us from selling a property or may require us to maintain specified debt levels for a period of years on some properties
24. 46Increased operating expenses could reduce cash flow from operations and funds available to deploy capital or make distributions
25. 47The market environment may adversely affect our operating results, financial condition and ability to pay distributions on our Preferred Stock or any renewed distributions on our Common Stock
26. 48Real estate-related taxes may increase, and if these increases are not passed on to tenants, our income will be reduced
27. 49Proposition ULA may reduce the proceeds that we will receive when we sell our Los Angeles properties
28. 50We face risks associated with development, redevelopment, repositioning or construction of real estate projects
29. 51We face significant competition
30. 52War and terrorism could harm our operating results
31. 53In connection with the ownership and operation of real estate assets, we may be liable for costs and damages related to environmental matters90% rewritten
32. 54Our real estate business is subject to risks from climate change
33. 55Compliance with the ADA and fire, safety and other regulations may require us to make unanticipated expenditures and/or increase our operating costs that could significantly reduce the cash available for distributions on our Preferred Stock or any renewed distributions on our Common Stock
34. 56Additional federal, state and local laws also may require modifications to our properties or restrict our ability to renovate our properties. We cannot predict the ultimate amount of the cost of compliance with the ADA or other legislation
35. 57Inflation may adversely affect our real estate operations
36. 58Supply chain disruption and increased costs in labor and materials may adversely affect our real estate operations
37. 59Our participation in co-investments may subject us to risks that otherwise may not be present in other real estate assets
38. 60Our manager faces conflicts of interest relating to joint ventures or other co-investment arrangements that we may enter into with CIM or its affiliates, which could result in a disproportionate benefit to CIM or its affiliates

Risks Related to Debt Financing

1. 02U.S. Federal Income and Other Tax Risks
2. 61We have incurred significant indebtedness and may incur significant additional indebtedness on a consolidated basis
3. 62We have incurred significant indebtedness and may incur significant additional indebtedness to fund future acquisitions, development activities and operational needs. The degree of leverage could make us more vulnerable to a downturn in business or the economy generally
4. 63We intend to rely in part on external sources of capital to fund future capital needs and, if we encounter difficulty in obtaining such capital, we may not be able to meet maturing obligations or make additional acquisitions
5. 64High interest rates may make it difficult for us to finance or refinance assets, which could reduce the number of properties we can acquire and the amount of cash distributions we can make
6. 65Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay distributions on our Preferred Stock or any renewed distributions on our Common Stock38% rewritten
7. 66We may not be able to generate sufficient cash flow to meet our debt service obligations
8. 67We cannot assure our stockholders that our business will generate sufficient cash flow from operations or that future sources of cash will be available to us in an amount sufficient to enable us to pay amounts due on our indebtedness or to fund our other liquidity needs
9. 68Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions on our Preferred Stock or any renewed distributions on our Common Stock
10. 69Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution on our Preferred Stock or any renewed distributions on our Common Stock
11. 70We may in the future enter into hedging transactions that could expose us to contingent liabilities in the future and materially adversely impact our financial condition and results of operations
12. 71Failure to qualify and maintain our qualification as a REIT would have significant adverse consequences to us and the value of our securities
13. 72Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
14. 73Our ownership of and relationship with our taxable REIT subsidiaries will be limited, and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax
15. 74We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability or reduce our operating flexibility
16. 75In certain circumstances, we may be subject to certain federal, state and local taxes as a REIT, which would reduce our cash available for distribution on our Preferred Stock or any renewed distributions on our Common Stock
17. 76REIT annual distribution requirements may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our objectives and reduce our stockholders’ overall return
18. 77Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities
19. 78Our property taxes could increase due to property tax rate changes or reassessment, which would impact our cash flows
20. 79REIT stockholders can receive taxable income without cash distributions
21. 80The share transfer and ownership restrictions applicable to REITs and contained in our charter may inhibit market activity in our shares of stock and restrict our business combination opportunities73% rewritten
22. 81first year for which a REIT election is made. To help ensure that we meet these tests, among other purposes, our charter restricts the acquisition and ownership of our shares of stockNew

Risks Related to Our Business

1. 03We rely on the Administrator to provide management and administration services to us, and CIM Urban relies completely on the Operator to provide CIM Urban with certain services
2. 04If we seek to internalize the management functions provided pursuant to the Master Services Agreement and the Investment Management Agreement, we could incur substantial costs and lose certain key personnel
3. 05Uninsured losses or losses in excess of our insurance coverage could materially adversely affect our financial condition and cash flows, and there can be no assurance as to future costs and the scope of coverage that may be available under insurance policies86% rewritten
4. 06As a result of the factors described above, we may not have sufficient coverage against all losses that we may experience for any reason
5. 07Cybersecurity risks and cybersecurity incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results
6. 08If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results
7. 09The outbreak of a pandemic could negatively affect and will likely continue to negatively affect our business, financial condition, results of operations and cash flows
8. 10The COVID-19 pandemic has had, and may continue to have, significant impacts on workplace practices and those changes, or other office space utilization trends, could impact our business

Risks Related to Conflicts of Interest

1. 11The Administrator and Operator are entitled to receive fees for the services they provide regardless of our performance, which may reduce their incentive to devote time and resources to our portfolio
2. 12The Fee payable to the Operator depends in large part on annual appraisals of our real estate properties
3. 13We may be obligated to pay the Operator quarterly incentive compensation even if we incur a net loss during a particular quarter
4. 14The Operator may undertake transactions that are motivated, in whole or in part, by a desire to increase its compensation
5. 15Each of the Administrator and Operator provides services to us under broad mandates, and our Board of Directors may not necessarily be involved in each acquisition, disposition or financing decision made by the Administrator or Operator
6. 16The Operator, the Administrator and their respective affiliates engage in real estate activities that could compete with us and our subsidiaries, which could result in decisions that are not in the best interests of our stockholders
7. 17Certain of our directors and executive officers may face conflicts of interest related to positions they hold with the Operator, the Administrator, CIM Group and their affiliates, which could result in decisions that are not in the best interest of our stockholders

Risks Related to Our Organizational Structure

1. 18Provisions of our charter and bylaws and the MGCL may deter takeover attempts, which may limit the opportunity of our stockholders to sell their shares at a favorable price
2. 19Control shares do not include shares the acquiror is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions
3. 20stock in excess of the ownership limit. A transfer of shares of our stock to a person who, as a result of the transfer, violates the ownership limit also may be void under certain circumstances
4. 21The Operator may change its acquisition process, or elect not to follow it, without stockholder consent at any time, which may adversely affect returns on our assets32% rewritten
5. 22The power of the Board of Directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders
6. 23The MGCL or our charter may limit the ability of our stockholders or us to recover on a claim against a director or officer who negligently causes us to incur losses

Risks Related to Our Common Stock and Preferred Stock

1. 82There is no public market for our Preferred Stock, and we do not expect any such market to develop
2. 83None of our Preferred Stock has been rated
3. 84We may issue shares of our Common Stock at prices below the then-current NAV per share of our Common Stock, which could materially reduce our NAV per share of our Common Stock
4. 85Changes in market conditions could adversely affect the market prices of our Common Stock
5. 86The rights of the holders of shares of our Common Stock to receive dividends rank junior to those of the holders of shares of our Preferred Stock
6. 87Our Common Stock ranks, with respect to rights upon liquidation, dissolution or winding-up of the Company, junior to our Preferred Stock
7. 88The redemption price of shares of Preferred Stock may be paid, in our sole discretion in cash or in shares of Common Stock, which ranks junior to our Preferred Stock41% rewritten
8. 89We have the option to redeem shares of Preferred Stock under certain circumstances without the consent of their holders33% rewritten
9. 90We may suffer from delays in deploying capital, which could adversely affect our ability to pay distributions on our Preferred Stock or any renewed distributions on our Common Stock and the value of our securities
10. 91The cash distributions received by holders of our Preferred Stock and Common Stock may be less frequent or lower in amount than expected by such holders or not occur at all22% rewritten
11. 92Our ability to redeem shares of our Preferred Stock, or to pay distributions on our Preferred Stock and Common Stock, may be limited by Maryland law
12. 93Holders of our securities are subject to inflation risk22% rewritten
13. 94The transfer and ownership restrictions applicable to our securities may impair the ability of stockholders to receive shares of our Common Stock if the Company continues to elect to pay the redemption price in shares of Common Stock, upon redemption of the Preferred Stock63% rewritten
14. 95The terms of our Preferred Stock do not contain any financial covenants
15. 96Holders of our Preferred Stock have no voting rights with respect to such shares
16. 97Our NAV is an estimate of the fair value of our assets and may not necessarily reflect realizable value
17. 98We may be unable to pay or maintain cash distributions or increase distributions to stockholders over time
18. 99Distributions at any point in time may not reflect the current performance of our properties or our current operating cash flow
19. 100Changes in accounting standards may adversely impact our financial condition and/or results of operations
20. 101We may not be able to maintain a listing of our Common Stock on Nasdaq36% rewritten