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DEBT | 9 Months Ended
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Sep. 30, 2020
Debt Disclosure [Abstract] |
DEBT | 6. DEBT Information on our debt is as follows:
|  | September 30, 2020 |  | December 31, 2019
|  | (in thousands)
Mortgage loan with a fixed interest rate of 4.14% per annum, with monthly payments of interest only, and a balance of $97,100,000 due on July 1, 2026. The loan is nonrecourse. |  | $ | 97,100 |  |  | $ | 97,100 |
Deferred loan costs related to mortgage loans |  | (154) |  |  | (174) |
Total Mortgage Payable |  | 96,946 |  |  | 96,926 |
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 3.87% and 5.68% as of September 30, 2020 and December 31, 2019, respectively. |  | 5,772 |  |  | 7,845 |
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 1.56% and 3.32% as of September 30, 2020 and December 31, 2019, respectively. |  | 2,780 |  |  | 4,307 |
|  | 8,552 |  |  | 12,152 |
Unamortized premiums |  | 466 |  |  | 629 |
Total Secured Borrowings—Government Guaranteed Loans |  | 9,018 |  |  | 12,781 |
2018 revolving credit facility |  | 166,500 |  |  | 153,000 |
2020 unsecured revolving credit facility |  | — |  |  | — |
Junior subordinated notes with a variable interest rate which resets quarterly based on the three-month LIBOR plus 3.25%, with quarterly interest only payments. Balance due at maturity on March 30, 2035. |  | 27,070 |  |  | 27,070 |
SBA 7(a) loan-backed notes with a variable interest rate which resets monthly based on the lesser of the one-month LIBOR plus 1.40% or the prime rate less 1.08%, with payments of interest and principal due monthly. Balance due at maturity in March 20, 2043. |  | 15,123 |  |  | 22,282 |
Borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility with a fixed interest rate of 0.35%. |  | 16,016 |  |  | — |
|  | 224,709 |  |  | 202,352 |
Deferred loan costs related to other debt |  | (2,422) |  |  | (2,867) |
Discount on junior subordinated notes |  | (1,705) |  |  | (1,771) |
Total Other Debt |  | 220,582 |  |  | 197,714 |
Total Debt |  | $ | 326,546 |  |  | $ | 307,421 |
Our mortgage payable is secured by a deed of trust on the property and assignment of rents. The junior subordinated notes may be redeemed at par at our option. Secured borrowings—government guaranteed loans represent sold loans which are treated as secured borrowings because the loan sales did not meet the derecognition criteria provided for in ASC 860-30, Secured Borrowing and Collateral. These loans included cash premiums that are amortized as a reduction to interest expense over the life of the loan using the effective interest method and are fully amortized when the underlying loan is repaid in full. SBA 7(a) loan-backed notes are secured by deeds of trust or mortgages. Deferred loan costs, which represent legal and third-party fees incurred in connection with our borrowing activities, are capitalized and amortized to interest expense on a straight-line basis over the life of the related loan, approximating the effective interest method. Deferred loan costs of $3,466,000 and $4,535,000 are presented net of accumulated amortization of $890,000 and $1,494,000 as of September 30, 2020 and December 31, 2019, respectively, and are a reduction to total debt. In June 2016, we entered into six mortgage loan agreements with an aggregate principal amount of $392,000,000. A portion of the net proceeds from the loans was used to repay outstanding balances under our previous unsecured credit facility and the remaining portion was used to repurchase shares of our Common Stock in a private repurchase in September 2016. On September 21, 2017, in connection with the sale of an office property in Los Angeles, California, one mortgage loan with an outstanding principal balance of $21,700,000, collateralized by such property, was assumed by the buyer. On March 1, 2019, additional mortgage loans with an aggregate outstanding principal balance of $205,500,000 at such time, were legally defeased in connection with the sale of the related properties. The cash outlay required for this defeasance in the net amount of $224,086,000 was based on the purchase price of U.S. government securities that will generate sufficient cash flow to fund continued interest payments on the loans from the effective date of this defeasance through the date on which we could repay the loans at par. As a result of this defeasance, we recognized a loss on early extinguishment of debt of $0 and $19,290,000 for the three and nine months ended September 30, 2019, respectively, which represented the sum of the difference between the purchase price of U.S. government securities of $224,086,000 and the aggregate outstanding principal balance of the mortgage loans of $205,500,000, the write-off of deferred loan costs of $637,000 and related accumulated amortization of $170,000, and transaction costs of $237,000. On March 14, 2019, in connection with the sale of an office property in San Francisco, California, one mortgage loan with an outstanding principal balance of $28,200,000 at such time was assumed by the buyer. As a result of this assumption, we recognized a loss on early extinguishment of debt of $0 and $178,000 for the three and nine months ended September 30, 2019, respectively, which represented the write-off of deferred loan costs of $243,000 and related accumulated amortization of $65,000. On May 16, 2019, one mortgage loan with an outstanding principal balance of $39,500,000 at such time, was legally defeased in connection with the sale of the related property. The cash outlay required for this defeasance in the net amount of $44,108,000 was based on the purchase price of U.S. government securities that will generate sufficient cash flow to fund continued interest payments on the loan from the effective date of this defeasance through the date on which we could repay the loan at par. As a result of this defeasance, we recognized a loss on early extinguishment of debt of $0 and $4,911,000 for the three and nine months ended September 30, 2019, respectively, the latter of which represented the sum of the difference between the purchase price of U.S. government securities of $44,108,000 and the outstanding principal balance of the mortgage loan of $39,500,000, the write-off of deferred loan costs of $287,000 and related accumulated amortization of $82,000, and transaction costs of $98,000. On March 1, 2019, in connection with the sale of an office property in Washington, D.C., we prepaid the related mortgage loan with an outstanding principal balance of $46,000,000 at such time, using proceeds from the sale. As a result, we recognized a loss on early extinguishment of debt of $0 and $5,603,000 for the three and nine months ended September 30, 2019, respectively, which represented a prepayment penalty of $5,325,000 and the write-off of deferred loan costs of $537,000 and related accumulated amortization of $259,000. On May 30, 2018, we completed a securitization of the unguaranteed portion of certain of our SBA 7(a) loans receivable with the issuance of $38,200,000 of unguaranteed SBA 7(a) loan-backed notes. The securitization uses a trust formed for the benefit of the note holders (the “Trust”) which is considered a variable interest entity (“VIE”). Applying the consolidation requirements for VIEs under the accounting rules in ASC Topic 810, Consolidation, the Company determined that it is the primary beneficiary based on its power to direct activities through its role as servicer and its obligations to absorb losses and right to receive benefits. The SBA 7(a) loan-backed notes are collateralized solely by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of our SBA 7(a) loans receivable. The SBA 7(a) loan-backed notes mature on March 20, 2043, with monthly payments due as payments on the collateralized loans are received. Based on the anticipated repayments of our collateralized SBA 7(a) loans, at issuance, we estimated the weighted average life of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%. We reflect the SBA 7(a) loans receivable as assets on our consolidated balance sheets and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheets. The restricted cash on our consolidated balance sheets as of September 30, 2020 and December 31, 2019 included $1,113,000 and $3,306,000, respectively, of funds related to our SBA 7(a) loan-backed notes. In October 2018, CIM Commercial entered into a revolving credit facility with a bank syndicate (the “2018 revolving credit facility”). In September 2020, the 2018 revolving credit facility was amended (the “2018 Credit Facility Modification”) primarily in order to modify the calculation of the borrowing base to mitigate the effect that COVID-19 has had on CIM Commercial’s ability to borrow under the facility. As modified, CIM Commercial can borrow up to a maximum of $209,500,000, subject to a borrowing base calculation. The 2018 revolving credit facility is secured by deeds of trust on certain properties. Outstanding advances under the 2018 revolving credit facility bear interest: (a) during the Deferral Period (as defined below), which is currently in effect, at (i) the base rate plus 1.05% or (ii) LIBOR plus 2.05% and (b) following the Deferral Period, at (i) the base rate plus 0.55% or (ii) LIBOR plus 1.55%. As of September 30, 2020 and December 31, 2019, the variable interest rate was 2.21% and 3.29%, respectively. The interest rate on the first $120,000,000 of one-month LIBOR indexed variable rate borrowings on our 2018 revolving credit facility was effectively converted to a fixed rate of 3.11% through interest rate swaps until such swaps were terminated on March 11, 2019. The 2018 revolving credit facility is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The 2018 revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions. On October 30, 2018, we borrowed $170,000,000 on this facility to repay outstanding borrowings on our unsecured term loan facility. On December 28, 2018, we repaid $40,000,000 of outstanding borrowings on our 2018 revolving credit facility and we terminated one interest rate swap with a notional value of $50,000,000 (Note 11). On February 28, 2019 and March 11, 2019, we repaid $10,000,000 and $120,000,000, respectively, of outstanding borrowings on our 2018 revolving credit facility using cash on hand and net proceeds from sales of assets in the first quarter of 2019 (Note 3), and, in connection with the March 11, 2019 repaymen t, we terminated our two remaining interest rate swaps, which had an aggregate notional value of $120,000,000 (Note 11). As of September 30, 2020 and December 31, 2019, $166,500,000 and $153,000,000, respectively, was outstanding under the 2018 revolving credit facility, and approximately $28,000,000 and $73,900,000, respectively, was available for future borrowings. The 2018 revolving credit facility contains customary covenants and is not subject to any financial covenants (other than a liquid asset requirement during the Deferral Period as further described below), but is subject to a borrowing base calculation that determines the amount we can borrow. Under the terms of the 2018 Credit Facility Modification, the borrowing base calculation was modified for the period from September 2, 2020 through June 30, 2021 (the “Deferral Period”). The Deferral Period is also subject to (i) an increase in the applicable interest rate as described at the beginning of this paragraph, (ii) the addition of a reserve amount of $15,000,000 against our borrowing availability, which may be reduced by certain capital expenditures made in respect of our properties securing the 2018 Credit Facility, and (iii) the requirement that we maintain a minimum balance of “liquid assets” of $15,000,000, defined as a combination of (a) unencumbered cash and cash equivalents and (b) up to $5,000,000 of unfunded availability under the 2018 revolving credit facility. In May 2020, to further enhance its liquidity position and maintain financial flexibility, CIM Commercial entered into an unsecured revolving credit facility with a bank (the “2020 unsecured revolving credit facility”) pursuant to which CIM Commercial can borrow up to a maximum of $10,000,000. Outstanding advances under the 2020 unsecured revolving credit facility bear interest at the rate of 1.00%. CIM Commercial also pays a revolving credit facility fee of 1.12% with each advance under the 2020 unsecured revolving credit facility, which fee is subject to a cap of $112,000 in the aggregate. The 2020 unsecured revolving credit facility matures in May 2022. The 2020 unsecured revolving credit facility contains certain customary covenants including a maximum leverage ratio and a minimum fixed charge coverage ratio, as well as certain other conditions. As of September 30, 2020, $0 was outstanding under the 2020 unsecured revolving credit facility and $10,000,000 was available for future borrowings. In June 2020, we borrowed funds from the Federal Reserve through the Paycheck Protection Program Liquidity Facility (the “PPPLF”). Advances under the PPPLF carry an interest rate of 0.35%, are made on a dollar-for-dollar basis based on the amount of loans originated under the Paycheck Protection Program and are secured by loans made by us under the Paycheck Protection Program. The PPPLF contains customary covenants but is not subject to any financial covenants. The maturity date of PPPLF borrowings is the same as the maturity date of the loans pledged to secure the extension of credit, generally two years. At maturity, both principal and accrued interest are due. The maturity date of a PPPLF borrowing will be accelerated if, among other things, we have been reimbursed by the SBA for a loan forgiveness (to the extent of the forgiveness), we have received payment from the SBA representing exercise of the loan guarantee or we have received payment from the underlying borrower (to the extent of the payment received). No new extensions of credit will be made under the PPPLF after September 30, 2020 unless the Federal Reserve Board and the United States Department of the Treasury decide to extend the PPPLF. We borrowed money under the PPPLF to finance all the loans we originated under the Paycheck Protection Program. As of September 30, 2020, $16,016,000 was outstanding under the PPPLF. As of September 30, 2020 and December 31, 2019, accrued interest and unused commitment fees payable of $576,000 and $650,000, respectively, were included in accounts payable and accrued expenses. Future principal payments on our debt (face value) as of September 30, 2020 are as follows:
Years Ending December 31, |  | Mortgage Payable |  | Secured Borrowings Principal (1) |  | 2018 Revolving Credit Facility |  | Other (1) (2) |  | Total
|  | (in thousands)
2020 (Three months ending December 31, 2020) |  | $ | — |  |  | $ | 107 |  |  | $ | — |  |  | $ | 450 |  |  | $ | 557 |
2021 |  | — |  |  | 435 |  |  | — |  |  | 8,542 |  |  | 8,977 |
2022 |  | — |  |  | 449 |  |  | 166,500 |  |  | 9,333 |  |  | 176,282 |
2023 |  | — |  |  | 462 |  |  | — |  |  | 1,124 |  |  | 1,586 |
2024 |  | — |  |  | 477 |  |  | — |  |  | 703 |  |  | 1,180 |
Thereafter |  | 97,100 |  |  | 6,622 |  |  | — |  |  | 38,057 |  |  | 141,779 |
|  | $ | 97,100 |  |  | $ | 8,552 |  |  | $ | 166,500 |  |  | $ | 58,209 |  |  | $ | 330,361 |
(1)Principal payments on secured borrowings and SBA 7(a) loan-backed notes, which are included in Other, are generally dependent upon cash flows received from the underlying loans. Our estimate of their repayment is based on scheduled payments on the underlying loans. Our estimate will differ from actual amounts to the extent we experience prepayments and or loan liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans. (2)Represents the junior subordinated notes, SBA 7(a) loan-backed notes, and borrowed funds from the Federal Reserve through the PPPLF.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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