Company: CMCT
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0000908311-25-000017
Chunk: 106

Company: Creative Media & Community Trust Corp
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1A
Chunk 106
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 lending operations expose us to a high degree of risk associated with real estate.

The performance and value of our loans depends upon many factors beyond our control. The ultimate performance and value of our loans are subject to risks associated with the ownership and operation of the properties which collateralize our 

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loans, including the property owner’s ability to operate the property with sufficient cash flow to meet debt service requirements. The performance and value of the properties collateralizing our loans may be adversely affected by:

•changes in national or regional economic conditions;

•changes in real estate market conditions due to changes in national, regional or local economic conditions or property market characteristics;

•competition from other properties;

•changes in interest rates and the condition of the debt and equity capital markets;

•the ongoing need for capital repairs and improvements;

•increases in real estate tax rates and other operating expenses (including utilities);

•adverse changes in governmental rules and fiscal policies; acts of God, including earthquakes, hurricanes, fires and other natural disasters; pandemic outbreaks and other global health emergencies; disruptive global political events, including terrorist activity and war (including the conflict between Russia and Ukraine and conflicts in the Middle East, which has led to disruption, instability and volatility in global markets and industries); or a decrease in the availability of or an increase in the cost of insurance;

•adverse changes in zoning laws;

•the impact of environmental legislation and compliance with environmental laws; and

•other factors that are beyond our control or the control of the commercial property owners.

In the event that any of the properties underlying our loans experience any of the foregoing events or occurrences, the value of, and return on, such loans may be negatively impacted, which in turn 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 or to maintain our level of distributions on our Common Stock or Preferred Stock.

There are significant risks related to loans originated under the SBA 7(a) Program.

Many of the borrowers under our SBA 7(a) Program are privately-owned businesses. There is typically no publicly available information about these businesses; therefore, we must rely on our own due diligence to obtain information in connection with our decisions. Our borrowers may not meet net income, cash flow and other coverage tests typically imposed by banks. A borrower’s ability to repay its loan may be adversely impacted by numerous factors, including a downturn in its industry or other negative local or macro-economic conditions. Deterioration