Company: CMCT
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000908311-25-000038
Chunk: 169

Company: Creative Media & Community Trust Corp
Filing Date: 2025-05-09
Form: 10-Q
Item: Item 8
Chunk 169
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 2025 (Unaudited) – (Continued)

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 the Company could realize in a current market exchange.The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities.Debt—The carrying amounts of the Company’s secured borrowings - government guaranteed loans, SBA 7(a) loan-backed notes, 2022 Credit Facility and variable rate mortgage payable approximate their fair values, as the interest rates on these securities are variable and approximate current market interest rates. The Company determines the fair value of fixed rate mortgage notes payable and junior subordinated notes by discounting the expected cash flows based on estimated borrowing rates available to the Company as of the measurement date. Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs.Loans Receivable—The Company determines the fair value of loans receivable by performing a present value analysis for the anticipated future cash flows using an appropriate market discount rate taking into consideration the credit risk and using an anticipated prepayment rate. The value of the government guaranteed portions of loans held for sale is based primarily on the anticipated proceeds to be received upon sale. The following summarizes the ranges of discount rates and prepayment rates used to arrive at the estimated fair values of the Company’s loans receivable:  March 31, 2025December 31, 2024Discount RatePrepayment RateDiscount RatePrepayment RateSBA 7(a) loans receivable, subject to credit risk7.30% - 10.75%4.07% - 17.50%7.30% - 10.75%4.07% - 17.50%SBA 7(a) loans receivable, subject to loan-backed notes9.00% - 10.75%4.81% - 17.50%9.00% - 10.75%4.81% - 17.50%SBA 7(a) loans receivable, subject to secured borrowings10.25% - 10.25%5.00% - 17.50%10.25% - 10.25%5.00% - 17.50