Company: CMCT
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0000908311-25-000096
Chunk: 77

Company: Creative Media & Community Trust Corp
Filing Date: 2025-11-14
Form: 10-Q
Item: Item 1
Chunk 77
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 (2)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. The Company’s estimate of their repayment is based on scheduled payments on the underlying loans. The Company’s estimate will differ from actual amounts to the extent the Company experiences prepayments and/or loan liquidations or charge-offs. 

(3)Represents the junior subordinated notes and SBA 7(a) Loan-Backed Notes. 

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIESIn the ordinary course of business, the Company may use certain types of derivative instruments for the purpose of managing or hedging its interest rate risk. The following table summarizes the terms of the Company’s interest rate cap agreements as of September 30, 2025 (dollar amounts in thousands):   Outstanding Notional   Fair Value of AssetsBalance SheetAmount as ofStrikeEffectiveMaturityas ofLocationSeptember 30, 2025Rates (1)DatesDatesSeptember 30, 2025Interest Rate CapsOther assets$171,049 4.5% to 5.75% 12/6/2024 - 8/04/20251/1/2027 - 1/31/2027$10 ____________________________________(1)The index used for the Company’s interest rate cap agreements is 1-Month Term SOFR.Additional disclosures related to the fair value of the Company’s derivative instrument is included in Note 13. The notional amount under the derivative instrument is an indication of the extent of the Company’s involvement in the instrument, but does not represent exposure to credit, interest rate or market risks.Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company has an interest rate cap that is used to manage exposure to interest rate movements but does not meet the requirements to be designated as a hedging instrument. The change in fair value of the derivative instrument that is not designated as a hedge is recorded directly to earnings as interest expense on the accompanying consolidated statements of operations. During the three and nine months ended September 30, 2025, the Company recorded an unrealized loss of $43,000 and $142,000, respectively, which was included in interest expense on the accompanying consolidated statements of operations related to its interest rate caps. During the three and nine months ended September 30,