Company: CMCT
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0000908311-25-000067
Chunk: 48

Company: Creative Media & Community Trust Corp
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 1
Chunk 48
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For the three and six months ended June 30, 2025 and 2024, the Company recognized rental income as follows (in thousands):Three Months Ended June 30,Six Months Ended June 30,2025202420252024Rental and other property incomeFixed lease payments (1)$13,947 $16,338 $28,316 $32,686 Variable lease payments (2)1,832 2,911 4,683 5,336 Rental and other property income$15,779 $19,249 $32,999 $38,022 ______________________(1)Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above-market leases, below-market leases and lease incentives.(2)Variable lease payments include expense reimbursements billed to tenants and percentage rent, net of bad debt expense from the Company’s operating leases plus cash payments from tenants deemed not probable of collection.Collectability of Future Lease PaymentsThe Company continually reviews whether collection of future lease payments, including any straight-line rent, and current and future operating expense reimbursements from tenants is probable. The determination of whether collectability is probable takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon the determination that the collectability of future lease payments is not probable, the Company will record a reduction to rental and other property income and a decrease in the outstanding receivable. Revenue from leases where collection is deemed to be not probable is recorded on a cash basis until collectability becomes probable. Management’s estimate of the collectability of future lease payments is based on the best information available at the time of estimate. The Company does not use a general reserve approach. As of June 30, 2025 and December 31, 2024, the Company had identified certain tenants where collection was no longer considered probable and decreased outstanding receivables by $592,000 and $640,000, respectively.Revenue from lending activitiesInterest income included in interest and other income is comprised of interest earned on loans and the Company’s short-term investments and the accretion of loan discounts. Interest income on loans is accrued as earned with the accrual of interest suspended when the related loan becomes a Non-Accrual Loan (as defined below