CIM Opportunity Zone Fund's Net Income Soars on Lease Gain

TL;DR

**CIM Opportunity Zone Fund's Q2 net income looks great on paper, but dig deeper: a massive one-time lease gain masks a concerning drop in core solar revenue.**

AI Summary

CIM Opportunity Zone Fund, L.P. reported a significant increase in net income for the six months ended June 30, 2025, reaching $105.23 million, a substantial rise from $15.59 million in the prior year period. This surge was primarily driven by a realized gain on net investment in lease of $117.36 million, which was not present in the previous year. Total revenues, however, decreased to $46.82 million for the six months ended June 30, 2025, down from $83.41 million in the same period of 2024, largely due to a decline in solar revenue from $65.45 million to $28.64 million. The company's total assets grew to $2.45 billion as of June 30, 2025, from $2.34 billion at December 31, 2024, with real estate under development increasing from $291.44 million to $408.51 million. Cash and cash equivalents decreased significantly from $336.19 million to $205.09 million. Notes payable, at fair value, decreased from $295.46 million to $277.59 million. The Fund continues to focus on investing in infrastructure and real estate within designated 'Opportunity Zones' to generate returns from capital appreciation and operating income.

Why It Matters

This filing reveals a mixed picture for CIM Opportunity Zone Fund, L.P. While a one-time realized gain on a net investment in lease significantly boosted net income, a substantial drop in solar revenue raises questions about the sustainability of core operating performance. For investors, this highlights the importance of scrutinizing the source of earnings, as the $117.36 million gain is non-recurring. Employees and customers in the solar sector might face uncertainty given the revenue decline. In the competitive Opportunity Zone market, the fund's ability to generate consistent operating income from its real estate and infrastructure assets, beyond one-off gains, will be crucial for long-term viability and attracting further capital.

Risk Assessment

Risk Level: medium — The fund's total revenues decreased significantly from $83.41 million in H1 2024 to $46.82 million in H1 2025, primarily due to a $36.82 million drop in solar revenue. This decline in core operating revenue, despite a large one-time gain, indicates potential operational challenges or market shifts in its solar investments, which could impact future profitability and cash flow sustainability.

Analyst Insight

Investors should look beyond the headline net income figure and analyze the quality of earnings. Given the significant decline in solar revenue, a deeper dive into the operational performance of the fund's core assets is warranted. Consider if the fund's strategy in Opportunity Zones is generating sustainable, recurring income or relying on episodic gains.

Financial Highlights

debt To Equity

N/A

revenue

$46.82M

operating Margin

N/A

total Assets

$2.45B

total Debt

$277.59M

net Income

$105.23M

eps

N/A

gross Margin

N/A

cash Position

$205.09M

revenue Growth

-43.8%

Revenue Breakdown

Key Numbers

• $105.23M — Net income for six months ended June 30, 2025 (Increased significantly from $15.59 million in H1 2024)
• $117.36M — Realized gain on net investment in lease (Primary driver of net income increase in H1 2025)
• $46.82M — Total revenues for six months ended June 30, 2025 (Decreased from $83.41 million in H1 2024)
• $28.64M — Solar revenue for six months ended June 30, 2025 (Decreased from $65.45 million in H1 2024)
• $2.45B — Total Assets as of June 30, 2025 (Increased from $2.34 billion at December 31, 2024)
• $408.51M — Real estate under development as of June 30, 2025 (Increased from $291.44 million at December 31, 2024)
• $205.09M — Cash and cash equivalents as of June 30, 2025 (Decreased from $336.19 million at December 31, 2024)
• $277.59M — Notes payable, at fair value, as of June 30, 2025 (Decreased from $295.46 million at December 31, 2024)

Key Players & Entities

• CIM Opportunity Zone Fund, L.P. (company) — registrant
• CIM Opportunity Zone Fund GP, LLC (company) — General Partner of the Fund
• CIM Group, LLC (company) — affiliate of the General Partner
• Delaware (regulator) — state of incorporation
• Section 1400Z-1 of the Internal Revenue Code of 1986 (regulator) — governing tax code for Opportunity Zones
• Bloomberg (company) — publisher

FAQ

Risk Factors

• Realized Gain Volatility [medium — financial]: The significant net income of $105.23 million in H1 2025 was driven by a $117.36 million realized gain on net investment in lease, a non-recurring item not present in H1 2024. This highlights potential volatility in earnings based on asset disposition events.
• Opportunity Zone Investment Performance [medium — market]: The Fund's objective is to generate returns from capital appreciation and operating income from Opportunity Zone investments. Performance is tied to the success of these specific real estate and infrastructure projects, which are subject to market conditions and development risks.
• Real Estate Development Execution [medium — operational]: Real estate under development increased by $117.07 million to $408.51 million. The successful execution of these development projects is critical for future returns and is subject to construction delays, cost overruns, and regulatory hurdles.
• Declining Solar Revenue [high — financial]: Solar revenue decreased by $36.82 million to $28.64 million in H1 2025 compared to H1 2024. This substantial drop indicates potential challenges in the solar segment or a strategic shift away from it.
• Reduced Cash Position [medium — financial]: Cash and cash equivalents decreased by $131.1 million to $205.09 million. While still substantial, this reduction may impact the Fund's liquidity for new investments or operational needs.
• Qualified Opportunity Fund Compliance [high — regulatory]: The Fund must maintain at least 90% of its assets in 'qualified opportunity zone property' to maintain its QOF status. Changes in tax laws or failure to meet this threshold could have significant tax implications for investors.

Industry Context

The Opportunity Zone program aims to stimulate investment in distressed communities. Funds like CIM Opportunity Zone Fund, L.P. focus on real estate and infrastructure development within these zones, seeking capital appreciation and operating income. The sector is influenced by economic conditions, local development policies, and the evolving regulatory landscape of the Opportunity Zone program.

Regulatory Implications

The Fund's status as a Qualified Opportunity Fund (QOF) is critical and requires adherence to specific investment criteria (at least 90% in QOZ property). Non-compliance could lead to loss of tax benefits for investors and potential penalties. Changes in tax legislation related to Opportunity Zones could also impact the Fund's strategy and returns.

What Investors Should Do

1. Analyze the sustainability of earnings
2. Monitor real estate development progress
3. Evaluate the decline in solar revenue
4. Assess liquidity and cash management

Key Dates

• 2018-11-01: Fund Formation — Marks the establishment of CIM Opportunity Zone Fund, L.P. as a Delaware limited partnership.
• 2019-01-21: Commencement of Operations — Indicates the start of the Fund's investment activities.
• 2024-03-18: Fifth Amended and Restated Partnership Agreement — Governs the Fund's operations and structure, indicating potential changes or updates to its framework.
• 2025-06-30: Period End for 10-Q Filing — Reporting date for the financial statements, providing current operational and financial status.

Glossary

Opportunity Zone

Geographically designated areas in the U.S. that qualify for tax incentives under the Tax Cuts and Jobs Act of 2017, aimed at spurring economic development. (The Fund's core investment strategy is focused on properties within these zones.)

Qualified Opportunity Fund (QOF)

An investment vehicle that invests at least 90% of its assets in qualified opportunity zone property, allowing investors to defer or reduce capital gains taxes. (The Fund qualifies and intends to maintain its status as a QOF, crucial for its tax benefits and investor appeal.)

Net investment in lease

Represents the net value of a lease agreement, likely including the asset's value and any associated financing or contractual rights, after accounting for lease payments and expenses. (A significant realized gain on this item drove the Fund's net income in the current period.)

Real estate under development

Costs incurred for properties that are in the process of being constructed or redeveloped, not yet ready for their intended use. (This category shows a substantial increase, indicating active development projects within the Fund's portfolio.)

Variable Interest Entities (VIEs)

Entities where equity investors do not have sufficient equity at risk for the entity to finance its activities without additional financial support from other parties, requiring consolidation if the primary beneficiary. (The Fund must assess its involvement with VIEs to determine proper financial statement consolidation.)

Year-Over-Year Comparison

Compared to the prior year period, CIM Opportunity Zone Fund, L.P. experienced a dramatic increase in net income, soaring to $105.23 million from $15.59 million, primarily due to a large realized gain on lease investment. However, total revenues saw a significant decline, falling to $46.82 million from $83.41 million, largely driven by a sharp decrease in solar revenue. Total assets grew to $2.45 billion, with a notable increase in real estate under development, while cash reserves diminished considerably.

Filing Documents

• cim-20250630.htm (10-Q) — 1310KB
• cimopportunityzonefundlp-ea.htm (EX-31.1) — 10KB
• cimopportunityzonefundlp-e.htm (EX-31.2) — 10KB
• cimopportunityzonefundlp-eb.htm (EX-32.1) — 8KB
• 0001765107-25-000014.txt ( ) — 8189KB
• cim-20250630.xsd (EX-101.SCH) — 65KB
• cim-20250630_cal.xml (EX-101.CAL) — 74KB
• cim-20250630_def.xml (EX-101.DEF) — 257KB
• cim-20250630_lab.xml (EX-101.LAB) — 681KB
• cim-20250630_pre.xml (EX-101.PRE) — 470KB
• cim-20250630_htm.xml (XML) — 1488KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION 3

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 3 Consolidated Balance Sheets as of June 3 0 , 2025 and December 31, 2024 3 Consolidated Statements of Operations for the three and six months ended June 3 0 , 2025 and 2024 4 Consolidated Statements of Changes in Partners' Capital and Redeemable Partners' Capital for the three and six months ended June 3 0 , 2025 and 2024 5 Consolidated Statements of Cash Flows for the s ix months ended June 3 0 , 2025 and 2024 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 30

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 36

Controls and Procedures

Item 4. Controls and Procedures 36

— OTHER INFORMATION

PART II — OTHER INFORMATION 38

Legal Proceedings

Item 1. Legal Proceedings 38

Risk Factors

Item 1A. Risk Factors 38

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 38

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 38

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 38

Other Information

Item 5. Other Information 38

Exhibits

Item 6. Exhibits 39

Signatures

Signatures 40 2 Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CIM OPPORTUNITY ZONE FUND, L.P. CONSOLIDATED BALANCE SHEETS (in thousands, except unit amounts) (unaudited) June 30, 2025 December 31, 2024 ASSETS Land $ 178,553 $ 178,553 Building and improvements 550,205 547,886 Solar facilities 742,326 854,078 Intangible assets 14,608 14,525 Real estate under development 408,507 291,436 Total investments in real estate 1,894,199 1,886,478 Accumulated depreciation and amortization ( 91,973 ) ( 79,927 ) Total investments in real estate, net 1,802,226 1,806,551 Investments in unconsolidated entities, at fair value 120,103 119,127 Cash and cash equivalents 205,091 336,192 Restricted cash 31,378 4,450 Accounts receivable, net 34,452 32,572 Contributions receivable 57 55 Due from related party 221 — Net investment in lease 218,934 — Right of use asset 32,119 32,517 Prepaid expenses and other assets 6,233 4,168 Total Assets $ 2,450,814 $ 2,335,632 LIABILITIES Notes payable, at fair value $ 277,589 $ 295,464 Accounts payable and accrued expenses 70,742 53,528 Prepaid rent and other liabilities 1,865 3,109 Lease liability 36,174 35,925 Intangible liabilities, net 29,383 31,111 Due to related party 3,963 2,553 Distributions payable 31 31 Advance capital contributions 300 — Total Liabilities 420,047 421,721 COMMITMENTS AND CONTINGENCIES (NOTE 10) REDEEMABLE PARTNERS' CAPITAL: 1,841,102 and 1,825,181 limited partnership units issued and outstanding as of June 30, 2025 and December 31, 2024 2,284,666 2,249,462 PARTNERS' CAPITAL GENERAL PARTNER: 558 and 553 limited partnership units issued and outstanding as of June 30, 2025 and December 31, 2024 937 882 Retained earnings (deficit) ( 372,737 ) ( 447,254 ) Total partners' capital excluding noncontrolling interests ( 371,800 ) ( 446,372 ) Non-controlling interests 117,901 110,821 Total Partners' Capital ( 253,899 ) ( 335,551 ) TOTAL LIABILITIES, REDEEMABLE PARTNERS' CAPITAL AND PARTNERS' CAPITAL $ 2,450,814 $ 2,335,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (Unaudited) 1. ORGANIZATION CIM Opportunity Zone Fund, L.P., (the "Fund"), a Delaware limited partnership, was formed on November 1, 2018 and commenced operations on January 21, 2019 (the "Initial Closing"). The Fund is governed by the Fifth Amended and Restated Limited Partnership Agreement, dated as of March 18, 2024 (as amended and restated, the "Partnership Agreement"). The Fund is organized as an open-ended vehicle for the purpose of investing in infrastructure and real estate, through entities that acquire, own, develop or re-develop and operate infrastructure and real estate assets, including assets in low-income communities in the United States that have been designated as "Opportunity Zones" pursuant to Section 1400Z-1 of the Internal Revenue Code of 1986 (the "Code") and which meet the criteria described in the Partnership Agreement. The Fund's objective is generating returns from capital appreciation and operating income once development of these assets is complete. At least 90% of the Fund's assets will consist of "qualified opportunity zone property", which enables the Fund to be classified as a "qualified opportunity fund" within the meaning of Section 1400Z-2 of the Code (a "QOF"). The Fund qualified, and intends to continue to qualify, as a QOF beginning with its taxable year ended December 31, 2020. The general partner of the Fund is CIM Opportunity Zone Fund GP, LLC, a Delaware limited liability company (the "General Partner"), and an affiliate of CIM Group, LLC (together with its controlled affiliates, "CIM"). One or more affiliates of CIM acts as the manager of the Fund (the "Manager"). The Fund also has limited partners (the "Limited Partners"), affiliated limited partners (the "Affiliated Limited Partners") and, together with the General Partner, (the "Partners"). The Fund shall continue until it is dissolved and subsequently terminated upon (a) a determination made by the General

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (Unaudited) entities are variable interest entities ("VIEs"), and if so, whether the Fund is the primary beneficiary. The Fund's judgment with respect to its level of influence or control over an entity and whether the Fund is the primary beneficiary of a VIE involves consideration of various factors, including the form of the Fund's ownership interest, the Fund's voting interest, the size of the Fund's investment (including loans), and the Fund's ability to participate in major policy-making decisions. The Fund's ability to correctly assess its influence or control over an entity affects the presentation of its investments on the Fund's consolidated financial statements. Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Investments in Real Estate and Infrastructure — Investments in real estate and infrastructure are stated at cost, less accumulated depreciation and amortization. The Fund considers the period of future benefit of each respective asset to determine the appropriate useful life. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows: Buildings and improvements 15 - 40 years Furniture, fixtures, and equipment 3 - 5 years Tenant improvements Lesser of useful life or lease term Intangible lease assets and liabilities Lease term Solar batteries 20 years Solar assets 35 years Capitalized Project Costs — The Fund capitalizes project costs, including pre-construction costs, interest expense, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, or construction of a project, while activities are ongoing to prepare an asset for its

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (Unaudited) agreements, in-place leases and ground leases, if any, based in each case on their relative fair values. Assumed debt is recorded at fair value based upon the present value of the expected future payments and current interest rates. In allocating the purchase consideration of the identified intangible assets and liabilities of an acquired property, above-market, below-market, and in-place lease values are recorded based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management's estimate of fair market lease rates for the corresponding in-place leases measured over a period equal to the remaining non-cancelable term of the lease, and for below-market agreements, over a period equal to the initial term plus any below-market fixed-rate renewal periods. Acquired above-market and below-market leases are amortized and recorded to rental and other property income over the initial terms of the respective leases. The aggregate value of other acquired intangible assets, consisting of in-place leases and tenant relationships, is measured by the estimated cost of operations during a theoretical lease-up period to replace in-place leases, including lost revenues and any unreimbursed operating expenses, plus an estimate of deferred leasing commissions for in-place leases. The value of in-place leases is amortized over the remaining non-cancelable periods of the respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts relating to that lease are written-off. Investments in Unconsolidated Entities, at Fair Value — The Fund accounts for its investments in unconsolidated entities under the equity method, as the Fund has the ability to exercise significant influence over the investments. The Fund's investme

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (Unaudited) in lease of $ 117.4 million in the consolidated statements of operations. See Note 11 — Leases for further details on the Fund's sales-type lease. The Fund has lease agreements with lease and non-lease components. The Fund has elected to not separate non-lease components from lease components for all classes of underlying assets (primarily real estate assets) and will account for the combined components as rental and other property income. Non-lease components included in rental and other property income include certain tenant reimbursements for maintenance services (including common-area maintenance services or "CAM"), real estate taxes, insurance and utilities paid for by the lessor but consumed by the lessee. As a lessor, the Fund has further determined that this policy will be effective only on a lease that has been classified as an operating lease and the revenue recognition pattern and timing is the same for both types of components. Significant judgments and assumptions are inherent in not only determining if a contract contains a lease, but also the lease classification, terms, payments, and, if needed, discount rates. Judgments include the nature of any options, including if they will be exercised, evaluation of implicit discount rates and the assessment and consideration of "fixed" payments for straight-line rent revenue calculations. Lease costs represent the initial direct costs incurred in the origination, negotiation and processing of a lease agreement. Such costs include lease commissions and are amortized over the life of the lease on a straight-line basis. Costs related to salaries and benefits, supervision, administration, unsuccessful origination efforts and other activities not directly related to completed lease agreements are expensed as incurred. Upon successful lease execution, leasing commissions are capitalized. Current Expected Credit Losses — Current expected cred

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