Brookfield Real Estate Income Trust Inc.
11/12/2025 | Press release | Distributed by Public on 11/12/2025 16:29
Quarterly Report for Quarter Ending SEPTEMBER 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References herein to the "Company," "Brookfield REIT," "we," "us," or "our" refer to Brookfield Real Estate Income Trust Inc. and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the unaudited financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. Terms used and not defined herein have the meanings set forth elsewhere in this Quarterly Report on Form 10-Q.
Forward-Looking Statements
Statements contained in this Quarterly Report on Form 10-Q that are not historical facts, particularly those in the section entitled "Recent Developments - Business Outlook" and "Liquidity and Capital Resources", are based on our current expectations, estimates, projections, opinions, and/or beliefs. Such statements are not facts and involve known and unknown risks, uncertainties, and other factors. Investors should not rely on these statements as if they were fact. Certain information contained in this Quarterly Report on Form 10-Q constitutes "forward-looking statements," which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "target," "estimate," "intend," "continue," "forecast," or "believe" or the negatives thereof or other variations thereon or other comparable terminology. Due to various risks and uncertainties, including those described under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024 and under Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q and elsewhere in this Quarterly Report on Form 10-Q, actual events or results or our actual performance may differ materially from those reflected or contemplated in such forward-looking statements. No representation or warranty is made as to future performance or such forward-looking statements. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved. We do not undertake to revise or update any forward-looking statements.
Overview
We are a Maryland corporation formed on July 27, 2017 to invest in commercial real estate assets. We seek to invest in well- located, high quality real estate properties that generate strong current cash flow and could further appreciate in value through our proactive, best-in-class asset management strategies. Our real estate-related debt strategy seeks to achieve high current income and superior risk-adjusted returns, as well as provide a source of liquidity.
We are externally managed by Brookfield REIT Adviser LLC (the "Adviser"), an affiliate of Brookfield Asset Management Ltd. (together with its affiliates, "Brookfield"). We are structured as anumbrella partnership real estate investment trust ("UPREIT"),which means that we own substantially all of our assets through our operating partnership, Brookfield REIT Operating Partnership L.P. (the "Operating Partnership"), a Delaware limited partnership, of which we are the sole general partner.
We are conducting a continuous public offering (the "Public Offering") of Class S, Class T, Class D and Class I shares of our common stock pursuant to the Securities Act of 1933, as amended (the "Securities Act"). On April 30, 2018, we launched our initial public offering of up to $2.0 billion in shares of our common stock. On November 2, 2021, our initial public offering terminated, and we commenced our second public offering of up to $7.5 billion in shares of our common stock. On July 2, 2025, the second public offering terminated and we commenced our third public offering of up to $7.5 billion in shares of our common stock.
In addition to the Public Offering, we are conducting private offerings of Class I and Class C shares to feeder vehicles that offer interests in such vehicles to non-U.S. persons. The offer and sale of Class I and Class C shares to the feeder vehicles is exempt from the registration provisions of the Securities Act by virtue of Section 4(a)(2) and Regulation S promulgated thereunder. We are also offering Class E shares to Brookfield and its affiliates, certain of Brookfield's and Oaktree's employees, and our independent directors in one or more private offerings. The offer and sale of Class E shares is exempt from the registration provisions of the Securities Act by virtue of Section 4(a)(2) and Regulation D promulgated thereunder.
On January 1, 2025, we issued unregistered shares of Class I common stock to an institutional investor in exchange for a $200 million subscription. The issuance was made at the same transaction price as Class I shares sold through the Public Offering as of January 1, 2025, with fees consistent with existing Class I stockholders. Brookfield entered into a separate agreement with the investor pursuant to which Brookfield will support a specified total annual return on the investor's investment in our Class I shares in the form of periodic cash payments, subject to certain limits. In exchange, the investor has agreed not to request the repurchase of its shares, subject to limited exceptions, for a period of five years from the issuance date, at which point the investor may request that we repurchase its shares through our share repurchase plan ratably over a two-year period.
As of November 12, 2025, we have received cumulative net proceeds of $1.1 billion, including proceeds received pursuant to our distribution reinvestment plan, from the sale of shares of our Class S, Class D, Class I, Class E, Class C and Class T common stock in our Public Offering and our private offerings.
We qualified as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2019, and we generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT.
As of September 30, 2025, the Company owned 19 investments in real estate, four investments in unconsolidated real estate ventures, five investments in real estate-related loans, 11 investments in real estate-related securities, two interest rate derivatives and five forward currency swap related to investments in real estate-related loans and securities. We currently operates in six reportable segments: multifamily and student housing, office, logistics, single-family rental, net lease and real estate-related loans and securities. We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from owning properties or real estate-related loans.
DST Program
On October 1, 2024, we initiated, through the Operating Partnership, a program (the "DST Program") to issue and sell up to a maximum aggregate offering amount of $1.0 billion of beneficial interests ("DST Interests") in specific Delaware statutory trusts ("DSTs") holding one or more real properties (each, a "DST Property" and, collectively, the "DST Properties"). These DST Interests will be issued and sold to "accredited investors," as that term is defined under Regulation D promulgated by the SEC under the Securities Act, in one or more offerings (the "DST Offerings"). Under the DST Program, each DST Property will be sourced from our real properties or from third parties, which will be held in a DST and subsequently leased by one of our wholly owned subsidiaries in accordance with a certain master lease agreement. Each master lease agreement will be guaranteed by the Operating Partnership, which will hold a fair market value option (the "FMV Option"), giving it the right, but not the obligation, to acquire the DST Interests in the applicable DST from the investors in exchange for Operating Partnership units or cash, at the Operating Partnership's discretion. Such FMV Option shall be exercisable during a one-year option period, beginning two years following the sale of the last DST Interest in any such DST Offering. The Operating Partnership, in its sole and absolute discretion, may assign its rights in the FMV Option to a subsidiary, an affiliate, a successor entity to the Operating Partnership or the acquirer of a majority of the Operating Partnership's assets. After a one-year holding period, investors who acquire Operating Partnership units pursuant to the FMV Option generally have the right to cause the Operating Partnership to redeem all or a portion of their Operating Partnership units for, at our sole discretion, shares of our common stock, cash, or a combination of both.
We expect that the DST Program will give us the opportunity to expand and diversify our capital-raising strategies by offering what we believe to be an attractive investment product for investors that may be seeking like-kind replacement properties to complete tax-deferred exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"). Affiliates of the Adviser have provided and may continue to provide mortgage financing with respect to certain DST Properties and are expected to receive fees in connection with the sale of the DST Interests and the management of the DSTs. We intend to use the net offering proceeds from the DST Program to make investments in accordance with our investment strategy and policies, reduce our borrowings, repay indebtedness, fund the repurchase of shares of all classes of our common stock under our share repurchase plan and for other corporate purposes. We have not allocated specific amounts of the net proceeds from the DST Program for any specific purpose. As of September 30, 2025, we have raised approximately $75.5 million of aggregate gross proceeds from our DST Program.
Recent Developments
Business Outlook
Real estate fundamentals continue to remain strong in most sectors and property valuations have generally stabilized after a prolonged period of volatility. Recent uncertainty regarding U.S. trade policy and the outcome of global trade negotiations has contributed to increased volatility in public markets. While the potential impact of tariffs on real estate is still uncertain, high-quality properties with strong operating cash flows and stable occupancy should remain resilient through a period of instability. Additionally, rising construction costs are expected to limit development and new supply going forward, which should provide further tailwinds for private real estate investment.
In September, the U.S. Federal Reserve issued its first rate cut in nine months, with additional rate cuts widely expected in the coming months. The change in rate policy and decline in interest rates should create favorable conditions for private real estate, including positive impacts to property values and cash flows.
We believe we are well-positioned to capitalize on these opportunities going forward, with no unsatisfied repurchase requests and approximately $480 million of total liquidity as of September 30, 2025.
Please refer to Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, and elsewhere in this Quarterly Report on Form 10-Q for additional disclosure relating to material trends or uncertainties that may impact our business.
Q3 2025 Highlights
Operating and Capital Raising Results:
•Year-to-date total returns through September 30, 2025, excluding upfront selling commissions, were -0.34% for Class S shares, 0.32% for Class I shares, -0.21% for Class T shares, and 0.07% for Class D shares. Negative year-to-date performance is primarily attributable to valuation decreases at the beginning of the year at certain properties due to adjusting capitalization rates to reflect recent comparable transactions. Total return is calculated as the percent change in the NAV per share from the beginning of the applicable period, plus the amount of any net distributions per share declared in the period. Management believes total return is a useful measure of the overall performance of our shares.
•Annualized total returns from inception through September 30, 2025, excluding upfront selling commissions, were 5.39% for Class S, 6.42% for Class I, -0.21% for Class T shares, and -1.94% for Class D shares. Since inception returns for Class D shares are calculated from June 1, 2022, the date the first Class D shares were issued. Since inception returns for Class T shares are calculated from February 1, 2025, the date the first Class T shares were issued.
•Raised $11.6 million of gross proceeds from the sale of our common stock through public and private offerings during the three months ended September 30, 2025. Additionally, we raised $22.0 million through our DST Program during the quarter.
•Declared monthly net distributions totaling $11.4 million during the three months ended September 30, 2025. As of September 30, 2025, the annualized net distribution rate was 6.10% for Class S shares, 6.85% for Class I shares, 5.95% for Class T shares, and 6.52% for Class D shares.
•Reinvested distributions of $3.2 million during the three months ended September 30, 2025.
Investing and Financing Activity:
•In July 2025, we repaid an $80.0 million property mortgage secured by Briggs + Union and contributed the property to the DST Program. The DST subsequently obtained a property mortgage from an affiliate with a principal balance of $81.0 million and a fixed rate of 4.20%.
•In September 2025, we originated a £29.3 million mezzanine loan secured by One London Wall Place, a fully-leased, Class-A office building in London, U.K. The loan has a fixed rate of 9.9% and maturity date of April 2027. In connection with the loan, we entered into a foreign exchange swap to hedge the full principal and interest payment amounts.
•In September 2025, we funded $59.8 million related to our limited partnership interests in the U.S. Diversified Logistics Portfolio I and U.S. Diversified Logistics Portfolio II.
Current Portfolio:
•As of September 30, 2025, our investment portfolio, based on the NAV of our investments, consisted of 79% real estate properties and 21% real estate-related loans and securities. NAV is measured as the fair value of our investments less any mortgages or debt obligations related to such investments. There is no indebtedness on our real estate-related debt investments.
•Our real estate properties as of September 30, 2025, based on the total asset value of our properties measured at fair value, consisted of multifamily (48%), net lease (21%), logistics (15%), single-family rental (9%), student housing (5%) and office (2%).
•As of September 30, 2025, our real estate-related loans and securities consisted of 22 investments with an aggregate fair value of $208.0 million.
Portfolio
Investments in Real Estate
The following table provides information regarding our portfolio of real estate properties as of September 30, 2025 ($ in millions):
|
Investment(1)
|
Location | Property Type | Acquisition Date |
Ownership Percentage(2)
|
Purchase Price(3)
|
Square Feet/ Number of Units |
Occupancy Rate(4)
|
|||||||||||||||||||||||||||||||||||||
| Anzio Apartments | Atlanta, GA | Multifamily | April 2019 | 90% | $ | 59.2 | 448 | 87% | ||||||||||||||||||||||||||||||||||||
| Arbors of Las Colinas | Dallas, TX | Multifamily | December 2020 | 90% | 63.5 | 408 | 89% | |||||||||||||||||||||||||||||||||||||
| 1110 Key Federal Hill | Baltimore, MD | Multifamily | September 2021 | 100% | 73.6 | 224 | 88% | |||||||||||||||||||||||||||||||||||||
| Domain | Orlando, FL | Multifamily | November 2021 | 100% | 74.1 | 324 | 89% | |||||||||||||||||||||||||||||||||||||
| The Burnham | Nashville, TN | Multifamily | November 2021 | 100% | 129.0 | 328 | 86% | |||||||||||||||||||||||||||||||||||||
| Flats on Front | Wilmington, NC | Multifamily | December 2021 | 100% | 97.5 | 273 | 93% | |||||||||||||||||||||||||||||||||||||
| Verso | Beaverton, OR | Multifamily | December 2021 | 100% | 74.0 | 172 | 95% | |||||||||||||||||||||||||||||||||||||
| 2626 South Side Flats | Pittsburgh, PA | Multifamily | January 2022 | 100% | 90.0 | 264 | 91% | |||||||||||||||||||||||||||||||||||||
|
The Parker at Huntington Metro(5)
|
Alexandria, VA | Multifamily | March 2022 | 100% | 136.0 | 360 | 92% | |||||||||||||||||||||||||||||||||||||
|
Briggs + Union(5)
|
Mount Laurel, NJ | Multifamily | April 2022 | 100% | 158.0 | 490 | 91% | |||||||||||||||||||||||||||||||||||||
| Single-Family Rentals | Various | Single-Family Rental | Various | 100% | 178.5 | 667 | 90% | |||||||||||||||||||||||||||||||||||||
| Reflection | Atlanta, GA | Student Housing | June 2024 | 97% | 116.0 | 741 | 85% | |||||||||||||||||||||||||||||||||||||
|
Principal Place(6)
|
London, UK | Net Lease | November 2021 | 20% | 99.8 | 644,000 | 100% | |||||||||||||||||||||||||||||||||||||
| DreamWorks Animation Studios | Glendale, CA | Net Lease | December 2021 | 100% | 326.5 | 497,000 | 100% | |||||||||||||||||||||||||||||||||||||
| Lakes at West Covina | Los Angeles, CA | Office | February 2020 | 95% | 41.0 | 177,000 | 96% | |||||||||||||||||||||||||||||||||||||
| 6123-6227 Monroe Ct | Morton Grove, IL | Logistics | November 2021 | 100% | 17.2 | 208,000 | 100% | |||||||||||||||||||||||||||||||||||||
| 8400 Westphalia Road | Upper Marlboro, MD | Logistics | November 2021 | 100% | 27.0 | 100,000 | 100% | |||||||||||||||||||||||||||||||||||||
| McLane Distribution Center | Lakeland, FL | Logistics | November 2021 | 100% | 26.7 | 211,000 | 100% | |||||||||||||||||||||||||||||||||||||
| 2003 Beaver Road | Landover, MD | Logistics | February 2022 | 100% | 9.4 | 38,000 | 100% | |||||||||||||||||||||||||||||||||||||
| 187 Bartram Parkway | Franklin, IN | Logistics | February 2022 | 100% | 28.8 | 300,000 | 100% | |||||||||||||||||||||||||||||||||||||
|
U.S. Diversified Logistics Portfolio I(7)
|
Various | Logistics | February 2025 | 19% | 40.0 | 9,384,444 | 94% | |||||||||||||||||||||||||||||||||||||
|
U.S. Diversified Logistics Portfolio II(7)
|
Various | Logistics | June 2025 | 19% | 14.4 | 1,926,759 | 94% | |||||||||||||||||||||||||||||||||||||
| Total | $ | 1,880.2 | ||||||||||||||||||||||||||||||||||||||||||
| (1) | Investments in real estate properties includes our consolidated property investments and our unconsolidated investments in Principal Place, U.S. Diversified Logistics Portfolio I and U.S. Diversified Logistics Portfolio II. | ||||
| (2) | The joint venture agreements entered into by us (other than the Principal Place joint venture) provide the other partner a profits interest based on achieving certain internal rate of return hurdles. Such investments are consolidated by us and any profits interest due to the other partners is reported within non-controlling interests. | ||||
| (3) | Excludes acquisition costs. | ||||
| (4) |
For multifamily and student housing investments, occupancy represents the percentage of all leased units divided by the total available units as of September 30, 2025. Single-family rentals occupancy represents all occupied homes divided by the total stabilized homes as of the date indicated. For office, net lease and logistics investments, occupancy represents the percentage of all leased square footage divided by the total available square footage as of September 30, 2025.
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||||
| (5) | Held through our DST Program. The property has been consolidated on our Consolidated Balance Sheets and any profits interest due to the third-party investors in the DST Program are reported within non-controlling interests in consolidated joint ventures. | ||||
| (6) | Purchase price represents our initial equity investment in the joint venture of £73.3 million GBP converted to USD using the spot rate on the acquisition date. | ||||
| (7) | Held through a limited partnership interest in a Brookfield-managed fund that owns the investments. Purchase price represents the aggregate amount of capital funded to the limited partnership by us. | ||||
Investments in Real Estate-Related Loans and Securities
The following table details our investments in real estate-related loans and securities as of September 30, 2025 ($ in thousands):
| September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Type of Loan/Security | Number of Positions |
Weighted Average Coupon(1)
|
Weighted Average Maturity Date(2)
|
Face Amount |
Cost Basis/Allowance Adjustment (3)
|
Carrying Amount | ||||||||||||||||||||||||||||||||
| Investments held at fair value | ||||||||||||||||||||||||||||||||||||||
| CMBS - floating | 6 |
SOFR + 4.24%
|
November 2026 | $ | 27,838 | $ | 25,773 | $ | 26,535 | |||||||||||||||||||||||||||||
| CMBS - fixed | 4 | 4.56% | November 2026 | 23,413 | 20,650 | 5,302 | ||||||||||||||||||||||||||||||||
| RMBS - fixed | 1 | 4.50% | May 2026 | 5,118 | 4,728 | 4,868 | ||||||||||||||||||||||||||||||||
| Real estate-related loans - floating | 1 |
SOFR + 8.00%
|
December 2025 | 119,000 | 119,000 | 119,000 | ||||||||||||||||||||||||||||||||
| Interest rate swaps | 2 | 4.40% | September 2026 | - | 186 | |||||||||||||||||||||||||||||||||
| Cross currency forward contracts | 4 | N/A | October 2025 | - | - | (76) | ||||||||||||||||||||||||||||||||
| Total investments held at fair value | 18 | 10.41% | March 2026 | $ | 175,369 | $ | 170,151 | $ | 155,815 | |||||||||||||||||||||||||||||
| Investments held at amortized cost | ||||||||||||||||||||||||||||||||||||||
| Real estate-related loans - floating | 1 |
SOFR + 8.15%
|
June 2026 | $ | 7,044 | $ | - | $ | 7,044 | |||||||||||||||||||||||||||||
| Real estate-related loans - fixed | 3 | 9.92% | November 2027 | 48,610 | (3,884) | 44,726 | ||||||||||||||||||||||||||||||||
| Total investments held at amortized cost | 4 | 10.23% | November 2027 | $ | 55,654 | $ | (3,884) | $ | 51,770 | |||||||||||||||||||||||||||||
| Total investments in real estate-related loans and securities | 22 | 10.37% | August 2026 | $ | 231,023 | $ | 166,267 | $ | 207,585 | |||||||||||||||||||||||||||||
| (1) |
As of September 30, 2025 SOFR was equal to 4.24%.
|
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| (2) | Weighted average maturity date is based on the fully extended maturity date of the instruments. | ||||
| (3) | Adjustments include the cumulative provision for current expected credit losses, unamortized fee income, and a foreign currency translation adjustment attributable to real estate-related loans. | ||||
LeaseExpirations
The following table details the expiring leases at our consolidated office, logistics, and net lease properties by annualized base rent and square footage as of September 30, 2025 ($ and square feet data in thousands). The table below excludes our multifamily, student housing and single-family rental properties as substantially all leases at such properties expire within 12 months.
| Year | Number of Expiring Leases |
Annualized Base Rent(1)
|
% of Total
Annualized Base
Rent Expiring
|
Square Feet | % of Total Square Feet Expiring | |||||||||||||||||||||||||||
| 2025 (remaining) | 5 | $ | 540 | 2 | % | 15 | 1 | % | ||||||||||||||||||||||||
| 2026 | 5 | 987 | 4 | % | 29 | 2 | % | |||||||||||||||||||||||||
| 2027 | 6 | 766 | 3 | % | 46 | 3 | % | |||||||||||||||||||||||||
| 2028 | 10 | 1,634 | 6 | % | 76 | 5 | % | |||||||||||||||||||||||||
| 2029 | 11 | 2,187 | 8 | % | 182 | 12 | % | |||||||||||||||||||||||||
| 2030 | 11 | 1,871 | 7 | % | 118 | 8 | % | |||||||||||||||||||||||||
| 2031 | 4 | 1,154 | 4 | % | 53 | 4 | % | |||||||||||||||||||||||||
| 2032 | 1 | 1,390 | 5 | % | 211 | 14 | % | |||||||||||||||||||||||||
| 2033 | 2 | 109 | - | % | 3 | - | % | |||||||||||||||||||||||||
| 2034 | 1 | 1,467 | 5 | % | 300 | 20 | % | |||||||||||||||||||||||||
| Thereafter | 2 | 15,524 | 56 | % | 467 | 31 | % | |||||||||||||||||||||||||
| Total | 58 | $ | 27,629 | 100 | % | 1,500 | 100 | % | ||||||||||||||||||||||||
| (1) |
Annualized base rent is determined from the annualized base rent per leased square foot of the applicable year and excludes tenant recoveries, straight-line rent, and above-market and below-market lease amortization.
|
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Results of Operations
The following table sets forth information regarding our consolidated results of operations ($ in thousands):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | 2025 | 2024 | $ | ||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Rental revenues | $ | 32,361 | $ | 33,715 | $ | (1,354) | decreased | $ | 97,577 | $ | 96,765 | $ | 812 | ||||||||||||||||||||||
| Other revenues | 3,716 | 5,676 | (1,960) | decreased | 10,258 | 11,366 | (1,108) | ||||||||||||||||||||||||||||
| Total Revenues | 36,077 | 39,391 | (3,314) | decreased | 107,835 | 108,131 | (296) | ||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Rental property operating | 14,503 | 13,571 | 932 | increased | 41,771 | 39,206 | 2,565 | ||||||||||||||||||||||||||||
| General and administrative | 1,470 | 2,295 | (825) | decreased | 5,033 | 6,078 | (1,045) | ||||||||||||||||||||||||||||
| Management fee | 3,221 | 2,715 | 506 | increased | 9,511 | 8,544 | 967 | ||||||||||||||||||||||||||||
| Impairment of investments in real estate | - | 33,922 | (33,922) | - | 33,922 | (33,922) | |||||||||||||||||||||||||||||
| Depreciation and amortization | 13,085 | 16,209 | (3,124) | decreased | 39,354 | 43,307 | (3,953) | ||||||||||||||||||||||||||||
| Total Expenses | 32,279 | 68,712 | (36,433) | decreased | 95,669 | 131,057 | (35,388) | ||||||||||||||||||||||||||||
| Other Income (Expense) | |||||||||||||||||||||||||||||||||||
| Income from real estate-related loans and securities | 5,155 | 4,453 | 702 | increased | 14,504 | 14,822 | (318) | ||||||||||||||||||||||||||||
| Interest expense | (15,043) | (18,957) | 3,914 | decreased | (44,391) | (52,284) | 7,893 | ||||||||||||||||||||||||||||
| Gain on extinguishment of debt | - | 32,251 | (32,251) | increased | - | 32,251 | (32,251) | ||||||||||||||||||||||||||||
| Gain from unconsolidated entities, net | 3,902 | 1,554 | 2,348 | increased | 17,543 | 5,278 | 12,265 | ||||||||||||||||||||||||||||
| Other income (expense), net | 223 | (476) | 699 | increased | 680 | 1,707 | (1,027) | ||||||||||||||||||||||||||||
| Total Other Income (Expense) | (5,763) | 18,825 | (24,588) | decreased | (11,664) | 1,774 | (13,438) | ||||||||||||||||||||||||||||
| Net (Loss) Income | $ | (1,965) | $ | (10,496) | $ | 8,531 | increased | $ | 502 | $ | (21,152) | $ | 21,654 | ||||||||||||||||||||||
| Net (income) loss attributable to non-controlling interests in consolidated joint ventures | (540) | 289 | (829) | increased | $ | (957) | $ | 722 | $ | (1,679) | |||||||||||||||||||||||||
| Net income attributable to non-controlling interests - preferred stockholders | - | (3) | 3 | (77) | (69) | (8) | |||||||||||||||||||||||||||||
| Net loss attributable to redeemable non-controlling interests | 764 | 10 | 754 | decreased | 203 | 20 | 183 | ||||||||||||||||||||||||||||
| Net Loss Attributable to Brookfield REIT Stockholders | $ | (1,741) | $ | (10,200) | $ | 8,459 | increased | $ | (329) | $ | (20,479) | $ | 20,150 | ||||||||||||||||||||||
| Per common share data: | |||||||||||||||||||||||||||||||||||
| Net (loss) income per share of common stock - basic and diluted | $ | (0.03) | $ | (0.12) | $ | 0.09 | increased | $ | - | $ | (0.24) | $ | 0.24 | ||||||||||||||||||||||
Revenues
Revenues primarily consist of base rent arising from tenant leases at our multifamily, student housing, single-family rental, net lease, office and logistics properties. During the three and nine months ended September 30, 2025, revenues decreased $3.3 million to $36.1 million and decreased $0.3 million to $107.8 million, respectively, compared to the three and nine months ended September 30, 2024. The decrease was primarily due to the sale of an office property in September 2024, partially offset by the incremental rental revenue generated from properties acquired during 2024, as well as rental revenue growth at certain single-family rental properties.
The components of revenue during these periods are as follows ($ in thousands):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | 2025 | 2024 | $ | ||||||||||||||||||||||||||||||
| Rental revenue | $ | 29,979 | $ | 31,354 | $ | (1,375) | $ | 90,683 | $ | 89,780 | $ | 903 | |||||||||||||||||||||||
| Tenant reimbursements | 2,382 | 2,361 | 21 | 6,894 | 6,985 | (91) | |||||||||||||||||||||||||||||
| Ancillary income and fees | 3,716 | 5,676 | (1,960) | 10,258 | 11,366 | (1,108) | |||||||||||||||||||||||||||||
| Total revenues | $ | 36,077 | $ | 39,391 | $ | (3,314) | $ | 107,835 | $ | 108,131 | $ | (296) | |||||||||||||||||||||||
Rental property operating expenses
Rental property operating expenses consist of the costs of ownership and operation of our real estate properties, including real estate taxes, repairs and maintenance expenses, utilities, property management fees, and insurance expenses. During the three and nine months ended September 30, 2025, rental property operating expenses increased $0.9 millionto $14.5 millionand increased $2.6 million to $41.8 million, respectively, compared to the three and nine months ended September 30, 2024. The increase is primarily due to operating expenses attributable to acquisition activity in 2024, partially offset by the sale of an office property in September 2024.
General and administrative expenses
General and administrative expenses are corporate-level expenses that relate mainly to our compliance and administration costs, including legal fees, audit fees, professional tax fees, valuation fees, board of director fees and other professional fees. During the three and nine months ended September 30, 2025, general and administrative expenses decreased $0.8 million to $1.5 million and decreased $1.0 million to $5.0 million, respectively, compared to the three and nine months ended September 30, 2024. The decrease in general and administrative expenses was primarily driven by a decrease in income tax expense and professional fees related to our taxable REIT subsidiaries.
Management fee
Management fees are earned by our Adviser for providing services pursuant to the Advisory Agreement. During the three and nine months ended September 30, 2025, management fees increased $0.5 million to $3.2 millionand$1.0 million to $9.5 million, respectively, compared to the three and nine months ended September 30, 2024. Management fees are calculated based on our aggregate NAV of Class S, Class I, Class T, Class D, and Class C shares and the Operating Partnership's NAV of the Class C, Class D, Class D-1, Class I, Class S, Class S-1, Class T and Class T-1 units of the Operating Partnership held by unitholders other than the Company and are paid monthly (no management fees are paid on Class E shares or units). The increase in management fees for the three and nine months ended September 30, 2025, compared to the corresponding periods in the prior year were due to a higher average NAV during the current periods.
Depreciation and amortization
During the three and nine months ended September 30, 2025, depreciation and amortization decreased $3.1 millionto $13.1 million and decreased $4.0 millionto $39.4 million, respectively, compared to the three and nine months ended September 30, 2024.The decrease is attributable to the routine asset retirements and the disposition of an office asset.
Income from real estate-related loans and securities
During the three and nine months ended September 30, 2025, income from real estate-related loans and securities increased $0.7 million to $5.2 million and decreased $0.3 million to $14.5 million, respectively, compared to the three and nine months ended September 30, 2024. The increase in the most recent three month period is due to the acquisition of a real estate-related loan. The decrease for the most recent ninemonth period is primarily attributable to the sales of real estate-related securities, offset by an increase in interest income from real estate-related loans resulting from purchases during the current period.
Interest expense
Interest expense is primarily related to interest incurred on our mortgage loans, credit agreements with a lender secured by certain of our properties, and an uncommitted line of credit from an affiliate of Brookfield (the "Affiliate Line of Credit"). Interest expense decreased $3.9 millionto $15.0 millionand decreased $7.9 million to $44.4 million during the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024. The decrease is attributable to the extinguishment of debt through the sale of an office property in 2024, as well as the refinancing of certain mortgage loans at lower interest rates, partially offset by increases due to property acquisitions. As of September 30, 2025, our weighted average cost of leverage, including the impact of our interest rate derivatives, was 4.98%, compared to 5.58% as of September 30, 2024.
Gain from unconsolidated entities, net
Gain from unconsolidated entities, net consists of changes in the fair value of our investments in unconsolidated entities that are held at fair value, as well as realized and unrealized gains and losses on our foreign currency swap contracts related to our unconsolidated non-U.S. investment in Principal Place. During the three and nine months ended September 30, 2025 gains from unconsolidated entities increased $2.3 million to $3.9 million and $12.3 million to $17.5 million, respectively, compared to the three and nine months ended September 30, 2024. The increase was primarily due to the fair value gains on our unconsolidated interests in the U.S. Diversified Logistics Portfolio investments.
Other income (expense), net
Other income (expense), net consists of realized and unrealized gains and losses on our interest rate derivatives and income from our trading securities. During the three and nine months ended September 30, 2025, other income increased $0.7 million to $0.2 million anddecreased $1.0 millionto $0.7 million, respectively,compared to the three and nine months ended September 30, 2024. The increases in the most recent three month period is due to the unrealized gains on our interest rate derivatives. The decrease for the most recent ninemonth period is primarily attributable to the absence of realized gains recognized in 2024 upon the maturity of interest rate derivative contracts, partially offset by unrealized gains from changes in the fair value of our interest rate derivative currently held.
Net loss attributable to redeemable non-controlling interests
Net loss attributable to redeemable non-controlling interests was $0.2 millionfor the nine months ended September 30, 2025 and less than $0.1 millionfor the nine months ended September 30, 2024. The income or loss allocable to redeemable non-controlling interests is related to interests held in the Operating Partnership by parties other than us. The change from the prior period was due to an increase in redeemable non-controlling interests during the year ended December 31, 2024.
Reimbursement by the Adviser
Pursuant to the Advisory Agreement, the Adviser will reimburse us for any expenses that cause our Total Operating Expenses (as defined in our charter) in any four consecutive fiscal quarters to exceed the greater of: (i) 2% of our Average Invested Assets or (ii) 25% of our Net Income (each as defined in our charter) (the "2%/25% Limitation"). For the four consecutive quarters ended September 30, 2025, our Total Operating Expenses did not exceed the 2%/25% Limitation.
Liquidity and Capital Resources
Our primary needs for liquidity are to fund investments, to make distributions to our stockholders, to repurchase shares of our common stock pursuant to our share repurchase plan, to pay our offering and operating expenses, to fund capital expenditures at our properties and to pay debt service on our outstanding indebtedness. We may also have future funding obligations related to loan commitments on our real-estate related loans and unfunded capital commitments related to our limited partnership interests. Our operating expenses include, among other things, fees and expenses related to managing our properties and other investments, the management and performance fees we pay to the Adviser (to the extent the Adviser elects to receive such fees in cash) and general corporate expenses.
We believe that our current liquidity position is sufficient to meet the operating needs of our business, with $443.2 million of liquidity as of September 30, 2025, consisting of $19.5 million of unrestricted cash and cash equivalents, $3.0 million of short-term U.S. Treasury Bonds, $325.7 million of undrawn available capacity on our Secured Credit Facility and SFR Secured Credit Facility, and $95.0 million of undrawn available capacity on our Affiliate Line of Credit. We may also generate additional liquidity through the sale of our real estate-related securities, which had an aggregate fair value of $36.7 million as of September 30, 2025.
Our portfolio remains conservatively leveraged at 50.5% as of September 30, 2025, and we can generate additional liquidity by incurring indebtedness secured by our investments. Our leverage ratio is calculated by dividing (i) the consolidated property-level and entity-level debt, excluding any third-party interests in such debt, net of cash, loan-related restricted cash, and trading securities by (ii) the gross asset value of real estate equity investments (calculated using the greater of fair value and cost of gross real estate assets), excluding any third-party interests in such investments, plus our equity in real estate-related debt investments. Additionally, there is no indebtedness on our real estate-related debt investments.
Our cash needs for acquisitions and other investments will be funded primarily from the sale of shares of our common stock and through the assumption or incurrence of debt. During the three and nine months ended September 30, 2025, we received $11.6 million and $222.3 million, respectively, of proceeds from the sale of shares of our common stock. In addition, during the three and nine months ended September 30, 2025, we repurchased $21.6 million and $83.7 million, respectively, in shares of our common stock under our share repurchase plan. Since inception, we have satisfied 100% of repurchase requests.
The following table is a summary of our indebtedness as of September 30, 2025 ($ in thousands):
| Indebtedness |
Weighted Average Interest Rate(1)
|
Weighted Average Maturity Date(2)
|
Maximum Facility Size | Principal Balance Outstanding | ||||||||||||||||||||||
| Fixed rate loans: | ||||||||||||||||||||||||||
| Fixed rate mortgages | 4.06% | October 2030 | N/A | $ | 500,420 | |||||||||||||||||||||
| Total fixed rate loans | 500,420 | |||||||||||||||||||||||||
| Variable rate loans: | ||||||||||||||||||||||||||
| Variable rate mortgages |
SOFR+1.72%
|
February 2028 | N/A | 479,699 | ||||||||||||||||||||||
|
Secured Credit Facility(3)
|
SOFR+2.75%
|
May 2027 | $250,000 | - | ||||||||||||||||||||||
|
SFR Secured Credit Facility(4)
|
SOFR+1.85%
|
May 2027 | $185,000 | 109,300 | ||||||||||||||||||||||
|
Affiliate line of credit(5)
|
SOFR+2.25%
|
November 2025 | $125,000 | 30,000 | ||||||||||||||||||||||
| Total variable rate loans | 618,999 | |||||||||||||||||||||||||
| Total indebtedness | 1,119,419 | |||||||||||||||||||||||||
| Deferred financing costs, net | (6,579) | |||||||||||||||||||||||||
| Total indebtedness, net | $ | 1,112,840 | ||||||||||||||||||||||||
| (1) |
As of September 30, 2025, SOFR was 4.24%
|
||||
| (2) | Includes the fully extended maturity date for loans with extension options that are at our discretion and we currently expect to be able to exercise. | ||||
| (3) |
As of September 30, 2025, there were no outstanding borrowings on the Secured Credit Facility.
|
||||
| (4) |
As of September 30, 2025, borrowings on the SFR Secured Credit Facility were secured by the single-family rental portfolio.
|
||||
| (5) |
Borrowings under the Affiliate Line of Credit bears interest at a rate of the lowest then-current interest rate for any similar credit product offered by a third-party lender to us or our subsidiaries or, if not available, SOFR plus a 0.10% credit adjustment and a 2.25% margin.
|
||||
Cash Flows
The following table provides a summary of the net change in our cash and cash equivalents and restricted cash ($ in thousands):
| Nine Months Ended | |||||||||||
| September 30, 2025 | September 30, 2024 | ||||||||||
| Cash flows provided by operating activities | $ | 30,236 | $ | 34,744 | |||||||
| Cash flows (used in) provided by investing activities | (202,357) | 51,117 | |||||||||
| Cash flows provided by (used in) financing activities | 181,702 | (87,465) | |||||||||
| Net change in cash and cash equivalents and restricted cash | $ | 9,581 | $ | (1,604) | |||||||
Cash flows provided by operating activities decreased $4.5 million during the nine months ended September 30, 2025, compared to the corresponding period in 2024. The decrease is primarily due to $11.5 million of payments received in the prior period for settlements of derivative contracts, offset by $7.9 million less of interest expense in the current period.
Cash flows (used in) provided by investing activities decreased $253.5 million for the nine months ended September 30, 2025, compared to the corresponding period in 2024. The change is primarily due to a $290.9 million increase in cash used to purchase or fund real estate-related loans and securities (net of proceeds from sales and principal repayments), a $42.4 million decrease in cash proceeds from the sale of trading securities (net of purchases of trading securities) and funding of $59.8 million related to our limited partnership interests in the U.S. Diversified Logistics Portfolio I and U.S. Diversified Logistics Portfolio II. The current period activity was offset by prior period activity of $166.5 million in cash used in the acquisition of real estate and $25.5 million in cash proceeds from the disposition of real estate.
Cash flows provided by (used in) financing activities increased $269.2 million for the nine months ended September 30, 2025, compared to the corresponding period in 2024. The increase is primarily due to a $172.2 million increase in proceeds from the issuance of common stock, a $71.4 million decrease in cash used for repurchases of common stock, and a $53.0 million increase in contributions from non-controlling interests related to our DST Program, which was offset by a $19.3 million decrease in net cash fromborrowings and repayments on indebtedness and a $5.9 million increase in common stock distributions.
Net Asset Value
Our board of directors, including a majority of our independent directors, has adopted valuation guidelines that contain a comprehensive set of methodologies to be used by the Adviser and our independent valuation advisor in connection with estimating the values of our assets and liabilities for purposes of our NAV calculation. The calculation of our NAV is intended to be a calculation of the fair value of our assets less our outstanding liabilities and will likely differ from the book value of our equity reflected in our financial statements. The purchase and repurchase price per share for each class of our common stock is the then-current transaction price, which generally equals our prior month's NAV per share, as determined monthly, plus, for purchases only, applicable selling commissions and dealer manager fees.
For more information on the calculation of our NAV and the valuation method used, please refer to Item 5 of our Annual Report on Form 10-K for the year ended December 31, 2024.
Our total NAV presented in the following tables includes the NAV of our Class S, Class I, Class T, Class D, Class C and Class E shares of common stock, as well as partnership interests in the Operating Partnership held by parties other than us. The following table provides a breakdown of the major components of our NAV as of September 30, 2025 ($ and shares/units in thousands):
| Components of NAV | September 30, 2025 | |||||||
| Investments in real estate | $ | 1,793,100 | ||||||
| Investments in real estate-related loans and securities | 207,999 | |||||||
|
Investments in unconsolidated entities(1)
|
162,136 | |||||||
| Cash and cash equivalents | 19,534 | |||||||
| Restricted cash | 14,354 | |||||||
| Other assets | 18,283 | |||||||
| Debt obligations | (1,104,627) | |||||||
|
Accrued stockholder servicing fees(2)
|
(199) | |||||||
| Management fee payable | (1,123) | |||||||
| Dividend payable | (5,538) | |||||||
| Subscriptions received in advance | (2,254) | |||||||
| Other liabilities | (38,995) | |||||||
| Non-controlling interests in joint ventures | (80,738) | |||||||
| Net asset value | $ | 981,932 | ||||||
| Number of shares/units outstanding | 94,111 | |||||||
| (1) |
Investments in unconsolidated entities reflects the value of our net equity investment in entities we do not consolidate. As of September 30, 2025, our allocable share of the gross real estate asset value held by such entities was $409.1 million.
|
||||
| (2) |
Stockholder servicing fees only apply to Class S, Class T and Class D shares. For purposes of NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis as such fee is paid. Under GAAP, we accrue the full cost of the stockholder servicing fee as an offering cost at the time we sell Class S, Class T and Class D shares of our common stock. As of September 30, 2025, we have accrued under GAAP approximately $14.0 million of stockholder servicing fees.
|
||||
The following table provides a breakdown of our total NAV and NAV per share/unit by class as of September 30, 2025 ($ and shares/units in thousands, except per share/unit data):
| NAV Per Share/Unit |
Class S Shares |
Class I Shares |
Class D Shares |
Class T Shares |
Class C Shares(1)
|
Class E Shares(1)
|
Third-party Class I OP Units(2)
|
Third-party Class E OP Units(2)
|
Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Net asset value | $ | 265,145 | $ | 325,821 | $ | 1,055 | $ | 159 | $ | 70,286 | $ | 15,681 | $ | 278,509 | $ | 25,276 | $ | 981,932 | ||||||||||||||||||||||||||||||||||||||
| Number of shares/units outstanding | 25,553 | 31,071 | 100 | 15 | 6,904 | 1,497 | 26,559 | 2,412 | 94,111 | |||||||||||||||||||||||||||||||||||||||||||||||
|
NAV Per Share/Unit as of September 30, 2025
|
$ | 10.3763 | $ | 10.4864 | $ | 10.5808 | $ | 10.5505 | $ | 10.1810 | $ | 10.4760 | $ | 10.4864 | $ | 10.4760 | ||||||||||||||||||||||||||||||||||||||||
| (1) | Class C and Class E shares of our common stock are offered to investors pursuant to private offerings. | ||||
| (2) | Includes units of the Operating Partnership held by parties other than us. | ||||
Set forth below are the weighted averages of the key assumptions in the discounted cash flow methodology used in the September 30, 2025 valuations, based on property types. Once we own more than one office investment, we will include the key assumptions for that property type.
| Property Type | Discount Rate | Exit Capitalization Rate | ||||||||||||
| Multifamily/Student Housing | 7.3% | 5.8% | ||||||||||||
| Single-Family Rental | 7.1% | 5.4% | ||||||||||||
| Net Lease | 6.9% | 5.4% | ||||||||||||
| Logistics | 9.5% | 6.1% | ||||||||||||
These assumptions are determined by our independent valuation advisor and our independent third-party appraisal firms (other than international properties, which are determined by the Adviser and reviewed by our independent valuation advisor). A change in these assumptions would impact the calculation of the value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
| Input | Hypothetical Change | Multifamily/Student Housing Investment Values | Single-Family Rental Investment Values |
Net Lease Investment Values |
Logistics Investment Values |
|||||||||||||||||||||||||||
| Discount Rate | 0.25% Decrease | 1.9% | 1.1% | 1.9% | 1.9% | |||||||||||||||||||||||||||
| (weighted average) | 0.25% Increase | (1.8)% | (0.9)% | (1.9)% | (1.9)% | |||||||||||||||||||||||||||
| Exit Capitalization Rate | 0.25% Decrease | 2.6% | 3.9% | 2.9% | 2.7% | |||||||||||||||||||||||||||
| (weighted average) | 0.25% Increase | (2.4)% | (3.4)% | (2.6)% | (2.5)% | |||||||||||||||||||||||||||
The preceding tables do not include recently acquired properties, which are held at cost in accordance with our valuation guidelines.
The following table reconciles Stockholders' Equity per our Consolidated Balance Sheets to our NAV ($ in thousands):
|
Reconciliation of Stockholders' Equity to NAV
|
September 30, 2025 | |||||||
| Stockholders' equity under U.S. GAAP | $ | 436,127 | ||||||
| Redeemable non-controlling interest | 303,784 | |||||||
| Total partners' capital of Operating Partnership under GAAP | 739,911 | |||||||
| Adjustments: | ||||||||
| Accrued stockholder servicing fee | 13,985 | |||||||
| Deferred rent | (7,208) | |||||||
| Advanced organizational and offering costs | 4,975 | |||||||
| Unrealized net real estate depreciation | (8,429) | |||||||
| Accumulated depreciation and amortization | 238,698 | |||||||
| NAV | $ | 981,932 | ||||||
The following details the adjustments to reconcile stockholders' equity under GAAP to our NAV:
•Accrued stockholder servicing fee represents the accrual for the full cost of the stockholder servicing fee for Class S and Class D shares. Under GAAP, we accrued the full cost of the stockholder servicing fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum stockholder servicing fee) as an offering cost at the time we sold such share. Refer to Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements for further details of the GAAP treatment regarding the stockholder servicing fee. For purposes of calculating NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis when such fee is paid.
•Deferred rent represents straight line rental revenue recorded under GAAP. For purposes of calculating NAV, deferred rental revenues are excluded.
•The Adviser and its affiliates advanced organization and offering expenses on our behalf (other than upfront selling commissions, dealer manager fees and stockholder servicing fees) through July 5, 2023, subject to the following reimbursement terms: (1) all such advanced expenses paid through July 5, 2022 are reimbursed ratably over the 60 months following July 6, 2022; and (2) all such advanced expenses paid from July 6, 2022 through July 5, 2023 are reimbursed ratably over the 60 months following July 6, 2023. Under GAAP, organization costs are expensed as incurred and offering costs are charged to equity as such amounts are incurred. For purposes of calculating NAV, such costs are recognized as a reduction to NAV as they are reimbursed to the Adviser.
•Our investments in real estate are presented at their depreciated historical cost basis in our GAAP Consolidated Financial Statements. Certain of our investments in real estate-related loans are presented at their amortized cost basis in our GAAP Consolidated Financial Statements. Additionally, our mortgage loans, term loans, and credit facilities ("Debt") are presented at their carrying value in our GAAP Consolidated Financial Statements. As such, any changes in the fair market value of our investments in real estate, investments in real estate-related loans or Debt are not included in our GAAP results. For purposes of calculating NAV, our investments in real estate, investments in real estate-related loans, and our Debt are recorded at fair value and any changes in fair value are recognized as unrealized net real estate appreciation.
•We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. For the purposes of calculating NAV, such depreciation and amortization is excluded.
Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution
We believe funds from operations ("FFO") is a meaningful non-GAAP supplemental measure of our operating results. Our Consolidated Financial Statements are presented under historical cost accounting which, among other things, requires depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of real estate investments will fluctuate over time based on market conditions and as such, depreciation under historical cost accounting may be less informative. FFO is a standard REIT industry metric defined by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO, as defined by NAREIT and presented below, is calculated as net income or loss (computed in accordance with GAAP), excluding (i) gains or losses from sales of depreciable real property, (ii) impairment write-downs on depreciable real property, plus (iii) real estate-related depreciation and amortization, and (iv) after adjustments for our share of consolidated and unconsolidated joint ventures.
We also believe that adjusted FFO ("AFFO") is a meaningful non-GAAP supplemental measure of our operating results. AFFO further adjusts FFO in order for our operating results to reflect the specific characteristics of our business by adjusting for items we believe are not related to our operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) straight-line rental income, (ii) amortization of above- and below-market lease intangibles, (iii) amortization of mortgage premium/discount, (iv) organization costs, (v) amortization of restricted stock awards, (vi) unrealized gains and losses from changes in fair value of real estate-related loans and securities, (vii) non-cash performance fee or other non-cash incentive compensation, and (viii) similar adjustments for unconsolidated joint ventures.
We also believe funds available for distribution ("FAD") is an additional meaningful non-GAAP supplemental measure that provides useful information for considering our operating results and certain other items relative to the amount of our distributions. FAD is calculated as AFFO adjusted for (i) management fees paid in shares or operating partnership units, even if subsequently repurchased by us, (ii) realized gains and losses on investments in real estate-related loans and securities, (iii) realized gains and losses on financial instruments, (iv) stockholder servicing fees paid during the period, and (v) similar adjustments for unconsolidated joint ventures. FAD is not indicative of cash available to fund our cash needs and does not represent cash flows from operating activities in accordance with GAAP, as it excludes adjustments for working capital items and actual cash receipts from interest income recognized on real estate related securities. Cash flows from operating activities in accordance with GAAP would generally be adjusted for such items. Furthermore, FAD is adjusted for stockholder servicing fees which are not considered when determining cash flows from operating activities in accordance with GAAP.
The following table presents a reconciliation of FFO, AFFO and FAD to net loss attributable to our stockholders and redeemable non-controlling interests. We believe it is meaningful to include redeemable non-controlling interests since it is a component of our NAV ($ in thousands):
|
For the three months ended
|
For the nine months ended
|
||||||||||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | ||||||||||||||||||||
| Net loss attributable to Brookfield REIT stockholders and redeemable non-controlling interests | $ | (2,505) | $ | (10,210) | $ | (532) | $ | (20,499) | |||||||||||||||
| Adjustments to arrive at FFO: | |||||||||||||||||||||||
| Depreciation and amortization | 13,085 | 16,209 | 39,354 | 43,307 | |||||||||||||||||||
| Impairment of investments in real estate | - | 33,922 | - | 33,922 | |||||||||||||||||||
| Gain on extinguishment of debt | - | (32,251) | - | (32,251) | |||||||||||||||||||
| Amount attributable to non-controlling interests for above adjustments | (186) | (210) | (570) | (645) | |||||||||||||||||||
| FFO attributable to stockholders and redeemable non-controlling interests | 10,394 | 7,460 | 38,252 | 23,834 | |||||||||||||||||||
| Adjustments to arrive at AFFO: | |||||||||||||||||||||||
| Straight-line rental income | (465) | (536) | (796) | (2,163) | |||||||||||||||||||
| Amortization of above and below market lease intangibles, net | (330) | (206) | (993) | (583) | |||||||||||||||||||
| Amortization of deferred financing costs | 604 | 1,052 | 1,551 | 2,642 | |||||||||||||||||||
| Amortization of upfront derivative acquisition costs | 256 | 427 | 805 | 1,431 | |||||||||||||||||||
| Amortization of restricted stock awards | 81 | 81 | 242 | 242 | |||||||||||||||||||
|
Unrealized gain on investments, net(1)
|
(5,260) | (708) | (18,855) | (27) | |||||||||||||||||||
| Provision for current expected credit losses | 289 | 96 | 289 | (134) | |||||||||||||||||||
| Amount attributable to non-controlling interests for above adjustments | (36) | (61) | (163) | (129) | |||||||||||||||||||
| AFFO attributable to stockholders and redeemable non-controlling interests | 5,533 | 7,605 | 20,332 | 25,113 | |||||||||||||||||||
| Adjustments to arrive at FAD: | |||||||||||||||||||||||
| Non-cash management fee | 3,221 | 2,715 | 9,511 | 8,544 | |||||||||||||||||||
| Realized gain on sale of real estate-related loans and securities | (815) | (2,866) | (902) | (6,613) | |||||||||||||||||||
| Realized gain on sale of treasury bills | (391) | (264) | (1,141) | (771) | |||||||||||||||||||
|
Realized (gain) loss on financial instruments(2)
|
1,993 | 776 | 1,993 | (2,839) | |||||||||||||||||||
| Stockholder servicing fees | (583) | (693) | (1,805) | (2,272) | |||||||||||||||||||
| FAD attributable to stockholders and redeemable non-controlling interests | $ | 8,958 | $ | 7,273 | $ | 27,988 | $ | 21,162 | |||||||||||||||
| (1) |
Unrealized gain on investments, net relates to provisions for current estimated credit losses and mark-to-market changes on our investments in real estate-related securities, derivative contracts, and investments in unconsolidated entities reported at fair value. For the three and nine months ended September 30, 2025, unrealized gain on investments, net includes $1.4 million and $4.3 million, respectively, of net operating income less interest expense attributable to our unconsolidated investment in Principal Place. For the three and nine months ended September 30, 2024, unrealized gain on investments, net includes $1.4 million and $4.1 million, respectively, of net operating income less interest expense attributable to our unconsolidated investment in Principal Place.
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| (2) | Realized gain on financial instruments relates to settlements on our derivatives contracts. | ||||
FFO, AFFO, and FAD should not be considered more relevant or accurate than the GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO, AFFO, and FAD should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO, AFFO, and FAD are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders.
Distributions
We generally intend to distribute substantially all of our taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to our stockholders each year to satisfy the requirements for qualification as a REIT under the Code.
In December 2019, we began declaring monthly distributionsfor each class of our common stock, which are generally paid 20 calendar days after month-end. Each class of our common stock receives the same aggregate gross distribution per share. The net distribution varies for each class based on the applicable stockholder servicing fees, management fees and performance fees, which are deducted from the monthly distribution per share.
The followingtable details the aggregatenet distributions declared for each of our classes of common stock for the three and nine months ended September 30, 2025.
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Class S | Class I | Class D | Class T | Class C | Class E | ||||||||||||||||||||||||||||||
| Aggregate gross distributions declared per share of common stock | $ | 0.2122 | $ | 0.2122 | $ | 0.2122 | $ | 0.2122 | $ | 0.2122 | $ | 0.2122 | |||||||||||||||||||||||
| Stockholder servicing fees per share of common stock | (0.0222) | - | (0.0068) | (0.0226) | - | - | |||||||||||||||||||||||||||||
| Management fees per share of common stock | (0.0324) | (0.0328) | (0.0331) | (0.0330) | (0.0318) | - | |||||||||||||||||||||||||||||
| Net distributions declared per share of common stock | $ | 0.1576 | $ | 0.1794 | $ | 0.1723 | $ | 0.1566 | $ | 0.1804 | $ | 0.2122 | |||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Class S | Class I | Class D | Class T | Class C | Class E | ||||||||||||||||||||||||||||||
| Aggregate gross distributions declared per share of common stock | $ | 0.6380 | $ | 0.6380 | $ | 0.6380 | $ | 0.5667 | $ | 0.6380 | $ | 0.6380 | |||||||||||||||||||||||
| Stockholder servicing fees per share of common stock | (0.0669) | - | (0.0203) | (0.0600) | - | - | |||||||||||||||||||||||||||||
| Management fees per share of common stock | (0.0987) | (0.0998) | (0.1007) | (0.0887) | (0.0970) | - | |||||||||||||||||||||||||||||
| Net distributions declared per share of common stock | $ | 0.4724 | $ | 0.5382 | $ | 0.5170 | $ | 0.4180 | $ | 0.5410 | $ | 0.6380 | |||||||||||||||||||||||
The following tables summarize our distributions declared during the three and nine months ended September 30, 2025 and 2024 ($ in thousands):
| Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | ||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | ||||||||||||||||||||
| Company Distributions | |||||||||||||||||||||||
| Payable in cash | $ | 8,176 | 72 | % | $ | 5,741 | 40 | % | |||||||||||||||
| Reinvested in shares | 3,242 | 28 | % | 8,661 | 60 | % | |||||||||||||||||
| Total Company distributions | $ | 11,418 | 100 | % | $ | 14,402 | 100 | % | |||||||||||||||
|
Operating Partnership Distributions(1)
|
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| Payable in cash | $ | - | - | % | $ | - | - | % | |||||||||||||||
| Reinvested in units | 5,245 | 100 | % | 18 | 100 | % | |||||||||||||||||
| Total Operating Partnership distributions | $ | 5,245 | 100 | % | $ | 18 | 100 | % | |||||||||||||||
| Total Company and Operating Partnership Distributions | $ | 16,663 | 100 | % | $ | 14,420 | 100 | % | |||||||||||||||
| Sources of Company and Operating Company Distributions | |||||||||||||||||||||||
| Cash flows from operating activities | $ | 8,294 | 50 | % | $ | 6,733 | 47 | % | |||||||||||||||
|
Cash flow from other sources(2)
|
8,369 | 50 | % | 7,669 | 53 | % | |||||||||||||||||
| Total sources of distributions | $ | 16,663 | 100 | % | $ | 14,402 | 100 | % | |||||||||||||||
|
Cash flows from operating activities(3)
|
$ | 8,294 | $ | 6,733 | |||||||||||||||||||
| Funds from Operations | $ | 10,394 | $ | 7,460 | |||||||||||||||||||
| Adjusted Funds from Operations | $ | 5,533 | $ | 7,605 | |||||||||||||||||||
| Funds Available for Distribution | $ | 8,958 | $ | 7,273 | |||||||||||||||||||
| Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | ||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | ||||||||||||||||||||
| Company Distributions | |||||||||||||||||||||||
| Payable in cash | $ | 24,915 | 71 | % | $ | 17,892 | 40 | % | |||||||||||||||
| Reinvested in shares | 10,069 | 29 | % | 26,289 | 60 | % | |||||||||||||||||
| Total Company distributions | $ | 34,984 | 100 | % | $ | 44,181 | 100 | % | |||||||||||||||
|
Operating Partnership Distributions(1)
|
|||||||||||||||||||||||
| Payable in cash | $ | - | - | % | $ | - | - | % | |||||||||||||||
| Reinvested in units | 15,473 | 100 | % | 53 | 100 | % | |||||||||||||||||
| Total Operating Partnership distributions | $ | 15,473 | 100 | % | $ | 53 | 100 | % | |||||||||||||||
| Total Company and Operating Partnership Distributions | $ | 50,457 | 100 | % | $ | 44,234 | 100 | % | |||||||||||||||
| Sources of Company and Operating Partnership Distributions | |||||||||||||||||||||||
| Cash flows from operating activities | $ | 30,236 | 60 | % | $ | 34,744 | 79 | % | |||||||||||||||
|
Cash flow from other sources(2)
|
20,221 | 40 | % | 9,437 | 21 | % | |||||||||||||||||
| Total sources of distributions | $ | 50,457 | 100 | % | $ | 44,181 | 100 | % | |||||||||||||||
|
Cash flows from operating activities(3)
|
$ | 30,236 | $ | 34,744 | |||||||||||||||||||
| Funds from Operations | $ | 38,252 | $ | 23,834 | |||||||||||||||||||
| Adjusted Funds from Operations | $ | 20,332 | $ | 25,113 | |||||||||||||||||||
| Funds Available for Distribution | $ | 27,988 | $ | 21,162 | |||||||||||||||||||
| (1) | Distributions paid by the Operating Partnership to third parties other than the Company. | ||||
| (2) | Includes cash flows from investing activities, such as proceeds from sales of trading securities and real estate-related securities. | ||||
| (3) |
See "Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution" below for descriptions of Funds from Operations (FFO), Adjusted Funds from Operations (AFFO), and Funds Available for Distribution (FAD), for reconciliations of these metrics to GAAP Net loss attributable to stockholders and redeemable non-controlling interests, and for considerations on how to review these metrics.
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Distribution Policy
We intend to distribute sufficient income so that we satisfy the requirements for qualification as a REIT. In order to qualify as a REIT, we are required to distribute 90% of our annual REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains, to our stockholders. Generally, income distributed to stockholders will not be taxable to us under the Code if we distribute at least 90% of our REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains.
Distribution Reinvestment Plan
We have adopted a distribution reinvestment plan whereby stockholders will have their cash distributions attributable to the shares they own automatically reinvested in additional shares of common stock; provided, however, that clients of certain participating broker-dealers that do not permit automatic enrollment in the distribution reinvestment plan and stockholders that are residents of certain states that do not permit automatic enrollment in the distribution reinvestment plan will automatically receive their distributions in cash unless they elect to participate in the distribution reinvestment plan. The per share purchase price for shares purchased pursuant to the distribution reinvestment plan will be equal to the offering price before upfront selling commissions and dealer manager fees (the "transaction price") at the time the distribution is payable, which will generally be equal to our prior month's NAV per share for that share class. Stockholders will not pay upfront selling commissions or dealer manager fees when purchasing shares pursuant to the distribution reinvestment plan. The stockholder servicing fees with respect to our Class T, Class S and Class D shares are calculated based on the NAV for those shares and may reduce the NAV or, alternatively, the distributions payable with respect to shares of each such class, including shares issued in respect of distributions on such shares under the distribution reinvestment plan.
Critical Accounting Estimates
The preparation of these financial statements in accordance with GAAP involve significant judgment and assumptions and require estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. The following is a summary of our significant accounting policies that we believe are the most affected by our judgments, estimates, and assumptions.
Refer to Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in this Quarterly Report on Form 10-Q for a summary of our critical accounting policies.
Principles of Consolidation and Variable Interest Entities
We consolidate entities in which we retain a controlling financial interest or entities that meet the definition of a variable interest entity ("VIE") for which we are deemed to be the primary beneficiary. In performing our analysis of whether we are the primary beneficiary, at initial investment and at each quarterly reporting period, we consider whether we individually have the power to direct the activities of the VIE that most significantly affect the entity's economic performance and also have the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The determination of whether an entity is a VIE, and whether we are the primary beneficiary, involves significant judgments, including the determination of which activities most significantly affect the entity's performance, estimates about the current and future fair values and performance of assets held by the entity and/or general market conditions.
Investments in Real Estate
In accordance with the guidance for business combinations, we determine whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, we account for the transaction as an asset acquisition. We evaluate each real estate acquisition to determine whether the integrated set of acquired assets and activities meets the definition of a business.
Upon acquisition of a property, we assess the fair value of the acquired tangible and intangible assets (including land, buildings, tenant improvements, "above-market" and "below-market" leases, acquired in-place leases, other identified intangible assets and assumed liabilities) and we allocate the purchase price to the acquired assets and assumed liabilities. The most significant portion of the allocation is to building and land and requires the use of market based estimates and assumptions. We assess and consider fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that we deem appropriate, as well as other available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends and market and economic conditions.
We also consider an allocation of the purchase price of other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenants' credit quality and expectations of lease renewals. For acquired in-place leases, above- and below-market lease values are recorded at their fair values (using a discount rate that reflects the risks associated with the lease acquired) equal to the difference between the contractual amounts to be paid pursuant to the in-place leases and management's estimate of fair market value lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. Other intangible assets acquired include amounts for in-place lease values that are based on our evaluation of the specific characteristics of each tenant's lease. Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, we consider leasing commissions, legal and other related expenses.
Impairment of Long-Lived Assets
We review our real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates the carrying amount of an asset may not be recoverable. A property is considered impaired if the estimate of aggregate future cash flows generated by the property is less than the carrying value of the property, taking into account an appropriate capitalization rate in determining the future terminal value. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The evaluation of anticipated future cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates, capital requirements, anticipated hold periods and terminal capitalization rates that could differ materially from actual results. Since cash flows on real estate properties considered to be "long-lived assets to be held and used" are considered on an undiscounted basis to determine whether an asset has been impaired, our strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized,
and such loss could be material to our results. If we determine that an impairment has occurred, the affected assets must be reduced to their fair value.
Recent Accounting Pronouncements
See Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion concerning recent accounting pronouncements.
Brookfield Real Estate Income Trust Inc. published this content on November 12, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 12, 2025 at 22:29 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]