Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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

References herein to "Company," "we," "us," or "our" refer to Core University Living Real Estate Income Trust and its subsidiaries unless the context specifically requires otherwise.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," "identify" or other similar words or the negatives thereof. These statements may include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds, and are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control. Such forward-looking statements are inherently uncertain and there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. We believe these factors also include those described under the section entitled "Item 1A. Risk Factors" in our Pre-Effective Amendment No. 1 to Form 10, filed with the Securities and Exchange Commission (the "SEC") on July 15, 2026 (the "Registration Statement") in connection with our registration of securities pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and our Quarterly Report on Form 10-Q, filed with the SEC on August 31, 2026 (the "August 31 Form 10-Q"), which are accessible on the SEC's website at www.sec.gov. These factors are not exhaustive and should be read in conjunction with the other cautionary statements that are included in this document (or other filings with the SEC). Except as otherwise required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Although we believe the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate and our actual results, performance and achievements may be materially different from that expressed or implied by these 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.

Overview

We are a Maryland statutory trust formed on January 23, 2026. We are an externally advised, perpetual-life entity that intends to qualify as a REIT for U.S. federal income tax purposes commencing with taxable year ending December 31, 2026. We were formed to primarily invest in and manage a diversified portfolio of core and core-plus student housing properties primarily in Tier 1 Markets. A "Tier 1 Market" means a city where there is a campus of a U.S. college or university with a student enrollment of 20,000 or more, including undergraduate, graduate and professional students. To a lesser extent, we also expect to invest in (i) development, redevelopment or repositioning of student housing properties and (ii) real estate-related securities and other short-term investments to provide us with a source of liquidity. Over time, we may invest in debt backed principally by student housing investments.

We operate under the direction of our board of trustees, which is responsible for the overall management of our business and affairs. Our board of trustees is comprised of a majority of independent trustees. The board of trustees delegates the day-to-day management of the Company to the Adviser pursuant to the Advisory Agreement.

We are conducting a continuous, blind pool private offering of our common shares in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), to investors that are accredited investors (as defined in Regulation D under the Securities Act). We have engaged Chauner Securities, Inc. (the "Dealer Manager") to serve as the dealer manager for the Offering and pay compensation to the Dealer Manager, of which a portion is reallowed to broker-dealers and other financial intermediaries participating in the distribution of our common shares.

Under our Declaration of Trust, we have authority to issue an unlimited number of common shares, including unlimited numbers of common shares classified as Class A shares, Class D shares, Class E shares, Class F-D shares, Class F-I shares, Class F-S shares, Class I shares and Class S shares. We also have authority to issue an unlimited number of preferred shares of beneficial interest, par value $0.01 per share.

As of September 30, 2026, we have received aggregate proceeds of $131,484,000 from the sale of our common shares. We contributed the proceeds to the Operating Partnership in exchange for a corresponding number of Operating Partnership units that correspond to the classes of our shares sold. The Operating Partnership has primarily used the proceeds to make real estate investments as further described below under "Portfolio Information." We intend to continue selling shares on a monthly basis.

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 acquiring properties, other than those referred to in our Registration Statement. See "Item 1A. Risk Factors."

Shareholders may obtain copies of our filings with the SEC, free of charge from the website maintained by the SEC at www.sec.gov or from our website at www.culreit.com. We are providing the address to our website solely for informational purposes. The information on our website is not a part of, nor is it incorporated by reference into this report. From time to time, we may use our website as a distribution channel for information about our Company. The information we post through this channel may be deemed material. Accordingly, shareholders should monitor this channel, in addition to following our press releases and SEC filings.

Emerging Growth Company Status

We are and will remain an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the date of an initial public offering pursuant to an effective registration statement under the Securities Act, (ii) in which we have total annual gross revenue of at least $1.235 billion, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our shares that is held by non-affiliates exceeds $700 million as of the date of our most recently completed second fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as we remain an "emerging growth company" we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). Also, because we are not a large accelerated filer or an accelerated filer under Rule 12b-2 of the Exchange Act and will not be for so long as our common shares are not traded on a securities exchange, we will not be subject to auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act even once we are no longer an emerging growth company. We cannot predict if investors will find our shares less attractive because we may rely on some or all of these exemptions.

In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We will take advantage of the extended transition period for complying with new or revised accounting standards, which may make it more difficult for investors and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with public company effective dates.

Market Conditions

At a macro level, commercial real estate market conditions continued to improve during the quarter, supported by increasing capital allocations to the asset class and generally improving property-level fundamentals. As investors have gained greater confidence in current valuations and underlying operating performance, capital flows into real estate have increased year over year across a broad range of property sectors. Consistent with these trends, industry data published by the National Council of Real Estate Investment Fiduciaries ("NCREIF") indicates a gradual recovery in property values and operating fundamentals across much of the real estate market.

Despite these positive trends, several macroeconomic risks remain. Inflationary pressures, geopolitical uncertainty, and monetary policy continue to influence economic and real estate market conditions. In particular, management is closely monitoring the impact of rising borrowing costs resulting from elevated bond yields and recent increases in benchmark interest rates. While debt capital remains available from a variety of lending sources, including life insurance companies, banks, and debt funds, financing costs have increased. Although capital inflows have generally supported transaction activity and valuations, the ultimate impact of rising borrowing costs on transaction volume, asset pricing, and real estate valuations remains uncertain. Management will continue to closely monitor these developments and assess their potential impact on the Company's business and investments.

Within the purpose-built student housing sector, operating fundamentals remain generally favorable, although performance has normalized following several years of exceptionally strong operating results. For the 2026/2027 academic year, rent growth across the sector was modestly positive and occupancy levels were generally stable relative to the prior year. Performance continues to vary meaningfully across markets, with many universities within Power Four athletic conferences outperforming non-Power Four institutions. "Power Four" means the Atlantic Coast Conference, the Big Ten Conference, the Big 12 Conference, and the Southeastern Conference. Management believes these differences are primarily influenced by enrollment trends, university financial health, and the level of new supply within individual markets. While certain university markets continue to experience elevated development activity, student housing fundamentals, university health, and enrollment trends generally continue to support the long-term outlook for the sector. Independent industry data, including information published by NCREIF, continues to indicate that purpose-built student housing has maintained favorable performance characteristics relative to many other real estate sectors.

Investment Objectives

The Company was formed to pursue the following investment objectives:

There can be no assurance that we will achieve our investment objectives.

Q3 2026 Highlights

Operating Results

Investments

Capital Activity and Financings

Portfolio Information

As of September 30, 2026, our portfolio consisted of the following student housing properties:

Results of Operations

The following table sets forth information regarding our Condensed Consolidated Results of Operations for the three months ended September 30, 2026 and for the period from January 23, 2026 (date of formation) through September 30, 2026 ($ in thousands):

Rental revenue

Rental revenue of $6,255,000 reflects revenue from the properties related to the Initial Portfolio from the July 22, 2026 acquisition date through September 30, 2026.

Property operating expenses

Property operating expenses of $1,987,000 consist of the recurring costs of operating the Initial Portfolio, including payroll for on-site property management and leasing personnel, utilities, repairs and maintenance, marketing, and other operating costs. These costs are incurred at the property level.

Real estate taxes and insurance

Real estate taxes and insurance of $864,000 consist of property-level tax accruals and property/casualty insurance premiums. Real estate tax expense is generally based on assessed values and is subject to reassessment following our acquisition of the Initial Portfolio.

Management fee

The management fee for the three months ended September 30, 2026 and the period from January 23, 2026 through September 30, 2026 was $118,000. Management fees are calculated based on the Company's NAV, which increased in conjunction with the acquisition of the Initial Portfolio in July.

General and administrative expense

General and administrative expenses of $1,958,000 consist of a variety of Company expenses, including organizational costs, audit fees, and other professional fees. The costs are incurred at the Company level.

Depreciation and amortization

Depreciation and amortization of $2,317,000 consists of depreciation on the real estate assets acquired as part of the Initial Portfolio (buildings, building and land improvements, and furniture, fixtures and equipment) and amortization of the intangible lease assets recorded in purchase accounting, computed on a straight-line basis over the remaining in-place lease terms.

Interest expense

Interest expense of $1,982,000 relates to the Loan and includes both contractual interest and amortization of deferred financing costs.

Unrealized gain from interest rate derivative

Unrealized gain from interest rate derivatives of $173,000 relates to the change in the fair value of the interest rate cap for the period.

Other income

Other income of $3,000 primarily consists of interest income associated with the Company's cash.

Non-GAAP Financial Measures

Funds from Operations and Adjusted Funds from Operations

We believe funds from operations ("FFO") is a meaningful non-GAAP supplemental measure of our operating results. Our condensed consolidated financial statements are presented using 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 has decreased over time. However, we believe that the value of our real estate investments will fluctuate over time based on market conditions and, as such, depreciation under historical cost accounting may be less informative as a measure of our performance. FFO is an operating measure defined by Nareit, the National Association of Real Estate Investment Trusts, that is broadly used in the REIT industry. FFO, as defined by Nareit and presented below, is calculated as net income or loss (computed in accordance with GAAP), excluding (i) depreciation and amortization, (ii) impairment of real estate investments, (iii) net gains or losses from sales of real estate, and (iv) similar adjustments for non-controlling interests and unconsolidated entities.

We also believe that adjusted FFO ("AFFO") is an additional meaningful non-GAAP supplemental measure of our operating results. AFFO further adjusts FFO to reflect the performance of our portfolio by adjusting for items we believe are not directly attributable to our property operations as we acquire additional investments and advance in our life cycle. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) unrealized gains or losses on derivative instruments, (ii) amortization of deferred financing costs, (iii) straight-line rental income and expense, (iv) amortization of restricted share awards, (v) organization costs and (vi) amortization of above-and-below market lease intangibles. AFFO is not defined by NAREIT and our calculation of AFFO may not be comparable to disclosures made by other REITs.

FFO and AFFO should not be considered more relevant or accurate than GAAP net income (loss) in evaluating our operating performance. In addition, FFO and AFFO 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 and AFFO 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 shareholders.

The following table presents a reconciliation of net loss to FFO and AFFO ($ in thousands):

Net Asset Value

Our NAV per share is calculated in accordance with valuation guidelines that have been approved by our board of trustees. Our Adviser is ultimately responsible for the determination of our NAV. Our NAV per share, which is updated as of the last calendar day of each month, is made available to our shareholders on our website at www.culreit.com.

Our NAV for each class of shares is based on the net asset values of our investments (including debt backed by commercial real estate), the addition of any other assets (such as cash on hand) and the deduction of any liabilities, including the allocation/accrual of any Performance Participation to the Special Limited Partner, and also includes the deduction of any management fees, shareholder servicing fees and asset-based servicing fees (when paid by us) specifically applicable to such class of shares.

The calculation of our NAV is intended to be a calculation of the fair value of our assets less our outstanding liabilities as described below and likely differs from the book value of our equity reflected in our financial statements. To calculate our NAV for purposes of establishing a purchase and repurchase price for our shares, we have adopted a model, as explained below, that adjusts the value of our assets and liabilities from historical cost to fair value generally in accordance with the GAAP principles set forth in FASB ASC Topic 820, Fair Value Measurements. Because these fair value calculations involve significant professional judgment in the application of both observable and unobservable inputs, the calculated fair value of our assets may differ from their actual realizable value or future fair value.

While we believe our NAV calculation methodologies are consistent with standard industry practices, there is no rule or regulation that requires we calculate NAV in a certain way. As a result, other REITs may use different methodologies or assumptions to determine NAV. In addition, NAV is not a measure used under GAAP and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV differ from GAAP. NAV should not be considered equivalent to stockholders' equity or any other GAAP measure.

The following valuation methods are used for purposes of calculating our NAV:

Each class has an undivided interest in our assets and liabilities, other than class-specific management fees, shareholder servicing fees and applicable asset-based servicing fees. In accordance with our valuation guidelines, the Adviser calculates our NAV per share for each class as of the last calendar day of each month, using a process that reflects several components, including the estimated fair value of (i) each of our properties based upon individual appraisal reports provided each month by our independent valuation advisor, (ii) our real estate debt and other assets and (iii) our liabilities. Because management fees, shareholder servicing fees and asset-based servicing fees (when paid by the Company) allocable to a specific class of shares are only included in the NAV calculation for that class, the NAV per share for our share classes are expected to differ over time.

OP Units are economically equivalent to a corresponding class of common shares. On the last day of each month, the NAV per OP Unit of such OP Unit equals the NAV per share of the corresponding class of common shares. The NAV of our operating partnership on the last day of each month equals the sum of the NAVs of each outstanding OP Unit on such day. At the end of each month, before taking into consideration repurchases or class-specific expense accruals for that month, any change in our aggregate NAV (whether an increase or decrease) is allocated among each class of shares based on each class's relative percentage of the previous aggregate NAV plus issuances of common shares that were effective during such month. The NAV calculation is available generally within 15 calendar days after the end of the applicable month. Changes in our monthly NAV include, without limitation, accruals of our net portfolio income, interest expense, the management fee, any accrued Performance Participation, distributions, unrealized/realized gains and losses on assets, any applicable organization and offering costs and any expense reimbursements. Changes in our monthly NAV also include material, non-recurring events, such as capital expenditures and material property acquisitions and dispositions occurring during the month. On an ongoing basis, the Adviser adjusts the accruals to reflect actual operating results and the outstanding receivable, payable and other account balances resulting from the accumulation of monthly accruals for which financial information is available. Notwithstanding anything herein to the contrary, the Adviser may in its discretion consider material market data and other information that becomes available after the end of the applicable month in valuing our assets and liabilities and calculating our NAV for a particular month.

Following the aggregation of the net asset values of our investments, the addition of any other assets (such as cash on hand) and the deduction of any other liabilities, the Adviser incorporates any class-specific adjustments to our NAV, including additional issuances and repurchases of our common shares and accruals of class-specific management fees, shareholder servicing fees and applicable asset-based servicing fees. For each applicable class of shares, the management fee, shareholder servicing fee and applicable asset-based servicing fee is calculated as a percentage of the aggregate NAV for such class of shares.

Please refer to "Net Asset Value Calculation and Valuation Guidelines" in our Pre-Effective Amendment No. 1 to Form 10 for further details on how our NAV is determined.

Certain transactions or events may have occurred since September 30, 2026 that could have a material impact on our NAV per share, upon which our transaction price is based. Our total NAV presented in the following tables includes the aggregate NAV of our outstanding shares. The following table provides a breakdown of the major components of our total NAV as of September 30, 2026 ($ and shares in thousands):

NAV and NAV Per Share Calculation

The following table provides a breakdown of our total NAV and NAV per share by class as of September 30, 2026 ($ and shares in thousands, except per-share data):

As of September 30, 2026, there were no Class D, Class F-D, Class F-I, Class F-S, Class I or Class S shares outstanding.

Discount Rates and Capitalization Rates

For purposes of calculating our NAV, our independent valuation advisor provides us with valuations of our real properties monthly in accordance with our valuation guidelines. Certain key assumptions that were used by the independent valuation advisor in the discounted cash flow analysis are set forth in the following table:

A change in the exit capitalization and discount rates used would impact the calculation of the value of our real properties. For example, assuming all other factors remain constant, the changes listed below would result in the following effects on the value of our real properties:

Reconciliation of Total Equity to NAV

The following table reconciles total equity under GAAP to our NAV as of September 30, 2026 ($ in thousands):

The following details the adjustments to reconcile total equity and redeemable common shares under GAAP to our NAV:

Our NAV is not a representation, warranty or guarantee that: (i) we would fully realize our NAV upon a sale of our assets, the sale of our company to a third party or a liquidation of our company; (ii) our common shares would trade at our per share NAV on a national securities exchange; and (iii) a shareholder would be able to realize the per share NAV if such shareholder attempted to sell his or her shares to a third party.

Distributions

Beginning on August 31, 2026, we declared monthly distributions for each class of our common shares, which are generally paid 25 days after month-end. Each class of our common shares received the same aggregate gross distribution per share, and the net distribution varies for each class based on the applicable shareholder servicing fee, which is deducted from the distribution per share and paid directly to the applicable distributor.

The following table details the total net distribution for each of our share classes for the period from January 23, 2026 (Date of Formation) through September 30, 2026:

The following table presents the sources of the cash distributions we declared for the three months ended September 30, 2026 and for the period from January 23, 2026 (Date of Formation) through September 30, 2026 ($ in thousands):

Financial Condition, Liquidity, and Capital Resources

We are a newly organized, non-listed REIT that commenced real estate operations during the three months ended September 30, 2026. During the quarter, we acquired the Initial Portfolio on July 22, 2026, issued Class A shares and Class E shares for $131,484,000 in gross proceeds, and closed on a $180,400,000 loan and related loan agreement. As a result, our results of operations, financial condition, and cash flows as of and for the period ended September 30, 2026 reflect the commencement of our principal operations and our initial deployment of capital. The discussion below reflects our liquidity and capital resources giving effect to these transactions, which we believe is necessary to an understanding of our financial condition and results of operations going forward.

We intend to elect to be taxed as a REIT under Sections 856 through 860 of the Code, as amended, beginning with our taxable year ending December 31, 2026. In order to maintain our qualification as a REIT, we are required to, among other things, distribute as dividends at least 90% of our REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains, to our shareholders and meet certain tests regarding the nature of our income and assets.

Short-term liquidity and capital resources (next twelve months)

Our principal sources of cash over the next 12 months are expected to be from (i) the net proceeds from our Offering, (ii) cash flows generated by the Initial Portfolio, and (iii) borrowings available to us, including under the Loan Agreement. Our principal cash requirements over this period are expected to include (i) origination or acquisition of student housing investments, (ii) the cost of operations (including the management fee and Performance Participation), (iii) debt service of any borrowings, (iv) periodic common share repurchases, including under our share repurchase plan, and (v) cash distributions to the holders of our common shares to the extent declared by our board of trustees.

The Adviser has agreed to advance all of our organization and offering expenses (excluding selling commissions and servicing fees) and operating expenses (excluding expenses incurred at the property level, management fees and the Performance Participation) through the earlier of (i) the date that our aggregate NAV is at least $1.0 billion and (ii) July 22, 2027, the first anniversary of our first property acquisition from a third party (such date, the "Expense Reimbursement Date"). Thereafter, we will reimburse the Adviser for any organization and offering and operating expenses as and when incurred. We will reimburse the Adviser for all such advanced expenses ratably over the 60 months one year following the Expense Reimbursement Date. The Adviser and its affiliates incurred organization and offering expenses on our behalf of approximately $652,000 and $2,119,000, respectively, through September 30, 2026.

We believe our expected sources of liquidity described above will be adequate to meet our anticipated cash requirements for at least the next 12 months. We have identified the following known trends, demands, and uncertainties we believe are reasonably likely to affect our short-term liquidity and capital resources.

Interest rate exposure. The Loan bears interest at a variable rate (Term SOFR plus a 1.50% margin, or, if applicable, the alternate base rate plus a 0.50% margin, subject to a 1.0% floor). In connection with closing the Loan, we entered into an interest rate cap agreement that caps Term SOFR at 4.0%. The interest rate cap has a notional amount of $180,400,000 and expires in August 2027, which is prior to the Loan's initial maturity date in July 2029. To the extent the cap expires prior to the Loan's maturity or any extension thereof, we would need to renew or replace the cap or would otherwise become fully exposed to increases in Term SOFR above the current cap level, which would increase our debt service requirements.

Reliance on continued capital raising. Our ability to fund future acquisitions and meet our REIT distribution requirement, beyond cash generated by the Initial Portfolio, depends in part on our ability to continue raising capital through the Offering. Failure to raise sufficient capital could negatively impact our funds available for investment activity and distributions.

Share repurchase plan. Our share repurchase plan allows shareholders to request quarterly repurchases at approximately the prior month's NAV per share, subject to a 2% deduction on shares held for less than 12 months. Repurchases are capped at 5% of aggregate NAV per quarter, and our board may repurchase less than requested, or none, at its discretion. High share repurchases could reduce the funds available for both future investment activity and distributions.

Long-term liquidity and capital resources (beyond twelve months)

Over the longer term, we expect to meet our liquidity needs - including the repayment or refinancing of outstanding indebtedness at maturity, funding additional real estate acquisitions, and continued compliance with our REIT distribution requirement - through a combination of proceeds from the Offering, cash flows from operations, and additional indebtedness.

Our debt agreements may contain conditions on our ability to extend or refinance maturities on favorable terms, or at all, such as financial performance tests, loan-to-value requirements, and extension fees. We believe these conditions represent a known uncertainty relevant to our long-term liquidity and capital resources, as our ability to satisfy them will depend on the performance of the underlying properties and prevailing market conditions at the time such conditions must be met.

The following table aggregates our contractual obligations and commitments as of September 30, 2026 ($ in thousands):

Cash Flows

The following table presents a summary of our cash flows for the period from January 23, 2026 (Date of Formation) through September 30, 2026 ($ in thousands):

Cash flows provided by operating activities

For the period from January 23, 2026 (Date of Formation) through September 30, 2026, net cash provided by operating activities was $935,000. Cash provided by operating activities was primarily attributable to the acquisition of the Initial Portfolio and related operational activity.

Cash flows used in investing activities

For the period from January 23, 2026 (Date of Formation) through September 30, 2026, net cash used in investing activities was $300,605,000. This was primarily attributable to $300,464,000 of cash paid in connection with the acquisition of the Initial Portfolio, which was funded through a combination of net proceeds from our private offering and proceeds from the Loan. This acquisition reflects the initial deployment of capital in furtherance of our investment strategy.

Cash flows provided by financing activities

For the period from January 23, 2026 (Date of Formation) through September 30, 2026, net cash provided by financing activities was $309,695,000. The primary sources of cash were $131,484,000 of gross proceeds from the Offering and $180,400,000 of proceeds from the Loan.

Recent Accounting Pronouncements

See Note 2 - "Summary of Significant Accounting Policies" for a discussion concerning recent accounting pronouncements.

Critical Accounting Estimates

Below is a discussion of the accounting estimates that management believes are critical. We consider these estimates critical because they involve significant judgments and assumptions and require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. Our accounting policies have been established to conform with GAAP. The preparation of the financial statements in accordance with GAAP requires management to use judgments in the application of such policies. 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. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.

Real estate purchase price allocation

We expect that most of our acquisitions will qualify as asset acquisitions rather than business combinations pursuant to ASC 805, Business Combinations. We account for acquisitions in accordance with GAAP, which requires that we allocate the purchase price of a property to the tangible and intangible assets acquired and the liabilities assumed based on their relative fair values. This guidance requires us to make significant estimates and assumptions, including fair value estimates, which requires the use of significant unobservable inputs as of the acquisition date.

The value of the tangible assets, consisting of land and buildings, is determined as if vacant. Acquisitions of portfolios of properties are allocated to the individual properties based upon an income approach or a cash flow analysis using appropriate risk adjusted capitalization rates which take into account the relative size, age, and location of the individual property along with current and projected occupancy and rental rate levels or appraised values, if available.

Our allocations of purchase prices are based on certain significant estimates and assumptions, variations in such estimates and assumptions could result in a materially different presentation of the condensed consolidated financial statements or materially different amounts being reported in the condensed consolidated financial statements.

Impairment of investments in real estate

Management reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates the carrying amount of the real estate may not be recoverable. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value of such investment, an impairment loss is recognized. 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 and anticipated holding periods 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.

Management classifies the assets and liabilities related to its real estate investments as held-for-sale when a sale is probable to occur within one year. The Company considers a sale to be probable when a binding contract has been executed, the buyer has posted a non-refundable deposit, and there are limited contingencies to closing. The impairment loss is recognized based on the excess of the depreciated cost of the real estate investment over its fair value, less estimated closing costs.