JP Morgan Real Estate Income Trust Inc.
11/06/2026 | Press release | Distributed by Public on 11/06/2026 15:52
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 the "Company," "we," "us," or "our" refer to J.P. Morgan Real Estate Income Trust, Inc. together with its consolidated subsidiaries, including J.P. Morgan REIT Operating Partnership, L.P. (the "Operating Partnership"), a Delaware limited partnership of which we are the general partner, 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 about our business, including, in particular, statements about our plans, strategies and objectives. You can generally identify forward-looking statements by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. These statements 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 Annual Report on Form 10-K for the year ended December 31, 2025, which is accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document (or our prospectus and other filings). 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.
Overview
We are a Maryland corporation formed on November 5, 2021. We were formed to invest primarily in stabilized, income-generating real properties. We are an externally advised, perpetual-life REIT formed to pursue the following investment objectives:
•provide attractive current income in the form of regular, stable cash distributions;
•preserve and protect invested capital;
•realize appreciation in NAV from proactive investment management and asset management; and
•provide an investment alternative for stockholders seeking to allocate a portion of their long-term investment portfolios to real estate.
We cannot assure you that we will achieve our investment objectives. In particular, we note that our NAV may be subject to volatility related to changes in the values of our assets.
We currently qualify, and intend to continue to qualify, as a REIT for federal income tax purposes. We own all or substantially all of our assets through the Operating Partnership, of which we are the sole general partner.
Our board of directors at all times has ultimate oversight and policymaking authority over us, including responsibility for governance, financial controls, compliance and disclosure. Pursuant to the Advisory Agreement, however, we have delegated to the Adviser the authority to source, evaluate and monitor our investment opportunities and make decisions related to the acquisition, management, financing and disposition of our assets, in accordance with our investment objectives, guidelines, policies and limitations, subject to oversight by our board of directors.
Our initial public offering of our common stock commenced on July 22, 2022. We acquired our first investment on September 2, 2022.
On July 8, 2025, we filed a Registration Statement on Form S-11 (File No. 333-288565) for our second public offering to register up to $4.8 billion of shares of common stock, consisting of up to $3.8 billion in shares of common stock in our primary offering and up to $1.0 billion in shares pursuant to our distribution reinvestment plan. On February 4, 2026, we commenced our second public offering and our initial public offering automatically terminated. In addition to our public offerings, we are conducting several private offerings.
We intend to contribute the net proceeds from the Offerings which are not used or retained to pay the fees and expenses attributable to our operations to the Operating Partnership. The Operating Partnership will use the net proceeds received from us to make investments in accordance with our investment strategy and policies.
The number and type of properties or real estate-related and other investments that we acquire will depend upon real estate market conditions, the amount of proceeds we raise in the Offerings and other circumstances existing at the time we are acquiring such assets.
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 revenue or income to be derived from acquiring properties, real estate debt and real estate-related or other securities.
Q3 2026 Highlights
Capital raising and distributions
•Raised net proceeds of $26.8 million from the sale of shares of our common stock, including shares issued under our distribution reinvestment plan, during the three months ended September 30, 2026.
•Declared distributions totaling $12.8 million for the three months ended September 30, 2026.
The details of the average annualized distribution rates and total returns as of September 30, 2026 are shown in the following table:
| Class D | Class I | Class E | Class Y | ||||||||||||||||||||
|
Average annualized distribution rate(1)
|
5.0% | 5.0% | 4.6% | 3.8% | |||||||||||||||||||
|
Year-to-date total return, without upfront selling commissions(2)
|
3.7% | 3.7% | 4.7% | 3.5% | |||||||||||||||||||
|
Year-to-date total return, assuming maximum upfront selling commissions(2)
|
2.2% | 3.7% | 4.7% | - | |||||||||||||||||||
|
Inception-to-date total return, without upfront selling commissions(2) (3)
|
5.9% | 5.9% | 7.8% | 5.6% | |||||||||||||||||||
|
Inception-to-date total return, assuming maximum upfront selling commissions(2) (3)
|
5.5% | 5.9% | 7.8% | 4.3% | |||||||||||||||||||
(1)Average annualized distribution rate is calculated as the current month's distribution annualized and divided by the prior month's NAV, which is inclusive of all fees and expenses.
(2)Total return is calculated as the change in NAV per share during the respective period plus any distributions per share declared in the period and assumes any distributions are reinvested in accordance with our distribution reinvestment plan. Inception-to-date total return is annualized.
(3)The inception date was January 3, 2023 for Class D shares, November 1, 2023 for Class I shares, August 1, 2022 for Class E shares and January 1, 2024 for Class Y shares.
Investing
•Originated a $60.0 million real estate debt investment, of which $54.0 million was funded at origination.
•Acquired one retail and two industrial properties for $283.0 million, excluding closing costs during the three months ended September 30, 2026.
Financing
•Increased the maximum aggregate purchase price of the Repurchase Facility from $250.0 million to $400.0 million. The Repurchase Facility was used to finance commercial mortgage loan origination.
•Increased the aggregate amount of the Credit Facility from $325.0 million to $550.0 million. The Credit Facility was used to finance real estate acquisitions.
Portfolio
The following chart outlines the percentage of our assets across investments in real estate, real estate debt and real estate-related and other securities based on fair value by category as of September 30, 2026:
Asset Allocation(1)
(1)Real estate includes our direct property investments; real estate debt includes commercial mortgage loans; and real estate-related and other securities consists of our CMBS investments.
The following charts further describe the composition of our investments in real estate based on estimated fair value as of September 30, 2026:
Investments in real estate
As of September 30, 2026, we owned 72 real estate properties which are summarized in the following table ($ in thousands):
| Property type | Number of Properties |
Sq. Ft. (in thousands)/
Number of Units(1)
|
Weighted-Average Occupancy Rate(1)(2)
|
Gross Asset
Value(3)
|
Revenue(4)
|
% of Revenue |
||||||||||||||||||||||||||||||||
| Multifamily | 17 | 3,087 units | 92% | $ | 733,953 | $ | 48,869 | 51% | ||||||||||||||||||||||||||||||
|
Single-family rental(5)
|
1 | 126 units | 70% | 46,100 | 2,645 | 3% | ||||||||||||||||||||||||||||||||
|
Industrial(6)
|
43 | 6,476 sq. ft. | 98% | 709,679 | 29,057 | 31% | ||||||||||||||||||||||||||||||||
|
Retail(7)
|
4 | 368 sq. ft. | 99% | 169,116 | 10,544 | 11% | ||||||||||||||||||||||||||||||||
| Office | 7 | 958 sq. ft. | 61% | 62,094 | 3,759 | 4% | ||||||||||||||||||||||||||||||||
| Total | 72 | $ | 1,720,942 | $ | 94,874 | 100% | ||||||||||||||||||||||||||||||||
(1)Excludes properties under development related to one of our retail investments.
(2)Reflects real estate operating property investments only. Occupancy for our multifamily and single-family rental properties is measured monthly by dividing property market rent for occupied units by the gross market rent potential of all units. Gross market rent potential is the average monthly market rent of all units at the property. For our retail, office and industrial properties, occupancy represents the percentage of all leased square footage divided by the total available square footage as indicated. An operating property is an existing property that was purchased, regardless of current occupancy. For a newly developed property, operating is defined as reaching 60% occupancy or having been available for occupancy for a year from its certificate of occupancy.
(3)Based on fair value as of September 30, 2026.
(4)Revenue includes tenant recoveries, straight-line rent, above-market lease amortization and below-market lease amortization.
(5)Represents 126 townhomes that are presented as a single property in the number of properties.
(6)Includes 3.7 million square feet of land related to industrial outdoor storage and 2.0 million square feet of buildings related to other industrial properties.
(7)Includes three retail developments that are represented as a single property in the number of properties.
The following table provides information regarding our real estate properties as of September 30, 2026:
| Property Type and Investment | Number of Properties |
Location(1)
|
Acquisition Date |
Ownership
Interest(2)
|
Sq. ft. (in thousands)/Number of Units(3)
|
Occupancy(4)
|
||||||||||||||||||||||||||||||||
| Multifamily: | ||||||||||||||||||||||||||||||||||||||
| Caroline West Gray | 1 | Houston, TX | November 2022 | 95% | 275 units | 95% | ||||||||||||||||||||||||||||||||
| Caroline Post Oak | 1 | Houston, TX | November 2022 | 95% | 238 units | 91% | ||||||||||||||||||||||||||||||||
| Coda on Centre | 1 | Pittsburgh, PA | December 2022 | 100% | 175 units | 99% | ||||||||||||||||||||||||||||||||
| Preserve at Pine Valley | 1 | Wilmington, NC | February 2025 | 90% | 219 units | 88% | ||||||||||||||||||||||||||||||||
| Bass Lofts | 1 | Atlanta, GA | March 2025 | 100% | 133 units | 96% | ||||||||||||||||||||||||||||||||
| The Elmstead | 1 | Providence, RI | May 2025 | 100% | 100 units | 95% | ||||||||||||||||||||||||||||||||
| The Kensley | 1 | Jacksonville, FL | June 2025 | 100% | 300 units | 82% | ||||||||||||||||||||||||||||||||
| Echelon Oswego | 1 | Chicago, IL | June 2025 | 100% | 312 units | 89% | ||||||||||||||||||||||||||||||||
| Reflections at Red Mountain | 1 | Mesa, AZ | June 2025 | 100% | 256 units | 86% | ||||||||||||||||||||||||||||||||
| Charleston Darby Portfolio | 5 | Charleston, SC | August 2025 | 90% | 647 units | 93% | ||||||||||||||||||||||||||||||||
| Vineyard Commons | 1 | Kingston, NY | August 2025 | 100% | 185 units | 96% | ||||||||||||||||||||||||||||||||
| Baker Chocolate Factory | 1 | Boston, MA | October 2025 | 95% | 133 units | 95% | ||||||||||||||||||||||||||||||||
| Harrison Hill | 1 | Philadelphia, PA | April 2026 | 100% | 114 units | 98% | ||||||||||||||||||||||||||||||||
| Total multifamily | 17 | 3,087 units | ||||||||||||||||||||||||||||||||||||
| Single-family rental: | ||||||||||||||||||||||||||||||||||||||
|
Fiore(5)
|
1 | Sarasota, FL | December 2023 - September 2024 | 100% | 126 units | 70% | ||||||||||||||||||||||||||||||||
| Total single-family rental | 1 | 126 units | ||||||||||||||||||||||||||||||||||||
| Industrial: | ||||||||||||||||||||||||||||||||||||||
| Industrial outdoor storage | ||||||||||||||||||||||||||||||||||||||
| 6200 Bristol | 1 | Philadelphia, PA | October 2022 | 100% | 424 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| Industrial outdoor storage portfolio | 17 |
Various(6)
|
June and September 2025 | 100% | 3,284 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| Total industrial outdoor storage | 18 | 3,708 sq. ft. | ||||||||||||||||||||||||||||||||||||
| Other industrial | ||||||||||||||||||||||||||||||||||||||
| Savannah Truck Terminal | 1 | Savannah, GA | July 2023 | 100% | 136 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| PODS | 2 |
Various(7)
|
November 2024 | 100% | 154 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| Norfolk Industrial Portfolio | 7 |
Various(8)
|
April 2025 | 88% | 581 sq. ft. | 84% | ||||||||||||||||||||||||||||||||
| Dallas Infill Portfolio | 9 | Dallas, TX | May and July 2025 | 100% | 553 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| Property Type and Investment | Number of Properties |
Location(1)
|
Acquisition Date |
Ownership
Interest(2)
|
Sq. ft. (in thousands)/Number of Units(3)
|
Occupancy(4)
|
||||||||||||||||||||||||||||||||
| One Brooklyn | 1 | New York, NY | July 2025 | 100% | 76 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| 11801 Industry | 1 | Jacksonville, FL | July 2025 | 100% | 257 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| 125 Fisher Street | 1 | Worcester, MA | December 2025 | 100% | 199 sq. ft. | 90% | ||||||||||||||||||||||||||||||||
| Sun Sentinel | 1 | Miami, FL | July 2026 | 100% | 291 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| Shoemaker | 2 | Los Angeles, CA | September 2026 | 100% | 521 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| Total other industrial | 25 | 2,768 sq. ft. | ||||||||||||||||||||||||||||||||||||
| Total industrial | 43 | 6,476 sq. ft. | ||||||||||||||||||||||||||||||||||||
| Retail: | ||||||||||||||||||||||||||||||||||||||
| Shops at Grand Avenue | 1 | New York, NY | May 2024 | 95% | 100 sq. ft. | 98% | ||||||||||||||||||||||||||||||||
| Stablewood | 1 |
Various(9)
|
Various | 98% | - | - | ||||||||||||||||||||||||||||||||
| Shoppes at Heron Lakes | 1 | Miami, FL | November 2025 | 100% | 136 sq. ft. | 100% | ||||||||||||||||||||||||||||||||
| Southlake Marketplace | 1 | Dallas, TX | July 2026 | 100% | 132 sq. ft. | 99% | ||||||||||||||||||||||||||||||||
| Total retail | 4 | 368 sq. ft. | ||||||||||||||||||||||||||||||||||||
| Office: | ||||||||||||||||||||||||||||||||||||||
| The Edge portfolio | 7 | Boston, MA | June 2026 | 98% | 958 sq. ft. | 61% | ||||||||||||||||||||||||||||||||
| Total office | 7 | 958 sq. ft. | ||||||||||||||||||||||||||||||||||||
(1)Refers to the metropolitan statistical area.
(2)Certain of the joint venture agreements entered into by us provide the other partner a profits interest based on certain internal rate of return hurdles being achieved.
(3)Excludes properties under development related to one of our retail investments.
(4)Reflects real estate operating property investments only. Occupancy for our multifamily properties is measured monthly by dividing property market rent for occupied units by the gross market rent potential of all units. Gross market rent potential is the average monthly market rent of all units at the property. For our retail, office and industrial investments, occupancy represents the percentage of all leased square footage divided by the total available square footage as indicated. An operating property is an existing property that was purchased, regardless of current occupancy. For a newly developed property, operating is defined as reaching 60% occupancy or having been available for occupancy for a year from its certificate of occupancy.
(5)Represents 126 townhomes that are presented as a single property in the number of properties.
(6)Includes five properties located in Illinois, three properties located in New Jersey, two properties in each of Pennsylvania, New York and Wisconsin and one property in each of California, Connecticut and Washington.
(7)Represents one property located in Tampa, Florida and one located in Pinellas Park, Florida.
(8)Represents six properties located in Norfolk, Virginia and one located in Rockledge, Florida.
(9)Represents three retail developments including one in Holland, Michigan, one in Greeley, Colorado and one in Oklahoma City, Oklahoma.
Lease expirations
The following table details the expiring operating leases at our retail and industrial properties by annualized base rent as of September 30, 2026 ($ in thousands). The table below excludes our multifamily and single-family rental properties as substantially all leases at such properties expire within 12 months:
| Year | Number of Expiring Leases |
Annualized Rent(1)
|
% of Total Annualized Rent Expiring | |||||||||||||||||
| 2026 (remaining) | 7 | $ | 873 | 1% | ||||||||||||||||
| 2027 | 22 | 4,399 | 7% | |||||||||||||||||
| 2028 | 41 | 7,377 | 11% | |||||||||||||||||
| 2029 | 21 | 5,034 | 8% | |||||||||||||||||
| 2030 | 26 | 9,386 | 14% | |||||||||||||||||
| 2031 | 23 | 5,438 | 8% | |||||||||||||||||
| 2032 | 7 | 4,435 | 7% | |||||||||||||||||
| 2033 | 9 | 6,927 | 10% | |||||||||||||||||
| 2034 | 6 | 775 | 1% | |||||||||||||||||
| 2035 | 6 | 10,773 | 16% | |||||||||||||||||
| Thereafter | 24 | 10,690 | 17% | |||||||||||||||||
| Total | 192 | $ | 66,107 | 100% | ||||||||||||||||
(1)Represents annualized base rent as of September 30, 2026 and excludes tenant recoveries.
Investments in real estate debt
The following table summarizes our investments in real estate debt as of September 30, 2026 and December 31, 2025 ($ in thousands):
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Real Estate Debt | Number of Positions | Credit Rating |
Weighted-Average Coupon |
Weighted-Average Maturity Date | Cost Basis | Fair Value | Cost Basis | Fair Value | ||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage loans | 5 | Not Rated |
SOFR(1) + 2.49%
|
May 16, 2028 | $ | 358,600 | $ | 358,542 | $ | 224,600 | $ | 224,600 | ||||||||||||||||||||||||||||||||||||||
(1)"SOFR" refers to the Secured Overnight Financing Rate as of September 30, 2026.
Investments in real estate-related and other securities
The following table summarizes our investments in real estate-related and other securities as of September 30, 2026 and December 31, 2025 ($ in thousands):
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Real Estate-Related and Other Securities |
Weighted-Average Coupon |
Weighted-Average Maturity Date | Face Amount |
Cost Basis |
Fair Value |
Face Amount |
Cost Basis |
Fair Value |
||||||||||||||||||||||||||||||||||||||||||
| CMBS | 6.8% | August 19, 2039 | $ | 15,000 | $ | 15,107 | $ | 14,605 | $ | 15,000 | $ | 15,107 | $ | 15,323 | ||||||||||||||||||||||||||||||||||||
Results of Operations
The following tables set forth information regarding our consolidated results of operations ($ in thousands, except per share data):
|
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Rental revenue | $ | 35,863 | $ | 22,556 | $ | 13,307 | $ | 94,874 | $ | 44,061 | $ | 50,813 | |||||||||||||||||||||||
| Total revenues | 35,863 | 22,556 | 13,307 | 94,874 | 44,061 | 50,813 | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Rental property operating | 14,407 | 7,435 | 6,972 | 37,129 | 14,904 | 22,225 | |||||||||||||||||||||||||||||
| General and administrative | 1,869 | 2,412 | (543) | 5,214 | 5,610 | (396) | |||||||||||||||||||||||||||||
| Depreciation and amortization | 16,600 | 14,363 | 2,237 | 44,689 | 26,053 | 18,636 | |||||||||||||||||||||||||||||
| Total expenses | 32,876 | 24,210 | 8,666 | 87,032 | 46,567 | 40,465 | |||||||||||||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||||||||||||||
| Income from investments in real estate debt | 6,193 | 2,412 | 3,781 | 16,211 | 5,974 | 10,237 | |||||||||||||||||||||||||||||
| (Loss) income from investments in real estate-related and other securities | (139) | 306 | (445) | 43 | 2,440 | (2,397) | |||||||||||||||||||||||||||||
| Mandatorily redeemable instruments interest costs | - | (2,045) | 2,045 | (585) | (4,783) | 4,198 | |||||||||||||||||||||||||||||
| Interest expense | (11,681) | (5,567) | (6,114) | (29,625) | (11,047) | (18,578) | |||||||||||||||||||||||||||||
| Other income (loss), net | 2,926 | (148) | 3,074 | 4,431 | 4,825 | (394) | |||||||||||||||||||||||||||||
| Total other (expense) income, net | (2,701) | (5,042) | 2,341 | (9,525) | (2,591) | (6,934) | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 286 | $ | (6,696) | $ | 6,982 | $ | (1,683) | $ | (5,097) | $ | 3,414 | |||||||||||||||||||||||
| Net loss attributable to non-controlling interests in consolidated joint ventures | (77) | (277) | 200 | (352) | (390) | 38 | |||||||||||||||||||||||||||||
| Net income (loss) attributable to JPMREIT stockholders | $ | 363 | $ | (6,419) | $ | 6,782 | $ | (1,331) | $ | (4,707) | $ | 3,376 | |||||||||||||||||||||||
| Net income (loss) per share of common stock - basic | $ | - | $ | (0.09) | $ | 0.09 | $ | (0.01) | $ | (0.07) | $ | 0.06 | |||||||||||||||||||||||
| Net income (loss) per share of common stock - diluted | $ | - | $ | (0.09) | $ | 0.09 | $ | (0.01) | $ | (0.07) | $ | 0.06 | |||||||||||||||||||||||
| Weighted-average shares of common stock outstanding - basic | 100,972 | 72,503 | 28,469 | 93,771 | 62,968 | 30,803 | |||||||||||||||||||||||||||||
| Weighted-average shares of common stock outstanding - diluted | 100,976 | 72,503 | 28,473 | 93,771 | 62,968 | 30,803 | |||||||||||||||||||||||||||||
Rental revenue
Due to our acquisitions of real estate since September 30, 2025, our rental revenue for the three and nine months ended September 30, 2026 and September 30, 2025 is not comparable. Rental revenue primarily consists of base rent arising from tenant leases at our multifamily, single-family rental, industrial, office and retail properties. Rental revenue, aside from short-term leases generally less than one year in term, is recognized on a straight-line basis over the life of the lease, including any fixed and measurable rent escalations and abatements.
Rental property operating expenses
Rental property operating expenses consist of the costs of ownership and operation of our real estate investments. Examples of rental property operating expenses include insurance, utilities, real estate taxes and repair and maintenance expenses. Due to our acquisitions of real estate since September 30, 2025, our rental property operating expenses for the three and nine months ended September 30, 2026 and September 30, 2025 are not comparable.
Depreciation and amortization expenses
Depreciation and amortization expenses are impacted by the fair values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. During the three and nine months ended September 30, 2026, depreciation and amortization expenses increased by $2.2 million and $18.6 million, respectively, in comparison to the corresponding periods in 2025 due to our acquisitions of real estate since September 30, 2025.
Income from investments in real estate debt
During the three and nine months ended September 30, 2026, income from investments in real estate debt increased by $3.8 million and $10.2 million, respectively, in comparison to the corresponding periods in 2025 primarily due to the $240.5 million of real estate debt originated since September 30, 2025, partially offset by $16.8 million of repayments.
Income from investments in real estate-related and other securities
During the three and nine months ended September 30, 2026, income from investments in real estate-related and other securities decreased by $0.4 million and $2.4 million, respectively, in comparison to the corresponding periods in 2025. For the three months ended September 30, 2026, the decrease was primarily due to a decrease in interest income of $0.1 million and an increase in unrealized loss of $0.2 million. For the nine months ended September 30, 2026, the decrease was due to a decrease in interest income of $1.0 million, an increase in unrealized loss of $0.9 million and a decrease in realized gain of $0.5 million.
Mandatorily redeemable instruments interest costs
During the three and nine months ended September 30, 2026, mandatorily redeemable instruments interest costs decreased by $2.0 million and $4.2 million, respectively, in comparison to the corresponding periods in 2025 as a result of the mandatorily redeemable instruments being fully redeemed in May 2026.
Interest expense
During the three and nine months ended September 30, 2026, interest expense increased by $6.1 million and $18.6 million, respectively, in comparison to the corresponding periods in 2025. Interest expense consists of interest expense incurred on our mortgage notes, Repurchase Facility and the Credit Facility. The change in interest expense was primarily attributable to an increase in interest expense relating to our new mortgage notes and an increase in borrowings under the Repurchase Facility and the Credit Facility since September 30, 2025.
Other income, net
During the three and nine months ended September 30, 2026, other income, net increased by $3.1 million and decreased by $0.4 million, respectively, in comparison to the corresponding periods in 2025.
For the three months ended September 30, 2026, the increase was primarily due to a $2.3 million increase in unrealized gains on derivatives instruments and an increase of $0.7 million in interest income from sales-type leases.
Funds from Operations and Adjusted Funds from Operations
We believe funds from operations ("FFO") is a meaningful supplemental non-GAAP operating measure, which should be considered along with, but not as an alternative to, net income (loss) as a measure of operating performance. Our condensed 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 change over time based on market conditions and as such, depreciation under historical cost accounting may be less informative. FFO is a standard REIT industry measure 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) depreciation and amortization, (ii) impairment of investments in real estate, (iii) net gains or losses from sales of real estate, (iv) net gains or losses from change in control, and (v) similar adjustments for non-controlling interests and unconsolidated entities.
We also believe that adjusted FFO ("AFFO") is a meaningful supplemental non-GAAP disclosure 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 core operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) straight-line rental income and expense, (ii) amortization of above- and below-market lease intangibles, net, (iii) unrealized gains or losses in fair value of financial instruments, (iv) non-cash performance participation allocation, (v) organization costs, (vi) amortization of deferred financing costs, (vii) amortization of restricted stock awards, (viii) amortization of mortgage premium/discount, and (ix) similar adjustments for unconsolidated joint ventures. AFFO is not defined by Nareit and our calculation of AFFO may not be comparable to disclosures made by other REITs.
The following table presents a reconciliation of net loss attributable to stockholders to FFO and AFFO ($ in thousands):
|
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income (loss) attributable to JPMREIT stockholders | $ | 363 | $ | (6,419) | $ | (1,331) | $ | (4,707) | |||||||||||||||
| Adjustments to arrive at FFO: | |||||||||||||||||||||||
| Real estate depreciation and amortization | 16,600 | 14,363 | 44,689 | 26,053 | |||||||||||||||||||
| Net gain from sale of real estate | (417) | - | (374) | - | |||||||||||||||||||
| Amount attributable to non-controlling interests for above adjustments | (396) | (436) | (1,242) | (916) | |||||||||||||||||||
| FFO attributable to stockholders | 16,150 | 7,508 | 41,742 | 20,430 | |||||||||||||||||||
| Adjustments to arrive at AFFO: | |||||||||||||||||||||||
| Straight-line rental income | (1,195) | (797) | (3,652) | (1,448) | |||||||||||||||||||
| Amortization of above-and below-market lease intangibles | (246) | (553) | (1,331) | (1,345) | |||||||||||||||||||
| Changes in fair value of financial instruments, net | (1,317) | 1,742 | (1,931) | 1,679 | |||||||||||||||||||
| Performance Participation Allocation | (189) | 739 | 95 | 739 | |||||||||||||||||||
| Amortization of deferred financing costs | 753 | 446 | 2,040 | 691 | |||||||||||||||||||
| Amortization of stock based compensation awards | 34 | 20 | 86 | 70 | |||||||||||||||||||
| Accretion of mortgage discount | 153 | 107 | 458 | 220 | |||||||||||||||||||
| Amount attributable to non-controlling interests for above adjustments | 102 | 55 | 248 | 133 | |||||||||||||||||||
| AFFO attributable to JPMREIT stockholders | $ | 14,245 | $ | 9,267 | $ | 37,755 | $ | 21,169 | |||||||||||||||
Liquidity and Capital Resources
Liquidity
Our primary needs for liquidity and capital resources are to fund our 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 fees and expenses and to pay interest on any outstanding indebtedness we may incur. Our offering and operating fees and expenses include the management fee we pay to the Adviser, the performance participation allocation that the Operating Partnership pay to the Special Limited Partner, stockholder servicing fees we pay to the Dealer Manager, legal, audit, tax and valuation expenses, federal and state filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution expenses and fees related to acquiring, financing, appraising and managing our properties. We do not have any office or personnel expenses as we do not have any employees.
Over time, we generally intend to fund our cash needs for items other than asset acquisitions from operations. Our cash needs for acquisitions will be funded primarily from the sale of shares of our common stock, through the assumption or incurrence of secured or unsecured financings from banks or other lenders and from proceeds from the sales of assets. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures.
If we are unable to raise substantial funds, we will make fewer investments, resulting in less diversification in terms of the type, number and size of investments we make and the value of an investment in us will fluctuate with the performance of the specific assets we acquire. Further, we have certain fixed operating expenses, including certain expenses as a publicly offered REIT, regardless of whether we are able to raise substantial funds. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.
Capital resources
The following table is a summary of our indebtedness as of September 30, 2026 and December 31, 2025 ($ in thousands):
| Principal Balance Outstanding | |||||||||||||||||||||||||||||
| Indebtedness | Interest Rate | Maturity Date |
Maximum Facility Size |
September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||
| Fixed rate debt secured by our properties | |||||||||||||||||||||||||||||
| Caroline West Gray | 5.44% | December 1, 2029 | N/A | $ | 45,911 | $ | 45,911 | ||||||||||||||||||||||
| Caroline Post Oak | 5.44% | December 1, 2029 | N/A | 40,528 | 40,528 | ||||||||||||||||||||||||
| Coda on Centre | 4.28% | May 1, 2029 | N/A | 27,443 | 27,860 | ||||||||||||||||||||||||
|
The Elmstead(1)
|
4.30% | April 1, 2031 | N/A | 21,104 | 21,245 | ||||||||||||||||||||||||
| Bass Lofts | 3.95% | September 5, 2027 | N/A | 14,613 | 14,902 | ||||||||||||||||||||||||
| One Brooklyn | 4.35% | July 1, 2028 | N/A | 6,600 | 6,600 | ||||||||||||||||||||||||
| Charleston | 5.08% | September 1, 2030 | N/A | 59,728 | 59,728 | ||||||||||||||||||||||||
| Baker Chocolate | 3.91% | January 1, 2028 | N/A | 23,500 | 23,500 | ||||||||||||||||||||||||
| Total fixed rate | 239,427 | 240,274 | |||||||||||||||||||||||||||
| Variable rate debt secured by our properties | |||||||||||||||||||||||||||||
|
6200 Bristol(2)
|
SOFR + 2.05% | April 1, 2029 | N/A | 10,000 | 10,000 | ||||||||||||||||||||||||
|
Norfolk Industrial Portfolio(3)
|
SOFR + 1.75% | June 19, 2030 | N/A | 45,300 | 43,700 | ||||||||||||||||||||||||
|
Preserve at Pine Valley(4)
|
SOFR + 1.50% | December 10, 2030 | N/A | 21,200 | 21,200 | ||||||||||||||||||||||||
|
Vineyard Commons(5)
|
SOFR + 1.40% | January 1, 2030 | N/A | 45,175 | 45,175 | ||||||||||||||||||||||||
| Stablewood | SOFR + 3.75% | August 8, 2028 | $ | 50,000 | 11,369 | 5,292 | |||||||||||||||||||||||
| Total variable rate | 133,044 | 125,367 | |||||||||||||||||||||||||||
| Total debt secured by real estate | 372,471 | 365,641 | |||||||||||||||||||||||||||
| Repurchase Facility | SOFR + 1.52% | August 22, 2027 | $ | 400,000 | 268,950 | 168,450 | |||||||||||||||||||||||
| Credit Facility | SOFR + 1.40% | July 15, 2028 | $ | 550,000 | 305,500 | 73,000 | |||||||||||||||||||||||
| Total indebtedness | $ | 946,921 | $ | 607,091 | |||||||||||||||||||||||||
(1)This loan is comprised of a senior and mezzanine loan. The interest rate and maturity date presented are the weighted average.
(2)We entered into an interest rate swap that was not designated as a hedge, which fixed the rate at 6.26%.
(3)We entered into an interest rate swap that was not designated as a hedge, which fixed the rate at 5.41% on $43.7 million of the outstanding principal amount.
(4)We entered into an interest rate swap that was not designated as a hedge, which fixed the rate at 4.90%.
(5)We entered into an interest rate swap that was not designated as a hedge, which fixed the rate at 4.88%.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash ($ in thousands):
| For the Nine Months Ended | |||||||||||||||||
| September 30, 2026 | September 30, 2025 | Change | |||||||||||||||
| Net cash provided by operating activities | $ | 45,382 | $ | 28,040 | $ | 17,342 | |||||||||||
| Net cash used in investing activities | (518,125) | (751,411) | 233,286 | ||||||||||||||
| Net cash provided by financing activities | 481,466 | 617,504 | (136,038) | ||||||||||||||
| Net change in cash, cash equivalents and restricted cash | $ | 8,723 | $ | (105,867) | $ | 114,590 | |||||||||||
Cash flows provided by operating activities increased by $17.3 million for the nine months ended September 30, 2026 compared to the corresponding period in 2025 primarily due to an increase in cash flows from operations from our investments in real estate as a result of growth in the size of our portfolio.
Cash flows used in investing activities decreased by $233.3 million for the nine months ended September 30, 2026 compared to the corresponding period in 2025 primarily due to a decrease of $304.2 million in real estate acquisitions and a decrease of $63.1 million in purchase of real-estate related and other securities, partially offset by an increase of $78.3 million in the origination of investments in real estate debt and by a decrease of $55.0 million in proceeds from real estate-related and other securities.
Cash flows provided by financing activities decreased by $136.0 million for the nine months ended September 30, 2026 compared to the corresponding period in 2025 primarily due to a decrease of net proceeds from the issuance of common stock of $229.1 million, an increase of $428.0 million in repayments under the Credit Facility, an increase of $50.6 million in repurchases of common stock and Mandatorily Redeemable Instruments and a decrease of $87.3 million in proceeds from mortgage notes, partially offset by an increase of $615.3 million in borrowings under the Credit Facility and an increase of $58.7 million in proceeds from the Repurchase Facility.
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 comply with the REIT provisions of the Code. Each class of common stock receives the same gross distribution per share. The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the monthly distribution per share.
The following tables detail the aggregate distributions declared for each applicable class of common stock:
| For the Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Class D | Class I | Class S | Class T | Class E | Class X | Class Y | |||||||||||||||||||||||||||||||||||
| Aggregate gross distributions declared per share of common stock | $ | 0.1299 | $ | 0.1299 | $ | - | $ | 0.1299 | $ | 0.1299 | $ | - | $ | 0.1299 | |||||||||||||||||||||||||||
|
Stockholder servicing fee per share of common stock(1)
|
- | - | - | (0.0246) | - | - | (0.0243) | ||||||||||||||||||||||||||||||||||
| Net distributions declared per share of common stock | $ | 0.1299 | $ | 0.1299 | $ | - | $ | 0.1053 | $ | 0.1299 | $ | - | $ | 0.1056 | |||||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Class D | Class I | Class S | Class T | Class E | Class X | Class Y | |||||||||||||||||||||||||||||||||||
| Aggregate gross distributions declared per share of common stock | $ | 0.3832 | $ | 0.3832 | $ | - | $ | 0.1722 | $ | 0.3832 | $ | - | $ | 0.3832 | |||||||||||||||||||||||||||
|
Stockholder servicing fee per share of common stock(1)
|
- | - | - | (0.0326) | - | - | (0.0718) | ||||||||||||||||||||||||||||||||||
| Net distributions declared per share of common stock | $ | 0.3832 | $ | 0.3832 | $ | - | $ | 0.1396 | $ | 0.3832 | $ | - | $ | 0.3114 | |||||||||||||||||||||||||||
(1) Stockholder servicing fees only apply to Class D, Class S, Class T and Class Y shares. For purposes of NAV, the Company recognizes the stockholder servicing fee as a reduction of NAV on a monthly basis as such fee is paid. Under GAAP, the Company accrues the full cost of the stockholder servicing fee as an offering cost at the time the Company sells Class D, Class S, Class T and Class Y shares. The stockholder servicing fee on Class D shares was waived as of September 30, 2026, and the NAV attributable to current holders of Class D shares will not be included in the computation of stockholder servicing fees charged on Class D shares in perpetuity. The Company accrued stockholder servicing fees of $8.6 million and $6.3 million as of September 30, 2026 and December 31, 2025, respectively.
The following tables summarize our distributions paid on our shares of common stock ($ in thousands):
| For The Three Months Ended September 30, 2026 | For The Three Months Ended September 30, 2025 | |||||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||||||||||||||||
| Distributions | ||||||||||||||||||||||||||
| Paid in cash | $ | 5,046 | 40 | % | $ | 3,939 | 50 | % | ||||||||||||||||||
| Reinvested in shares | 7,524 | 60 | % | 4,018 | 50 | % | ||||||||||||||||||||
| Total distributions | $ | 12,570 | 100 | % | $ | 7,957 | 100 | % | ||||||||||||||||||
| Source of Distributions | ||||||||||||||||||||||||||
| Cash flows from operating activities | 12,570 | 100 | % | 7,957 | 100 | % | ||||||||||||||||||||
| Offering proceeds | - | - | - | - | ||||||||||||||||||||||
| Total sources of distributions | $ | 12,570 | 100 | % | $ | 7,957 | 100 | % | ||||||||||||||||||
| Cash flows from operating activities | $ | 17,713 | $ | 13,644 | ||||||||||||||||||||||
| Funds from Operations | $ | 16,150 | $ | 7,508 | ||||||||||||||||||||||
| Adjusted Funds from Operations | $ | 14,245 | $ | 9,267 | ||||||||||||||||||||||
| For The Nine Months Ended September 30, 2026 | For The Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||||||||||||||||
| Distributions | ||||||||||||||||||||||||||
| Paid in cash | $ | 14,353 | 42 | % | $ | 10,155 | 52 | % | ||||||||||||||||||
| Reinvested in shares | 19,669 | 58 | % | 9,371 | 48 | % | ||||||||||||||||||||
| Total distributions | $ | 34,022 | 100 | % | $ | 19,526 | 100 | % | ||||||||||||||||||
| Source of Distributions | ||||||||||||||||||||||||||
| Cash flows from operating activities | $ | 34,022 | 100 | % | $ | 19,526 | 100 | % | ||||||||||||||||||
| Offering proceeds | - | - | - | - | ||||||||||||||||||||||
| Total sources of distributions | $ | 34,022 | 100 | % | $ | 19,526 | 100 | % | ||||||||||||||||||
| Cash flows from operating activities | $ | 45,382 | $ | 28,040 | ||||||||||||||||||||||
| Funds from Operations | $ | 41,742 | $ | 20,430 | ||||||||||||||||||||||
| Adjusted Funds from Operations | $ | 37,755 | $ | 21,169 | ||||||||||||||||||||||
In addition to the distributions paid on our common stock, during the three and nine months ended September 30, 2026 and 2025, we paid $0.0 million, $0.6 million, $0.9 million and $3.1 million, respectively, for Mandatorily Redeemable
Instruments. Such amounts are recorded in mandatorily redeemable instruments interest costs on our Condensed Consolidated Statements of Operations.
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 overarching principle of these guidelines is to produce a valuation that represents a fair and accurate estimate of the value of our investments or the price that would be received for our investments in an arm's-length transaction between a willing buyer and a willing seller in possession of all material information about our investments. These valuation guidelines are largely based upon standard industry practices used by private, open-end real estate funds and other public, non-listed REITs, and are administered by the Adviser.
As a public company, we are required to issue financial statements based on historical cost in accordance with GAAP, which are subject to an independent audit. 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 from historical cost to fair value in accordance with the GAAP principles set forth in FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures. However, our valuation procedures and our NAV are not subject to GAAP and are not subject to independent audit. Our NAV may differ from equity reflected on our audited financial statements, even if we are required to adopt a fair value basis of accounting for GAAP financial statement purposes in the future. Because these fair value calculations involve significant professional judgment in the application of both observable and unobservable attributes, 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 that we calculate NAV in a certain way. As a result, other public, non-listed REITs may use different methodologies or assumptions to determine NAV.
The following valuation methods are used for purposes of calculating our NAV:
•Investments in real property are valued by our independent valuation advisor and independent third-party appraisal firms using the income approach's discounted cash flow method. The discounted cash flow method takes into consideration contractual rent payments over the life of the lease term offset by any capitalized expenditures. Our independent valuation advisor and independent third-party appraisers may supplement the discounted cash flow analysis with a sales comparison approach and the income approach's direct capitalization method, but typically reconcile exclusively to the discounted cash flow method.
•In general, investments in real estate debt are valued by an independent debt valuation services firm using a variety of methods, including but not limited to, market quotations and/or discounted cash flow method. Our independent debt valuation services firm calculates the fair value of loans in accordance with GAAP and by considering all relevant calculations and scenarios that a market participant would consider in evaluating the financial instrument. Most loans held as an investment are valued by discounting debt service cash flows using a market yield.
•Investments in real estate-related and other securities consists of investments in commercial mortgage-backed securities. We classify real estate-related and other securities as trading securities which the Adviser generally values on the basis of publicly available market quotations or at fair value determined in accordance with GAAP.
•Interest rate swaps are valued using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
•Treasury note futures contracts are valued based on quoted market prices for identical instruments.
•Liabilities include the fees payable to the Adviser and the Dealer Manager, accounts payable, accrued operating expenses, property-level mortgages, the Repurchase Facility, any portfolio-level credit facilities and other liabilities, where applicable. Other than property-level mortgages and the Repurchase Facility, we include the cost basis of our liabilities as part of NAV, which approximates fair value. These carrying amounts are meant to reasonably approximate fair value due to the liquid and short-term nature of the instruments. We include as part of NAV the fair value of our property-level mortgages and Repurchase Facility, which are valued monthly by an independent valuation services firm. For most loans valued from the borrower's perspective, our independent debt valuation services firm utilizes a discounted cash flow analysis in evaluating its fair value conclusions. Additional
inputs or adjustments to fair value conclusions may be applicable based on observations of market participant behavior.
In accordance with the valuation guidelines, our fund administrator calculates our NAV per share for each class of our common stock as of the last calendar day of each month, using a process that reflects several components (each as described above), including the estimated fair value of (1) each of our properties based upon individual appraisal reports provided quarterly by third-party independent valuation firms or our independent valuation advisor, (2) our real estate-related assets for which third-party market quotes are available, (3) our other real estate-related assets, if any, and (4) our other assets and liabilities. The NAV per share for the share classes we are offering to the public may differ because stockholder servicing fees, management fees and the performance participation allocable to a specific class of shares are only included in the NAV calculation for that class.
At the end of each month, before taking into consideration additional issuances of shares of capital stock, share 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 shares that were effective on the first calendar day of 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 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. 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. On an ongoing basis, the Adviser will adjust 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.
The Adviser advanced our organization and offering expenses on our behalf (other than upfront selling commissions, dealer manager fees and stockholder servicing fees) through July 22, 2024. On such date, we began reimbursing the Adviser for all such advanced costs ratably over a period that will continue until 60 months following such date. For purposes of calculating our NAV, the organization and offering expenses paid by the Adviser through July 22, 2024 will not be recognized as expenses, or as a component of equity and reflected in our NAV, until we reimburse the Adviser for these expenses. In addition, the operating expenses paid by the Adviser through April 30, 2026 will not be recognized as expenses and reflected in our NAV, until we reimburse the Adviser for these expenses.
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, our fund administrator incorporates any class-specific adjustments to our NAV, including additional issuances and repurchases of our common stock and accruals of class-specific stockholder servicing fees, management fees and any accrued performance participation. For each applicable class of shares, each of the stockholder servicing fee and the management fee is calculated as a percentage of the aggregate NAV for such class of shares. At the close of business on the record date for any declared distribution, our NAV for each class will be reduced to reflect the accrual of our liability to pay any distribution to our stockholders of record of such class. NAV per share for each class is calculated by dividing such class's NAV at the end of each month by the number of shares outstanding for that class at the end of such month.
We calculate NAV per share in accordance with the valuation guidelines that have been approved by our board of directors. We believe our NAV is a meaningful supplemental non-GAAP operating metric. The following table provides a breakdown of the major components of our NAV as of September 30, 2026 ($ and shares/units in thousands):
| Components of NAV | September 30, 2026 | |||||||
| Investments in real estate | $ | 1,720,942 | ||||||
| Investments in real estate debt | 358,542 | |||||||
| Investments in real estate-related and other securities | 14,605 | |||||||
| Cash and cash equivalents | 24,603 | |||||||
| Restricted cash | 7,225 | |||||||
| Other assets | 15,153 | |||||||
| Debt obligations | (942,312) | |||||||
| Other liabilities | (31,924) | |||||||
| Accrued performance participation allocation | (95) | |||||||
|
Stockholder servicing fees payable the following month(1)
|
(97) | |||||||
| Non-controlling interests in joint ventures | (19,395) | |||||||
| Net Asset Value | $ | 1,147,247 | ||||||
| Number of outstanding shares/units | 101,508 | |||||||
(1)Stockholder servicing fees only apply to Class T, Class S, Class D and Class Y 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 accounting principles generally accepted in the United States of America ("GAAP"), we accrue the lifetime cost of the stockholder servicing fee as an offering cost at the time we sell Class T, Class S, Class D and Class Y shares. The stockholder servicing fee on Class D shares was waived as of September 30, 2026, and the NAV attributable to current holders of Class D shares will not be included in the computation of stockholder servicing fees charged on Class D shares in perpetuity. As of September 30, 2026, we had accrued under GAAP stockholder servicing fees of $8.6 million.
The following table provides a breakdown of our total NAV and NAV per share/unit by class as of September 30, 2026 ($ and shares/units in thousands except per-share/unit data):
| Share Class/Unit | Net asset value |
Number of outstanding shares/units |
NAV per share/unit |
|||||||||||||||||
| Class D Shares | $ | 10,793 | 1,022 | $ | 10.56 | |||||||||||||||
| Class I Shares | 251,628 | 23,710 | 10.61 | |||||||||||||||||
| Class S Shares | - | - | - | |||||||||||||||||
| Class T Shares | 283 | 25 | 11.50 | |||||||||||||||||
| Class E Shares | 744,885 | 64,411 | 11.56 | |||||||||||||||||
| Class X Shares | - | - | - | |||||||||||||||||
| Class Y Shares | 138,692 | 12,256 | 11.32 | |||||||||||||||||
|
Operating Partnership Units(1)
|
966 | 84 | 11.56 | |||||||||||||||||
| Total | $ | 1,147,247 | 101,508 | |||||||||||||||||
(1)Class E units held by the Special Limited Partner.
Set forth below are the weighted averages of the key assumptions in the discounted cash flow methodology used in the September 30, 2026 valuations, based on property types. Once we own more than one single-family rental or more than one office property, we will include the key assumptions for such property types.
| Property Type | Discount Rate | Exit Capitalization Rate | ||||||||||||
| Multifamily | 7.37% | 5.90% | ||||||||||||
| Industrial | 7.93% | 6.43% | ||||||||||||
| Retail | 7.52% | 6.63% | ||||||||||||
These assumptions are determined by our independent valuation advisor and reviewed by the Adviser. A change in these assumptions would impact the calculation of the values 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 Investment Values | Industrial Investment Values | Retail Investment Values | ||||||||||||||||||||||
| Discount Rate | 0.25% decrease | 1.90% | 1.92% | 2.00% | ||||||||||||||||||||||
| (weighted average) | 0.25% increase | (1.86)% | (1.85)% | (1.82)% | ||||||||||||||||||||||
| Exit Capitalization Rate | 0.25% decrease | 2.68% | 2.42% | 2.27% | ||||||||||||||||||||||
| (weighted average) | 0.25% increase | (2.45)% | (2.22)% | (2.09)% | ||||||||||||||||||||||
The following table reconciles stockholders' equity per our Condensed Consolidated Balance Sheets to our NAV as of September 30, 2026 ($ in thousands):
| Reconciliation of Stockholders' Equity to NAV | September 30, 2026 | |||||||
| Stockholders' equity under GAAP | $ | 974,352 | ||||||
| Redeemable non-controlling interest | 966 | |||||||
| Total stockholders' equity and Operating Partnership units | 975,318 | |||||||
| Adjustments: | ||||||||
|
Organization, offering costs and operating expenses(1)
|
6,625 | |||||||
|
Accrued stockholder servicing fees(2)
|
8,513 | |||||||
|
Unrealized real estate and borrowings appreciation, net(3)
|
56,519 | |||||||
|
Accumulated depreciation and amortization(4)
|
107,287 | |||||||
|
Straight-line rent receivable(5)
|
(7,004) | |||||||
|
Investment in sales-type leases, net(5)
|
(11) | |||||||
| NAV | $ | 1,147,247 | ||||||
(1)The Adviser advanced our organization and offering expenses on our behalf (other than upfront selling commissions and stockholder servicing fees) through July 22, 2024. On such date, we began reimbursing the Adviser for all such advanced costs ratably over a period that will continue until 60 months following such date. During the three and nine months ended ended September 30, 2026, we reimbursed $0.7 million and $1.2 million to the Adviser. In addition, the Adviser advanced on our behalf certain of our operating expenses through April 30, 2026. Starting May 1, 2026, we began reimbursing the Adviser for all such advanced expenses ratably over a period that will continue until 60 months following such date. Under GAAP, organization costs are expensed as incurred and offering costs are charged to equity as such amounts are incurred. For the purposes of calculating NAV, such costs will be recognized as a reduction to NAV as they are reimbursed ratably over the respective 60-month reimbursement periods.
(2)Stockholder servicing fees only apply to Class D, Class S, Class T and Class Y shares. For purposes of NAV, we recognize the stockholder servicing fee as a reduction to our NAV on a monthly basis as such fee is paid. Under GAAP, we accrue the lifetime cost of the stockholder servicing fee as an offering cost at the time we sell Class D, Class S, Class T and Class Y shares. The stockholder servicing fee on Class D shares was waived as of September 30, 2026, and the NAV attributable to current holders of Class D shares will not be included in the computation of stockholder servicing fees charged on Class D shares in perpetuity.
(3)Our investments in real estate are presented at historical cost in our GAAP condensed consolidated financial statements. Additionally, our mortgage notes, Repurchase Facility and the Credit Facility ("Borrowings") are presented at their carrying values in our condensed consolidated financial statements. As such, any changes in the fair market values of our investments in real estate or our Borrowings are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate and our Borrowings are recorded at fair value.
(4)In accordance with GAAP, we depreciate our investments in real estate and amortize certain other assets and liabilities. Such depreciation and amortization is not recorded for purposes of determining our NAV.
(5)We record straight-line rent and income from sales-type leases in accordance with GAAP. Any resulting receivable or liability is excluded for purposes of determining our NAV.
Critical Accounting Policies
The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and requires 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.
Purchase price allocation of acquired investments in real estate
Upon the acquisition of a property, we assess the fair value of acquired tangible and intangible assets and liabilities (including land, buildings, tenant improvements, above-market and below-market leases, acquired in-place leases, other identified intangible assets and assumed liabilities) and allocate the purchase price to the acquired assets and assumed liabilities on a relative fair value basis in accordance with ASC 805, Business Combinations. All expenses related to asset acquisitions are capitalized and allocated among the identified assets. Generally, the most significant portion of the allocation is to the 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 appropriate discount and/or capitalization rates, 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. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.
Acquired above-market and below-market leases are recorded at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) management's estimate of fair market lease rates for each corresponding in-place lease, 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. A change in any of the assumptions above, which are subjective, could have a material impact on our results of operations.
The allocation of the purchase price directly affects the following in our condensed consolidated financial statements:
•the amount of purchase price allocated to the various tangible and intangible assets and liabilities on our Condensed Consolidated Balance Sheets;
•the amounts allocated to above-market and below-market leases are amortized to rental income over the remaining non-cancelable terms of the respective leases. The amounts allocated to all other tangible and intangible assets are amortized to depreciation or amortization expense. Thus, depending on the amounts allocated between land and depreciable assets, changes in the purchase price allocation among our assets could have a material impact on our net income; and
•the period of time over which tangible and intangible assets are depreciated varies greatly, and thus, changes in the amounts allocated to these assets will have a direct impact on our results of operations. Intangible assets are generally amortized over the respective lives of the leases. Also, we depreciate our buildings over a maximum of 40 years, but do not depreciate our land. These differences in timing could have a material impact on our results of operations.
Impairment of long-lived assets
We review real estate properties (including any related amortizable intangible assets or liabilities) for impairment each quarter or when there is an indicator, including, but not limited to, property operating performance, changes in anticipated holding period and general market conditions, that the value of the real estate properties may be impaired. Our estimate of the expected future cash flows in testing for impairment is subjective and based on, among other things, our estimates regarding future market conditions, rental rates, occupancy levels, costs of tenant improvements, assumptions regarding the residual value of our properties at the end of our anticipated holding period, discount rates, exit capitalization rates and the length of our anticipated holding period. In preparing the projection of undiscounted future cash flows, we estimate exit capitalization rates and market rental rates using information that we obtain from market comparability studies and other comparable sources and apply the undiscounted cash flows against our expected holding period. These assumptions could differ materially from actual results. If changes in our strategy or the market conditions result in a reduction in the holding period and an earlier sale date, an impairment loss could be recognized and such loss could be material. If impairment was indicated, the carrying value of the property would be written down to its estimated fair value based on our best estimate of
the property's discounted future cash flows using market derived capitalization rates, discount rates and market rental rates applied against our expected hold period.
We evaluated our portfolio, as of September 30, 2026 and December 31, 2025, for impairment indicators. We did not record any impairment losses for the three and nine months ended September 30, 2026 or year ended December 31, 2025.
Mandatorily Redeemable Instruments
We report our Mandatorily Redeemable Instruments as a liability on our Condensed Consolidated Balance Sheets at JPMIM's cash redemption value. JPMIM's cash redemption value is determined based on our NAV per Class E unit as of our balance sheet date. For purposes of determining our NAV, our investments in real estate are recorded at fair value based on independent third-party valuations prepared by licensed appraisers in accordance with standard industry practice or in the case of real estate-related and other securities using readily available actively quoted prices.
These fair value estimates of our investments in real estate are particularly important as they are used for the calculation of NAV, which determines the adjustment to the carrying value of our Mandatorily Redeemable Instruments. Significant differences in the fair value of our Mandatorily Redeemable Instruments may result from changes in market conditions that cause our NAV, and thus JPMIM's redemption value, to increase or decrease during the period which is recorded as a component of Mandatorily redeemable instruments interest costs on our Condensed Consolidated Statements of Operations.
Investments in real estate debt
Our investments in real estate debt consist of investments in commercial mortgage loans. Our investments in real estate debt are carried at fair value as we elected the fair value option. Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Our real estate debt investments are unlikely to have readily available market quotations. As such, we determine fair value by utilizing or reviewing certain of the following (i) market yield data, (ii) discounted cash flow modeling, (iii) collateral asset performance, (iv) local or macro real estate performance, (v) capital market conditions, (vi) debt yield or loan-to-value ratios and (vii) borrower financial condition and performance. We classify these investments as Level 3 within the valuation hierarchy. Judgments used to determine the fair values of Level 3 instruments are more significant than those required when determining the fair value of instruments classified as Level 1 or 2 due to the inherent uncertainty of the estimates and judgments used. These values may differ materially from the values that would have been used had a ready market for these investments existed. External factors may cause those values and the values of those investments for which readily observable inputs exist, to increase or decrease over time, impacting the value of our investment which is recorded in income from investments in real estate debt on the Condensed Consolidated Statements of Operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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