IPC Alternative Real Estate Income Trust Inc.
08/07/2026 | Press release | Distributed by Public on 08/07/2026 13:48
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Words such as "may," "could," "should," "expect," "intend," "plan," "goal," "seek," "anticipate," "believe," "estimate," "predict," "variables," "potential," "continue," "expand," "maintain," "create," "strategies," "likely," "will," "would" and variations of these terms and similar expressions, or the negative of these terms or similar expressions, are intended to identify forward-looking statements.
These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of the management of IPC Alternative Real Estate Income Trust, Inc. based on their knowledge and understanding of the business and industry, the economy and other future conditions. Unless the context otherwise requires, the "Company," "we," "our" or "us" refers to IPC Alternative Real Estate Income Trust, Inc. and its consolidated subsidiaries. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the "SEC") on March 18, 2026, and elsewhere in this Quarterly Report on Form 10-Q.
Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management's view only as of the date of this Quarterly Report, and may ultimately prove to be incorrect or false. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.
We routinely post important information about us and our business, including financial and other information for investors, on our website. We encourage investors to visit our website at ipcaltreit.com from time to time, as information is updated and new information is posted.
Overview
We are a Maryland corporation that intends to invest in a diversified portfolio of stabilized, income-generating commercial real estate across alternative property types, with a non-exclusive focus on self-storage facilities, student housing properties and healthcare-related properties. Healthcare-related assets may include medical outpatient buildings, ambulatory surgery centers, senior living communities and life science and laboratory facilities. We may also invest in value-add or other development projects in these asset classes, potentially through a variety of ownership structures including but not limited to direct ownership, joint ventures, co-investment opportunities, preferred equity positions and others. We were originally formed on June 17, 2021, as a Delaware limited liability company named "Inland Private Capital Alternative Assets Fund, LLC." We converted to a Maryland corporation on June 12, 2023 and elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2024. Until that time, we were subject to taxation at regular corporate rates under the Internal Revenue Code of 1986, as amended (the "Code"). We are the sole general partner of IPC Alternative Real Estate Operating Partnership, LP (the "Operating Partnership"), a Delaware limited partnership, and we own substantially all of our assets through the Operating Partnership.
On September 28, 2023, the SEC declared our registration statement on Form S-11 (File No. 333-272750) (the "Registration Statement") for our public offering of common stock effective. We have registered a public offering of up to $1.25 billion in shares of common stock, consisting of up to $1.0 billion in shares in our primary offering and up to $250 million shares pursuant to our distribution reinvestment plan (the "Public Offering"). We are offering to sell any combination of four classes of shares of our common stock, Class T shares, Class S shares, Class D shares and Class I shares, with a dollar value up to the maximum offering amount. The share classes have different upfront selling commissions and dealer manager fees, and different ongoing distribution fees. The purchase price per share for each class of common stock will vary and will generally equal our prior month's net asset value ("NAV") per share, as determined monthly, plus applicable upfront selling commissions and dealer manager fees.
As of December 1, 2023, we had satisfied the minimum offering requirement in all states, except the State of Pennsylvania, and authorized the release of proceeds from escrow. On May 1, 2026, upon consolidation of the Operating Partnership, the Company satisfied the minimum offering requirement in the State of Pennsylvania.
On August 28, 2025, we commenced a private offering (the "Private Offering") of up to $500 million of our Class I shares, Class X-1 shares and Class X-2 shares of common stock to "accredited investors" as defined in Regulation D promulgated under the Securities Act. The purchase price per share for each class of common stock in the Private Offering will vary and will generally be the prior month's NAV per share for such class. No upfront selling commissions, dealer manager fees or ongoing distribution fees will be paid with respect to purchases of Class I shares, Class X-1 shares and Class X-2 shares sold in the Private Offering. The Private Offering is
being conducted pursuant to Rule 506(c) of Regulation D and other applicable exemptions. Class I shares, Class X-1 shares and Class X-2 shares in the Private Offering are only available through distribution participants selected by Inland Securities Corporation (the "Dealer Manager") as being eligible based on the amount of offering proceeds anticipated to be raised through such distribution participants, as well as other factors, in the Dealer Manager's discretion. Distribution participants that are initially eligible only to sell Class I or Class X-1 shares in the Private Offering, may become eligible to sell Class X-1 and/or Class X-2 shares in the Private Offering if the gross proceeds in the Private Offering raised by such distribution participants reach the target specified by the Dealer Manager. We may also offer investors who have purchased Class I shares in the Public Offering and have held such shares for at least one year the option to exchange such shares for Class X-1 or Class X-2 shares at an exchange rate based on the NAV per share of each class involved in the exchange as of the exchange date if such investor's financial intermediary has reached the requisite gross proceeds raised threshold in the Private Offering as specified by the Dealer Manager. All Class I shares sold in the Private Offering will be exchanged for Class X-1 or Class X-2 shares at an exchange rate based on the NAV per share of each class involved in the exchange as of the exchange date regardless of hold period if the gross proceeds in the Private Offering raised by the applicable distribution participant reach the target specified by the Dealer Manager. Similarly, Class X-1 shares sold in the Private Offering will be exchanged for Class X-2 shares at an exchange rate based on the NAV per share of each class as of the exchange date if the gross proceeds in the Private Offering raised by the applicable distribution participant reach the target specified by the Dealer Manager.
Prior to May 1, 2026, other than our investment in the Operating Partnership, we had neither engaged in any operations nor generated any revenues. Our entire activity from inception through April 30, 2026, primarily consisted of investment in the Operating Partnership, allocation of income (loss) and receipt of distributions from the Operating Partnership and distributions paid to our common stockholders. When we receive proceeds from the sale of shares of our common stock in the Public Offering and the Private Offering (collectively, the "Offerings"), we contribute such proceeds to the Operating Partnership and receive Operating Partnership units ("OP Units") that correspond to the classes of our shares sold. We accounted for the units acquired in the Operating Partnership as an equity method investment during any period our investment in the Operating Partnership was not considered significant to the Operating Partnership.
Effective May 1, 2026, following the contribution of capital raised as a result of the May 1, 2026 closing in our Public Offering, we determined that our investment in the Operating Partnership was significant to the Operating Partnership, as determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). As a result, effective May 1, 2026, we consolidated the Operating Partnership. As of June 30, 2026, we hold 201,136 Class T OP Units, 31,294 Class D OP Units, 381,633 Class I OP Units and 39,479 Class X-1 OP Units, representing a total 10.9% controlling interest in the Operating Partnership. We expect to continue to invest our capital and all our proceeds from the Offerings in the Operating Partnership and hold no other assets other than OP Units.
As of June 30, 2026 and December 31, 2025, we had total assets of $444.0 million and $11.3 million, respectively. As of June 30, 2026, we owned 30 medical outpatient properties totaling 746,601 square feet, four self-storage properties totaling 250,755 square feet and one student housing property with 406 student housing beds. The properties owned as of June 30, 2026 are located in 12 states. A majority of our medical outpatient properties are single-tenant medical outpatient properties. For the six months ended June 30, 2026, medical outpatient properties, self-storage properties and the student housing property represented 74.3%, 11.5% and 14.2%, respectively, of our total revenues. As of June 30, 2026, medical outpatient properties, self-storage properties and the student housing property were 97.7%, 88.8% and 86.7% leased, respectively. We have no employees.
In the initial stages of our capital raise pursuant to the Offerings, a primary source of proposed real estate investments will consist of Delaware statutory trust ("DST") or other private investment programs sponsored by Inland Private Capital Corporation ("IPC"), an affiliate of our sponsor. These investments are expected to take the form of a transaction structured as a tax-deferred contribution of the property owned by the DST or other IPC-sponsored investment program to the Company in exchange for OP Units under Section 721 of the Code. As part of this strategy, IPC maintains the DST Program, which commenced on June 27, 2024, through which IPC sponsors a series of private placements exempt from registration pursuant to Rule 506(b) of Regulation D under the Securities Act of beneficial interests in specific DSTs owning one or more real properties. In connection with the DST Program, we receive a fair market value purchase option with respect to each DST, giving us the option, but not the obligation, exercisable in our sole and absolute discretion, to require DST investors to exchange their DST interests for Class T OP Units, Class S OP Units, Class D OP Units, Class I OP Units, or, in limited circumstances at our discretion, cash, which option may be exercised during the three, three-month periods that begin on the 24-month, 36-month and 48-month anniversary of the final closing of the sale of DST interests pursuant to each private placement.
We, the Operating Partnership and our advisor, IPC Alternative Real Estate Advisor, LLC (the "Advisor") are parties to an amended and restated advisory agreement (as may be amended or restated from time to time, the "Advisory Agreement"), which has been effective since August 28, 2025. Pursuant to the Advisory Agreement, the Advisor is responsible for sourcing, evaluating and monitoring our investment opportunities and making 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. The Advisory Agreement provides that we will pay the Advisor a management fee equal to (i) 1.25% of aggregate NAV of the Operating
Partnership attributable to outstanding Class T OP Units, Class S OP Units, Class D OP Units and Class I OP Units of the Operating Partnership, (ii) 1.00% of the aggregate NAV of the Operating Partnership attributable to outstanding Class X-1 OP Units, (iii) 0.75% of the aggregate NAV of the Operating Partnership attributable to outstanding Class X-2 OP Units and (iv) 0.50% of the aggregate NAV of the Operating Partnership attributable to outstanding Class A OP Units, in each case per annum payable monthly in arrears. The management fee may be paid, at the Advisor's election, in cash, Class I shares of the Company or Class I OP Units of the Operating Partnership.
The Operating Partnership is governed by the Fourth Amended and Restated Limited Partnership Agreement of the Operating Partnership, dated August 28, 2025 (as may be amended or restated from time to time, the "Limited Partnership Agreement"). On August 24, 2023, IPC REIT Special Limited Partner, LP (the "Special Limited Partner"), an affiliate, was admitted as a limited partner of the Operating Partnership and the Special Limited Partner contributed $10,000 for a performance participation interest in the Operating Partnership. The Special Limited Partner's performance participation interest in the Operating Partnership entitles it to receive an allocation of "Total Return," "Class X-1 Total Return" and "Class A Total Return."
"Total Return" is defined as distributions paid or accrued on OP Units (excluding Class X-1 OP Units, Class X-2 OP Units and Class A OP Units) plus the change in the NAV of such OP Units (excluding Class X-1 OP Units, Class X-2 OP Units and Class A OP Units), adjusted for subscriptions and repurchases. Under the Limited Partnership Agreement, the annual Total Return will be allocated solely to the Special Limited Partner only after the Class T OP Unit, Class S OP Unit, Class D OP Unit and Class I OP Unit holders have received a total return of 5% (after recouping any loss carryforward amount) and such allocation will continue until the allocation between the Special Limited Partner and all other such OP Unit holders is equal to 12.5% and 87.5%, respectively. Thereafter, the Special Limited Partner will receive an allocation of 12.5% of the annual Total Return.
"Class X-1 Total Return" is defined as distributions paid or accrued on Class X-1 OP Units plus the change in NAV of such Class X-1 OP Units, adjusted for subscriptions and repurchases. Under the Limited Partnership Agreement, the annual Class X-1 Total Return will be allocated solely to the Special Limited Partner only after the Class X-1 OP Unit holders have received a total return of 5% (after recouping any loss carryforward amount) and such allocation will continue until the allocation between the Special Limited Partner and all other such Class X-1 OP Unit holders is equal to 10.0% and 90.0%, respectively. Thereafter, the Special Limited Partner will receive an allocation of 10.0% of the annual Class X-1 Total Return.
"Class A Total Return" is defined as distributions paid or accrued on Class A OP Units plus the change in the NAV of such Class A OP Units, adjusted for subscriptions and repurchases. Under the Limited Partnership Agreement, the annual Class A Total Return will be allocated solely to the Special Limited Partner only after the Class A OP Unit holders have received a total return of 5% (after recouping any loss carryforward amount) and such allocation will continue until the allocation between the Special Limited Partner and all other such Class A OP Unit holders is equal to 12.5% and 87.5%, respectively. Thereafter, the Special Limited Partner will receive an allocation of 12.5% of the annual Class A Total Return.
The Special Limited Partner is not entitled to a performance participation allocation with respect to Class X-2 OP Units.
The following discussion and analysis is based on the financial statements for the three and six months ended June 30, 2026 and 2025 and as of June 30, 2026 and December 31, 2025.
We operate in three reportable segments: Healthcare, Self-Storage and Education. We assess performance and make operational decisions based on the performance of each segment individually.
Select Property Information (all dollar amounts in thousands, except per square foot amounts)
Investment Portfolio
As of June 30, 2026, our real property portfolio consisted of 35 properties totaling approximately 746,601 square feet of medical outpatient properties, 250,755 square feet of self-storage properties and one student housing property with 406 student housing beds. These properties are located in 17 markets throughout the U.S.
The following table summarizes certain operating metrics of our portfolio by segment and by market as of June 30, 2026:
|
Property |
Number of Properties |
Percentage of Gross Asset Value (1) |
Rentable Square Feet |
Percentage of Rentable Square Feet |
Percentage Leased(2) |
|||||||||||||||
|
Healthcare |
||||||||||||||||||||
|
Austin MSA(3), TX |
1 |
2.6 |
% |
16,388 |
2.2 |
% |
100.0 |
% |
||||||||||||
|
Chicago MSA, IL |
3 |
6.3 |
% |
56,173 |
7.5 |
% |
100.0 |
% |
||||||||||||
|
Connecticut |
2 |
4.9 |
% |
112,369 |
15.1 |
% |
100.0 |
% |
||||||||||||
|
Dallas, TX |
1 |
1.5 |
% |
16,050 |
2.1 |
% |
100.0 |
% |
||||||||||||
|
Garden City, NY |
1 |
2.3 |
% |
16,920 |
2.3 |
% |
100.0 |
% |
||||||||||||
|
Greendale, IN |
1 |
2.2 |
% |
24,722 |
3.3 |
% |
100.0 |
% |
||||||||||||
|
Houston, TX |
2 |
13.4 |
% |
88,450 |
11.8 |
% |
100.0 |
% |
||||||||||||
|
Indianapolis, IN |
1 |
3.0 |
% |
42,187 |
5.7 |
% |
100.0 |
% |
||||||||||||
|
Oklahoma City, OK (4) |
1 |
3.1 |
% |
33,500 |
4.5 |
% |
100.0 |
% |
||||||||||||
|
Phoenix MSA, AZ |
10 |
26.3 |
% |
199,958 |
26.8 |
% |
100.0 |
% |
||||||||||||
|
Raleigh, NC |
1 |
1.6 |
% |
13,131 |
1.8 |
% |
100.0 |
% |
||||||||||||
|
San Antonio MSA, TX |
4 |
7.0 |
% |
71,995 |
9.6 |
% |
75.8 |
% |
||||||||||||
|
Salt Lake City MSA, UT |
2 |
6.4 |
% |
54,758 |
7.3 |
% |
100.0 |
% |
||||||||||||
|
Healthcare Total |
30 |
80.6 |
% |
746,601 |
100.0 |
% |
||||||||||||||
|
Self-Storage |
||||||||||||||||||||
|
Decatur, GA |
1 |
1.0 |
% |
37,650 |
15.0 |
% |
85.9 |
% |
||||||||||||
|
Marietta, GA |
1 |
1.8 |
% |
59,250 |
23.6 |
% |
85.9 |
% |
||||||||||||
|
Montgomery, AL |
2 |
6.1 |
% |
153,855 |
61.4 |
% |
90.7 |
% |
||||||||||||
|
Self-Storage Total |
4 |
8.9 |
% |
250,755 |
100.0 |
% |
||||||||||||||
|
Education |
Beds |
Percentage of Beds |
||||||||||||||||||
|
St. Louis, MO |
1 |
10.5 |
% |
406 |
100.0 |
% |
86.7 |
% |
||||||||||||
|
Portfolio Total |
35 |
100.0 |
% |
|||||||||||||||||
(1)
Based on fair value as of June 30, 2026.
(2)
For our student housing property, this percentage was calculated as the number of leased beds divided by the total beds as of June 30, 2026.
(3)
"MSA" refers to metropolitan statistical area.
(4)
Sole tenant on the property has been on cash basis since September 30, 2022.
As of June 30, 2026, all of the properties listed in the table were owned in fee simple, with the exception of the following:
•
We own a leasehold interest in the medical outpatient property located in Greendale, Indiana, as well as a fee simple interest in the improvements located thereon. The ground lessor is Saint Elizabeth Medical Center, Inc. The ground lease has a term of approximately 60 years, expiring on December 31, 2077, with two 15-year renewal options. We are required to pay the ground landlord base rent of $9 per month until December 31, 2026. On January 1, 2027 and every 10 years thereafter throughout the term, the base rent will be increased by an amount equal to 15% of the base rent for the immediately preceding 10-year period.
•
We own a leasehold interest in a medical outpatient property located in Phoenix, Arizona, as well as a fee simple interest in the improvements located thereon. The ground lessor is the State of Arizona, as Trustee through the State Land Commissioner. The ground lease has a term of 99 years, expiring on July 6, 2092. We are required to pay the ground landlord a current annual base rent of $67, which increases by an annual amount of $6 every five years starting on July 7, 2028 through maturity. The original calculation of the base rent was based on a percentage of the appraised value of the land but is fixed going forward, adjusted for the increases every five years.
•
We own a leasehold interest in a medical outpatient property located in West Jordan, Utah, as well as a fee simple interest in the improvements located thereon. The ground lessor is Jordan Valley Medical Center, L.P. The ground lease has a term of 99 years, expiring on October 7, 2114, with three 15-year renewal options. Base rent over the first 15 years of the ground lease term is $360; however, the entirety of this amount has been paid. Total base rent after the first 15 years, i.e., from October 2030 through the remainder of the term, is $1.
Average Effective Annual Base Rents
The following table provides a summary of the average effective annual base rents across our portfolio as of June 30, 2026:
|
Property Type |
Average Effective Annual |
|||
|
Healthcare |
$ |
29.04 |
||
|
Self-Storage |
$ |
15.51 |
||
|
Education |
$ |
11,572 |
||
(1)
For healthcare and self-storage properties, average effective annual base rent represents the annualized base rent per leased square foot for the six months ended June 30, 2026. For the education property, average effective annual base rent represents the annualized base rent per leased bed for the six months ended June 30, 2026. The average effective annual base rent includes the effects of rent concessions, abatements and rent collected from cash basis tenants, and excludes tenant recoveries, straight-line rent, and above-market and below-market lease amortization.
Lease Terms
Medical outpatient lease terms typically range from 5 to 15 years, and often include renewal options. Most of our medical outpatient leases include fixed rental increases or Consumer Price Index-based rental increases and are not based on the income or profits of any person. The majority of our self-storage leases and student housing residential leases expire within 12 months.
Lease Expirations
As of June 30, 2026, the weighted-average remaining term of our total leased healthcare portfolio was approximately 7.2 years based on annualized base rent and 7.0 years based on leased square footage, excluding renewal options. The following table summarizes the lease expirations at our medical outpatient properties for leases in place as of June 30, 2026, without giving effect to the exercise of renewal or termination rights, if any. The table excludes ground leases described above as well as the self-storage and student housing properties, as substantially all leases at such properties expire within 12 months.
|
Year Ending December 31 |
Number of |
Rentable Square Feet |
Percentage of Total Leased Square Feet |
Annualized Base Rent ($)(1) |
Percentage of Total Annualized Base Rent |
|||||||||||||||
|
2026 (remainder of the year) |
- |
- |
- |
$ |
- |
- |
||||||||||||||
|
2027 |
- |
- |
- |
- |
- |
|||||||||||||||
|
2028 |
2 |
58,575 |
8.0 |
% |
1,610 |
7.7 |
% |
|||||||||||||
|
2029 |
2 |
42,442 |
5.8 |
% |
1,365 |
6.5 |
% |
|||||||||||||
|
2030 |
1 |
27,401 |
3.8 |
% |
640 |
3.0 |
% |
|||||||||||||
|
2031 |
5 |
98,935 |
13.6 |
% |
3,289 |
15.6 |
% |
|||||||||||||
|
2032 |
7 |
208,171 |
28.5 |
% |
4,449 |
21.1 |
% |
|||||||||||||
|
2033 |
9 |
164,457 |
22.6 |
% |
5,539 |
26.3 |
% |
|||||||||||||
|
2034 |
- |
- |
- |
- |
- |
|||||||||||||||
|
2035 |
2 |
16,050 |
2.2 |
% |
428 |
2.0 |
% |
|||||||||||||
|
Thereafter |
3 |
113,172 |
15.5 |
% |
3,737 |
17.8 |
% |
|||||||||||||
|
Total |
31 |
729,203 |
100.0 |
% |
$ |
21,057 |
100.0 |
% |
||||||||||||
(1)
Annualized base rent is calculated as monthly base rent excluding the impact of any contractual tenant concessions per the terms of the lease as of June 30, 2026, multiplied by 12.
(2)
None of our medical outpatient properties have early termination provisions.
Tenant Diversification
We believe that the tenants that occupy our real estate portfolio are generally well-diversified. As of June 30, 2026, there were three tenants that represented more than 10.0% of our healthcare portfolio's total annualized base rent or more than 10.0% of our healthcare portfolio's total leased square feet.
The following table reflects our ten largest healthcare tenants, based on annualized base rent, as of June 30, 2026.
|
Tenant Name |
Number |
Rentable Square Feet |
Percentage of Rentable Square Feet |
Total Annualized Base Rent |
Percentage of Healthcare Portfolio Annualized Base Rent |
Annualized Base Rent Per Square Foot |
||||||||||||||||||
|
Ironwood Cancer & Research Centers |
8 |
146,245 |
19.6 |
% |
$ |
5,040 |
23.9 |
% |
$ |
34.46 |
||||||||||||||
|
Memorial Hermann Health System |
2 |
88,450 |
11.8 |
% |
3,207 |
15.2 |
% |
36.26 |
||||||||||||||||
|
Epiphany Dermatology, P.A. |
2 |
36,385 |
4.9 |
% |
1,331 |
6.3 |
% |
36.57 |
||||||||||||||||
|
Starling Physicians, P.C. |
2 |
112,369 |
15.0 |
% |
1,291 |
6.1 |
% |
11.49 |
||||||||||||||||
|
Surgical Hospital of Oklahoma(1) |
1 |
33,500 |
4.5 |
% |
1,098 |
5.2 |
% |
32.79 |
||||||||||||||||
|
Banner Health |
1 |
29,350 |
3.9 |
% |
953 |
4.5 |
% |
32.46 |
||||||||||||||||
|
Jordan Valley Medical Center LP |
1 |
25,056 |
3.4 |
% |
901 |
4.3 |
% |
35.95 |
||||||||||||||||
|
Community Hospitals of Indiana |
1 |
42,187 |
5.6 |
% |
863 |
4.1 |
% |
20.46 |
||||||||||||||||
|
NYU School of Medicine |
1 |
16,920 |
2.3 |
% |
767 |
3.7 |
% |
45.35 |
||||||||||||||||
|
Emerus Community Hospital |
1 |
16,388 |
2.2 |
% |
747 |
3.6 |
% |
45.57 |
||||||||||||||||
|
Total |
20 |
546,850 |
73.2 |
% |
$ |
16,198 |
76.9 |
% |
$ |
29.62 |
||||||||||||||
(1) Tenant has been on cash basis since September 30, 2022.
Liquidity and Capital Resources
General
Our primary uses and sources of cash are as follows:
|
Uses |
Sources |
||||
|
• |
Interest and principal payments on mortgage loans or lines of credit |
• |
Cash receipts from tenants |
||
|
• |
Property operating expenses |
• |
Proceeds from new or refinanced mortgage loans |
||
|
• |
General and administrative expenses |
• |
Proceeds from issuance of securities |
||
|
• |
Organization and offering expenses |
• |
Sale of shares through the DRP |
||
|
• |
Distributions to stockholders and noncontrolling interests |
• |
Proceeds from related party line of credit |
||
|
• |
Repurchases of shares under the SRP |
• |
Proceeds from sales of real estate (if any) |
||
|
• |
Redemptions of noncontrolling interests |
||||
|
• |
Fees payable to the Advisor and property managers |
||||
|
• |
Capital expenditures, tenant improvements and leasing commissions |
||||
|
• |
Acquisitions of real estate directly or indirectly through the purchase of equity interests in a DST, or through joint ventures |
||||
As of June 30, 2026, we were not actively marketing for sale any properties.
As of June 30, 2026 and December 31, 2025, we had total debt outstanding of $270.0 million and $0, respectively. The debt outstanding as of June 30, 2026 bore interest at a weighted average interest rate of 5.14% per annum. The debt consists of:
(i)
a secured term loan in a maximum total principal commitment amount of $96.5 million (as amended and restated on October 30, 2025, the "CONA Mortgage Loan") with Capital One, National Association, individually and as administrative agent, and other lenders from time to time. The maturity date of the CONA Mortgage Loan is October 29, 2027, with three one-year extension options subject to the payment of certain fees and expenses and certain other conditions. The CONA Mortgage Loan had an outstanding balance of $95 million as of June 30, 2026,
(ii)
a secured term loan in a principal amount of $122.7 million (as amended on January 26, 2026, the "BMO Mortgage Loan") with BMO Harris Bank N.A., individually and as administrative agent, and other lenders from time to time. The BMO Mortgage Loan has a maturity date of September 30, 2028, with no extension options. The BMO Mortgage Loan had an outstanding balance of $122.7 million as of June 30, 2026,
(iii)
a secured term loan in the principal amount of $27.8 million (as modified on March 28, 2026, the "Parkway UL Mortgage Loan") with Parkway Bank and Trust Company ("Parkway"). The Parkway UL Mortgage Loan has a maturity date of March 28, 2029. The Parkway UL Mortgage Loan had an outstanding balance of $27.8 million as of June 30, 2026, and
(iv)
a secured term loan in the principal amount of $24.6 million (as modified on April 25, 2026, the "Parkway Storage Mortgage Loan") with Parkway. The Parkway Storage Mortgage Loan has a maturity date of April 25, 2029. The Parkway Storage Mortgage Loan had an outstanding balance of $24.6 million as of June 30, 2026.
As of June 30, 2026, we had an outstanding balance of $14 million on the revolving credit facility loan agreement and revolving promissory note entered into by the Operating Partnership with IPC, as lender (the "Credit Facility"). The Credit Facility provides for loan advances in aggregate an aggregate amount not to exceed $22.5 million. The current maturity date of the Credit Facility is November 30, 2026. The daily balance of the loan under the Credit Facility bears interest at a rate of 4.25% per annum, however in connection with the occurrence and continuance of certain events of default (and at IPC's option for all other events of default), the interest rate will increase to 9.25% per annum. We have the right to prepay all or any part of the loan at any time upon five days' notice to IPC. The Credit Facility acts in the manner of a revolving credit facility wherein prepayments from us shall be available for funding future advances to us.
As of June 30, 2026 and December 31, 2025, our cash and cash equivalents balance was $6.1 million and $0, respectively.
As of June 30, 2026, we had paid all interest amounts when due, and were in compliance with all financial covenants under the mortgage loans as amended.
Cash Flow Analysis
Comparison of the six months ended June 30, 2026 and June 30, 2025
|
$ in thousands |
Six Months Ended June 30, |
Change |
||||||||||
|
2026 |
2025 |
2026 vs. 2025 |
||||||||||
|
Net cash flows provided by operating activities |
$ |
704 |
$ |
- |
$ |
704 |
||||||
|
Net cash flows provided by (used in) investing activities |
$ |
6,674 |
$ |
(3,182 |
) |
$ |
9,856 |
|||||
|
Net cash flows provided by financing activities |
$ |
644 |
$ |
3,182 |
$ |
(2,538 |
) |
|||||
Operating activities
The increase in cash provided by operating activities during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was due to the consolidation of the Operating Partnership.
Investing activities
|
$ in thousands |
Six Months Ended June 30, |
Change |
||||||||||
|
2026 |
2025 |
2026 vs. 2025 |
||||||||||
|
Capital expenditures and tenant improvements |
(77 |
) |
- |
(77 |
) |
|||||||
|
Cash, cash equivalents and restricted cash acquired upon consolidation of equity method investment |
8,019 |
- |
8,019 |
|||||||||
|
Investment in Operating Partnership |
(1,488 |
) |
(3,305 |
) |
1,817 |
|||||||
|
Proceeds from redemptions from Operating Partnership |
73 |
- |
73 |
|||||||||
|
Distributions from investment in Operating Partnership |
135 |
119 |
16 |
|||||||||
|
Distributions from Operating Partnership for offering costs |
12 |
4 |
8 |
|||||||||
|
Net cash provided by (used in) investing activities |
$ |
6,674 |
$ |
(3,182 |
) |
$ |
9,856 |
|||||
The increase in cash provided by investing activities during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to the timing of the consolidation of the Operating Partnership and a decrease in investment in the Operating Partnership due to lower amount of proceeds from issuance of common stock.
Financing activities
|
$ in thousands |
Six Months Ended June 30, |
Change |
||||||||||
|
2026 |
2025 |
2026 vs. 2025 |
||||||||||
|
Proceeds from issuance of common stock |
$ |
2,412 |
$ |
3,305 |
$ |
(893 |
) |
|||||
|
Total net changes related to debt |
1,000 |
- |
1,000 |
|||||||||
|
Payment of offering costs |
(128 |
) |
(4 |
) |
(124 |
) |
||||||
|
Shares repurchased |
(174 |
) |
- |
(174 |
) |
|||||||
|
Redemptions of noncontrolling interests |
(1,145 |
) |
- |
(1,145 |
) |
|||||||
|
Distributions paid to common stockholders |
(208 |
) |
(119 |
) |
(89 |
) |
||||||
|
Distributions paid to noncontrolling interests |
(1,113 |
) |
- |
(1,113 |
) |
|||||||
|
Net cash provided by financing activities |
$ |
644 |
$ |
3,182 |
$ |
(2,538 |
) |
|||||
The decrease in cash provided by financing activities during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to the timing of the consolidation of the Operating Partnership and a decrease in proceeds from issuance of common stock.
Results of Operations
Prior to May 1, 2026, other than our investment in the Operating Partnership, we had neither engaged in any operations nor generated any revenues. Our results of operations only consisted of income (loss) allocated from the Operating Partnership. Subsequent to the consolidation of the Operating Partnership on May 1, 2026, we have generated primarily all of our net operating income from property operations. In order to evaluate the overall portfolio, our management analyzes the net operating income of properties that we own and operate. Net operating income is a supplemental non-GAAP performance measure that we believe is useful to investors in measuring the operating performance of our property portfolio because our primary business is the ownership of real estate, and net operating income excludes various items included in GAAP net income that do not relate to, or are not indicative of, our property operating performance, such as depreciation and amortization and parent-level corporate expenses (including general and administrative expenses).
We consider property net operating income an important supplemental non-GAAP financial measure because it reflects only those income and expense items that are incurred at the property level, and when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates and operating expenses. Although property net operating income is a widely used measure among REITs, there can be no assurance that property net operating income presented by us is comparable to similarly titled metrics used by other REITs.
We calculate property net operating income using net income and excluding general and administrative expenses, advisor management fee, depreciation and amortization, interest expense, and interest or other income.
The following tables present the property net operating income for the three and six months ended June 30, 2026 and 2025, prior to loss from equity method investment, general and administrative expenses, advisor management fee, depreciation and amortization, and interest, along with a reconciliation to net (loss) income, calculated in accordance with GAAP.
Comparison of the three months ended June 30, 2026 and June 30, 2025
|
Three Months Ended |
||||||||||||
|
2026 |
2025 |
Change |
||||||||||
|
Rental revenue |
$ |
5,551 |
$ |
- |
$ |
5,551 |
||||||
|
Other property revenue |
72 |
- |
72 |
|||||||||
|
Total revenues |
5,623 |
- |
5,623 |
|||||||||
|
Property operating expenses |
1,031 |
- |
1,031 |
|||||||||
|
Real estate tax expense |
314 |
- |
314 |
|||||||||
|
Total property operating expenses |
1,345 |
- |
1,345 |
|||||||||
|
Property net operating income |
$ |
4,278 |
$ |
- |
$ |
4,278 |
||||||
|
Loss from equity method investment in Operating Partnership |
(100 |
) |
(173 |
) |
73 |
|||||||
|
Gain on consolidation of equity method investment |
2,140 |
- |
2,140 |
|||||||||
|
General and administrative expenses |
(628 |
) |
- |
(628 |
) |
|||||||
|
Advisor management fee |
(140 |
) |
- |
(140 |
) |
|||||||
|
Performance participation allocation |
(82 |
) |
- |
(82 |
) |
|||||||
|
Depreciation and amortization |
(4,092 |
) |
- |
(4,092 |
) |
|||||||
|
Interest expense |
(2,702 |
) |
- |
(2,702 |
) |
|||||||
|
Interest and other income |
8 |
- |
8 |
|||||||||
|
Net loss |
$ |
(1,318 |
) |
$ |
(173 |
) |
$ |
(1,145 |
) |
|||
Net loss. Comparing the results of operations during the three months ended June 30, 2026 with the results during the three months ended June 30, 2025, net loss increased by $1,145. The increase is due to the timing of the consolidation of the Operating Partnership.
Loss from equity method investment in Operating Partnership. Loss from equity method investment in Operating Partnership decreased $73 in 2026 compared to 2025. The decrease is primarily due to the timing of the consolidation of the Operating Partnership.
The change in all other line items in the table above is due to the consolidation of the Operating Partnership on May 1, 2026.
Comparison of the six months ended June 30, 2026 and June 30, 2025
|
Total |
||||||||||||
|
Six Months Ended |
||||||||||||
|
$ in thousands |
2026 |
2025 |
Change |
|||||||||
|
Rental revenue |
$ |
5,551 |
$ |
- |
$ |
5,551 |
||||||
|
Other property revenue |
72 |
- |
72 |
|||||||||
|
Total revenues |
5,623 |
- |
5,623 |
|||||||||
|
Property operating expenses |
1,031 |
- |
1,031 |
|||||||||
|
Real estate tax expense |
314 |
- |
314 |
|||||||||
|
Total property operating expenses |
1,345 |
- |
1,345 |
|||||||||
|
Property net operating income |
$ |
4,278 |
$ |
- |
$ |
4,278 |
||||||
|
Loss from equity method investment in Operating Partnership |
(463 |
) |
(311 |
) |
(152 |
) |
||||||
|
Gain on consolidation of equity method investment |
2,140 |
- |
2,140 |
|||||||||
|
General and administrative expenses |
(628 |
) |
- |
(628 |
) |
|||||||
|
Advisor management fee |
(140 |
) |
- |
(140 |
) |
|||||||
|
Performance participation allocation |
(82 |
) |
- |
(82 |
) |
|||||||
|
Depreciation and amortization |
(4,092 |
) |
- |
(4,092 |
) |
|||||||
|
Interest expense |
(2,702 |
) |
- |
(2,702 |
) |
|||||||
|
Interest and other income |
8 |
- |
8 |
|||||||||
|
Net loss |
$ |
(1,681 |
) |
$ |
(311 |
) |
$ |
(1,370 |
) |
|||
Net loss. Comparing the results of operations during the six months ended June 30, 2026 with the results during the six months ended June 30, 2025, net loss increased by $1,370. The increase is due to an increase in the Company's ownership percentage in the Operating Partnership and the timing of the consolidation of the Operating Partnership.
Loss from equity method investment in Operating Partnership. Loss from equity method investment in Operating Partnership increased $152 in 2026 compared to 2025. The increase is primarily due to an increase in the Company's ownership percentage in the Operating Partnership, partially offset by the timing of the consolidation of the Operating Partnership.
The change in all other line items in the table above is due to the consolidation of the Operating Partnership on May 1, 2026.
Non-GAAP Financial Measures
Accounting for real estate assets in accordance with GAAP assumes the value of real estate assets is reduced over time due primarily to non-cash depreciation and amortization expense. Because real estate values may rise and fall with market conditions, operating results from real estate companies that use GAAP accounting may not present a complete view of their performance. We use Funds from Operations, or "FFO", a non-GAAP metric to evaluate our performance. FFO provides a supplemental measure to compare our performance and operations to other REITs. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or "NAREIT", has promulgated a standard known as FFO, which we believe more accurately reflects the operating performance of a REIT. FFO, as defined by NAREIT and presented below, is net income (loss) computed in accordance with GAAP, excluding depreciation and amortization related to real estate, excluding gains (or losses) from sales of certain real estate assets, excluding impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate, similar adjustments for noncontrolling interests and unconsolidated entities and excluding gains and losses from change in control.
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 operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) amortization of above- and below-market lease intangibles, (ii) straight-line income and expense, (iii) amortization of deferred financing costs, (iv) amortization of mortgage premium/discount, (v) amortization of derivatives costs and (vi) similar adjustments for noncontrolling interests and unconsolidated entities.
Our presentation of FFO and AFFO may not be comparable to other similarly titled measures presented by other REITs. We believe that the use of FFO and AFFO provides a more complete understanding of our operating performance to unitholders, investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs. Neither FFO nor AFFO is intended to be an alternative to "net income" or to "cash flows from operating activities" as determined by GAAP as a measure of our capacity to pay distributions. Management uses FFO and AFFO to compare our operating performance to that of other REITs and to assess our operating performance.
FFO and AFFO for the six months ended June 30, 2026 and 2025 are calculated as follows:
|
$ in thousands |
Six Months Ended |
||||||||
|
2026 |
2025 |
||||||||
|
Net income (loss) attributable to common stockholders |
$ |
1,320 |
$ |
(311 |
) |
||||
|
Adjustments to arrive at FFO: |
|||||||||
|
Depreciation and amortization related to investment properties |
4,092 |
- |
|||||||
|
Gain on consolidation of equity method investment |
(2,140 |
) |
- |
||||||
|
Allocable share of adjustments related to unconsolidated entities |
574 |
436 |
|||||||
|
Amount attributable to noncontrolling interests for above adjustments |
(3,655 |
) |
- |
||||||
|
FFO attributable to common stockholders |
191 |
125 |
|||||||
|
Adjustments to arrive at AFFO: |
|||||||||
|
Above- and below-market rent intangible lease amortization, net |
79 |
- |
|||||||
|
Straight-line income, net |
(273 |
) |
- |
||||||
|
Amortization of debt discount |
5 |
- |
|||||||
|
Amortization of derivatives costs |
248 |
- |
|||||||
|
Allocable share of adjustments related to unconsolidated entities |
(95 |
) |
14 |
||||||
|
Amount attributable to noncontrolling interests for above adjustments |
(53 |
) |
- |
||||||
|
AFFO attributable to common stockholders |
$ |
102 |
$ |
139 |
|||||
Supplemental Information - Operating Partnership
We conduct all of our operations through the Operating Partnership and expect to continue to invest our capital and all our proceeds from the Offerings in the Operating Partnership and hold no other assets other than OP Units. As such, we believe including the statements of operations and comprehensive loss and the FFO and AFFO for the Operating Partnership would be meaningful to the investors.
The following table details the statements of operations and comprehensive loss of the Operating Partnership for the three and six months ended June 30, 2026 and 2025:
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Revenues: |
||||||||||||||||
|
Rental revenue |
$ |
8,409 |
$ |
8,365 |
$ |
16,942 |
$ |
16,698 |
||||||||
|
Other property revenue |
104 |
85 |
201 |
147 |
||||||||||||
|
Total revenues |
8,513 |
8,450 |
17,143 |
16,845 |
||||||||||||
|
Expenses: |
||||||||||||||||
|
Property operating expenses |
1,471 |
1,341 |
2,855 |
2,566 |
||||||||||||
|
Real estate tax expense |
475 |
495 |
979 |
958 |
||||||||||||
|
General and administrative expenses |
1,005 |
1,114 |
2,616 |
2,136 |
||||||||||||
|
Advisor management fee |
210 |
193 |
417 |
385 |
||||||||||||
|
Performance participation allocation |
210 |
- |
871 |
- |
||||||||||||
|
Depreciation and amortization |
5,553 |
4,375 |
9,961 |
9,207 |
||||||||||||
|
Total expenses |
8,924 |
7,518 |
17,699 |
15,252 |
||||||||||||
|
Other Income (Expense): |
||||||||||||||||
|
Interest expense |
(3,829 |
) |
(3,832 |
) |
(7,252 |
) |
(7,613 |
) |
||||||||
|
Interest and other income |
11 |
2 |
18 |
2 |
||||||||||||
|
Net loss |
$ |
(4,229 |
) |
$ |
(2,898 |
) |
$ |
(7,790 |
) |
$ |
(6,018 |
) |
||||
|
Comprehensive loss: |
||||||||||||||||
|
Net loss |
$ |
(4,229 |
) |
$ |
(2,898 |
) |
$ |
(7,790 |
) |
$ |
(6,018 |
) |
||||
|
Unrealized gain (loss) on derivatives |
(713 |
) |
171 |
368 |
(129 |
) |
||||||||||
|
Reclassification adjustment for amounts included in net loss |
(303 |
) |
(1,021 |
) |
(1,171 |
) |
(2,049 |
) |
||||||||
|
Comprehensive loss |
$ |
(5,245 |
) |
$ |
(3,748 |
) |
$ |
(8,593 |
) |
$ |
(8,196 |
) |
||||
The following table details the calculation of FFO and AFFO for the Operating Partnership for the six months ended June 30, 2026 and 2025:
|
$ in thousands |
Six Months Ended |
|||||||||
|
2026 |
2025 |
|||||||||
|
Net income (loss) |
$ |
(7,790 |
) |
$ |
(6,018 |
) |
||||
|
Add |
Depreciation and amortization related to investment properties |
9,961 |
9,207 |
|||||||
|
Funds from operations (FFO) |
2,171 |
3,189 |
||||||||
|
Less: |
Above- and below-market rent intangible lease amortization, net |
(388 |
) |
(665 |
) |
|||||
|
Straight-line income, net |
(515 |
) |
(215 |
) |
||||||
|
Add: |
Amortization of deferred financing costs |
347 |
779 |
|||||||
|
Amortization of mortgage premium/discount |
19 |
20 |
||||||||
|
Amortization of derivatives costs |
(368 |
) |
380 |
|||||||
|
Adjusted funds from operations (AFFO) |
$ |
1,266 |
$ |
3,488 |
||||||
Net Asset Value
We calculate our NAV each month in accordance with valuation guidelines approved by our board of directors. 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 will differ from GAAP. Stockholders should not consider NAV to be equivalent to stockholders' equity or any other GAAP measure. Please refer to Exhibit 4.3 to this Quarterly Report on Form 10-Q for further details on how our NAV is determined.
Our total NAV presented in the following tables includes the NAV of the Company's common stockholders, as well as partnership interests of the Operating Partnership held by parties other than us.
The following table provides a breakdown of the major components of our NAV as of June 30, 2026 (dollars and shares/units in thousands):
|
Components of NAV |
As of |
|||
|
Investments in real estate |
$ |
417,300 |
||
|
Cash and cash equivalents |
6,065 |
|||
|
Restricted cash |
1,957 |
|||
|
Other assets |
7,871 |
|||
|
Debt |
(269,970 |
) |
||
|
Other liabilities (1) |
(21,461 |
) |
||
|
Net asset value |
$ |
141,762 |
||
|
Total shares/units outstanding |
5,992 |
|||
(1)
Includes accrued distribution fees. Distribution fees apply only to Class T shares and units, Class S shares and units and Class D shares and units. For purposes of calculating NAV, we recognize the distribution fee as a reduction of NAV on a monthly basis as such fee is paid. Under GAAP, we accrue the full cost of the distribution fee as an offering cost at the time we sell Class T shares and units, Class S shares and units, and Class D shares and units. As of June 30, 2026, we had accrued under GAAP $323 of distribution fees payable to the Dealer Manager related to the Class T shares and units and Class D shares and units. As of June 30, 2026, we had not sold or issued any Class S shares or units, therefore, we had not accrued any distribution fees payable to the Dealer Manager related to such shares or units. The Dealer Manager does not retain any of these fees, all of which are retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers for ongoing stockholder services performed by such broker-dealers.
The following table sets forth our NAV and NAV per share/unit by class as of June 30, 2026 (dollars and shares/units in thousands except per share/unit data):
|
NAV Per Share/Unit |
Class T |
Class D |
Class I |
Class X-1 |
Class A Units |
Total |
||||||||||||||||||
|
Net asset value |
$ |
4,824 |
$ |
734 |
$ |
11,081 |
$ |
924 |
$ |
124,199 |
$ |
141,762 |
||||||||||||
|
Number of outstanding shares/units |
206 |
31 |
473 |
39 |
5,243 |
5,992 |
||||||||||||||||||
|
NAV per share/unit as of June 30, 2026 |
$ |
23.4718 |
$ |
23.4398 |
$ |
23.4107 |
$ |
23.4045 |
$ |
23.6899 |
||||||||||||||
Set forth below are the weighted averages of the key assumptions used by our independent valuation advisor in the discounted cash flow analysis used for the June 30, 2026 valuations, based on property types:
|
Property Type |
Discount Rate |
Exit Capitalization Rate |
||||||
|
Healthcare |
7.53 |
% |
6.32 |
% |
||||
|
Self-Storage |
8.42 |
% |
6.92 |
% |
||||
|
Education |
8.25 |
% |
6.75 |
% |
||||
A change in these key assumptions would impact the calculation of the value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our property investment values:
|
Property Type |
Hypothetical Change |
Healthcare |
Self-Storage |
Education |
||||||||||
|
Discount rate (weighted average) |
0.25% decrease |
1.90 |
% |
1.61 |
% |
1.83 |
% |
|||||||
|
0.25% increase |
(1.87 |
)% |
(2.15 |
)% |
(1.83 |
)% |
||||||||
|
Exit capitalization rate (weighted average) |
0.25% decrease |
2.35 |
% |
1.88 |
% |
2.06 |
% |
|||||||
|
0.25% increase |
(2.20 |
)% |
(2.15 |
)% |
(2.06 |
)% |
||||||||
The following table reconciles equity under GAAP per our combined balance sheets to our NAV (dollars in thousands):
|
Reconciliation of Equity to NAV |
As of |
|||
|
Equity per GAAP |
$ |
136,366 |
||
|
Adjustments: |
||||
|
Accumulated depreciation and amortization |
4,127 |
|||
|
Unrealized net real estate and debt depreciation |
(899 |
) |
||
|
Straight-line rent adjustment |
(307 |
) |
||
|
Unamortized equity-based compensation |
20 |
|||
|
Financing costs |
2,185 |
|||
|
Other liabilities |
270 |
|||
|
Net asset value |
141,762 |
|||
Distributions by the Company
The table below presents the aggregate monthly gross distributions declared by the Company by record date for all classes of shares of common stock outstanding since January 1, 2025.
|
Record Date |
Aggregate monthly gross distribution declared per share(1) |
|||
|
January 31, 2025 |
$ |
0.1042 |
||
|
February 28, 2025 |
$ |
0.1042 |
||
|
March 31, 2025 |
$ |
0.1042 |
||
|
April 30, 2025 |
$ |
0.1042 |
||
|
May 31, 2025 |
$ |
0.1042 |
||
|
June 30, 2025 |
$ |
0.1042 |
||
|
July 31, 2025 |
$ |
0.1042 |
||
|
August 31, 2025 |
$ |
0.1042 |
||
|
September 30, 2025 |
$ |
0.1042 |
||
|
October 31, 2025 |
$ |
0.1042 |
||
|
November 30, 2025 |
$ |
0.1042 |
||
|
December 31, 2025 |
$ |
0.1042 |
||
|
January 31, 2026 |
$ |
0.1042 |
||
|
February 28, 2026 |
$ |
0.1042 |
||
|
March 31, 2026 |
$ |
0.1042 |
||
|
April 30, 2026 |
$ |
0.1042 |
||
|
May 31, 2026 |
$ |
0.1042 |
||
|
June 30, 2026 |
$ |
0.1042 |
||
(1)
For Class I and Class X-1 common stock, these gross distributions declared also represent their net distributions declared.
The gross distribution declared was reduced each month for Class T and Class D shares of the Company's common stock for applicable class-specific distribution fees to arrive at a lower net distribution amount paid to such class. For a description of the distribution fees applicable to Class D, Class S and Class T shares of the Company's stock, please see "Note 11 - Transactions with Related Parties" which is included in this Quarterly Report on Form 10-Q. As of June 30, 2026, the Company had not issued any shares of Class S or Class X-2 common stock.
The following table shows the monthly net distribution per share for shares of Class T and Class D common stock outstanding since January 1, 2025.
|
Record Date |
Monthly net distribution declared per share of Class T common stock |
Monthly net distribution declared per share of Class D common stock |
||||||
|
January 31, 2025 |
$ |
0.0867 |
$ |
0.0990 |
||||
|
February 28, 2025 |
$ |
0.0884 |
$ |
0.0995 |
||||
|
March 31, 2025 |
$ |
0.0869 |
$ |
0.0991 |
||||
|
April 30, 2025 |
$ |
0.0875 |
$ |
0.0992 |
||||
|
May 31, 2025 |
$ |
0.0870 |
$ |
0.0991 |
||||
|
June 30, 2025 |
$ |
0.0876 |
$ |
0.0993 |
||||
|
July 31, 2025 |
$ |
0.0873 |
$ |
0.0992 |
||||
|
August 31, 2025 |
$ |
0.0872 |
$ |
0.0992 |
||||
|
September 30, 2025 |
$ |
0.0879 |
$ |
0.0994 |
||||
|
October 31, 2025 |
$ |
0.0874 |
$ |
0.0992 |
||||
|
November 30, 2025 |
$ |
0.0879 |
$ |
0.0994 |
||||
|
December 31, 2025 |
$ |
0.0874 |
$ |
0.0992 |
||||
|
January 31, 2026 |
$ |
0.0875 |
$ |
0.0993 |
||||
|
February 28, 2026 |
$ |
0.0891 |
$ |
0.0997 |
||||
|
March 31, 2026 |
$ |
0.0873 |
$ |
0.0992 |
||||
|
April 30, 2026 |
$ |
0.0877 |
$ |
0.0993 |
||||
|
May 31, 2026 |
$ |
0.0871 |
$ |
0.0992 |
||||
|
June 30, 2026 |
$ |
0.0877 |
$ |
0.0993 |
||||
Sources of Distributions
|
$ in thousands |
Six Months Ended June 30, |
|||||||
|
2026 |
2025 |
|||||||
|
Distributions |
||||||||
|
Paid in cash (1) |
$ |
1,321 |
$ |
86 |
||||
|
Reinvested in shares |
142 |
33 |
||||||
|
Total distributions |
$ |
1,463 |
$ |
119 |
||||
|
Cash flows from operating activities |
$ |
704 |
$ |
- |
||||
(1)
Includes distributions paid to noncontrolling interests during the six months ended June 30, 2026.
During the six months ended June 30, 2026, 53% of our distributions were funded by cash flows generated from operations, and the remainder were funded using cash generated during prior periods. During the six months ended June 30, 2025, 100% of our distributions were funded by the Operating Partnership, which used its cash flows generated from operations to fund these distributions.
Critical Accounting Estimates and Policies
Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. Our significant accounting policies are described in Note 2 - "Summary of Significant Accounting Policies" which is included in this Quarterly Report on Form 10-Q and the December 31, 2025 Notes to Financial Statements which is included in our Annual Report on Form 10-K. We have identified Impairment of Investments in Unconsolidated Entities, Purchase Price Allocation of Acquired Real Estate and Impairment of Investment Properties as critical accounting policies.
We consider these policies to be critical because they require our management to use judgment in the application of the accounting policy, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and 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. If management's judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses.
Impairment of Investments in Unconsolidated Entities
Our investments in unconsolidated entities are periodically assessed for impairment and an impairment loss is recorded when the fair value of the investment falls below the carrying value and such decline is determined to be other-than-temporary. The evaluation of an investment in an unconsolidated entity for potential impairment can require us to exercise significant judgment.
Refer to Exhibit 4.3 to this Quarterly Report on Form 10-Q for further details on the assumptions and estimates used in determination of fair value of our investment in the Operating Partnership.
Purchase Price Allocation of Acquired Real Estate
We generally account for the acquisition of real estate as an asset acquisition which requires that 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. The cost of the acquisition is then allocated to the assets acquired and liabilities assumed based on their relative estimated fair values. We assess relative fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that we deem appropriate, as well as other available market information. We estimate future cash flows based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. Valuation is highly subjective and is based in part on assumptions, such as comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions, at a particular point in time.
The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. We also consider an allocation of purchase price to acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including but not limited to the nature and extent of the existing relationship with the tenants, the tenants' credit quality and expectations of lease renewals.
We record acquired above-market and below-market leases at their fair values (using a discount rate that reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid under 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. When 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. When estimating costs to execute similar leases, we consider leasing commissions, legal and other related expenses.
Impairment of Investment Properties
We assess the carrying values of long-lived assets each quarter or whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. The evaluation of anticipated future cash flows is highly subjective and is based in part on assumptions regarding the economic condition of the property at a particular point in time, future occupancy, rental rates and capital requirements that could differ materially from actual results. If it is determined that the carrying value is not recoverable because the undiscounted cash flows do not exceed the carrying value, we will be required to record an impairment loss to the extent that the carrying value exceeds fair value.
Recent Accounting Pronouncements
For information related to recently issued accounting pronouncements, reference is made to Note 2 - "Summary of Significant Accounting Policies" which is included in this Quarterly Report on Form 10-Q and Note 2 - "Summary of Significant Accounting Policies" which is included in our December 31, 2025 Notes to Financial Statements included in our Annual Report on Form 10-K.
Off-Balance Sheet Arrangements
As of June 30, 2026, we had no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on their financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Subsequent Events
For information related to subsequent events, reference is made to "Note 16 - Subsequent Events," which is included in our Notes to Financial Statements included in this Quarterly Report on Form 10-Q.
IPC Alternative Real Estate Income Trust Inc. published this content on August 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 07, 2026 at 19:48 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]