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Financial Services

Ares Real Estate Income Trust Inc.

11/10/2025 | Press release | Distributed by Public on 11/10/2025 14:40

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References to the terms "we," "our" or "us" refer to Ares Real Estate Income Trust Inc. and its consolidated subsidiaries. The following discussion and analysis should be read together with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the "Securities Act," and Section 21E of the Securities Exchange Act of 1934, as amended, or the "Exchange Act." Such forward-looking statements relate to, without limitation, our future capital expenditures, distributions, acquisitions and dispositions (including the amount and nature thereof), other developments and trends of the real estate industry, business strategies and the expansion and growth of our operations. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements are subject to a number of assumptions, risks and uncertainties which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements are generally identifiable by the use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "project," "continue," or the negative of these words, or other similar words or terms. Readers are cautioned not to place undue reliance on these forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

●

the impact of macroeconomic trends, such as the unemployment rate, availability of credit, impact of inflation, changes in interest rates, uncertainties regarding actual and potential shifts in the U.S. and foreign trade, economic and other policies, including with respect to treaties and tariffs and the conflicts in Ukraine and in the Middle East, which may have a negative effect on the following, among other things:

●

the fundamentals of our business, including overall market occupancy, space utilization for our tenants, who we refer to as customers from time-to-time herein, and rental rates;

●

the financial condition of our customers, some of which are retail, financial, legal and other professional firms, our lenders, and institutions that hold our cash balances and short-term investments, which may expose us to increased risks of breach or default by these parties;

●

customers' ability to pay rent on their leases or our ability to re-lease space that is or becomes vacant; and

●

the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;

●

general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on customers' financial condition and competition from other developers, owners and operators of real estate);

●

our ability to effectively raise and deploy proceeds from our ongoing securities offerings;

●

risks associated with the demand for liquidity under our share redemption program and our ability to meet such demand;

●

risks associated with the availability and terms of debt and equity financing and the use of debt to fund acquisitions and developments, including the risk associated with interest rates impacting the cost and/or availability of financing;

●

the business opportunities that may be presented to and pursued by us, changes in laws or regulations (including changes to laws governing the taxation of real estate investment trusts ("REITs"));

●

conflicts of interest arising out of our relationships with Ares real estate (the "Sponsor"), the Advisor and their affiliates;

●

changes in accounting principles, policies and guidelines applicable to REITs;

●

environmental, regulatory and/or safety requirements; and

●

the availability and cost of comprehensive insurance, including coverage for terrorist acts.

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For further discussion of these and other factors, see Part I, Item 1A, "Risk Factors" in our 2024 Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

OVERVIEW

General

Ares Real Estate Income Trust Inc. is a NAV-based perpetual life REIT that was formed on April 11, 2005, as a Maryland corporation. We are primarily focused on investing in and operating a diverse portfolio of real property. As of September 30, 2025, our consolidated real property portfolio consisted of 137 properties, totaling approximately 28.7 million square feet located in 34 markets throughout the U.S. We also owned, either directly through our unconsolidated joint venture partnerships or indirectly through other entities owned by our unconsolidated joint venture partnerships, six industrial properties, 148 credit lease properties, 15 data center investments and 18 debt-related investments as of September 30, 2025. Unless otherwise noted, these unconsolidated properties and investments are excluded from the presentation of our portfolio data herein.

We have operated and elected to be treated as a REIT for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2006, and we intend to continue to operate in accordance with the requirements for qualification as a REIT. We utilize an UPREIT organizational structure to hold all or substantially all of our assets through the Operating Partnership.

We intend to offer shares of our common stock on a continuous basis. We also intend to conduct an ongoing distribution reinvestment plan offering for our stockholders to reinvest distributions in our shares. During the nine months ended September 30, 2025, we raised gross proceeds of approximately $87.2 million from the sale of approximately 11.3 million shares of our common stock in our ongoing securities offerings, including proceeds from our distribution reinvestment plans of approximately $23.4 million. See "Note 8 to the Condensed Consolidated Financial Statements" for more information about our securities offerings.

Additionally, we have a program to raise capital through private placement offerings by selling DST Interests. These private placement offerings are exempt from registration requirements pursuant to Rule 506(b) of Regulation D under the Securities Act. We anticipate that these interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"). Similar to our prior private placement offerings, we expect that the DST Program will give us the opportunity to expand and diversify our capital raise strategies by offering what we believe to be an attractive and unique investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions under Section 1031 of the Code. We also offer DST Program Loans to finance no more than 50% of the purchase price of the DST Interests to certain purchasers of the DST Interests. During the nine months ended September 30, 2025, we sold $1.01 billion of gross interests related to the DST Program, $74.3 million of which were financed by DST Program Loans. See "Note 6 to the Condensed Consolidated Financial Statements" for additional detail regarding the DST Program.

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As of September 30, 2025, our total investment portfolio consisted of the following sector allocations:

Real Estate (1)

(1) Calculated using the fair value of our real property, investments in unconsolidated joint venture partnerships, investments in real estate-related securities and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures). Includes our pro-rata share of fair value of real estate investments in our unconsolidated joint venture partnerships (determined in accordance with our valuation procedures).

We currently group our real property portfolio into five categories: residential, industrial, retail, office and other. The following table summarizes our real property portfolio by category as of September 30, 2025:


						Average
				% of Total		Effective Annual						% of
($ and square feet in thousands,	Number of	Number of	Rentable	Rentable		Base Rent per		%		Aggregate		Aggregate
except for per square foot data)	Markets (1)	Real Properties	Square Feet	Square Feet		Square Foot (2)		Leased		Fair Value		Fair Value
Residential properties	12	24	6,720	23.4	%	$	28.58	91.6	%	$	2,651,800	39.8	%
Industrial properties	27	79	17,672	61.5			7.26	96.1			2,698,850	40.5
Retail properties	8	18	2,292	8.0			21.03	97.0			718,600	10.8
Office properties	5	6	1,220	4.3			39.42	72.5			392,000	5.9
Other properties	5	10	811	2.8			18.86	83.9			200,750	3.0
Total real property portfolio	34	137	28,715	100.0	%	$	14.62	93.8	%	$	6,662,000	100.0	%

(1)	Reflects the number of unique markets by category and in total. As such, the total number of markets does not equal the sum of the number of markets by category as certain categories are located in the same market.

(2)	Amount calculated as total annualized base rent, which includes the impact of any contractual tenant concessions (cash basis) per the terms of the lease, divided by total lease square footage as of September 30, 2025.

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As of September 30, 2025, we had four floating-rate debt-related investments with a weighted-average interest rate of 8.6% and a weighted-average remaining life of 0.9 years. As of September 30, 2025, the aggregate outstanding principal was $180.1 million, the aggregate carrying amount was $179.8 million and total aggregate current commitments were up to $218.0 million.

As of September 30, 2025, we had two available-for-sale debt securities, which were comprised of one CMBS and one preferred equity investment. As of September 30, 2025, the aggregate fair value of these investments was $139.2 million.

During the nine months ended September 30, 2025, we originated six loans with a total principal balance of $473.7 million. Additionally, during the nine months ended September 30, 2025 we sold six loans, including one of which was held for sale as of December 31, 2024, totaling $527.6 million, equal to the carrying cost of the debt-related investments on the dates of sale, to a joint venture partnership in which we have an ownership interest. During the three and nine months ended September 30, 2025, we recognized origination fee income related to this mortgage origination program of $0.5 million and $2.2 million, respectively.

We currently focus our investment activities primarily across the major U.S. property sectors (residential (which includes and/or may include multi-family and other types of rental housing such as manufactured, student and single-family rental housing), industrial, retail and office (which includes and/or may include medical office and life science laboratories)), self-storage properties and investments in real estate debt and securities. To a lesser extent, we strategically invest in and/or intend to invest in geographies outside of the U.S., which may include Canada, Mexico, the United Kingdom, Europe, Japan and other foreign jurisdictions, and in other sectors such as credit lease and self-storage, properties in sectors adjacent to our primary investment sectors and/or infrastructure, to create a diversified blend of current income and long-term value appreciation. Our near-term investment strategy is likely to prioritize new investments in the residential, and industrial sectors due to relatively attractive fundamental conditions. We also intend to continue to hold an allocation of properties in the retail and office sectors, the former of which is largely grocery-anchored.

Net Asset Value

Our board of directors, including a majority of our independent directors, has adopted valuation procedures, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. With the approval of our board of directors, including a majority of our independent directors, we have engaged Altus Group U.S. Inc., a third-party valuation firm, to serve as our independent valuation advisor ("Altus Group" or the "Independent Valuation Advisor") with respect to helping us administer the valuation and review process for the real properties in our portfolio, providing monthly real property appraisals and valuations for certain of our debt-related assets, reviewing annual third-party real property appraisals, reviewing the internal valuations of DST Program Loans and debt-related liabilities performed by our Advisor, providing quarterly valuations of our properties subject to master lease obligations associated with the DST Program, and assisting in the development and review of our valuation procedures. See Exhibit 99.2 of this Quarterly Report on Form 10-Q for a more detailed description of our valuation procedures, including important disclosure regarding real property valuations provided by the Independent Valuation Advisor.

Our valuation procedures, which address specifically each category of our assets and liabilities and are applied separately from the preparation of our financial statements in accordance with GAAP, involve adjustments from historical cost. There are certain factors which cause NAV to be different from total equity or stockholders' equity on a GAAP basis. Most significantly, the valuation of our real assets, which is the largest component of our NAV calculation, is provided to us by the Independent Valuation Advisor. For GAAP purposes, these assets are generally recorded at depreciated or amortized cost. Another example that will cause our NAV to differ from our GAAP total equity or stockholders' equity is the straight-lining of rent, which results in a receivable for GAAP purposes that is not included in the determination of our NAV. The fair values of our assets and certain liabilities are determined using widely accepted methodologies and, as appropriate, the GAAP principles within the Financial Accounting Standards Board ("FASB") Accounting Standards Codification under Topic 820, Fair Value Measurements and Disclosures and are used by ALPS in calculating our NAV per share. However, our valuation procedures and our NAV are not subject to GAAP and will not be subject to independent audit. We did not develop our valuation procedures with the intention of complying with fair value concepts under GAAP and, therefore, there could be differences between our fair values and the fair values derived from the principal market or most advantageous market concepts of establishing fair value under GAAP. The aggregate real property valuation of $6.66 billion compares to a GAAP basis of real properties (net of intangible lease liabilities and before accumulated amortization and depreciation) of $6.19 billion, representing a difference of approximately $469.4 million, or 7.6%.

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As used below, "Fund Interests" means our outstanding shares of common stock, along with OP Units, which may be or were held directly or indirectly by the Advisor, the Former Sponsor, members or affiliates of the Former Sponsor, and third parties, and "Aggregate Fund NAV" means the NAV of all the Fund Interests.

The following table sets forth the components of Aggregate Fund NAV as of September 30, 2025 and December 31, 2024:


	As of
(in thousands)	September 30, 2025		December 31, 2024
Investments in residential properties	$	2,651,800	$	2,331,100
Investments in industrial properties		2,698,850		2,102,900
Investments in retail properties		718,600		694,900
Investments in office properties		392,000		464,850
Investments in other properties (1)		200,750		164,300
Total investment in real estate properties		6,662,000		5,758,050
Investments in real estate debt and securities		454,518		549,471
Investments in unconsolidated joint venture partnerships		398,226		235,413
DST Program Loans		195,102		120,651
Total investments		7,709,846		6,663,585
Cash and cash equivalents		71,806		19,554
Restricted cash		8,038		7,865
Other assets		79,679		71,071
Line of credit, term loans and mortgage notes		(2,591,255)		(2,723,502)
Secured financings on debt-related investments		(109,642)		-
Financing obligations associated with our DST Program		(2,360,548)		(1,335,598)
Other liabilities		(148,320)		(105,577)
Accrued performance participation allocation		-		-
Accrued advisory fees		(4,606)		(3,646)
Noncontrolling interests in consolidated joint venture partnerships		(19,863)		(15,832)
Aggregate Fund NAV	$	2,635,135	$	2,577,920
Total Fund Interests outstanding		334,789		339,795

(1)	Includes self-storage properties.

The following table sets forth the NAV per Fund Interest as of September 30, 2025:



(in thousands, except per Fund Interest data)	Total		Class T-R Shares		Class S-R Shares		Class D-R Shares		Class I-R Shares		Class E Shares		Class S-PR Shares		Class D-PR Shares		Class I-PR Shares		OP Units
Monthly NAV	$	2,635,135	$	191,041	$	308,428	$	45,466	$	470,627	$	319,971	$	31,139	$	82	$	44,857	$	1,223,524
Fund Interests outstanding		334,789		24,271		39,185		5,777		59,792		40,652		3,956		11		5,699		155,446
NAV Per Fund Interest	$	7.8710	$	7.8710	$	7.8710	$	7.8710	$	7.8710	$	7.8710	$	7.8710	$	7.8710	$	7.8710	$	7.8710

Under GAAP, we record liabilities for ongoing distribution fees that we estimate we may pay in future periods for the Fund Interests. As of September 30, 2025, we estimated approximately $64.4 million of ongoing distribution fees were potentially payable. We do not deduct the liability for estimated future distribution fees in our calculation of NAV since we intend for our NAV to reflect our estimated value on the date that we determine our NAV. Accordingly, our estimated NAV at any given time does not include consideration of any estimated future distribution fees that may become payable after such date.

Financing obligations associated with our DST Program, as reflected in our NAV table above, represent outstanding proceeds raised from our private placements under the DST Program due to the fact that we have an option (which may or may not be exercised) to

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purchase the interests in the DSTs and thereby acquire the real property owned by the trusts. We may acquire these properties using OP Units, cash, or a combination of both. See "Note 6 to the Condensed Consolidated Financial Statements" for additional details regarding our DST Program. We may use proceeds raised from our DST Program for the repayment of debt, acquisition of properties and other investments, distributions to our stockholders, payments under our debt obligations and master lease agreements related to properties in our DST Program, redemption payments, capital expenditures and other general corporate purposes. We pay our Advisor an annual, fixed component of our advisory fee of 1.10% of the consideration received for selling interests in DST Properties to third-party investors, net of upfront fees and expense reimbursements payable out of gross proceeds from the sale of such interests and DST Interests financed through DST Program Loans.

We include no discounts to our NAV for the illiquid nature of our shares, including the limitations on our stockholders' ability to redeem shares under our share redemption program and our ability to make exceptions to, modify or suspend our share redemption program at any time. Our NAV generally does not reflect the potential impact of exit costs (e.g. selling costs and commissions related to the sale of a property) that would likely be incurred if our assets and liabilities were liquidated or sold today. While we may use market pricing concepts to value individual components of our NAV, our per share NAV is not derived from the market pricing information of open-end real estate funds listed on stock exchanges.

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

The valuations of our real properties as of September 30, 2025, excluding certain newly acquired properties that are currently held at cost which we believe reflects the fair value of such properties, were provided by the Independent Valuation Advisor in accordance with our valuation procedures. Certain key assumptions that were used by the Independent Valuation Advisor in the discounted cash flow analysis are set forth in the following table based on weighted-averages by property type.


											Weighted-
	Residential		Industrial		Retail		Office		Other		Average Basis
Exit capitalization rate	5.1	%	5.7	%	6.4	%	7.4	%	5.6	%	5.7	%
Discount rate / internal rate of return	7.1	%	7.4	%	7.2	%	8.8	%	7.7	%	7.3	%
Average holding period (years)	10.0		10.0		9.9		10.0		10.0		10.0

A change in the exit capitalization and discount rates used would impact the calculation of the value of our real property. For example, assuming all other factors remain constant, the changes listed below would result in the following effects on the value of our real properties, excluding certain newly acquired properties that are currently held at cost which we believe reflects the fair value of such properties:


	Hypothetical											Weighted-
Input	Change	Residential		Industrial		Retail		Office		Other		Average Values
Exit capitalization rate (weighted-average)	0.25% decrease	3.3	%	3.0	%	2.3	%	2.5	%	2.8	%	3.0	%
	0.25% increase	(3.0)	%	(2.8)	%	(2.2)	%	(2.3)	%	(2.6)	%	(2.7)	%
Discount rate (weighted-average)	0.25% decrease	2.0	%	2.0	%	1.9	%	2.0	%	1.9	%	2.0	%
	0.25% increase	(1.9)	%	(1.9)	%	(1.8)	%	(2.0)	%	(1.9)	%	(1.9)	%

From September 30, 2017 through November 30, 2019, we valued our debt-related investments and real estate-related liabilities generally in accordance with fair value standards under GAAP. Beginning with our valuation for December 31, 2019, our property-level mortgages, corporate-level credit facilities and other secured and unsecured debt that are intended to be held to maturity (which for fixed rate debt not subject to interest rate hedges may be the date near maturity at which time the debt will be eligible for prepayment at par for purposes herein), including those subject to interest rate hedges, were valued at par (i.e. at their respective outstanding balances). In addition, because we utilize interest rate hedges to stabilize interest payments (i.e. to fix all-in interest rates through interest rate swaps or to limit interest rate exposure through interest rate caps) on individual loans, each loan and associated interest rate hedge is treated as one financial instrument which is valued at par if intended to be held to maturity. This policy of valuing at par applies regardless of whether any given interest rate hedge is considered as an asset or liability for GAAP purposes. Notwithstanding, if we acquire an investment and assume associated in-place debt from the seller that is above- or below-market, then consistent with how we recognize assumed debt for GAAP purposes when acquiring an asset with pre-existing debt in place, the liabilities used in the determination of our NAV will include the market value of such debt based on market value as of the closing date. The associated premium or discount on such debt as of closing that is reflected in our liabilities will then be amortized through loan maturity. Per our valuation policy, the corresponding investment is valued on an unlevered basis for purposes of determining

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NAV. Accordingly, all else equal, we would not recognize an immediate gain or loss to our NAV upon acquisition of an investment whereby we assume associated pre-existing debt that is above- or below-market. As of September 30, 2025, we classified all of our debt as intended to be held to maturity, and our liabilities included mark-to-market adjustments for pre-existing debt that we assumed upon acquisition. We currently estimate the fair value of our debt (inclusive of associated interest rate hedges) that was intended to be held to maturity as of September 30, 2025 was $8.0 million lower than the carrying value used for purposes of calculating our NAV (as described above) for such debt in aggregate; meaning that if we used the fair value of our debt rather than the carrying value used for purposes of calculating our NAV (and treated the associated hedge as part of the same financial instrument), our NAV would have been higher by approximately $8.0 million, or $0.03 per share, not taking into account all of the other items that impact our monthly NAV, as of September 30, 2025.

Reconciliation of Stockholders' Equity and Noncontrolling Interests to NAV

The following table reconciles stockholders' equity and noncontrolling interests per our condensed consolidated balance sheet to our NAV as of September 30, 2025:


(in thousands)	As of September 30, 2025
Total stockholders' equity	$	625,504
Noncontrolling interests		544,605
Total equity under GAAP		1,170,109

Adjustments:
Accrued distribution fee (1)		64,387
Redeemable noncontrolling interests (2)		8,200
Unrealized net appreciation (depreciation) on real estate and financial assets and liabilities (3)		519,491
Unrealized gain (loss) on investments in unconsolidated joint venture partnerships (4)		23,709
Accumulated depreciation and amortization (5)		902,952
Other adjustments (6)		(53,713)
Aggregate Fund NAV	$	2,635,135

(1)

Accrued distribution fee represents the accrual for the full cost of the distribution fee for Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares and OP Units. Under GAAP, we accrued the full cost of the distribution fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum distribution fee) as an offering cost at the time we sold the Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares, Class D-PR shares and OP Units. Similarly, we accrued a liability for future distribution fees we expect will be paid based on our estimate of how long the Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares, Class D-PR shares and OP Units will be outstanding, also as an offering cost. For purposes of calculating the NAV, we recognize the distribution fee as a reduction of NAV on a monthly basis when such fee is paid and do not deduct the liability for estimated future distribution fees that may become payable after the date as of which our NAV is calculated.

(2)	Redeemable noncontrolling interests are related to our OP Units, and are included in our determination of NAV but not included in total equity under GAAP.

(3)

Our investments in real estate and certain of our financial assets and liabilities, including our debt, certain of our financing obligations, certain of our DST Program Loans, and certain of our investments in real estate debt and securities, are presented at their carrying value in our condensed consolidated financial statements. As such, any increases or decreases in the fair market value of our investments in real estate and certain of our financial assets and liabilities are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate, investments in real estate debt and securities, financing obligations, and DST Program Loans are recorded at fair value. Notwithstanding, our property-level mortgages, corporate-level credit facilities and other secured and unsecured debt that are intended to be held to maturity are valued at par (i.e., at their respective outstanding balances).

(4)

Certain of our investments in unconsolidated joint venture partnerships are presented using the equity method of accounting in our condensed consolidated financial statements. As such, certain increases or decreases in the fair market value of the underlying investments or debt instruments associated with those investments in unconsolidated joint venture partnerships are not included in our GAAP results. For purposes of determining our NAV, the investments in the underlying real estate and certain of the underlying debt instruments are recorded at fair value and reflected in our NAV at our proportional ownership interest.

(5)	We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of determining our NAV.

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(6)

Includes (i) straight-line rent receivables, which are recorded in accordance with GAAP but not recorded for purposes of determining our NAV, (ii) certain interest rate hedges, which are recorded at fair value in accordance with GAAP but are not included for purposes of determining our NAV if intended to be held to maturity, and (iii) other minor adjustments.

Performance

Our NAV increased from $7.59 per share as of December 31, 2024 to $7.87 per share as of September 30, 2025. The increase in NAV was primarily driven by the performance of our real estate portfolio with strong leasing, continued rent growth, and stabilizing capital markets.

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Effective December 31, 2019, our board of directors approved amendments to our valuation procedures which revised the way we value property-level mortgages, corporate-level credit facilities, other secured and unsecured debt and associated interest rate hedges when loans, including associated interest rate hedges, are intended to be held to maturity, effectively eliminating all mark-to-market adjustments for such loans and hedges from the calculation of our NAV. The following table summarizes the impact of interest rate movements on our share class returns assuming we continued to include the mark-to-market adjustments for all borrowing-related interest rate hedge and debt instruments beginning with the December 31, 2019 NAV:


					One-Year
	Trailing				(Trailing		Three-Year		Five-Year		Ten-Year		Since Inception
(as of September 30, 2025) (1)	Three-Months		Year-to-Date		12-Months)		Annualized		Annualized		Annualized		Annualized (2)
Class T-R Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(0.47)	%	3.61	%	6.04	%	(1.11)	%	4.29	%	4.37	%	5.73	%
Adjusted Class T-R Share Total Return (with upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(0.66)	%	2.27	%	5.36	%	(2.33)	%	4.49	%	4.33	%	5.70	%
Difference	0.19	%	1.34	%	0.68	%	1.22	%	(0.20)	%	0.04	%	0.03	%

Class T-R Share Total Return (without upfront selling commissions and dealer manager fees) (3)	3.02	%	7.23	%	9.75	%	0.03	%	5.01	%	4.69	%	5.83	%
Adjusted Class T-R Share Total Return (without upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	2.82	%	5.85	%	9.05	%	(1.20)	%	5.21	%	4.65	%	5.80	%
Difference	0.20	%	1.38	%	0.70	%	1.23	%	(0.20)	%	0.04	%	0.03	%

Class S-R Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(0.47)	%	3.61	%	6.04	%	(1.11)	%	4.29	%	4.37	%	5.73	%
Adjusted Class S-R Share Total Return (with upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(0.66)	%	2.27	%	5.36	%	(2.33)	%	4.49	%	4.33	%	5.70	%
Difference	0.19	%	1.34	%	0.68	%	1.22	%	(0.20)	%	0.04	%	0.03	%

Class S-R Share Total Return (without upfront selling commissions and dealer manager fees) (3)	3.02	%	7.23	%	9.75	%	0.03	%	5.01	%	4.69	%	5.83	%
Adjusted Class S-R Share Total Return (without upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	2.82	%	5.85	%	9.05	%	(1.20)	%	5.21	%	4.65	%	5.80	%
Difference	0.20	%	1.38	%	0.70	%	1.23	%	(0.20)	%	0.04	%	0.03	%

Class D-R Share Total Return (3)	3.17	%	7.71	%	10.41	%	0.63	%	5.64	%	5.29	%	6.00	%
Adjusted Class D-R Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	2.97	%	6.32	%	9.70	%	(0.61)	%	5.84	%	5.26	%	5.97	%
Difference	0.20	%	1.39	%	0.71	%	1.24	%	(0.20)	%	0.03	%	0.03	%

Class I-R Share Total Return (3)	3.24	%	7.92	%	10.69	%	0.89	%	5.90	%	5.61	%	6.36	%
Adjusted Class I-R Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	3.04	%	6.52	%	9.97	%	(0.36)	%	6.10	%	5.57	%	6.33	%
Difference	0.20	%	1.40	%	0.72	%	1.25	%	(0.20)	%	0.04	%	0.03	%

Class E Share Return Total Return (3)	3.24	%	7.92	%	10.69	%	0.89	%	5.90	%	5.63	%	6.40	%
Adjusted Class E Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	3.04	%	6.52	%	9.97	%	(0.36)	%	6.10	%	5.59	%	6.37	%
Difference	0.20	%	1.40	%	0.72	%	1.25	%	(0.20)	%	0.04	%	0.03	%

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					One-Year
	Trailing				(Trailing		Three-Year		Five-Year		Ten-Year		Since Inception
(as of September 30, 2025) (1)	Three-Months		Year-to-Date		12-Months)		Annualized		Annualized		Annualized		Annualized (2)
Class S-PR Share Total Return (with upfront selling commissions and dealer manager fees) (3)	(0.59)	%	3.48	%	5.91	%	n/a	%	n/a	%	n/a	%	6.25	%
Adjusted Class S-PR Share Total Return (with upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	(0.78)	%	2.14	%	5.23	%	n/a	%	n/a	%	n/a	%	5.32	%
Difference	0.19	%	1.34	%	0.68	%	n/a	%	n/a	%	n/a	%	0.93	%

Class S-PR Share Total Return (without upfront selling commissions and dealer manager fees) (3)	3.02	%	7.23	%	9.75	%	n/a	%	n/a	%	n/a	%	9.84	%
Adjusted Class S-PR Share Total Return (without upfront selling commissions and dealer manager fees) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	2.82	%	5.85	%	9.05	%	n/a	%	n/a	%	n/a	%	8.87	%
Difference	0.20	%	1.38	%	0.70	%	n/a	%	n/a	%	n/a	%	0.97	%

Class D-PR Share Total Return (with upfront selling commissions) (3)	1.62	%	6.10	%	n/a	%	n/a	%	n/a	%	n/a	%	7.21	%
Adjusted Class D-PR Share Total Return (with upfront selling commissions) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	1.43	%	4.73	%	n/a	%	n/a	%	n/a	%	n/a	%	6.07	%
Difference	0.19	%	1.37	%	n/a	%	n/a	%	n/a	%	n/a	%	1.14	%

Class D-PR Share Total Return (without upfront selling commissions) (3)	3.17	%	7.71	%	n/a	%	n/a	%	n/a	%	n/a	%	8.84	%
Adjusted Class D-PR Share Total Return (without upfront selling commissions) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	2.97	%	6.32	%	n/a	%	n/a	%	n/a	%	n/a	%	7.68	%
Difference	0.20	%	1.39	%	n/a	%	n/a	%	n/a	%	n/a	%	1.16	%

Class I-PR Share Total Return (3)	3.24	%	7.92	%	10.69	%	n/a	%	n/a	%	n/a	%	10.78	%
Adjusted Class I-PR Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4)	3.04	%	6.52	%	9.97	%	n/a	%	n/a	%	n/a	%	9.81	%
Difference	0.20	%	1.40	%	0.72	%	n/a	%	n/a	%	n/a	%	0.97	%

(1)

Performance is measured by total return, which includes income and appreciation (i.e., distributions and changes in NAV) and is a compound rate of return that assumes reinvestment of all distributions for the respective time period, and excludes upfront selling commissions and dealer manager fees paid by investors, except for returns noted "with upfront selling commissions and dealer manager fees" ("Total Return"). Partial period returns are not calculated. Past performance is not a guarantee of future results. Current performance may be higher or lower than the performance data quoted.

(2)

NAV inception date for Class T-R shares, Class S-R shares, Class D-R shares, Class I-R shares (formerly known as Class T shares, Class S shares, Class D shares and Class I shares, respectively) and Class E shares was September 30, 2012, which is when we first sold shares of our common stock after converting to an NAV-based REIT on July 12, 2012. Investors in our fixed price offerings prior to NAV inception on September 30, 2012 are likely to have a lower return. The inception date for Class I-PR shares and Class S-PR shares was September 3, 2024 and the inception date for Class D-PR was December 2, 2024, which is when we first sold shares of such share classes of our common stock. Since inception returns are not annualized for shared classes outstanding less than one year.

(3)

The Total Returns presented are based on the actual NAVs at which stockholders transacted, calculated pursuant to our valuation procedures. From NAV inception to November 30, 2019, these NAVs reflected mark-to-market adjustments on our borrowing-related interest rate hedge positions; and from September 1, 2017 to November 30, 2019, these NAVs also reflected mark-to-market adjustments on our borrowing-related debt instruments. Prior to September 1, 2017, our valuation policies dictated marking borrowing-related debt instruments to par except in certain circumstances; therefore, we did not formally track mark-to-market adjustments on our borrowing-related debt instruments during such time.

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(4)

The Adjusted Total Returns presented are based on adjusted NAVs calculated as if we had continued to mark our hedge and debt instruments to market following a policy change to largely exclude borrowing-related interest rate hedge and debt marks to market from our NAV calculations (except in certain circumstances pursuant to our valuation procedures), beginning with our NAV calculated as of December 31, 2019 NAV. Therefore, the NAVs used in the calculation are identical to those presented per Note (3) above from NAV inception through November 30, 2019. The adjusted NAVs include the incremental impacts to advisory fees and performance fees; however, the adjusted NAVs are not assumed to have impacted any share purchase or redemption. For calculation purposes, transactions were assumed to occur at the adjusted NAVs.

Trends Affecting Our Business

Our results of operations are affected by a variety of factors, including conditions in both the U.S. and global financial markets and the economic and political environments.

During the third quarter of 2025, the U.S. economy continued to expand supported by consumer spending. Meanwhile, macroeconomic volatility slowed, providing space for recovery in the commercial real estate sector. Individual property transaction volumes continued year-over-year increases, while broad market indices demonstrated flat to increasing commercial real estate values on a year-over-year and quarter-over-quarter basis. Aiding valuations, new construction starts across various sectors like multifamily and retail remain near 10-year lows. Lending markets continued to support improving commercial real estate activity as conduit and CMBS new issue volumes increased quarter-over-quarter.

In September and October 2025, the Federal Reserve resumed its monetary easing cycle with an aggregate 50 basis point rate reduction. While the Federal Reserve has signaled a willingness to further reduce interest rates in 2025, there is no certainty that there will be a decrease in interest rates or of the magnitude or pace of potential decreases, especially if inflation accelerates.

Rising operating costs, such as property insurance and raw material costs for property development and improvements, placed pressure on cash flow performance across many real estate property types in the third quarter of 2025. Although certain markets are showing a recovery, office properties nationally continue to experience challenges driven by remote work and elevated costs to operate, improve or repurpose these office properties. These factors have largely resulted in lower demand for office space and have driven elevated levels of vacancy rates and default rates. Offsetting some of these challenges, there has been a significant decline in new commercial real estate development that began in 2023 and has continued benefitting existing in-demand property types. Ultimately, this lack of new future inventory may result in a shortage of contemporary, in-demand properties in the years to come, furthering the disparity between supply and demand dynamics. In addition, there is a significant amount of unspent capital targeting commercial real estate properties that could support values and elevate transaction activities. Property valuations and capitalization rates remained steady and we believe certain of these market trends will be offset by continued strong operating fundamentals, such as occupancy and rental rates, in property types that include multifamily and industrial.

While lower market rates and increased capital markets liquidity support commercial real estate property transactions and values, uncertainty remains around proposed U.S. trade and economic policies and their potential impact to the U.S. economy. Should these economic factors become more acute, the commercial real estate market may be further adversely impacted.

We believe our portfolio is well-positioned in this market environment. However, there is no guarantee that our outlook will remain positive for the long-term, especially if leasing fundamentals weaken in the future.

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RESULTS OF OPERATIONS

Summary of 2025 Activities

During the nine months ended September 30, 2025, we completed the following activities:

●

We acquired two residential properties, 14 industrial properties and two self-storage properties for an aggregate contractual purchase price of approximately $760.2 million. We invested an aggregate of $246.3 million in our unconsolidated joint venture partnerships and our investments in real estate debt and securities.

●

We sold four industrial properties and one office property for net proceeds of approximately $110.9 million and recorded a net gain on sale of $57.2 million related to the sale of these properties.

●

We leased approximately 1.5 million square feet of our commercial properties, which included 0.2 million square feet of new leases and 1.3 million square feet of renewals.

●

We decreased our leverage ratio from 41.2% as of December 31, 2024, to 34.9% as of September 30, 2025. Our leverage ratio for reporting purposes is calculated as outstanding principal balance of our borrowings, including secured financings on debt-related investments, less cash and cash equivalents, divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships and investments in real estate debt and securities not associated with the DST Program (determined in accordance with our valuation procedures).

●

We raised gross proceeds of $1.10 billion from the sale of our common stock and DST Interests. This includes $87.2 million from the sale of 11.3 million shares of our common stock in our securities offerings, including proceeds from our distribution reinvestment plans of $23.4 million, and $1.01 billion of gross capital through private placement offerings by selling DST Interests, $74.3 million of which were financed by DST Program Loans.

●

We redeemed 12.4 million shares of common stock at a weighted-average purchase price of $7.65 per share for an aggregate amount of $94.5 million. Additionally, we redeemed a combined 4.0 million OP Units of redeemable noncontrolling interests and noncontrolling interests for an aggregate dollar amount of $30.9 million.

●

We amended and restated our unsecured credit facility, by entering into a $1.0 billion revolving credit facility, a $700.0 million term loan and a second $300.0 million term loan, for an aggregate amount of $2.0 billion. The amendment and restatement provides us with the ability from time to time to increase the aggregate size of the credit facility up to a total of $2.5 billion, subject to receipt of lender commitments and other conditions.The amendment and restatement extends the maturity date of the revolving credit facility to June 18, 2029, subject to a one-year extension option. The amendment and restatement also extends maturity date of both term loans to June 18, 2029, with both subject to a one-year extension option, each subject to certain conditions.

●

We entered into the Goldman Sachs MRA, which allows us to borrow up to $500.0 million. Under the Goldman Sachs MRA, we are permitted to sell, and later repurchase, certain qualifying mortgage loans, senior notes, mezzanine loans and pari-passu participations in commercial mortgage loans and mezzanine loans approved by Goldman Sachs in its sole discretion. The termination date of the Goldman Sachs MRA is July 10, 2026, which may be extended pursuant to a one-year extension option, subject to certain conditions. The interest rate on the Goldman Sachs MRA borrowings is determined based on prevailing rates corresponding to the terms of the borrowings. As of September 30, 2025, we had $109.6 million of borrowings outstanding pursuant to the Goldman Sachs MRA, collateralized by our debt-related investments, held for sale, which have a carrying value of $135.7 million.

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Results for the Three and Nine Months Ended September 30, 2025 Compared to Prior Periods

The following table sets forth information regarding our consolidated results of operations for the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, and for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024:


	For the Three Months Ended				Change				For the Nine Months Ended September 30,				Change
($ in thousands, except per share data)	September 30, 2025		June 30, 2025		$		%		2025		2024		$		%
Revenues:
Rental revenues	$	113,691	$	109,218	$	4,473	4.1	%	$	329,305	$	273,416	$	55,889	20.4	%
Debt-related income		9,036		9,065		(29)	(0.3)			28,090		36,136		(8,046)	(22.3)
Total revenues		122,727		118,283		4,444	3.8			357,395		309,552		47,843	15.5
Operating expenses:
Rental expenses		43,469		40,154		3,315	8.3			123,332		103,467		19,865	19.2
Real estate-related depreciation and amortization		49,339		46,856		2,483	5.3			142,068		110,991		31,077	28.0
General and administrative expenses		3,544		3,149		395	12.5			9,598		9,356		242	2.6
Advisory fees		13,166		12,188		978	8.0			36,758		30,089		6,669	22.2
Acquisition costs and reimbursements		1,793		1,420		373	26.3			4,568		5,560		(992)	(17.8)
Total operating expenses		111,311		103,767		7,544	7.3			316,324		259,463		56,861	21.9
Other income (expenses):
Income from unconsolidated joint venture partnerships		15,933		15,641		292	1.9			35,088		11,049		24,039	NM
Interest expense		(65,567)		(58,963)		(6,604)	(11.2)			(179,914)		(137,538)		(42,376)	(30.8)
Gain on sale of real estate property		46,711		506		46,205	NM			57,200		1,048		56,152	NM
Unrealized loss on debt-related investments		(251)		-		(251)	NM			(251)		-		(251)	NM
Unrealized gain (loss) on DST Program Loans		3		(1)		4	NM			17		(164)		181	NM
Unrealized (loss) gain on financing obligations		(18,121)		(14,353)		(3,768)	(26.3)			(36,612)		8,968		(45,580)	NM
Gain (loss) on extinguishment of debt and financing obligations, net		125		(791)		916	NM			(666)		21,800		(22,466)	NM
Provision for current expected credit losses		308		57		251	NM			464		1,474		(1,010)	(68.5)
Other income and expenses		4,163		2,550		1,613	63.3			8,028		4,675		3,353	71.7
Total other income (expenses)		(16,696)		(55,354)		38,658	69.8			(116,646)		(88,688)		(27,958)	(31.5)
Net loss before income tax expense		(5,280)		(40,838)		35,558	87.1			(75,575)		(38,599)		(36,976)	(95.8)
Income tax expense		(10,274)		(1,658)		(8,616)	NM			(16,570)		(8,664)		(7,906)	(91.3)
Net loss		(15,554)		(42,496)		26,942	63.4			(92,145)		(47,263)		(44,882)	(95.0)
Net loss attributable to redeemable noncontrolling interests		54		149		(95)	(63.8)			329		235		94	40.0
Net loss attributable to noncontrolling interests		7,216		19,773		(12,557)	(63.5)			42,932		15,413		27,519	NM
Net loss attributable to common stockholders	$	(8,284)	$	(22,574)	$	14,290	63.3	%	$	(48,884)	$	(31,615)	$	(17,269)	(54.6)	%
Weighted-average shares outstanding-basic		179,216		178,395		821	0.5	%		178,748		190,642		(11,894)	(6.2)	%
Weighted-average shares outstanding-diluted		335,065		335,463		(398)	(0.1)	%		335,983		296,283		39,700	13.4	%
Net loss attributable to common stockholders per common share-basic and diluted	$	(0.05)	$	(0.13)	$	0.08	61.5	%	$	(0.27)	$	(0.17)	$	(0.10)	(58.8)	%

NM = Not meaningful

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Total Revenues. Total revenues for the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, in aggregate, increased by $4.4 million and for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, total revenues increased by $47.8 million, primarily due to the factors described below.

Rental Revenues. Rental revenues are comprised of rental income, straight-line rent, and amortization of above- and below-market lease assets and liabilities. For the three months ended September 30, 2025 as compared to the three months ended June 30, 2025, in aggregate, total rental revenues increased by $4.5 million primarily due to the increase in non-same store revenues resulting from net growth in our portfolio. For the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, in aggregate, total rental revenues increased by $55.9 million, primarily due to the increase in non-same store revenues resulting from significant net growth in our portfolio. See "Same Store Portfolio Results of Operations" below for further details of the same store revenues.

The following table presents the components of our consolidated rental revenues:


	For the Three Months Ended				Change				For the Nine Months Ended September 30,				Change
($ in thousands)	September 30, 2025		June 30, 2025		$		%		2025		2024		$		%
Rental income	$	110,954	$	106,924	$	4,030	3.8	%	$	322,031	$	265,015	$	57,016	21.5	%
Straight-line rent		1,208		1,022		186	18.2			3,157		5,531		(2,374)	(42.9)
Amortization of above- and below-market intangibles		1,529		1,272		257	20.2			4,117		2,870		1,247	43.4
Total rental revenues	$	113,691	$	109,218	$	4,473	4.1	%	$	329,305	$	273,416	$	55,889	20.4	%

Debt-Related Income. Debt-related income is comprised of interest income and amortization related to our debt-related investments and debt securities. For the three months ended September 30, 2025, as compared to June 30, 2025, in aggregate, total debt-related income remained consistent. For the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, in aggregate, total debt-related income decreased by $8.0 million, primarily due to the repayment of four loans and one security from our investments in real estate debt and securities.

Total Operating Expenses. For the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, in aggregate, total operating expenses increased by $7.5 million, and for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, total operating expenses increased by $56.9 million, primarily due to the factors described below.

Rental Expenses. Rental expenses include certain property operating expenses typically reimbursed by our customers at our commercial properties, such as real estate taxes, property insurance, property management fees, repair and maintenance, and include certain non-recoverable expenses, such as consulting services and tenant leasing costs. Commercial leases that are structured on a "triple net basis", in which customers pay their proportionate share of real estate taxes, insurance, common area maintenance, and certain other operating costs, account for 89.7% of our total leased commercial portfolio, based on number of commercial leases as of September 30, 2025. For the three months ended September 30, 2025, total rental expenses increased by $3.3 million as compared to the three months ended June 30, 2025, primarily due to increase in non-same store rental expenses resulting from net growth in our portfolio. For the nine months ended September 30, 2025, total rental expenses increased by $19.9 million, as compared to the nine months ended September 30, 2024, primarily due to increase in non-same store rental expenses resulting from significant net growth in our portfolio. See "Same Store Portfolio Results of Operations" below for further details of the same store expenses.

Real Estate-Related Depreciation and Amortization. For the three months ended September 30, 2025, as compared to three months ended June 30, 2025, in aggregate, real estate-related depreciation and amortization expense increased by $2.5 million, primarily due to net growth in our portfolio. For the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, in aggregate, real estate-related depreciation and amortization expense increased by $31.1 million, primarily due to significant net growth in our portfolio.

Other Remaining Operating Expenses.In aggregate, the remaining operating expenses increased by $1.7 million for the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, primarily due to an increase of $1.0 million of advisory fees primarily driven by the sale of gross interests related to the DST program. In aggregate, the remaining operating expenses increased by $5.9 million for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, primarily due to an increase in advisory fees of $6.7 million primarily driven by the sale of gross interests related to the DST Program.

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Other Income and Expenses.In aggregate, the remaining items that comprise our net income (loss) had a $30.0 million impact on our net income (loss) for the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, primarily due to the following:

●

an increase in gain on sale of real estate property of $46.2 million driven primarily by the sale of one office property with a large gain during the three months ended September 30, 2025.

Partially offset by:

●

an increase in income tax expense of $8.6 million, primarily driven by activities of our taxable REIT subsidiaries associated with our DST Program and our investments in unconsolidated joint venture partnerships, which resulted in taxable income for the period;

●

an increase in interest expense of $6.6 million driven primarily by an increase in average outstanding borrowings and financing obligations during the period; and

●

an increase in unrealized loss on financing obligations of $3.8 million driven by changes in valuations of properties in our DST Program.

In aggregate, the remaining items that comprise our net income (loss) had a $ (35.9) million impact on our net income (loss) for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, primarily due to the following:

●

an increase in unrealized loss on financing obligations of $45.6 million driven by changes in valuations of properties in our DST Program;

●

an increase in interest expense of $42.4 million driven primarily by an increase in average outstanding borrowings and financing obligations during the period; and

●

a decrease in gain (loss) on extinguishment of debt and financing obligations, net of $22.5 million driven by the recognition of a gain on our financing obligations upon extinguishment when we exercised a purchase option for certain properties in our DST Program during the nine months ended September 30, 2024.

Partially offset by:

●

an increase in gain on sale of real estate property of $56.2 million driven by the sale of four industrial properties and one office property during the nine months ended September 30, 2025, as compared to one partial retail property disposition during the nine months ended September 30, 2024; and

●

an increase in income from unconsolidated joint venture partnerships of $24.0 million primarily driven by positive performance of our investments in unconsolidated joint venture partnerships.

Same Store Portfolio Results of Operations

Property net operating income ("NOI") is a supplemental non-GAAP measure of our property operating results. We define property NOI as rental revenues less operating expenses. While we believe our net income (loss), as defined by GAAP, to be the most appropriate measure to evaluate our overall performance, we consider property NOI to be an appropriate supplemental performance measure. We believe property NOI provides useful information to our investors regarding our results of operations because property NOI reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of properties, such as real estate-related depreciation and amortization, general and administrative expenses, advisory fees, impairment charges, interest expense, gains on sale of properties, other income and expenses, gains and losses on the extinguishment of debt and noncontrolling interests. However, property NOI should not be viewed as an alternative measure of our financial performance since it excludes such items, which could materially impact our results of operations. Further, our property NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating property NOI, therefore, our investors should consider net income (loss) as the primary indicator of our overall financial performance.

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We evaluate the performance of consolidated operating properties we own and manage using a same store analysis because the population of properties in this analysis is consistent from period to period, thereby eliminating the effects of any material changes in the composition of the aggregate portfolio on performance measures. We have defined the same store portfolio to include consolidated operating properties owned for the entirety of both the current and prior reporting periods for which the operations had been stabilized. Unconsolidated properties are excluded from the same store portfolio because we account for our interest in our joint venture partnership using the equity method of accounting; therefore, our proportionate share of income and loss is recognized in income (loss) of our unconsolidated joint venture partnerships on the condensed consolidated statements of operations. Other operating properties not meeting the same store criteria are reflected in the non-same store portfolio. Our same store analysis may not be comparable to that of other real estate companies and should not be considered to be more relevant or accurate in evaluating our operating performance than current GAAP methodology.

The same store operating portfolio for the three months ended September 30, 2025 as compared to the three months ended June 30, 2025 presented below includes 122 properties totaling 24.1 million square feet owned as of April 1, 2025, which represented 84.1% of total rentable square feet as of September 30, 2025. The same store operating portfolio for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 presented below includes 93 properties totaling approximately 19.2 million square feet owned as of January 1, 2024, which represented 66.9% of total rentable square feet as of September 30, 2025.

The following table reconciles GAAP net income (loss) to same store portfolio property NOI for the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, and for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024:


	For the Three Months Ended				For the Nine Months Ended September 30,
(in thousands)	September 30, 2025		June 30, 2025		2025		2024
Net loss attributable to common stockholders	$	(8,284)	$	(22,574)	$	(48,884)	$	(31,615)
Debt-related income		(9,036)		(9,065)		(28,090)		(36,136)
Real estate-related depreciation and amortization		49,339		46,856		142,068		110,991
General and administrative expenses		3,544		3,149		9,598		9,356
Advisory fees		13,166		12,188		36,758		30,089
Acquisition costs and reimbursements		1,793		1,420		4,568		5,560
Income from unconsolidated joint venture partnerships		(15,933)		(15,641)		(35,088)		(11,049)
Interest expense		65,567		58,963		179,914		137,538
Gain on sale of real estate property		(46,711)		(506)		(57,200)		(1,048)
Unrealized loss on debt-related investments		251		-		251		-
Unrealized (gain) loss on DST Program Loans		(3)		1		(17)		164
Unrealized loss (gain) on financing obligations		18,121		14,353		36,612		(8,968)
(Gain) loss on extinguishment of debt and financing obligations, net		(125)		791		666		(21,800)
Provision for current expected credit losses		(308)		(57)		(464)		(1,474)
Other income and expenses		(4,163)		(2,550)		(8,028)		(4,675)
Income tax expense		10,274		1,658		16,570		8,664
Net loss attributable to redeemable noncontrolling interests		(54)		(149)		(329)		(235)
Net loss attributable to noncontrolling interests		(7,216)		(19,773)		(42,932)		(15,413)
Property net operating income	$	70,222	$	69,064	$	205,973	$	169,949
Less: Non-same store property NOI		6,099		3,590		47,220		9,562
Same store property NOI	$	64,123	$	65,474	$	158,753	$	160,387

Our real property markets are aggregated into five reportable property segments: residential, industrial, retail, office and other. Our property segments are based on our internal reporting of operating results used to assess performance based on the type of our properties. These property segments are comprised of the markets by which management and its operating teams conduct and monitor business. See "Note 15 to the Condensed Consolidated Financial Statements" for further information on our segments. Management considers rental revenues and property NOI aggregated by property segment to be an appropriate way to analyze performance.

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The following table includes a breakout of results for our same store portfolio by property segment for rental revenues, rental expenses and property NOI for the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, and the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024:


($ in thousands,	For the Three Months Ended						Change				For the Nine Months Ended September 30,						Change
except per square foot data)	September 30, 2025			June 30, 2025				$	%		2025			2024			$		%
Rental revenues:
Residential	$	42,673		$	42,237		$	436	1.0	%	$	98,020		$	98,597		$	(577)	(0.6)	%
Industrial		32,871			32,963			(92)	(0.3)			78,736			78,697			39	0.1
Retail		15,029			15,245			(216)	(1.4)			45,330			45,550			(220)	(0.5)
Office		10,941			10,454			487	4.7			32,422			30,979			1,443	4.7
Other		3,567			3,459			108	3.1			2,849			2,791			58	2.1
Total same store rental revenues		105,081			104,358			723	0.7			257,357			256,614			743	0.3
Non-same store properties		8,610			4,860			3,750	77.2			71,948			16,802			55,146	NM
Total rental revenues	$	113,691		$	109,218		$	4,473	4.1	%	$	329,305		$	273,416		$	55,889	20.4	%
Rental expenses:
Residential	$	(21,939)		$	(20,950)		$	(989)	(4.7)	%	$	(50,109)		$	(48,743)		$	(1,366)	(2.8)	%
Industrial		(8,101)			(7,918)			(183)	(2.3)			(19,688)			(19,698)			10	0.1
Retail		(3,965)			(3,806)			(159)	(4.2)			(11,967)			(11,792)			(175)	(1.5)
Office		(5,394)			(4,728)			(666)	(14.1)			(15,656)			(14,844)			(812)	(5.5)
Other		(1,559)			(1,482)			(77)	(5.2)			(1,184)			(1,150)			(34)	(3.0)
Total same store rental expenses		(40,958)			(38,884)			(2,074)	(5.3)			(98,604)			(96,227)			(2,377)	(2.5)
Non-same store properties		(2,511)			(1,270)			(1,241)	(97.7)			(24,728)			(7,240)			(17,488)	NM
Total rental expenses	$	(43,469)		$	(40,154)		$	(3,315)	(8.3)	%	$	(123,332)		$	(103,467)		$	(19,865)	(19.2)	%
Property NOI:
Residential	$	20,734		$	21,287		$	(553)	(2.6)	%	$	47,911		$	49,854		$	(1,943)	(3.9)	%
Industrial		24,770			25,045			(275)	(1.1)			59,048			58,999			49	0.1
Retail		11,064			11,439			(375)	(3.3)			33,363			33,758			(395)	(1.2)
Office		5,547			5,726			(179)	(3.1)			16,766			16,135			631	3.9
Other		2,008			1,977			31	1.6			1,665			1,641			24	1.5
Total same store property NOI		64,123			65,474			(1,351)	(2.1)			158,753			160,387			(1,634)	(1.0)
Non-same store properties		6,099			3,590			2,509	69.9			47,220			9,562			37,658	NM
Total property NOI	$	70,222		$	69,064		$	1,158	1.7	%	$	205,973		$	169,949		$	36,024	21.2	%
Same store average percentage leased:
Residential		93.0	%		92.7	%						92.4	%		92.0	%
Industrial		96.0			97.2							96.2			97.8
Retail		96.7			96.1							96.1			96.9
Office		78.0			79.7							78.5			78.2
Other		84.5			83.4							84.6			79.7
Same store average annualized base rent per square foot:
Residential	$	28.85		$	28.84						$	27.93		$	28.36
Industrial		7.36			7.24							7.76			7.36
Retail		21.03			20.83							21.03			20.07
Office		38.70			38.33							38.70			38.10
Other		18.86			18.86							23.68			23.84

NM = Not meaningful

Residential Segment.For the three months ended September 30, 2025, our residential segment same store property NOI decreased by $0.6 million, as compared to the three months ended June 30 2025, primarily due to increased operating expenses at various properties. For the nine months ended September 30, 2025, our residential segment same store property NOI decreased by $1.9 million, as compared to the nine months ended September 30, 2024, primarily due to reduced market rents and increased rent concessions as well as increased operating expenses.

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Industrial Segment. For the three months ended September 30, 2025, our industrial segment same store property NOI remained consistent as compared to the three months ended June 30, 2025. For the nine months ended September 30, 2025, our industrial segment same store property NOI remained consistent as compared to the nine months ended September 30, 2024.

Retail Segment.For the three months ended September 30, 2025, our retail segment same store property NOI decreased by $0.4 million as compared to June 30, 2025, primarily due to reduced percentage rent at two of our properties and early termination fee income at one of our properties during the second quarter. For the nine months ended September 30, 2025, our retail segment same store property NOI decreased by $0.4 million, as compared to the nine months ended September 30, 2024, primarily due to reduced occupancy at our 270 Center property.

Office Segment.For the three months ended September 30, 2025, our office segment same store property NOI decreased by $0.2 million as compared to the three months ended June 30, 2025, primarily due to reduced occupancy at various properties. Our office segment same store property NOI increased by $0.6 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to increased occupancy at various properties.

Other Segment.For the three months ended September 30, 2025, our other segment same store property NOI remained consistent as compared to the three months ended June 30, 2025. For the nine months ended September 30, 2025, our other segment same store property NOI remained consistent as compared to the nine months ended September 30, 2024.

ADDITIONAL MEASURES OF PERFORMANCE

Funds From Operations ("FFO") and Adjusted Funds From Operations ("AFFO")

We believe that FFO and AFFO, in addition to net income (loss) and cash flows from operating activities as defined by GAAP, are useful supplemental performance measures that our management uses to evaluate our consolidated operating performance. However, these supplemental, non-GAAP measures should not be considered as alternatives to net income (loss) or to cash flows from operating activities as indications of our performance and are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders. No single measure can provide users of financial information with sufficient information and only our disclosures read as a whole can be relied upon to adequately portray our financial position, liquidity and results of operations. In addition, other REITs may define FFO, AFFO and similar measures differently and choose to treat certain accounting line items in a manner different from us due to specific differences in investment and operating strategy or for other reasons.

FFO. As defined by the National Association of Real Estate Investment Trusts ("NAREIT"), FFO is a non-GAAP measure that excludes certain items such as real estate-related depreciation and amortization. We believe FFO is a meaningful supplemental measure of our operating performance that is useful to investors because depreciation and amortization in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. By excluding gains or losses on the sale of assets, we believe FFO provides a helpful additional measure of our consolidated operating performance on a comparative basis. We use FFO as an indication of our consolidated operating performance and as a guide to making decisions about future investments.

AFFO.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) our performance participation allocation, (ii) unrealized (gain) loss from changes in fair value of financial instruments and (iii) increase (decrease) in financing obligation liability appreciation, as applicable.

Although some REITs may present certain performance measures differently, we believe FFO and AFFO generally facilitate a comparison to other REITs that have similar operating characteristics to us. We believe investors are best served if the information that is made available to them allows them to align their analyses and evaluation with the same performance metrics used by management in planning and executing our business strategy. Neither the SEC, NAREIT, nor any regulatory body has passed judgment on the acceptability of the adjustments used to calculate AFFO. In the future, the SEC, NAREIT, or a regulatory body may decide to standardize the allowable adjustments across the non-traded REIT industry at which point we may adjust our calculations and characterizations of AFFO.

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The following unaudited table presents a reconciliation of GAAP net income (loss) to FFO and AFFO:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands, except per share data)	2025		2024		2025		2024
GAAP net loss	$	(15,554)	$	(3,907)	$	(92,145)	$	(47,263)
Weighted-average shares outstanding-diluted		335,065		317,591		335,983		296,283
GAAP net loss per common share-diluted	$	(0.05)	$	(0.01)	$	(0.27)	$	(0.17)
Adjustments to arrive at FFO:
Real estate-related depreciation and amortization		49,339		39,287		142,068		110,991
Gain on sale of real estate property		(46,711)		(1,048)		(57,200)		(1,048)
Our share of adjustments from joint venture partnerships		191		1,736		1,405		5,097
FFO	$	(12,735)	$	36,068	$	(5,872)	$	67,777
FFO per common share-diluted	$	(0.04)	$	0.11	$	(0.02)	$	0.23
Adjustments to arrive at AFFO:
Unrealized loss (gain) on financial instruments (1)		18,061		(25,994)		36,382		(32,078)
Decrease in financing obligation liability appreciation		-		-		-		(69)
Our share of adjustments from joint venture partnerships		(7,889)		(3,318)		(19,089)		(10,857)
AFFO	$	(2,563)	$	6,756	$	11,421	$	24,773

(1)

Unrealized (gain) loss on financial instruments primarily relates to mark-to-market changes on our derivatives not designated as cash flow hedges, mark-to-market changes on our debt-related investments, DST Program Loans and financing obligations for which we have elected the fair value option, valuation allowance and changes to our provision for current expected credit losses on our debt-related investments and gains or losses on extinguishment of our financing obligations.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our primary sources of capital for meeting our cash requirements include debt financings, cash generated from operating activities, net proceeds from our securities offerings, asset sales and repayments from investments in real estate debt and securities. Our principal uses of funds are distributions to our stockholders, payments under our debt obligations and payments pursuant to the master lease agreements related to properties in our DST Program, redemption payments, acquisition of properties and other investments and capital expenditures. Over time, we intend to fund a majority of our cash needs, including the repayment of debt and capital expenditures, from operating cash flows and refinancings. As of September 30, 2025, we had approximately $167.9 million of borrowings, including scheduled amortization payments, becoming payable within the next 12 months, though the term of the associated mortgage loan agreement for $51.6 million of these borrowings can be extended pursuant to a one-year extension option, subject to certain conditions. Additionally, a $107.0 million mortgage note that matured in October 2025 was repaid in October 2025 using availability under our line of credit. As of September 30, 2025, we had approximately $114.8 million of future minimum lease payments related to the properties in our DST Program coming due in the next 12 months. In addition, we have $235.4 million in unfunded commitments related to our investments in unconsolidated joint venture partnerships and our investments in real estate debt and securities as of September 30, 2025. We expect to be able to repay our principal and interest obligations and fund our capital commitments over the next 12 months and beyond through operating cash flows, refinancings, borrowings under our line of credit, proceeds from capital raise and/or disposition proceeds. Additionally, given the increase in market volatility, changes in interest rates and high inflation, we have experienced a decreased pace of net proceeds raised from our securities offerings, reducing our ability to purchase assets, which may similarly delay the returns generated from our investments and affect our NAV.

Our Advisor, subject to the oversight of our board of directors and, under certain circumstances, the investment committee or other committees established by our board of directors, will evaluate potential acquisitions or dispositions and will engage in negotiations with buyers, sellers and lenders on our behalf. Pending investment in property, debt, or other investments, we may decide to temporarily invest any unused proceeds from our securities offerings in certain investments that are expected to yield lower returns than those earned on real estate assets. These lower returns may affect our NAV and our ability to make distributions to our stockholders. Potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from our securities offerings, proceeds from the sale of assets and undistributed funds from operations.

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As of September 30, 2025, our financial position was strong with 34.9% leverage, calculated as outstanding principal balance of our borrowings, including secured financings on debt-related investments, less cash and cash equivalents, divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships and investments in real estate debt and securities not associated with the DST Program (determined in accordance with our valuation procedures). In addition, our consolidated portfolio was 93.4% occupied (93.8% leased) as of September 30, 2025 and is diversified across 137 properties totaling 28.7 million square feet across 34 geographic markets. Our properties contain a diverse roster of 437 commercial customers, large and small, and has an allocation based on fair value of real properties as determined by our NAV calculation of 39.8% residential, 40.5% industrial, 10.8% retail which is primarily grocery-anchored, 5.9% office and 3.0% other properties in adjacent sectors.

We believe that our cash on-hand, anticipated net offering proceeds, proceeds from our line of credit, and other financing and disposition activities should be sufficient to meet our anticipated future acquisition, operating, debt service, distribution and redemption requirements.

Cash Flows. The following table summarizes our cash flows for the following periods:


	For the Nine Months Ended September 30,
(in thousands)	2025		2024		$ Change
Total cash provided by (used in):
Operating activities	$	90,788	$	30,934	$	59,854
Investing activities		(765,939)		(489,968)		(275,971)
Financing activities		727,403		467,500		259,903
Effect of exchange rate changes on cash, cash equivalents and restricted cash		173		64		109
Net increase in cash, cash equivalents and restricted cash	$	52,425	$	8,530	$	43,895

Net cash provided by operating activities increased by $59.9 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to the difference between $193.9 million sale of our held for sale debt-related investment in January and our current held for sale debt-related investment of $135.7 million.

Net cash used in investing activities increased by $276.0 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to an increase in real estate acquisitions of $438.7 million and an increase in net investment activity in our investments in unconsolidated joint venture partnerships of $67.9 million, partially offset by net principal collection activity on our investments in real estate debt and securities of $106.7 million and an increase in proceeds from disposition of real estate property of $106.9 million.

Net cash provided by financing activities increased by $259.9 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to an increase in net offering activity of $450.5 million, partially offset by a decrease in net borrowing activity of $221.6 million.

Capital Resources and Uses of Liquidity

In addition to our cash and cash equivalents balances available, our capital resources and uses of liquidity are as follows:

Line of Credit and Term Loans. As of September 30, 2025, we had an aggregate of $2.0 billion of commitments under our unsecured credit agreement, including $1.0 billion under our line of credit and $1.0 billion under our two term loans. As of that date, we had: (i) $226.2 million outstanding under our line of credit; and (ii) $1.0 billion outstanding under our term loans. The weighted-average effective interest rate across all of our unsecured borrowings is 4.56%, which includes the effect of the interest rate swap and cap agreements related to $1.0 billion in borrowings under our line of credit and our term loans.

As of September 30, 2025, the unused and available portions under our line of credit were $773.8 million and $213.4 million, respectively. Our $1.0 billion line of credit matures in June 2029, and may be extended pursuant to a one-year extension option, subject to certain conditions, including the payment of extension fees. Our $700.0 million term loan matures in June 2029, and may be extended pursuant to a one-year extension option, subject to certain conditions. Our $300.0 million term loan matures in June 2029, and may be extended pursuant to a one-year extension option, subject to certain conditions. Our line of credit borrowings are available for general corporate purposes, including but not limited to the refinancing of other debt, payment of redemptions, acquisition and operation of permitted investments. Refer to "Note 5 to the Condensed Consolidated Financial Statements" for additional information regarding our line of credit and term loans.

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Mortgage Notes. As of September 30, 2025, we had property-level borrowings of $1.36 billion outstanding with a weighted-average remaining term of approximately 1.9 years. These borrowings are secured by mortgages or deeds of trust and related assignments and security interests in the collateralized properties, and had a weighted-average interest rate of 5.25%. Refer to "Note 5 to the Condensed Consolidated Financial Statements" for additional information regarding the mortgage notes.

Debt Covenants. Our line of credit, term loan and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, our line of credit and term loan agreements contain certain corporate level financial covenants, including leverage ratio, fixed charge coverage ratio and tangible net worth thresholds. These covenants may limit our ability to incur additional debt, or to pay distributions. We were in compliance with our debt covenants as of September 30, 2025.

Leverage. We use financial leverage to provide additional funds to support our investment activities. We may finance a portion of the purchase price of any real estate asset that we acquire with borrowings on a short or long-term basis from banks, life insurance companies and other lenders. We calculate our leverage for reporting purposes as the outstanding principal balance of our borrowings, including secured financings on debt-related investments, less cash and cash equivalents, divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships and investments in real estate debt and securities not associated with the DST Program (determined in accordance with our valuation procedures). We had leverage of 34.9% as of September 30, 2025. Our current target leverage ratio is between 40-60%. Although we will generally work to maintain our targeted leverage ratio, there are no assurances that we will maintain the targeted range disclosed above or achieve any other leverage ratio that we may target in the future. Due to changes in interest rates and increased market volatility, the cost of financing or refinancing our assets may affect returns generated by our investments. Additionally, these factors may cause our borrowing capacity to be reduced, which could similarly delay or reduce benefits to our stockholders.

Future Minimum Lease Payments Related to the DST Program. As of September 30, 2025, we had $2.36 billion of future minimum lease payments related to the DST Program. The underlying interests of each property that is sold to investors pursuant to the DST Program are leased back by an indirect wholly-owned subsidiary of the Operating Partnership on a long-term basis of up to 29 years.

Offering Proceeds. For the nine months ended September 30, 2025, the amount of aggregate gross proceeds raised from our securities offerings (including shares issued pursuant to the distribution reinvestment plans) was $87.2 million ($84.7 million net of direct selling costs).

Distributions. To obtain the favorable tax treatment accorded to REITs, we normally will be required each year to distribute to our stockholders at least 90% of our real estate investment trust taxable income, determined without regard to the deduction for distributions paid and by excluding net capital gains. The payment of distributions is determined by our board of directors and may be adjusted at its discretion at any time. Distribution levels are set by our board of directors at a level it believes to be appropriate and sustainable based upon a review of a variety of factors including the current and anticipated market conditions, current and anticipated future performance and make-up of our investments, our overall financial projections and expected future cash needs. We intend to continue to make distributions on a monthly basis.

For the fourth quarter of 2025, our board of directors authorized monthly distributions to all common stockholders of record as of the close of business on the last business day of each month, or October 31, 2025, November 28, 2025 and December 31, 2025 (each a "Distribution Record Date"). The distributions were authorized at a quarterly rate of $0.10350 per share of each class of our common stock, less the respective distribution fees that are payable monthly with respect to Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares. This quarterly rate is equal to a monthly rate of $0.03450 per share of each class of our common stock, less the respective distribution fees that are payable with respect to Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares. Distributions for each month of the fourth quarter of 2025 have been or will be paid in cash or reinvested in shares of our common stock for those electing to participate in our DRIP following the close of business on the respective Distribution Record Date applicable to such monthly distributions. There can be no assurances that this new distribution rate will be maintained in future periods.

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The following table outlines sources used, as determined on a GAAP basis, to pay total gross distributions (which are paid in cash or reinvested in shares of our common stock through our DRIP) for the periods indicated below:


	For the Nine Months Ended September 30, 2025				For the Nine Months Ended September 30, 2024
($ in thousands)	Amount		Percentage		Amount		Percentage
Distributions:
Paid in cash (1)	$	78,399	76.9	%	$	64,680	72.8	%
Reinvested in shares		23,569	23.1			24,172	27.2
Total (2)	$	101,968	100.0	%	$	88,852	100.0	%
Sources of Distributions:
Cash flows from operating activities	$	78,399	76.9	%	$	30,934	34.8	%
Borrowings		-	-			33,746	38.0
DRIP (3)		23,569	23.1			24,172	27.2
Total (2)	$	101,968	100.0	%	$	88,852	100.0	%

(1)	Includes other cash distributions consisting of: (i) distributions paid to noncontrolling interest holders; and (ii) ongoing distribution fees paid to the Dealer Manager with respect to Class T-R shares, Class S-R shares, Class D-R shares, Class S-PR shares, Class D-PR shares and OP Units.

(2)	Includes distributions paid to holders of OP Units for redeemable noncontrolling interests.

(3)	Stockholders may elect to have their distributions reinvested in shares of our common stock through our DRIP.

For the nine months ended September 30, 2025 and 2024, our FFO was $ (5.9) million, or (5.8)% of our total distributions, and $67.8 million, or 76.3% of our total distributions, respectively. FFO is a non-GAAP operating metric and should not be used as a liquidity measure. However, management believes the relationship between FFO and distributions may be meaningful for investors to better understand the sustainability of our operating performance compared to distributions made. Refer to "Additional Measures of Performance" above for the definition of FFO, as well as a detailed reconciliation of our GAAP net income (loss) to FFO.

Redemptions.Below is a summary of redemptions and repurchases pursuant to our share redemption program for the nine months ended September 30, 2025 and 2024. All eligible redemption requests were fulfilled for the periods presented. Eligible redemption requests are requests submitted in good order by the request submission deadline set forth in the share redemption program. Our board of directors may make exceptions to, modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders. Refer to Part II, Item 2. "Unregistered Sales of Equity Securities and Use of Proceeds-Share Redemption Program" for detail regarding our share redemption program.


	For the Nine Months Ended September 30,
(in thousands, except for per share data)	2025		2024
Number of shares redeemed or repurchased		12,351		19,811
Aggregate dollar amount of shares redeemed or repurchased	$	94,466	$	153,228
Average redemption or repurchase price per share	$	7.65	$	7.74

For the nine months ended September 30, 2025 and 2024, we received and redeemed 100% of eligible redemption requests for an aggregate amount of approximately $94.5 million and $153.2 million, respectively, which we redeemed using cash flows from operating activities in excess of our distributions paid in cash, cash on hand, proceeds from our securities offerings, proceeds from the disposition of properties, and borrowings under our line of credit. We generally repay funds borrowed from our line of credit from a variety of sources including: cash flows from operating activities in excess of our distributions; proceeds from our securities offerings; proceeds from the disposition of properties and other longer-term borrowings.

For purposes of the share redemption program, redemption requests received in a month are included on the last day of such month because that is the last day the stockholders have rights in the Company. We record these redemptions in our financial statements as having occurred on the first day of the next month following receipt of the redemption request because shares redeemed in a given month are considered outstanding through the last day of the month.

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CRITICAL ACCOUNTING ESTIMATES

Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our unaudited condensed consolidated financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the condensed consolidated 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 condensed consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. For a detailed description of our critical accounting estimates, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Form 10-K. As of September 30, 2025, our critical accounting estimates have not changed from those described in our 2024 Form 10-K.

SUBSEQUENT EVENTS

See "Note 16 to the Condensed Consolidated Financial Statements" for information regarding subsequent events.

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