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

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

Certain Definitions

Except as otherwise specified in this quarterly report on Form 10-Q (the "Quarterly Report"), the terms "we," "us," "our" and the "Company" refer to AB Commercial Real Estate Private Debt Fund, LLC, a Delaware limited liability company. We refer to AllianceBernstein L.P., our investment adviser, as "AB" or the "Investment Manager," and to State Street Bank and Trust Company or its affiliates, our administrator, as the "Administrator." The term "Members" refers to holders of our limited liability company units, which we refer to herein as the "Units". The term "LLC Agreement" refers to our Second Amended and Restated Limited Liability Company Operating Agreement.

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about the Company, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," "outlook," "potential," "predicts" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled "Item 1A. Risk Factors" of the Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These forward-looking statements apply only as of the date of this Quarterly Report. Moreover, we assume no duty and do not undertake to update the forward-looking statements.

The following analysis of the Company's financial condition and results of operations should be read in conjunction with the Company's financial statements and the related notes thereto contained elsewhere in this Quarterly Report.

Overview

We are a Delaware limited liability company formed on June 1, 2021 to operate as a private investment fund generally for qualified US investors. We have elected and intend to qualify annually to be taxed as a REIT under the Code. Our Board was appointed to serve the Company. However, pursuant to the Management Agreement between us and the Investment Manager, the Board delegated to the Investment Manager all rights, power, authority, discretion, duties and responsibilities in respect of the Company, including without limitation, responsibility for the investment activities of the Company and the day-to-day management and administration of the Company. The Board remains responsible for overseeing the performance of the Investment Manager. The investment management services provided by the Investment Manager are in accordance with our investment objectives and policies, subject to the oversight by the Board. To achieve certain tax, regulatory and/or administrative efficiencies, we may invest through or otherwise utilize one or more Subsidiaries that are managed and/or sponsored by the Investment Manager or its affiliates. The discussion in this Annual Report relating to investments made by us or other actions may relate to such investments or other actions made by a Subsidiary, as applicable. Our investment objective is to generate attractive risk-adjusted returns through a diversified portfolio of commercial real estate-related investments that are predominantly credit investments secured by commercial real estate located in the United States, principally through investments made pursuant to the investment program described herein.

We, directly or indirectly (including through a Subsidiary), invest in Portfolio Investments that may include, without limitation, the following: Directly Originated Loans; legacy, new issue, and single-borrower CMBSs; commercial real estate-related securities; performing, sub-performing and non-performing loans; and net lease assets. While we intend to focus primarily on loans directly secured by commercial real estate-related assets, we also have the flexibility, subject to compliance with the REIT qualification requirements, to invest in other types of debt investments, including unsecured debt of entities that directly or indirectly own real property or real estate-related debt. We may also invest in commercial real estate-related preferred and common equity interests where doing so is in keeping with our investment objective. We retain ultimate discretion on our investment profile.

Our Private Offering

The Company currently falls outside of the definition of an "investment company" under the Investment Company Act, by satisfying the conditions of Section 3(c)(5)(C) of the Investment Company Act, which excludes from the definition of an investment company persons that are primarily engaged in investing in interests in real estate. We expect to conduct private offerings of our Units to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). Our initial private offering of Units (the "Private Offering") was conducted in reliance on Regulation D under the Securities Act. Any investors in our Private Offering were required to be "accredited investors" as defined in Regulation D of the Securities Act. The criteria required of Regulation D under the Securities Act may not apply to investors in subsequent offerings. Investments by U.S. investors in the Private Offering were also subject to state securities laws. Further, due to certain anti-money laundering restrictions and economic sanctions concerns, Units may not be offered, sold, transferred, or delivered, directly or indirectly, to certain unacceptable investors. Our LLC Agreement also imposes additional restrictions upon the ownership of the Units to ensure, among other things, that we qualify and maintain our status as a REIT under the Code.

We entered into separate subscription agreements with a number of investors for the Private Offering. Each investor has made a capital commitment (a "Capital Commitment") to purchase Units pursuant to a subscription agreement (a "Subscription Agreement"). We refer to the initial date on which Capital Commitments were first accepted by or on behalf of the Company from Members as the "Initial Closing," and each such date on which Capital Commitments are accepted as a "closing." Thereafter,

subsequent closings for additional Capital Commitments from new and existing Members may generally be held as of the end of the calendar quarter, subject to our discretion to hold closings at any other time.

Each Capital Commitment made by a Member at a closing has its own lock-up period (a "Lock-Up Period"). The Lock- Up Period for each Capital Commitment is the period commencing on the applicable closing and ending on the third anniversary of such closing. Upon the expiration of a Member's Lock-Up Period, such Member may choose to be released from its Remaining Commitment (as defined below), subject to certain post-commitment period obligations.

A Member's "Remaining Commitment" equals such Capital Commitment reduced by amounts contributed to the Company in respect of capital calls and post-commitment period capital calls and increased by (i) the amount of any unused capital contributions that are returned to such Member pursuant to the last sentence of the following paragraph and (ii) distributions to such Member that represent a return of capital (and not Current Income (as defined below)). Each Capital Commitment made by a Member is accounted for separately, including for purposes of determining Remaining Commitments and capital calls. In no event will a Member be required to make a capital contribution in respect of its Capital Commitment in excess of its Remaining Commitment.

Each Capital Commitment (or a portion thereof, as applicable) of a Member lasts until (i) the Company determines to repurchase all or any portion of such Member's Units that are attributable to such Capital Commitment (or such portion thereof, as applicable), as discussed below (which for the avoidance of doubt, will not become available pursuant to a Member's repurchase request until the expiration of the Lock-Up Period), (ii) such Member has chosen to be released from its Remaining Commitments after the expiration of its Lock-Up Period (except with respect to post commitment period obligations) or (iii) the Company has elected to wind up.

Investors are required to purchase Units each time we provide notice of a capital call, which notice is delivered at least 5 business days prior to the date on which a capital call is due, in an aggregate amount not exceeding their respective Capital Commitments. All capital calls generally are made pro rata in accordance with the investors' Capital Commitments.

We currently have one class of Units. We may issue additional classes of Units in the future (or we may enter into agreements with certain Members that alter, modify or change the terms of the Units held by such Members), which may differ from the Units described herein, including, without limitation, in respect of a Related Investor. New classes of Units may be established by us without providing prior notice to, or receiving consent from, existing Members. The terms of such classes will be determined by us in our sole discretion. See Item 13. Certain Relationships and Related Transactions, and Director Independence-Transactions with Related Persons; Policies and Procedures for Review of Related Party Transactions-The Investment Manager-Diverse Member Group of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

We may, directly or indirectly, borrow for working capital purposes, including, but not limited to, paying fees and expenses or managing cash flows from Capital Commitments. In connection therewith, we will be authorized to pledge, charge, mortgage, assign, transfer and grant security interests to a lender in (i) all Capital Commitments, our right to initiate drawdowns and collect the capital contributions of the Members and to enforce their obligations to make capital contributions to purchase Units, and (ii) a Company collateral account into which the payment by the Members of their remaining Capital Commitment are to be made. We refer to any such financing as a "Commitment Facility." In connection with any Commitment Facility, and as further described in the LLC Agreement, each Member remains absolutely and unconditionally obligated to fund capital calls duly issued by us or by the lender under a Commitment Facility (including, without limitation, those required as a result of the failure of any other Member to fund capital calls), without setoff, counterclaim or defense, including without limitation any defense of fraud or mistake, or any defense under any bankruptcy or insolvency law, including Section 365 of the Bankruptcy Code, subject in all cases to the Members' rights to assert such claims against us in one or more separate actions; provided that, any such claims are subordinate to all payments due to the lenders under a Commitment Facility.

A Member that defaults in respect of its remaining Capital Commitment may be subject to certain remedies, including forfeiture of its Units.

The NAV per Unit is calculated by the Administrator (as defined below) as of each Valuation Date pursuant to the procedures determined by the Investment Manager. Generally, the last business day of each calendar quarter or such other date designated by us to accept the purchase of Units, as determined in our sole discretion, is the "Valuation Date." The NAV per Unit is determined by dividing the value of the total assets of the Company less the liabilities of the Company by the total number of Units outstanding as at any Valuation Date. Liabilities are determined based upon generally accepted accounting principles, subject to our right, in consultation with the Investment Manager, to provide reserves or holdbacks for estimated accrued expenses, liabilities or contingencies, including general reserves or holdbacks for unspecified contingencies (even if not required by generally accepted accounting principles). In calculating the NAV per unit, income and expenditure are treated as accruing from day-to-day.

In connection with any capital call, the per Unit price for the corresponding purchase of Units is determined by the Company in accordance with the policies described herein. In particular, in the event that Units are issued as of the first business day of a calendar quarter, the per Unit price of such Units is equal to the NAV per Unit established by the Company as of the immediately preceding Valuation Date (i.e., the last business day of the immediately preceding calendar quarter). In the event that Units are issued on any day that is not the first business day of the calendar quarter, we use the methods described above, to the extent reasonably possible, to determine the NAV per Unit as of such issuance date.

Income

Our investment objective is to generate attractive risk-adjusted returns through investments primarily in loans secured by high quality commercial real estate properties located in the United States. The Investment Manager seeks to prioritize capital preservation and stable income for investors by building a portfolio of investments primarily through Directly Originated Loans secured by high-quality commercial real estate properties, including senior mortgage loans, mezzanine loans, and B-notes. Our investment strategy also allows for the acquisition of discounted loans with room to restructure in order to improve recoverability above the price paid or achieve an enhanced income stream. To a lesser extent, the Investment Manager invests in the following: legacy, new issue, and single-borrower CMBSs; commercial real estate-related securities; performing, sub-performing and non-performing/distressed loans; and net lease assets. While we focus mainly on loans directly secured by commercial real estate-related assets, we will also have the flexibility to invest in other types of debt investments, including unsecured debt of entities that directly or indirectly own real property or real estate-related debt, and may invest in commercial real estate-related preferred and common equity interests where doing so is in keeping with the investment objective. This embedded diversification enables the Team to invest across real estate debt opportunities in various stages of an economic cycle, and to capitalize on dislocations in the markets over time.

We generate revenue in the form of cash dividends, interest and other similar cash distributions received by the Company in respect of its investments, as well as principal repayment or sale or distribution proceeds in respect of such investments.

Expenses

Our primary operating expenses include the payment of fees to the Investment Manager pursuant to the Management Agreement and the LLC Agreement, payment of fees to the Administrator pursuant to the Administration Agreement and reimbursement of the Investment Manager or its affiliates for Organizational Expenses. For a description of fees payable to our Investment Manager under the Management Agreement and the LLC Agreement, see Item 1. Business-Investment Manager Fees of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

We will reimburse the Investment Manager for Organizational Expenses. Pursuant to an Expense Limitation Agreement (as amended), the Investment Manager may determine to cap Organizational Expenses and Company Expenses in the aggregate that are borne by the Company to the extent necessary to prevent Organizational Expenses and Company Expenses, on an annualized basis, from exceeding a percentage determined by the Investment Manager in its discretion. This cap will be maintained until the third anniversary of the Initial Closing Date, which is November 5, 2024. Pursuant to the cap, any fees waived and expenses borne by the Investment Manager may be reimbursed by the Company during the period of time following the end of the amortization period and ending on the third anniversary of the start of the amortization period, provided that no reimbursement payment will be made that would cause the Company's expenses to exceed the same cap. Extraordinary expenses (including, but not limited to, litigation expenses, indemnification expenses, lender liability expenses and other expenses not incurred in the ordinary course of the Company's business), the Management Fee, the Incentive Fee, interest expenses, financing costs and expenses, reserves for and costs associated with determining current expected credit losses, loan servicing fees and expenses and other fees and expenses incurred in connection with the acquisition, disposition, ownership and operating of the Portfolio Investments will not be included as Company Expenses for purposes of calculating the expense cap.

The Administrator receives negotiated fees paid out of our assets based upon the nature and the extent of services performed by the Administrator. We reimburse the Administrator for all reasonable out-of-pocket expenses.

We bear all direct costs, fees and expenses incurred in connection with our management and operations, including but not limited to the following, which we refer to as "Company Expenses":

Generally, Company Expenses (other than any expenses that we determine in our sole discretion should be reflected in the NAV of the Units held by a particular Member) are reflected in the NAV of Units of all of the Members on a pro rata basis. To the extent that Company Expenses are borne by the Investment Manager or its affiliates, we reimburse such party for such expenses.

Portfolio Summary

As of September 30, 2025, the Company had made investments in 16 loans receivables with a loan balance of $1,056 million along with investments in 3 unconsolidated equity investments for an initial consideration of $92.8 million. These loans had a weighted average interest rate of 7.22% and weighted average remaining term of 1.78 years.

Portfolio Investment Activity for the three months ended September 30, 2025

During the three months ended September 30, 2025, the Company had one payoff and originated three loans. In addition, lenders foreclosed on Loan 7, which the Company previously classified as a loan receivable held for investment. As part of the foreclosure, the Company obtained an equity ownership interest in the underlying asset and began accounting for the investment under the equity method.

Loan 11 was paid off at par during the period.

Loans 21, 22 and 23 were originated, and are described in greater detail under "Portfolio Information."

Portfolio Information

The table below sets forth select information about the assets in the Company's portfolio as of September 30, 2025:

As of September 30, 2025 the concentration of mortgage loan receivables by property type, geographic location, and loan to value ("LTV") are as follows:

As of September 30, 2025, the Company had made investments in commercial debt securities. The table below sets forth select information about these assets in the Company's portfolio as of September 30, 2025:

As of September 30, 2025, the Company held 7.12% , 6.98% and 6.33% interests in AB Commercial Real Estate Debt Fund, SICAV-SIF ("AB CRED II"), AB Commercial Real Estate Debt Fund III, SICAV-SIF S.C.Sp. ("AB CRED III") and Horton Plaza JV LLC("Horton Plaza"), respectively, entities managed by affiliates of the Investment Manager and unconsolidated joint ventures for which the Company is not the primary beneficiary, at their carrying values of $3.3 million, $23.1 million and $18.1 million, respectively.

Factors Impacting Operating Results

Our results of operations are affected by a number of factors and primarily depend on, among other things, the level of the interest income generated by the Company from targeted assets, the market value of our assets and the supply of, and demand for, real estate-related loans, including mezzanine loans, first mortgage loans, subordinated mortgage loans, preferred equity investments and other loans related to high quality commercial real estate in the United States, and the financing and other costs associated with our business. Interest income and borrowing costs of the Company may vary as a result of changes in interest rates, which could impact the net interest we receive on our assets. Our operating results may also be impacted by conditions in the financial markets and unanticipated credit events experienced by borrowers under our loan assets.

Use of Leverage

The Company deploys moderate amounts of leverage as part of its operating strategy, which may consist of borrowings under first mortgage financings, warehouse facilities, term loans, repurchase agreements and other credit facilities. While borrowing and leverage present opportunities for increasing total return, they may have the effect of potentially creating or increasing losses.

Critical Accounting Policies and Use of Estimates

This discussion of our operating plans is based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. In addition to the discussion below, we describe our critical accounting policies in the notes to our financial statements.

Investments

Loan Receivables

The Company originates and purchases commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost.

Provision for Loan Losses

The Company uses a current expected credit loss model ("CECL") for estimating the provision for loan losses on its loan portfolio. The CECL model requires the consideration of possible credit losses over the life of an instrument and includes a portfolio-based component and an asset-specific component. In compliance with the CECL reporting requirements, the Company supplemented its existing credit monitoring and management processes with additional processes to support the calculation of the CECL reserves. The credit loss model is a forward-looking, econometric, commercial real estate loss forecasting tool. It is comprised of a probability of default model and a loss given default model that, layered together with user's loan-level data, selected forward-looking macroeconomic variables, and pool-level mean loss rates, produces life of loan expected losses at the loan and portfolio level. Where management has determined that the credit loss model does not fully capture certain external factors, including portfolio trends or loan-specific factors, a qualitative adjustment to the reserve, is recorded.

The asset-specific reserve component relates to reserves for losses on individually impaired loans. The Company evaluates each loan for impairment at least quarterly. Impairment occurs when it is deemed probable that the Company will not be able to collect all principal amounts due according to the contractual terms of the loan. If the loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan to the present value of the expected future cash flows discounted at the loan's effective rate or the fair value of the collateral, less the estimated costs to sell, if recovery of the Company's investment is expected solely from the collateral. The Company may use the direct capitalization rate valuation methodology or the sales comparison approach to estimate the fair value of the collateral for such loans and in certain cases will obtain external appraisals and take into account potential sale bids. Determining fair value of the collateral may take into account a number of assumptions including, but not limited to, cash flow projections, market capitalization rates, discount rates and data regarding recent comparable

sales of similar properties. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties.

The Company's loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis. Specifically, a property's operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property's liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower's competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic submarket in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management and underwriting personnel, who utilize various data sources, including (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers' business plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and other market data and ultimately presented to management for approval.

The allowance for credit losses was $4.7 million and $6.1 million at September 30, 2025 and December 31, 2024, respectively, and is included in the accompanying consolidated balance sheets. During the three and nine months ended September 30, 2025 this allowance was impacted by a decrease of $0.6 million and $1.0 million, respectively in provision for credit losses as reflected in the accompanying consolidated statements of income.

Non-accrual loans

The Company designates non-accrual loans generally when (i) the principal or coupon interest components of loan payments become 90-days past due or (ii) in the opinion of the Company, it is doubtful the Company will be able to collect all amounts due according to the contractual terms of the loan. Interest income on non-accrual loans in which the Company reasonably expects a full recovery of the loan's outstanding principal balance is recognized when received in cash. Otherwise, income recognition will be suspended and any cash received will be applied as a reduction to the amortized cost. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and future principal and coupon interest are reasonably assured to be received in accordance with the contractual loan terms. A loan will be written off when management has determined it is no longer realizable and deemed non-recoverable. The Company has no non-accrual loans as of September 30, 2025 and one non-accrual loan as of December 31, 2024.

Equity Method Investments

The Company accounts for its investments in unconsolidated entities under the equity method of accounting. The Company applies the equity method by initially recording these investments at cost, as equity method investments, subsequently adjusted for equity in earnings and cash contributions and distributions. In some instances, the reporting period of the investments' financial statements lags the Company's financial reporting period, but such lag is never more than three months. In the event there is an outside basis portion of the Company's equity method investments, it is amortized over the anticipated useful lives of the underlying entities' tangible and intangible assets acquired and liabilities assumed.

In the third quarter of 2025, the Company received a 6.33% interest, in one VIE through foreclosure of a mixed use property underlying a delinquent commercial mortgage loan. The entity was determined to be a VIE but the Company was not determined to be the primary beneficiary; as a result, the investment in the entity is considered an equity method investment.

The Company evaluates equity investments on a periodic basis to determine if there are any indicators that the value of the equity investment may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, we measure the charge as the excess of the carrying value of our investment over its estimated fair value.

The Company classifies distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor's cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investments and is classified as cash inflows from investing activities.

Accounting for Securities

Security transactions are recorded on a trade-date basis. We measure realized gains or losses from the repayment or sale of investments using the specific identification method. The amortized cost basis of investments represents the original cost adjusted for the accretion/amortization of discounts and premiums and upfront loan origination fees. We report changes in fair value of investments that are measured at fair value as a component of net change in unrealized appreciation (depreciation) on investments in the statement of operations.

Revenue Recognition

Interest income, adjusted for amortization of market premium and accretion of market discount, is recorded on an accrual basis to the extent that we expect to collect such amounts. Original issue discount, principally representing the estimated fair value of detachable equity or warrants obtained in conjunction with our debt investments, and market discount or premium are capitalized and accreted or amortized into income over the life of the respective security using the effective interest method. Loan origination fees received in connection with the closing of investments are reported as unearned income which is included as amortized cost of the investment; the unearned income from such fees is accreted over the contractual life of the loan based on a straight line up to the maturity date of the loan. Upon prepayment of a loan or debt security, any prepayment penalties, unamortized loan origination fees, and unamortized market discounts are recorded as income.

Management Fees

We accrue for the Management Fee and Incentive Fee as part of the quarterly valuation of the Company, or as otherwise provided in the LLC Agreement.

Federal Income Taxes

We have elected and intend to qualify annually to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year that began on the date of our Initial Closing. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, to Members. Our intention is to adhere to the REIT qualification requirements and to maintain our qualification for taxation as a REIT.

As a REIT, we are generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to Members. If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to U.S. federal income taxes at regular corporate rates and we may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, we may be subject to certain state and local taxes on our income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities is subject to U.S. federal, state, and local income taxes at the applicable rates.

We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We perform an annual review for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the financial statements.

Deferred Financing Costs

Deferred financing costs include capitalized expenses related to the closing of the debt obligations. Amortization of deferred financing costs is computed on the straight-line basis over the contractual term for the Credit Facility, Repurchase Agreement and Notes Payable. The amortization of such costs is included in interest expense in the consolidated statements of income, with any unamortized amounts included in deferred financing costs on the consolidated balance sheets.

Results of Operations:

The following is a summary of the Company's operating results for the three and nine months ended September 30, 2025 and 2024 (in '000s):

Net Interest Income (Loss)

Net interest income decreased by $0.7 million during the three months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. The decrease was due primarily to a sharper increase in the interest expense, which outpaced the growth in interest income.

Interest income increased by $0.3 million during the three months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. The increase was due primarily to a $205.0 million increase in the average principal balance of our loan portfolio. This increase was partially offset by lower index rates, and assets on non-accrual status.

Interest expense increased by $1.0 million during the three months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. The increase was driven by a $160.1 million increase in the weighted average portfolio financing for the corresponding period for the previous fiscal year. The proceeds from our financing facilities were used to close new investments and fund draws under previously closed loans.

Net interest income decreased by $1.9 million during the nine months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. The decrease was primarily due to lower index rates, including Term SOFR, and the placement of Loan 7 on non-accrual status prior to the foreclosure described in further detail under "Portfolio Investment Activity for the three months ended September 30, 2025."

Interest income increased by $1.7 million during the nine months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. The increase was due primarily to a $211.1 million increase in the average principal balance of our loan portfolio, as a result of capital deployment from financing proceeds.

Interest expense increased by $3.5 million during the nine months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. The increase was driven by a $149.6 million increase in the weighted average portfolio financing for the corresponding period for the previous fiscal year. The proceeds from our financing facilities were used to close new investments and fund draws under previously closed loans.

Operating Expenses

Total operating expenses decreased by $0.7 million during the three months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. This decrease was primarily due to a decrease in incentive fees.

Total operating expenses decreased by $1.0 million during the nine months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. This decrease was primarily due to a decrease in incentive fees.

Total Other Income

Total other income decreased by $0.9 million during the three months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. The decrease was primarily driven by a decrease of income from equity method investments.

Total other income decreased by $3.7 million during the nine months ended September 30, 2025, as compared to the corresponding period for the previous fiscal year. The decrease was primarily driven by a decrease of income from equity method investments.

Net Income (Loss)

During the three months ended September 30, 2025, the net income was approximately $3.3 million lower, as compared to the corresponding period for the previous fiscal year. This decrease was primarily driven by an increase in provision for credit losses during the three months ended September 30, 2025, as compared to a decrease over the corresponding period for the previous fiscal year, as well as a decrease in income from equity method investments.

During the nine months ended September 30, 2025, the net income was approximately $4.3 million lower, as compared to the corresponding period for the previous fiscal year. This decrease was primarily driven by a decrease in income from equity method investments.

Cash Flows Provided by Operating Activities

During the nine months ended September 30, 2025, cash flows provided by operating activities were approximately $18.8 million, primarily driven by net income.

Cash Flows Used for Investing Activities

During the nine months ended September 30, 2025, cash flows used for investing activities were approximately $202.1 million, primarily driven by the origination of mortgage loan receivables which was partially offset by the repayment of mortgage loan receivables.

Cash Flows Provided by Financing Activities

During the nine months ended September 30, 2025, cash flows provided by financing activities were approximately $216.2 million, primarily driven by credit facility and repurchase agreement borrowings partially offset by paydowns, and distribution paid.

Financial Condition, Liquidity and Capital Resources

We expect to generate cash primarily from (i) cash flows from our operations, (ii) any financing arrangements now existing or that the Company may enter into in the future and (iii) any future offerings of our equity or debt securities. We may fund a portion of our investments through borrowings from banks, or other large global institutions such as insurance companies, and issuances of senior securities.

The Company's primary use of funds from a credit facility will be investments in Portfolio Investments and the payment of operating expenses.

Cash and cash equivalents as of September 30, 2025, taken together with the Company's uncalled Capital Commitments of $407.8 million and the potential for additional borrowings under the Company's Credit Facility and the Company's Repurchase Agreement, is expected to be sufficient for the Company's investing activities and to conduct the Company's operations for at least the next twelve months.

Capital Commitments

The Company entered into separate subscription agreements with a number of investors for the Private Offering. Each investor will make a capital commitment (a "Capital Commitment") to purchase Units pursuant to a subscription agreement (a "Subscription Agreement"). We refer to the initial date on which Capital Commitments were first accepted by or on behalf of the Company from Members as the "Initial Closing," and each such date on which Capital Commitments are accepted as a "closing." Thereafter, subsequent closings for additional Capital Commitments from new and existing Members may generally be held as of the end of the calendar quarter, subject to our discretion to hold closings at any other time. As of September 30, 2025, the Company received capital commitments of $790.8 million, of which $407.8 million remained unfunded. For the nine months ended September 30, 2025 and year ended December 31, 2024 the Company received a request to redeem 1,221,696 and 433,789 common units, respectively.

For further details, see "Note 3. Capital Commitments," to the Company's financial statements.

State Street Credit Facility

On December 14, 2021, the Company entered into the State Street Credit Agreement to establish the State Street Credit Facility with the State Street Credit Facility Administrative Bank and the State Street Credit Facility Lenders. The maximum principal amount (the "Maximum Commitment") of the Credit Facility was initially $65 million. The Maximum Commitment may be increased from time to time upon request of the Company to an amount not exceeding $140 million, subject to certain terms and conditions as described in the State Street Credit Agreement. As of December 31, 2024, the Maximum Commitment was $100 million.

As of December 31, 2024, borrowings under the State Street Credit Facility bear interest, at the Company's election at the time of drawdown, at a rate per annum equal to (i) with respect to SOFR Rate Loans, Adjusted SOFR (SOFR plus the applicable spread based upon the interest period of one-month in the amount of 0.0%, three-month in the amount of 0.0% and nine month in the amount of 0.0%) for the applicable Interest Period; and (ii) with respect to reference rate loans, the reference rate in effect from day to day which is the Federal Funds Rate plus 0.50%.

On December 14, 2022, the Company entered into an amendment (the "First Amendment") to the State Street Credit Agreement. The First Amendment, among other changes, (i) extended the maturity date of the State Street Credit Facility from December 13, 2022 to December 12, 2023 and (ii) provided for a mechanism to temporarily increase the Maximum Commitment on an uncommitted basis.

On December 12, 2023, the Company entered into an amendment (the "Second Amendment") to the State Street Credit Agreement. The Second Amendment, among other changes, (i) extended the maturity date of the State Street Credit Facility from December 12, 2023 to December 10, 2024 and (ii) increased the Borrowing Base from 60 percent of the aggregate Unfunded Capital Commitments to 70 percent of the aggregate Unfunded Capital Commitments.

On December 10, 2024, the Company entered into an amendment (the "Third Amendment") to the State Street Credit Agreement. The Third Amendment, among other changes, (i) extended the maturity date of the State Street Credit Facility from December 10, 2024 to December 10, 2026 and (ii) provided for a mechanism to temporarily increase the Maximum Commitment to $250 million until April 30, 2025, after which date the Maximum Commitment will be reduced to $140 million.

As of September 30, 2025, the Company had $0 million outstanding on the State Street Credit Facility and the Company was in compliance with the terms of the State Street Credit Agreement. The Company intends to continue to utilize the State Street Credit Facility on a revolving basis to fund investments and for other general corporate purposes.

For further details, see "Note 8. Debt Obligations," to the Company's financial statements.

Morgan Stanley Repurchase Agreement

On April 27, 2022, AB CRE PDF Member I LLC ("PDF Member I") entered into a $150 million master repurchase and securities contract agreement (the "Morgan Stanley Repurchase Agreement"), with an option to increase the maximum facility amount (the "Maximum Facility Amount") to $250 million with Morgan Stanley Mortgage Capital Holdings LLC ("Morgan Stanley"), as administrative agent for Morgan Stanley Bank, N.A. Pursuant to the Morgan Stanley Repurchase Agreement, PDF Member I is permitted to sell, and later repurchase, eligible commercial mortgage loans collateralized by multifamily, office, retail, industrial, hospitality, self-storage or mixed-use properties or such other property types acceptable to Morgan Stanley. The initial expiration date of the Morgan Stanley Repurchase Agreement was April 27, 2025.

On July 21, 2022, the Company entered into an omnibus amendment (the "First Morgan Stanley Repurchase Agreement Amendment") to the Morgan Stanley Repurchase Agreement. The First Morgan Stanley Repurchase Agreement Amendment increased the Maximum Facility Amount to $200 million.

On April 26, 2024, the Company entered into an amendment (the "Second Morgan Stanley Repurchase Agreement Amendment") to the Morgan Stanley Repurchase Agreement. The Second Repurchase Agreement Amendment (i) increased the Maximum Facility Amount to $400 million and (ii) extended the maturity date of the Morgan Stanley Repurchase Agreement to April 27, 2026.

On April 9, 2025, the Company entered into an amendment (the "Third Morgan Stanley Repurchase Agreement Amendment") to the Morgan Stanley Repurchase Agreement. The Third Morgan Stanley Repurchase Agreement Amendment increased the master repurchase facility size from $300,000,000 to $350,000,000.

On July 28, 2025, the Company entered into an amendment (the "Fourth Morgan Stanley Repurchase Agreement Amendment") to the Morgan Stanley Repurchase Agreement. The Fourth Morgan Stanley Repurchase Agreement Amendment increased the master repurchase facility size from $350,000,000 to $400,000,000.

On September 17, 2025, the Company entered into an amendment (the "Fifth Morgan Stanley Repurchase Agreement Amendment") to the Morgan Stanley Repurchase Agreement. The Fifth Morgan Stanley Repurchase Agreement Amendment (i) increased the master repurchase facility size from $400,000,000 to $500,000,000 and (ii) extended the maturity date of the Morgan Stanley Repurchase Agreement to April 27, 2027.

For further details, see "Note 8. Debt Obligations," to the Company's financial statements.

Note Payable

On March 31, 2023, AB CRE PDF Athena LLC, a wholly owned subsidiary of the Company, entered into a note-on-note financing (the "Note") with Citibank, N.A. ("Citibank"). The Note has a maximum commitment of $125.6 million and is scheduled to mature ,subject to the terms and conditions of Article 33 thereof, within one hundred fifty (150) days after the maturity date of the underlying collateral (as the same may be extended pursuant to any extension option of the Underlying Mortgagor (as defined in the Loan and Security Agreement) in accordance with the underlying collateral or as otherwise approved by the Class A Lender), or as otherwise provided in the Loan and Security Agreement, by and among AB CRE PDF Athena LLC, as borrower, Citibank, as Class A Lender and the Company, as Subordinated Lender (the "Loan and Security Agreement"). As of July 10, 2025, the maturity date of the underlying Loan 9 was extended to August 9, 2026 and the maturity date of the Note was, then, automatically extended to January 6, 2027 in accordance with the Loan and Security Agreement. Except as otherwise provided in the Loan and Security Agreement, borrowings under the Note bear interest at Term SOFR plus 1.20%. The Note is collateralized by Loan 9, described in Note 4.

Citibank Repurchase Agreement

On April 1, 2025, AB CRE PDF Lending C LLC ("PDF Lending C"), a wholly-owned subsidiary of the Company, entered into a $250,000,000 master repurchase agreement and securities contract (the "Citibank Repurchase Agreement"), with Citibank, with an option, at Citibank's discretion, to increase the maximum facility amount to $500,000,000. Pursuant to the Citibank Repurchase Agreement, PDF Lending C is permitted to sell, and later repurchase, eligible commercial mortgage loans collateralized by multi-family hospitality, office, retail, industrial or self-storage properties or such other property types acceptable to Citibank. The expiration date for adding new loans to the facility is April 1, 2027, unless extended or earlier terminated in accordance with the terms of the Citibank Repurchase Agreement. Any capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Citibank Repurchase Agreement.

Under the Citibank Repurchase Agreement, the purchase price paid by PDF Lending C for each Purchased Asset is equal to the product of (a) the lesser of (i) the unpaid principal balance of such Purchased Asset and (ii) the Market Value of such Purchased Asset, multiplied by (b) the applicable Purchase Price Percentage for such Purchased Asset. Upon repurchase of the Purchased Asset by PDF Lending C, the Repurchase Price for such Purchased Asset shall equal the sum of (i) the outstanding Purchase Price for such Purchased Asset, plus (ii) the accrued and unpaid Purchase Price Differential with respect to such Purchased Asset, plus (iii) all accrued and unpaid costs and expenses of Citibank relating to such Purchased Asset, plus (iv) any other amounts then due and owing by PDF Lending C to Citibank and its Affiliates pursuant to the terms of the Transaction Documents.

In connection with the Citibank Repurchase Agreement, the Company has agreed to guarantee certain obligations of PDF Lending C under the Citibank Repurchase Agreement.

HSBC Loan

On December 7, 2023, AB CRE PDF TNVA1 LLC ("TNVA1"), a wholly owned subsidiary of the Company entered into a Loan and Security Agreement (the "HSBC Loan and Security Agreement") by and among TNVA1, as borrower, HSBC Bank USA, National Association ("HSBC"), as administrative agent for itself and the other lenders signatory thereto, and the lenders signatory thereto (the "HSBC Lenders") as part of a "note-on-note" loan (the "HSBC TNVA1 Loan") transaction. The HSBC Lenders have made the HSBC TNVA1 Loan in the aggregate principal amount of $86.1 million. The HSBC TNVA1 Loan generally bears interest at a rate per annum equal to the greater of (i) Term SOFR plus a margin of 2.25%, with a 0.0% floor on Term SOFR and (ii) 5.25%. The HSBC TNVA1 Loan is secured by a first priority security interest in certain collaterally assigned loans. For further details, see "Note 8. Debt Obligations," to the Company's financial statements.

On August 26, 2025, TNVA1 entered into an amendment (the "First Amendment") to the HSBC Loan and Security Agreement. The First Amendment, among other changes, (i) extends the initial maturity date of borrowings under the HSBC Loan and Security Agreement to July 9, 2027 and (ii) provides for an additional loan under the HSBC Loan and Security Agreement of $92,250,000 (the "Additional Loan"), increasing the aggregate total borrowings under the HSBC Loan and Security Agreement to $187,150,000. The Additional Loan bears interest at Term SOFR plus a margin of 1.50%, and it is secured by a first priority security interest in a mortgage loan of the Fund that was collaterally assigned to the Lenders in connection with the Amendment. The Amendment also introduced new customary covenants and events of default with respect to the Additional Loan. In connection with the Amendment, the Fund reinstated and modified its obligations to guarantee the payment of the HSBC TNVA1 Loan in an amount equal to the lesser of (i) 25% of the outstanding principal balance of the HSBC TNVA1 Loan and (ii) $46,787,500.00.

Off-Balance Sheet Arrangements

Our investments in debt primarily consist of real estate loans which have commitments outstanding on certain loans. For additional information on our commitments as of September 30, 2025, refer to Note 11 of the "Notes to Consolidated Financial Statements." We do not expect these commitments, taken as a whole, to be significant to, or to have a material impact on, our overall liquidity or capital resources or our operations.

The Company is subject to an unfunded commitment amount of $47.0 million from the underlying interest in the equity method investments. We do not expect these unfunded commitments to impact the Company's overall liquidity or capital resources.

Other Contractual Obligations

We have entered into certain contracts under which we have material future commitments. We entered into a Management Agreement with the Investment Manager. Under the Management Agreement, the Investment Manager is responsible for:

For these services, we pay (x) a quarterly Management Fee in respect of each Member, in arrears, equal to the Applicable Percentage of such Member multiplied by the sum of (i) the net asset value ("NAV") of the Units and (ii) the product of (a) all unfunded commitment amounts under any investments ("Portfolio Investments") with ongoing funding obligations (e.g., delayed-draw term loans) and (b) the Indebtedness Fraction, each of (i) and (ii) as of the last day of each calendar respect of each Member, in arrears, to the Management Agreement and (y) an incentive fee based on our performance pursuant to the LLC Agreement.

We entered into an Administration Agreement with the Administrator. Under the Administration Agreement, the Administrator acts as administrator to the Company and provides accounting, NAV calculation and certain other administrative services to us.