Principal Credit Real Estate Income Trust
05/13/2026 | Press release | Distributed by Public on 05/13/2026 12:19
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
References herein to "Principal Credit Real Estate Income Trust," the "Company," "we," "us," or "our" refer to Principal Credit Real Estate Income Trust and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q ("Form 10-Q").
Forward-Looking Information
Some of the statements in this Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this Form 10-Q may include statements as to:
▪our future operating results;
▪our business prospects and the prospects of the assets in which we may invest;
▪the impact of the investments that we expect to make;
▪our ability to raise sufficient capital to execute our investment and lending strategies;
▪our ability to source adequate investment and lending opportunities to efficiently deploy capital;
▪our current and expected financing arrangements;
▪the effect of global and national economic and market conditions generally upon our operating results, including, but not limited to, changes with respect to inflation, interest rate changes and supply chain disruptions, and changes in government rules, regulations and fiscal policies;
▪the adequacy of our cash resources, financing sources and working capital;
▪the timing and amount of cash flows, distributions and dividends, if any, from our investments;
▪our contractual arrangements and relationships with third parties;
▪actual and potential conflicts of interest with the Adviser (as defined below) or any of its affiliates;
▪the dependence of our future success on the general economy and its effect on the assets in which we may invest;
▪our use of financial leverage;
▪the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;
▪the ability of the Adviser or its affiliates to attract and retain highly talented professionals;
▪our ability to structure investments in a tax-efficient manner and the effect of changes to tax legislation and our tax position; and
▪the tax status of the assets in which we may invest.
In addition, our narrative analysis below contains forward-looking statements intended to enhance the reader's ability to assess our future financial performance. Forward-looking statements include, but are not limited to, statements that represent our beliefs concerning future operations, strategies, financial results or other developments, and contain words and phrases such as "anticipate," "believe," "plan," "estimate," "expect," "intend" and similar expressions. Forward-looking statements are made based upon management's current expectations and beliefs concerning future developments and their potential effects on us. Such forward-looking statements are not guarantees of future performance. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in Item 1A. - "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2025, and elsewhere in this Form 10-Q. Other factors that could cause actual results to differ materially include:
▪changes in the economy, particularly those affecting the real estate industry;
▪risks associated with possible disruption in our operations or the economy generally due to terrorism, war and military conflicts, natural disasters and climate related risks, acts of god, epidemics or other events having a broad impact on the economy;
▪adverse conditions in the areas where our investments or the properties underlying such investments are located and local real estate conditions;
▪our portfolio may be concentrated in certain industries and geographies, and, as a consequence, our aggregate return may be substantially affected by adverse economic or business conditions affecting that particular type of asset or geography;
▪limitations on our business and our ability to satisfy requirements to maintain our exclusion from registration under the Investment Company Act of 1940, as amended, or to maintain our qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes;
▪since there is no public trading market for our common shares, repurchase of common shares by us will likely be the only way to dispose of your shares. Our share repurchase plan provides shareholders with the opportunity to request that we repurchase their common shares on a quarterly basis, but we are not obligated to repurchase any common shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular quarter in our discretion. In addition, repurchases will be subject to available liquidity and other significant restrictions. Further, our board of trustees may make exceptions to, modify and suspend our share repurchase plan if, in its reasonable determination, it deems such action to be in our best interest. As a result, our common shares should be considered as having only limited liquidity and at times may be illiquid;
▪distributions are not guaranteed and may be funded from sources other than cash flows from operations, including, without limitation, borrowings, offering proceeds, the sale of our assets, and repayments of our real estate debt investments, and we have no limits on the amounts we may fund from such sources;
▪the purchase and repurchase prices for our common shares are generally based on our prior month's net asset value ("NAV") and are not based on any public trading market; and
▪future changes in laws or regulations and conditions in our operating areas.
Although we believe that the assumptions on which these forward-looking statements are based, are reasonable, any of the assumptions could 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 Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this Form 10-Q. Moreover, we assume no duty and do not undertake to update the forward-looking statements.
Overview
We are a Maryland statutory trust formed on May 22, 2024. We are externally managed and sponsored by Principal Real Estate Investors, LLC (the "Adviser" and, together with Principal Real Estate Europe Limited, "Principal Real Estate"), an affiliate of Principal Global Investors Holding Company (US), LLC ("Principal Global Investors"). Principal Real Estate is the dedicated real estate group of Principal Global Investors Holding Company (US), LLC, a member company and affiliate of Principal Financial Group, which is a public company listed on the NASDAQ under the ticker symbol "PFG".
We are an externally advised, perpetual-life REIT formed to pursue the following investment objectives:
▪provide current income in the form of regular, stable cash distributions to achieve an attractive distribution yield;
▪preserve and protect invested capital, and mitigate downside risk by originating loans against high quality real estate assets with meaningful borrower equity or implied equity; and
▪provide an investment alternative for shareholders seeking to allocate a portion of their long-term investment portfolios to commercial real estate ("CRE") debt with lower volatility than publicly traded securities and compelling risk-adjusted returns compared to fixed income alternatives.
Our investment strategy is focused on originating, acquiring, financing, managing and disposing of a portfolio of primarily CRE debt investments, including senior mortgage loans, subordinated debt and other similar investments (collectively referred to as, "CRE Debt Investments"), diversified across both geography and asset class. To a lesser extent, the Company invests in other real estate-related debt securities, including commercial mortgage-backed securities and collateralized loan obligations. Our CRE Debt Investments are expected to be primarily secured by properties in the U.S. and include multifamily, industrial and select other CRE asset classes, such as student housing, self-storage, life science and data center assets.
Our board of trustees at all times will have ultimate oversight and policy-making authority over us, including responsibility for governance, financial controls, compliance and disclosure. Pursuant to the Second Amended and Restated Advisory Agreement, dated August 8, 2025, by and between the Company and the Adviser, as amended by that certain Amendment No. 1, dated March 24, 2026 (as amended, the "Advisory Agreement"), we have delegated to the Adviser the authority to source, evaluate and monitor our investment opportunities and make decisions related to the acquisition, management, financing and disposition of our assets, in accordance with our investment objectives, guidelines, policies and limitations, subject to oversight by our board of trustees.
We are structured as a non-listed, perpetual-life REIT, and therefore our securities are not listed on a national securities exchange and, as of the date of this Form 10-Q, there is no plan to list our securities on a national securities exchange. We are organized as a holding company and conduct our business primarily through our various subsidiaries. The Company qualifies and intends to make an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2025, and generally will not be subject to U.S. federal corporate income tax to the extent it distributes 90% of its taxable income to its shareholders and maintains its qualification as a REIT.
We are conducting a continuous, blind pool private offering (the "Offering") of our common shares in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), to investors that are (i) accredited investors (as defined in Regulation D under the Securities Act) and (ii) in the case of common shares sold outside the United States, to persons that are not "U.S. persons" (as defined in Regulation S under the Securities Act).
We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our real estate debt investments or real estate-related securities, other than those referred to in this Form 10-Q.
Q1 2026 Highlights
Fundraising and Distributions
•During the three months ended March 31, 2026, pursuant to the Offering, the Company sold an aggregate of 212,850 of its common shares for aggregate net consideration of approximately $4.4 million, plus applicable upfront selling commissions and dealer manager fees. In addition, during the three months ended March 31, 2026, the Company issued 3,167 shares pursuant to its distribution reinvestment plan (the "DRIP").
•During the three months ended March 31, 2026, the Company declared aggregate distributions of $0.4050 per Class I, Class F-I, Class E, and Class A share and $0.1203 per Class F-S share. Refer to the Distributions section below for further details on the distributions declared.
Investments
•On March 26, 2026, the Company received $25.0 million in proceeds attributable to the repayment of a loan receivable secured by an industrial asset in Castle Rock, CO.
Financing Activity
•On March 26, 2026, the Company repaid $18.8 million of outstanding loans payable under a secured financing facility secured by an industrial asset in Castle Rock, CO.
Results of Operations
The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2026 and 2025 (amounts in thousands):
| For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 | Change | |||||||||
| Revenues | |||||||||||
| Interest income | $ | 6,711 | $ | 3,479 | $ | 3,232 | |||||
| Other revenue | 23 | 765 | (742) | ||||||||
| Total revenue | 6,734 | 4,244 | 2,490 | ||||||||
| Expenses | - | ||||||||||
| Interest expense | 3,913 | 2,825 | 1,088 | ||||||||
| General and administrative | 602 | 703 | (101) | ||||||||
| Management fees | 211 | 39 | 172 | ||||||||
| Performance fees | 25 | - | 25 | ||||||||
| Financing fees | - | 898 | (898) | ||||||||
| Organization costs | - | 841 | (841) | ||||||||
| Total expenses | 4,751 | 5,306 | (555) | ||||||||
| Unrealized gains (losses) | - | ||||||||||
| Unrealized gain (loss) on loans receivable | (86) | 181 | (267) | ||||||||
| Unrealized gain (loss) on loans payable | (8) | (90) | 82 | ||||||||
| Total unrealized gains (losses) | (94) | 91 | (185) | ||||||||
| Net income (loss) | $ | 1,889 | $ | (971) | $ | 2,860 | |||||
•During the three months ended March 31, 2026, revenues totaled $6.7 million, and consisted of interest income of $6.7 million and other revenue of $0.02 million (predominantly late fees). The increase in total revenue of $2.5 million compared to the comparative period in 2025 was primarily due to the increase in the size of our investment portfolio.
•During the three months ended March 31, 2026, interest expense was $3.9 million and the Company incurred no financing fees. Interest expense and financing fees were $2.8 million and $0.9 million, respectively, for the three months ended March 31, 2025. The increase in interest expense during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was due to the increase in the size of our investment portfolio. The decrease in financing fees during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was due to no new loans being placed on the Company's financing arrangements with Goldman Sachs Bank USA ("Goldman") and Citibank, N.A. ("Citibank").
•During the three months ended March 31, 2026, general and administrative fees were approximately $0.6 million and primarily related to operating costs incurred during the period. These costs have been advanced by the Adviser pursuant to the terms of the Advisory Agreement. The Company will commence reimbursement of the advance expenses to the Adviser on March 3, 2027, and will reimburse the Adviser for such advanced expenses ratably in 60 monthly installments thereafter. The Company began recognizing operating costs incurred by the Adviser on March 1, 2025, the date of the initial closing of the Offering that included non-Anchor Investors.
•Management fees and performance fees are earned by the Adviser for providing services pursuant to the Advisory Agreement. During the three months ended March 31, 2026 and March 31, 2025, management fees were $0.21 million and $0.04 million, respectively. Performance fees earned during the three months ended March 31, 2026 and March 31, 2025 were $0.03 million and $0.00 million respectively. The increases were primarily due to the increase in the size of our investment portfolio and performance related thereto.
Financial Condition
Investment Activities
As of March 31, 2026, the Company had originated nine CRE Debt Investments. The following table details the statistics of the Company's investments in loans receivable portfolio as of March 31, 2026 (amounts in thousands):
|
Loan / Property Type
|
Location |
Origination Date(1)
|
Total Loan |
Principal Balance Outstanding
|
Fair Value
|
Cash Coupon(2)
|
Maximum Maturity(3)
|
LTV(4)
|
||||||||||||||||||||||||
| Senior Loans: | ||||||||||||||||||||||||||||||||
| Industrial | Puyallup, WA | 12/16/2024 | $32,500 | $30,370 | $30,439 | 1-Month Term SOFR | + | 3.25% | 1/1/2029 | 51% | ||||||||||||||||||||||
| Industrial | Olathe, KS | 12/30/2024 | $40,728 | $39,493 | $39,493 | 1-Month Term SOFR | + | 3.40% | 1/1/2030 | 79% | ||||||||||||||||||||||
| Industrial | Greenwood, IN | 12/30/2024 | $12,637 | $10,197 | $10,197 | 1-Month Term SOFR | + | 3.85% | 1/1/2030 | 56% | ||||||||||||||||||||||
| Industrial | Mesa, AZ | 12/30/2024 | $19,139 | $17,989 | $17,990 | 1-Month Term SOFR | + | 3.70% | 1/1/2030 | 73% | ||||||||||||||||||||||
| Industrial | Richmond, CA | 12/30/2024 | $27,017 | $24,372 | $24,372 | 1-Month Term SOFR | + | 3.85% | 1/1/2030 | 64% | ||||||||||||||||||||||
| Residential | Tempe, AZ | 2/14/2025 | $76,500 | $76,383 | $76,447 | 1-Month Term SOFR | + | 3.25% | 3/1/2030 | 72% | ||||||||||||||||||||||
| Residential | Spring Hill, TN | 6/13/2025 | $50,000 | $50,000 | $50,061 | 1-Month Term SOFR | + | 3.35% | 7/1/2030 | 65% | ||||||||||||||||||||||
| Residential | Los Angeles, CA | 7/17/2025 | $68,500 | $68,500 | $68,523 | 1-Month Term SOFR | + | 3.25% | 8/1/2030 | 77% | ||||||||||||||||||||||
| Residential | Richmond, TX | 8/7/2025 | $35,600 | $35,600 | $35,636 | 1-Month Term SOFR | + | 3.25% | 9/5/2030 | 71% | ||||||||||||||||||||||
| $362,621 | $352,904 | $353,158 | ||||||||||||||||||||||||||||||
(1)Origination date represents the date the loan investment was initially originated or acquired by the Company.
(2)Cash coupon is expressed as the relevant floating benchmark rate 1-Month Term Secured Overnight Financing Rate ("SOFR") plus the spread in effect as of March 31, 2026. All loans in the Company's loan portfolio are subject to a rate floor. The effective 1-Month Term SOFR rate for the Company's loan portfolio ranged from 6.92% to 7.53% as of March 31, 2026.
(3)Maximum maturity assumes all extension options are exercised by the borrower; however, loans may be repaid prior to such date.
(4)The LTV ratio for each investment is based on the most recent outstanding loan balance and the MAI appraised value, which are not updated for subsequent loan modifications or upsizes.
Financing Activities
We finance the majority of our CRE Debt Investments portfolio through repurchase agreements. The table below summarizes our borrowings as of March 31, 2026 (amounts in thousands):
| Description |
Weighted Average Interest Rate(1)
|
Maximum Facility Size | Available Capacity | Debt Amount Outstanding | Fair Value of Debt | Fair Value of Collateral | Current Maturity |
Maximum Maturity(2)
|
||||||||||||||||||
| Goldman Repurchase Agreement | 5.86% | $ | 250,000 | $ | 107,073 | $ | 142,927 | $ | 142,979 | $ | 198,938 | 12/17/2026 | 12/17/2031 | |||||||||||||
| Citi Repurchase Agreement | 5.40% | 250,000 | 134,425 | 115,575 | 115,667 | 154,220 | 6/28/2027 | 6/27/2028 | ||||||||||||||||||
| $ | 500,000 | $ | 241,498 | $ | 258,502 | $ | 258,646 | $ | 353,158 | |||||||||||||||||
(1)Represents weighted average interest rate as of period end. Borrowings under our repurchase agreement carry interest at 1-Month Term SOFR plus a spread.
(2)Maximum maturity assumes all extension options are exercised. The extensions are subject to satisfaction of certain predefined conditions including compliance with certain financial and administrative covenants as well as payment of applicable extension fees.
Liquidity and Capital Resources
Liquidity is a measure of our ability to meet our cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make new investments where appropriate, pay distributions to our shareholders and other general business needs. We closely monitor our liquidity position and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months.
On July 19, 2024, each of (1) Principal Life Insurance Company and/or its affiliate ("Principal Life") and (2) an unaffiliated life insurance company and/or its affiliates (collectively with Principal Life, the "Anchor Investors") entered into a subscription agreement with the Company, pursuant to which, each of the Anchor Investors agreed, from time to time, to purchase an aggregate amount of $75.0 million in the Company's Class A shares, in each case, at a price per share equal to the most recently determined NAV of the Class A shares (collectively, referred to as, the "Anchor Investment"). Further, each of the Anchor Investors has agreed to hold all of the Class A shares it receives in connection with the Anchor Investment until the earlier of (1) the first date that the Company's NAV reaches $1.5 billion and (2) March 3, 2030 (such date, the "Anchor Investor Liquidity Date"). Following the Anchor Investor Liquidity Date, each quarter, the Anchor Investors may, from time to time, request, with respect to the Class A shares issued in respect of the Anchor Investment, that we repurchase an aggregate number of Class A shares equal to the amount available under our share repurchase plan's 5% quarterly cap, but only after we first satisfy repurchase requests from all other common shareholders who have properly submitted a repurchase request for such quarter in accordance with our share repurchase plan. As of March 31, 2026, Anchor Investors have purchased $100.0 million in our Class A shares, with $50.0 million in the aggregate remaining uncalled pursuant to the Anchor Investment.
We expect to generate cash primarily from (i) the net proceeds of the Offering, including through issuances to the Anchor Investors in respect of the Anchor Investment, (ii) cash flows from our operations, (iii) our existing financing arrangements and any financing arrangements we may enter into in the future and (iv) any future offerings of equity and/or debt securities (other than through the Offering).
Our primary use of cash will be for (i) origination or acquisition of commercial mortgage loans and other commercial debt investments, CMBS and other commercial real estate-related debt investments, (ii) the cost of operations (including the management fee and performance fee), (iii) debt service of any borrowings, (iv) periodic repurchases, including under our share purchase plan (as described herein), and (v) cash distributions (if any) to the holders of our shares to the extent authorized by our board of trustees and declared by us.
The Company will seek to enter into bank debt, credit facility, and / or other financing arrangements on at least customary and market terms; however, such incurrence would be subject to prevailing market conditions, the Company's liquidity requirements, contractual and regulatory restrictions and other factors. As of March 31, 2026, the Company had established loan repurchase facilities with Goldman and Citibank for $250.0 million and $250.0 million, respectively. The Company has pledged four residential and five industrial loans as collateral and based on the value of the loans pledged as collateral and the advanced rates attributed to each loan by the lender, the Company had $142.9 million and $115.6 million in outstanding debt with Goldman and Citibank, respectively, as of March 31, 2026. Refer to Note 3 - "Investments in Loans Receivable" and Note 4 - "Loans Payable" for further information.
As of March 31, 2026 and December 31, 2025, the Company had cash and cash equivalents of $20.7 million and $10.5 million, and an approved, but undrawn credit capacity, which is the amount the Company is permitted to borrow less the amounts outstanding, of $107.1 million and $134.4 million with Goldman and Citibank, respectively. These amounts do not include $50.0 million of undrawn commitments pursuant to the terms of the Anchor Investment, which represents readily available liquidity as of March 31, 2026 and December 31, 2025, respectively.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash for the three months ended March 31, 2026 (amounts in thousands):
| Amounts | |||||
| Net cash provided by (used in) operating activities | $ | 2,676 | |||
| Net cash provided by (used in) investing activities | 23,759 | ||||
| Net cash provided by (used in) financing activities | (16,587) | ||||
| Net change in cash, cash equivalents and restricted cash | $ | 9,848 | |||
Net cash provided by operating activities of $2.7 million was primarily comprised of interest income, increases in due to affiliates and increases in accrued interest receivable during the period.
Net cash provided by investing activities of $23.8 million was primarily related to a loan payoff that occurred during the period, partially offset by funding activities and decreases in escrow deposits.
Net cash used in financing activities of $16.6 million was primarily attributable to the repayment of a loan under a Master Repurchase Agreement between the Company and Goldman, and distributions paid to shareholders, partially offset by contributions from shareholders.
NAV and NAV Per Share Calculation
For the purposes of the monthly NAV computations, our board of trustees, including a majority of our independent trustees, adopted valuation guidelines that contain a comprehensive set of methodologies used by the Adviser and our independent valuation advisor. These guidelines are designed to produce a fair and accurate estimate of the price that would be received for our investments in an arm's-length transaction between a willing buyer and a willing seller in possession of all material information about our investments. Periodically, our board of trustees, including a majority of our independent trustees, will review the appropriateness of our valuation procedures. From time to time, our board of trustees, including a majority of our independent trustees, may adopt changes to the valuation guidelines if it (1) determines that such changes are likely to result in a more accurate reflection of NAV or a more efficient or less costly procedure for the determination of NAV without having a material adverse effect on the accuracy of such determination or (2) otherwise reasonably believes a change is appropriate for the determination of NAV. Refer to Item 7. "Management's Discussion and Analysis of Financial Conditions and Results of Operations" on our Annual Report on Form 10-K for the year ended December 31, 2025, for further information on the valuation methods used for the purposes of determining the valuations of our assets and liabilities, calculating related unrealized gains and losses and our monthly NAV.
With regard to NAV calculations, the same fair values of assets and liabilities determined by the application of the methods cited above are generally used in monthly NAV calculations. To calculate our NAV for purposes of establishing a purchase and repurchase price for our common shares, we have adopted a model that calculates the fair values of our assets and liabilities in accordance with our valuation guidelines. Because these fair value calculations involve significant professional judgment in the application of both observable and unobservable inputs, the calculated fair value of our assets may differ from their actual realizable value or future fair value. While we believe our NAV calculation methodologies are consistent with standard industry practices, there is no rule or regulation that requires we calculate NAV in a certain way. As a result, other REITs may use different methodologies or assumptions to determine NAV. In addition, NAV is not a measure used under GAAP and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV differ from GAAP. Shareholders should not consider NAV to be equivalent to shareholders' equity or any other GAAP measure. The calculation of our NAV is intended to be a calculation of the fair value of our assets less our outstanding liabilities as described below and will likely differ from the book value of our equity reflected in our financial statements.
The board of trustees of the Company has delegated to the Adviser the responsibility for monitoring significant events that may materially affect the values of our facilities for determining whether the existing valuations should be re-evaluated prior to the next scheduled monthly valuation in light of such significant events.
Each share class will have an undivided interest in our assets and liabilities, other than class-specific shareholder servicing fees, distributions payable, the management fee and the performance fee. In accordance with the valuation guidelines, our fund administrator will calculate our NAV per share for each class as of the last calendar day of each month, including the estimated fair value of (1) real estate debt and other investments owned by us and (2) any other assets and liabilities. Because shareholder servicing fees, distributions payable, the management fee and the performance fee allocable to a specific class of shares will only be included in the NAV calculation for that class, the NAV per share for our classes of shares may differ.
The monthly NAV for each class of shares will be based on the net asset values of our investments, the addition of any other assets (such as cash on hand), and the deduction of any other liabilities (including distributions payable, accrued management fees, accrued performance fees and the deduction of any shareholder servicing fees specifically applicable to such class of shares). At the end of each month, before taking into consideration repurchases or class-specific expense accruals for that month, any change in our aggregate NAV (whether an increase or decrease) is allocated among each class of shares based on each class's relative percentage of the previous aggregate NAV plus issuances of shares that were effective on the first calendar day of such month. The NAV calculation is available generally within 15 calendar days after the end of the applicable month. Changes in monthly NAV includes, without limitation, accruals of our net portfolio income, interest expense, the management fee, the performance fee, distributions, unrealized/realized gains and losses on assets, any applicable organization and offering expenses and any expense reimbursements. Changes in monthly NAV also includes material non-recurring events occurring during the month. On an ongoing basis, the Adviser will adjust the accruals to reflect actual operating results and the outstanding receivable, payable and other account balances resulting from the accumulation of monthly accruals for which financial information is available. The operating expenses and organizational and offering expenses which are advanced by the Adviser to be reimbursed by us will not be included in such calculations until reimbursed to the Adviser.
For purposes of calculating our NAV, neither (1) organization and offering expenses advanced by the Adviser, nor (2) operating expenses advanced by the Adviser, are recognized as expenses or as a component of equity and reflected in our NAV until we reimburse the Adviser for these costs, which is expected to begin on March 3, 2027. After August 31, 2026, we will reimburse the Adviser for any organization and offering expenses and operating expenses that it incurs on behalf of us as and when incurred (or promptly thereafter).
Following the aggregation of the net asset values of our investments, the addition of any other assets (such as cash on hand) and the deduction of any other liabilities, our fund administrator incorporates any class-specific adjustments to NAV, including additional issuances and repurchases of shares and accruals of class-specific distributions, management fees, performance fees and shareholder servicing fees. The declaration of distributions will reduce the NAV for each class of our shares in an amount equal to the accrual of our liability to pay any such distribution to our shareholders of record of each class. NAV per share for each class of shares is calculated by dividing such class's NAV at the end of each month by the number of shares outstanding for that class at the end of such month.
The following table provides a breakdown of the major components of our total NAV as of March 31, 2026 (amounts in thousands, except for share amounts):
| Amounts | |||||
| Cash and cash equivalents | $ | 20,700 | |||
| Restricted cash | 7,995 | ||||
| Investments in loans receivable, at fair value | 353,158 | ||||
| Accrued interest receivable | 2,111 | ||||
| Unearned stock compensation | 33 | ||||
| Loans payable, at fair value | (258,646) | ||||
| Due to affiliates and management fees | (989) | ||||
| Escrow deposits | (7,995) | ||||
| Interest payable | (650) | ||||
| Accrued expenses and other liabilities | (2) | ||||
| Distributions payable | (725) | ||||
| Total NAV | $ | 114,990 | |||
| Number of outstanding shares (all classes) | 5,377,413 | ||||
The following table reconciles U.S. GAAP shareholders' equity and redeemable common shares per our Condensed Consolidated Balance Sheets to our NAV as of March 31, 2026 (amounts in thousands):
| Amounts | |||||
| Total shareholders' equity and redeemable common shares | $ | 109,286 | |||
| Adjustments: | |||||
| Unearned stock compensation | 33 | ||||
| Accrued shareholder servicing fee | 61 | ||||
|
Organization and offering costs advanced by the Adviser(1)
|
2,499 | ||||
|
Operating expenses advanced by the Adviser(2)
|
3,111 | ||||
| Total NAV | $ | 114,990 | |||
(1)This represents the unamortized amount of organization expenses and offering costs advanced by the Adviser through March 31, 2026. The Adviser has agreed to advance organization and offering expenses on behalf of the Company (including legal, accounting, and other expenses attributable to the organization, but excluding upfront selling commissions, dealer manager fees and shareholder servicing fees) through August 31, 2026. The Company will reimburse the Adviser for all such advanced expenses ratably over the 60 months commencing on March 3, 2027. Organization and offering expenses incurred after August 31, 2026, will be paid by the Company as incurred.
(2)This represents the unamortized amount of operating expenses advanced by the Adviser through March 31, 2026. The Adviser has agreed to advance certain of the Company's operating expenses through August 31, 2026. The Company will reimburse the Adviser for such advanced expenses ratably over the 60 months commencing on March 3, 2027. Operating expenses incurred after August 31, 2026, will be paid by the Company and deducted as an expense for NAV as incurred.
The following table provides a breakdown of our total NAV and NAV per share by class as of March 31, 2026 (amounts in thousands, except for share and per share data):
|
Class S Common Shares |
Class T Common Shares |
Class D Common Shares |
Class I Common Shares |
Class F-S Common Shares |
Class F-I Common Shares |
Class E Common Shares |
Class A Common Shares |
Preferred Shares | Total | |||||||||||||||||||||||
| Total NAV | $ | - | $ | - | $ | - | $ | 833 | $ | 700 | $ | 10,779 | $ | 549 | $ | 102,055 | $ | 74 | $ | 114,990 | ||||||||||||
| Number of outstanding shares | - | - | - | 41,137 | 34,273 | 527,690 | 25,480 | 4,748,759 | 74 | 5,377,413 | ||||||||||||||||||||||
|
NAV per share as of March 31, 2026 |
$ | - | $ | - | $ | - | $ | 20.26 | $ | 20.42 | $ | 20.43 | $ | 21.55 | $ | 21.49 | $ | 1,000.00 | ||||||||||||||
Distributions
Any distributions we make will be at the discretion of our board of trustees, considering factors such as our earnings, cash flows, capital needs and general financial condition. As a result, our distribution rates and payment frequency may vary from time to time. Shareholders of shares that are repurchased prior to the applicable time of the record date are not entitled to receive a distribution with respect to such shares.
Our board of trustees' discretion as to the payment of distributions will be directed, in substantial part, by its goal to cause us to comply with the REIT requirements. To maintain our qualification as a REIT, we generally are required to make aggregate annual distributions to our shareholders of at least 90% of our REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains.
Beginning January 31, 2025, we have declared monthly distributions for each class of common shares then-outstanding, which are generally paid 20 days after month-end. Each class of our common shares received the same gross distribution per share if then-outstanding. The net distribution rates per share vary for each class based on the applicable shareholder servicing fee, which is deducted from the gross distribution per share and paid to the Dealer Manager.
The table below details the net distribution for each of our share classes for the three months ended March 31, 2026:
|
Class I
Common
Shares
|
Class F-S
Common
Shares
|
Class F-I
Common
Shares
|
Class E
Common
Shares
|
Class A
Common
Shares
|
|||||||||||||
| January 31, 2026 | $ | 0.1350 | $ | - | $ | 0.1350 | $ | 0.1350 | $ | 0.1350 | |||||||
| February 28, 2026 | 0.1350 | - | 0.1350 | 0.1350 | 0.1350 | ||||||||||||
| March 31, 2026 | 0.1350 | 0.1203 | 0.1350 | 0.1350 | 0.1350 | ||||||||||||
| Totals | $ | 0.4050 | $ | 0.1203 | $ | 0.4050 | $ | 0.4050 | $ | 0.4050 | |||||||
The following table summarizes our distributions declared during the three months ended March 31, 2026 (in thousands):
| Amount | % | |||||||
| Distributions | ||||||||
| Payable in cash | $ | 2,088 | 97.0 | % | ||||
| Reinvested in shares | 65 | 3.0 | % | |||||
| Total distributions | $ | 2,153 | 100.0 | % | ||||
| Sources of Distributions | ||||||||
|
Cash flows from operating activities(1)
|
$ | 2,153 | 100.0 | % | ||||
| Total sources of distributions | $ | 2,153 | 100.0 | % | ||||
|
Total cash flows from operating activities(1)
|
$ | 2,676 | ||||||
(1)For the three months ended March 31, 2026, our cash flows from operating activities funded 100% of our distributions.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and requires estimates about matters that are inherently uncertain. There have been no material changes to our Critical Accounting Estimates, including significant accounting policies that we believe are the most affect by our judgment, estimates and assumptions, which are described in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Developments
Refer to Note 2 - "Summary of Significant Accounting Policies" to the financial statements for a discussion of recent accounting developments and the expected impact to the Company.
Principal Credit Real Estate Income Trust published this content on May 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 13, 2026 at 18:19 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]