Invesco Real Estate Income Trust Inc.
03/26/2026 | Press release | Distributed by Public on 03/26/2026 14:57
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in Part I Item 1A - "Risk Factors" in this Annual Report on Form 10-K.
Overview
We are a Maryland corporation formed in October 2018. We invest primarily in stabilized, income-oriented commercial real estate in the United States. To a lesser extent, we also originate and acquire private real estate debt and invest in real estate-related securities. We own, and expect to continue to own, all or substantially all of our assets through Invesco REIT Operating Partnership L.P. ("INREIT OP" or "Operating Partnership"), of which we are the sole general partner.
We are externally managed and advised by our Adviser, a registered investment advisor and an indirect, wholly-owned subsidiary of Invesco Ltd., an independent global investment management firm. Our Adviser utilizes the personnel and global resources of Invesco Real Estate, the real estate investment center of Invesco, to provide investment management services to us. We qualified to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2020. To maintain our REIT qualification, we must meet a number of organizational and operational requirements, including that we are generally required to distribute at least 90% of our REIT taxable income to our stockholders annually. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income (determined without regard to our net capital gain and dividends-paid deduction) to stockholders and maintain our qualification as a REIT. We operate our business in a manner that permits our exclusion from the definition of "Investment Company" under the Investment Company Act of 1940, as amended (the "Investment Company Act").
As of December 31, 2025, we own or have invested in 68 properties. See "Investment Portfolio-Real Estate" below for additional information on these investments. As of December 31, 2025, we also own real estate-related securities, have investments in commercial loans and have invested in an affiliated fund which invests primarily in mortgage loans that are collateralized by commercial and residential real estate throughout the United States.
Public Offering
In May 2021, we commenced our initial public offering of up to $3.0 billion in shares of common stock. In November 2024, our initial public offering terminated and we commenced our follow-on public offering of up to $3.0 billion consisting of up to $2.4 billion in shares and up to $600.0 million in shares under our distribution reinvestment plan in the Public Offering. We are offering to sell any combination of five classes of shares of our common stock, Class T shares, Class S shares, Class D shares, Class I shares and Class E shares in the Public Offering, with a dollar value up to the maximum offering amount. The share classes have different upfront selling commissions and dealer manager fees and different ongoing stockholder servicing fees. The purchase price per share for each class of our common stock sold in the Public Offering will vary and will generally equal our prior month's NAV per share for such class, as determined monthly, plus any applicable upfront selling commissions and dealer manager fees. We intend to continue selling shares in our follow-on public offering on a monthly basis.
As of March 26, 2026, we have received gross aggregate proceeds of $238.3 million through our public offerings.
Private Offerings
In addition to the Public Offering, we are conducting multiple private offerings of our common stock. As of March 26, 2026, we have received gross proceeds of $621.5 million in the Private Offerings.
In August 2022, our board of directors authorized management to initiate, through the Operating Partnership, a program (the "DST Program") to issue and sell up to a maximum aggregate offering amount of $3.0 billion of beneficial interests ("Interests") in specific Delaware statutory trusts (the "DSTs") holding real properties (the "DST Properties"). These Interests will be issued and sold to "accredited investors," as that term is defined under Regulation D promulgated by the SEC under the Securities Act of 1933, as amended (the "Securities Act") in private placements exempt from registration pursuant to Section 4(a)(2) of the Securities Act (the "DST Offerings"). Under the DST Program, each DST Property may be sourced from our real properties or from third parties, will be held in a separate DST, and will be leased back by a wholly-owned subsidiary of the Operating Partnership in accordance with a master lease agreement. Each master lease agreement is guaranteed by the Operating Partnership, which has a fair market value purchase option (the "FMV Option") giving it the right, but not the obligation, to acquire the interests in the applicable DST from the investors any time after two years from the closing of the applicable DST offering in exchange for units of the Operating Partnership ("OP Units") or cash. After a one-year holding period, investors who acquire OP Units under the FMV Option generally have the right to cause the Operating Partnership to redeem all or a portion of their OP Units for, at our sole discretion, shares of our common stock, cash, or a combination of both.
The DST Program gives us the opportunity to expand and diversify our capital-raising strategies by offering what we believe to be an attractive investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended. Certain affiliates of the Adviser receive fees in connection with the sale of the Interests and the management of the DSTs. We intend to use the net offering proceeds from the DST Program to make investments in accordance with our investment strategy and policies, reduce our borrowings, repay indebtedness, fund the repurchase of shares of all classes of our common stock under our share repurchase plan and for other corporate purposes. We commenced our DST Program in February 2023. As of March 26, 2026, we have raised $277.8 million net proceeds from our DST Program.
Factors Affecting Operating Results
Our results of operations are affected by a number of factors and depend on the rental income generated by the properties that we acquire or lend on, the timing of lease expirations, operating expenses, income or loss from unconsolidated entities, general market conditions and the competitive environment for real estate assets. Of these factors, evolving macroeconomic and geopolitical landscapes, interest rates, capital flows and transaction activity had the most direct impacts on our performance and financial condition during 2025.
Market Conditions
Our business is affected by conditions in the financial markets and economic conditions in the United States and, to a lesser extent, elsewhere in the world. Inflation and economic trend data, along with policy developments under the current administration, will ultimately determine if and when interest rates decline. These financial and economic conditions may be further impacted by increasing geopolitical tensions in the Middle East. For the time being, secured borrowing costs for core and core-plus real estate remain in the five to six percent range, which will inform how investors underwrite value and their conviction in required growth. Our investment decisions today are further colored by a divergence in sector fundamentals, impacts of recent changes to U.S. trade policies and the resulting effects on both near-term and long-term consumer demand. Our real estate portfolio is comprised of tangible, income-generating assets, the cash flows of which are less directly impacted by fluctuations in public markets. Recent changes to U.S. trade policies may cause construction costs to increase, which makes owning existing real estate below replacement cost attractive and a defensive place for capital preservation. These dynamics could create attractive entry points and investment opportunities as the market moves through an inflection point, further emphasizing the importance of disciplined, investment-level execution to generate outperformance.
Rental Property Operating Results
We generate rental property income by the properties that we acquire. The amount of rental revenue depends upon a number of factors, including our ability to enter into leases with above- or at-market value rents and rent collection, which is determined primarily by each current and future tenant's financial condition and ability to make rent payments to us on time. Rental property operating expenses include real estate taxes, property insurance, repairs and maintenance, property management fees, utilities and other costs associated with owning real estate.
Our investments are diversified across real estate sectors, including industrial, healthcare, multifamily, student housing, office, and self-storage, as well as real estate debt. With our pipeline of new investments, available liquidity and low leverage, we believe we are well positioned to access private real estate as the market emerges from an inflection point. While market volatility and certain fundamental factors have affected and may continue to affect the commercial real estate market and our performance, we believe there are positive long-term fundamentals within our portfolio and benefits from our recent portfolio repositioning. In addition, we believe that demand will continue for Section 1031 investment products, supporting our DST Program.
2025 Highlights
Operating Results
•Declared monthly net distributions totaling $37.8 million for the year ended December 31, 2025. The details of the average annualized distribution rates and total returns are shown in the following table:
| Class T | Class S | Class D | Class I | Class E | Class N | Class S-PR | Class K-PR | |||||||||||||||||||||||||||||||||||||||||||
|
Average Annualized Distribution Rate(1)
|
5.6% | 5.6% | 6.2% | 6.4% | 6.0% | 6.1% | 6.2% | 6.2% | ||||||||||||||||||||||||||||||||||||||||||
|
Year-to-Date Total Return, without upfront selling commissions(2)
|
3.6% | 3.6% | 4.1% | 4.3% | 5.3% | 5.3% | 3.4% | 3.4% | ||||||||||||||||||||||||||||||||||||||||||
|
Year-to-Date Total Return, assuming maximum upfront selling commissions(2)
|
-% | -% | 2.5% | 4.3% | 5.3% | 5.3% | (0.3)% | 3.4% | ||||||||||||||||||||||||||||||||||||||||||
|
Inception-to-Date Total Return, without upfront selling commissions(2)(3)
|
4.3% | 4.4% | 4.6% | 4.9% | 6.2% | 7.8% | 3.4% | 3.4% | ||||||||||||||||||||||||||||||||||||||||||
|
Inception-to-Date Total Return, assuming maximum upfront selling commissions(2)(3)
|
3.5% | 3.6% | 4.2% | 4.9% | 6.2% | 7.8% | (0.3)% | 3.4% | ||||||||||||||||||||||||||||||||||||||||||
(1)The annualized distribution rate is calculated as the current month's distribution annualized and divided by the prior month's NAV, which is inclusive of all fees and expenses.
(2)Total return is calculated as the change in NAV per share during the respective periods plus any distributions per share declared in the period and assumes any distributions are reinvested in accordance with our distribution reinvestment plan.
(3)The inception date was June 1, 2021 for Class T, S and D shares; May 21, 2021 for Class I shares; May 14, 2021 for Class E shares; September 28, 2020 for Class N shares and June 30, 2025 for Class S-PR and K-PR shares.
Capital Activity
•During the year ended December 31, 2025, we raised $19.7 million of net proceeds from the sale of our common stock and $172.8 million in net proceeds from the DST Program.
Investments
•We purchased $13.2 million and sold $36.0 million in real estate-related securities bringing our total investment in real estate-related securities to $33.3 million for the year ended December 31, 2025.
•We acquired nine real estate properties for a total purchase price of $217.5 million, inclusive of acquisition-related costs. The properties include two industrial properties in North Carolina and Florida, a multifamily apartment community in Nevada, an office building in North Carolina and five manufactured housing communities in Texas, Arizona and Washington. The acquisitions are consistent with our strategy of acquiring income-producing commercial and residential real estate assets in growth markets across the United States.
•We increased our investment in our Retail GP Fund overall by $0.3 million as a result of two new investments and one sale of an investment bringing our net investment to $22.3 million.
•On February 7, 2025, we received proceeds of $0.8 million from the partial repayment of the 5805 N Jackson Gap commercial loan in connection with the extension of the maturity date of the loan.
•On February 28, 2025, we sold a 40% indirect leasehold interest in a student housing property, The Carmin, to an unaffiliated third party for a sale price of $138.5 million.
•On April 24, 2025, we completed a buyout of the joint venture partner for the Meridian Business 940, Capital Park 2919, and 3101 Agler properties that were previously included as part of the Midwest Industrial Portfolio.
•On December 10, 2025, we closed on The Catherine II Loan, a floating rate loan origination secured by a multifamily property located in Santa Monica, California, for a total commitment of $86.3 million and a principal balance of $83.1 million.
Financings
•On February 28, 2025, we refinanced The Carmin mortgage note in connection with the sale of 40% of the membership interest in the property. Proceeds from the new secured mortgage note were partially used to repay the existing mortgage. We incurred debt extinguishment charges of approximately $34,000 in connection with the refinancing.
•On April 24, 2025, we repaid the mortgage note secured by the Midwest Industrial Portfolio in connection with the joint venture buyout which had a total principal balance of $70.0 million and incurred debt extinguishment charges of $0.5 million.
•On July 25, 2025, we entered into a loan amendment to the existing Revolving Credit Facility. The amendment extended the maturity date to July 23, 2027 with an option to extend the maturity date to July 21, 2028, subject to certain conditions. The amendment also provides us the ability to request increases in aggregate commitments up to $250.0 million and modified pricing that borrowings under the Revolving Credit Facility carry interest at a rate equal to SOFR plus an applicable margin that is based on our leverage ratio.
•On December 9, 2025, we entered into a traditional repurchase agreement with Citibank for a total principal balance of $66.5 million. We have pledged one investment in a commercial loan with a fair value of $83.1 million as collateral for this agreement.
Investment Portfolio
Summary of Portfolio
The following chart summarizes the allocation of our investment portfolio based on fair value as of December 31, 2025:
Investment Allocation(1)
The following charts describe the diversification of our investments in real estate based on fair value as of December 31, 2025:
Property Type(2)
Geography(3)
(1)Investment allocation is measured as the asset value of each investment category (real estate property investments, private real estate debt, real estate-related securities or cash) against the total asset value of all investment categories, excluding the value of any third-party interests in such assets. Real estate investments include our direct property investments, unconsolidated investments and our interest in retail properties through INREIT's interest in ITP Investments LLC. See "-Real Estate" below for additional information on these investments. Totals may not sum to 100% due to rounding.
(2)Property Type weighting is measured as the asset value of real estate investments for each sector category (Healthcare, Industrial, Office, Multifamily, Grocery-Anchored Retail, Self-Storage, Student Housing, Private Real Estate Debt, Other) against the total asset value of all real estate investments, excluding the value of any third-party interests in such real estate investments. The Other segment includes non-controlling interests in retail properties through our interest in ITP Investments LLC and our investments in manufactured housing communities. Totals may not sum to 100% due to rounding.
(3)Geography weighting excludes the asset value of any investments in private real estate debt, real estate-related securities or cash and is measured as the asset value of direct real estate properties and unconsolidated investments for each geographical category (East, Midwest, South, West) against the total asset value of all real estate property investments. Totals may not sum to 100% due to rounding.
As of December 31, 2025, we owned interests in 68 properties, which we acquired for a total purchase price of $1.1 billion, inclusive of closing costs. Our diversified portfolio of income producing assets consists of healthcare, office, industrial, self-storage, multifamily, student housing and grocery-anchored retail properties, as well as real estate debt investments, concentrated in growth markets across the United States.
The following table provides a summary of our real estate portfolio as of December 31, 2025:
| Segment |
Number of Properties |
Sq. Feet / Units /Beds /Lots |
Occupancy Rate |
Gross Asset
Value
(in thousands)(1)
|
Segment
Revenue
(in thousands)(2)
|
Percentage of Total Segment Revenue |
||||||||||||||||||||||||||||||||
| Industrial | 14 | 2,354,714 sq. ft. | 84% | $ | 297,176 | $ | 18,145 | 21% | ||||||||||||||||||||||||||||||
| Healthcare | 20 | 1,030,397 sq. ft. | 94% | 170,255 | 3,400 | 4% | ||||||||||||||||||||||||||||||||
| Multifamily | 3 | 739 units | 95% | 169,324 | 17,449 | 20% | ||||||||||||||||||||||||||||||||
| Student Housing | 1 | 833 beds | 91% | 116,065 | 13,801 | 16% | ||||||||||||||||||||||||||||||||
| Office | 2 | 181,517 sq. ft. | 97% | 86,044 | 3,022 | 4% | ||||||||||||||||||||||||||||||||
| Self-Storage | 8 | 463,395 sq. ft. | 87% | 82,340 | 7,090 | 8% | ||||||||||||||||||||||||||||||||
| Grocery-Anchored Retail | 1 | 122,308 sq. ft. | 100% | 60,347 | 5,643 | 7% | ||||||||||||||||||||||||||||||||
|
Other(3)
|
19 | 4,857,674 sq. ft. / 383 lots | 94% | 95,234 | 4,461 | 5% | ||||||||||||||||||||||||||||||||
| Total | 68 | $ | 1,076,785 | $ | 73,011 | 85% | ||||||||||||||||||||||||||||||||
(1)Based on fair value as of December 31, 2025. Gross Asset Value consists of $851.4 million of our allocable share of consolidated real estate properties and $225.4 million of our allocable share of the gross real estate value held by unconsolidated entities, in each case excluding the value of any third-party interests in such real estate investments. See "-Real Estate" below for additional information on these investments.
(2)Segment revenue is presented for the year ended December 31, 2025. Healthcare and Other segment revenue includes income from unconsolidated entities.
(3)The full amount of the Other segment is comprised of non-controlling interests we own in retail properties through our interest in ITP Investments LLC and our investments in manufactured housing communities. See "-Real Estate" below for additional information on these investments.
The following table provides a summary of our real estate debt as of December 31, 2025:
| Segment |
Number of Instruments |
Fair
Value
(in thousands)(1)
|
Segment
Revenue
(in thousands)(2)
|
Percentage of Total Segment Revenue |
||||||||||||||||||||||
| Real Estate Debt | 4 | $ | 71,448 | $ | 7,340 | 9% | ||||||||||||||||||||
(1)Based on fair value as of December 31, 2025. The Fair Value includes investments in commercial mortgages excluding the value of secured lending agreements, the investment in an affiliated debt fund and unconsolidated preferred equity. See "-Real Estate Debt" below for additional information on these investments.
(2)Segment revenue is presented for the year ended December 31, 2025. The Real Estate Debt segment revenue includes income from unconsolidated entities as a result of the San Simeon Preferred Equity investment, income from commercial loans and income from an investment in an affiliated fund.
The following table provides a summary of our real estate-related securities as of December 31, 2025:
| Segment |
Number of Instruments |
Fair
Value
(in thousands)(1)
|
Segment
Revenue
(in thousands)(2)
|
Percentage of Total Segment Revenue |
||||||||||||||||||||||
| Real Estate-Related Securities | 20 | $ | 33,259 | $ | 2,840 | 3% | ||||||||||||||||||||
(1)Based on fair value as of December 31, 2025. The Fair Value includes investments in liquid real estate-related securities consisting of investments in commercial mortgage backed securities ("CMBS") and preferred stock of REITs. See "-Investments in Real Estate-Related Securities" below for additional information on these investments.
(2)Segment revenue is presented for the year ended December 31, 2025. The Real Estate-Related Securities segment revenue includes the gain (loss) from real estate-related securities, net.
Real Estate
The following table provides information regarding our portfolio of real estate as of December 31, 2025:
| Segment and Investment | Number of Properties | Location(s) | Acquisition Date(s) | Ownership Interest |
Sq. Feet / Units /Beds /Lots |
Occupancy | ||||||||||||||||||||||||||||||||
| Industrial: | ||||||||||||||||||||||||||||||||||||||
|
13034 Excelsior(5)
|
1 | Norwalk, CA | December 2020 | 100% | 53,527 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
5201 Industry(5)
|
1 | Pico Rivera, CA | December 2020 | 100% | 40,480 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Meridian Business 940(2)(5)
|
1 | Aurora, IL | September 2021 | 100% | 257,542 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Capital Park 2919(2)(5)
|
1 | Grove City, OH | January 2022 | 100% | 378,283 | sq. ft | 100% | |||||||||||||||||||||||||||||||
|
3101 Agler Road(2)(5)
|
1 | Columbus, OH | March 2022 | 100% | 160,000 | sq. ft | 100% | |||||||||||||||||||||||||||||||
|
Earth City 13330(2)
|
1 | Earth City, MO | March 2022 | 95% | 542,600 | sq. ft | 42% | |||||||||||||||||||||||||||||||
|
International Business 4535(5)
|
1 | Charlotte, NC | July 2024 | 100% | 61,200 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
| NJ Exit 5 Industrial Portfolio | 5 | Lumberton, NJ | December 2024 | 95% | 384,335 | sq. ft. | 85% | |||||||||||||||||||||||||||||||
|
Buckhorn Industrial(5)
|
1 | Mebane NC | August 2025 | 100% | 265,200 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Interstate Commerce(5)
|
1 | Fort Pierce, FL | September 2025 | 100% | 211,547 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
| Total Industrial | 14 | 2,354,714 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Healthcare: | ||||||||||||||||||||||||||||||||||||||
|
Sunbelt Medical Office Portfolio(1)
|
20 | CA, CO, FL, TN, TX | September 2020 / December 2020 / February 2021 | 42.5% | 1,030,397 | sq. ft. | 94% | |||||||||||||||||||||||||||||||
| Total Healthcare | 20 | 1,030,397 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Multifamily: | ||||||||||||||||||||||||||||||||||||||
|
Everly Roseland(3)
|
1 | Roseland, NJ | April 2022 | 57% | 360 | units | 96% | |||||||||||||||||||||||||||||||
| Elan at Bluffview | 1 | Dallas, TX | November 2024 | 100% | 181 | units | 98% | |||||||||||||||||||||||||||||||
| Fleetwood Apartments | 1 | Las Vegas, NV | August 2025 | 93% | 198 | units | 91% | |||||||||||||||||||||||||||||||
| Total Multifamily | 3 | 739 | units | |||||||||||||||||||||||||||||||||||
| Student Housing: | ||||||||||||||||||||||||||||||||||||||
|
The Carmin(6)
|
1 | Tempe, AZ | December 2021 | 59% | 833 | beds | 91% | |||||||||||||||||||||||||||||||
| Total Student Housing | 1 | 833 | beds | |||||||||||||||||||||||||||||||||||
| Office: | ||||||||||||||||||||||||||||||||||||||
| Willows Commerce 9805 | 1 | Redmond, WA | December 2020 | 100% | 80,980 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
| Elizabeth on Seventh | 1 | Charlotte, NC | December 2025 | 100% | 100,537 | sq. ft. | 93% | |||||||||||||||||||||||||||||||
| Total Office | 2 | 181,517 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Self-Storage: | ||||||||||||||||||||||||||||||||||||||
|
River Road Storage(5)
|
1 | Salem, OR | September 2021 | 100% | 76,034 | sq. ft. | 88% | |||||||||||||||||||||||||||||||
|
South Loop Storage(5)
|
1 | Houston, TX | September 2021 | 100% | 66,981 | sq. ft. | 89% | |||||||||||||||||||||||||||||||
|
University Parkway Storage(5)
|
1 | Winston-Salem, NC | April 2022 | 100% | 52,275 | sq. ft. | 91% | |||||||||||||||||||||||||||||||
|
Bend Self-Storage Portfolio(5)
|
2 | Bend, OR | June 2022 | 100% | 62,705 | sq. ft. | 90% | |||||||||||||||||||||||||||||||
|
Clarksville Self-Storage Portfolio(5)
|
3 | Clarksville, TN | July 2022 | 100% | 205,400 | sq. ft. | 83% | |||||||||||||||||||||||||||||||
| Total Self-Storage | 8 | 463,395 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Grocery-Anchored Retail: | ||||||||||||||||||||||||||||||||||||||
| Cortlandt Crossing | 1 | Mohegan Lake, NY | February 2022 | 100% | 122,308 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
| Total Grocery-Anchored Retail | 1 | 122,308 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||||||||||||||
|
Retail GP Fund(4)
|
14 |
Various(4)
|
Various(4)
|
4.5% - 9% | 4,857,674 | sq. ft. | 94% | |||||||||||||||||||||||||||||||
| Tanner Road MHC | 1 | Houston, TX | May 2025 | 100% | 85 | lots | 100% | |||||||||||||||||||||||||||||||
| Arizona MHC Portfolio | 3 | Tucson, AZ | September 2025 | 100% | 195 | lots | 89% | |||||||||||||||||||||||||||||||
| Silver Shores MHC | 1 | Everett, WA | November 2025 | 100% | 103 | lots | 96% | |||||||||||||||||||||||||||||||
| Total Other | 19 | |||||||||||||||||||||||||||||||||||||
| Total Investment Properties | 68 | |||||||||||||||||||||||||||||||||||||
(1)We hold our interest in the Sunbelt Medical Office Portfolio through a 50% ownership interest in a joint venture with Invesco U.S. Income Fund L.P., an affiliate of Invesco, (the "Invesco JV"). The Invesco JV holds an 85% ownership interest in a joint venture with a third party. We account for our investment using the equity method of accounting. The dates of acquisition in the table above reflect the dates of our investments in the Invesco JV.
(2)Meridian Business 940, Capital Park 2919, 3101 Agler and Earth City 13330 were previously presented as Midwest Industrial Portfolio. On April 24, 2025, we purchased the remaining 5% interest of the Meridian Business 940, Capital Park 2919 and 3101 Agler properties, in which we previously had a 95% ownership interest, from our joint venture partner.
(3)We hold our interest in Everly Roseland through a 60% consolidated ownership interest in Everly Roseland Co-Invest, a co-investment between INREIT OP and Invesco Real Estate Atlas US Everly LLC ("Atlas US"), an affiliate of Invesco and a majority owned subsidiary of Invesco Global Property Plus Fund. The Everly Roseland Co-Invest holds a 95% consolidated ownership interest in a joint venture with a third-party.
(4)We hold an 85% ownership interest in a joint venture, ITP Investments LLC ("ITP LLC"). ITP LLC has a 90% interest in PT Co-GP Fund, LLC ("Retail GP Fund"), which was formed to invest in retail properties through non-controlling general partner interests. The ownership interest in the table above reflects ITP LLC's ownership interest. The properties were acquired over several transactions from October 2021 to December 2025 and are located throughout the United States.
(5)These properties are held through our DST Program as of December 31, 2025 and have been consolidated in our consolidated balance sheets. Any profits interest due to the third-party investors in the DST Program are reported within non-controlling interests in consolidated joint ventures in our consolidated balance sheets.
(6)On February 28, 2025, we sold a 40% indirect leasehold interest in The Carmin student housing property to an unaffiliated third party. Our new consolidated ownership interest is 59%. Subsequent to December 31, 2025, we amended our joint venture agreement resulting in a new consolidated ownership interest of 57%.
Lease Expirations
The following schedule details the expiring leases at our consolidated office, industrial, and grocery-anchored retail properties, as well as our unconsolidated healthcare properties by annualized base rent and square footage as of December 31, 2025. The table below excludes our self-storage, multifamily, manufactured housing and student housing properties as substantially all leases at such properties expire within 12 months.
| Year |
Number of Expiring Leases |
Annualized
Base Rent (in thousands)(1)(2)
|
% of Total Annualized Base Rent Expiring |
Square
Feet(2)
|
% of Total Square Feet Expiring |
|||||||||||||||||||||||||||
| 2026 | 50 | $ | 3,733 | 10% | 347,246 | 13% | ||||||||||||||||||||||||||
| 2027 | 35 | 2,849 | 8% | 333,875 | 13% | |||||||||||||||||||||||||||
| 2028 | 39 | 2,827 | 7% | 85,867 | 3% | |||||||||||||||||||||||||||
| 2029 | 37 | 6,063 | 16% | 538,007 | 20% | |||||||||||||||||||||||||||
| 2030 | 37 | 3,935 | 11% | 209,424 | 8% | |||||||||||||||||||||||||||
| 2031 | 12 | 1,020 | 3% | 117,584 | 4% | |||||||||||||||||||||||||||
| 2032 | 16 | 2,220 | 6% | 77,809 | 3% | |||||||||||||||||||||||||||
| 2033 | 13 | 1,748 | 5% | 42,587 | 2% | |||||||||||||||||||||||||||
| 2034 | 16 | 3,313 | 9% | 324,662 | 12% | |||||||||||||||||||||||||||
| 2035 | 12 | 4,003 | 11% | 406,707 | 15% | |||||||||||||||||||||||||||
| Thereafter | 26 | 5,409 | 14% | 176,367 | 7% | |||||||||||||||||||||||||||
| Total | 293 | $ | 37,120 | 100% | 2,660,135 | 100% | ||||||||||||||||||||||||||
(1)Annualized base rent is determined from the annualized December 31, 2025 base rent per leased square foot of the applicable year and excludes tenant recoveries, straight-line rent and above-market and below-market lease amortization.
(2)Annualized base rent and square feet are presented at our pro rata share.
Real Estate Debt
We hold an investment in San Simeon Preferred Equity. San Simeon Preferred Equity owns San Simeon Apartments, a 431 unit multifamily property in Houston, Texas which is 90% occupied. Our investment is structured as a preferred membership interest, and we account for our investment in the San Simeon Apartments using the equity method of accounting. At December 31, 2025, we hold a total equity investment of $30.1 million.
We have an investment in Invesco Commercial Mortgage Income - U.S. Fund, L.P. ("CMI"), an affiliate of Invesco managed by our Adviser, which invests primarily in mortgage loans that are collateralized by commercial and residential real estate throughout the United States. As of December 31, 2025, our investment in CMI was $12.5 million.
The following table summarizes our investments in commercial loans as of December 31, 2025 and 2024:
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| in thousands | Origination Date | Loan Type | Periodic Payment Terms |
Interest Rate(1)
|
Loan Amount(2)
|
Principal Balance Outstanding | Fair Value |
Maturity Date(3)
|
||||||||||||||||||||||||||||||||||||||||||
| 5805 N Jackson Gap Loan | 1/20/2023 | Mezzanine | Interest only | 12.48% | $ | 12,245 | $ | 12,245 | $ | 12,235 | 2/9/2028 | |||||||||||||||||||||||||||||||||||||||
| The Catherine II Loan | 12/10/2025 | Senior | Interest only | 6.71% | 86,250 | 83,100 | 83,100 | 12/9/2030 | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 98,495 | $ | 95,345 | $ | 95,335 | ||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| in thousands | Origination Date | Loan Type | Periodic Payment Terms |
Interest Rate(1)
|
Loan Amount(2)
|
Principal Balance Outstanding | Fair Value |
Maturity Date(3)
|
||||||||||||||||||||||||||||||||||||||||||
| 5805 N Jackson Gap Loan | 1/20/2023 | Mezzanine | Interest only | 12.48% | $ | 13,007 | $ | 13,007 | $ | 12,996 | 2/9/2028 | |||||||||||||||||||||||||||||||||||||||
| $ | 13,007 | $ | 13,007 | $ | 12,996 | |||||||||||||||||||||||||||||||||||||||||||||
(1)Loan earns interest at Secured Overnight Financing Rate ("SOFR") plus a spread.
(2)Loan amount consists of outstanding principal balance plus unfunded loan commitments.
(3)Assumes all extension options are exercised by the borrower; however, loans may be repaid prior to such date. Extension options are subject to certain conditions, as defined in the respective loan agreement.
On February 9, 2025, the borrower of 5805 N Jackson Gap Loan exercised its first option to extend the maturity date of the loan to February 9, 2026. In connection with the extension, the borrower repaid $0.8 million of the principal balance of the loan as required by the terms of the loan agreement. Subsequent to December 31, 2025, a short-term extension was granted to the borrower to extend the maturity date of the loan to March 9, 2026. On February 20, 2026, the loan was repaid in full at par value.
Investments in Real Estate-Related Securities
The following tables summarize our investments in real estate-related securities by asset type:
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| in thousands | Principal Balance | Unamortized Premium (Discount) |
Amortized Cost / Cost(1)
|
Unrealized Gain (Loss), Net | Fair Value | Period-end Weighted Average Yield | Weighted-Average Maturity Date | |||||||||||||||||||||||||||||||||||||
| Non-agency CMBS | $ | 31,974 | $ | (1,065) | $ | 30,909 | $ | 342 | $ | 31,251 | 4.95 | % | 11/9/2027 | |||||||||||||||||||||||||||||||
| Preferred stock of REITs | N/A | N/A | 1,975 | 33 | 2,008 | 6.32 | % | N/A | ||||||||||||||||||||||||||||||||||||
| Total | $ | 31,974 | $ | (1,065) | $ | 32,884 | $ | 375 | $ | 33,259 | ||||||||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| in thousands | Principal Balance | Unamortized Premium (Discount) |
Amortized Cost / Cost(1)
|
Unrealized Gain (Loss), Net | Fair Value | Period-end Weighted Average Yield | Weighted-Average Maturity Date | |||||||||||||||||||||||||||||||||||||
| Non-agency CMBS | $ | 52,377 | $ | (1,553) | $ | 50,824 | $ | 49 | $ | 50,872 | 6.81 | % | 1/14/2027 | |||||||||||||||||||||||||||||||
| Common stock of REITs | N/A | N/A | 5,543 | 56 | 5,600 | 4.41 | % | N/A | ||||||||||||||||||||||||||||||||||||
| Total | $ | 52,377 | $ | (1,553) | $ | 56,367 | $ | 105 | $ | 56,472 | ||||||||||||||||||||||||||||||||||
(1)For non-agency CMBS, the amount presented represents amortized cost. For preferred and common stock of REITs, the amount presented represents cost.
Results of Operations
The following table sets forth the results of our operations:
| For the Year Ended December 31, | |||||||||||||||||
| in thousands | 2025 | 2024 | $ Change | ||||||||||||||
| Revenues | |||||||||||||||||
| Rental revenue | $ | 63,703 | $ | 59,303 | $ | 4,400 | |||||||||||
| Income from commercial loans | 2,750 | 3,701 | (951) | ||||||||||||||
| Other revenue | 4,435 | 3,090 | 1,345 | ||||||||||||||
| Total revenues | 70,888 | 66,094 | 4,794 | ||||||||||||||
| Expenses | |||||||||||||||||
| Rental property operating | 27,198 | 25,561 | 1,637 | ||||||||||||||
| General and administrative | 7,128 | 7,714 | (586) | ||||||||||||||
| Management fee - related party | 3,018 | 2,013 | 1,005 | ||||||||||||||
| Performance participation interest - related party | 151 | - | 151 | ||||||||||||||
| Depreciation and amortization | 31,117 | 24,550 | 6,567 | ||||||||||||||
| Total expenses | 68,612 | 59,838 | 8,774 | ||||||||||||||
| Other income (expense), net | |||||||||||||||||
| Income (loss) from unconsolidated entities, net | 2,198 | 2,476 | (278) | ||||||||||||||
| Gain (loss) from real estate-related securities, net | 2,840 | 3,688 | (848) | ||||||||||||||
| Gain (loss) from disposition of investments in real estate | - | 33,628 | (33,628) | ||||||||||||||
| Debt extinguishment charges | (485) | (193) | (292) | ||||||||||||||
| Income (loss) from investment in affiliated fund, net | 1,224 | 1,498 | (274) | ||||||||||||||
| Gain (loss) on derivative instruments, net | (339) | 2,001 | (2,340) | ||||||||||||||
| Unrealized gain (loss) on commercial loans | 1 | 170 | (169) | ||||||||||||||
| Interest income | 2,239 | 1,761 | 478 | ||||||||||||||
| Interest expense | (17,153) | (24,171) | 7,018 | ||||||||||||||
| Other income (expense) | (872) | (370) | (502) | ||||||||||||||
| Total other income (expense), net | (10,347) | 20,488 | (30,835) | ||||||||||||||
| Net income (loss) attributable to Invesco Real Estate Income Trust Inc. | $ | (8,071) | $ | 26,744 | $ | (34,815) | |||||||||||
| Dividends to preferred stockholders | $ | - | $ | (4) | $ | 4 | |||||||||||
| Issuance and redemption costs of redeemed preferred stock | - | (24) | 24 | ||||||||||||||
| Net (income) loss attributable to non-controlling interests in consolidated joint ventures | (1,642) | 531 | (2,173) | ||||||||||||||
| Net (income) loss attributable to non-controlling interest in INREIT OP | (55) | (21) | (34) | ||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (9,768) | $ | 27,226 | $ | (36,994) | |||||||||||
| Earnings (loss) per share: | |||||||||||||||||
| Net income (loss) per share of common stock, basic and diluted | $ | (0.43) | $ | 1.23 | $ | (1.66) | |||||||||||
| Weighted average shares of common stock | |||||||||||||||||
| Basic | 22,904,056 | 22,183,231 | 720,825 | ||||||||||||||
| Diluted | 22,904,056 | 22,181,149 | 722,907 | ||||||||||||||
Rental Revenue, Other Revenue and Rental Property Operating Expenses
Our rental revenue primarily consists of fixed contractual base rent from our tenants and is recognized on a straight-line basis over the non-cancelable terms of the related leases. Our rental property operating expenses generally include the costs of ownership of real estate, including insurance, utilities, real estate taxes and repair and maintenance expense. Rental revenue, other revenue and rental property operating expenses increased by $4.4 million, $1.3 million and $1.6 million, respectively, for the year ended December 31, 2025 as compared to the same period in 2024. Rental revenueand property operating expenses increased due to the acquisition of nine new properties in the last twelve months. The increase in other revenue is due to an increase in interests sold in our DST Program in 2025 driving an increase in the organizational and offering expense reimbursements and closing cost reimbursements that we receive.
Income from Commercial Loans and Unrealized Gain (Loss) on Commercial Loans
During the year ended December 31, 2025, income from our commercial loans decreased by $1.0 million compared to the year ended December 31, 2024. The decrease was primarily due to the repayment of the 9801 Blue Grass Loan that matured in 2024 and the partial repayment of the principal on the 5805 N Jackson Gap Loan in February 2025 partially offset by income from The Catherine II Loan that was originated in December 2025. Unrealized gain (loss) on commercial loans decreased by $0.2 million driven by changes to the interest rate environment as compared to 2024.
General and Administrative Expenses
During the year ended December 31, 2025, general and administrative expenses decreased $0.6 million compared to the year ended December 31, 2024.The decrease was primarily due to the reimbursement of $1.1 million issued from the Adviser for expenses incurred by us for third-party support for our DST Program, partially offset by higher corporate level expenses in the current year.
Management Fee - Related Party
During the year ended December 31, 2025, the management fee increased by $1.0 million compared to the year ended December 31, 2024 due to increases in our net asset value.
Performance Participation Interest - Related Party
During the year ended December 31, 2025, the performance participation interest increased approximately $0.2 million consistent with increases in our net asset value. There was no performance participation interest accrual for the year ended December 31, 2024.
Depreciation and Amortization
During the year ended December 31, 2025, depreciation and amortization increased $6.6 million compared to the year ended December 31, 2024, primarily due to the acquisition of nine new properties in the last twelve months.
Income (Loss) from Unconsolidated Entities, Net
During the year ended December 31, 2025, income (loss) from unconsolidated entities, net decreased $0.3 million compared to the year ended December 31, 2024. This was primarily due to a decrease in income from the Retail GP Fund caused by higher gains from dispositions in the prior year as compared to the current year.
Gain (Loss) from Real Estate-Related Securities, Net
During the year ended December 31, 2025, gain (loss) from real estate-related securities, net decreased by $0.8 million compared to the year ended December 31, 2024. The decrease was primarily due to market fluctuations on CMBS holdings.
Gain (Loss) from Disposition of Investments in Real Estate
There were no dispositions of investments in real estate during the year ended December 31, 2025. During the year ended December 31, 2024, we completed dispositions of two self-storage properties and a student housing property for a total gain of $33.6 million.
Debt Extinguishment Charges
During the year ended December 31, 2025, we incurred debt extinguishment charges of $0.5 million from the early repayment of the mortgage notes secured by The Carmin and Midwest Industrial Portfolio properties. During the year ended December 31, 2024, we incurred debt extinguishment charges of $0.2 million related to the early repayment of the mortgage on the Bixby Kennesaw property as a result of the sale.
Income (Loss) from Investment in Affiliated Fund, Net
During the year ended December 31, 2025, income (loss) from investment in affiliated fund, net decreased by $0.3 million compared to the year ended December 31, 2024. The decrease is primarily due to a decrease in net investment income caused by partial redemptions and distributions which decreased our investment and unrealized loss allocations of the fund.
Gain (Loss) on Derivative Instruments, Net
During the year ended December 31, 2025, gain (loss) on derivative instruments, net decreased $2.3 million compared to the year ended December 31, 2024. The decrease is primarily due to a decrease in contractual interest received from the derivative instruments due to expired and terminated contracts.
Interest Income
During the year ended December 31, 2025, interest income increased by $0.5 million compared to the year ended December 31, 2024. The increase was primarily due to a higher average cash balance in 2025 compared to 2024.
Interest Expense
During the year ended December 31, 2025, interest expense decreased by $7.0 million compared to the year ended December 31, 2024. The decreaseis primarily due to the repayment of the mortgage for the Bixby Kennesaw property in December 2024 and the repayment of the mortgage related to the Midwest Industrial Portfolio in April 2025.
Other Income (Expense)
During the year ended December 31, 2025, other expense increased by $0.5 million compared to the year ended December 31, 2024. This increase was primarily due to an increase in income tax expense in the current year driven by increased activity at the TRS entity.
Refer to Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of the Annual Report on Form 10-K for the year ended December 31, 2024 for discussion of our consolidated results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Liquidity and Capital Resources
Liquidity
Our primary needs for liquidity and capital resources are to fund our investments, to make distributions to our stockholders, to repurchase shares of our common stock under our share repurchase plan, to pay our offering costs and operating fees and expenses and to pay interest on our borrowings. We will obtain the funds required to purchase investments and conduct our operations from the net proceeds of our Private Offerings, our Public Offering, DST Program and any future offerings we may conduct (collectively, the "Capital Raising Programs"), from secured and unsecured borrowings from banks and other lenders and from net cash provided by operating activities. Generally, cash needs for items other than asset acquisitions are met from operations, and cash needs for asset acquisitions are funded by our Capital Raising Programs and debt financings. However, there may be a delay between the sale of our shares and our purchase of assets that could result in a delay in the benefits to our stockholders, if any, of returns generated from our investment operations.
Our target leverage ratio is approximately 50% to 60%. As used herein, "leverage ratio" is measured by dividing (x) the sum of the Company's consolidated property-level debt, entity-level debt and debt-on-debt, net of cash and restricted cash, by (y) the asset value of the Company's real estate investments, private real estate debt investments and equity in the Company's real estate-related securities portfolio (in each case measured using the greater of fair market value and cost), including the Company's net investment in unconsolidated investments. For purposes of determining the asset value of the Company's real estate investments, the Company includes the asset value of the DST Properties due to the master lease structure, including the Company's fair market value purchase option. The leverage ratio calculation does not include (i) indebtedness incurred in connection with funding a deposit in advance of the closing of an investment, (ii) indebtedness incurred as other working capital advances, (iii) indebtedness on the Company's real estate securities investments or (iv) the pro rata share of debt within the Company's unconsolidated investments. Further, the refinancing of any amount of existing indebtedness will not be deemed to constitute incurrence of new indebtedness for purposes of the leverage ratio calculation so long as no additional amount of net indebtedness is incurred in connection therewith (excluding the amount of transaction expenses associated with such refinancing). Our charter prohibits us from borrowing more than 300% of our net assets, which approximates borrowing 75% of the cost of our investments. We may exceed this limit if a majority of our independent directors approves each borrowing in excess of the limit and we disclose the justification for doing so to our stockholders.
If we are unable to raise substantial funds in the Capital Raising Programs, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments we make. Further, we have certain fixed operating expenses, including certain expenses as a publicly offered REIT, regardless of whether we are able to raise substantial funds in the Capital Raising Programs. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.
The Adviser and its affiliates provide us with our management team, including our officers and appropriate support personnel. The Adviser or the Adviser's affiliates may provide us services that would otherwise be performed by third parties. In such event, we will reimburse the Adviser or the Adviser's affiliate the cost of performing such services provided that such reimbursements will not exceed the amount that would be payable if such services were provided by a third party in an arms-length transaction.
The Adviser advanced all of our operating expenses on our behalf through December 31, 2021.Beginning January 2022 and ceasing September 2022, we began ratably reimbursing the Adviser over 60months for the operating expenses incurred prior to December 31, 2021 and will recommence reimbursements to the Adviser following the earlier of (1) the date that our NAV reaches $1.0 billionand (2) December 31, 2027. As of December 31, 2025 and 2024, we have $5.4 million, respectively, due to the Adviser for advanced operating expenses that are recorded as a component of due to affiliates on our consolidated balance sheets.
The Adviser advanced all of our organization and offering expenses (other than upfront selling commissions, dealer manager fees, and ongoing stockholder servicing fees) incurred through December 31, 2022. We will begin reimbursing the Adviser for advanced organization and offering expenses upon the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2027. We will reimburse the Adviser for all of our advanced expenses ratably over 60 months following such date. As of December 31, 2025 and 2024, we have $6.8 million, respectively, due to the Adviser for advanced organization and offering expenses that are recorded as a component of due to affiliates on our consolidated balance sheets.
InJanuary 2022, we began reimbursing the Adviser on a quarterly basis for operating expenses incurred subsequent to December 31, 2021. As of December 31, 2025 and 2024, we have $3.8 million and $4.9 million, respectively, due to the Adviser for operating expenses. The amount due to the Adviser is recorded as a component of due to affiliates on our consolidated balance sheets.
In January 2023, we began reimbursing the Adviser on a quarterly basis for organization and offering expenses incurred subsequent to December 31, 2022. As of December 31, 2025 and 2024, we have $0.5 million and $1.4 million, respectively, due to the Adviser for organization and offering expenses that are recorded as a component of due to affiliates on our consolidated balance sheets.
Under our charter, we may reimburse the Adviser, at the end of each fiscal quarter, for total operating expenses paid by the Adviser. However, we may not reimburse the Adviser at the end of any fiscal quarter for total operating expenses (as defined in our charter) that, in the four consecutive fiscal quarters then ended, exceed the greater of 2% of average invested assets or 25% of net income determined without reduction for any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of our assets for that period (the "2%/25% Guidelines").
We may reimburse the Adviser for expenses in excess of the 2%/25% Guidelines if a majority of our independent directors determines that such excess expenses (an "Excess Amount") are justified based on unusual and non-recurring factors. Operating expenses for the four fiscal quarters ended December 31, 2025 did not exceed the charter-imposed limitation.
MassMutual committed to purchase $400.0 million of Class N common stock in the Private Offerings and fully met its commitment as of December 31, 2022.
Beginning January 1, 2026 and continuing until we have repurchased $200.0 million of MassMutual shares, we are required to repurchase MassMutual shares on a monthly basis, subject to thresholds based on monthly net offering proceeds. In any month, MassMutual may choose to waive our obligation to repurchase shares. We are required to limit repurchases to ensure that the aggregate NAV of MassMutual shares is at least $50.0 million. MassMutual has waived this repurchase obligation through March 31, 2026.
Beginning January 1, 2026, MassMutual holds the right to request that we repurchase MassMutual shares on a monthly basis, subject to thresholds based on monthly net offering proceeds and the Company's NAV. This right to request that we repurchase MassMutual shares is in addition to the requirement to repurchase MassMutual shares described in the preceding paragraph. We will not be required to repurchase (1) in any calendar year, more than $150.0 million of MassMutual shares or (2) in any calendar month, MassMutual shares with an aggregate repurchase price equal to more than 100% of the net proceeds to us from the sale of shares of our common stock during such month. MassMutual has not exercised the right to request repurchases as of March 26, 2026.
Capital Resources
As of December 31, 2025, our indebtedness includes a secured lending agreement for one investment in a commercial loan, three mortgages secured by their corresponding properties and a financing obligation. We also have additional funds available to us through our revolving credit facility. As of December 31, 2025, we have a $40.0 million balance on our revolving credit facility.
Our borrowing arrangements include a revolving credit facility, secured lending agreement and mortgage notes payable. The table below summarizes our borrowing arrangements as of December 31, 2025 and 2024:
| December 31, 2025 | Principal Balance Outstanding | |||||||||||||||||||||||||||||||||||||||||||||||||
| $ in thousands | Current Maturity |
Extended Maturity Date(1)
|
Interest Rate(2)
|
Weighted Average Interest Rate | Maximum Facility Size | Available Capacity | December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||
| Revolving Credit Facility | 7/23/2027 | 7/21/2028 |
S + applicable margin(3)
|
5.57% | $ | 250,000 | $ | 60,000 | $ | 40,000 | $ | - | ||||||||||||||||||||||||||||||||||||||
| Secured Lending Agreement | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase Agreement | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Citibank | 12/9/2027 | 12/9/2029 | S + 1.70% | 5.46% | $ | 160,200 | $ | 93,720 | $ | 66,480 | $ | - | ||||||||||||||||||||||||||||||||||||||
| Mortgage Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||
| The Carmin | 3/5/2026 | 3/5/2032 | S + 1.75% | 5.96% | $ | 84,000 | $ | - | $ | 84,000 | $ | 65,500 | ||||||||||||||||||||||||||||||||||||||
| Cortlandt Crossing | 3/1/2027 | N/A | 3.13% | 3.13% | 39,660 | - | 39,660 | 39,660 | ||||||||||||||||||||||||||||||||||||||||||
| Everly Roseland | 4/28/2027 | 4/28/2029 | S + 1.45% | 5.78% | 113,500 | 1,842 | 111,658 | 111,441 | ||||||||||||||||||||||||||||||||||||||||||
| Midwest Industrial Portfolio | N/A | N/A | N/A | 3.19% | N/A | N/A | - | 70,000 | ||||||||||||||||||||||||||||||||||||||||||
| Total mortgages payable | 235,318 | 286,601 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred financing costs, net | (570) | (1,335) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgages payable, net | $ | 234,748 | $ | 285,266 | ||||||||||||||||||||||||||||||||||||||||||||||
(1)Assumes all available extension options are exercised upon meeting certain conditions, which may include payment of a non-refundable extension fee.
(2)The term "S" refers to the relevant floating benchmark rate, SOFR.
(3)Borrowings under the Revolving Credit Facility carry interest at a rate equal to (i) SOFR, (ii) SOFR with an interest period of one, three or six-months, or (iii) a Base Rate, where the base rate is the highest of (a) federal funds rate plus 0.5%, (b) the rate of interest as publicly announced by Bank of America , N.A. ("Bank of America") as its "prime rate", (c) SOFR with an interest period of one month plus 1.0%, or (d) 1.0%, in each case, plus an applicable margin that is based on our leverage ratio.
As of December 31, 2025, we were in compliance with all loan covenants in our revolving credit facility, secured lending and mortgage note agreements.
We have a Revolving Credit Facility with Bank of America, which was amended on July 25, 2025. The amendment extended the maturity date from September 5, 2025 to July 23, 2027 and grants an option to extend the term to July 21, 2028, subject to certain conditions. With the amendment, the aggregate commitment is $100.0 million with an ability to request increases up to $250.0 million in aggregate commitments. With the amendment, the unused commitment fee was modified to be 0.25% if usage is less than 50% and 0.15% if usage is greater than or equal to 50% that accrues on the daily amount by which the aggregate commitments exceed the total outstanding balance of the Revolving Credit Facility.
On December 9, 2025, we entered into a traditional repurchase agreement with Citibank. We have pledged one investment in a commercial loan with a fair value of $83.1 million as collateral for this agreement. We segregate the commercial real estate loan that we have pledged as collateral in our books and records. Our repurchase agreement counterparty has the right to resell or repledge the collateral posted but has the obligation to return the pledged collateral upon maturity of the repurchase agreement.
We have entered into mortgage notes that are secured by our real estate investments.
On February 28, 2025, we sold a 40% indirect leasehold interest in The Carmin student housing property and refinanced the mortgage note secured by the property. Proceeds from the new secured mortgage note were partially used to repay the existing mortgage. We incurred debt extinguishment charges of approximately $34,000 in connection with the refinancing of the mortgage note.
On April 24, 2025, we repaid the mortgage note secured by Meridian Business 940, Capital Park 2919, 3101 Agler and Earth City 13330 (collectively the "Midwest Industrial Portfolio") in connection with our buyout of the joint venture partner. We incurred debt extinguishment charges of $0.5 million from the early repayment of the mortgage note.
In connection with the sale and leaseback of The Carmin property, as of December 31, 2025, we hold a financing obligation on our condensed consolidated balance sheets of $54.0 million, net of debt issuance costs. We entered into a ground lease executed as a sale and leaseback transaction in 2021 whereby we sold The Carmin to an unaffiliated third party for $54.0 million and simultaneously leased back the property from the same unaffiliated third party for 104 years. We accounted for the sale and leaseback of The Carmin as a failed sale and leaseback transaction because the lease is classified as a finance lease. Accordingly, we did not recognize the sale of The Carmin, and we recorded the net proceeds from the sale as a financing lease obligation. We continue to account for the property as a real estate investment in our consolidated financial statements and depreciate the property as if we were the legal owner. We allocate the rental payments we make under the lease between interest expense and principal repayment of the financing obligation using the effective interest method and amortize over the 104 year lease term. The total principal payments will not exceed the difference between the gross proceeds from the sale of $54.0 million and the initial carrying value of the land of $17.6 million, resulting in maximum principal payments of $36.3 million over the term of the arrangement.
See Note 10 - "Borrowings" to our consolidated financial statements in this Annual Report on Form 10-K for a discussion of our borrowing arrangements.
Other potential future sources of capital include incremental secured or unsecured financings from banks or other lenders and proceeds from the sale of assets. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. We have not yet identified any sources for these types of financings.
At December 31, 2025, we had cash and cash equivalents of $25.6 million and restricted cash of $2.0 million. Our restricted cash consists of subscriptions received in advance, amounts in escrow for taxes and insurance related to mortgages at certain properties and security deposits.
Capital Uses
During periods when we are selling more shares than we are repurchasing, we primarily use our capital to acquire our investments, which we also fund with other capital resources. During periods when we are repurchasing more shares than we are selling, we primarily use our capital to fund repurchases. During the year ended December 31, 2025, we received repurchase requests below the applicable repurchase limits under our Share Repurchase Plan and fulfilled all repurchase requests.
Our operating expenses include, among other things, the management fee we pay to the Adviser and the performance participation allocation that INREIT OP pays to the Special Limited Partner, both of which will impact our liquidity to the extent the Adviser or the Special Limited Partner elects to receive such payments in cash, or subsequently redeem shares or OP units previously issued to them. To date, the Adviser and the Special Limited Partner have both always elected to be paid in shares or OP units, resulting in a non-cash expense.
Forward-Looking Statements Regarding Liquidity
We believe that with respect to liquidity, we are well positioned with $85.6 million of immediate liquidity as of December 31, 2025, made up of $60.0 million of undrawn capacity on our Revolving Credit Facility and $25.6 million of cash and cash equivalents. In addition, we hold $33.3 million in investments in real estate-related securities that could be liquidated to satisfy any potential liquidity requirements.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash:
| in thousands | For the Year Ended December 31, 2025 | For the Year Ended December 31, 2024 | For the Year Ended December 31, 2023 | ||||||||||||||
| Cash flows provided by operating activities | $ | 28,203 | $ | 18,048 | $ | 20,219 | |||||||||||
| Cash flows provided by (used in) investing activities | (272,634) | 12,093 | 26,469 | ||||||||||||||
| Cash flows provided by (used in) financing activities | 218,904 | (20,454) | (48,558) | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | (25,527) | $ | 9,687 | $ | (1,870) | |||||||||||
Operating Activities - Cash flows from operating activities of $28.2 million for the year ended December 31, 2025 and $18.0 million for the year ended December 31, 2024, respectively, consists of our net loss of $8.1 million in 2025 and net income of $26.7 million in 2024 adjusted for non-cash items and changes in assets and liabilities. The change in our assets and liabilities is primarily due to the timing of cash receipts and cash payments, including amounts we owe our affiliates.
Investing Activities- Cash flows from investing activities decreased $284.7 million during the year ended December 31, 2025 compared to the corresponding period in 2024 primarily due to acquisitions of real estate and originations of commercial loans of $189.4 million together with no additional proceeds from dispositions of real estate or repayments of commercial loans of $150.4 million in 2025, partially offset by an increase in net proceeds from the real estate-related securities portfolio of $50.2 million. Cash flows from investing activities decreased $14.4 million during the year ended December 31, 2024 compared to the corresponding period in 2023 primarily due to acquisitions of real estate and purchases of real estate related securities of $141.8 million. These decreases were offset by proceeds from the dispositions of real estate, proceeds from the repayment of the Blue Grass commercial loan, proceeds from the sale of real estate related securities, and distributions of capital from unconsolidated entities of $99.1 million together with no additional investments in our affiliated fund or originations of commercials loans of $28.0 million.
Financing Activities- Cash flows from financing activities increased $239.4 million for the year ended December 31, 2025 compared to the corresponding period in 2024 primarily due to increases in contributions from our non-controlling interests primarily related to DST proceeds, cash proceeds from the sale of an interest in The Carmin and net borrowings of $263.1 million. The increase was offset by a decrease in net proceeds and repurchases of common stock of $17.1 million and cash paid in connection with the buyout of our joint venture partner in the Midwest Industrial Portfolio of $1.5 million. Cash flows provided by financing activities decreased $28.1 million for the year ended December 31, 2024 compared to the corresponding period in 2023 primarily due to contributions from our non-controlling interests and a decrease in common stock distributions for an overall increase of $44.6 million. This increase was offset by decreases in subscriptions received in advance, proceeds from the issuance of common stock, stock repurchases and net borrowings of $15.7 million.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment and use of assumptions as to future uncertainties. Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties. All of these estimates reflect our best judgment about current, and for some estimates, future economic and market conditions and their effects based on information available as of the date of these financial statements. If conditions change from those expected, it is possible that materially different amounts could be reported in our financial statements.
Purchase Price Allocation of Acquired Real Estate
Upon the acquisition of a property, we assess the fair value of acquired tangible and intangible assets and liabilities (including land, buildings, tenant improvements, above-market and below-market leases, acquired in-place leases, other identified intangible assets and assumed liabilities) and allocate the purchase price to the acquired assets and assumed liabilities on a relative fair value basis in accordance with Accounting Standard Codification 805, Business Combinations. All expenses related to the acquisition are capitalized and allocated among the identified assets. Generally, the most significant portion of the allocation is to building and land and requires the use of market-based estimates and assumptions.
We estimate value using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis). Factors considered in our analysis include an estimate of carrying costs during hypothetical expected lease-up periods, considering current market rental rates and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets and liabilities acquired. In estimating carrying costs, management also includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on specific local cap rates and discount rates. We also estimate costs to execute similar leases, including leasing commissions, legal and other related expenses to the extent that such costs are not already incurred in connection with a new lease origination as part of the transaction. We also consider the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and management's expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors. A change in any of the assumptions above, which are subjective, could have a material impact on our results of operations.
The allocation of the purchase price directly affects the following in our consolidated financial statements:
•the amount of purchase price allocated to the various tangible and intangible assets and liabilities on our consolidated balance sheets;
•the amounts allocated to the value of above-market and below-market lease values are amortized to rental income over the remaining non-cancelable terms of the respective leases. The amounts allocated to all other tangible and intangible assets are amortized to depreciation or amortization expense. Thus, depending on the amounts allocated between land and other depreciable assets, changes in the purchase price allocation among our assets could have a material impact on our FFO, a metric which is used by many REIT investors to evaluate our operating performance; and
•the period of time over which tangible and intangible assets are depreciated varies greatly, and thus, changes in the amounts allocated to these assets will have a direct impact on our results of operations. Intangible assets are generally amortized over the respective life of the leases. Also, we depreciate our buildings up to 40 years, but do not depreciate our land. These differences in timing could have a material impact on our results of operations.
Impairment of Long-Lived Assets
We review real estate properties (including any related amortizable intangible assets or liabilities) for impairment each quarter or when there is an indicator, including property operating performance, changes in anticipated holding period, general market conditions, that the value of the real estate properties may be impaired. A property value is considered impaired if our estimate of current and expected operating cash flows of the property over its anticipated hold period is less than the net carrying value of the property. Our estimate of the expected future cash flows used in testing for impairment is subjective and based on, among other things, our estimates regarding future market conditions, rental rates, occupancy levels, costs of tenant improvements, assumptions regarding the residual value of our properties at the end of our anticipated holding period, discount rates, exit capitalization rates and the length of our anticipated holding period. In preparing the projection of undiscounted future cash flows, we estimate exit capitalization rates and market rental rates using information that we obtain from market comparability studies and other comparable sources, and apply the undiscounted cash flows against our expected holding period. These assumptions could differ materially from actual results. If changes in our strategy or the market conditions result in a reduction in the holding period and an earlier sale date, an impairment loss could be recognized and such loss could be material. If impairment were indicated, the carrying value of the property would be written down to its estimated fair value based on our best estimate of the property's discounted future cash flows using market derived capitalization rates, discount rates and market rental rates applied against our expected hold period.
Impairment of Investments in Unconsolidated Entities
We review investments in unconsolidated entities for impairment each quarter or when there is an indicator that the carrying amount of the investments may not be fully recoverable. An investment is considered to be impaired when the decline in value below the carrying amount is determined to be other than temporary. Our evaluation of considering whether factors indicate that a potential impairment has occurred can require us to exercise significant judgment. If impairment was indicated, the carrying amount of the investment would be written down to its fair value based on our best estimate, which is also subjective and requires the use of certain assumptions. Our estimate of the fair value used in testing investments in unconsolidated entities for impairment is calculated in a manner similar to our real estate properties.
Valuation of Investments in Commercial Loans
We have elected the fair value option for our commercial real estate loan investments. We believe the fair value option will provide its financial statements users with reduced complexity, greater consistency, understandability and comparability. In the month that we originate or acquire a loan, the par value of the loan represents the fair value of the transaction. Thereafter, an independent valuation advisor values our commercial loan investments monthly using a discounted cash flow analysis. The yield used in the discounted cash flow analysis is determined by comparing the features of the loan to the interest rates and terms required by lenders in the new loan origination market for similar loans and the yield required by investors acquiring similar loans in the secondary market as well as a comparison of current market and collateral conditions to those present at origination or acquisition.
Redeemable Equity Instruments
We report our Class N redeemable common stock and redeemable non-controlling interest in INREIT OP on our consolidated balance sheets at redemption value. Redemption value is determined based on our NAV per share or unit as of our balance sheet date. For purposes of determining our NAV, our investments in real estate are recorded at fair value based on third party valuations prepared by licensed appraisers in accordance with standard industry practice.
These fair value estimates of our investments in real estate are particularly important as they are used for the calculation of NAV, which determines the adjustment to the carrying value of our Class N redeemable common stock and redeemable non-controlling interest in INREIT OP. Significant differences in the fair value of our Class N redeemable common stock and redeemable non-controlling interest in INREIT OP stock may result from changes in market conditions that cause our NAV, and thus the redemption value, to increase or decrease during the period. Although increases and decreases in our NAV do not have an impact to our consolidated statements of operations, they would cause a significant change in our equity.
Pending Accounting Pronouncements
See Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in this Annual Report on Form 10-K for a discussion of pending accounting pronouncements.
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