New Mountain Net Lease Trust

11/06/2026 | Press release | Distributed by Public on 11/06/2026 13:35

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. 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 "Item 1A. Risk Factors" in our 2025 Annual Report on Form 10-K filed with the SEC on March 30, 2026. Dollars are in thousands, except for per share amounts.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements in this Quarterly Report on 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 Quarterly Report on Form 10-Q may include statements as to:

•
Interest rates;
•
Economic growth;
•
Changes in demographics;
•
Market conditions;
•
Rent growth;
•
Net operating income growth;
•
Capitalization rates; and
•
Occupancy rates.

In addition, words such as "anticipate," "believe," "expect" and "intend" indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties. 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" in our 2025 Annual Report on Form 10-K and elsewhere in this Quarterly Report on Form 10-Q. Other factors that could cause actual results to differ materially include:

•
Changes in interest rates;
•
Inflation;
•
Unexpected market movements;
•
A slowdown or contraction of the economy;
•
Legislative or regulatory developments;
•
Errors in strategy execution;
•
Acts of God and wars (including the war in Ukraine and the conflict and escalating tensions in the Middle East); and
•
Other asset-level developments, including the risk factors described in "Item 1A. Risk Factors."

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could also be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statements in this Quarterly Report on 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 Quarterly Report on Form 10-Q. Moreover, except as otherwise required by federal securities laws we assume no duty and do not undertake to update the forward-looking statements.

Overview

We are a Maryland statutory trust formed on August 5, 2024. Our investment strategy is primarily to acquire, own, finance and lease a diversified portfolio of operationally critical, single-tenant, industrial net lease real estate assets located in the United States. We utilize New Mountain's deep sponsor relationships and sponsor coverage effort to help identify, source, and execute new net lease opportunities. Our acquisition approach focuses on underwriting (i) tenant's credit, (ii) the real estate, and (iii) the location's criticality to the tenant's underlying operations. We leverage New Mountain's leading underwriting engine, housed in the private equity and credit arms, to provide tools to efficiently and, we believe, accurately underwrite the underlying tenant credit. We may also selectively invest in real estate-related assets, including debt investments.

We are an externally advised, perpetual-life real estate investment trust ("REIT") formed to pursue the following investment objectives:

•
Provide current income in the form of predictable, stable monthly cash distributions;
•
Realize appreciation in the net asset value ("NAV") from differentiated sourcing, investment selection, structuring and proactive asset management;
•
Preserve and protect invested capital; and
•
Provide an investment alternative for shareholders seeking to allocate a portion of their long-term investment portfolios to commercial real estate with the potential for additional upside through real estate tax advantages, appreciation and lower volatility than publicly traded real estate companies.

We may not achieve our investment objectives. See "Item 1A. Risk Factors."

As part of our investment strategy, we may also selectively invest in real estate-related assets, including debt investments such as commercial mortgage loans, bank loans, mezzanine loans, other interests relating to real estate, debt of companies in the business of owning and/or operating real estate-related businesses, agency and non-agency RMBS, CMBS, CLOs, CDOs and publicly listed equity securities of real estate and real estate-related companies, preferred equity, real estate corporate debt, equity of other REITs/traded securities, to provide current income and, alongside our credit facilities and operating cash flow, serve as an additional source of liquidity for cash management, satisfying share repurchases under our share repurchase plan and other purposes.

Our Board of Trustees will at all times have ultimate oversight and policy-making authority over us, including responsibility for governance, financial controls, compliance and disclosure. Pursuant to the advisory agreement between us and the Adviser or its affiliate (the "Advisory Agreement"), however, 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 engaging in a continuous, unlimited private placement offering of our common shares to "accredited investors" (as defined in Rule 501 promulgated pursuant to the Securities Act) made pursuant to exemptions provided by Section 4(a)(2) of the Securities Act and applicable state securities laws. On January 2, 2025, we completed the Formation Transactions and the initial closing of our private offering. See "Item 1. Business-Formation Transactions." We elected and have qualified to be taxed as a REIT under the U.S. Internal Revenue Code of 1986, as amended (the "Code") beginning with the first taxable year of New Mountain Net Lease Partners Corporation, a Maryland corporation (the "Predecessor") (our predecessor for U.S. federal tax purposes) ended December 31, 2018, and each year since, and intend to continue to make such an election.

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 derived from acquiring properties or real estate-related securities, other than those referred to in this Form 10-Q.

From January 2, 2025 through September 30, 2026, we received net proceeds of $557,245 from the sale of our common shares, including $263,034 in connection with the initial retail closing. We have contributed the net proceeds to the Operating Partnership in exchange for a corresponding number of Class A, Class F, Class E, and Class I units of the Operating Partnership. The Operating Partnership has primarily used the net proceeds to make investments in real estate. We intend to continue selling shares on a monthly basis.

Emerging Growth Company Status

We are, and will remain, an "emerging growth company" as defined in the JOBS Act until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the date of an initial public offering pursuant to an effective registration statement under the Securities Act, (ii) in which we have total annual gross revenue of at least $1.235 billion, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our shares that is held by non-affiliates exceeds $700 million as of the date of our most recently completed second fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as we remain an "emerging growth company", we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act"). Also, because we are not a large accelerated filer or an accelerated filer under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and will not be for so long as our common shares are not traded on a securities exchange, we will not be subject to auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act even once we are no longer an emerging growth company. We cannot predict if investors will find our shares less attractive because we may rely on some or all of these exemptions.

Results of Operations of the Company

Q3 2026 Operating Highlights

Distributions

•
Declared net distributions totaling $17,132 for the three months ended September 30, 2026. The following table details the annualized distribution rates and total returns:

Class A Shares

Class F Shares

Class I Shares

Class E Shares

Annualized Distribution Rate(1)

7.8

%

7.8

%

7.7

%

8.5

%

Inception-to-Date Total Return(2)

11.8

%

11.8

%

11.0

%

13.5

%

(1)
The annualized distribution rate is calculated by annualizing the net distribution amounts per share declared as of September 30, 2026, and dividing by the NAV per share as of August 31, 2026.
(2)
The inception-to-date total return is annualized and calculated as the change in NAV per share since January 2, 2025, plus any declared distributions per share since January 2, 2025 and assumes reinvestment of distributions in accordance with our distribution reinvestment plan for Class F and Class I shares only. We believe total return is a useful measure of our overall performance.

Investment Activity

•
Acquired thirty-seven properties totaling approximately 1,404,252 square feet during the three months ended September 30, 2026. The properties were acquired for an aggregate purchase price of approximately $262,278, including closing costs.

Capital Activity and Financing Activity

•
We raised proceeds of $64,679 from the sale of our common shares during the three months ended September 30, 2026.
•
We incurred and paid down our mortgage notes and credit facility debt as follows during the three months ended September 30, 2026: (i) we borrowed $112,625 and paid down $84,809 on our revolving loan with City National Bank, and (ii) we borrowed $142,777 and paid down $95,089 on our Aggregation Facility with Goldman Sachs.

Overall Portfolio

As of September 30, 2026, our portfolio consisted of 211 properties leased to 41 tenants.

Real Estate Investments

The following chart describes the diversification of the Company's real estate portfolio as of September 30, 2026:

(1)
Industrial and Essential Services Building Sub-Type Diversification, Geographic Diversification, and Tenant Industry Diversification are weighted by the forward 12 months cash rent based on in place rent agreements as of September 30, 2026, excluding tenant recoveries, straight-line rent, and above-market and below-market lease amortization.

Portfolio Overview

The following table provides information regarding the portfolio as of September 30, 2026:

Location

Number of
Properties

Acquisition
Date (1)

Ownership
Percentage

Occupancy(2)

Square Feet

Various

6

Jun-18

50

%

100

%

1,790,587

Various

6

Jun-18

100

%

100

%

96,444

Various

4

Oct-18

70

%

100

%

951,651

St Joseph, MI; Monette, AR

2

Nov-18

100

%

100

%

214,500

Rome, GA; Payson, UT

2

Nov-18

67

%

100

%

474,299

Various

21

Dec-18

100

%

100

%

539,369

Cleveland, TN; St. Charles, IL

2

Jun-19

100

%

100

%

310,401

St. Louis, MO

2

Jun-19

100

%

100

%

64,609

Earth City, MO; Morristown, TN

4

Jun-19

100

%

100

%

484,031

Various

5

Jul-19

100

%

100

%

438,407

Denver, CO; St. Louis, MO

2

Aug-19

100

%

100

%

122,475

Various

5

Oct-19

80

%

100

%

1,356,188

Various

4

Mar-20

100

%

100

%

451,920

London, Ontario

1

Mar-20

100

%

100

%

340,414

Ann Arbor, MI; Mesa, AZ

3

Sep-20

100

%

100

%

121,779

Chicago Heights, IL

1

Sep-20

100

%

100

%

184,530

Denver, PA

1

Sep-20

100

%

100

%

197,300

Various

3

Nov-20

80

%

100

%

639,162

Spencer, IN

1

Feb-21

80

%

100

%

258,375

Various

14

Feb-21

80

%

100

%

230,010

Yaphank, NY

1

Mar-21

80

%

100

%

491,200

Clinton, TN; Los Angeles, CA

2

Mar-21

100

%

100

%

247,366

Bristol, PA

1

May-21

100

%

100

%

49,534

Various

3

Jun-21

100

%

100

%

465,895

Various

3

Aug-21

80

%

100

%

183,797

Various

4

Aug-21

100

%

100

%

972,499

Various

4

Sep-21

100

%

100

%

332,681

Various

3

Nov-21

80

%

100

%

861,600

Various

24

Dec-21

80

%

100

%

606,967

Elgin, IL

1

Dec-21

100

%

100

%

425,578

Various

4

Dec-21

100

%

100

%

394,658

Eden Prairie, MN

1

Dec-21

100

%

100

%

67,041

Gainesville, FL

8

Mar-22

100

%

100

%

444,973

Various

17

Aug-22

100

%

100

%

597,209

Sterling, VA

4

Sep-25

100

%

100

%

316,268

Carlsbad, CA

1

Oct-25

100

%

100

%

128,745

Vernon, CA

1

May-26

100

%

100

%

238,457

Everett, WA

1

May-26

100

%

100

%

288,977

Hiddenite, NC

1

Jun-26

100

%

100

%

70,000

Jonesboro, AR

1

Jun-26

100

%

100

%

135,410

Various

3

Jul-26

100

%

100

%

412,306

Various

13

Aug-26

100

%

100

%

81,331

Various

3

Sep-26

100

%

100

%

443,303

Various

16

Sep-26

100

%

100

%

72,598

Winchester, VA; New Hope, MN

2

Sep-26

100

%

100

%

394,714

Total

211

100

%

17,989,558

(1)
For investments acquired in connection with the completion of the Formation Transactions on January 2, 2025, the "Acquisition Date" represents the month and year that the Predecessor acquired its direct interest in the property from a third party.
(2)
Occupancy represents the quotient of (1) the total square footage of our properties minus the square footage of our properties that are vacant and from which we are not receiving any rental payment, and (2) the total square footage of our properties as of September 30, 2026.

Lease Expirations

The following table details the expiring leases of the Company's portfolio by annualized base rent in millions and square footage as of September 30, 2026.

Year

Number of
Expiring Leases

Number of
Properties

Annualized
Base
Rent(1)

% of Total
Annualized Base
Rent Expiring(2)

% of Total
Square
Feet Expiring

2026 (Remaining)

-

-

$

-

0.0

%

0.0

%

2027

-

-

-

0.0

%

0.0

%

2028

-

-

-

0.0

%

0.0

%

2029

-

-

-

0.0

%

0.0

%

2030

-

-

-

0.0

%

0.0

%

2031

-

-

-

0.0

%

0.0

%

2032

4

4

3.8

3.0

%

3.9

%

2033

1

1

1.1

0.9

%

0.4

%

2034

4

10

2.1

1.6

%

4.5

%

2035

3

3

5.7

4.5

%

3.6

%

Thereafter

39

193

115.2

90.0

%

87.6

%

Total

51

211

$

127.9

100

%

100

%

(1)
Annualized base rent is determined by reference to the Company's pro rata share of the September 30, 2026 base rent, and is based on in-place lease agreements as of September 30, 2026 multiplied by 12, and excludes tenant recoveries, straight-line rent, and above-market and below-market lease amortization.
(2)
Lease expirations are based on current lease terms and do not reflect any unexercised tenant renewal or extension options.

Results of Operations (amounts in thousands, except share data)

The information presented below is the results of the operations of the Company.

Three Months Ended September 30,

Change

2026

2025

2026 compared
to 2025

Revenues

Rental revenue

$

36,058

$

27,611

$

8,447

Total revenues

36,058

27,611

8,447

Expenses

Property operating expense

270

92

178

Depreciation and amortization

11,833

8,893

2,940

Management fee

1,976

1,181

795

Performance participation allocation

2,294

925

1,369

General and administrative

1,974

1,070

904

Organizational costs

-

(48

)

48

Total expenses

18,347

12,113

6,234

Other (expense)/income

Interest expense

(13,399

)

(10,244

)

(3,155

)

Other income

387

-

387

Net change in unrealized appreciation/(depreciation) on investments related to foreign exchange fluctuations

(8

)

201

(209

)

Net change in unrealized depreciation on derivative swaps

-

(37

)

37

Total other (expense)/income

(13,020

)

(10,080

)

(2,940

)

Net income before income tax expense

4,691

5,418

(727

)

Income tax expense

(20

)

(4

)

(16

)

Net income

4,671

5,414

(743

)

Net income attributable to non-controlling interests in Class E OP Units

(36

)

-

(36

)

Net income attributable to non-controlling interests

(1,325

)

(1,238

)

(87

)

Net income attributable to the Company's shareholders

$

3,310

$

4,176

$

(866

)

Comparison of the three months ended September 30, 2026 and 2025

Rental revenue - Rental revenue is comprised of rental payments under our net leases and was $36,058 for the three months ended September 30, 2026, representing an increase of $8,447, or 30.6%, compared to $27,611 for the three months ended September 30, 2025. This increase was primarily attributed to the acquisition of properties.

Property operating expense - Property operating expense is comprised primarily of insurance, taxes, and asset management fees, and was $270 for the three months ended September 30, 2026, representing an increase of $178, or 193.5%, compared to $92 for the three months ended September 30, 2025. This increase was primarily driven by higher asset management fees.

Depreciation and amortization - Depreciation and amortization expense was $11,833 for the three months ended September 30, 2026, representing an increase of $2,940, or 33.1%, compared to $8,893 for the three months ended September 30, 2025. The increase was primarily attributed to the acquisition of properties.

Management fee - The management fee was $1,976 for the three months ended September 30, 2026, representing an increase of $795, or 67.3%, compared to $1,181 for the three months ended September 30, 2025. The increase was driven by higher NAV in 2026 and issuances of shares with higher management fees.

Performance participation allocation - The performance participation allocation expense was $2,294 for the three months ended September 30, 2026, representing an increase of $1,369, or 148.0%, compared to $925 for the three months ended September 30, 2025. The increase in performance participation allocation expense is primarily due to an increase in the total return of the Company.

General and administrative - General and administrative expenses, which are comprised primarily of legal, transaction, audit and tax, and professional fees, was $1,974 for the three months ended September 30, 2026, representing an increase of $904, or 84.5%, from $1,070 for the three months ended September 30, 2025, primarily as a result of increased professional services fees driven by the growth of the Company.

Organizational costs - Organizational costs are comprised of the expenses incurred during the formation of NEWLEASE, such as legal fees and incorporation fees, and was zero for the three months ended September 30, 2026, and $48 for the three months ended September 30, 2025. The $ 48 recognized during the three months ended September 30, 2025, represents a refund received related to a prior organizational cost invoice that had been previously expensed.

Interest expense - Interest expense is comprised of primarily interest expenses associated with mortgages on the real estate portfolio, notes issued under the asset-backed securities transaction ("ABS Program"), Aggregation Facility, and our credit facilities and was $13,399 for the three months ended September 30, 2026, representing an increase of $3,155, or 30.8%, from $10,244 for the three months ended September 30, 2025. The increase is primarily due to increased debt levels related to new acquisitions, partially offset by lower interest rates related to the debt associated with the ABS Program.

Other income - Other income is primarily comprised of interest income and was $387 for the three months ended September 30, 2026, and zero for the three months ended September 30, 2025. The increase was primarily attributable to interest income from investment in debt securities and interest earned on deposits held in escrow under purchase and sale agreements.

Net change in unrealized appreciation/(depreciation) on investments related to foreign exchange fluctuations - Net change in unrealized appreciation/(depreciation) on investments related to foreign exchange fluctuations represents changes in foreign exchange rates related to foreign investments and was ($8) for the three months ended September 30, 2026, representing a decrease of $209, from $201 for the three months ended September 30, 2025. This decrease was primarily related to exchange rate fluctuations related to a mortgage held in Canadian dollars.

Net change in unrealized depreciation on derivative swaps - Net change in unrealized depreciation on derivative swaps is comprised of unrealized depreciation in the fair market value of certain derivatives and was zero for the three months ended September 30, 2026, and $37 for the three months ended September 30, 2025. NEWLEASE entered into an interest rate swap in August 2025. There were no derivatives held during the three months ended September 30, 2026.

Income tax expense - Income tax expense represents income taxes and was $20 for the three months ended September 30, 2026, representing an increase of $16, from $4 for the three months ended September 30, 2025, primarily as a result of an increase in state tax expenses.

Nine Months Ended September 30,

Change

2026

2025

2026 compared
to 2025

Revenues

Rental revenue

$

97,906

$

81,723

$

16,183

Total revenues

97,906

81,723

16,183

Expenses

Property operating expense

531

387

144

Depreciation and amortization

31,303

26,322

4,981

Management fee

5,246

3,295

1,951

Performance participation allocation

7,526

2,360

5,166

General and administrative

4,806

2,599

2,207

Organizational costs

-

103

(103

)

Total expenses

49,412

35,066

14,346

Other (expense)/income

Interest expense

(34,972

)

(30,663

)

(4,309

)

Other income

1,093

2

1,091

Net change in unrealized appreciation/(depreciation) on investments related to foreign exchange fluctuations

310

(296

)

606

Net change in unrealized appreciation/(depreciation) on derivative swaps

51

(37

)

88

Net realized loss on financial instruments

(48

)

-

(48

)

Total other (expense)/income

(33,566

)

(30,994

)

(2,572

)

Net income before income tax expense

14,928

15,663

(735

)

Income tax benefit/(expense)

57

(21

)

78

Net income

14,985

15,642

(657

)

Net income attributable to non-controlling interests in Class E OP Units

(82

)

-

(82

)

Net income attributable to non-controlling interests

(4,032

)

(3,786

)

(246

)

Net income attributable to the Company's shareholders

$

10,871

$

11,856

$

(985

)

Comparison of the nine months ended September 30, 2026 and 2025

Rental revenue - Rental revenue is comprised of rental payments under our net leases and was $97,906 for the nine months ended September 30, 2026, representing an increase of $16,183, or 19.8%, compared to $81,723 for the nine months ended September 30, 2025. The increase was primarily attributed to the acquisition of properties.

Property operating expense - Property operating expense is comprised primarily of insurance, taxes, and asset management fees, and was $531 for the nine months ended September 30, 2026, representing an increase of $144, or 37.2%, compared to $387 for the nine months ended September 30, 2025. The increase was primarily driven by higher asset management fees that were partially offset by lower insurance premiums and miscellaneous expenses.

Depreciation and amortization - Depreciation and amortization expense was $31,303 for the nine months ended September 30, 2026, representing an increase of $4,981, or 18.9%, compared to $26,322 for the nine months ended September 30, 2025. The increase was primarily attributed to the acquisition of properties.

Management fee - The management fee was $5,246 for the nine months ended September 30, 2026, representing an increase of $1,951, or 59.2%, compared to $3,295 for the nine months ended September 30, 2025. The increase was driven by higher NAV in 2026 and issuances of shares with higher management fees.

Performance participation allocation - The performance participation allocation expense was $7,526 for the nine months ended September 30, 2026, representing an increase of $5,166, or 218.9%, compared to $2,360 for the nine months ended September 30, 2025. The increase in respective performance participation allocation expense is primarily due to an increase in the total return of the Company.

General and administrative - General and administrative expenses, which are comprised primarily of legal, transaction, audit and tax, and professional fees, was $4,806 for the nine months ended September 30, 2026, representing an increase of $2,207, or 84.9%, from $2,599 for the nine months ended September 30, 2025, primarily as a result of increased professional services fees driven by the growth of the Company.

Organizational costs - Organizational costs are comprised of the expenses incurred during the formation of the Company, such as legal fees, and was zero for the nine months ended September 30, 2026, and $103 for the nine months ended September 30, 2025. The decrease is primarily attributable to the Company only being eligible to expense organizational costs incurred prior to January 2, 2026, the first anniversary of the initial closing of the Company's private offering, as discussed in Note 13. The 2025 amount reflects organizational costs of $151 incurred in the first half of 2025, partially offset by a $48 refund received in the third quarter of 2025 related to a prior organizational cost invoice that had been previously expensed.

Interest expense - Interest expense is comprised of primarily interest expenses associated with mortgages on the real estate portfolio, notes issued under the ABS Program, Aggregation Facility, and our credit facilities and was $34,972 for the nine months ended September 30, 2026, representing an increase of $4,309, or 14.1%, from $30,663 for the nine months ended September 30, 2025. The increase is primarily due to increased debt levels related to new acquisitions, partially offset by lower interest rates related to the debt associated with the ABS Program and the repayment of two mortgages in 2026.

Other income - Other income is primarily comprised of certain yield maintenance proceeds and interest income, and was $1,093 for the nine months ended September 30, 2026, representing an increase of $1,091, from $2 for the nine months ended September 30, 2025. The increase was primarily attributable to yield maintenance proceeds received in connection with the repayment of two mortgages in 2026, interest income from investment in debt securities, and interest earned on deposits held in escrow under purchase and sale agreements.

Net change in unrealized appreciation/(depreciation) on investments related to foreign exchange fluctuations - Net change in unrealized appreciation/(depreciation) on investments related to foreign exchange fluctuations represents changes in foreign exchange rates related to foreign investments and was $310 for the nine months ended September 30, 2026, representing an increase of $606, from ($296) for the nine months ended September 30, 2025. This increase was primarily related to exchange rate fluctuations related to a mortgage held in Canadian dollars.

Net change in unrealized appreciation/(depreciation) on derivative swaps - Net change in unrealized appreciation/(depreciation) on derivative swaps is comprised of unrealized appreciation in the fair market value of certain derivatives and was $51 for the nine months ended September 30, 2026, representing an increase of $88, compared to ($37) for the nine months ended September 30, 2025. The increase reflects the changes of the fair value of an interest rate swap which was terminated in 2026.

Net realized loss on financial instruments - Net realized loss on financial instruments was $48 for the nine months ended September 30, 2026, compared to zero for the nine months ended September 30, 2025. The realized loss resulted from the termination of an interest rate swap agreement in 2026.

Income tax benefit/(expense) - Income tax benefit/(expense) represents income taxes and was $57 for the nine months ended September 30, 2026, representing a favorable change of $78, from ($21) for the nine months ended September 30, 2025, primarily as a result of state tax refunds received, partially offset by an increase in state tax expenses during the nine months ended September 30, 2026.

Net Asset Value

The NAV is intended to represent the fair value of our assets less our outstanding liabilities and will likely differ from the book value of our equity reflected in our financial statements. To calculate our NAV, we adjust the value of our assets and liabilities from historical cost to fair value. The Adviser will determine the fair value of our net lease investments and associated financing on a monthly basis, which valuations will be reviewed and confirmed for reasonableness by the independent valuation advisor on a quarterly basis. In addition, all properties are subject to annual appraisals conducted by independent third-party appraisers, which, among other factors, the Adviser takes into account in determining the appropriate valuation.

While we believe our NAV calculation methodologies are generally 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 accounting principles generally accepted in the United States ("GAAP") and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV will differ from GAAP. NAV should not be considered to be equivalent to shareholders' equity or any other GAAP measure.

The following table provides a breakdown of the major components of our NAV as of September 30, 2026 (dollars are in thousands):

Components of NAV

September 30, 2026

Investments in real estate, net

$

952,191

Cash and cash equivalents

37,802

Other assets

474

Revolving credit facility

(53,023

)

Subscriptions received in advance

(29,325

)

Distribution and redemption payable

(6,080

)

Due to affiliate

(2,634

)

Management fee payable

(681

)

Accrued performance participation allocation

(2,294

)

Accounts payable and accrued expenses

(1,595

)

Net Asset Value

$

894,835

Number of outstanding shares/units

41,982,065

The following table provides a breakdown of our total NAV and NAV per share of common shares by class as of September 30, 2026:

NAV Per Share

Class A
Shares

Class F
Shares

Class I
Shares

Class E
Shares

Third-Party
Operating
Partnership
Units

Restricted Share
Units(1)

Total

Net asset value

$

196,551

$

250,908

$

290,712

$

147,393

$

9,087

$

184

$

894,835

Number of outstanding shares

9,159,016

11,830,388

13,852,880

6,717,001

414,140

8,640

41,982,065

NAV per share as of September 30, 2026

$

21.46

$

21.21

$

20.99

$

21.94

$

21.94

$

21.94

(1)
Restricted Share Units ("RSUs") represent RSUs that have been granted but remain unsettled as of September 30, 2026, including RSUs that have vested and RSUs granted in 2026 that have not yet vested.

The following table details the weighted average capitalization rate by property type, which is the key assumption used in the valuations as of September 30, 2026.

Capitalization Rate

Industrial

6.65

%

Essential services

6.89

%

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

Input

Hypothetical
Change

Industrial

Essential Services

Capitalization Rate

0.25% decrease

+3.91

%

+3.77

%

(weighted average)

0.25% increase

(3.62

)

%

(3.50

)

%

Recently acquired properties are carried at cost, which approximates fair value.

The following table reconciles shareholders' equity per our Condensed Consolidated Balance Sheet to our NAV:

September 30, 2026

Shareholders' equity

$

550,321

Redeemable non-controlling interests

9,087

Total shareholders' equity and redeemable non-controlling interests under GAAP

559,408

Adjustments:

Accrued organization and offering costs

4,732

Net unrealized real estate appreciation

198,234

Accumulated depreciation and amortization under GAAP

196,735

Straight-line rent

(64,274

)

NAV

$

894,835

The following details the adjustments to reconcile GAAP shareholders' equity and redeemable non-controlling interests to our NAV:

•
The Adviser agreed to advance certain organization and offering costs on our behalf through January 2, 2026. The Company will reimburse the Adviser for all such advanced expenses ratably over the 60-month period commencing January 2, 2026. Under GAAP, organization and operating expenses are expensed when incurred and offering costs are charged to shareholders' equity when incurred. For purposes of calculating NAV, such costs will be recognized as paid over the 60-month reimbursement period.
•
For the purpose of calculating NAV, properties are valued at fair market value, as determined by the Adviser.
•
We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization expenses are not recorded for purposes of calculating our NAV. For the purposes of calculating our NAV, investments in real estate and borrowings are held at their estimated fair values.
•
We recognize rental revenue on a straight-line basis for all leases that have fixed rental revenue under GAAP. Such straight-line adjustments are excluded for purposes of calculating NAV.

Distributions

Beginning January 31, 2025, we declared monthly distributions for each class of common shares, which are generally paid the seventh business day post month-end. We have paid distributions consecutively each month since such time. The following table details the total net distributions for each of our share classes for the nine months ended September 30, 2026 and 2025:

Record Date

Class A Shares

Class F Shares

Class I Shares

Class E Shares

January 31, 2026

$

0.1377

$

0.1377

$

0.1336

$

0.1546

February 28, 2026

0.1377

0.1377

0.1336

0.1546

March 31, 2026

0.1377

0.1377

0.1336

0.1546

April 30, 2026

0.1377

0.1377

0.1336

0.1546

May 31, 2026

0.1377

0.1377

0.1336

0.1546

June 30, 2026

0.1377

0.1377

0.1336

0.1546

July 31, 2026

0.1377

0.1377

0.1336

0.1546

August 31, 2026

0.1377

0.1377

0.1336

0.1546

September 30, 2026

0.1377

0.1377

0.1336

0.1546

Total

$

1.2393

$

1.2393

$

1.2024

$

1.3914

Record Date

Class A Shares

Class F Shares

Class I Shares

Class E Shares

January 31, 2025

$

0.1329

$

0.1329

$

0.1329

$

0.1329

February 28, 2025

0.1335

0.1335

0.1335

0.1335

March 31, 2025

0.1335

0.1335

0.1335

0.1335

April 30, 2025

0.1336

0.1336

0.1336

0.1336

May 31, 2025

0.1336

0.1336

0.1336

0.1336

June 30, 2025

0.1336

0.1336

0.1336

0.1336

July 31, 2025

0.1336

0.1336

0.1336

0.1336

August 31, 2025

0.1336

0.1336

0.1336

0.1336

September 30, 2025

0.1336

0.1336

0.1336

0.1336

Total

$

1.2015

$

1.2015

$

1.2015

$

1.2015

For the nine months ended September 30, 2026, we declared net distributions of $47,641. The Company intends for long-term cumulative distributions to be funded primarily through operating cash flows. The following table details our distributions declared for the nine months ended September 30, 2026 and 2025:

Nine Months Ended

September 30, 2026

September 30, 2025

Distributions

Amount

Percentage

Amount

Percentage

Payable in cash

$

42,610

89.4

%

$

33,382

98.4

%

Reinvested in shares

5,031

10.6

%

549

1.6

%

Total distributions

$

47,641

100

%

$

33,931

100

%

Sources of Distributions

Cash flows from operating activities(1)

$

47,641

100

%

$

33,931

100

%

(1)
Cash flows from operations are $63,419 and $39,871 for the nine months ended September 30, 2026 and 2025, respectively.

Funds from Operations and Adjusted Funds from Operations

We believe Funds from Operations ("FFO") is a meaningful non-GAAP supplemental measure of our operating results. Our condensed consolidated financial statements are presented using historical cost accounting which, among other things, requires depreciation of real estate investments. As a result, our operating results imply that the value of our real estate investments has decreased over time. However, we believe that the value of our real estate investments will fluctuate over time based on market conditions and, as such, depreciation under historical cost accounting may be less informative as a measure of our performance. Accordingly, we believe it provides a more accurate representation of operating performance by excluding gains or losses on the sale of properties and other non-cash items such as depreciation and amortization. FFO is an operating measure defined by the National Association of Real Estate Investment Trusts ("NAREIT") that is broadly used in the REIT industry. FFO, as defined by NAREIT and presented below, is calculated as net income or loss (computed in accordance with GAAP), excluding (i) depreciation and amortization, (ii) impairment of investments in real estate, (iii) net gains or losses from sales of real estate, (iv) net gains or losses from change in control, and (v) similar adjustments for non-controlling interests and unconsolidated entities.

We also believe that Adjusted FFO ("AFFO") is an additional meaningful non-GAAP supplemental measure of our operating results. AFFO further adjusts FFO to reflect the performance of our portfolio by adjusting for items we believe are not directly attributable to our operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) straight-line rental income, (ii) amortization of above- and below-market lease intangibles, (iii) organizational costs, (iv) management fees paid in common shares or Operating Partnership units, even if subsequently repurchased or redeemed by us, (v) the performance participation allocation to NEWLEASE Special Limited Partner LP or other incentive compensation awards that are based on our NAV, which includes unrealized gains and losses not recorded in GAAP net income (loss), and that are paid in common shares or Operating Partnership units, even if subsequently repurchased or redeemed by us, (vi) transaction costs, (vii) amortization of deferred financing costs, (viii) net change in unrealized depreciation/(appreciation) on investments related to foreign exchange fluctuations, (ix) net change in unrealized appreciation on derivative swaps, (x) gains or losses on extinguishment of debt, (xi) unrealized gains or losses in fair value of financial instruments, and (xii) similar adjustments for non-controlling interests and unconsolidated entities.

The Company's definition of AFFO excludes the impact of the amortization of deferred financing costs ("DFCs") on our debt, which is included in GAAP net income (loss). We do not consider the amortization of DFCs to be directly attributable to our operations and view DFCs similar to acquisition expenses, which are capitalized into the cost basis of our investments, and therefore excluded from AFFO. We believe that excluding amortization of DFCs from our calculations of AFFO and results in metrics that better reflect the results of our operations.

FFO and AFFO should not be considered more relevant or accurate than GAAP net income (loss) in evaluating our operating performance. In addition, FFO and AFFO should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO and AFFO are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our shareholders. In addition, our methodology for calculating AFFO may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported AFFO may not be comparable to the AFFO reported by other companies.

The following table reconciles net income of the Company and the Operating Partnership to FFO and AFFO for the three and nine months ended September 30, 2026 and 2025:

Three Months Ended

September 30, 2026

September 30, 2025

Net income attributable to the Company's shareholders

$

3,310

$

4,176

Adjustments to arrive at FFO:

Depreciation and amortization

11,833

8,893

Amount attributable to non-controlling interests for above adjustments

(1,238

)

(1,238

)

FFO attributable to the Company's shareholders

13,905

11,831

Adjustments to arrive at AFFO:

Straight-line rental income

(3,208

)

(2,293

)

Amortization of above and below market lease intangibles, net

(221

)

(52

)

Organizational costs

-

(48

)

Management fees paid in shares

1,976

-

Performance participation allocation

2,294

925

Amortization of deferred financing costs

1,399

701

Net change in unrealized appreciation/(depreciation) on investments related to foreign exchange fluctuations

8

(201

)

Net change in unrealized depreciation on derivative swaps

-

37

Amount attributable to non-controlling interests for above adjustments

152

214

AFFO attributable to the Company's shareholders

$

16,305

$

11,114

Nine Months Ended

September 30, 2026

September 30, 2025

Net income attributable to the Company's shareholders

$

10,871

$

11,856

Adjustments to arrive at FFO:

Depreciation and amortization

31,303

26,322

Amount attributable to non-controlling interests for above adjustments

(3,715

)

(3,715

)

FFO attributable to the Company's shareholders

38,459

34,463

Adjustments to arrive at AFFO:

Straight-line rental income

(8,035

)

(6,952

)

Amortization of above and below market lease intangibles, net

(523

)

(111

)

Organizational costs

-

103

Management fees paid in shares

3,739

75

Performance participation allocation

7,526

2,360

Amortization of deferred financing costs

3,391

1,951

Net change in unrealized appreciation/(depreciation) on investments related to foreign exchange fluctuations

(310

)

296

Net change in unrealized appreciation/(depreciation) on derivative swaps

(51

)

37

Amount attributable to non-controlling interests for above adjustments

482

687

AFFO attributable to the Company's shareholders

$

44,678

$

32,909

Liquidity and Capital Resources

Liquidity

We believe we have sufficient liquidity to operate our business with immediate liquidity comprised of cash and cash equivalents of $10,190 and availability under our credit facilities of $1,666 as of September 30, 2026. In addition to our immediate liquidity, we obtain incremental liquidity through the sale of our common shares, from which we generated net proceeds of $190,425 for the nine months ended September 30, 2026. We may also generate additional liquidity through the sale of our real estate investments, borrowing money through unsecured financings, or incurring other forms of indebtedness, such as through additional issuances under our ABS Program.

We will use cash for (i) new acquisitions of net lease properties and, to a lesser extent, real estate-related investments, (ii) cost of operations (including management fee and performance participation allocation), (iii) debt service, (iv) periodic repurchases under our share repurchase plan (as described herein), and (v) cash distributions to our common shareholders to the extent declared by our Board of Trustees. We believe our current liquidity position is sufficient to meet the needs of our expected investment activity.

Capital Resources

As of September 30, 2026, our indebtedness included loans secured by our properties, unsecured lines of credit, and non-recourse secured debt. The following table is a summary of our indebtedness:

Weighted

Weighted

Maximum

Principal Balance as of

Indebtedness

Average
Interest Rate

Maturity
Date

Facility
Size

September 30, 2026

December 31, 2025

Mortgage notes and credit facilities, net

Notes issued under the ABS Program

5.43

%

3/31/2056

$ NA

$

289,048

$

134,898

(1)

Mortgages

3.98

%

5/27/2030

NA

739,724

782,757

Revolving credit facility

S+2.75%

(2)

7/25/2028

65,000

53,834

28,590

Deferred financing costs, net

(14,996

)

(14,125

)

Total mortgage notes and credit facilities, net

1,067,610

932,120

Aggregation facility

S+2.00%

(3)

8/30/2028

(4)

NA

142,777

-

Total indebtedness

$

1,210,387

$

932,120

(1)
Excludes $645,444 of debt issued under the ABS Program allocated to New Mountain Net Lease Partners II, L.P., a Delaware limited partnership and private fund advised by New Mountain ("NMNL II"), related to properties contributed by such entity for which an intercreditor agreement relates. The ABS Program is cross-collateralized by properties contributed by each of NMNL II and the Company. Notwithstanding the cross-collateralization, each of the Company and NMNL II retains independent ownership of the assets it contributes to the ABS Program. While the Company and NMNL II entered into an intercreditor agreement designed to allocate liabilities associated with the ABS Program pro rata based on the assets each party finances and provides for indemnification between each of NMNL II and the Company with respect to any liabilities arising from assets contributed by such party, such intercreditor agreement may not prevent the Company from experiencing losses related to properties contributed by NMNL II.
(2)
The revolving credit facility interest rate is equal to the daily simple Secured Overnight Financing Rate ("SOFR") (rounded to the nearest 1/100th) + 2.75%. The weighted average interest rate for the nine months ended September 30, 2026 was 6.40%.
(3)
The Aggregation Facility interest rate is equal to the daily simple SOFR rate (rounded to the nearest 1/100th) + 2.00%. The weighted average interest rate for the nine months ended September 30, 2026 was 5.65%.
(4)
Includes the fully extended maturity date for loans with extension options that are at our discretion and we currently expect to be able to exercise.

As of September 30, 2026, approximately 25% of our real estate investment portfolio served as collateral for outstanding borrowings under our ABS Program. We believe the ABS Program provides a level of flexibility not commonly available in traditional non-recourse financing and is often preferable to debt issued in the commercial mortgage-backed securities (CMBS) market. Under the ABS Program, an affiliate of the Company acts as both master servicer and special servicer for the collateral pool, enabling active portfolio oversight and timely resolution of asset-level matters. In addition, under the ABS Program, our ability to sell or substitute collateral, subject to meeting defined conditions, we believe enhances our ability to manage the portfolio over time and make changes based on evolving market characteristics. Through the ABS Program structure, we utilize bankruptcy-remote, special purpose subsidiaries to issue multiple series of investment-grade net lease mortgage notes (ABS notes) over time, which are secured by certain of our properties and properties of one or more investment vehicles managed by an affiliate of New Mountain.

The ABS notes are generally issued by our wholly owned special purpose entity subsidiaries to institutional investors through the asset-backed securities market. These ABS notes are typically issued in three classes, Class A, Class B, and Class C. In our consolidated special purpose entities, issuance of net lease mortgage notes consists of an aggregate principal amount of $303,809 across such classes, as summarized below.

Note Class

Rating (1)

Amount (2)

Weighted Average Coupon Rate

Weighted Average Term

Weighted Average Maturity

Class A

AAA

$

212,879

5.35

%

30 years

April 2056

Class B

AA

75,506

5.57

%

30 years

May 2056

Class C

A

15,424

6.07

%

30 years

November 2055

Total/Weighted Average Coupon Rate

$

303,809

5.44

%

(1)
By S&P Global Ratings.
(2)
Excludes $646,291 of debt issued under the ABS Program allocated to NMNL II related to properties contributed by such entity. The ABS Program is cross-collateralized by properties contributed by each of NMNL II and the Company. Notwithstanding the cross-collateralization, each of the Company and NMNL II retains independent ownership of the assets it contributes to the ABS Program. While the Company and NMNL II entered into an intercreditor agreement designed to allocate liabilities associated with the ABS Program pro rata based on the assets each party finances and provides for indemnification between each of NMNL II and the Company with respect to any liabilities arising from assets contributed by such party, such intercreditor agreement may not prevent the Company from experiencing losses related to properties contributed by NMNL II.

Cash Flows

Cash flows provided by operating activities were $63,419 for the nine months ended September 30, 2026 compared to $39,871 for the nine months ended September 30, 2025. The change in cash flows provided by operating activities was primarily due to a decrease in other assets, partially offset by a decrease in accounts payable and accrued expenses.

Cash flows used in investing activities were $469,024 for the nine months ended September 30, 2026 compared to $83,393 for the nine months ended September 30, 2025. The change in cash flows used in investing activities was primarily due to the acquisition of real estate investments and capital expenditures in 2026.

Cash flows provided by/(used in) financing activities were $425,484 for the nine months ended September 30, 2026 compared to ($208,184) for the nine months ended September 30, 2025. The change in cash flows from financing activities was primarily due to subscriptions received in advance and borrowings and repayments of debt.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting estimates.

Investments in Real Estate

At acquisition, we determine whether an investment will qualify as asset acquisitions or business combinations pursuant to Accounting Standards Codification 805 - "Business Combinations." We expect most of our investments to be asset acquisitions.

Upon the acquisition of a property, we assess the fair value of the acquired tangible and intangible assets and assumed liabilities (including land, buildings, tenant improvements, above- and below-market leases, acquired in-place leases, and other identified intangible assets and assumed liabilities) and we allocate the purchase price to them, on a relative fair value basis. The most significant portion of the allocation is generally to building and land and requires the use of market-based estimates and assumptions. We assess and consider fair value based on estimated cash flow projections that utilize appropriate discount and/or capitalization rates, as well as other available market information. Estimates of future cash flows are based on several factors including the historical operating results, known and anticipated trends, and market and economic conditions.

We review real estate properties for impairment each quarter or when there is an event or change in circumstances that indicate an impaired value. The review of recoverability of real estate investments held for use is based on an estimate of the undiscounted future cash flows that are expected to result from the real estate investment's use and eventual disposition. These cash flows consider factors

such as expected future operating income, trends and prospects, as well as the effects of leasing demand, capital expenditures, competition and other factors. If an impairment event exists due to the projected inability to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds estimated fair value. No impairments were recorded during the three and nine months ended September 30, 2026 and 2025.

Revenue Recognition

We evaluate on an individual lease basis whether it is probable that we will collect substantially all amounts due from our tenants and recognize changes in the collectability assessment of our operating leases as adjustments to rental revenue. Management exercises judgment in assessing collectability of tenant receivables and considers payment history, current credit status, publicly available information about the financial condition of the tenant, and other factors. Our assessment of the collectability of tenant receivables can have a significant impact on the rental revenue recognized in our Condensed Consolidated Statements of Operations.

Recent Accounting Pronouncements

See "Notes to Condensed Consolidated Financial Statements-2. Significant Accounting Policies" for a discussion concerning recent accounting pronouncements.

Future Cash Requirements

The following table aggregates our contractual obligations and commitments as of September 30, 2026:

Obligation

Total

Less than
1 year

1-3 years

4-5 years

More than
5 years

Indebtedness

$

1,225,383

$

3,836

$

440,326

$

680,011

$

101,210

Advanced organization and offering costs

4,732

1,113

2,227

1,392

-

Total

$

1,230,115

$

4,949

$

442,553

$

681,403

$

101,210

New Mountain Net Lease Trust published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 19:35 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]