Brookfield Real Estate Income Trust Inc.

11/12/2026 | Press release | Distributed by Public on 11/12/2026 14:52

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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
References herein to the "Company," "Brookfield REIT," "we," "us," or "our" refer to Brookfield Real Estate Income Trust
Inc. and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the unaudited financial statements and notes thereto appearing
elsewhere in this Quarterly Report on Form 10-Q. Terms used and not defined herein have the meanings set forth elsewhere in
this Quarterly Report on Form 10-Q.
Forward-Looking Statements
Statements contained in this Quarterly Report on Form 10-Q that are not historical facts, particularly those in the section
entitled "Recent Developments - Business Outlook" and "Liquidity and Capital Resources", are based on our current
expectations, estimates, projections, opinions, and/or beliefs. Such statements are not facts and involve known and unknown
risks, uncertainties, and other factors. Investors should not rely on these statements as if they were fact. Certain information
contained in this Quarterly Report on Form 10-Q constitutes "forward-looking statements," which can be identified by the use
of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "target," "estimate,"
"intend," "continue," "forecast," or "believe" or the negatives thereof or other variations thereon or other comparable
terminology. Due to various risks and uncertainties, including those described under Item 1A. Risk Factors in our Annual
Report on Form 10-K for the year ended December 31, 2025 and under Part II, Item 1A. Risk Factors in this Quarterly Report
on Form 10-Q and elsewhere in this Quarterly Report on Form 10-Q, actual events or results or our actual performance may
differ materially from those reflected or contemplated in such forward-looking statements. No representation or warranty is
made as to future performance or such forward-looking statements. In light of the significant uncertainties inherent in these
forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other
person that our objectives and plans, which we consider to be reasonable, will be achieved. We do not undertake to revise or
update any forward-looking statements.
Overview
We are a Maryland corporation formed on July 27, 2017 to invest in commercial real estate assets. We seek to invest in well-
located, high-quality real estate properties that generate strong current cash flow and could further appreciate in value through
our proactive, best-in-class asset management strategies. Our real estate-related debt strategy seeks to achieve high current
income and superior risk-adjusted returns, as well as provide a source of liquidity.
We are externally managed by Brookfield REIT Adviser LLC (the "Adviser"), an affiliate of Brookfield Asset Management
Ltd. (together with its affiliates, "Brookfield"). We are structured as an umbrella partnership real estate investment trust
("UPREIT"), which means that we own substantially all of our assets through our operating partnership, Brookfield REIT
Operating Partnership L.P. (the "Operating Partnership"), a Delaware limited partnership, of which our wholly owned
subsidiary is the sole general partner.
We are conducting a continuous public offering (the "Public Offering") of Class S, Class I, Class D and Class T shares of our
common stock pursuant to the Securities Act of 1933, as amended (the "Securities Act"). On April 30, 2018, we launched our
initial public offering of up to $2.0 billion in shares of our common stock. On November 2, 2021, our initial public offering
terminated, and we commenced our second public offering of up to $7.5 billion in shares of our common stock. On July 2,
2025, the second public offering terminated and we commenced our third public offering of up to $7.5 billion in shares of our
common stock.
In addition to the Public Offering, we are conducting private offerings of Class I and Class C shares to feeder vehicles that offer
interests in such vehicles to non-U.S. persons. The offer and sale of Class I and Class C shares to the feeder vehicles is exempt
from the registration provisions of the Securities Act by virtue of Section 4(a)(2) and Regulation S promulgated thereunder. We
are also offering Class E shares to Brookfield and its affiliates, certain of their employees, and our independent directors in one
or more private offerings. The offer and sale of Class E shares is exempt from the registration provisions of the Securities Act
by virtue of Section 4(a)(2) and Regulation D promulgated thereunder.
On January 1, 2025, we sold in a private offering exempt from the registration provisions of the Securities Act by virtue of
Section 4(a)(2) unregistered shares of Class I common stock to an institutional investor in exchange for a $200 million
subscription. The issuance was made at the same transaction price as Class I shares sold through the Public Offering as of
January 1, 2025, with fees consistent with existing Class I stockholders. Brookfield entered into a separate agreement with the
investor pursuant to which Brookfield will support a specified total annual return on the investor's investment in our Class I
shares in the form of periodic cash payments, subject to certain limits. In exchange, the investor has agreed not to request the
repurchase of its shares, subject to limited exceptions, for a period of five years from the issuance date, at which point the
investor may request that we repurchase its shares through our share repurchase plan ratably over a two-year period.
As of November 12, 2026, we have received cumulative net proceeds of $1.3 billion, including proceeds received pursuant to
our distribution reinvestment plan, from the sale of shares of our common stock in our Public Offering and our private
offerings.
We qualified as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2019, and
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 to stockholders and maintain our qualification as a REIT.
As of September 30, 2026, we owned 22 investments in real estate, 20 investments in real estate-related securities, six
investments in unconsolidated real estate ventures, three investments in real estate-related loans, two foreign currency forward
contracts related to investments in real estate-related loans and securities, one cross currency swap related to investments in real
estate-related loans and securities and one cross currency swap related to investments in unconsolidated real estate ventures. We
currently operate in seven reportable segments: housing, office, logistics, single-family rental, net lease, data centers and real
estate-related loans and securities. We are not aware of any material trends or uncertainties, favorable or unfavorable, other than
national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on
either capital resources or the revenues or income to be derived from owning properties or real estate-related loans.
DST Program
On October 1, 2024, we initiated, through the Operating Partnership, a program (the "DST Program") to issue and sell up to a
maximum aggregate offering amount of $1.0 billion of beneficial interests ("DST Interests") in specific Delaware statutory
trusts ("DSTs") holding one or more real properties (each, a "DST Property" and, collectively, the "DST Properties"). These
DST 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, in one or more offerings (the "DST Offerings"). Under the DST Program, each DST Property
will be sourced from our real properties or from third parties, which will be held in a DST and subsequently leased by one of
our wholly owned subsidiaries in accordance with a certain master lease agreement. Each master lease agreement will be
guaranteed by the Operating Partnership, which will hold a fair market value option (the "FMV Option"), giving it the right, but
not the obligation, to acquire the DST Interests in the applicable DST from the investors in exchange for Operating Partnership
units or cash, at the Operating Partnership's discretion. Such FMV Option shall be exercisable during a one-year option period,
beginning two years following the sale of the last DST Interest in any such DST Offering. The Operating Partnership, in its sole
and absolute discretion, may assign its rights in the FMV Option to a subsidiary, an affiliate, a successor entity to the Operating
Partnership or the acquirer of a majority of the Operating Partnership's assets. After a one-year holding period, investors who
acquire Operating Partnership units pursuant to the FMV Option generally have the right to cause the Operating Partnership to
redeem all or a portion of their Operating Partnership units for, at our sole discretion, shares of our common stock, cash, or a
combination of both.
We believe that the DST Program will expand and diversify our capital-raising strategies by offering an attractive investment
product for investors that may be seeking like-kind replacement properties to complete tax-deferred exchange transactions
under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"). Affiliates of the Adviser have provided
and may continue to provide mortgage financing with respect to certain DST Properties and are expected to receive fees in
connection with the sale of the DST 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 have not allocated specific amounts of the net proceeds from the DST Program for any specific
purpose. As of September 30, 2026, we have raised approximately $241.0 million of aggregate gross proceeds from our DST
Program.
Recent Developments
Business Outlook
Real estate fundamentals remain strong in most sectors, with steady demand and moderating new supply supporting stable or
improving occupancy trends. Logistics and rental housing properties, which comprise 80% of our real estate portfolio, have
remained particularly resilient and continue to show positive tailwinds as new construction starts have significantly decreased.
Recent macroeconomic factors, including inflationary pressures and rising interest rates, have contributed to increased volatility
in public markets. While the potential impact on private real estate remains uncertain, high-quality properties with strong
operating cash flows and stable occupancy should remain resilient through a period of instability. Elevated borrowing costs and
changes in the availability of debt financing may influence real estate investment activity in the near term. However, favorable
real estate fundamentals should continue to support durable cash flows and property operating performance.
With this backdrop, we believe the current environment will continue to present attractive investment opportunities. During the
quarter, we acquired an interest in a 77-property logistics portfolio for an initial equity investment of approximately $42
million. We also acquired East Dallas Crossing, a fully-leased, Class-A warehouse in the Dallas area, for approximately $114
million. We continue to see an active acquisition pipeline for high-quality real estate properties and are well-positioned for
further acquisition activity with $340.0 million of liquidity as of September 30, 2026.
Please refer to Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, and
elsewhere in this Quarterly Report on Form 10-Q for additional disclosure relating to material trends or uncertainties that may
impact our business.
Q3 2026 Highlights
Operating and Capital Raising Results:
•Year-to-date total returns through September 30, 2026, excluding upfront selling commissions, were 6.24% for Class S
shares, 6.78% for Class I shares, 6.70% for Class D shares and 6.18% for Class T shares. Positive performance for the
quarter was attributable to the net operating income generated by our highly-leased portfolio of investments and
valuation gains at our logistics and manufactured housing investments. Total return is calculated as the percent change
in the NAV per share from the beginning of the applicable period, plus the amount of any net distributions per share
declared in the period. Management believes total return is a useful measure of the overall performance of our shares.
•Annualized total returns from inception through September 30, 2026, excluding upfront selling commissions, were
5.58% for Class S shares, 6.58% for Class I shares, 0.12% for Class D shares and 3.91% for Class T shares. Since
inception returns for Class D shares are calculated from June 1, 2022, the date the first Class D shares were issued.
Since inception returns for Class T shares are calculated from February 1, 2025, the date the first Class T shares were
issued.
•Raised $89.5 million of gross proceeds from the sale of our common stock through public and private offerings during
the three months ended September 30, 2026. Additionally, we raised $28.7 million through our DST Program during
the quarter.
•Declared monthly net distributions totaling $13.0 million during the three months ended September 30, 2026. As of
September 30, 2026, the annualized net distribution rate was 4.49% for Class S shares, 5.25% for Class I shares,
4.94% for Class D shares and 4.36% for Class T shares.
•Reinvested distributions of $6.8 million during the three months ended September 30, 2026.
Investing and Financing Activity:
•In July 2026, we acquired an interest in a diversified logistics portfolio across several U.S. markets for an initial equity
investment of approximately $42 million. The portfolio includes 77 properties totaling approximately 8.2 million
square feet and approximately 506 acres of industrial outdoor storage. The portfolio is 93% leased to a diverse tenant
mix with a weighted average remaining lease term of approximately 4 years.
•In September 2026, we acquired East Dallas Crossing, a 1.1-million-square-foot Class-A warehouse and distribution
facility in Forney, Texas, for approximately $114 million. In connection with the acquisition, we obtained a $49
million mortgage loan. The property was constructed in 2021 as a build-to-suit facility and is fully triple-net leased to
an investment-grade tenant, with approximately 10 years of remaining lease term and contractual annual rent
escalations.
•During the quarter, we borrowed $66.0 million on the Affiliate Line of Credit to fund investment acquisitions and
repaid $56.5 million of borrowings using proceeds raised through the DST Program and common stock subscriptions.
Current Portfolio:
•As of September 30, 2026, our investment portfolio, based on the NAV of our investments, consisted of 91% real
estate properties and 9% real estate-related loans and securities. NAV is measured as the fair value of our investments
less any mortgages or debt obligations related to such investments. There is no indebtedness on our real estate-related
debt investments.
•Our real estate properties as of September 30, 2026, based on the total asset value of our properties measured at fair
value, consisted of multifamily (35%), logistics (25%), net lease (16%), single-family rental (8%), manufactured
housing (8%), student housing (4%), data center (3%) and office (1%).
•As of September 30, 2026, our real estate-related loans and securities consisted of 23 investments with an aggregate
fair value of $88.4 million.
Portfolio
Investments in Real Estate
The following table provides information regarding our portfolio of real estate properties as of September 30, 2026 ($ in
millions):
Investment(1)
Location
Property Type
Acquisition
Date
Ownership
Percentage(2)
Purchase
Price(3)
Square Feet/
Number of
Units
Occupancy
Rate(4)
Anzio Apartments
Atlanta, GA
Multifamily
April 2019
90%
$59.2
92%
Arbors of Las Colinas
Dallas, TX
Multifamily
December 2020
90%
63.5
94%
1110 Key Federal Hill
Baltimore, MD
Multifamily
September 2021
100%
73.6
88%
Domain
Orlando, FL
Multifamily
November 2021
100%
74.1
90%
The Burnham
Nashville, TN
Multifamily
November 2021
100%
129.0
92%
Flats on Front
Wilmington, NC
Multifamily
December 2021
100%
97.5
94%
Verso
Beaverton, OR
Multifamily
December 2021
100%
74.0
92%
2626 South Side Flats
Pittsburgh, PA
Multifamily
January 2022
100%
90.0
96%
The Parker at Huntington
Metro(5)
Alexandria, VA
Multifamily
March 2022
100%
136.0
94%
Briggs + Union(5)
Mount Laurel, NJ
Multifamily
April 2022
100%
158.0
96%
Single-Family Rental
Various
Single-Family Rental
Various
100%
210.7
90%
Reflection
Atlanta, GA
Student Housing
June 2024
97%
116.0
99%
U.S. Manufactured
Housing(7)
Various
Manufactured
Housing
June 2026
2%
86.8
83,514
92%
Principal Place(6)
London, UK
Net Lease
November 2021
20%
99.8
644,000
100%
DreamWorks Animation
Studios
Glendale, CA
Net Lease
December 2021
100%
326.5
497,000
100%
Lakes at West Covina
Los Angeles, CA
Office
February 2020
95%
41.0
177,000
97%
6123-6227 Monroe Ct
Morton Grove, IL
Logistics
November 2021
100%
17.2
208,000
100%
8400 Westphalia Road
Upper Marlboro, MD
Logistics
November 2021
100%
27.0
100,000
100%
McLane Distribution Center
Lakeland, FL
Logistics
November 2021
100%
26.7
211,000
100%
2003 Beaver Road
Landover, MD
Logistics
February 2022
100%
9.4
38,000
100%
187 Bartram Parkway
Franklin, IN
Logistics
February 2022
100%
28.8
300,000
100%
U.S. Diversified Logistics
Portfolio I(7)
Various
Logistics
February 2025
19%
45.1
9,384,444
87%
U.S. Diversified Logistics
Portfolio II(7)
Various
Logistics
June 2025
19%
14.7
1,926,759
92%
34 Market Street(5)
Everett, MA
Logistics
March 2026
100%
155.4
221,856
100%
255 Caspian Drive(5)
Sunnyvale, CA
Data Center
May 2026
100%
90.3
119,756
100%
U.S. Diversified Logistics
Portfolio III(7)
Various
Logistics
July 2026
19%
42.4
8,240,112
93%
East Dallas Crossing
Forney, TX
Logistics
September 2026
100%
114.1
1,080,308
100%
Total
$2,406.8
(1)
Investments in real estate properties include our consolidated property investments and our unconsolidated investments in Principal
Place, U.S. Diversified Logistics Portfolio I, U.S. Diversified Logistics Portfolio II, U.S. Diversified Logistics Portfolio III and U.S.
Manufactured Housing.
(2)
The joint venture agreements entered into by us (other than the Principal Place joint venture) provide the other partner a profits interest
based on achieving certain internal rate of return hurdles. Such investments are consolidated by us and any profits interest due to the
other partners is reported within non-controlling interests.
(3)
Excludes acquisition costs.
(4)
For multifamily and student housing investments, occupancy represents the percentage of all leased units divided by the total available
units as of September 30, 2026. Single-family rental occupancy represents all occupied homes divided by the total stabilized homes as
of the date indicated. Manufactured housing occupancy represents occupied pads divided by total rentable pads. For office, net lease
and logistics investments, occupancy represents the percentage of all leased square footage divided by the total available square footage
as of September 30, 2026.
(5)
Held through our DST Program. The property has been consolidated on our Consolidated Balance Sheets and any profits interest due to
the third-party investors in the DST Program are reported within non-controlling interests in consolidated joint ventures.
(6)
Purchase price represents our initial equity investment in the joint venture of £73.3 million, converted to USD using the spot rate on the
acquisition date.
(7)
Held through a limited partnership interest in a Brookfield-managed fund that owns the investments. Purchase price represents the
aggregate amount of capital funded to the limited partnership by us as of September 30, 2026.
Investments in Real Estate-Related Loans and Securities
The following table details our investments in real estate-related loans and securities as of September 30, 2026 ($ in thousands):
September 30, 2026
Type of Loan/Security
Number
of
Positions
Weighted
Average
Coupon(1)
Weighted
Average
Maturity Date(2)
Face
Amount
Cost Basis/
Allowance
Adjustment
(3)
Carrying
Amount
Investments held at fair value
CMBS - floating
SOFR + 3.62%
January 2030
$30,046
$27,939
$29,029
CMBS - fixed
4.56%
November 2026
23,413
20,650
5,177
RMBS - fixed
4.83%
October 2030
18,011
17,712
17,402
Cross currency forward contracts
N/A
October 2026
-
-
Total investments held at fair value
5.86%
March 2029
$71,470
$66,301
$51,635
Investments held at amortized cost
Real estate-related loans - fixed
9.92%
June 2028
39,016
(3,765)
35,251
Total investments held at amortized cost
9.92%
June 2028
$39,016
$(3,765)
$35,251
Total investments in real estate-related
loans and securities
7.29%
December 2028
$110,486
$62,536
$86,886
(1)
As of September 30, 2026 SOFR was equal to 3.90%.
(2)
Weighted average maturity date is based on the fully extended maturity date of the instruments.
(3)
Adjustments include the cumulative provision for current expected credit losses, unamortized fee income, and a foreign currency
translation adjustment attributable to real estate-related loans.
Lease Expirations
The following table details the expiring leases at our consolidated office, logistics, and net lease properties by annualized base
rent and square footage as of September 30, 2026 ($ and square feet data in thousands). The table below excludes our housing
and single-family rental properties as substantially all leases at such properties expire within 12 months.
Year
Number of
Expiring Leases
Annualized Base
Rent(1)
% of Total
Annualized Base
Rent Expiring
Square Feet
% of Total Square
Feet Expiring
2026 (remaining)
$353
1%
-%
2027
1,347
3%
2%
2028
1,845
4%
3%
2029
2,247
5%
6%
2030
6,986
14%
8%
2031
1,357
3%
2%
2032
1,414
3%
7%
2033
-%
-%
2034
1,491
3%
10%
2035
15,514
32%
16%
Thereafter
15,973
32%
1,302
46%
Total
$48,639
100%
2,920
100%
(1)
Annualized base rent is determined from the annualized base rent per leased square foot of the applicable year and excludes tenant
recoveries, straight-line rent, and above-market and below-market lease amortization.
Results of Operations
The following table sets forth information regarding our consolidated results of operations ($ in thousands):
Three Months Ended
September 30,
Change
Nine Months Ended
September 30,
Change
2026
2025
$
2026
2025
$
Revenues
Rental revenues
$39,509
$32,361
$7,148
$110,136
$97,577
$12,559
Other revenues
3,978
3,716
11,282
10,258
1,024
Total Revenues
43,487
36,077
7,410
121,418
107,835
13,583
Expenses
Rental property operating
16,648
14,503
2,145
46,536
41,771
4,765
General and administrative
1,652
1,470
5,282
5,033
Management fee
3,731
3,221
10,396
9,511
Depreciation and amortization
15,437
13,085
2,352
43,987
39,354
4,633
Total Expenses
37,468
32,279
5,189
106,201
95,669
10,532
Other Income (Expense)
Income from real estate-related loans and securities
1,370
5,155
(3,785)
5,759
14,504
(8,745)
Interest expense
(17,629)
(15,043)
(2,586)
(47,968)
(44,391)
(3,577)
Gain from unconsolidated entities
12,493
3,902
8,591
26,097
17,543
8,554
Other income, net
6,380
6,157
9,595
8,915
Total Other Income (Expense)
2,614
(5,763)
8,377
(6,517)
(11,664)
5,147
Net Income (Loss)
$8,633
$(1,965)
$10,598
$8,700
$502
$8,198
Net income attributable to non-controlling interests in
consolidated joint ventures
$(5,608)
$(540)
$(5,068)
$(8,998)
$(957)
$(8,041)
Net income attributable to non-controlling interests - preferred
shareholders
-
-
-
(77)
(77)
-
Net (income) loss attributable to redeemable non-controlling
interests
(3)
(767)
-
(203)
Net (income) loss attributable to non-controlling interests in the
Operating Partnership
(49)
-
(49)
-
Net Income (Loss) Attributable to Brookfield REIT
Stockholders
$2,973
$(1,741)
$4,714
$(367)
$(329)
$(38)
Per common share data:
Net (loss) income per share of common stock - basic and
diluted
$0.03
$(0.03)
$0.06
$(0.00)
$(0.00)
$0.00
Revenues
Revenues primarily consist of base rent arising from tenant leases at our housing, single-family rental, net lease, data centers,
office and logistics properties. During the three and nine months ended September 30, 2026, revenues increased $7.4 million to
$43.5 million and increased $13.6 million to $121.4 million compared to the three and nine months ended September 30, 2025.
The increase was primarily due to incremental rental revenue generated from properties acquired during 2025 and 2026.
The components of revenue during these periods are as follows ($ in thousands):
Three Months Ended September
30,
Change
Nine Months Ended September
30,
Change
2026
2025
$
2026
2025
$
Rental revenue
$36,006
$29,979
$6,027
$101,055
$90,683
$10,372
Ancillary income and fees
3,978
3,716
11,282
10,258
1,024
Tenant reimbursements
3,503
2,382
1,121
9,081
6,894
2,187
Total revenues
$43,487
$36,077
$7,410
$121,418
$107,835
$13,583
Rental property operating expenses
Rental property operating expenses consist of the costs of ownership and operation of our real estate properties, including real
estate taxes, repairs and maintenance expenses, utilities, property management fees, and insurance expenses. During the three
and nine months ended September 30, 2026, rental property operating expenses increased $2.1 million to $16.6 million and
increased $4.8 million to $46.5 million, respectively, compared to the three and nine months ended September 30, 2025. The
increase is primarily driven by additional operating expenses attributable to acquisition activity in 2025 and 2026, as well as
higher real estate taxes at our housing properties.
General and administrative expenses
General and administrative expenses are corporate-level expenses that relate mainly to our professional, compliance and
administration costs, including accounting and administrative fees, legal fees, audit fees, professional tax fees, valuation fees,
board of director fees and other professional fees. During the three and nine months ended September 30, 2026, general and
administrative expenses increased $0.2 million to $1.7 million and increased $0.2 million to $5.3 million, respectively,
compared to the three and nine months ended September 30, 2025. The increase in general and administrative expenses during
the three months ended September 30, 2026, compared to the corresponding prior period was primarily due to an increase in
tax, accounting and legal expenses, offset by a decrease in board of director, software and technology costs. The increase in
general and administrative expenses during the nine months ended September 30, 2026, compared to the corresponding prior
period was primarily driven by an increase in filing and accounting fees, offset by a decrease in software and technology costs.
Management fee
Management fees are earned by our Adviser for providing services pursuant to the advisory agreement among the Adviser, the
Operating Partnership and the Company (the "Advisory Agreement"). During the three and nine months ended September 30,
2026, management fees increased $0.5 million to $3.7 million and increased $0.9 million to $10.4 million, respectively,
compared to the three and nine months ended September 30, 2025. Management fees are calculated based on our aggregate
NAV of Class S, Class I, Class D, Class C and Class T shares (no management fees are paid on Class E shares) and aggregate
DST Property consideration, and are paid monthly. The Operating Partnership pays the Adviser a management fee equal to
1.25% per annum of the Operating Partnership's NAV of its Class T, Class T-1, Class S, Class S-1, Class D, Class D-1, Class I,
Class I-1 and Class C units held by unitholders other than the Company, payable monthly. The increase in management fees
was due to higher aggregate NAV and DST Property consideration during the current period.
Depreciation and amortization
During the three and nine months ended September 30, 2026, depreciation and amortization expense increased $2.4 million to
$15.4 million and increased $4.6 million to $44.0 million, respectively, compared to the three and nine months ended
September 30, 2025. The increase was primarily attributable to a larger asset base resulting from acquisition activity, as well as
the accelerated depreciation associated with the early termination of a lease at our office property.
Income from real estate-related loans and securities
During the three and nine months ended September 30, 2026, income from real estate-related loans and securities decreased
$3.8 million to $1.4 million and decreased $8.7 million to $5.8 million, respectively, compared to the three and nine months
ended September 30, 2025. The decrease in the most recent three and nine month periods is attributable to the repayment of a
real estate-related loan in October 2025 and sales of real estate-related securities, partially offset by an increase in interest
income from a real estate-related loan that was originated in September 2025. As of September 30, 2026, the weighted average
coupon of our investments in real estate-related loans and securities was 7.29% compared to 10.37% as of September 30, 2025.
Interest expense
Interest expense is primarily related to interest incurred on our mortgage loans, secured credit facilities and Affiliate Line of
Credit. Interest expense increased $2.6 million to $17.6 million and increased $3.6 million to $48.0 million during the three and
nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. The
increase is primarily attributable to an increase in outstanding indebtedness from mortgage loans related to property acquisitions
and borrowings under the Affiliate Line of Credit, partially offset by lower interest rates on variable-rate debt in the first half of
2026 and the refinancing of certain mortgage loans at lower interest rates. As of September 30, 2026, our weighted average cost
of leverage, including the impact of our interest rate derivatives, was 5.00%, compared to 4.98% as of September 30, 2025.
Gain from unconsolidated entities
Gain from unconsolidated entities consists of changes in the fair value of our investments in unconsolidated entities that are
held at fair value, our share of income and loss from investments we record at historical cost, as well as realized and unrealized
gains and losses on our foreign currency swap contracts related to our unconsolidated non-U.S. investment in Principal Place.
During the three and nine months ended September 30, 2026, gain from unconsolidated entities increased by $8.6 million to
$12.5 million and increased by $8.6 million to $26.1 million, respectively, compared to the three and nine months ended
September 30, 2025. The increase in the three months ended September 30, 2026 compared to the corresponding prior period
was primarily driven by an increase in unrealized gains on the fair value of the U.S. Diversified Logistics Portfolios I, II and III
and an increase in the unrealized gain on the fair value of our unconsolidated interest in Principal Place, partially offset by a
decrease in the unrealized gain on the fair value of the cross currency swap and an increase in our allocable share of net loss
from the U.S. Manufactured Housing investment, which is held at historical cost. The increase in the nine months ended
September 30, 2026 compared to the corresponding prior period was primarily driven by an increase in unrealized gain on the
fair value of the U.S. Diversified Logistics Portfolios I, II and III, and a decrease in unrealized gain on the fair value of the cross
currency swap, partially offset by a decrease in unrealized gain on the fair value of our unconsolidated interest in Principal
Place and an increase in our allocable share of net loss from the U.S. Manufactured Housing investment.
Other income, net
Other income, net consists of realized and unrealized gains and losses on our interest rate derivatives and income from our
trading securities. During the three and nine months ended September 30, 2026, other income increased $6.2 million to $6.4
million and increased $8.9 million to $9.6 million, respectively, compared to the three and nine months ended September 30,
2025. The increase is due to unrealized gains on our interest rate derivatives, which are held at fair value.
Net income attributable to non-controlling interests in consolidated joint ventures
Net income attributable to non-controlling interests in consolidated joint ventures consists of income to the non-controlling
interest holders in joint venture investments, including interests in our DST Properties. During the three and nine months ended
September 30, 2026, net income attributable to non-controlling interests in consolidated joint ventures increased by $5.1 million
to $5.6 million and $8.0 million to $9.0 million, respectively, compared to the three and nine months ended September 30,
2025. The increase was primarily due to income attributable to investors in the DST Program.
Net (income) loss attributable to redeemable non-controlling interests and Net (income) loss attributable to non-controlling
interests in the Operating Partnership
Net (income) loss attributable to redeemable non-controlling interests and non-controlling interests in the Operating Partnership
was less than $0.1 million for the three and nine months ended September 30, 2026, and $0.8 million and $0.2 million of
income for the three and nine months ended September 30, 2025. The income or loss allocable to redeemable non-controlling
interests and non-controlling interests in the Operating Partnership is related to interests held in the Operating Partnership by
parties other than us. The change from the prior period was due to a decrease in redeemable non-controlling interests resulting
from the repurchase of Operating Partnership units from the Brookfield Investor in exchange for common shares during the
year ended December 31, 2025.
Reimbursement by the Adviser
Pursuant to the Advisory Agreement, the Adviser will reimburse us for any expenses that cause our Total Operating Expenses
(as defined in our charter) in any four consecutive fiscal quarters to exceed the greater of: (i) 2% of our Average Invested
Assets or (ii) 25% of our Net Income (each as defined in our charter) (the "2%/25% Limitation"). For the four consecutive
quarters ended September 30, 2026, our Total Operating Expenses did not exceed the 2%/25% Limitation.
Liquidity and Capital Resources
Our primary needs for liquidity are to fund investments, to make distributions to our stockholders, to repurchase shares of our
common stock pursuant to our share repurchase plan, to pay our offering and operating expenses, to fund capital expenditures at
our properties and to pay debt service on our outstanding indebtedness. We may also have future funding obligations related to
loan commitments on our real estate-related loans and unfunded capital commitments related to our limited partnership
interests. Our operating expenses include, among other things, fees and expenses related to managing our properties and other
investments, the management and performance fees we pay to the Adviser (to the extent the Adviser elects to receive such fees
in cash) and general corporate expenses.
We believe that our current liquidity position is sufficient to meet the operating needs of our business, with $340.0 million of
liquidity as of September 30, 2026, consisting of $22.0 million of unrestricted cash and cash equivalents, $305.0 million of
undrawn available capacity on our Secured Credit Facility and SFR Secured Credit Facility (which includes $300.0 million of
uncommitted capacity that can be used for the acquisition or refinancing of investments), and $13.0 million of undrawn
available capacity on our Affiliate Line of Credit. We may also generate additional liquidity through the sale of our real estate-
related securities, which had an aggregate fair value of $51.6 million as of September 30, 2026.
Our portfolio remains conservatively leveraged at 55% as of September 30, 2026, and we can generate additional liquidity by
incurring indebtedness secured by our investments. Our leverage ratio is calculated by dividing (i) the consolidated property-
level and entity-level debt, excluding any third-party interests in such debt, net of cash, loan-related restricted cash, and trading
securities by (ii) the gross asset value of real estate equity investments (calculated using the greater of fair value and cost of
gross real estate assets), excluding any third-party interests in such investments, plus our equity in real estate-related debt
investments. Additionally, there is no indebtedness on our real estate-related debt investments.
Our cash needs for acquisitions and other investments will be funded primarily from the sale of shares of our common stock,
proceeds from the DST Program, and through the assumption or incurrence of debt. During the three and nine months ended
September 30, 2026, we received $89.5 million and $102.7 million, respectively, of proceeds from the sale of shares of our
common stock and $28.7 million and $123.5 million, respectively, from our DST Program. In addition, during the three and
nine months ended September 30, 2026, we repurchased $21.1 million and $75.3 million, respectively, in shares of our common
stock under our share repurchase plan. Since inception, we have satisfied 100% of repurchase requests.
The following table is a summary of our total indebtedness, net as of September 30, 2026 ($ in thousands):
Indebtedness
Weighted Average
Interest Rate(1)
Weighted Average
Maturity Date(2)
Maximum
Facility Size
Principal Balance
Outstanding
Fixed rate loans:
Fixed rate mortgages
4.06%
November 2030
N/A
$500,420
Total fixed rate loans
500,420
Variable rate loans:
Variable rate mortgages(3)
SOFR+1.70%
April 2029
N/A
650,233
Secured Credit Facility
SOFR+2.75%
May 2027
$250,000
-
SFR Secured Credit Facility(4)
SOFR+1.85%
April 2029
$185,000
129,973
Affiliate Line of Credit(5)
SOFR+2.25%
November 2026
$125,000
112,000
Total variable rate loans
892,206
Total indebtedness
1,392,626
Deferred financing costs, net
(8,330)
Total indebtedness, net
$1,384,296
(1)
As of September 30, 2026 and December 31, 2025, SOFR was 3.90% and 3.87%, respectively.
(2)
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.
(3)
Includes a $48.7 million mortgage loan that matures in December 2026 and a $279.3 million mortgage loan that matures in March
2027. Management intends to and expects to have the ability to extend or refinance the mortgage loans prior to maturity.
(4)
As of September 30, 2026, borrowings on the SFR Secured Credit Facility were secured by the single-family rental properties.
(5)
Borrowings under the Affiliate Line of Credit (defined below) bear interest at a rate of the lowest then-current interest rate for any
similar credit product offered by a third-party lender to the Company or its subsidiaries or, if not available, SOFR plus a 0.10% credit
adjustment and a 2.25% margin.
Cash Flows
The following table provides a summary of the net change in our cash and cash equivalents and restricted cash ($ in thousands):
Nine Months Ended
September 30, 2026
September 30, 2025
Cash flows provided by operating activities
$28,048
$30,236
Cash flows used in investing activities
(419,322)
(202,357)
Cash flows provided by financing activities
385,408
181,702
Net change in cash and cash equivalents and restricted cash
$(5,866)
$9,581
Cash flows provided by operating activities decreased $2.2 million during the nine months ended September 30, 2026,
compared to the corresponding period in 2025. The decrease is primarily due to a $3.6 million increase in interest expense and a
$1.1 million increase in upfront derivative acquisition costs, offset by a $13.6 million increase in total revenue and a $10.5
million increase in total expenses.
Cash flows used in investing activities increased $217.0 million for the nine months ended September 30, 2026, compared to
the corresponding period in 2025. The change is primarily due to a $360.5 million increase in cash used for the acquisitions of
real estate and a $70.4 million increase in cash used to acquire interests in unconsolidated investments. These activities are
partially offset by a $9.9 million increase in proceeds from principal repayments on our investments in real estate-related loans
and securities, a $3.4 million increase in proceeds from the sale of partial interests in unconsolidated investments, a $145.3
million decrease in cash used to purchase or fund real estate-related loans and securities (net of proceeds from the sale of real
estate-related loans and securities), and a $55.5 million decrease in cash used to purchase trading securities (net of proceeds
from the sale of trading securities).
Cash flows provided by financing activities increased $203.7 million for the nine months ended September 30, 2026, compared
to the corresponding period in 2025. The increase is primarily due to a $110.9 million increase in borrowings from mortgage
loans (net of repayments), a $35.2 million decrease in repayments of secured credit facilities (net of borrowings), a $94.8
million increase in borrowings on the Affiliate Line of Credit (net of repayments), a $59.1 million increase in contributions
from non-controlling interests related to the DST Program, and a $19.5 million decrease in repurchases of common stock.
These increases are partially offset by a $118.7 million decrease in proceeds from the issuance of common stock.
Net Asset Value
Our board of directors, including a majority of our independent directors, has adopted valuation guidelines that contain a
comprehensive set of methodologies to be used by the Adviser and our independent valuation advisor in connection with
estimating the values of our assets and liabilities for purposes of our NAV calculation. The calculation of our NAV is intended
to be a calculation of the fair value of our assets less our outstanding liabilities and will likely differ from the book value of our
equity reflected in our financial statements. The purchase and repurchase price per share for each class of our common stock is
the then-current transaction price, which generally equals our prior month's NAV per share, as determined monthly, plus, for
purchases only, applicable selling commissions and dealer manager fees.
For more information on the calculation of our NAV and the valuation method used, please refer to Item 5 of our Annual
Report on Form 10-K for the year ended December 31, 2025.
Our total NAV presented in the following tables includes the NAV of our Class S, Class I, Class T, Class D, Class C and Class
E shares of common stock, as well as partnership interests in the Operating Partnership held by parties other than us. The
following table provides a breakdown of the major components of our NAV as of September 30, 2026 ($ and shares/units in
thousands):
Components of NAV
September 30, 2026
Investments in real estate
$2,199,787
Investments in real estate-related loans and securities
88,380
Investments in unconsolidated entities(1)
345,912
Cash and cash equivalents
22,032
Restricted cash
18,547
Other assets
41,894
Debt obligations
(1,378,526)
Accrued stockholder servicing fees(2)
(188)
Management fee payable
(1,273)
Dividend payable
(4,511)
Subscriptions received in advance
(6,843)
Other liabilities
(48,590)
Non-controlling interests in joint ventures
(232,278)
Net asset value
$1,044,343
Number of shares/units outstanding
99,135
(1)
Investments in unconsolidated entities reflects the value of our net equity investment in entities we do not consolidate. As
of September 30, 2026, our allocable share of the gross real estate asset value held by such entities was $791.6 million.
(2)
Stockholder servicing fees only apply to Class S, Class T and Class D shares. For purposes of NAV, we recognize the
stockholder servicing fee as a reduction of NAV on a monthly basis as such fee is paid. Under GAAP, we accrue the full
cost of the stockholder servicing fee as an offering cost at the time we sell Class S, Class T and Class D shares of our
common stock. As of September 30, 2026, we have accrued under GAAP approximately $11.6 million of stockholder
servicing fees.
The following table provides a breakdown of our total NAV and NAV per share/unit by class as of September 30, 2026 ($ and
shares/units in thousands, except per share/unit data):
NAV Per Share/Unit
Class S
Shares
Class I
Shares
Class D
Shares
Class T
Shares
Class C
Shares(1)
Class E
Shares(1)
Third-party
Class I-1 OP
Units(2)
Third-party
Class E OP
Units(2)
Total
Net asset value
$248,378
$663,835
$985
$838
$68,519
$44,285
$16,465
$1,038
$1,044,343
Number of shares/units
outstanding
23,715
62,731
6,680
4,184
1,556
99,135
NAV Per Share/Unit as of
September 30, 2026
$10.4734
$10.5822
$10.6949
$10.6734
$10.2566
$10.5845
$10.5822
$10.5845
(1)
Class C and Class E shares of our common stock are offered to investors pursuant to private offerings.
(2)
Includes units of the Operating Partnership held by parties other than us.
Set forth below are the weighted averages of the key assumptions in the discounted cash flow methodology used in the
September 30, 2026 valuations, based on property types. In the event we own more than one office, data center, or
manufactured housing investment in the portfolio, we will include the key assumptions for these property types.
Property Type
Discount Rate
Exit Capitalization Rate
Multifamily/Student Housing
7.4%
5.7%
Single-Family Rental
7.2%
5.5%
Net Lease
7.4%
5.5%
Logistics
8.6%
6.3%
These assumptions are determined by our independent valuation advisor and our independent third-party appraisal firms (other
than international properties, which are determined by the Adviser and reviewed by our independent valuation advisor). A
change in these assumptions would impact the calculation of the value of our property investments. For example, assuming all
other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
Input
Hypothetical
Change
Multifamily/
Student Housing
Investment Values
Single-Family
Rental Investment
Values
Net Lease
Investment
Values
Logistics
Investment
Values
Discount Rate
0.25% Decrease
1.9%
0.9%
2.0%
1.8%
(weighted average)
0.25% Increase
(1.9)%
(1.0)%
(1.9)%
(1.8)%
Exit Capitalization Rate
0.25% Decrease
2.7%
3.6%
2.9%
2.5%
(weighted average)
0.25% Increase
(2.5)%
(3.4)%
(2.6)%
(2.3)%
The preceding tables do not include recently acquired properties, which are held at cost in accordance with our valuation
guidelines.
The following table reconciles Stockholders' Equity per our Consolidated Balance Sheets to our NAV ($ in thousands):
Reconciliation of Stockholders' Equity to NAV
September 30, 2026
Stockholders' equity under U.S. GAAP
$709,580
Redeemable non-controlling interests attributable to OP unitholders
1,039
Non-controlling interests attributable to OP unitholders
15,325
Total partners' capital of Operating Partnership under GAAP
725,944
Adjustments:
Accrued stockholder servicing fee
11,584
Deferred rent
(914)
Advanced organizational and offering costs
2,255
Unrealized net real estate appreciation
9,592
Accumulated depreciation and amortization
295,882
NAV
$1,044,343
The following details the adjustments to reconcile stockholders' equity under GAAP to our NAV:
•Accrued stockholder servicing fee represents the accrual for the full cost of the stockholder servicing fee for Class S,
Class D and Class T shares. Under GAAP, we accrued the full cost of the stockholder servicing fee payable over the
life of each share (assuming such share remains outstanding the length of time required to pay the maximum
stockholder servicing fee) as an offering cost at the time we sold such share. Refer to Note 2 - "Summary of
Significant Accounting Policies" to our consolidated financial statements for further details of the GAAP treatment
regarding the stockholder servicing fee. For purposes of calculating NAV, we recognize the stockholder servicing fee
as a reduction of NAV on a monthly basis when such fee is paid.
•Deferred rent represents straight-line rental revenue recorded under GAAP. For purposes of calculating NAV, deferred
rental revenues are excluded.
•The Adviser and its affiliates advanced organization and offering expenses on our behalf (other than upfront selling
commissions, dealer manager fees and stockholder servicing fees) through July 5, 2023, subject to the following
reimbursement terms: (1) all such advanced expenses paid through July 5, 2022 are reimbursed ratably over the 60
months following July 6, 2022; and (2) all such advanced expenses paid from July 6, 2022 through July 5, 2023 are
reimbursed ratably over the 60 months following July 6, 2023. Under GAAP, organization costs are expensed as
incurred and offering costs are charged to equity as such amounts are incurred. For purposes of calculating NAV, such
costs are recognized as a reduction to NAV as they are reimbursed to the Adviser.
•Our investments in real estate are presented at their depreciated historical cost basis in our GAAP Consolidated
Financial Statements. Certain of our investments in real estate-related loans are presented at their amortized cost basis
in our GAAP Consolidated Financial Statements. Additionally, our mortgage loans, term loans, and credit facilities
("Debt") are presented at their carrying value in our GAAP Consolidated Financial Statements. As such, any changes
in the fair market value of our investments in real estate, investments in real estate-related loans or Debt are not
included in our GAAP results. For purposes of calculating NAV, our investments in real estate, investments in real
estate-related loans, and our Debt are recorded at fair value and any changes in fair value are recognized as unrealized
net real estate appreciation.
•We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP.
For the purposes of calculating NAV, such depreciation and amortization is excluded.
Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution
We believe funds from operations ("FFO") is a meaningful non-GAAP supplemental measure of our operating results. Our
Consolidated Financial Statements are presented under historical cost accounting which, among other things, requires
depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the
value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of real
estate investments will fluctuate over time based on market conditions and as such, depreciation under historical cost
accounting may be less informative. FFO is a standard REIT industry metric defined by the National Association of Real Estate
Investment Trusts ("NAREIT"). FFO, as defined by NAREIT and presented below, is calculated as net income or loss
(computed in accordance with GAAP), excluding (i) gains or losses from sales of depreciable real property, (ii) impairment
write-downs on depreciable real property and investments in entities when the impairment is directly attributable to decreases in
the value of depreciable real estate held by the entity, plus (iii) real estate-related depreciation and amortization, and (iv) after
adjustments for our share of consolidated and unconsolidated joint ventures.
We also believe that adjusted FFO ("AFFO") is a meaningful non-GAAP supplemental measure of our operating results. AFFO
further adjusts FFO in order for our operating results to reflect the specific characteristics of our business by adjusting for items
we believe are not related 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) amortization of mortgage
premium/discount, (iv) organization costs, (v) amortization of restricted stock awards, (vi) unrealized gains and losses from real
estate-related securities, derivatives, and investments in unconsolidated entities reported at fair value, (vii) non-cash
performance fee or other non-cash incentive compensation, (viii) provision for current expected credit loss or benefit, (ix)
similar adjustments for non-controlling interests, and (x) our allocable share of AFFO from unconsolidated entities.
We also believe funds available for distribution ("FAD") is an additional meaningful non-GAAP supplemental measure that
provides useful information for considering our operating results and certain other items relative to the amount of our
distributions. FAD is calculated as AFFO adjusted for (i) management fees paid in shares or operating partnership units, even if
subsequently repurchased by us, (ii) realized gains and losses on investments in real estate-related loans and securities, (iii)
realized gains and losses on financial instruments, (iv) stockholder servicing fees paid during the period, (v) similar adjustments
for non-controlling interests, and (vi) our allocable share of FAD from unconsolidated entities. FAD is not indicative of cash
available to fund our cash needs and does not represent cash flows from operating activities in accordance with GAAP, as it
excludes adjustments for working capital items and actual cash receipts from interest income recognized on real estate related
securities. Cash flows from operating activities in accordance with GAAP would generally be adjusted for such items.
Furthermore, FAD is adjusted for stockholder servicing fees which are not considered when determining cash flows from
operating activities in accordance with GAAP.
The following table presents a reconciliation of FFO, AFFO and FAD to net income (loss) attributable to our stockholders and
redeemable non-controlling interests. We believe it is meaningful to include redeemable non-controlling interests since it is a
component of our NAV ($ in thousands):
For the three months ended
For the nine months ended
September 30,
2026
September 30,
2025 (1)
September 30,
2026
September 30,
2025(1)
Net income (loss) attributable to Brookfield REIT stockholders,
redeemable non-controlling interests, and third-party Operating
Partnership unitholders
$3,025
$(2,505)
$(374)
$(532)
Adjustments to arrive at FFO:
Depreciation and amortization
15,437
13,085
43,987
39,354
Amount attributed to non-controlling interests attributable to
consolidated joint ventures for above adjustments
(176)
(186)
(573)
(570)
FFO attributable to Brookfield REIT stockholders, redeemable
non-controlling interests, and third-party Operating Partnership
unitholders
18,286
10,394
43,040
38,252
Adjustments to arrive at AFFO:
Straight-line rental income
(600)
(465)
(1,602)
(796)
Amortization of above and below market lease intangibles, net
(1,125)
(330)
(1,784)
(993)
Amortization of deferred financing costs
1,700
1,551
Amortization of upfront derivative acquisition costs
Amortization of restricted stock awards
Unrealized gain on investments, net(2)
(18,335)
(5,260)
(34,085)
(18,855)
Provision for current expected credit loss (benefit)
-
(664)
Allocable share of AFFO related to unconsolidated entities
1,501
-
6,002
-
Amount attributed to non-controlling interests attributable to
consolidated joint ventures for above adjustments
3,034
(36)
3,008
(163)
AFFO attributable to Brookfield REIT stockholders, redeemable
non-controlling interests, and third-party Operating Partnership
unitholders
3,765
5,533
16,530
20,332
Adjustments to arrive at FAD:
Non-cash management fee
3,731
3,221
10,396
9,511
Realized gain on sale of real estate-related loans and securities
(152)
(815)
(344)
(902)
Realized gain on sale of Treasury Bonds
(112)
(391)
(956)
(1,141)
Realized loss on financial instruments(3)
1,993
1,993
Stockholder servicing fees
(519)
(583)
(1,564)
(1,805)
Allocable share of FAD related to unconsolidated entities
-
-
FAD attributable to Brookfield REIT stockholders, redeemable
non-controlling interests, and third-party Operating Partnership
unitholders
$6,855
$8,958
$24,166
$27,988
Per common share and Operating Partnership unit data:
FAD per share/unit - basic and diluted
$0.07
$0.09
$0.25
$0.29
Weighted average number of shares/units outstanding - basic
and diluted
98,224
95,215
95,215
96,130
(1)
The prior period has been recast to present unconsolidated entities in a consistent manner with the current period presentation.
(2)
Unrealized loss (gain) on investments, net relates to mark-to-market changes on our investments in real estate-related securities,
derivative contracts, and investments in unconsolidated entities reported at fair value and historical cost.
(3)
Realized loss on financial instruments relates to settlements on our foreign currency swaps and interest rate swaps.
FFO, AFFO, and FAD should not be considered to be more relevant or accurate than the GAAP methodology in calculating net
income (loss) or in evaluating our operating performance. In addition, FFO, AFFO, and FAD should not be considered as
alternatives to net (loss) income 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, AFFO, and FAD are not intended to be used as liquidity measures indicative of cash flow available to fund our cash
needs, including our ability to make distributions to our stockholders.
Distributions
We generally intend to distribute substantially all of our taxable income, which does not necessarily equal net income as
calculated in accordance with GAAP, to our stockholders each year to satisfy the requirements for qualification as a REIT
under the Code.
In December 2019, we began declaring monthly distributions for each class of our common stock, which are generally paid 20
calendar days after month-end. Each class of our common stock receives the same aggregate gross distribution per share. The
net distribution varies for each class based on the applicable stockholder servicing fees, management fees and performance fees,
which are deducted from the monthly distribution per share.
The following table details the aggregate net distributions declared for each of our classes of common stock for the three and
nine months ended September 30, 2026.
Three Months Ended September 30, 2026
Class S
Class I
Class D
Class T
Class C
Class E
Aggregate gross distributions declared per share of common stock
$0.1779
$0.1779
$0.1779
$0.1779
$0.1779
$0.1779
Stockholder servicing fees per share of common stock
(0.0221)
-
(0.0067)
(0.0225)
-
-
Management fee per share of common stock
(0.0392)
(0.0396)
(0.0399)
(0.0399)
(0.0384)
-
Net distributions declared per share of common stock
$0.1166
$0.1383
$0.1313
$0.1155
$0.1395
$0.1779
Nine Months Ended September 30, 2026
Class S
Class I
Class D
Class T
Class C
Class E
Aggregate gross distributions declared per share of common stock
$0.5962
$0.5962
$0.5962
$0.5962
$0.5962
$0.5962
Stockholder servicing fees per share of common stock
(0.0654)
-
(0.0196)
(0.0665)
-
-
Management fee per share of common stock
(0.1123)
(0.1135)
(0.1144)
(0.1144)
(0.1101)
-
Net distributions declared per share of common stock
$0.4185
$0.4827
$0.4622
$0.4153
$0.4861
$0.5962
The following tables summarize our distributions and the Operating Partnership's distributions declared during the three and
nine months ended September 30, 2026 and 2025 ($ in thousands):
Three Months Ended September 30,
2026
Three Months Ended September 30,
2025
Amount
Percentage
Amount
Percentage
Company Distributions
Payable in cash
$6,007
46%
$8,176
72%
Reinvested in shares
7,022
54%
3,242
28%
Total Company distributions
$13,029
100%
$11,418
100%
Operating Partnership Distributions(1)
Payable in cash
$215
92%
$-
-%
Reinvested in units
8%
5,245
100%
Total Operating Partnership distributions
$233
100%
$5,245
100%
Total Company and Operating Partnership
Distributions
$13,262
100%
$16,663
100%
Sources of Company and Operating Partnership
Distributions
Cash flows provided by operating activities
$9,079
68%
$8,294
50%
Cash flow from other sources(2)
4,183
32%
8,369
50%
Total sources of distributions
$13,262
100%
$16,663
100%
Cash flows provided by operating activities(3)
$9,079
$8,294
Funds from Operations
$18,286
$10,394
Adjusted Funds from Operations
$3,765
$5,533
Funds Available for Distribution
$6,855
$8,958
Nine Months Ended September 30,
2026
Nine Months Ended September 30,
2025
Amount
Percentage
Amount
Percentage
Company Distributions
Payable in cash
$21,008
48%
$24,915
71%
Reinvested in shares
23,014
52%
10,069
29%
Total Company distributions
$44,022
100%
$34,984
100%
Operating Partnership Distributions(1)
Payable in cash
$751
93%
$-
-%
Reinvested in units
7%
15,473
100%
Total Operating Partnership distributions
$806
100%
$15,473
100%
Total Company and Operating Partnership
Distributions
$44,828
100%
$50,457
100%
Sources of Company and Operating Partnership
Distributions
Cash flows provided by operating activities
$28,048
63%
$30,236
60%
Cash flow from other sources(2)
16,780
37%
20,221
40%
Total sources of distributions
$44,828
100%
$50,457
100%
Cash flows provided by operating activities(3)
$28,048
$30,236
Funds from Operations
$43,040
$38,252
Adjusted Funds from Operations
$16,530
$20,332
Funds Available for Distribution
$24,166
$27,988
(1)
Distributions paid by the Operating Partnership to third parties other than the Company.
(2)
Includes cash flows from investing activities, such as proceeds from sales of trading securities and real estate-related securities.
(3)
See "Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution" below for descriptions of Funds
from Operations (FFO), Adjusted Funds from Operations (AFFO), and Funds Available for Distribution (FAD), for reconciliations of
these metrics to GAAP Net loss attributable to stockholders and redeemable non-controlling interests, and for considerations on how to
review these metrics.
Distribution Policy
We intend to distribute sufficient income so that we satisfy the requirements for qualification as a REIT. In order to qualify as a
REIT, we are required to distribute 90% of our annual REIT taxable income, determined without regard to the dividends-paid
deduction and excluding net capital gains, to our stockholders. Generally, income distributed to stockholders will not be taxable
to us under the Code if we distribute at least 90% of our REIT taxable income, determined without regard to the dividends-paid
deduction and excluding net capital gains.
Distribution Reinvestment Plan
We have adopted a distribution reinvestment plan whereby stockholders will have their cash distributions attributable to the
shares they own automatically reinvested in additional shares of common stock; provided, however, that clients of certain
participating broker-dealers that do not permit automatic enrollment in the distribution reinvestment plan and stockholders that
are residents of certain states that do not permit automatic enrollment in the distribution reinvestment plan will automatically
receive their distributions in cash unless they elect to participate in the distribution reinvestment plan. The per share purchase
price for shares purchased pursuant to the distribution reinvestment plan will be equal to the offering price before upfront
selling commissions and dealer manager fees (the "transaction price") at the time the distribution is payable, which will
generally be equal to our prior month's NAV per share for that share class. Stockholders will not pay upfront selling
commissions or dealer manager fees when purchasing shares pursuant to the distribution reinvestment plan. The stockholder
servicing fees with respect to our Class S, Class D and Class T shares are calculated based on the NAV for those shares and
may reduce the NAV or, alternatively, the distributions payable with respect to shares of each such class, including shares
issued in respect of distributions on such shares under the distribution reinvestment plan.
Critical Accounting Estimates
The preparation of these financial statements in accordance with GAAP involves significant judgment and assumptions and
requires estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and
liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts
of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts
could be reported in our financial statements. The following is a summary of our significant accounting policies that we believe
are the most affected by our judgments, estimates, and assumptions.
Refer to Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in this Quarterly
Report on Form 10-Q for a summary of our critical accounting policies.
Principles of Consolidation and Variable Interest Entities
We consolidate entities in which we retain a controlling financial interest or entities that meet the definition of a VIE for which
we are deemed to be the primary beneficiary. In performing our analysis of whether we are the primary beneficiary, at initial
investment and at each quarterly reporting period, we consider whether we individually have the power to direct the activities of
the VIE that most significantly affect the entity's economic performance and also have the obligation to absorb losses or the
right to receive benefits of the VIE that could potentially be significant to the VIE. The determination of whether an entity is a
VIE, and whether we are the primary beneficiary, involves significant judgments, including the determination of which
activities most significantly affect the entity's performance, estimates about the current and future fair values and performance
of assets held by the entity and/or general market conditions.
Investments in Real Estate
In accordance with the guidance for business combinations, we determine whether the acquisition of a property qualifies as a
business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property
acquired is not a business, we account for the transaction as an asset acquisition. We evaluate each real estate acquisition to
determine whether the integrated set of acquired assets and activities meets the definition of a business.
Upon acquisition of a property, we assess the fair value of the acquired tangible and intangible assets (including land, buildings,
tenant improvements, "above-market" and "below-market" leases, acquired in-place leases, other identified intangible assets
and assumed liabilities) and we allocate the purchase price to the acquired assets and assumed liabilities. The most significant
portion of the allocation is 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 discount and/or capitalization rates that we deem
appropriate, as well as other available market information. Estimates of future cash flows are based on a number of factors
including the historical operating results, known and anticipated trends and market and economic conditions.
We also consider an allocation of the purchase price of other acquired intangibles, including acquired in-place leases that may
have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship
with the tenants, the tenants' credit quality and expectations of lease renewals. For acquired in-place leases, above- and below-
market lease values are recorded at their fair values (using a discount rate that reflects the risks associated with the lease
acquired) equal to the difference between the contractual amounts to be paid pursuant to the in-place leases and management's
estimate of fair market value lease rates for the corresponding in-place leases, measured over a period equal to the remaining
term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for
below-market leases. Other intangible assets acquired include amounts for in-place lease values that are based on our evaluation
of the specific characteristics of each tenant's lease. Factors to be considered include estimates of carrying costs during
hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating
carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates
during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, we
consider leasing commissions, legal and other related expenses.
Impairment of Long-Lived Assets
We review our real estate properties for impairment each quarter or when there is an event or change in circumstances that
indicates the carrying amount of an asset may not be recoverable. A property is considered impaired if the estimate of aggregate
future cash flows generated by the property is less than the carrying value of the property, taking into account an appropriate
capitalization rate in determining the future terminal value. The impairment loss is recognized based on the excess of the
carrying amount of the asset over its fair value. The evaluation of anticipated future cash flows is highly subjective and is based
in part on assumptions regarding future occupancy, rental rates, capital requirements, anticipated hold periods and terminal
capitalization rates that could differ materially from actual results. Since cash flows on real estate properties considered to be
"long-lived assets to be held and used" are considered on an undiscounted basis to determine whether an asset has been
impaired, our strategy of holding properties over the long term directly decreases the likelihood of recording an impairment
loss. If our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized,
and such loss could be material to our results. If we determine that an impairment has occurred, the affected assets must be
reduced to their fair value.
For our investments in unconsolidated entities for which we have not elected the FVO, we review these investments for
impairment each quarter or when there is an event or change in circumstances that indicates a decrease in value. If there is a
decrease in value due to a series of operating losses or other factors, the investment is evaluated to determine if the loss in value
is considered other-than-temporary. Although a current fair value below the carrying value of the investment is an indicator of
impairment, we will only recognize an impairment if the loss in value is determined to be an other-than-temporary impairment.
If an impairment is determined to be other-than-temporary, we will record an impairment charge sufficient to reduce the
investment's carrying value to its fair value, which would result in a new cost basis. This new cost basis will be used for future
periods when recording subsequent income or loss and cannot be written up to a higher value as a result of increases in fair
value.
Recent Accounting Pronouncements
See Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in this Quarterly Report
on Form 10-Q for a discussion concerning recent accounting pronouncements.
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