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," "Fidelity Core Real Estate Fund," "we," or "our" refer to Fidelity Core Real Estate Fund together with its consolidated subsidiaries, including the Operating Partnership, unless the context specifically requires otherwise.

The following discussion and analysis of the Company's financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, the Company's unaudited financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this "Quarterly Report"), which have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable. The Company's actual results could differ materially from those discussed in these forward-looking statements.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws about the Company's business, including, in particular, statements about its plans, strategies and objectives. These forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," "identified" or other similar words or the negatives thereof. These may include financial projections and estimates and their underlying assumptions, statements about plans, objectives and expectations with respect to future operations, statements with respect to acquisitions, statements regarding future performance and statements regarding identified but not yet closed acquisitions or other investments. Such forward-looking statements are inherently uncertain and there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond the Company's control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in this Quarterly Report and in the Company's other filings with the Securities and Exchange Commission (the "SEC"), which are accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document (or the Company's other filings). Except as otherwise required by federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Overview

The Company invests primarily in stabilized, income-generating real estate assets located in the United States. The Company also, to a lesser extent, invests in real estate debt investments and securities. The Company owns all or substantially all of its investments through the Operating Partnership. The Company is externally managed by the Investment Manager. The Company currently operates its business as one reportable segment.

The Company has elected to be taxed as a REIT under the IRC, commencing with its taxable year ended December 31, 2023. REITs generally will not be subject to U.S. federal income taxes on taxable income to the extent they annually distribute all of their net taxable income to shareholders and maintain their qualification as a REIT. As of September 30, 2026, the Company had received cumulative proceeds of $433.6 million from the sale of 39.5 million common shares across each of the share classes, in the Company's continuous Offering, inclusive of DRIP proceeds. The Company contributed the net proceeds from the sale of shares to the Operating Partnership in exchange for a corresponding number of Class I, Class S, and Class F OP Units, as applicable, of the Operating Partnership. The Operating Partnership has primarily used the net proceeds to make investments in real estate and real estate debt and for other general corporate purposes as further described below under "Investment Portfolio." The Company intends to continue selling shares on a monthly basis through its continuous Offering.

Q3 2026 Highlights

Operating Results

For the three months ended September 30, 2026, the Company declared distributions totaling approximately $4.9 million. The details of the average annualized distribution rates and total net returns as of September 30, 2026, are shown in the following table:

Capital Activity

Current Portfolio

Investment Portfolio

Portfolio Summary

The following chart allocates the Company's investments in real estate and real estate debt based on fair value as of September 30, 2026:

The following charts further describe the diversification of the Company's investments in real estate based on fair value as of September 30, 2026:

Investments in Real Estate

The following table provides a summary of the Company's portfolio by property type as of September 30, 2026:

The following table provides additional information regarding the Company's real estate portfolio as of September 30, 2026:

Lease Expirations

The following tables detail the expiring leases at the Company's consolidated Industrial, Retail, and Medical Office properties by annualized base rent and square footage as of September 30, 2026. Residential properties are excluded as substantially all leases at such properties expire within 12 months.

As of and for the nine months ended September 30, 2026, there were no leases at the Company's properties that contained early termination options. As of and for the year ended December 31, 2025, there were no leases at the Company's properties that contained early termination options.

Tenant Concentration

The percentage of total revenue attributable to tenants at the Company's properties accounting for 10% or more of the total revenue, and the corresponding percentage of accounts receivable, are as follows:

The loss of the tenant discussed in the table above could have a material adverse effect on the Company's financial condition and results of operations.

Investments in Real Estate Debt

The following charts describe the diversification of the Company's investments in real estate debt by credit rating and collateral type, based on fair value as of September 30, 2026:

See "Item 1. Consolidated Financial Statements - Notes to Consolidated Financial Statements - Note 6. Investments in Real Estate Debt, at Fair Value" for details on the Company's investments in real estate debt.

Results of Operations

The following table sets forth information regarding the Company's consolidated results of operations for the three months ended September 30, 2026 and 2025:

Revenues

During the three months ended September 30, 2026, revenue from leases increased $4.0 million as compared to the three months ended September 30, 2025. The change was primarily driven by an increase in investments in real estate as a result of property acquisitions, as well as an increase in average rental rates across the Company's portfolio.

Rental property operating expenses

During the three months ended September 30, 2026, rental property operating expenses increased approximately $0.7 million as compared to the three months ended September 30, 2025. The change was primarily driven by an increase in investments in real estate as a result of property acquisitions.

General and administrative expenses

During the three months ended September 30, 2026, general and administrative expenses increased approximately $0.4 million as compared to the three months ended September 30, 2025. The change was primarily driven by an increase in property management fees, legal and marketing fees, and audit fees expense as a result of property acquisitions.

Management fee

During the three months ended September 30, 2026, the management fee payable to the Investment Manager increased approximately $0.3 million, compared to the three months ended September 30, 2025. The increase is due to a higher average NAV during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.

Incentive fee

During the three months ended September 30, 2026, the incentive fee payable to the Investment Manager increased approximately $0.1 million, compared to the three months ended September 30, 2025. The increase was due to a larger total return driven by a higher average NAV.

Depreciation and amortization expenses

During the three months ended September 30, 2026, depreciation and amortization expenses increased approximately $0.7 million, compared to the three months ended September 30, 2025. The change was primarily driven by an increase in depreciation expense across the Company's portfolio as a result of property acquisitions.

Dividend and interest income

During the three months ended September 30, 2026, dividend and interest income decreased approximately $0.1 million as compared to the three months ended September 30, 2025. The change was primarily driven by interest earned on lower average money market balances.

Interest expense

During the three months ended September 30, 2026, interest expense increased approximately $1.3 million, compared to the three months ended September 30, 2025. The increase was primarily driven by additional property mortgage borrowings as a result of property acquisitions.

Other income

During the three months ended September 30, 2026, other income increased approximately $0.9 million as compared to the three months ended September 30, 2025. The change was primarily attributable to net unrealized appreciation on swaps, partially offset by increase in unrealized loss on real estate debt, unrealized loss on real estate securities and realized loss on swaps.

The following table sets forth information regarding the Company's consolidated results of operations for the nine months ended September 30, 2026 and 2025:

Revenues

During the nine months ended September 30, 2026, revenue from leases increased $10.1 million as compared to the nine months ended September 30, 2025. The change was primarily driven by an increase in investments in real estate as a result of property acquisitions, as well as an increase in average rental rates across the Company's portfolio.

Rental property operating expenses

During the nine months ended September 30, 2026, rental property operating expenses increased approximately $2.2 million as compared to the nine months ended September 30, 2025. The change was primarily driven by an increase in investments in real estate as a result of property acquisitions.

General and administrative expenses

During the nine months ended September 30, 2026, general and administrative expenses increased approximately $0.8 million as compared to the nine months ended September 30, 2025. The change was primarily driven by an increase in property management fees, legal and marketing fees, and audit fees expense as a result of property acquisitions.

Management fee

During the nine months ended September 30, 2026, the management fee payable to the Investment Manager increased approximately $1.0 million, compared to the nine months ended September 30, 2025. The increase is due to a higher average NAV during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025.

Incentive fee

During the nine months ended September 30, 2026, the incentive fee payable to the Investment Manager increased approximately $0.5 million, compared to the nine months ended September 30, 2025. The increase was due to a larger total return driven by a higher average NAV.

Depreciation and amortization expenses

During the nine months ended September 30, 2026, depreciation and amortization expenses increased approximately $3.0 million, compared to the nine months ended September 30, 2025. The change was primarily driven by an increase in investments in real estate as a result of property acquisitions.

Dividend and interest income

During the nine months ended September 30, 2026, dividend and interest income increased approximately $0.1 million as compared to the nine months ended September 30, 2025. The increase was primarily driven by interest earned on higher average investments in real estate debt balances.

Interest expense

During the nine months ended September 30, 2026, interest expense increased approximately $2.45 million, compared to the nine months ended September 30, 2025. The increase was primarily driven by additional property mortgage borrowings as a result of property acquisitions.

Other income

During the nine months ended September 30, 2026, other income increased approximately $0.8 million as compared to the nine months ended September 30, 2025. The change was primarily attributable to net unrealized appreciation on swaps and increase in unrealized gain on real estate securities, partially offset by increase in unrealized loss on real estate debt and realized loss on swaps.

Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution

The Company believes Funds from Operations ("FFO") is a meaningful non-GAAP supplemental measure of its operating results. The Company's consolidated financial statements are presented using historical cost accounting which, among other things, requires depreciation of real estate investments. As a result, the Company's operating results imply that the value of its real estate investments have decreased over time. However, the Company believes that the value of its 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 performance. 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.

The Company also believes that Adjusted FFO ("AFFO") is an additional meaningful non-GAAP supplemental measure of its operating results. AFFO further adjusts FFO to reflect the performance of the Company's portfolio by adjusting for items the Company believes are not directly attributable to its operations. The Company's adjustments to FFO to arrive at AFFO include removing the impact of (i) changes in fair value of real estate related securities and real estate debt, (ii) straight-line rental income, (iii) amortization of deferred financing costs, (iv) amortization of mortgage premium/discount, (v) amortization of above- and below-market lease intangibles, and adding (vi) similar adjustments for non-controlling interests.

The Company also believes that Funds Available for Distribution ("FAD") is an additional meaningful non-GAAP supplemental measure of its operating results. FAD provides useful information for considering the Company's operating results and certain other items relative to the amount of its distributions, and the Company believes is therefore meaningful to shareholders. FAD is calculated as AFFO adjusted for (i) management fees paid in shares, even if subsequently repurchased by the Company, (ii) other capital expenditures, (iii) realized gains or losses on real estate related securities and real estate debt, and (iv) similar adjustments for non-controlling interests. FAD is not indicative of cash available to fund the Company's cash needs and does not represent cash flows from operating activities in accordance with GAAP, as FAD is adjusted for other capital expenditures, which are not considered when determining cash flows from operations.

FFO, AFFO, and FAD should not be considered more relevant or accurate than GAAP net income (loss) in evaluating the Company's operating performance. In addition, FFO, AFFO, and FAD should not be considered as alternatives to net income (loss) as indications of the Company's performance or as alternatives to cash flows from operating activities as indications of the Company's 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 the Company's cash needs, including its ability
to make distributions to its shareholders. In addition, the Company's methodology for calculating AFFO and FAD may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, the Company's reported AFFO and FAD may not be comparable to the AFFO and FAD reported by other companies.

The following table presents a reconciliation of net income (loss) attributable to the Company's shareholders to FFO, AFFO, and FAD attributable to the Company's shareholders:

Net Asset Value Calculation and Valuation Guidelines

The Company's NAV for each class of common shares is based on the net asset values of its investments (including real estate debt and other securities), the addition of any other assets (such as cash on hand), and the deduction of any liabilities, including the deduction of Management Fees, the accrual of any Incentive Fee and shareholder servicing fees specifically applicable to such class of shares, in all cases as described below. The Company commenced determining a monthly NAV per common share in February 2023.

General

The Investment Manager has adopted valuation guidelines that contain a comprehensive set of methodologies to be used by the Investment Manager and the Company's independent valuation service provider in connection with estimating the values of its assets and liabilities for purposes of the Company's NAV calculation. These guidelines are designed to produce a fair and accurate estimate of the price that would be received for its investments in an arm's-length transaction between a willing buyer and a willing seller in possession of all material information about its investments. The Company's independent valuation service provider (discussed below) will review its valuation guidelines and methodologies related to direct investments in real property with the Investment Manager at least annually. The Investment Manager's Fair Value Committee similarly reviews and provides ongoing oversight over its valuation guidelines and methodologies for real estate investments, including direct investments and investments in real estate-related securities, such as publicly-traded REITs. From time to time, the Investment Manager may adopt changes to the valuation guidelines if it (a) determines that such changes are likely to result in a more accurate reflection of NAV or a more efficient or less costly procedure for the determination of NAV without having a material adverse effect on the accuracy of such determination or (b) otherwise reasonably believes a change is appropriate for the determination of NAV.

The Company's NAV per common share is determined by taking the market value of its investments, cash and other assets, subtracting its total liabilities, and dividing the result by the total number of common shares outstanding, and will likely differ from the book value of the Company's equity reflected in its financial statements. The Company issues financial statements based on historical cost in accordance with GAAP. To calculate the Company's NAV for the purpose of establishing a purchase and repurchase price for the shares, it has adopted a model, as explained below, that adjusts the value of the Company's assets and liabilities from historical cost to fair value generally in accordance with the GAAP principles set forth in FASB Accounting Standards Codification Topic 820, Fair Value Measurements. The Investment Manager calculates the fair value of the Company's real estate properties based in part on values provided by third-party independent appraisers and valuation service providers and reviewed by the Investment Manager's Fair Value Committee. The Investment Manager may retain additional third-parties to assist with the Company's valuations of certain investments. Because these fair value calculations involve material professional judgment in the application of both observable and unobservable attributes, the calculated fair value of the Company's assets may differ from their actual realizable value or future fair value. While the Company believes its NAV calculation methodologies are consistent with standard industry practices, there is no rule or regulation that requires that the Company calculates NAV in a certain way. In addition, NAV is not a measure used under GAAP and the valuations of, and certain adjustments made to, the Company's assets and liabilities used in the determination of NAV will differ from GAAP. NAV should not be considered an equivalent to shareholders' equity or any other GAAP measure.

The Company's Independent Valuation Service Provider

The Investment Manager has engaged Altus Group U.S. Inc. ("Altus Group"), to serve as the Company's independent valuation service provider with respect to its real properties. Altus Group reviews annual third-party appraisals of the Company's properties and prepares interim valuations on a monthly basis of properties that are not externally contemporaneously appraised. Altus Group is a multidisciplinary provider of independent, commercial real estate consulting and advisory services with multiple offices around the world, including in Canada, the U.K., Australia, the United States and Asia Pacific. Altus Group is engaged in the business of valuing commercial real estate properties and is not affiliated with the Company or the Investment Manager. The Investment Manager, with the consent of the Investment Manager's Fair Value Committee, may engage a different valuation service provider to substitute for Altus Group and/or additional independent valuation providers in the future. While the Company's independent valuation service provider reviews for reasonableness the assumptions, methodologies and valuation conclusions applied in the appraisals of the Company's real properties, the independent valuation service provider is not responsible for, and does not calculate, the Company's NAV. The Investment Manager is ultimately responsible for the determination of the Company's NAV. The Trustee is not involved in the valuation of the Company's assets and liabilities or the calculation of its NAV, but will periodically review such information about the NAV calculation process prepared by the Investment Manager as it deems necessary to exercise its oversight responsibility.

The Company's independent valuation service provider may be replaced at any time, in accordance with agreed-upon notice requirements, by the Investment Manager. The Company will disclose to its shareholders any changes to the identity or role of the Company's independent valuation service provider. The independent valuation service provider discharges its responsibilities in accordance with the Company's valuation guidelines. The Company's NAV per common share is calculated by the Administrator, and such calculation is reviewed and confirmed by the Investment Manager. Pursuant to the Company's valuation services agreement with its independent valuation service provider, the Investment Manager receives appraisal reports for its property investments from third-party appraisal firms that have been reviewed by the Company's independent valuation service provider along with the independent valuation service provider's own valuations. Based in part on these appraisals, the Investment Manager renders a final valuation in order for the Administrator to calculate the Company's NAV. The appraisals for the Company's property investments performed by independent third-party appraisal firms and reviewed by the Company's independent valuation service provider are one of several components considered by the Investment Manager in determining the values of the Company's properties that are used when the Administrator calculates its NAV per common share.

The Company agreed to pay fees to its independent valuation service provider on a quarterly basis. The Company has also agreed to indemnify its independent valuation service provider against certain liabilities arising out of this engagement. The compensation the Company pays to the independent valuation service provider is not based on the estimated values of its properties. The Company's independent valuation service provider and certain of the independent third-party appraisers have provided, and are expected to continue to provide, real estate appraisal, appraisal management and real estate valuation advisory services to FMR and its affiliates and have received, and are expected to continue to receive, fees in connection with such services. The Company's independent valuation service provider and certain of the independent third-party appraisers and their respective affiliates may from time to time in the future perform other commercial real estate and financial advisory services for FMR and its affiliates, or in transactions related to the properties that are the subjects of the valuations being performed for the Company, or otherwise, so long as such other services do not adversely affect the independence of the independent valuation service provider or the applicable appraiser as certified in the applicable appraisal report.

Valuation of Investments

Consolidated Properties

For the purposes of calculating the Company's monthly NAV, its properties are valued at cost at acquisition, which the Company expects to represent fair value at that time, subject to any variation pursuant to the Company's valuation guidelines. In accordance with GAAP, the Company determines whether the acquisition of a property qualifies as an asset acquisition or business combination. The Company capitalizes acquisition-related costs associated with asset acquisitions and expense such costs associated with business combinations.

Each property is valued by an independent third-party appraisal firm annually. Annual appraisals may be delayed for a short period in exceptional circumstances. Third-party appraisals are performed in accordance with the Uniform Standards of Professional Appraisal Practice, or the similar industry standard for the country where the property appraisal is conducted and reviewed by the Company's independent valuation service provider and the Investment Manager's Fair Value Committee for reasonableness. Upon conclusion of the appraisal, the independent third-party appraisal firm prepares a written report with an estimated fair value of the property. The Company believes its policy of obtaining appraisals by independent third parties materially enhances the accuracy of its NAV calculations. Any appraisal provided by an independent third-party appraisal firm will be performed in accordance with the Company's valuation guidelines and will not be considered in the Investment Manager's valuation of the applicable property until the Company's independent valuation service provider and the Investment Manager's Fair Value Committee has confirmed the reasonableness of such appraisal.

Each month the independent valuation service provider values those properties not being externally valued by an independent third-party appraisal firm in such month, based on current material market data and other information deemed relevant, with review and confirmation for reasonableness by the Investment Manager's Fair Value Committee. The Investment Manager's reasonableness reviews are based on market, asset, and portfolio level information, including historical or forecasted operating revenues and expenses of the properties, lease agreements on the properties, revenues and expenses of the properties, information regarding recent or planned estimated capital expenditures, the then-most recent annual third-party appraisals, and any other information relevant to valuing the real estate property.

The Investment Manager monitors the Company's properties for events that the Investment Manager believes may be expected to have a material impact on the most recent estimated values of such properties and notifies its independent valuation service provider of any such events. If, in the opinion of the Investment Manager, an event becomes known to the Investment Manager (including through communication with its independent valuation service provider) that is likely to have any material impact on previously provided estimated values of the affected properties, the Investment Manager will engage the independent service provider to revalue such properties, subject to review and confirmation for reasonableness by the Investment Manager. If deemed appropriate by the Investment Manager or the Company's independent valuation service provider, any necessary revaluation will be determined as soon as practicable. Annual appraisals may also trigger a revaluation in the value of a property when received.

For example, a revaluation may be appropriate to reflect the occurrence of an unexpected property specific event such as a termination or renewal of a material lease, a material change in vacancies, an unanticipated structural or environmental event at a property or a significant capital market event that may cause the value of a property to change materially. Revaluations may also be appropriate to reflect the occurrence of broader market-driven events identified by the Investment Manager or the Company's independent valuation service provider, which may impact more than a specific property. Any such revaluations will be estimates of the market impact of specific events as they occur, based on assumptions and judgments that may or may not prove to be correct, and may also be based on the limited information readily available at that time. In general, the Company expects that any revaluations will be calculated promptly after a determination that a material change has occurred, and the financial effects of such change are quantifiable by the Investment Manager. However, rapidly changing market conditions or material events may not be immediately reflected in the Company's monthly NAV. The resulting potential disparity in the Company's NAV may be detrimental to shareholders whose shares are repurchased or new purchasers of shares, depending on whether the Company's NAV per share is overstated or understated.

Real estate appraisals will be reported on a free and clear basis (for example, without taking into consideration any mortgage on the property), irrespective of any property level financing that may be in place. The Company expects to use the discounted cash flow methodology (income approach) as the primary methodology to value properties, whereby a property's value is calculated by discounting the estimated cash flows and the anticipated terminal value of the subject property at a market derived discount rate applicable for the subject property. Consistent with industry practices, the income approach also incorporates subjective judgments regarding comparable rental and operating expense data, capitalization or discount rate, and projections of future rent and expenses based on appropriate evidence as well as the residual value of the asset as components in determining value.

Other methodologies that may also be used to value properties include sales comparisons and cost approaches. Under the sales comparison approach, the independent third-party appraiser develops an opinion of value by comparing the subject property to similar, recently sold properties in the surrounding or competing area. The cost approach is based on the understanding that market participants relate value to cost. The value of a property is derived by adding the estimated land value to the current cost of constructing a replacement for the improvements and then subtracting the amount of depreciation in the structures from all causes. Because the appraisals performed by the independent third party appraisal firms, valuations of the Company's properties by its independent valuation service provider, and the Investment Manager's determination of the reasonableness of valuations for the Company's properties provided in such reports involve subjective judgments, the estimated fair value of its assets that will be included in its NAV may not reflect the liquidation value or net realizable value of its properties.

In conducting their investigations and analyses, the Company's independent valuation service provider and other independent third party appraisal firms take into account customary and accepted financial and commercial procedures and considerations as they deem relevant, which may include, without limitation, the review of documents, materials and information relevant to valuing the property that are provided by the Company, such as (i) historical or forecasted operating revenues and expenses of the property; (ii) lease agreements on the property; (iii) the revenues and expenses of the property; (iv) information regarding recent or planned estimated capital expenditures; and (v) any other information relevant to valuing the real estate property. Although the Company's independent valuation service provider may review information supplied or otherwise made available by the Company for reasonableness, it will assume and rely upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to it by any other party and will not undertake any duty or responsibility to verify independently any of such information. The Company's independent valuation service provider will not make or obtain an independent valuation or appraisal of any of the Company's other assets or liabilities (contingent or otherwise) other than its real properties. With respect to operating or financial forecasts and other information and data to be provided to or otherwise to be reviewed by or discussed with the Company's independent valuation service provider, its independent valuation service provider will assume that such forecasts and other information and data were reasonably prepared in good faith on bases reflecting currently available estimates and judgments of its management and the Investment Manager, and will rely upon the Investment Manager to advise its independent valuation service provider promptly if any material information previously provided becomes inaccurate or was required to be updated during the period of review.

In performing their analyses, the Investment Manager, the Company's independent valuation service provider and other independent third-party appraisal firms make numerous other assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond its control and the Company's control, as well as certain factual matters. For example, the Company's independent valuation service provider and other independent third-party appraisal firms assume that the Company has clear and marketable title to each real estate property valued, that no title defects exist unless specifically informed to the contrary, that improvements were made in accordance with law, that no hazardous materials are present or were present previously, that no deed restrictions exist, and that no changes to zoning ordinances or regulations governing use, density or shape are pending or being considered. Furthermore, the Company's independent valuation service provider's review, opinions and conclusions are necessarily based upon market, economic, financial and other circumstances and conditions existing prior to the valuation, and any material change in such circumstances and conditions may affect the Company's independent valuation service provider's review and conclusions. The Company's independent valuation service provider's review reports may contain other assumptions, qualifications and limitations set forth in the respective appraisal reports that qualify the review, opinions and conclusions set forth therein. As such, the carrying values of the Company's real properties may not reflect the price at which the properties could be sold in the market, and the difference between carrying values and the ultimate sales prices could be material. In addition, accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that can be considered in the context of the appraisal.

Pursuant to the Company's valuation services agreement with its independent valuation service provider, each individual appraisal report for its assets is addressed solely to the Company to assist the Investment Manager in determining the Company's NAV. The appraisal reports relating to the Company's properties are not addressed to the public, do not contain any conclusion regarding its NAV, may not be relied upon by any other person to establish an estimated value of its shares and do not constitute a recommendation to any person to purchase or sell any shares. In preparing appraisal reports, independent third-party appraisal firms do not, and have not been requested to, solicit third-party indications of interest for shares or any of the Company's properties in connection with possible purchases thereof or the acquisition of all or any part of the Company.

Unconsolidated Properties Held Through Joint Ventures

Unconsolidated properties held through joint ventures are generally valued by the Investment Manager in a manner that is consistent with the guidelines described above for consolidated properties. Once the value of a property held by the joint venture is determined by an independent appraisal and the Company determines the fair value of any other assets and liabilities of the joint venture, the value of the Company's interest in the joint venture would then be determined by the Investment Manager using a hypothetical liquidation calculation to value the Company's interest in the joint venture, which would be a percentage of the joint venture's NAV. Unconsolidated properties held in a joint venture that acquires multiple properties over time may be valued as a single investment.

Valuation of Real Estate Debt and Other Securities

In general, real estate debt and other securities are valued by the Investment Manager based on market quotations or at fair value determined in accordance with GAAP. GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date.

Readily Available Market Quotations for Equity Securities

Equity securities (including common stock, ETFs, closed-end funds, preferred equity securities and other instruments that trade on recognized stock exchanges) are valued at the last sale price, official closing price or, if there are no reported sales, at the closing bid price on the primary exchange on which they are listed for trading.

No Readily Available Market Quotations

When market quotations, official closing prices, or information furnished by a pricing service are not readily available or, in the opinion of the Investment Manager's Fair Value Committee, are deemed unreliable, then the impacted investments will be fair valued in good faith by the Investment Manager's Fair Value Committee in accordance with the fair value methodologies set forth within the Fair Value Committee Policies and Procedures. The fair value methodologies established within the Fair Value Committee Policies and Procedures identify various reasons for which fair value determinations are necessary and provide corresponding fair value methodologies and methodology descriptions determined by the Investment Manager's Fair Value Committee to be appropriate in each instance. Where multiple methodologies are available, the fair value methodology to be applied is selected by the Investment Manager's Fair Value Committee based on the relevant facts and circumstances and a determination of which available methodology is most appropriate. Selected methodologies are consistently applied but may be changed by the Investment Manager's Fair Value Committee if a different available methodology is determined to be equally or more representative of the fair value of the investment. Due to the inherent uncertainty of these estimates, estimates of fair value may differ from the values that would have been used had a ready market for these investments existed and the differences could be material.

Interest Rate Swaps

Swaps are marked-to-market daily based on valuations from third party pricing services, registered derivatives clearing organizations (clearinghouses) or broker-supplied valuations. These pricing sources may utilize inputs such as interest rate curves, credit spread curves, default possibilities and recovery rates.

Liabilities

The Company expects that its liabilities will include the Management Fees and Incentive Fees payable to the Investment Manager, accounts payable, accrued operating expenses, property-level mortgages, any portfolio-level credit facilities, and other liabilities. Other than debt (as discussed below), the Company includes the fair value of its liabilities as part of its NAV calculation. All liabilities are valued using widely accepted methodologies specific to each type of liability in accordance with GAAP.

The Investment Manager's valuation of each investment's liabilities, including any third-party incentive fee payments or investment level debt, deal terms and structure is not reviewed by the Company's independent valuation service provider or appraised.

Property-Level Mortgages

The Company's property level mortgages and corporate level credit facilities that are intended to be held to maturity, including those subject to interest rate hedges, are valued at par (i.e., at their respective outstanding balances) by the Investment Manager. Since the Company may utilize interest rate hedges to stabilize interest payments (i.e., to fix all-in interest rates through interest rate swaps or to limit interest rate exposure through interest rate caps) on individual loans, each loan and associated interest rate hedge are treated as one financial instrument which are valued at par if intended to be held to maturity (which for fixed rate debt not subject to interest rate hedges may be the date near maturity at which time the debt will be eligible for prepayment at par for the purposes herein). This policy of valuing at par will apply regardless of whether any given interest rate hedge is considered an asset or liability for GAAP purposes.

In the event the Company acquires an investment and assumes associated in-place debt from the seller that is above or below market, then consistent with how the Company recognizes assumed debt for GAAP purposes when acquiring an asset with pre-existing debt in place, the liabilities used in determining its NAV will include the market value of such debt. The associated premium or discount on such debt as at closing that is reflected in the Company's liabilities will then be amortized through loan maturity. Per the real estate valuation policy described above, the corresponding investment is valued on an unlevered basis for the purposes of determining NAV. Accordingly, all else being equal, the Company would not recognize an immediate gain or loss to its NAV upon acquisition of an investment whereby it assumes associated pre-existing debt that is above or below market.

The Company's property-level mortgages and corporate-level credit facilities that are not intended to be held to maturity (in conjunction with any associated interest rate hedges that are not intended to be held to maturity) are valued at par. Debt that is not intended to be held to maturity refers to any property level mortgages that the Company definitely intends to prepay in association with any asset considered as held for sale from a GAAP perspective, other than property level mortgages or corporate level credit facilities that the Company definitely intends to prepay, or any interest rate hedge that the Company definitely intends to terminate.

In addition, for non-recourse mortgages and interest rate hedges, the combined value of the net liability for each mortgage and associated interest rate hedge is limited to the value of the underlying asset(s), so as to not make the equity of such asset(s) less than zero.

Costs and expenses incurred to secure financings are amortized over the life of the applicable loan. Unless costs can be specifically identified, the Company allocates the financing costs and expenses incurred with obtaining multiple loans that are not directly related to any single loan among the applicable loans, generally pro rata based on the amounts of proceeds from each loan.

NAV and NAV Per Common Share Calculation

The Company's NAV is calculated for each class of shares by the Administrator, however the Investment Manager is ultimately responsible for the determination of the Company's NAV. The Investment Manager oversees the process by which the Administrator calculates the NAV and reviews and confirms the NAV as calculated by the Administrator.

NAV per common share for each class is calculated as of the last calendar day of each month, using a process that reflects several components (each as described above), including the estimated fair value of (1) each of the Company's properties based in part upon individual appraisal reports provided annually by third-party independent valuation firms and reviewed for reasonableness by the Company's independent valuation service provider and the Investment Manager's Fair Value Committee, as finally determined and updated monthly by the Company's independent valuation service provider, with review and confirmation for reasonableness by the Investment Manager's Fair Value Committee, (2) the Company's real estate debt and other securities for which third-party market quotes are available, (3) the Company's other real estate debt and other securities, if any, and (4) the Company's other assets and liabilities.

The Company's NAV for each class of common shares is based on the net asset values of the Company's investments (including real estate debt and other securities), the addition of any other assets (such as cash on hand), and the deduction of any liabilities (including the deduction of any amounts specifically applicable to such class of common shares). At the end of each month, before taking into consideration repurchases or class-specific expense accruals for that month, any change in the Company's aggregate NAV (whether an increase or decrease) is allocated among each class of common shares based on each class's relative percentage of the previous aggregate NAV adjusted for issuance of common shares that were effective on the first calendar day of such month. The NAV calculation of the last calendar day of each month is generally available within 15 days following the end of such month.

Changes in the Company's monthly NAV include, without limitation, accruals of its net portfolio income, interest expense, the Management Fee, any accrued Incentive Fee, distributions, unrealized/realized gains and losses on assets, and other expenses. Changes in the Company's monthly NAV also include material non-recurring events, such as capital expenditures and material property acquisitions and dispositions occurring during the month. Notwithstanding anything herein to the contrary, the Investment Manager may in its discretion consider material market data and other information that becomes available after the end of the applicable month in valuing the Company's assets and liabilities and calculating its NAV for a particular month. On an ongoing basis, the Investment Manager will adjust the accruals to reflect actual operating results and the outstanding receivable, payable and other account balances resulting from the accumulation of monthly accruals for which financial information is available.

The Company's NAV will be reduced to reflect the accrual of a liability to pay any distribution to its shareholders of record as of the record date in the month a distribution is declared. NAV per share for each class of common shares is calculated by dividing such class's NAV as of the last calendar day of each month by the number of shares outstanding for that class at the end of such month.

Operating Partnership units are valued in the same fashion as set forth above. The Operating Partnership has units that are economically equivalent to the Company's shares. The NAV of the Operating Partnership on the last calendar day of each month equals the sum of the NAVs of each outstanding Operating Partnership unit on such day.

Relationship between NAV and Share Purchase and Repurchase Price

Shares are sold in the Company's Offering on a monthly basis at the then-current "transaction price," which will vary and will generally equal the most recently determined NAV per common share, together with applicable upfront selling commissions. The Company's NAV may vary significantly from one month to the next. Although the transaction price for shares is generally based on the most recently determined NAV per common share, the NAV per common share as of the date on which a shareholder's purchase is settled may be significantly different. The Company generally does not expect to change the transaction price from the most recently determined NAV per common share, but may offer shares at a price that it believes reflects the NAV per common share more appropriately than the most recently determined NAV per common share, including by updating a previously disclosed transaction price, or suspend its offering in exceptional cases where it believes there has been a material change (positive or negative) to its NAV per common share since the most recently determined NAV due to the aggregate impact of factors such as general significant market events or disruptions or force majeure events. If a previously disclosed transaction price is changed, then the Company will (i) update such price on the Company's website at https://i.fidelity.com/corereit and (ii) provide notice of such transaction price directly to subscribing investors when it is made available. Subscribers are not committed to purchase shares at the time their subscriptions are submitted and any subscription may be canceled at any time up to the third business day before the time it has been accepted. The Company will not update a previously disclosed transaction price after the date by which a subscriber is permitted to cancel a submitted subscription. Pursuant to the terms of the share repurchase plan (the "Share Repurchase Plan"), a shareholder may withdraw a redemption request at any time prior to 4:00 p.m. (Eastern time) on the last business day of the applicable quarter. Pursuant to the Share Repurchase Plan, if the transaction price applicable to a quarter is not made available by the tenth business day prior to the last business day of such quarter (or is changed after such date), then no repurchase requests will be accepted for such quarter and shareholders who wish to have their shares repurchased the following quarter must resubmit their repurchase requests.

Shares will be repurchased pursuant to the Share Repurchase Plan on a quarterly basis at a repurchase price equal to the transaction price applicable to the Repurchase Date (which will generally be equal to the Company's prior month's NAV per common share), subject to the terms of the Share Repurchase Plan.

Generally, within 15 calendar days after the last calendar day of each month, the Company will determine its NAV per common share as of the last calendar day of such month, which will generally be the transaction price for the following month. See below for most recently available transaction price information.

The Company's total NAV presented in the following tables includes the NAV of the Company's Class I common shares. As of September 30, 2026, no Class S or Class F common shares were outstanding. The transaction price for the Company's common shares as of September 30, 2026, for subscriptions accepted as of November 1, 2026 is as follows:

The November 1, 2026 transaction price is equal to the NAV per common share as of September 30, 2026. A detailed presentation of the NAV per common share is set forth below.

NAV per common share is calculated in accordance with the valuation guidelines discussed above. The following table provides a breakdown of the major components of the Company's NAV as of September 30, 2026:

The following table provides a breakdown of the Company's total NAV and NAV per common share as of September 30, 2026:

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:

These assumptions are determined by the Investment Manager (except for investments valued by a third party appraisal firm), and reviewed by the Company's independent valuation advisor and the Investment Manager's Fair Value Committee. A change in these assumptions would impact the calculation of the value of the Company's property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on investment values:

The following tables summarize the Company's month-end NAV per common share for the nine months ended September 30, 2026 and 2025:

Limits on the Calculation of the Company's NAV Per Common Share

The overarching principle of the Company's valuation guidelines is to produce reasonable estimated values for each of its investments (and other assets and liabilities), or the price that would be received for that investment in orderly transactions between market participants. However, the majority of the Company's assets will consist of real estate properties and, as with any real estate valuation protocol and as described above, the valuation of its properties (and other assets and liabilities) is based on a number of judgments, assumptions and opinions about future events that may or may not prove to be correct. The use of different judgments, assumptions, or opinions would likely result in a different estimate of the value of the Company's real estate properties (and other assets and liabilities). Any resulting potential disparity in the Company's NAV per common share may be in favor of shareholders whose shares are repurchased, existing shareholders or new purchasers of shares, as the case may be, depending on the circumstances at the time.

Additionally, while the methodologies contained in the Company's valuation guidelines are designed to operate reliably within a wide variety of circumstances, it is possible that in certain unanticipated situations or after the occurrence of certain extraordinary events (such as a significant disruption in relevant markets, major political disruption event, or an act of nature), the Company's ability to calculate its NAV may be impaired or delayed, including, without limitation, circumstances where there is a delay in accessing or receiving information from vendors or other reporting agents upon which it may rely upon in determining the monthly value of its NAV. In these circumstances, a more accurate valuation of the Company's NAV could be obtained by using different assumptions or methodologies. Accordingly, in special situations when, in the Investment Manager's reasonable judgment, the administration of the valuation guidelines would result in a valuation that does not represent a fair and accurate estimate of the value of the Company's investments, alternative methodologies may be applied. Notwithstanding the foregoing, the Company may suspend its Offering or the Share Repurchase Plan if it determines that the calculation of its NAV is materially incorrect or unreliable or there is a condition that restricts the valuation of a material portion of its assets.

The Company includes no discounts to its NAV for the illiquid nature of the shares, including the limitations on the Share Repurchase Plan and its ability to make exceptions to, modify or suspend the Share Repurchase Plan at any time. The Company's NAV generally does not consider exit costs that would likely be incurred if its assets and liabilities were liquidated or sold. While the Company may use market pricing concepts to value individual components of its NAV, its NAV per common share is not derived from the market pricing information of open-end real estate funds listed on stock exchanges.

The Company does not represent, warrant or guarantee that:

Distributions

The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its shareholders each year to comply with the REIT provisions of the IRC. Distributions are declared separately for each class of common shares. While each class generally receives the same gross distribution per share, net distributions may vary among classes due to class-specific fees and expenses. In particular, net distributions for Class S common shares are reduced by applicable shareholder servicing fees, which are deducted from the gross distribution per share and paid to the Dealer Manager. The distributions are payable to the Company's shareholders of record following each quarter-end, which are generally paid 20 days after the declaration date. These distributions are paid in cash or reinvested in the Company's common shares for shareholders participating in the Company's DRIP. As of September 30, 2026, no Class S or Class F common shares were outstanding.

The following table details the total distributions per share of the Company's common shares for the nine months ended September 30, 2026:

The following table summarizes the Company's distributions declared for the nine months ended September 30, 2026 and 2025:

Liquidity and Capital Resources

Liquidity

The Company believes it has sufficient liquidity to operate its business, with $129.0 million of liquidity as of September 30, 2026. When the Company refers to its liquidity, this includes amounts available under its undrawn revolving credit facility of $50.0 million, as well as unrestricted cash and investments in money market funds of $79.0 million. The Company also generates incremental liquidity through its operating cash flows, which were $16.3 million for the nine months ended September 30, 2026. The Company may also generate incremental liquidity through the sale of its real estate debt investments or real estate securities investments, which were carried at their estimated fair value of $26.0 million and $0.6 million, respectively, as of September 30, 2026.

In addition, the Company's leverage ratio was 28% as of September 30, 2026. The Company can generate additional liquidity through incurring additional indebtedness secured by its real estate and real estate debt investments, unsecured financings, and other forms of indebtedness. The Company's leverage ratio is measured by dividing (i) consolidated property-level (consisting of mortgages secured by real properties) and entity-level (consisting of the Company's line of credit) debt net of cash and debt-related restricted cash, by (ii) the asset value of real estate investments (measured using the greater of fair market value and cost) plus the equity in settled real estate debt and real estate related investments. All of the above components of the leverage ratio are net of non-controlling interests in joint ventures.

In addition to the Company's current liquidity, the Company obtains incremental liquidity through the sale of common shares in its continuous Offering, from which it has received cumulative proceeds (inclusive of DRIP) of $433.6 million as of September 30, 2026.

Capital Resources

As of September 30, 2026, the Company's indebtedness included loans secured by its properties and an unsecured revolving credit facility. The following table sets forth a summary of the Company's indebtedness as of September 30, 2026, all components of which are net of non-controlling interests in joint ventures:

Capital Uses

The Company primarily uses its capital from the sale of shares to acquire investments, which it also funds with other capital resources. The Company continues to believe that its current liquidity position is sufficient to meet the needs of its business over the next 12 months. In addition, the Company may have other funding obligations, which it expects to satisfy with the cash flows generated from its investments and capital resources described above. Such obligations may include distributions to its shareholders, operating expenses, capital expenditures, repayment of indebtedness, and debt service on its outstanding indebtedness. The Company's operating expenses include, among other things, the management fee and incentive fee (as defined in "Item 1. Consolidated Financial Statements - Notes to Consolidated Financial Statements - Note 12. Related Party Transactions.") it pays to the Investment Manager, both of which will impact the Company's liquidity to the extent the Investment Manager elects to receive such payments in cash, or subsequently redeem shares previously issued to it. To date, the Investment Manager has always elected to receive the management fee in shares, resulting in a non-cash expense.

Cash Flows

The following table provides a breakdown of the net change in the Company's cash and cash equivalents and restricted cash:

Cash flows provided by operating activities increased approximately $8.0 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to operations related to acquisitions of investments in real estate.

Cash flows used in investing activities increased approximately $52.6 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily due to increase in investments of real estate of $58.3 million and investments in money market funds of $12.7 million, partially offset by decrease in investments in real estate debt of $18.1 million.

Cash flows provided by financing activities increased approximately $50.1 million during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily due to increase in proceeds from mortgages of $82.4 million, partially offset by decrease in proceeds from sale of common shares of approximately $10.6 million and increase in repurchases of common shares of $17.5 million and distributions of approximately $3.3 million.

Critical Accounting Policies and Estimates

The preparation of the Company's financial statements in accordance with GAAP involves significant judgments and assumptions and require estimates about matters that are inherently uncertain. These judgments will affect the Company's reported amounts of assets and liabilities and its 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 the Company's consolidated financial statements. The following is a summary of the Company's accounting policies and estimates that it believes are the most critical, as they are affected by significant judgments, estimates, and assumptions. See "Item 1. Consolidated Financial Statements - Notes to Consolidated Financial Statements - Note 2. Significant Accounting Policies." included in this Quarterly Report for further descriptions of the below accounting policy.

Purchase Price Allocation of Acquired Real Estate

Upon acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets and liabilities (including building and improvements, land and land improvements, furniture, fixtures and equipment, above-market leases, below-market leases, in place tenant leases, leasing commissions, and legal and marketing) and allocates the purchase price to the acquired assets and assumed liabilities. The cost of the acquisition is then allocated to the assets acquired and liabilities assumed based on their relative fair values. The most significant portion of the allocation is typically to building and land and requires the use of market based estimates and assumptions. The Company estimates building fair value utilizing a cost approach, which assesses buildup of characteristics including class and quality of the property type, replacement cost of a new property, inclusive of indirect and entrepreneurial costs and compares that to a "go-dark" approach which requires market rate estimates and/or capitalization rates, as well as other available market information. Estimates are based on a number of factors including known and anticipated trends and market and economic conditions. The Company generally uses a sales comparison approach when estimating land fair value, by evaluating recent sales transactions in the market and making adjustments for certain characteristics such as market conditions, timing and possible appreciation, and location.

The fair value of other tangible assets of an acquired property considers a market rate per square foot for improvements and applies that rate to the square footage of the acquired property.

The Company also considers an allocation of purchase price of other acquired intangibles, including acquired in-place leases that are based on the Company's evaluation of the specific characteristics of each tenant's lease. Factors to be considered include various market leasing assumptions such as market rent, market expenses, downtime assumptions, and expectations of lease renewals.

Acquired above-market and below-market leases are recorded at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in place lease and (2) management's estimate of fair market lease rates for each corresponding in place lease, 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 leasing commissions, legal and other related costs during hypothetical expected lease-up periods. A change in any of the assumptions above, which are subjective, could have a material impact on the Company's results of operations.

The allocation of the purchase price directly affects the following in the Company's consolidated financial statements:

Recent Accounting Pronouncements

See "Item 1. Consolidated Financial Statements - Notes to Consolidated Financial Statements - Note 2. Significant Accounting Policies." for a discussion concerning recent accounting pronouncements.

Off-Balance Sheet Arrangements

Other than contractual commitments and other legal contingencies incurred in the normal course of its business, the Company does not expect to have any off-balance sheet financings or liabilities.

From time to time, the Company may become party to certain legal proceedings in the ordinary course of business. As of September 30, 2026, management is not aware of any material litigation involving the Company.