Oak Street Net Lease Trust
03/13/2026 | Press release | Distributed by Public on 03/13/2026 04:03
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References herein to "Blue Owl Real Estate Net Lease Trust," "Company," "we," "us," or "our" refer to Blue Owl Real Estate Net Lease Trust and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in "Part I. Item 1A - Risk Factors" in this Annual Report on Form 10-K. Dollars are in thousands, except for per share amounts.
Overview
Blue Owl Real Estate Net Lease Trust (formerly, Oak Street Net Lease Trust) was formed on April 4, 2022 ("Inception") as a Maryland statutory trust; however, no activity occurred until the first capital funding from Blue Owl on August 9, 2022. The Company invests primarily in stabilized income-generating commercial real estate in the United States. To a lesser extent, we may invest outside the U.S. and in real estate debt. The Company is the sole general partner and majority limited partner in Blue Owl NLT Operating Partnership LP (formerly, OakTrust Operating Partnership L.P.), a Delaware limited partnership ("NLT OP" or the "Operating Partnership"), and we own substantially all of our assets through NLT OP. We are externally managed by our Adviser. The Company's principal business is the acquisition, ownership, financing and leasing of single-tenant commercial real estate properties subject to long-term net leases with investment grade and other creditworthy tenants or guarantors, and its management does not distinguish the principal business, or group the operations, by property type, lease classification, investment type, or any other grouping for purposes of measuring performance. Accordingly, the Company has one operating segment and one reportable segment.
The Company is a non-listed, perpetual life real estate investment trust ("REIT") that qualifies as a REIT under the Code for U.S. federal income tax. 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 shareholders and maintain our qualification as a REIT.
As of December 31, 2025, we have received net proceeds of $7,505,564 from the sale of our common shares. We have contributed the net proceeds to NLT OP in exchange for a corresponding number of Class S, Class N, Class D, and Class I units of NLT OP. NLT OP has primarily used the net proceeds to make investments in real estate and real estate debt as further described below under "Investment Portfolio." We intend to continue selling shares on a monthly basis.
DST Program
On August 31, 2023, the Company, through NLT OP, initiated a program (the "DST Program") to issue and sell up to a maximum aggregate offering amount of $3,000,000 of beneficial interests ("Interests") in one or more Delaware statutory trusts (the "DSTs") holding real properties (the "DST Properties"). The 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 private placements exempt from registration pursuant to Section 4(a)(2) of the Securities Act (the "DST Offerings"). Under the DST Program, DST Properties, which may be sold, contributed, sourced or otherwise seeded from the Company's real properties held through NLT OP or from third parties, will be held in one or more DSTs, and will be leased back by wholly owned subsidiaries of NLT OP in accordance with corresponding master lease agreements. Each master lease agreement will be guaranteed by NLT OP, which will have the right, but not the obligation, to acquire the Interests in the applicable DST from the beneficial owners, in each case, in exchange for cash or units of NLT OP ("OP Units"), at a purchase price equal to the fair market value of the beneficial owner's Interest or the fair market value of the beneficial owner's interest in one or more of the DST Properties (the "FMV Buyback Option"). The FMV Buyback Option is exercisable during the one-year option period beginning two years from the final closing of the applicable DST Offering or in such other time frame as provided for in the applicable DST arrangement. After a one-year holding period, investors who receive OP Units pursuant to the FMV Buyback Option generally have the right to cause NLT OP to redeem all or a portion of their OP Units for, at the Company's sole discretion, common shares of the Company, cash or a combination of both.
We expect that the DST Program will give us the opportunity to continue to expand and diversify our capital-raising strategies by offering what we believe to be an attractive investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended. Affiliates of the Adviser receive fees in connection with the sale of the Interests and the management of the DSTs. We intend to continue 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 shares 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 December 31, 2025, the Company has raised proceeds of $357,568 from its DST program including $4,658 of upfront fees earned at closing. As of December 31, 2025, 100% of the interests in our first, second, and third DST Offerings have been sold to third parties, and approximately 47% of the interest in our fourth DST Offering has been sold to third parties. As a result of the FMV Buyback Option, the sale of DST Interests is offset by a financing obligation liability. The Company has elected to account for the DST financing obligation using the FVO, and as such, the liability is remeasured at fair value on a recurring basis.
Emerging Growth Company Status
We are and we will remain an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the date of an initial public offering pursuant to an effective registration statement under the Securities Act, (ii) in which we have total annual gross revenue of at least $1,235,000, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our shares that is held by non-affiliates exceeds $700,000 as of the date of our most recently completed second fiscal quarter, and (b) the date on which we have issued more than $1,000,000 in non-convertible debt during the prior three-year period. For so long as we remain an "emerging growth company" we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002. We cannot predict if investors will find our shares less attractive because we may rely on some or all of these exemptions.
In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We will take advantage of the extended transition period for complying with new or revised accounting standards, which may make it more difficult for investors and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with public company effective dates and may result in less investor confidence.
Recent Developments
Our business is impacted by conditions in the financial markets and economic conditions in the United States and to a lesser extent, globally.
During the fourth quarter of 2025, global equity and debt markets saw appreciation despite some elevated volatility in the third quarter, with U.S. equity indices reaching new all-time highs while credit spreads remained relatively tight. The 10-year Treasury yield ended the quarter approximately flat quarter over quarter and down approximately 40 basis points from the beginning of the year, and the Federal Reserve cut the federal funds rate by an additional 50 basis points during the fourth quarter following a 25 basis point cut in September 2025.
Industry valuations and transaction volumes remain under pressure due to a combination of the announcement of tariffs, increased vacancy rates, and uncertainty around future capital availability. In contrast, our real assets business, focused on triple net lease, continued to deploy significant capital. Our investors continue to benefit from the inflation-mitigating characteristics of the net lease structure, highly predictable net rent growth, and long-duration contractual income across the portfolio.
We are continuing to closely monitor developments related to the macroeconomic factors that have contributed to market volatility, and to assess the impact of these factors on financial markets and on our business. Our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment. It is currently not possible to predict the ultimate effects of these events on the financial markets, overall economy, and our Financial Statements. See "Part I. Item 1A. Risk Factors - Risks Related to Our Business and Operations" in this Annual Report on Form 10-K.
2025 Highlights (Results of Operations)
Operating Results
•Declared monthly net distributions totaling $385,762 for the year ended December 31, 2025. The details of the average annualized distribution rates and total returns are shown in the following table:
| Class S |
Class N
|
Class D | Class I | ||||||||||||||||||||
|
Annualized Distribution Rate(1)
|
5.85 | % | 6.15 | % | 6.55 | % | 6.67 | % | |||||||||||||||
|
Year-to-Date Total Return, without upfront selling commissions(2)
|
9.92 | % | 10.26 | % | 10.57 | % | 10.89 | % | |||||||||||||||
|
Year-to-Date Total Return, assuming maximum upfront selling commissions(2)
|
6.20 | % | 8.10 | % | 8.94 | % | N/A | ||||||||||||||||
|
Inception-to-Date Total Return, without upfront selling commissions(2)
|
7.75 | % | 8.66 | % | 8.05 | % | 8.84 | % | |||||||||||||||
|
Inception-to-Date Total Return, assuming maximum upfront selling commissions(2)
|
6.64 | % | 7.78 | % | 7.57 | % | N/A | ||||||||||||||||
__________________
(1)The annualized distribution rate is calculated as the current month's distribution annualized and divided by the prior month's net asset value, which is inclusive of all fees and expenses. The Company believes the annualized distribution rate is a useful measure of overall investment performance of our shares.
(2)Total return is calculated as the change in NAV per share during the respective periods plus any distributions per share declared in the period and assumes any distributions are reinvested in accordance with our distribution reinvestment plan. Total return for periods greater than one year are annualized. The Company believes total return is a useful measure of the overall investment performance of our shares.
Investments
•Acquired 10 industrial properties, 31 retail properties, and three parcels of land for a total purchase price of $1,412,465 during the year ended December 31, 2025. The acquisitions are consistent with our strategy of acquiring diversified, income-producing, commercial real estate assets concentrated in high growth markets.
•Invested $2,068,185 and sold $605,128 in real estate debt during the year ended December 31, 2025.
•During the year ended December 31, 2025, contributed $680,988 to acquire additional interests in STORE.
•During the year ended December 31, 2025, made investments in unconsolidated real estate affiliates as follows:
|
Investment
|
Ownership Percentage as of December 31, 2025
|
Contributions (1)
|
||||||||||||
|
Net lease
|
50.9% | $ | 210,384 | |||||||||||
|
Investments in real estate debt (2)
|
51.0% - 60.0% | $ | 221,577 | |||||||||||
|
Net lease data centers(3)
|
14.1% - 74.2% | $ | 748,517 | |||||||||||
(1) Contributions are net of sales of interests during the year ended December 31, 2025.
(2) Includes non-cash contributions.
(3) Includes the Company's investment in Longhorn JV, LLC ("Longhorn 1.0 JV"). The Company has determined that Longhorn 1.0 JV is considered a significant subsidiary under SEC Regulation S-X Rule 3-09 and Rule 4-08(g) as of December 31, 2025. Accordingly, the Company is required to include Abilene DC 1, LLC's audited consolidated financial statements as of and for the year ended December 31, 2025, as Exhibit 99.3 to this Annual Report on Form 10-K.
•During the year ended December 31, 2025, made investments in consolidated real estate affiliates as follows:
|
Investment
|
Ownership Percentage as of December 31, 2025
|
Contributions
|
Type of Investment
|
|||||||||||||||||
|
BORMW Quantum Shore JV LLC ("Quantum JV")(1)
|
99.0% | $ | 3,480 | Build-to-suit | ||||||||||||||||
|
MACOOOH001 JV LLC ("MACOOOH001 JV")
|
98.0% | 20,768 | Build-to-suit | |||||||||||||||||
(1) Includes non-cash contributions.
Capital Activity and Financings
•Raised net proceeds of $3,174,063 from the sale of our common shares and repurchased 32,144,033 of our common shares for $331,163 during the year ended December 31, 2025.
•Incurred and paid down our mortgage notes and credit facility debt as follows: (i) incurred secured debt of $57,750; and (ii) incurred net unsecured debt of $251,550.
•Incurred net borrowings under secured financings of investments in real estate debt of $803,569, which are secured by certain of the Company's CMBS investments and commercial real estate loans.
Overall Portfolio
•Our portfolio as of December 31, 2025 consisted of investments in real estate, including consolidated joint ventures, (42%), investments in leases (5%), investments in real estate debt (19%), and investments in unconsolidated real estate affiliates (34%), based on fair value.
•Our 272 properties as of December 31, 2025, of which 270 are wholly owned and two are held through consolidated joint ventures, consisted primarily of Industrial (68%), Retail (23%), Land (4%), and Office (5%), based on fair value.
•Our investments in real estate debt as of December 31, 2025, consisted of commercial real estate loans, CMBS, and investments in loans receivable related to the land at build-to-suit properties. For further details on credit ratings and underlying real estate collateral, refer to "Investment Portfolio - Investments in Real Estate Debt".
•As of December 31, 2025, we held interests in 3,617 properties through our 15 investments in unconsolidated real estate affiliates, primarily through our investment in STORE Capital LLC ("STORE").
Investment Portfolio
Real Estate Investments
The following chart describes the diversification of our wholly owned and consolidated joint venture investments in real estate by property type based on fair value as of December 31, 2025:
Property Type (1)
(1) Property Type weighting is measured as the asset value of our wholly owned and consolidated joint venture investments in real estate for each sector category against the total asset value of all such investments. "Real estate investments" excludes properties held within unconsolidated joint ventures, including the Company's investment in STORE.
The following table provides a summary of our wholly owned real estate portfolio as of December 31, 2025, including Investments in real estate and Investments in leases - Financing receivables:
__________
|
Property Type (1)
|
Number of Properties | Sq. Feet (in thousands) |
Occupancy Rate (2) (3)
|
Average Effective Annual Base Rent Per Leased Sq. Foot
|
Annual Base Rent
|
Percentage of Total Revenue | ||||||||||||||||||||||||||||||||
|
Industrial
|
75 | 23,104 | 100% | $8.90 | $ | 205,903 | 64% | |||||||||||||||||||||||||||||||
|
Retail
|
189 | 3,193 | 100% | $23.80 | 75,992 | 24% | ||||||||||||||||||||||||||||||||
| Land | 4 | 27,592 | N/A | $0.80 | 21,250 | 7% | ||||||||||||||||||||||||||||||||
| Office | 4 | 1,006 | 100% | $20.00 | 20,125 | 6% | ||||||||||||||||||||||||||||||||
|
Total
|
272 | 54,895 | $ | 323,270 | 100% | |||||||||||||||||||||||||||||||||
(1)Excludes properties owned by unconsolidated real estate affiliates.
(2)Occupancy Rate is calculated as the percentage of square footage leased.
(3)Land investments are excluded from Occupancy Rate. Build-to-suit investments are included in Occupancy Rate to the extent a lease has been executed.
Real Estate and Leases
The following table provides information regarding our wholly owned real estate property types as of December 31, 2025:
|
Property Type and Investment(1)
|
Number of Properties | Location | Acquisition/Commencement Date | Ownership Interest | Sq. Feet (in thousands) |
Occupancy Rate (2)(7)
|
||||||||||||||||||||||||||||||||
| Industrial: | ||||||||||||||||||||||||||||||||||||||
| Amazon | 5 | Various | Aug. - Dec. 2022 | 100% | 4,964 | 100% | ||||||||||||||||||||||||||||||||
| Dorel Industries | 1 | Cornwall, ON | November 2022 | 100% | 492 | 100% | ||||||||||||||||||||||||||||||||
|
EquipmentShare.com (3) (4)
|
31 | Various | Oct. - Nov. 2022 | 100% | 780 | 100% | ||||||||||||||||||||||||||||||||
| Magna International | 2 | Various | Sep. 2022 - Dec. 2025 | 100% | 2,317 | 100% | ||||||||||||||||||||||||||||||||
|
Paradigm (4)
|
3 | Various | October 2022 | 100% | 314 | 100% | ||||||||||||||||||||||||||||||||
|
Whirlpool (4)
|
1 | Amana, IA | November 2022 | 100% | 1,572 | 100% | ||||||||||||||||||||||||||||||||
| Tenneco | 5 | Various | December 2022 | 100% | 2,150 | 100% | ||||||||||||||||||||||||||||||||
| LOC Performance | 2 | Various | March 2023 | 100% | 990 | 100% | ||||||||||||||||||||||||||||||||
| QVC | 2 | Various | January 2023 | 100% | 2,166 | 100% | ||||||||||||||||||||||||||||||||
|
Save Mart (4)
|
2 | Various | September 2023 | 100% | 555 | 100% | ||||||||||||||||||||||||||||||||
| Quanta Cloud | 1 | San Jose, CA | June 2024 | 100% | 91 | 100% | ||||||||||||||||||||||||||||||||
| General Mills | 1 | Belvidere, IL | July 2024 | 100% | 1,318 | 100% | ||||||||||||||||||||||||||||||||
| Hillenbrand | 2 | Various | September 2024 | 100% | 712 | 100% | ||||||||||||||||||||||||||||||||
| Air Distribution Technologies | 7 | Various | July 2024 | 100% | 1,097 | 100% | ||||||||||||||||||||||||||||||||
| Johnson Controls | 4 | Various | September 2022 - December 2025 | 100% | 325 | 100% | ||||||||||||||||||||||||||||||||
| US Foods | 1 | Fresno, CA | July 2025 | 100% | 97 | 100% | ||||||||||||||||||||||||||||||||
|
PsiQuantum (5)
|
1 | Chicago, IL | September 2025 | 99% | 433 | N/A | ||||||||||||||||||||||||||||||||
| Flowchem | 1 | Prairie View, TX | October 2025 | 100% | 184 | 100% | ||||||||||||||||||||||||||||||||
|
Marzetti(5)
|
1 | Columbus, OH | November 2025 | 98% | 665 | 100% | ||||||||||||||||||||||||||||||||
| Citi Trends | 1 | Roland, OK | December 2025 | 100% | 563 | 100% | ||||||||||||||||||||||||||||||||
| United Natural Foods | 1 | Manchester, PA | December 2025 | 100% | 1,319 | 100% | ||||||||||||||||||||||||||||||||
| Retail: | ||||||||||||||||||||||||||||||||||||||
|
Cracker Barrel (4)
|
53 | Various | September 2022 | 100% | 537 | 100% | ||||||||||||||||||||||||||||||||
|
Ramoco Fuels NC LLC
|
27 | Various | September 2023 | 100% | 94 | 100% | ||||||||||||||||||||||||||||||||
| Walgreen Co. | 29 | Various | September 2022 | 100% | 426 | 100% | ||||||||||||||||||||||||||||||||
| Maverick Gaming | 11 | Various | Sep. 2022 - Jun. 2023 | 100% | 317 | 100% | ||||||||||||||||||||||||||||||||
|
Save Mart (4)
|
10 | Various | July 2023 | 100% | 475 | 100% | ||||||||||||||||||||||||||||||||
|
N&L Investments
|
8 | Various | September 2022 | 100% | 22 | 100% | ||||||||||||||||||||||||||||||||
|
JK Petroleum (6)
|
5 | Various | September 2022 | 100% | 24 | 100% | ||||||||||||||||||||||||||||||||
|
Abbasi (6)
|
10 | Various | September 2022 | 100% | 35 | 100% | ||||||||||||||||||||||||||||||||
|
World Fuel Services (6)
|
5 | Various | September 2022 | 100% | 62 | 100% | ||||||||||||||||||||||||||||||||
| Dollar General | 10 | Various | Dec. 2024 - May 2025 | 100% | 113 | 100% | ||||||||||||||||||||||||||||||||
| Tractor Supply | 1 | Brooksville, PA | January 2025 | 100% | 22 | 100% | ||||||||||||||||||||||||||||||||
| Starbucks | 4 | Various | Feb. - Sep. 2025 | 100% | 7 | 100% | ||||||||||||||||||||||||||||||||
| Washington Trust | 4 | Various | January 2025 | 100% | 27 | 100% | ||||||||||||||||||||||||||||||||
| MedVet | 3 | Various | Jun. - Aug. 2025 | 100% | 44 | 100% | ||||||||||||||||||||||||||||||||
| ASDA | 9 | Various | December 2025 | 100% | 988 | 100% | ||||||||||||||||||||||||||||||||
| Office: | ||||||||||||||||||||||||||||||||||||||
| Chubb | 2 | Whitehouse, NJ | November 2022 | 100% | 429 | 100% | ||||||||||||||||||||||||||||||||
| Energy Center | 1 | Houston, TX | October 2022 | 100% | 524 | 100% | ||||||||||||||||||||||||||||||||
| EquipmentShare.com | 1 | Colombia, MO | October 2022 | 100% | 53 | 100% | ||||||||||||||||||||||||||||||||
| Land: | ||||||||||||||||||||||||||||||||||||||
| HOF Village Waterpark | 1 | Canton, OH | November 2022 | 100% | 664 | N/A | ||||||||||||||||||||||||||||||||
|
Related Midwest
|
1 | Chicago, IL | September 2025 | 100% | 16,369 | N/A | ||||||||||||||||||||||||||||||||
| Skybox | 1 | Wichita Falls, TX | November 2025 | 100% | 9,480 | N/A | ||||||||||||||||||||||||||||||||
| Kraemer Garden | 1 | Waite Park, MN | December 2025 | 100% | 1,079 | N/A | ||||||||||||||||||||||||||||||||
|
Total
|
272 | 54,895 | ||||||||||||||||||||||||||||||||||||
__________________
(1)Excludes properties owned by unconsolidated real estate affiliates, including STORE.
(2)Land investments are excluded from Occupancy Rate.
(3)Includes build-to-suit assets currently in development.
(4)Includes properties sold or contributed to the DST Program that remain consolidated under GAAP.
(5)Includes assets held in a consolidated joint venture holding a build-to-suit asset.
(6)Includes leases that have not commenced as of December 31, 2025.
(7)Occupancy Rate is calculated as the percentage of square footage leased.
Lease Expirations
The following schedule details the expiring leases at our wholly owned real estate properties by annualized base rent and square footage as of December 31, 2025:
| Year | Number of Expiring Leases |
Annualized Base Rent(1)
|
% of Total Annualized Base Rent Expiring |
Square Feet (in thousands)
|
% of Total Square Feet Expiring | |||||||||||||||||||||||||||
| 2026 | - | $ | - | - | % | - | - | % | ||||||||||||||||||||||||
| 2027 | - | - | - | % | - | - | % | |||||||||||||||||||||||||
| 2028 | 1 | 2,025 | 1 | % | 191 | - | % | |||||||||||||||||||||||||
| 2029 | - | - | - | % | - | - | % | |||||||||||||||||||||||||
| 2030 | - | - | - | % | - | - | % | |||||||||||||||||||||||||
| 2031 | - | - | - | % | - | - | % | |||||||||||||||||||||||||
| 2032 | 3 | 23,467 | 7 | % | 2,328 | 4 | % | |||||||||||||||||||||||||
| 2033 | 17 | 11,221 | 3 | % | 1,551 | 3 | % | |||||||||||||||||||||||||
| 2034 | 16 | 14,790 | 5 | % | 1,917 | 3 | % | |||||||||||||||||||||||||
| 2035 | 3 | 2,301 | 1 | % | 254 | - | % | |||||||||||||||||||||||||
| Thereafter | 196 | 269,466 | 83 | % | 48,654 | 90 | % | |||||||||||||||||||||||||
|
Total
|
236 | $ | 323,270 | 100 | % | 54,895 | 100 | % | ||||||||||||||||||||||||
__________________
(1) Excludes executed leases and build-to-suit properties for which leases have not commenced as of December 31, 2025.
Investments in Unconsolidated Real Estate Affiliates
The Company owns interests in unconsolidated real estate investments with third parties which are primarily accounted for under the FVO. The following table details the Company's investments in unconsolidated real estate affiliates as of December 31, 2025:
| Investment | Number of Investments | Number of Properties | Ownership Percentage | Carrying Amount | ||||||||||||||||||||||
|
Unconsolidated real estate affiliates accounted for under the equity method
|
||||||||||||||||||||||||||
|
Net lease
|
1 | 2 | 49.1% | $ | 5,163 | |||||||||||||||||||||
|
Total unconsolidated real estate affiliates accounted for under the equity method
|
1 | 2 | $ | 5,163 | ||||||||||||||||||||||
|
Unconsolidated real estate affiliates accounted for under the FVO
|
||||||||||||||||||||||||||
|
STORE (1)
|
1 | 3,576 | 22.4% | $ | 2,452,660 | |||||||||||||||||||||
|
Net lease
|
3 | 24 | 50.9% | 208,949 | ||||||||||||||||||||||
|
Investments in real estate debt
|
3 | N/A |
51.0% - 60.0%
|
188,973 | ||||||||||||||||||||||
|
Net lease data centers (2)
|
8 | 15 |
10.6% - 65.5%
|
951,121 | ||||||||||||||||||||||
|
Total unconsolidated real estate affiliates accounted for under the FVO
|
14 | 3,615 | $ | 3,801,703 | ||||||||||||||||||||||
|
Total unconsolidated real estate affiliates
|
15 | 3,617 | $ | 3,806,866 | ||||||||||||||||||||||
(1) The Company has an indirect investment in STORE through Ivory OSREC OS Aggregator LLC. The Company has determined that STORE is considered a significant subsidiary under SEC Regulation S-X Rule 3-09 and Rule 4-08(g) as of December 31, 2025 and 2024. Accordingly, the Company is required to include Ivory Parent LLC's and STORE's audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, prepared by STORE and audited by its independent registered public accounting firm, as Exhibits 99.1 and 99.2 to this Annual Report on Form 10-K.
(2) Includes the Company's investment in Longhorn JV LLC ("Longhorn 1.0 JV"). The Company has determined that Longhorn 1.0 JV is considered a significant subsidiary under SEC Regulation S-X Rule 3-09 and Rule 4-08(g) as of December 31, 2025. Accordingly, the Company is required to include Abilene DC 1, LLC's audited consolidated financial statements as of and for the year ended December 31, 2025, as Exhibit 99.3 to this Annual Report on Form 10-K.
Investments in Real Estate Debt
The following table details the Company's investments in real estate debt held at fair value:
| Type of Security/Loan |
Weighted Average Coupon (1)(2)
|
Weighted Average Maturity Date (3)
|
Face Amount | Cost Basis | Fair Value | |||||||||||||||||||||||||||
|
CMBS (4)
|
SOFR +4%
|
1/24/2036 | $ | 850,286 | $ | 849,316 | $ | 853,531 | ||||||||||||||||||||||||
|
Commercial real estate loan (4) (5)
|
9 | % | 6/6/2030 | 848,991 | 844,731 | 852,355 | ||||||||||||||||||||||||||
|
Total investments in real estate debt (6)
|
8 | % | $ | 1,699,277 | $ | 1,694,047 | $ | 1,705,886 | ||||||||||||||||||||||||
__________________
(1)The term SOFR refers to the relevant floating benchmark rate, one-month SOFR.
(2)The weighted average coupon for our CMBS includes both floating and fixed rate investments. Fixed rate CMBS represent a spread over SOFR for purposes of the weighted average calculation.
(3)The weighted average maturity date is based on the fully extended maturity date of the instrument.
(4)Includes investments pledged as collateral under a secured financing agreement. See Note 9 - Debt for additional information.
(5)Certain commercial real estate loans include potential future funding obligations to borrower. See Note 15 - Commitments and Contingencies for additional information.
(6)Total investments in real estate debt per the table above excludes our investments in CMBS investments classified as held to maturity and loans receivable, which are presented below.
The following table details the Company's CMBS investments which are classified as held-to-maturity and presented at amortized cost. The carrying value of these CMBS investments as of December 31, 2025 is net of an allowance for credit losses of $2,829. The Company did not record an allowance for credit losses related to these CMBS investments as of December 31, 2024. The Company has the intent and ability to hold these CMBS investments until maturity.
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Type of Security/Loan |
Weighted Average
Coupon(1)
|
Weighted Average Maturity Date(2)
|
Face Amount |
Cost Basis | Carrying Value | |||||||||||||||||||||||||||
| CMBS |
SOFR + 7%
|
3/26/2030 | $ | 387,750 | $ | 387,229 | $ | 384,570 | ||||||||||||||||||||||||
Other Investments
During the year ended December 31, 2024, the Company acquired land related to build-to-suit properties in sale leaseback transactions for a total purchase price of $28,827 which is being accounted for as an investment in loans receivable and held at amortized cost, as the related lease is not deemed to have commenced until the constructed assets are made available for use by the lessee. Direct costs associated with originating loans are deferred and amortized as an adjustment to interest income over the term of the related loan receivable. During the year ended December 31, 2025, the Company placed seven build-to-suit properties in service and contributed properties for an interest in LV Petroleum JV, including two of its build-to-suit properties with an investment in loans receivable balance of $6,623. See Note 4 - Investments in Real Estate, net for additional information. As of December 31, 2025 and 2024, the Company held 13 and 22 investments in loans receivable related to build-to-suit arrangements with a total balance of $10,691 and $27,635, respectively, which are included within Investments in real estate debt in the Consolidated Balance Sheets.
Results of Operations
The following table sets forth the results of our operations for the years ended December 31, 2025 and 2024:
| Year Ended | Change | |||||||||||||||||||
| December 31, 2025 | December 31, 2024 | $ | ||||||||||||||||||
|
Revenues
|
||||||||||||||||||||
| Rental revenue | $ | 235,909 | $ | 206,995 | $ | 28,914 | ||||||||||||||
| Income from investment in leases - Financing receivables | 39,865 | 61,626 | (21,761) | |||||||||||||||||
| Total revenues | 275,774 | 268,621 | 7,153 | |||||||||||||||||
| Expenses | ||||||||||||||||||||
| Rental property operating | 34,199 | 26,612 | 7,587 | |||||||||||||||||
| General and administrative | 30,163 | 26,893 | 3,270 | |||||||||||||||||
| Impairment charges | - | 24,053 | (24,053) | |||||||||||||||||
| Management fee | 80,727 | 45,383 | 35,344 | |||||||||||||||||
| Performance participation allocation | 97,760 | 38,321 | 59,439 | |||||||||||||||||
| Depreciation and amortization | 107,531 | 96,111 | 11,420 | |||||||||||||||||
| Total expenses | 350,380 | 257,373 | 93,007 | |||||||||||||||||
| Other income (expense) | ||||||||||||||||||||
| Income from unconsolidated real estate affiliates | 549,415 | 221,916 | 327,499 | |||||||||||||||||
|
(Loss) gain from dispositions of real estate
|
(2,180) | 43,620 | (45,800) | |||||||||||||||||
| Interest expense | (102,678) | (117,433) | 14,755 | |||||||||||||||||
| Interest income | 119,108 | 20,784 | 98,324 | |||||||||||||||||
|
Other income (expense), net
|
2,922 | (3,230) | 6,152 | |||||||||||||||||
|
Total other income, net
|
566,587 | 165,657 | 400,930 | |||||||||||||||||
|
Net income before income taxes
|
491,981 | 176,905 | 315,076 | |||||||||||||||||
| Income tax expense | 774 | 3,820 | (3,046) | |||||||||||||||||
|
Net income
|
$ | 491,207 | $ | 173,085 | $ | 318,122 | ||||||||||||||
|
Net income attributable to non-controlling interests
|
(26,175) | (12,793) | (13,382) | |||||||||||||||||
|
Net income attributable to ORENT shareholders
|
$ | 465,032 | $ | 160,292 | $ | 304,740 | ||||||||||||||
|
Net income per share of common stock - basic
|
$ | 0.79 | $ | 0.49 | ||||||||||||||||
|
Net income per share of common stock - diluted
|
$ | 0.79 | $ | 0.49 | ||||||||||||||||
| Weighted-average shares of common stock outstanding, basic | 585,286,421 | 325,419,692 | ||||||||||||||||||
| Weighted-average shares of common stock outstanding, diluted | 618,474,416 | 354,595,618 | ||||||||||||||||||
Rental revenue
Rental revenue from our property operations was $235,909 for the year ended December 31, 2025 and $206,995 for the year ended December 31, 2024. The increase in revenues during the periods presented is primarily due to acquisitions of properties classified as Investments in real estate, which increased from 182 as of December 31, 2024 to 241 as of
December 31, 2025, as well as contractual rent increases across the existing portfolio from December 31, 2024 to December 31, 2025.
Income from investment in leases - Financing receivables
Income from investment in leases - Financing receivables was $39,865 for the year ended December 31, 2025, and $61,626 for the year ended December 31, 2024. The decrease is primarily due to revenue from properties that were sold or contributed to joint ventures during 2025 and 2024 and leases that were terminated during 2024.
Rental property operating expenses
Rental property operating expenses were $34,199 for the year ended December 31, 2025, and $26,612 for the year ended December 31, 2024. The increase is primarily the result of our increased property count compared to the prior year.
General and administrative expenses
General and administrative expenses were $30,163 for the year ended December 31, 2025, and $26,893 for the year ended December 31, 2024. The increase in general and administrative expenses is primarily due to an increase in third-party professional fees, partially offset by a decrease in the credit allowance adjustment under the current expected credit losses ("CECL") model.
Impairment charges
During the year ended December 31, 2024, the Company recognized impairment charges of $24,053 as a result of the Company identifying triggering events in connection with the termination of its leases with SQRL Holdings and HOF Village Waterpark due to non-payment of rent. The Company did not recognize any impairment charges during the year ended December 31, 2025.
Management fee
The management fee for the year ended December 31, 2025 was $80,727 and $45,383 for the year ended December 31, 2024. The increase was primarily due to an increase in NAV.
Performance participation allocation
Performance participation allocation was $97,760 for the year ended December 31, 2025, and $38,321 for the year ended December 31, 2024. The increase was due to an increase in NAV in excess of the required 5% return.
Depreciation and amortization
Depreciation and amortization was $107,531 for the year ended December 31, 2025, and $96,111 for the year ended December 31, 2024. The increase in depreciation and amortization during the periods presented is due to an increase in properties classified as Investments in real estate from 182 properties as of December 31, 2024, to 241 properties as of December 31, 2025.
Income from unconsolidated real estate affiliates
Income from unconsolidated real estate affiliates was $549,415 for the year ended December 31, 2025, and $221,916 for the year ended December 31, 2024. The increase in income from unconsolidated real estate affiliates is primarily due to an increase in the Company's investment in STORE, as well as income from new investments in unconsolidated real estate affiliates made during the current year.
Net (loss) gain on dispositions
During the year ended December 31, 2025, the Company recognized a loss on dispositions of real estate of $2,180 due to the reversal of non-cash accretion of tenant loan receivables related to the contribution of 15 LV Petroleum properties to LV Petroleum JV. During the year ended December 31, 2024, the Company recognized a net gain on dispositions of real
estate of $43,620, resulting from the disposal of one industrial property, one parcel of excess land at an industrial property, one retail property and one land property for total proceeds of $256,893.
Interest expense
Interest expense was $102,678 for the year ended December 31, 2025 and $117,433 for the year ended December 31, 2024. The decrease in expense was primarily due to decreases in mortgage borrowings, as well as decreases in the affiliate line of credit and STORE FIPA loan which were repaid in full in 2024, partially offset by interest on our secured financings of investments in real estate debt in the current year.
Interest income
Interest income was $119,108 and $20,784 for the years ended December 31, 2025 and 2024, respectively. The increase in interest income in the current year was primarily due to acquisitions of investments in real estate debt, as well as an increase in interest earned on our deposits with banks.
Other (expense) income, net
Other income, net was net income of $2,922 for the year ended December 31, 2025, compared to net expense of $3,230 for the year ended December 31, 2024. The increase in income in the current year was primarily due to unrealized gains and income from our investments in real estate debt, as well as a reduction in debt extinguishment fees.
Liquidity and Capital Resources
Liquidity
We believe we have sufficient liquidity to operate our business with immediate liquidity comprised of cash and cash equivalents of $119,444 and availability under our credit facility of $642,601 as of December 31, 2025. In addition to our immediate liquidity, we obtain incremental liquidity through the sale of our common shares, from which we generated net proceeds of $3,174,063 for the year ended December 31, 2025, as well as through the ability to sell our liquid CMBS investments with a fair value of $853,531 as of December 31, 2025. Additionally, we may incur indebtedness secured by our real estate and real estate debt investments, borrow money through unsecured financings, or incur other forms of indebtedness. We may also generate incremental liquidity through the sale of our real estate and proceeds from our DST Program.
Our primary liquidity needs are to fund our investments, make distributions to our shareholders, repurchase common shares pursuant to our Share Repurchase Plan, pay operating expenses, fund capital expenditures, and repay indebtedness. Our operating expenses include, among other things, the management fee we pay to the Adviser and the performance participation allocation that NLT OP pays to the Special Limited Partners, both of which will impact our liquidity to the extent the Adviser or the Special Limited Partners elect to receive such payments in cash, or subsequently redeem shares or OP Units previously issued to them.
Our cash needs for acquisitions and other capital investments will be funded primarily from the sale of common shares and through the incurrence or assumption of debt. Other potential future sources of capital include secured or unsecured financings from banks or other lenders and proceeds from the sale of assets. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. We expect to be able to refinance debt obligations maturing in the near term through the use of capacity on our unsecured line of credit or exercise of existing extension options.
We continue to believe that our current liquidity position is sufficient to meet the needs of our expected investment activity.
Capital Resources
As of December 31, 2025, our indebtedness included loans secured by our properties, unsecured credit facilities, unsecured senior notes, and other borrowings. The following table is a summary of our indebtedness as of December 31, 2025 and 2024 (in thousands):
| Principal Balance as of | ||||||||||||||||||||||||||||||||
| Indebtedness |
Weighted Average
Interest Rate(1)(2)
|
Weighted Average Maturity Date
|
Maximum Facility Size | December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||
| Mortgage notes & credit facility: | ||||||||||||||||||||||||||||||||
|
Unsecured term loan credit facility
|
S + 1.35%
|
6/12/2030 | $1,250,000 | $ | 1,250,000 | $ | 1,165,500 | |||||||||||||||||||||||||
|
Unsecured revolving credit facility
|
S + 1.40%
|
6/12/2029 | $2,610,000 | 414,000 | 246,950 | |||||||||||||||||||||||||||
|
Fixed rate mortgages
|
4.99% | 8/25/2029 | N/A | 106,447 | 99,098 | |||||||||||||||||||||||||||
|
Variable rate mortgages
|
S + 1.88%
|
3/2/2029 | N/A | 106,462 | 129,824 | |||||||||||||||||||||||||||
| Deferred financing costs, net | (43,912) | (13,624) | ||||||||||||||||||||||||||||||
|
Total mortgage notes & credit facility, net:
|
1,832,997 | 1,627,748 | ||||||||||||||||||||||||||||||
|
Unsecured senior notes
|
||||||||||||||||||||||||||||||||
|
Unsecured senior notes
|
6.35% | 2/2/2030 | N/A | $ | 130,000 | $ | 130,000 | |||||||||||||||||||||||||
|
Deferred financing costs, net
|
(3,504) | (3,655) | ||||||||||||||||||||||||||||||
|
Unsecured senior notes, net
|
$ | 126,496 | $ | 126,345 | ||||||||||||||||||||||||||||
|
Other borrowings
|
||||||||||||||||||||||||||||||||
|
Secured financings of investments in real estate debt
|
S + 1.67%
|
6/20/2027 | $ | 1,750,000 | $ | 757,069 | $ | - | ||||||||||||||||||||||||
| Deferred financing costs, net | (3,122) | - | ||||||||||||||||||||||||||||||
|
Other borrowings, net
|
$ | 753,947 | $ | - | ||||||||||||||||||||||||||||
| Total indebtedness | $ | 2,713,440 | $ | 1,754,093 | ||||||||||||||||||||||||||||
_______________
(1)The term "S" refers to the relevant floating benchmark rates, which include daily secured overnight financing rate ("SOFR"), 30-day SOFR, one-month euro interbank offered rate ("EURIBOR"), daily Canadian overnight repo rate average ("CORRA"), and one-month SONIA as applicable to each loan. As of December 31, 2025, we have outstanding interest rate swaps that mitigate our exposure to potential future interest rate increases under our floating-rate debt. See further discussion of outstanding interest rate swaps below.
(2)The Company's mortgage and notes payable contain yield or spread maintenance provisions.
Mortgage Notes and Credit Facilities
On June 12, 2025, the Company entered into an amended and restated credit agreement, which amends and restates the credit agreement dated August 11, 2022. The amended and restated credit agreement provides for, among other things, (a) an upsize of the senior unsecured term loan facility from $1,165,500 to $1,250,000, (b) an upsize of the aggregate principal amount of the senior unsecured revolving credit facility from $724,500 to $2,485,000, (c) an upsize of the accordion feature, subject to the satisfaction of various conditions, which could bring total commitments from up to $3,200,000 to up to $5,000,000, (d)an extension of the revolving credit scheduled maturity date from August 2026 to June 2029, (e) an extension of the initial term loan scheduled maturity date from August 2027 to June 2030, and (f) the amendment of certain financial and other covenants. On July 23, 2025, the agreement was further amended to increase the aggregate principal amount of the senior unsecured revolving credit facility from $2,485,000to $2,610,000.
The unsecured term loan credit facility bears interest at a base rate plus a margin ranging from 0.25% to 1.85%. The base rate is the greatest of (a) Keybank N.A.'s announced prime rate, (b) 0.5% above the federal funds effective rate, (c) SOFR plus 1.0% and (d) 1.0%. The weighted average interest rate for the unsecured term loan credit facility for the year ended December 31, 2025 was 5.59% (unhedged) and 5.01% (hedged).
The unsecured revolving credit facility consists of USD ("USD Revolver") and Alternative ("Alternative Revolver") denominated currencies, and bears interest at a base rate plus a margin ranging from 0.30% to 1.90%. The base rate is the greatest of (a) Keybank N.A.'s announced prime rate, (b) 0.5% above the federal funds effective rate, (c) SOFR plus 1.0% and (d) 1.0%. The adjusted floating rate for the Alternative Revolver is EURIBOR for Euro borrowings, and CORRA plus 0.30% for Canadian Dollar borrowings. The weighted average interest rate for the unsecured revolving credit facility for the year ended December 31, 2025 was 5.63% (unhedged) and 4.69% (hedged). During the year ended December 31, 2025, the Company earned an additional $682 of income as a result of over hedging on our interest rate swaps. We believe the interest rate swaps are still highly effective.
During the year ended December 31, 2025, the Company entered into a variable rate mortgage note of $57,750 secured by a property contributed to a DST as part of our DST Program. The interest on the mortgage and any amounts received or owed under the interest rate swap are borne by such DST and are not consolidated in the Company's Condensed Consolidated Financial Statements. Additionally, the Company contributed a variable rate mortgage note of $84,500 for interest in a joint venture. Refer to Note 3 - Acquisitions and Dispositions for additional information.
The following table details the Company's interest rate swaps as of December 31, 2025:
| Notional Balance | Fixed Rate | |||||||
| Mortgage notes & credit facilities: | ||||||||
| Unsecured term loan credit facility | ||||||||
| $700,000 | 3.65 | % | ||||||
| $250,000 | 3.42 | % | ||||||
| $145,500 | 4.23 | % | ||||||
| $100,000 | 3.67 | % | ||||||
| $54,500 | 3.40 | % | ||||||
| Unsecured revolving credit facility | ||||||||
| $100,000 | 3.25 | % | ||||||
| $45,500 | 3.40 | % | ||||||
| Variable rate mortgages | ||||||||
| $47,666 | 3.74 | % | ||||||
Unsecured Senior Notes
On August 28, 2024, NLT OP entered into a Note Purchase Agreement (the "Note Purchase Agreement") governing the issuance of $29,000 of 6.24% Senior Notes Series A, due August 28, 2028, $38,500 of 6.32% Senior Notes, Series B, due August 28, 2029, $39,500 of 6.40% Senior Notes, Series C, due August 28, 2030 and $23,000 of 6.43% Senior Notes, Series D, due August 28, 2031 (collectively, the "Notes"), to accredited investors in a private placement. Interest on the notes is due semi-annually on the 28th day of February and August of each year, beginning on February 28, 2025. Proceeds from the issuance of the Notes were used to pay down existing indebtedness of the Company and for other general purposes. On October 16, 2025, NLT OP entered into an amendment to the Note Purchase Agreement, providing for, among other things, the amendment of certain financial and other covenants to align with the amended and restated credit agreement.
Secured Financings of Investments in Real Estate Debt
During the year ended December 31, 2025, the Company entered into financing agreements secured by certain of its CMBS investments and commercial real estate loans. The terms of the CMBS master repurchase agreements provide the lenders the ability to determine the size and terms of the financing provided based upon the particular collateral pledged by the Company, and may require the Company to provide additional collateral in the form of cash or securities if the market value of such financed investment declines. The CMBS master repurchase agreements have no set maturity date, with each borrowing having initial terms of one to three months. The Company has the option to continuously extend the maturity of outstanding balances for additional one-to-three month terms upon each interim maturity date. The financing arrangements secured by the Company's commercial real estate loans have a maturity date which is the earliest of (a) the weighted average maturity date of March 26, 2028 or (b) the maturity date of the underlying secured commercial real estate loans. Certain arrangements have a one year extension option.
As of December 31, 2025, the Company's total secured financings of investments in real estate debt outstanding was $757,069, secured by $497,710 of its CMBS investments and $631,980 of its commercial real estate loans. These financings have a weighted average maturity date of June 20, 2027, and a weighted average interest rate of SOFR + 1.67%, the relevant floating benchmark rate. As of December 31, 2024, the Company did not have any secured financings of investments in real estate debt outstanding. The Company's secured financings of investments in real estate debt are included within Other Borrowings within the Condensed Consolidated Balance Sheets.
Financial Covenants
The Company is subject to various financial and operational covenants under certain of its mortgage notes, term loan credit facilities, revolving credit facility, and unsecured senior notes agreements. These covenants require the Company to maintain certain financial ratios, which include leverage, debt service coverage, and tangible net worth thresholds, among others. As of December 31, 2025, the Company believes it was in compliance with all of its loan covenants that could result in a default under such agreements.
Offering of Common Shares
On September 1, 2022, the Company commenced the offering of its shares through a continuous private placement offering. As of December 31, 2025, the Company is authorized to issue an unlimited number of shares of each of its four classes of common shares (Class S shares, Class N shares, Class D shares, and Class I shares).
As of March 10, 2026, we had received net proceeds of $8,214,747 from selling an aggregate 802,699,054 common shares in the private offering (consisting of 340,000,969 Class S shares, 53,134,696 Class N shares, 13,374,298, Class D shares, and 396,189,091 Class I shares).
Cash Flows
Cash flows provided by operating activities were $395,519 for the year ended December 31, 2025, compared to $173,203 for the year ended December 31, 2024. The change in cash flows provided by operating activities was primarily due to an increase in interest income from our investments in real estate debt and distributions of earnings from unconsolidated real estate affiliates.
Cash flows used in investing activities were $4,266,674 for the year ended December 31, 2025, compared to $1,600,314 for the year ended December 31, 2024. The net increase in cash flows used in investing activities was primarily due to an increase in investing activity related to unconsolidated real estate affiliates, real estate debt, and acquisitions of properties classified as Investments in real estate.
Cash flows provided by financing activities were $3,869,297 for the year ended December 31, 2025, compared to $1,459,217 for the year ended December 31, 2024. The change in cash flows provided by financing activities was primarily due to a net increase in secured borrowings on investments in real estate debt, proceeds received from the issuance of common shares, and proceeds from the Company's DST program.
Critical Accounting Estimates
The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and require 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 consolidated 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. See Note 2 - Summary of Significant Accounting Policies and Estimates for further descriptions of the below accounting policies.
Investments in Unconsolidated Real Estate Affiliates
For investments that do not meet the consolidation requirements and for which we have significant influence over the operations of the entity, the investment is accounted for under ASC 323 Investments - Equity Method and Joint Ventures. Under ASU 825-10 Financial Assets and Liabilities Eligible for Fair Value Option, we have elected the fair value option ("FVO") for certain of our investments in unconsolidated real estate affiliates, as such election aligns the accounting for GAAP and the calculation of monthly NAV for these investments.
We evaluate our equity method investments for which we have not elected the FVO on a periodic basis to determine if there are any indicators that the value of our equity investment may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, we measure the charge as the excess of the carrying value of our investment over its estimated fair value, which is determined by calculating our share of the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint-venture agreement. For equity investments in entities that hold real estate, the estimated fair value of the underlying investment's real estate is calculated based on whether the acquisition of a property qualifies as a business combination or an asset acquisition. The fair value of the underlying investment's debt, if any, is calculated based on
market interest rates and other market information. The fair value of the underlying investment's other financial assets and liabilities have fair values that generally approximate their carrying values.
The investments for which we have elected the FVO are reported in Investments in unconsolidated real estate affiliates on the Consolidated Balance Sheet. These investments are initially recorded at fair value and subsequently, changes in fair value are recorded as Income from unconsolidated real estate affiliates in the Consolidated Statement of Operations. Distributions received from equity method investments are classified using the nature of distributions approach. Distributions received are classified based on the nature of the activity or activities that generated the distribution as a return on investment, which are classified as cash inflows from operating activities, or a return on investment, which are classified as cash inflows from investing activities. Transaction costs associated with the equity method investments are expensed as incurred. Investments made, including the transaction costs, for equity method investments are classified as cash outflows from investing activities in the Consolidated Statement of Cash Flows.
Impairment of Investments in Real Estate
We review real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value of such investment, an impairment loss is recognized. 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, and proceeds from other collateral held 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.
We review investments in unconsolidated entities 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 ("OTTI"). 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 "Notes to Consolidated Financial Statements-2. Summary of Significant Accounting Policies and Estimates" for a discussion concerning recent accounting pronouncements.
Future Cash Requirements
The following table aggregates our contractual obligations and commitments as of December 31, 2025.
| Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||||||||||||||
| Indebtedness | $ | 2,763,978 | $ | 274,446 | $ | 440,183 | $ | 2,026,349 | $ | 23,000 | ||||||||||||||||||||||
| Organization and offering costs | 7,060 | 2,811 | 4,249 | - | - | |||||||||||||||||||||||||||
| Total | $ | 2,771,038 | $ | 277,257 | $ | 444,432 | $ | 2,026,349 | $ | 23,000 | ||||||||||||||||||||||
The Company has future commitments to fund the construction of wholly owned assets and assets held at joint ventures under build-to-suit arrangements. As of December 31, 2025, the Company estimates that its total remaining future commitments to complete the construction of the assets is $1,896,223. Additionally, as of December 31, 2025, the Company has commitments to fund up to $240,984 in additional future fundings related to our commercial real estate loans, including those held through joint ventures.
Oak Street Net Lease Trust published this content on March 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 13, 2026 at 10:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]