Goldman Sachs Real Estate Finance Trust Inc.

11/13/2025 | Press release | Distributed by Public on 11/13/2025 12:08

Quarterly Report for Quarter Ending SEPTEMBER 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References herein to "Goldman Sachs Real Estate Finance Trust," the "Company," "we," "us," or "our" refer to Goldman Sachs Real Estate Finance Trust, Inc and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the unaudited consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q as well as the information contained in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC").
Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "target," "estimate," "intend," "continue" or "believe" or the negatives of, or other variations on, these terms or comparable terminology; however, not all forward-looking statements may contain such words. You should read statements that contain these words carefully because they include information about possible or assumed future results of our business, investment strategies, financial condition, liquidity, results of operations, plans and objectives. Forward-looking statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are difficult to predict and are generally beyond our control.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. You should not place undue reliance on these forward-looking statements. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. These events or factors include but are not limited to those described under the section entitled "Summary Risk Factors" in Part I, Item IA in our Form 10-K and Part II, Item 1A of our Quarterly Report on Form 10-Q. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the U.S. Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Executive Overview
Introduction
Goldman Sachs Real Estate Finance Trust Inc is a newly organized perpetual life, net asset value ("NAV")-based real estate investment trust ("REIT") formed on March 8, 2024, as a Maryland corporation to originate, acquire and manage a portfolio of commercial real estate loans secured by high-quality assets located in North America (primarily in the United States). The investment objective is to generate current income and attractive risk-adjusted returns by originating senior secured, floating-rate loans, and, to a lesser extent, B Notes and mezzanine loans (collectively, "junior loans"), collateralized by real property or ownership interests in real property (collectively "Credit Investments"). Our Credit Investments are expected to be diversified across property type and geography, with a focus on multifamily, industrial, student housing, seniors housing, hospitality, retail and other major sectors located in gateway and growth markets. We expect to generate current cash flow by financing real estate assets or portfolios in moderate transition.
We are externally managed by Goldman Sachs & Co. LLC (the "Adviser"). The Adviser is also a registered broker-dealer and acts as the Placement Agent for our private offering. The Adviser is a registered investment adviser under the Investment Advisers Act of 1940, as amended, with personnel responsible for acting on its behalf as a registered investment adviser.
We intend to elect to be taxed and to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2025. As a REIT, we generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT.
We satisfied the minimum offering amount and broke escrow in our continuous private offering on January 6, 2025("Escrow Break").
Factors Impacting Our Operating Results
Our operating results can be affected by a number of factors and depend on loan origination activity, interest earned on the commercial real estate loan investments held in the portfolio, interest paid on the borrowing facilities of the portfolio and changes in the fair market value of our commercial real estate loan investments and real estate-related securities. Our net interest income varies primarily as a result of the number of loan originations in the period, the timing of entering into new borrowing arrangements, repayments from the borrower of the outstanding principal balance of our commercial real estate loan investments during the period, and changes in benchmark interest rates and market spreads. Market spreads vary according to the type of investment or borrowing, conditions in the financial markets, competition and other factors, none of which can be predicted with any certainty.
We have elected the fair value option for our commercial real estate loan investments and investments in real estate-related securities. The fair market value of our commercial real estate loans can be impacted primarily by changes in credit spread premiums (yield advantage over a benchmark rate) and the supply of, and demand for, assets in which we invest. In determining the fair value of a particular real estate-related security, we use pricing service providers, who may use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models to determine the reported price.
Outlook
During the third quarter of 2025, commercial real estate market fundamentals exhibited sustained improvement, resulting in increased transaction volume and lending activity. With liquidity persisting across real estate credit markets, we continue to observe spread compression and remain actively engaged in navigating the competitive landscape. Tariff volatility has moderated, and transaction volume has regained momentum. We anticipate that rate cuts will drive a further rise in transaction activity, particularly increasing the share of positions in the portfolio where we are financing acquisitions. Robust transaction momentum is expected to increase the demand for credit, thereby creating more opportunities for us to deploy capital at current valuations. While lower base rates could impact the yield from the underlying loans, the reduction in our financing costs, also floating rate, will serve as a buffer to any tightening. Therefore, we believe we are well positioned to continue performing across varying interest rate environments.
Since commencing investment activity, we have capitalized on the opportunity to generate attractive risk-adjusted yields with significant equity cushion from a senior lending position at a fresh mark on value for the real estate collateral. The current portfolio is comprised of senior loans across the multifamily, industrial, hospitality and self-storage sectors with stable underlying cash flows and/or transitional business plans requiring a moderate level of investment for lease-up, renovation or repositioning. The loans in the portfolio are all structured with protections to mitigate potential risks, such as extension tests for various performance hurdles, cash management provisions, and interest rate floors. We are actively monitoring our existing portfolio through robust asset management and sponsor alignment. While macroeconomic trends associated with changing policies may impact the commercial real estate sector, we believe the returns generated from these commercial real estate loans should perform independently from the broader public market.
We are actively evaluating new opportunities to deploy capital for the portfolio while remaining selective and disciplined in our underwriting. For portfolio construction, we continue to have conviction across defensive property types in markets with favorable long-term growth trends to generate durable income and withstand operating pressure. We believe the supply and demand imbalance for real estate credit will continue to create favorable opportunities for alternative lending sources.
Third Quarter 2025 Highlights
Capital Activity
•Declared monthly net distributions totaling $6.7 million.
•Raised $43.5 million of net proceeds from the sale of our common stock through our continuous private offering.
Investments
•Originated five floating rate senior commercial real estate loans collateralized by multifamily and hospitality properties in the United States with a loan commitment amount of $329.3 million and total outstanding principal amount of $323.6 million.
•Purchased $12.4 million in real estate-related securities.
Financing Activities
•Increased the maximum facility size on the existing Wells Fargo Bank master repurchase agreement to $500 million.
•Borrowed $218.4 million from our master repurchase agreements.
Financial Condition
Investment Activities
We commenced investing in commercial real estate loans in January 2025. We elected the fair value option for our commercial real estate loan investments and, accordingly, we recognize any origination costs or fees associated with the loans in the period of origination. Our commercial real estate loan investments earn interest at term Secured Overnight Financing Rate ("SOFR") plus a spread and had a weighted average interest rate of 7.06% as of September 30, 2025.
The following table presents information on our loan portfolio as of September 30, 2025 ($ in thousands):
September 30, 2025 December 31, 2024
Number of investments 17 -
Principal balance outstanding
$
888,527
$
-
Fair value
$
888,527
$
-
Unfunded loan commitments(1)
$
59,276
$
-
Weighted-average interest rate(2)
7.06 % - %
Weighted-average maximum maturity (years)(3)
4.6 -
Weighted average loan to value (LTV)(4)
65 % - %
(1)Unfunded commitments generally consist of funding for leasing costs, interest reserves and capital expenditures. These future commitments will generally be funded over the term of each loan, subject in certain cases to an expiration date.
(2)Represents the weighted average of interest rates that were in-place on each loan as of period end. Loans earn interest at one-month Term SOFR plus a spread.
(3)Assumes all extension options are exercised by the borrower; however, loans may be repaid prior to such date. Extension options are subject to certain conditions as defined in the respective loan agreement.
(4)Weighted average LTV ratio for our loan investments is determined based on the valuations of the collateral securing our commercial real estate loans at origination.
The following charts illustrate the diversification and composition of our loan portfolio based on fair value as of September 30, 2025:
As of September 30, 2025, we had the following investments in commercial real estate loans ($ in thousands):
Property Type Location
Origination Date(1)
Weighted Average Interest Rate(2)
Loan Amount(3)
Principal Balance Outstanding Fair Value
Maximum Maturity Date(4)
Multifamily Nashville, TN 1/10/2025 6.92% $ 33,300 $ 33,300 $ 33,300 2030
Industrial Various, Various 1/10/2025 7.32% 53,808 47,579 47,579 2030
Industrial Riverside, CA 1/15/2025 7.12% 68,493 60,391 60,391 2030
Multifamily Austin, TX 2/7/2025 6.92% 37,500 37,350 37,350 2030
Industrial Las Vegas, NV 2/28/2025 7.02% 31,000 28,388 28,388 2030
Self-storage Los Angeles, CA 4/25/2025 7.97% 55,079 47,883 47,883 2030
Multifamily Charlotte, NC 4/25/2025 6.72% 51,000 50,500 50,500 2030
Multifamily Denver, CO 4/28/2025 6.67% 72,700 72,200 72,200 2030
Industrial Dallas, TX 4/28/2025 7.07% 37,300 29,718 29,718 2030
Industrial Various, NJ 5/16/2025 7.13% 74,341 54,585 54,585 2029
Multifamily Phoenix, AZ 5/22/2025 6.77% 52,500 51,500 51,500 2030
Hospitality Phoenix, AZ 5/30/2025 7.77% 51,500 51,500 51,500 2030
Multifamily Tampa, FL 7/11/2025 6.77% 110,482 105,483 105,483 2030
Multifamily Boston, MA 8/6/2025 6.67% 69,500 69,500 69,500 2030
Multifamily Georgetown, TX 9/12/2025 7.12% 37,000 37,000 37,000 2030
Hospitality Miami, FL 9/26/2025 7.27% 61,000 61,000 61,000 2030
Multifamily Emeryville, CA 9/30/2025 7.42% 51,300 50,650 50,650 2030
Total 7.06% $ 947,803 $ 888,527 $ 888,527
(1)Origination date represents the date the loan investment was initially originated or acquired by us.
(2)Loans earn interest at one-month SOFR plus a spread, based on the rates that were in-place for each loan as of period end.
(3)Loan amounts consist of outstanding principal balance plus unfunded loan commitments for each loan.
(4)Assumes all extension options are exercised by the borrower; however, loans may be repaid prior to such date. Extension options are subject to certain conditions as defined in the respective loan agreement.
Loan Risk Ratings
We evaluate each loan at origination and assign an overall risk rating based on several factors, including but not limited to, credit metrics and volatility, sponsorship, sector type, property condition and performance, and market to determine the overall health of each loan investment in the portfolio ("Loan Risk Rating"). Loans are rated "1" (Very Low Risk), "2" (Low Risk), "3" (Average Risk), "4" (High Risk/Potential for Loss), or "5" (Impaired/Loss likely). We re-evaluate the loan risk ratings on our loan portfolio quarterly and update risk ratings as needed. Loan risk ratings are assessed subjectively and may not accurately reflect the risk associated with our loans or be directly comparable to loan risk ratings assigned by our competitors.
Our loan portfolio had a weighted-average loan risk rating of 2 as of September 30, 2025.
Real Estate-Related Securities, at Fair Value
As of September 30, 2025, our real estate-related securities portfolio consisted of investments in commercial mortgage-backed securities ("CMBS") and residential mortgage-backed securities ("RMBS").
The following table presents information on our real estate-related securities as of September 30, 2025 ($ in thousands):
September 30, 2025
Number of positions 29
Principal balance $ 12,311
Amortized cost $ 12,113
Fair value $ 12,151
Period-end weighted average yield 4.89 %
Weighted average maturity date July 2051
We did not hold real estate-related securities as of December 31, 2024.
Financing and Other Liabilities
We finance the majority of our commercial real estate loan portfolio through repurchase agreements. We have three repurchase agreements that bear interest at one-month term SOFR plus a spread.
The below table presents our repurchase agreements as of September 30, 2025:
Description
Weighted Average Interest Rate(1)
Maturity Date(2)
Maximum Facility Size
Amount Outstanding
Citibank N.A. 5.86% January 2028 $ 750,000 $ 192,156
Wells Fargo Bank
5.69% March 2028 500,000 292,474
Morgan Stanley 5.89% June 2029 450,000 172,625
$ 1,700,000 $ 657,255
(1)Represents the weighted average interest rates that were in-place for each borrowing as of period end. Borrowings under the repurchase agreements carry interest at one-month Term SOFR plus a spread.
(2)Maturity date represents the agreement's initial maturity date and does not include any extension options.
Each of our repurchase agreements contains customary terms and conditions, including but not limited to, negative covenants relating to restrictions on our operations with respect to our status as a REIT, and financial covenants, such as a minimum tangible net worth covenant, cash liquidity covenant and maximum leverage ratio covenant.
As of September 30, 2025, we were in compliance with the covenants of our repurchase agreements.
Results of Operations
We commenced operations in January 2025. Accordingly, our results of operations for the periods presented are not comparable. We expect revenues and expenses to increase during the year ending December 31, 2025 because we will have a year of operations in 2025 and expect to continue making additional investments.
For the three months ended September 30, 2025 and 2024 and the nine months ended September 30, 2025 and the period from March 27, 2024 (date of initial capitalization) through September 30, 2024, our results of operations are shown in the table below ($ in thousands, except per share amounts):
Three Months Ended September 30, Nine Months Ended September 30, 2025 For the Period from March 27, 2024 (date of initial capitalization) through September 30, 2024
2025 2024
Change
Change
Net Interest Income
Commercial real estate loan interest income $ 13,199 $ - $ 13,199 $ 23,699 $ - $ 23,699
Real estate related-securities interest income 195 - 195 195 - 195
Other interest income 1,105 - 1,105 2,428 - 2,428
Interest expense (8,566) - (8,566) (14,187) - (14,187)
Net interest income 5,933 - 5,933 12,135 - 12,135
Loan fee income 3,243 - 3,243 7,129 - 7,129
Net revenues 9,176 - 9,176 19,264 - 19,264
Expenses
Organization costs - - - 2,194 - 2,194
Related party fees 40 - 40 98 - 98
General and administrative 1,278 1 1,277 3,514 1 3,513
Total expenses 1,318 1 1,317 5,806 1 5,805
Other Income (Expense)
Unrealized gain (loss) on commercial real estate loan investments (129) - (129) 1,133 - 1,133
Realized and unrealized gain on real estate-related securities 39 - 39 39 - 39
Total other income (expense) (90) - (90) 1,172 - 1,172
Net income (loss) $ 7,768 $ (1) $ 7,769 $ 14,630 $ (1) $ 14,631
Earnings per share:
Net income (loss) attributable to common stockholders
Basic $ 0.59 $ (1.44) $ 2.03 $ 1.44 $ (1.75) $ 3.19
Diluted $ 0.59 $ (1.44) $ 2.03 $ 1.44 $ (1.75) $ 3.19
Weighted average number of shares of common stock
Basic 13,117,753 400 13,117,353 10,178,461 400 10,178,061
Diluted 13,117,753 400 13,117,353 10,178,461 400 10,178,061
Net interest income
Our net interest income increased as a result of the new loans and securities earning interest during the three and nine months ended September 30, 2025. This was partially offset by interest expense related to the repurchase agreements.
Loan fee income
Loan fee income totaled $3.2 million and $7.1 million for the three and nine months ended September 30, 2025 and consists of loan origination fees earned on loans that were originated during the periods.
Expenses
Our expenses for the three and nine months ended September 30, 2025 totaled $1.3 million and $5.8 million and primarily consist of organization costs and general and administrative expenses.
Our general and administrative expenses for the three and nine months ended September 30, 2025 primarily consist of accounting, auditing, legal and other professional fees.
Our related party fees for the three and nine months ended September 30, 2025 consist of transfer agent fees.
Other income (expense)
For the three and nine months ended September 30, 2025, we recorded approximately $(0.1) million and $1.1 million of unrealized gain (loss) on commercial real estate loan investments related to the acquired Warehoused Investments. For the three and nine months ended September 30, 2025, we recorded $39.0 thousand of realized and unrealized gain (loss) on securities primarily related to the unrealized gain for the real estate-related securities fair value adjustment.
Net income attributable to common stockholders
For the three months ended September 30, 2025, our net income attributable to common stockholders was $7.8 million, or $0.59 basic and diluted net income per weighted-average share available to common stockholders. Net income for the three months ended September 30, 2025 primarily reflected net revenues of $9.2 million (consisting of net interest income of $5.9 million and loan fee income of $3.2 million) and expenses of $1.3 million (primarily general and administrative expenses).
For the nine months ended September 30, 2025, our net income attributable to common stockholders was $14.6 million, or $1.44 basic and diluted net income per weighted-average share available to common stockholders. Net income for the nine months ended September 30, 2025 reflected net revenues of $19.3 million (consisting of net interest income of $12.1 million and loan fee income of $7.1 million), expenses of $5.8 million (primarily organization and general and administrative expenses) and other income of $1.2 million (primarily consisting of unrealized gain on commercial real estate loan investments).
Liquidity and Capital Resources
Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to pay distributions, fund investments, repay borrowings, repurchase shares and fund other general business needs. Our sources of funds for liquidity consist of the net proceeds from our continuous private offering, net cash provided by operating activities, proceeds and available borrowings from repurchase agreements, loan repayments, and future issuances of equity and/or debt securities.
We currently believe that we have sufficient liquidity and capital resources available for the acquisition of additional commercial real estate loans, repayments on borrowings, the payment of dividends as required for continued qualification as a REIT, and to repurchase shares of our common stock under our share repurchase plan. Cash needs for funding commercial real estate loans are funded by our continuous private offering and debt financings, and all other cash needs are generally met from operations. There may be a delay between the sale of our shares and our origination of commercial real estate loan investments or purchase of assets that could result in a delay in the benefits to our stockholders, if any, of returns generated from our investment operations.
Our Adviser has agreed to several support measures. Our Adviser has agreed to advance all organization and offering costs other than upfront selling commissions, placement fees and distribution fees on our behalf through the first anniversary of the date on which we broke escrow for the private offering, January 6, 2025. We will reimburse the Adviser for such agreed upon advanced costs ratably over a 60-month period commencing on the first anniversary of the date on which we break escrow for the private offering. As of September 30, 2025, the Adviser has incurred organization and offering expenses on our behalf of approximately $4.1 million. The Placement Agent currently intends to pay its expenses without reimbursement from us. Our Adviser has agreed to waive its management fee and performance fee for the first nine months commencing on and including the date on which we break escrow in our private offering. Additionally, per the Expense Support and Reimbursement Agreement entered in February 2025, our Advisor may elect to pay certain general and administrative expenses on our behalf ("Expense Support"). Following any calendar month in which certain thresholds are met, we will reimburse the Adviser all of or a portion of the outstanding balance of expense support provided. To the extent not previously reimbursed, all unreimbursed expense support amounts (other than those permanently waived by the Adviser) shall be due and payable on the earlier of January 6, 2030, or the termination of the Expense Support and Reimbursement Agreement.
We held cash and cash equivalents of $102.5 million and restricted cash of $13.8 million as of September 30, 2025. Our cash and cash equivalents change due to normal fluctuations in cash balances related to the timing of principal and interest payments and loan origination and funding activity. Our restricted cash changes based on the volume of new subscriptions for our shares.
The following table presents changes in cash and cash equivalents and restricted cash ($ in thousands):
Nine Months Ended September 30, 2025 For the Period from March 27, 2024 (date of initial capitalization) through September 30, 2024
Cash flows from operating activities
$ 17,110 $ (1)
Cash flows from investing activities
(899,175) -
Cash flows from financing activities
998,286 10
Net change in cash, cash equivalents and restricted cash
$ 116,221 $ 9
Our operating activities provided net cash of $17.1 million for the nine months ended September 30, 2025, primarily due to our net interest income, loan fee income and amounts advanced by our Adviser under our advisory agreement.
Our investing activities used net cash of $899.2 million for the nine months ended September 30, 2025, primarily due to originating and acquiring commercial real estate loan investments and real estate-related securities during the period.
Our financing activities provided net cash of $998.3 million for the nine months ended September 30, 2025. During the nine months ended September 30, 2025, we received net proceeds from the issuance of common stock in the Offering of $313.4 million, $25.0 million from the Goldman Sachs Investment and net proceeds from our repurchase agreements of $657.3 million. We also received net proceeds of $13.8 million from investor subscriptions in the Offering paid in advance.
We intend to elect to be taxed and to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Code commencing with our taxable year ending December 31, 2025. Under the Code, to qualify as a REIT, we must distribute at least 90% of our taxable income subject to certain adjustments and excluding capital gain. However, to the extent that a REIT satisfies this distribution requirement but distributes less than 100% of its taxable income, the REIT may be subject to federal and certain state income taxes on its undistributed taxable income. To maintain our REIT status, we must meet certain tests, for example the nature of its income, assets and organization. REITs are subject to a number of other organizational and operational requirements under the Code. If we failed to qualify as a REIT, we would be subject to certain federal income taxes at regular corporate rates and would not be able to qualify as a REIT for four subsequent taxable years.
We generally intend to fund our cash needs for items other than our investments from operations. Our cash needs for investments will be funded primarily from the sale of shares of our common stock and through the assumption or incurrence of debt. Financing a portion of our assets will allow us to broaden our portfolio by increasing the funds available for investment. We may leverage our portfolio by assuming or incurring secured or unsecured investment-level or entity-level debt. We may seek to obtain lines of credit under which we would reserve borrowing capacity. Borrowings under lines of credit may be used not only to repurchase shares, but also to fund debt investments or for any other corporate purpose.
Our primary sources of liquidity include available borrowings under our repurchase agreements and cash and cash equivalents. As of September 30, 2025, we had $102.5 million of cash and cash equivalents. We also had $5.0 million of available borrowings under our repurchase agreements based on existing collateral and $46.2 million of additional capacity related to unfunded commitments from our commercial real estate loan investments.
We will use financial leverage to provide additional funds to support our investment activities. This allows us to make more investments than would otherwise be possible, resulting in a broader portfolio and attractive yield. Our target REIT-level leverage ratio will be approximately 60-75%. For purposes of calculating our leverage, we exclude any senior portions of investments that are sold to, or held by, third-party lenders to achieve "structural leverage," where we retain a mezzanine or other subordinate investment that is unencumbered and not otherwise pledged as collateral for borrowed money. We have no limits on the amount of debt we may incur.
Contractual Obligations and Commitments
Commitments and contingencies may arise in the ordinary course of business. As of September 30, 2025, we had unfunded commitments of $59.3 million related to our commercial real estate loan investments. Unfunded commitments generally consist of funding for leasing costs, interest reserves and capital expenditures. Funding depends on timing of lease-up, renovation and capital improvements as well as satisfaction of certain cash flow tests. Therefore, the exact timing and amounts of such future loan fundings are uncertain. We expect to fund our loan commitments over the maximum current maturity of the related loans of 4.6 years.
Critical Accounting Policies and Estimates
The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and requires estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. If conditions change from those expected, it is possible that the judgments and estimates described below could change, which may result in a change in the valuation of our investment portfolio, the valuation of our redeemable common stock, and a change in our net interest income recognition among other effects.
Investments in Loans
We have elected the fair value option for all commercial real estate loan investments we have originated or acquired. Under the fair value option, changes in the fair value will be recognized in our consolidated statements of operations.
The fair value, determined by a third-party appraiser, will be determined by discounting the future contractual cash flows to the present value using a current market interest rate or spread. The market rate is determined through consideration of the interest rates for debt of comparable quality and maturity, and the value of the underlying real estate investment.
Revenue Recognition
Interest income from our commercial real estate loan investments is recognized over the life of each investment using the effective interest method and is recorded on the accrual basis.
Commercial real estate loan investments are placed on non-accrual status when it is probable that principal or interest will not be collected according to contractual terms. Accrued interest generally is reversed when a commercial real estate loan investment is placed on non-accrual status. Interest payments received on non-accrual commercial real estate loan investments may be recognized as income or applied to principal depending upon management's judgment. Non-accrual commercial real estate loan investments are restored to accrual status when past due principal and interest are paid and, in management's judgment, principal and interest payments are likely to remain current.
Recognition of premiums and discounts associated with commercial real estate loan investments that are acquired are deferred and recorded over the term of the investment as an adjustment to interest income. For commercial real estate loans we originate, we recognize the origination fee income and related costs for commercial loans immediately in loan fee income and general and administrative expenses, respectively.
Redeemable Common Stock
We classify common stock held by Goldman Sachs as redeemable common stock because the Goldman Sachs Investment is held by an entity that is considered an affiliate and there is no requirement for the affiliate transaction committee (which is comprised solely of independent directors) or similar governing committee to approve or reject the redemption of the Goldman Sachs interest.
We report redeemable common stock on the consolidated balance sheets at redemption value. Redemption value is determined based on NAV per share as of the period end. Increases or decreases in the value of redeemable common stock will be charged to additional paid-in capital until we have retained earnings.
See Note 2 - Significant Accounting Policies in the consolidated financial statements and notes thereto, appearing elsewhere in this Report on Form 10-Q for additional information concerning our significant accounting policies.
Recent Accounting Standards
See Note 2 - Significant Accounting Policies to our consolidated financial statements included in this Report.
Net Asset Value ("NAV") and NAV Per Share Calculation
For the purposes of calculating a monthly NAV, our board of directors, including a majority of our independent directors, has adopted valuation guidelines that contain a comprehensive set of methodologies to be used by our independent valuation advisors in connection with estimating the values of our assets and liabilities. These guidelines are designed to produce a fair and accurate estimate of the price that would be received for our investments in an arm's-length transaction between a willing buyer and a willing seller in possession of all material information about our investments. Refer to Part II. Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Repurchase of Equity Securities - Net Asset Value Calculation and Valuation Guidelines" in our Annual Report on Form 10-K for further information on the valuation methods used for the purposes of determining the valuations of our assets and liabilities.
To calculate our NAV for the purpose of establishing a purchase and repurchase price for our shares of common stock, we have adopted a model that calculates the fair value of our assets and liabilities in accordance with our valuation guidelines. Because these fair value calculations involve significant professional judgment in the application of both observable and unobservable attributes, the calculated fair value of our assets may differ from their actual realizable value or future fair value. While we believe our NAV calculation methodologies are consistent with standard industry practices, there is no rule or regulation that requires we calculate NAV in a certain way. As a result, other REITs may use different methodologies or assumptions to determine NAV. In addition, NAV is not a measure used under GAAP and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV will differ from GAAP. Stockholders should not consider NAV to be equivalent to stockholders' equity or any other GAAP measure.
Our NAV per share is calculated by an affiliate of CBRE, Inc. ("CBRE"), a third-party firm that provides us with certain administrative and accounting services, as of the last calendar day of each month and is available generally within 15 calendar days after the end of each applicable month. The Adviser is responsible for reviewing and confirming our NAV, and overseeing the process around the calculation of our NAV.
Each month, before taking into consideration accrued dividends or other class-specific accruals, any change in the aggregate NAV (the "Aggregate Fund NAV") of our outstanding shares of each class of common stock at the end of the prior month will be allocated among each class of common stock. This allocation will be based on each class's relative percentage of the previous Aggregate Fund NAV (treating all shares issued on the first calendar day of the month as outstanding as of the date of such previous Aggregate Fund NAV). Changes in our monthly Aggregate Fund NAV include, without limitation, accruals of our net portfolio income, interest expense, unrealized/realized gains and losses on assets, any applicable organization and offering costs and any expense reimbursements. Changes in our monthly Aggregate Fund NAV also include material non-recurring events, such as capital expenditures and material acquisitions and dispositions occurring during the month. Notwithstanding anything herein to the contrary, the Adviser may in its discretion consider material market data and other information that becomes available after the end of the applicable month in valuing our assets and liabilities and calculating our NAV for a particular month. For purposes of calculating our NAV, the organization and offering expenses and general and administrative expenses advanced, waived or paid by the Adviser will not be recognized as expenses or as a component of equity and reflected in our NAV until we pay the Adviser for these costs.
Following the allocation of the changes in our Aggregate Fund NAV as described above, NAV for each class is adjusted for class-specific accruals for distributions, ongoing distribution fees, management fees and performance fees payable to the Adviser to determine the monthly NAV for each class. These accruals are made on a class-specific basis and borne by all holders of the applicable class. These class-specific accruals may differ for each class, even when the NAV per share of each class is the same. We normally expect that the class-specific accruals will result in different amounts of distributions being paid with respect to certain classes of shares. When the NAV per share of our classes are different, then changes to our assets and liabilities that are allocable based on NAV will also be different for each class. Because the purchase price of shares in the primary offering is equal to the transaction price, which generally equals the most recently disclosed monthly NAV per share, plus the upfront selling commissions and placement fees, which are effectively paid by purchasers of shares at the time of purchase, the upfront selling commissions and placement fees have no effect on the NAV of any class.
NAV per share for each class is calculated by dividing such class's NAV at the end of each month by the number of shares outstanding for that class at the end of such month.
The following table presents the components of our NAV as of September 30, 2025 ($ in thousands, except share data):
Components of NAV September 30, 2025
Commercial real estate loan investments, at fair value $ 888,527
Real estate-related securities, at fair value 12,151
Cash and cash equivalents 102,456
Restricted cash 13,773
Other assets 5,493
Repurchase agreements, at fair value (657,255)
Subscriptions received in advance (13,773)
Distributions payable (2,221)
Other liabilities (3,184)
Due to affiliate(1)
(1,621)
Net asset value $ 344,346
Number of outstanding shares(2)
13,734,292
(1)Excludes (i) amounts advanced by the Adviser of $2.2 million for organization costs and $1.9 million for offering costs, and (ii) accrued distribution fees not currently payable to the Dealer Manager of $6.3 million, and (iii) general and administrative costs paid on our behalf by the Adviser pursuant to the Expense Support and Reimbursement Agreement of $0.1 million.
(2)Includes 1,000,000 shares of non-voting common stock held by a Goldman Sachs affiliate that are classified as redeemable common stock under U.S. GAAP.
The following table provides a breakdown of our aggregate NAV and NAV per share by class as of September 30, 2025 ($ in thousands, except share and per share data):
Class S Class I Non-voting Common Stock Class F-I Aggregate NAV
Net asset value $ 86,197 $ 182,965 $ 25,059 $ 50,125 $ 344,346
Number of outstanding shares 3,440,401 7,293,891 1,000,000 2,000,000 13,734,292
NAV Per Share $ 25.05 $ 25.08 $ 25.06 $ 25.06 $ 25.07
Set forth below is the range of the discount rate, the key assumption used in the discounted cash flow methodology, the primary methodology used in the September 30, 2025 valuation of our investments in commercial loans.
Investments
Discount Rate
Commercial Real Estate Loans 6.54% - 7.84%
The investment value sensitivity analysis table presented below shows the estimated impact of a change in market discount rates, up and down 100 basis points, on the fair value of our investments in commercial loans as of September 30, 2025, assuming a static portfolio and constant financing. When evaluating the impact of changes in discount rates, the most likely cash flows are also considered in the analysis, including assumed prepayment dates. The analysis presented assumes that all other factors remain unchanged.
The changes listed below would result in the following effects on our investment values ($ in thousands):
September 30, 2025
Change in Discount Rates Projected Increase (Decrease) in Investment Value Percentage Change in Projected Investment Value
1.00% increase $ (19,479) (2.2) %
1.00% decrease $ - - %
The following table reconciles U.S. GAAP stockholders' equity per our consolidated balance sheets to our NAV ($ in thousands):
September 30, 2025
Stockholders' equity $ 308,783
Adjustments:
Redeemable common stock - related party(1)
25,059
Organization and offering costs advanced by Adviser(2)
4,088
Expense Support provided by Adviser(3)
73
Accrued distribution fees not currently payable(4)
6,343
NAV $ 344,346
(1)We classify common stock held by a Goldman Sachs affiliate as redeemable common stock and include the value of these shares as a component of our NAV. We report our redeemable common stock on our consolidated balance sheets at redemption value. Redemption value is determined based on our net asset value per share as of our balance sheet date.
(2)The Adviser will advance all of our organization and offering costs, other than upfront selling commissions, placement fees and distributions fees, through January 6, 2026, the first anniversary of the date of Escrow Break. We expense organization costs as incurred in our consolidated statements of operations and recorded $1.9 million of our offering costs as a reduction of additional paid-in capital in our consolidated balance sheets as of September 30, 2025. We will reimburse the Adviser for all of our organization and offering costs advanced ratably over the 60 months commencing January 6, 2026. For purposes of calculating our NAV, organization costs and offering costs paid by the Adviser will not be recognized as an expense or a reduction to NAV until we reimburse the Adviser for these costs.
(3)Pursuant to the Expense Support and Reimbursement Agreement, the Adviser may elect to pay certain of our general and administrative expenses on our behalf. These costs include certain general and administrative expenses that are in our U.S. GAAP consolidated financial statements, but will not be recognized as an expense or a reduction of NAV until we reimburse the Adviser for these costs.
(4)We have entered into an agreement with the Placement Agent in connection with our continuous private offering. Under the terms of our agreement, the Placement Agent is entitled to receive distribution fees over time for Class T, Class S, and Class D shares sold in the private offering. As of September 30, 2025, we have accrued distributions fees totaling $6.4 million, of which $60 thousand is currently payable to the Placement Agent. Distribution fees will not be recognized as an expense or a reduction to NAV until we pay these costs.
Distributions
Distributions are authorized at the discretion of our board of directors, in accordance with our earnings, cash flows and general financial condition. Our board of directors' discretion is directed, in substantial part, by its obligation to cause us to comply with the REIT requirements.
We generally intend to distribute substantially all of our taxable income, which does not necessarily equal net income as calculated in accordance with U.S. GAAP, to our stockholders each year to comply with the REIT provisions of the Internal Revenue Code of 1986 (the "Code") and minimize tax liability.
We began declaring monthly distributions in January 2025. The net distribution varies for each class based on the applicable distribution fee, which is deducted from the gross distribution per share and paid to the Placement Agent and paid to the applicable distributor.
The table below presents the net distribution per share for each of our common share classes for the nine months ended September 30, 2025:
Class T Class S Class D Class I Non-voting Common Stock Class F-I Class F-II
January 31, 2025 $ - $ 0.1920 $ - $ 0.2100 $ 0.2100 $ - $ -
February 28, 2025 - 0.1497 - 0.1660 0.1660 - -
March 31, 2025 - 0.1219 - 0.1400 0.1400 0.1400 -
April 30, 2025 - 0.1925 - 0.2100 0.2100 0.2100 -
May 31, 2025 - 0.1719 - 0.1900 0.1900 0.1900 -
June 30, 2025 - 0.1485 - 0.1660 0.1660 0.1660 -
July 31, 2025 - 0.1619 - 0.1800 0.1800 0.1800 -
August 31, 2025 - 0.1619 - 0.1800 0.1800 0.1800 -
September 30, 2025 - 0.1485 - 0.1660 0.1660 0.1660 -
Total $ - $ 1.4488 $ - $ 1.6080 $ 1.6080 $ 1.2320 $ -
The following table presents our distributions paid during the nine months ended September 30, 2025:
Nine Months Ended
September 30, 2025
Amount Percentage
Distributions
Paid in cash $ 8,550 62 %
Reinvested in shares 5,263 38 %
Total distributions $ 13,813 100 %
Source of distributions
Cash flow from operating activities(1)
$ 13,813 100 %
Total sources of distribution $ 13,813 100 %
Net cash provided by operating activities $ 17,110
(1)Cash flow from operating activities is supported by expense support payments from the Adviser pursuant to the Advisory Agreement and the Expense Support Agreement. See Note 11 - Related Party Transactions to our consolidated financial statements included herein for additional information regarding the agreement.
Goldman Sachs Real Estate Finance Trust Inc. published this content on November 13, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 13, 2025 at 18:08 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]