Goldman Sachs Real Estate Finance Trust Inc.

05/14/2026 | Press release | Distributed by Public on 05/14/2026 10:14

Quarterly Report for Quarter Ending MARCH 31, 2026 (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" and in Part I, Item IA in our Form 10-K. 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 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 Asset Management, L.P. (the "Adviser"). 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. Goldman Sachs & Co. LLC, an affiliate of our Adviser and our initial adviser until December 1, 2025, is a registered broker-dealer and acts as the Placement Agent for the private offering (in its capacity as our placement agent, the "Placement Agent").
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 ended 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 the 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. In addition, to the extent we sponsor collateralized loan obligations ("CLO") and retain the junior securities, our operating results will be affected by the performance of the underlying collateral, including default rates, loss severities and prepayment rates, as well as the structural features and payment priorities of the CLO, all of which may cause the value of and cash flows on our retained interests to fluctuate.
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 first quarter of 2026, commercial real estate market fundamentals continued to show signs of stabilization and improvement, contributing to sustained transaction volume and lending activity, despite broader market volatility from geopolitical and technological uncertainty. With liquidity persisting across real estate credit markets, we continue to observe spread compression and remain actively engaged in navigating the competitive landscape. Transaction activity gained momentum as price discovery improved and bid-ask spreads narrowed.
As greater clarity emerges around the path of monetary policy, we expect transaction activity to continue to increase, including a larger share of opportunities where we are financing acquisitions. Robust transaction momentum is expected to drive increased demand for credit, thereby creating more opportunities for us to deploy capital at current valuations. While lower base rates could impact the yield on the underlying loans, the reduction in our financing costs, also floating rate, will serve as a buffer to any tightening. Therefore, we believe the portfolio is 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 a significant equity cushion from a senior lending position at current valuations for the real estate collateral. The current portfolio is comprised primarily of senior loans across the multifamily, industrial, hospitality and self-storage sectors, supported by stable in-place cash flows and/or select transitional business plans requiring a moderate level of investment for lease-up, renovation, or repositioning. All loans in the portfolio are structured with robust downside protections to mitigate potential risks, including performance-based extension tests, cash management provisions, and interest rate floors. We continue to actively monitor the portfolio through in-house asset management and close alignment with sponsors.
Despite increased competition we remain selective and disciplined in our underwriting. From a portfolio construction perspective, we maintain conviction in defensive property types within markets supported by favorable long-term demographic and economic trends to generate durable income and withstand operating pressure. We believe the ongoing supply-demand imbalance in real estate credit will continue to create favorable opportunities for alternative lending providers.
First Quarter 2026 Highlights
Capital Activity
•Declared monthly net distributions totaling $9.3 million for the three months ended March 31, 2026.
•Raised $95 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 industrial properties in the United States with a loan commitment amount of $251 million and total outstanding principal amount of $241 million.
•Purchased $24.2 million in real estate-related securities.
Financing Activities
•Entered into a master repurchase agreement and pledged certain commercial real estate loans as collateral and made net pay downs of $531.4 million across all repurchase agreements.
•Financed a pool of loans and loan participations from our existing loan portfolio through a managed CLO, contributing $1.1 billion of commercial real estate loan investments and collateral into the CLO, issuing $924.0 million of offered notes, plus $53.8 million of notes retained by us.
Financial Condition
Investment Activities
As of March 31, 2026, we originated or acquired commercial real estate loans with a fair value of $1.5 billion. We elected the fair value option for our commercial real estate loan investments and, accordingly, we recognize any origination costs or fees associated with the loans in the period of origination. Our commercial real estate loan investments earn interest at term Secured Overnight Financing Rate ("SOFR") plus a spread and had a weighted average interest rate of 6.36% as of March 31, 2026.
The table below presents certain selected information regarding our loan portfolio ($ in thousands):
March 31, 2026 December 31, 2025
Number of investments 30 25
Principal balance outstanding 1,532,193 1,287,006
Fair value 1,532,193 1,287,006
Unfunded loan commitments(1)
89,079 83,174
Weighted-average interest rate(2)
6.36 % 6.49 %
Weighted-average maximum maturity (years)(3)
4.4 4.6
Weighted average loan to value (LTV)(4)
66 % 66 %
(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)The weighted average LTV for our commercial real estate loan investments is based on the loan principal amount and the independent property appraisals.
The following charts illustrate the diversification and composition of our loan portfolio based on fair value as of March 31, 2026:
As of March 31, 2026, we had the following investments in commercial real estate loan investments ($ 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 6.37% $ 33,300 $ 33,300 $ 33,300 2030
Industrial Various 1/10/2025 6.27% 127,200 114,503 114,503 2031
Industrial Riverside, CA 1/15/2025 6.57% 68,493 61,157 61,157 2030
Multifamily Austin, TX 2/7/2025 6.37% 37,500 37,350 37,350 2030
Industrial Las Vegas, NV 2/28/2025 6.47% 31,000 29,026 29,026 2030
Multifamily Charlotte, NC 4/25/2025 6.17% 51,000 50,500 50,500 2030
Self Storage Los Angeles, CA 4/25/2025 7.42% 55,079 50,313 50,313 2030
Multifamily Denver, CO 4/28/2025 6.12% 72,700 72,200 72,200 2030
Industrial Dallas, TX 4/28/2025 6.52% 37,300 30,742 30,742 2030
Industrial Multi-city, NJ 5/16/2025 6.52% 74,341 54,585 54,585 2029
Multifamily Phoenix, AZ 5/22/2025 6.22% 52,500 51,500 51,500 2030
Hotel Phoenix, AZ 5/30/2025 7.22% 51,500 51,500 51,500 2030
Multifamily Tampa, FL 7/11/2025 6.22% 110,482 105,482 105,482 2030
Multifamily Boston, MA 8/6/2025 6.12% 69,500 69,500 69,500 2030
Multifamily Georgetown, TX 8/28/2025 6.57% 37,000 37,000 37,000 2030
Hotel Miami, FL 9/26/2025 6.72% 61,000 61,000 61,000 2030
Multifamily Emeryville, CA 9/30/2025 6.87% 51,300 50,650 50,650 2030
Multifamily San Francisco, CA 10/21/2025 6.07% 29,125 29,125 29,125 2030
Industrial Buda, TX 10/24/2025 6.82% 40,600 29,447 29,447 2030
Multifamily Austin, TX 11/4/2025 6.12% 48,600 47,621 47,621 2030
Multifamily Houston, TX 11/21/2025 5.97% 43,900 40,000 40,000 2030
Multifamily Houston, TX 12/2/2025 5.97% 38,560 37,500 37,500 2031
Multifamily Dallas, TX 12/12/2025 6.12% 44,600 44,600 44,600 2031
Multifamily Houston, TX 12/15/2025 5.97% 48,600 47,300 47,300 2031
Multifamily Charlotte, NC 12/19/2025 6.07% 55,000 54,837 54,837 2031
Industrial Fort Worth, TX 1/23/2026 6.42% 31,370 28,083 28,083 2031
Industrial Islandia, NY 1/30/2026 6.77% 41,000 35,300 35,300 2031
Multifamily Boone, NC 2/3/2026 6.17% 50,475 50,475 50,475 2031
Multifamily Denver, CO 2/26/2026 6.12% 81,000 80,350 80,350 2031
Multifamily Raleigh, NC 2/26/2026 6.17% 47,247 47,247 47,247 2031
Total
6.36% $ 1,621,272 $ 1,532,193 $ 1,532,193
(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 March 31, 2026.
Real Estate-Related Securities, at Fair Value
As of March 31, 2026, 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 ($ in thousands):
March 31, 2026 December 31, 2025
Number of positions 82 53
Face amount $ 45,853 $ 23,100
Amortized cost $ 45,954 $ 23,021
Fair value $ 45,778 $ 23,095
Period-end weighted average yield 5.11 % 4.97 %
Weighted average maturity date May 2052 June 2052
Financing and Other Liabilities
We finance the majority of our commercial real estate loan portfolio through collateralized loan obligations and repurchase agreements. We have four repurchase agreements that bear interest at one-month term SOFR plus a spread. The below table summarizes our repurchase agreements as of March 31, 2026 ($ in thousands):
Description
Weighted Average Interest Rate(1)
Maturity Date(2)
Maximum Facility Size
Amount Outstanding
Citibank N.A. 5.30% January 2028 $ 750,000 $ 208,866
Wells Fargo Bank 5.16% March 2028 500,000 139,679
Banco Santander 5.02% March 2029 500,000 32,106
Morgan Stanley 5.14% June 2029 750,000 49,027
$ 2,500,000 $ 429,678
(1)Represents the weighted average interest rate of the most recent interest period in effect for each borrowing as of period end. Borrowings under the repurchase agreements bear interest at one-month term SOFR plus a spread.
(2)Maturity date 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 designed to ensure adequate liquidity, limit balance sheet leverage, and maintain a meaningful equity base over time. These agreements require that at a minimum we maintain a minimum level of unrestricted cash and/or liquid assets at all times equal to the greater of $10.0 million and 5% of our recourse indebtedness, total liabilities may not exceed 4.0x total assets, and we must maintain a tangible net worth of at least 75% of net proceeds from our equity raises (after accounting for any redemptions).
As of March 31, 2026, we were in compliance with the covenants of our repurchase agreements.
The table below summarizes our collateralized loan obligations as of March 31, 2026 ($ in thousands):
CLO Name
Weighted Average Interest Rate(1)
Par Value Outstanding(2)
Number of Loans in Pool
Principal Balance of Collateral(3)
Maturity Date
2026-FL1
5.53 % $ 924,000 22 $ 983,000 October 2043
(1) Represents the weighted average interest rate in effect as of March 31, 2026.
(2) Excludes $53.8 million of CLO notes retained by us, which are eliminated in consolidation.
(3) Excludes Delayed Closing Collateral Interest of $67.0 million. In April 2026, the Delayed Close Collateral Interest was fully utilized.
Results of Operations
For the three months ended March 31, 2026 and 2025 our results of operations consisted of ($ in thousands, except per share amount):
Three Months Ended March 31,
2026 2025 Change
Net Interest Income
Commercial real estate loan interest income $ 22,712 $ 2,827 $ 19,885
Real estate-related securities interest income 395 - 395
Other interest income 701 229 472
Interest expense (15,012) (968) (14,044)
Net interest income 8,796 2,088 6,708
Loan fee income 2,511 685 1,826
Net revenues 11,307 2,773 8,534
Expenses
Organization costs - 2,194 (2,194)
Related-party fees 2,204 26 2,178
General and administrative 1,289 1,153 136
Total expenses 3,493 3,373 120
Other Income
Unrealized gain (loss) on commercial real estate loan investments (144) 1,388 (1,532)
Realized and unrealized gain (loss) on real estate-related securities (261) - (261)
Total other income, net (405) 1,388 (1,793)
Net income $ 7,409 $ 788 $ 6,621
Earnings per share:
Net income attributable to common stockholders
Basic $ 0.40 $ 0.12 $ 0.28
Diluted $ 0.40 $ 0.12 $ 0.28
Weighted average number of shares of common stock
Basic 18,500,025 6,657,557 11,842,468
Diluted 18,500,025 6,657,557 11,842,468
Net interest income
Net interest income increased as a result of thirty commercial real estate loans earning interest during the three months ended March 31, 2026 compared to five commercial real estate loans earning interest during the three months ended March 31, 2025. This was partially offset by interest expense related to the repurchase facilities.
Loan fee income
Loan fee income increased as a result of an increase in the number of commercial real estate loans originated during the period. During the three months ended March 31, 2026, we originated five commercial real estate loans compared to two loans originated during the three months ended March 31, 2025.
Expenses
Expenses increased during the three months ended March 31, 2026 primarily due to the increase in related-party fees offset by the decrease in organization costs.
Related-party fees primarily consist of management fees, performance fees and transfer agent fees. The management and performance fee was waived for all classes of our common stock outstanding through October 6, 2025, the first nine months from escrow break in the Offering.
Other income, net
Other income decreased as a result of unrealized and realized losses on the real estate-related securities and unrealized losses on commercial real estate loan investments compared to unrealized gains on commercial real estate loan investments. As discussed in Note 11 - Related Party Transactions of the consolidated financial statements, three Warehoused Investments were acquired from Goldman Sachs during the three months ended March 31, 2025 at the aggregate cost basis of $138.2 million and corresponding fair value of $139.6 million.
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, collateralized loan obligations, 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 items other than funding commercial real estate loans are generally met from operations, and cash needs are funded by our continuous private offering and debt financings. However, 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.
We expect to generate cash primarily from (i) the net proceeds of our private offering, (ii) cash flows from our operations, and (iii) any financing arrangements we may enter.
Our Adviser agreed to several support measures. Our Adviser advanced all organization and offering costs other than upfront selling commissions, placement fees and distribution fees on our behalf through January 6, 2026, the first anniversary of the date on which we broke escrow for the private offering. We will reimburse the Adviser for such advanced costs ratably over a 60-month period commencing on the first anniversary of the date on which we broke escrow for the private offering. The Adviser has incurred organization and offering expenses on our behalf of which $3.7 million is payable as of March 31, 2026. The Placement Agent currently intends to pay its expenses without reimbursement from us. Our Adviser waived its management fee and performance fee for the first nine months commencing on and including the date on which we broke escrow in our private offering. Additionally, per the Expense Support and Reimbursement Agreement entered in February 2025, our Adviser may elect to pay certain of our general and administrative expenses on our behalf. 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 $217.8 million and restricted cash of $18.0 million as of March 31, 2026. Our cash and cash equivalents change due to normal fluctuations in cash balances related to the timing of principal and interest payments and loan origination and funding activity. Our restricted cash changes based on the volume of new subscriptions for our shares.
The following table presents changes in cash and cash equivalents and restricted cash ($ in thousands):
Three Months Ended March 31,
2026 2025
Cash flows from operating activities
$ 4,684 $ 2,189
Cash flows from investing activities
(267,923) (202,138)
Cash flows from financing activities
412,739 297,964
Net change in cash, cash equivalents and restricted cash
$ 149,500 $ 98,015
Cash flows provided by our operating activities increased $2.5 million during the three months ended March 31, 2026, compared to the corresponding period in 2025 primarily driven by the increase in net interest income resulting from an additional 25 commercial real estate loans.
Cash flows used in our investing activities increased $65.8 million during the three months ended March 31, 2026, compared to the corresponding period in 2025 primarily driven by an increase in the principal balance of loans originated and additional investments in real estate-related securities.
Cash flows provided by our financing activities increased $114.8 million for the three months ended March 31, 2026, compared to the corresponding period in 2025 primarily driven by proceeds from the issuance of our CLO net with net pay downs of our repurchase facilities.
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 March 31, 2026, we had $217.8 million of cash and cash equivalents. We may also have additional available borrowings under our repurchase agreements based on existing collateral or additional capacity related to unfunded commitments from our commercial real estate loan investments.
Amounts available under these sources as of March 31, 2026 and December 31, 2025 are summarized in the following table ($ in thousands):
March 31, 2026 December 31, 2025
Cash and cash equivalents $ 217,754 $ 72,169
Available borrowings under master repurchase agreements 2,070,322 1,038,893
$ 2,288,076 $ 1,111,062
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 60-80%. 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.
The CLO includes a reinvestment period until September 2028 (plus up to 60 days thereafter to the extent necessary to acquire reinvestment collateral interests pursuant to binding commitments entered into during the reinvestment period) during which we may acquire additional collateral interests meeting certain eligibility criteria.
Contractual Obligations and Commitments
Commitments and contingencies may arise in the ordinary course of business. As of March 31, 2026, we had unfunded commitments of $89.1 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 4.4 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 our 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.
Non-GAAP Financial Measures
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 March 31, 2026 and December 31, 2025 ($ in thousands, except share data):
Components of NAV March 31, 2026 December 31, 2025
Commercial real estate loan investments, at fair value $ 1,532,193 $ 1,287,006
Real estate-related securities, at fair value 45,778 23,095
Cash and cash equivalents 217,754 72,169
Restricted cash 17,969 14,054
Other assets 78,177 6,383
Repurchase agreements, at fair value (429,678) (961,107)
Collateralized loan obligations, net (917,886) -
Subscriptions received in advance (17,969) (14,054)
Distributions payable (3,414) (2,853)
Other liabilities (3,317) (3,674)
Redemptions payable (8,929) -
Due to affiliates(1)
(2,721) (2,227)
Net asset value $ 507,957 $ 418,792
Number of outstanding shares(2)
20,339,813 16,705,647
(1)Excludes (i) amounts advanced by the Adviser of $1.9 million for organization costs and $1.8 million for offering costs, and (ii) accrued distribution fees not currently payable to the Placement Agent of $8.0 million, and (iii) general and administrative costs paid on our behalf by the Adviser pursuant to the Expense Support and Reimbursement Agreement of $0.4 million.
(2)Includes 1,000,000 shares of Class NV-1 common stock held by a Goldman Sachs affiliate that are classified as redeemable common stock under U.S. GAAP.
The following table provides a breakdown of our aggregate NAV and NAV per share by class as of March 31, 2026 ($ in thousands, except share and per share data):
Class S Class I Class NV-1 Class NV-2 Class F-I Class F-II Aggregate NAV
Net asset value $ 111,316 $ 221,197 $ 24,968 $ 50,659 $ 49,944 $ 49,872 $ 507,956
Number of outstanding shares 4,459,012 8,854,949 1,000,000 2,029,047 2,000,000 1,996,805 20,339,813
NAV Per Share $ 24.96 $ 24.98 $ 24.97 $ 24.97 $ 24.97 $ 24.98 $ 24.97
The following table reconciles U.S. GAAP stockholders' equity per our consolidated balance sheets to our NAV ($ in thousands):
March 31, 2026 December 31, 2025
Stockholders' equity $ 470,777 $ 382,539
Adjustments:
Redeemable common stock - related party(1)
25,000 25,068
Organization and offering costs advanced by Adviser(2)
3,749 3,944
General and administrative expenses advanced by Adviser(3)
414 -
Accrued distribution fees not currently payable(4)
8,017 7,241
NAV $ 507,957 $ 418,792
(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 period end.
(2)The Adviser advanced 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 expensed organization costs as incurred in our consolidated statements of operations and recorded our offering costs as a reduction of additional paid-in capital in our consolidated balance sheets. We began to reimburse the Adviser for such agreed upon advanced costs ratably over a 60-month period commencing on January 6, 2026. For purposes of calculating our NAV, organization costs and offering costs paid by the Adviser are not 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. Following any calendar month in which distributable earnings for such calendar month exceed the distributions accrued to our common stockholders based on distributions declared with respect to record dates occurring in such calendar month (the amount of such excess being hereinafter referred to as "Available Operating Funds"), we will pay such Available Operating Funds, or a portion thereof, to the Adviser until such time as all payments made by the Adviser on our behalf have been reimbursed.
(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 March 31, 2026, we have accrued distributions fees totaling $8.1 million, of which $0.1 million is currently payable to the Placement Agent.
Set forth below is the range of the discount rate, the key assumption used in the discounted cash flow methodology, the primary methodology used in the March 31, 2026 valuation of our investments in commercial loans.
Investments
Discount Rate
Commercial Real Estate Loans 5.97% - 7.32%
The investment value sensitivity analysis table presented below shows the estimated impact of a change in market discount rates, up and down 100 basis points, on the fair value of our investments in commercial loans as of March 31, 2026, assuming a static portfolio and constant financing. When evaluating the impact of changes in discount rates, the most likely cash flows are also considered in the analysis, including assumed prepayment dates. The analysis presented assumes that all other factors remain unchanged.
The changes listed below would result in the following effects on our investment values ($ in thousands):
March 31, 2026
Change in Discount Rates Projected Increase (Decrease) in Investment Value Percentage Change in Projected Investment Value
1.00% increase $ (30,239) (1.97) %
1.00% decrease $ - - %
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 any applicable distribution fee (which is paid to the applicable distributor), management fee and performance fee, each of which is deducted on a class basis from the gross distribution per share.
The table below details the net distribution per share for each of our common share classes for the three months ended March 31, 2026:
Class T Class S Class D Class I Class NV-1
Class NV-II
Class F-I Class F-II
January 31, 2026 $ - $ 0.1479 $ - $ 0.1660 $ 0.1660 $ - $ 0.2118 $ 0.1850
February 28, 2026 - 0.1497 - 0.1660 0.1660 - 0.2152 0.1910
March 31, 2026 - 0.1479 - 0.1660 0.1660 0.1675 0.2077 0.1810
Total $ - $ 0.4455 $ - $ 0.4980 $ 0.4980 $ 0.1675 $ 0.6347 $ 0.5570
The following table summarizes our distributions paid during the three months ended March 31, 2026 and the year ended December 31, 2025 ($ in thousands):
Three Months Ended
Year Ended
March 31, 2026 December 31, 2025
Amount
Percentage
Amount Percentage
Distributions
Paid in cash $ 5,211 59 % $ 12,572 60 %
Reinvested in shares 3,558 41 % 8,335 40 %
Total distributions $ 8,769 100 % $ 20,907 100 %
Source of distributions
Cash flow from operating activities(1)
$ 8,769 100 % $ 20,907 100 %
Total sources of distribution $ 8,769 100 % $ 20,907 100 %
Net cash provided by operating activities $ 4,684 $ 25,677
(1)As of March 31, 2026, our inception to date cash flows from operating activities have funded 100% of our distributions. Cash flow from operating activities is supported by expense 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 agreements.
Goldman Sachs Real Estate Finance Trust Inc. published this content on May 14, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 14, 2026 at 16:14 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]