Invesco Real Estate Income Trust Inc.
11/13/2026 | Press release | Distributed by Public on 11/13/2026 12:31
Quarterly Report for Quarter Ending SEPTEMBER 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this quarterly report on Form 10-Q, or this "Quarterly Report," we refer to Invesco Real Estate Income Trust Inc. and its consolidated subsidiaries as "we," "us," "our Company," or "our," unless we specifically state otherwise or the context indicates otherwise. We refer to our external manager, Invesco Advisers, Inc., as our "Adviser," and we refer to the indirect parent company of our Adviser, Invesco Ltd. together with its consolidated subsidiaries (which does not include us), as "Invesco."
The following discussion should be read in conjunction with our condensed consolidated financial statements and the accompanying notes to our condensed consolidated financial statements, which are included in Item 1 of this Quarterly Report, 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 may include statements that constitute "forward-looking statements" within the meaning of the United States securities laws and the Private Securities Litigation Reform Act of 1995, and such statements are intended to be covered by the safe harbor provided by the same. These forward-looking statements may include statements about possible or assumed future results of our business, investment strategies, financial condition, liquidity, results of operations, distributions, repurchases, plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "intend," "project," "forecast" or similar expressions and future or conditional verbs such as "will," "may," "could," "should," and "would," and any other statement that necessarily depends on future events, we intend to identify forward-looking statements, although not all forward-looking statements may contain such words.
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. We caution you not to rely unduly on any forward-looking statements and urge you to carefully consider the factors described under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. 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.
Overview
We are a Maryland corporation formed in October 2018. We invest primarily in stabilized, income-oriented commercial real estate in the United States. To a lesser extent, we also originate and acquire private real estate credit and invest in real estate-related securities. We own, and expect to continue to own, all or substantially all of our assets through Invesco REIT Operating Partnership L.P. ("INREIT OP" or "Operating Partnership"), of which we are the sole general partner.
We are externally managed and advised by our Adviser, a registered investment adviser and an indirect, wholly-owned subsidiary of Invesco Ltd., an independent global investment management firm. Our Adviser utilizes the personnel and global resources of Invesco Real Estate, the real estate investment center of Invesco, to provide investment management services to us. We qualified to be treated as a real estate investment trust ("REIT") for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2020. To maintain our REIT qualification, we must meet a number of organizational and operational requirements, including that we are generally required to distribute at least 90% of our REIT taxable income to our stockholders annually. 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 (determined without regard to our net capital gain and dividends-paid deduction) to stockholders and maintain our qualification as a REIT. We operate our business in a manner that permits our exclusion from the definition of "Investment Company" under the Investment Company Act of 1940, as amended (the "Investment Company Act").
As of September 30, 2026, we own or have invested in 71 properties. See "Investment Portfolio-Real Estate" below for additional information on these investments. As of September 30, 2026, we also own real estate-related securities, have investments in commercial loans and have invested in an affiliated fund which invests primarily in mortgage loans that are collateralized by commercial and residential real estate throughout the United States.
Public Offering
In May 2021, we commenced our initial public offering of up to $3.0 billion in shares of common stock. In November 2024, our initial public offering terminated, and we commenced our follow-on public offering of up to $3.0 billion of shares of common stock, consisting of up to $2.4 billion in shares of common stock in our primary offering and up to $600.0 million in shares of common stock under our distribution reinvestment plan (collectively, the "Public Offering"). We are offering to sell any combination of five classes of shares of our common stock, Class T shares, Class S shares, Class D shares, Class I shares and Class E shares in the Public Offering, with a dollar value up to the maximum offering amount. The share classes have different upfront selling commissions and dealer manager fees and different ongoing stockholder servicing fees. The purchase price per share for each class of our common stock sold in the Public Offering will vary and will generally equal our prior month's net asset value ("NAV") per share for such class, as determined monthly, plus any applicable upfront selling commissions and dealer manager fees. We intend to continue selling shares in our follow-on public offering on a monthly basis. As of September 30, 2026, we have received aggregate gross proceeds of $251.3 million from the Public Offering.
Private Offerings
In addition to the Public Offering, we are conducting multiple private offerings of our common stock (the "Private Offerings"). As of September 30, 2026, we have received gross proceeds of $645.1 million in the Private Offerings.
In August 2022, our board of directors authorized management to initiate, through the Operating Partnership, a program (the "DST Program") to issue and sell up to a maximum aggregate offering amount of $3.0 billion of beneficial interests ("Interests") in specific Delaware statutory trusts (the "DSTs") holding real properties (the "DST Properties"). These Interests will be issued and sold to "accredited investors," as that term is defined under Regulation D promulgated by the SEC under the Securities Act of 1933, as amended (the "Securities Act") in private placements exempt from registration pursuant to Section 4(a)(2) of the Securities Act (the "DST Offerings"). Under the DST Program, each DST Property may be sourced from our real properties or from third parties, will be held in a separate DST, and will be leased back by a wholly-owned subsidiary of the Operating Partnership in accordance with a master lease agreement. Each master lease agreement is guaranteed by the Operating Partnership, which has a fair market value purchase option (the "FMV Option") giving it the right, but not the obligation, to acquire the interests in the applicable DST from the investors any time after two years from the closing of the applicable DST offering in exchange for units of the Operating Partnership ("OP Units") or cash. After a one-year holding period, investors who acquire OP Units under the FMV Option generally have the right to cause the Operating Partnership to redeem all or a portion of their OP Units for, at our sole discretion, shares of our common stock, cash, or a combination of both.
The DST Program gives us the opportunity to expand and diversify our capital-raising strategies by offering what we believe to be an attractive investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986 (the "Code"), as amended. Certain affiliates of the Adviser receive fees in connection with the sale of the Interests and the management of the DSTs. We intend to use the net offering proceeds from the DST Program to make investments in accordance with our investment strategy and policies, reduce our borrowings, repay indebtedness, fund the repurchase of shares of all classes of our common stock under our share repurchase plan and for other corporate purposes. We commenced our DST Program in February 2023. As of September 30, 2026, we have raised $371.4 million net proceeds from our DST Program.
Factors Affecting Operating Results
Our results of operations are affected by a number of factors and depend on the rental income generated by the properties that we acquire or lend on, the timing of lease expirations, operating expenses, income or loss from unconsolidated entities, general market conditions and the competitive environment for real estate assets. Of these factors, evolving macroeconomic and geopolitical landscapes, interest rates, transaction activity, and leasing strength across parts of the portfolio had the most direct impacts on our performance and financial condition during the past several quarters.
Market Conditions
Our business is affected by conditions in the financial markets and economic conditions in the United States and, to a lesser extent, elsewhere in the world. Inflation, labor-market conditions, and economic trend data may influence the future path of interest rates. Financial and economic conditions may also be affected by geopolitical conflicts, changes in U.S. trade policy, and other developments that may impact capital markets, supply chains, or economic activity. Borrowing costs have risen since reaching recent lows in Q1 2026 and may affect transaction activity, valuations, and required growth within investor underwriting. Our investment decisions today are further colored by a divergence in sector fundamentals, impacts of changes to U.S. trade policies and the resulting effects on both near-term and long-term consumer demand. Our real estate portfolio is comprised of tangible, income-generating assets, the cash flows of which are less directly impacted by fluctuations in public markets. Changes to U.S. trade policies may cause construction costs to increase, which makes owning existing real estate below replacement cost attractive and a defensive place for capital preservation. These dynamics could create attractive entry points and investment opportunities as the market moves through an inflection point, further emphasizing the importance of disciplined, investment-level execution to generate outperformance.
Rental Property Operating Results
We generate rental property income from the properties that we acquire. The amount of rental revenue depends upon a number of factors, including our ability to enter into leases with above- or at-market value rents and rent collection, which is determined primarily by each current and future tenant's financial condition and ability to make rent payments to us on time. Rental property operating expenses include real estate taxes, property insurance, repairs and maintenance, property management fees, utilities and other costs associated with owning real estate.
Our investments are diversified across real estate sectors, including industrial, healthcare, multifamily, retail, self-storage, office, and manufactured housing, as well as private real estate credit. With our pipeline of new investments, available liquidity and low leverage, we believe we are well positioned to access private real estate as the market emerges from an inflection point. While market volatility and certain fundamental factors have affected and may continue to affect the commercial real estate market and our performance, we believe there are positive long-term fundamentals within our portfolio and benefits from our recent portfolio repositioning. In addition, we believe that demand will continue for Section 1031 investment products, supporting our DST Program.
Q3 2026 Highlights
Operating Results
•We declared monthly net distributions totaling $10.0 million for the three months ended September 30, 2026. The details of the average annualized distribution rates and total returns are shown in the following table:
| Class T | Class S | Class D | Class I | Class E | Class N | Class S-PR | Class K-PR | |||||||||||||||||||||||||||||||||||||||||||
|
Average Annualized Distribution Rate(1)
|
5.5% | 5.5% | 6.1% | 6.3% | 5.8% | 5.9% | 5.9 | % | 6.1 | % | ||||||||||||||||||||||||||||||||||||||||
|
Year-to-Date Total Return, without upfront selling commissions(2)
|
4.4% | 4.0% | 4.8% | 5.0% | 5.8% | 5.5% | 4.4 | % | 4.5 | % | ||||||||||||||||||||||||||||||||||||||||
|
Year-to-Date Total Return, assuming maximum upfront selling commissions(2)
|
0.7% | 0.4% | 3.3% | 5.0% | 5.8% | 5.5% | 0.7 | % | 4.5 | % | ||||||||||||||||||||||||||||||||||||||||
|
Inception-to-Date Total Return, without upfront selling commissions(2)(3)
|
4.5% | 4.5% | 4.8% | 5.1% | 6.4% | 7.7% | 6.2 | % | 6.3 | % | ||||||||||||||||||||||||||||||||||||||||
|
Inception-to-Date Total Return, assuming maximum upfront selling commissions(2)(3)
|
3.8% | 3.8% | 4.5% | 5.1% | 6.4% | 7.7% | 3.2 | % | 6.3 | % | ||||||||||||||||||||||||||||||||||||||||
(1)The annualized distribution rate is calculated as the current month's distribution annualized and divided by the prior month's NAV, which is inclusive of all fees and expenses. The percent shown is the average annualized distribution rate for the three months ended September 30, 2026.
(2)Total return is calculated as the change in NAV per share during the respective periods plus any distributions per share declared in the period and assumes any distributions are reinvested in accordance with our distribution reinvestment plan. Returns for periods longer than one year are annualized.
(3)The inception date was June 1, 2021 for Class T, S and D shares; May 21, 2021 for Class I shares; May 14, 2021 for Class E shares; September 28, 2020 for Class N shares and June 30, 2025 for Class S-PR and K-PR shares.
Capital Activity
•During the three months ended September 30, 2026, we raised $10.5 million of net proceeds from the sale of our common stock and $77.5 million of net proceeds from the DST Program.
Investments
•We purchased $17.7 million and sold $2.5 million in real estate-related securities bringing our total investment in real estate-related securities to $41.9 million.
•We purchased an 85% occupied, 626-unit storage facility located in La Habra, California, for a purchase price of $15.6 million inclusive of acquisition-related costs.
•We purchased a 100% leased retail property in the Raleigh, North Carolina Metropolitan Statistical Area for a purchase price of $85.9 million inclusive of acquisition-related costs.
•We invested $0.3 million to form West Spring Healthcare Properties, LLC, a real estate operating company focused on the acquisition and asset management of medical office buildings.
•We acquired an additional 7.5% indirect interest in the Sunbelt Medical Office Portfolio for $15.0 million.
Investment Portfolio
Summary of Portfolio
The following chart summarizes the allocation of our investment portfolio based on gross asset value as of September 30, 2026:
Investment Allocation (1)
The following charts describe the diversification of our investments in real estate based on gross asset value as of September 30, 2026:
Property Type (2)
Geography (3)
(1)Investment allocation is measured as the gross asset value of each investment category (real estate property investments, private real estate credit, real estate-related securities or cash) against the gross asset value of all investment categories, excluding the value of any third-party interests in such real estate property investments. Prior to June 1, 2026, the private real estate credit allocation was measured net of the value of the secured lending agreement. Real estate property investments include our direct property investments, unconsolidated investments and our interest in retail properties through our interest in ITP Investments LLC. See "-Real Estate" below for additional information on these investments. Totals may not sum to 100% due to rounding.
(2)Property Type weighting is measured as the asset value of real estate investments for each sector category (Healthcare, Industrial, Office, Multifamily, Retail, Self-Storage, Student Housing, Other) against the total asset value of all real estate investments, excluding the value of any third-party interests in such real estate investments. The Other segment includes non-controlling interests in retail properties through our interest in ITP Investments LLC and our investments in manufactured housing communities. Totals may not sum to 100% due to rounding.
(3)Geography weighting excludes the asset value of any investments in private real estate credit, real estate-related securities or cash and is measured as the asset value of direct real estate properties and unconsolidated investments for each geographical category (East, Midwest, South, West) against the total asset value of all real estate property investments. Totals may not sum to 100% due to rounding.
As of September 30, 2026, we owned interests in 71 properties, which we acquired for a total purchase price of $1.2 billion, inclusive of closing costs. Our diversified portfolio of income producing assets consists of healthcare, office, industrial, self-storage, multifamily, student housing and retail properties, as well as private real estate credit investments, concentrated in growth markets across the United States.
The following table provides a summary of our real estate portfolio as of September 30, 2026:
| Segment |
Number of Properties |
Sq. Feet / Units /Beds |
Occupancy Rate |
Gross Asset
Value
($ in thousands)(1)
|
Segment
Revenue
($ in thousands)(2)
|
Percentage of Total Segment Revenue |
||||||||||||||||||||||||||||||||
| Industrial | 15 | 2,607,344 sq. ft. | 99% | $ | 338,223 | $ | 19,385 | 22% | ||||||||||||||||||||||||||||||
| Healthcare | 20 | 1,030,397 sq. ft. | 94% | 204,082 | 4,934 | 6% | ||||||||||||||||||||||||||||||||
| Multifamily | 3 | 739 units | 94% | 168,672 | 15,018 | 17% | ||||||||||||||||||||||||||||||||
| Retail | 2 | 461,723 sq. ft. | 100% | 146,704 | 4,734 | 5% | ||||||||||||||||||||||||||||||||
| Self-Storage | 9 | 527,915 sq. ft. | 85% | 98,803 | 5,534 | 6% | ||||||||||||||||||||||||||||||||
| Office | 2 | 181,517 sq. ft. | 99% | 88,416 | 6,600 | 7% | ||||||||||||||||||||||||||||||||
| Student Housing | 1 | 833 beds | 74% | 81,375 | 9,684 | 11% | ||||||||||||||||||||||||||||||||
|
Other(3)
|
19 | 4,926,147 sq. ft. / 383 lots | 93% | 103,390 | 7,480 | 8% | ||||||||||||||||||||||||||||||||
| Total | 71 | $ | 1,229,665 | $ | 73,369 | 82% | ||||||||||||||||||||||||||||||||
(1)Based on fair value as of September 30, 2026. Gross Asset Value consists of $967.8 million of our allocable share of consolidated real estate properties and $261.9 million of our allocable share of the gross real estate value held by unconsolidated entities, in each case excluding the value of any third-party interests in such real estate investments. See "-Real Estate" below for additional information on these investments.
(2)Segment revenue is presented for the nine months ended September 30, 2026. Healthcare and Other segment revenue includes income from unconsolidated entities.
(3)The full amount of the Other segment is comprised of non-controlling interests we own in retail properties through our interest in ITP Investments LLC and our investments in manufactured housing communities. See "-Real Estate" below for additional information on these investments.
The following table provides a summary of our private real estate credit as of September 30, 2026:
| Segment |
Number of Instruments |
Fair
Value
($ in thousands)(1)
|
Segment
Revenue
($ in thousands)(2)
|
Percentage of Total Segment Revenue |
||||||||||||||||||||||
| Private Real Estate Credit | 4 | $ | 231,364 | $ | 13,515 | 15% | ||||||||||||||||||||
(1)Based on fair value as of September 30, 2026. The Fair Value includes investments in commercial mortgages, the investment in an affiliated debt fund and unconsolidated preferred equity. See "-Private Real Estate Credit" below for additional information on these investments.
(2)Segment revenue is presented for the nine months ended September 30, 2026. The Private Real Estate Credit segment revenue includes income from unconsolidated entities as a result of the San Simeon Preferred Equity investment, income from commercial loans and income from the investment in an affiliated fund.
The following table provides a summary of our real estate-related securities as of September 30, 2026:
| Segment |
Number of Instruments |
Fair
Value
(in thousands)(1)
|
Segment
Revenue
(in thousands)(2)
|
Percentage of Total Segment Revenue |
||||||||||||||||||||||
| Real Estate-Related Securities | 25 | $ | 41,856 | $ | 848 | 1% | ||||||||||||||||||||
(1)Based on fair value as of September 30, 2026. The Fair Value includes investments in liquid real estate-related securities consisting of investments in commercial mortgage backed securities ("CMBS") and preferred stock of REITs. See "-Investments in Real Estate-Related Securities" below for additional information on these investments.
(2)Segment revenue is presented for the nine months ended September 30, 2026. The Real Estate-Related Securities segment revenue includes the gain (loss) from real estate-related securities, net.
Real Estate
The following table provides information regarding our portfolio of real estate as of September 30, 2026:
| Segment and Investment | Number of Properties | Location(s) | Acquisition Date(s) | Ownership Interest |
Sq. Feet / Units /Beds |
Occupancy | ||||||||||||||||||||||||||||||||
| Industrial: | ||||||||||||||||||||||||||||||||||||||
|
13034 Excelsior(4)
|
1 | Norwalk, CA | December 2020 | 100% | 53,527 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
5201 Industry(4)
|
1 | Pico Rivera, CA | December 2020 | 100% | 40,480 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Meridian Business 940(4)
|
1 | Aurora, IL | September 2021 | 100% | 257,452 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Capital Park 2919(4)
|
1 | Grove City, OH | January 2022 | 100% | 378,283 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
3101 Agler Road(4)
|
1 | Columbus, OH | March 2022 | 100% | 160,000 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
| Earth City 13330 | 1 | Earth City, MO | March 2022 | 95% | 542,600 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
International Business 4535(4)
|
1 | Charlotte, NC | July 2024 | 100% | 61,200 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
| NJ Exit 5 Industrial Portfolio | 5 | Lumberton, NJ | December 2024 | 95% | 384,335 | sq. ft. | 91% | |||||||||||||||||||||||||||||||
|
Buckhorn Industrial(4)
|
1 | Mebane, NC | August 2025 | 100% | 265,200 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Interstate Commerce(4)
|
1 | Fort Pierce, FL | September 2025 | 100% | 211,547 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Gateway One(4)
|
1 | West Columbia, SC | April 2026 | 100% | 252,720 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
| Total Industrial | 15 | 2,607,344 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Healthcare: | ||||||||||||||||||||||||||||||||||||||
|
Sunbelt Medical Office Portfolio(1)
|
20 | CA, CO, FL, TN, TX | September 2020 / December 2020 / February 2021 | 50.0% | 1,030,397 | sq. ft. | 94% | |||||||||||||||||||||||||||||||
| Total Healthcare | 20 | 1,030,397 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Multifamily: | ||||||||||||||||||||||||||||||||||||||
|
Everly Roseland(2)
|
1 | Roseland, NJ | April 2022 | 57% | 360 | units | 95% | |||||||||||||||||||||||||||||||
| Elan at Bluffview | 1 | Dallas, TX | November 2024 | 100% | 181 | units | 97% | |||||||||||||||||||||||||||||||
| Fleetwood Apartments | 1 | Las Vegas, NV | August 2025 | 93% | 198 | units | 95% | |||||||||||||||||||||||||||||||
| Total Multifamily | 3 | 739 | units | |||||||||||||||||||||||||||||||||||
| Office: | ||||||||||||||||||||||||||||||||||||||
| Willows Commerce 9805 | 1 | Redmond, WA | December 2020 | 100% | 80,980 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Elizabeth on Seventh(4)
|
1 | Charlotte, NC | December 2025 | 100% | 100,537 | sq. ft. | 93% | |||||||||||||||||||||||||||||||
| Total Office | 2 | 181,517 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Student Housing: | ||||||||||||||||||||||||||||||||||||||
|
The Carmin(6)
|
1 | Tempe, AZ | December 2021 | 57% | 833 | beds | 74% | |||||||||||||||||||||||||||||||
| Total Student Housing | 1 | 833 | beds | |||||||||||||||||||||||||||||||||||
| Self-Storage: | ||||||||||||||||||||||||||||||||||||||
|
River Road Storage(4)
|
1 | Salem, OR | September 2021 | 100% | 76,034 | sq. ft. | 88% | |||||||||||||||||||||||||||||||
|
South Loop Storage(4)
|
1 | Houston, TX | September 2021 | 100% | 66,981 | sq. ft. | 87% | |||||||||||||||||||||||||||||||
|
University Parkway Storage(4)
|
1 | Winston-Salem, NC | April 2022 | 100% | 55,935 | sq. ft. | 83% | |||||||||||||||||||||||||||||||
|
Bend Self-Storage Portfolio(4)
|
2 | Bend, OR | June 2022 | 100% | 62,755 | sq. ft. | 85% | |||||||||||||||||||||||||||||||
|
Clarksville Self-Storage Portfolio(4)
|
3 | Clarksville, TN | July 2022 | 100% | 206,670 | sq. ft. | 83% | |||||||||||||||||||||||||||||||
| Imperial Beach Storage | 1 | La Habra, CA | July 2026 | 100% | 59,540 | sq. ft. | 88% | |||||||||||||||||||||||||||||||
| Total Self-Storage | 9 | 527,915 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Retail: | ||||||||||||||||||||||||||||||||||||||
| Cortlandt Crossing | 1 | Mohegan Lake, NY | February 2022 | 100% | 122,308 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
|
Knightdale Marketplace(4)(5)
|
1 | Knightdale, NC | September 2026 | 100% | 339,415 | sq. ft. | 100% | |||||||||||||||||||||||||||||||
| Total Retail | 2 | 461,723 | sq. ft. | |||||||||||||||||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||||||||||||||
|
Retail GP Fund(3)
|
14 |
Various(3)
|
Various(3)
|
4.5% - 9.5%
|
4,926,147 | sq. ft. | 93% | |||||||||||||||||||||||||||||||
| Tanner Road MHC | 1 | Houston, TX | May 2025 | 100% | 85 | lots | 100% | |||||||||||||||||||||||||||||||
| Arizona MHC Portfolio | 3 | Tucson, AZ | September 2025 | 100% | 195 | lots | 85% | |||||||||||||||||||||||||||||||
| Silver Shores MHC | 1 | Everett, WA | November 2025 | 100% | 103 | lots | 97% | |||||||||||||||||||||||||||||||
| Total Other | 19 | |||||||||||||||||||||||||||||||||||||
| Total Investment Properties | 71 | |||||||||||||||||||||||||||||||||||||
(1)We hold our interest in the Sunbelt Medical Office Portfolio through a 50% ownership interest in a joint venture with Invesco U.S. Income Fund L.P., an affiliate of Invesco, (the "Invesco JV"). The Invesco JV held an 85% ownership interest in a joint venture with a third party. On September 23, 2026, the Invesco JV purchased the 15% interest in the joint venture from the third party. As of September 30, 2026, the Invesco JV holds a 100% ownership interest in the joint venture. We account for our investment using the equity method of accounting. The dates of acquisition in the table above reflect the dates of our investments in the Invesco JV.
(2)We hold our interest in Everly Roseland through a 60% consolidated ownership interest in Everly Roseland Co-Invest, a co-investment between INREIT OP and Invesco Real Estate Atlas US Everly LLC ("Atlas US"), an affiliate of Invesco and majority owned subsidiary of Invesco Global Property Plus Fund ("IGP+"). The Everly Roseland Co-Invest holds a 95% consolidated ownership interest in a joint venture with a third party.
(3)We hold an 85% ownership interest in a joint venture, ITP Investments LLC ("ITP LLC"). ITP LLC has a 90% interest in PT Co-GP Fund, LLC ("Retail GP Fund"), which was formed to invest in retail properties through non-controlling general partner interests. The ownership interest and aggregate purchase price in the table above reflects ITP LLC's ownership interest and the total amount paid by ITP LLC to obtain non-controlling general partner interests in the retail properties. The properties were acquired over several transactions from October 2021 to February 2026 and are located throughout the United States.
(4)These properties are held through our DST Program as of September 30, 2026 and have been consolidated in our condensed consolidated balance sheets. Any profits interest due to the third-party investors in the DST Program is reported within non-controlling interests in consolidated joint ventures in our condensed consolidated balance sheets.
(5)Knightdale Marketplace is a portion of a single shopping center comprised of Knightdale East, Knightdale West, and Knightdale Parcel A. Knightdale East and Knightdale West are held through the DST Program, while Knightdale Parcel A was acquired separately by the Operating Partnership and is not included in IREX VI Retail DST.
(6)In February 2026, we amended our joint venture agreement related to The Carmin student housing property resulting in a new consolidated ownership interest of 57%.
Lease Expirations
The following schedule details the expiring leases at our consolidated office, industrial, and retail properties, as well as our unconsolidated healthcare properties by annualized base rent and square footage as of September 30, 2026. The table below excludes our self-storage, multifamily, manufactured housing and student housing properties as substantially all leases at such properties expire within 12 months.
| Year |
Number of Expiring Leases |
Annualized
Base Rent (in thousands)(1)(2)
|
% of Total Annualized Base Rent Expiring |
Square
Feet(2)
|
% of Total Square Feet Expiring |
|||||||||||||||||||||||||||
| 2026 (remaining) | 23 | $ | 1,430 | 3% | 152,150 | 4% | ||||||||||||||||||||||||||
| 2027 | 37 | 3,271 | 6% | 348,322 | 10% | |||||||||||||||||||||||||||
| 2028 | 43 | 4,603 | 9% | 315,781 | 9% | |||||||||||||||||||||||||||
| 2029 | 55 | 8,681 | 17% | 732,318 | 20% | |||||||||||||||||||||||||||
| 2030 | 45 | 4,986 | 10% | 281,476 | 8% | |||||||||||||||||||||||||||
| 2031 | 29 | 3,519 | 7% | 368,662 | 10% | |||||||||||||||||||||||||||
| 2032 | 22 | 3,093 | 6% | 122,452 | 3% | |||||||||||||||||||||||||||
| 2033 | 19 | 2,648 | 5% | 127,656 | 3% | |||||||||||||||||||||||||||
| 2034 | 19 | 3,913 | 8% | 363,871 | 10% | |||||||||||||||||||||||||||
| 2035 | 17 | 5,408 | 11% | 524,837 | 14% | |||||||||||||||||||||||||||
| Thereafter | 41 | 9,055 | 18% | 318,606 | 9% | |||||||||||||||||||||||||||
| Total | 350 | $ | 50,608 | 100% | 3,656,130 | 100% | ||||||||||||||||||||||||||
(1)Annualized base rent is determined from the annualized September 30, 2026 base rent per leased square foot of the applicable year and excludes tenant recoveries, straight-line rent and above-market and below-market lease amortization.
(2)Annualized base rent and square feet are presented at our pro rata share.
Private Real Estate Credit
We hold an investment in San Simeon Preferred Equity. San Simeon Preferred Equity owns San Simeon Apartments, a 431 unit multifamily property in Houston, Texas, which is 92% occupied. Our investment is structured as a preferred membership interest, and we account for our investment in the San Simeon Apartments using the equity method of accounting. At September 30, 2026, we hold a total equity investment of $26.4 million.
We have an investment in Invesco Commercial Mortgage Income - U.S. Fund, L.P. ("CMI"), an affiliate of Invesco managed by our Adviser, which invests primarily in mortgage loans that are collateralized by commercial and residential real estate throughout the United States. As of September 30, 2026, our investment in CMI was $6.8 million.
The following tables summarize our investments in commercial loans as of September 30, 2026 and December 31, 2025:
| September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| in thousands | Origination Date | Loan Type | Periodic Payment Terms |
Interest Rate(1)
|
Loan Amount(2)
|
Principal Balance Outstanding | Fair Value |
Maturity Date(3)
|
||||||||||||||||||||||||||||||||||||||||||
| The Catherine II Loan | 12/10/2025 | Senior | Interest Only | 6.77% | $ | 86,250 | $ | 84,149 | $ | 84,183 | 12/9/2030 | |||||||||||||||||||||||||||||||||||||||
| Sync DFW Multifamily Portfolio Loan | 1/9/2026 | Senior | Interest Only | 6.42% | 113,998 | 113,998 | 114,060 | 1/9/2031 | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 200,248 | $ | 198,147 | $ | 198,243 | ||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| in thousands | Origination Date | Loan Type | Periodic Payment Terms |
Interest Rate(1)
|
Loan Amount(2)
|
Principal Balance Outstanding | Fair Value |
Maturity Date(3)
|
||||||||||||||||||||||||||||||||||||||||||
| 5805 N Jackson Gap Loan | 1/20/2023 | Mezzanine | Interest Only | 12.48% | $ | 12,245 | $ | 12,245 | $ | 12,235 | 2/9/2028 | |||||||||||||||||||||||||||||||||||||||
| The Catherine II Loan | 12/10/2025 | Senior | Interest Only | 6.71% | 86,250 | 83,100 | 83,100 | 12/9/2030 | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 98,495 | $ | 95,345 | $ | 95,335 | ||||||||||||||||||||||||||||||||||||||||||||
(1)Loan earns interest at Secured Overnight Financing Rate ("SOFR") plus a spread.
(2)Loan amount consists of outstanding principal balance plus unfunded loan commitments.
(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.
In February 2026, we granted the borrower of 5805 N Jackson Gap Loan, a mezzanine commercial loan, a short-term extension of the loan's maturity date to March 9, 2026. The loan was subsequently repaid in full at par value in February 2026.
Interest income recognized from the 5805 N Jackson Gap Loan was $0.3 million during the nine months ended September 30, 2026. No interest income was recognized during the three months ended September 30, 2026 because the loan was repaid in February 2026. During the three and nine months ended September 30, 2025, interest income recognized from the loan was $0.4 million and $1.2 million, respectively. Interest income from the loan is recorded as income from commercial loans in our condensed consolidated statements of operations.
We have originated commercial real estate loan investments structured as senior loans, which are partially financed by the secured lending agreement described in Note 10 - "Borrowings." During the three and nine months ended September 30, 2026, these loans generated interest income of $3.3 million and $9.4 million, respectively. In addition, we recognized $1.0 million of origination fee income during the nine months ended September 30, 2026. No origination fee income was recognized during the three months ended September 30, 2026 as there were no loan originations during the period. Interest income and origination fee income are recorded as income from commercial loans in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2026, we recognized interest expense associated with the secured lending agreement of $2.2 million and $6.4 million, respectively, which is recorded as interest expense in our condensed consolidated statements of operations. We did not have any senior commercial real estate loan investments or secured lending agreements outstanding during the three and nine months ended September 30, 2025.
Investments in Liquid Real Estate-Related Securities
The following tables detail our investments in real estate-related securities as of September 30, 2026 and December 31, 2025:
| September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| in thousands | Principal Balance | Unamortized Premium (Discount) |
Amortized Cost / Cost(1)
|
Unrealized Gain (Loss), Net | Fair Value | Period-end Weighted-Average Yield | Weighted-Average Maturity Date | |||||||||||||||||||||||||||||||||||||
| Non-agency CMBS | $ | 41,122 | $ | (840) | $ | 40,282 | $ | (219) | $ | 40,063 | 6.32 | % | 12/12/2028 | |||||||||||||||||||||||||||||||
| Preferred stock of REITs | N/A | N/A | 1,975 | (182) | 1,793 | 7.08 | % | N/A | ||||||||||||||||||||||||||||||||||||
| Total | $ | 41,122 | $ | (840) | $ | 42,257 | $ | (401) | $ | 41,856 | ||||||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| in thousands | Principal Balance | Unamortized Premium (Discount) |
Amortized Cost / Cost(1)
|
Unrealized Gain (Loss), Net | Fair Value | Period-end Weighted-Average Yield | Weighted-Average Maturity Date | |||||||||||||||||||||||||||||||||||||
| Non-agency CMBS | $ | 31,974 | $ | (1,065) | $ | 30,909 | $ | 342 | $ | 31,251 | 4.95 | % | 11/9/2027 | |||||||||||||||||||||||||||||||
| Preferred stock of REITs | N/A | N/A | 1,975 | 33 | 2,008 | 6.32 | % | N/A | ||||||||||||||||||||||||||||||||||||
| Total | $ | 31,974 | $ | (1,065) | $ | 32,884 | $ | 375 | $ | 33,259 | ||||||||||||||||||||||||||||||||||
(1)For non-agency CMBS, the amount presented represents amortized cost. For preferred stock of REITs, the amount presented represents cost.
Results of Operations
The following table sets forth the results of our operations:
| Three Months Ended September 30, | $ Change | Nine Months Ended September 30, | $ Change | ||||||||||||||||||||||||||||||||
| in thousands except share amounts | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Rental revenue | $ | 20,834 | $ | 15,672 | $ | 5,162 | $ | 61,096 | $ | 45,088 | $ | 16,008 | |||||||||||||||||||||||
| Income from commercial loans | 3,257 | 391 | 2,866 | 10,730 | 1,176 | 9,554 | |||||||||||||||||||||||||||||
| Other revenue | 1,783 | 1,215 | 568 | 4,346 | 3,245 | 1,101 | |||||||||||||||||||||||||||||
| Total revenues | 25,874 | 17,278 | 8,596 | 76,172 | 49,509 | 26,663 | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Rental property operating | 8,035 | 6,836 | 1,199 | 24,150 | 19,173 | 4,977 | |||||||||||||||||||||||||||||
| General and administrative | 2,075 | 725 | 1,350 | 5,662 | 5,324 | 338 | |||||||||||||||||||||||||||||
| Management fee - related party | 1,360 | 776 | 584 | 3,541 | 2,089 | 1,452 | |||||||||||||||||||||||||||||
| Performance participation interest - related party | 302 | (8) | 310 | 1,565 | - | 1,565 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 10,117 | 7,612 | 2,505 | 29,326 | 21,821 | 7,505 | |||||||||||||||||||||||||||||
| Total expenses | 21,889 | 15,941 | 5,948 | 64,244 | 48,407 | 15,837 | |||||||||||||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||||||||||||||
| Income (loss) from unconsolidated entities, net | 2,081 | 14 | 2,067 | 4,900 | 506 | 4,394 | |||||||||||||||||||||||||||||
| Gain (loss) on real estate-related securities, net | 224 | 976 | (752) | 848 | 2,226 | (1,378) | |||||||||||||||||||||||||||||
| Income (loss) from investment in affiliated fund, net | 150 | 225 | (75) | 164 | 922 | (758) | |||||||||||||||||||||||||||||
| Gain (loss) on derivative instruments, net | 120 | 182 | (62) | 892 | (455) | 1,347 | |||||||||||||||||||||||||||||
| Unrealized gain (loss) on commercial loans | (74) | 23 | (97) | 105 | (22) | 127 | |||||||||||||||||||||||||||||
| Debt extinguishment charges | - | - | - | - | (485) | 485 | |||||||||||||||||||||||||||||
| Interest income | 128 | 607 | (479) | 317 | 2,093 | (1,776) | |||||||||||||||||||||||||||||
| Interest expense | (6,005) | (4,254) | (1,751) | (17,990) | (12,739) | (5,251) | |||||||||||||||||||||||||||||
| Other income (expense), net | (273) | (130) | (143) | (498) | (293) | (205) | |||||||||||||||||||||||||||||
| Total other income (expense), net | (3,649) | (2,357) | (1,292) | (11,262) | (8,247) | (3,015) | |||||||||||||||||||||||||||||
| Net income (loss) attributable to Invesco Real Estate Income Trust Inc. | $ | 336 | $ | (1,020) | $ | 1,356 | $ | 666 | $ | (7,145) | $ | 7,811 | |||||||||||||||||||||||
| Net (income) loss attributable to non-controlling interests in consolidated joint ventures | $ | (3,086) | $ | (437) | $ | (2,649) | $ | (7,914) | $ | (741) | $ | (7,173) | |||||||||||||||||||||||
| Net (income) loss attributable to non-controlling interest in INREIT OP | 55 | - | 55 | 56 | (55) | 111 | |||||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (2,695) | $ | (1,457) | $ | (1,238) | $ | (7,192) | $ | (7,941) | $ | 749 | |||||||||||||||||||||||
| Earnings (loss) per share: | |||||||||||||||||||||||||||||||||||
| Net income (loss) per share of common stock, basic and diluted | $ | (0.11) | $ | (0.06) | $ | (0.05) | $ | (0.31) | $ | (0.35) | $ | 0.04 | |||||||||||||||||||||||
| Weighted average shares of common stock | |||||||||||||||||||||||||||||||||||
| Basic | 23,823,316 | 22,941,347 | 881,969 | 23,572,317 | 22,837,463 | 734,854 | |||||||||||||||||||||||||||||
| Diluted | 23,823,316 | 22,941,347 | 881,969 | 23,572,317 | 22,837,463 | 734,854 | |||||||||||||||||||||||||||||
Rental Revenue, Other Revenue and Rental Property Operating Expenses
Our rental revenue primarily consists of fixed contractual base rent from our tenants and is recognized on a straight-line basis over the non-cancelable terms of the related leases. Our rental property operating expenses generally include the costs of ownership of real estate, including insurance, utilities, real estate taxes and repair and maintenance expense. Rental revenue increased by $5.2 million, other revenue increased by $0.6 million and rental property operating expenses increased by $1.2 million for the three months ended September 30, 2026 as compared to the same period in 2025. Rental revenue increased by $16.0 million, other revenue increased by $1.1 million and rental property operating expenses increased by $5.0 million for the nine months ended September 30, 2026 as compared to the same period in 2025. For the three and nine months ended September 30, 2026, rental revenue and property operating expenses increased due to the acquisition of five new properties in the last twelve months. The increase in other revenue is due to an increase in interests sold in our DST Program driving an increase in the organizational and offering expense reimbursements and closing cost reimbursements that we receive.
Income from Commercial Loans and related Interest Expense
During the three and nine months ended September 30, 2026, income from commercial loans increased $2.9 million and $9.6 million, respectively, compared to the three and nine months ended September 30, 2025. This is primarily due to interest income of $3.3 million and $9.4 million during the three and nine months ended September 30, 2026, respectively, from the two new senior loan originations in the last twelve months and origination fee income on the Sync DFW Multifamily Portfolio Loan of $1.0 million in January 2026. This increase is partially offset by a decrease in interest income from the 5805 N Jackson Gap loan which was repaid in full in February 2026. The senior commercial loan investments are partially financed by a secured lending agreement. During the three and nine months ended September 30, 2026, interest expense related to the secured lending agreement increased $2.2 million and $6.4 million, respectively. This resulted in net interest income from commercial loans of $1.0 million and $3.0 million, respectively, during the three and nine months ended September 30, 2026. We did not have senior commercial loans financed by a secured lending agreement in the prior period.
Unrealized Gain (Loss) on Commercial Loans
During the three months ended September 30, 2026, unrealized gain (loss) on commercial loans decreased by $0.1 million compared to the three months ended September 30, 2025. During the nine months ended September 30, 2026, unrealized gain (loss) on commercial loans increased by $0.1 million compared to the nine months ended September 30, 2025. These changes were primarily driven by changes to the interest rate environment in the current period.
General and Administrative
During the three and nine months ended September 30, 2026, general and administrative expenses increased $1.4 million and $0.3 million, respectively, compared to the three and nine months ended September 30, 2025. The increase was primarily due to an increase in costs associated with our DST Program compared to the prior period.
Management Fee - Related Party
During the three and nine months ended September 30, 2026, the management fee increased $0.6 million and $1.5 million, respectively, compared to the three and nine months ended September 30, 2025 due to increases in our net asset value.
Performance Participation Interest - Related Party
During the three and nine months ended September 30, 2026, the performance participation interest increased approximately $0.3 million and $1.6 million, respectively, compared to the three and nine months ended September 30, 2025 due to increases in our net asset value and positive valuation adjustments.
Depreciation and Amortization
During the three and nine months ended September 30, 2026, depreciation and amortization increased $2.5 million and $7.5 million, respectively, compared to the three and nine months ended September 30, 2025 primarily due to the acquisition of five properties in the last twelve months.
Income (Loss) from Unconsolidated Entities, Net
During the three and nine months ended September 30, 2026, income from unconsolidated entities increased $2.1 million and $4.4 million, respectively, compared to the three and nine months ended September 30, 2025. The increase is primarily due to an increase in net income at Vida JV LLC due to unrealized gains from derivatives and a gain recognized on the sale of one property in the Retail GP Fund during the current period.
Gain (Loss) on Real Estate-Related Securities, Net
During the three and nine months ended September 30, 2026, our gains on real estate-related securities decreased by approximately $0.8 million and $1.4 million, respectively, compared to the three and nine months ended September 30, 2025. The decrease was primarily due to market fluctuations on CMBS holdings.
Income (Loss) from Investment in Affiliated Fund, Net
During the three and nine months ended September 30, 2026, income (loss) from investment in affiliated fund decreased by $0.1 million and $0.8 million, respectively, compared to the three and nine months ended September 30, 2025. The decrease is primarily due to a decrease in our investment amount caused by partial redemptions and distributions which decreased our income allocations of the fund.
Gain (Loss) on Derivative Instruments, Net
During the three months ended September 30, 2026, gain (loss) on derivative instruments decreased by $0.1 million compared to the three months ended September 30, 2025. During the nine months ended September 30, 2026, gain (loss) on derivative instruments increased by $1.3 million compared to the nine months ended September 30, 2025. These changes were primarily driven by changes to the interest rate environment in the current period.
Debt Extinguishment Charges
We did not incur any debt extinguishment charges during the three and nine months ended September 30, 2026. During the nine months ended September 30, 2025, we incurred debt extinguishment charges of $0.5 million related to the refinancing of the mortgage secured by The Carmin student housing property and the early repayment of the mortgage secured by the Midwest Industrial Portfolio properties in conjunction with the joint venture buyout.
Interest Income
During the three and nine months ended September 30, 2026, interest income decreased by $0.5 million and $1.8 million, respectively, compared to the three and nine months ended September 30, 2025, primarily due to a lower average cash balance in the current period. This interest income represents cash held in our bank accounts while interest income from commercial loans is presented separately and described above.
Interest Expense
During the three and nine months ended September 30, 2026, interest expense increased $1.8 million and $5.3 million compared to the three and nine months ended September 30, 2025 primarily due to the interest expense related to the secured lending agreement described above.
Other Income (Expense)
During the three and nine months ended September 30, 2026, other income decreased by $0.1 million and $0.2 million compared to the three and nine months ended September 30, 2025, primarily due to income tax expense recorded in the current period driven by increased activity at the TRS entity, as compared to an income tax benefit in the prior period.
Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution
We believe funds from operations ("FFO") is a meaningful non-GAAP measure. Our condensed consolidated financial statements are presented in accordance with GAAP under historical cost accounting which, among other things, requires depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of our real estate investments will fluctuate over time based on market conditions and as such, depreciation under historical cost accounting may be less informative. FFO is a standard REIT industry metric defined by the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as net income or loss (computed in accordance with GAAP), excluding (i) gains or losses from sales of depreciable real property, (ii) impairment write-downs on depreciable real property, plus (iii) real estate-related depreciation and amortization and (iv) similar adjustments for non-controlling interests and unconsolidated entities.
We also believe that adjusted FFO ("AFFO") is a meaningful non-GAAP measure of our operating results. AFFO further adjusts FFO to reflect the performance of our portfolio by adjusting for items we believe are not directly attributable to our operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) straight-line rental income, (ii) amortization of capitalized tax abatements, (iii) amortization of above- and below-market lease intangibles, (iv) amortization of deferred financing costs, (v) organization expenses advanced by the Adviser, as well as repayment of those expenses, (vi) unrealized losses (gains) from changes in fair value of financial instruments, (vii) non-cash share based compensation awards and amortization of unvested restricted stock awards, (viii) non-cash performance participation interest or other non-cash incentive compensation even if repurchased by us, (ix) debt extinguishment charges and (x) similar adjustments for non-controlling interests and unconsolidated entities. We may add additional adjustments from FFO to arrive at AFFO as appropriate.
We also believe funds available for distribution ("FAD") is a meaningful non-GAAP measure that provides useful information for considering our operating results and certain other items relative to the amount of our distributions by removing the impact of certain non-cash items from our operating results. FAD is calculated as AFFO excluding (i) realized losses (gains) on investments in financial instruments and (ii) management fees paid in shares of our common stock or INREIT OP units even if repurchased by us, and including deductions for (a) recurring tenant improvements, leasing commissions, and other capital projects, (b) stockholder servicing fees paid during the period, (c) certain operating expenses advanced by the Adviser, as well as repayment of those expenses, (d) accrued preferred return from preferred membership interest, (e) accrued preferred return from preferred equity investment, (f) accrued property incentive fees and (g) similar adjustments for non-controlling interests and unconsolidated entities. FAD is not indicative of cash available to fund our cash needs and does not represent cash flows from operating activities in accordance with GAAP, as it excludes adjustments for working capital items and actual cash receipts from interest income recognized on investments in commercial loans. Cash flows from operating activities in accordance with GAAP would generally be adjusted for such items. Furthermore, FAD is adjusted for stockholder servicing fees and recurring tenant improvements, leasing commissions and other capital expenditures, which are not considered when determining cash flows from operating activities in accordance with GAAP.
FFO, AFFO, and FAD should not be considered to be more relevant or accurate than the GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO, AFFO, and FAD should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO, AFFO, and FAD are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders. In addition, our methodology for calculating AFFO and FAD may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported AFFO and FAD may not be comparable to the AFFO and FAD reported by other companies.
The following table presents a reconciliation of FFO, AFFO and FAD to net income (loss) attributable to our stockholders:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| in thousands | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income (loss) attributable to our stockholders | $ | (2,695) | $ | (1,457) | $ | (7,192) | $ | (7,941) | |||||||||||||||
| Adjustments to arrive at FFO: | |||||||||||||||||||||||
| Real estate depreciation and amortization | 10,117 | 7,612 | 29,326 | 21,821 | |||||||||||||||||||
| Amount attributed to unconsolidated entities for real estate depreciation and amortization | 2,339 | 2,192 | 7,191 | 6,924 | |||||||||||||||||||
| Amount attributed to non-controlling interests for real estate depreciation and amortization | (1,082) | (2,161) | (3,434) | (3,017) | |||||||||||||||||||
| Amount attributed to unconsolidated entities for (gain) loss on disposition of real estate | (574) | (79) | (574) | (419) | |||||||||||||||||||
| FFO attributable to our stockholders | 8,105 | 6,107 | 25,317 | 17,368 | |||||||||||||||||||
| Adjustments to arrive at AFFO: | |||||||||||||||||||||||
| Straight-line rental income | (401) | (118) | (1,353) | (450) | |||||||||||||||||||
|
Amortization of capitalized tax abatement(1)
|
42 | 42 | 125 | 125 | |||||||||||||||||||
| Amortization of above-market and below-market lease intangibles | (544) | (438) | (1,602) | (1,305) | |||||||||||||||||||
| Amortization of deferred financing costs | 239 | 428 | 771 | 1,175 | |||||||||||||||||||
| Debt extinguishment charges | - | - | - | 485 | |||||||||||||||||||
|
Unrealized losses (gains) from changes in the fair value of financial instruments(2)
|
433 | 172 | 199 | 1,270 | |||||||||||||||||||
| Non-cash share based compensation awards | 75 | 51 | 236 | 176 | |||||||||||||||||||
| Non-cash performance participation interest | 302 | (8) | 1,565 | - | |||||||||||||||||||
| Amount attributed to unconsolidated entities for unrealized losses (gains) on fair value of financial instruments | (528) | 1,033 | (1,359) | 2,098 | |||||||||||||||||||
| Amount attributed to unconsolidated entities for above adjustments | (486) | 89 | (835) | 220 | |||||||||||||||||||
| Amount attributed to non-controlling interests for above adjustments | (30) | 1,107 | 147 | 582 | |||||||||||||||||||
| AFFO attributable to our stockholders | 7,207 | 8,465 | 23,211 | 21,744 | |||||||||||||||||||
| Adjustments to arrive at FAD: | |||||||||||||||||||||||
| Non-cash management fee | 1,360 | 776 | 3,541 | 2,089 | |||||||||||||||||||
|
Recurring tenant improvements, leasing commissions and other capital expenditures(3)
|
(1,067) | (788) | (344) | (644) | |||||||||||||||||||
| Accrued preferred return from preferred membership interest | (318) | (315) | (947) | (923) | |||||||||||||||||||
| Accrued preferred return from preferred equity investment | (195) | (87) | (566) | (259) | |||||||||||||||||||
| Stockholder servicing fees | (68) | (52) | (184) | (148) | |||||||||||||||||||
|
Recurring capital expenditures attributed to unconsolidated entities(3)
|
(185) | (221) | (852) | (1,801) | |||||||||||||||||||
|
Recurring capital expenditures attributed to non-controlling interests(3)
|
189 | 195 | (82) | 985 | |||||||||||||||||||
|
Realized (gains) losses on financial instruments(4)
|
(5) | (96) | (37) | 933 | |||||||||||||||||||
| Accrued property incentive fees | - | - | - | (92) | |||||||||||||||||||
| FAD attributable to our stockholders | $ | 6,918 | $ | 7,877 | $ | 23,740 | $ | 21,884 | |||||||||||||||
(1)We obtained a tax abatement in conjunction with our purchase of the 3101 Agler property with an expiration date of December 31, 2031. We are amortizing the tax abatement over its remaining useful life as a component of property operating expenses in the condensed consolidated statements of operations. As of September 30, 2026, accumulated amortization of the capitalized tax abatement was $0.8 million.
(2)Unrealized losses (gains) from changes in fair value of financial instruments primarily relates to mark-to-market changes on our investments in real estate-related securities, investment in affiliated fund, investments in commercial loans and derivatives.
(3)Recurring capital expenditures are required to maintain our investments. Capital expenditures exclude underwritten tenant improvements, leasing commissions and capital expenditures with useful lives over 10 years.
(4)Realized (gains) losses on financial instruments relates to the sale of real estate related securities, realized (gains) losses from derivative instruments and realized (gains) losses from our investment in affiliated fund.
Net Asset Value
We calculate NAV in accordance with the valuation guidelines approved by our board of directors. We calculate our NAV for each class of shares based on the net asset values of our investments (including loans and real estate-related securities), the addition of any other assets (such as cash on hand), and the deduction of any liabilities (including mortgages, other indebtedness, the allocation/accrual of any performance participation to Invesco REIT Special Limited Partner L.L.C. (the "Special Limited Partner") and the deduction of any stockholder servicing fees specifically applicable to such class of shares). 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. You should not consider NAV to be equivalent to stockholders' equity or any other GAAP measure.
The following table reconciles stockholders' equity under GAAP per our condensed consolidated balance sheets to our NAV:
| in thousands | September 30, 2026 | December 31, 2025 | ||||||||||||
| Stockholders' equity | $ | 23,236 | $ | 67,071 | ||||||||||
| Non-redeemable non-controlling interests in INREIT OP | 13,045 | - | ||||||||||||
| Total stockholders' equity and INREIT OP partners' capital | 36,281 | 67,071 | ||||||||||||
| Adjustments: | ||||||||||||||
|
Class N redeemable common stock(1)
|
462,403 | 445,933 | ||||||||||||
|
Unrealized net real estate and borrowings appreciation (depreciation)(2)
|
10,776 | (16,533) | ||||||||||||
|
Accumulated depreciation and amortization(3)
|
156,601 | 141,816 | ||||||||||||
|
Organization costs, offering costs and certain operating expenses(4)
|
12,000 | 12,000 | ||||||||||||
|
Redeemable non-controlling interests attributable to INREIT OP(5)
|
144 | - | ||||||||||||
|
Accrued stockholder servicing fee(6)
|
2,862 | 2,510 | ||||||||||||
|
Impairment of investments in real estate(7)
|
6,182 | 6,182 | ||||||||||||
|
Straight-line rent receivable(8)
|
(10,228) | (8,534) | ||||||||||||
|
Change in interest in consolidated joint ventures(9)
|
(8,000) | (17,020) | ||||||||||||
| Other | - | (862) | ||||||||||||
| NAV | $ | 669,021 | $ | 632,563 | ||||||||||
(1)MassMutual's Class N shares have been classified as redeemable common stock, which is not a component of stockholders' equity on our condensed consolidated balance sheets in this Quarterly Report on Form 10-Q, because MassMutual has the contractual right to redeem the shares under certain circumstances. MassMutual's redemption rights are not transferable. We include the value of these shares as a component of our NAV.
(2)Our investments in real estate are presented under historical cost in our condensed consolidated financial statements in this Quarterly Report on Form 10-Q. Additionally, our mortgage notes, revolving credit facility, secured lending agreement and financing obligation ("Borrowings") are presented at their carrying value in our condensed consolidated financial statements. As such, any increases or decreases in the fair market value of our investments in real estate or our Borrowings are not included in our condensed consolidated financial statements. For purposes of determining our NAV, our investments in real estate and our Borrowings are recorded at fair value. The increase in current year appreciation is due to the recovery of real estate equity valuations as compared to the prior year, primarily driven by growth in operating income and the purchase of assets at a discount.
(3)We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization, including depreciation and amortization related to our investments in unconsolidated entities, is excluded for purposes of determining our NAV.
(4)The Adviser advanced all of our operating expenses on our behalf through December 31, 2021. Beginning January 2022 and ceasing September 2022, we began ratably reimbursing the Adviser over 60 months for the operating expenses incurred prior to December 31, 2021 and will recommence reimbursements to the Adviser following the earlier of (1) the date our NAV reaches $1.0 billion and (2) December 31, 2027.
The Adviser advanced all of our organization and offering expenses (other than upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees) incurred through December 31, 2022. We will reimburse the Adviser for all of our advanced expenses ratably over 60 months following the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2027.
Under GAAP, operating costs are expensed as incurred and organization and offering costs are charged to equity as such amounts are incurred. For NAV, all such costs will be recognized as a reduction to NAV as they are reimbursed ratably over 60 months. The adjustment presented represents the difference between the organization costs, offering costs and certain operating expenses advanced by the Adviser and the amount that has been reimbursed to the Adviser.
(5)The Class E units in the Operating Partnership held by the Special Limited Partner have been classified as redeemable non-controlling interest, which is not a component of stockholders' equity on our condensed consolidated balance sheets in this Quarterly Report on Form 10-Q. We include the value of these units as a component of our NAV. These Class E units are classified as redeemable non-controlling interest in the Operating Partnership on our condensed consolidated balance sheets because the Special Limited Partner has the contractual right to redeem the units under certain circumstances.
(6)Accrued stockholder servicing fee represents the accrual for the cost of the stockholder servicing fee for Class T, Class S, Class D and Class S-PR shares. Under GAAP, we accrued the full cost of the stockholder servicing fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum stockholder servicing fee) as an offering cost at the time we sold the Class T, Class S and Class D shares. For Class S-PR shares, we accrued the full amount of stockholder servicing fee payable over an estimated investor holding period as an offering cost at the time we sold the shares. For purposes of calculating NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis when such fee is paid.
(7)We record impairment of investments in real estate in accordance with GAAP. Any impairment recorded for GAAP is excluded for purposes of determining our NAV.
(8)We record straight-line rent in accordance with GAAP. Any resulting straight-line rent receivable or liability is excluded for purposes of determining our NAV.
(9)Under GAAP, changes in ownership interests in consolidated joint ventures that do not result in a loss of control are accounted for as equity transactions. The difference between the adjustment to the carrying amount of noncontrolling interests and the consideration received or paid is recognized in additional paid-in capital. For purposes of determining NAV, the cumulative impact of these transactions recorded in additional paid-in capital is reversed to reflect the consideration received or paid. The change in this adjustment during the period was primarily attributable to the promote crystallization transaction related to The Carmin joint venture.
The following table provides a breakdown of the major components of our total NAV as of September 30, 2026 and December 31, 2025:
| in thousands, except share/unit data | ||||||||||||||
| Components of NAV | September 30, 2026 | December 31, 2025 | ||||||||||||
| Investments in real estate | $ | 1,155,436 | $ | 1,006,986 | ||||||||||
| Investments in unconsolidated entities | 178,854 | 157,442 | ||||||||||||
| Investments in real estate-related securities | 41,856 | 33,259 | ||||||||||||
| Investments in commercial loans | 198,243 | 95,335 | ||||||||||||
| Investment in affiliated fund | 6,802 | 12,545 | ||||||||||||
| Cash and cash equivalents | 20,206 | 25,578 | ||||||||||||
| Restricted cash | 9,065 | 1,954 | ||||||||||||
| Other assets | 4,956 | 2,230 | ||||||||||||
| Mortgage notes, revolving credit facility, secured lending agreement and financing obligation, net | (479,718) | (394,425) | ||||||||||||
| Subscriptions received in advance | (4,917) | (401) | ||||||||||||
| Other liabilities | (27,358) | (20,574) | ||||||||||||
| Accrued performance participation interest | (1,565) | (151) | ||||||||||||
| Management fee payable | (929) | (626) | ||||||||||||
| Accrued stockholder servicing fees | (24) | (17) | ||||||||||||
| Non-controlling interests in joint-ventures | (431,886) | (286,572) | ||||||||||||
| Net asset value | $ | 669,021 | $ | 632,563 | ||||||||||
| Number of outstanding shares/units | 24,389,375 | 23,183,377 | ||||||||||||
The following table provides a breakdown of our total NAV and NAV per share/unit by class as of September 30, 2026:
| in thousands, except share/unit data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NAV Per Share/Unit | Class T Shares | Class S Shares | Class D Shares | Class I Shares | Class E Shares | Class N Shares | Class S-PR Shares | Class K-PR Shares |
Operating Partnership Units(1)
|
Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net asset value | $ | 6,555 | $ | 11,724 | $ | 12,768 | $ | 102,123 | $ | 27,384 | $ | 440,669 | $ | 33,535 | $ | 20,800 | $ | 13,463 | $ | 669,021 | ||||||||||||||||||||||||||||||||||||||||||
| Number of outstanding shares/units | 251,262 | 449,507 | 489,017 | 3,888,739 | 961,905 | 15,818,838 | 1,245,382 | 772,519 | 512,206 | 24,389,375 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
NAV Per Share/Unit as of September 30, 2026
|
$ | 26.0880 | $ | 26.0821 | $ | 26.1087 | $ | 26.2613 | $ | 28.4681 | $ | 27.8573 | $ | 26.9275 | $ | 26.9246 | $ | 26.2844 | ||||||||||||||||||||||||||||||||||||||||||||
(1)Includes the limited partnership interest of the Operating Partnership held by the Special Limited Partner and parties other than the Company.
Our real estate properties are valued by an independent advisor using a discounted cash flow methodology. The following table summarizes the weighted averages of the key unobservable inputs used in the September 30, 2026 valuations:
| Property Type | Discount Rate | Exit Capitalization Rate | ||||||||||||
| Healthcare | 7.2% | 5.8% | ||||||||||||
| Office | 9.3% | 7.3% | ||||||||||||
| Industrial | 7.8% | 5.8% | ||||||||||||
| Self-Storage | 8.0% | 5.8% | ||||||||||||
| Multifamily | 7.5% | 5.5% | ||||||||||||
| Student Housing | 8.0% | 5.8% | ||||||||||||
| Retail | 8.4% | 7.3% | ||||||||||||
| Manufactured Housing Community | 9.5% | 5.6% | ||||||||||||
These assumptions are determined by Capright and reviewed by the Adviser. A change in these assumptions would impact the calculation of the value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
| Input |
Hypothetical Change |
Healthcare Investment Values |
Office Investment Values |
Industrial Investment Values |
Self-Storage Investment Values |
Multifamily Investment Values |
Student Housing Investment Values |
Retail Investment Values |
Manufactured Housing Community Investment Values |
|||||||||||||||||||||||||||||||||||||||||||||||
| Discount Rate (weighted average) | 0.25% decrease | +1.9% | +1.8% | +2.0% | +1.9% | +1.9% | +1.9% | +1.8% | +1.9% | |||||||||||||||||||||||||||||||||||||||||||||||
| Discount Rate (weighted average) | 0.25% increase | (1.9)% | (1.8)% | (1.9)% | (1.8)% | (1.9)% | (1.9)% | (1.8)% | (1.9)% | |||||||||||||||||||||||||||||||||||||||||||||||
| Exit Capitalization Rate (weighted average) | 0.25% decrease | +2.8% | +2.0% | +2.9% | +2.6% | +3.0% | +2.7% | +1.9% | +3.0% | |||||||||||||||||||||||||||||||||||||||||||||||
| Exit Capitalization Rate (weighted average) | 0.25% increase | (2.6)% | (1.9)% | (2.6)% | (2.4)% | (2.7)% | (2.5)% | (1.8)% | (2.7)% | |||||||||||||||||||||||||||||||||||||||||||||||
Distributions
We generally intend to distribute substantially all of our taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to our stockholders each year to comply with the REIT provisions of the Code. Distributions are at the discretion of our board of directors and include a review of earnings, cash flow, liquidity and capital resources.
The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor.
For the three and nine months ended September 30, 2026, we declared distributions of $10.0 million and $29.3 million, respectively. For the three and nine months ended September 30, 2025, we declared distributions of $9.5 million and $28.3 million, respectively.
The following table summarizes our distributions declared during the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended | |||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||||||||||||||
| in thousands | Amount | Percentage | Amount | Percentage | |||||||||||||||||||
| Distributions | |||||||||||||||||||||||
| Payable in cash | $ | 3,583 | 36 | % | $ | 3,633 | 38 | % | |||||||||||||||
| Reinvested in shares | 6,435 | 64 | % | 5,847 | 62 | % | |||||||||||||||||
| Total distributions | $ | 10,018 | 100 | % | $ | 9,480 | 100 | % | |||||||||||||||
| Sources of Distributions | |||||||||||||||||||||||
| Cash flows from operating activities | $ | 8,332 | 83 | % | $ | 9,480 | 100 | % | |||||||||||||||
|
Distributions of capital from investments in unconsolidated entities(1)
|
1,686 | 17 | % | - | - | % | |||||||||||||||||
| Total sources of distributions | $ | 10,018 | 100 | % | $ | 9,480 | 100 | % | |||||||||||||||
| Cash flows from operating activities | $ | 8,332 | $ | 13,184 | |||||||||||||||||||
|
Funds from Operations(2)
|
$ | 8,105 | $ | 6,107 | |||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||||||||||||||
| in thousands | Amount | Percentage | Amount | Percentage | |||||||||||||||||||
| Distributions | |||||||||||||||||||||||
| Payable in cash | $ | 10,469 | 36 | % | $ | 11,000 | 39 | % | |||||||||||||||
| Reinvested in shares | 18,837 | 64 | % | 17,265 | 61 | % | |||||||||||||||||
| Total distributions | $ | 29,306 | 100 | % | $ | 28,265 | 100 | % | |||||||||||||||
| Sources of Distributions | |||||||||||||||||||||||
| Cash flows from operating activities | $ | 29,306 | 100 | % | $ | 20,573 | 73 | % | |||||||||||||||
|
Distributions of capital from investments in unconsolidated entities(1)
|
- | - | % | 6,720 | 24 | % | |||||||||||||||||
|
Offering proceeds(3)
|
- | - | % | 972 | 3 | % | |||||||||||||||||
| Total sources of distributions | $ | 29,306 | 100 | % | $ | 28,265 | 100 | % | |||||||||||||||
| Cash flows from operating activities | $ | 35,258 | $ | 20,573 | |||||||||||||||||||
|
Funds from Operations(2)
|
$ | 25,317 | $ | 17,368 | |||||||||||||||||||
(1)Represents distributions received from equity method investments that are classified as cash flows from investing activities. These equity method investments currently include our interest in a joint venture through which we own our interest in the Sunbelt Medical Office Portfolio, our preferred membership interest in San Simeon Preferred Equity, which owns a multifamily property, our interest in a real estate operating company focused on the aggregation and asset management of manufactured housing, and our interest in a joint venture through which we hold our interests in a fully integrated retail platform operating company and non-controlling interests we own in fourteen retail properties. Distributions received from equity method investments are classified as either cash flows from operating or investing activities based on the cumulative earnings approach. See Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2025 for additional details on the cumulative earnings approach. In addition, this amount represents distributions from our investment in an affiliated fund. The distributions received from this investment are classified as investing activities.
(2)See "-Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution" above for description of Funds from Operations ("FFO"), for reconciliation of FFO to GAAP net income (loss) attributable to INREIT stockholders and for considerations on how to review this metric.
(3)Offering proceeds represents distributions reinvested in shares of our common stock at the stockholders' election through our distribution reinvestment plan.
The table below details the net distribution for each of our share classes for the nine months ended September 30, 2026:
| Declaration Date |
Class T Shares |
Class S Shares |
Class D Shares |
Class I Shares |
Class E Shares |
Class N Shares |
Class S-PR Shares | Class K-PR Shares | ||||||||||||||||||||||||||||||||||||||||||
| January 30, 2026 | $ | 0.1207 | $ | 0.1206 | $ | 0.1340 | $ | 0.1395 | $ | 0.1395 | $ | 0.1395 | $ | 0.1387 | $ | 0.1395 | ||||||||||||||||||||||||||||||||||
| February 27, 2026 | 0.1202 | 0.1202 | 0.1322 | 0.1372 | 0.1372 | 0.1372 | 0.1353 | 0.1372 | ||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | 0.1207 | 0.1207 | 0.1340 | 0.1395 | 0.1395 | 0.1395 | 0.1368 | 0.1395 | ||||||||||||||||||||||||||||||||||||||||||
| April 30, 2026 | 0.1198 | 0.1197 | 0.1326 | 0.1380 | 0.1380 | 0.1380 | 0.1352 | 0.1380 | ||||||||||||||||||||||||||||||||||||||||||
| May 29, 2026 | 0.1207 | 0.1206 | 0.1340 | 0.1395 | 0.1395 | 0.1395 | 0.1355 | 0.1395 | ||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | 0.1198 | 0.1198 | 0.1326 | 0.1380 | 0.1380 | 0.1380 | 0.1340 | 0.1380 | ||||||||||||||||||||||||||||||||||||||||||
| July 31, 2026 | 0.1207 | 0.1207 | 0.1340 | 0.1395 | 0.1395 | 0.1395 | 0.1351 | 0.1395 | ||||||||||||||||||||||||||||||||||||||||||
| August 31, 2026 | 0.1206 | 0.1207 | 0.1339 | 0.1395 | 0.1395 | 0.1395 | 0.1340 | 0.1395 | ||||||||||||||||||||||||||||||||||||||||||
| September 30, 2026 | 0.1197 | 0.1198 | 0.1326 | 0.1380 | 0.1380 | 0.1380 | 0.1325 | 0.1380 | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 1.0829 | $ | 1.0828 | $ | 1.1999 | $ | 1.2487 | $ | 1.2487 | $ | 1.2487 | $ | 1.2171 | $ | 1.2487 | ||||||||||||||||||||||||||||||||||
Liquidity and Capital Resources
Liquidity
Our primary needs for liquidity and capital resources are to fund our investments, to make distributions to our stockholders, to repurchase shares of our common stock under our share repurchase plan, to pay our offering costs and operating fees and expenses and to pay interest on our borrowings. We will obtain the funds required to purchase investments and conduct our operations from the net proceeds of our Private Offerings, our Public Offering, DST Program and any future offerings we may conduct (collectively, the "Capital Raising Programs"), from secured and unsecured borrowings from banks and other lenders and from net cash provided by operating activities. Generally, cash needs for items other than asset acquisitions are met from operations, and cash needs for asset acquisitions are funded by our Capital Raising Programs and debt financings. However, there may be a delay between the sale of our shares and our 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 target leverage ratio is approximately 50% to 60%. As used herein, "leverage ratio" is measured by dividing (x) the sum of the Company's consolidated property-level debt, entity-level debt and debt-on-debt, net of cash and restricted cash, by (y) the asset value of the Company's real estate investments, private real estate credit investments and equity in the Company's real estate-related securities portfolio (in each case measured using the greater of fair market value and cost), including the Company's net investment in unconsolidated investments. For purposes of determining the asset value of the Company's real estate investments, the Company includes the asset value of the DST Properties due to the master lease structure, including the Company's fair market value purchase option. The leverage ratio calculation does not include (i) indebtedness incurred in connection with funding a deposit in advance of the closing of an investment, (ii) indebtedness incurred as other working capital advances, (iii) indebtedness on the Company's real estate securities investments or (iv) the pro rata share of debt within the Company's unconsolidated investments. Further, the refinancing of any amount of existing indebtedness will not be deemed to constitute incurrence of new indebtedness for purposes of the leverage ratio calculation so long as no additional amount of net indebtedness is incurred in connection therewith (excluding the amount of transaction expenses associated with such refinancing). Our charter prohibits us from borrowing more than 300% of our net assets, which approximates borrowing 75% of the cost of our investments. We may exceed this limit if a majority of our independent directors approves each borrowing in excess of the limit and we disclose the justification for doing so to our stockholders.
If we are unable to raise substantial funds in the Public Offering or Private Offerings, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments we make. Further, we have certain fixed operating expenses, including certain expenses as a publicly offered REIT, regardless of whether we are able to raise substantial funds in the Public Offering and Private Offerings. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.
The Adviser and its affiliates provide us with our management team, including our officers and appropriate support personnel. The Adviser or the Adviser's affiliates may provide us services that would otherwise be performed by third parties. In such event, we will reimburse the Adviser or the Adviser's affiliate the cost of performing such services provided that such reimbursements will not exceed the amount that would be payable if such services were provided by a third party in an arm's-length transaction.
The Adviser advanced all of our operating expenses on our behalf through December 31, 2021. Beginning January 2022 and ceasing September 2022, we began ratably reimbursing the Adviser over 60 months for the operating expenses incurred prior to December 31, 2021 and will recommence reimbursements to the Adviser following the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2027. As of September 30, 2026 and December 31, 2025, we have $5.4 million due to the Adviser for advanced operating expenses that are recorded as a component of due to affiliates on our condensed consolidated balance sheets.
The Adviser advanced all of our organization and offering expenses (other than upfront selling commissions, dealer manager fees, and ongoing stockholder servicing fees) incurred through December 31, 2022. We will begin reimbursing the Adviser for advanced organization and offering expenses upon the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2027. We will reimburse the Adviser for all of our advanced expenses ratably over 60 months following such date. As of September 30, 2026 and December 31, 2025, we have $6.8 million due to the Adviser for advanced organization and offering expenses that are recorded as a component of due to affiliates on our condensed consolidated balance sheets.
In January 2022, we began reimbursing the Adviser on a quarterly basis for operating expenses incurred subsequent to December 31, 2021. As of September 30, 2026 and December 31, 2025, we have $2.8 million and $3.8 million, respectively, due to the Adviser for operating expenses. The amount due to the Adviser is recorded as a component of due to affiliates on our condensed consolidated balance sheets.
In January 2023, we began reimbursing the Adviser on a quarterly basis for organization and offering expenses incurred subsequent to December 31, 2022. As of September 30, 2026 and December 31, 2025, we have $0.7 million and $0.5 million, respectively, due to the Adviser for organization and offering expenses that are recorded as a component of due to affiliates on our condensed consolidated balance sheets.
Under our charter, we may reimburse the Adviser, at the end of each fiscal quarter, for total operating expenses paid by the Adviser. However, we may not reimburse the Adviser at the end of any fiscal quarter for total operating expenses (as defined in our charter) that, in the four consecutive fiscal quarters then ended, exceed the greater of 2% of average invested assets or 25% of net income determined without reduction for any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of our assets for that period (the "2%/25% Guidelines").
We may reimburse the Adviser for expenses in excess of the 2%/25% Guidelines if a majority of our independent directors determines that such excess expenses (an "Excess Amount") are justified based on unusual and non-recurring factors. Operating expenses for the four consecutive fiscal quarters ended September 30, 2026 did not exceed the charter-imposed limitation.
In May 2026, we and MassMutual entered into Amendment No. 3 (the "Amendment") to the Subscription Agreement which amended the Subscription Agreement to modify MassMutual's repurchase rights as described below.
MassMutual committed and fully funded $400.0 million of Class N common stock in our Private Offerings. The Amendment extended the commencement date of our obligation to make monthly repurchases of MassMutual's shares from January 1, 2026 to April 1, 2028, and revised the amount of shares required to be repurchased in any month. Pursuant to the Amendment, the amount (based upon aggregate repurchase price) of Class N shares that we are required to repurchase from MassMutual in any month will be equal to (a) the sum of 100% of Net Flows (as defined below) to us from the sale of shares of common stock to IGP+, plus (b) between 50% and 100% (in our discretion) of Net Flows to us from the sale of shares of common stock to persons other than IGP+, less (c) the aggregate repurchase price paid by us to satisfy repurchase requests made under our share repurchase plan, if any, effective as of the last day of the prior month. In any month, MassMutual may choose to waive our obligation to repurchase shares. We are required to continue repurchasing shares until we have repurchased $200.0 million. We are required to limit repurchases to ensure that the aggregate NAV of MassMutual shares is at least $50.0 million.
The Amendment extended the commencement of MassMutual's right to request repurchases of its shares from January 1, 2026 to April 1, 2028 and revised the amount of shares it may request to be repurchased in any month. As revised, the amount (based upon aggregate repurchase price) of Class N shares that we are required to repurchase in any month upon MassMutual's request will be limited to no more than the lesser of (a) 15% of Net Flows to us from the sale of shares of common stock and securities convertible into shares of common stock to persons other than MassMutual and its affiliates in the month immediately preceding the month in which MassMutual makes a repurchase request less the aggregate repurchase price paid by us to satisfy repurchase requests made under our share repurchase plan, if any, effective as of the last day of the month immediately preceding the month in which MassMutual makes a repurchase request, and (b) 1.5% of our aggregate net asset value as of the last day of the month immediately preceding the month in which MassMutual makes a repurchase request.
Net Flows means, for any month, (i) gross proceeds to us from the sale of shares of common stock effective as of the first calendar day of that month, net of all applicable upfront selling commissions and dealer manager fees, less (ii) the aggregate repurchase price paid by us to satisfy repurchase requests made under the share repurchase plan, if any, effective as of the last day of the prior month.
Prior to the Amendment, MassMutual had elected to forgo automatic monthly repurchases through May 1, 2026, and did not exercise the right to request repurchases.
Capital Resources
Our borrowing arrangements include a Revolving Credit Facility, secured lending agreement and mortgage notes payable. The table below summarizes our borrowing arrangements as of September 30, 2026 and December 31, 2025:
| September 30, 2026 | Principal Balance Outstanding | |||||||||||||||||||||||||||||||||||||||||||||||||
| $ in thousands | Current Maturity |
Extended Maturity Date(1)
|
Interest Rate(2)
|
Weighted Average Interest Rate | Maximum Facility Size | Available Capacity | September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||
| Revolving Credit Facility | 7/23/2027 | 7/21/2028 |
S + applicable margin(3)
|
5.20% | $ | 250,000 | $ | 67,000 | $ | 32,000 | $ | 40,000 | ||||||||||||||||||||||||||||||||||||||
| Secured Lending Agreement | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase Agreement | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Citibank | 12/9/2027 | 12/9/2029 |
S + 1.70%
|
5.28% | $ | 300,000 | $ | 141,553 | $ | 158,447 | $ | 66,480 | ||||||||||||||||||||||||||||||||||||||
| Mortgage Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||
| The Carmin | 3/5/2027 | 3/5/2032 | S + 1.75% | 5.38% | $ | 84,000 | $ | - | $ | 84,000 | $ | 84,000 | ||||||||||||||||||||||||||||||||||||||
| Cortlandt Crossing | 3/1/2027 | N/A | 3.13% | 3.13% | 39,660 | - | 39,660 | 39,660 | ||||||||||||||||||||||||||||||||||||||||||
| Everly Roseland | 4/28/2027 | 4/28/2029 |
S + 1.45%
|
5.12% | 113,500 | 1,307 | 112,193 | 111,658 | ||||||||||||||||||||||||||||||||||||||||||
| Total mortgages payable | 235,853 | 235,318 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred financing costs, net | (277) | (570) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgages payable, net | $ | 235,576 | $ | 234,748 | ||||||||||||||||||||||||||||||||||||||||||||||
(1)Assumes all available extension options are exercised upon meeting certain conditions, which may include payment of a non-refundable extension fee.
(2)The term "S" refers to the relevant floating benchmark rate, SOFR.
(3)Borrowings under the Revolving Credit Facility carry interest at a rate equal to (i) SOFR, (ii) SOFR with an interest period of one, three or six months, or (iii) a Base Rate, where the base rate is the highest of (a) federal funds rate plus 0.5%, (b) the rate of interest as publicly announced by Bank of America, N.A. ("Bank of America") as its "prime rate," (c) SOFR with an interest period of one month plus 1.0%, or (d) 1.0%, in each case, plus an applicable margin that is based on our leverage ratio.
As of September 30, 2026, we were in compliance with all loan covenants in our revolving credit facility, secured lending and mortgage note agreements.
On January 22, 2021, we entered into the Revolving Credit Facility with Bank of America. As of September 30, 2026, the aggregate commitment is $100.0 million with an ability to request increases up to $250.0 million in aggregate commitments. The available borrowing capacity on the Revolving Credit Facility is the difference between the maximum facility size and the current principal outstanding balance, including any outstanding letters of credit, limited by the aggregate fair value and cash flows of our unencumbered properties as applicable. The unused commitment fee is 0.25% if usage is less than 50% and 0.15% if usage is greater than or equal to 50% that accrues on the daily amount by which the aggregate commitments exceed the total outstanding balance of the Revolving Credit Facility.
In December 2025, we entered into a traditional repurchase agreement with Citibank. As of September 30, 2026, the aggregate commitment is $160.2 million with the ability to request increases up to $300.0 million with new originations, subject to certain conditions. We have pledged two investments in commercial loans with a fair value of $198.2 million as collateral for this agreement. We segregate the commercial real estate loans that we have pledged as collateral in our books and records. Our repurchase agreement counterparty has the right to resell or repledge the collateral posted but has the obligation to return the pledged collateral upon maturity of the repurchase agreement.
We were not required to post any margin under our master repurchase agreement as of September 30, 2026. A margin deficiency may generally result from either a decline in the underlying loans' market value or a shortfall in operating performance of the property. We may finance multiple commercial loan investments under a repurchase agreement; therefore, a margin excess in one asset could help mitigate a margin deficiency in another asset under the same repurchase agreement. We intend to maintain a level of liquidity that will enable us to meet margin calls. Master repurchase agreements are recourse obligations.
We have entered into mortgage notes that are secured by our real estate investments.
In March 2026, we exercised the first extension option of the mortgage note for The Carmin, which extended the maturity date to March 5, 2027. We have five remaining extension options available which would extend the maturity date to March 5, 2032.
In connection with the failed sale and leaseback of The Carmin property, as of September 30, 2026, we hold a financing obligation on our condensed consolidated balance sheets of $54.0 million, net of debt issuance costs.
See Note 10 - "Borrowings" to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of our borrowing arrangements.
Other potential future sources of capital include incremental secured or unsecured financings from banks or other lenders and proceeds from the sale of assets. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. We have not yet identified any sources for these types of financings.
At September 30, 2026, we had cash and cash equivalents of $20.2 million and restricted cash of $9.1 million. Our restricted cash consists of subscriptions received in advance, an interest and capital expenditure reserve that we are contractually required to maintain on deposit under the terms of our preferred membership interest in a limited liability company, amounts in escrow for taxes and insurance related to mortgages at certain properties and security deposits.
Capital Uses
During periods when we are selling more shares than we are repurchasing, we primarily use our capital to acquire our investments, which we also fund with other capital resources. During periods when we are repurchasing more shares than we are selling, we primarily use our capital to fund repurchases. During the months ended July 31, 2026, August 31, 2026 and September 30, 2026, we received repurchase requests below the applicable repurchase limits under our share repurchase plan and fulfilled all repurchase requests.
Our operating expenses include, among other things, the management fee we pay to the Adviser and the performance participation allocation that INREIT OP pays to the Special Limited Partner, both of which will impact our liquidity to the extent the Adviser or the Special Limited Partner elects to receive such payments in cash, or subsequently redeem shares or OP units previously issued to them. To date, the Adviser and the Special Limited Partner have both always elected to be paid in shares or OP units, resulting in a non-cash expense.
Forward-Looking Statements Regarding Liquidity
We believe that with respect to liquidity, we are well positioned with $87.2 million of immediate liquidity as of September 30, 2026, comprised of $67.0 million of undrawn capacity on our Revolving Credit Facility and $20.2 million of cash and cash equivalents. In addition, we hold $41.9 million in investments in real estate-related securities that could be liquidated to satisfy any potential liquidity requirements.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash:
| Nine Months Ended September 30, | |||||||||||
| in thousands | 2026 | 2025 | |||||||||
| Cash flows provided by (used in) operating activities | $ | 35,258 | $ | 20,573 | |||||||
| Cash flows provided by (used in) investing activities | (246,890) | (120,561) | |||||||||
| Cash flows provided by (used in) financing activities | 213,371 | 89,536 | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | 1,739 | $ | (10,452) | |||||||
Operating Activities
Cash flows provided by operating activities of $35.3 million for the nine months ended September 30, 2026 consists of our net income of $0.7 million adjusted for non-cash items and changes in assets and liabilities. The change in our assets and liabilities is primarily due to the timing of cash receipts and cash payments, including amounts we owe our affiliates. We also had an increase in distributions received from equity method investments classified as operating activities based on the cumulative earnings approach in connection with the San Simeon Preferred Equity modification.
Investing Activities
Cash flows used in investing activities increased $126.3 million during the nine months ended September 30, 2026 compared to the corresponding period in 2025 primarily due to the origination of the Sync DFW Multifamily Portfolio Loan, the acquisitions of Gateway One, Imperial Beach, and Knightdale Marketplace, and the Vida joint venture buyout during the period. This increase was offset by the repayment of the 5805 N Jackson Gap Loan, a partial redemption of our investment in an affiliated fund and the sale of real estate related securities.
Financing Activities
Cash flows provided by financing activities increased $123.8 million for the nine months ended September 30, 2026 compared to the corresponding period in 2025 primarily due to an increase in net borrowings of $110.5 million, an increase in contributions from non-controlling interests of $26.9 million and an increase in net proceeds of common stock of $15.1 million. These increases were partially offset by net cash paid in connection with joint venture buyouts and amendments for two of our properties of $24.4 million and an increase in distributions to non-controlling interests of $4.5 million.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates that are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Pending Accounting Pronouncements
There have been no significant changes to the status of our adoption of the recently issued accounting pronouncement that is disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Invesco Real Estate Income Trust Inc. published this content on November 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 13, 2026 at 18:31 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]