North Haven Net REIT
11/06/2026 | Press release | Distributed by Public on 11/06/2026 16:01
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References herein to "North Haven Net REIT," the "Company," "we," "us," or "our" refer to North Haven Net REIT and its subsidiaries.
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q ("Form 10-Q"). Dollars are in thousands, except for per share amounts or unless otherwise noted.
Forward-Looking Statements
Some of the statements in this Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this Form 10-Q may include statements as to:
•
Interest rates;
•
Economic growth;
•
Changes in demographics;
•
Market conditions;
•
Rent growth;
•
Net operating income growth;
•
Capitalization rates; and
•
Occupancy rates.
The forward-looking statements contained in this Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in "Item 1A. Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the "SEC") on March 5, 2026, and elsewhere in this Form 10-Q. Other factors that could cause actual results to differ materially include:
•
Changes in interest rates;
•
Inflation;
•
Unexpected market movements;
•
A slowdown or contraction of the economy;
•
Legislative or regulatory developments;
•
Errors in strategy execution;
•
Acts of God and wars (including the war in Ukraine and the conflict and escalating tensions in the Middle East); and
•
Other asset-level developments, including the risk factors described in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statements in this Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this Form 10-Q. Moreover, except as otherwise required by federal securities laws, we assume no duty and do not undertake to update the forward-looking statements.
Overview
We are a Maryland statutory trust formed on February 6, 2023. Our investment strategy is focused primarily on originating, acquiring, financing and managing a diversified portfolio of high-quality commercial real estate assets that are primarily long-term leased under net lease structures to tenants for whom the properties are mission critical, meaning essential to the continuance of their business operations. We also prioritize investing in real estate sectors such as industrial (e-commerce), manufacturing (on-shoring and near-shoring) and healthcare (aging demographics). To a lesser extent, we invest in commercial real estate debt-related assets, which may include first mortgage loans, subordinated mortgage loans, mezzanine loans, preferred equity, real estate-related corporate credit,
and commercial mortgage-backed securities ("CMBS"), as well as other real estate-related securities (such as common and preferred stock of publicly traded real estate investment trusts ("REITs") and other real estate companies) and loans (collectively referred to as, "CRE debt investments").
We are an externally advised, perpetual-life REIT formed to pursue the following investment objectives:
•
Provide attractive current income in the form of predictable, stable cash distributions;
•
Realize appreciation in net asset value ("NAV") from differentiated sourcing, investment selection, structuring and proactive asset management; and
•
Provide an investment alternative for shareholders seeking to allocate a portion of their long-term investment portfolios to commercial real estate with potentially lower volatility than publicly-traded real estate companies and private credit with the potential for additional upside through real estate tax advantages and appreciation potential.
We may not achieve our investment objectives. See "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026.
We are structured as a non-listed, perpetual-life REIT, and therefore our securities are not listed on a national securities exchange and, as of the date of this Form 10-Q, there is no plan to list our securities on a national securities exchange. We are organized as a holding company and plan to conduct our business primarily through our various subsidiaries. Commencing with our taxable year ended December 31, 2024, we elected to be taxed as a REIT under the U.S. Internal Revenue Code of 1986, as amended (the "Code"), for U.S. federal income tax purposes and generally will not be subject to U.S. federal income tax on our taxable income to the extent we annually distribute all of our REIT taxable net income to shareholders and maintain our qualification as a REIT.
Our board of trustees will at all times have ultimate oversight and policy-making authority over us, including responsibility for governance, financial controls, compliance and disclosure. Pursuant to an advisory agreement (the "Advisory Agreement"), by and among us, NH Net REIT Operating Partnership, LP, a Delaware limited partnership (the "Operating Partnership"), and the Adviser, a Delaware corporation and wholly-owned subsidiary of Morgan Stanley, however, we have delegated to the Adviser the authority to source, evaluate and monitor our investment opportunities and make decisions related to the acquisition, management, financing and disposition of our assets, in accordance with our investment objectives, guidelines, policies and limitations, subject to oversight by our board of trustees.
On January 11, 2024, we commenced the Offering of an unlimited number of our common shares in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), by virtue of Section 4(a)(2) and Rule 506 of Regulation D thereunder, to investors that are (i) accredited investors (as defined in Regulation D under the Securities Act) and (ii) in the case of common shares sold outside the United States, to persons that are not "U.S. persons" (as defined in Regulation S under the Securities Act). We sell our common shares in the Offering on a monthly basis. We completed the initial closing of the Offering and our principal operations commenced on April 1, 2024.
As of September 30, 2026, we have received gross proceeds of $1,620,668 from the sale of our common shares and contributed the net proceeds to the Operating Partnership in exchange for a corresponding number of Operating Partnership units. The Operating Partnership has primarily used the net proceeds to make investments. We continue to sell our common shares on a monthly basis in the Offering.
We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from acquiring properties or real estate-related securities, other than those referred to in this Form 10-Q.
Q3 2026 Highlights
Capital Activity
•
Raised gross proceeds of $209,522 for the three months ended September 30, 2026, through the sale of our common shares.
Operating Results
•
Declared monthly net distributions totaling $27,921 for the three months ended September 30, 2026. The details of our total returns are shown in the following table:
|
Class S |
Class F-S |
Class I |
Class L-I |
Class F-I |
Class E |
|||||||||||||||||||
|
Annualized Distribution Rate(1) |
5.90 |
% |
6.55 |
% |
6.75 |
% |
7.20 |
% |
7.41 |
% |
9.00 |
% |
||||||||||||
|
Inception-to-Date Total Return, without upfront selling commissions(2)(3) |
7.73 |
% |
7.81 |
% |
8.66 |
% |
1.67 |
% |
8.71 |
% |
9.31 |
% |
||||||||||||
(1)
The annualized distribution rate is calculated by annualizing the declared distribution amounts per share as of September 30, 2026 and dividing by the NAV per share as of August 31, 2026. Refer to "Note 12. Equity" for more information.
(2)
Total return is calculated as the change in NAV per share from the date the first share of each respective class was sold through September 30, 2026, plus any distributions per share declared in the period and assumes reinvestment of distributions pursuant to the Company's distribution reinvestment plan. The inception date for Class F-S shares, Class F-I shares and Class E shares is April 1, 2024, the inception date for Class S shares and Class I shares is August 1, 2024, and the inception date for Class L-I shares is October 1, 2026. Total return for periods greater than one year is annualized. We believe total return is a useful measure of our overall performance.
(3)
Class S shares and Class F-S shares exclude upfront selling commissions. Inclusive of the maximum upfront selling commissions, the inception-to-date total return for Class S shares and Class F-S shares are 6.3% and 6.5%, respectively.
Investments
•
Acquired 12 industrial properties for an aggregate gross purchase price of $523,071, one research and development property for a gross purchase price of $84,235, one retail property for a gross purchase price of $26,926 and one healthcare property for a gross purchase price of $16,446. All gross purchase prices are inclusive of capitalized costs and we believe the acquisitions are consistent with our strategy of acquiring income-producing, mission critical, single-tenant, net leased commercial properties.
Investment Portfolio
Investments in Real Estate
As of September 30, 2026 our real estate investments had an aggregate fair value of $3,078,597. The following table provides information regarding our real estate investments as of September 30, 2026:
|
# |
Property Type |
Property Sub-Type |
Tenant |
Market |
Square Feet (in thousands) |
Occupancy Rate(1) |
Acquisition Date |
Ownership Percentage |
||||||||||||||
|
1 |
Industrial |
IOS |
First Student |
Chicago, IL |
3,062 |
100 |
% |
June 2026 |
100 |
% |
||||||||||||
|
2 |
Industrial |
Distribution - Warehouse |
Ace |
Kansas City, MO |
1,536 |
100 |
% |
August 2026 |
100 |
% |
||||||||||||
|
3 |
Industrial |
Distribution - Warehouse |
General Mills |
Atlanta, GA |
1,513 |
100 |
% |
July 2025 |
100 |
% |
||||||||||||
|
4 |
Industrial |
Distribution - Warehouse |
GE |
Chicago, IL |
1,199 |
100 |
% |
July 2026 |
100 |
% |
||||||||||||
|
5 |
Industrial |
IOS |
CRH Americas |
Inland Empire, CA |
1,146 |
100 |
% |
September 2025 |
100 |
% |
||||||||||||
|
6 |
Industrial |
Distribution - Warehouse |
Tesla |
St. Louis, MO |
1,010 |
100 |
% |
December 2024 |
100 |
% |
||||||||||||
|
7 |
Industrial |
Distribution - Warehouse |
Amazon |
Chicago, IL |
1,001 |
100 |
% |
November 2025 |
100 |
% |
||||||||||||
|
8 |
Industrial |
Distribution - Warehouse |
Assa Abloy |
Kansas City, KS |
927 |
100 |
% |
October 2024 |
100 |
% |
||||||||||||
|
9 |
Industrial |
Distribution - Warehouse |
Amazon |
Los Angeles, CA |
824 |
100 |
% |
November 2025 |
100 |
% |
||||||||||||
|
10 |
Industrial |
Manufacturing |
BAE |
Binghamton, NY |
782 |
90 |
% |
September 2026 |
100 |
% |
||||||||||||
|
11 |
Industrial |
Distribution - Warehouse |
MillerKnoll |
Cincinnati, OH |
730 |
100 |
% |
June 2026 |
100 |
% |
||||||||||||
|
12 |
Industrial |
Distribution - Warehouse |
Nissan |
Los Angeles, CA |
620 |
100 |
% |
April 2025 |
100 |
% |
||||||||||||
|
13 |
Industrial |
Manufacturing |
Munters |
Roanoke, VA |
567 |
100 |
% |
September 2026 |
100 |
% |
||||||||||||
|
14 |
Industrial |
Cold Storage |
C&S Wholesale Grocers |
Boston, MA |
524 |
100 |
% |
June 2024 |
100 |
% |
||||||||||||
|
15 |
Industrial |
Distribution - Warehouse |
Nissan |
New York City / New Jersey |
508 |
100 |
% |
April 2025 |
100 |
% |
||||||||||||
|
16 |
Industrial |
Distribution - Warehouse |
FedEx |
Washington, D.C. |
487 |
100 |
% |
January 2025 |
100 |
% |
||||||||||||
|
17 |
Industrial |
Manufacturing |
Magna |
Kansas City, MO |
468 |
100 |
% |
September 2024 |
95 |
% |
||||||||||||
|
18 |
Industrial |
Cold Storage |
C&S Wholesale Grocers |
Boston, MA |
446 |
100 |
% |
June 2024 |
100 |
% |
||||||||||||
|
19 |
Industrial |
Distribution - Warehouse |
SiteOne |
Chicago, IL |
417 |
100 |
% |
May 2026 |
100 |
% |
||||||||||||
|
20 |
Industrial |
Manufacturing |
Inteva |
Bluffton, IN |
404 |
100 |
% |
December 2024 |
100 |
% |
||||||||||||
|
21 |
Industrial |
Manufacturing |
SAIC |
Bedford, IN |
401 |
100 |
% |
July 2024 |
100 |
% |
||||||||||||
|
22 |
Industrial |
Manufacturing |
Legrand |
Chicago, IL |
331 |
100 |
% |
April 2026 |
100 |
% |
||||||||||||
|
23 |
Industrial |
Manufacturing |
General Dynamics |
Boston, MA |
303 |
100 |
% |
May 2026 |
100 |
% |
||||||||||||
|
24 |
Industrial |
Manufacturing |
Western Digital |
Fremont, CA |
290 |
100 |
% |
December 2025 |
100 |
% |
||||||||||||
|
25 |
Industrial |
Distribution - Warehouse |
Amazon |
Detroit, MI |
258 |
100 |
% |
August 2024 |
100 |
% |
||||||||||||
|
26 |
Industrial |
Manufacturing |
ACTEGA |
Charlotte, NC |
239 |
100 |
% |
June 2024 |
100 |
% |
||||||||||||
|
27 |
Industrial |
Cold Storage |
Americold |
Nashville, TN |
235 |
100 |
% |
December 2025 |
100 |
% |
||||||||||||
|
28 |
Industrial |
Distribution - Warehouse |
Nissan |
Dallas, TX |
231 |
100 |
% |
April 2025 |
100 |
% |
||||||||||||
|
29 |
Industrial |
Distribution - Warehouse |
Huntington |
Norfolk, VA |
231 |
100 |
% |
September 2025 |
100 |
% |
||||||||||||
|
30 |
Industrial |
Cold Storage |
Performance Food Group |
Cleveland, OH |
216 |
100 |
% |
December 2024 |
100 |
% |
||||||||||||
|
31 |
Industrial |
Manufacturing |
Honeywell |
Phoenix, AZ |
197 |
100 |
% |
July 2026 |
100 |
% |
||||||||||||
|
32 |
Alternative |
Research & Development |
KLA |
Silicon Valley, CA |
189 |
100 |
% |
August 2026 |
100 |
% |
||||||||||||
|
33 |
Industrial |
Distribution - Warehouse |
FedEx |
New York, NY |
189 |
100 |
% |
October 2025 |
100 |
% |
||||||||||||
|
34 |
Industrial |
Distribution - Warehouse |
Nissan |
Chicago, IL |
180 |
100 |
% |
April 2025 |
100 |
% |
||||||||||||
|
35 |
Retail |
Merchandise Store |
Bass Pro |
Triadelphia, WV |
173 |
100 |
% |
December 2025 |
100 |
% |
||||||||||||
|
36 |
Industrial |
Manufacturing |
Bazzini Nuts |
Allentown, PA |
161 |
100 |
% |
January 2025 |
100 |
% |
||||||||||||
|
37 |
Industrial |
Manufacturing |
Curtiss-Wright |
Philadelphia, PA |
160 |
100 |
% |
August 2026 |
100 |
% |
||||||||||||
|
38 |
Industrial |
Manufacturing |
Oterra |
Mount Pleasant, WI |
156 |
100 |
% |
March 2025 |
100 |
% |
||||||||||||
|
39 |
Industrial |
Manufacturing |
Oceaneering |
Norfolk, VA |
154 |
100 |
% |
February 2024 |
100 |
% |
||||||||||||
|
40 |
Industrial |
Manufacturing |
UL Solutions |
Fremont, CA |
139 |
100 |
% |
September 2025 |
100 |
% |
||||||||||||
|
41 |
Industrial |
Manufacturing |
ATI |
Hartford, CT |
111 |
100 |
% |
November 2024 |
100 |
% |
||||||||||||
|
42 |
Retail |
Fitness Center |
Life Time |
Kansas City, KS |
110 |
100 |
% |
April 2026 |
100 |
% |
||||||||||||
|
43 |
Retail |
Fitness Center |
Life Time |
Phoenix, AZ |
109 |
100 |
% |
September 2024 |
100 |
% |
||||||||||||
|
44 |
Retail |
Fitness Center |
Life Time |
Phoenix, AZ |
108 |
100 |
% |
December 2025 |
100 |
% |
||||||||||||
|
45 |
Retail |
Fitness Center |
Life Time |
Dallas, TX |
108 |
100 |
% |
December 2025 |
100 |
% |
||||||||||||
|
46 |
Retail |
Fitness Center |
Life Time |
Dallas, TX |
108 |
100 |
% |
April 2026 |
100 |
% |
||||||||||||
|
47 |
Retail |
Fitness Center |
Life Time |
Chicago, IL |
107 |
100 |
% |
April 2026 |
100 |
% |
||||||||||||
|
48 |
Industrial |
Cold Storage |
Giant Eagle |
Columbus, OH |
105 |
100 |
% |
September 2025 |
100 |
% |
||||||||||||
|
49 |
Industrial |
Manufacturing |
King County |
Seattle, WA |
92 |
100 |
% |
November 2025 |
100 |
% |
||||||||||||
|
50 |
Industrial |
Manufacturing |
AIM |
Phoenix, AZ |
80 |
100 |
% |
July 2026 |
100 |
% |
||||||||||||
|
51 |
Healthcare |
Medical Office |
NYU Langone |
New York, NY |
55 |
100 |
% |
December 2025 |
100 |
% |
||||||||||||
|
52 |
Retail |
Merchandise Store |
Floor & Decor |
New York City / New Jersey |
51 |
100 |
% |
September 2026 |
100 |
% |
||||||||||||
|
53 |
Industrial |
Distribution - Warehouse |
Daikin |
Midland, TX |
45 |
100 |
% |
November 2025 |
100 |
% |
||||||||||||
|
54 |
Industrial |
Distribution - Warehouse |
Daikin |
Canton, OH |
41 |
100 |
% |
November 2024 |
100 |
% |
||||||||||||
|
55 |
Industrial |
Distribution - Warehouse |
Daikin |
Panama City, FL |
40 |
100 |
% |
November 2024 |
100 |
% |
||||||||||||
|
56 |
Healthcare |
Medical Office |
UF Health Eustis |
Orlando, FL |
11 |
100 |
% |
August 2026 |
100 |
% |
(1)
Occupancy rate includes all leased square footage as of September 30, 2026.
Investment in Real Estate Debt
During the three months ended September 30, 2026, the Company's investment in real estate debt was repaid at par for aggregate gross proceeds of $76,004.
Build-to-Suit Developments
In June 2025, the Company acquired a preferred equity interest in a joint venture considered to be a VIE of which the Company is the primary beneficiary, and as such is consolidated within the Company's condensed consolidated financial statements. The purpose of the joint venture is to construct a build-to-suit research and development facility subject to a net lease for a single tenant. Refer to "Note 6. Real Estate Under Development" for additional information.
In August 2025, the Company purchased a 242,355 square foot parcel of land in St. John, Indiana for $5,144, inclusive of closing costs in connection with a built-to-suit arrangement for a single tenant. As of September 30, 2026, the Company funded $13,847 in costs related to the development. Refer to "Note 6. Real Estate Under Development" for additional information.
Lease Expirations
The following table details the expiring leases on our real estate investments by annualized base rent and square footage as of September 30, 2026 (square feet in thousands):
|
Year |
Number of Expiring Leases(1) |
Annualized Base Rent(2) |
Square Feet |
% of Total Annualized Base Rent Expiring |
% of Total Square Feet Expiring |
|||||||||||||||
|
2026 |
- |
$ |
- |
- |
0 |
% |
0 |
% |
||||||||||||
|
2027 |
1 |
386 |
91 |
0 |
% |
0 |
% |
|||||||||||||
|
2028 |
- |
- |
- |
0 |
% |
0 |
% |
|||||||||||||
|
2029 |
- |
- |
- |
0 |
% |
0 |
% |
|||||||||||||
|
2030 |
1 |
810 |
111 |
1 |
% |
1 |
% |
|||||||||||||
|
2031 |
- |
- |
- |
0 |
% |
0 |
% |
|||||||||||||
|
Thereafter |
70 |
198,281 |
23,683 |
99 |
% |
99 |
% |
|||||||||||||
|
Total |
72 |
$ |
199,477 |
23,885 |
100 |
% |
100 |
% |
||||||||||||
(1)
Remaining lease term assumes the exercise of the extension options that are for materially below-market rents.
(2)
Annualized base rent is determined from the annualized base rent per leased square foot as of September 30, 2026 and excludes tenant recoveries, straight-line rent and above-market and below-market lease amortization.
Key Components of Our Results from Operations
The following table sets forth information regarding our condensed consolidated results of operations for the three months ended September 30, 2026 and 2025:
|
For the Three Months Ended September 30, |
$ |
|||||||||||
|
2026 |
2025 |
Change |
||||||||||
|
Revenues |
||||||||||||
|
Rental revenue |
$ |
56,001 |
$ |
21,263 |
$ |
34,738 |
||||||
|
Total revenues |
$ |
56,001 |
$ |
21,263 |
$ |
34,738 |
||||||
|
Expenses |
||||||||||||
|
Rental property operating |
$ |
4,982 |
$ |
1,506 |
$ |
3,476 |
||||||
|
Depreciation and amortization |
25,027 |
10,644 |
14,383 |
|||||||||
|
Management fees |
3,286 |
- |
3,286 |
|||||||||
|
Performance participation allocation |
4,899 |
- |
4,899 |
|||||||||
|
General and administrative |
1,894 |
1,163 |
731 |
|||||||||
|
Total expenses |
$ |
40,088 |
$ |
13,313 |
$ |
26,775 |
||||||
|
Other income (expenses) |
||||||||||||
|
Income from investment in real estate debt |
$ |
375 |
$ |
1,710 |
$ |
(1,335 |
) |
|||||
|
Other income |
1,623 |
3,044 |
(1,421 |
) |
||||||||
|
Interest expense |
(21,696 |
) |
(7,565 |
) |
(14,131 |
) |
||||||
|
Total other income (expenses) |
$ |
(19,698 |
) |
$ |
(2,811 |
) |
$ |
(16,887 |
) |
|||
|
Net income (loss) |
$ |
(3,785 |
) |
$ |
5,139 |
$ |
(8,924 |
) |
||||
|
Net loss attributable to non-controlling interests |
$ |
(19 |
) |
$ |
(3 |
) |
$ |
(16 |
) |
|||
|
Net income (loss) attributable to common shareholders |
$ |
(3,766 |
) |
$ |
5,142 |
$ |
(8,908 |
) |
||||
Rental Revenue
During the three months ended September 30, 2026, rental revenue from our tenants in connection with our investments in real estate increased by $34,738 compared to the three months ended September 30, 2025. The increase is primarily attributable to the Company holding 29 additional net lease investments during the three months ended September 30, 2026 compared to the three months ended September 30, 2025.
Rental Property Operating
During the three months ended September 30, 2026, operating expenses in connection with our investments in real estate increased by $3,476 compared to the three months ended September 30, 2025. Rental property operating expenses generally consist of property taxes, insurance and property maintenance, which are generally reimbursable by our tenants as a component of rental revenue. The increase is primarily attributable to the Company holding 29 additional net lease investments during the three months ended September 30, 2026 compared to the three months ended September 30, 2025.
Depreciation and Amortization
During the three months ended September 30, 2026, depreciation on our investments in real estate increased by $8,605 and amortization on our lease intangible assets and liabilities increased by $5,778 compared to the three months ended September 30, 2025. The increase is primarily attributable to the Company holding 29 additional net lease investments during the three months ended September 30, 2026 compared to the three months ended September 30, 2025.
Management Fees
During the three months ended September 30, 2026, the Company incurred $3,286 in management fees and no management fees were recorded for the three months ended September 30, 2025 because the Adviser waived the fees during that period.
Performance Participation Allocation
During the three months ended September 30, 2026, the Company incurred $4,899 in performance participation allocation and no performance participation allocation was recorded for the three months ended September 30, 2025 because it was waived by the Adviser during that period.
General and Administrative Costs
During the three months ended September 30, 2026, general and administrative expenses, which primarily consists of professional services, insurance and transfer agency fees, increased by $731 compared to the three months ended September 30, 2025. The increase is attributable to an increase in professional fees due to a greater number of investments and NAV during the three months ended September 30, 2026 compared to the three months ended September 30, 2025.
Income from Investment in Real Estate Debt
During the three months ended September 30, 2026, income from the Company's investment in real estate debt decreased by $1,335 because its investment in real estate debt was repaid at par during the three months ended September 30, 2026.
Other Income
During the three months ended September 30, 2026, other income, which is comprised of interest income generated on our cash and cash equivalents, decreased by $1,421 as compared to the three months ended September 30, 2025 as a result of a lower average cash balance and lower interest rates on money market funds during three months ended September 30, 2026.
Interest Expense
During the three months ended September 30, 2026, interest expense increased by $14,131 compared to the three months ended September 30, 2025 as a result of an increase of $563,324 in average principal balance on secured debt.
The following table sets forth information regarding our condensed consolidated results of operations for the nine months ended September 30, 2026 and 2025:
|
For the Nine Months September 30, |
$ |
|||||||||||
|
2026 |
2025 |
Change |
||||||||||
|
Revenues |
||||||||||||
|
Rental revenue |
$ |
142,932 |
$ |
53,733 |
$ |
89,199 |
||||||
|
Total revenues |
$ |
142,932 |
$ |
53,733 |
$ |
89,199 |
||||||
|
Expenses |
||||||||||||
|
Rental property operating |
$ |
13,692 |
$ |
5,008 |
$ |
8,684 |
||||||
|
Depreciation and amortization |
63,408 |
26,703 |
36,705 |
|||||||||
|
Management fees |
8,170 |
- |
8,170 |
|||||||||
|
Performance participation allocation |
13,189 |
- |
13,189 |
|||||||||
|
General and administrative |
5,295 |
3,297 |
1,998 |
|||||||||
|
Total expenses |
$ |
103,754 |
$ |
35,008 |
$ |
68,746 |
||||||
|
Other income (expenses) |
||||||||||||
|
Income from investment in real estate debt |
$ |
3,512 |
$ |
5,075 |
$ |
(1,563 |
) |
|||||
|
Decrease in current expected credit loss allowance |
549 |
- |
549 |
|||||||||
|
Other income |
6,171 |
8,882 |
(2,711 |
) |
||||||||
|
Interest expense |
(58,062 |
) |
(16,617 |
) |
(41,445 |
) |
||||||
|
Total other income (expenses) |
$ |
(47,830 |
) |
$ |
(2,660 |
) |
$ |
(45,170 |
) |
|||
|
Net income (loss) |
$ |
(8,652 |
) |
$ |
16,065 |
$ |
(24,717 |
) |
||||
|
Net loss attributable to non-controlling interests |
$ |
(38 |
) |
$ |
(1 |
) |
$ |
(37 |
) |
|||
|
Net income (loss) attributable to common shareholders |
$ |
(8,614 |
) |
$ |
16,066 |
$ |
(24,680 |
) |
||||
Rental Revenue
During the nine months ended September 30, 2026, rental revenue from our tenants in connection with our investments in real estate increased by $89,199 compared to the nine months ended September 30, 2025. The increase is primarily attributable to the Company holding 29 additional net lease investments during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Rental Property Operating
During the nine months ended September 30, 2026, operating expenses in connection with our investments in real estate increased by $8,684 compared to the nine months ended September 30, 2025. Rental property operating expenses generally consist of property taxes, insurance and property maintenance, which are generally reimbursable by our tenants as a component of rental revenue. The increase is primarily attributable to the Company holding 29 additional net lease investments during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Depreciation and Amortization
During the nine months ended September 30, 2026, depreciation on our investments in real estate increased by $21,550 and amortization on our lease intangible assets and liabilities increased by $15,155 compared to the nine months ended September 30, 2025. The increase is primarily attributable to the Company holding 29 additional net lease investments during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Management Fees
During the nine months ended September 30, 2026, the Company incurred $8,170 in management fees and no management fees were recorded for the nine months ended September 30, 2025 because the Adviser waived the fees during that period.
Performance Participation Allocation
During the nine months ended September 30, 2026, the Company incurred $13,189 in performance participation allocation and no performance participation allocation was recorded for the nine months ended September 30, 2025 because it was waived by the Adviser during that period.
General and Administrative Costs
During the nine months ended September 30, 2026, general and administrative expenses, which primarily consist of professional services, insurance and transfer agency fees, increased by $1,998 compared to the nine months ended September 30, 2025. The increase is attributable to an increase in professional fees due to a greater number of investments and NAV during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Income from Investment in Real Estate Debt
During the nine months ended September 30, 2026, income from the Company's investment in real estate debt decreased by $1,563 because its investment in real estate debt was repaid at par during the three months ended September 30, 2026.
Decrease in Current Expected Credit Loss Allowance
During the nine months ended September 30, 2026, the Company's current expected credit loss allowance was reduced by $549 because its investment in real estate debt was repaid at par during the three months ended September 30, 2026.
Other Income
During the nine months ended September 30, 2026, other income, which is comprised of interest income generated on our cash and cash equivalents, decreased by $2,711 as compared to the nine months ended September 30, 2025 as a result of a lower average cash balance and lower interest rates on money market funds during nine months ended September 30, 2026.
Interest Expense
During the nine months ended September 30, 2026, interest expense increased by $41,445 compared to the nine months ended September 30, 2025 as a result of an increase of $563,324 in average principal balance on secured debt.
NAV and NAV Per Share Calculation
We calculate NAV per share in accordance with the valuation guidelines that have been approved by our board of trustees (the "Valuation Guidelines").
The following table provides a breakdown of the major components of our NAV as of September 30, 2026:
|
Components of NAV |
September 30, 2026 |
|||
|
Investments in real estate |
$ |
3,078,597 |
||
|
Cash and cash equivalents |
242,449 |
|||
|
Restricted cash and restricted cash equivalents |
70,444 |
|||
|
Real estate under development, net(1) |
88,389 |
|||
|
Other assets |
18,861 |
|||
|
Secured debt, net of deferred financing costs |
(1,597,587 |
) |
||
|
Subscriptions received in advance |
(65,515 |
) |
||
|
Other liabilities |
(99,758 |
) |
||
|
Due to affiliates |
(6,713 |
) |
||
|
Non-controlling interests |
(12,122 |
) |
||
|
Net Asset Value |
$ |
1,717,045 |
||
|
Number of outstanding common shares / Operating Partnership units(2) |
81,876,399 |
|||
(1)
Presented net of $139,499 in tenant contributions related to real estate under development.
(2)
Includes Class E shares and Class E Operating Partnership units subject to redemption features, classified as redeemable common shares and redeemable non-controlling interests.
The following table provides a breakdown of the total NAV and NAV per share/unit by class as of September 30, 2026 (dollars are in thousands except for per share/unit amounts):
|
Net asset value per share / unit |
Class S |
Class F-S |
Class I |
Class L-I |
Class F-I |
Class E |
Operating |
Total |
||||||||||||||||||||||||
|
NAV |
$ |
531,243 |
$ |
386,694 |
$ |
311,978 |
$ |
5,053 |
$ |
267,888 |
$ |
209,057 |
$ |
5,132 |
$ |
1,717,045 |
||||||||||||||||
|
Shares / Operating Partnership units outstanding |
25,405,284 |
18,388,165 |
14,915,152 |
241,502 |
12,743,424 |
9,938,889 |
243,983 |
81,876,399 |
||||||||||||||||||||||||
|
NAV per share / unit |
$ |
20.9107 |
$ |
21.0295 |
$ |
20.9169 |
$ |
20.9244 |
$ |
21.0217 |
$ |
21.0343 |
$ |
21.0343 |
$ |
20.9712 |
||||||||||||||||
(1)
Includes Class E shares subject to repurchase features, classified as redeemable common shares.
The key assumption used to determine the valuations of our investments in real estate is the capitalization rate. As of September 30, 2026, the weighted-average capitalization rate for our industrial, healthcare and retail net lease properties was 6.5%, 6.8% and 6.9%, respectively. The table below shows how a change in the capitalization rate, assuming all other factors remain unchanged, would impact the value of our net lease industrial, retail and healthcare property investments.
|
Assumption |
Hypothetical |
Industrial |
Healthcare |
Retail |
||||||||||
|
Capitalization rate |
0.25% Decrease |
4.1 |
% |
3.8 |
% |
3.7 |
% |
|||||||
|
(weighted-average) |
0.25% Increase |
(3.8 |
)% |
(3.6 |
)% |
(3.5 |
)% |
|||||||
In accordance with our Valuation Guidelines, investments in real estate are held at cost for up to three months following their acquisition. Once we determine a fair value for more than one research and development and one land property, we will include the key assumptions used in the determination of fair value for such property type and a sensitivity analysis related thereto.
The following table reconciles total shareholders' equity per our condensed consolidated balance sheets to our NAV:
|
September 30, 2026 |
||||
|
Total shareholders' equity |
$ |
1,430,744 |
||
|
Redeemable common shares |
25,767 |
|||
|
Redeemable non-controlling interests |
5,133 |
|||
|
Total shareholders' equity, redeemable common shares and redeemable non-controlling interests under GAAP |
$ |
1,461,644 |
||
|
Adjustments: |
||||
|
Accrued shareholder servicing fees |
63,759 |
|||
|
Accumulated depreciation and amortization |
87,619 |
|||
|
Advanced organization expenses, offering costs and operating expenses |
5,212 |
|||
|
Unrealized net real estate and real estate debt appreciation |
98,811 |
|||
|
NAV |
$ |
1,717,045 |
||
The following details the adjustments to reconcile GAAP total shareholders' equity to our NAV:
•
Under GAAP, shareholder servicing fees are accrued upon the sale of Class S or Class F-S shares, while for NAV only the portion that is payable in the subsequent month is recognized.
•
The Adviser advanced organization and offering expenses and certain operating expenses on our behalf through April 1, 2025. Following April 1, 2025, we began to reimburse the Adviser on a pro-rata basis over a 60 month period. Under GAAP, such advanced organization and operating expenses are expensed when incurred and such advanced offering expenses are charged to shareholders' equity when incurred. Amounts advanced by the Adviser do not impact NAV until we reimburse such amounts.
•
We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of calculating our NAV. For the purposes of calculating our NAV, investments in real estate and borrowings are held at their estimated fair values.
•
We record our investment in real estate debt at amortized cost which includes an allowance for current expected credit losses and deferred fees in accordance with GAAP. For the purpose of calculating our NAV, our investment in real estate debt is held at its estimated fair values.
•
We recognize rental revenue on a straight-line basis under GAAP. Deferred rent adjustments are excluded for the purpose of calculating NAV.
Distributions
We commenced our principal operations on April 1, 2024, and have declared distributions for common shareholders and Operating Partnership unitholders of record as of the last business day of each month since that time. The net distribution varies for each class based on the applicable gross distribution amount (which varies by class to account for varying management fees and the performance participation allocations) and shareholder servicing fee, which are deducted from the monthly distribution per share and paid directly by us to the recipient. The following table summarizes net distributions declared to our common shareholders and Operating Partnership unitholders during the nine months ended September 30, 2026:
|
Record Date |
Class S |
Class F-S |
Class I |
Class L-I |
Class F-I |
Class E (1) |
||||||||||||||||||
|
January 30, 2026 |
$ |
0.1008 |
$ |
0.1124 |
$ |
0.1153 |
$ |
- |
$ |
0.1270 |
$ |
0.1541 |
||||||||||||
|
February 27, 2026 |
0.1009 |
0.1126 |
0.1154 |
- |
0.1272 |
0.1543 |
||||||||||||||||||
|
March 31, 2026 |
0.1010 |
0.1128 |
0.1156 |
- |
0.1274 |
0.1546 |
||||||||||||||||||
|
April 30, 2026 |
0.1017 |
0.1136 |
0.1163 |
- |
0.1282 |
0.1556 |
||||||||||||||||||
|
May 29, 2026 |
0.1019 |
0.1138 |
0.1166 |
- |
0.1286 |
0.1561 |
||||||||||||||||||
|
June 30, 2026 |
0.1021 |
0.1140 |
0.1168 |
- |
0.1288 |
0.1563 |
||||||||||||||||||
|
July 31, 2026 |
0.1022 |
0.1142 |
0.1169 |
- |
0.1290 |
0.1566 |
||||||||||||||||||
|
August 31, 2026 |
0.1024 |
0.1144 |
0.1171 |
0.1249 |
0.1292 |
0.1569 |
||||||||||||||||||
|
September 30, 2026 |
0.1028 |
0.1148 |
0.1176 |
0.1254 |
0.1297 |
0.1576 |
||||||||||||||||||
|
Total: |
$ |
0.9158 |
$ |
1.0226 |
$ |
1.0476 |
$ |
0.2503 |
$ |
1.1551 |
$ |
1.4021 |
||||||||||||
(1)
Non-controlling interests consisted of Class E Operating Partnership units which received per unit distributions in an amount equal to Class E shares.
|
Record Date |
Class S |
Class F-S |
Class I |
Class IO |
Class F-I |
Class F-IO |
Class E (1) |
|||||||||||||||||||||
|
January 31, 2025 |
$ |
0.0867 |
$ |
0.0867 |
$ |
0.1010 |
$ |
- |
$ |
0.1010 |
$ |
- |
$ |
0.1010 |
||||||||||||||
|
February 28, 2025 |
0.0868 |
0.0868 |
0.1011 |
- |
0.1011 |
- |
0.1011 |
|||||||||||||||||||||
|
March 31, 2025 |
0.0869 |
0.0869 |
0.1012 |
- |
0.1012 |
- |
0.1012 |
|||||||||||||||||||||
|
April 30, 2025 |
0.0871 |
0.0871 |
0.1014 |
0.1014 |
0.1014 |
0.1014 |
0.1014 |
|||||||||||||||||||||
|
May 30, 2025 |
0.0871 |
0.0871 |
0.1015 |
0.1015 |
0.1015 |
0.1015 |
0.1015 |
|||||||||||||||||||||
|
June 30, 2025 |
0.0872 |
0.0872 |
0.1016 |
0.1016 |
0.1016 |
0.1016 |
0.1016 |
|||||||||||||||||||||
|
July 31, 2025 |
0.0873 |
0.0873 |
0.1017 |
0.1017 |
0.1017 |
0.1017 |
0.1017 |
|||||||||||||||||||||
|
August 31, 2025 |
0.1001 |
0.1001 |
0.1145 |
0.1145 |
0.1145 |
0.1145 |
0.1145 |
|||||||||||||||||||||
|
September 30, 2025 |
0.1006 |
0.1006 |
0.1150 |
0.1150 |
0.1150 |
0.1150 |
0.1150 |
|||||||||||||||||||||
|
Total: |
$ |
0.8098 |
$ |
0.8098 |
$ |
0.9390 |
$ |
0.6357 |
$ |
0.9390 |
$ |
0.6357 |
$ |
0.9390 |
||||||||||||||
(1)
Non-controlling interests consisted of Class E Operating Partnership units which received per unit distributions in an amount equal to Class E shares.
The following table summarizes the payment character and sources of distributions paid for the nine months ended September 30, 2026 and 2025:
|
For the Nine Months Ended September 30, |
||||||||||||||||
|
2026 |
2025 |
|||||||||||||||
|
Distributions |
Amount |
Percentage |
Amount(1) |
Percentage |
||||||||||||
|
Paid in cash |
$ |
29,183 |
42 |
% |
$ |
15,379 |
43 |
% |
||||||||
|
Reinvested in shares |
39,840 |
58 |
% |
20,005 |
57 |
% |
||||||||||
|
Total distributions |
$ |
69,023 |
100 |
% |
$ |
35,384 |
100 |
% |
||||||||
|
Sources of Distributions |
||||||||||||||||
|
Cash flows from operating activities |
$ |
69,023 |
100 |
% |
$ |
35,384 |
100 |
% |
||||||||
|
Total sources of distributions |
$ |
69,023 |
100 |
% |
$ |
35,384 |
100 |
% |
||||||||
|
Cash flows from operating activities |
$ |
75,708 |
$ |
42,654 |
||||||||||||
(1)
Prior period amounts have been revised to conform with the current period presentation.
Financial Condition, Liquidity and Capital Resources
Liquidity
We believe we have sufficient liquidity to operate our business with $312,893 in cash, cash equivalents and restricted cash as of September 30, 2026. We expect to generate cash primarily from (i) the net proceeds of the Offering, (ii) cash flows from our operations, (iii) financing arrangements and (iv) any future offerings of our equity or debt securities. Our primary use of cash will be for (i) acquisition of net lease assets, acquisition or origination of CRE debt investments and other real estate-related debt investments, (ii) the cost of operations (including the management fee and performance participation), (iii) debt service of any borrowings, (iv) periodic repurchases, including under our share repurchase plan (as amended the "Share Repurchase Plan"), and (v) cash distributions (if any) to the holders of our common shares to the extent declared by our board of trustees.
Capital Resources
The following table summarizes our secured debt as of September 30, 2026 and December 31, 2025:
|
September 30, 2026 |
December 31, 2025 |
|||||||||||||||||||||||
|
Indebtedness |
Weighted-Average Interest Rate(1) |
Weighted-Average Maturity Date |
Principal Balance |
Amortized Cost |
Weighted-Average Interest Rate(1) |
Weighted-Average Maturity Date |
Principal Balance |
Amortized Cost |
||||||||||||||||
|
Mortgage loans(2) |
5.89% |
5/10/2031 |
$ |
1,637,537 |
$ |
1,636,362 |
5.72% |
3/5/2031 |
$ |
1,064,893 |
$ |
1,063,201 |
||||||||||||
|
Secured note(3) |
N/A |
N/A |
- |
- |
S + 2.00% |
1/1/2028 |
50,300 |
50,300 |
||||||||||||||||
|
Deferred financing costs, net |
(12,372 |
) |
(8,845 |
) |
||||||||||||||||||||
|
Total secured debt, net: |
$ |
1,637,537 |
$ |
1,623,990 |
$ |
1,115,193 |
$ |
1,104,656 |
||||||||||||||||
(1)
The term "S" represents the one-month SOFR, which was 3.88% as of December 31, 2025.
(2)
Amortized cost is net of unamortized mortgage discount of $1,174 and $1,762 and premium of $0 and $70 as of September 30, 2026 and December 31, 2025, respectively.
(3)
Secured by an investment in real estate debt with the same benchmark rate and maturity date including two one-year extension options. During the three months ended September 30, 2026, the secured note was repaid in full in connection with the repayment of the investment in real estate debt.
Cash Flows
Cash flows from operating activities were $75,708 for the nine months ended September 30, 2026, primarily as a result of net rental revenue generated on our investments in real estate.
Cash flows used in investing activities were $1,020,145 for the nine months ended September 30, 2026, primarily relating to the acquisition of net lease investments and funding of construction costs related to a joint venture to construct a build-to-suit research and development facility subject to a net lease for a single tenant. Refer to "Note 6. Real Estate Under Development" for additional information.
Cash flows from financing activities were $1,122,485 for the nine months ended September 30, 2026, primarily relating to proceeds from the Offering and secured debt.
Critical Accounting Estimates
The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and requires estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our condensed consolidated financial statements. The following is a summary of our significant accounting policies that we believe are the most affected by our judgments, estimates, and assumptions. See "Note 2. Summary of Significant Accounting Policies" to our condensed consolidated financial statements for further descriptions of the below accounting policies.
Investments in Real Estate
We expect that most of our acquisitions will qualify as asset acquisitions rather than business combinations pursuant to the ASC Topic 805, "Business Combinations." Upon the acquisition of a property, we assess the fair value of the acquired tangible and intangible assets and assumed liabilities (including land, buildings, above- and below-market leases, acquired in-place leases, and other identified intangible assets and assumed liabilities) and we allocate the purchase price to them, on a relative fair value basis. The most significant portion of the allocation is generally to building and land and requires the use of market-based estimates and assumptions. We assess and consider fair value based on estimated cash flow projections that utilize appropriate discount and/or capitalization rates, as well as other available market information. Estimates of future cash flows are based on several factors including the historical operating results, known and anticipated trends, and market and economic conditions.
The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. We also consider an allocation of purchase price of acquired intangible assets and liabilities.
We also consider whether acquired in-place leases that may have a customer relationship intangible value, considering factors including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenants' credit quality and expectations of lease renewals.
Acquired above- and below-market leases are recorded at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) management's estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases.
Other intangible assets acquired include amounts for in-place lease values that are based on our evaluation of the specific characteristics of each tenant's lease. Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, we consider leasing commissions, legal and other related expenses.
Impairment of Investments in Real Estate
Once real estate assets have been recorded, they are subsequently evaluated for impairment on a quarterly basis. A real estate asset is considered impaired when the sum of estimated future undiscounted cash flows to be generated by the real estate asset over the estimated remaining holding period is less than the carrying value of such real estate asset. An impairment charge is recorded equal to the excess of the carrying value of the real estate asset over the fair value. When determining the fair value of a real estate asset for the purpose of assessing impairment, we make certain assumptions including, but not limited to: consideration of projected operating cash flows, intended holding period of the real estate, comparable selling prices and projected cash flows from the eventual disposition of the real estate based upon our estimate of a capitalization rate and discount rate. While we exercise significant judgment in generating our assumptions, the asset's fair value is subject to uncertainty, as actual operating cash flows and disposition proceeds could differ from those assumed in our valuations. Additionally, the output is sensitive to the assumptions used in calculating any potential impairment.
Impairment of Investments in Unconsolidated Joint Ventures
We analyze investments in unconsolidated joint ventures for impairment. This analysis consists of determining whether an expected loss in market value of an investment is other than temporary by evaluating the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the investment, and our intent and ability to retain our investment for a period of time sufficient to allow for any anticipated recovery in market value. As the factors used in this analysis are difficult to predict and subject to future events that may alter our assumptions, we may be required to recognize future impairment losses on our investment in unconsolidated affiliates.
Recent Accounting Pronouncements
See "Note 2. Summary of Significant Accounting Policies" to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion concerning recent accounting pronouncements.
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