Brookfield Real Estate Income Trust Inc.

03/17/2026 | Press release | Distributed by Public on 03/17/2026 15:31

Annual Report for Fiscal Year Ending DECEMBER 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References herein to the "Company," "we," "us," or "our" refer to Brookfield Real Estate Income Trust Inc. and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in Part I Item 1.A - "Risk Factors" in this Annual Report on Form 10-K.
Overview
We are a Maryland corporation formed on July 27, 2017 to invest in commercial real estate assets. We seek to invest in well-located, high quality real estate properties that generate strong current cash flow and could further appreciate in value through our proactive, best-in-class asset management strategies. Our real estate-related debt strategy seeks to achieve high current income and superior risk-adjusted returns, as well as provide a source of liquidity.
We are externally managed by Brookfield REIT Adviser LLC (the "Adviser"), an affiliate of Brookfield Asset Management Ltd. (together with its affiliates, "Brookfield"). We are structured as an umbrella partnership real estate investment trust ("UPREIT"), which means that we own substantially all of our assets through our operating partnership, Brookfield REIT Operating Partnership L.P. (the "Operating Partnership"), a Delaware limited partnership, of which our wholly owned subsidiary is the sole general partner.
We are conducting a Public Offering of Class S, Class T, Class D and Class I shares of our common stock pursuant to the Securities Act of 1933, as amended (the "Securities Act"). On April 30, 2018, we launched our initial public offering of up to $2.0 billion in shares of our common stock. On November 2, 2021, the Initial Public Offering terminated, and we commenced our second public offering of up to $7.5 billion in shares of our common stock. On July 2, 2025, the second public offering terminated and we commenced our third public offering of up to $7.5 billion in shares of our common stock.
In addition to the Current Public Offering, we are conducting private offerings of Class I and Class C shares to feeder vehicles that offer interests in such vehicles to non-U.S. persons. The offer and sale of Class I and Class C shares to the feeder vehicles is exempt from the registration provisions of the Securities Act by virtue of Section 4(a)(2) and Regulation S promulgated thereunder. We are also offering Class E shares to Brookfield and its affiliates, certain of Brookfield's and Oaktree's employees, and our independent directors in one or more private offerings. The offer and sale of Class E shares is exempt from the registration provisions of the Securities Act by virtue of Section 4(a)(2) and Regulation D promulgated thereunder.
On January 1, 2025, we sold in a private offering exempt from the registration provisions of the Securities Act by virtue of Section 4(a)(2) unregistered shares of Class I common stock to an institutional investor in exchange for a $200.0 million subscription. The issuance was made at the same transaction price as Class I shares sold through the Public Offering as of January 1, 2025, with fees consistent with existing Class I stockholders. Brookfield entered into a separate agreement with the investor pursuant to which Brookfield will support a specified total annual return on the investor's investment in our Class I shares in the form of periodic cash payments, subject to certain limits. In exchange, the investor has agreed not to request the repurchase of its shares, subject to limited exceptions, for a period of five years from the issuance date, at which point the investor may request that we repurchase its shares through our share repurchase plan ratably over a two-year period.
As of March 17, 2026, we have received cumulative net proceeds of $1.1 billion, including proceeds received pursuant to our distribution reinvestment plan, from the sale of shares of our Class S, Class D, Class I, Class E, Class C and Class T common stock in our Public Offering and our private offerings.
We qualified as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2019, and we generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT.
As of December 31, 2025, we owned 19 investments in real estate, 21 investments in real estate-related securities, four investments in real estate-related loans, two forward currency swaps related to investments in real estate-related loans and securities, four investments in unconsolidated real estate ventures and one forward currency swap related to investments in unconsolidated real estate ventures. We currently operate in six reportable segments: multifamily, student housing, office, logistics, single-family rental, net lease and real estate-related loans and securities. 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 owning properties or real estate-related loans.
DST Program
On October 1, 2024, we initiated, through the Operating Partnership, a program (the "DST Program") to issue and sell up to a maximum aggregate offering amount of $1.0 billion of beneficial interests ("DST Interests") in specific Delaware statutory trusts ("DSTs") holding one or more real properties (each, a "DST Property" and, collectively, the "DST Properties"). These DST Interests will be issued and sold to "accredited investors," as that term is defined under Regulation D promulgated by the SEC under the Securities Act, in one or more offerings (the "DST Offerings"). Under the DST Program, each DST Property will be sourced from our real properties or from third parties, which will be held in a DST and subsequently leased by one of our wholly owned subsidiaries in accordance with a certain master lease agreement. Each master lease agreement will be guaranteed by the Operating Partnership, which will hold a fair market value option (the "FMV Option"), giving it the right, but not the obligation, to acquire the DST Interests in the applicable DST from the investors in exchange for Operating Partnership units or cash, at the Operating Partnership's discretion. Such FMV Option shall be exercisable during a one-year option period, beginning two years following the sale of the last DST Interest in any such DST Offering. The Operating Partnership, in its sole and absolute discretion, may assign its rights in the FMV Option to a subsidiary, an affiliate, a successor entity to the Operating Partnership or the acquirer of a majority of the Operating Partnership's assets. After a one-year holding period, investors who acquire Operating Partnership units pursuant to the FMV Option generally have the right to cause the Operating Partnership to redeem all or a portion of their Operating Partnership units for, at our sole discretion, shares of our common stock, cash, or a combination of both.
We expect that the DST Program will give 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 like-kind replacement properties to complete tax-deferred exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"). Affiliates of the Adviser have provided and may continue to provide mortgage financing with respect to certain DST Properties and are expected to receive fees in connection with the sale of the DST 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 have not allocated specific amounts of the net proceeds from the DST Program for any specific purpose. As of December 31, 2025, we have raised approximately $117.5 million of aggregate gross proceeds from our DST Program.
Recent Developments
Business Outlook
Real estate fundamentals remain strong in most sectors, supported by steady tenant demand and stable occupancy. After a prolonged period of valuation adjustments driven by higher interest rates and reduced transaction activity, pricing has begun to stabilize in most sectors. Broader macroeconomic uncertainty, driven by the potential for elevated tariffs and geopolitical conflicts, has contributed to volatility in public markets; however, the extent and duration of any indirect impact on private real estate fundamentals remains uncertain. Assets characterized by durable income streams, strong tenant credit profiles, and prudent capital structures are expected to be better positioned in this environment.
In December 2025, the U.S. Federal Reserve reduced the federal funds rate for the third consecutive month, bringing rates to the lowest point in more than three years. While future monetary policy actions remain uncertain, a lower interest rate environment, coupled with a more stable macroeconomic environment, should improve the availability of capital and increase real estate transaction activity.
New property development is expected to be curtailed in the near-term due to higher construction costs, limiting future supply additions across most property types. Historically, a decrease in new supply leads to a period of real estate rental income growth and valuation increases. Favorable supply trends, combined with a healthy capital markets environment, should present attractive opportunities for well-capitalized sponsors to acquire assets with strong underlying fundamentals and long-term growth potential.
With no unsatisfied repurchase requests and approximately $548.6 million of total liquidity as of December 31, 2025, we believe we are well-positioned to capitalize on current market conditions and selectively pursue opportunities consistent with our investment strategy.
2025 Highlights
Operating and Capital Raising Results:
•Total return for the year ended December 31, 2025, excluding upfront selling commissions, was 0.11% for Class S, 1.00% for Class I, 0.68% for Class D shares and 0.38% for Class T shares. Positive performance in 2025 was attributable to the net operating income generated by our investments and stabilizing property valuations. Total return is calculated as the percent change in the net asset value ("NAV") per share during the respective periods, plus the amount of any net distributions per share declared in the period. Management believes total return is a useful measure of the overall performance of our shares.
•Annualized total return from inception through December 31, 2025, excluding upfront selling commissions, was 5.24% for Class S, 6.26% for Class I, -1.64% for Class D and 0.38% for Class T shares. Since inception returns for Class D shares are calculated from June 1, 2023, the date the first Class D shares were issued and Class T shares are calculated from February 1, 2025, the date the first Class T shares were issued.
•Raised $227.9 million from the sale of our common stock during the year ended December 31, 2025.
•Declared monthly net distributions totaling $49.7 million for the year ended December 31, 2025. As of December 31, 2025, the annualized net distribution rate was 6.11% for Class S, 6.88% for Class I, 6.56% for Class D and 5.99% for Class T shares.
•Reinvested distributions of $14.9 million during the year ended December 31, 2025.
Investing and Financing Activity:
•In January 2025, we acquired a position in a mezzanine loan secured by real estate with a principal balance of a $99.9 million ($119.0 million fully funded). The loan was acquired at par and had an interest rate of SOFR plus 8.00%. In October 2025, we received full repayment of the loan in the amount of $119.0 million.
•In February 2025, we acquired a 19.4% interest in the U.S. Diversified Logistics Portfolio I, a portfolio of 72 logistics properties located in ten major U.S. markets, through a limited partnership interest in a private fund that owns the investment.
•In February 2025, we refinanced a property mortgage at Lakes at West Covina for a five-year term with a principal amount of $23.7 million and a fixed interest rate of 7.3%.
•In April 2025, we closed on a $185.0 million credit facility secured by our single-family rental portfolio. As of December 31, 2025, the SFR Secured Credit Facility (as defined below) has an outstanding principal balance of $130.0 million with undrawn capacity of $55.0 million for future single-family rental acquisitions.
•In May 2025, we refinanced our five property logistics portfolio with a $62.0 million mortgage loan. The loan has a five-year term and an interest rate of SOFR plus 1.70%.
•In May 2025, we amended the Secured Credit Facility (as defined below) for an additional two-year term with a total capacity of $250.0 million and an interest rate of SOFR plus 2.75%. As of December 31, 2025, there is no outstanding balance on the facility.
•In June 2025, we acquired a 19.4% interest in the U.S. Diversified Logistics Portfolio II, a portfolio of 53 logistics properties located in four major U.S. markets, through a limited partnership interest in a private fund that owns the investment.
•In July 2025, we repaid an $80.0 millionproperty mortgage secured by Briggs + Union and contributed the property to the DST Program. The DST subsequently obtained a property mortgage from an affiliate of the Adviser with a principal balance of $81.0 millionand a fixed rate of 4.2%.
•In September 2025, we originated a £29.3 millionmezzanine loan secured by One London Wall Place, a fully-leased, Class-A office building in London, U.K. The loan has a fixed rate of 9.9%and maturity date of April 2027. In connection with the loan, we entered into a foreign exchange swap to hedge the full principal and interest payment amounts. In October and December 2025, we received principal repayments from the borrower in the amounts of £1.5 millionand £3.5 million, respectively.
•In November 2025, we acquired a portfolio of 120 single-family rental homes in Tampa, Florida, for a purchase price of $32.1 million. In connection with the acquisition, we issued Operating Partnership units with a value of $16.3 million to the seller as consideration and borrowed $20.5 million on the SFR Secured Credit Facility.
Current Portfolio:
•Our portfolio as of December 31, 2025, based on the net asset value of our investments, consisted of 81% real estate properties and 19% real estate-related loans and securities. Net asset value is measured as the fair value of our investments less any mortgages or debt obligations related to such investments. There is no indebtedness on our real estate-related debt investments.
•Our real estate properties as of December 31, 2025, based on the total asset value of our properties measured at fair value, consisted of multifamily (47%), net lease (21%), logistics (15%), single-family rental (10%), student housing (5%), and office (2%).
•As of December 31, 2025, our real estate-related loans and securities consisted of 26 investments with an aggregate fair value of $101.1 million.
Portfolio
The following table provides information regarding our portfolio of real properties as of December 31, 2025:
Investment(1)
Location Property Type Acquisition Date
Ownership Percentage(2)
Purchase Price(3)
Square Feet/ Number of Units
Occupancy Rate(4)
Anzio Apartments Atlanta, GA Multifamily April 2019 90% $ 59.2 448 89 %
Arbors of Las Colinas Dallas, TX Multifamily December 2020 90% 63.5 408 95 %
1110 Key Federal Hill Baltimore, MD Multifamily September 2021 100% 73.6 224 84 %
Domain Orlando, FL Multifamily November 2021 100% 74.1 324 92 %
The Burnham Nashville, TN Multifamily November 2021 100% 129.0 328 96 %
Flats on Front Wilmington, NC Multifamily December 2021 100% 97.5 273 94 %
Verso Beaverton, OR Multifamily December 2021 100% 74.0 172 94 %
2626 South Side Flats Pittsburgh, PA Multifamily January 2022 100% 90.0 264 90 %
The Parker at Huntington Metro(5)
Alexandria, VA Multifamily March 2022 100% 136.0 360 93 %
Briggs + Union(5)
Mount Laurel, NJ Multifamily April 2022 100% 158.0 490 93 %
Single-Family Rentals Various Single-Family Rental Various 100% 210.7 787 92 %
Reflection Atlanta, GA Student Housing June 2024 97% 116.0 741 84 %
Principal Place(6)
London, UK Net Lease November 2021 20% 99.8 644,000 100 %
DreamWorks Animation Studios Glendale, CA Net Lease December 2021 100% 326.5 497,000 100 %
Lakes at West Covina Los Angeles, CA Office February 2020 95% 41.0 177,000 96 %
6123-6227 Monroe Ct Morton Grove, IL Logistics November 2021 100% 17.2 208,000 100 %
8400 Westphalia Road Upper Marlboro, MD Logistics November 2021 100% 27.0 100,000 100 %
McLane Distribution Center Lakeland, FL Logistics November 2021 100% 26.7 211,000 100 %
2003 Beaver Road Landover, MD Logistics February 2022 100% 9.4 38,000 100 %
187 Bartram Parkway Franklin, IN Logistics February 2022 100% 28.8 300,000 100 %
US Diversified Logistics Portfolio I(7)
Various Logistics February 2025 19% 41.0 9,384,444 91 %
US Diversified Logistics Portfolio II(7)
Various Logistics June 2025 19% 14.4 1,926,759 90 %
Total $ 1,913.4
(1) Investments in real estate properties includes our consolidated property investments and our unconsolidated investments in Principal
Place, U.S. Diversified Logistics Portfolio I and U.S. Diversified Logistics Portfolio II.
(2) The joint venture agreements entered into by us (other than the Principal Place joint venture, and U.S. Diversified Logistics Portfolio I and II) provide the other partner a profits interest based on achieving certain internal rate of return hurdles. Such investments are consolidated by us and any profits interest due to the other partners is reported within non-controlling interests.
(3) Excludes acquisition costs.
(4)
For multifamily and student housing investments, occupancy represents the percentage of all leased units divided by the total available units as of December 31, 2025. Single-family rentals occupancy represents all occupied homes divided by the total stabilized homes as of the date indicated. For office, net lease and logistics investments, occupancy represents the percentage of all leased square footage divided by the total available square footage as of December 31, 2025.
(5) Held through our DST Program. The property has been consolidated on our Consolidated Balance Sheets and any profits interest due to
the third-party investors in the DST Program are reported within non-controlling interests in consolidated joint ventures.
(6) Purchase price represents our initial equity investment in the joint venture of £73.3 million British Pounds ("GBP") converted to USD using the spot rate on the acquisition date.
(7)
Held through a limited partnership interest in a Brookfield-managed fund that owns the investments. Purchase price represents the
aggregate amount of capital funded to the limited partnership by us as of December 31, 2025.
Investments in Real Estate-Related Loans and Securities
The following table details our real estate-related loans and securities as of December 31, 2025 ($ in thousands):
December 31, 2025
Type of Loan/ Security Number of Positions
Weighted Average Coupon(1)
Weighted Average Maturity Date(2)
Face Amount
Cost Basis/Allowance Adjustment (3)
Carrying Amount
Investments held at Fair value
CMBS - floating 7 SOFR+ 3.91% May 2027 $ 28,765 $ 25,985 $ 27,133
CMBS - fixed 4 4.56% November 2026 23,413 20,650 5,170
RMBS - floating 2 SOFR+ 1.76% August 2030 2,499 2,501 2,504
RMBS - fixed 8 4.71% January 2036 21,492 21,000 21,226
Cross currency forward contracts 1 N/A January 2026 - - (3)
Total investments held at fair value 22 5.85% October 2029 76,169 70,136 56,030
Investments held at amortized cost
Real estate-related loans - floating 1 SOFR+8.15% June 2026 7,044 - 7,044
Real estate-related loans - fixed 3 9.92% May 2028 42,013 (4,034) 37,979
Total investments held at amortized cost 4 10.22% January 2028 49,057 (4,034) 45,023
Total investments in real estate-related loans and securities 26 7.56% February 2029 $ 125,226 $ 66,102 $ 101,053
(1)
As of December 31, 2025, SOFR was equal to 3.87%.
(2) Weighted average maturity date is based on the fully extended maturity date of the instruments.
(3) Adjustments include the cumulative provision for current expected credit losses, unamortized fee income, and a foreign currency translation adjustment attributable to real estate-related loans.
Lease Expirations
The following table details the expiring leases at our consolidated office, logistics and net lease properties by annualized base rent and square footage as of December 31, 2025 ($ and square feet data in thousands). The table below excludes our multifamily, student housing and single-family rental properties as substantially all leases at such properties expire within 12 months.
Year Number of Expiring Leases
Annualized Base Rent(1)
% of Total
Annualized Base
Rent Expiring
Approximate Gross Leasable Square Footage of Expiring Leases % of Total Square Feet Expiring
2026 6 $ 1,327 5 % 39 3 %
2027 6 769 3 % 46 3 %
2028 10 1,648 6 % 76 5 %
2029 11 2,195 8 % 182 12 %
2030 12 1,964 7 % 120 8 %
2031 5 1,185 4 % 54 4 %
2032 1 1,390 5 % 211 14 %
2033 2 109 - % 3 - %
2034 1 1,467 5 % 300 20 %
2035 1 15,284 57 % 460 31 %
Thereafter - - - % - - %
Total 55 $ 27,338 100 % 1,491 100 %
(1)
Annualized base rent is determined from the annualized 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.
Results of Operations
The following table sets forth information regarding our consolidated results of operations ($ in thousands):
Year Ended December 31,
2025 vs. 2024
2025 2024 $
Revenues
Rental revenues $ 129,834 $ 129,421 $ 413
Other revenues 13,474 14,567 (1,093)
Total revenues 143,308 143,988 (680)
Expenses
Rental property operating 55,717 52,886 2,831
General and administrative 6,392 8,113 (1,721)
Management fee 12,726 11,183 1,543
Impairment of investments in real estate - 33,922 (33,922)
Depreciation and amortization 52,550 55,259 (2,709)
Total expenses 127,385 161,363 (33,978)
Other (expense) income
Income from real estate-related loans and securities 17,497 12,055 5,442
Interest expense (59,032) (68,446) 9,414
Gain on extinguishment of debt - 32,251 (32,251)
Gain (loss) from unconsolidated entities 20,998 6,413 14,585
Other income, net 1,407 2,921 (1,514)
Total other expense (19,130) (14,806) (4,324)
Net loss $ (3,207) $ (32,181) $ 28,974
Net (income) loss attributable to non-controlling interests in consolidated joint ventures (1,845) 800 (2,645)
Net income attributable to non-controlling interests - preferred stockholders (77) (69) (8)
Net loss attributable to redeemable non-controlling interests 916 3,680 (2,764)
Net loss attributable to non-controlling interest in Operating Partnership unitholders 45 - 45
Net loss income attributable to Brookfield REIT stockholders $ (4,168) $ (27,770) $ 23,602
Per common share data:
Net loss income per share of common stock - basic and diluted $ (0.06) $ (0.34) $ 0.28
Weighted average number of shares outstanding - basic and diluted 70,182 82,198 (12,016)
Revenues
Revenues primarily consist of base rent arising from tenant leases at our multifamily, student housing, single-family rental, net lease, office and logistics properties. Revenues decreased $0.7 million, from $144.0 million for the year ended December 31, 2024 to $143.3 million for the year ended December 31, 2025. The decrease was primarily due to the sale of an office property in September 2024, partially offset by the incremental rental revenue generated from properties acquired during 2024 and 2025, as well as rental revenue growth at certain single-family rental properties.
The components of revenue during these periods are as follows ($ in thousands):
Year Ended December 31,
2025 vs. 2024
2025 2024 $
Rental revenue $ 120,492 $ 119,983 $ 509
Tenant reimbursements 9,342 9,438 (96)
Ancillary income and fees 13,474 14,567 (1,093)
Total revenue $ 143,308 $ 143,988 $ (680)
Rental Property Operating Expenses
Rental property operating expenses consist of the costs of ownership and operation of our real estate properties, including real estate taxes, repairs and maintenance expenses, utilities, property management fees and insurance expenses. Rental property
operating expenses increased $2.8 million during the year ended December 31, 2025 to $55.7 million compared to $52.9 million for the year ended December 31, 2024. The increase in 2025 was mainly attributable to higher real estate taxes at certain multifamily properties and operating expenses arising from single-family rental and student housing acquisition activities during 2024 and 2025, partially offset by the disposition of an office property.
General and Administrative Expenses
General and administrative expenses are corporate-level expenses that relate mainly to our compliance and administration costs, including legal fees, audit fees, professional tax fees, valuation fees, board of director fees and other professional fees. During the year ended December 31, 2025, general and administrative expenses were $6.4 million compared to $8.1 million during the year ended December 31, 2024. The decrease of $1.7 million was primarily driven by a decrease in professional fees and income tax expense related to our TRSs.
Management Fee
Management fees are earned by our Adviser for providing services pursuant to the advisory agreement among the Adviser, the Operating Partnership and the Company (the "Advisory Agreement"). During the year ended December 31, 2025, the total management fee expense was $12.7 million compared to $11.2 million during the year ended December 31, 2024. Management fees are calculated based on our aggregate NAV of Class S, Class I, Class T, Class D and Class C shares (no management fees are paid on Class E shares) and aggregate DST Property consideration, and are paid monthly. The Operating Partnership pays the Adviser a management fee equal to 1.25% per annum of the Operating Partnership's NAV of its Class T, Class T-1, Class S, Class S-1, Class D, Class D-1, Class I, Class I-1 and Class C units held by unitholders other than the Company, payable monthly. The increase in management fees was due to a higher average NAV during the year ended December 31, 2025, compared to the prior year, and an increase in aggregate DST Property consideration.
Impairment of Investments in Real Estate
During the year ended December 31, 2025, we did not recognize any impairment charges on our investments in real estate. During the year ended December 31, 2024, we recognized impairment charges of $33.9 million related to an office property that was sold during the year.
Depreciation and Amortization
During the year ended December 31, 2025, depreciation and amortization decreased $2.7 million compared to the corresponding period in 2024. The decrease is attributable to the routine asset retirements and the disposition of an office asset.
Income from Real Estate-Related Loans and Securities
Income from real estate-related loans and securities was $17.5 million and $12.1 million for the years ended December 31, 2025 and 2024, respectively. The $5.4 million increase was primarily attributable to the interest income from real estate-related loans resulting from purchases during the current period, including the $119 million mezzanine loan held from January 2025 to October 2025, partially offset by the sales of real estate-related securities. As of December 31, 2025, the weighted average coupon of our investments in real estate-related loans and securities was 7.56% and 36% of our investments in real estate-related loans and securities were variable rate.
Interest Expense
Interest expense is primarily related to interest incurred on our mortgage loans, a credit agreement with a lender secured by certain of our properties (the "Secured Credit Facility"), a credit agreement with a lender secured by our single-family rental properties (the "SFR Secured Credit Facility") and an uncommitted line of credit from an affiliate of Brookfield (the "Affiliate Line of Credit"). For the year ended December 31, 2025, interest expense was $59.0 million compared to $68.4 million for the year ended December 31, 2024. The $9.4 million decrease is attributable to the extinguishment of debt through the sale of an office property in 2024, as well as the refinancing of certain mortgage loans at lower interest rates and declining interest rates on our variable-rate debt, partially offset by increases due to financings on new property acquisitions. As of December 31, 2025, and 2024 our weighted average cost of leverage, including the impact of our interest rate derivatives, was 4.76%, and 5.02% respectively.
Gain on Extinguishment of Debt
Gain on extinguishment of debt consists of the difference between the carrying amount of debt that is repaid or otherwise settled prior to maturity and the total consideration paid to extinguish the obligation. During the year ended December 31, 2025 we did not recognize any gain on extinguishment of debt. In comparison, during the year ended December 31, 2024, we recognized a gain on extinguishment of debt of $32.3 million related to the sale of an office property.
Gain (Loss) from Unconsolidated Entities, Net
Gain from unconsolidated entities consists of changes in the fair value of our investments in unconsolidated entities that are held at fair value, as well as realized and unrealized gains and losses on our foreign currency swap contracts related to our unconsolidated non-U.S. investment in Principal Place. During the years ended December 31, 2025 and 2024, gain from unconsolidated entities was $21.0 million and $6.4 million, respectively. The $14.6 million increase was primarily attributable to $13.3 million and $1.1 million favorable changes in the fair value of the U.S. Diversified Logistics Portfolios I and II, respectively, which benefited from undistributed gains related to property dispositions. The $7.3 million gain from foreign currency translation related to our unconsolidated interest in Principal Place was offset by a $7.1 million loss from changes in the fair value of our foreign currency swap contracts.
Other Income (Expense), Net
Other income (expense), net consists of realized and unrealized gains and losses on our interest rate derivatives and income from our trading securities. During the years ended December 31, 2025 and 2024, other income was $1.4 million and $2.9 million, respectively. The $1.5 million decrease is primarily attributable to the reduction of realized gains recognized in interest rate derivative contracts, partially offset by realized gains on treasury bills in 2025.
Net Loss Attributable to Redeemable Non-Controlling Interests
Net loss attributable to redeemable non-controlling interests was $0.9 million for the year ended December 31, 2025 compared to $3.7 million for the year ended December 31, 2024. The $2.8 million decrease was primarily attributable to the decrease in Net loss in 2025.
Reimbursement by the Adviser
Pursuant to the Advisory Agreement, the Adviser will reimburse us for any expenses that cause our Total Operating Expenses (as defined in our charter) in any four consecutive fiscal quarters to exceed the greater of: (i) 2% of our Average Invested Assets or (ii) 25% of our Net Income (each as defined in our charter) (the "2%/25% Limitation"). For the four consecutive quarters ended December 31, 2025, our Total Operating Expenses did not exceed the 2%/25% Limitation.
Refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-Kfor the year ended December 31, 2024 filed with the SEC on March 18, 2025 for discussion of our consolidated results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, which specific discussion is incorporated herein by reference.
Liquidity and Capital Resources
Our primary needs for liquidity are to fund investments, to make distributions to our stockholders, to repurchase shares of our common stock pursuant to our share repurchase plan, to pay our offering and operating expenses, to fund capital expenditures at our properties and to pay debt service on our outstanding indebtedness. We may also have future funding obligations related to loan commitments on our real estate-related loans and unfunded capital commitments related to our limited partnership interests. Our operating expenses include, among other things, fees and expenses related to managing our properties and other investments, the management and performance fees we pay to the Adviser (to the extent the Adviser elects to receive such fees in cash) and general corporate expenses.
We believe that our current liquidity position is sufficient to meet the operating needs of our business, with $548.6 million of liquidity as of December 31, 2025, consisting of $35.1 million of unrestricted cash and cash equivalents, $83.5 million of short-term U.S. Treasury Bonds, $305.0 million of undrawn available capacity on our Secured Credit Facility and SFR Secured Credit Facility, and $125.0 million of undrawn available capacity on our Affiliate Line of Credit. We may also generate additional liquidity through the sale of our real estate-related loans and securities, which had an aggregate fair value of $101.1 million as of December 31, 2025.
Our portfolio remains conservatively leveraged at 47% as of December 31, 2025, and we can generate additional liquidity by incurring indebtedness secured by our investments. Our leverage ratio is calculated by dividing (i) the consolidated property-level and entity-level debt, excluding any third-party interests in such debt, net of cash, loan-related restricted cash, and trading securities by (ii) the gross asset value of real estate equity investments (calculated using the greater of fair value and cost of gross real estate assets), excluding any third-party interests in such investments, plus our equity in real estate-related debt investments. Additionally, there is no indebtedness on our real estate-related debt investments.
Our cash needs for acquisitions and other investments will be funded primarily from the sale of shares of our common stock and through the assumption or incurrence of debt. During the year ended December 31, 2025, we received $227.9 million of proceeds from the sale of shares of our common stock, including proceeds from our private offerings. In addition, for the year
ended December 31, 2025, we repurchased $112.3 million in shares of our common stock under our share repurchase plan. Since inception, we have satisfied 100% of repurchase requests.
The following table is a summary of our indebtedness as of December 31, 2025 and 2024 ($ in thousands):
Principal Balance Outstanding
Indebtedness
Weighted Average Interest Rate(1)
Weighted Average Maturity Date(2)
Maximum Facility Size December 31, 2025 December 31, 2024
Fixed rate loans:
Fixed rate mortgages 4.06% October 2030 N/A $ 500,420 $ 395,720
Total fixed rate loans 500,420 395,720
Variable rate loans:
Variable rate mortgages SOFR+1.72% February 2028 N/A 479,561 524,597
Secured credit facility SOFR+2.75% May 2027 $250,000 - 144,485
SFR Secured credit facility(3)
SOFR+1.85% April 2029 $185,000 129,973 -
Affiliate line of credit(4)
SOFR+2.25% November 2026 $125,000 - 12,790
Total variable rate loans 609,534 681,872
Total indebtedness 1,109,954 1,077,592
Deferred financing costs, net (6,447) (3,436)
Total indebtedness, net $ 1,103,507 $ 1,074,156
(1)
As of December 31, 2025 and 2024, SOFR was 3.87% and 4.49%, respectively.
(2) Includes the fully extended maturity date for loans with extension options that are at the Company's discretion and the Company currently expect to be able to exercise.
(3)
As of December 31, 2025 borrowings on the SFR Secured Credit Facility were secured by the single-family rental portfolio.
(4) Borrowings under the Affiliate Line of Credit bear interest at a rate of the lowest then-current interest rate for any similar credit product offered by a third-party lender to the Company or its subsidiaries or, if not available, SOFR plus a 0.10% credit adjustment and a 2.25% margin.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash ($ in thousands):
For the Years Ended
December 31, 2025
December 31, 2024
December 31, 2023
Cash flows provided by operating activities $ 36,644 $ 43,296 $ 33,738
Cash flows (used in) provided by investing activities (185,859) 61,903 53,765
Cash flows provided by (used in) by financing activities 171,353 (121,593) (126,801)
Net increase (decrease) in cash and cash equivalents and restricted cash $ 22,138 $ (16,394) $ (39,298)
Cash flows provided by operating activities decreased by $6.7 million for the year ended December 31, 2025 compared to the corresponding period in 2024. The decrease is primarily due to $13.5 million of payments made in the current period for settlements of derivative contracts and $5.1 million decrease in accounts payable, accrued expenses and other liabilities, offset by a $9.4 million decrease in interest expense in the current period, $1.4 million more proceeds from the settlement of derivative contracts in the current period, $0.7 million less lease inducements and origination costs and $0.5 million less upfront derivative costs.
Cash flows provided by operating activities increased by $9.6 million for the year ended December 31, 2024 compared to the corresponding period in 2023 due to $10.1 million of proceeds received in the current period from the settlement of interest rate swap contracts.
Cash flows provided by investing activities decreased $247.8 million for the year ended December 31, 2025 compared to the corresponding period in 2024. The change is primarily due to a $196.7 million increase in cash used to purchase or fund real estate-related loans and securities (net of proceeds from sales and principal repayments), a $113.3 million increase in cash used for the purchase of trading securities (net of proceeds from sales of trading securities), $61.4 million of capital calls funded related to our limited partnership interests in the U.S. Diversified Logistics Portfolio I and U.S. Diversified Logistics Portfolio
II, and a decrease of $25.5 million in cash proceeds from the disposition of real estate in the prior year. The current period activity was offset by a $150.7 million decrease in cash used in the acquisition of real estate from the prior year.
Cash flows provided by investing activities increased $8.1 million for the year ended December 31, 2024 compared to the corresponding period in 2023. The increase is primarily due to a $62.8 million increase in cash from the sale of trading securities (net of purchases of trading securities), as well as an increase of $81.6 million in cash flows provided by the sale of real estate-related securities (net of purchases of real estate-related securities) and principal repayments of real estate-related loans and securities. This was partially offset by $139.5 million increase in cash used in the acquisition of real estate (net of dispositions of real estate).
Cash flows used in financing activities increased $292.9 million for the year ended December 31, 2025 compared to the corresponding period in 2024. The increase is primarily due to a $172.7 million increase in proceeds from the issuance of common stock, a $69.4 million decrease in cash used for repurchases of common stock, and a $77.1 million increase in contributions from non-controlling interests related to our DST Program, offset by a $15.2 million decrease in net cash fromborrowings and repayments on indebtedness and a $8.5 million increase in common stock distributions.
Cash flows used in financing activities decreased $5.2 million for the year ended December 31, 2024 compared to the corresponding period in 2023. The decrease is primarily due to $43.9 million of net proceeds received from borrowings on mortgage loans, the Secured Credit Facility, and the Affiliate Line of Credit (net of repayments) and a $16.6 million increase in contributions from non-controlling interests from sales of our DST Program. This was partially offset by a $48.7 million decrease in proceeds from the issuance of common stock and a $6.3 million increase in repurchases of common stock.
Critical Accounting Estimates
The preparation of these financial statements in accordance with GAAP involve significant judgment and assumptions and require estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. The following is a summary of our significant accounting policies that we believe are the most affected by our judgements, estimates, and assumptions.
Refer to Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in this Annual Report on Form 10-K for a summary of our critical accounting policies.
Principles of Consolidation and Variable Interest Entities
We consolidate entities in which we retain a controlling financial interest or entities that meet the definition of a variable interest entity ("VIE") for which we are deemed to be the primary beneficiary. In performing our analysis of whether we are the primary beneficiary, at initial investment and at each quarterly reporting period, we consider whether we individually have the power to direct the activities of the VIE that most significantly affect the entity's economic performance and also have the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The determination of whether an entity is a VIE, and whether we are the primary beneficiary, involves significant judgments, including the determination of which activities most significantly affect the entity's performance, estimates about the current and future fair values and performance of assets held by the entity and/or general market conditions.
Investments in Real Estate
In accordance with the guidance for business combinations, we determine whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, we account for the transaction as an asset acquisition. We evaluate each real estate acquisition to determine whether the integrated set of acquired assets and activities meets the definition of a business.
Upon acquisition of a property, we assess the fair value of the acquired tangible and intangible assets (including land, buildings, tenant improvements, "above-market" and "below-market" leases, acquired in-place leases, other identified intangible assets and assumed liabilities) and we allocate the purchase price to the acquired assets and assumed liabilities. The most significant portion of the allocation is 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 discount and/or capitalization rates that we deem appropriate, as well as other available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends and market and economic conditions.
We also consider an allocation of the purchase price of other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, 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. For acquired in-place leases, above- and below-market lease values are recorded at their fair values (using a discount rate that reflects the risks associated with the lease acquired) equal to the difference between the contractual amounts to be paid pursuant to the in-place leases and management's
estimate of fair market value lease rates for the corresponding in-place leases, 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 Long-Lived Assets
We review our real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates the carrying amount of an asset may not be recoverable. A property is considered impaired if the estimate of aggregate future cash flows generated by the property is less than the carrying value of the property, taking into account an appropriate capitalization rate in determining the future terminal value. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The evaluation of anticipated future cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates, capital requirements, anticipated hold periods and terminal capitalization rates that could differ materially from actual results. Since cash flows on real estate properties considered to be "long-lived assets to be held and used" are considered on an undiscounted basis to determine whether an asset has been impaired, our strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material to our results. If we determine that an impairment has occurred, the affected assets must be reduced to their fair value.
Recent Accounting Pronouncements
See Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in this Annual Report on Form 10-K for a discussion concerning recent accounting pronouncements.
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