Starwood Real Estate Income Trust Inc.
11/12/2025 | Press release | Distributed by Public on 11/12/2025 14:11
Quarterly Report for Quarter Ending SEPTEMBER 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References herein to "Starwood Real Estate Income Trust, Inc.," "Company," "we," "us," or "our" refer to Starwood Real Estate Income Trust, Inc. and its subsidiaries unless the context specifically requires otherwise.
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. 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 under Item 1A. "Risk Factors" in our Annual Report on Form 10-K filed with the SEC on March 21, 2025 and elsewhere in this Quarterly Report on Form 10-Q. We do not undertake to revise or update any forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include statements about our business, including, in particular, statements about our plans, strategies and objectives. Forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue" or other similar words. These statements include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds for repurchases, and are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control.
Although we believe the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate and our actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements. In light of the significant uncertainties inherent in these forward looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved.
You should carefully review Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, and elsewhere in this Quarterly Report on Form 10-Q for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
We were formed on June 22, 2017 as a Maryland corporation to invest primarily in stabilized, income-oriented commercial real estate and debt secured by commercial real estate. Our portfolio is principally comprised of properties located in the United States and is diversified on a global basis through investments in properties outside of the United States, with a focus on Europe. To a lesser extent, we also invest in real estate debt, including loans secured by real estate and real estate-related securities. We are an externally advised, perpetual-life REIT. We own all or substantially all of our assets through the Operating Partnership, of which we are the sole general partner. We and the Operating Partnership are externally managed by the Advisor.
Our board of directors has at all times oversight and policy-making authority over us, including responsibility for governance, financial controls, compliance and disclosure. Pursuant to an advisory agreement among the Advisor, the Operating Partnership and us (the "Advisory Agreement"), we have delegated to the Advisor 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 directors.
We have elected to be taxed as a REIT under the Code for U.S. federal income tax purposes, commencing with our taxable year ended December 31, 2019. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income (determined without regard to our net capital gain and dividends-paid deduction) to stockholders and maintain our qualification as a REIT.
Public Offerings
On December 27, 2017, we commenced our initial public offering of up to $5.0 billion in shares of our common stock. On June 2, 2021, our initial public offering terminated and we commenced our follow-on public offering of up to $10.0 billion in shares of common stock.
On August 10, 2022, the follow-on public offering terminated and we commenced our third public offering of up to $18.0 billion in shares of common stock, consisting of up to $16.0 billion in shares in our primary offering and up to $2.0 billion in shares pursuant to our distribution reinvestment plan. We intend to continue selling shares in our third public offering on a monthly basis. On July 16, 2025, we filed a new registration statement to register our fourth public offering (the "Fourth Public Offering") of up to $9.5 billion in shares in our primary offering and up to $0.5 billion in shares pursuant to our distribution reinvestment plan. As of November 12, 2025, the Fourth Public Offering has not been declared effective.
As of November 12, 2025, we had received net proceeds of $14.3 billion from the sale of our common stock through our public offerings. We have contributed the net proceeds from our public offerings to the Operating Partnership in exchange for a corresponding number of Class T, Class S, Class D and Class I units. The Operating Partnership has primarily used the net proceeds to make investments in real estate and real estate debt as further described below under "Portfolio."
DST Program
In April 2024, we, through the Operating Partnership, commenced the DST Program to issue and sell up to a maximum aggregate offering amount of $1.0 billion of DST Interests in specific DSTs holding one or more 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 private placements exempt from registration pursuant to Section 4(a)(2) of the Securities Act (the "DST Offerings").
Under the DST Program, each DST Property may be sourced from our real properties or from third parties, which will be held in a DST are leased-back to a wholly owned subsidiary of the Operating Partnership on a long-term basis through January 2, 2031, unless sooner terminated pursuant to master lease agreements. Each master lease agreement will be guaranteed by the Operating Partnership, which will retain 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 any time after two years from the closing of the applicable 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 acquiror 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 Code. Affiliates of the Advisor 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.
As of September 30, 2025, we have raised approximately $51.5 million in gross offering proceeds through the DST Program.
Investment Objectives
Our investment objectives are to invest in assets that will enable us to:
•
provide current income in the form of regular, stable cash distributions to achieve an attractive distribution yield;
•
preserve and protect invested capital;
•
realize appreciation in NAV from proactive investment management and asset management; and
•
provide an investment alternative for stockholders seeking to allocate a portion of their long-term investment portfolios to commercial real estate with lower volatility than publicly traded real estate companies.
We cannot assure you that we will achieve our investment objectives. See Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional details.
Recent Developments
Business Outlook
Amid today's economic uncertainty and stock market volatility, real estate offers tangible, income-generating assets with low correlation to public market fluctuations, making it an effective portfolio diversifier. The tariff events are likely to cause construction costs to increase, which makes owning existing real estate below replacement cost attractive and a defensive place for capital preservation.
We continue to prioritize generating liquidity for stockholders submitting share repurchase requests, while also staying focused on protecting and maximizing value for our stockholders who remain fully invested. This requires picking the right spots to generate liquidity as the markets continue to improve.
Please refer to Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 and elsewhere in this Quarterly Report on Form 10-Q for additional disclosure relating to material trends or uncertainties that may impact our business.
Q3 2025 Highlights
Operating Results:
•
Declared monthly net distributions totaling $121.0 million for the three months ended September 30, 2025. The details of the average annualized distribution rates and total returns are shown in the following table:
|
Class T |
Class S |
Class D |
Class I |
|
|
Shares |
Shares |
Shares |
Shares |
|
|
Average Annualized Distribution Rate |
5.1% |
5.1% |
5.9% |
6.0% |
|
Annualized Year-to-Date Total Return, without upfront selling commissions and dealer manager fees |
(3.1%) |
(3.1%) |
(2.5%) |
(2.2%) |
|
Annualized Inception-to-Date Total Return, without upfront selling commissions and dealer manager fees |
5.0% |
5.0% |
5.4% |
5.8% |
|
Annualized Inception-to-Date Total Return, assuming full upfront selling commissions and dealer manager fees |
4.5% |
4.4% |
5.1% |
N/A |
Financing Activity:
•
Refinanced and closed an aggregate of $1.9 billion in property-level financing.
Portfolio
Summary of Portfolio
The following chart outlines the percentage of our assets across investments in real estate and our investment in a real estate loan based on fair value as of September 30, 2025:
The following charts further describe the composition of our investments in real estate and our investment in a real estate loan based on fair value as of September 30, 2025:
(1)
Investments in real estate includes our direct property investments and our unconsolidated investments. Our investment in a real estate loan includes our term loan.
(2)
Includes our direct property investments, our unconsolidated investments and our investment in a term loan.
(3)
Geography weighting includes our term loan. Geography weighting is measured as the asset value of real estate properties, unconsolidated real estate ventures, and our investment in a real estate loan for each geographical category against the total value of all (i) real estate properties, (ii) unconsolidated real estate ventures, and (iii) our investment in a real estate loan.
Investments in Real Estate
The following table provides a summary of our portfolio as of September 30, 2025 ($ in thousands):
|
Segment |
Number of |
Sq. Feet |
Occupancy |
Gross Asset Value(2) |
Segment |
Percentage of |
||||||||||
|
Multifamily |
63,233 units |
95% |
$ |
15,343,300 |
$ |
886,963 |
75% |
|||||||||
|
Industrial |
15.79 sq. ft. |
92% |
2,707,782 |
113,870 |
10% |
|||||||||||
|
Office |
3.90 sq. ft. |
91% |
1,574,950 |
124,224 |
10% |
|||||||||||
|
Other Properties(3)(4) |
N/A (5) |
N/A |
952,557 |
63,693 |
5% |
|||||||||||
|
Total |
$ |
20,578,589 |
$ |
1,188,750 |
100% |
|||||||||||
(1)
The occupancy rate for our multifamily investments is defined as the number of leased units divided by the total unit count as of September 30, 2025. The occupancy rate for our industrial and office investments is defined as all leased square footage divided by the total available square footage as of September 30, 2025.
(2)
Based on fair value as of September 30, 2025.
(3)
Includes a 100% interest in a subsidiary with 20 single-family rental units and a 95% interest in a consolidated joint venture with 861 single-family rental units. These are excluded from the number of consolidated properties count.
(4)
Excludes our investments in unconsolidated real estate ventures.
(5)
Includes approximately 2.3 million sq. ft. across our self-storage, medical office and retail properties, 324 keys at our consolidated hospitality properties and 881 single-family rental units.
Average Effective Annual Base Rents
The following table provides a summary of the average effective annual base rents across our portfolio as of September 30, 2025:
|
Property Type |
Average Effective Annual |
||||
|
Multifamily(1) |
$ |
18,266 |
|||
|
Industrial(2) |
$ |
8.19 |
|||
|
Office(2) |
$ |
35.52 |
|||
(1)
For multifamily properties, average effective annual base rent per leased unit represents the annualized base rent for the nine months ended September 30, 2025. The average effective annual base rent includes the effects of rent concessions and abatements and excludes tenant recoveries, straight-line rent and above-market and below-market lease amortization.
(2)
For industrial and office properties, average effective annual base rent represents the annualized base rent per leased square foot for the nine months ended September 30, 2025. The average effective annual base rent includes the effects of rent concessions and abatements and excludes tenant recoveries, straight-line rent and above-market and below-market lease amortization.
The following table provides information regarding our portfolio of real estate properties as of September 30, 2025:
|
Segment and Investment |
Number of |
Location |
Acquisition |
Ownership |
Sq. Feet |
Occupancy(2) |
||||||||
|
Multifamily: |
||||||||||||||
|
Florida Multifamily Portfolio |
Jacksonville/Naples, FL |
January 2019 |
100% |
1,150 |
92% |
|||||||||
|
Phoenix Property |
Mesa, AZ |
January 2019 |
100% |
256 |
93% |
|||||||||
|
Columbus Multifamily |
Columbus, OH |
October 2019 |
96% |
516 |
98% |
|||||||||
|
Cascades Apartments(3) |
Charlotte, NC |
October 2019 |
57% |
570 |
94% |
|||||||||
|
Exchange on Erwin |
Durham, NC |
November 2019 |
100% |
265 |
98% |
|||||||||
|
Avida Apartments |
Salt Lake City, UT |
December 2019 |
100% |
400 |
93% |
|||||||||
|
Southeast Affordable Housing Portfolio |
Various |
Various 2020 |
100% |
4,384 |
89% |
|||||||||
|
Florida Affordable Housing Portfolio II |
Jacksonville, FL |
October 2020 |
100% |
958 |
89% |
|||||||||
|
Mid-Atlantic Affordable Housing Portfolio |
Various |
October 2020 |
100% |
3,660 |
96% |
|||||||||
|
Kalina Way(3) |
Salt Lake City, UT |
December 2020 |
57% |
264 |
98% |
|||||||||
|
Southeast Affordable Housing Portfolio II |
DC, FL, GA, MD, SC, VA |
May 2021 |
100% |
1,642 |
96% |
|||||||||
|
Azalea Multifamily Portfolio |
TX, FL, NC, MD, TN, GA |
June/July 2021 |
100% |
4,548 |
95% |
|||||||||
|
Keystone Castle Hills |
Dallas, TX |
July 2021 |
100% |
690 |
95% |
|||||||||
|
Greater Boston Affordable Portfolio |
Boston, MA |
August/September 2021 |
99% |
842 |
96% |
|||||||||
|
Columbus Preferred Portfolio |
Columbus, OH |
September 2021 |
96% |
400 |
97% |
|||||||||
|
The Palmer Dadeland |
Dadeland, FL |
September 2021 |
100% |
844 |
96% |
|||||||||
|
Seven Springs Apartments |
Burlington, MA |
September 2021 |
100% |
331 |
94% |
|||||||||
|
Maison's Landing |
Taylorsville, UT |
September 2021 |
100% |
492 |
96% |
|||||||||
|
Sawyer Flats |
Gaithersburg, MD |
October 2021 |
100% |
648 |
96% |
|||||||||
|
Raleigh Multifamily Portfolio |
Raleigh, NC |
November 2021 |
95% |
2,291 |
94% |
|||||||||
|
SEG Multifamily Portfolio |
Various |
November 2021 |
100% |
14,066 |
95% |
|||||||||
|
South Florida Multifamily Portfolio |
Various |
November 2021 |
95% |
1,150 |
96% |
|||||||||
|
Florida Affordable Housing Portfolio III |
Various |
November 2021 |
100% |
2,660 |
98% |
|||||||||
|
Central Park Portfolio |
Denver, CO |
December 2021 |
100% |
1,444 |
94% |
|||||||||
|
National Affordable Housing Portfolio |
Various |
December 2021 |
100% |
3,264 |
95% |
|||||||||
|
Phoenix Affordable Housing Portfolio |
Phoenix, AZ |
April/May 2022 |
100% |
1,462 |
93% |
|||||||||
|
Mid-Atlantic Affordable Housing Portfolio II |
DC, GA |
April 2022 |
100% |
1,449 |
95% |
|||||||||
|
Texas and North Carolina Multifamily Portfolio |
TX, NC |
April/June 2022 |
95% |
1,601 |
94% |
|||||||||
|
Summit Multifamily Portfolio |
Various |
May/June 2022 |
100% |
8,612 |
95% |
|||||||||
|
Florida Affordable Housing Portfolio IV |
Various, FL |
June/July 2022 |
100% |
2,054 |
95% |
|||||||||
|
Blue Multifamily Portfolio |
San Antonio, TX |
August 2022 |
100% |
320 |
95% |
|||||||||
|
Total Multifamily |
63,233 |
|||||||||||||
|
Industrial: |
||||||||||||||
|
Airport Logistics Park |
Nashville, TN |
September 2020 |
100% |
0.40 |
100% |
|||||||||
|
Marshfield Industrial Portfolio |
Baltimore, MD |
October 2020 |
100% |
1.33 |
79% |
|||||||||
|
Denver/Boulder Industrial Portfolio |
Denver, CO |
April 2021 |
100% |
1.68 |
92% |
|||||||||
|
Reno Logistics Portfolio |
Reno, NV |
May 2021 |
100% |
3.04 |
76% |
|||||||||
|
Northern Italy Industrial Portfolio |
Northern Italy |
August 2021 |
100% |
0.75 |
100% |
|||||||||
|
Southwest Light Industrial Portfolio |
AZ, NV |
September 2021 |
100% |
2.48 |
93% |
|||||||||
|
Norway Logistics Portfolio |
Oslo, Norway |
February 2022 |
100% |
0.38 |
100% |
|||||||||
|
Verona Oppeano |
Verona, Italy |
June 2022 |
100% |
2.64 |
100% |
|||||||||
|
Denmark Logistics Portfolio |
Eastern Denmark |
June 2022 |
100% |
1.97 |
100% |
|||||||||
|
Belgioioso Logistics |
Greater Milan, Italy |
August 2022 |
100% |
1.12 |
100% |
|||||||||
|
Total Industrial |
15.79 |
|||||||||||||
|
Office: |
||||||||||||||
|
Florida Office Portfolio |
Jacksonville, FL |
May 2019 |
97% |
1.27 |
79% |
|||||||||
|
Columbus Office Portfolio |
Columbus, OH |
October 2019 |
96% |
0.32 |
90% |
|||||||||
|
Nashville Office |
Nashville, TN |
February 2020 |
100% |
0.36 |
100% |
|||||||||
|
60 State Street |
Boston, MA |
March 2020 |
100% |
0.91 |
95% |
|||||||||
|
Stonebridge |
Atlanta, GA |
February 2021 |
100% |
0.46 |
100% |
|||||||||
|
M Campus |
Paris, France |
December 2021 |
100% |
0.24 |
100% |
|||||||||
|
Barcelona Mediacomplex |
Barcelona, Spain |
June 2022 |
100% |
0.34 |
97% |
|||||||||
|
Total Office |
3.90 |
|||||||||||||
|
Segment and Investment |
Number of |
Location |
Acquisition |
Ownership |
Sq. Feet |
Occupancy(2) |
||||||||
|
Other Properties: |
||||||||||||||
|
U.S. Select Service Portfolio |
CO, OH |
January 2019 |
100% |
324 |
71% |
|||||||||
|
Fort Lauderdale Hotel (5) |
Fort Lauderdale, FL |
March 2019 |
43% |
236 |
67% |
|||||||||
|
Exchange on Erwin - Commercial |
Durham, NC |
November 2019 |
100% |
0.10 |
100% |
|||||||||
|
Barlow |
Chevy Chase, MD |
March 2020 |
100% |
0.29 |
85% |
|||||||||
|
Single-Family Rental Joint Venture |
N/A |
Various |
Various |
95% |
861 |
89% |
||||||||
|
Sun Belt Single-Family Rental Portfolio |
N/A |
Various |
December 2021 |
100% |
20 |
60% |
||||||||
|
Morningstar Self-Storage Joint Venture |
Various |
December 2021/March 2022 |
95% |
1.94 |
88% |
|||||||||
|
Extended Stay Portfolio (5) |
Various |
July 2022 |
45% |
24,935 |
85% |
|||||||||
|
Total Other Properties |
N/A (4) |
|||||||||||||
|
Total Investment Properties |
||||||||||||||
(1)
Certain of the joint venture agreements entered into by us provide the other partner a profits interest based on certain internal rate of return hurdles being achieved. Such investments are consolidated by us and any profits interest due to the other partner will be reported within non-controlling interests in consolidated joint ventures on our Condensed Consolidated Balance Sheets. The table also includes two investments (197 total properties) owned by two unconsolidated real estate ventures.
(2)
The occupancy rate for our multifamily and certain other properties, including single-family rental investments, is defined as the number of leased units divided by the total unit count as of September 30, 2025. The occupancy rate for our industrial and office is defined as all leased square footage divided by the total available square footage as of September 30, 2025. The occupancy rate for our other investments, including self-storage investments, is defined as all leased square footage divided by the total available square footage as well as the trailing 12 month average occupancy for hospitality and extended stay investments for the period ended September 30, 2025.
(3)
Held through our DST Program as of September 30, 2025. These properties have been consolidated on our Condensed Consolidated Balance Sheets. Any profit interest due to the third-party investors in the DST Program are reported within non-controlling interests in consolidated joint ventures on our Condensed Consolidated Balance Sheets.
(4)
Includes approximately 2.3 million sq. ft. across our self-storage, medical office and retail properties, 25,495 keys at our hospitality and extended stay properties and 881 single-family rental units.
(5)
Investment in unconsolidated real estate venture.
Impairment of Investments in Real Estate
Management reviews its consolidated real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value of such investment, an impairment loss is recognized. 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 and capital requirements that could differ materially from actual results. Since cash flows on real estate properties 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.
During the three and nine months ended September 30, 2025, we recognized a $5.1 million impairment charge on one hospitality property. During the three and nine months ended September 30, 2024, we recognized a $1.8 million impairment charge on one hospitality property.
Impairment of Investments in Unconsolidated Real Estate Ventures
Management reviews its investments in unconsolidated joint ventures for impairment each quarter and will record impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying values has occurred and such decline is other-than-temporary. The ultimate realization of the investment in unconsolidated joint ventures is dependent on a number of factors, including the performance of each investment and market conditions.
During the three and nine months ended September 30, 2025 and 2024, we did not recognize any impairments on our investments in unconsolidated real estate ventures.
Investment in Real Estate Debt
The following table details our investment in real estate debt as of September 30, 2025 ($ in thousands):
|
September 30, 2025 |
||||||||||||||
|
Type of Loan |
Number of Positions |
Coupon (1) |
Maturity Date (2) |
Cost Basis |
Fair Value |
|||||||||
|
Term loan |
BBSY + 4.75% |
June 2030 |
$ |
956,877 |
$ |
909,383 |
||||||||
(1)
The symbol "BBSY" refers to the relevant benchmark rate, which is three-month BBSY.
(2)
Maturity date is based on the fully extended maturity date of the underlying collateral.
During June 2022, we provided financing in the form of a term loan to an unaffiliated entity in connection with its acquisition of Australia's largest hotel and casino company. The loan is in the amount of AUD 1,377 million and has an initial term of five years, with a two-year extension option. The loan is pre-payable at the option of the borrower at any time. During June 2025, we extended the loan term by three years to June 2030.
Lease Expirations
The following table details the expiring leases at our industrial, office and other properties by annualized base rent as of September 30, 2025 ($ in thousands). The table below excludes our multifamily and certain other properties, including single-family rental and self-storage properties, as substantially all leases at such properties expire within 12 months.
|
Industrial |
Office |
Other Properties |
Total |
|||||||||||||||||||||||||||||
|
Year |
Annualized |
% of Total |
Annualized |
% of Total |
Annualized |
% of Total |
Annualized |
% of Total |
||||||||||||||||||||||||
|
2025 (remaining) |
$ |
5,740 |
2% |
$ |
345 |
0% |
$ |
111 |
0% |
$ |
6,196 |
2% |
||||||||||||||||||||
|
2026 |
18,291 |
6% |
6,053 |
2% |
807 |
0% |
25,151 |
8% |
||||||||||||||||||||||||
|
2027 |
28,859 |
10% |
12,578 |
4% |
1,433 |
0% |
42,870 |
14% |
||||||||||||||||||||||||
|
2028 |
19,945 |
7% |
12,449 |
4% |
1,251 |
0% |
33,645 |
11% |
||||||||||||||||||||||||
|
2029 |
14,919 |
5% |
8,749 |
3% |
6,600 |
2% |
30,268 |
10% |
||||||||||||||||||||||||
|
2030 |
15,816 |
5% |
19,941 |
7% |
1,712 |
1% |
37,469 |
13% |
||||||||||||||||||||||||
|
2031 |
6,982 |
2% |
32,566 |
11% |
696 |
0% |
40,244 |
13% |
||||||||||||||||||||||||
|
2032 |
7,567 |
3% |
10,459 |
3% |
4,118 |
1% |
22,144 |
7% |
||||||||||||||||||||||||
|
2033 |
8,039 |
3% |
31,112 |
10% |
2,197 |
1% |
41,348 |
14% |
||||||||||||||||||||||||
|
2034 |
1,351 |
1% |
5,976 |
2% |
422 |
0% |
7,749 |
3% |
||||||||||||||||||||||||
|
Thereafter |
4,235 |
1% |
6,960 |
3% |
2,874 |
1% |
14,069 |
5% |
||||||||||||||||||||||||
|
Total |
$ |
131,744 |
45% |
$ |
147,188 |
49% |
$ |
22,221 |
6% |
$ |
301,153 |
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.
Certain operating leases contain early termination options that require advance notification and may include payment of penalty, which, in most cases, is substantial enough to be deemed economically disadvantageous by a tenant to exercise. As of September 30, 2025, approximately 1% of our industrial portfolio square footage and approximately 21% of our office portfolio square footage is subject to early termination provisions. Approximately 4% of our office portfolio that is subject to these early termination provisions have early termination dates prior to January 1, 2028.
During the nine months ended September 30, 2025, three tenants exercised early lease termination provisions, impacting 34,202 square feet across our industrial and office properties, which represents approximately 0.2% of our combined square footage owned across our industrial and office properties. During the year ended December 31, 2024, two tenants exercised early lease termination provisions, impacting 56,747 square feet across our industrial and office properties, which represents 0.3% of our combined square footage owned across our industrial and office properties.
Results of Operations
The following table sets forth information regarding our consolidated results of operations ($ in thousands):
|
For the Three Months Ended September 30, |
2025 vs. 2024 |
||||||||||||||
|
2025 |
2024 |
$ |
|||||||||||||
|
Revenues |
|||||||||||||||
|
Rental revenue |
$ |
384,637 |
$ |
414,932 |
$ |
(30,295 |
) |
||||||||
|
Other revenue |
9,313 |
9,917 |
(604 |
) |
|||||||||||
|
Total revenues |
393,950 |
424,849 |
(30,899 |
) |
|||||||||||
|
Expenses |
|||||||||||||||
|
Property operating |
172,369 |
183,574 |
(11,205 |
) |
|||||||||||
|
General and administrative |
10,289 |
9,683 |
606 |
||||||||||||
|
Management fees |
21,678 |
23,690 |
(2,012 |
) |
|||||||||||
|
Performance participation allocation |
- |
- |
- |
||||||||||||
|
Impairment of investments in real estate |
5,123 |
1,782 |
3,341 |
||||||||||||
|
Depreciation and amortization |
178,267 |
185,138 |
(6,871 |
) |
|||||||||||
|
Total expenses |
387,726 |
403,867 |
(16,141 |
) |
|||||||||||
|
Other expense |
|||||||||||||||
|
Loss from unconsolidated real estate ventures |
(4,280 |
) |
(4,692 |
) |
412 |
||||||||||
|
Income from investments in real estate debt, net |
17,093 |
21,513 |
(4,420 |
) |
|||||||||||
|
Net loss on dispositions of real estate |
(3,239 |
) |
(225 |
) |
(3,014 |
) |
|||||||||
|
Interest expense |
(159,915 |
) |
(165,520 |
) |
5,605 |
||||||||||
|
Other expense, net |
(34,752 |
) |
(207,535 |
) |
172,783 |
||||||||||
|
Total other expense |
(185,093 |
) |
(356,459 |
) |
171,366 |
||||||||||
|
Net loss |
(178,869 |
) |
(335,477 |
) |
156,608 |
||||||||||
|
Net loss attributable to non-controlling interests in consolidated joint ventures |
1,354 |
1,969 |
(615 |
) |
|||||||||||
|
Net loss attributable to non-controlling |
9,004 |
16,548 |
(7,544 |
) |
|||||||||||
|
Net loss attributable to stockholders |
$ |
(168,511 |
) |
$ |
(316,960 |
) |
$ |
148,449 |
|||||||
Revenues
Rental revenue primarily consists of base rent arising from tenant leases at our multifamily, industrial, office and other properties. Rental revenue is recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. During the three months ended September 30, 2025 and 2024, rental revenue was $384.6 million and $414.9 million, respectively. The decrease in rental revenue was driven by the impact of asset sales during the year ended December 31, 2024 and during the nine months ended September 30, 2025, offset by an increase in average rental rates for multifamily and industrial assets for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Other revenue primarily consists of revenue generated by our hospitality properties. Hospitality revenue consists primarily of room revenue. During the three months ended September 30, 2025 and 2024, other revenue was $9.3 million and $9.9 million, respectively, resulting in a year over year decrease of approximately $0.6 million, driven by sales of hospitality assets.
Expenses
Property operating expenses consist of the costs of ownership and operation of our real estate investments. Examples of property operating expenses include real estate taxes, insurance, utilities and repair and maintenance expenses. Property operating expenses also include general and administrative expenses unrelated to the operations of the properties. During the three months ended September 30, 2025 and 2024, property operating expenses were $172.4 million and $183.6 million, respectively. The decrease was driven primarily by the impact of asset sales during the year ended December 31, 2024 and during the nine months ended September 30, 2025.
General and administrative expenses are corporate-level expenses that relate mainly to our compliance and administration costs and consist primarily of legal fees, accounting fees, transfer agent fees and other professional fees. During the three months ended September 30, 2025, general and administrative expenses increased $0.6 million compared to the three months ended September 30, 2024 primarily due to an increase in legal and other professional fee expenses associated with property-level refinancings.
Management fees are earned by our Advisor for providing services pursuant to the Advisory Agreement. During the three months ended September 30, 2025 and 2024, management fees were $21.7 million and $23.7 million, respectively. The decrease was primarily driven by the reduction in our average NAV from September 30, 2024 to September 30, 2025. The decrease was also driven by the Advisor's waiver of 20% of its management fee effective in May 2024, thereby reducing management fees from 1.25% of NAV to 1% of NAV, until our share repurchase plan has been reinstated to the monthly repurchase limit of 2% of NAV and quarterly repurchase limit of 5% of NAV.
Performance participation allocation relates to allocations from the Operating Partnership to the Special Limited Partner based on the total return of the Operating Partnership. Total return is defined as distributions paid or accrued plus the change in NAV. The performance participation allocation is measured annually and any amount earned by the Special Limited Partner becomes payable as of December 31 of the applicable year. During the three months ended September 30, 2025 and 2024, there was no performance participation allocation as the return hurdle was not achieved.
During the three months ended September 30, 2025, we recognized a $5.1 million impairment charge on one hospitality property. During the three months ended September 30, 2024, we recognized a $1.8 million impairment charge on one hospitality property.
Depreciation and amortization expenses are impacted by the values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. During the three months ended September 30, 2025 and 2024, depreciation and amortization expenses were $178.3 million and $185.1 million, respectively. The decrease in depreciation expense was driven by a reduction in investments in real estate, net as a result of asset sales during the year ended December 31, 2024 and during the nine months ended September 30, 2025.
Other Expense
During the three months ended September 30, 2025 and 2024, loss from unconsolidated real estate ventures was ($4.3) million and ($4.7) million, respectively, representing a $0.4 million reduction in losses from unconsolidated real estate ventures.
During the three months ended September 30, 2025 and 2024, income from investments in real estate debt, net was $17.1 million and $21.5 million, respectively, which consisted of interest income, realized losses, and unrealized gains and losses resulting from changes in the fair value of our real estate debt investments and related hedges. The decrease was primarily attributable to a reduction in interest income on our one remaining floating-rate term loan investment and an unrealized loss driven by changes in the fair value of the investment.
During the three months ended September 30, 2025, we recorded ($3.2) million of net losses from the disposition of 10 single-family rental units and other disposals of Furniture, fixtures and equipment. During the three months ended September 30, 2024, we recorded ($0.2) million of net losses from the disposition of 26 single-family rental units.
During the three months ended September 30, 2025 and 2024, interest expense was $159.9 million and $165.5 million, respectively, which primarily consisted of interest expense incurred on our mortgage notes, secured credit facilities, line of credit and borrowings under our secured financing on investments in real estate debt. The decrease was primarily driven by a decrease in interest expense of $6.1 million on our unsecured line of credit during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
During the three months ended September 30, 2025 and 2024, other expense, net was ($34.8) million and ($207.5) million, respectively. These results were primarily driven by by unrealized losses relating to the changes in the fair value of our interest rate caps and swaps of ($39.7) million during the three months ended September 30, 2025 compared to unrealized losses of ($193.2) million during the three months ended September 30, 2024. The interest rate caps and swaps are used primarily to limit our interest rate payments on certain of our variable rate borrowings.
|
For the Nine Months Ended September 30, |
2025 vs. 2024 |
||||||||||||||
|
2025 |
2024 |
$ |
|||||||||||||
|
Revenues |
|||||||||||||||
|
Rental revenue |
$ |
1,165,488 |
$ |
1,240,479 |
$ |
(74,991 |
) |
||||||||
|
Other revenue |
23,262 |
30,215 |
(6,953 |
) |
|||||||||||
|
Total revenues |
1,188,750 |
1,270,694 |
(81,944 |
) |
|||||||||||
|
Expenses |
|||||||||||||||
|
Property operating |
510,353 |
543,746 |
(33,393 |
) |
|||||||||||
|
General and administrative |
28,970 |
35,571 |
(6,601 |
) |
|||||||||||
|
Management fees |
66,622 |
82,200 |
(15,578 |
) |
|||||||||||
|
Performance participation allocation |
- |
- |
- |
||||||||||||
|
Impairment of investments in real estate |
5,123 |
1,782 |
3,341 |
||||||||||||
|
Depreciation and amortization |
524,771 |
557,425 |
(32,654 |
) |
|||||||||||
|
Total expenses |
1,135,839 |
1,220,724 |
(84,885 |
) |
|||||||||||
|
Other expense |
|||||||||||||||
|
Loss from unconsolidated real estate ventures |
(10,634 |
) |
(10,365 |
) |
(269 |
) |
|||||||||
|
Income from investments in real estate debt, net |
55,223 |
74,384 |
(19,161 |
) |
|||||||||||
|
Net gain on dispositions of real estate |
20,538 |
2,431 |
18,107 |
||||||||||||
|
Interest expense |
(463,033 |
) |
(477,741 |
) |
14,708 |
||||||||||
|
Other expense, net |
(226,778 |
) |
(214,283 |
) |
(12,495 |
) |
|||||||||
|
Total other expense |
(624,684 |
) |
(625,574 |
) |
890 |
||||||||||
|
Net loss |
(571,773 |
) |
(575,604 |
) |
3,831 |
||||||||||
|
Net loss attributable to non-controlling interests in consolidated joint ventures |
3,637 |
2,861 |
776 |
||||||||||||
|
Net loss attributable to non-controlling |
28,548 |
28,716 |
(168 |
) |
|||||||||||
|
Net loss attributable to stockholders |
$ |
(539,588 |
) |
$ |
(544,027 |
) |
$ |
4,439 |
|||||||
Revenues
Rental revenue primarily consists of base rent arising from tenant leases at our multifamily, industrial, office and other properties. Rental revenue is recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. During the nine months ended September 30, 2025 and 2024, rental revenue was approximately $1.2 billion and $1.2 billion, respectively. The decrease in rental revenue was driven by the impact of asset sales during the year ended December 31, 2024 and during the nine months ended September 30, 2025, offset by an increase in average rental rates for multifamily and industrial assets for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
Other revenue primarily consists of revenue generated by our hospitality properties. Hospitality revenue consists primarily of room revenue. During the nine months ended September 30, 2025 and 2024, other revenue was $23.3 million and $30.2 million, respectively, resulting in a year over year decrease of approximately $7.0 million driven by sales of hospitality assets.
Expenses
Property operating expenses consist of the costs of ownership and operation of our real estate investments. Examples of property operating expenses include real estate taxes, insurance, utilities and repair and maintenance expenses. Property operating expenses also include general and administrative expenses unrelated to the operations of the properties. During the nine months ended September 30, 2025 and 2024, property operating expenses were $510.4 million and $543.7 million, respectively. The decrease was driven primarily by the impact of asset sales during the year ended December 31, 2024 and during the nine months ended September 30, 2025.
General and administrative expenses are corporate-level expenses that relate mainly to our compliance and administration costs and consist primarily of legal fees, accounting fees, transfer agent fees and other professional fees. During the nine months ended September 30, 2025, general and administrative expenses decreased $6.6 million compared to the nine months ended September 30, 2024 primarily due to a reduction in legal and other professional fee expenses.
Management fees are earned by our Advisor for providing services pursuant to the Advisory Agreement. During the nine months ended September 30, 2025 and 2024, management fees were $66.6 million and $82.2 million, respectively. The decrease was primarily driven by the reduction in our average NAV from September 30, 2024 to September 30, 2025. The decrease was also driven
by the Advisor's waiver of 20% of its management fee effective in May 2024, thereby reducing management fees from 1.25% of NAV to 1% of NAV, until our share repurchase plan has been reinstated to the monthly repurchase limit of 2% of NAV and quarterly repurchase limit of 5% of NAV.
Performance participation allocation relates to allocations from the Operating Partnership to the Special Limited Partner based on the total return of the Operating Partnership. Total return is defined as distributions paid or accrued plus the change in NAV. The performance participation allocation is measured annually and any amount earned by the Special Limited Partner becomes payable as of December 31 of the applicable year. During the nine months ended September 30, 2025 and 2024, there was no performance participation allocation as the return hurdle was not achieved.
During the nine months ended September 30, 2025, we recognized a $5.1 million impairment charge on one hospitality property. During the nine months ended September 30, 2024, we recognized a $1.8 million impairment charge on one hospitality property.
Depreciation and amortization expenses are impacted by the values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. During the nine months ended September 30, 2025 and 2024, depreciation and amortization expenses were $524.8 million and $557.4 million, respectively. The decrease in depreciation expense was driven by a reduction in investments in real estate, net as a result of asset sales during the year ended December 31, 2024 and during the nine months ended September 30, 2025.
Other Expense
During the nine months ended September 30, 2025 and 2024, loss from unconsolidated real estate ventures was ($10.6) million and ($10.4) million, respectively, representing a $0.3 million reduction in losses from unconsolidated real estate ventures.
During the nine months ended September 30, 2025 and 2024, income from investments in real estate debt, net was $55.2 million and $74.4 million, respectively, which consisted of interest income, realized losses, and unrealized gains and losses resulting from changes in the fair value of our real estate debt investments and related hedges. The decrease was primarily driven by the disposition of our investments in real estate debt securities and the disposition of our GBP-denominated term loan investment during the nine months ended September 30, 2024.
During the nine months ended September 30, 2025, we recorded $20.5 million of net gains from the disposition of 43 industrial properties, 13 multifamily properties, one hospitality property, one retail property and 52 single-family rental units. During the nine months ended September 30, 2024, we recorded $2.4 million of net gains from the disposition of two hospitality properties and 78 single-family rental units.
During the nine months ended September 30, 2025 and 2024, interest expense was $463.0 million and $477.7 million, respectively, which primarily consisted of interest expense incurred on our mortgage notes, secured credit facilities, line of credit and borrowings under our secured financing on investments in real estate debt. The decrease was primarily driven by a decrease in interest expense of $14.0 million on our unsecured line of credit during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
During the nine months ended September 30, 2025 and 2024, other expense, net was ($226.8) million and ($214.3) million, respectively. These results were primarily driven by unrealized losses relating to the changes in the fair value of our foreign exchange market forwards of ($93.8) million during the nine months ended September 30, 2025, compared to unrealized losses of ($12.9) million during the nine months ended September 30, 2024. These results were offset by a reduction in unrealized losses relating to the changes in the fair value of our interest rate caps and swaps of ($156.8) million during the nine months ended September 30, 2025 compared to unrealized losses relating to the changes in fair value of our interest rate caps and swaps of ($233.6) million during the nine months ended September 30, 2024. The interest rate caps and swaps are used primarily to limit our interest rate payments on certain of our variable rate borrowings.
Funds from Operations and Adjusted Funds from Operations
We believe funds from operations ("FFO") is a meaningful supplemental non-GAAP operating measure, which should be considered along with, but not as an alternative to, net loss as a measure of operating performance. Our consolidated financial statements are presented under historical cost accounting which, among other things, requires depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of real estate investments will change over time based on market conditions and as
such, depreciation under historical cost accounting may be less informative. FFO is a standard REIT industry measure defined by Nareit, the National Association of Real Estate Investment Trusts.
FFO, as defined by Nareit and presented below, is calculated as net income or loss (computed in accordance with GAAP), excluding (i) gains or losses from sales of depreciable real property, (ii) impairment write-downs on depreciable real property, (iii) plus real estate-related depreciation and amortization, (iv) net gains or losses from sales of real estate, and (v) similar adjustments for unconsolidated joint ventures.
We also believe that adjusted FFO ("AFFO") is a meaningful supplemental non-GAAP disclosure of our operating results. AFFO further adjusts FFO in order for our operating results to reflect the specific characteristics of our business by adjusting for items we believe are not related to our core operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) straight-line rental income and expense, (ii) deferred income amortization, (iii) amortization of above- and below-market lease intangibles, net, (iv) amortization of mortgage premium / discount, (v) unrealized gains or losses from changes in the fair value of investments in real estate debt and other financial instruments, (vi) gains and losses resulting from foreign currency translations, (vii) amortization of restricted stock awards, (viii) non-cash performance participation allocation, even if repurchased by us, (ix) amortization of deferred financing costs, and (x) similar adjustments for unconsolidated joint ventures. AFFO is not defined by Nareit and our calculation of AFFO may not be comparable to disclosures made by other REITs.
The following table presents a reconciliation of net loss attributable to stockholders to FFO and AFFO ($ in thousands):
|
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||||||
|
2025 |
2024 |
2025 |
2024 |
||||||||||||||
|
Net loss attributable to stockholders |
$ |
(168,511 |
) |
$ |
(316,960 |
) |
$ |
(539,588 |
) |
$ |
(544,027 |
) |
|||||
|
Adjustments to arrive at FFO: |
|||||||||||||||||
|
Real estate depreciation and amortization |
178,267 |
185,138 |
524,771 |
557,425 |
|||||||||||||
|
Impairment of investments in real estate |
5,123 |
1,782 |
5,123 |
1,782 |
|||||||||||||
|
Investment in unconsolidated real estate ventures - depreciation and amortization |
13,056 |
13,275 |
38,439 |
40,686 |
|||||||||||||
|
Net loss (gain) on dispositions of real estate |
3,239 |
225 |
(20,538 |
) |
(2,431 |
) |
|||||||||||
|
Amount attributable to non-controlling interests |
(1,264 |
) |
(1,047 |
) |
(3,775 |
) |
(3,151 |
) |
|||||||||
|
FFO attributable to stockholders |
29,910 |
(117,587 |
) |
4,432 |
50,284 |
||||||||||||
|
Adjustments to arrive at AFFO: |
|||||||||||||||||
|
Straight-line rental income and expense |
(1,432 |
) |
(2,147 |
) |
(4,534 |
) |
(7,769 |
) |
|||||||||
|
Deferred income amortization(1) |
(8,053 |
) |
(4,312 |
) |
(18,451 |
) |
(14,439 |
) |
|||||||||
|
Amortization of above- and below-market lease intangibles, net |
(137 |
) |
(390 |
) |
(646 |
) |
(1,970 |
) |
|||||||||
|
Unrealized losses from changes in the fair value of investments in real estate debt and other financial instruments |
39,781 |
226,791 |
253,703 |
241,531 |
|||||||||||||
|
Foreign currency gain |
(3,987 |
) |
(15,649 |
) |
(24,756 |
) |
(3,856 |
) |
|||||||||
|
Non-cash performance participation allocation |
- |
- |
- |
- |
|||||||||||||
|
Amortization of deferred financing costs |
1,154 |
5,528 |
18,412 |
18,116 |
|||||||||||||
|
Amortization of restricted stock awards |
210 |
210 |
630 |
630 |
|||||||||||||
|
Loss on extinguishment of debt |
1,289 |
- |
1,809 |
- |
|||||||||||||
|
Amount attributable to non-controlling interests |
(400 |
) |
(1,470 |
) |
(1,299 |
) |
(1,612 |
) |
|||||||||
|
AFFO attributable to stockholders |
$ |
58,335 |
$ |
90,974 |
$ |
229,300 |
$ |
280,915 |
|||||||||
(1)
Includes the amortization of mortgage premium / discount.
FFO and AFFO should not be considered to be more relevant or accurate than the GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO and AFFO should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO and AFFO are not intended to be used as
liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders.
Net Asset Value
Our board of directors, including all of our independent directors, has adopted valuation guidelines that contain a comprehensive set of methodologies to be used by the Advisor, our independent valuation advisor and third-party appraisal firms in connection with estimating the values of our assets and liabilities for purposes of our NAV calculation. These guidelines are designed to produce a fair and accurate estimate of the price that would be received for our investments in an arm's-length transaction between a willing buyer and a willing seller in possession of all material information about our investments. Our independent valuation advisor reviews our valuation guidelines and methodologies related to investments in real property with the Advisor and our board of directors at least annually. From time to time, our board of directors, including a majority of our independent directors, may adopt changes to the valuation guidelines if it (i) determines that such changes are likely to result in a more accurate reflection of NAV or a more efficient or less costly procedure for the determination of NAV without having a material adverse effect on the accuracy of such determination or (ii) otherwise reasonably believes a change is appropriate for the determination of NAV.
For more information on our NAV calculation and valuation guidelines, please refer to Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" in our Annual Report on Form 10-K for the year ended December 31, 2024. Please also refer to Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, as supplemented, for additional disclosure relating to material trends or uncertainties that may impact our NAV and our business.
The following table provides a breakdown of the major components of our NAV as of September 30, 2025 ($ and shares/units in thousands):
|
Components of NAV |
September 30, 2025 |
|||
|
Investments in real estate |
$ |
20,985,384 |
||
|
Investment in real estate debt |
912,498 |
|||
|
Cash and cash equivalents |
243,842 |
|||
|
Restricted cash |
229,665 |
|||
|
Other assets |
206,470 |
|||
|
Debt obligations |
(11,752,181 |
) |
||
|
Secured financings on investments in real estate debt |
(547,564 |
) |
||
|
Subscriptions received in advance |
(125 |
) |
||
|
Other liabilities |
(1,640,764 |
) |
||
|
Performance participation accrual |
- |
|||
|
Management fee payable |
(7,137 |
) |
||
|
Accrued stockholder servicing fees(1) |
(2,751 |
) |
||
|
Non-controlling interests in consolidated joint ventures |
(114,395 |
) |
||
|
Net asset value |
$ |
8,512,942 |
||
|
Number of outstanding shares/units |
415,552 |
|||
__________
(1)
Stockholder servicing fees only apply to Class T, Class S, and Class D shares. For purposes of NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis. Under GAAP, we accrue the full cost of the stockholder servicing fee as an offering cost at the time we sell Class T, Class S and Class D shares. As of September 30, 2025, we have accrued under GAAP $233.9 million of stockholder servicing fees payable to the Dealer Manager related to the Class T, Class S and Class D shares sold.
The following table provides a breakdown of our total NAV and NAV per share by share class as of September 30, 2025 ($ and shares/units in thousands, except per share/unit data):
|
NAV Per Share |
Class S |
Class T |
Class D |
Class I |
Third-party |
Total |
||||||||||||||||||
|
Net asset value |
$ |
3,656,585 |
$ |
101,335 |
$ |
504,999 |
$ |
3,841,760 |
$ |
408,263 |
$ |
8,512,942 |
||||||||||||
|
Number of outstanding shares/units |
177,511 |
4,917 |
25,026 |
188,108 |
19,990 |
415,552 |
||||||||||||||||||
|
NAV Per Share/Unit as of September 30, 2025 |
$ |
20.60 |
$ |
20.61 |
$ |
20.18 |
$ |
20.42 |
$ |
20.42 |
||||||||||||||
__________
(1)
Includes the Operating Partnership units held by the Special Limited Partner and other third parties.
Set forth below are the weighted averages of the key assumptions in the discounted cash flow methodology used in the September 30, 2025 valuations, based on property types.
|
Property Type |
Discount Rate |
Exit Capitalization |
||
|
Multifamily |
6.9% |
5.5% |
||
|
Industrial |
7.3% |
5.7% |
||
|
Office |
8.0% |
6.8% |
||
|
Other |
8.5% |
7.1% |
For quarter-end months, these assumptions are determined by the independent valuation advisor or third party appraisers, as applicable, per the terms of our valuation guidelines. The Advisor reviews the assumptions from each of the appraisals. A change in these assumptions would impact the calculation of the value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
|
Input |
Hypothetical |
Multifamily |
Industrial |
Office |
Other |
|||||
|
Discount Rate |
0.25% decrease |
+1.9% |
+1.9% |
+1.9% |
+1.9% |
|||||
|
(weighted average) |
0.25% increase |
(1.9)% |
(1.9)% |
(1.8)% |
(1.9)% |
|||||
|
Exit Capitalization Rate |
0.25% decrease |
+3.0% |
+2.9% |
+2.4% |
+2.2% |
|||||
|
(weighted average) |
0.25% increase |
(2.7)% |
(2.6)% |
(2.2)% |
(2.0)% |
The following table reconciles stockholders' equity from our Condensed Consolidated Balance Sheet to our NAV ($ in thousands):
|
Reconciliation of Stockholders' Equity to NAV |
September 30, 2025 |
||||
|
Total stockholders' equity under GAAP |
$ |
4,226,688 |
|||
|
Redeemable non-controlling interests |
408,263 |
||||
|
Total partners' capital of Operating Partnership |
4,634,951 |
||||
|
Adjustments: |
|||||
|
Accrued stockholder servicing fee |
231,150 |
||||
|
Unrealized net real estate and real estate debt appreciation |
11,844 |
||||
|
Accumulated depreciation and amortization |
3,634,997 |
||||
|
NAV |
$ |
8,512,942 |
|||
The following details the adjustments to reconcile stockholders' equity to our NAV:
•
Accrued stockholder servicing fee represents the accrual for the full cost of the stockholder servicing fee for Class T, Class S and Class D shares. Under GAAP, we accrued the full cost of the stockholder servicing fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum stockholder servicing fee) as an offering cost at the time we sold the Class T, Class S and Class D shares. Refer to Note 2 - "Summary of Significant Accounting Policies" to our consolidated financial statements in our Current Report on Form 8-K/A, filed on July 11, 2025, for the year ended December 31, 2024, for further details of the GAAP treatment regarding the stockholder servicing fee. For purposes of NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis.
•
Our investments in real estate are presented under historical cost in our condensed consolidated financial statements. Additionally, our mortgage notes, secured credit facilities, secured financings on investments in real estate debt and unsecured line of credit ("Debt") are presented at their carrying value in our condensed consolidated financial statements. As such, any changes in the fair value of our Debt are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate and our Debt are recorded at fair value.
•
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 determining our NAV.
Distributions
Since February 2019, we have declared monthly distributions for each class of our common stock, which are generally paid three business days after month-end. Each class of our common stock received the same gross distribution per share, which was an aggregate of $0.9315 per share for the nine months ended September 30, 2025. The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the gross distribution per share and paid to the Dealer Manager. The table below details the net distribution for each of our share classes for the nine months ended September 30, 2025:
|
Class T |
Class S |
Class D |
Class I |
|||||||||||||
|
Shares |
Shares |
Shares |
Shares |
|||||||||||||
|
January 31, 2025 |
$ |
0.0877 |
$ |
0.0877 |
$ |
0.0989 |
$ |
0.1035 |
||||||||
|
February 28, 2025 |
0.0893 |
0.0893 |
0.0994 |
0.1035 |
||||||||||||
|
March 31, 2025 |
0.0879 |
0.0879 |
0.0990 |
0.1035 |
||||||||||||
|
April 30, 2025 |
0.0886 |
0.0886 |
0.0992 |
0.1035 |
||||||||||||
|
May 31, 2025 |
0.0883 |
0.0882 |
0.0991 |
0.1035 |
||||||||||||
|
June 30, 2025 |
0.0888 |
0.0888 |
0.0993 |
0.1035 |
||||||||||||
|
July 31, 2025 |
0.0883 |
0.0883 |
0.0991 |
0.1035 |
||||||||||||
|
August 31, 2025 |
0.0884 |
0.0883 |
0.0991 |
0.1035 |
||||||||||||
|
September 30, 2025 |
0.0890 |
0.0890 |
0.0993 |
0.1035 |
||||||||||||
|
Total |
$ |
0.7963 |
$ |
0.7961 |
$ |
0.8924 |
$ |
0.9315 |
||||||||
The following table summarizes our distributions declared on our common stock and Operating Partnership units held by parties other than us during the nine months ended September 30, 2025 and 2024 ($ in thousands):
|
For the Nine Months Ended |
For the Nine Months Ended |
||||||||||||||||
|
Amount |
% |
Amount |
% |
||||||||||||||
|
Distributions |
|||||||||||||||||
|
Payable in cash |
$ |
262,782 |
72 |
% |
$ |
252,177 |
68 |
% |
|||||||||
|
Reinvested in shares |
101,854 |
28 |
% |
120,012 |
32 |
% |
|||||||||||
|
Total distributions |
$ |
364,636 |
100 |
% |
$ |
372,189 |
100 |
% |
|||||||||
|
Sources of Distributions |
|||||||||||||||||
|
Cash flows from operating activities(1) |
$ |
334,881 |
92 |
% |
$ |
372,189 |
100 |
% |
|||||||||
|
Cash flows from investing activities(1) |
29,755 |
8 |
% |
- |
- |
% |
|||||||||||
|
Offering proceeds |
- |
- |
% |
- |
- |
% |
|||||||||||
|
Total sources of distributions |
$ |
364,636 |
100 |
% |
$ |
372,189 |
100 |
% |
|||||||||
|
Cash flows from operating activities |
$ |
296,282 |
$ |
352,633 |
|||||||||||||
|
Funds from operations(2) |
$ |
4,432 |
$ |
50,284 |
|||||||||||||
__________
(1)
As of September 30, 2025, our inception to date cash flows from operating activities and certain cash flows from interest rate derivatives, classified as cash flows from investing activities, have funded 100% of our distributions.
(2)
See "Funds from Operations and Adjusted Funds from Operations" above for a description of FFO and a reconciliation of FFO to GAAP net loss attributable to stockholders.
Liquidity and Capital Resources
Our primary sources of liquidity include cash and cash equivalents and available borrowings under our unsecured line of credit and senior secured revolving credit facility. The following table summarizes amounts available under these sources as of September 30, 2025 ($ in thousands):
|
September 30, 2025 |
|||||
|
Cash and cash equivalents |
$ |
243,842 |
|||
|
Available borrowings on undrawn unsecured line of credit |
342,000 |
||||
|
Available borrowings on undrawn senior secured revolving credit facility |
150,000 |
||||
|
Total available liquidity and capital resources |
$ |
735,842 |
|||
Our primary needs for liquidity and capital resources are to fund our investments, to make distributions to our stockholders, to repurchase shares of our common stock pursuant to our share repurchase plan, to pay our offering and operating expenses and capital expenditures and to pay debt service on the outstanding indebtedness we incur. Since November 2022, share repurchase requests from our stockholders have exceeded the limits of our share repurchase plan. Our operating expenses include, among other things, fees and expenses related to managing our properties and other investments, the management fee we pay to the Advisor (to the extent the Advisor elects to receive the management fee in cash), the performance participation allocation that the Operating Partnership will pay to the Special Limited Partner (when earned and to the extent that the Special Limited Partner elects to receive the performance participation allocation in cash) and general corporate expenses.
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. Other potential future sources of capital include secured or unsecured financings from banks or other lenders and proceeds from the sale of assets and investments in real estate-related debt. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. From inception through September 30, 2025, our distributions have been primarily funded from cash flows from operating activities in addition to certain cash flows from interest rate derivatives, classified as cash flows from investing activities. In addition, for the three and nine months ended September 30, 2025, we have repurchased $0.1 billion and $0.3 billion in shares of our common stock under our share repurchase plan.
The following table is a summary of our indebtedness as of September 30, 2025 and December 31, 2024 ($ in thousands):
|
Principal Balance Outstanding(3)(4) |
||||||||||||||||
|
Indebtedness |
Weighted |
Weighted |
Maximum |
September 30, |
December 31, |
|||||||||||
|
Fixed rate loans |
||||||||||||||||
|
Fixed rate mortgages |
3.00% |
March 2031 |
N/A |
$ |
2,755,723 |
$ |
2,978,914 |
|||||||||
|
Total fixed rate loans |
2,755,723 |
2,978,914 |
||||||||||||||
|
Variable rate loans |
||||||||||||||||
|
Floating rate mortgages |
B + 1.92% |
September 2028 |
N/A |
9,124,527 |
9,658,934 |
|||||||||||
|
Variable rate secured credit facility(5) |
B + 2.25% |
December 2025 |
$161,665 |
161,665 |
164,152 |
|||||||||||
|
Senior secured revolving credit facility(6) |
B + 2.50% |
January 2027 |
$150,000 |
- |
- |
|||||||||||
|
Total variable rate loans |
9,286,192 |
9,823,086 |
||||||||||||||
|
Total loans secured by the Company's |
12,041,915 |
12,802,000 |
||||||||||||||
|
Secured financings on investments in real estate debt |
B + 2.65% |
June 2030 |
$ |
547,564 |
547,564 |
468,082 |
||||||||||
|
Unsecured line of credit(7) |
B + 2.50% |
May 2027 |
$ |
1,550,000 |
1,208,000 |
1,362,000 |
||||||||||
|
Total Indebtedness |
$ |
13,797,479 |
$ |
14,632,082 |
||||||||||||
__________
(1)
The symbol "B" refers to the relevant floating benchmark rates, which includes one-month SOFR, NYFED 30 day SOFR, three-month EURIBOR, three-month CIBOR and three-month BBSY, as applicable to each loan.
(2)
For loans where we, at our own discretion, have extension options, the maximum maturity date has been assumed.
(3)
The majority of our mortgages contain prepayment provisions including (but not limited to) lockout periods, yield or spread maintenance provisions and fixed penalties.
(4)
Excludes a $12.6 million mortgage loan on a property classified as held-for-sale as of December 31, 2024. As of September 30, 2025, there were no mortgage loans that met the criteria to be classified as held-for-sale.
(5)
The repayment of the variable rate secured credit facility is guaranteed by the Operating Partnership.
(6)
The repayment of the senior secured revolving credit facility is secured by pledges of ownership interests in holding companies that are directly under the Operating Partnership.
(7)
The repayment of the unsecured line of credit facility is guaranteed by us.
During the period from October 1, 2025 through November 12, 2025, we refinanced and closed an aggregate of approximately $1.0 billion in property-level financing.
During the period from October 1, 2025 through November 12, 2025, we repurchased $0.1 billion of common stock under our share repurchase plan. In October 2025, we received repurchase requests in excess of the 0.5% monthly limit. Based on the terms of our
share repurchase plan, we honored all repurchase requests for November 2025 on a pro rata basis up to the 0.5% monthly limitation following the repurchase priority. As such, following the repurchase priority, approximately 4% of each stockholder's October's repurchase request was satisfied.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash ($ in thousands):
|
For the Nine Months Ended |
|||||||||
|
September 30, 2025 |
September 30, 2024 |
||||||||
|
Cash flows provided by operating activities |
$ |
296,282 |
$ |
352,633 |
|||||
|
Cash flows provided by investing activities |
1,206,112 |
617,925 |
|||||||
|
Cash flows used in financing activities |
(1,551,412 |
) |
(1,009,277 |
) |
|||||
|
Effect of exchange rate changes |
(409 |
) |
46 |
||||||
|
Net decrease in cash and cash equivalents and restricted cash |
$ |
(49,427 |
) |
$ |
(38,673 |
) |
|||
Cash flows provided by operating activities decreased by approximately $56.4 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This decrease is primarily attributable to a reduction in property operating income as a result of asset sales during the year ended December 31, 2024.
Cash flows provided by investing activities increased by approximately $0.6 billion during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily due to an increase of approximately $1.1 billion in proceeds from dispositions of real estate, partially offset by a decrease of approximately $0.6 billion in proceeds received from the dispositions of real estate debt investments and real estate debt securities.
Cash flows used in financing activities increased by approximately $0.5 billion during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily driven by a $1.4 billion decrease in net borrowings on our mortgage notes, secured credit facilities and unsecured line of credit and a $0.1 billion decrease in net proceeds from the issuance of our common stock. The increase was offset by a $0.6 billion decrease in repurchases of our common stock and a $0.3 billion increase in borrowings under secured financings on investments in real estate debt.
Critical Accounting Policies
The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and requires estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. We consider our accounting policies over investments in real estate and lease intangibles, investments in real estate debt, and revenue recognition to be our critical accounting policies. Refer to Note 2 - "Summary of Significant Accounting Policies" to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further descriptions of such accounting policies.
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.
Off-Balance Sheet Arrangements
We have no existing off-balance sheet arrangements.
Starwood Real Estate Income Trust Inc. published this content on November 12, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 12, 2025 at 20:11 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]