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0001625941--12-31false2026Q1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESRecently issued Accounting Standards [OPEN TO UPDATE THROUGH FILING DATE]
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________________________
FORM 10-Q
____________________________________________________________________
(Mark One)
| | | | | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2026
or
| | | | | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from__________ to
Commission file number: 000-56032
____________________________________________________________________
Ares Industrial Real Estate Income Trust Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________
| | | | | |
Maryland | 47-1592886 |
(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer
Identification No.) |
| |
One Tabor Center 1200 Seventeenth Street, Suite 2900 Denver, CO | 80202 |
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (303) 228-2200
____________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | Smaller reporting company | ☐ |
| | | | | |
Non-accelerated filer | ☒ | | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 7, 2026, there were 69,326,662 shares of the registrant’s Class T-R common stock, 17,517,834 shares of the registrant’s Class D-R common stock, 162,059,620 shares of the registrant’s Class I-R common stock, 17,244,397 shares of the registrant’s Class S-PR common stock, 145,972 shares of the registrant’s Class D-PR common stock, and 13,480,796 shares of the registrant’s Class I-PR common stock outstanding.
ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | | | |
| | As of |
| (in thousands, except per share data) | | March 31,
2026 | | December 31,
2025 |
| | (unaudited) | | |
| ASSETS | | | | |
| Net investment in real estate properties | | $ | 6,815,627 | | | $ | 6,852,623 | |
| Investments in unconsolidated joint venture partnerships | | 19,698 | | | 19,647 | |
| Investments in real estate debt and securities, at fair value | | 660,517 | | | 693,861 | |
| Cash and cash equivalents | | 70,622 | | | 63,037 | |
| Restricted cash | | 12,788 | | | 13,281 | |
| Derivative instruments | | 41,837 | | | 24,992 | |
| DST Program Loans, at fair value | | 40,098 | | | 30,372 | |
| Other assets | | 103,947 | | | 100,614 | |
| Total assets | | $ | 7,765,134 | | | $ | 7,798,427 | |
| LIABILITIES AND EQUITY | | | | |
| Liabilities | | | | |
| Accounts payable and accrued liabilities | | $ | 85,174 | | | $ | 76,407 | |
| Debt, net | | 4,599,040 | | | 4,709,322 | |
| Secured financings on investments in real estate debt securities | | 70,001 | | | 72,584 | |
| Intangible lease liabilities, net | | 49,209 | | | 52,230 | |
| Financing obligations, at fair value | | 662,461 | | | 494,109 | |
| Distribution fees payable to affiliates | | 141,766 | | | 142,465 | |
| Other liabilities | | 70,690 | | | 70,396 | |
| Total liabilities | | 5,678,341 | | | 5,617,513 | |
Commitments and contingencies (Note 14) | | | | |
| Redeemable noncontrolling interests | | 103,256 | | | 102,373 | |
| Equity | | | | |
| Stockholders’ equity: | | | | |
Preferred stock, $0.01 par value per share — 200,000 shares authorized, none issued and outstanding | | — | | | — | |
Common stock, $0.01 par value per share (Note 8) | | 2,795 | | | 2,772 | |
| Additional paid-in capital | | 3,193,639 | | | 3,176,212 | |
| Accumulated deficit and distributions | | (1,729,659) | | | (1,641,945) | |
| Accumulated other comprehensive income | | 6,773 | | | 2,097 | |
| Total stockholders’ equity | | 1,473,548 | | | 1,539,136 | |
| Noncontrolling interests | | 509,989 | | | 539,405 | |
| Total equity | | 1,983,537 | | | 2,078,541 | |
| Total liabilities and equity | | $ | 7,765,134 | | | $ | 7,798,427 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands, except per share data) | | 2026 | | 2025 |
| Revenues: | | | | |
| Rental revenues | | $ | 140,715 | | | $ | 133,919 | |
| Debt-related income | | 13,328 | | | 10,483 | |
| Total revenues | | 154,043 | | | 144,402 | |
| Operating expenses: | | | | |
| Rental expenses | | 37,580 | | | 34,211 | |
| Real estate-related depreciation and amortization | | 79,309 | | | 77,576 | |
| General and administrative expenses | | 4,881 | | | 4,868 | |
| Advisory fees | | 17,666 | | | 16,555 | |
| Acquisition costs and reimbursements | | 1,582 | | | 591 | |
| Total operating expenses | | 141,018 | | | 133,801 | |
| Other income (expenses): | | | | |
| Equity in income (loss) from unconsolidated joint venture partnerships | | 28 | | | (24) | |
| Interest expense | | (70,511) | | | (69,888) | |
| Loss on financing obligations | | (6,548) | | | (835) | |
| Loss on financial assets | | (27) | | | — | |
| Loss on extinguishment of debt and financing obligations, net | | — | | | (161) | |
| Gain on derivative instruments | | — | | | 12 | |
| | | | |
| Other income and expenses | | 462 | | | 1,665 | |
| Total other income (expenses) | | (76,596) | | | (69,231) | |
| Net loss | | (63,571) | | | (58,630) | |
| Net loss attributable to redeemable noncontrolling interests | | 1,296 | | | 1,404 | |
| Net loss attributable to noncontrolling interests | | 16,057 | | | 10,592 | |
| Net loss attributable to common stockholders | | $ | (46,218) | | | $ | (46,634) | |
| Weighted-average shares outstanding—basic | | 278,586 | | | 271,030 | |
| Weighted-average shares outstanding—diluted | | 383,253 | | | 340,746 | |
| Net loss attributable to common stockholders per common share—basic and diluted | | $ | (0.17) | | | $ | (0.17) | |
See accompanying Notes to Condensed Consolidated Financial Statements.
ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands) | | 2026 | | 2025 |
| Net loss | | $ | (63,571) | | | $ | (58,630) | |
| Change from cash flow hedging activities | | 6,530 | | | (14,623) | |
| Change from activities related to available-for-sale debt securities | | (115) | | | (515) | |
| Comprehensive loss | | (57,156) | | | (73,768) | |
| Comprehensive loss attributable to redeemable noncontrolling interests | | 1,165 | | | 1,766 | |
| Comprehensive loss attributable to noncontrolling interests | | 14,436 | | | 13,327 | |
| Comprehensive loss attributable to common stockholders | | $ | (41,555) | | | $ | (58,675) | |
See accompanying Notes to Condensed Consolidated Financial Statements.
ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Stockholders’ Equity | | | | |
| | Common Stock | | Additional
Paid-In Capital | | Accumulated
Deficit
and Distributions | | Accumulated
Other
Comprehensive
Income (Loss) | | Noncontrolling
Interests | | Total Equity |
| (in thousands) | | Shares | | Amount | | | | | |
| FOR THE THREE MONTHS ENDED MARCH 31, 2025 | | | | | | | | | | | | | | |
| Balance as of December 31, 2024 | | 270,974 | | $ | 2,710 | | | $ | 2,950,215 | | | $ | (1,358,679) | | | $ | 28,773 | | | $ | 369,091 | | | $ | 1,992,110 | |
Net loss (excludes $(1,404) attributable to redeemable noncontrolling interests) | | — | | — | | | — | | | (46,634) | | | — | | | (10,592) | | | (57,226) | |
Change from cash flow hedging activities and available-for-sale debt securities (excludes $362 attributable to redeemable noncontrolling interests) | | — | | — | | | — | | | — | | | (12,041) | | | (2,735) | | | (14,776) | |
| Issuance of common stock | | 6,333 | | 63 | | | 78,074 | | | — | | | — | | | — | | | 78,137 | |
| Share-based compensation, net of cancellations | | (93) | | (1) | | | 241 | | | — | | | — | | | — | | | 240 | |
| Upfront offering costs, including selling commissions, dealer manager fees, and offering costs | | — | | — | | | (1,369) | | | — | | | — | | | — | | | (1,369) | |
| Trailing distribution fees | | — | | — | | | (1,981) | | | 2,475 | | | — | | | (661) | | | (167) | |
| Redemptions of common stock | | (5,815) | | (58) | | | (73,983) | | | — | | | — | | | — | | | (74,041) | |
| | | | | | | | | | | | | | |
Distributions declared (excludes $1,223 attributable to redeemable noncontrolling interests) | | — | | — | | | — | | | (40,650) | | | — | | | (9,243) | | | (49,893) | |
| Redemption value allocation adjustment to redeemable noncontrolling interests | | — | | — | | | (3,194) | | | — | | | — | | | — | | | (3,194) | |
| Reallocation of stockholders' equity and noncontrolling interests | | — | | — | | | (149) | | | — | | | 5 | | | 144 | | | — | |
| Balance as of March 31, 2025 | | 271,399 | | $ | 2,714 | | | $ | 2,947,854 | | | $ | (1,443,488) | | | $ | 16,737 | | | $ | 346,004 | | | $ | 1,869,821 | |
| FOR THE THREE MONTHS ENDED MARCH 31, 2026 | | | | | | | | | | | | | | |
| Balance as of December 31, 2025 | | 277,170 | | $ | 2,772 | | | $ | 3,176,212 | | | $ | (1,641,945) | | | $ | 2,097 | | | $ | 539,405 | | | $ | 2,078,541 | |
Net loss (excludes $1,296 attributable to redeemable noncontrolling interests) | | — | | — | | | — | | | (46,218) | | | — | | | (16,057) | | | (62,275) | |
Change from cash flow hedging activities and available-for-sale debt securities (excludes $131 attributable to redeemable noncontrolling interests) | | — | | — | | | — | | | — | | | 4,663 | | | 1,621 | | | 6,284 | |
| Issuance of common stock | | 6,094 | | 61 | | | 77,187 | | | — | | | — | | | — | | | 77,248 | |
| Share-based compensation, net of cancellations | | (74) | | (1) | | | 452 | | | — | | | — | | | — | | | 451 | |
| Upfront offering costs, including selling commissions, dealer manager fees, and offering costs | | — | | — | | | (1,508) | | | — | | | — | | | — | | | (1,508) | |
| Trailing distribution fees | | — | | — | | | (1,934) | | | 2,377 | | | — | | | 256 | | | 699 | |
| Redemptions of common stock | | (3,669) | | (37) | | | (48,142) | | | — | | | — | | | — | | | (48,179) | |
Distributions declared (excludes $1,232 attributable to redeemable noncontrolling interests) | | — | | — | | | — | | | (43,873) | | | — | | | (15,254) | | | (59,127) | |
| Redemption value allocation adjustment to redeemable noncontrolling interests | | — | | — | | | (3,280) | | | — | | | — | | | — | | | (3,280) | |
| Redemptions of noncontrolling interests | | — | | — | | | — | | | — | | | — | | | (5,317) | | | (5,317) | |
| Reallocation of stockholders' equity and noncontrolling interests | | — | | — | | | (5,348) | | | — | | | 13 | | | 5,335 | | | — | |
| Balance as of March 31, 2026 | | 279,521 | | $ | 2,795 | | | $ | 3,193,639 | | | $ | (1,729,659) | | | $ | 6,773 | | | $ | 509,989 | | | $ | 1,983,537 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| (in thousands) | | 2026 | | 2025 |
| Operating activities: | | | | |
| Net loss | | $ | (63,571) | | | $ | (58,630) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | | |
| Real estate-related depreciation and amortization | | 79,309 | | | 77,576 | |
| Amortization of deferred financing costs | | 4,378 | | | 4,083 | |
| | | | |
| Equity in (income) loss from unconsolidated joint venture partnerships | | (28) | | | 24 | |
| Loss on changes in fair value of interest rate caps | | 112 | | | 2,617 | |
| Amortization of interest rate cap premiums | | 6,164 | | | 3,985 | |
| Loss on financing obligations | | 6,548 | | | 835 | |
| Paid-in-kind interest on borrowings, net of repayments | | — | | | 277 | |
| Paid-in-kind interest on investments in real estate debt and securities, net of repayments | | (4,103) | | | (3,171) | |
| | | | |
| Loss on financial assets | | 27 | | | — | |
| Straight-line rent and amortization of above- and below-market leases | | (5,499) | | | (8,208) | |
| Loss on extinguishment of debt and financing obligations, net | | — | | | 161 | |
| | | | |
| Other | | 2,520 | | | 3,579 | |
| Changes in operating assets and liabilities | | | | |
| Other assets, accounts payable and accrued liabilities and other liabilities | | (2,462) | | | (2,576) | |
| Net cash provided by operating activities | | 23,395 | | | 20,552 | |
| Investing activities: | | | | |
| Real estate acquisitions | | (15,292) | | | — | |
| | | | |
| Capital expenditures | | (12,661) | | | (18,563) | |
| Investments in debt-related investments | | (16,025) | | | (10,439) | |
| Investments in unconsolidated joint venture partnerships | | (100) | | | (31) | |
| Distributions from joint venture partnerships | | 77 | | | — | |
| | | | |
| Collection of principal on available-for-sale debt securities | | 3,580 | | | 2,078 | |
| Collection of principal on debt-related investments | | 49,864 | | | — | |
| | | | |
| Disbursement of escrows and reserves for debt-related investments, net | | (477) | | | — | |
| | | | |
| Net cash provided by (used in) investing activities | | 8,966 | | | (26,955) | |
| Financing activities: | | | | |
| Proceeds from line of credit | | 325,000 | | | 216,284 | |
| Repayments of line of credit | | (450,000) | | | (176,284) | |
| Proceeds from term loan | | — | | | 109,000 | |
| Repayments of term loan | | — | | | (109,000) | |
| Net repayments of secured funding agreement | | (2,583) | | | (7,161) | |
| Proceeds from mortgage note | | — | | | 55 | |
| | | | |
| Debt issuance costs paid | | (343) | | | (15,295) | |
| Interest rate cap premiums | | (11,036) | | | (9,653) | |
| Proceeds from issuance of common stock, net | | 53,668 | | | 56,268 | |
| Proceeds from financing obligations, net | | 152,050 | | | 48,213 | |
| Offering costs paid in connection with issuance of common stock and private placements | | (1,140) | | | (1,122) | |
| | | | |
| Distributions paid to common stockholders, redeemable noncontrolling interest holders and noncontrolling interest holders | | (31,803) | | | (25,623) | |
| Distribution fees paid to affiliates | | (4,713) | | | (4,010) | |
| Redemptions of common stock | | (48,179) | | | (74,041) | |
| Redemptions of redeemable noncontrolling interests and noncontrolling interests | | (5,210) | | | (2,563) | |
| Other | | (980) | | | (1,195) | |
| Net cash (used in) provided by financing activities | | (25,269) | | | 3,873 | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | | 7,092 | | | (2,530) | |
| Cash, cash equivalents and restricted cash, at beginning of period | | 76,318 | | | 28,797 | |
| Cash, cash equivalents and restricted cash, at end of period | | $ | 83,410 | | | $ | 26,267 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Ares Industrial Real Estate Income Trust Inc. (the “Company,” “we,” “our” or “us”) is a Maryland corporation formed on August 12, 2014. Unless the context otherwise requires, the “Company,” “we,” “our,” “us” and “AIREIT” refers to Ares Industrial Real Estate Income Trust Inc. and our consolidated subsidiaries, which includes AIREIT Operating Partnership LP (the “Operating Partnership”). We are externally managed by Ares Commercial Real Estate Management LLC (the “Advisor”).
The accompanying unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain disclosures normally included in the annual audited financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been omitted. As such, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 6, 2026 (“2025 Form 10-K”).
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Global macroeconomic conditions, including heightened inflation, changes to fiscal, monetary and trade policy, higher interest rates and challenges in the supply chain, coupled with the conflicts in Ukraine and in the Middle East, have the potential to negatively impact us. These current macroeconomic conditions may continue or aggravate and could cause the United States to experience an economic slowdown or recession. We anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments and eliminations, consisting only of normal recurring adjustments necessary for a fair presentation in conformity with GAAP.
2. INVESTMENTS IN REAL ESTATE PROPERTIES
As of March 31, 2026 and December 31, 2025, our consolidated investment in real estate properties consisted of 271 and 269 industrial buildings, respectively. Additionally, investment in real estate properties included one building under construction as of December 31, 2025. We did not have any buildings under construction as of March 31, 2026.
The following table summarizes our consolidated investments in real properties:
| | | | | | | | | | | | | | |
| | As of |
| (in thousands) | | March 31, 2026 (1) | | December 31, 2025 |
| Land | | $ | 1,401,716 | | | $ | 1,397,895 | |
| Building and improvements | | 6,183,080 | | | 6,152,773 | |
| Intangible lease assets | | 597,466 | | | 591,393 | |
| Construction in progress | | 40,415 | | | 37,938 | |
| Investment in real estate properties | | 8,222,677 | | | 8,179,999 | |
| Less accumulated depreciation and amortization | | (1,407,050) | | | (1,327,376) | |
| Net investment in real estate properties | | $ | 6,815,627 | | | $ | 6,852,623 | |
____________________________________________________
(1)Includes one property with an aggregate accounting basis of $15.3 million that met the criteria of held for sale as of March 31, 2026.
Acquisitions
During the three months ended March 31, 2026, we acquired 100% of the following property, which was determined to be an asset acquisition:
| | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | Acquisition Date | | Number of
Buildings | | Total Purchase
Price (1) |
| 2026 Acquisitions | | | | | | |
| 1 North Avenue DC (2) | | 3/25/2026 | | 1 | | $ | 26,761 | |
| | | | | | |
____________________________________________________
(1)Total purchase price is equal to the total consideration paid plus any debt assumed at fair value.
(2)Includes debt assumed at fair value as of the acquisition date of $11.2 million, with a principal amount of $11.2 million.
During the three months ended March 31, 2026, we allocated the purchase price of our acquisitions to land, building and improvements, and intangible lease assets and liabilities as follows:
| | | | | | | | |
| (in thousands) | | For the Three Months Ended
March 31, 2026 |
| Land | | $ | 3,821 | |
| Building and improvements | | 21,932 | |
| Intangible lease assets | | 2,171 | |
| | |
| Below-market lease liabilities | | (1,163) | |
| Total purchase price (1) | | $ | 26,761 | |
____________________________________________________
(1)Total purchase price is equal to the total consideration paid plus any debt assumed at fair value.
The weighted-average amortization period for the intangible lease assets and liabilities acquired in connection with our acquisition during the three months ended March 31, 2026, as of the date of acquisition, was 2.4 years.
Intangible Lease Assets and Liabilities
Intangible lease assets and liabilities as of March 31, 2026 and December 31, 2025 included the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2026 | | As of December 31, 2025 |
| (in thousands) | | Gross | | Accumulated
Amortization | | Net | | Gross | | Accumulated
Amortization | | Net |
| Intangible lease assets (1) | | $ | 583,877 | | | $ | (388,730) | | | $ | 195,147 | | | $ | 577,804 | | | $ | (371,628) | | | $ | 206,176 | |
| Above-market lease assets (1) | | 13,589 | | | (9,340) | | | 4,249 | | | 13,589 | | | (8,976) | | | 4,613 | |
| Below-market lease liabilities | | (143,694) | | | 94,485 | | | (49,209) | | | (142,531) | | | 90,301 | | | (52,230) | |
____________________________________________________
(1)Included in net investment in real estate properties on the condensed consolidated balance sheets.
Rental Revenue Adjustments and Depreciation and Amortization Expense
The following table summarizes straight-line rent adjustments, amortization recognized as an increase (decrease) to rental revenues from above- and below-market lease assets and liabilities, and real estate-related depreciation and amortization expense:
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands) | | 2026 | | 2025 |
| Increase (Decrease) to Rental Revenue: | | | | |
| Straight-line rent adjustments | | $ | 1,679 | | | $ | 2,929 | |
| Above-market lease amortization | | (364) | | | (418) | |
| Below-market lease amortization | | 4,184 | | | 5,697 | |
| Real Estate-Related Depreciation and Amortization: | | | | |
| Depreciation expense | | $ | 62,207 | | | $ | 60,426 | |
| Intangible lease asset amortization | | 17,102 | | | 17,150 | |
3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS
The following table summarizes our investments in unconsolidated joint venture partnerships, which consist of Build-To-Core Industrial Partnership II Tranche B LP (the “BTC II B Partnership”) and Ares QR Industrial Partnership III LP (the “QR III Partnership”) (together, the “JV Partnerships”):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of | | Investments in Unconsolidated
Joint Venture Partnerships as of |
| | March 31, 2026 | | December 31, 2025 | |
| ($ in thousands) | | Ownership
Percentage | | Number of
Buildings (1) | | Ownership
Percentage | | Number of
Buildings (1) | | March 31,
2026 | | December 31,
2025 |
| BTC II B Partnership | | 8.0 | % | | 1 | | 8.0 | % | | 1 | | $ | 19,527 | | | $ | 19,571 | |
| QR III Partnership | | 8.0 | % | | — | | 8.0 | % | | — | | 171 | | | 76 | |
| Total JV Partnerships | | | | 1 | | | | 1 | | $ | 19,698 | | | $ | 19,647 | |
____________________________________________________
(1)Represents acquired or completed buildings. As of both March 31, 2026 and December 31, 2025, the BTC II B Partnership also owned three industrial buildings that were in the pre-construction phase.
4. INVESTMENTS IN REAL ESTATE DEBT AND SECURITIES
Debt-Related Investments
The following table summarizes our debt-related investments as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | Fair Value | | Outstanding Principal | | Weighted-Average Interest Rate | | Weighted-Average Remaining Life (Years) |
| As of March 31, 2026 | | | | | | | | |
| Senior loans, carried at fair value | | $ | 429,551 | | | $ | 429,551 | | | 7.6 | % | | 1.3 |
| Mezzanine loans, carried at fair value | | 132,000 | | | 132,000 | | | 8.7 | | | 1.7 |
| Total debt-related investments | | $ | 561,551 | | | $ | 561,551 | | | 7.9 | % | | 1.4 |
| | | | | | | | |
| As of December 31, 2025 | | | | | | | | |
| Senior loans, carried at fair value | | $ | 459,275 | | | $ | 459,275 | | | 7.8 | % | | 1.7 |
| Mezzanine loans, carried at fair value | | 132,000 | | | 132,000 | | | 8.7 | | | 1.9 |
| Total debt-related investments | | $ | 591,275 | | | $ | 591,275 | | | 8.0 | % | | 1.7 |
During the three months ended March 31, 2026, we received $49.9 million of principal repayments on one senior loan debt-related investment. There were no principal repayments received during the three months ended March 31, 2025.
Available-for-Sale Debt Securities
As of March 31, 2026 and December 31, 2025, we had debt security investments designated as available-for-sale debt securities. The weighted-average remaining term of our available-for-sale debt securities, which is based on the fully extended maturity date of the instruments, was approximately 2.4 years and 2.7 years as of March 31, 2026 and December 31, 2025, respectively. There were no credit losses associated with our available-for-sale debt securities as of March 31, 2026 or December 31, 2025. The following table summarizes our investments in available-for-sale debt securities as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | Face Amount (1) | | Amortized Cost | | Unamortized Discount | | Unrealized Gain, Net (2) | | Fair Value |
| As of March 31, 2026 | | $ | 98,994 | | | $ | 98,577 | | | $ | 417 | | | $ | 389 | | | $ | 98,966 | |
| As of December 31, 2025 | | $ | 102,574 | | | $ | 102,082 | | | $ | 492 | | | $ | 504 | | | $ | 102,586 | |
____________________________________________________
(1)Face amount is presented net of repayments.
(2)Represents cumulative unrealized gain (loss) beginning from acquisition date.
5. DEBT AND SECURED FINANCINGS
A summary of our debt is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Weighted-Average Effective
Interest Rate as of | | Maturity Date | | Balance as of |
| ($ in thousands) | | March 31,
2026 | | December 31,
2025 | | | March 31,
2026 | | December 31,
2025 |
| Line of credit (1) | | 5.03 | % | | 5.11 | % | | March 2029 | | $ | 263,000 | | | $ | 388,000 | |
| Term loan (2) | | 3.85 | | | 3.85 | | | March 2027 | | 550,000 | | | 550,000 | |
| Term loan (3) | | 3.39 | | | 3.40 | | | March 2028 | | 600,000 | | | 600,000 | |
| Fixed-rate mortgage notes (4) | | 4.25 | | | 4.24 | | | July 2026 - January 2033 | | 1,453,550 | | | 1,442,350 | |
| Floating-rate mortgage notes (5) | | 4.84 | | | 4.85 | | | July 2026 - April 2027 | | 1,771,150 | | | 1,771,150 | |
| Total principal amount / weighted-average (6) | | 4.36 | % | | 4.39 | % | | | | $ | 4,637,700 | | | $ | 4,751,500 | |
| Less unamortized debt issuance costs | | | | | | | | (38,705) | | | (42,230) | |
| Add unamortized mark-to-market adjustment on assumed debt | | | | | | | | 45 | | | 52 | |
| Total debt, net | | | | | | | | $ | 4,599,040 | | | $ | 4,709,322 | |
| Gross book value of properties encumbered by debt | | | | | | | | $ | 5,031,668 | | | $ | 4,998,919 | |
____________________________________________________
(1)The effective interest rate is calculated based on either: (i) the term Secured Overnight Financing Rate (“Term SOFR”) plus a 10 basis point adjustment (“Adjusted Term SOFR”) plus a margin ranging from 1.25% to 2.00%; or (ii) an alternative base rate plus a margin ranging from 0.25% to 1.0%, each depending on our consolidated leverage ratio. Customary fall-back provisions apply if Term SOFR is unavailable. The weighted-average effective interest rate is the all-in interest rate, including the effects of interest rate cap agreements. The line of credit is available for general corporate purposes including, but not limited to, our acquisition and operation of permitted investments. As of March 31, 2026, total commitments for the line of credit were $1.0 billion and the unused and available portions under the line of credit were $737.0 million and $653.6 million, respectively.
(2)The effective interest rate is calculated based on either (i) Term SOFR plus an adjustment between 10 and 25 basis points, plus a margin ranging from 1.20% to 1.90%; or (ii) an alternative base rate plus a margin ranging from 0.20% to 0.90%, each depending on our consolidated leverage ratio. The weighted-average effective interest rate is the all-in interest rate, including the effects of interest rate swap agreements which fix Term SOFR for $300.0 million of
borrowings and interest rate cap agreements on $250.0 million of borrowings under the term loan. As of March 31, 2026, total commitments for the term loan were $550.0 million. This term loan is available for general corporate purposes including, but not limited to, our acquisition and operation of permitted investments.
(3)The effective interest rate is calculated based on either (i) Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90%; or (ii) an alternative base rate plus a margin ranging from 0.20% to 0.90%, each depending on our consolidated leverage ratio. The weighted-average effective interest rate is the all-in interest rate, including the effects of interest rate swap agreements which fix Term SOFR for $300.0 million of borrowings and an interest rate cap agreement on $300.0 million of borrowings under the term loan. As of March 31, 2026, total commitments for the term loan were $600.0 million. This term loan is available for general corporate purposes including, but not limited to, our acquisition and operation of permitted investments.
(4)Interest rates range from 2.85% to 6.09%, including the effect of an interest rate swap agreement that fixes Term SOFR for $367.8 million of borrowings. As of March 31, 2026, borrowings under a $300.0 million mortgage note amounted to $279.6 million, and borrowings under a $222.3 million mortgage note amounted to $204.0 million. The assets and credit of each of our consolidated properties pledged as collateral for our mortgage notes are not available to satisfy our other debt and obligations, unless we first satisfy the mortgage notes payable on the respective underlying properties.
(5)The effective interest rates are calculated based on either Term SOFR or Adjusted Term SOFR plus a margin ranging from 1.50% to 2.33% and include the effects of interest rate cap agreements.
(6)The weighted-average remaining term of our consolidated debt was approximately 1.6 years as of March 31, 2026, excluding any extension options on the line of credit, term loans, and certain of our mortgage notes.
For the three months ended March 31, 2026 and 2025, the amount of interest incurred related to our consolidated indebtedness, excluding debt issuance cost amortization and adjustments for amounts capitalized, was $58.7 million and $55.1 million, respectively, including $6.2 million and $4.1 million, respectively, related to the amortization of our interest rate cap premiums. For the three months ended March 31, 2026 and 2025, the amount of interest capitalized was $0.2 million and $0.9 million, respectively. See “Note 6” for the amount of interest incurred related to the DST Program (as defined below).
As of March 31, 2026, the principal payments due on our consolidated debt during each of the next five years and thereafter were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Line of Credit (1) | | Term Loans (2) | | Mortgage Notes (3) | | Total |
| Remainder of 2026 | | $ | — | | | $ | — | | | $ | 1,167,080 | | | $ | 1,167,080 | |
| 2027 | | — | | | 550,000 | | | 1,305,650 | | | 1,855,650 | |
| 2028 | | — | | | 600,000 | | | — | | | 600,000 | |
| 2029 | | 263,000 | | | — | | | 461,140 | | | 724,140 | |
| 2030 | | — | | | — | | | 11,200 | | | 11,200 | |
| Thereafter | | — | | | — | | | 279,630 | | | 279,630 | |
| Total principal payments | | $ | 263,000 | | | $ | 1,150,000 | | | $ | 3,224,700 | | | $ | 4,637,700 | |
____________________________________________________
(1)The line of credit matures in March 2029 and the term may be extended pursuant to a one-year extension option subject to certain conditions.
(2)The $600.0 million term loan matures in March 2028 and the term may be extended pursuant to two one-year extension options, subject to certain conditions.
(3)With respect to our mortgage notes, the term of our $367.8 million mortgage note that matures in July 2026 may be extended pursuant to a one-year extension option, subject to certain conditions. The terms of our $590.0 million mortgage note that matures in July 2026 and our $563.9 million mortgage note that matures in April 2027 may each be extended pursuant to three one-year extension options, subject to certain conditions. Additionally, the term of one of our fixed-rate mortgage notes with commitments of $222.3 million that matures in May 2027 may be extended pursuant to two one-year extension options, subject to certain conditions.
Debt Covenants
Our line of credit, term loans and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, the line of credit and term loan agreements contain certain corporate level financial covenants, including leverage ratio, fixed charge coverage ratio, and tangible net worth thresholds. We were in compliance with all covenants as of March 31, 2026.
Master Repurchase Agreement
On June 26, 2023, we entered into a master repurchase agreement (the “Morgan Stanley MRA”) with Morgan Stanley Bank, N.A. (“Morgan Stanley”). Under the Morgan Stanley MRA, we may negotiate individual transactions to sell, and later repurchase, certain securities or other assets to Morgan Stanley. Any transactions under the Morgan Stanley MRA will be recognized as secured borrowings while they are outstanding and are carried at the contractual amount, as specified in the Morgan Stanley MRA. Such borrowings are recorded as secured financings on investments in real estate debt securities on the condensed consolidated balance sheets. The terms of the Morgan Stanley MRA provide the lenders the ability to determine the size and terms of the financing provided based upon the particular collateral we have pledged, and may require us to provide additional collateral in the form of cash, securities, and other assets if the market value of such financed investments declines. The Morgan Stanley MRA may be terminated at any time by either party to the agreement, without penalty. The interest rate on the Morgan Stanley MRA borrowings is determined based on prevailing rates corresponding to the terms of the borrowings, and interest is paid at the termination of each borrowing.
As of March 31, 2026, we had $70.0 million of borrowings outstanding pursuant to the Morgan Stanley MRA, collateralized by our available-for-sale debt securities, which were fair valued at $99.0 million. As of December 31, 2025, we had $72.6 million of borrowings outstanding pursuant to the Morgan Stanley MRA, collateralized by our available-for-sale debt securities, which were fair valued at $102.6 million. Advances under the Morgan Stanley MRA accrue interest at a per annum rate equal to the sum of Term SOFR plus a pricing margin ranging from 0.80% to 1.20%. For the three months ended March 31, 2026 and 2025, the amount of interest incurred related to our secured financings under the Morgan Stanley MRA was $0.8 million and $1.3 million, respectively. These amounts are recorded as a component of interest expense on the condensed consolidated statements of operations.
Derivative Instruments
To manage interest rate risk for certain of our variable-rate debt, we use interest rate derivative instruments as part of our risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by either providing a fixed interest rate or capping the variable interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the interest rate swap agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of variable amounts from a counterparty at the end of each period in which the interest rate exceeds the agreed fixed price.
For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss is recorded as a component of accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated balance sheets and is reclassified into earnings as interest expense for the same period that the hedged transaction affects earnings, which is when the interest expense is recognized on the related debt.
For interest rate cap derivative instruments that are not designated as cash flow hedges, changes in fair value are recognized through income. As a result, in periods with high interest rate volatility, we may experience significant fluctuations in our net income (loss).
During the next 12 months, we estimate that approximately $6.2 million will be reclassified as a decrease to interest expense related to active effective hedges of existing floating-rate debt.
The following table summarizes the location and fair value of the derivative instruments on our condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | Number of
Contracts | | Current Notional
Amount | | Balance Sheet
Location | | Fair
Value |
| As of March 31, 2026 | | | | | | | | |
| Interest rate swaps designated as cash flow hedges | | 9 | | $ | 967,830 | | | Derivative instruments | | $ | 10,101 | |
| | | | | | | | |
| Interest rate caps designated as cash flow hedges | | 15 | | 2,361,900 | | | Derivative instruments | | 31,736 | |
| Total derivative instruments | | 24 | | $ | 3,329,730 | | | | | $ | 41,837 | |
| As of December 31, 2025 | | | | | | | | |
| Interest rate swaps designated as cash flow hedges | | 12 | | $ | 1,192,830 | | | Derivative instruments | | $ | 9,087 | |
| Interest rate caps not designated as cash flow hedges | | 1 | | 408,000 | | | Derivative instruments | | 112 | |
| Interest rate caps designated as cash flow hedges | | 12 | | 1,728,900 | | | Derivative instruments | | 15,793 | |
| Total derivative instruments | | 25 | | $ | 3,329,730 | | | | | $ | 24,992 | |
The following table presents the effect of our derivative instruments on our condensed consolidated financial statements.
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands) | | 2026 | | 2025 |
| Derivative Instruments Designated as Cash Flow Hedges | | | | |
| Gain (loss) recognized in AOCI | | $ | 9,408 | | | $ | (9,088) | |
| Amount reclassified from AOCI as a decrease in interest expense | | (2,878) | | | (5,535) | |
| Total interest expense presented in the condensed consolidated statements of operations in which the effects of the cash flow hedges are recorded | | (70,511) | | | (69,888) | |
| Derivative Instruments Not Designated as Cash Flow Hedges | | | | |
| Unrealized loss on derivative instruments recognized in other income (expenses) (1) | | $ | (112) | | | $ | (2,617) | |
| Realized gain on derivative instruments recognized in other income (expenses) (2) | | 112 | | | 2,629 | |
____________________________________________________
(1)Unrealized loss on derivative instruments relates to mark-to-market changes on our derivatives not designated as cash flow hedges.
(2)Realized gain on derivative instruments relates to interim settlements for our derivatives not designated as cash flow hedges.
6. DST PROGRAM
We have a program to raise capital through private placement offerings by selling beneficial interests (“DST Interests”) in specific Delaware statutory trusts (each, a “DST,” or multiple “DSTs”) holding real properties (the “DST Program”). Under the DST Program, each private placement offers interests in one or more real properties placed into one or more DSTs by the Operating Partnership or its affiliates (each, a “DST Property,” and collectively, the “DST Properties”). In order to facilitate additional capital raise through the DST Program, we have made and may continue to offer loans (“DST Program Loans”) to finance a portion of the sale of DST Interests to potential investors.
The following table summarizes our DST Program Loans as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | Outstanding
Principal | | Unrealized Loss, Net (1) | | Book Value | | Weighted-Average
Interest Rate | | Weighted-Average
Remaining Life (Years) |
| As of March 31, 2026 | | | | | | | | | | |
| DST Program Loans, carried at fair value | | $ | 40,125 | | | $ | (27) | | | $ | 40,098 | | | 6.3 | % | | 9.2 |
| Total | | $ | 40,125 | | | $ | (27) | | | $ | 40,098 | | | 6.3 | % | | 9.2 |
| As of December 31, 2025 | | | | | | | | | | |
| DST Program Loans, carried at fair value | | $ | 30,372 | | | $ | — | | | $ | 30,372 | | | 6.5 | % | | 9.1 |
| Total | | $ | 30,372 | | | $ | — | | | $ | 30,372 | | | 6.5 | % | | 9.1 |
____________________________________________________
(1)Represents cumulative unrealized gain or loss on DST Program Loans carried at fair value.
The following table summarizes our financing obligations as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | DST
Interests Sold, Net (1) | | | | Unrealized
Loss, Net (2) | | Book Value |
| As of March 31, 2026 | | | | | | | | |
| Financing obligations, carried at fair value | | $ | 648,463 | | | | | $ | 13,998 | | | $ | 662,461 | |
| Total | | $ | 648,463 | | | | | $ | 13,998 | | | $ | 662,461 | |
| As of December 31, 2025 | | | | | | | | |
| Financing obligations, carried at fair value | | $ | 486,659 | | | | | $ | 7,450 | | | $ | 494,109 | |
| Total | | $ | 486,659 | | | | | $ | 7,450 | | | $ | 494,109 | |
____________________________________________________
(1)DST Interests sold are presented net of upfront fees.
(2)Represents cumulative unrealized gain or loss on financing obligations carried at fair value.
The following table presents our DST Program activity for the three months ended March 31, 2026 and 2025:
| | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| (in thousands) | | 2026 | | 2025 |
| DST Interests sold | | $ | 164,838 | | | $ | 50,441 | |
| DST Interests financed by DST Program Loans | | 9,753 | | | 1,349 | |
| Unrealized loss on DST Program Loans (1) | | (27) | | | — | |
| Unrealized loss on financing obligations (2) | | (6,548) | | | (835) | |
| Income earned from DST Program Loans (3) | | 528 | | | 1,552 | |
| | | | |
| | | | |
| Rent obligation incurred under master lease agreements (4) | | 6,786 | | | 10,348 | |
____________________________________________________
(1)Included in loss on financial assets on the condensed consolidated statements of operations.
(2)Included in loss on financing obligations on the condensed consolidated statements of operations.
(3)Included in other income and expenses on the condensed consolidated statements of operations.
(4)Included in interest expense on the condensed consolidated statements of operations.
We record DST Interests as financing obligation liabilities for accounting purposes. If we exercise our option to reacquire a DST Property by settling in cash or issuing partnership units in the Operating Partnership (“OP Units”), or a combination of OP Units and cash in exchange for DST Interests, we extinguish the related financing obligation liability and DST Program Loans and record the settlement of cash or the issuance of the OP Units as an issuance of equity. During the three months ended March 31, 2026 and 2025, we did not issue any OP units in exchange for DST Interests.
Refer to “Note 11” for detail relating to the fees paid to the Advisor, Ares Management Capital Markets LLC (the “Dealer Manager”) and their affiliates for raising capital through the DST Program.
7. FAIR VALUE
We estimate the fair value of our financial assets and liabilities using available market information and valuation methodologies we believe to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that we would realize upon disposition of our financial assets and liabilities.
Fair Value Measurements on a Recurring Basis
The following table presents our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Level 1 | | Level 2 | | Level 3 | | Total
Fair Value |
| As of March 31, 2026 | | | | | | | | |
| Assets | | | | | | | | |
| Derivative instruments | | $ | — | | | $ | 41,837 | | | $ | — | | | $ | 41,837 | |
| Available-for-sale debt securities | | — | | | 98,966 | | | — | | | 98,966 | |
| Debt-related investments | | — | | | — | | | 561,551 | | | 561,551 | |
| DST Program Loans | | — | | | — | | | 40,098 | | | 40,098 | |
| Total assets measured at fair value | | $ | — | | | $ | 140,803 | | | $ | 601,649 | | | $ | 742,452 | |
| Liabilities | | | | | | | | |
| Financing obligations | | $ | — | | | $ | — | | | $ | 662,461 | | | $ | 662,461 | |
| Total liabilities measured at fair value | | $ | — | | | $ | — | | | $ | 662,461 | | | $ | 662,461 | |
| As of December 31, 2025 | | | | | | | | |
| Assets | | | | | | | | |
| Derivative instruments | | $ | — | | | $ | 24,992 | | | $ | — | | | $ | 24,992 | |
| Available-for-sale debt securities | | — | | | 102,586 | | | — | | | 102,586 | |
| Debt-related investments | | — | | | — | | | 591,275 | | | 591,275 | |
| DST Program Loans | | — | | | — | | | 30,372 | | | 30,372 | |
| Total assets measured at fair value | | $ | — | | | $ | 127,578 | | | $ | 621,647 | | | $ | 749,225 | |
| Liabilities | | | | | | | | |
| Financing obligations | | $ | — | | | $ | — | | | $ | 494,109 | | | $ | 494,109 | |
| Total liabilities measured at fair value | | $ | — | | | $ | — | | | $ | 494,109 | | | $ | 494,109 | |
The following methods and assumptions were used to estimate the fair value of each class of financial assets and liabilities:
Derivative Instruments. The derivative instruments are interest rate swaps and interest rate caps whose fair value is estimated using market-standard valuation models. Such models involve using market-based observable inputs, including interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements, which we have concluded are not material to the valuation. Due to the derivative instruments being unique and not actively traded, the fair value is classified as Level 2. See “Note 5” above for further discussion of our derivative instruments.
Available-for-Sale Debt Securities. The available-for-sale debt securities are debt securities collateralized by mortgages on commercial real estate properties whose fair value is estimated using third-party broker quotes, which provide valuation estimates based upon contractual cash flows, observable inputs comprising credit spreads and market liquidity. We incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements, which we have concluded are not material to the valuation. Due to the available-for-sale debt securities being unique and not actively traded, the fair value is classified as Level 2.
Debt-Related Investments. Our debt-related investments are unlikely to have readily available market quotations. In such cases, we will generally determine the initial value based on the acquisition price of such investments, if we acquire the investment, or the par value of such investment, if we originate the investment. Following the initial measurement, fair value is estimated by utilizing or reviewing certain of the following: (i) market yield data, (ii) discounted cash flow modeling, (iii) collateral asset performance, (iv) local or macro real estate performance, (v) capital market conditions, (vi) debt yield, debt-service coverage and/or loan-to-value ratios, and (vii) borrower financial condition and performance. These inputs are generally considered Level 3.
DST Program Loans. The estimate of fair value of DST Program Loans takes into consideration various factors including current market rates and conditions and similar agreements with comparable loan-to-value ratios and credit profiles, as applicable. DST Program Loans with near-term maturities are generally valued at par. The inputs used in estimating the fair value of these financial assets are generally considered Level 3.
Financing Obligations. The estimate of fair value of financing obligations takes into consideration various factors including current market rates and conditions, leasing and other activity at the underlying DST Program investments, remaining master lease payments to DST investors, and the current portion of DST Program offerings sold to DST investors. The inputs used in estimating the fair value of these financial liabilities are generally considered Level 3.
The following table summarizes our financial assets measured at fair value on a recurring basis using Level 3 inputs for the three months ended March 31, 2026 and 2025:
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | DST Program Loans | | Debt-related investments | | Total |
| Balance as of December 31, 2024 | | $ | 13,892 | | | $ | 388,662 | | | $ | 402,554 | |
| Purchases and contributions | | 1,349 | | | 10,621 | | | 11,970 | |
| Paid-in-kind interest, net of repayments | | — | | | 3,171 | | | 3,171 | |
| Balance as of March 31, 2025 | | $ | 15,241 | | | $ | 402,454 | | | $ | 417,695 | |
| | | | | | |
| Balance as of December 31, 2025 | | $ | 30,372 | | | $ | 591,275 | | | $ | 621,647 | |
| Purchases and contributions | | 9,753 | | | 16,037 | | | 25,790 | |
| Unrealized loss on financial assets | | (27) | | | — | | | (27) | |
| Repayments of principal | | — | | | (49,864) | | | (49,864) | |
| Paid-in-kind interest, net of repayments | | — | | | 4,103 | | | 4,103 | |
| Balance as of March 31, 2026 | | $ | 40,098 | | | $ | 561,551 | | | $ | 601,649 | |
The following table summarizes our financial liabilities measured at fair value on a recurring basis using Level 3 inputs for the three months ended March 31, 2026 and 2025:
| | | | | | | | |
| (in thousands) | | Financing Obligations |
| Balance as of December 31, 2024 | | $ | 239,982 | |
| DST Interests sold, net of upfront fees | | 49,562 | |
| Unrealized loss on financing obligations | | 835 | |
| Balance as of March 31, 2025 | | $ | 290,379 | |
| | |
| Balance as of December 31, 2025 | | $ | 494,109 | |
| DST Interests sold, net of upfront fees | | 161,804 | |
| Unrealized loss on financing obligations | | 6,548 | |
| Balance as of March 31, 2026 | | $ | 662,461 | |
The following table presents the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of March 31, 2026:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Fair Value | | Valuation Technique | | Unobservable Inputs | | Impact to Valuation from an Increase to Input |
| Assets: | | | | | | | | |
| Debt-related investments | | $ | 561,551 | | | Yield Method | | Market Yield | | Decrease |
| DST Program Loans | | 40,098 | | | Yield Method | | Market Yield | | Decrease |
| Liabilities: | | | | | | | | |
| Financing obligations | | $ | 662,461 | | | Discounted Cash Flow | | Discount Rate Exit Capitalization Rate | | Decrease Decrease |
The following table presents the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Fair Value | | Valuation Technique | | Unobservable Inputs | | Impact to Valuation from an Increase to Input |
| Assets: | | | | | | | | |
| Debt-related investments | | $ | 591,275 | | | Yield Method | | Market Yield | | Decrease |
| DST Program Loans | | 30,372 | | | Yield Method | | Market Yield | | Decrease |
| Liabilities: | | | | | | | | |
| Financing obligations | | $ | 494,109 | | | Discounted Cash Flow | | Discount Rate Exit Capitalization Rate | | Decrease Decrease |
Financial Liabilities Not Measured At Fair Value
As of March 31, 2026 and December 31, 2025, the fair values of cash and cash equivalents, restricted cash, other assets, and accounts payable and accrued liabilities approximate their carrying values due to the short-term nature of these instruments. The table below includes fair values for certain of our financial instruments for which it is practicable to estimate fair value. The carrying values and fair values of these financial instruments were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | As of March 31, 2026 | | As of December 31, 2025 |
| (in thousands) | | Level in
Fair Value Hierarchy | | Carrying
Value (1) | | Fair
Value | | Carrying
Value (1) | | Fair
Value |
| | | | | | | | | | |
| | | | | | | | | | |
| Liabilities: | | | | | | | | | | |
| Line of credit | | 3 | | $ | 263,000 | | | $ | 263,000 | | | $ | 388,000 | | | $ | 388,000 | |
| Term loans | | 3 | | 1,150,000 | | | 1,150,000 | | | 1,150,000 | | | 1,150,000 | |
| Mortgage notes | | 3 | | 3,224,700 | | | 3,177,283 | | | 3,213,500 | | | 3,178,163 | |
| Secured financings on investments in real estate debt securities | | 3 | | 70,001 | | | 70,001 | | | 72,584 | | | 72,584 | |
__________________________________________________
(1)The carrying value reflects the principal amount outstanding.
The estimate of fair value of our line of credit, term loans, mortgage notes and secured financings on investments in real estate debt securities takes into consideration various factors including current market rates and conditions and similar agreements with comparable loan-to-value ratios and credit profiles, as applicable. Debt instruments with near-term maturities are generally valued at par.
8. STOCKHOLDERS’ EQUITY
Securities Offerings
During the three months ended March 31, 2026, we raised gross proceeds of approximately $77.2 million from the sale of approximately 5.9 million shares of our common stock in our securities offerings, including proceeds from our distribution reinvestment plan (“DRIP”) of approximately $23.3 million.
Common Stock
The following table describes the number of shares of each class of our common stock authorized and issued and outstanding as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of |
| | March 31, 2026 | | December 31, 2025 |
| (in thousands) | | Shares Authorized | | Shares Issued and Outstanding | | Shares Authorized | | Shares Issued and Outstanding |
Class T-R, $0.01 par value per share | | 200,000 | | 71,276 | | 200,000 | | 73,828 |
Class D-R, $0.01 par value per share | | 75,000 | | 17,717 | | 75,000 | | 17,892 |
Class I-R, $0.01 par value per share | | 200,000 | | 162,124 | | 200,000 | | 161,217 |
Class S-PR, $0.01 par value per share | | 425,000 | | 16,019 | | 425,000 | | 14,133 |
Class D-PR, $0.01 par value per share | | 175,000 | | 103 | | 175,000 | | 83 |
Class I-PR, $0.01 par value per share | | 425,000 | | 12,282 | | 425,000 | | 10,017 |
The following table summarizes the changes in the shares outstanding for each class of common stock for the periods presented below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Class T-R
Shares | | Class D-R
Shares | | Class I-R
Shares | | Class S-PR
Shares | | Class D-PR
Shares | | Class I-PR
Shares | | Total
Shares |
| FOR THE THREE MONTHS ENDED MARCH 31, 2025 | | | | | | | | | | | | | | |
| Balance as of December 31, 2024 (1) | | 92,626 | | 18,850 | | 154,731 | | 3,451 | | — | | 1,316 | | 270,974 |
| Issuance of common stock: | | | | | | | | | | | | | | |
| Primary shares | | — | | — | | — | | 2,780 | | 23 | | 1,611 | | 4,414 |
| DRIP | | 533 | | 117 | | 1,006 | | 18 | | — | | 11 | | 1,685 |
| Stock grants, net of cancellations | | — | | — | | 144 | | — | | — | | — | | 144 |
| Redemptions | | (2,465) | | (359) | | (2,977) | | (14) | | — | | — | | (5,815) |
| Conversions | | (4,674) | | (5) | | 4,679 | | (91) | | (4) | | 95 | | — |
| Forfeitures | | — | | — | | (3) | | — | | — | | — | | (3) |
| Balance as of March 31, 2025 | | 86,020 | | 18,603 | | 157,580 | | 6,144 | | 19 | | 3,033 | | 271,399 |
| FOR THE THREE MONTHS ENDED MARCH 31, 2026 | | | | | | | | | | | | | | |
| Balance as of December 31, 2025 | | 73,828 | | 17,892 | | 161,217 | | 14,133 | | 83 | | 10,017 | | 277,170 |
| Issuance of common stock: | | | | | | | | | | | | | | |
| Primary shares | | — | | — | | — | | 1,811 | | 20 | | 2,251 | | 4,082 |
| DRIP | | 438 | | 114 | | 1,051 | | 95 | | 1 | | 76 | | 1,775 |
| Stock grants, net of cancellations | | — | | — | | 163 | | — | | — | | — | | 163 |
| Redemptions | | (1,035) | | (243) | | (2,308) | | (20) | | (1) | | (62) | | (3,669) |
| Conversions | | (1,955) | | (46) | | 2,001 | | — | | — | | — | | — |
| | | | | | | | | | | | | | |
| Balance as of March 31, 2026 | | 71,276 | | 17,717 | | 162,124 | | 16,019 | | 103 | | 12,282 | | 279,521 |
____________________________________________________
(1)There is no data presented for Class D-PR shares as of this date because there were no Class D-PR shares outstanding.
Distributions
The following table summarizes our distribution activity (including distributions to noncontrolling interests and distributions reinvested in shares of our common stock) for each of the quarters ended below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amount |
| (in thousands, except per share data) | | Declared per
Common Share (1) | | Common Stock
Distributions
Paid in Cash | | Other Cash
Distributions (2) | | Reinvested
in Shares | | Distribution
Fees (3) | | Gross
Distributions (4) |
| 2026 | | | | | | | | | | | | |
| March 31 | | $ | 0.15750 | | | $ | 18,134 | | | $ | 16,486 | | | $ | 23,362 | | | $ | 2,377 | | | $ | 60,359 | |
| Total | | $ | 0.15750 | | | $ | 18,134 | | | $ | 16,486 | | | $ | 23,362 | | | $ | 2,377 | | | $ | 60,359 | |
| 2025 | | | | | | | | | | | | |
| December 31 | | $ | 0.15750 | | | $ | 17,955 | | | $ | 14,528 | | | $ | 23,148 | | | $ | 2,426 | | | $ | 58,057 | |
| September 30 | | 0.15750 | | | 17,870 | | | 13,558 | | | 22,862 | | | 2,443 | | | 56,733 | |
| June 30 | | 0.15000 | | | 17,018 | | | 13,064 | | | 21,474 | | | 2,463 | | | 54,019 | |
| March 31 | | 0.15000 | | | 16,726 | | | 10,466 | | | 21,449 | | | 2,475 | | | 51,116 | |
| Total | | $ | 0.61500 | | | $ | 69,569 | | | $ | 51,616 | | | $ | 88,933 | | | $ | 9,807 | | | $ | 219,925 | |
____________________________________________________
(1)Amounts reflect the quarterly distribution rate authorized by our board of directors per Class T-R share, per Class D-R share, per Class I-R share, per Class S-PR share, per Class D-PR share and per Class I-PR share of common stock. Distributions were declared and paid as of monthly record dates. These monthly distributions have been aggregated and presented on a quarterly basis. The distributions on Class T-R shares, Class D-R shares, Class S-PR shares and
Class D-PR shares of common stock are reduced by the respective distribution fees that are payable with respect to such Class T-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares.
(2)Consists of distribution fees paid to the Dealer Manager with respect to OP Units and distributions paid to holders of OP Units and other noncontrolling interest holders.
(3)Distribution fees are paid monthly to the Dealer Manager with respect to Class T-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares issued in our securities offerings. All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers. Refer to “Note 11” for further detail regarding distribution fees.
(4)Gross distributions are total distributions before the deduction of any distribution fees relating to Class T-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares issued in our securities offerings.
Redemptions
Below is a summary of redemptions pursuant to our share redemption program for the three months ended March 31, 2026 and 2025. All eligible redemption requests were fulfilled for the periods presented. Eligible redemption requests are requests submitted in good order by the request submission deadline set forth in the share redemption program. Our board of directors may make exceptions to, modify or suspend our current share redemption programs if it deems such action to be in the best interest of our stockholders:
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands, except per share data) | | 2026 | | 2025 |
| Number of shares redeemed | | 3,669 | | 5,815 |
| Aggregate dollar amount of shares redeemed | | $ | 48,179 | | | $ | 74,041 | |
| Average redemption price per share | | $ | 13.13 | | | $ | 12.73 | |
9. REDEEMABLE NONCONTROLLING INTERESTS
The Operating Partnership’s net income and loss will generally be allocated to the general partner and the limited partners in accordance with the respective percentage interest in the OP Units issued by the Operating Partnership.
The Operating Partnership issued OP Units to the Advisor and BCI IV Advisors Group LLC (the “Former Sponsor”) as payment of the performance participation allocation (also referred to as the performance component of the advisory fee) pursuant to the then-effective advisory agreement by and among the Company, the Operating Partnership and the then-current advisor to the Company. We have classified these OP Units as redeemable noncontrolling interests in mezzanine equity on the condensed consolidated balance sheets. The redeemable noncontrolling interests are recorded at the greater of the carrying amount, adjusted for its share of the allocation of income or loss and dividends, or the redemption value, which is equivalent to fair value, of such OP Units at the end of each measurement period.
The following table summarizes the redeemable noncontrolling interests activity for the three months ended March 31, 2026 and 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2026 | | For the Three Months Ended March 31, 2025 |
| ($ and units in thousands) | | $ | | Units | | $ | | Units |
| Balance at beginning of the year | | $ | 102,373 | | | 7,819 | | $ | 105,492 | | | 8,227 |
| Distributions to redeemable noncontrolling interests | | (1,232) | | | — | | (1,223) | | | — |
| Redemptions of redeemable noncontrolling interests | | — | | | — | | (3,063) | | | (239) |
| | | | | | | | |
| Net loss attributable to redeemable noncontrolling interests | | (1,296) | | | — | | (1,404) | | | — |
| Change from cash flow hedging activities and available-for-sale debt securities attributable to redeemable noncontrolling interests | | 131 | | | — | | (362) | | | — |
| Redemption value allocation adjustment to redeemable noncontrolling interests (1) | | 3,280 | | | — | | 3,194 | | | — |
| Ending balance | | $ | 103,256 | | | 7,819 | | $ | 102,634 | | | 7,988 |
____________________________________________________
(1)Represents the adjustment recorded to mark to the redemption value, which is equivalent to fair value as of March 31, 2026 and 2025.
10. NONCONTROLLING INTERESTS
Third Party Investor OP Units
As of March 31, 2026 and December 31, 2025, the Operating Partnership had issued OP Units to third-party investors (which excludes interests held by redeemable noncontrolling interest holders), representing 25.2% and 25.4%, respectively, of limited partnership interests. The following table summarizes the number of OP Units issued and outstanding to third-party investors:
| | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| (in thousands) | | 2026 | | 2025 |
| Balance at beginning of the period | | 97,082 | | 61,558 |
| | | | |
| | | | |
| Redemption of units | | (403) | | — |
| Balance at end of the period | | 96,679 | | 61,558 |
Subject to certain restrictions and limitations, the holders of OP Units may redeem all or a portion of their OP Units for either: shares of the equivalent class of common stock, cash or a combination of both. If we elect to redeem OP Units for shares of our common stock, we will generally deliver one share of our common stock for each such OP Unit redeemed (subject to any redemption fees withheld), and such shares may, subsequently, only be redeemed for cash in accordance with the terms of our share redemption program. If we elect to redeem OP Units for cash, the cash delivered per unit will equal the then-current net asset value (“NAV”) per unit of the applicable class of OP Units (subject to any redemption fees withheld), which will equal the then-current NAV per share of our corresponding class of shares. During the three months ended March 31, 2026, the aggregate amount of OP Units redeemed was $5.3 million. There were no OP Units redeemed during the three months ended March 31, 2025. The estimated maximum redemption value of the aggregate outstanding OP Units issued to third party investors as of March 31, 2026 and December 31, 2025 was $1.3 billion and $1.3 billion (unaudited), respectively.
11. RELATED PARTY TRANSACTIONS
Summary of Fees and Expenses
The table below summarizes the fees and expenses incurred by us for services provided by the Advisor and its affiliates, and by the Dealer Manager related to the services the Dealer Manager provided in connection with our securities offerings and any related amounts payable:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, | | | Receivable (Payable) as of |
| (in thousands) | | 2026 | | 2025 | | | | | | March 31, 2026 | | December 31, 2025 |
| Selling commissions and dealer manager fees (1) | | $ | 272 | | | $ | 406 | | | | | | | $ | — | | | $ | — | |
| Ongoing distribution fees (1)(2) | | 4,717 | | | 3,994 | | | | | | | (1,623) | | | (1,619) | |
| Advisory fee—fixed component | | 17,666 | | | 16,555 | | | | | | | (5,966) | | | (5,746) | |
| Other fees and expense reimbursements (3)(4) | | 3,735 | | | 3,483 | | | | | | | (6,475) | | | (6,478) | |
| Property management fee (5) | | 2,863 | | | 956 | | | | | | | (966) | | | (833) | |
| DST Program selling commissions, dealer manager fees and distribution fees (1) | | 1,403 | | | 786 | | | | | | | (307) | | | (360) | |
| Other DST Program related costs (4) | | 2,121 | | | 739 | | | | | | | (85) | | | (104) | |
| Development fees (6) | | 98 | | | 132 | | | | | | | — | | | (644) | |
| Total | | $ | 32,875 | | | $ | 27,051 | | | | | | | $ | (15,422) | | | $ | (15,784) | |
____________________________________________________
(1)All or a portion of these amounts will be retained by, or reallowed (paid) to, participating broker-dealers and servicing broker-dealers.
(2)The distribution fees are payable monthly in arrears. Additionally, we accrue for future estimated amounts payable related to ongoing distribution fees. The future estimated amounts payable were approximately $141.8 million and $142.5 million as of March 31, 2026 and December 31, 2025, respectively.
(3)Other fees and expense reimbursements include certain fees and expenses incurred for organization and offering, acquisition, and general administrative services provided to us under the Advisory Agreement, including, but not limited to, certain expenses described below after footnote 6, allocated rent paid to both third parties and affiliates of the Advisor, equipment, utilities, insurance, travel and entertainment.
(4)Includes costs reimbursed to the Advisor related to the DST Program.
(5)The cost of the property management fee, including the property accounting and construction management fees, is generally borne by the tenant or tenants at each real property, either via a direct reimbursement to us or, in the case of tenants subject to a gross lease, as part of the lease cost. In certain limited circumstances, we may pay a portion of the property management fee, including the property accounting and construction management fees, without reimbursement from the tenant or tenants at a real property. For certain properties, an affiliate of the Advisor provides property management, construction management and property accounting services and receives the full property management fee, including the property accounting and construction management fees.
(6)Development fees are included in the total development project costs of the respective properties and are capitalized in construction in progress, which is included in net investment in real estate properties on our condensed consolidated balance sheets. Amounts also include development acquisition fees relating to our joint venture partnerships, which are included in investments in unconsolidated joint venture partnerships on our condensed consolidated balance sheets.
Certain of the expense reimbursements described in the table above include a portion of the compensation expenses of officers, including a portion of compensation (whether paid in cash, stock, or other forms), benefits and other overhead costs of certain of our named executive officers, as well as employees of the Advisor or its affiliates related to activities for which the Advisor did not otherwise receive a separate fee. We incurred approximately $3.5 million and $3.3 million for the three months ended March 31, 2026 and 2025, respectively, for such compensation expenses reimbursable to the Advisor.
12. NET INCOME (LOSS) PER COMMON SHARE
The computation of our basic and diluted net income (loss) per share attributable to common stockholders is as follows:
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands, except per share data) | | 2026 | | 2025 |
| Net loss attributable to common stockholders—basic | | $ | (46,218) | | | $ | (46,634) | |
| Net loss attributable to redeemable noncontrolling interests | | (1,296) | | | (1,404) | |
| Net loss attributable to noncontrolling interests | | (16,057) | | | (10,592) | |
| Net loss attributable to common stockholders—diluted | | $ | (63,571) | | | $ | (58,630) | |
| Weighted-average shares outstanding—basic | | 278,586 | | 271,030 |
| Incremental weighted-average shares outstanding—diluted | | 104,667 | | 69,716 |
| Weighted-average shares outstanding—diluted | | 383,253 | | 340,746 |
| Net loss per share attributable to common stockholders: | | | | |
| Basic | | $ | (0.17) | | | $ | (0.17) | |
| Diluted | | $ | (0.17) | | | $ | (0.17) | |
13. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information and disclosure of non-cash investing and financing activities is as follows:
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands) | | 2026 | | 2025 |
| Supplemental disclosure of non-cash investing and financing activities: | | | | |
| Distributions reinvested in common stock | | $ | 23,309 | | | $ | 21,463 | |
| Increase in DST Program Loans receivable through sale of DST Interests | | 9,753 | | | 1,349 | |
| | | | |
| (Decrease) increase in distribution fees payable to affiliates | | (699) | | | 167 | |
| Increase (decrease) in accrued capital expenditures | | 2,612 | | | (1,527) | |
| Non-cash selling commissions and dealer manager fees | | 272 | | | 406 | |
| Mortgage notes assumed on real estate acquisition at fair value | | 11,200 | | | — | |
Restricted Cash
Restricted cash consists of lender, insurance, property, and debt-related investment escrow accounts, utility and financing deposits, as well as investor funds received related to pending DST Interest sales. The following table presents the components of the beginning of period and end of period cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows:
| | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| (in thousands) | | 2026 | | 2025 |
| Beginning of period: | | | | |
| Cash and cash equivalents | | $ | 63,037 | | | $ | 25,148 | |
| Restricted cash | | 13,281 | | | 3,649 | |
| Cash, cash equivalents and restricted cash | | $ | 76,318 | | | $ | 28,797 | |
| End of period: | | | | |
| Cash and cash equivalents | | $ | 70,622 | | | $ | 22,484 | |
| Restricted cash | | 12,788 | | | 3,783 | |
| Cash, cash equivalents and restricted cash | | $ | 83,410 | | | $ | 26,267 | |
14. COMMITMENTS AND CONTINGENCIES
Litigation
From time to time, we and our subsidiaries may be involved in various claims and legal actions arising in the ordinary course of business. As of March 31, 2026, we and our subsidiaries were not involved in any material legal proceedings.
Environmental Matters
A majority of the properties we acquire have been or will be subject to environmental reviews either by us or the previous owners. In addition, we may incur environmental remediation costs associated with certain land parcels we may acquire in connection with the development of land. We have acquired and may in the future acquire certain properties in urban and industrial areas that may have been leased to or previously owned by commercial and industrial companies that discharged hazardous materials. We may purchase various environmental insurance policies to mitigate our exposure to environmental liabilities. We are not aware of any unmitigated environmental liabilities that we believe would have a material adverse effect on our business, financial condition, or results of operations as of March 31, 2026.
Unfunded Commitments
As of March 31, 2026, we had unfunded commitments of $176.5 million to fund various investments in real estate debt and securities and investments in unconsolidated joint venture partnerships.
15. SEGMENT FINANCIAL INFORMATION
We operate as one reportable segment: industrial real estate. Factors used to determine our reportable segment include the physical and economic characteristics of our properties and/or investments and the related operating activities. Our Chief Operating Decision Maker (“CODM”) is David M. Fazekas, Partner and Co-President.
Our CODM relies on net operating income, among other factors, to make decisions about allocating resources and assessing segment performance. Net operating income is the key performance metric that captures the unique operating characteristics of the segment. Net investment in real estate properties, investments in real estate debt and securities, restricted cash, tenant receivables, straight-line rent receivables and other assets directly assignable to a property or investment are allocated to the industrial real estate segment. Corporate items that are not directly assignable to a property, such as investments in unconsolidated joint venture partnerships and DST Program Loans, are not allocated to the industrial real estate segment, but are reflected as reconciling items.
The following table reflects our total consolidated assets by segment as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | | | | |
| | As of |
| (in thousands) | | March 31, 2026 (1) | | December 31, 2025 |
| Assets: | | | | |
| Industrial real estate | | $ | 7,582,470 | | | $ | 7,651,472 | |
| Total segment assets | | 7,582,470 | | | 7,651,472 | |
| Corporate | | 182,664 | | | 146,955 | |
| Total assets | | $ | 7,765,134 | | | $ | 7,798,427 | |
_______________________________________________
(1)Industrial real estate segment includes one property with an aggregate accounting basis of $15.3 million that met the criteria of held for sale as of March 31, 2026.
We consider net operating income, a non-GAAP financial measure, to be an appropriate supplemental performance measure and believe net operating income provides useful information regarding our financial condition and results of operations because net operating income reflects the operating performance of our investments and excludes certain items that are not considered to be controllable in connection with the management of the investments, such as real estate-related depreciation and amortization, general and administrative expenses, advisory fees, impairment charges, interest expense, gains on sale of properties, other income and expenses, gains and losses on the extinguishment of debt and noncontrolling interests. However, net operating income should not be viewed as an alternative measure of our financial performance since it excludes such items, which could materially impact our results of operations. Further, our net operating income may not be comparable to that of other real estate companies, as they may use different methodologies for calculating net operating income. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.
The following table is a reconciliation of our reported net income (loss) attributable to common stockholders to our net operating income for the three months ended March 31, 2026 and 2025.
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands) | | 2026 | | 2025 |
| Net loss attributable to common stockholders | | $ | (46,218) | | | $ | (46,634) | |
| Real estate-related depreciation and amortization | | 79,309 | | | 77,576 | |
| General and administrative expenses | | 4,881 | | | 4,868 | |
| Advisory fees | | 17,666 | | | 16,555 | |
| Acquisition costs and reimbursements | | 1,582 | | | 591 | |
| Equity in (income) loss from unconsolidated joint venture partnerships | | (28) | | | 24 | |
| Interest expense | | 70,511 | | | 69,888 | |
| Loss on financing obligations | | 6,548 | | | 835 | |
| Loss on financial assets | | 27 | | | — | |
| Loss on extinguishment of debt and financing obligations, net | | — | | | 161 | |
| Gain on derivative instruments | | — | | | (12) | |
| | | | |
| Other income and expenses | | (462) | | | (1,665) | |
| Net loss attributable to redeemable noncontrolling interests | | (1,296) | | | (1,404) | |
| Net loss attributable to noncontrolling interests | | (16,057) | | | (10,592) | |
| Net operating income | | $ | 116,463 | | | $ | 110,191 | |
The following table sets forth consolidated financial results for the industrial real estate segment for the three months ended March 31, 2026 and 2025:
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands) | | 2026 | | 2025 |
| Rental revenues | | $ | 140,715 | | | $ | 133,919 | |
| Debt-related income | | 13,328 | | | 10,483 | |
| Rental expenses | | (37,580) | | | (34,211) | |
| Net operating income | | $ | 116,463 | | | $ | 110,191 | |
16. SUBSEQUENT EVENTS
Renewal of Advisory Agreement
We, the Operating Partnership, and the Advisor previously entered into that certain Amended and Restated Advisory Agreement (2025), dated as of April 30, 2025 (the “2025 Advisory Agreement”). The term of the 2025 Advisory Agreement continued through April 30, 2026, subject to renewal for an unlimited number of one-year periods. The Company, the Operating Partnership and the Advisor renewed the 2025 Advisory Agreement on substantially the same terms through April 30, 2027, by entering into the Amended and Restated Advisory Agreement (2026) (the “2026 Advisory Agreement”), effective as of April 30, 2026. In addition, the 2026 Advisory Agreement reflects certain immaterial amendments to clarify the description of certain services that will continue to be provided by the Advisor and its affiliates in connection with private placements of securities by the Company and its subsidiaries.
Disposition of Real Property
Subsequent to March 31, 2026, we sold one industrial building for a gross sales price of $19.0 million. Our accounting basis (net of accumulated depreciation and amortization) for this property as of the disposition date was approximately $15.3 million.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to the terms “we,” “our,” or “us” refer to Ares Industrial Real Estate Income Trust Inc. and its consolidated subsidiaries. The following discussion and analysis should be read together with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes certain statements that may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements relate to, without limitation, our ability to raise capital and effectively and timely deploy the net proceeds from our securities offerings, the expected use of net proceeds from our securities offerings, our reliance on Ares Commercial Real Estate Management LLC (the “Advisor”) and Ares real estate (the “Sponsor” or “AREG”) of Ares Management Corporation (“Ares”), our understanding of our competition and our ability to compete effectively, our financing needs, our expected leverage, the effects of our current strategies, rent and occupancy growth, general conditions in the geographic area where we will operate, our future debt and financial position, our future capital expenditures, future distributions and acquisitions (including the amount and nature thereof), other developments and trends of the real estate industry, investment strategies and the expansion and growth of our operations. Forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “project,” or the negative of these words or other comparable terminology. These statements are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict.
The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions, and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, present and future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:
•Our ability to raise capital and effectively deploy the net proceeds raised in our securities offerings in accordance with our investment strategy and objectives;
•The failure of properties to perform as we expect;
•Risks associated with acquisitions, dispositions and development of properties;
•Our failure to successfully integrate acquired properties and operations;
•Unexpected delays or increased costs associated with any development projects;
•The availability of cash flows from operating activities for distributions and capital expenditures;
•Defaults on or non-renewal of leases by customers, lease renewals at lower than expected rent, or failure to lease properties at all or on favorable rents and terms;
•Difficulties in economic conditions generally and the real estate, debt, and securities markets specifically, including the impact of inflation, changes in interest rates, developments related to tariffs and trade policies and the resulting impacts on market volatility and global trade and the conflicts in Ukraine and in the Middle East;
•Legislative or regulatory changes, including changes to the laws governing the taxation of real estate investment trusts (“REITs”);
•Our failure to obtain, renew, or extend necessary financing or access the debt or equity markets;
•Conflicts of interest arising out of our relationships with the Sponsor, the Advisor, and their affiliates;
•Risks associated with using debt to fund our business activities, including re-financing and interest rate risks;
•Changes in interest rates, operating costs, or greater than expected capital expenditures;
•Changes to U.S. generally accepted accounting principles (“GAAP”); and
•Our ability to continue to qualify as a REIT.
Any of the assumptions underlying forward-looking statements could prove to be inaccurate. Our stockholders are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report on Form 10-Q. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and the risk that actual results will differ materially from the expectations expressed in this Quarterly Report on Form 10-Q will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events, changed circumstances, or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report on Form 10-Q, including, without limitation, the risks described under “Risk Factors,” the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report on Form 10-Q will be achieved.
OVERVIEW
General
AIREIT is a Maryland corporation formed on August 12, 2014 to make investments in income-producing real estate assets consisting primarily of high-quality distribution warehouses and other industrial properties that are leased to creditworthy corporate customers. While we have and will continue to focus our investment activities primarily on building a national industrial warehouse operating company, we may in the future invest outside the U.S. or in other types of commercial real property or real estate debt investments. We currently operate as a REIT for U.S. federal income tax purposes, and elected to be treated as a REIT beginning with our taxable year ended December 31, 2017. We utilize an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) organizational structure to hold all or substantially all of our assets through the Operating Partnership.
We intend to offer shares of our common stock on a continuous basis, subject to continued compliance with the rules and regulations of the SEC and applicable state laws. We also intend to conduct an ongoing distribution reinvestment plan offering for our stockholders to reinvest distributions in our shares. During the three months ended March 31, 2026, we raised gross proceeds of approximately $77.2 million from the sale of approximately 5.9 million shares of our common stock, including shares issued pursuant to our DRIP. See “Note 8 to the Condensed Consolidated Financial Statements” for information concerning our securities offerings.
Additionally, we have a program to raise capital through private placement offerings by selling DST Interests. During the three months ended March 31, 2026, we sold $164.8 million of gross interests related to the DST Program, $9.8 million of which were financed by DST Program Loans. See “Note 6 to the Condensed Consolidated Financial Statements” for additional detail regarding the DST Program.
As of March 31, 2026, we directly owned and managed a real estate portfolio that included 271 industrial buildings totaling approximately 57.6 million square feet located in 31 markets throughout the U.S., with 439 customers, and was 89.2% occupied (90.2% leased) with a weighted-average remaining lease term (based on square feet) of approximately 3.7 years. The occupied rate reflects the square footage with a paying customer in place. The leased rate includes the occupied square footage and additional square footage with leases in place that have not yet commenced. Industrial market fundamentals remain favorable and we continue to evaluate acquisition opportunities within the industrial market to effectively execute our business strategy. As of March 31, 2026, our real estate portfolio included:
•269 industrial buildings totaling approximately 57.4 million square feet comprised our operating portfolio, which includes stabilized properties, and was 89.3% occupied (90.3% leased) with a weighted-average remaining lease term (based on square feet) of approximately 3.7 years; and
•Two industrial buildings totaling approximately 0.2 million square feet comprised our value-add portfolio, which includes buildings acquired with the intention to reposition or redevelop, or buildings recently completed which have not yet reached stabilization. We generally consider a building to be stabilized on the earlier to occur of the first anniversary of a building’s shell completion or a building achieving 90% occupancy.
As of March 31, 2026, we owned and managed one industrial building totaling approximately 0.7 million square feet and three buildings that were in the pre-construction phase totaling approximately 1.0 million square feet, through our 8.0% minority ownership interest in the BTC II B Partnership. Unless otherwise noted, these buildings are excluded from the presentation of our portfolio data herein.
As of March 31, 2026, we had debt security investments designated as available-for-sale debt securities with a fair value of $99.0 million and a cumulative unrealized gain of $0.4 million from the acquisition dates. The weighted-average remaining term of our debt securities, which is based on the fully extended maturity date of the instruments, was approximately 2.4 years as of March 31, 2026.
As of March 31, 2026, we had seven debt-related investments comprised of floating-rate senior and mezzanine loans with an aggregate current commitment of $702.7 million, with a weighted-average remaining term of 1.4 years and a weighted-average interest rate of 7.9%, calculated based on Term SOFR plus a weighted-average margin of 4.2%. As of March 31, 2026, the outstanding principal amount and fair value were both $561.6 million.
We have used, and intend to continue to use, the net proceeds from our offerings primarily to make investments in real estate assets. We may use the net proceeds from our offerings to make other real estate-related investments and debt investments and to pay distributions. The number and type of properties we may acquire and debt and other investments we may make will depend upon real estate market conditions, the amount of proceeds we raise in our offerings, and other circumstances existing at the time we make our investments.
Our primary investment objectives include the following:
•preserving and protecting our stockholders’ capital contributions;
•providing current income to our stockholders in the form of regular distributions; and
•realizing capital appreciation in our NAV from active investment management and asset management.
There is no assurance that we will attain our investment objectives. Our charter places numerous limitations on us with respect to the manner in which we may invest our funds. In most cases these limitations cannot be changed unless our charter is amended, which may require the approval of our stockholders.
We may acquire assets free and clear of mortgage or other indebtedness by paying the entire purchase price in cash or equity securities, or a combination thereof, and we may selectively encumber all or only certain assets with debt. The proceeds from our borrowings may be used to fund investments, make capital expenditures, pay distributions, and for general corporate purposes.
We expect to manage our corporate financing strategy under the current mortgage lending and corporate financing environment by considering various lending sources, which may include long-term fixed-rate mortgage loans, floating-rate mortgage notes, unsecured or secured lines of credit or term loans, private placement or public bond issuances, and the assumption of existing loans in connection with certain property acquisitions, or any combination of the foregoing.
Net Asset Value
Our board of directors, including a majority of our independent directors, has adopted valuation procedures, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. With the approval of our board of directors, including a majority of our independent directors, we have engaged Altus Group U.S. Inc., a third-party valuation firm, to serve as our independent valuation advisor (“Altus Group” or the “Independent Valuation Advisor”) with respect to helping us administer the valuation and review process for the real properties in our portfolio, providing monthly real property appraisals and valuations for certain of our debt-related assets, reviewing annual third-party real property appraisals, reviewing the internal valuations of DST Program Loans and debt-related liabilities performed by our Advisor, providing quarterly valuations of our properties subject to master lease obligations associated with the DST Program, and assisting in the development and review of our valuation procedures. See Exhibit 99.2 of this Quarterly Report on Form 10-Q for a more detailed description of our valuation procedures, including important disclosure regarding real property valuations provided by the Independent Valuation Advisor.
Our valuation procedures, which address specifically each category of our assets and liabilities and are applied separately from the preparation of our financial statements in accordance with GAAP, involve adjustments from historical cost. There are certain factors which cause NAV to be different from total equity or stockholders’ equity on a GAAP basis. Most significantly, the valuation of our real assets, which is the largest component of our NAV calculation, is provided to us by the Independent Valuation Advisor. For GAAP purposes, these assets are generally recorded at depreciated or amortized cost. Another example that will cause our NAV to differ from our GAAP total equity or stockholders’ equity is the straight-lining of rent, which results in a receivable for GAAP purposes that is not included in the determination of our NAV. The fair values of our assets and certain liabilities are determined using widely accepted methodologies and, as appropriate, the GAAP principles within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) under Topic 820, Fair Value Measurements and Disclosures and are used by ALPS in calculating our NAV per share.
However, our valuation procedures and our NAV are not subject to GAAP and will not be subject to independent audit. We did not develop our valuation procedures with the intention of complying with fair value concepts under GAAP and, therefore, there could be differences between our fair values and the fair values derived from the principal market or most advantageous market concepts of establishing fair value under GAAP. The aggregate real property valuation of $9.7 billion compares to a GAAP basis of real properties (net of intangible lease liabilities and before accumulated amortization and depreciation) of $8.1 billion, representing a difference of approximately $1.6 billion, or 20.1%.
As used below, “Fund Interests” means our outstanding shares of common stock, along with OP Units, which may be or were held directly or indirectly by the Advisor, affiliates of the Sponsor and Advisor and third parties, and “Aggregate Fund NAV” means the NAV of all the Fund Interests.
The following table sets forth the components of Aggregate Fund NAV as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | | | | |
| | As of |
| (in thousands) | | March 31, 2026 | | December 31, 2025 |
| Investments in industrial properties | | $ | 9,700,600 | | | $ | 9,573,550 | |
| Investments in unconsolidated joint venture partnerships | | 12,799 | | | 14,265 | |
| Investments in real estate debt and securities | | 660,517 | | | 693,861 | |
| DST Program Loans | | 40,098 | | | 30,372 | |
| Total investments | | 10,414,014 | | | 10,312,048 | |
| Cash and cash equivalents | | 70,622 | | | 63,037 | |
| Restricted cash | | 12,788 | | | 13,281 | |
| Other assets | | 96,412 | | | 87,902 | |
| Line of credit, term loans and mortgage notes | | (4,637,745) | | | (4,751,552) | |
| Secured financings on investments in real estate debt securities | | (70,001) | | | (72,584) | |
| Financing obligations associated with our DST Program | | (662,461) | | | (494,109) | |
| Other liabilities | | (150,325) | | | (141,279) | |
| Accrued performance participation allocation | | — | | | — | |
| Accrued fixed component of advisory fee | | (5,966) | | | (5,746) | |
| Aggregate Fund NAV | | $ | 5,067,338 | | | $ | 5,010,998 | |
| Total Fund Interests outstanding | | 383,648 | | | 381,727 | |
The following table sets forth the NAV per Fund Interest as of March 31, 2026:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands, except per Fund | | | | Class T-R | | Class D-R | | Class I-R | | Class S-PR | | Class D-PR | | Class I-PR | | |
| Interest data) | | Total | | Shares | | Shares | | Shares (1) | | Shares | | Shares | | Shares | | OP Units |
| As of March 31, 2026 | | | | | | | | | | | | | | | | |
| Monthly NAV | | $ | 5,067,338 | | | $ | 941,435 | | | $ | 234,009 | | | $ | 2,136,484 | | | $ | 211,589 | | | $ | 1,357 | | | $ | 162,224 | | | $ | 1,380,240 | |
| Fund Interests outstanding | | 383,648 | | | 71,276 | | | 17,717 | | | 161,753 | | | 16,019 | | | 103 | | | 12,282 | | | 104,498 | |
| NAV Per Fund Interest | | $ | 13.2083 | | | $ | 13.2083 | | | $ | 13.2083 | | | $ | 13.2083 | | | $ | 13.2083 | | | $ | 13.2083 | | | $ | 13.2083 | | | $ | 13.2083 | |
____________________________________________________
(1) Total Class I-R Fund Interests outstanding include vested stock grants only for NAV calculation purposes.
Under GAAP, we record liabilities for ongoing distribution fees that we estimate we may pay in future periods for the Fund Interests. As of March 31, 2026, we estimated approximately $141.8 million of ongoing distribution fees were potentially payable. We do not deduct the liability for estimated future distribution fees in our calculation of NAV since we intend for our NAV to reflect our estimated value on the date that we determine our NAV. Accordingly, our estimated NAV at any given time does not include consideration of any estimated future distribution fees that may become payable after such date.
Financing obligations associated with our DST Program, as reflected in our NAV table above, represent outstanding proceeds raised from our private placements under the DST Program due to the fact that we have an option (which may or may not be exercised) to purchase the interests in the DSTs and thereby acquire the real property owned by the trusts. We
may acquire these properties using OP Units, cash, or a combination of both. See “Note 6 to the Condensed Consolidated Financial Statements” for additional details regarding our DST Program. We may use proceeds raised from our DST Program for the repayment of debt, acquisition of properties and other investments, distributions to our stockholders, payments under our debt obligations and master lease agreements related to properties in our DST Program, redemption payments, capital expenditures, and other general corporate purposes. We pay our Advisor an annual, fixed component of our advisory fee of 1.25% of the consideration received for selling interests in DST Properties to third-party investors, net of upfront fees and expense reimbursements payable out of gross proceeds from the sale of such interests and DST Interests financed through DST Program Loans.
We include no discounts to our NAV for the illiquid nature of our shares, including the limitations on our stockholders’ ability to redeem shares under our share redemption program and our ability to make exceptions to, modify or suspend our share redemption program at any time. Our NAV generally does not reflect the potential impact of exit costs (e.g. selling costs and commissions related to the sale of a property) that would likely be incurred if our assets and liabilities were liquidated or sold today. While we may use market pricing concepts to value individual components of our NAV, our per share NAV is not derived from the market pricing information of open-end real estate funds listed on stock exchanges.
Our NAV is not a representation, warranty or guarantee that: (i) we would fully realize our NAV upon a sale of our assets; (ii) shares of our common stock would trade at our per share NAV on a national securities exchange; and (iii) a stockholder would be able to realize the per share NAV if such stockholder attempted to sell his or her shares to a third party.
The valuations of our real properties as of March 31, 2026, excluding certain newly acquired properties that are currently held at cost, which we believe reflects the fair value of such properties, were provided by the Independent Valuation Advisor in accordance with our valuation procedures. Certain key assumptions that were used by the Independent Valuation Advisor in the discounted cash flow analysis are set forth in the following table:
| | | | | | | | |
| | Weighted- |
| | Average Basis |
| Exit capitalization rate | | 5.6 | % |
| Discount rate / internal rate of return | | 7.3 | % |
| Average holding period (years) | | 10.1 |
A change in the exit capitalization and discount rates used would impact the calculation of the value of our real property. For example, assuming all other factors remain constant, the changes listed below would result in the following effects on the value of our real properties, excluding certain newly acquired properties that are currently held at cost which we believe reflects the fair value of such properties:
| | | | | | | | | | | | | | | | | |
| | | | | Increase |
| | | | | (Decrease) to |
| | Hypothetical | | the Fair Value of |
| Input | | Change | | Real Properties |
| Exit capitalization rate (weighted-average) | | 0.25 | % | decrease | | 3.0 | % |
| | 0.25 | % | increase | | (2.8) | % |
| Discount rate (weighted-average) | | 0.25 | % | decrease | | 2.0 | % |
| | 0.25 | % | increase | | (2.0) | % |
Prior to January 31, 2020, we valued our real estate-related liabilities generally in accordance with fair value standards under GAAP. Beginning with our valuation for February 29, 2020, our property-level mortgages, corporate-level credit facilities, and other secured and unsecured debt that are intended to be held to maturity (which for fixed rate debt not subject to interest rate hedges may be the date near maturity at which time the debt will be eligible for prepayment at par for purposes herein), including those subject to interest rate hedges, were valued at par (i.e. at their respective outstanding balances). In addition, because we utilize interest rate hedges to stabilize interest payments (i.e. to fix all-in interest rates through interest rate swaps or to limit interest rate exposure through interest rate caps) on individual loans, each loan and associated interest rate hedge is treated as one financial instrument which is valued at par if intended to be held to maturity. This policy of valuing at par applies regardless of whether any given interest rate hedge is considered as an asset or liability for GAAP purposes. Notwithstanding, if we acquire an investment and assume associated in-place debt from the seller that is above- or below-market, then consistent with how we recognize assumed debt for GAAP purposes when acquiring an asset with pre-existing debt in place, the liabilities used in the determination of our NAV will include the market value of
such debt based on market value as of the closing date. The associated premium or discount on such debt as of closing that is reflected in our liabilities will then be amortized through loan maturity. Per our valuation policy, the corresponding investment is valued on an unlevered basis for purposes of determining NAV. Accordingly, all else equal, we would not recognize an immediate gain or loss to our NAV upon acquisition of an investment whereby we assume associated pre-existing debt that is above- or below-market. As of March 31, 2026, we classified all of our debt as intended to be held to maturity, and our liabilities included mark-to-market adjustments for pre-existing debt that we assumed upon acquisition. We currently estimate the fair value of our debt (inclusive of associated interest rate hedges) that was intended to be held to maturity as of March 31, 2026 was $55.7 million lower than the carrying value used for purposes of calculating our NAV (as described above) for such debt in aggregate; meaning that if we used the fair value of our debt rather than the carrying value used for purposes of calculating our NAV (and treated the associated hedge as part of the same financial instrument), our NAV would have been higher by approximately $55.7 million, or $0.14 per share, not taking into account all of the other items that impact our monthly NAV, as of March 31, 2026.
Reconciliation of Stockholders’ Equity and Noncontrolling Interests to NAV
The following table reconciles stockholders’ equity and noncontrolling interests per our condensed consolidated balance sheet to our NAV as of March 31, 2026:
| | | | | | | | |
| (in thousands) | | As of March 31, 2026 |
Total stockholders’ equity | | $ | 1,473,548 | |
| Noncontrolling interests | | 509,989 | |
| Total equity under GAAP | | 1,983,537 | |
| | |
| Adjustments: | | |
| Accrued distribution fee (1) | | 141,766 | |
| Redeemable noncontrolling interests (2) | | 103,256 | |
| Unrealized net appreciation (depreciation) on real estate and financial assets and liabilities (3) | | 1,621,617 | |
| Unrealized gain (loss) on investments in unconsolidated joint venture partnerships (4) | | (6,899) | |
| Accumulated depreciation and amortization (5) | | 1,312,565 | |
| Other adjustments (6) | | (88,504) | |
| Aggregate Fund NAV | | $ | 5,067,338 | |
____________________________________________________
(1)Accrued distribution fee represents the accrual for the full cost of the distribution fee for Class T-R shares, Class D-R shares, Class S-PR shares, Class D-PR shares and OP Units. Under GAAP, we accrued the full cost of the distribution fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum distribution fee) as an offering cost at the time we sold the Class T-R shares, Class D-R shares, Class S-PR shares, Class D-PR shares and OP Units. Similarly, we accrued a liability for future distribution fees we expect will be paid based on our estimate of how long the Class T-R shares, Class D-R shares, Class S-PR shares, Class D-PR shares and OP Units will be outstanding, also as an offering cost. For purposes of calculating the NAV, we recognize the distribution fee as a reduction of NAV on a monthly basis when such fee is paid and do not deduct the liability for estimated future distribution fees that may become payable after the date as of which our NAV is calculated.
(2)Redeemable noncontrolling interests are related to our OP Units, and are included in our determination of NAV but not included in total equity under GAAP.
(3)Our investments in real estate and certain of our financial assets and liabilities, including our debt, certain of our financing obligations, and certain of our DST Program Loans, are presented at their carrying value in our condensed consolidated financial statements. As such, any increases or decreases in the fair market value of our investments in real estate and certain of our financial assets and liabilities are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate, investments in real estate debt and securities, financing obligations, and DST Program Loans are recorded at fair value. Notwithstanding, our property-level mortgages, corporate-level credit facilities and other secured and unsecured debt that are intended to be held to maturity are valued at par (i.e., at their respective outstanding balances).
(4)Our investments in our unconsolidated joint venture partnerships are presented using the equity method of accounting in our condensed consolidated financial statements. As such, certain increases or decreases in the fair market value of the underlying investments or debt instruments associated with the investments in our unconsolidated joint venture partnerships are not included in our GAAP results. For purposes of determining our NAV, the investments in the
underlying real estate and certain of the underlying debt instruments are recorded at fair value and reflected in our NAV at our proportional ownership interest.
(5)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.
(6)Includes (i) straight-line rent receivables, which are recorded in accordance with GAAP but not recorded for purposes of determining our NAV, (ii) certain interest rate hedges, which are recorded at fair value in accordance with GAAP but are not included for purposes of determining our NAV if intended to be held to maturity, and (iii) other minor adjustments.
Performance
Our NAV increased from $13.13 per share as of December 31, 2025 to $13.21 per share as of March 31, 2026. The increase in NAV was primarily driven by the performance of our real estate portfolio with continued rent growth and stabilizing capital markets.
As noted above, effective February 29, 2020, our board of directors approved amendments to our valuation procedures which revised the way we value property-level mortgages, corporate-level credit facilities, other secured and unsecured debt and associated interest rate hedges when loans, including associated interest rate hedges, are intended to be held to maturity, effectively eliminating all mark-to-market adjustments for such loans and hedges from the calculation of our NAV. The following table summarizes the impact of interest rate movements on our returns assuming we continued to include the mark-to-market adjustments for all borrowing-related interest rate hedge and debt instruments beginning with the February 29, 2020 NAV:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | One-Year | | | | | | |
| | Trailing | | | | (Trailing | | Three-Year | | Five-Year | | Since Inception |
| As of March 31, 2026 | | Three-Months (1) | | Year-to-Date (1) | | 12-Months) (1) | | Annualized (1) | | Annualized (1) | | Annualized (1)(2)(3) |
| Class T-R Share Total Return (with Sales Charge) (3) | | (2.94) | % | | (2.94) | % | | 2.04 | % | | (1.95) | % | | 8.18 | % | | 6.95 | % |
| Adjusted Class T-R Share Total Return (with Sales Charge) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | (2.60) | % | | (2.60) | % | | 1.66 | % | | (2.75) | % | | 8.34 | % | | 6.97 | % |
| Difference | | (0.34) | % | | (0.34) | % | | 0.38 | % | | 0.80 | % | | (0.16) | % | | (0.02) | % |
| | | | | | | | | | | | |
| Class T-R Share Total Return (without Sales Charge) (3) | | 1.63 | % | | 1.63 | % | | 6.85 | % | | (0.44) | % | | 9.18 | % | | 7.53 | % |
| Adjusted Class T-R Share Total Return (without Sales Charge) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | 1.99 | % | | 1.99 | % | | 6.45 | % | | (1.25) | % | | 9.34 | % | | 7.56 | % |
| Difference | | (0.36) | % | | (0.36) | % | | 0.40 | % | | 0.81 | % | | (0.16) | % | | (0.03) | % |
| | | | | | | | | | | | |
| Class D-R Share Total Return (3) | | 1.77 | % | | 1.77 | % | | 7.44 | % | | 0.13 | % | | 9.76 | % | | 8.34 | % |
| Adjusted Class D-R Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | 2.13 | % | | 2.13 | % | | 7.05 | % | | (0.69) | % | | 9.92 | % | | 8.36 | % |
| Difference | | (0.36) | % | | (0.36) | % | | 0.39 | % | | 0.82 | % | | (0.16) | % | | (0.02) | % |
| | | | | | | | | | | | |
| Class I-R Share Total Return (3) | | 1.83 | % | | 1.83 | % | | 7.68 | % | | 0.36 | % | | 10.06 | % | | 8.47 | % |
| Adjusted Class I-R Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | 2.19 | % | | 2.19 | % | | 7.29 | % | | (0.46) | % | | 10.22 | % | | 8.50 | % |
| Difference | | (0.36) | % | | (0.36) | % | | 0.39 | % | | 0.82 | % | | (0.16) | % | | (0.03) | % |
| | | | | | | | | | | | |
| Class S-PR Share Total Return (with Sales Charge) (3) | | (2.96) | % | | (2.96) | % | | 1.97 | % | | n/a | | n/a | | 4.02 | % |
| Adjusted Class S-PR Share Total Return (with Sales Charge) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | (2.61) | % | | (2.61) | % | | 1.60 | % | | n/a | | n/a | | 3.15 | % |
| Difference | | (0.35) | % | | (0.35) | % | | 0.37 | % | | n/a | | n/a | | 0.87 | % |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | One-Year | | | | | | |
| | Trailing | | | | (Trailing | | Three-Year | | Five-Year | | Since Inception |
| As of March 31, 2026 | | Three-Months (1) | | Year-to-Date (1) | | 12-Months) (1) | | Annualized (1) | | Annualized (1) | | Annualized (1)(2)(3) |
| Class S-PR Share Total Return (without Sales Charge) (3) | | 1.61 | % | | 1.61 | % | | 6.78 | % | | n/a | | n/a | | 7.11 | % |
| Adjusted Class S-PR Share Total Return (without Sales Charge) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | 1.98 | % | | 1.98 | % | | 6.38 | % | | n/a | | n/a | | 6.21 | % |
| Difference | | (0.37) | % | | (0.37) | % | | 0.40 | % | | n/a | | n/a | | 0.90 | % |
| | | | | | | | | | | | |
| Class D-PR Share Total Return (with Sales Charge) (3) | | 0.24 | % | | 0.24 | % | | 5.81 | % | | n/a | | n/a | | 6.60 | % |
| Adjusted Class D-PR Share Total Return (with Sales Charge) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | 0.59 | % | | 0.59 | % | | 5.75 | % | | n/a | | n/a | | 4.35 | % |
| Difference | | (0.35) | % | | (0.35) | % | | 0.06 | % | | n/a | | n/a | | 2.25 | % |
| | | | | | | | | | | | |
| Class D-PR Share Total Return (without Sales Charge) (3) | | 1.76 | % | | 1.76 | % | | 7.42 | % | | n/a | | n/a | | 7.91 | % |
| Adjusted Class D-PR Share Total Return (without Sales Charge) (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | 2.13 | % | | 2.13 | % | | 7.36 | % | | n/a | | n/a | | 5.36 | % |
| Difference | | (0.37) | % | | (0.37) | % | | 0.06 | % | | n/a | | n/a | | 2.55 | % |
| | | | | | | | | | | | |
| Class I-PR Share Total Return (3) | | 1.83 | % | | 1.83 | % | | 7.68 | % | | n/a | | n/a | | 8.02 | % |
| Adjusted Class I-PR Share Total Return (continued inclusion of mark-to-market adjustments for borrowing-related interest rate hedge and debt instruments) (4) | | 2.19 | % | | 2.19 | % | | 7.29 | % | | n/a | | n/a | | 7.12 | % |
| Difference | | (0.36) | % | | (0.36) | % | | 0.39 | % | | n/a | | n/a | | 0.90 | % |
____________________________________________________
(1)Performance is measured by total return, which includes income and appreciation (i.e., distributions and changes in NAV) and reinvestment of all distributions (“Total Return”) for the respective time period. Partial period returns are not calculated. Past performance is not a guarantee of future results. Performance data quoted above is historical. Current performance may be higher or lower than the performance data quoted. Actual individual stockholder returns will vary. The returns have been prepared using unaudited data and valuations of the underlying investments in our portfolio, which are estimates of fair value and form the basis for our NAV. Valuations based upon unaudited or estimated reports from the underlying investments may be subject to later adjustments or revisions, may not correspond to realized value and may not accurately reflect the price at which assets could be liquidated on any given day.
(2)The inception date for Class I-R shares and Class T-R shares (formerly designated as Class I shares and Class T shares, respectively) was November 1, 2017, which is when Class I-R and Class T-R shares of our common stock were first issued to third-party investors. The inception date for Class D-R shares (formerly designated as Class D shares) was July 2, 2018, which is when Class D-R shares of our common stock were first issued to third-party investors. The inception date for Class I-PR shares and Class S-PR shares was September 3, 2024, which is when Class I-PR shares and Class S-PR shares of our common stock were first issued to third-party investors. The inception date for Class D-PR shares was January 2, 2025 which is when Class D-PR shares of our common stock were first issued to third-party investors. Since inception returns are not annualized for share classes outstanding for less than one year.
(3)The Total Returns presented are based on the actual NAVs at which stockholders transacted, calculated pursuant to our valuation procedures. With respect to the “Class T-R Share Total Return (with Sales Charge),” “Class S-PR Share Total Return (with Sales Charge),” and “Class D-PR Share Total Return (with Sales Charge),” the Total Returns are calculated assuming the stockholder also paid the maximum upfront selling commission, dealer manager fee and ongoing distribution fees in effect during the time period indicated. With respect to “Class T-R Share Total Return (without Sales Charge)”, “Class S-PR Share Total Return (without Sales Charge),” and “Class D-PR Share Total Return (without Sales Charge),” the Total Returns are calculated assuming the stockholder did not pay any upfront selling commission or dealer manager fee, but did pay the maximum ongoing distribution fees in effect during the time period indicated. From NAV inception to January 31, 2020, these NAVs reflected mark-to-market adjustments on our borrowing-related debt instruments and our borrowing-related interest rate hedge positions.
(4)The Adjusted Total Returns presented are based on adjusted NAVs calculated as if we had continued to mark our borrowing-related hedge and debt instruments to market following a policy change to largely exclude borrowing-related interest rate hedge and debt marks to market from our NAV calculations (except in certain circumstances pursuant to our valuation procedures), beginning with our NAV calculated as of February 29, 2020. Therefore, the NAVs used in the calculation of Adjusted Total Returns were calculated in the same manner as the NAVs used in the calculation of the unadjusted total return for periods through January 31, 2020. The Adjusted Total Returns include the incremental impact of the adjusted NAVs on advisory fees and performance fees; however, they do not include the incremental impact that the adjusted NAVs would have had on any expense support from our Advisor, or the prices at which shares were purchased in our securities offerings or pursuant to our share redemption program. For calculation purposes, transactions in our common stock were assumed to occur at the adjusted NAVs.
Trends Affecting Our Business
Our results of operations are affected by a variety of factors, including conditions in both the U.S. and global financial markets as well as economic and political environments.
During the first quarter of 2026, the U.S. economy continued to expand, supported by continued consumer spending with moderating expectations for U.S. gross domestic product growth and low levels of unemployment amidst heightened geopolitical tensions. During this time, the commercial real estate market exhibited stable to improving conditions. Specifically, individual property transaction volumes expanded while broad market indices demonstrated flat to increasing commercial real estate values on a year-over-year basis.
Aiding valuations, new construction starts remained near or at 10-year lows across industrial properties and lending markets remained supportive given increased activity from capital markets and banks.
While the Federal Reserve has signaled a potential for interest rate reductions in 2026, there is no certainty that there will be a decrease in interest rates or of the magnitude or pace of potential decreases, especially if inflation accelerates.
Rising operating costs placed pressure on cash flow performance across many real estate property types. Triple net leases within the industrial sector help offset some of these impacts. Additionally, the sector experienced significant new supply coming out of the pandemic which has caused vacancy rates to rise off historical lows and rent growth to moderate. Offsetting new deliveries has been a significant decline in new industrial construction starts driven by higher interest rates. Ultimately, this lack of new future inventory may result in a shortage of contemporary, in-demand properties in the years to come, furthering the disparity between supply and demand dynamics. In addition, there is a significant amount of unspent capital targeting commercial real estate properties that could support values and elevate transaction activities. Property valuations and capitalization rates remained steady and we believe certain of these market trends will be offset by continued strong operating fundamentals of industrial real estate, such as positive rent growth and historically low vacancy rates.
Uncertainty around U.S. economic and foreign policies, international relations and their potential impact to the U.S. economy has increased risk. Should the risks from these factors become more acute, the commercial real estate market may be adversely impacted.
We believe our portfolio is well-positioned in this market environment. However, there is no guarantee that our outlook will remain positive for the long-term, especially if leasing fundamentals weaken in the future.
RESULTS OF OPERATIONS
Summary of 2026 Activities
During the three months ended March 31, 2026, we completed the following activities:
•Our NAV increased to $13.21 per share as of March 31, 2026 from $13.13 per share as of December 31, 2025. See “Item 2. Management’s Discussion and Analysis—Performance” above for additional information regarding this increase.
•We raised $77.2 million of gross equity capital from our securities offerings. Additionally, we raised $164.8 million of gross capital through private placement offerings by selling DST Interests, $9.8 million of which were financed by DST Program Loans. We redeemed 3.7 million shares of our common stock for an aggregate dollar amount of $48.2 million. Additionally, we redeemed 0.4 million OP Units of noncontrolling interests for an aggregate dollar amount of $5.3 million.
•We acquired one industrial building totaling approximately 0.2 million square feet for an aggregate purchase price of $26.8 million. We also assumed a fixed-rate mortgage note in connection with this acquisition with a fair value of $11.2 million and outstanding principal of $11.2 million as of the acquisition date.
•We completed the development of one industrial building totaling 0.1 million square feet.
•We leased approximately 2.1 million square feet, which included 0.7 million square feet of new and future leases and 1.4 million square feet of renewals through 29 separate transactions with an average annual base rent of $9.53 per square foot.
Portfolio Information
As of March 31, 2026 and December 31, 2025, our owned and managed portfolio was as follows:
| | | | | | | | | | | | | | |
| | As of |
| (square feet in thousands) | | March 31, 2026 | | December 31, 2025 |
| Portfolio data: | | | | |
| Total buildings | | 271 | | 269 |
| Total rentable square feet | | 57,613 | | 57,403 |
| Total number of customers | | 439 | | 440 |
| Percent occupied of operating portfolio (1) | | 89.3 | % | | 90.8 | % |
| Percent occupied of total portfolio (1) | | 89.2 | % | | 90.7 | % |
| Percent leased of operating portfolio (1) | | 90.3 | % | | 91.4 | % |
| Percent leased of total portfolio (1) | | 90.2 | % | | 91.3 | % |
____________________________________________________
(1)See “Overview—General” above for a description of our operating portfolio and our total portfolio (which includes our operating and value-add portfolios) and for a description of the occupied and leased rates.
Results for the Three Months Ended March 31, 2026 Compared to Prior Periods
The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025, and for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | | | | For the Three Months Ended March 31, | | | | |
| (in thousands, except per share data) | | March 31, 2026 | | December 31, 2025 | | Change | | % Change | | 2026 | | 2025 | | Change | | % Change |
| Revenues: | | | | | | | | | | | | | | | | |
| Rental revenues | | $ | 140,715 | | | $ | 140,027 | | | $ | 688 | | | 0.5 | % | | $ | 140,715 | | | $ | 133,919 | | | $ | 6,796 | | | 5.1 | % |
| Debt-related income | | 13,328 | | | 15,123 | | | (1,795) | | | (11.9) | | | 13,328 | | | 10,483 | | | 2,845 | | | 27.1 | |
| Total revenues | | 154,043 | | | 155,150 | | | (1,107) | | | (0.7) | | | 154,043 | | | 144,402 | | | 9,641 | | | 6.7 | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Rental expenses | | 37,580 | | | 35,705 | | | 1,875 | | | 5.3 | | | 37,580 | | | 34,211 | | | 3,369 | | | 9.8 | |
| Real estate-related depreciation and amortization | | 79,309 | | | 80,021 | | | (712) | | | (0.9) | | | 79,309 | | | 77,576 | | | 1,733 | | | 2.2 | |
| General and administrative expenses | | 4,881 | | | 4,109 | | | 772 | | | 18.8 | | | 4,881 | | | 4,868 | | | 13 | | | 0.3 | |
| Advisory fees | | 17,666 | | | 17,214 | | | 452 | | | 2.6 | | | 17,666 | | | 16,555 | | | 1,111 | | | 6.7 | |
| Acquisition costs and reimbursements | | 1,582 | | | 848 | | | 734 | | | 86.6 | | | 1,582 | | | 591 | | | 991 | | | NM |
| Total operating expenses | | 141,018 | | | 137,897 | | | 3,121 | | | 2.3 | | | 141,018 | | | 133,801 | | | 7,217 | | | 5.4 | |
| Other income (expenses): | | | | | | | | | | | | | | | | |
| Equity in income (loss) from unconsolidated joint venture partnerships | | 28 | | | 29 | | | (1) | | | (3.4) | | | 28 | | | (24) | | | 52 | | | NM |
| Interest expense | | (70,511) | | | (72,215) | | | 1,704 | | | 2.4 | | | (70,511) | | | (69,888) | | | (623) | | | (0.9) | |
| Loss on financing obligations | | (6,548) | | | (2,798) | | | (3,750) | | | NM | | (6,548) | | | (835) | | | (5,713) | | | NM |
| Loss on financial assets | | (27) | | | — | | | (27) | | | NM | | (27) | | | — | | | (27) | | | NM |
| Gain (loss) on extinguishment of debt and financing obligations, net | | — | | | 13,100 | | | (13,100) | | | (100.0) | | | — | | | (161) | | | 161 | | | 100.0 | |
| Gain on derivative instruments | | — | | | 61 | | | (61) | | | (100.0) | | | — | | | 12 | | | (12) | | | (100.0) | |
| | | | | | | | | | | | | | | | |
| Other income and (expenses) | | 462 | | | 1,087 | | | (625) | | | (57.5) | | | 462 | | | 1,665 | | | (1,203) | | | (72.3) | |
| Total other income (expenses) | | (76,596) | | | (60,736) | | | (15,860) | | | (26.1) | | | (76,596) | | | (69,231) | | | (7,365) | | | (10.6) | |
| Net loss | | (63,571) | | | (43,483) | | | (20,088) | | | (46.2) | | | (63,571) | | | (58,630) | | | (4,941) | | | (8.4) | |
| Net loss attributable to redeemable noncontrolling interests | | 1,296 | | | 923 | | | 373 | | | 40.4 | | | 1,296 | | | 1,404 | | | (108) | | | (7.7) | |
| Net loss attributable to noncontrolling interests | | 16,057 | | | 9,960 | | | 6,097 | | | 61.2 | | | 16,057 | | | 10,592 | | | 5,465 | | | 51.6 | |
| Net loss attributable to common stockholders | | $ | (46,218) | | | $ | (32,600) | | | $ | (13,618) | | | (41.8) | % | | $ | (46,218) | | | $ | (46,634) | | | $ | 416 | | | 0.9 | % |
| Weighted-average shares outstanding—basic | | 278,586 | | | 276,376 | | | 2,210 | | | 0.8 | | | 278,586 | | | 271,030 | | | 7,556 | | | 2.8 | |
| Weighted-average shares outstanding—diluted | | 383,253 | | | 368,622 | | | 14,631 | | | 4.0 | | | 383,253 | | | 340,746 | | | 42,507 | | | 12.5 | |
| Net loss attributable to common stockholders per common share—basic and diluted | | $ | (0.17) | | | $ | (0.12) | | | $ | (0.05) | | | (41.7) | % | | $ | (0.17) | | | $ | (0.17) | | | $ | — | | | — | % |
____________________________________________________
NM = Not meaningful
Total Revenues. In aggregate, total revenues decreased by approximately $1.1 million for the three months ended March 31, 2026, as compared to the previous quarter. Total revenues increased by approximately $9.6 million for the three months ended March 31, 2026, as compared to the same period in 2025, primarily due to the factors described below.
Rental Revenues. Rental revenues are comprised of rental income, straight-line rent, and amortization of above- and below-market lease assets and liabilities. Rental revenues increased by approximately $0.7 million for the three months ended March 31, 2026 as compared to the previous quarter.
Rental revenues increased by approximately $6.8 million for the three months ended March 31, 2026, as compared to the same period in 2025, driven by increases in non-same store revenues related to increased market rents. See “Same Store Portfolio Results of Operations” below for further detail on same store revenues.
Debt-Related Income. Debt-related income is comprised of interest income, origination fees and amortization related to our debt-related investments and debt securities. Total debt-related income decreased by $1.8 million for the three months ended March 31, 2026 as compared to the previous quarter, due to origination fees received as a result of debt investment activity during the three months ended December 31, 2025 as compared to no originations of debt investments during the three months ended March 31, 2026.
Total debt-related income increased by $2.8 million for the three months ended March 31, 2026, as compared to the same period in 2025, driven by the growth in our portfolio of investments in real estate debt since March 31, 2025.
Rental Expenses. Rental expenses include certain property operating expenses typically reimbursed by our customers, such as real estate taxes, property insurance, property management fees, repair and maintenance, and utilities. Leases that are structured on a “triple net basis,” in which customers pay their proportionate share of real estate taxes, insurance, common area maintenance, and certain other operating costs, account for 98.8% of our total leased portfolio, based on number of leases. Total rental expenses increased by $1.9 million for the three months ended March 31, 2026, as compared to the previous quarter, due to increased property taxes and the increase in non-same store expenses related to the growth in our portfolio.
Total rental expenses increased by $3.4 million for the three months ended March 31, 2026, as compared to the same period in 2025, due to the increase in property taxes related to the same store portfolio, as well as the increase in non-same store expenses related to the growth in our portfolio. See “Same Store Portfolio Results of Operations” below for further details of the same store expenses.
Real Estate-Related Depreciation and Amortization. In aggregate, real estate-related depreciation and amortization expense decreased by $0.7 million for the three months ended March 31, 2026, as compared to the previous quarter.
Real estate-related depreciation and amortization expense increased by $1.7 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to growth in our portfolio and the stabilization of buildings during 2025.
Other Remaining Operating Expenses. In aggregate, the remaining operating expenses increased by approximately $2.0 million for the three months ended March 31, 2026, as compared to the previous quarter driven by a $0.8 million increase in general and administrative expenses related to the timing of employee stock grants, as well as a $0.7 million increase in acquisition costs. In aggregate, the remaining operating expenses increased by $2.1 million for the three months ended March 31, 2026 as compared to the same period in 2025, driven by a $1.1 million increase in advisory fees and a $1.0 million increase in acquisition costs.
Other Income and Expenses. In aggregate, the remaining items that comprise our net income (loss) had a $(15.9) million impact on our net income (loss) for the three months ended March 31, 2026, as compared to the previous quarter, primarily due to the following:
•a $13.1 million gain on extinguishment of financing obligations resulting from the exercise of a purchase option for certain properties in our DST Program for the three months ended December 31, 2025 while there was no similar gain for the three months ended March 31, 2026; and
•an unrealized loss on financing obligations of $6.5 million for the three months ended March 31, 2026, compared to an unrealized loss on financing obligations of $2.8 million for the previous quarter.
In aggregate, the remaining items that comprise our net income (loss) had a $(7.4) million impact on our net income (loss) for the three months ended March 31, 2026, as compared to the same period in 2025, primarily due to the following:
•a $6.5 million loss on financing obligations for the three months ended March 31, 2026, compared to a loss on financing obligations of $0.8 million for the same period in 2025; and
•a $1.2 million decrease in other income for the three months ended March 31, 2026 compared to the same period in 2025, driven by a decrease in income earned from our DST Program Loans.
Same Store Portfolio Results of Operations
Property net operating income (“NOI”) is a supplemental non-GAAP measure of our property operating results. We define property NOI as rental revenues less operating expenses. While we believe our net income (loss), as defined by GAAP, to be the most appropriate measure to evaluate our overall performance, we consider property NOI to be an appropriate supplemental performance measure. We believe property NOI provides useful information to our investors regarding our results of operations because property NOI reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of properties, such as real estate-related depreciation and amortization, acquisition-related expenses, advisory fees, impairment charges, general and administrative expenses, interest expense, gains on sale of properties, other income and expense and noncontrolling interests. However, property NOI should not be viewed as an alternative measure of our financial performance since it excludes such items, which could materially impact our results of operations. Further, our property NOI may not be comparable to that of other real estate companies as they may use different methodologies for calculating property NOI, therefore our investors should consider net income (loss) as the primary indicator of our overall financial performance.
We evaluate the performance of consolidated operating properties we own and manage using a same store analysis because the population of properties in this analysis is consistent from period to period, thereby eliminating the effects of any material changes in the composition of the aggregate portfolio on performance measures. We have defined the same store portfolio to include consolidated operating properties owned for the entirety of both the current and prior reporting periods for which the operations had been stabilized. Unconsolidated properties are excluded from the same store portfolio because we account for our interests in our joint venture partnerships using the equity method of accounting; therefore, our proportionate share of income and loss is recognized in income (loss) of our unconsolidated joint venture partnerships on the condensed consolidated statements of operations. “Other properties” includes buildings not meeting the same store criteria. Our same store analysis may not be comparable to that of other real estate companies and should not be considered to be more relevant or accurate in evaluating our operating performance than current GAAP methodology.
The same store operating portfolio for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025 presented below included 262 buildings totaling approximately 56.3 million square feet owned as of October 1, 2025, which represented 97.7% of total rentable square feet, 97.9% of total rental revenues, and 98.2% of net operating income for the three months ended March 31, 2026. The same store operating portfolio for three months ended March 31, 2026 as compared to the three months ended March 31, 2025 presented below included 252 buildings totaling approximately 54.4 million square feet owned as of January 1, 2025, which represented 94.4% of total rentable square feet, 94.2% of total rental revenues, and 94.4% of net operating income for the three months ended March 31, 2026.
The following table reconciles GAAP net income (loss) to same store property NOI for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025, and the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | | | | For the Three Months Ended March 31, | | | | |
| (in thousands) | | March 31, 2026 | | December 31, 2025 | | Change | | % Change | | 2026 | | 2025 | | Change | | % Change |
| Net loss attributable to common stockholders | | $ | (46,218) | | | $ | (32,600) | | | $ | (13,618) | | | (41.8) | % | | $ | (46,218) | | | $ | (46,634) | | | $ | 416 | | | 0.9 | % |
| Debt-related income | | (13,328) | | | (15,123) | | | 1,795 | | | 11.9 | | | (13,328) | | | (10,483) | | | (2,845) | | | (27.1) | |
| Real estate-related depreciation and amortization | | 79,309 | | | 80,021 | | | (712) | | | (0.9) | | | 79,309 | | | 77,576 | | | 1,733 | | | 2.2 | |
| General and administrative expenses | | 4,881 | | | 4,109 | | | 772 | | | 18.8 | | | 4,881 | | | 4,868 | | | 13 | | | 0.3 | |
| Advisory fees | | 17,666 | | | 17,214 | | | 452 | | | 2.6 | | | 17,666 | | | 16,555 | | | 1,111 | | | 6.7 | |
| Acquisition costs and reimbursements | | 1,582 | | | 848 | | | 734 | | | 86.6 | | | 1,582 | | | 591 | | | 991 | | | NM |
| Equity in (income) loss from unconsolidated joint venture partnerships | | (28) | | | (29) | | | 1 | | | 3.4 | | | (28) | | | 24 | | | (52) | | | NM |
| Interest expense | | 70,511 | | | 72,215 | | | (1,704) | | | (2.4) | | | 70,511 | | | 69,888 | | | 623 | | | 0.9 | |
| Loss on financing obligations | | 6,548 | | | 2,798 | | | 3,750 | | | NM | | 6,548 | | | 835 | | | 5,713 | | | NM |
| Loss on extinguishment of debt and financing obligations, net | | — | | | (13,100) | | | 13,100 | | | 100.0 | | | — | | | 161 | | | (161) | | | (100.0) | |
| Loss on financial assets | | 27 | | | — | | | 27 | | | NM | | 27 | | | — | | | 27 | | | NM |
| Gain on derivative instruments | | — | | | (61) | | | 61 | | | 100.0 | | | — | | | (12) | | | 12 | | | 100.0 | |
| | | | | | | | | | | | | | | | |
| Other income and expenses | | (462) | | | (1,087) | | | 625 | | | 57.5 | | | (462) | | | (1,665) | | | 1,203 | | | 72.3 | |
| Net loss attributable to redeemable noncontrolling interests | | (1,296) | | | (923) | | | (373) | | | (40.4) | | | (1,296) | | | (1,404) | | | 108 | | | 7.7 | |
| Net loss attributable to noncontrolling interests | | (16,057) | | | (9,960) | | | (6,097) | | | (61.2) | | | (16,057) | | | (10,592) | | | (5,465) | | | (51.6) | |
| Property net operating income | | $ | 103,135 | | | $ | 104,322 | | | $ | (1,187) | | | (1.1) | % | | $ | 103,135 | | | $ | 99,708 | | | $ | 3,427 | | | 3.4 | % |
| Less: Non-same store property NOI | | 1,893 | | | 485 | | | 1,408 | | | NM | | 5,827 | | | 337 | | | 5,490 | | | NM |
| Same store property NOI | | $ | 101,242 | | | $ | 103,837 | | | $ | (2,595) | | | (2.5) | % | | $ | 97,308 | | | $ | 99,371 | | | $ | (2,063) | | | (2.1) | % |
____________________________________________________
NM = Not meaningful
The following table includes a breakout of our results for our same store portfolio for rental revenues, rental expenses and property NOI for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025 and for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | | | | For the Three Months Ended
March 31, | | | | |
| (in thousands) | | March 31, 2026 | | December 31, 2025 | | Change | | % Change | | 2026 | | 2025 | | Change | | % Change |
| Rental revenues: | | | | | | | | | | | | | | | | |
| Same store operating properties | | $ | 137,720 | | | $ | 139,269 | | | $ | (1,549) | | | (1.1) | % | | $ | 132,622 | | | $ | 133,396 | | | $ | (774) | | | (0.6) | % |
| Other properties | | 2,995 | | | 758 | | | 2,237 | | | NM | | 8,093 | | | 523 | | | 7,570 | | | NM |
| Total rental revenues | | 140,715 | | | 140,027 | | | 688 | | | 0.5 | % | | 140,715 | | | 133,919 | | | 6,796 | | | 5.1 | % |
| Rental expenses: | | | | | | | | | | | | | | | | |
| Same store operating properties | | (36,478) | | | (35,432) | | | (1,046) | | | (3.0) | % | | (35,314) | | | (34,025) | | | (1,289) | | | (3.8) | % |
| Other properties | | (1,102) | | | (273) | | | (829) | | | NM | | (2,266) | | | (186) | | | (2,080) | | | NM |
| Total rental expenses | | (37,580) | | | (35,705) | | | (1,875) | | | (5.3) | % | | (37,580) | | | (34,211) | | | (3,369) | | | (9.8) | % |
| Net operating income: | | | | | | | | | | | | | | | | |
| Same store operating properties | | 101,242 | | | 103,837 | | | (2,595) | | | (2.5) | % | | 97,308 | | | 99,371 | | | (2,063) | | | (2.1) | % |
| Other properties | | 1,893 | | | 485 | | | 1,408 | | | NM | | 5,827 | | | 337 | | | 5,490 | | | NM |
| Total property net operating income | | $ | 103,135 | | | $ | 104,322 | | | $ | (1,187) | | | (1.1) | % | | $ | 103,135 | | | $ | 99,708 | | | $ | 3,427 | | | 3.4 | % |
____________________________________________________
NM = Not meaningful
Rental Revenues. Same store rental revenues decreased by $1.5 million for the three months ended March 31, 2026, as compared to the previous quarter, due to an increase in bad debt income, partially offset by increased rental and recovery revenues. Non-same store rental revenues increased by $2.2 million for the three months ended March 31, 2026, as compared to the previous quarter, due to the timing of acquisitions during the three months ended December 31, 2025.
Same store rental revenues decreased by $0.8 million for the three months ended March 31, 2026 as compared to the same period in 2025. Non-same store rental revenues increased by $7.6 million for the three months ended March 31, 2026, as compared to the same period in 2025, primarily due to the acquisition or completion of 16 buildings and the stabilization of an additional three buildings since January 1, 2025.
Rental Expenses. Same store rental expenses increased by $1.0 million for the three months ended March 31, 2026, as compared to the previous quarter, primarily due to increased property taxes, partially offset by decreased repair and maintenance costs. Non-same store rental expenses increased by $0.8 million for the three months ended March 31, 2026, as compared to the previous quarter, due to the growth in the non-same store portfolio described above.
Same store rental expenses increased by $1.3 million for the three months ended March 31, 2026, as compared to the same period in 2025, primarily due to increased property taxes. Non-same store rental expenses increased by $2.1 million for the three months ended March 31, 2026, as compared to the same period in 2025, due to the growth in our portfolio described above.
ADDITIONAL MEASURES OF PERFORMANCE
Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”)
We believe that FFO and AFFO, in addition to net income (loss) and cash flows from operating activities as defined by GAAP, are useful supplemental performance measures that our management uses to evaluate our consolidated operating performance. However, these supplemental, non-GAAP measures should not be considered as alternatives to net income (loss) or to cash flows from operating activities as indications of our performance and 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. No single measure can provide users of financial information with sufficient information and only our disclosures read as a whole can be relied upon to adequately portray our financial position, liquidity and results of operations. In addition, other REITs may define FFO, AFFO, and similar measures differently and choose to treat certain accounting line items in a manner different from us due to specific differences in investment and operating strategy or for other reasons.
FFO. As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO is a non-GAAP measure that excludes certain items such as real estate-related depreciation and amortization. We believe FFO is a meaningful supplemental measure of our operating performance that is useful to investors because depreciation and amortization in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. By excluding gains or losses on the sale of assets, we believe FFO provides a helpful additional measure of our consolidated operating performance on a comparative basis. We use FFO as an indication of our consolidated operating performance and as a guide to making decisions about future investments.
AFFO. AFFO further adjusts FFO to reflect the performance of our portfolio by adjusting for items we believe are not directly attributable to our operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) performance-based incentive fee (income) expense, (ii) unrealized (gain) loss from changes in fair value of financial instruments, (iii) increase (decrease) in financing obligation liability appreciation, and (iv) forfeited investment deposits, as applicable.
Although some REITs may present certain performance measures differently, we believe FFO and AFFO generally facilitate a comparison to other REITs that have similar operating characteristics to us. We believe investors are best served if the information that is made available to them allows them to align their analyses and evaluation with the same performance metrics used by management in planning and executing our business strategy. Neither the SEC, NAREIT, nor any regulatory body has passed judgment on the acceptability of the adjustments used to calculate AFFO. In the future, the SEC, NAREIT, or a regulatory body may decide to standardize the allowable adjustments across the non-traded REIT industry at which point we may adjust our calculations and characterizations of AFFO.
The following unaudited table presents a reconciliation of GAAP net income (loss) to FFO and AFFO:
| | | | | | | | | | | | | | |
| | For The Three Months Ended
March 31, |
| (in thousands, except per share data) | | 2026 | | 2025 |
| GAAP net loss | | $ | (63,571) | | | $ | (58,630) | |
| Weighted-average shares outstanding—diluted | | 383,253 | | | 340,746 | |
| GAAP net loss per common share—diluted | | $ | (0.17) | | | $ | (0.17) | |
| Adjustments to arrive at FFO: | | | | |
| Real estate-related depreciation and amortization | | 79,309 | | | 77,576 | |
| | | | |
| Our share of adjustments from unconsolidated joint venture partnerships | | 62 | | | 62 | |
| FFO | | $ | 15,800 | | | $ | 19,008 | |
| FFO per common share—diluted | | $ | 0.04 | | | $ | 0.06 | |
| Adjustments to arrive at AFFO: | | | | |
| | | | |
| Unrealized loss on financial instruments (1) | | 6,687 | | | 3,452 | |
| | | | |
| | | | |
| AFFO | | $ | 22,487 | | | $ | 22,460 | |
____________________________________________________
(1)Unrealized loss on financial instruments relates to mark-to-market changes on our derivatives not designated as cash flow hedges, mark-to-market changes on our DST Program Loans and financing obligations for which we have elected the fair value option and gains or losses on extinguishment of our financing obligations.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Our primary sources of capital for meeting our cash requirements are net proceeds from our securities offerings, including proceeds from the sale of shares offered through our DRIP, debt financings, and cash generated from operating activities. Our principal uses of funds are, and will be, for the acquisition of properties and other investments, capital expenditures, operating expenses, payments under our debt obligations, distributions to our stockholders, redemption payments and payments pursuant to the master lease agreements related to the properties in our DST Program. Over time, we intend to fund a majority of our cash needs for items other than asset acquisitions, including the repayment of debt and capital expenditures, from operating cash flows and refinancings. Our primary material cash requirements for the next 12 months relate to our unfunded commitments on our debt-related investments and unconsolidated joint venture partnerships, our indebtedness, future minimum lease payments associated with our DST Program, redemptions, and the fixed component of the advisory fee. As of March 31, 2026, we had outstanding line of credit, term loan and mortgage note borrowings with varying maturities for an aggregate principal amount of $4.6 billion, with $2.1 billion becoming payable within the next 12 months, though the term of our $367.8 million mortgage note that matures in July 2026 may be extended pursuant to a one-year extension option, subject to certain conditions, and the term of our $590.0 million mortgage note that matures in July 2026 may be extended pursuant to three one-year extension options, subject to certain conditions. As of March 31, 2026, we had $32.5 million of future minimum lease payments related to the properties in our DST Program due in the next 12 months. We also had $176.5 million in unfunded commitments related to our investments in unconsolidated joint venture partnerships and our investments in real estate debt and securities as of March 31, 2026. We expect to be able to pay our interest expense and rent obligations over the next 12 months and beyond through operating cash flows and/or borrowings.
During the three months ended March 31, 2026, we raised $77.2 million of gross equity capital from our securities offerings and redemptions of common stock amounted to $48.2 million. As of March 31, 2026, we had cash and cash equivalents of $70.6 million and leverage of 44.7%, calculated as outstanding principal balance of our borrowings, including secured financings on investments in real estate debt securities, less cash and cash equivalents, divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships and investments in real estate debt and securities not associated with the DST Program, as determined in accordance with our valuation procedures. See “—Capital Resources and Uses of Liquidity—Offering Proceeds” for further information concerning capital raised thus far in 2026. As of March 31, 2026, we owned and managed a real estate portfolio that included 271 industrial buildings totaling approximately 57.6 million square feet, with a diverse roster of 439 customers, large and small, spanning a multitude of industries and sectors across 31 markets, with a strategic weighting towards top tier markets where we have historically seen the lowest volatility combined with positive returns over time. Our portfolio was 89.2% occupied (90.2% leased) with a weighted-average remaining lease term (based on square feet) of 3.7 years.
The Advisor, subject to the oversight of our board of directors and, under certain circumstances, the investment committee or other committees established by our board of directors, will continue to evaluate potential acquisitions and dispositions and will engage in negotiations with sellers and lenders on our behalf. Pending investment in property, debt and other investments, we may decide to temporarily invest any unused proceeds from our securities offerings in certain investments that are expected to yield lower returns than those earned on real estate assets. During these times of economic uncertainty, we have seen and could once again see a slowdown in transaction volume, which would adversely impact our ability to acquire real estate assets, which would cause us to retain more lower yielding investments and hold them for longer periods of time while we seek to acquire additional real estate assets. These lower returns may affect our NAV and our ability to make distributions to our stockholders. Potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from the sale of assets, and undistributed funds from operations.
We believe that our cash on-hand, anticipated net offering proceeds, and anticipated financing activities will be sufficient to meet our liquidity needs for the next 12 months and beyond.
Cash Flows. The following table summarizes our cash flows, as determined on a GAAP basis, for the following periods:
| | | | | | | | | | | | | | | | | | |
| | For The Three Months Ended March 31, | | |
| (in thousands) | | 2026 | | 2025 | | Change |
| Total cash provided by (used in): | | | | | | |
| Operating activities | | $ | 23,395 | | | $ | 20,552 | | | $ | 2,843 | |
| Investing activities | | 8,966 | | | (26,955) | | | 35,921 | |
| Financing activities | | (25,269) | | | 3,873 | | | (29,142) | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | | $ | 7,092 | | | $ | (2,530) | | | $ | 9,622 | |
Net cash provided by operating activities during the three months ended March 31, 2026 increased by approximately $2.8 million as compared to the same period in 2025, primarily due to a $3.4 million increase in property net operating income, partially offset by a $1.0 million decrease in interest earned on DST Program Loans.
Net cash provided by investing activities increased by approximately $35.9 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due (i) to the collection of $49.9 million of principal on our debt-related investments and (ii) a $5.9 million decrease in capital expenditure activity; partially offset by $15.3 million of real estate acquisition activity and an increase in debt-related investment activity of $5.6 million.
Net cash used in financing activities decreased by approximately $29.1 million during the three months ended March 31, 2026 as compared to the same period in 2025, primarily driven by (i) a decrease in net borrowings and secured financings of $160.5 million and (ii) a net increase in distributions paid to common stockholders, redeemable noncontrolling interest holders and noncontrolling interest holders of $6.9 million; partially offset by (a) a net increase in proceeds from the issuance of common stock and financing obligations of $101.2 million, (b) a net decrease in redemptions of $23.2 million, and (c) a $15.0 million decrease in debt issuance costs paid.
Capital Resources and Uses of Liquidity
In addition to our cash and cash equivalents balances available, our capital resources and uses of liquidity are as follows:
Line of Credit and Term Loans. As of March 31, 2026, we had an aggregate of $2.2 billion of commitments under our credit agreements, including $1.0 billion under our line of credit and $1.2 billion under our two term loans. As of that date, we had $263.0 million outstanding under our line of credit with an effective interest rate of 5.03%, which includes the effect of interest rate cap agreements. Additionally, as of March 31, 2026, we had $1.2 billion outstanding under our term loans with an effective interest rate of 3.61%, which includes the effect of the interest rate swap agreements and interest rate cap agreements. The unused and available portions under our line of credit were $737.0 million and $653.6 million, respectively, as of March 31, 2026. Our $1.0 billion line of credit matures in March 2029 and may be extended pursuant to a one-year extension option, subject to continuing compliance with certain financial covenants and other customary conditions. Our $550.0 million term loan matures in March 2027. Our $600.0 million term loan matures in March 2028, and may be extended pursuant to two one-year extension options, subject to continuing compliance with certain financial covenants and other customary conditions. Our line of credit and term loan borrowings are available for general corporate purposes including, but not limited to, the acquisition and operation of permitted investments by us. Refer to “Note 5 to the Condensed Consolidated Financial Statements” for additional information regarding our line of credit and term loans.
Mortgage Notes. As of March 31, 2026, we had property-level borrowings of approximately $3.2 billion of principal outstanding with a weighted-average remaining term of 1.5 years, excluding any extension options on certain of our mortgage notes. These borrowings are secured by mortgages or deeds of trust and related assignments and security interests in the collateralized properties, and had a weighted-average interest rate of 4.58%. Refer to “Note 5 to the Condensed Consolidated Financial Statements” for additional information regarding the mortgage notes.
Debt Covenants. Our line of credit, term loan and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, the agreements governing our line of credit and term loans contain certain corporate level financial covenants, including leverage ratio, fixed charge coverage ratio, and tangible net worth thresholds. These covenants may limit our ability to incur additional debt, to make borrowings under our line of credit, or to pay distributions. We were in compliance with all of our debt covenants as of March 31, 2026.
Leverage. We use financial leverage to provide additional funds to support our investment activities. We may finance a portion of the purchase price of any real estate asset that we acquire with borrowings on short or long-term basis from banks, institutional investors and other lenders. We calculate our leverage for reporting purposes as outstanding principal balance of our borrowings, including secured financings on investments in real estate debt securities, less cash and cash equivalents, divided by the fair value of our real property, net investments in unconsolidated joint venture partnerships and investments in real estate debt and securities not associated with the DST Program, as determined in accordance with our valuation procedures. We had leverage of 44.7% as of March 31, 2026. Our management expects that as we deploy capital going forward, our leverage will near approximately 50%. Due to changes in interest rates and increased market volatility, the cost of financing or refinancing our purchase of assets may affect returns generated by our investments. Additionally, these factors may cause our borrowing capacity to be reduced, which could similarly delay or reduce benefits to our stockholders.
Future Minimum Lease Payments Related to the DST Program. As of March 31, 2026, we had $633.5 million of future minimum lease payments related to the DST Program. The underlying interests of each property that is sold to investors pursuant to the DST Program are leased back by an indirect wholly-owned subsidiary of the Operating Partnership on a long-term basis of up to 29 years.
Offering Proceeds. For the three months ended March 31, 2026, aggregate gross proceeds raised from our securities offerings, including proceeds raised through our DRIP, were $77.2 million ($75.7 million net of direct selling costs).
Distributions. We intend to continue to accrue and make distributions on a regular basis. For the three months ended March 31, 2026, approximately 38.8% of our total gross distributions were paid from cash flows from operating activities, as determined on a GAAP basis, and 61.2% of our total gross distributions were funded from sources other than cash flows from operating activities, as determined on a GAAP basis; specifically, 38.7% were funded with proceeds from shares issued pursuant to our DRIP and 22.5% were funded from other sources as described in the table below. Some or all of our future distributions may be paid from sources other than cash flows from operating activities, such as cash flows from financing activities, which include borrowings (including borrowings secured by our assets), proceeds from the issuance of shares pursuant to our DRIP, proceeds from sales of assets, the net proceeds from shares sold in our securities offerings and from our sale of DST Interests. We have not established a cap on the amount of our distributions that may be paid from any of these sources. The amount of any distributions will be determined by our board of directors, and will depend on, among other things, current and projected cash requirements, tax considerations and other factors deemed relevant by our board.
For the second quarter of 2026, our board of directors authorized monthly distributions to all common stockholders of record as of the close of business on the last business day of each month, or April 30, 2026, May 29, 2026 and June 30, 2026 (each a “Distribution Record Date”). The distributions were authorized at a quarterly rate of $0.1575 per share of each class of our common stock, less the respective distribution fees that are payable monthly with respect to Class T-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares. This quarterly rate is equal to a monthly rate of $0.0525 per share of each class of our common stock, less the respective distribution fees that are payable with respect to Class T-R shares, Class D-R shares, Class S-PR shares and Class D-PR shares. Distributions for each month of the second quarter of 2026 have been or will be paid in cash or reinvested in shares of our common stock for those electing to participate in our DRIP following the close of business on the respective Distribution Record Date applicable to such monthly distributions.
There can be no assurances that the current distribution rate or amount per share will be maintained. In the near-term, we expect that we may need to continue to rely on sources other than cash flows from operations, as determined on a GAAP basis, to pay distributions, which, if insufficient, could negatively impact our ability to pay such distributions. In certain years and certain individual quarters, total distributions were not fully funded by cash flows from operations. In such cases, the shortfalls were funded from DRIP or borrowings.
The following table outlines sources used, as determined on a GAAP basis, to pay total gross distributions (which are paid in cash or reinvested in shares of our common stock through our DRIP) for the periods indicated below:
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| | For the Three Months Ended March 31, 2026 | | For the Three Months Ended March 31, 2025 |
| ($ in thousands) | | Amount | | Percentage | | Amount | | Percentage |
| Distributions | | | | | | | | |
| Paid in cash (1) | | $ | 36,997 | | | 61.3 | % | | $ | 29,667 | | | 58.0 | % |
| Reinvested in shares | | 23,362 | | | 38.7 | | | 21,449 | | | 42.0 | |
| Total | | $ | 60,359 | | | 100.0 | % | | $ | 51,116 | | | 100.0 | % |
| Sources of Distributions | | | | | | | | |
| Cash flows from operating activities | | $ | 23,395 | | | 38.8 | % | | $ | 20,552 | | | 40.2 | % |
| Other sources (2) | | 13,602 | | | 22.5 | | | 9,115 | | | 17.8 | |
| DRIP (3) | | 23,362 | | | 38.7 | | | 21,449 | | | 42.0 | |
| Total | | $ | 60,359 | | | 100.0 | % | | $ | 51,116 | | | 100.0 | % |
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(1)Includes (i) distributions paid to noncontrolling interest holders and (ii) ongoing distribution fees relating to Class T-R shares, Class D-R shares, Class S-PR shares, Class D-PR shares and OP Units. See “Note 11 to the Condensed Consolidated Financial Statements” for further detail regarding the ongoing distribution fees.
(2)Other sources may include cash flows from investing activities, such as proceeds from the sale of assets and repayments from debt investments, or cash flows from financing activities, such as proceeds raised from our offerings, including our DST Program, and proceeds from our debt financings.
(3)Stockholders may elect to have their distributions reinvested in shares of our common stock through our DRIP.
For the three months ended March 31, 2026 and 2025, our FFO was $15.8 million and $19.0 million, respectively, compared to total gross distributions of $60.4 million and $51.1 million, respectively. FFO is a non-GAAP operating metric and should not be used as a liquidity measure. However, management believes the relationship between FFO and distributions may be meaningful for investors to better understand the sustainability of our operating performance compared to distributions made. Refer to “Additional Measures of Performance” above for the definition of FFO, as well as a detailed reconciliation of our GAAP net income (loss) to FFO.
Refer to “Note 8 to the Condensed Consolidated Financial Statements” for further detail on our distributions.
Redemptions. Below is a summary of redemptions pursuant to our share redemption program for the three months ended March 31, 2026 and 2025. All eligible redemption requests were fulfilled for the periods presented. Eligible redemption requests are requests submitted in good order by the request submission deadline set forth in the share redemption program. Our board of directors may make exceptions to, modify or suspend our current share redemption program if it deems such action to be in the best interest of our stockholders. See Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds—Share Redemption Program,” for detail regarding our share redemption program.
| | | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, |
| (in thousands, except per share data) | | 2026 | | 2025 |
| Number of shares redeemed | | 3,669 | | 5,815 |
| Aggregate dollar amount of shares redeemed | | $ | 48,179 | | | $ | 74,041 | |
| Average redemption price per share | | $ | 13.13 | | | $ | 12.73 | |
For purposes of the share redemption program, redemption requests received in a month are included on the last day of such month because that is the last day the stockholders have rights in the Company. We record these redemptions in our financial statements as having occurred on the first day of the next month following receipt of the redemption request because shares redeemed in a given month are considered outstanding through the last day of the month.
SUBSEQUENT EVENTS
See “Note 16 to the Condensed Consolidated Financial Statements” for information regarding subsequent events.
CRITICAL ACCOUNTING ESTIMATES
Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our unaudited condensed consolidated financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our condensed consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. For a detailed description of our critical accounting estimates, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K. As of March 31, 2026, our critical accounting estimates have not changed from those described in our 2025 Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We have been and may continue to be exposed to the impact of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows, and optimize overall borrowing costs. To achieve these objectives, we plan to borrow on a fixed interest rate basis and utilize interest rate swap and cap agreements on certain variable interest rate debt in order to limit the effects of changes in interest rates on our results of operations. As of March 31, 2026, our consolidated debt outstanding consisted of borrowings under our line of credit, term loans and mortgage notes. In addition, we plan to purchase or originate variable rate debt investments, which can offset interest rate risk associated with our variable interest rate consolidated debt.
Fixed Interest Rate Debt. As of March 31, 2026, our fixed interest rate debt consisted of $600.0 million of borrowings under our two term loans, which were effectively fixed through the use of interest swap agreements, and $1.5 billion of principal borrowings under seven of our mortgage notes. In total, our fixed interest rate debt represented approximately 44.3% of our total consolidated debt as of March 31, 2026. The impact of interest rate fluctuations on our consolidated fixed interest rate debt will generally not affect our future earnings or cash flows unless such borrowings mature, are otherwise terminated or payments are made on the principal balance. However, interest rate changes could affect the fair value of our fixed interest rate debt. As of March 31, 2026, the fair value and the carrying value of our consolidated fixed interest rate debt, excluding the values of hedges, were $2.0 billion and $2.1 billion, respectively. The fair value estimate of our fixed interest rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated on March 31, 2026. Given we generally expect to hold our fixed interest rate debt to maturity or until such debt instruments otherwise open up for prepayment at par, and the amounts due under such debt instruments should be limited to the outstanding principal balance and any accrued and unpaid interest at such time, we do not expect that any resulting change in fair value of our fixed interest rate debt due to market fluctuations in interest rates would have a significant impact on our operating cash flows.
Variable Interest Rate Debt. As of March 31, 2026, our consolidated variable interest rate debt consisted of $263.0 million under our line of credit, $550.0 million under our term loans, and $1.8 billion under four of our mortgage notes, which represented 55.7% of our total consolidated debt. Interest rate changes on the variable portion of our consolidated variable-rate debt could impact our future earnings and cash flows, but would not significantly affect the fair value of such debt. As of March 31, 2026, we were exposed to market risks related to fluctuations in interest rates on $2.6 billion of consolidated borrowings; however, $2.4 billion of these borrowings are capped through the use of interest rate cap agreements. A hypothetical 25 basis points increase in the all-in interest rate on the outstanding balance of our consolidated variable interest rate debt as of March 31, 2026, would increase our annual interest expense by approximately $2.0 million, including the effects of our interest rate cap agreements. In addition, we have originated variable rate debt-related investments with aggregate current commitments of $702.7 million and aggregate outstanding principal of $561.6 million as of March 31, 2026, which can offset the interest rate risk associated with our variable rate borrowings.
Derivative Instruments. As of March 31, 2026, we had 24 outstanding derivative instruments with a total current notional amount of $3.3 billion outstanding and effective. These derivative instruments were comprised of interest rate swaps and interest rate caps that were designed to mitigate the risk of future interest rate increases by either providing a fixed interest rate or capping the variable interest rate for a limited, pre-determined period of time. See “Note 5 to the Condensed Consolidated Financial Statements” for further detail on our derivative instruments. We are exposed to credit risk of the counterparty to our interest rate cap and swap agreements in the event of non-performance under the terms of the agreements. If we were not able to replace these caps or swaps in the event of non-performance by the counterparty, we would be subject to variability of the interest rate on the amount outstanding under our debt that is fixed or capped through the use of the swaps or caps, respectively.
Variable Interest Rate Debt Investments. In the case of a significant increase in interest rates, additional debt service payments due from our borrowers may strain the operating cash flows of the real estate assets underlying our mortgages and, potentially, contribute to non-performance or, in severe cases, default, which may be mitigated by borrower purchased interest rate caps. Alternatively, in the case of a significant decrease in interest rates, our debt-related investments could be adversely impacted and interest income from our debt-related investments could decrease substantially, which could reduce the effectiveness of our interest rate risk strategy, described above.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the direction of our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of March 31, 2026, our disclosure controls and procedures were effective.
Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, “Risk Factors” of our 2025 Form 10-K which could materially affect our business, financial condition, and/or future results. The risks described in our 2025 Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There have been no material changes to the risk factors disclosed in our 2025 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
On August 2, 2024, we commenced a private offering, which is exempt from the registration provisions of the Securities Act pursuant to Section 4(a)(2), Regulation D and/or Regulation S thereunder. Each purchaser of the shares of our common stock sold in the private offering is required to represent that it is an "accredited investor" as that term is defined in Rule 501 of Regulation D or a non-U.S. person and is acquiring shares for investment purposes only and not with a view to resale or distribution.
During the three months ended March 31, 2026, we issued and sold approximately 1.9 million Class S-PR shares, 2.3 million Class I-PR shares and 21 thousand Class D-PR shares, and generated gross aggregate proceeds of $56.2 million in connection with the private offering. During the three months ended March 31, 2026, aggregate upfront selling commissions and dealer manager fees of $0.3 million were paid in connection with the private offering.
Share Redemption Program
We expect that there will be no regular secondary trading market for shares of our common stock. While our stockholders should view their investment as long-term with limited liquidity, we have adopted a share redemption program applicable to all shares of our common stock, whereby stockholders may receive the benefit of limited liquidity by presenting for redemption to us all or any portion of those shares in accordance with the procedures and subject to certain conditions and limitations. All references herein to classes of shares of our common stock do not include the OP Units issued by our Operating Partnership, unless the context otherwise requires.
While stockholders may request on a monthly basis that we redeem all or any portion of their shares pursuant to our share redemption program, we are not obligated to redeem any shares and may choose to redeem only some, or even none, of the shares that have been requested to be redeemed in any particular month, in our discretion. In addition, our ability to fulfill redemption requests is subject to a number of limitations. As a result, share redemptions may not be available each month. Under our share redemption program, to the extent we determine to redeem shares in any particular month, we will only redeem shares as of the last calendar day of that month (each such date, a “Redemption Date”). Shares redeemed on the Redemption Date remain outstanding on the Redemption Date and are no longer outstanding on the day following the Redemption Date. Redemptions will be made at the transaction price in effect on the Redemption Date, except that shares
that have not been outstanding for at least one year will be redeemed at 95% of the transaction price. The Early Redemption Deduction may be waived in certain circumstances including: (i) in the case of redemption requests arising from the death or qualified disability of the holder; (ii) in the event that a stockholder’s shares are redeemed because the stockholder has failed to maintain the $2,000 minimum account balance; (iii) with respect to shares purchased through our DRIP or received from us as a stock dividend; (iv) with respect to redemption requests submitted by discretionary model portfolio management programs (and similar arrangements); or (v) with respect to redemption requests submitted by feeder vehicles (or similar vehicles) primarily created to hold shares of our common stock, which are offered to non-U.S. persons, where such vehicles seek to avoid imposing such a deduction because of administrative or systems limitations. In addition, shares of our common stock acquired through the redemption of OP Units will not be subject to the Early Redemption Deduction. To have your shares redeemed, your redemption request and required documentation must be received in good order by 4:00 p.m. (Eastern time) on the second to last business day of the applicable month. Settlements of share redemptions will be made within three business days of the Redemption Date. An investor may withdraw its redemption request by notifying the transfer agent before 4:00 p.m. (Eastern time) on the last business day of the applicable month.
Under our share redemption program, we may redeem during any calendar month shares whose aggregate value (based on the price at which the shares are redeemed) is 2.0% of our aggregate NAV as of the last calendar day of the previous quarter and during any calendar quarter whose aggregate value (based on the price at which the shares are redeemed) is up to 5.0% of our aggregate NAV as of the last calendar day of the prior calendar quarter, subject to any carry-over capacity and net redemptions described below.
Provided that the share redemption program has been operating and not suspended for the first month of a given quarter and that all properly submitted redemption requests were satisfied, any unused capacity for that month will carry over to the second month. Also, provided that the share redemption program has been operating and not suspended for the first two months of a given quarter and that all properly submitted redemption requests were satisfied, any unused capacity for those two months will carry over to the third month. In no event will such carry-over capacity permit the redemption of shares with aggregate value (based on the redemption price per share for the month the redemption is effected) in excess of 5% of the combined NAV of all classes of shares as of the last calendar day of the previous calendar quarter (provided that for these purposes redemptions may be measured on a net basis as described in the paragraph below).
We currently measure the foregoing redemption allocations and limitations based on net redemptions during a month or quarter, as applicable. The term “net redemptions” means, during the applicable period, the excess of our share redemptions (capital outflows) over the proceeds from the sale of our shares (capital inflows). For purposes of measuring our redemption capacity pursuant to our share redemption program, proceeds from new subscriptions in a month are included in capital inflows on the first day of the next month because that is the first day on which such stockholders have rights in the Company. Also for purposes of measuring our redemption capacity pursuant to our share redemption program, redemption requests received in a month are included in capital outflows on the last day of such month because that is the last day stockholders have rights in the Company. We record these redemptions in our financial statements as having occurred on the first day of the next month following receipt of the redemption request because shares redeemed in a given month are outstanding through the last day of the month. Thus, for any given calendar quarter, the maximum amount of redemptions during that quarter will be equal to (1) 5% of the combined NAV of all classes of shares as of the last calendar day of the previous calendar quarter, plus (2) proceeds from sales of new shares in our securities offerings (including purchases pursuant to our DRIP) since the beginning of the current calendar quarter. The same would apply for a given month, except that redemptions in a month would be subject to the 2% limit described above (subject to potential carry-over capacity), and netting would be measured on a monthly basis. With respect to future periods, our board of directors may choose whether the allocations and limitations will be applied to “gross redemptions,” i.e., without netting against capital inflows, rather than to net redemptions. If redemptions for a given month or quarter are measured on a gross basis rather than on a net basis, the redemption limitations could limit the amount of shares redeemed in a given month or quarter despite our receiving a net capital inflow for that month or quarter. In order for our board of directors to change the application of the allocations and limitations from net redemptions to gross redemptions or vice versa, we will provide notice to stockholders in a memorandum supplement or special or periodic report filed by us, as well as in a press release or on our website, at least 10 days before the first business day of the quarter for which the new test will apply. The determination to measure redemptions on a gross basis, or vice versa, will only be made for an entire quarter, and not particular months within a quarter.
If the transaction price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no redemption requests will be accepted for such month and stockholders who wish to have their shares redeemed the following month must resubmit their redemption requests.
Although the vast majority of our assets consist of properties that cannot generally be readily liquidated on short notice without impacting our ability to realize full value upon their disposition, we intend to maintain a number of sources of
liquidity including: (i) cash equivalents (e.g. money market funds), other short-term investments, U.S. government securities, agency securities and liquid real estate debt and securities; and (ii) one or more borrowing facilities. We may fund redemptions from any available source of funds, including operating cash flows, borrowings, proceeds from our securities offerings and our sale of DST Interests, and/or sales of our assets.
Should redemption requests, in our judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the Company as a whole, or should we otherwise determine that investing our liquid assets in real properties or other illiquid investments rather than redeeming our shares is in the best interests of the Company as a whole, then we may choose to redeem fewer shares than have been requested to be redeemed, or none at all. In the event that we determine to redeem some but not all of the shares submitted for redemption during any month for any of the foregoing reasons, shares submitted for redemption during such month will be redeemed on a pro rata basis. All unsatisfied redemption requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of the share redemption program, as applicable. If the transaction price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no redemption requests will be accepted for such month and stockholders who wish to have their shares redeemed the following month must resubmit their redemption requests.
Our board of directors may make exceptions to, modify or suspend our share redemption program if in its reasonable judgment it deems such actions to be in our best interest and the best interest of our stockholders. Although our board of directors has the discretion to suspend our share redemption program, our board of directors will not terminate our share redemption program other than in connection with a liquidity event which results in our stockholders receiving cash or securities listed on a national securities exchange or where otherwise required by law. Our board of directors may determine that it is in our best interests and the interest of our stockholders to suspend the share redemption program as a result of regulatory changes, changes in law, if our board of directors becomes aware of undisclosed material information that it believes should be publicly disclosed before shares are redeemed, a lack of available funds, a determination that redemption requests are having an adverse effect on our operations or other factors. Once the share redemption program has been suspended, our board of directors must affirmatively authorize the recommencement of the program before stockholder requests will be considered again. Following any suspension, our share redemption program requires our board of directors to consider at least quarterly whether the continued suspension of the program is in our best interest and the best interest of our stockholders; however, we are not required to authorize the re-commencement of the share redemption program within any specified period of time and any suspension may be for an indefinite period, which would be tantamount to a termination.
The preceding summary does not purport to be a complete summary of our share redemption program and is qualified in its entirety by reference to the share redemption program, which is incorporated by reference as Exhibit 4.1 to this Quarterly Report on Form 10-Q.
Refer to Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional details regarding our redemption history.
The table below summarizes the redemption activity for the three months ended March 31, 2026, for which all eligible redemption requests were redeemed in full:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Total Number of Shares | | Maximum Number of |
| | | | Average Price | | Redeemed as Part of | | Shares That May Yet Be |
| | Total Number of | | Paid per | | Publicly Announced | | Redeemed Under the |
| (shares in thousands) | | Shares Redeemed | | Share Requested (1) | | Plans or Programs | | Plans or Programs (2) |
| For the Month Ended | | | | | | | | |
| January 31, 2026 | | 1,383 | | $ | 13.09 | | | 1,383 | | — | |
| February 28, 2026 | | 1,237 | | 13.12 | | | 1,237 | | — | |
| March 31, 2026 (3) | | 1,049 | | 13.20 | | | 1,049 | | — | |
| Total | | 3,669 | | $ | 13.13 | | | 3,669 | | — | |
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(1)Amount represents the average price paid to investors upon redemption.
(2)We limit the number of shares that may be redeemed per calendar quarter under the share redemption program as described above.
(3)Redemption requests accepted in March 2026 are considered redeemed on April 1, 2026 for accounting purposes and, as a result, are not included in the table above. This differs from how we treat capital outflows for purposes of the limitations of our share redemption program. For purposes of measuring our redemption capacity pursuant to our share redemption program, redemption requests received in a month are included in capital outflows on the last day of such month because that is the last day stockholders have rights in the Company and we redeemed $54.6 million of shares of common stock for the three months ended March 31, 2026.
ITEM 5. OTHER INFORMATION
During the three months ended March 31, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
ITEM 6. EXHIBITS
The exhibits required by this item are set forth on the Exhibit Index attached hereto.
EXHIBIT INDEX
| | | | | | | | |
Exhibit
Number | | Description |
| | |
| 3.1 | | |
| | |
| 3.2 | | |
| | |
| 3.3 | | |
| | |
| 3.4 | | |
| | |
| 3.5 | | |
| | |
| 3.6 | | |
| | |
| 4.1 | | |
| | |
| 4.2 | | |
| | |
| 4.3 | | |
| | |
| 31.1* | | |
| | |
| 31.2* | | |
| | |
| 32.1** | | |
| | |
| 99.1* | | |
| | |
| 99.2 | | |
| | |
| 101 | | The following materials from Ares Industrial Real Estate Income Trust Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, filed on May 13, 2026, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Condensed Consolidated Statements of Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements. |
| | |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
____________________________________________________
*Filed herewith.
**Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | |
| ARES INDUSTRIAL REAL ESTATE INCOME TRUST INC. |
| | |
May 13, 2026 | By: | /s/ JEFFREY W. TAYLOR |
| | Jeffrey W. Taylor Partner, Co-President (Principal Executive Officer) |
| | |
May 13, 2026 | By: | /s/ TAYLOR M. PAUL |
| | Taylor M. Paul Managing Director, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |