Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 13, 2024 | |
Entity Listings [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Transition Report | false | |
Entity File Number | 000-56536 | |
Entity Registrant Name | Fortress Net Lease REIT | |
Entity Central Index Key | 0001966394 | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 92-1937121 | |
Entity Address, Address Line One | 1345 Avenue of the Americas | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10105 | |
City Area Code | 212 | |
Local Phone Number | 798-6100 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Class F-I [Member] | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 10,846,273 | |
Class B [Member] | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 4,801,005 | |
Class D [Member] | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 34,846,574 | |
Class E [Member] | ||
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 227,065 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Investments in real estate, net | $ 205,756 | $ 98,469 |
Intangible assets, net | 40,473 | 20,912 |
Cash and cash equivalents | 188,428 | 4,515 |
Restricted cash | 59,002 | 127,889 |
Other assets | 1,980 | 673 |
Total assets | 495,639 | 252,458 |
Liabilities | ||
Subscriptions received in advance | 54,074 | 123,192 |
Distribution payable | 1,845 | 470 |
Accounts payable and accrued expenses | 20,051 | 10,052 |
Total liabilities | 89,147 | 143,369 |
Commitments and contingencies (see Note 8) | ||
Equity | ||
Additional paid-in capital | 415,965 | 115,952 |
Accumulated deficit | (9,893) | (6,982) |
Total equity | 406,492 | 109,089 |
Total liabilities and equity | 495,639 | 252,458 |
Related Party [Member] | ||
Liabilities | ||
Other liabilities | 12,279 | 9,205 |
Nonrelated Party [Member] | ||
Liabilities | ||
Other liabilities | 898 | 450 |
Class F-I [Member] | ||
Equity | ||
Common stock | 29 | 0 |
Class F-I X [Member] | ||
Equity | ||
Common stock | 30 | 23 |
Class B [Member] | ||
Equity | ||
Common stock | 48 | 21 |
Class C [Member] | ||
Equity | ||
Common stock | 0 | 73 |
Class D [Member] | ||
Equity | ||
Common stock | 311 | 0 |
Class E [Member] | ||
Equity | ||
Common stock | $ 2 | $ 2 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 | |
Equity | |||
Common stock par value (in dollars per share) | $ 0.01 | ||
Common stock, shares outstanding (in shares) | 41,937,000 | 11,877,000 | |
Class F-I [Member] | |||
Equity | |||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 2,861,000 | 0 | |
Common stock, shares outstanding (in shares) | 2,861,000 | 0 | |
Class F-I X [Member] | |||
Equity | |||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 2,992,000 | 2,346,000 | |
Common stock, shares outstanding (in shares) | [1] | 2,992,000 | 2,346,000 |
Class B [Member] | |||
Equity | |||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 4,785,000 | 2,102,000 | |
Common stock, shares outstanding (in shares) | 4,785,000 | 2,102,000 | |
Class C [Member] | |||
Equity | |||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 0 | 7,227,000 | |
Common stock, shares outstanding (in shares) | 0 | 7,227,000 | |
Class D [Member] | |||
Equity | |||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 31,088,000 | 0 | |
Common stock, shares outstanding (in shares) | 31,088,000 | 0 | |
Class E [Member] | |||
Equity | |||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 211,000 | 202,000 | |
Common stock, shares outstanding (in shares) | 211,000 | 202,000 | |
[1]Class F-I X represents Class F-I common shares that are currently entitled to a fee waiver, as described in the Form 10. |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 31, 2024 | |
Revenue | ||
Revenues | $ 0 | $ 2,677 |
Expenses | ||
Organizational costs | 0 | 1,753 |
General and administrative | 0 | 1,060 |
Depreciation and amortization | 0 | 802 |
Total expenses | 0 | 3,615 |
Other income (expense) | ||
Interest income | 0 | 2,394 |
Net income | $ 0 | $ 1,456 |
Net income per share of common stock - basic (in Dollars per share) | $ 0 | $ 0.04 |
Net income per share of common stock - diluted (in Dollars per share) | $ 0 | $ 0.04 |
Weighted-average shares of common stock outstanding, basic (in shares) | 0 | 33,867,000 |
Weighted-average shares of common stock outstanding, diluted (in shares) | 0 | 33,867,000 |
Rental Revenue [Member] | ||
Revenue | ||
Revenues | $ 0 | $ 2,677 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] Class F-I [Member] | Common Stock [Member] Class F-I X [Member] | Common Stock [Member] Class B [Member] | Common Stock [Member] Class C [Member] | Common Stock [Member] Class D [Member] | Common Stock [Member] Class E [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning balance at Jan. 23, 2023 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Common stock issued | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Offering costs | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Distribution reinvestment | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Share class exchange | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Net income (loss) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Distributions declared on common stock | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Ending balance at Mar. 31, 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Beginning balance at Dec. 31, 2023 | 0 | 23 | 21 | 73 | 0 | 2 | 115,952 | (6,982) | 109,089 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Common stock issued | 29 | 7 | 37 | 10 | 218 | 0 | 299,763 | 0 | 300,064 |
Offering costs | 0 | 0 | 0 | 0 | 0 | 0 | (682) | (682) | |
Distribution reinvestment | 0 | 0 | 0 | 0 | 0 | 0 | 932 | 0 | 932 |
Share class exchange | 0 | 0 | (10) | (83) | 93 | 0 | 0 | 0 | 0 |
Net income (loss) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1,456 | 1,456 |
Distributions declared on common stock | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (4,367) | (4,367) |
Ending balance at Mar. 31, 2024 | $ 29 | $ 30 | $ 48 | $ 0 | $ 311 | $ 2 | $ 415,965 | $ (9,893) | $ 406,492 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2024 | ||
Cash flows from operating activities: | |||
Net income | $ 0 | $ 1,456 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Organizational costs | 0 | 1,753 | |
Depreciation and amortization | 0 | 802 | |
Other items | 0 | (1,017) | |
Changes in assets and liabilities: | |||
Decrease in other assets | 0 | 296 | |
Increase in other liabilities | 0 | 893 | |
Net cash provided by operating activities | 0 | 4,183 | |
Cash flows from investing activities: | |||
Acquisitions of real estate | 0 | (92,762) | [1] |
Capital expenditures and improvements | 0 | (25,281) | |
Net cash used in investing activities | 0 | (118,043) | |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock | 0 | 177,804 | |
Subscriptions received in advance | 0 | 53,141 | |
Payment of distributions to common stock | 0 | (2,059) | |
Net cash provided by financing activities | 0 | 228,886 | |
Net change in cash, cash equivalents and restricted cash | 0 | 115,026 | |
Cash, cash equivalents and restricted cash, beginning of period | 0 | 132,404 | |
Cash, cash equivalents and restricted cash, end of period | 0 | 247,430 | |
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet: | |||
Cash and cash equivalents | 0 | 188,428 | |
Restricted cash | 0 | 59,002 | |
Total cash, cash equivalents and restricted cash | 0 | 247,430 | |
Non-cash investing and financing activities: | |||
Changes in accrued capital expenditures | 0 | 9,377 | |
Distributions declared and unpaid | 0 | 1,845 | |
Dividend reinvestment | 0 | 932 | |
Offering costs due to affiliate | 0 | 682 | |
Share class exchange | $ 0 | $ 94 | |
[1]The total purchase price was paid for in cash. |
Organization and Business Purpo
Organization and Business Purpose | 3 Months Ended |
Mar. 31, 2024 | |
Organization and Business Purpose [Abstract] | |
Organization and Business Purpose | 1. Organization and Business Purpose Fortress Net Lease REIT (“FNLR” or the “Company”) was formed on January 24, 2023 (the “Date of Formation”) as a Maryland statutory trust and intends to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes. The Company was organized to invest primarily in single-tenant commercial real estate properties subject to long-term net leases with investment grade and other creditworthy tenants or guarantors located in the United States and, to a lesser extent, Canada, Europe or other jurisdictions as the Company sees fit. The Company, through FNLR GP LLC (a wholly owned subsidiary of the Company), is the sole general partner of FNLR OP LP, a Delaware limited partnership (“FNLR OP”), and FNLR SLP LLC (the “Special Limited Partner”), a wholly owned subsidiary of Fortress Investment Group LLC (“Fortress”), owns a special limited partner interest in FNLR OP. Substantially all of the Company’s business is conducted through FNLR OP. The Company and FNLR OP are externally managed by FNLR Management LLC (the “Adviser”), an affiliate of Fortress. The Company’s principal business is the acquisition, ownership and leasing of single tenant properties subject to long-term net leases with creditworthy tenants or guarantors. The principal business and operations are not distinguished by geography or property type for purposes of measuring performance. Accordingly, the Company has only one reportable segment. As of March 31, 2024, the Company owned seven investments in real estate, of which three are subject to build-to-suit leases, and four for which the Company executed triple net lease agreements to fully lease the properties. All acquisitions are industrial properties located in the United States. On May 1, 2023, the Company initiated the offering of its shares through a continuous private placement offering, under Regulation D of the Securities Act of 1933, as amended. The Company is authorized to issue an unlimited number of common shares of beneficial interests, par value $0.01 per share. The share classes have different upfront selling commissions, dealer manager fees and ongoing shareholder servicing fees. As of March 31, 2024, the Company had received aggregate net proceeds of $419.8 million from the sales of shares of its common stock through this initial offering. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The Company believes the following significant accounting policies, among others, affect its more significant estimates and assumptions used in the preparation of the condensed consolidated financial statements. Principles of Consolidation and Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. All significant intercompany balances and transactions have been eliminated in consolidation. Management believes it has made all necessary adjustments, consisting of only normal recurring items, so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s registration statement on Form 10 for the period from January 24, 2023 (Date of Formation) through December 31, 2023 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 1, 2024 (as amended, the “Form 10”). The Company consolidates all entities in which it has a controlling financial interest through majority ownership or voting rights and variable interest entities whereby the Company is the primary beneficiary. In determining whether the Company has a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, the Company considers whether the entity is a variable interest entity (“VIE”) and whether it is the primary beneficiary. The Company is the primary beneficiary of a VIE when it has (i) the power to direct the most significant activities impacting the economic performance of the VIE and (ii) the obligation to absorb losses or receive benefits significant to the VIE. FNLR OP is considered to be a VIE. The Company consolidates this entity because it has the ability to direct the most significant activities of the entity such as purchases, dispositions, financings, budgets and overall operating plans. The Company meets the VIE disclosure exemption criteria, as the Company’s interest in FNLR OP is considered a majority voting interest. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ materially from those estimates. Investments in Real Estate In accordance with ASC 805, Business Combinations Whether the acquisition of a property acquired is considered a business combination or asset acquisition, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs associated with asset acquisitions. Upon acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-market” and “below-market” leases, acquired in-place leases, other identifiable intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities on a relative fair value basis. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as other available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends, and market and economic conditions. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records acquired above-market and below-market leases at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. The Company records acquired in-place lease values based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include costs to execute similar leases or estimated carrying costs during hypothetical expected lease-up periods considering current market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, if any, and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including but not limited to, the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. Definite-lived intangible lease assets are recorded as Intangible assets on the Company’s Condensed Consolidated Balance Sheets and amortized at lease commencement over the life of the lease. Amortization of in-place lease intangibles was $201,206 and $0 for the three months ended March 31, 2024 and for the period from January 24, 2023 (Date of Formation) through March 31, 2023, respectively, and recorded as Depreciation and amortization expense on the Condensed Consolidated Statements of Operations. The cost of building and improvements includes the purchase price of the Company’s properties and any acquisition-related costs, along with any subsequent improvements to such properties. The Company’s investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated remaining useful lives of the assets as follows: Description Depreciable Life Buildings 35-40 years Tenant improvements 25 years Land improvements 4-6 years In-place lease intangibles Over lease term The Company determines a tenant improvement’s depreciable useful life as the shorter of the tenant’s lease term or the economic useful life associated with the tenant improvement. Depreciation expense was $601,096 and $0 for the three months ended March 31, 2024 and for the period from January 24, 2023 (Date of Formation) through March 31, 2023, respectively, and included in Depreciation and amortization expense on the Condensed Consolidated Statements of Operations. The Company capitalizes certain costs related to the development of real estate, including pre-construction costs, construction costs, real estate taxes and insurance. Additionally, the Company capitalizes interest costs related to development activities. Capitalization of these costs begin when the activities and related expenditures commence and cease when the project is substantially complete and ready for its intended use at which time the project is placed in service and depreciation commences but no later than one year after substantial completion. The Company reviews real estate properties for impairment quarterly or when there is an event or change in circumstances that indicates an impaired value. Since cash flows on real estate properties considered to be “long-lived assets to be held and used” are evaluated on an undiscounted basis to determine whether an asset has been impaired, the Company’s strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material to our results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value. No impairments occurred during the three months ended March 31, 2024 or for the period from January 24, 2023 (Date of Formation) through March 31, 2023. Definite-lived intangible assets are recorded as a component of Intangible assets on the Company’s Condensed Consolidated Balance Sheets. The amortization of acquired above-market and below-market leases will be recorded as an adjustment to Rental revenue on the Company’s Condensed Consolidated Statements of Operations. The amortization of in-place leases is recorded as an adjustment to Depreciation and amortization expense on the Company’s Condensed Consolidated Statements of Operations. As of March 31, 2024, the Company has not recorded any above-market or below-market lease intangibles. The Company reviews indefinite-lived intangible assets for impairment annually or when there is an event or change in circumstances that indicate a decrease in value. If there are qualitative factors that indicate it is more likely than not that the indefinite-lived intangible asset is impaired, the Company calculates the fair value of the asset and will record the impairment charge if the carrying amount exceeds the fair value. This new cost basis will be used for future periods when recording subsequent loss and cannot be written up to a higher value as a result of increases in fair value. No impairments occurred during the three months ended March 31, 2024 or for the period from January 24, 2023 (Date of Formation) through March 31, 2023. Rental Revenue The Company accounts for rental revenue in accordance with ASC 842, Leases Income Taxes The Company qualifies to be taxed as a REIT for U.S. federal income tax purposes commencing with the year ending December 31, 2023. The Company’s qualification as a REIT will depend upon its ability to meet, on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”) relating to, among other things, the sources of the Company’s gross income, the composition and value of the Company’s assets, the Company’s distribution levels and the diversity of ownership of the Company’s capital shares. The Company believes that it is organized in conformity with the requirements for qualification as a REIT under the Code and that its intended manner of operation will enable the Company to meet the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes commencing with the Company’s taxable year ending December 31, 2023. As a REIT, the Company generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its shareholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute each year at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. If the Company fails to qualify for taxation as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company’s income for that year will be taxed at regular corporate rates, and the Company would be disqualified from taxation as a REIT for the four taxable years following the year during which the Company ceased to qualify as a REIT. Even if the Company qualifies as a REIT for U.S. federal income tax purposes, it may still be subject to state and local taxes on its income and assets and to U.S. federal income and excise taxes on its undistributed income. Earnings Per Share Basic earnings/(loss) per share of common shares is determined by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the period. All classes of common shares are allocated net income/(loss) at the same rate per share and receive the same gross distribution per share. Diluted earnings/(loss) per share is computed by dividing net earnings/(loss) attributable to shareholders for the period by the weighted average number of common shares and common share equivalents outstanding (unless their effect is antidilutive) for the period. There are no common share equivalents outstanding that would have a dilutive effect as a result of the net earnings/(loss), and accordingly, the weighted average number of common shares outstanding is identical for both basic and diluted shares for the three months ended March 31, 2024 and for the period from January 24, 2023 (Date of Formation) through March 31, 2023. Share-Based Compensation Each of the trustees who are not affiliated with the Adviser or Fortress will receive $100,000 of Class E shares for services provided. The annual award of common shares will vest one year from the date of grant and will be based on the then-current per share transaction price of Class E shares at the time of issuance. The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation Recent Accounting Pronouncements In November of 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” |
Investments in Real Estate, net
Investments in Real Estate, net | 3 Months Ended |
Mar. 31, 2024 | |
Investments in Real Estate, net [Abstract] | |
Investments in Real Estate, net | 3. Investments in Real Estate, net Investments in real estate, net consisted of the following: (in thousands) March 31, 2024 December 31, 2023 Buildings and tenant improvements $ 100,985 $ 49,264 Land and land improvements 34,097 12,718 Construction in progress 71,294 36,506 Total 206,376 98,488 Accumulated depreciation (620 ) (19 ) Investments in real estate, net $ 205,756 $ 98,469 During the three months ended March 31, 2024, the Company acquired six industrial properties for approximately $92.8 million. The total rentable square feet of gross leasable area (“GLA”) of the Company was 1,880 thousand and 983 thousand square feet as of March 31, 2024 and December 31, 2023, respectively, all of which is fully occupied. Acquisitions The following table sets forth the acquisition values, number of properties and total rentable square feet of GLA of the Company for the three months ended March 31, 2024: Property Type Acquisition Value (in thousands) Number of Properties Square Feet (in thousands) Industrial $ 21,884 1 242 Industrial 25,353 2 401 Industrial 45,525 3 254 There were no acquisitions for the period from January 24, 2023 (Date of Formation) through March 31, 2023. The following table details the purchase price allocation for the properties acquired during the three months ended March 31, 2024: (in thousands) Amount Buildings and tenant improvements $ 51,622 Land and land improvements 21,378 In-place lease intangibles 19,762 Total Purchase Price (1) $ 92,762 (1) The total purchase price was paid for in cash. |
Intangibles
Intangibles | 3 Months Ended |
Mar. 31, 2024 | |
Intangibles [Abstract] | |
Intangibles | 4. Intangibles The gross carrying amount and accumulated amortization of the Company’s identified intangible lease assets consisted of the following: (in thousands) March 31, 2024 December 31, 2023 Intangible lease assets: In-place lease intangibles $ 33,188 $ 13,426 Condominium interest 7,492 7,492 Total intangible lease assets 40,680 20,918 Accumulated amortization: In-place lease intangibles 207 6 Total intangible lease assets 207 6 Intangible lease assets, net $ 40,473 $ 20,912 The estimated future amortization of the Company’s in-place lease intangible assets for each of the next five years and thereafter as of March 31, 2024 is as follows: (in thousands) Amount 2024 (remaining) $ 1,095 2025 1,469 2026 1,469 2027 1,469 2028 1,469 2029 1,469 Thereafter 24,541 Total $ 32,981 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 5. Related Party Transactions Due to Affiliate The following table details the components of due to affiliate: (in thousands) March 31, 2024 December 31, 2023 Organizational and offering costs $ 11,630 $ 9,195 General and administrative expenses 649 10 Due to affiliate $ 12,279 $ 9,205 Management Fee The Company will pay the Adviser a management fee ranging from 1.00% to 1.25% of net asset value (“NAV”) per annum payable monthly. However, the Adviser has waived the management fee for six months for certain investors measured from the later of (i) the day on which such shareholder first purchased any waiver-eligible shares and (ii) if applicable, the day on which such shares were released from escrow (such later date in respect of any investor, the “Issuance Date”). The management fee paid to the Adviser in respect of any Class E Shares will be waived by the Adviser for periods following the time that the Company becomes a “publicly offered REIT” for U.S. federal income tax purposes. Performance Participation Allocation The Special Limited Partner holds a performance participation interest in FNLR OP that entitles it to receive an allocation of total return. This allocation is an expense to the Company as it represents a liability payable for services rendered relating to ongoing operations of the Company. Total return is defined as total distributions plus the change in the Company’s NAV per share, adjusted for subscriptions and repurchases. The Special Limited Partner is entitled to an allocation from FNLR OP equal to (i) for the Class F-S units, Class F-D units, Class F-I units (including Class F-I X units which are eligible for a waiver of performance participation allocation), Class B units and Class E units of FNLR OP, 10% of total return and (ii) for the Class C units of FNLR OP, 5% of total return in each case, after the other unit holders have received a total return of 5% (after recouping any loss carryforward amount). The allocation of the performance participation interest is measured on a calendar year basis, made annually and accrued monthly, and is payable in Class A units of FNLR OP, Class E shares or cash at the election of the Special Limited Partner. The Special Limited Partner has waived the performance participation for six months for certain investors measured from the applicable Issuance Date. In addition, the Special Limited Partner’s performance participation interest with respect to Class E units of FNLR OP will be waived by the Special Limited Partner following the time that the Company becomes a “publicly offered REIT” for U.S. federal income tax purposes. Advanced Organizational and Offering Costs The Adviser agreed to advance all of the organization and offering costs on behalf of the Company (including legal, marketing, due diligence, administrative, accounting, transfer agent fees and other expenses attributable to the Company’s organization) through November 1, 2024. Such costs will be reimbursed to the Adviser on a pro-rata basis over a 60-month period beginning November 1, 2024, the first anniversary of the date on which the Company broke escrow for its private offering, and are recorded as a component of Due to affiliate on the Company’s Condensed Consolidated Balance Sheets. Approximately $11.6 million and $9.2 million of reimbursable costs were payable to the Adviser at March 31, 2024 and December 31, 2023, respectively. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | 6. Leases Lessor – Operating leases The Company’s rental revenue primarily consists of rent earned from operating leases at the Company’s triple net lease, fully occupied properties which consist of fixed annual rent that escalates annually throughout the term of the applicable leases. The tenant is generally responsible for all property-related expenses, including taxes, insurance and maintenance, and the Company has rights in accordance with the lease agreement to protect the value of the leased property. The Company’s triple net lease properties are each occupied by a single tenant. The following table presents the undiscounted future minimum rents the Company expects to receive for its net lease properties classified as operating leases as of March 31, 2024. Future Minimum Receipts Year (in thousands) 2024 (remaining) $ 10,545 2025 31,011 2026 31,924 2027 32,864 2028 33,833 2029 34,829 Thereafter 872,003 Total $ 1,047,009 |
Equity
Equity | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Equity | 7. Equity Authorized Capital As of March 31, 2024, the Company had the authority to issue an unlimited number of preferred shares and seven classes of common shares including Class F-S, Class F-D, Class F-I, Class B, Class C, Class D and Class E. The Company also presents Class F-I X which represents Class F-I common shares that are currently entitled to a fee waiver, as described in the Form 10. Each class of common shares and preferred shares has a par value of $0.01. The Company’s board of trustees has the ability to establish the preferences and rights of each class or series of preferred shares, without shareholder approval, and as such, it may afford the holders of any series or class of preferred shares preferences, powers and rights senior to the rights of holders of common shares. The differences among the common share classes relate to ongoing servicing fees, management fees, performance participation allocation and share repurchase rights. Other than differences in fees and repurchase rights, each class of common shares has the same economic and voting rights. Common Shares The following table details the movement in the Company’s outstanding shares of common shares: Three Months Ended March 31, 2024 (in thousands) Class F-I Class F-I X (1) Class B Class C Class D Class E Total December 31, 2023 - 2,346 2,102 7,227 - 202 11,877 Common shares issued 2,861 630 3,669 1,052 21,748 7 29,967 Distribution reinvestment - 16 14 26 35 2 93 Class transfers - - (1,000 ) (8,305 ) 9,305 - - Common shares repurchased - - - - - - - March 31, 2024 2,861 2,992 4,785 - 31,088 211 41,937 (1) Class F-I X represents Class F-I common shares that are currently entitled to a fee waiver, as described in the Form 10. Share and Unit Repurchases The Company has adopted a share repurchase plan whereby, subject to certain limitations, shareholders may request, on a monthly basis, that the Company repurchase all or any portion of their shares. The aggregate NAV of total repurchases of the Company’s common shares under the Company’s share repurchase plan and redemptions of Operating Partnership units is limited to no more than 2% of the Company’s aggregate NAV per month (measured using the aggregate NAV attributable to shareholders as of the end of the immediately preceding month) and no more than 5% of the Company’s aggregate NAV per calendar quarter (measured using the average aggregate NAV attributable to shareholders as of the end of the immediately preceding three months). Shares or units issued to the Adviser and its affiliates as payment for management fees or as reimbursements of expenses or for the Special Limited Partner’s performance participation interest are not subject to these repurchase limitations. The Company is not obligated to repurchase any shares and may choose to repurchase fewer shares than have been requested to be repurchased, or none at all, in its discretion at any time. Further, the Company’s board of trustees may make exceptions to, modify or suspend the Company’s share repurchase plan (including to make exceptions to the repurchase limitations or purchase fewer shares than such repurchase limitations) if it deems such action to be in the Company’s best interest. In the event that the Company determines to repurchase some but not all of the shares submitted for repurchase during any month, shares repurchased at the end of the month will be repurchased on a pro-rata basis. The Company had no repurchase requests for the three months ended March 31, 2024. Distributions The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income in accordance with GAAP, to its shareholders each year to comply with the REIT provisions of the Code. Each class of common shares receive the same gross distribution per share during the period the Adviser and Special Limited Partner have waived the management fee and performance participation allocation, respectively. The following table details the aggregate distributions declared for each applicable class of common shares: Three Months Ended March 31, 2024 Class F-I (1) Class F-I X Class B Class C (1) Class D Class E Aggregate gross distributions declared per share of common shares $ 0.0440 $ 0.1275 $ 0.1275 $ 0.0835 $ 0.1275 $ 0.1275 (1) Class F-I shares and Class C shares were outstanding for a portion of the three month period ending March 31, 2024. Share-Based Compensation The Company accrued approximately $75,000 of non-cash compensation expense for the three months ended March 31, 2024. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies In the normal course of business, the Company may, directly or indirectly, enter into agreements that contain representations and warranties and which provide indemnifications. Future events could occur that lead to the execution of these provisions against the Company. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company had outstanding commitments of approximately $159.3 million and $183.5 million as of March 31, 2024 and December 31, 2023, respectively, in connection with its properties under development. |
Earning Per Share
Earning Per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 9. Earnings Per Share Basic earnings/(loss) per common share is determined by dividing net income/(loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. All classes of common shares are allocated net income/(loss) at the same rate per share and receive the same gross distribution per share. (in thousands, except per share data) Three Months Ended March 31, 2024 For the period from January 24, 2023 (Date of Formation) through March 31, 2023 Net income $ 1,456 $ - Weighted average number of common shares outstanding 33,867 - Net income per common share $ 0.04 $ - |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events In preparation of the accompanying condensed consolidated financial statements, the Company has evaluated events and transactions that occurred after March 31, 2024 for recognition or disclosure purposes. Based on this evaluation, the Company identified the following subsequent events, from March 31, 2024 through the date the condensed consolidated financial statements were issued. As of April 1, 2024, the Company has qualified as a publicly offered REIT for U.S. federal income tax purposes. Proceeds from the Issuance of Common Shares On April 1, 2024, the Company issued and sold 5,360,972 common shares, consisting of 1,891,784 Class F-I shares (of which 6,994 shares were eligible for a waiver of management fees and performance participation, see “Note 5 – Related Party Transactions”), 7,589 Class B shares, 3,451,175 Class D shares, (including Class D shares issued and sold pursuant to the TTC Subscription Agreement), and 10,424 Class E shares, to accredited investors in the Company’s the Company In addition, on May 1, 2024, the Company issued and sold 3,423,126 common shares, consisting of 3,101,739 Class F-I shares (of which 7,668 shares were eligible for a waiver of management fees and performance participation, see “Note 5 – Related Party Transactions”) 8,248 Class B shares, 307,603 Class D shares (including Class D shares issued and sold pursuant to the TTC Subscription Agreement), and 5,536 Class E shares, to accredited investors in the Company’s the Company Acquisitions On April 11, 2024, the Company acquired twenty-seven industrial properties located across nine states within the United States for approximately $133.2 million. The properties were subsequently leased back to the seller under an absolute triple net master lease. On May 7, 2024, the Company acquired six retail properties located across the state of Washington for approximately $15.2 million. The properties were subsequently leased back to the seller under an absolute triple net master lease. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. All significant intercompany balances and transactions have been eliminated in consolidation. Management believes it has made all necessary adjustments, consisting of only normal recurring items, so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s registration statement on Form 10 for the period from January 24, 2023 (Date of Formation) through December 31, 2023 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 1, 2024 (as amended, the “Form 10”). The Company consolidates all entities in which it has a controlling financial interest through majority ownership or voting rights and variable interest entities whereby the Company is the primary beneficiary. In determining whether the Company has a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, the Company considers whether the entity is a variable interest entity (“VIE”) and whether it is the primary beneficiary. The Company is the primary beneficiary of a VIE when it has (i) the power to direct the most significant activities impacting the economic performance of the VIE and (ii) the obligation to absorb losses or receive benefits significant to the VIE. FNLR OP is considered to be a VIE. The Company consolidates this entity because it has the ability to direct the most significant activities of the entity such as purchases, dispositions, financings, budgets and overall operating plans. The Company meets the VIE disclosure exemption criteria, as the Company’s interest in FNLR OP is considered a majority voting interest. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ materially from those estimates. |
Investments in Real Estate | Investments in Real Estate In accordance with ASC 805, Business Combinations Whether the acquisition of a property acquired is considered a business combination or asset acquisition, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs associated with asset acquisitions. Upon acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-market” and “below-market” leases, acquired in-place leases, other identifiable intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities on a relative fair value basis. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as other available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends, and market and economic conditions. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records acquired above-market and below-market leases at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. The Company records acquired in-place lease values based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include costs to execute similar leases or estimated carrying costs during hypothetical expected lease-up periods considering current market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, if any, and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including but not limited to, the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. Definite-lived intangible lease assets are recorded as Intangible assets on the Company’s Condensed Consolidated Balance Sheets and amortized at lease commencement over the life of the lease. Amortization of in-place lease intangibles was $201,206 and $0 for the three months ended March 31, 2024 and for the period from January 24, 2023 (Date of Formation) through March 31, 2023, respectively, and recorded as Depreciation and amortization expense on the Condensed Consolidated Statements of Operations. The cost of building and improvements includes the purchase price of the Company’s properties and any acquisition-related costs, along with any subsequent improvements to such properties. The Company’s investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated remaining useful lives of the assets as follows: Description Depreciable Life Buildings 35-40 years Tenant improvements 25 years Land improvements 4-6 years In-place lease intangibles Over lease term The Company determines a tenant improvement’s depreciable useful life as the shorter of the tenant’s lease term or the economic useful life associated with the tenant improvement. Depreciation expense was $601,096 and $0 for the three months ended March 31, 2024 and for the period from January 24, 2023 (Date of Formation) through March 31, 2023, respectively, and included in Depreciation and amortization expense on the Condensed Consolidated Statements of Operations. The Company capitalizes certain costs related to the development of real estate, including pre-construction costs, construction costs, real estate taxes and insurance. Additionally, the Company capitalizes interest costs related to development activities. Capitalization of these costs begin when the activities and related expenditures commence and cease when the project is substantially complete and ready for its intended use at which time the project is placed in service and depreciation commences but no later than one year after substantial completion. The Company reviews real estate properties for impairment quarterly or when there is an event or change in circumstances that indicates an impaired value. Since cash flows on real estate properties considered to be “long-lived assets to be held and used” are evaluated on an undiscounted basis to determine whether an asset has been impaired, the Company’s strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material to our results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value. No impairments occurred during the three months ended March 31, 2024 or for the period from January 24, 2023 (Date of Formation) through March 31, 2023. Definite-lived intangible assets are recorded as a component of Intangible assets on the Company’s Condensed Consolidated Balance Sheets. The amortization of acquired above-market and below-market leases will be recorded as an adjustment to Rental revenue on the Company’s Condensed Consolidated Statements of Operations. The amortization of in-place leases is recorded as an adjustment to Depreciation and amortization expense on the Company’s Condensed Consolidated Statements of Operations. As of March 31, 2024, the Company has not recorded any above-market or below-market lease intangibles. The Company reviews indefinite-lived intangible assets for impairment annually or when there is an event or change in circumstances that indicate a decrease in value. If there are qualitative factors that indicate it is more likely than not that the indefinite-lived intangible asset is impaired, the Company calculates the fair value of the asset and will record the impairment charge if the carrying amount exceeds the fair value. This new cost basis will be used for future periods when recording subsequent loss and cannot be written up to a higher value as a result of increases in fair value. No impairments occurred during the three months ended March 31, 2024 or for the period from January 24, 2023 (Date of Formation) through March 31, 2023. |
Rental Revenue | Rental Revenue The Company accounts for rental revenue in accordance with ASC 842, Leases |
Income Taxes | Income Taxes The Company qualifies to be taxed as a REIT for U.S. federal income tax purposes commencing with the year ending December 31, 2023. The Company’s qualification as a REIT will depend upon its ability to meet, on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”) relating to, among other things, the sources of the Company’s gross income, the composition and value of the Company’s assets, the Company’s distribution levels and the diversity of ownership of the Company’s capital shares. The Company believes that it is organized in conformity with the requirements for qualification as a REIT under the Code and that its intended manner of operation will enable the Company to meet the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes commencing with the Company’s taxable year ending December 31, 2023. As a REIT, the Company generally will not be subject to U.S. federal income tax on its net taxable income that it distributes currently to its shareholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute each year at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. If the Company fails to qualify for taxation as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company’s income for that year will be taxed at regular corporate rates, and the Company would be disqualified from taxation as a REIT for the four taxable years following the year during which the Company ceased to qualify as a REIT. Even if the Company qualifies as a REIT for U.S. federal income tax purposes, it may still be subject to state and local taxes on its income and assets and to U.S. federal income and excise taxes on its undistributed income. |
Earnings Per Share | Earnings Per Share Basic earnings/(loss) per share of common shares is determined by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the period. All classes of common shares are allocated net income/(loss) at the same rate per share and receive the same gross distribution per share. Diluted earnings/(loss) per share is computed by dividing net earnings/(loss) attributable to shareholders for the period by the weighted average number of common shares and common share equivalents outstanding (unless their effect is antidilutive) for the period. There are no common share equivalents outstanding that would have a dilutive effect as a result of the net earnings/(loss), and accordingly, the weighted average number of common shares outstanding is identical for both basic and diluted shares for the three months ended March 31, 2024 and for the period from January 24, 2023 (Date of Formation) through March 31, 2023. |
Share-Based Compensation | Share-Based Compensation Each of the trustees who are not affiliated with the Adviser or Fortress will receive $100,000 of Class E shares for services provided. The annual award of common shares will vest one year from the date of grant and will be based on the then-current per share transaction price of Class E shares at the time of issuance. The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November of 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies [Abstract] | |
Estimated Remaining Useful Lives of Assets | The Company’s investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated remaining useful lives of the assets as follows: Description Depreciable Life Buildings 35-40 years Tenant improvements 25 years Land improvements 4-6 years In-place lease intangibles Over lease term |
Investments in Real Estate, n_2
Investments in Real Estate, net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Investments in Real Estate, net [Abstract] | |
Investments in Real Estate, Net | Investments in real estate, net consisted of the following: (in thousands) March 31, 2024 December 31, 2023 Buildings and tenant improvements $ 100,985 $ 49,264 Land and land improvements 34,097 12,718 Construction in progress 71,294 36,506 Total 206,376 98,488 Accumulated depreciation (620 ) (19 ) Investments in real estate, net $ 205,756 $ 98,469 |
Acquisitions, Number of Properties and Total Rentable Square Feet | The following table sets forth the acquisition values, number of properties and total rentable square feet of GLA of the Company for the three months ended March 31, 2024: Property Type Acquisition Value (in thousands) Number of Properties Square Feet (in thousands) Industrial $ 21,884 1 242 Industrial 25,353 2 401 Industrial 45,525 3 254 |
Purchase Price Allocation for Properties Acquired | The following table details the purchase price allocation for the properties acquired during the three months ended March 31, 2024: (in thousands) Amount Buildings and tenant improvements $ 51,622 Land and land improvements 21,378 In-place lease intangibles 19,762 Total Purchase Price (1) $ 92,762 (1) The total purchase price was paid for in cash. |
Intangibles (Tables)
Intangibles (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Intangibles [Abstract] | |
Identified Intangible Lease Assets | The gross carrying amount and accumulated amortization of the Company’s identified intangible lease assets consisted of the following: (in thousands) March 31, 2024 December 31, 2023 Intangible lease assets: In-place lease intangibles $ 33,188 $ 13,426 Condominium interest 7,492 7,492 Total intangible lease assets 40,680 20,918 Accumulated amortization: In-place lease intangibles 207 6 Total intangible lease assets 207 6 Intangible lease assets, net $ 40,473 $ 20,912 |
Estimated Future Amortization of Intangible Assets | The estimated future amortization of the Company’s in-place lease intangible assets for each of the next five years and thereafter as of March 31, 2024 is as follows: (in thousands) Amount 2024 (remaining) $ 1,095 2025 1,469 2026 1,469 2027 1,469 2028 1,469 2029 1,469 Thereafter 24,541 Total $ 32,981 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Components of Due to Affiliate | The following table details the components of due to affiliate: (in thousands) March 31, 2024 December 31, 2023 Organizational and offering costs $ 11,630 $ 9,195 General and administrative expenses 649 10 Due to affiliate $ 12,279 $ 9,205 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Undiscounted Future Minimum Rents the Company Expects to Receive | The following table presents the undiscounted future minimum rents the Company expects to receive for its net lease properties classified as operating leases as of March 31, 2024. Future Minimum Receipts Year (in thousands) 2024 (remaining) $ 10,545 2025 31,011 2026 31,924 2027 32,864 2028 33,833 2029 34,829 Thereafter 872,003 Total $ 1,047,009 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Movement of Outstanding Shares of Common Shares | The following table details the movement in the Company’s outstanding shares of common shares: Three Months Ended March 31, 2024 (in thousands) Class F-I Class F-I X (1) Class B Class C Class D Class E Total December 31, 2023 - 2,346 2,102 7,227 - 202 11,877 Common shares issued 2,861 630 3,669 1,052 21,748 7 29,967 Distribution reinvestment - 16 14 26 35 2 93 Class transfers - - (1,000 ) (8,305 ) 9,305 - - Common shares repurchased - - - - - - - March 31, 2024 2,861 2,992 4,785 - 31,088 211 41,937 (1) Class F-I X represents Class F-I common shares that are currently entitled to a fee waiver, as described in the Form 10. |
Aggregate Distributions Declared for Each Applicable Class of Common Shares | The following table details the aggregate distributions declared for each applicable class of common shares: Three Months Ended March 31, 2024 Class F-I (1) Class F-I X Class B Class C (1) Class D Class E Aggregate gross distributions declared per share of common shares $ 0.0440 $ 0.1275 $ 0.1275 $ 0.0835 $ 0.1275 $ 0.1275 (1) Class F-I shares and Class C shares were outstanding for a portion of the three month period ending March 31, 2024. |
Earning Per Share (Tables)
Earning Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Basic Earnings/(Loss) per Common Share | All classes of common shares are allocated net income/(loss) at the same rate per share and receive the same gross distribution per share. (in thousands, except per share data) Three Months Ended March 31, 2024 For the period from January 24, 2023 (Date of Formation) through March 31, 2023 Net income $ 1,456 $ - Weighted average number of common shares outstanding 33,867 - Net income per common share $ 0.04 $ - |
Organization and Business Pur_2
Organization and Business Purpose (Details) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) Property Segment $ / shares | |
Organization and Business Purpose [Abstract] | |
Number of reportable segment | Segment | 1 |
Number of investments owned in real estate | 6 |
Common stock par value (in dollars per share) | $ / shares | $ 0.01 |
Proceeds from sale of common stock through initial offering | $ | $ 419.8 |
Real Estate Investment [Member] | |
Organization and Business Purpose [Abstract] | |
Number of investments owned in real estate | 7 |
Build-to-Suit Leases [Member] | |
Organization and Business Purpose [Abstract] | |
Number of investments owned in real estate | 3 |
Triple Net Lease Agreement [Member] | |
Organization and Business Purpose [Abstract] | |
Number of investments owned in real estate | 4 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies, Investments in Real Estate (Details) - USD ($) | 2 Months Ended | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Estimated Remaining Useful Lives [Abstract] | |||
Depreciation expense | $ 0 | $ 601,096 | |
Real estate properties for impairment | 0 | 0 | |
Lease intangibles | 40,473,000 | $ 20,912,000 | |
Indefinite-lived intangible assets for impairment | 0 | $ 0 | |
Tenant Improvements [Member] | |||
Estimated Remaining Useful Lives [Abstract] | |||
Depreciable life | 25 years | ||
Minimum [Member] | Building [Member] | |||
Estimated Remaining Useful Lives [Abstract] | |||
Depreciable life | 35 years | ||
Minimum [Member] | Land Improvements [Member] | |||
Estimated Remaining Useful Lives [Abstract] | |||
Depreciable life | 4 years | ||
Maximum [Member] | |||
Estimated Remaining Useful Lives [Abstract] | |||
Term to commence depreciation after substantial completion of project | 1 year | ||
Maximum [Member] | Building [Member] | |||
Estimated Remaining Useful Lives [Abstract] | |||
Depreciable life | 40 years | ||
Maximum [Member] | Land Improvements [Member] | |||
Estimated Remaining Useful Lives [Abstract] | |||
Depreciable life | 6 years | ||
In-place Lease Intangibles [Member] | |||
Investments in Real Estate [Abstract] | |||
Amortization of intangibles assets | $ 0 | $ 201,206 | |
Estimated Remaining Useful Lives [Abstract] | |||
Depreciable life | Over lease term | ||
Above-Market Lease [Member] | |||
Estimated Remaining Useful Lives [Abstract] | |||
Lease intangibles | $ 0 | ||
Below Market Lease [Member] | |||
Estimated Remaining Useful Lives [Abstract] | |||
Lease intangibles | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies, Share-Based Compensation (Details) - Class E [Member] | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Share-Based Compensation [Abstract] | |
Vesting period | 1 year |
Each Trustees Who are not Affiliated with Adviser [Member] | |
Share-Based Compensation [Abstract] | |
Stock issued during period, value, services | $ 100,000 |
Investments in Real Estate, n_3
Investments in Real Estate, net, Summary (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Investments in Real Estate, net [ [Abstract] | ||
Investments in real estate, gross | $ 206,376 | $ 98,488 |
Accumulated depreciation | (620) | (19) |
Investments in real estate, net | 205,756 | 98,469 |
Buildings and Tenant Improvements [Member] | ||
Investments in Real Estate, net [ [Abstract] | ||
Investments in real estate, gross | 100,985 | 49,264 |
Land and Land Improvements [Member] | ||
Investments in Real Estate, net [ [Abstract] | ||
Investments in real estate, gross | 34,097 | 12,718 |
Construction in Progress [Member] | ||
Investments in Real Estate, net [ [Abstract] | ||
Investments in real estate, gross | $ 71,294 | $ 36,506 |
Investments in Real Estate, n_4
Investments in Real Estate, net, Acquisition (Details) ft² in Thousands, $ in Thousands | 2 Months Ended | 3 Months Ended | ||
Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) ft² Property | Dec. 31, 2023 ft² | ||
Acquisitions [Abstract] | ||||
Acquisition value | $ | $ 0 | $ 92,762 | [1] | |
Number of properties | Property | 6 | |||
Square feet | ft² | 1,880 | 983 | ||
Industrial One [Member] | ||||
Acquisitions [Abstract] | ||||
Acquisition value | $ | $ 21,884 | |||
Number of properties | Property | 1 | |||
Square feet | ft² | 242 | |||
Industrial Two [Member] | ||||
Acquisitions [Abstract] | ||||
Acquisition value | $ | $ 25,353 | |||
Number of properties | Property | 2 | |||
Square feet | ft² | 401 | |||
Industrial Three [Member] | ||||
Acquisitions [Abstract] | ||||
Acquisition value | $ | $ 45,525 | |||
Number of properties | Property | 3 | |||
Square feet | ft² | 254 | |||
[1]The total purchase price was paid for in cash. |
Investments in Real Estate, n_5
Investments in Real Estate, net, Purchase Price Allocation for Properties Acquired (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2024 | ||
Purchase Price Allocation for Properties [Abstract] | |||
Purchase Price | $ 0 | $ 92,762 | [1] |
In-place Lease Intangibles [Member] | |||
Purchase Price Allocation for Properties [Abstract] | |||
Purchase Price | 19,762 | ||
Buildings and Tenant Improvements [Member] | |||
Purchase Price Allocation for Properties [Abstract] | |||
Purchase Price | 51,622 | ||
Land and Land Improvements [Member] | |||
Purchase Price Allocation for Properties [Abstract] | |||
Purchase Price | $ 21,378 | ||
[1]The total purchase price was paid for in cash. |
Intangibles, Identified Intangi
Intangibles, Identified Intangible Lease Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Intangible Lease Assets [Abstract] | ||
Intangible lease assets, gross | $ 40,680 | $ 20,918 |
Intangible lease assets, accumulated amortization | 207 | 6 |
Intangible lease assets, net | 40,473 | 20,912 |
In-place Lease Intangibles [Member] | ||
Intangible Lease Assets [Abstract] | ||
Intangible lease assets, gross | 33,188 | 13,426 |
Intangible lease assets, accumulated amortization | 207 | 6 |
Condominium Interest [Member] | ||
Intangible Lease Assets [Abstract] | ||
Intangible lease assets, gross | $ 7,492 | $ 7,492 |
Intangibles, Estimated Future A
Intangibles, Estimated Future Amortization of Intangible Assets (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Estimated Future Amortization of Intangible Assets [Abstract] | |
2024 (remaining) | $ 1,095 |
2025 | 1,469 |
2026 | 1,469 |
2027 | 1,469 |
2028 | 1,469 |
2029 | 1,469 |
Thereafter | 24,541 |
Finite Lived Intangible Assets Estimated Amortization Expense | $ 32,981 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Related Party [Abstract] | ||
Special limited partner performance participation waived period | 6 months | |
Related Party [Member] | ||
Related Party [Abstract] | ||
Organizational and offering costs | $ 11,630 | $ 9,195 |
General and administrative expenses | 649 | 10 |
Other liabilities | $ 12,279 | $ 9,205 |
Total return percentage | 5% | |
Period for reimbursement of cost on pro-rata basis | 60 months | |
Related Party [Member] | Class F-S [Member] | ||
Related Party [Abstract] | ||
Total return percentage | 10% | |
Related Party [Member] | Class F-D [Member] | ||
Related Party [Abstract] | ||
Total return percentage | 10% | |
Related Party [Member] | Class F-I [Member] | ||
Related Party [Abstract] | ||
Total return percentage | 10% | |
Related Party [Member] | Class F-I X [Member] | ||
Related Party [Abstract] | ||
Total return percentage | 10% | |
Related Party [Member] | Class B [Member] | ||
Related Party [Abstract] | ||
Total return percentage | 10% | |
Related Party [Member] | Class E [Member] | ||
Related Party [Abstract] | ||
Total return percentage | 10% | |
Related Party [Member] | Class C [Member] | ||
Related Party [Abstract] | ||
Total return percentage | 5% | |
Related Party [Member] | Minimum [Member] | ||
Related Party [Abstract] | ||
Management fee percentage on net asset value | 1% | |
Related Party [Member] | Maximum [Member] | ||
Related Party [Abstract] | ||
Management fee percentage on net asset value | 1.25% |
Leases (Details)
Leases (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Undiscounted Future Minimum Rents Expects to Receive for its Net Lease Properties | |
2024 (remaining) | $ 10,545 |
2025 | 31,011 |
2026 | 31,924 |
2027 | 32,864 |
2028 | 33,833 |
2029 | 34,829 |
Thereafter | 872,003 |
Total | $ 1,047,009 |
Equity (Details)
Equity (Details) | 3 Months Ended | |
Mar. 31, 2024 USD ($) Class $ / shares shares | ||
Equity [Abstract] | ||
Number of classes of shares | Class | 7 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | |
Common Stock [Abstract] | ||
Beginning balance (in shares) | 11,877,000 | |
Common shares issued (in shares) | 29,967,000 | |
Distribution reinvestment (in shares) | 93,000 | |
Class transfers (in shares) | 0 | |
Common shares repurchased (in shares) | 0 | |
Ending balance (in shares) | 41,937,000 | |
Shares repurchase amount | $ | $ 0 | |
Non-cash compensation expense | $ | $ 75,000 | |
Class F-I [Member] | ||
Common Stock [Abstract] | ||
Beginning balance (in shares) | 0 | |
Common shares issued (in shares) | 2,861,000 | |
Distribution reinvestment (in shares) | 0 | |
Class transfers (in shares) | 0 | |
Common shares repurchased (in shares) | 0 | |
Ending balance (in shares) | 2,861,000 | |
Aggregate gross distributions declared per share of common shares (in dollars per share) | $ / shares | $ 0.044 | [1] |
Class F-I X [Member] | ||
Common Stock [Abstract] | ||
Beginning balance (in shares) | 2,346,000 | [2] |
Common shares issued (in shares) | 630,000 | [2] |
Distribution reinvestment (in shares) | 16,000 | [2] |
Class transfers (in shares) | 0 | [2] |
Common shares repurchased (in shares) | 0 | [2] |
Ending balance (in shares) | 2,992,000 | [2] |
Aggregate gross distributions declared per share of common shares (in dollars per share) | $ / shares | $ 0.1275 | |
Class B [Member] | ||
Common Stock [Abstract] | ||
Beginning balance (in shares) | 2,102,000 | |
Common shares issued (in shares) | 3,669,000 | |
Distribution reinvestment (in shares) | 14,000 | |
Class transfers (in shares) | (1,000,000) | |
Common shares repurchased (in shares) | 0 | |
Ending balance (in shares) | 4,785,000 | |
Aggregate gross distributions declared per share of common shares (in dollars per share) | $ / shares | $ 0.1275 | |
Class C [Member] | ||
Common Stock [Abstract] | ||
Beginning balance (in shares) | 7,227,000 | |
Common shares issued (in shares) | 1,052,000 | |
Distribution reinvestment (in shares) | 26,000 | |
Class transfers (in shares) | (8,305,000) | |
Common shares repurchased (in shares) | 0 | |
Ending balance (in shares) | 0 | |
Aggregate gross distributions declared per share of common shares (in dollars per share) | $ / shares | $ 0.0835 | [1] |
Class D [Member] | ||
Common Stock [Abstract] | ||
Beginning balance (in shares) | 0 | |
Common shares issued (in shares) | 21,748,000 | |
Distribution reinvestment (in shares) | 35,000 | |
Class transfers (in shares) | 9,305,000 | |
Common shares repurchased (in shares) | 0 | |
Ending balance (in shares) | 31,088,000 | |
Aggregate gross distributions declared per share of common shares (in dollars per share) | $ / shares | $ 0.1275 | |
Class E [Member] | ||
Common Stock [Abstract] | ||
Beginning balance (in shares) | 202,000 | |
Common shares issued (in shares) | 7,000 | |
Distribution reinvestment (in shares) | 2,000 | |
Class transfers (in shares) | 0 | |
Common shares repurchased (in shares) | 0 | |
Ending balance (in shares) | 211,000 | |
Aggregate gross distributions declared per share of common shares (in dollars per share) | $ / shares | $ 0.1275 | |
[1]Class F-I shares and Class C shares were outstanding for a portion of the three month period ending March 31, 2024.[2]Class F-I X represents Class F-I common shares that are currently entitled to a fee waiver, as described in the Form 10. |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Commitments and Contingencies [Abstract] | ||
Outstanding commitments on properties under development | $ 159.3 | $ 183.5 |
Earning Per Share (Details)
Earning Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 3 Months Ended |
Mar. 31, 2023 | Mar. 31, 2024 | |
Earnings Per Share [Abstract] | ||
Net income | $ 0 | $ 1,456 |
Weighted average shares of common stock outstanding, basic (in shares) | 0 | 33,867,000 |
Weighted average shares of common stock outstanding, diluted (in shares) | 0 | 33,867,000 |
Net income per common share, basic (in dollars per share) | $ 0 | $ 0.04 |
Net income per common share, diluted (in dollars per share) | $ 0 | $ 0.04 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | 2 Months Ended | 3 Months Ended | |||||
May 07, 2024 USD ($) Property | May 01, 2024 USD ($) shares | Apr. 11, 2024 USD ($) State Property | Apr. 01, 2024 USD ($) shares | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) Property shares | ||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 29,967,000 | ||||||
Proceeds from issuance of common stock | $ | $ 0 | $ 177,804 | |||||
Acquisitions [Abstract] | |||||||
Number of properties acquired | Property | 6 | ||||||
Acquisition value | $ | $ 0 | $ 92,762 | [1] | ||||
Class F-I [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 2,861,000 | ||||||
Class B [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 3,669,000 | ||||||
Class D [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 21,748,000 | ||||||
Class E [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 7,000 | ||||||
Subsequent Event [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Proceeds from issuance of common stock | $ | $ 34,400 | $ 53,800 | |||||
Subsequent Event [Member] | Retail Properties [Member] | |||||||
Acquisitions [Abstract] | |||||||
Number of properties acquired | Property | 6 | ||||||
Acquisition value | $ | $ 15,200 | ||||||
Subsequent Event [Member] | Industrial Properties [Member] | |||||||
Acquisitions [Abstract] | |||||||
Number of properties acquired | Property | 27 | ||||||
Number of states in which properties is located | State | 9 | ||||||
Acquisition value | $ | $ 133,200 | ||||||
Subsequent Event [Member] | Class F-I [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 3,101,739 | 1,891,784 | |||||
Number of shares eligible for waiver of management fees and performance participation (in shares) | 7,668 | 6,994 | |||||
Subsequent Event [Member] | Class B [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 8,248 | 7,589 | |||||
Subsequent Event [Member] | Class D [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 307,603 | 3,451,175 | |||||
Subsequent Event [Member] | Class E [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 5,536 | 10,424 | |||||
Subsequent Event [Member] | Common Stock [Member] | |||||||
Proceeds from Issuance of Common Shares [Abstract] | |||||||
Number of shares issued and sold (in shares) | 3,423,126 | 5,360,972 | |||||
[1]The total purchase price was paid for in cash. |