Invesco Commercial Real Estate Finance Trust 10-Q 2024 Q2 Quarterly report

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 June 30, 2024

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 000-56564

Invesco Commercial Real Estate Finance Trust, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________

Maryland	92-1080856
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
2300 N Field Street, Suite 1200 Dallas, Texas	75201
(Address of principal executive offices)	(Zip Code)

(972) 715-7400

(Registrant’s telephone number, including area code)

2001 Ross Avenue, Suite 3400 Dallas, Texas

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act: None

Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered

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, 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	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		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 August 9, 2024, there were 14,667,616 outstanding shares of common stock of Invesco Commercial Real Estate Finance Trust, Inc. comprised of 60,631 Class S common stock, 4,524,858 Class S-1 common stock, 54,677 Class D common stock, 1,917,244 Class I common stock, 174,206 Class E common stock, and 7,936,000 Class F common stock.

Invesco Commercial Real Estate Finance Trust, Inc.

Table of Contents

		Page
PART I FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	1
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Common Stock for the three and six months ended June 30, 2024 and 2023	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	39
PART II OTHER INFORMATION		40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	40
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42

PART I

ITEM 1.    FINANCIAL STATEMENTS

Invesco Commercial Real Estate Finance Trust, Inc.

Condensed Consolidated Balance Sheets

Unaudited

$ in thousands except share amounts	June 30, 2024		December 31, 2023
ASSETS
Commercial real estate loan investments, at fair value (including pledged loans of $1,082,910 and $591,003, respectively)	$	1,121,010	$	613,503
Cash and cash equivalents	6,169		1,975
Restricted cash	9,927		23,566
Interest receivable	3,997		2,448
Due from affiliates	675		—
Other assets	287		151
Total assets	$	1,142,065	$	641,643
LIABILITIES
Repurchase agreements, at fair value	$	849,754	$	457,861
Revolving credit facility, at fair value	10,000		14,000
Interest payable	2,472		1,687
Dividends and distributions payable (including $36 and $2,363 due to related party, respectively)	1,599		3,138
Accounts payable, accrued expenses and other liabilities	12,003		23,978
Due to affiliates	22,522		10,167
Total liabilities	898,350		510,831
Commitments and contingencies (See Note 12)
Redeemable common stock - related party (see Note 7)	$	5,660	$	105,340
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value per share, 50,000,000 shares authorized:
12.5% Series A Cumulative Redeemable Preferred Stock, 228 shares issued and outstanding ($228 aggregate liquidation preference)	205		205
Common stock, Class S shares, $0.01 par value per share, 500,000,000 shares authorized	—		—
Common stock, Class S-1 shares, $0.01 par value per share, 500,000,000 shares authorized	39		11
Common stock, Class D shares, $0.01 par value per share, 500,000,000 shares authorized	—		—
Common stock, Class I shares, $0.01 par value per share, 500,000,000 shares authorized	15		3
Common stock, Class E shares, $0.01 par value per share, 500,000,000 shares authorized	1		—
Common stock, Class F shares, $0.01 par value per share, 500,000,000 shares authorized	47		—
Additional paid-in capital	250,304		32,549
Accumulated deficit	(12,556)		(7,296)
Total stockholders’ equity	238,055		25,472
Total liabilities, redeemable common stock and stockholders’ equity	$	1,142,065	$	641,643

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

,

Invesco Commercial Real Estate Finance Trust, Inc.

Condensed Consolidated Statements of Operations

Unaudited

	Three Months Ended June 30,				Six Months Ended June 30,
$ in thousands except share and per share amounts	2024		2023		2024		2023
Net Interest Income
Commercial real estate loan interest income	$	20,415	$	1,520	$	35,555	$	1,520
Other interest income	587		—		828		—
Interest expense	(13,843)		(1,588)		(24,249)		(1,588)
Net interest income	7,159		(68)		12,134		(68)
Other Income (Expense)
Unrealized gain (loss) on commercial real estate loan investments, net	285		—		1,203		—
Unrealized gain (loss) on repurchase agreements, net	(199)		—		(922)		—
Commitment fee income, net of related party expense of $2,120, $3,518, $868 and $868 for the three and six months ended June 30, 2024 and 2023, respectively	2,120		867		3,518		867
Other income	249		36		350		36
Total other income (expense), net	2,455		903		4,149		903
Expenses
Management and performance fees - related party	952		—		1,302		—
Debt issuance and other financing costs related to borrowings, at fair value	3,221		1,735		3,690		2,387
Organizational costs	14		154		19		604
General and administrative	1,800		551		2,958		576
Total expenses	5,987		2,440		7,969		3,567
Net income (loss)	3,627		(1,605)		8,314		(2,732)
Dividends to preferred stockholders	(7)		(1)		(14)		(1)
Net income (loss) attributable to common stockholders	$	3,620	$	(1,606)	$	8,300	$	(2,733)
Earnings (loss) per share:
Net income (loss) attributable to common stockholders
Basic	$	0.34	$	(2,147.96)	$	0.93	$	(7,151.30)
Diluted	$	0.34	$	(2,147.96)	$	0.93	$	(7,151.30)
Weighted average number of shares of common stock
Basic	10,729,623		748		8,956,409		382
Diluted	10,729,651		748		8,956,715		382

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Invesco Commercial Real Estate Finance Trust, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Common Stock

Unaudited

	Series A Preferred Stock		Class S Common Stock		Class S-1 Common Stock		Class D Common Stock		Class I Common Stock		Class E Common Stock		Class F Common Stock		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Total Stockholders' Equity		Redeemable Common Stock
$ in thousands
Balance as of December 31, 2023	$	205	$	—	$	11	$	—	$	3	$	—	$	—	$	32,549	$	(7,296)	$	25,472	$	105,340
Net income (loss)	—		—		—		—		—		—		—		—		4,687		4,687		—
Issuance of common stock, net of offering costs	—		—		14		—		7		1		—		52,949		—		52,971		—
Common stock distribution reinvestment	—		—		—		—		—		—		—		773		—		773		—
Common stock dividends	—		—		—		—		—		—		—		—		(6,311)		(6,311)		—
Preferred stock dividends	—		—		—		—		—		—		—		—		(7)		(7)		—
Amortization of equity based compensation	—		—		—		—		—		—		—		17		—		17		—
Balance as of March 31, 2024	$	205	$	—	$	25	$	—	$	10	$	1	$	—	$	86,288	$	(8,927)	$	77,602	$	105,340
Net income (loss)	—				—		—		—		—		—		—		3,627		3,627		—
Issuance of common stock, net of offering costs	—		—		13		—		5		—		47		161,565		—		161,630		—
Issuance of redeemable common stock	—		—		—		—		—		—		—		—		—		—		145
Common stock distribution reinvestment	—		—		1		—		—		—		—		2,635		—		2,636		—
Common stock dividends	—		—		—		—		—		—		—		—		(7,249)		(7,249)		—
Preferred stock dividends	—		—		—		—		—		—		—		—		(7)		(7)		—
Amortization of equity based compensation	—		—		—		—		—		—		—		20		—		20		—
Repurchase of common stock	—		—		—		—		—		—		—		(29)		—		(29)		—
Repurchase of redeemable common stock	—		—		—		—		—		—		—		—		—		—		(100,000)
Adjustment to the carrying value of redeemable common stock	—		—		—		—		—		—		—		(175)		—		(175)		175
Balance as of June 30, 2024	$	205	$	—	$	39	$	—	$	15	$	1	$	47	$	250,304	$	(12,556)	$	238,055	$	5,660

	Series A Preferred Stock		Class S Common Stock		Class S-1 Common Stock		Class D Common Stock		Class I Common Stock		Class E Common Stock		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Total Stockholders' Equity		Redeemable Common Stock
$ in thousands
Balance at December 31, 2022	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Net income (loss)	—		—		—		—		—		—		—		(1,127)		(1,127)		—
Balance at March 31, 2023	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	(1,127)	$	(1,127)	$	—
Net income (loss)	—		—		—		—		—		—		—		(1,605)		(1,605)		—
Issuance of preferred stock, net of offering costs	100		—		—		—		—		—		—		—		100		—
Issuance of common stock, net of offering costs	—		—		—		—		—		—		47		—		47		—
Preferred stock dividends	—		—		—		—		—		—		—		(1)		(1)		—
Balance at June 30, 2023	$	100	$	—	$	—	$	—	$	—	$	—	$	47	$	(2,733)	$	(2,586)	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Invesco Commercial Real Estate Finance Trust, Inc.

Condensed Consolidated Statements of Cash Flows

Unaudited

	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
$ in thousands
Cash flows from operating activities:
Net income (loss)	$	8,314	$	(2,732)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized (gain) loss on commercial real estate loan investments, net	(1,203)		—
Unrealized (gain) loss on repurchase agreements, net	922		—
Debt issuance costs	2,090		1,835
Amortization of equity based compensation	37		—
Change in operating assets and liabilities:
Increase in operating assets	(1,763)		(774)
Increase in due from affiliates	(675)		—
Increase in operating liabilities	2,341		1,164
Increase in due to affiliates	8,463		2,204
Net cash provided by (used in) operating activities	18,526		1,697
Cash flows from investing activities:
Originations and fundings of commercial real estate loans	(506,304)		(157,405)
Net cash used in investing activities	(506,304)		(157,405)
Cash flows from financing activities:
Proceeds from revolving credit facility	192,000		116,000
Repayment of revolving credit facility	(196,000)		(75,300)
Proceeds from repurchase agreements	439,447		117,140
Repayment of repurchase agreements	(48,476)		—
Proceeds from issuance of common stock, net of offering costs	194,465		47
Proceeds from issuance of preferred stock, net of offering costs	—		100
Repurchase of redeemable common stock	(100,000)		—
Subscriptions received in advance	9,927		—
Repayment of related party loan	—		(30)
Cash paid for debt issuance costs	(1,326)		—
Payments of dividends	(11,704)		(1)
Net cash provided by financing activities	478,333		157,956
Net change in cash, cash equivalents and restricted cash	(9,445)		2,248
Cash, cash equivalents and restricted cash, beginning of period	25,541		30
Cash, cash equivalents and restricted cash, end of period	$	16,096	$	2,278
Supplemental disclosures:
Interest paid	$	23,464	$	1,361
Non-cash investing and financing activities:
Dividends and distributions declared not paid	$	1,599	—
Common stock distribution reinvestment	$	3,409	$	—
Issuance of redeemable common stock for payment of management fees	$	145	$	—
Adjustment to carrying value of redeemable common stock	$	175	$	—
Deferred offering costs due to affiliate	$	(78)	$	463
Offering costs due to affiliates	$	3,352	$	—
Debt issuance costs due to affiliate	$	685	$	—
Accrued common stock repurchases	$	29	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Invesco Commercial Real Estate Finance Trust, Inc.

Notes to Condensed Consolidated Financial Statements

1.Organization and Business Purpose

Invesco Commercial Real Estate Finance Trust, Inc. (the “Company” or “we”) is a Maryland corporation incorporated in October 2022. Our primary investment strategy is to originate, acquire and manage a diversified portfolio of loans and debt-like preferred equity interests secured by, or unsecured but related to, commercial real estate. We commenced investing activities in May 2023 and have one operating segment.

We are externally managed by Invesco Advisers, Inc. (the “Adviser”), a registered investment adviser and an indirect, wholly-owned subsidiary of Invesco Ltd. (“Invesco”), an independent global investment management firm.

We intend to qualify to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2023. We operate our business in a manner that permits our exclusion from the definition of an “Investment Company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

We are engaging in a continuous, unlimited private offering of our common stock to “accredited investors” (as defined by Rule 501 under the Securities Act) (the “Continuous Offering”) under exemptions provided by Section 4(a)(2) of the Securities Act and applicable state securities laws.

2.Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

Certain disclosures included in our Annual Report on Form 10-K are not required to be included on an interim basis in our quarterly reports on Form 10-Q. We have condensed or omitted these disclosures. Therefore, this Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023.

Our condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and consolidate the financial statements of the Company and its controlled subsidiaries. All significant intercompany transactions, balances, revenues and expenses are eliminated upon consolidation. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for a fair statement of our financial condition and results of operations for the period presented.

All numbers in these notes, except in the tables herein, are stated in full amounts, unless otherwise indicated.

Reclassifications

Certain prior period reported amounts have been reclassified to be consistent with the current presentation. Such reclassifications have no impact on total assets, net income or equity attributable to common stockholders.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Examples of estimates may include, but are not limited to, estimates of the fair values of financial instruments and estimated payment periods for certain stockholder servicing fee liabilities. Actual results may differ from those estimates.

Significant Accounting Policies

With the exception of the below, there have been no changes to our accounting policies included in Note 2 to the consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2023.

5

Debt Issuance and Other Financing Costs

We finance our investments using a variety of debt instruments. When we incur debt issuance costs prior to a debt facility closing, we expense the costs as incurred if we intend to elect the fair value option to account for the debt facility and the closing is probable as of the balance sheet date. When we incur financing costs on our existing debt facilities for which we have elected the fair value option, we expense the costs as incurred.

3.Commercial Real Estate Loan Investments

The table below summarizes our investments in commercial real estate loans as of June 30, 2024 and December 31, 2023.

$ in thousands
Loan Type	Loan Amount(1)		Principal Balance Outstanding		Fair Value		Weighted Average Interest Rate(2)		Weighted Average Life (years)(3)
June 30, 2024
Senior loans(4)	$	1,378,571	$	1,119,807	$	1,121,010	8.41	%	4.47
Total	$	1,378,571	$	1,119,807	$	1,121,010	8.41	%	4.47
December 31, 2023
Senior loans(4)	$	671,406	$	613,503	$	613,503	8.53	%	4.69
Total	$	671,406	$	613,503	$	613,503	8.53	%	4.69

(1)Loan amount consists of outstanding principal balance plus unfunded loan commitments.

(2)Represents weighted average interest rate of the most recent interest period in effect for each loan as of period end. Loans earn interest at the one-month Term Secured Overnight Financing Rate (“SOFR”) plus a spread.

(3)Assumes all extension options are exercised by the borrower; however, loans may be repaid prior to such date. Extension options are subject to certain conditions as defined in the respective loan agreement.

(4)Senior loans include senior mortgages and similar credit quality loans, including related contiguous subordinate loans and accommodation mezzanine loans in connection with the senior mortgage financing.

The tables below detail the property type and geographic distribution of the properties securing our commercial real estate loans as of June 30, 2024 and December 31, 2023.

$ in thousands	June 30, 2024				December 31, 2023
Property Type	Fair Value		Percentage		Fair Value		Percentage
Multifamily	$	804,336	71.8	%	$	346,760	56.5	%
Industrial	316,674		28.2	%	266,743		43.5	%
Total	$	1,121,010	100.0	%	$	613,503	100.0	%

$ in thousands	June 30, 2024				December 31, 2023
Geographic Location(1)	Fair Value		Percentage		Fair Value		Percentage
West	$	543,467	48.5	%	$	311,852	50.8	%
South	358,821		32.0	%	173,991		28.4	%
East	218,722		19.5	%	127,660		20.8	%
Total	$	1,121,010	100.0	%	$	613,503	100.0	%

(1) All of the properties securing our commercial real estate loans are located within the United States.

The weighted average loan-to-value ratio, a metric utilized in the fair value measurement of our commercial real estate loan investments, for our 22 loan investments was approximately 62% based on the initial loan amount and the independent property appraisals at the time of origination.

6

4.Borrowings

The table below summarizes our repurchase agreement and revolving line of credit borrowings as of June 30, 2024 and December 31, 2023.

		June 30, 2024					December 31, 2023
$ in thousands	Maturity Date(1)	Weighted Average Interest rate(2)	Maximum Facility Size		Amount Outstanding		Fair Value		Amount Outstanding		Fair Value
Repurchase Agreements:
Morgan Stanley Bank N.A.(3)	5/25/2025	7.61%	$	500,000	$	318,637	$	318,957	$	174,209	$	174,209
Citibank N.A.	6/20/2026 (current); 6/20/2028 (fully extended)	7.39%	535,000		206,926		207,210		61,464		61,464
Bank of Montreal(4)	7/18/2025	7.45%	223,424		217,709		217,982		222,188		222,188
Barclays(5)	4/24/2027	7.33%	250,000		47,200		47,245		—		—
Wells Fargo	5/23/2026 (current); 5/23/2029 (fully extended)	7.25%	200,000		58,360		58,360		—		—
Total Repurchase Agreements		7.48%	1,708,424		848,832		849,754		457,861		457,861
Revolving Credit Facility(6)		8.23%	100,000		10,000		10,000		14,000		14,000
Total		7.48%	$	1,808,424	$	858,832	$	859,754	$	471,861	$	471,861

(1)    For Repurchase Agreements, maturity date represents the current borrowing facility maturity date and the maximum maturity for borrowing facilities with extension options that are at our option, subject to compliance with certain financial and administrative covenants, as well as payment of applicable extension fees.

(2)    Represents weighted average interest rate of the most recent interest period in effect for each borrowing as of period end. Borrowings under our repurchase agreements and revolving credit facility carry interest at one-month Term SOFR plus a spread.

(3)    Borrowing facility has an extension option of one year, subject to lender approval and compliance with certain financial and administrative covenants.

(4)    Borrowing facility has three extension options of one year each, subject to lender approval and compliance with certain financial and administrative covenants.

(5)    Borrowing facility has two extension options of one year each, subject to lender approval and compliance with certain financial and administrative covenants.

(6)    The final maturity date of the Revolving Credit Facility is aligned with the Company’s ability to call remaining outstanding capital under certain subscription agreements, as further explained below.

7

The following table shows the aggregate amount of maturities of our outstanding borrowings over the next five years and thereafter as of June 30, 2024:

Year	Repurchase Agreements(1)		Revolving Credit Facility		Total
$ in thousands
2024 (remaining)	$	—	$	10,000	$	10,000
2025	536,346		—		536,346
2026	—		—		—
2027	47,200		—		47,200
2028	206,926		—		206,926
2029	58,360		—		58,360
Thereafter	—		—		—
Total	$	848,832	$	10,000	$	858,832

(1) Assumes all extension options are exercised for borrowing facilities that may be extended at our option, subject to compliance with certain financial and administrative covenants.

Repurchase Agreements

We have pledged our commercial real estate loan investments with a fair value of approximately $1.1 billion as collateral for our repurchase agreements. We segregate the commercial real estate loans that we have pledged as collateral in our books and records. Our repurchase agreement counterparties have the right to resell or repledge the collateral posted but have the obligation to return the pledged collateral upon maturity of the repurchase agreement.

We may be required to post margin under our repurchase agreements if there is a material adverse change in the credit characteristics of a particular loan with respect to the underlying property, borrower, or particular real estate market. We were not required to post any margin under our repurchase agreements as of June 30, 2024 and December 31, 2023. A margin deficiency may generally result from either a decline in the underlying loan’s market value or a shortfall in operating performance of the property. Our repurchase agreement counterparties generally retain the right to determine the fair value of the underlying collateral in their sole discretion. Subject to applicable thresholds, we would generally be required to post cash as collateral. We may finance multiple commercial loan investments under a repurchase agreement; therefore, a margin excess in one asset could help mitigate a margin deficiency in another asset under the same repurchase agreement. We intend to maintain a level of liquidity that will enable us to meet margin calls.

Our repurchase agreements are subject to certain liquidity, tangible net worth and leverage covenants. We were in compliance with these covenants as of June 30, 2024.

Revolving Credit Facility

Our revolving credit facility is secured by uncalled capital subscriptions under the terms of the Invesco Subscription Agreement and the Class F Subscription Agreement. See Note 7 - “Redeemable Common Stock - Related Party” and Note 8 - “Stockholders’ Equity”, respectively, where each is more fully described. Borrowings under the facility bear interest at one-month Term SOFR or the prime rate plus a spread. The revolving credit facility allows for the ability to obtain tranches of term financing in addition to general borrowings under an Uncommitted Tranche (as defined in the credit agreement). At June 30, 2024, the amount outstanding under the facility was drawn from the Uncommitted Tranche. The Uncommitted Tranche is due on demand (15 business days after notice); any Funded Tranche (as defined in the credit agreement) is due no later than (a) three years from issuance or (b) 360 days after notice; and all amounts outstanding under the facility are due 30 days prior to the last date on which capital calls may be issued. As of June 30, 2024, we had an available balance of $90.0 million under the facility. The facility is prepayable without penalty.

Our revolving credit facility is subject to certain affirmative and negative covenants including a limitation on indebtedness. We were in compliance with these covenants as of June 30, 2024.

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5.Loan Payable - Related Party

In December 2022, we entered into a revolving credit agreement with an affiliate of Invesco that provided for maximum borrowings of $30,000. Principal on loans made under the agreement is due nine months after the date each loan is made. We incur interest on loans made under the agreement at the short-term applicable federal rate in effect at the time each borrowing is made.

We incurred $649 of interest expense on the loan in the six months ended June 30, 2023. We repaid the loan, which had an outstanding balance of $30,000 and accrued interest expense in June 2023.

6.Accounts payable, accrued expenses and other liabilities

The following table details the components of accounts payable, accrued expenses and other liabilities as of June 30, 2024 and December 31, 2023.

$ in thousands	June 30, 2024		December 31, 2023
Accounts payable and accrued expenses	$	548	$	14
Subscriptions paid in advance (1)	9,927		23,566
Accrued common stock repurchases	29		—
Other liabilities	1,499		398
Total	$	12,003	$	23,978

(1) Represents subscriptions received by our transfer agent prior to the date the subscriptions are effective.

7.Redeemable Common Stock - Related Party

Invesco Realty, Inc. (“Invesco Realty”), an affiliate of Invesco, has committed to purchase up to $300.0 million in shares of our common stock (the “Invesco Subscription Agreement”). We may call (i) $150.0 million in capital in one or more closings through March 23, 2028 and (ii) $150.0 million in additional capital if needed to avoid triggering any third party concentration limits associated with distribution or placement of our shares. Invesco Realty may not submit its shares for repurchase under the share repurchase plan described in Note 8 - “Stockholders’ Equity” until the earlier of March 23, 2028 and the date that our aggregate NAV is at least $1.5 billion. We can only accept a repurchase request from Invesco Realty after all requests from unaffiliated stockholders have been fulfilled. We may elect to repurchase all or any portion of the shares acquired by Invesco Realty at any time at a per share price equal to the most recently determined NAV per share for each class (or another transaction price we believe reflects the NAV per share more appropriately than the prior month’s NAV per share). The Adviser or its affiliate must continue to hold at least $200,000 in shares for so long as Invesco or any affiliate thereof serves as our external adviser.

As of June 30, 2024, we may call $144.7 million of the initial $150.0 million in capital under the Invesco Subscription Agreement.

As discussed in Note 11 - “Related Party Transactions”, our management and performance fees are payable in cash or Class E shares at the option of the Adviser. Because the Adviser may elect to have the Company repurchase shares issued as payment for management fees or performance fees, we classify these shares as redeemable common stock. Class E shares issued to the Adviser as payment for management or performance fees are not subject to the repurchase limits of the Company’s share repurchase plan described in Note 8 - “Stockholders’ Equity,” any lockup period applicable to the Adviser, or any reduction penalty for an early repurchase. The Adviser also has the option to exchange Class E shares issued as payment for management or performance fees for Class S, Class S-1, Class D, Class F, or Class I shares. During the three months ended June 30, 2024, we issued 5,792 Class E shares to the Adviser as payment for the management fees payable as of March 31, 2024.

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The following table summarizes the changes in redeemable common stock for the six months ended June 30, 2024:

$ in thousands	Class S Redeemable Common Shares		Class D Redeemable Common Shares		Class I Redeemable Common Shares		Class E Redeemable Common Shares		Total Redeemable Common Stock
Balance as of December 31, 2023	$	26,335	$	26,335	$	26,335	$	26,335	$	105,340
Issuance of redeemable common stock	—		—		—		—		—
Adjustment to carrying value of redeemable common stock	—		—		—		—		—
Balance as of March 31, 2024	$	26,335	$	26,335	$	26,335	$	26,335	$	105,340
Issuance of redeemable common stock	—		—		—		145		145
Repurchase of redeemable common stock	(25,000)		(25,000)		(25,000)		(25,000)		(100,000)
Adjustment to carrying value of redeemable common stock	35		35		13		92		175
Balance as of June 30, 2024	$	1,370	$	1,370	$	1,348	$	1,572	$	5,660

The following table summarizes the changes in our outstanding shares of redeemable common stock for the six months ended June 30, 2024:

	Class S Redeemable Common Shares	Class D Redeemable Common Shares	Class I Redeemable Common Shares	Class E Redeemable Common Shares	Total
Total Outstanding Shares as of December 31, 2023	1,052,487	1,052,487	1,052,487	1,052,464	4,209,925
Issuance of redeemable common stock	—	—	—	—	—
Total Outstanding Shares as of March 31, 2024	1,052,487	1,052,487	1,052,487	1,052,464	4,209,925
Issuance of redeemable common stock	—	—	—	5,792	5,792
Repurchase of redeemable common stock	(997,920)	(997,921)	(998,825)	(995,972)	(3,990,638)
Total Outstanding Shares as of June 30, 2024	54,567	54,566	53,662	62,284	225,079

For the three and six months ended June 30, 2024, we recorded an increase to redeemable common stock and a decrease to additional paid-in-capital of $175,000 to adjust the value of the redeemable common shares outstanding to our June 30, 2024 NAV per share for each respective share class. The change in the redemption value does not affect income available to common stockholders.

8.Stockholders’ Equity

Stapled Unit Offerings of Preferred and Common Stock

As of June 30, 2024 and December 31, 2023, 111 Stapled Units and 117 New Stapled Units were issued and outstanding. Each Stapled Unit consists of one share of 12.5% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), one Class S share, one Class D share and one Class I share. Each New Stapled Unit consists of one share of Series A Preferred Stock and one Class S-1 share. The Stapled Unit and New Stapled Unit holders cannot separate the individual shares of stock that constitute the Stapled Unit and New Stapled Units and can only sell or transfer the Stapled Unit and New Stapled Units as a unit. Holders of Stapled Units and New Stapled Units are not eligible to participate in the share repurchase plan discussed below.

The Series A Preferred Stock has a liquidation value of $1,000 per share. Holders of our Series A Preferred Stock are entitled to receive dividends at an annual rate of 12.5% of the liquidation preference, or $125.00 per share per annum. Dividends are cumulative and payable annually. We can call the Series A Preferred Stock at any time through December 31, 2024 at a 5% redemption premium above the liquidation value. The Series A Preferred Stock has no redemption premium on or after January 1, 2025, and we can call the Series A Preferred Stock for $1,000 per share at any time on or after January 1, 2025. We can call the common shares issued in these offerings at any time at the current transaction price for the respective class of common stock. Each class of common shares is separately redeemable from the Series A Preferred Stock and each other class of common shares. If we elect to redeem any class of common shares included in the Stapled Unit or New Stapled Unit, we will redeem all common shares of that class included in the Stapled Units or New Stapled Units, as applicable.

Common Stock

In December 2023, we entered into a subscription agreement (the “Class F Subscription Agreement”) with an institutional investor to purchase up to $200 million of Class F shares. The initial purchase price for Class F shares was the prior month’s

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NAV per share of Class E shares. For a discussion of fees paid to the Adviser with respect to Class F shares, see Note 11 - “Related Party Transactions - Management Fee and Performance Fee”.

During the three months ended June 30, 2024, we called $120.0 million of capital under the Class F Subscription Agreement, issuing 4,747,348 Class F shares. As of June 30, 2024, we may call an additional $80.0 million of the $200.0 million capital committed under the Class F Subscription Agreement.

The table below summarizes the changes in our outstanding shares of common stock as of the six months ended June 30, 2024 and 2023

	Six Months Ended June 30, 2024
	Class S Shares	Class S-1 Shares	Class D Shares	Class I Shares	Class E Shares	Class F Shares	Total
Total Outstanding Shares as of December 31, 2023(1)	1,052,598	1,054,174	1,052,598	1,383,506	1,067,805	—	5,610,681
Issuance of common stock	—	1,467,311	—	656,221	57,994	—	2,181,526
Common stock distribution reinvestment	—	21,860	—	8,245	622	—	30,727
Total Outstanding Shares as of March 31, 2024	1,052,598	2,543,345	1,052,598	2,047,972	1,126,421	—	7,822,934
Issuance of common stock	5,757	1,258,476	—	448,043	10,707	4,747,348	6,470,331
Stock awards(2)	—	—	—	—	3,340	—	3,340
Issuance of redeemable common stock(3)	—	—	—	—	5,792	—	5,792
Common stock distribution reinvestment	—	71,248	—	31,704	1,582	—	104,534
Repurchase of common stock	—	—	—	(1,200)		—	(1,200)
Repurchase of redeemable common stock	(997,920)	—	(997,921)	(998,825)	(995,972)	—	(3,990,638)
Total Outstanding Shares as of June 30, 2024	60,435	3,873,069	54,677	1,527,694	151,870	4,747,348	10,415,093

(1) Total Outstanding Shares includes 4,209,925 shares, 4,209,925 shares and 225,079 shares at December 31, 2023, March 31, 2024 and June 30, 2024, respectively, that are classified as redeemable common stock. See Note 7 - “Redeemable Common Stock - Related Party”.

(2) Represents shares issued to independent directors under the Incentive Plan. See Share-Based Compensation Plan below.

(3) Consists of shares issued to the Adviser for the payment of management fees that are classified as redeemable common stock. See Note 7 - “Redeemable Common Stock - Related Party”.

	Six Months Ended June 30, 2023
	Class S Shares	Class S-1 Shares	Class D Shares	Class I Shares	Class E Shares	Class F Shares	Total
Total Outstanding Shares as of December 31, 2022	—	—	—	—	—	—	—
Issuance of common stock	—	—	—	—	—	—	—
Total Outstanding Shares as of March 31, 2023	—	—	—	—	—	—	—
Issuance of common stock(1)	511	—	511	511	400	—	1,933
Total Outstanding Shares as of June 30, 2023	511	—	511	511	400	—	1,933

(1) Includes 1,600 shares issued to an affiliate of Invesco under the Invesco Subscription Agreement.

Distributions

For the three and six months ended June 30, 2024, we declared distributions of $7.3 million and $13.6 million, respectively. We accrued $1.6 million for distributions payable, of which $36,000 was accrued for distributions payable to related parties, in our condensed consolidated balance sheets as of June 30, 2024. For the year ended December 31, 2023, we declared distributions of $7.8 million. We accrued $3.1 million for distributions payable, of which $2.4 million was accrued for distributions payable to related parties, in our condensed consolidated balance sheets as of December 31, 2023.

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The table below details the aggregate distributions declared per share for each applicable class of stock for the three and six months ended June 30, 2024.

	Three Months Ended June 30, 2024
		Class S Shares		Class S-1 Shares		Class D Shares		Class I Shares		Class E Shares		Class F Shares
Aggregate distribution declared per share		$	0.7800	$	0.7800	$	0.7800	$	0.7800	$	0.7800	$	0.7800
Stockholder servicing fee per share		(0.0017)		(0.0529)		—		—		—		—
Net distribution declared per share		$	0.7783	$	0.7271	$	0.7800	$	0.7800	$	0.7800	$	0.7800

	Six Months Ended June 30, 2024
		Class S Shares		Class S-1 Shares		Class D Shares		Class I Shares		Class E Shares		Class F Shares
Aggregate distribution declared per share		$	1.6400	$	1.6400	$	1.6400	$	1.6400	$	1.6400	$	0.7800
Stockholder servicing fee per share		(0.0017)		(0.1063)		—		—		—		—
Net distribution declared per share		$	1.6383	$	1.5337	$	1.6400	$	1.6400	$	1.6400	$	0.7800

Share Repurchase Plan

We have adopted a share repurchase plan for our common stock. On a monthly basis, our stockholders may request that we repurchase all or any portion of their shares. We may choose, in our discretion, to repurchase all, some or none of the shares that have been requested to be repurchased at the end of any month, subject to the limitations in the share repurchase plan.

Under the Invesco Subscription Agreement described in Note 7 - “Redeemable Common Stock - Related Party”, Invesco Realty may not participate in our share repurchase plan until the earlier of March 23, 2028 and the date that our aggregate NAV is at least $1.5 billion. We can only accept a repurchase request from Invesco Realty after all requests from unaffiliated stockholders have been fulfilled.

Under its subscription agreement, the Class F stockholder may not participate in our share repurchase plan until the earlier of (i) the date our NAV reaches $1.5 billion and (ii) March 23, 2028. However, the Class F stockholder is entitled to request that we repurchase their shares in the event that there is a key person event or a material strategy change as defined in the terms of the Class F subscription agreement.

Class E shares issued to the Adviser as payment for management fees or performance fees are not subject to the repurchase limits of our share repurchase plan, any lockup period applicable to the Adviser or any reduction penalty for an early repurchase.

For the three and six months ended June 30, 2024, we repurchased 1,200 shares of common stock and fulfilled all repurchase requests that were made under the share repurchase plan. For the three and six months ended June 30, 2023, we did not repurchase any shares under the share repurchase plan.

Distribution Reinvestment Plan

We have adopted a distribution reinvestment plan whereby stockholders will have their cash distributions automatically reinvested in additional shares of common stock unless they elect to receive their distributions in cash. The per share purchase price for shares purchased under the distribution reinvestment plan is equal to the transaction price at the time the distribution is payable.

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Share-Based Compensation Plan

In May 2024 and November 2023, we granted 3,340 and 2,989 restricted shares of Class E common stock, respectively, to our independent directors under the terms of our 2023 Equity Incentive Plan (the “Incentive Plan”). The restricted shares granted in November 2023 became vested in March 2024. The restricted shares granted in May 2024 will become unrestricted shares of common stock on the first anniversary of the grant date unless forfeited, subject to certain conditions that accelerate vesting. For the three and six months ended June 30, 2024, we recognized $20,000 and $37,000, respectively, of compensation expense related to these awards. As of June 30, 2024, we had 1,093,671 shares of common stock available for future issuance under the Incentive Plan.

9.Earnings per Common Share

Earnings per share for the three and six months ended June 30, 2024 and 2023 is computed as presented in the table below.

	Three Months Ended June 30,				Six Months Ended June 30,
$ in thousands, except share and per share amounts	2024		2023		2024		2023
Numerator (Income)
Basic Earnings:
Net income (loss) available to common stockholders	$	3,620	$	(1,606)	$	8,300	$	(2,733)
Denominator (Weighted Average Shares)
Basic Earnings:
Shares available to common stockholders	10,729,623		748		8,956,409		382
Effect of dilutive securities:
Restricted stock awards	28		—		306		—
Dilutive Shares	10,729,651		748		8,956,715		382
Earnings (loss) per share:
Net income (loss) attributable to common stockholders
Basic	$	0.34	$	(2,147.96)	$	0.93	$	(7,151.30)
Diluted	$	0.34	$	(2,147.96)	$	0.93	$	(7,151.30)

10.Fair Value of Financial Instruments

A three-level valuation hierarchy exists for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The three levels are defined as follows:

Level 1 — quoted prices are available in active markets for identical investments as of the measurement date. We do not adjust the quoted price for these investments.

Level 2 — quoted prices are available in markets that are not active or model inputs are based on inputs that are either directly or indirectly observable as of the measurement date.

Level 3 — pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the investment. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.

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Valuation of Financial Instruments Measured at Fair Value

The following table details our financial instruments measured at fair value on a recurring basis:

	June 30, 2024
	Fair Value Measurements Using:
$ in thousands	Level 1		Level 2		Level 3		Total at Fair Value
Assets:
Commercial real estate loan investments	$	—	$	—	$	1,121,010	$	1,121,010
Liabilities:
Revolving credit facility	—		—		10,000		10,000
Repurchase agreements	—		—		849,754		849,754
Total liabilities	$	—	$	—	$	859,754	$	859,754

	December 31, 2023
	Fair Value Measurements Using:
$ in thousands	Level 1		Level 2		Level 3		Total at Fair Value
Assets:
Commercial real estate loan investments	$	—	$	—	$	613,503	$	613,503
Liabilities:
Revolving credit facility	—		—		14,000		14,000
Repurchase agreements	—		—		457,861		457,861
Total liabilities	$	—	$	—	$	471,861	$	471,861

Valuation of Commercial Real Estate Loan Investments

Our commercial real estate loan investments consist of senior mortgages and similar credit quality loans, including related contiguous subordinate loans, and are classified as Level 3. The commercial loans are carried at fair value based on significant unobservable inputs. The following table shows a reconciliation of the beginning and ending fair value measurements of our commercial real estate loan investments:

$ in thousands	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Beginning Balance	$	824,333	$	613,503
Loan originations and fundings	296,392		506,304
Net unrealized gain (loss)	285		1,203
Balance as of June 30, 2024	$	1,121,010	$	1,121,010

The following tables summarize the significant unobservable inputs used in the fair value measurement of our investments in commercial loans:

	June 30, 2024
Type	Valuation Technique	Unobservable Input	Weighted Average Rate	Range	Weighted Average Life (years)(1)
Commercial loans	Discounted cash flow	Discount rate	8.18%	7.83% - 8.43%	0.72

(1) Based on expected cash flows and potential prepayments.

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	December 31, 2023
Type	Valuation Technique	Unobservable Input	Weighted Average Rate	Range	Weighted Average Life (years)
Commercial loans	Discounted cash flow	Discount rate	8.52%	8.16% - 8.71%	2.12

The discount rate above is subject to change based on changes in economic and market conditions, in addition to changes in the underlying economics of the arrangement, such as changes in the underlying property valuation and debt service. These rates are also based on the location, type and nature of each underlying property and related industry publications. Changes in discount rates result in increases or decreases in the fair values of these investments. The discount rate encompasses, among other things, uncertainties in the valuation models with respect to the amount and timing of cash flows. It is not possible for us to predict the effect of future economic or market conditions based on our estimated fair values.

Valuation of Revolving Credit Facility

Given the uncertainty of future cash flows, including our ability to prepay without penalty, we determined the fair value of our revolving credit facility to approximate par.

The following table shows a reconciliation of the beginning and ending fair value measurements of our revolving credit facility:

$ in thousands	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Beginning Balance	$	18,000	$	14,000
Proceeds from revolving credit facility	101,000		192,000
Repayment of revolving credit facility	(109,000)		(196,000)
Net unrealized (gain) loss	—		—
Balance as of June 30, 2024	$	10,000	$	10,000

Valuation of Repurchase Agreements

We have entered into repurchase agreement facilities to provide floating rate financing for our commercial real estate loan investments. Our repurchase agreements are carried at fair value based on significant unobservable inputs and are classified as Level 3.

The following table shows a reconciliation of the beginning and ending fair value measurements of our repurchase agreements:

$ in thousands	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Beginning Balance	$	609,981	$	457,861
Borrowings under repurchase agreements	288,050		439,447
Repayments of repurchase agreements	(48,476)		(48,476)
Net unrealized (gain) loss	199		922
Balance as of June 30, 2024	$	849,754	$	849,754

The following tables summarize the significant unobservable inputs used in the fair value measurement of our repurchase agreements:

	June 30, 2024
Type	Valuation Technique	Unobservable Input	Weighted Average Rate	Range	Weighted Average Life (years)(1)
Repurchase agreements	Discounted cash flow	Discount rate	7.24%	6.98% - 7.53%	0.73

(1) Based on expected cash flows and potential prepayments.

	December 31, 2023
Type	Valuation Technique	Unobservable Input	Weighted Average Rate	Range	Weighted Average Life (years)
Repurchase agreements	Discounted cash flow	Discount rate	7.62%	7.31% - 7.86%	1.48

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The discount rate above is subject to change based on changes in economic and market conditions, in addition to changes in the underlying economics of the pledged commercial real estate loan, such as changes in the loan-to-value ratio, credit profile and debt service. These rates are also based on the location, type and nature of each pledged property underlying the commercial real estate loan and related industry publications. Changes in discount rates result in increases or decreases in the fair values of these investments. The discount rate encompasses, among other things, uncertainties in the valuation models with respect to the amount and timing of cash flows. It is not possible for us to predict the effect of future economic or market conditions based on our estimated fair values.

11.Related Party Transactions

Due to/from Affiliates

Our due from affiliates balance consists of amounts paid by the Company that are due to us from the Adviser under the terms of our advisory agreement and totaled $675,000 as of June 30, 2024. (December 31, 2023: None).

The following table details the components of due to affiliates as of June 30, 2024 and December 31, 2023.

$ in thousands	June 30, 2024		December 31, 2023
Adviser commitment fee payable	$	2,120	$	113
Advanced organizational costs	724		707
Advanced offering costs	1,261		1,293
Advanced debt issuance and other financing costs	7,001		3,727
Advanced general and administrative expenses(1)	5,497		2,993
Accrued stockholder servicing fees	4,717		1,334
Accrued management fee	307		—
Accrued performance fee	850		—
Other	45		—
Total	$	22,522	$	10,167

(1) Advanced general and administrative expenses as of June 30, 2024 and December 31, 2023 includes approximately $287,000 and $73,000, respectively, of prepaid expenses which are included in other assets on our condensed consolidated balance sheets.

Adviser Commitment Fee

We charge a commitment fee to borrowers in connection with the origination of each new loan. The commitment fee is calculated as a percentage of the whole loan at the time of the loan closing. We pay the Adviser 50% of the commitment fee (not to exceed 0.5% of the loan amount) as compensation for sourcing, structuring and negotiating the loan. The commitment fee income and related expense to the Adviser is reported as commitment fee income, net of related party expense on the condensed consolidated statements of operations.

Organizational Costs and Offering Expenses

Under the terms of our amended and restated advisory agreement dated April 24, 2024, the Adviser advanced all of our organizational costs and offering expenses (other than upfront selling commissions and ongoing stockholder servicing fees) incurred through May 31, 2024. We will reimburse the Adviser for all of our organizational costs and offering expenses advanced through May 31, 2024 ratably over 52 months commencing December 1, 2024. We will reimburse the Adviser on a quarterly basis for organizational and offering expenses incurred on our behalf subsequent to May 31, 2024.

Under the terms of our advisory agreement, organizational costs and offering expenses became a liability of the Company on March 23, 2023. Organizational costs and offering expenses include costs incurred by the Adviser prior to entering into the advisory agreement with the Company.

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Operating Expenses Reimbursement

Under the terms of our amended and restated advisory agreement dated April 24, 2024, the Adviser advanced our operating expenses, including debt issuance costs and general and administrative expenses, incurred through May 31, 2024. We will reimburse the Adviser for all of our operating expenses advanced through May 31, 2024 ratably over 52 months commencing December 1, 2024.

Following May 31, 2024, we will reimburse the Adviser quarterly for total operating expenses paid by the Adviser on our behalf. However, we may not reimburse the Adviser at the end of any fiscal quarter for total operating expenses (as defined in our charter) that, in the four consecutive fiscal quarters then ended, exceed the greater of 2% of average invested assets or 25% of net income determined without reduction for any non-cash reserves and excluding any gain from the sale of our assets for that period (the “2%/25% Guidelines”). We may reimburse the Adviser for expenses in excess of the 2%/25% Guidelines if a majority of our independent directors determines that such excess expenses are justified based on unusual and non-recurring factors.

For the three and six months ended June 30, 2024, the Adviser had incurred expenses on our behalf of $45,000 subsequent to May 31, 2024, of which $45,000 is accrued as a component of due to affiliates on our condensed consolidated balance sheets as of June 30, 2024 and included within Other in the table above.

Stockholder Servicing Fees and Other Selling Commissions

The Dealer Manager is entitled to receive upfront selling commissions and stockholder servicing fees for Class S, Class S-1 and Class D shares sold in the Continuous Offering. The Dealer Manager reallows (pays) all or a portion of the stockholder servicing fees to participating broker-dealers and servicing broker-dealers for ongoing stockholder services performed by such broker-dealers and will waive stockholder servicing fees to the extent a broker-dealer is not eligible to receive it for failure to provide such service.

We accrue the full amount of stockholder servicing fees payable as an offering cost at the time each Class S-1, Class S, and Class D share is sold during the Continuous Offering. During the three months and six months ended June 30, 2024, we paid approximately $159,000 and $245,000 of stockholder servicing fees, respectively, with respect to the outstanding Class S-1 shares and did not pay stockholder servicing fees with respect to the outstanding Class S and Class D shares. During the year ended December 31, 2023, we paid approximately $15,000 of stockholder servicing fees with respect to the outstanding Class S-1 shares and did not pay stockholder servicing fees with respect to the outstanding Class S and Class D shares.

The following table summarizes the upfront selling commissions for each class of shares payable at the time of subscription and the stockholder servicing fee we pay the Dealer Manager on an annualized basis as a percentage of the NAV for such class:

	Class S Shares	Class S-1 Shares	Class D Shares	Class I  Shares	Class E Shares	Class F Shares
Maximum Upfront Selling Commissions (% of Transaction Price)	up to 3.5%	up to 3.5%	up to 1.5%	—	—	—
Stockholder Servicing Fee (% of NAV)	0.85%	0.85%	0.25%	—	—	—

We will cease paying the stockholder servicing fee with respect to any Class S share or Class D share held in a stockholder’s account at the end of the month in which the Dealer Manager, in conjunction with the transfer agent, determines that total upfront selling commissions and stockholder servicing fees paid with respect to the shares held by the stockholder would exceed, in the aggregate, 8.75% of the gross proceeds from the sale of such shares (including the gross proceeds of any shares issued under our distribution reinvestment plan upon the reinvestment of distributions paid with respect thereto or with respect to any shares issued under our distribution reinvestment plan directly or indirectly attributable to such shares). At the end of such month, such Class S share or Class D share will convert into a number of Class I shares (including any fractional shares), with an equivalent aggregate NAV as such share. Such servicing fee limit does not apply to the Class S-1 shares.

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Management Fee and Performance Fee

We will pay the Adviser a management fee equal to 1.0% per annum of NAV, calculated monthly before giving effect to any accruals for the management fee, stockholder servicing fees, performance fees or any distributions with respect to our Class S shares, Class S-1 shares, Class D shares and Class I shares. We will also pay the Adviser a Performance Fee equal to 10% of our “Performance Fee Income” with respect to our Class S shares, Class S-1 shares, Class D shares and Class I shares. Performance Fee Income with respect to each class of common shares subject to a performance fee means the net income (determined in accordance with U.S. GAAP) allocable to such class of common shares subject to adjustment as defined under the terms of our advisory agreement. During the period that the Adviser is advancing our organizational, offering and operating expenses, net income for purposes of the performance fee calculation will exclude these advanced expenses for the period incurred under US GAAP. After the period that the Adviser is advancing our organizational, offering and operating expenses, net income for purposes of the performance fee calculation will include previously advanced expenses that are to be repaid to the Adviser during the period. We will not pay the Adviser a performance fee with respect to any class of shares that has a negative total return per share for the calendar year. For purposes of the performance fee calculation, total return per share is defined as an amount equal to: (i) the cumulative distributions per share accrued with respect to such class of common shares since the beginning of the calendar year plus (ii) the change in NAV per share of such class of common shares since the beginning of the calendar year, prior to giving effect to (y) any accrual for performance fees with respect to such class of common shares or (z) any applicable stockholder servicing fees. We will not pay the Adviser a management or performance fee with respect to our Class E shares.

The management fee and the performance fee are payable in cash or Class E shares at the option of the Adviser.

We will not pay the Adviser a management fee with respect to our Class F shares. We will pay the Adviser a performance fee with respect to the Class F shares. The Class F performance fee payable with respect to each calendar year will be an amount equal to 10% of the excess of Performance Fee Income allocable to Class F shares over a 6% annualized return on the Class F NAV per share. No performance fee is payable if the Performance Fee Income allocable to Class F is below the annualized 6% return in any calendar year or for a rolling two-year period.

Management fees and performance fees began to accrue on March 1, 2024. Management fees will be accrued monthly and paid quarterly in arrears and performance fees will be paid annually. During the three and six months ended June 30, 2024, we incurred management fees of $307,000 and $452,000, respectively, of which $307,000 is accrued as a component of due to affiliates on our condensed consolidated balance sheets as of June 30, 2024. During the three and six months ended June 30, 2024, we incurred performance fees of $645,000 and $850,000, respectively, of which $850,000 is accrued as a component of due to affiliates on our condensed consolidated balance sheets as of June 30, 2024. During the three and six months ended June 30, 2024, we issued 5,792 Class E Redeemable Common Stock shares as payment for the management fees earned. The shares issued to the Adviser for payment of the management fee were issued at the applicable NAV per share at the end of each quarter for which the fee was earned.

The initial term of our advisory agreement expires on March 31, 2025. The advisory agreement is subject to automatic renewals for successive one-year periods unless otherwise terminated in accordance with the provisions of the agreement. If the advisory agreement is terminated, the Adviser will be entitled to receive its prorated management fee and performance fee owed through the date of termination. If we elect not to renew our advisory agreement based on unsatisfactory performance and not for cause, we owe our Adviser a termination fee equal to three times the sum of our average annual management fee during the 24-month period before termination, calculated as of the end of the most recently completed fiscal quarter.

Our Adviser is subject to the supervision and oversight of our Board and has only such functions and authority as we delegate to it. The Adviser and its affiliates provide us with our management team, including our officers and appropriate support personnel. Each of our officers is an employee of the Adviser or one of its affiliates. We do not have any employees. We incurred $218,000 and $450,000, respectively, of costs for support personnel provided by the Adviser for the three and six months ended June 30, 2024 that are recorded as a component of due to affiliates on our consolidated balance sheets. During the three and six months ended June 30, 2023, we incurred $46,000 and $46,000, respectively, of costs for support personnel provided by the Adviser.

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Related Party Share Ownership

The table below summarizes the number of shares and the total purchase price of the shares that have been purchased by affiliates as of June 30, 2024.

$ in thousands, except share amounts	Class S Shares	Class S-1 Shares	Class D Shares	Class I Shares	Class E Shares	Class F Shares	Total Purchase Price
Invesco Realty, Inc.(1)	54,567	—	54,567	53,662	56,491	—	$	5,340
Invesco Advisers, Inc.(2)	—	—	—	—	5,792	—	145
Members of our board of directors (3)	—	—	—	—	14,732	—	84
Total	54,567	—	54,567	53,662	77,015	—	$	5,569

(1) Shares issued to Invesco Realty, Inc. are governed by the terms of the Invesco Subscription Agreement and classified as redeemable common shares on our condensed consolidated balance sheets. See Note 7 - “Redeemable Common Stock - Related Party” for further information.

(2) Shares issued to Invesco Advisers, Inc. are governed by the terms of our advisory agreement and classified as redeemable common shares on our condensed consolidated balance sheets. See Note 7 - “Redeemable Common Stock - Related Party” for further information.

(3) Represents shares issued to members of our board of directors, including stock awards under our Share-Based Compensation Plan.

12.Commitments and Contingencies

Commitments and contingencies may arise in the ordinary course of business. As of June 30, 2024, we had unfunded commitments of $258.8 million for 18 of our commercial real estate loan investments. The unfunded commitments consist of funding for leasing costs, interest reserves and capital expenditures. Funding depends on timing of lease-up, renovation and capital improvements as well as satisfaction of certain cash flow tests. Therefore, the exact timing and amounts of such future loan fundings are uncertain. We expect to fund our loan commitments over the weighted average remaining term of the related loans of 3.00 years.

We have also committed to pay counterparty legal, diligence and other fees in connection with new financing facilities in the ordinary course of business.

From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of June 30, 2024, the Company was not involved in any material legal proceedings.

13.Subsequent Events

Investment Portfolio Activity

Subsequent to June 30, 2024, we originated four commercial real estate loans with an aggregate outstanding principal amount of $175.3 million and a total loan amount of $178.9 million. The loans earn interest at one-month term SOFR plus a spread for a weighted average interest rate of 8.25% based on the interest rate in effect at origination.

Financing Activity

Subsequent to June 30, 2024, we entered into a secured financing agreement which provides for current and future financings of up to $837.5 million on a non-mark-to-market, match-term basis to the underlying loans. We also entered into a secured financing agreement which provides for current and future financings of up to $300.0 million on a non-mark-to-market, match-term basis to the underlying loans.

These secured financing agreements increased our total aggregate maximum facility size on our borrowings from $1.8 billion as of June 30, 2024 to $2.7 billion.

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Stockholders’ Equity

Subsequent to June 30, 2024, we issued the following stock:

$ in thousands except share amounts	Shares Issued to Third-Parties		Shares Issued to Affiliates(1)(2)		DRP Shares(3)
Common Stock:
Class S	196		—		—
Class S-1	639,333		—		12,456
Class D	—		—		—
Class I	383,648		—		5,902
Class E	9,931		12,142		263
Class F	3,158,612		—		30,040
Total	4,191,720		12,142		48,661
Total net proceeds(4)	$	106,067	$	—	$	1,226

(1)Affiliates include related parties discussed in Note 11 - “Related Party Transactions”.

(2)Includes 12,142 Class E shares issued to our Adviser as payment for management fees for total consideration of $306,000, which is excluded from Total net proceeds.

(3)Represents shares issued under our distribution reinvestment plan.

(4)With respect to DRP Shares, Total net proceeds represents total value of shares issued under our distribution reinvestment plan.

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this quarterly report on Form 10-Q, or this “Quarterly Report,” we refer to Invesco Commercial Real Estate Finance Trust, Inc. and its consolidated subsidiaries as “we,” “us,” “the Company,” or “our,” unless we specifically state otherwise or the context indicates otherwise. We refer to our external manager, Invesco Advisers, Inc., as our “Adviser,” and we refer to the indirect parent company of our Adviser, Invesco Ltd. together with its consolidated subsidiaries (which does not include us), as “Invesco.”

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes to our unaudited condensed consolidated financial statements, which are included in Item 1 of this Quarterly Report, as well as the information contained in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”).

Forward Looking Statements

This Quarterly Report may include statements that constitute “forward-looking statements” within the meaning of the United States securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include statements about possible or assumed future results of our business, investment strategies, financial condition, liquidity, results of operations, plans and objectives. When we use the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “project,” “forecast” or similar expressions and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” and any other statement that necessarily depends on future events, we intend to identify forward-looking statements.

Forward-looking statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are difficult to predict and are generally beyond our control. Although we make such statements based on assumptions we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations as a result of several factors, including, but not limited to the following: our limited operating history; conflicts of interest with our Adviser; our Adviser’s broad discretion; risks related to the origination or acquisition of whole loans; creditor risks with respect to our portfolio; our investments becoming distressed or illiquid; our ability to obtain leverage; increases to our leverage ratio above our target; use of repurchase agreements for our financing; no limitations on our amount of short-term corporate debt; and other factors described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report and our Annual Report on Form 10-K filed with the SEC. Considering the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved. We caution you not to rely unduly on any forward-looking statements and urge you to carefully consider the factors. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive Overview

Introduction

We are a Maryland corporation formed in October 2022. Our primary investment strategy is to originate, acquire, and manage a diversified portfolio of loans and debt-like preferred equity interests secured by, or unsecured but related to, commercial real estate. To a lesser extent, we may purchase non-distressed public or private debt securities and invest in private operating companies in the business of or related to commercial real estate credit through debt or equity investment. We commenced investing in commercial real estate loans in May 2023. Prior to investing, we were primarily engaged in organizational activities.

We are externally managed by Invesco Advisers, Inc. (the “Adviser”), a registered investment adviser and an indirect, wholly-owned subsidiary of Invesco Ltd., an independent global investment management firm. Our Adviser utilizes the personnel and global resources of Invesco Real Estate to provide investment management services to us. We intend to qualify to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2023. To maintain our REIT qualifications, we are generally required to distribute at least 90% of our REIT taxable income to our stockholders annually. We operate our business in a manner that permits our exclusion from the definition of an “Investment Company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

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We are engaging in a continuous, unlimited private offering of our common stock to “accredited investors” (as defined by Rule 501 promulgated pursuant to the Securities Act) (the “Continuous Offering”) under exemptions provided by Section 4(a)(2) of the Securities Act and applicable state securities laws.

Factors Impacting Our Operating Results

Our operating results can be affected by a number of factors and depend on loan origination activity, interest earned on the commercial loan investments held in the portfolio, interest paid on the borrowing facilities of the portfolio and changes in the fair market value of our commercial real estate loan investments and our borrowings. Our net interest income varies primarily as a result of the number of loan originations in the period, the timing of entering into new borrowing arrangements, repayments from the borrower of the outstanding principal balance of our loan assets during the period, and changes in benchmark interest rates and market spreads. Market spreads vary according to the type of investment or borrowing, conditions in the financial markets, competition and other factors, none of which can be predicted with any certainty.

We have elected the fair value option for our commercial real estate loan investments and our borrowing facilities. The fair market value of our commercial real estate loans can be impacted by changes in credit spread premiums (yield advantage over a benchmark rate) and the supply of, and demand for, assets in which we invest.

Market Conditions

During the second quarter of 2024, the Company originated eight commercial real estate loans with an aggregate total loan commitment amount of $424.1 million and a spot coupon of 12.09% based on the weighted average interest rate on our net committed equity position as of June 30, 2024. Market credit spreads on both whole loan originations and senior financing continued to tighten in the second quarter, particularly within Multifamily. The weighted average interest rate spread on our net committed equity position is comprised of the difference between the spread on our commercial real estate loans applied to the committed loan amounts less the spread on our borrowings applied to the total financing. This difference is divided by our net committed equity position. The weighted average interest rate is this spread combined with the Term SOFR benchmark rate in effect on June 30, 2024 after considering any impact of the interest rate floor.

The eight originations in the second quarter of 2024 were comprised of seven Multifamily originations and one Industrial origination across the US with 64% focused on acquisition financing (remaining 36% were originated for the purpose of refinancing the borrower’s existing investment). In the wider market, sale financing was down more sharply but largely offset by a small increase in refinancing volumes.

The wider real estate market saw some signs of stabilization as Green Street’s Commercial Property Price Index “CPPI” increased to 0.7% in June, with the majority of change driven by a 5% increase in apartment prices over the past month.

In June, the Federal Reserve kept their benchmark rate unchanged at 5.25%-5.50% and Federal Reserve Chair Jerome Powell has noted that at least one rate cut is expected before the end of the year. The Company has benefited from continued elevated interest rates and will monitor market conditions as they continue to evolve.

Outlook

We believe the Company will continue to find opportunities during this period of capital market dislocation to originate attractive loans with credit/structuring profiles at a premium to historical pricing. We anticipate that commercial real estate transaction volume will remain limited throughout 2024 with investment sales declining by 22% year over year as of the first quarter of 2024 but showing signs of values stabilizing.

As banks continue to pull back from new origination activity, debt funds have stepped up with origination volume outperforming pre-pandemic levels. We expect this trend will continue as banks comply with tighter regulations and remain selective in providing commercial real estate financing, with some recently seeking ancillary business and deposits alongside loan originations or pivoting into more indirect methods of real estate lending such as providing warehouse lines or other types of financing facilities. We will continue to monitor bank and CMBS activity throughout 2024 and the resulting liquidity impact it may have on sponsor/borrower loan payoffs in our portfolio.

Overall, we believe the Company is positioned to take advantage of new opportunities that will arise and benefit from its current stable portfolio and prudently managed balance sheet. We believe that our “credit over yield” investment philosophy will allow us to provide durable current income to stockholders while seeking to minimize risk during the current market environment.

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Q2 2024 Highlights

Capital Activity and Distributions

•Declared monthly net distributions totaling $7.3 million for the quarter ended June 30, 2024.

•Raised $43.4 million of net proceeds from the sale of our common stock through our Continuous Offering during the quarter ended June 30, 2024.

•Called $120.0 million of capital under the Class F Subscription Agreement.

•Repurchased 3,990,638 shares of our redeemable common stock from Invesco Realty, Inc. pursuant to the Invesco Subscription Agreement for an aggregate repurchase price of $100.0 million. The shares were not repurchased under the share repurchase plan.

Investments

•Originated a floating rate senior commercial real estate loan with a total commitment amount of $66.1 million and outstanding principal amount of $59.1 million as of June 30, 2024 The underlying property is a Multifamily property located within the Los Angeles metropolitan statistical area.

•Originated a floating rate senior commercial real estate loan with a total commitment amount of $150.0 million and outstanding principal amount of $40.7 million as of June 30, 2024. The underlying property is a portfolio of Multifamily properties located within the New York metropolitan statistical area.

•Originated a floating rate senior commercial real estate loan with a total commitment amount of $23.7 million and outstanding principal amount of $23.5 million as of June 30, 2024. The underlying property is a Multifamily property located within the Fort Worth metropolitan statistical area.

•Originated a floating rate senior commercial real estate loan with a total commitment amount of $22.5 million and outstanding principal amount of $21.8 million as of June 30, 2024. The underlying property is a Multifamily property located within the Fort Worth metropolitan statistical area.

•Originated a floating rate senior commercial real estate loan with a total commitment amount of $47.3 million and outstanding principal amount of $42.6 million as of June 30, 2024. The underlying property is an Industrial property located within the Orange County metropolitan statistical area.

•Originated a floating rate senior commercial real estate loan with a total commitment amount of $40.7 million and outstanding principal amount of $35.2 million as of June 30, 2024. The underlying property is a Multifamily property located within the Dallas metropolitan statistical area.

•Originated a floating rate senior commercial real estate loan with a total commitment amount of $33.5 million and outstanding principal amount of $30.4 million as of June 30, 2024. The underlying property is a Multifamily property located within the San Francisco metropolitan statistical area.

•Originated a floating rate senior commercial real estate loan with a total commitment amount of $40.4 million and outstanding principal amount of $38.1 million as of June 30, 2024. The underlying property is a Multifamily property located within the Jacksonville metropolitan statistical area.

Financing Activity

•Made net repayments of $8.0 million to our revolving credit facility for the three months ended June 30, 2024.

•Received net borrowings of $239.6 million from our repurchase agreements for the three months ended June 30, 2024.

•In the quarter ended June 30, 2024, we entered into a repurchase agreement facility with Barclays Bank PLC. The repurchase agreement has a maximum facility size of $250.0 million and bears interest at a one-month term SOFR plus a spread.

•In the quarter ended June 30, 2024, we entered into a repurchase agreement facility with Wells Fargo. The repurchase agreement has a maximum facility size of $200.0 million and bears interest at a one-month term SOFR plus a spread.

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Financial Condition

Investment Activities

We commenced investing in commercial real estate loans in May 2023. As of June 30, 2024, we originated 22 commercial real estate senior loans with a fair value of $1.1 billion. We elected the fair value option for our commercial real estate loan investments and, accordingly, we recognize any origination costs or fees associated with the loans in the period of origination. Our loan investments earn interest at term SOFR plus a spread and had a weighted average interest rate of 8.41% as of June 30, 2024.

The following table details overall statistics for our loan portfolio as of June 30, 2024:

$ in thousands	June 30, 2024			December 31, 2023
Number of investments	22			10
Principal balance	$	1,119,807		$	613,503
Fair value	$	1,121,010		$	613,503
Unfunded loan commitments(1)	$	258,764		$	57,903
Weighted-average interest rate(2)	8.41		%	8.53		%
Weighted-average maximum maturity (years)(3)	4.47			4.69
Origination loan to value (LTV)(4)	62		%	65		%

(1)    Unfunded commitments will primarily be funded to finance construction or development of real estate-related assets, capital improvements of existing assets, or lease-related expenditures. These future commitments will generally be funded over the term of each loan, subject in certain cases to an expiration date.

(2)    Represents weighted average interest rate of the most recent interest period in effect for each loan as of period end. Loans earn interest at the one-month Term SOFR plus a spread.

(3)    Assumes all extension options are exercised by the borrower; however, loans may be repaid prior to such date. Extension options are subject to certain conditions as defined in the respective loan agreement.

(4)    LTV is generally based on the initial loan amount and the independent property appraisals at the time of origination.

The following charts illustrate the diversification and composition of our loan portfolio based on fair value as of June 30, 2024:

Loan originations activity during the three months ended June 30, 2024, totaled $291.3 million as a result of eight new loan originations. Additionally, loan fundings activity during the three months ended June 30, 2024, totaled $5.1 million for additional commitments made under existing loans. In the three months ended June 30, 2024, we earned $20.4 million of interest income on our loan portfolio.

The following table details our loan activity:

	Three Months Ended		Six Months Ended
$ in thousands	June 30, 2024		June 30, 2024
Loan originations	$	291,282	$	495,721
Loan fundings	5,110		10,583
Loan repayments and sales	—		—
Total net fundings	$	296,392	$	506,304

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The following table provides details of our loan portfolio, on a loan-by-loan basis, as of June 30, 2024:

$ in thousands
Metropolitan Statistical Area	Property Type	Origination Date	Weighted Average Interest Rate(1)	Loan Amount(2)		Principal Balance Outstanding		Fair Value		Current Maturity	Maximum Maturity(3)
Phoenix	Industrial	05/17/2023	8.68%	$	136,000	$	123,095	$	123,094	6/9/2025	6/9/2028
San Jose(4)	Multifamily	05/31/2023	8.48%	41,700		41,700		41,724		6/9/2026	6/9/2028
New York(5)	Multifamily	07/26/2023	8.43%	73,600		73,600		73,680		8/9/2026	8/9/2028
Los Angeles	Multifamily	08/04/2023	8.43%	85,180		81,037		81,122		8/9/2025	8/9/2028
Miami	Industrial	08/25/2023	8.68%	42,676		35,923		35,944		9/9/2025	9/9/2028
Richmond	Industrial	09/25/2023	8.68%	38,300		33,896		33,925		10/9/2025	10/9/2028
Atlanta	Industrial	11/06/2023	8.68%	92,950		80,984		81,071		11/9/2025	11/9/2028
Dallas	Multifamily	12/07/2023	8.13%	70,000		61,873		62,048		12/9/2026	12/9/2028
Seattle	Multifamily	12/12/2023	8.28%	68,500		68,500		68,609		12/9/2026	12/9/2028
New York(6)	Multifamily	12/21/2023	8.33%	22,500		22,500		22,530		12/9/2026	12/9/2028
Houston	Multifamily	01/24/2024	8.33%	61,500		61,000		61,126		2/9/2027	2/9/2029
New York	Multifamily	02/08/2024	8.33%	120,000		47,651		47,750		2/9/2027	2/9/2029
Los Angeles	Multifamily	03/05/2024	8.48%	56,600		55,097		55,171		3/9/2027	3/9/2029
Los Angeles	Multifamily	03/28/2024	8.33%	45,000		41,535		41,567		4/9/2026	4/9/2029
Los Angeles	Multifamily	04/12/2024	8.38%	66,050		59,134		59,190		4/9/2027	4/9/2029
New York	Multifamily	05/02/2024	8.33%	150,000		40,724		40,837		5/9/2027	5/9/2029
Fort Worth	Multifamily	05/15/2024	8.23%	22,500		21,775		21,787		6/9/2026	6/9/2029
Fort Worth	Multifamily	05/15/2024	8.23%	23,650		23,500		23,512		6/9/2026	6/9/2029
Orange County	Industrial	05/31/2024	8.18%	47,275		42,600		42,640		6/9/2027	6/9/2029
Dallas	Multifamily	06/07/2024	8.13%	40,740		35,233		35,233		6/9/2027	6/9/2029
San Francisco	Multifamily	06/17/2024	7.98%	33,500		30,350		30,350		7/9/2027	7/9/2029
Jacksonville	Multifamily	06/28/2024	8.45%	40,350		38,100		38,100		7/9/2027	7/9/2029
			8.41%	$	1,378,571	$	1,119,807	$	1,121,010

(1)Represents weighted average interest rate of the most recent interest period in effect for each loan as of period end. Loans earn interest at the one-month Term SOFR plus a spread.

(2)Loan amount consists of outstanding principal balance plus unfunded loan commitments.

(3)Maximum maturity assumes all extension options are exercised by the borrower; however, loans may be repaid prior to such date. Extension options are subject to certain conditions as defined in the respective loan agreement.

(4)An affiliate of the Adviser previously originated a loan to an unaffiliated borrower in August 2018 secured by the same collateral as this loan. We negotiated the terms of our loan directly with the unaffiliated borrower at market and without the involvement of the affiliate of the Adviser. The unaffiliated borrower used the refinancing proceeds from our loan to repay the loan of the affiliate of the Adviser.

(5)The total whole loan is $73.6 million, including (i) a senior mortgage loan of $55.2 million, and (ii) a mezzanine note of $18.4 million.

(6)The total whole loan is $22.5 million, including (i) a senior mortgage loan of $18.0 million and (ii) a mezzanine note of $4.5 million.

As of June 30, 2024, six commercial real estate loans within our portfolio aggregating $230.1 million and approximately 21% of our loan portfolio, at fair value, are affiliated with a single sponsor that represents an institutional private equity company. These loans that the Company has made that are affiliated with a single sponsor are not cross collateralized or cross defaulted.

Loan Risk Ratings

We evaluate each loan at origination and assign an overall risk rating based on several factors, including but not limited to, credit metrics and volatility, sponsorship, sector type, property condition and performance, and market to determine the overall health of each loan investment in the portfolio (“Loan Risk Rating”). Loans are rated “1” (very low risk), “2” (low risk), “3” (medium risk), “4” (high risk/potential for loss), or “5” (impaired/loss likely). We re-evaluate the loan risk ratings on our loan portfolio quarterly and update risk ratings as needed.

Our loan portfolio had a weighted-average loan risk rating of 2.8 as of June 30, 2024 and 2.7 as of December 31, 2023.

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Financing and Other Liabilities

We utilize a revolving line of credit as a short-term cash management tool to pay fees and expenses, finance investment activity and bridge portfolio-level financing arrangements.

Our revolving line of credit bears interest at a one-month term SOFR plus a spread and had a weighted average borrowing rate of 8.23% as of June 30, 2024.

We finance the majority of our commercial real estate loan portfolio through repurchase agreements. We have five repurchase agreement facilities that bear interest at one-month term SOFR plus a spread. These facilities had a weighted average borrowing rate of 7.48% as of June 30, 2024.

The below table summarizes our repurchase agreement and revolving line of credit borrowings as of June 30, 2024.

$ in thousands	Weighted Average Interest rate(1)	Maturity Date(2)	Maximum Facility Size		Amount Outstanding		Available Balance
Repurchase Agreements:
Morgan Stanley Bank N.A.(3)	7.61%	5/25/2025	$	500,000	$	318,637	$	181,363
Citibank N.A.	7.39%	6/20/2026 (current); 6/20/2028 (fully extended)	535,000		206,926		328,074
Bank of Montreal(4)	7.45%	7/18/2025	223,424		217,709		5,715
Barclays(5)	7.33%	4/24/2027	250,000		47,200		202,800
Wells Fargo	7.25%	5/23/2026 (current); 5/23/2029 (fully extended)	200,000		58,360		141,640
Total Repurchase Agreements	7.48%		1,708,424		848,832		859,592
Revolving Credit Facility(6)	8.23%		100,000		10,000		90,000
Total	7.48%		$	1,808,424	$	858,832	$	949,592

(1)    Represents weighted average interest rate of the most recent interest period in effect for each borrowing as of period end. Borrowings under our repurchase agreements and revolving credit facility carry interest at one-month Term SOFR plus a spread.

(2)    For Repurchase Agreements, maturity date represents the current borrowing facility maturity date and the maximum maturity for borrowing facilities with extension options that are at our option, subject to compliance with certain financial and administrative covenants, as well as payment of applicable extension fees.

(3)    Borrowing facility has an extension option of one year, subject to lender approval and compliance with certain financial and administrative covenants.

(4)    Borrowing facility has three extension options of one year each, subject to lender approval and compliance with certain financial and administrative covenants.

(5)    Borrowing facility has two extension options of one year each, subject to lender approval and compliance with certain financial and administrative covenants.

(6)    The final maturity date of the Revolving Credit Facility is aligned with the Company’s ability to call remaining outstanding capital under certain subscription agreements.

Each of our repurchase agreements contains customary terms and conditions, including but not limited to, negative covenants relating to restrictions on our operations with respect to our status as a REIT, and financial covenants, such as a minimum interest coverage ratio covenant, minimum tangible net worth covenant, cash liquidity covenant and maximum leverage ratio covenant.

With respect to our revolving credit facility, we are required to comply with customary loan covenants and event of default provisions that include, but are not limited to, negative covenants relating to restrictions on operations with respect to our status as a REIT, and financial covenants. Such financial covenants include a minimum aggregate net capital contributions to net costs of investments ratio covenant and a maximum leverage ratio covenant.

As of June 30, 2024, we were in compliance with the covenants of our financing facilities.

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Results of Operations

We commenced investing in commercial real estate loans in May 2023. Accordingly, our results of operations for the six months ended June 30, 2024 and 2023 are not comparable. We expect revenues and expenses to increase during the year ending December 31, 2024 because we will have a full year of operations in 2024 and expect to continue making additional investments.

For the three and six months ended June 30, 2024 and 2023, our results of operations consisted of:

	Three Months Ended June 30,						Six Months Ended June 30,
$ in thousands except per share amount	2024		2023		$ Change		2024		2023		$ Change
Net Interest Income
Commercial real estate loan interest income	$	20,415	$	1,520	$	18,895	$	35,555	$	1,520	$	34,035
Other interest income	587		—		587		828		—		828
Interest expense	(13,843)		(1,588)		(12,255)		(24,249)		(1,588)		(22,661)
Net interest income	7,159		(68)		7,227		12,134		(68)		12,202
Other Income (Expense)
Unrealized gain (loss) on commercial real estate loan investments, net	285		—		285		1,203		—		1,203
Unrealized gain (loss) on repurchase agreements, net	(199)		—		(199)		(922)		—		(922)
Commitment fee income, net of related party expense of $2,120, $3,518, $868 and $868 for the three and six months ended June 30, 2024 and 2023, respectively	2,120		867		1,253		3,518		867		2,651
Other income	249		36		213		350		36		314
Total other income (expense), net	2,455		903		1,552		4,149		903		3,246
Expenses
Management and performance fees - related party	952		—		952		1,302		—		1,302
Debt issuance and other financing costs related to borrowings, at fair value	3,221		1,735		1,486		3,690		2,387		1,303
Organizational costs	14		154		(140)		19		604		(585)
General and administrative	1,800		551		1,249		2,958		576		2,382
Total expenses	5,987		2,440		3,547		7,969		3,567		4,402
Net income (loss)	$	3,627	$	(1,605)	$	5,232	$	8,314	$	(2,732)	$	11,046
Dividends to preferred stockholders	(7)		(1)		(6)		(14)		(1)		(13)
Net income (loss) attributable to common stockholders	$	3,620	$	(1,606)	$	5,226	$	8,300	$	(2,733)	$	11,033
Earnings (loss) per share:
Net income (loss) attributable to common stockholders
Basic	$	0.34	$	(2,147.96)	$	2,148.30	$	0.93	$	(7,151.30)	$	7,152.23
Diluted	$	0.34	$	(2,147.96)	$	2,148.30	$	0.93	$	(7,151.30)	$	7,152.23
Weighted average number of shares of common stock
Basic	10,729,623		748		10,728,875		8,956,409		382		8,956,027
Diluted	10,729,651		748		10,728,903		8,956,715		382		8,956,333

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Net Income (Loss) attributable to Common Stockholders

Net income (loss) attributable to common stockholders increased by $5.2 million during the three months ended June 30, 2024 and increased by $11.0 million during the six months ended June 30, 2024, as compared to June 30, 2023. The increase across both periods was primarily due to the increase in the number of commercial real estate loan originations during the period, which resulted in an increase in net interest income and commitment fee income, net of related party expenses, as compared to June 30, 2023.

Net Interest Income

Interest Income and Average Earning Asset Yields

The table below presents information related to our average earning assets and earning asset yields for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
$ in thousands	2024			2023			2024			2023
Average earning assets(1)	$	1,006,322		$	157,405		$	873,637		$	157,405
Average earning assets yield(2)	8.11		%	7.72		%	8.14		%	7.72		%

(1)    Average earning assets are based on weighted month-end balances. Average earning assets for the three and six months ended June 30, 2023 are based on the weighted month-end balances commencing in May 2023.

(2)    Average earning asset yield is calculated by dividing interest income by average earning assets. All yields are annualized.

Interest Expense and Cost of Funds

The table below presents information related our borrowings and cost of funds for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
$ in thousands	2024			2023			2024			2023
Average borrowings(1)	$	773,957		$	178,809		$	671,563		$	178,809
Maximum borrowings (2)	$	858,832		$	199,779		$	858,832		$	199,779
Average cost of funds(3)	7.15		%	7.10		%	7.22		%	7.10		%

(1)    Average borrowings are based on weighted month-end balances. Average borrowings for the three and six months ended June 30, 2023 are based on the weighted month-end balances commencing in May 2023.

(2)    Amount represents the maximum borrowings at each month-end within the period.

(3)    Average cost of funds is calculated by dividing annualized interest expense by average borrowings.

Our interest expense for the three and six months ended June 30, 2024 and 2023 is summarized below:

	Three Months Ended June 30,				Six Months Ended June 30,
$ in thousands	2024		2023		2024		2023
Repurchase agreement interest expense	$	13,689	$	857	$	23,823	$	857
Revolving credit agreement interest expense	154		731		426		731
Total interest expense	$	13,843	$	1,588	$	24,249	$	1,588

Other Income (Expense), Net

Other income (expense), net increased by $1.6 million during the three months ended June 30, 2024 and increased by $3.2 million during the six months ended June 30, 2024, as compared to June 30, 2023. This is primarily due to commitment fees earned on loan asset originations during the period and market valuation adjustments to our loan asset portfolio and financing facilities.

We generally seek to charge each borrower a commitment fee that is calculated as a percent of the whole loan on a fully funded basis at the time of origination. We retain 50% of commitment fees that we earn on our loan investments and pay our Adviser 50% of commitment fees that we earn (not to exceed 0.5% of the loan amount). We recognize commitment fees immediately in earnings because we elected the fair value option for our loan investments. For the three and six months ended June 30, 2024, commitment fee income, after related party expenses, increased by $1.3 million and $2.7 million, respectively, as compared to

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the three and six months ended June 30, 2023. We originated eight and twelve loans during the three and six months ended June 30, 2024, compared to two loan originations during the three and six months ended June 30, 2023.

The valuation of our commercial real estate loans, financing facilities, and company-level credit facilities is performed by an independent valuation adviser. In the three and six months ended June 30, 2024, we did not observe material changes in the collateral risks in our portfolio, however we did observe changes in market pricing for similar loan types to those in our portfolio and recorded a net unrealized gain of $285,000 and $1.2 million, respectively, on our investments. For the June 30, 2023 comparable periods, we did not record an unrealized gain or loss on our commercial real estate loan investments as we did not observe material changes in the collateral risks or market pricing of our portfolio during the period. We compared the features of our loans to the interest rates and terms required by lenders in the new loan origination market for similar loans, and the yield required by investors acquiring similar loans in the secondary market. We also compared current market and collateral conditions to those present at origination or acquisition. Additionally, for three and six months ended June 30, 2024, we recorded a net unrealized loss of $199,000 and $922,000, respectively, on our repurchase agreements following a review of market interest rates, which reflect estimates for how lenders would price equivalent loans for the remaining terms, for similar borrowing agreements with comparable loan-to-value ratios and credit profiles. For the June 30, 2023 comparable periods, we did not record an unrealized gain or loss on our repurchase agreements as we did not observe material changes in the market interest rates during the period.

Expenses

Our expenses for the three and six months ended June 30, 2024 increased by $3.5 million and $4.4 million, respectively, as compared to the three and six months ended June 30, 2023. The increase in expenses is primarily due to increased debt issuance and other financing costs and general and administrative expenses and the recognition of management fees and performance fees.

We expense debt issuance and other financing costs as incurred because we elected the fair value option for our repurchase agreements and revolving credit facility. When we incur debt issuance costs prior to a debt facility closing, we expense the costs as incurred if we intend to elect the fair value option to account for the debt facility and the closing is probable as of the balance sheet date. Our debt issuance and other financing costs include upfront lender fees, legal costs directly associated with entering into our debt facilities, and other lender fees associated with our existing debt facilities. For the three and six months ended June 30, 2024, debt issuance and other financing costs increased by $1.5 million and $1.3 million, respectively, as compared to the three and six months ended June 30, 2023. For the three and six months ended June 30, 2024, average borrowings were $774.0 million and $671.6 million, respectively, as compared to $178.8 million for the three and six months ended June 30, 2023.

Management fees and performance fees began to accrue on March 1, 2024. The management fee that we pay the Adviser to source our investments and manage our operations is based on our NAV. The performance fee that we pay the Adviser is based on the annual total return of the fund. Total return is determined based on total distributions plus the change in NAV.

Our general and administrative expenses for the three and six months ended June 30, 2024 increased by $1.2 million and $2.4 million, respectively, as compared to the three and six months ended June 30, 2023. The increase is primarily due to accounting, auditing, legal and other professional fees.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to pay dividends, fund investments, repay borrowings, and fund other general business needs. Our sources of funds for liquidity consist of the net proceeds from our continuous private offering, net cash provided by operating activities, proceeds and available borrowings from repurchase agreements and our revolving credit facility, loan repayments, uncalled capital commitments, and future issuances of equity and/or debt securities.

We currently believe that we have sufficient liquidity and capital resources available for the acquisition of additional investments, repayments on borrowings, the payment of cash dividends as required for continued qualification as a REIT, and to repurchase shares of our common stock under our share repurchase plan. Cash needs for items other than loan originations and asset acquisitions are generally met from operations, and cash needs for loan originations and asset acquisitions are funded by our continuous private offering and debt financings. However, there may be a delay between the sale of our shares and our origination of loan assets or purchase of assets that could result in a delay in the benefits to our stockholders, if any, of returns generated from our investment operations.

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We held cash and cash equivalents of $6.2 million and restricted cash of $9.9 million as of June 30, 2024. Our cash and cash equivalents change due to normal fluctuations in cash balances related to the timing of principal and interest payments and loan origination and funding activity. Our restricted cash changes based on the volume of new subscriptions for our shares.

The following table sets forth changes in cash and cash equivalents and restricted cash:

	Six Months Ended June 30,
$ in thousands	2024		2023
Cash flows from operating activities	$	18,526	$	1,697
Cash flows from investing activities	(506,304)		(157,405)
Cash flows from financing activities	478,333		157,956
Net change in cash, cash equivalents and restricted cash	$	(9,445)	$	2,248

Our operating activities provided net cash of $18.5 million for the six months ended June 30, 2024, primarily from amounts advanced by our Adviser under our advisory agreement, including $2.1 million of debt issuance costs.

Our investing activities used net cash of $506.3 million in the six months ended June 30, 2024, and consisted of originating twelve commercial real estate loan investments during the period.

Our financing activities provided net cash of $478.3 million in the six months ended June 30, 2024. During the six months ended June 30, 2024, we made net repayments on our revolving credit facility of $4.0 million and we received net proceeds from our repurchase agreements of $391.0 million and net proceeds from the issuance of common stock of $194.5 million. We also received net proceeds of $9.9 million from retail investor subscriptions paid in advance. We used cash of $11.7 million and $1.3 million during the six months ended June 30, 2024 to pay dividends and debt issuance costs, respectively. Additionally, we used cash of $100.0 million to repurchase redeemable common stock.

As of June 30, 2024, our total assets were approximately $1.1 billion and consisted primarily of 22 investments in commercial real estate loans totaling $1.1 billion, restricted cash of $9.9 million and cash and cash equivalents of $6.2 million. We financed our commercial real estate loan investments with $848.8 million of repurchase agreement borrowings from five lenders and $10.0 million from our revolving credit agreement.

Our primary sources of liquidity include available borrowings under our repurchase agreements and revolving credit facility and cash and cash equivalents. Amounts available under these sources as of June 30, 2024 and December 31, 2023 are summarized in the following table:

$ in thousands	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	6,169	$	1,975
Available borrowings under revolving credit agreements	90,000		86,000
Available borrowings under master repurchase agreements	859,592		226,283
	$	955,761	$	314,258

Our target leverage ratio after we have raised substantial offering proceeds and acquired a broad portfolio of commercial real estate loan investments is approximately 50% to 65% of the aggregate value of the underlying collateral of our commercial real estate loan investments. As used herein, “leverage ratio” is measured by dividing (x) the sum of the Company’s consolidated outstanding liabilities under its portfolio-level repurchase agreements and financing arrangements, by (y) the aggregate of the underlying collateral securing the loans in the Company’s portfolio that are not subordinated loans at the time such leverage is incurred. For purposes of determining the value of the underlying collateral of our commercial real estate loan portfolio, the value is calculated as of the date on which the loan is extended to the borrower.

We also may use Company-level credit facilities or other financing arrangements that are not secured by commercial real estate loans or other investments as short-term cash management tools to pay fees and expenses, finance investment activity, and bridge portfolio-level financing arrangements. There is no limit on the short-term indebtedness the Company may incur under Company-level credit facilities. Company-level credit facility loan balances outstanding for 12 months or longer will be factored into the leverage ratio above.

We may call $150 million in capital under the Invesco Subscription Agreement in one or more closings through March 23, 2028. We may call up to $150 million in additional capital if needed to avoid triggering any concentration limit imposed by a third party in connection with its distribution or placement of our shares. Invesco’s affiliate may not submit its shares for

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repurchase under our share repurchase plan until the earlier of March 23, 2028 and the date that our aggregate NAV is at least $1.5 billion. We can only accept a repurchase request from Invesco’s affiliate after all requests from unaffiliated stockholders have been fulfilled. We may elect to repurchase all or any portion of the shares acquired by Invesco’s affiliate at any time at a per share price equal to the most recently determined NAV per share for the applicable share class.

As of June 30, 2024, we may call an additional $144.7 million of the initial $150 million capital committed under the Invesco Subscription Agreement.

An institutional investor has committed to purchase up to $200 million of our Class F shares under the Class F Subscription Agreement at one or more closings held prior to December 5, 2024. The Class F stockholder may not submit its shares for repurchase under our share repurchase plan until the earlier of (i) the date our NAV reaches $1.5 billion and (ii) March 23, 2028. However, the Class F stockholder is entitled to request that we repurchase its shares in the event that there is a key person event or a material strategy change as defined in the terms of the Class F subscription agreement.

As of June 30, 2024, we have called $120.0 million of capital under the Class F Subscription Agreement and may call an additional $80.0 million committed under the Class F Subscription Agreement. Refer to Note 13 - “Subsequent Events” of our condensed consolidated financial statements included in Item 1 of this Report for activity under the Class F Subscription Agreement subsequent to June 30, 2024.

If we are unable to raise substantial funds in our Continuous Offering, we will make fewer investments resulting in less diversification in terms of the type, number, and size of investments we make. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reduce our net income, and limit our ability to make distributions.

As of June 30, 2024, we owed the Adviser $17.8 million consisting of advanced organizational costs and offering expenses, advanced operating expenses, operating expenses incurred by the Adviser not covered under the advance, management and performance fees, and commitment fees. The Adviser advanced all of our organizational costs and offering expenses (other than upfront selling commissions and ongoing stockholder servicing fees), and all of our operating expenses, including debt issuance costs, incurred through May 31, 2024. We will reimburse the Adviser for all advanced organizational costs, offering expense and operating expenses ratably over the 52 months commencing December 1, 2024. We will reimburse the Adviser on a quarterly basis for organizational costs, offering expenses and operating expenses incurred subsequent to May 31, 2024. Management fees and performance fees began to accrue on March 1, 2024. Management fees will be paid quarterly in arrears and performance fees will be paid annually. Commitment fees are not advanced by the Adviser and are currently payable to the Adviser. Refer to Note 11 - “Related Party Transactions” of our condensed consolidated financial statements included in Item 1 of this Report for the components of due to affiliates as of June 30, 2024.

Forward-Looking Statements Regarding Liquidity

During the periods when we are selling more shares than we are repurchasing, we primarily use our capital to acquire our investments, which we also fund with other capital resources. During periods when we are repurchasing more shares than we are selling, we primarily use our capital to fund repurchases. During the months ended April 30, 2024 and May 30, 2024, we did not receive any repurchase requests under our Share Repurchase Plan. During the month ended June 30, 2024, we received repurchase requests below the applicable repurchase limits under our Share Repurchase Plan and fulfilled all repurchase requests. We continue to believe that our current liquidity position is sufficient to meet the needs of our business.

In addition, we may have other funding obligations, which we expect to satisfy with the cash flows generated from our investments and our capital resources described above. Such obligations may include distributions to our stockholders, operating expenses, repayment of indebtedness, and debt service on our outstanding indebtedness. Our operating expenses include, among other things, the management fee and performance fee we pay to the Adviser, both of which will impact our liquidity to the extent the Adviser elects to receive such payments in cash, or subsequently redeems Class E shares previously issued to them. To date, the Adviser has elected to be paid in Class E shares, resulting in a non-cash expense.

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Contractual Obligations and Commitments

Commitments and contingencies may arise in the ordinary course of business. As of June 30, 2024, we had unfunded commitments of $258.8 million for 18 of our commercial real estate loan investments. Unfunded commitments generally consist of funding for leasing costs, interest reserves and capital expenditures. Funding depends on timing of lease-up, renovation and capital improvements as well as satisfaction of certain cash flow tests. Therefore, the exact timing and amounts of such future loan fundings are uncertain. We expect to fund our loan commitments over the remaining current maturity of the related loans of 3.00 years.

We have also committed to pay counterparty legal, diligence and other fees in connection with new financing facilities in the ordinary course of business.

Critical Accounting Policies and Estimates

With the exception of those disclosed in Note 2 - “Summary of Significant Accounting Policies” of our condensed consolidated financial statements included in Item 1 of this Report, there have been no significant changes to our critical accounting policies and estimates that are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Standards

There have been no significant changes to the status of our adoption of the recently issued accounting pronouncement that is disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Net Asset Value (“NAV”)

We calculate our NAV each month in accordance with valuation guidelines approved by our board of directors. We calculate our NAV for each class of shares based on the net asset values of our investments (including but not limited to commercial real estate loans and debt securities), the addition of any other assets (such as cash, restricted cash, receivables, and other assets obtained in the ordinary course of business), and the deduction of any liabilities (including but not limited to financing facilities, Company-level credit facilities, securitized loans, payables, and other liabilities incurred in the ordinary course of business). NAV is not a measure used under U.S. GAAP and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV differs from U.S. GAAP. NAV is not equivalent to stockholders’ equity or any other U.S. GAAP measure.

The following table reconciles U.S. GAAP stockholders’ equity per our condensed consolidated balance sheets to our NAV:

$ in thousands	June 30, 2024
Stockholders' equity	$	238,055
Adjustments:
Redeemable common stock - related party(1)	5,660
Organizational costs advanced by Adviser(2)	724
Offering costs advanced by Adviser(3)	1,261
Operating expenses advanced by Adviser(4)	12,211
Accrued stockholder servicing fees not currently payable(5)	4,649
Preferred stock liquidation preference	(228)
NAV	$	262,332

(1)    We classify common stock held by the Adviser and by an Invesco affiliate as redeemable common stock and include the value of these shares as a component of our NAV. We report our redeemable common stock on our condensed consolidated balance sheets at redemption value. Redemption value is determined based on our net asset value (“NAV”) per share as of our balance sheet date.

(2)    The Adviser advanced all of our organizational costs through May 31, 2024. We expense our organizational costs as incurred in our condensed consolidated statements of operations. We will reimburse the Adviser for all of our organizational costs advanced through May 31, 2024 ratably over the 52 months commencing December 1, 2024. We will reimburse the Adviser for any organizational costs incurred subsequent to May 31, 2024 as incurred. For purposes of calculating our NAV, organizational costs paid by the Adviser through May 31, 2024 will not be recognized as an expense until we reimburse the Adviser for these costs.

(3)    The Adviser advanced all of our offering costs through May 31, 2024. We will reimburse the Adviser for all of our offering costs incurred through May 31, 2024 ratably over 52 months commencing December 1, 2024. For purposes of calculating our NAV, offering costs paid by the Adviser through May 31, 2024 will not be recognized as a reduction in NAV until we reimburse the Adviser for these costs.

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(4)    The Adviser advanced all of our operating expenses, including $5.5 million for general and administrative expenses and $7.0 million for debt issuance and other financing costs, through May 31, 2024. These costs include $287,000 of certain prepaid expenses that are classified as other assets in our U.S. GAAP consolidated financial statements that have also been excluded from our NAV. We will reimburse the Adviser for all of our advanced operating expenses incurred through May 31, 2024 ratably over 52 months commencing December 1, 2024. We will reimburse the Adviser for any operating expenses incurred subsequent to May 31, 2024 as incurred. For purposes of calculating our NAV, operating expenses paid by the Adviser on our behalf through May 31, 2024 will not be reflected in our NAV until we reimburse the Adviser for these costs.

(5)    We have entered into an agreement with the Dealer Manager in connection with the Continuous Offering. Under the terms of our agreement, the Dealer Manager is entitled to receive upfront selling commissions and stockholder servicing fees for Class S, Class S-1 and Class D shares sold in the Continuous Offering. As of June 30, 2024, we have accrued stockholder servicing fees totaling $4.7 million of which $68,000 is currently payable to the Dealer Manager.

The following table details the major components of our NAV as of June 30, 2024:

$ in thousands, except share data	June 30, 2024
Commercial real estate loan investments, at fair value	$	1,121,010
Cash and cash equivalents	6,169
Restricted cash	9,927
Interest receivable	3,997
Due from affiliate	675
Repurchase agreements, at fair value	(849,754)
Revolving credit facility, at fair value	(10,000)
Interest payable	(2,472)
Dividends and distributions payable	(1,599)
Accounts payable, accrued expenses and other liabilities	(12,003)
Due to affiliates(1)	(3,390)
Preferred stock liquidation preference	(228)
Net asset value	$	262,332
Number of outstanding shares(2)	10,415,093

(1) Excludes (i) amounts advanced by the Adviser of $724,000 for organizational costs, $1.3 million for offering costs, $7.0 million for debt issuance and other financing costs and $5.5 million for general and administrative expenses and (ii) accrued stockholder servicing fees not currently payable to the Dealer Manager of $4.6 million.

(2) Includes 225,079 shares of common stock that are classified as redeemable common stock.

The following table provides a breakdown of our total NAV and NAV per share by class as of June 30, 2024:

$ in thousands, except per share data	Class S Shares		Class S-1 Shares		Class D Shares		Class I Shares		Class E Shares		Class F Shares		Total
Net asset value	$	1,514	$	97,090	$	1,369	$	38,265	$	3,831	$	120,263	$	262,332
Number of outstanding shares(1)	60,435		3,873,069		54,677		1,527,694		151,870		4,747,348		10,415,093
NAV Per Share	$	25.04	$	25.07	$	25.03	$	25.05	$	25.23	$	25.33

(1) Includes 54,567 Class S shares, 54,566 Class D shares, 53,662 Class I shares and 62,284 Class E shares that are classified as redeemable common stock.

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Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution

Funds from operations (“FFO”), adjusted funds from operations (“AFFO”) and funds available for distribution (“FAD”), as defined below, are not measures used under U.S. GAAP and certain adjustments made to our U.S. GAAP net income (loss) used in the determination of FFO, AFFO and FAD will differ from U.S. GAAP. FFO, AFFO, and FAD should not be considered to be more relevant or accurate than the U.S. GAAP methodology in calculating net income (loss) or in evaluating our operating performance. FFO, AFFO, and FAD should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other U.S. GAAP measurements. Further, FFO, AFFO, and FAD 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. In addition, our methodology for calculating AFFO and FAD may differ from methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported AFFO and FAD may not be comparable to the AFFO and FAD reported by other companies.

FFO is a standard REIT industry metric defined by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as net income or loss (computed in accordance with U.S. GAAP), excluding (i) gains or losses from sales of depreciable real property, (ii) impairment write-downs on depreciable real property, plus (iii) real estate-related depreciation and amortization and (iv) similar adjustments for non-controlling interests and unconsolidated entities.

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) organizational costs advanced by the Adviser, (ii) preferred stock offering costs, (iii) equity based compensation awards and amortization of unvested restricted stock awards, and (iv) unrealized (gains) losses from changes in the fair value of financial instruments. Organizational costs advanced by the Adviser are removed to arrive at FFO as these costs are reflective of the costs incurred to stand up our operations and are not considered ongoing operating costs. Offering costs related to preferred stock issuances, similarly, were organizational in nature and are not considered reflective of ongoing operational costs. We may add additional adjustments from FFO to arrive at AFFO as appropriate; for example, repayment of organizational costs to the Adviser will reduce AFFO in the periods such payments are made.

Our business objective is to provide attractive risk-adjusted returns to our stockholders, primarily through dividends. We believe FAD is a meaningful non-GAAP measure that provides useful information for considering our operating results and certain other items relative to the amount of our distributions by removing the impact of certain non-cash items from our operating results. FAD is calculated as AFFO excluding (i) operating expenses advanced by the Adviser until the advanced expenses are reimbursed to the Adviser, (ii) stockholder servicing fees paid during the period, and (iii) management fees and performance fees paid in shares of our common stock even if repurchased by us. FAD is not indicative of cash available to fund our cash needs and does not represent cash flows from operating activities in accordance with U.S. GAAP. Cash flows from operating activities in accordance with U.S. GAAP would generally include adjustments for working capital items and actual cash receipts from interest income recognized on commercial real estate loan investments, which are excluded for FAD. Furthermore, FAD is adjusted for stockholder servicing fees, which are not considered when determining cash flows from operating activities in accordance with U.S. GAAP.

To maintain our qualification as a REIT, U.S. federal income tax law generally requires that we distribute at least 90% of our REIT taxable income annually, determined without regard to the deduction for dividends paid and excluding net capital gains. We plan to distribute at least 100% of our REIT taxable income. Because we view funds available for distribution as a consistent measure of our investment portfolio's ability to generate income for distribution to common stockholders, funds available for distribution is one metric, but not the exclusive metric, that our Board uses to determine the amount, if any, and the payment date of dividends on our common stock. However, funds available for distribution should not be considered as an indication of our taxable income, a guaranty of our ability to pay dividends or as a proxy for the amount of dividends we may pay, as funds available for distribution excludes certain items that impact our cash needs.

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The table below provides a reconciliation of U.S. GAAP net income (loss) attributable to common stockholders to FFO, AFFO, and FAD for the following periods:

$ in thousands	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Net income (loss) attributable to common stockholders	$	3,620	$	8,300
Funds from operations (FFO)	$	3,620	$	8,300
Adjustments:
Organizational costs advanced by Adviser(1)	12		17
Equity based compensation expense	20		37
Unrealized (gain) loss on commercial real estate loan investments, net	(285)		(1,203)
Unrealized (gain) loss on repurchase agreements, net	199		922
Adjusted funds from operations (AFFO)	$	3,566	$	8,073
Adjustments:
Operating expenses advanced by Adviser(2)	4,003		5,563
Non-cash management fee	307		452
Non-cash performance fee	645		850
Stockholder servicing fees paid to the Dealer Manager	(159)		(245)
Funds available for distribution (FAD)	$	8,362	$	14,693

(1)    Represents organizational costs as reported on our condensed consolidated statements of operations, excluding certain organizational costs not advanced by the Adviser of $2,000 for the three and six months ended June 30, 2024.

(2)    Operating expenses advanced by the Adviser consist of:

$ in thousands	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Debt issuance and other financing costs related to borrowings, at fair value	$	3,221	$	3,690
General and administrative expenses	1,800		2,958
Less: equity based compensation expense	(20)		(37)
Less: operating expenses not advanced by the Adviser	(998)		(1,048)
Total operating expenses advanced by the Adviser	$	4,003	$	5,563

The components of funds available for distribution for the three and six months ended June 30, 2024 are:

$ in thousands	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
Net interest income	$	7,159	$	12,134
Commitment fee income, net of related party expense	2,120		3,518
Other income	249		350
Stockholder servicing fees paid to the Dealer Manager	(159)		(245)
Organizational costs not advanced by the Adviser	(2)		(2)
Operating expenses not advanced by the Adviser	(998)		(1,048)
Subtotal	8,369		14,707
Dividends to preferred stockholders	(7)		(14)
Funds available for distribution	$	8,362	$	14,693

Distributions

We generally intend to distribute substantially all of our taxable income, which does not necessarily equal net income as calculated in accordance with U.S. GAAP, to our stockholders each year to comply with the REIT provisions of the Internal Revenue Code of 1986 (the “Code”) and minimize tax liability.

We began declaring monthly distributions in August 2023 with a cumulative distribution from funds available for distribution up to that point. The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor.

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The table below details the net distribution per share for each of our common share classes for the six months ended June 30, 2024:

Declaration Date	Class S Shares		Class S-1 Shares		Class D Shares		Class I Shares		Class E Shares		Class F Shares
January 31, 2024	$	0.1600	$	0.1419	$	0.1600	$	0.1600	$	0.1600	$	—
February 29, 2024	0.1600		0.1419		0.1600		0.1600		0.1600		—
March 31, 2024(1)	0.1600		0.1428		0.1600		0.1600		0.1600		—
March 31, 2024(1)	0.3800		0.3800		0.3800		0.3800		0.3800		—
April 30, 2024	0.1600		0.1426		0.1600		0.1600		0.1600		0.1600
May 31, 2024(2)	0.1600		0.1419		0.1600		0.1600		0.1600		0.1600
May 31, 2024(2)	0.3000		0.3000		0.3000		0.3000		0.3000		0.3000
June 30, 2024	0.1583		0.1426		0.1600		0.1600		0.1600		0.1600
Total	$	1.6383	$	1.5337	$	1.6400	$	1.6400	$	1.6400	$	0.7800

(1)��   On March 31, 2024, we declared a monthly distribution of $0.1600 per share and a special distribution of $0.3800 per share for each share class.

(2)    On May 31, 2024, we declared a monthly distribution of $0.1600 per share and a special distribution of $0.3000 per share for each share class.

The following table summarizes our distributions declared during the three and six months ended June 30, 2024.

	Three Months Ended				Six Months Ended
	June 30, 2024				June 30, 2024
$ in thousands	Amount		Percentage		Amount		Percentage
Distributions
Payable in cash	$	4,478	62	%	$	9,257	68	%
Reinvested in shares	2,771		38	%	4,303		32	%
Total distributions	$	7,249	100	%	$	13,560	100	%
Sources of Distributions
Cash flows from operating activities(1)	$	7,249	100	%	$	13,560	100	%
Offering proceeds	—		—		—		—
Financing proceeds	—		—		—		—
Total sources of distribution	$	7,249	100	%	$	13,560	100	%
Net cash provided by operating activities	$	10,091			$	18,526

(1) As of June 30, 2024, our inception to date cash flows from operating activities funded 100% of our distributions.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company may be exposed to market risk with respect to the fair value of commercial real estate loans and borrowings due to changes in market conditions, including spreads, benchmark interest rates, property cash flows, and commercial property values that serve as collateral. While we do not seek to avoid risk completely, we believe that risk can be quantified from historical experience, and we seek to actively manage that risk, to earn sufficient compensation to justify taking those risks and to maintain capital levels consistent with the risks we undertake.

Interest Rate Risk

Interest rate risk is highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. We are exposed to interest rate volatility primarily as a result of the floating rate nature of the commercial real estate loans we hold and the financing we place on them. Additionally, we may use Company-level credit facilities featuring floating interest rates for liquidity and working capital purposes. Furthermore, we may make investments in fixed and floating rate debt securities; the value of our positions may increase or decrease depending on interest rate movements. Finally, interest rate changes may impact the availability of financing needed to expand our investment portfolio.

A rise in benchmark interest rates, such as SOFR, can be expected to lead to higher interest income earned (calculated as benchmark interest rate plus spread) on any variable rate commercial real estate loan we may hold and to declines in the value of any fixed rate commercial real estate loan we may hold. Rising benchmark interest rates carry default risk to our borrowers, because debt service payments may increase relative to cash flows from underlying properties, triggering borrower liquidity covenants. Therefore, we expect to protect interest income by requiring borrowers to purchase benchmark interest rate caps, which provides a hedge against rising benchmark interest rates, whereby the borrower will receive excess cash if benchmark interest rates exceed predetermined strike prices. Furthermore, rising benchmark interest rates also cause our overall cost of borrowing to increase, partially offsetting any increase in elevated interest income earned on our variable rate commercial real estate loan. We may use derivative financial instruments to hedge benchmark interest rate exposure on our borrowings to mitigate the impact on our debt service payments. An increase in benchmark interest rates may result in an increase in our net interest income and the amount of performance fees payable to the Adviser.

A decline in benchmark interest rates can be expected to lead to lower interest income earned from any variable rate commercial real estate loan we hold and increases in the value of any fixed rate commercial real estate loan we may hold. To mitigate the impact of reduced earnings as a result of declining benchmark interest rates, we expect to structure benchmark interest rate floors into each loan where the borrower will be required to pay minimum debt service payments should benchmark interest rates fall below a predetermined rate. Additionally, reduced benchmark interest rates also cause our overall cost of borrowings to decrease. Because our borrowings do not feature interest rate floors, but our variable rate commercial real estate loan feature minimum debt service payments due to us, declining benchmark interest rates below the structured floors may result in an increase to the net interest income received and an increase in the amount of performance fees payable to the Adviser.

As of June 30, 2024, we had $1.1 billion of outstanding principal on our floating rate commercial real estate loans, $848.8 million outstanding on our floating rate financing facilities and $10.0 million outstanding on our Company-level credit facilities.

The net interest income sensitivity analysis table presented below shows the estimated impact over a twelve-month period of an instantaneous parallel shift in the yield curve, up and down by 100 basis points on our net interest income, assuming no changes in the composition of our commercial real estate loan investment portfolio and our outstanding borrowings in effect as of June 30, 2024. The analysis presented utilized assumptions, models and estimates of our Adviser based on our Adviser’s judgment and experience.

$ in thousands	At June 30, 2024
Change in Interest Rates	Projected Increase (Decrease) in Net Interest Income		Percentage Change in Projected Net Interest Income
+1.00%	$	2,610	9.05	%
-1.00%	$	(2,579)	(8.94)	%

Certain assumptions have been made in connection with the calculation of the information set forth in the foregoing interest rate sensitivity table and, as such, there can be no assurance that assumed events will occur or that other events will not occur that

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would affect the outcomes. The interest rate scenarios assume interest rates at June 30, 2024. Furthermore, while the analysis reflects the estimated impact of interest rate increases and decreases on a static portfolio, we actively manage the size and composition of our investments, which can result in material changes to our interest rate risk in the portfolio.

The information set forth in the interest rate sensitivity table above and all related disclosures constitutes forward-looking statements within the meaning of Section 21E of the Exchange Act. Actual results could differ significantly from those estimated in the foregoing interest rate sensitivity table.

Credit Risk

We are exposed to credit risk in our commercial real estate loans with respect to a borrower’s ability to make required debt service payments to us and repay the unpaid principal balance in accordance with the terms of the applicable loan agreement. We manage this risk by conducting a credit analysis prior to making an investment and by actively monitoring our portfolio and the underlying credit quality, including subordination and diversification, of our commercial real estate loans. In addition, we re-evaluate the credit risk inherent in our commercial real estate loans on a regular basis under fundamental considerations such as gross domestic product, unemployment, interest rates, retail sales, store closing/openings, corporate earnings, housing inventory, affordability and regional home price trends.

While our investment objectives include avoiding excess sponsor/borrower concentration, we expect to experience some level of sponsor/borrower concentration prior to the time that we have raised substantial offering proceeds and acquired a broad portfolio of Credit Assets (the “Ramp-Up Period”). At June 30, 2024, three of the commercial real estate loans aggregating $238.1 million and approximately 21% of our loan portfolio, at fair value, are cross collateralized and cross defaulted under a master credit agreement with a single borrower. We have committed to fund an additional $29.3 million under the master credit agreement for leasing costs, interest reserves and capital expenditures, and we may choose to add additional commercial real estate loans under the master credit agreement. The loans that the Company has made under the master credit agreement are guaranteed by an affiliate of the borrower that in turn indirectly owns the borrower.

We are exposed to credit risk with respect to the tenants that occupy properties that serve as collateral to our commercial real estate loans. To mitigate this risk, we seek to avoid large single tenant exposure and we undertake a credit evaluation of major tenants prior to making a loan. This analysis includes extensive due diligence of a potential tenant’s creditworthiness and business, as well as an assessment of the strategic importance of the property to the tenant’s core business operations.

Finally, we may be exposed to counterparty credit risk under the terms of a derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties.

Market Risk

Market Value Risk

We may also be exposed to market risk with respect to the fair value of our commercial real estate loans, debt securities and borrowings due to changes in market conditions, including spreads, benchmark interest rates, property cash flows, and commercial property values that serve as collateral. We seek to manage our exposure to market risk by originating or acquiring commercial real estate loans secured by different property types located in diverse, but liquid markets with stable credit ratings. The fair value of our commercial real estate loans, debt securities and borrowings may fluctuate, therefore the amount we will realize upon any repayment, sale, or an alternative liquidation event is unknown.

The investment portfolio value sensitivity analysis table presented below shows the estimated impact of a change in market benchmark spreads, up and down 100 basis points, on the fair value of our benchmark spread-sensitive investments and borrowings as of June 30, 2024, assuming a static portfolio and constant financing. When evaluating the impact of changes in benchmark spreads, prepayment assumptions and principal reinvestment rates are adjusted based on our Adviser’s expectations. The analysis presented utilized assumptions, models and estimates of our Adviser based on our Adviser’s judgment and experience.

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$ in thousands	At June 30, 2024
Change in Benchmark Spreads	Projected Increase (Decrease) in Net Portfolio Value		Percentage Change in Projected Net Portfolio Value
+1.00%	$	(4,312)	(1.65)	%
-1.00%	$	1,806	0.69	%

Certain assumptions have been made in connection with the calculation of the information set forth in the foregoing benchmark spread sensitivity table and, as such, there can be no assurance that assumed events will occur or that other events will not occur that would affect the outcomes. Furthermore, while the analysis reflects the estimated impact of benchmark spread increases and decreases on a static portfolio, we actively manage the size and composition of our investments, which can result in material changes to our benchmark spread risk in the portfolio.

The information set forth in the benchmark spread sensitivity table above and all related disclosures constitutes forward-looking statements within the meaning of Section 21E of the Exchange Act. Actual results could differ significantly from those estimated in the foregoing benchmark spread sensitivity table.

Real Estate Risk

Commercial property values are subject to volatility and may be adversely affected by a number of factors, including: national, regional and local economic conditions; local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes and/or tax and legal considerations. Changes in commercial property values are difficult to predict with accuracy. We model a range of valuation scenarios and the resulting impacts to our business.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report was made under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon this evaluation, our CEO and CFO have concluded that as of the end of the period covered by this Quarterly Report our disclosure controls and procedures (a) are effective to reasonably ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of June 30, 2024, we were not involved in any such legal proceedings.

ITEM 1A.    RISK FACTORS

There were no material changes during the period covered by this Quarterly Report to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 29, 2024. Additional risks not presently known, or that we currently deem immaterial, also may have a material adverse effect on our business, financial condition and results of operations.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Unregistered Sales of Equity Securities

On April 15, 2024, we issued 28,978 Class S-1 shares at a price per share of $25.3226 for a total value of $734,000, 13,482 Class I shares at a price per share of $25.3032 for a total value of $341,000, and 620 Class E shares at a price per share of $25.3128 for a total value of $16,000 under our distribution reinvestment plan.

On May 15, 2024, we issued 9,485 Class S-1 shares at a price per share of $25.0347 for a total value of $237,000, 4,356 Class I shares at a price per share of $25.0294 for a total value of $109,000, and 227 Class E shares at a price per share of $25.1011 for a total value of $6,000 under our distribution reinvestment plan.

On June 12, 2024, we issued 32,785 Class S-1 shares at a price per share of $25.1994 for a total value of $826,000, 13,865 Class I shares at a price per share of $25.1718 for a total value of $349,000, and 735 Class E shares at a price per share of $25.2821 for a total value of $19,000 under our distribution reinvestment plan.

On May 17, 2024, we issued 3,340 Class E stock awards granted to members of our board of directors under our share-based compensation plan at a price per share of $25.2821 for a total value of $84,000.

The transactions described above were exempt from the registration provisions of the Securities Act by virtue of Section 4(a)(2) thereof.

Issuer Purchases of Equity Securities

We have adopted a share repurchase plan, whereby on a monthly basis, stockholders may request that we repurchase all or any portion of their shares of our common stock, subject to the terms and conditions of the share repurchase plan. We may choose, in our discretion, to repurchase all, some or none of the shares that have been requested to be repurchased at the end of any month, subject to any limitations in the share repurchase plan.

The total amount of share repurchases under the plan is limited to 2% of our aggregate NAV per month and 5% of our aggregate NAV per calendar quarter.

Shares will be repurchased at a price equal to the transaction price on the applicable repurchase date, subject to any early repurchase deduction. Our transaction price will generally equal our prior month's NAV per share for that share class. Shares repurchased within one year of the date of issuance generally will be repurchased at 95% of the current transaction price, subject to certain limited exceptions. Due to the illiquid nature of investments in commercial real estate loans, we may not have sufficient liquid resources to fund repurchase requests. Our board of directors may modify or suspend the share repurchase plan.

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During the three months ended June 30, 2024, we repurchased shares of our common stock in the following amounts:

Month of:	Total Number of Shares Repurchased	Average Price Paid per Share(1)		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs(2)	Maximum Number of Shares Pending Repurchase Pursuant to Publicly Announced Plans or Programs (3)
April 2024(4)	3,990,638	$	25.06	—	—
May 2024	—	$	—	—	—
June 2024	1,200	$	23.86	1,200	—
	3,991,838	$	25.06	1,200	—

(1)Shares repurchased within one year of the date of issuance generally will be repurchased at 95% of the current transaction price, subject to certain limited exception.

(2)Publicly announced plans or programs include share repurchases under our share repurchase plan, if any.

(3)All repurchase requests under our share repurchase plan were satisfied.

(4)The Total Number of Shares Repurchased and Average Price Paid per Share includes 3,990,638 shares of our redeemable common stock held by Invesco Realty, Inc. repurchased outside of the share repurchase plan, with an average price paid per share of $25.06, related to shares that were previously issued pursuant to the Invesco Subscription Agreement.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.    OTHER INFORMATION

None.

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ITEM 6.    EXHIBITS

Exhibit No.	Description
3.1	Articles of Amendment and Restatement of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10, filed with the SEC on June 29, 2023.
3.2	Articles of Amendment of the Company, incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 10/A, filed with the SEC on August 25, 2023.
3.3	Articles Supplementary Classifying and Designating a Class of Preferred Stock as 12.5% Series A Cumulative Redeemable Preferred Stock and Fixing Distribution and Other Preferences and Rights of Such Class, incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 10, filed with the SEC on June 29, 2023.
3.4	Articles Supplementary Classifying and Designating a Class of Common Stock as Class S-1 Common Stock and Fixing Distribution and Other Preferences and Rights of Such Class, incorporated by reference to Exhibit 3.4 to the Company’s Registration Statement on Form 10/A, filed with the SEC on August 25, 2023.
3.5	Articles Supplementary filed with the State Department of Assessments and Taxation of Maryland effective on October 16, 2023, incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K, filed with the SEC on October 19, 2023.
3.6	Articles Supplementary Classifying and Designating a Class of Common Stock as Class F Common Stock and Fixing Distribution and Other Preferences and Rights of Such Class, incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K, filed with the SEC on December 11, 2023.
3.7	Bylaws of the Company, incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form 10, filed with the SEC on June 29, 2023.
4.1	Distribution Reinvestment Plan adopted by the Company, effective as of March 23, 2023, incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 10, filed with the SEC on June 29, 2023.
31.1*	Certification of Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in iXBRL (inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Changes in Equity and Redeemable Equity Instruments; and (iv) Condensed Consolidated Statements of Cash Flows
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith ** Furnished herewith

The agreements and other documents filed as exhibits to this Quarterly Report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

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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.

	INVESCO COMMERCIAL REAL ESTATE FINANCE TRUST, INC.
August 14, 2024	By:	/s/ Hubert J. Crouch
		Hubert J. Crouch
		Chief Executive Officer
		(Principal Executive Officer)
August 14, 2024	By:	/s/ R. Lee Phegley, Jr.
		R. Lee Phegley, Jr.
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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