Principal Credit Real Estate Income Trust 10-Q 12 Nov 24 2024 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Sep. 30, 2024	Nov. 12, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	000-56670
Registrant Name	Principal Credit Real Estate Income Trust
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	99-3313328
Entity Address, Address Line One	711 High Street
Entity Address, City or Town	Des Moines
Entity Address, State or Province	IA
Entity Address, Postal Zip Code	50392
City Area Code	800
Local Phone Number	787-1621
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		50
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Central Index Key	0002026448
Amendment Flag	false

Condensed Balance Sheets (Unaud

Condensed Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2024	Jun. 30, 2024
ASSETS
Cash and cash equivalents	$ 714	$ 1,000
Total assets	714	1,000
LIABILITIES & EQUITY
Total liabilities	0	0
Commitments and contingencies (Note 6)	0	0
Redeemable common shares (Note 3)	1,000	1,000
Equity
Accumulated deficit	(286)
Total equity	(286)	0
Total liabilities and equity	$ 714	$ 1,000

Condensed Statement of Operatio

Condensed Statement of Operations (Unaudited) - USD ($)	3 Months Ended	4 Months Ended
	Sep. 30, 2024	Sep. 30, 2024
Revenues
Total Revenues	$ 0	$ 0
Expenses
General and administrative	286	286
Total Expenses	286	286
Net loss	$ (286)	$ (286)
Net loss per redeemable common share, basic (in dollars per share)	$ (5.72)	$ (7.73)
Net loss per redeemable common share, diluted (in dollars per share)	$ (5.72)	$ (7.73)
Weighted average redeemable common shares outstanding, basic (in shares)	50	37
Weighted average redeemable common shares outstanding, diluted (in shares)	50	37

Condensed Statements of Changes

Condensed Statements of Changes in Equity (Unaudited) - USD ($)	Total	Accumulated Deficit and Cumulative Distributions
Beginning balance at May. 22, 2024	$ 0	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(286)	(286)
Ending balance at Sep. 30, 2024	(286)	(286)
Beginning balance at Jun. 30, 2024	0	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(286)	(286)
Ending balance at Sep. 30, 2024	$ (286)	$ (286)

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended	4 Months Ended
	Sep. 30, 2024	Sep. 30, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (286)	$ (286)
Net cash used in operating activities	(286)	(286)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the issuance of redeemable common shares	0	1,000
Net cash used in investing activities	0	0
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by financing activities	0	1,000
Net increase/(decrease) in cash and cash equivalents	(286)	714
Cash and cash equivalents, beginning of period	1,000	0
Cash and cash equivalents, end of period	$ 714	$ 714

Organization and Business Purpo

Organization and Business Purpose	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business Purpose	Organization and Business Purpose Principal Credit Real Estate Income Trust (the “Company”) was formed on May 22, 2024 (“Date of Formation”), as a Maryland statutory trust and intends to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, commencing with its taxable year ending December 31, 2025. The Company is managed by Principal Real Estate Investors, LLC, a Delaware limited liability company (the “Adviser” and, together with Principal Real Estate Europe Limited, “Principal Real Estate”). Principal Real Estate is the dedicated real estate group of Principal Global Investors Holding Company (US), LLC, a member company and affiliate of Principal Financial Group, which is a public company listed on the NASDAQ under the ticker symbol “PFG.” The Company entered into a Dealer Manager Agreement with Principal Funds Distributor, Inc., a Washington corporation and affiliate of Principal Real Estate (the “Dealer Manager”). The Dealer Manager is registered as a broker-dealer and is a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). The Company was organized to originate, acquire, finance, manage and dispose of a portfolio of primarily commercial real estate (“CRE”) debt investments, including senior mortgage loans, subordinated debt and other similar investments (collectively referred to as, "CRE Debt Investments"), diversified across both geography and asset class. To a lesser extent, the Company may invest in other real estate-related debt securities, including commercial mortgage-backed securities and collateralized loan obligations. The Company believes its other real estate-related debt securities will help maintain liquidity to satisfy any share repurchases it chooses to make in any particular quarter and manage cash before investing subscription proceeds into investments while also seeking attractive current income. The Company will seek to focus on senior secured floating rate investments, collateralized by high quality real estate assets to generate current cash flow. The Company seeks to identify attractive risk-reward investments by financing high quality real estate assets primarily located in the top 50 metropolitan statistical areas as tracked by Principal Real Estate. As of September 30, 2024 , the Company has neither purchased nor contracted to purchase any investments. The Adviser has identified a pipeline of CRE Debt Investments in which it is probable that the Company will invest in during the fourth quarter of 2024.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies The Company believes the following significant accounting policies, among others, affect its more significant estimates and assumptions used in the preparation of the condensed financial statements. Basis of Presentation The accompanying unaudited condensed financial statements has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and include the accounts of the Company. Management believes it has made all necessary adjustments, consisting of only normal recurring items, so that the condensed financial statements are presented fairly and that estimates made in preparing its condensed financial statements are reasonable and prudent. Use of Estimates The preparation of the condensed financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of revenues. Actual results may ultimately differ materially from those estimates. Cash and Cash Equivalents Cash and cash equivalents represent cash held in banks, cash on hand, and liquid investments with original maturities of three months or less. The Company may have bank balances in excess of federally insured amounts; however, the Company deposits its cash and cash equivalents with high credit-quality institutions to minimize credit risk. The Company did not hold cash equivalents as of September 30, 2024. Fair Value Option The Company will elect the fair value option for certain eligible financial assets and liabilities including CRE debt investments, real estate-related debt securities and liabilities associated with borrowing facilities. The fair value elections will be made to create a more direct alignment between the Company’s financial reporting and the calculation of net asset value per share used to determine the prices at which investors can purchase and redeem shares of the Company’s common stock. The decision to elect the fair value option will be determined on an instrument-by-instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance will be required to be reported separately on the Company’s condensed balance sheet from those instruments using another accounting method. The Company’s fair value option elections will be made in accordance with the guidance in Accounting Standards Codification (“ASC”) 825, Financial Instruments (“ASC 825”) that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. In the cases of loans and securities investments for which the fair value option is elected, loan origination fees and costs related to the origination or acquisition of the instrument should be immediately recognized in earnings. Unrealized gains and losses on assets and liabilities for which the fair value option has been elected are also reported in earnings without deferral. This is because under the fair value option, a lender reports the instrument at its exit price (i.e., the price that would be received to sell the instrument in an orderly transaction), which reflects the market’s assessment of the instrument’s cash flows and risks and does not include any entity-specific costs or fees. Organization and Offering Expenses The Adviser has agreed to advance organization and offering expenses associated with this offering (including legal, accounting, and other expenses attributable to the organization, but excluding upfront selling commissions, dealer manager fees and shareholder servicing fees) and certain of the Company’s operating expenses that the Adviser incurs on behalf of the Company through the first anniversary of the initial closing (the “Initial Retail Closing”) of the Company’s continuous, blind pool private offering (the “Offering”) that includes non-Anchor Investors (as defined below). The Company will reimburse the Adviser for all such advanced expenses ratably over the 60-month period following the first anniversary of the Initial Retail Closing. Such reimbursement may be paid, at the Adviser’s election, in cash or Class E shares, or any combination thereof. If the Adviser elects to receive any portion of such reimbursement in common shares, the Company may repurchase such common shares from the Adviser at a later date. As of September 30, 2024, the Adviser and its affiliates have incurred organization and offering expenses on the Company’s behalf of approximately $0.6 million and $1.1 million, respectively. These organization and offering expenses are not recorded in the accompanying condensed balance sheet because such costs are not the Company’s liability until the date on which it commences operations associated with the Initial Retail Closing. When recorded by the Company, organizational expenses and operating expenses will be expensed as incurred, and offering expenses will be charged to shareholders’ equity. Any amount due to the Adviser but not paid will be recognized as a liability on the condensed balance sheet. Operating Expenses The Adviser has agreed to advance certain of the Company’s operating expenses and costs through the Initial Retail Closing of the continuous private offering. The Company will reimburse the Adviser for such advanced expenses ratably over the 60 months following the first anniversary of the Initial Retail Closing. Operating expenses incurred after the first anniversary of the Initial Retail Closing will be paid by the Company as incurred. As of September 30, 2024, general and administrative expenses in the amount of $0.1 million were incurred. These operating expenses are not recorded in the accompanying condensed financial statements because such costs are not the Company’s liability until the date of the Initial Retail Closing. When recorded by the Company, operating expenses will be expensed as incurred. Any amount due to the Adviser but not paid will be recognized as a liability on the balance sheet. Income Taxes For the taxable year ending December 31, 2024, the Company intends to be taxed as a corporation and will be subject to certain federal income tax on its taxable income (and may be subject to certain state and local taxes on income or assets, depending on Company holdings). The Company intends to make an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”), as amended, commencing with its taxable year ending December 31, 2025. If the Company elects and qualifies for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes 90% of its taxable income to its shareholders. Even if the Company qualifies for taxation as a REIT and distributes 90% of its taxable income to its shareholders, it may be subject to certain federal, state, local and foreign taxes on its income and assets , including (1) taxes on undistributed income, (2) taxes related to its taxable REIT subsidiaries (“TRSs”), (3) certain state or local income taxes and (4) taxes on any built-in gain in assets acquired during the period the Company filed as a corporation to the extent such assets were disposed of within five years of the Company’s conversion to REIT status. REITs are subject to a number of other organizational and operational requirements. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. The Company will establish a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before either the Company is able to realize their benefit or that future deductibility is uncertain. The Company believes that it is currently more likely than not that its deferred tax assets will not be realized and as such, it has recorded a full valuation allowance for these assets. The Company evaluates the likelihood of the ability to realize deferred tax assets in future periods on a quarterly basis, and when appropriate evidence indicates it would release its valuation allowance accordingly. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses, lack of taxable income, and accumulated deficit, given the Company was recently formed during the year, the Company provided a full valuation allowance against its tax assets resulting from the tax losses as of September 30, 2024.

Equity and Redeemable Common Sh

Equity and Redeemable Common Shares	9 Months Ended
	Sep. 30, 2024
Temporary Equity Disclosure [Abstract]
Equity and Redeemable Common Shares	Equity and Redeemable Common Shares As of July 19, 2024, the Company was authorized to issue an unlimited number of shares classified as common shares of beneficial interest, par value $0.01 per share (“common shares”), and an unlimited number of shares classified as preferred shares of beneficial interest, par value $0.01 per share. The Company intends to undertake the Offering, pursuant to which it will offer and sell its common shares to a limited number of accredited investors (as defined in Regulation D under the Securities Act of 1933, as amended), including common shares classified as Class T shares, common shares classified as Class S shares, common shares classified as Class D shares, common shares classified as Class I shares, and common shares classified as Class E shares. The share classes have different upfront selling commissions, dealer manager fees and ongoing shareholder servicing fees, as well as different management fees and performance fees. The initial per share purchase price for each class of common share (other than Class A shares) sold in the Offering will be equal to the most recently determined net asset value (“NAV”) per share for the Class A shares issued to the Anchor Investors, in connection with the Anchor Investment (as defined below) (which is deemed to be $20.00 until the last calendar day of the month during which the Company makes its first investment), plus, for Class S shares, Class T shares and Class D shares only, applicable upfront selling commissions and dealer manager fees. Thereafter, the purchase price per share for each class of common share will vary and will generally equal the prior month’s NAV per share for such class, as determined monthly, plus any applicable upfront selling commissions and dealer manager fees. On July 19, 2024, each of (1) Principal Life Insurance Company and/or its affiliate (“Principal Life”) and (2) an unaffiliated life insurance company and/or its affiliates (collectively with Principal Life, the “Anchor Investors”) entered into a subscription agreement with the Company, pursuant to which, each of the Anchor Investors agreed, from time to time, to purchase an aggregate amount of $75 million in the Company’s Class A shares, in each case, at a price per share equal to the most recently determined NAV of the Class A shares, or if a Class A share NAV has yet to be calculated, then at a price per share equal to $20.00 (collectively, referred to as, the “Anchor Investment”). As of September 30, 2024, no Anchor Investor has purchased any Class A shares in connection with the Anchor Investment. On June 25, 2024 (“Date of Initial Capitalization”), the Company was capitalized with a $1,000 investment by Principal Real Estate. Because employees of Principal Real Estate have the ability to cause the Company to repurchase the shares issued for this investment for cash, the Company has classified these redeemable common shares as mezzanine equity on the Company’s Condensed Balance Sheet. The Company intends to repurchase these initial redeemable common shares at a price equal to $20.00 per share at such time. Redeemable Total Balance at May 22, 2024 $ — $ — Issuance of Redeemable Common Shares 1,000 1,000 Balance at September 30, 2024 $ 1,000 $ 1,000

Related Party Transaction

Related Party Transaction	9 Months Ended
	Sep. 30, 2024
Related Party Transactions [Abstract]
Economic Dependency	Related Party Transactions Principal Life intends to purchase a total of $75 million of Class A shares. As of September 30, 2024, Principal Life has not purchased any Class A shares in connection with this commitment. On July 19, 2024, the Company entered into an advisory agreement (the “Advisory Agreement”) with the Adviser, pursuant to which the Adviser will be responsible for sourcing, evaluating, and monitoring investment opportunities and making decisions related to the origination, acquisition, management, financing, and disposition of assets, in accordance with the investment objectives, guidelines, policies and limitations, subject to oversight by the board of trustees. Management Fee As compensation for its services provided pursuant to the Advisory Agreement, the Adviser will be paid a management fee equal to (1) 1.25% of NAV for the outstanding Class S shares, Class T shares, Class D shares, and Class I shares and (2) 0.75% of NAV for the outstanding Class A shares, in each case, per annum, payable monthly in arrears. The management fee may be paid, at the Adviser’s election, in cash or Class E shares, or any combination thereof. The Company will not pay the Adviser the management fee with respect to the Class E shares, and as a result, it is a class-specific expense. As of September 30, 2024, there is no management fee accrued as there were no shares outstanding other than redeemable common shares. Performance Fee In addition, the Adviser will be entitled to a performance fee, which is calculated and payable quarterly in arrears in an amount equal to 12.5% of the Company’s Core Earnings for the immediately preceding calendar quarter, subject to the “Applicable Quarterly Hurdle Rate,” which is expressed as a rate of return on average adjusted capital, equal to (x) the 90-day average of the Secured Overnight Financing Rate (“90-Day Average SOFR”) as of the last business day of the preceding calendar quarter, divided by (y) four, plus 0.25% per quarter. For purposes of the performance fee, “adjusted capital” means cumulative net proceeds generated from sales of the Company’s common shares (including proceeds from the Company’s distribution reinvestment plan) reduced for distributions from non-liquidating dispositions of the Company’s investments paid to shareholders and amounts paid for share repurchases pursuant to the Company’s share repurchase plan. Once the Company’s Core Earnings in any calendar quarter exceed the Applicable Quarterly Hurdle Rate, the Adviser is entitled to a “catch-up” fee equal to the amount of Core Earnings in excess of the Applicable Quarterly Hurdle Rate, until the Company’s Core Earnings for such quarter equal the result of (i) the Applicable Quarterly Hurdle Rate, divided by (ii) 0.875 (or 1 minus 0.125) of adjusted capital. Thereafter, the Adviser is entitled to receive 12.5% of the Company’s Core Earnings. The Company will not pay the Adviser a performance fee with respect to the Class E shares or Class A shares. For purposes of calculating the performance fee, “Core Earnings” means: the net income (loss) attributable to shareholders of Class S shares, Class T shares, Class D shares and Class I shares, computed in accordance with GAAP, including realized gains (losses) not otherwise included in GAAP net income (loss) and excluding (i) non-cash equity compensation expense, (ii) the performance fee, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are included in GAAP net income (loss) for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, (v) one-time events pursuant to changes in GAAP, and (vi) certain non-cash adjustments and certain material non-cash in-come or expense items, in each case after discussions between the Adviser and the Company’s independent trustees and approved by a majority of the Company’s independent trustees. As of September 30, 2024, there is no performance fee accrued as there were no shares outstanding other than redeemable common shares and the Company had not commenced operations. The Company may retain the Adviser and/or certain of its affiliates, from time to time, for services relating to its investments or its operations, which may include capital markets services, restructuring services, valuation services, underwriting and diligence services, and special servicing, as well as services related to mortgage servicing, capital markets/credit origination, loan servicing and asset management, property, title and other types of insurance, management consulting and other similar operational and investment matters. Any fees paid to the Adviser’s affiliates for any such services will not reduce the management fee. In addition, such out-of-pocket costs and expenses will include expenses relating to compliance-related matters and regulatory filings relating to its activities (including, without limitation, expenses relating to the preparation and filing of Form PF, Form ADV, reports to be filed with the CFTC and SEC, reports, disclosures, and/or other regulatory filings of the Adviser and its affiliates relating to its activities (including its pro rata share of the costs of the Adviser and its affiliates of regulatory expenses that relate to the Company and investment funds, REITs, vehicles, accounts, products and/or other similar arrangements sponsored, advised, sub-advised and/or managed by Principal Real Estate or its affiliates, whether currently in existence or subsequently established)). As of September 30, 2024, no such services were provided by the Adviser and/or its affiliates to the Company. Economic Dependency The Company is dependent on the Adviser and its affiliates for certain services that are essential to it, including the sale of the Company’s common shares, origination, acquisition and disposition decisions, and certain other responsibilities. In the event that the Adviser and its affiliates are unable to provide such services, the Company would be required to find alternative service providers.

Economic Dependency

Economic Dependency	9 Months Ended
	Sep. 30, 2024
Related Party Transactions [Abstract]
Economic Dependency	Related Party Transactions Principal Life intends to purchase a total of $75 million of Class A shares. As of September 30, 2024, Principal Life has not purchased any Class A shares in connection with this commitment. On July 19, 2024, the Company entered into an advisory agreement (the “Advisory Agreement”) with the Adviser, pursuant to which the Adviser will be responsible for sourcing, evaluating, and monitoring investment opportunities and making decisions related to the origination, acquisition, management, financing, and disposition of assets, in accordance with the investment objectives, guidelines, policies and limitations, subject to oversight by the board of trustees. Management Fee As compensation for its services provided pursuant to the Advisory Agreement, the Adviser will be paid a management fee equal to (1) 1.25% of NAV for the outstanding Class S shares, Class T shares, Class D shares, and Class I shares and (2) 0.75% of NAV for the outstanding Class A shares, in each case, per annum, payable monthly in arrears. The management fee may be paid, at the Adviser’s election, in cash or Class E shares, or any combination thereof. The Company will not pay the Adviser the management fee with respect to the Class E shares, and as a result, it is a class-specific expense. As of September 30, 2024, there is no management fee accrued as there were no shares outstanding other than redeemable common shares. Performance Fee In addition, the Adviser will be entitled to a performance fee, which is calculated and payable quarterly in arrears in an amount equal to 12.5% of the Company’s Core Earnings for the immediately preceding calendar quarter, subject to the “Applicable Quarterly Hurdle Rate,” which is expressed as a rate of return on average adjusted capital, equal to (x) the 90-day average of the Secured Overnight Financing Rate (“90-Day Average SOFR”) as of the last business day of the preceding calendar quarter, divided by (y) four, plus 0.25% per quarter. For purposes of the performance fee, “adjusted capital” means cumulative net proceeds generated from sales of the Company’s common shares (including proceeds from the Company’s distribution reinvestment plan) reduced for distributions from non-liquidating dispositions of the Company’s investments paid to shareholders and amounts paid for share repurchases pursuant to the Company’s share repurchase plan. Once the Company’s Core Earnings in any calendar quarter exceed the Applicable Quarterly Hurdle Rate, the Adviser is entitled to a “catch-up” fee equal to the amount of Core Earnings in excess of the Applicable Quarterly Hurdle Rate, until the Company’s Core Earnings for such quarter equal the result of (i) the Applicable Quarterly Hurdle Rate, divided by (ii) 0.875 (or 1 minus 0.125) of adjusted capital. Thereafter, the Adviser is entitled to receive 12.5% of the Company’s Core Earnings. The Company will not pay the Adviser a performance fee with respect to the Class E shares or Class A shares. For purposes of calculating the performance fee, “Core Earnings” means: the net income (loss) attributable to shareholders of Class S shares, Class T shares, Class D shares and Class I shares, computed in accordance with GAAP, including realized gains (losses) not otherwise included in GAAP net income (loss) and excluding (i) non-cash equity compensation expense, (ii) the performance fee, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are included in GAAP net income (loss) for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, (v) one-time events pursuant to changes in GAAP, and (vi) certain non-cash adjustments and certain material non-cash in-come or expense items, in each case after discussions between the Adviser and the Company’s independent trustees and approved by a majority of the Company’s independent trustees. As of September 30, 2024, there is no performance fee accrued as there were no shares outstanding other than redeemable common shares and the Company had not commenced operations. The Company may retain the Adviser and/or certain of its affiliates, from time to time, for services relating to its investments or its operations, which may include capital markets services, restructuring services, valuation services, underwriting and diligence services, and special servicing, as well as services related to mortgage servicing, capital markets/credit origination, loan servicing and asset management, property, title and other types of insurance, management consulting and other similar operational and investment matters. Any fees paid to the Adviser’s affiliates for any such services will not reduce the management fee. In addition, such out-of-pocket costs and expenses will include expenses relating to compliance-related matters and regulatory filings relating to its activities (including, without limitation, expenses relating to the preparation and filing of Form PF, Form ADV, reports to be filed with the CFTC and SEC, reports, disclosures, and/or other regulatory filings of the Adviser and its affiliates relating to its activities (including its pro rata share of the costs of the Adviser and its affiliates of regulatory expenses that relate to the Company and investment funds, REITs, vehicles, accounts, products and/or other similar arrangements sponsored, advised, sub-advised and/or managed by Principal Real Estate or its affiliates, whether currently in existence or subsequently established)). As of September 30, 2024, no such services were provided by the Adviser and/or its affiliates to the Company. Economic Dependency The Company is dependent on the Adviser and its affiliates for certain services that are essential to it, including the sale of the Company’s common shares, origination, acquisition and disposition decisions, and certain other responsibilities. In the event that the Adviser and its affiliates are unable to provide such services, the Company would be required to find alternative service providers.

Commitment and Contingencies

Commitment and Contingencies	9 Months Ended
	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies As of September 30, 2024, the Company is not subject to any material litigation nor is the Company aware of any material litigation threatened against it.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events The Company evaluated events subsequent to September 30, 2024, through November 12, 2024, the date the condensed financial statements were available to be issued. Share Repurchase Plan Effective as of November 11, 2024, the board of trustees adopted a share repurchase plan (the “Share Repurchase Plan”), pursuant to which shareholders may request on a quarterly basis that the Company repurchase all or any portion of their common shares, subject to certain limitations as set forth therein. The aggregate NAV of total repurchases of Class S shares, Class T shares, Class D shares, Class I shares Class E shares and Class A shares (including repurchases at certain non-U.S. investor access funds primarily created to hold the Company’s shares) under its share repurchase plan is limited to no more than 5% of the Company’s aggregate NAV per calendar quarter (measured using the aggregate NAV as of the end of the immediately preceding month). The foregoing description of each of the Share Repurchase Plan does not purport to be complete and is qualified in its entirety by reference to the Share Repurchase Plan, a copy of which is included as Exhibit 4.1 to this Quarterly Report on Form 10-Q and incorporated herein by reference. Amended and Restated Dealer Manager Agreement On November 11, 2024, the Company and Principal Funds Distributor, Inc. entered into the Amended and Restated Dealer Manager Agreement (the “Amended Dealer Manager Agreement”). The Amended Dealer Manager Agreement and the Amended Form of Participating Broker-Dealer Agreement amend and restate the prior versions of the agreements to make certain updates to reflect the designation of the new Class F-I shares of the Company. The foregoing summary descriptions of the Amended Dealer Manager Agreement and the Amended Form of Participating Broker-Dealer Agreement do not purport to be complete and are qualified in their entirety by reference to the Amended Dealer Manager Agreement and the Amended Form of Participating Broker-Dealer Agreement, copies of which are included as Exhibits 10.1 and 10.2 to this Quarterly Report on Form 10-Q and incorporated herein by reference. Second Amended and Restated Declaration of Trust On November 11, 2024, the Company adopted the Second Amended and Restated Declaration of Trust (the “Amended Declaration of Trust”) pursuant to which the Company designated the new Class F-I shares. The foregoing summary description of the Amended Declaration of Trust does not purport to be complete and is qualified in its entirety by reference to the Amended Declaration of Trust, a copy of which is included as Exhibit 3.1 to this Quarterly Report on Form 10-Q and incorporated herein by reference. Amended and Restated Advisory Agreement On November 11, 2024, the Company and the Adviser entered into the Amended and Restated Advisory Agreement (the “Amended Advisory Agreement”). The Amended Advisory Agreement amends and restates the prior version of the agreement to make certain updates to reflect the designation of the new Class F-I shares of the Company. The foregoing summary description of the Amended Advisory Agreement does not purport to be complete and is qualified in its entirety by reference to the Amended Advisory Agreement, a copy of which is included as Exhibit 10.3 to this Quarterly Report on Form 10-Q and incorporated herein by reference. Distribution Reinvestment Plan

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation
Use of Estimates	Use of Estimates The preparation of the condensed financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of revenues. Actual results may ultimately differ materially from those estimates.
Cash and Cash Equivalents	Cash and Cash Equivalents
Fair Value Option	Fair Value Option The Company will elect the fair value option for certain eligible financial assets and liabilities including CRE debt investments, real estate-related debt securities and liabilities associated with borrowing facilities. The fair value elections will be made to create a more direct alignment between the Company’s financial reporting and the calculation of net asset value per share used to determine the prices at which investors can purchase and redeem shares of the Company’s common stock. The decision to elect the fair value option will be determined on an instrument-by-instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance will be required to be reported separately on the Company’s condensed balance sheet from those instruments using another accounting method. The Company’s fair value option elections will be made in accordance with the guidance in Accounting Standards Codification (“ASC”) 825, Financial Instruments (“ASC 825”) that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. In the cases of loans and securities investments for which the fair value option is elected, loan origination fees and costs related to the origination or acquisition of the instrument should be immediately recognized in earnings. Unrealized gains and losses on assets and liabilities for which the fair value option has been elected are also reported in earnings without deferral. This is because under the fair value option, a lender reports the instrument at its exit price (i.e., the price that would be received to sell the instrument in an orderly transaction), which reflects the market’s assessment of the instrument’s cash flows and risks and does not include any entity-specific costs or fees.
Organization and Offering Expenses	Organization and Offering Expenses The Adviser has agreed to advance organization and offering expenses associated with this offering (including legal, accounting, and other expenses attributable to the organization, but excluding upfront selling commissions, dealer manager fees and shareholder servicing fees) and certain of the Company’s operating expenses that the Adviser incurs on behalf of the Company through the first anniversary of the initial closing (the “Initial Retail Closing”) of the Company’s continuous, blind pool private offering (the “Offering”) that includes non-Anchor Investors (as defined below). The Company will reimburse the Adviser for all such advanced expenses ratably over the 60-month period following the first anniversary of the Initial Retail Closing. Such reimbursement may be paid, at the Adviser’s election, in cash or Class E shares, or any combination thereof. If the Adviser elects to receive any portion of such reimbursement in common shares, the Company may repurchase such common shares from the Adviser at a later date. As of September 30, 2024, the Adviser and its affiliates have incurred organization and offering expenses on the Company’s behalf of approximately $0.6 million and $1.1 million, respectively. These organization and offering expenses are not recorded in the accompanying condensed balance sheet because such costs are not the Company’s liability until the date on which it commences operations associated with the Initial Retail Closing. When recorded by the Company, organizational expenses and operating expenses will be expensed as incurred, and offering expenses will be charged to shareholders’ equity. Any amount due to the Adviser but not paid will be recognized as a liability on the condensed balance sheet.
Operating Expenses	Operating Expenses The Adviser has agreed to advance certain of the Company’s operating expenses and costs through the Initial Retail Closing of the continuous private offering. The Company will reimburse the Adviser for such advanced expenses ratably over the 60 months following the first anniversary of the Initial Retail Closing. Operating expenses incurred after the first anniversary of the Initial Retail Closing will be paid by the Company as incurred. As of September 30, 2024, general and administrative expenses in the amount of $0.1 million were incurred. These operating expenses are not recorded in the accompanying condensed financial statements because such costs are not the Company’s liability until the date of the Initial Retail Closing. When recorded by the Company, operating expenses will be expensed as incurred. Any amount due to the Adviser but not paid will be recognized as a liability on the balance sheet.
Income Taxes	Income Taxes For the taxable year ending December 31, 2024, the Company intends to be taxed as a corporation and will be subject to certain federal income tax on its taxable income (and may be subject to certain state and local taxes on income or assets, depending on Company holdings). The Company intends to make an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”), as amended, commencing with its taxable year ending December 31, 2025. If the Company elects and qualifies for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes 90% of its taxable income to its shareholders. Even if the Company qualifies for taxation as a REIT and distributes 90% of its taxable income to its shareholders, it may be subject to certain federal, state, local and foreign taxes on its income and assets , including (1) taxes on undistributed income, (2) taxes related to its taxable REIT subsidiaries (“TRSs”), (3) certain state or local income taxes and (4) taxes on any built-in gain in assets acquired during the period the Company filed as a corporation to the extent such assets were disposed of within five years of the Company’s conversion to REIT status. REITs are subject to a number of other organizational and operational requirements. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. The Company will establish a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before either the Company is able to realize their benefit or that future deductibility is uncertain. The Company believes that it is currently more likely than not that its deferred tax assets will not be realized and as such, it has recorded a full valuation allowance for these assets. The Company evaluates the likelihood of the ability to realize deferred tax assets in future periods on a quarterly basis, and when appropriate evidence indicates it would release its valuation allowance accordingly. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses, lack of taxable income, and accumulated deficit, given the Company was recently formed during the year, the Company provided a full valuation allowance against its tax assets resulting from the tax losses as of September 30, 2024.

Equity and Redeemable Common _2

Equity and Redeemable Common Shares (Tables)	9 Months Ended
	Sep. 30, 2024
Temporary Equity Disclosure [Abstract]
Redeemable Noncontrolling Interest	Redeemable Total Balance at May 22, 2024 $ — $ — Issuance of Redeemable Common Shares 1,000 1,000 Balance at September 30, 2024 $ 1,000 $ 1,000

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details) - USD ($)	9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024
Related Party Transaction [Line Items]
Cash equivalents	$ 0
Total liabilities	$ 0	$ 0
Organization Expense | Related Party
Related Party Transaction [Line Items]
Reimbursement period following initial retail closing	60 months
Total liabilities	$ 600,000
Offering Expense | Related Party
Related Party Transaction [Line Items]
Reimbursement period following initial retail closing	60 months
Total liabilities	$ 1,100,000
General and Administrative Expense | Related Party
Related Party Transaction [Line Items]
Reimbursement period following initial retail closing	60 months
Total liabilities	$ 100,000

Equity and Redeemable Common _3

Equity and Redeemable Common Shares - Narrative (Details) - USD ($)		3 Months Ended	4 Months Ended
	Jun. 25, 2024	Sep. 30, 2024	Sep. 30, 2024	Jul. 19, 2024
Temporary Equity Disclosure [Abstract]
Common shares, par value (in dollars per share)				$ 0.01
Preferred shares, par value (in dollars per share)				0.01
Net asset value per share (in dollars per share)				$ 20
Common shares, subscription value				$ 75,000,000
Sale of stock, price per share (in dollars per share)				$ 20
Proceeds from the issuance of redeemable common shares	$ 1,000	$ 0	$ 1,000
Shares repurchased, price per share (in dollars per share)	$ 20

Equity and Redeemable Common _4

Equity and Redeemable Common Shares - Redeemable Common Shares (Details)	4 Months Ended
	Sep. 30, 2024 USD ($)
Redeemable common shares [Roll Forward]
Balance at May 22, 2024 (Date of Formation)	$ 0
Issuance of Redeemable Common Shares	1,000
Balance at September 30, 2024	$ 1,000

Related Party Transaction (Deta

Related Party Transaction (Details) - USD ($)	Sep. 30, 2024	Jul. 19, 2024	Jun. 30, 2024
Related Party Transaction [Line Items]
Common shares, subscription value		$ 75,000,000
Total liabilities	$ 0		$ 0
Related Party | Principal Life
Related Party Transaction [Line Items]
Common shares, subscription value		$ 75,000,000
Related Party | Management Fee
Related Party Transaction [Line Items]
Total liabilities	0
Related Party | Management Fee | Class T, Class D And Class I Shares
Related Party Transaction [Line Items]
Management fee, percent of NAV outstanding		1.25%
Related Party | Management Fee | Common Class A
Related Party Transaction [Line Items]
Management fee, percent of NAV outstanding		0.75%
Related Party | Performance Fee
Related Party Transaction [Line Items]
Performance fee, core earnings		12.50%
Applicable quarterly hurdle rate		0.25%
Applicable core earnings, catch-up fee		0.875
Total liabilities	$ 0

Subsequent Events (Details)

Subsequent Events (Details)	Nov. 11, 2024
Subsequent Event
Subsequent Event [Line Items]
Share repurchase program, aggregate NAV maximum repurchase per quarter	5%