It was another successful quarter for the Fund, with realized returns of _____ and total returns of _____. 

Current market conditions are among the most unique and challenging we’ve experienced—perhaps rivaled only by the early days of the pandemic. While leasing activity appears to be bouncing along the bottom and showing continued signs of recovery, the effects of downtime and leasing costs are weighing on operating returns. 

At the same time, asset values remain relatively high—especially when compared to the cash flow yields generated at current valuations. This dynamic is a key reason why we have strategically sold select assets and will continue to do so. During the quarter, we sold two properties—a BrightStar Care Home and the Adelmann Building—both at excellent gains. We chose to exit these investments because their cash returns were no longer accretive to the Fund’s overall operating performance, even though our basis was significantly lower than that of the new owners. 

These transactions highlight two key points: 

The inherent value in the Fund’s existing assets and the prudence of our fair value estimates. 

The increasing difficulty of sourcing new investments that meet our cash flow requirements. 

Despite these challenges, we remain committed to disciplined underwriting standards and continue to identify promising opportunities. While we did not complete any acquisitions this quarter, we currently have several projects under contract that we’re excited about. These include retail centers in Wyoming and Montana, as well as multiple build-to-suit projects modeled after previously successful assets (see acquisition pipeline). 

We can’t thank you enough for your continued support and confidence. Although returns are lower than in past years, we are proud of our relative performance in a difficult market. The team remains focused on enhancing performance wherever possible. As market conditions normalize, we believe the Fund is well-positioned for decades of future success.