INVESTMENT IN UNCONSOLIDATED AFFILIATES

6 Months Ended

Jun. 30, 2025

INVESTMENT IN UNCONSOLIDATED AFFILIATES

INVESTMENT IN UNCONSOLIDATED AFFILIATES

NOTE 5 – Investment in unconsolidated affiliates

The Company’s investments in unconsolidated real estate ventures, are summarized as follows (in thousands):


								Total Investment in Unconsolidated Affiliates at						Total Assets in Unconsolidated Affiliates at						Total Liabilities of Unconsolidated Affiliates at
Unconsolidated Affiliates			Date Acquired			Trust Ownership Interest		June 30, 2025			December 31, 2024			June 30, 2025				December 31, 2024		June 30, 2025			December 31, 2024
Banner Building			2007			66.67%		$	1,325		$	1,276		$	8,536		$	8,561		$	6,605		$	6,704
Grand Forks INREIT, LLC			2003			50%			5,562			5,684			20,070			20,839			8,947			9,472
SE Savage, LLC			2019			60%			(180)			136			29,684			30,375			29,985			30,298
SE Maple Grove, LLC			2019			60%			(353)			(62)			27,092			27,754			27,632			27,938
SE Rogers, LLC			2020			60%			392			855			28,395			29,314			27,409			27,975
ST Oak Cliff, LLC			2021			70%			6,314			6,821			46,060			47,577			37,016			37,806
SE Brooklyn Park, LLC			2021			60%			514			871			27,342			28,121			26,545			26,877
ST Fossil Creek, LLC			2022			70%			6,299			7,038			47,465			48,229			38,966			38,175
Emory North Liberty, LC			2024			50%			7,585			5,494			39,575			33,281			24,654			22,294
SHG Emory North Liberty, LLC			2024			99%			(14)			232			491			500			380			268
								$	27,444		$	28,345		$	274,710		$	274,551		$	228,139		$	227,807

Negative investments presented in accrued expenses and other liabilities									547			62

Total investment in unconsolidated affiliates								$	27,991		$	28,407

Banner Building - the Operating Partnership owns a 66.67% interest as tenant in common in an office building in Fargo, North Dakota. The property is encumbered by a first mortgage with the Trust acting as a guarantor on the outstanding indebtedness.

Grand Forks INREIT, LLC - the Operating Partnership owns 50% interest as tenant in common through 100% ownership in a limited liability company. The property is located in Grand Forks, North Dakota. The property is encumbered by a non-recourse first mortgage with the Trust acting as a guarantor on the outstanding indebtedness.

SE Savage, LLC - the Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The entity is located in Savage, Minnesota. The property is encumbered by a first mortgage, with the Trust acting as a guarantor on the indebtedness.

SE Maple Grove, LLC - the Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The entity is located in Maple Grove, Minnesota. The property is encumbered by a first mortgage, with the Trust acting as a guarantor on the outstanding indebtedness. The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance of $3,428 and $3,428 at June 30, 2025 and December 31, 2024, respectively. The note is included in Notes receivable, affiliates on the Consolidated Balance Sheet at June 30, 2025 and December 31, 2024.

SE Rogers, LLC - the Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The entity is located in Rogers, Minnesota. The property is encumbered by a first mortgage, with the Trust acting as a guarantor on the outstanding indebtedness. The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance of $2,100 and $2,100 at June 30, 2025 and December 31, 2024, respectively. The note is included in Notes Receivable on the Consolidated Balance Sheet at June 30, 2025 and December 31, 2024.

ST Oak Cliff, LLC - the Operating Partnership owns a 70% interest in a limited liability company, with a related party a multifamily property. The entity is located in Dallas, Texas. The entity is encumbered by a first mortgage, with the Trust acting as a guarantor on the outstanding indebtedness.

SE Brooklyn Park, LLC - the Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The entity is located in Brooklyn Park, Minnesota. The property is encumbered by a first mortgage, with the Trust acting as a guarantor on the outstanding indebtedness. The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance of $2,294 and $2,294 at June 30, 2025 and December 31, 2024, respectively. The note is included in Notes Receivable on the Consolidated Balance Sheet at June 30, 2025 and December 31, 2024.

ST Fossil Creek, LLC - the Operating Partnership owns a 70% interest in a limited liability company, with a related party. The entity is located in Fort Worth, Texas. The property is encumbered by a first mortgage, with the Trust acting as a guarantor on the outstanding indebtedness.

Emory North Liberty, LC – the Operating Partnership owns a 50% interest in a limited company. The entity is currently developing a multifamily property located in North Liberty, Iowa. The property is encumbered by a construction mortgage, with the Trust acting as a guarantor on the outstanding indebtness. For the acquisition of Emory North Liberty, LC, Sterling determined that it does not control the key decision-making rights and is not the primary beneficiary related to Emory North Liberty, LC from the respective date it was acquired. The VIE that owned legal title to Emory North Liberty, LC was not included in Sterling’s consolidated financial statements, but rather as an unconsolidated affiliate, from the date it was acquired.

SHG Emory North Liberty, LLC – The Operating Partnership owns a 99% interest in a limited liability company. For the acquisition of SHG Emory North Liberty, LLC, Sterling determined that it does not control the key decision-making rights and is not the primary beneficiary related to SHG Emory North Liberty, LLC from the respective date it was acquired. The

VIE that owned legal title to SHG Emory North Liberty, LLC was not included in Sterling’s consolidated financial statements, but rather as an unconsolidated affiliate, from the date it was acquired.

The following is a summary of the financial position of the unconsolidated affiliates at June 30, 2025 and December 31, 2024.


		June 30, 2025			December 31, 2024

		(in thousands)
ASSETS
Real estate investments		$	311,129		$	305,398
Accumulated depreciation			(45,186)			(38,078)
Total Real Estate Investments, net			265,943			267,320
Cash and cash equivalents			5,530			4,147
Restricted deposits			1,211			1,263
Financing and lease costs, net			753			796
Other assets, net			1,273			1,025
Total Assets		$	274,710		$	274,551

LIABILITIES
Mortgage notes payable, net		$	222,331		$	221,819
Tenant security deposits payable			516			487
Accrued expenses and other liabilities			5,292			5,501
Total Liabilities		$	228,139		$	227,807
SHAREHOLDERS' EQUITY
Total Shareholders' Equity		$	46,571		$	46,744

Total liabilities and shareholders' equity		$	274,710		$	274,551

The following is a summary of results of operations of the unconsolidated affiliates for the three and six months ended June 30, 2025


		Three months ended June 30,						Six months ended June 30,
		2025			2024			2025			2024

		(in thousands)							(in thousands)
Income from rental operations		$	7,995		$	6,213		$	15,890		$	12,012
Expenses from rental operations			3,500			2,879			7,046			5,673
Net operating income		$	4,495		$	3,334		$	8,844		$	6,339
Depreciation and Amortization			3,606			2,699			7,228			5,181
Interest			2,237			1,611			4,427			3,239
Other expense			174			-			134			-
Net loss		$	(1,522)		$	(976)		$	(2,945)		$	(2,081)