13. Mandatorily Redeemable Instruments

The Class E units and Class E shares held by JPMIM and purchased pursuant to the Initial Capitalization are mandatorily redeemable, and only subject to delays to the continuous obligation to ultimately redeem the instruments once sufficient availability exists under share repurchase agreements. Therefore, the Mandatorily Redeemable Instruments held by JPMIM are classified as a liability pursuant to Topic 480 — Distinguishing Liabilities from Equity and are presented as Mandatorily Redeemable Instruments at the initial funding amount received, which is equivalent to fair value at the issuance dates. Subsequently, the Mandatorily Redeemable Instruments are carried at their cash redemption value as if the Class E units or Class E shares were repurchased or redeemable at the reporting date, which equals NAV per Class E unit or Class E share. The change in carrying value (changes in NAV per Class E unit or Class E share) is classified as Mandatorily redeemable instruments interest costs along with any cash distributions declared in the Consolidated Statements of Operations. During the years ended December 31, 2025, 2024 and 2023, the Company recorded $6.6 million, $7.9 million and $4.5 million of mandatorily redeemable instruments interest costs in the Consolidated Statements of Operations, which consisted of a redemption value adjustment charge of $2.8 million, $3.6 million and $1.5 million and distribution expenses of $3.8 million, $4.3 million and $3.0 million, respectively.

As an investor in Class E units, JPMIM’s interest does not have any voting rights but is entitled to receive distributions at the same rate applicable to other classes of shares and units.

Operating Partnership units also carry a protective exchange feature whereby in a liquidation, dilution or winding up, each unit will convert into a number of Class I units (or fraction thereof) having an equivalent NAV. Such feature is designed to carry over NAV into a new form of security immediately prior to liquidation and is not deemed a substantive conversion feature as it is only applicable upon liquidation or upon a listing event which is not the intent of this public, non-listed REIT structure.

As of December 31, 2024, the Company had sold 0.5 million Class E shares and 9.0 million Class E Operating Partnership units to the Adviser for an aggregate purchase price of $5.8 million and $94.2 million, respectively. During the year ended December 31, 2025, the Company did not sell any Class E units or Class E shares to the Adviser that are subject to mandatory repurchase requirements. During the year ended December 31, 2025, the Company repurchased 0.5 million Class E shares and 4.2 million Class E units amounting to $53.3 million, of which $6.1 million was payable as of December 31, 2025. There are no outstanding Class E shares held by the Adviser that are subject to mandatory repurchase requirements as of December 31, 2025.

The following table details the future payments due under the Company’s Mandatorily Redeemable Instruments as of December 31, 2025 ($ in thousands):

Redemption features

See Note 3 “JPMIM mandatory Class E repurchases” for a discussion of the redemption features associated with Class E shares and Class E units held by JPMIM.

Distributions

The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its stockholders each year to comply with the REIT provisions of the Code. The Mandatorily Redeemable Instruments receive the same gross distribution per share as the Class E common stock. For the years ended December 31, 2025, 2024 and 2023, distributions declared on the Mandatorily Redeemable Instruments totaled $3.8 million, $4.3 million and $3.0 million, respectively. When a distribution is declared, the Company records a distribution expense as a component of mandatorily redeemable instruments interest cost in the Consolidated Statements of Operations. A distribution payable is also recorded within accounts payable, accrued expenses and other liabilities on the Company’s Consolidated Balance Sheets until the distribution is paid. The distribution payable for Mandatorily Redeemable Instruments was $0.2 million, $0.4 million and $0.4 million as of December 31, 2025, 2024 and 2023, respectively.