INVESTMENT IN UNCONSOLIDATED AFFILIATES

3 Months Ended

Mar. 31, 2026

INVESTMENT IN UNCONSOLIDATED AFFILIATES

INVESTMENT IN UNCONSOLIDATED AFFILIATES

NOTE 6 – 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		March 31, 2026			December 31, 2025			March 31, 2026				December 31, 2025		March 31, 2026			December 31, 2025
Banner Building			2007			66.67%		$	1,357		$	1,347		$	8,434		$	8,470		$	6,455		$	6,505
Grand Forks INREIT, LLC			2003			50%			5,318			5,417			19,285			19,848			8,651			9,015
SE Savage, LLC			2019			60%			(923)			(575)			28,268			28,783			29,806			30,274
SE Maple Grove, LLC			2019			60%			251			553			25,946			26,394			26,374			26,545
SE Rogers, LLC			2020			60%			(63)			40			27,482			28,040			27,712			28,210
ST Oak Cliff, LLC			2021			70%			5,775			5,930			44,587			45,608			36,200			37,073
SE Brooklyn Park, LLC			2021			60%			(21)			144			26,287			26,535			26,314			26,398
ST Fossil Creek, LLC			2022			70%			6,357			5,333			46,536			46,131			37,956			39,013
SHG Emory North Liberty, LLC			2024			99%			10,797			11,027			12,175			12,241			654			482
								$	28,848		$	29,216		$	239,000		$	242,050		$	200,122		$	203,515

Negative investments presented in accrued expenses and other liabilities									1,006			575

Total investment in unconsolidated affiliates								$	29,854		$	29,791

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 is a 50% owner of a 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 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.

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. During 2025, the first mortgage was refinanced. As part of the refinancing process, a portion of the existing second mortgage payable to Sterling Properties, LLLP was repaid. The new senior lender did not permit subordinate debt; therefore, the remaining balance of the second mortgage was converted into a preferred equity interest in the entity.

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. During 2025, the first mortgage was refinanced and the second mortgage to Sterling Properties, LLLP was satisfied.

ST Oak Cliff, LLC - the Operating Partnership owns a 70% interest in a limited liability company, with a related party multifamily property. The entity is located in Dallas, Texas. The property 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 March 31, 2026 and December 31, 2025, respectively. The note is included in Notes receivable, affiliates on the consolidated balance sheet at March 31, 2026 and December 31, 2025.

ST Fossil Creek, LLC - the Operating Partnership owns a 70% interest in a limited liability company, with a related party multifamily property. 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.

SHG Emory North Liberty, LLC - the Operating Partnership owns a 99% interest in SHG Emory North Liberty, LLC (“SHG”), a limited liability company. Sterling determined that it does not control the key decision-making rights of SHG and is not the primary beneficiary of the entity. Accordingly, SHG is not consolidated in Sterling’s financial statements and is accounted for as an unconsolidated affiliate under the equity method of accounting from the date of acquisition.

●

SHG owns a 50% interest in Emory North Liberty, LC (“ENL”), a limited company that is developing a multifamily property located in North Liberty, Iowa. SHG has determined that it does not control the key decision-making rights of ENL and is not the primary beneficiary of the entity. Accordingly, EBL is not consolidated by SHG and is also accounted for as an unconsolidated affiliated under the equity method from the date of acquisition.

●

Sterling’s investment in ENL is indirect and is reflected solely through its equity method investment in SHG. Accordingly, ENL is not presented separately in the Company’s unconsolidated affiliate tables. However, the Company considers the underlying activities of ENL to be meaningful to an understanding of its investment in SHG. As of March 31, 2026, ENL had total assets of approximately $55,225 and total liabilities of approximately $33,308, consisting primarily of project-level development and construction financing.

The following is a summary of the financial position of the unconsolidated affiliates at March 31, 2026 and December 31, 2025.


		March 31, 2026			December 31, 2025

		(in thousands)
ASSETS
Real estate investments		$	272,104		$	272,102
Accumulated depreciation			(52,126)			(51,086)
Total Real Estate Investments, net			219,978			221,016
Cash and cash equivalents			3,782			6,130
Restricted deposits			2,203			1,451
Investment in unconsolidated affiliates			11,691			11,758
Financing and lease costs, net			689			710
Other assets, net			657			985
Total Assets		$	239,000		$	242,050

LIABILITIES
Mortgage notes payable, net		$	195,971		$	196,774
Tenant security deposits payable			422			428
Accrued expenses and other liabilities			3,729			6,313
Total Liabilities			200,122			203,515
SHAREHOLDERS' EQUITY
Total Shareholders' Equity			38,878			38,535

Total liabilities and shareholders' equity		$	239,000		$	242,050

The following is a summary of results of operations of the unconsolidated affiliates for the three months ended March 31, 2026 and 2025.


		Three months ended March 31,
		2026			2025

		(in thousands)
Income from rental operations		$	7,296		$	7,380
Expenses from rental operations			3,259			3,237
Net operating income			4,037			4,143
Depreciation and amortization			1,062			3,352
Interest			1,820			1,850
Other income (expense)			19			(162)
Net income (loss)		$	1,174		$	(1,221)