Note 5. Investment in DST

On December 10, 2025, the Company acquired a property of approximately 303,000 square feet in Anderson, Indiana (the "DST Property") for approximately $33.4 million, plus transaction costs, through a wholly owned subsidiary of the OP (the "Owner LLC"). On January 12, 2026, the OP assigned all of its rights, title, and interest in the Owner LLC to TRS I (the "Depositor"), who converted the Owner LLC into a DST, which was renamed as Sealy Industrial I, DST ("DST-I", or the "Trust") on January 13, 2026. The Depositor owned 100% of the beneficial interests in DST-I as of January 13, 2026. Under the trust agreement of DST-I (the "Trust Agreement"), Sealy Master DST Trustee, LLC (the "Administrative Trustee"), a Georgia limited liability company and a wholly-owned subsidiary of Sealy, is the trust manager and is responsible for the operation of DST-I. DST-I has entered into an asset management agreement with Sealy for the management of the day-to-day affairs of the Trust; and a property management agreement with Sealy for the management and operation of the DST Property. The Administrative Trustee is prohibited from taking actions that would constitute a power to vary the investment,

including reinvestment beyond constrained cash management, mortgage financing/refinancing, entering new leases except in tenant bankruptcy/insolvency, and more than minor non-structural modifications except as required by law.

On January 13, 2026, DST-I commenced a private placement offering of up to 100% of its beneficial interests to certain qualified accredited investors (the "DST-I Offering"). The maximum offering amount is approximately $40.5 million. As the beneficial interests in DST-I are sold and investor contributions are received, DST-I will pay the Depositor for the purchase price plus transaction costs of the DST Property, as well as a bridge carry fee of up to $1.6 million, or 4% of the maximum offering amount.

As of June 30, 2026, approximately 61.1% of the beneficial interests in DST-I had been sold and TRS I held approximately 38.9% of the beneficial interests in DST-I, or approximately $12.9 million.

Management performed a consolidation assessment pursuant to the consolidation guidance under ASC 810. We concluded that, while DST-I is a variable interest entity ("VIE"), the Company is not required to consolidate as the Company is not the primary beneficiary of the VIE. Under the Trust Agreement, the investors (including the Company) generally have no right to manage or operate the Trust and their rights are primarily limited to receiving pro rata distributions. As the Company has no significant influence over the Trust and the DST investment, the Company accounts for its investment in DST-I under ASC 321, Investments – Equity Securities. In accordance with ASC 321, the Company applies the measurement alternative for equity securities without readily determinable fair values. Under the measurement alternative, the Company's investment in DST-I is measured at cost, with remeasurements to fair value upon impairment or upon a price change observed in an orderly transaction of the same or similar investment of the same issuer. As of June 30, 2026, the Company had not recorded an impairment charge or change in carrying value related to its remaining investment in DST-I. The Company's maximum exposure to loss as a result of its involvement with the VIE is its investment balance, which was $12.9 million as of June 30, 2026.

During the three months ended June 30, 2026, the Company earned approximately $632,000 of bridge carry fee (4% of the DST-I offering proceeds during the quarter) and $359,000 of distributions (determined monthly by DST-I based on excess cash available). During the six months ended June 30, 2026, the Company earned approximately $989,000 of bridge carry fee (4% of the DST-I Offering proceeds through June 30, 2026) and $621,000 of distributions (determined monthly by DST-I based on excess cash available).