FORM 1-SA

SEMI-ANNUAL REPORT PURSUANT TO REGULATION A

For the semi-annual period ended June 30, 2026

Commission File Nos. 024-11552; 024-12537

Delaware

(State or other jurisdiction of incorporation or organization)

GCPF Management LLC

718 Washington Ave N,

Suite 400

Minneapolis, MN 55401

Office: (651) 999-5344

Email: hello@gratusfunds.com

Class A Interests (Unit)

Class B Interests (Unit)

(Title of each class of securities issued pursuant to Regulation A)

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

We make statements in this Semi-Annual Report on Form 1-SA (“Semi-Annual Report”) of Gratus Capital Properties Fund III, LLC (the “Company”, “Gratus Capital Properties Fund III,” “we,” “our” or “us”) that are forward-looking statements within the meaning of the federal securities laws. The words “believe,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “seek,” “may,” and similar expressions or statements regarding future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Semi-Annual Report or in the information incorporated by reference into this Semi-Annual Report. These risk factors include, but are not limited to, the factors referenced in the Gratus Capital Properties Fund III, LLC Offering Circular filed pursuant to Regulation A, dated July 20, 2026, (“Offering Circular”) in the section entitled “RISK FACTORS” beginning on page 10, which are incorporated herein by reference to the Offering Circular.

The forward-looking statements included in this Semi-Annual Report are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market condition and future business decision, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. The Company does not promise to update any forward-looking statements to reflect changes in the underlying assumptions or factors, new information, future events or other changes.

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:

Gratus Capital Properties Fund III, LLC

SEMI-ANNUAL REPORT ON FORM 1-SA

For the Period ended June 30, 2026

TABLE OF CONTENTS

PART II

GRATUS CAPITAL PROPERTIES FUND III, LLC

ITEM 1. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information discussed in this item should be read together with the Company’s financial statements and related notes appearing under Item 3 of this Semi-Annual Report.

Overview

Gratus Capital Properties Fund III, LLC is a Delaware limited liability company that was formed to primarily invest directly or indirectly in real estate and real estate related assets located throughout the United States. The Company began its first Regulation A offering on December 2, 2021; and commenced a second Regulation A Offering on June 30, 2025. On February 16, 2022, the Company broke impounds and acquired its first real estate asset. As of August 31, 2026, the Company has invested (via various intervening limited liability companies) in seven properties:

* Since the Company controls a majority of these Property Owning Entities, the financial statements of these two subsidiaries have been consolidated into the financial statements under the Company, as provided by GAAP. Due to this consolidation, these investments are not included in the amounts invested in real estate projects.

Results of Operations

For the period ended June 30th, 2026

Status of Properties

As of June 30, 2026:

Income & Expenses

The Company’s income has grown compared to the first six months of 2025 as the Company’s properties leased up and commenced operations. Total Rent for the first six months of 2026 collected from Compass Apartments and Current33 Apartments totaled $1,694,816, compared with $1,546,674 in the first six months of 2025. The Company also generated Other Rental Revenue of $330,645 compared with $328,386 in the first six months of 2025. This income was offset by losses from unconsolidated partnership investments of ($118,042), compared with ($270,212) during the first six months of 2025. These losses represent the Company's proportionate share of losses from investments in partnerships where we hold less than a 50% ownership interest and are $152,170 lower for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 because Compass II wasn’t fully leased up until late 2025, so results improved greatly year over year for that property.

From January 1, 2026 to June 30, 2026, the Company generated operational expenses of $1,081,474 (including Asset Management Fees of $214,481, General & Administrative expenses of $111,293, Payroll of $132,723, Professional Fees of $132,031, Property Insurance of $40,970, Property Taxes of $228,201, Repairs and Maintenance of $129,759, and Utilities of $92,016) along with interest expenses of $824,071. This compares with total operational expenses of $805,323 (including Asset Management Fees of $83,799, General & Administrative expenses of $103,079, Payroll of $110,941, Professional Fees of $110,767, Property Insurance of $38,923, Property Taxes of $179,688, Repairs and Maintenance of $85,582, and Utilities of $92,544) along with interest expenses of $767,974. The main drivers of the increased operating expenses were property taxes that increased by $48,513 as buildings became fully occupied, repairs and maintenance that increased by $44,177 as the operational properties required more regular upkeep, and asset management fees increased by $130,682 with the additional investment in the Company. More modest increases in General Administrative expenses ($8,214), Payroll ($21,782), and Professional Fees ($21,264).

General & Administrative expenses recorded in our financials reflect the routine operating costs associated with managing the properties and supporting the Company’s overall operations. These expenses include dues and subscriptions, licenses and permits, professional and broker fees, advertising and marketing, promotional items, travel and vehicle-related costs, tenant activities, office rent, supplies, software, office equipment and furnishings, and various administrative charges such as bank fees, telephone, cable, internet, legal, and accounting services. They also include tenant-related services such as screening, security deposit interest, and after-hours call services, as well as property management fees allocated to Compass Apartments and Current33 Apartments. The Office space and administrative services for the Company are provided without charge by the Company’s Manager. Such costs are immaterial to the financial statements and, accordingly, have not been reflected.

Assets & Liabilities

As of June 30, 2026, the Company had $48,802,644 in total assets and total liabilities of $33,904,659 . As of December 31, 2025, the Company had $50,672,159 in total assets and total liabilities of $35,973,849. This compares with $45,960,751 in total assets and total liabilities of $ 33,961,911 as of June 30, 2025 and $45,858,193 in total assets and total liabilities of $34,837,723 as of December 31, 2024. Changes in Assets were driven almost entirely by an increase in unconsolidated partnership investments ($7,694,442 on June 30, 2026 compared to $6,081,783 on December 31, 2025 and $2,774,948 on June 30, 2025) as well as a steady increase in accumulated depreciation ($5,747,971) on June 30, 2026 compared to ($4,561,744) on December 31, 2025 and ($3,378,364) on June 30, 2025. The carrying value of the assets of Compass Apartments and Current33 Apartments remained consistent with December 31 and June 30, 2025, $30,721,217 in buildings, $3,585,347 in land & leasehold improvements, $6,791,770 in personal property, and $2,509,517 in Land as of June 30, 2026. Mortgages are secured by real estate and as of June 30, 2026 also remained consistent, totaling approximately $33.2 million, as compared to approximately $33.5 million as of December 31, 2025, approximately $33.8 million as of June 30, 2025, and approximately $34.1 million as of December 31, 2024.

As of June 30, 2026, Compass Apartments I, LLC’s major assets were valued (at cost) as $245,385 in cash, $1,281,513 in land, $13,658,624 in building, and $3,180,227 in personal property, offset by $15,049,070 in mortgage debt. This contrasts with:

As of June 30, 2026, Current33 Apartments I, LLC’s major assets were valued (at cost) as $382,145 in cash, $1,220,000 in land, $17,062,593 in building, and $3,611,543 in personal property, offset by $18,172,411 in mortgage debt. This contrasts with:

Liquidity and Capital Resources

When examined apart from Compass Apartments I, LLC and Current33 Apartments I, LLC, the Company’s held $182,456 in cash and $7,694,442 in other real estate investments as of June 30, 2026; contrasted with $835,827.94 in cash and $ $6,081,783 in other real estate investments as of December 31, 2025, $2,247,987 in cash and $2,774,948 in other real estate investments as of June 30, 2025, and $166,594 in cash and $ $3,045,160 in other real estate investments as of December 31, 2024. All valuations are at cost.

As of June 30, 2026, the Company has one significant direct liability. On December 17, 2025, the company purchased its 30.77% equity interest in DECO Shakopee LLC (Maple Grove Industrial) for $3,500,000. In connection with the investment, the Company also entered into a Unit Purchase Agreement with an existing member (included as Exhibit 6.5), pursuant to which the Company will make an additional $2,070,008 investment in DECO Shakopee LLC. As part of this Purchase Agreement, the Company has entered into a $2,070,008 promissory note with a maturity date of December 31, 2026, with a fixed 9% interest rate. After paying off this promissory note, the Company has committed to make an additional $1,000,000 capital contribution to DECO Shakopee LLC to fund a future roof replacement. As of June 30, 2026 and the date of this Report, the Company owes an additional $339,307 in principal payments and contributions pursuant to this promissory note.

Additionally, the Company has a revolving credit line for up to $50,000,000 of funds with an affiliate of the Manager of the Company, pursuant to a Promissory Note. As of June 30, 2026, December 31, 2025, June 30, 2025, and December 31, 2024 the outstanding amount was zero. This Note is an uncollateralized revolving credit facility which matures October 28, 2030. Under this line of credit, the Company will pay the Manager simple interest, calculated as the coupon rate on a U.S. 10-year treasury + five percent (5%). This interest rate will be readjusted semi-annually on July 1 and January 1 and is capped at 10%. The Company will utilize the credit facility if necessary to be opportunistic in pursuing cash flowing investments for the Company.

The Company intends to raise additional funds in this offering, up to its Offering Maximum of $50,000,000 in order to complete its promised contributions to DECO Shakopee LLC and make additional real estate acquisitions. However, even if we do not raise any additional funds, we believe that the profits from operations, funds we have raised, taken together with our line of credit, are sufficient to fund our expenses over the next twelve months. The Company has short and long-term liquidity through operational profits, fundraising , and Manager provided credit facility.

As for Compass Apartments I, LLC and Current33 Apartments I, LLC, these properties are on budget and cash flowing. As of June 30, 2026, Compass Apartments I, LLC had $245,385 in cash and Current33 Apartments I, LLC had $382,145 in cash. We believe each property-owning entity has sufficient short- and long-term liquidity for all its projected needs.

Trends and Key Information Affecting our Performance

As of June 30, 2026, the Company continues to execute its investment strategy, with several multifamily investments operating at stabilized occupancy levels, an industrial investment contributing current cash flow, and the Renn & Royce development progressing through construction. Overall residential performance remained strong during the second quarter, while management continues to address slower condominium sales at Wild Oak, commercial lease-up and repositioning at Ivy at SOCO, and certain property-level operating results that remain below original expectations.

Multifamily Leasing Performance:

These results demonstrate the resilience of our multifamily strategy and our team’s ability to respond to market conditions through disciplined leasing, renewal management, and real-time pricing oversight.

Non-Multifamily Projects:

Development Pipeline:

The Company does not presently anticipate a need for additional Company capital to satisfy its existing investment obligations related to Renn & Royce.

Investment Strategy and Strategic Positioning

Multifamily remains a core component of the Company’s investment strategy due to its recurring rental income and underlying housing demand. The Company’s strategy also includes stabilized, cash-flowing acquisitions, such as Maple Grove Industrial Center, that can provide current income and diversification alongside its multifamily investments. This is consistent with the Company’s broader investment mandate described in its current Offering Circular.

The Company’s near-term capital priority is completing its existing investment commitment in Maple Grove. The Company expects to fund this commitment primarily through proceeds from its ongoing Offering. To the extent the Company raises capital beyond amounts required for its existing obligations and liquidity needs, management intends to more actively evaluate additional investment opportunities, with an emphasis on stabilized, cash-flowing assets while continuing to consider selective development opportunities that meet the Company’s underwriting and return criteria.

This approach is intended to balance near-term cash flow with opportunities for long-term value creation.

Strategic Relationships and Investment Focus

We continue to cultivate new relationships that expand our pipeline of opportunities. While ground-up development are still being considered, our emphasis is now on seeking stabilized, income-producing assets that align with our underwriting standards and enhance near-term portfolio performance. This flexible approach ensures we remain resilient while positioning the portfolio to benefit from evolving macroeconomic conditions.

Interest Rates and Monetary Policy Outlook

Interest rates continue to be an important factor affecting the Company’s investments, particularly with respect to property valuations, transaction activity, borrowing costs, condominium sales, and refinancing alternatives. While the interest-rate environment has become more stable relative to the heightened volatility experienced during the recent tightening cycle, borrowing costs remain elevated relative to historical levels. The Company’s current Offering Circular similarly identifies interest rates as a significant factor affecting multifamily valuations, transactions, and refinancing opportunities.

Management continues to monitor monetary policy, inflation, Treasury yields, lender underwriting standards, and broader capital-market conditions. A stable or declining interest-rate environment could improve underwriting visibility, refinancing alternatives, transaction activity, and real estate valuations; however, the timing and magnitude of future changes in interest rates remain uncertain.

Looking Ahead

Key trends expected to affect the Company’s performance during the remainder of 2026 include:

Geographic Focus

The Midwest continues to anchor the Company’s portfolio. Management remains focused on markets that demonstrate relative affordability, stable demand, and favorable long-term supply-demand fundamentals. The Company’s current investments are located in Minnesota and North Dakota, while the Company retains the flexibility under its investment strategy to pursue investments in other U.S. markets that meet its investment criteria.

Conclusion

As of June 30, 2026, the Company’s stabilized multifamily portfolio continues to demonstrate strong occupancy and generally stable underlying demand. Maple Grove Industrial Center is contributing stabilized cash flow, while Renn & Royce continues to advance toward scheduled completion. At the same time, management continues to address the slower-than-anticipated commercial lease-up and repositioning at Ivy at SOCO and condominium sales and refinancing considerations at Wild Oak.

Management’s near-term priorities are continued execution across the existing portfolio, raising capital to complete the Company’s remaining Maple Grove investment commitment, addressing the Wild Oak condominium and refinancing strategy, and advancing Renn & Royce toward completion. As additional capital becomes available beyond these existing requirements, the Company intends to selectively pursue opportunities that can increase cash flow, diversify the portfolio, and support long-term value creation.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Critical Accounting Policies

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards that have different effective dates for public and private companies. We have elected to take advantage of this extended transition period, and thus, our financial statements may not be comparable to those of other reporting companies. Accordingly, until the date we are no longer an “emerging growth company” or affirmatively opt out of the exemption, upon the issuance of a new or revised accounting standard that applies to our financial statements and has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.

The preparation of financial statements in accordance with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. Such judgments are based on our management’s experience, our historical experience, and the industry. We consider these policies critical because we believe that understanding these policies is critical to understanding and evaluating our reported financial results. Additionally, these policies may involve significant management judgments and assumptions, or require estimates about matters that are inherently uncertain. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.

ITEM 2. OTHER ITEMS

None.

ITEM 3. FINANCIAL STATEMENTS

The accompanying notes are an integral part of these consolidated financial statements

The accompanying notes are an integral part of these consolidated financial statements

The accompanying notes are an integral part of these consolidated financial statements

The accompanying notes are an integral part of these consolidated financial statements

GRATUS CAPITAL PROPERTIES FUND III, LLC & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2026 and 2025

(UNAUDITED)

NOTE 1 – NATURE OF OPERATIONS

Gratus Capital Properties Fund III, LLC, & Subsidiaries (The Company), a manager-managed Delaware limited liability company, was formed on November 10, 2020. Through subsidiary single purpose entities, the Company’s business model is to acquire multifamily and commercial properties, new developmental property and single-family assets throughout the United States, for the purpose of rehabilitation, development, operation and resale. In addition, the Company may from time to time purchase other cash flowing real estate related assets, such as land, mixed-use, hotels, multifamily, real estate backed investments and commercial properties in urban and other neighborhoods throughout the United States. The Company may also enter into joint venture investments in commercial real estate, lend senior and subordinated debt on properties in the same areas and invest in preferred equity positions in real estate owning entities. The Company believes that by lending to developers in key areas where the Company does not have a physical presence will provide diversified geographic asset investments, reducing the risks of providing returns on the real estate investment portfolio. The Company is managed by GCPF Management, LLC.

The Company is considered an emerging growth company under Section 101(a) of the Jumpstart Business Act as it is an issuer that had total annual gross revenues of less than $1 billion during its most recently completed fiscal period. Because the Company is an emerging growth company, the Company has an exemption from Section 404(b) of Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Securities Exchange Act of 1934. Under Section 404(b), the Company is exempt from the internal control assessment required by subsection (a) that requires each independent auditor that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer.

Through an Offering Circular Form 1A, filed during the year ended 2021, the Company offered up to seven million five hundred thousand (7,500,000) Class A, Class B and Class C Membership Interests (“Interests” or “Class A and Class B Membership Interests”) at $10.00 or $10.6383 per Unit depending on the intermediaries through which the investment is made (the “Offering”). During the six-month period ended June 30, 2026, the Company raised $1,430,569 of gross funds less syndication costs of $21,176. Funds were made available to the Company upon the Company raising a minimum of $1,000,000 (“Minimum Offering”). Funds are being used for acquiring real estate assets throughout the United States as well as for working capital. The Company intends to invest capital from the proceeds of this Offering over a period time; operate, refinance and reinvest and make distributions to the investors.

Commissions will be paid for the sale of the Interests offered by the Company of from 1% to 7%. See the Offering Circular attached for a more comprehensive discussion of management, risk factors, broker dealer fees and other relevant data.

The Company manager is Gratus Capital Properties Management, LLC, a Delaware limited liability company. An affiliate of the Manager (Affiliate) owns 100% of the authorized, issued and outstanding Class C Membership Interests.

The financial statements included forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in the Offering Statement on Form 1A, filed with the Securities and Exchange Commission (“SEC”). Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in our filings with the SEC. The Company does not undertake an obligation to publicly update or review any forward looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying Consolidated Statements of Financial Position and footnotes of Gratus Capital Properties Fund III, LLC have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP’). The Company adopted the calendar year for reporting the financial statements.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its controlled subsidiaries which are primarily majority owned. Any noncontrolling interest in the equity of a partnership is reported as a component of real estate partnership equity, with the exception of the Renn & Royce (Oakdale Flats) investment, in which the Company holds a 4.17% profit and loss interest. This investment is recorded on a cost basis, see note 3 Oakdale, MN. Net income (loss) for operating partnership investments is included in the Statement of Operations as “Income (loss) from partnerships.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the footnotes thereto. Actual results could differ from those estimates. It is reasonably possible that changes in estimates will occur in the near term. All amounts are rounded to the nearest whole dollar upon presentation so certain sums or differences may reflect a rounding difference in some instances.

Risks and Uncertainties

The Company has a limited operating history. The Company's business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in underlying real estate values. These adverse conditions could affect the Company's financial condition and the results of its operations. 

Concentration of Credit Risk

The Company maintains its cash with a major financial institution located in the United States of America, which it believes to be creditworthy. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

Construction in Progress:

Construction in progress (“CIP”) represents capitalized costs incurred for real estate assets that are under development, redevelopment, or significant renovation and are not yet placed in service. CIP is recorded at cost and includes, but is not limited to, land acquisition costs, direct construction costs, development fees, capitalized interest, real estate taxes, insurance, and other costs directly attributable to bringing the asset to its intended use.

The Company capitalizes interest, real estate taxes, and other indirect costs incurred during the development period in accordance with applicable accounting guidance. Capitalization of such costs commences when development activities begin and ceases when the asset is substantially complete and ready for its intended use.

Upon completion, assets are transferred from CIP to real estate investments and depreciation commences over the estimated useful lives of the assets. No depreciation is recorded while assets are classified as CIP.

Management evaluates CIP for impairment whenever events or changes in circumstances indicate that the carrying value of a project may not be recoverable. If such indicators are present, the Company assesses recoverability based on estimated future undiscounted cash flows and records an impairment loss if the carrying amount exceeds fair value.

The duration of development projects and the timing of transfers from CIP to operating real estate assets may vary and are subject to risks and uncertainties, including construction delays, cost overruns, permitting, and market conditions.

Cash and Cash Equivalents

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account. As of June 30, 2026, December 31, 2025, and December 31, 2024, the Company had $809,986, $1,479,956, & $1,265,231, respectively of cash on hand.

Investment Commitments and Unfunded Obligations

The Company has entered into agreements to invest in certain investment vehicles and/or securities for which funding has not yet been completed as of the balance sheet date. These commitments are generally subject to the satisfaction of customary closing conditions or capital call provisions.

As of June 30, 2026 the Company had outstanding unfunded investment commitments totaling $339,307. As of December 31, 2025 the Company had outstanding unfunded investment commitments totaling $2,070,008. The offsetting amount is recorded as a note payable in the accompanying financial statements.

The Company will recognize the investment and corresponding cash outflow in the period the obligation is made. The Company monitors these commitments for liquidity planning purposes and believes it has sufficient resources to meet such obligations as they become due.

Property, Equipment and Depreciation

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation of property and equipment is charged to the statement of operations using the straight-line method over the estimated useful lives of the respective assets as follows:

The Company evaluates property and equipment for impairment on an ongoing basis to determine whether events and circumstances warrant revision of the estimated benefit period. As of June 30, 2026, management believes that no impairment of the property and equipment exists.

Fair Value Measurements

Generally accepted accounting principles define fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

Syndication Costs

The Company continues to work with investment advisors and campaigns to raise capital. Legal and other directly related syndication costs incurred during the six months ended June 30, 2026 and the year ended December 31, 2025 were $437,913 and $416,737, respectively. Syndication costs are accounted for as a reduction of capital raised from the sale of Member Units and has been written off during the twelve months ended December 31, 2025.

Revenue Recognition

The Company accounts for leases in accordance with ASC 842, Leases. The Company determines at the inception of a contract whether it contains a lease and whether that lease should be classified as an operating or finance lease. A contract is considered to contain a lease if it conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

At the lease commencement date, the Company recognizes a right-of-use (“ROU”) asset and a corresponding lease liability for all leases with a term greater than 12 months. Lease liabilities are measured at the present value of future minimum lease payments, discounted using the Company’s incremental borrowing rate, which is determined based on the information available at lease commencement. ROU assets are initially measured at the amount of the lease liability, adjusted for any prepaid lease payments, lease incentives received, or initial direct costs incurred.

Operating lease expense is recognized on a straight-line basis over the lease term and is included in [“cost of revenues,” “selling, general and administrative expense,” or appropriate line item]. Finance lease costs are split between interest expense and amortization of the ROU asset.

The Company has elected the practical expedient to not recognize lease assets and liabilities for leases with a term of 12 months or less. The Company also elected the package of practical expedients permitted under the transition guidance within ASC 842, which, among other things, allows entities not to reassess prior conclusions about lease identification, classification, and initial direct costs for leases that commenced before the effective date of ASC 842.

Certain lease agreements contain options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Company’s lease agreements generally do not contain significant residual value guarantees or restrictive covenants.

The Company adopted ASC 842 on January 1, 2024, using the modified retrospective approach. As permitted under the standard, prior period amounts have not been restated and continue to be reported in accordance with ASC 840.

Organization Expenses

The Company has incurred no organization expenses in 2024 or 2025. Organization expenses incurred during the six months ended June 30, 2026 were $0.

Income Taxes -

The Company and its subsidiaries are taxed as partnerships for US federal income tax purposes. Accordingly, all consolidated items of income, deductions, gains or losses and credits are allocated to members in accordance with the operating agreement and subchapter K of the Internal Revenue Code. Since the Company is not liable for tax itself, no material federal tax provision has been recorded.

The Company has filed its federal and state income tax returns for the period from inception (November 10, 2020) through December 31, 2025. The positions shown on those tax returns are open for examination for a period of three years. Currently, the Company is not under examination by any taxing jurisdiction and has not been assessed any interest or penalties related to income tax matters. The Company routinely evaluates its tax positions that have been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. 

Member Unit and Equity Based Compensation

Consistent with US GAAP, the Company will record Member Unit-based compensation as a non-cash expense. The Company measures and recognizes compensation expense for all Member unit-based awards, granted to employees and directors based on the estimated fair value of the awards on the date of grant. The fair value of each option award is estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the fair value of the underlying member units, the expected term of the option, the expected volatility of the price of the Company’s Member units, risk-free interest rates, and the expected dividend yield of the Company’s Member units. The assumptions used to determine the fair value of the awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment.

The Company amortizes the fair value of each Member unit award over the requisite service period of the awards in accordance with the associated vesting schedule. Stock based compensation is adjusted based upon actual forfeitures.

Recent Accounting Pronouncements

In February 2019, FASB issued ASU No. 2016-02, Leases, that requires organizations that lease assets, referred to as "lessees", to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. ASU 2019-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will include qualitative and quantitative requirements. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, and early application is permitted. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

In June 2018, FASB amended ASU No. 2018-07, Compensation – Stock Compensation, to expand the scope of Topic 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, and early application is permitted. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

In August 2018, amendments to existing accounting guidance were issued through Accounting Standards Update 2018-15 to clarify the accounting for implementation costs for cloud computing arrangements. The amendments specify that existing guidance for capitalizing implementation costs incurred to develop or obtain internal-use software also applies to implementation costs incurred in a hosting arrangement that is a service contract. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, and early application is permitted. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact on our financial statements.

NOTE 3 – REAL ESTATE PARTNERSHIP INVESTMENTS

At the time ended June 30, 2026, the Company continues in their investment purchased from an affiliate in the following North Dakota and Minnesota real estate partnership investments:

Fargo North Dakota:

On December 20, 2021, an affiliate of the Manager of the Company (Affiliate), paid cash of 18.3% of the capital raised in the partnership and acquired a 17.11% profit and loss interest in a developmental limited liability partnership which is in Fargo, North Dakota (Partnership). The Partnership, through its wholly owned subsidiary, is developing and operating a mixed-use residential building composed of multifamily and condominium units. The Affiliate paid $1,558,378 for this interest. Whereas, the Members of the Partnership have limited liabilities to third parties, each Member is entitled to one (1) vote or a fraction of one (1) vote per one percent (1%) of the Membership interest held by the Member on each matter submitted to a vote at a meeting of Members, except to the extent that the voting rights of the Membership Interest of any class or classes are limited or denied by the Articles of the Operating Agreement or by law.

The development consists of 2.63 acres and is projected to include 119 multifamily rental units plus 14 for-sale condominiums, totaling 118,038 square feet. The development is expected to cost $35,638,702, with a mortgage of $25,525,135 and to open for occupancy in September of 2023. 

The Company accounts for the purchase of its 17.11% interest in Enclave OG, LLC on the equity method of accounting. The management prepared, the unaudited financials as of June 30, 2026, June 30, 2025, and the years ended December 31, 2025, and 2024 are presented are as follows:

Enclave OG, LLC (WILD OAK)

Statement of Operations – Highlights