v3.26.3
Related-Party Transactions
 9 Months Ended
Sep. 30, 2026
Related Party Transactions [Abstract]  
Related-Party Transactions

Note 10. Related-Party Transactions

The following is a summary of amounts incurred with the GP, Sealy, and their affiliates during the three and nine months ended September 30, 2026 and 2025:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

($s in thousands)

 

September 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

 

Financial Statement Line

Acquisition fees

 

$

—

 

 

$

382

 

 

$

—

 

 

$

1,379

 

 

Real estate assets

Asset management fee

 

$

1,140

 

 

$

1,043

 

 

$

3,447

 

 

$

2,830

 

 

Asset management fee

Distribution fees

 

$

44

 

 

$

76

 

 

$

178

 

 

$

418

 

 

Prepaid expenses and other assets

Financing fees

 

$

—

 

 

$

526

 

 

$

750

 

 

$

876

 

 

Deferred financing costs; Term loan

Issuance costs

 

$

666

 

 

$

703

 

 

$

2,045

 

 

$

3,392

 

 

Issuance costs

Leasing commissions

 

$

—

 

 

$

88

 

 

$

44

 

 

$

93

 

 

Prepaid expenses and other assets

Property management fees

 

$

263

 

 

$

269

 

 

$

819

 

 

$

710

 

 

Property operating expenses

Other

 

$

470

 

 

$

247

 

 

$

984

 

 

$

739

 

 

Various

 

•
Acquisition fees – the Company pays Sealy an acquisition fee of up to 1.0% of the total contract purchase price for real estate assets acquired. The Company also reimburses Sealy for acquisition-related expenses.
•
Asset management fee – the Company pays the GP an asset management fee of up to 1.0% of the book value of assets under management (the “AUM”) per annum payable monthly. The AUM is not adjusted for accumulated depreciation. As of both September 30, 2026 and December 31, 2025, the asset management fee payable to the GP was $570,000.
•
Distribution fees – the Class R Unit is subject to a distribution fee of 0.25% of the Class R Unit price per annum, payable to Sealy Investment Securities, LLC ("SIS"), a Sealy affiliate and the managing broker-dealer for the Private Offering, from quarterly and liquidating distributions. The Company may prepay SIS, and has prepaid, the distribution fee in the amount of 2.5% of the Class R Unitholders’ gross contributions. As of September 30, 2026 and December 31, 2025, prepaid distribution fees were $2.1 million, and $2.2 million, respectively. The Company withholds from the investors’ quarterly distributions at an annual rate of 0.25% of gross contributions currently and will withhold from liquidating distributions, not to exceed 2.5% in total.
•
Financing fees – the GP may earn a financing coordination fee of up to 0.5% of the principal amount of new or refinanced loans for services related to loan negotiations.
•
Issuance costs – the Company reimburses Sealy and SIS for offering-related costs and costs in connection with the administration of the DRIP. The following table sets forth issuance costs we incurred with related parties for the respective periods:

 

 

Three Months Ended

 

 

Nine Months Ended

 

(in thousands)

 

September 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Issuance costs - Sealy

 

$

—

 

 

$

—

 

 

$

102

 

 

$

1,231

 

Issuance costs - SIS

 

$

666

 

 

$

703

 

 

$

1,943

 

 

$

2,161

 

 

As of September 30, 2026 and December 31, 2025, issuance costs payable to SIS were approximately $165,000 and $399,000, respectively; no issuance costs remained payable to Sealy.

 

Additionally, the Company may pay SIS an alternative selling commission on Class I Units not to exceed 4.25% of gross offering proceeds. During the three and nine months ended September 30, 2026, the Company incurred $1,000

in alternative selling commissions. During the three and nine months ended September 30, 2025, the Company incurred $55,000 in alternative selling commissions.

•
Property management fees and leasing commissions – the Company has property management agreements with Sealy, under which it pays a monthly property management fee of 2.00% to 4.00% of monthly gross receipts from the properties, less any management fee paid to a third party. Additionally, Sealy receives 50% of all late payments and returned checks collected. The property management agreements also state that Sealy may receive leasing commissions based on the market in which each property is located, less any commission paid to a third party.
•
Other costs – the Company has no employees and, in accordance with the Partnership Agreement and the confidential private placement memorandum of the Private Offering, periodically reimburses Sealy and its affiliates for costs incurred on its behalf. These costs include compensation for management and administrative personnel providing services such as accounting and property management, as well as compliance costs, consulting services related to insurance, property tax, design services, and other expenses such as postage and pursuit costs on dead deals. As of September 30, 2026 and December 31, 2025, approximately $89,000 and $21,000 of other costs remained payable, respectively.