INVESTMENT IN UNCONSOLIDATED AFFILIATES

9 Months Ended

Sep. 30, 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		September 30, 2026			December 31, 2025			September 30, 2026				December 31, 2025		September 30, 2026			December 31, 2025
Banner Building			2007			66.67%		$	1,371		$	1,347		$	8,357		$	8,470		$	6,355		$	6,505
Grand Forks INREIT, LLC			2003			50%			5,229			5,417			19,124			19,848			8,667			9,015
SE Savage, LLC			2019			60%			(1,058)			(575)			27,791			28,783			29,555			30,274
SE Maple Grove, LLC			2019			60%			(152)			553			25,183			26,394			26,381			26,545
SE Rogers, LLC			2020			60%			(431)			40			26,778			28,040			27,594			28,210
ST Oak Cliff, LLC			2021			70%			6,800			5,930			44,083			45,608			34,270			37,073
SE Brooklyn Park, LLC			2021			60%			(345)			144			25,551			26,535			26,076			26,398
ST Fossil Creek, LLC			2022			70%			5,873			5,333			46,231			46,131			38,342			39,013
SHG Emory North Liberty, LLC			2024			99%			10,500			11,027			11,984			12,241			833			482
								$	27,787		$	29,216		$	235,082		$	242,050		$	198,073		$	203,515

Negative investments presented in accrued expenses and other liabilities									1,986			575

Total investment in unconsolidated affiliates								$	29,773		$	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 owns 50% interest as 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 that holds a multifamily property. The entity is located in Dallas, Texas. The entity 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 September 30, 2026 and December 31, 2025, respectively. The note is included in Notes receivable, affiliates on the Consolidated Balance Sheet at September 30, 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 that holds a multifamily property. The entity is located in Fort Worth, Texas. The property is encumbered by a first mortgage.

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, ENL is not consolidated by SHG and is also accounted for as an unconsolidated affiliate 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 September 30, 2026, ENL had total assets of approximately $65,127 and total liabilities of approximately $43,580, consisting primarily of project-level development and construction financing.

The following is a summary of the financial position of the unconsolidated affiliates at September 30, 2026 and December 31, 2025.


		September 30, 2026			December 31, 2025

		(in thousands)
ASSETS
Real estate investments		$	272,153		$	272,102
Accumulated depreciation			(57,701)			(51,086)
Total Real Estate Investments, net			214,452			221,016
Cash and cash equivalents			3,952			6,130
Restricted deposits			3,313			1,451
Investment in unconsolidated affiliates			11,506			11,758
Financing and lease costs, net			646			710
Other assets, net			1,213			985
Total Assets		$	235,082		$	242,050

LIABILITIES
Mortgage notes payable, net		$	192,482		$	196,774
Tenant security deposits payable			419			428
Accrued expenses and other liabilities			5,172			6,313
Total Liabilities			198,073			203,515
SHAREHOLDERS' EQUITY
Total Shareholders' Equity			37,009			38,535

Total liabilities and shareholders' equity		$	235,082		$	242,050

The following is a summary of results of operations of the unconsolidated affiliates for the three and nine months ended September 30, 2026 and 2025.


		Three months ended September 30,						Nine months ended September 30,
		2026			2025			2026			2025

		(in thousands)							(in thousands)
Income from rental operations		$	7,538		$	7,393		$	22,283		$	22,072
Expenses from rental operations			3,325			3,430			9,683			9,907
Net operating income			4,213			3,963			12,600			12,165
Depreciation and amortization			2,750			3,348			6,680			10,052
Interest			1,946			1,929			5,984			5,676
Other income (expense)			124			71			169			(237)
Net income (loss)		$	(359)		$	(1,243)		$	105		$	(3,800)