Sterling Real Estate Trust 10-Q: $24.22 Redemption Price, $29.4M Plan Left, $92.6M Affiliate Debt

Sterling is a REIT organized in North Dakota in December 2002 that owned 176 properties on September 30, 2026: 12,425 apartment units and about 1,142,000 square feet of commercial space. It is externally managed by Sterling Management, LLC, and the 10-K says there is no public trading market for its shares. People who own it mostly hold common shares or units in its operating partnership, Sterling Properties, LLLP, which the trust owned 41.32% of at September 30, 2026. This page reads the newest 10-Q against the seven years of 10-Ks before it. Most coverage of non-traded REITs is about the big NAV funds; for how those compare see our NAV REIT redemption tracker, and for the sector's other offers to buy shares, our tender offer census.

What the November 4, 2026 10-Q says

After the quarter, the 10-Q reports the October 15, 2026 distribution of $0.3188 a share or unit and the sale of two commercial properties: Marshall, Minnesota for $5,000 thousand on October 28 and Marquette, Michigan for $2,320 thousand on October 30. The earlier Parkway Office Building sale, in August 2026, produced a $1,082 thousand gain. Commercial occupancy is the weaker line: 85.7% at September 30, 2026 against 90.0% a year earlier.

The redemption price, 2019 to 2026: the table no filing gives you

Each 10-K states only the current price and the Board's step. Reading eight of them in a row shows the pattern.

All columns after the first three are our arithmetic on figures in the 10-Ks and the Q3 2026 10-Q: the annual distribution is four times the quarterly rate ($0.26125 in 2019, $0.264688 in 2020, $0.265 in 2021, $0.2875 in 2022-2024, $0.30 in 2025, $0.3188 in 2026), and FFO per share or unit is the reported FFO divided by the weighted average of shares and units. FFO for 2019-2021 is as originally reported; later 10-Ks changed the definition and restated 2022 (from $42,011 thousand to $41,376 thousand) and 2023 (from $38,711 thousand to $38,103 thousand), and the table uses the restated figures. The 2026 distribution is a run-rate, not a year.

Three readings follow, each limited to what the documents show:

• The redemption price is a formula in practice. Since 2021 it has been about 95% of the Board's estimated value. The dividend reinvestment plan uses the same 95%, while optional cash purchases are at 100% of the value (10-K, Note 15). A holder who buys at $25.50 and redeems at $24.22 gives up $1.28 a share, or 5.0% (our arithmetic).
• The distribution has moved with the value. Since 2022 the annual distribution has been 5.0% of the estimated value, to the cent. We do not read intent into that; it is simply what the numbers show, and it means a rise in the value comes with a rise in the payout.
• The 2022 step was the large one. The value went from $20.00 to $23.00 on January 1, 2022, up 15.0%, and the redemption price from $19.00 to $21.85. The 2026 step was 6.3% on the value (our arithmetic).

How the redemption plan works, and what changed on September 22, 2026

The plan text is filed as exhibits. The share plan (amended March 19, 2026) and the unit plan (restated September 22, 2026) are near-identical except for one number.

The plans say their purpose is to provide “limited interim liquidity” until a liquidity event. They do not promise it. The 8-K of September 25, 2026 describes the change in these words: the amendment increased the mandatory holding period for units “from one (1) year to two (2) years effective September 22, 2026.” The 10-Q filed six weeks later still describes the plan as covering holders “after they have held them for at least one year” and lists no change under Item 5, so a reader who only opens the 10-Q will miss it. The plan exhibit is the controlling text.

Units matter because most of the equity is in them. In the third quarter, shares and units outstanding on a weighted basis were 32,604 thousand, of which 19,129 thousand were operating-partnership units (58.7%, our arithmetic). Units were also $2,191 thousand of the $3,715 thousand of cash redemptions in the first nine months of 2026 (59.0%, our arithmetic). Units are issued to sellers who contribute property to the partnership (the 10-Q shows about 394,000 units issued for acquisitions in nine months); see our guide to 1031 exchanges into a REIT's operating partnership.

The monthly table in the 10-Q is rounded to thousands. In the first nine months the trust redeemed 63,000 shares and 90,000 units, 153,000 in all, which is 0.47% of the 32,604 thousand shares and units (our arithmetic). The remaining $29,393 thousand would buy about 1.21 million shares or units at $24.22 (our arithmetic). That figure is unused plan capacity, not a queue of waiting requests: the 10-Q says that “we redeemed all shares or units for which we received redemption requests.” The 10-Ks for 2023, 2024 and 2025 carry a similar sentence for those years.

The first nine months of 2026 are the lowest since 2022 on a pace basis (about $4.95 million annualized against $9.68 million in 2025, our arithmetic). The filings do not say why. Optional cash purchases by existing holders raised $2,867 thousand in the same period, which covers 77% of the cash paid out for redemptions (our arithmetic), against 27% in the first nine months of 2025.

The “affiliate” lines: who the lenders are

The balance sheet has two lines with the word affiliate in them. The Related Party note explains both, and neither is a loan from the sponsor in the usual sense.

• Bell Bank. The 10-Q says the trust had $76,586 thousand of principal outstanding on loans with Bell Bank at September 30, 2026 and describes “a historical and ongoing relationship” with it. A trustee “also serves as a Board Member of Bell Bank,” and the filing says that trustee could have an indirect material interest in the transactions. Interest on the Bell Bank debt was $2,398 thousand in the nine months (against $1,756 thousand a year earlier). This is bank debt secured on properties, from a lender the trust treats as a related party. It is not a loan from the advisor.
• Sterling Office and Industrial Properties, LLLP. The trust owed this affiliated partnership $16,000 thousand at September 30, 2026, with $215 thousand of interest in nine months. An 8-K of March 3, 2025 reports a $10 million revolving note at 5.25%. A second $10 million revolving note of June 25, 2025 runs the other way: the 8-K and its amendments show the trust's operating partnership as lender and the affiliate as borrower, at 6.75% after the rate was corrected. The filings we read do not say who owns the affiliated partnership.
• Share of the debt stack. Affiliate debt of $92,586 thousand is 9.0% of total assets, and affiliate interest of $2,613 thousand is 11.9% of nine-month interest expense of $21,885 thousand (our arithmetic). The balance rose 45.1% since December 31, 2025 (our arithmetic), most of it in the second quarter, when the balance sheet shows the credit lines falling from $29,496 thousand at March 31 to $5,000 thousand at June 30 and none at September 30.

Related-party fees are separate. In the nine months the trust paid the Advisor $3,693 thousand in advisory fees and GOLDMARK Property Management, which the filing describes as an affiliate, $5,692 thousand in management fees (together $9,385 thousand, our arithmetic). It also issued about 158,000 units, valued at $4,017 thousand, to an entity affiliated with two trustees in an acquisition; the 10-Q values units issued in acquisitions at $25.50.

Mortgage principal falls due in lumps: $81,156 thousand in 2027, $67,689 thousand in 2028 and $115,331 thousand in 2029 (10-Q, Note 9). For how other REITs are handling the same wall, see our debt maturity wall page.

Is the distribution covered?

FFO says yes; cash after spending says it is tighter. Both are in the filings.

On the 2025 figures, operating cash flow less capital spending ($21,476 thousand) roughly matched cash distributions ($21,572 thousand). In 2026 it did not ($12,698 thousand against $23,781 thousand). Capital spending includes projects the 10-Q describes as development: construction in progress rose by $24,511 thousand to $48,537 thousand (our arithmetic), including a $6,031 thousand parking-lot project and the rebuilding of a fire-damaged building. So the gap is not necessarily maintenance spending, and FFO adds back depreciation by design. Financing filled it: the cash flow statement shows $116,585 thousand of new mortgage proceeds and $74,299 thousand of principal repaid.

Over half of the quarterly dividend to shareholders is reinvested rather than paid in cash. In 2025, $8,418 thousand of the $15,591 thousand of dividends declared to shareholders was reinvested in shares (54%, our arithmetic).

One more item for reading net income. The 10-Q says $1,280 thousand of income in the first quarter came from “the correction of depreciation expense that had been recorded using an incorrect methodology in prior periods,” and that the trust concluded the effect on prior periods was not material. With a $239 thousand insurance gain, the $1,082 thousand Parkway gain and a $181 thousand real-estate-tax refund, it lists $2,782 thousand of one-offs inside nine-month net income of $20,504 thousand, 13.6% (our arithmetic). Separately, in October 2023 the trust filed an 8-K saying its June 2023 10-Q “should no longer be relied upon” because of an error in allocating income to the noncontrolling interest, with no effect on total net income or FFO; the 8-K disclosed a material weakness. The September 30, 2026 10-Q concludes that disclosure controls were effective.

The price is a Board estimate

Everything above rests on one number. How the trust describes it:

• The 10-K: “No formal valuation has been undertaken by us.”
• The 10-Q: “The Trustees determine the fair value, in their sole discretion,” It adds that the fair value “was not determined based on, nor intended to comply with, fair value standards under US GAAP,” and that the Board “considers how the price chosen will affect existing share and unit values, redemption prices, dividend coverage ratios, yield percentages” among other things.

None of that is unusual language for a REIT that predates the independent-NAV regime, and the filings do not describe an independent appraiser. It does mean the $24.22 is not a market price, and neither is the $25.50 it is 95% of.

A rough way to test the scale (our arithmetic, not a valuation): 32,604 thousand shares and units at $25.50 is about $831 million of equity. Add $624 million of mortgage and affiliate-note principal and subtract $4.6 million of cash and the implied total is about $1.45 billion. Nine-month net operating income of $67,124 thousand annualizes to about $89.5 million, or about 6.2% of that total. The real estate is carried at $1,215,046 thousand cost and $942,338 thousand net of depreciation. The calculation ignores unconsolidated affiliates, partly owned properties and construction in progress, so treat the 6.2% as a rough marker, not a cap rate.

What the filings do not say

• Who owns the affiliated lender, Sterling Office and Industrial Properties, LLLP, and on what terms the $16,000 thousand is repayable. The 10-Q gives a balance and interest, not a maturity.
• Why redemptions slowed in 2026, or how many requests were turned away by the new unit holding period. The 10-Q is dated six weeks after the change and reports nothing under Item 5.
• How the Board arrives at the value. No appraiser, model or capitalization rate appears in the sections we read.
• What happens to the unused $29,393 thousand if requests rise. The plan says purchases are “on a pro rata basis” at the trust's “sole discretion,” and the Board may suspend it.
• The fourth-quarter number. It will appear in the 10-K.

Dates to watch

What a reader can do with this

This page is analysis of public documents, not investment, legal or tax advice.

• Check which plan you are in. Shares and units have different holding periods since September 22, 2026. A unit received in a property exchange less than two years ago is not eligible, except on death or in a 401(k), under the exhibit text.
• Work the spread. At the 2026 price, 1,000 shares or units redeem for $24,220, against $25,500 at the Board's estimate and $22,800 at the 2025 price (our arithmetic). The distribution run-rate on 1,000 is $1,275.20 a year, or $5.27 a year per $100 of redemption value.
• Mind the date. A request for the fourth quarter has to arrive by November 30, 2026, and the price changes on January 1, 2027. Deciding before or after the Board's December vote is a decision about timing, not about value.
• Read the tax angle. Distributions can include return of capital; see our page on return of capital in REIT distributions. A redemption of units can have a different tax effect from a redemption of shares.
• Compare it with other exits. Our page on non-traded REIT listing discounts and the Form D census of private REITs, which includes a Sterling private-placement filing, put the plan in context.
• Keep the paper. Sterling files under CIK 1412502. If you want the loan notes, the related-party terms and the next 10-K read against your own position, that is what our written read of a filing is for.

If the unit holding period, the tax on a redemption or how much of your portfolio sits in one illiquid REIT is a large part of your plan, a second opinion may help.

FAQ

All figures are from SEC filings read on November 4, 2026. Sterling Real Estate Trust (CIK 1412502): Form 10-Q for September 30, 2026 (accession 0001104659-26-122537), June 30, 2026 (0001104659-26-090956) and March 31, 2026 (0001104659-26-056142); Forms 10-K for 2025 (0001104659-26-026323), 2024 (0001558370-25-003293), 2023 (0001558370-24-003150), 2022 (0001558370-23-003860), 2021 (0001558370-22-003743), 2020 (0001558370-21-003791) and 2019 (0001558370-20-002654); Forms 8-K of September 25, 2026 (0001104659-26-110737), May 1, 2026 (0001104659-26-053473, with the Share Redemption Plan as Exhibit 99.1), March 3, 2025 (0001558370-25-002034), the 8-K/A of July 28, 2025 (0001558370-25-009656) and the 8-K of November 1, 2023 (0001558370-23-017185); the Amended and Restated Unit Redemption Plan (Exhibit 10.1 to the September 2026 8-K); Form D/A of October 20, 2026 (0001437749-26-033012). Our arithmetic is labelled in the text and in the data file. This is analysis of public documents, not investment, legal or tax advice.