Notes Payable

9 Months Ended

Sep. 30, 2025

Notes Payable [Abstract]

Notes Payable

5. Notes Payable

Notes payable consists of the following:

Property	Interest Rate	Weighted Average Interest Rate for the Nine Months Ended September 30, 2025	Maturity Date	Amount Due at Maturity		As of September 30, 2025			As of December 31, 2024
Arbors Harbor Town	4.53%	4.53%	January 1, 2026	$	29,000	$	29,000		$	29,000
Arbors Harbor Town Supplemental	3.52%	3.52%	January 1, 2026		5,379		5,410			5,502
The Aster Apartments   (Repaid in full)					—		—			15,940
The Aster Apartments	5.20%	5.20%	June 1, 2030		21,765		21,765			—
Axis at Westmont	4.39%	4.39%	February 1, 2026		34,343		34,640			35,165
Valley Ranch Apartments	4.16%	4.16%	March 1, 2026		43,414		43,414			43,414
Autumn Breeze Apartments   (Repaid in full)					—		—			28,962
BayVue Apartments   (Repaid in full)					—		—			47,382
BayVue Apartments	4.98%	4.98%	July 1, 2030		48,188		48,188			—
Citadel Apartments Senior	SOFR + 1.61%     (floor 1.71%)	5.93%	October 11, 2026		35,200		35,200			35,200
Citadel Apartments Junior	SOFR + 8.86%     (floor 8.96%)	13.18%	October 11, 2026		8,800		8,800			8,800
Camellia Apartments	6.05%	6.05%	January 1, 2030		33,911		33,911			33,911
Discovery at Space Coast Apartments	5.60%	5.60%	January 1, 2030		42,668		43,735			43,735
Total notes payable		5.30%		$	302,668		304,063			327,011
Less: Deferred financing costs							(4,878	)		(3,843	)
Total notes payable, net						$	299,185		$	323,168

SOFR as of September 30, 2025 and December 31, 2024 was 4.31% and 4.53%, respectively. The Company’s loans are secured by the indicated real estate and are non-recourse to the Company, unless otherwise indicated.

Autumn Breeze Apartments Mortgage 

On March 31, 2020, the Company entered into the Autumn Breeze Apartments Mortgage, a 10-year $29.9 million non-recourse mortgage loan which was scheduled to mature on April 1, 2030. The Autumn Breeze Apartments Mortgage bore interest at 3.39% and required monthly interest-only payments through June 30, 2023 and monthly principal and interest payments of approximately $0.1 million thereafter through its stated maturity date with the unpaid principal balance due upon maturity.

In connection with the disposition of the Autumn Breeze Apartments on February 27, 2025, the Autumn Breeze Apartments Mortgage of $28.8 million was fully defeased at a total cost of $28.1 million. See Note 3.

Citadel Apartments Mortgages

On October 6, 2021, the Company entered into a non-recourse mortgage loan facility for up to $39.2 million (the “Citadel Apartments Senior Mortgage”). Simultaneously, on October 6, 2021, the Company also entered into a non-recourse mortgage loan facility for up to $9.8 million (the “Citadel Apartments Junior Mortgage” and together with the Citadel Apartments Senior Mortgage, the “Citadel Apartments Mortgages”). The Citadel Apartments Mortgages require monthly interest-only payments through their stated maturity date with the unpaid principal balance due upon maturity.  

The Citadel Apartments Mortgages were initially scheduled to mature on October 11, 2024, and had two one-year extension options, subject to the satisfaction of certain conditions. The Citadel Apartments Mortgages are both collateralized by a 293-unit multifamily residential property located in Houston, Texas (the “Citadel Apartments”), however, the Citadel Apartments Junior Mortgage is subordinate to the Citadel Apartments Senior Mortgage. 

Pursuant to the terms of the Citadel Apartments Mortgages, the Company was required to enter into one or more interest rate cap contracts in the aggregate notional amount of $49.0 million pursuant to which the SOFR rate was to be capped at 2.00% for as long as the Citadel Apartments Mortgages remain outstanding.

On September 26, 2024, the maturity dates of the Citadel Apartments Mortgages were both extended from October 11, 2024 to October 11, 2026. In connection with these extensions, the Company made an aggregate principal paydown of $5.0 million, which reduced the outstanding balances of the Citadel Apartments Senior Mortgage from $39.2 million to $35.2 million and the Citadel Apartments Junior Mortgage from $9.8 million to $8.8 million. Additionally, the lender agreed to allow for the aggregate notional amount for the interest rate contracts to be reduced from $49.0 million to $44.0 million (as a result of the aggregate principal paydown of $5.0 million) and for SOFR to be capped at 3.00%, rather than 2.00%, through the maturity of the Citadel Apartments Mortgages.

The Company has maintained interest rate cap contracts pursuant to the requisite terms since the origination of the Citadel Apartments Mortgages. On October 10, 2024, the Company entered into a one-year term interest rate cap contract with an effective date of October 11, 2024, with an unrelated financial institution at a cost of $0.5 million. This interest rate cap contract replaced an interest rate cap contract that expired on October 11, 2024 but had a reduced notional amount of $44.0 million and effectively caps SOFR at 3.00% during its term. On October 9, 2025, the Company extended the maturity date of this interest rate cap contract through October 11, 2026, at a cost of $0.3 million.

Aster Apartments Mortgage 

On May 30, 2025, the Company entered into a five-year $21.8 million non-recourse mortgage loan (the “Aster Apartments Mortgage”) scheduled to mature on June 1, 2030. The Aster Apartments Mortgage bears interest at 5.20% and requires monthly interest-only payments through its stated maturity date with the unpaid principal balance due upon maturity. The Aster Apartments Mortgage is collateralized by a 240-unit multifamily residential property located in Sugar Land, Texas (the “The Aster Apartments”). The majority of the proceeds from the Aster Apartments Mortgage were used to repay in full existing mortgages indebtedness of $15.9 million, which was also collateralized by The Aster Apartments. In connection with the Aster Apartments Mortgage, the Company paid the Advisor $0.2 million in debt financing fees.

BayVue Apartments Mortgage

On June 30, 2025, the Company entered into the BayVue Apartments Mortgage, a five-year $48.2 million non-recourse mortgage loan scheduled to mature on July 1, 2030. The BayVue Apartments Mortgage bears interest at 4.98% and requires monthly interest-only payments through June 30, 2028, monthly principal and interest payments of approximately $0.2 million thereafter through its stated maturity date with the unpaid principal balance due upon maturity. The BayVue Apartments Mortgage is collateralized by a 368-unit multifamily residential property located in Tampa, Florida (the “BayVue Apartments”). The majority of the proceeds from the BayVue Apartments Mortgage were used to repay in full existing mortgages indebtedness of $47.4 million, which was also collateralized by the BayVue Apartments. In connection with the BayVue Apartments Mortgage, the Company paid the Advisor $0.5 million in debt financing fees.

The above noted existing mortgage loan required the Company to enter into one or more interest rate cap contracts in the aggregate notional amount of $52.2 million pursuant to which SOFR was capped at 2.50% for as long as it remained outstanding. The Company maintained interest rate cap contracts pursuant to the requisite terms beginning with the origination of this mortgage loan. On July 8, 2024, the Company entered into a one-year interest rate cap contract with an effective date of July 15, 2024, with an unrelated financial institution at a cost of $1.1 million. This interest rate cap contract replaced another interest rate cap contract that expired on July 15, 2024, had a notional amount of $52.2 million and effectively capped SOFR at 2.50% during its term. This interest rate cap contract expired on July 15, 2025.

The following table provides information with respect to the contractual maturities and scheduled principal repayments of the Company’s indebtedness as of September 30, 2025.

	2025		2026		2027		2028		2029		Thereafter		Total
Principal maturities	$	211	$	156,252	$	-	$	689	$	1,072	$	145,839	$	304,063
Less: deferred financing costs														(4,878	)
Total notes payable, net													$	299,185

As of September 30, 2025, the Company was in compliance with all of its financial debt covenants.

Mortgage Debt Maturities

The following discussion relates to the Company’s current intentions with respect to its mortgage debt maturing over the next 12 months. 

The Company’s non-recourse mortgage loans (the “Arbors Harbor Town Mortgage” and the “Arbors Harbor Town Supplemental Mortgage” and collectively the “Arbors Harbor Town Mortgages”) (aggregate outstanding principal balances of $34.4 million as of September 30, 2025) collateralized by a 345-unit multifamily residential property located in Memphis, Tennessee (the Arbors Harbor Town”) are scheduled to mature on January 1, 2026. The Company currently intends to refinance the Arbors Harbor Town Mortgages on or before their scheduled maturity date.

The Company’s non-recourse mortgage loan (the “Axis at Westmont Mortgage”) (outstanding principal balance of $34.6 million as of September 30, 2025) collateralized by a 400-unit multifamily residential property located in Westmont, Illinois (the “Axis at Westmont”) is scheduled to mature on February 1, 2026. The Company currently intends to refinance the Axis at Westmont Mortgage on or before its scheduled maturity date.  

The Company’s non-recourse mortgage loan (the “Valley Ranch Apartments Mortgage”) (outstanding principal balance of $43.4 million as of September 30, 2025) collateralized by a 384-unit multifamily residential property located in Ann Arbor, Michigan (the “Valley Ranch Apartments”) is scheduled to mature on March 1, 2026. The Company currently intends to refinance the Valley Ranch Apartments Mortgage on or before its scheduled maturity date.  

The Citadel Apartments Mortgages (aggregate outstanding principal balance of $44.0 million as of September 30, 2025) are scheduled to mature on  October 11, 2026. The Company currently intends to refinance the Citadel Apartments Mortgages on or before their scheduled maturity date.  

The Company does not currently expect any issues in extending or refinancing its maturing mortgage indebtedness at favorable terms. However, if the Company is unable to do so, it will consider repaying the then outstanding principal balances at their respective maturity dates with available cash and/or proceeds from selective asset sales. The Company has no additional significant maturities of mortgage debt over the next 12 months.