10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-54295

Sterling Real Estate Trust

d/b/a Sterling Multifamily Trust

(Exact name of registrant as specified in its charter)

North Dakota	90-0115411
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
4340 18th Ave South Ste. 200 Fargo, North Dakota	58103
(Address of principal executive offices)	(Zip Code)

(701) 353-2720

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Shares of Beneficial Interest, par value $0.01 per share	N/A	N/A

Securities registered pursuant to Section 12(g) of the Act: none

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ◻ Yes ☑ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. ◻ Yes ☑ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ◻ No

Indicate by checkmark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). ☑ Yes ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

There is no established public market for the registrant’s shares of common stock.

Indicate the number of shares outstanding of each of the issuer’s classes of common shares, as of the latest practicable date.

Class	Outstanding at March 14, 2023
Common Shares of Beneficial Interest, $0.01 par value per share	10,947,790

Documents Incorporated by Reference: Portions of Sterling’s Proxy Statement for its 2023 Annual Meeting of Shareholders, which Sterling intends to file with the Securities and Exchange Commission within 120 days after the end of Sterling’s fiscal year ended December 31, 2022, are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) of this Annual Report on Form 10-K to the extent described herein. If Sterling does not file its Proxy Statement on or before 120 days after the end of its 2022 fiscal year, Sterling will file the required information in an amendment to this Annual Report on Form 10-K.

Sterling Real Estate Trust

INDEX

	PAGE
PART I
Item 1. Business		3
Item 1A. Risk Factors		8
Item 1B. Unresolved Staff Comments		24
Item 2. Properties		24
Item 3. Legal Proceedings		30
Item 4. Mine Safety Disclosures		30
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities		30
Item 6. Selected Financial Data		32
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		33
Item 7A. Quantitative and Qualitative Disclosures about Market Risk		45
Item 8. Financial Statements and Supplementary Data		45
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		45
Item 9A. Controls and Procedures		45
Item 9B. Other Information		47
PART III
Item 10. Trustees, Executive Officers and Corporate Governance		47
Item 11. Executive Compensation		47
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		47
Item 13. Certain Relationships and Related Transactions, and Trustee Independence		47
Item 14. Principal Accountant Fees and Services		47
PART IV
Item 15. Exhibits and Financial Statement Schedules		48
Item 16. Form 10-K Summary		48
Report of Independent Registered Public Accounting Firm and Financial Statements		51
Signatures		94

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements included in this Annual Report on Form 10-K and the documents incorporated into this document by reference contain certain “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, as amended (the “Exchange Act”). Such forward-looking statements include statements regarding our plans and objectives, including, among other things, our future financial condition, anticipated capital expenditures, anticipated dividends and other matters. Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology. These statements are only predictions and are not historical facts. Actual events or results may differ materially.

The forward-looking statements included herein are based on our current expectations, plans, estimates 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 conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Any of the assumptions underlying the forward-looking statements contained herein could be inaccurate. Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, we cannot assure readers that the forward-looking statements included in this filing will prove to be accurate. The accompanying information contained in this Annual Report on Form 10-K, including, without limitation, the information set forth under the section entitled “Risk Factors” in Item 1A, identifies important additional factors that could materially adversely affect actual results and performance. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of certain unanticipated events or changes to future operating results.

PART I

All dollar amounts in this Form 10-K are stated in thousands with the exception of share and per share amounts, unless otherwise indicated.

ITEM 1.  BUSINESS

GENERAL

Sterling Real Estate Trust (“we,” “us,” “our,” “Company,” “Trust” or “Sterling”) is a real estate investment trust (“REIT”). Sterling was registered in North Dakota as an unincorporated business trust in December 2002.  References in this Annual Report on Form 10-K to the “Company,” “Sterling,” “Trust,” “we,” “us,” or “our” include consolidated subsidiaries, unless the context indicates otherwise. As a REIT, we are not subject to U.S. federal income taxation as long as we satisfy certain requirements, principally relating to the nature of our income, the level of our dividends and other factors.  As of December 31, 2022, we owned directly or through our operating partnership, 185 properties in 12 states.

UPREIT Structure

The Trust operates as an Umbrella Partnership Real Estate Investment Trust, which is a REIT that holds all or substantially all of its assets through a partnership which the REIT controls as general partner. Therefore, the Trust conducts substantially all investment activities and holds substantially all of the Trust’s assets through the operating partnership Sterling Properties, LLLP. The Trust controls the operating partnership as the general partner and owns approximately 36.60% of the operating partnership as of December 31, 2022. For purposes of satisfying the asset and income tests for qualification as a REIT for tax purposes, the proportionate shares of the assets and income of the operating partnership are deemed to be the assets and income of the Trust.

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The UPREIT structure is used to facilitate acquisitions of real estate properties. A sale of property directly to a REIT is generally a taxable transaction to the property seller. However, in an UPREIT structure, if a property seller exchanges the property for limited partnership units, the seller may defer taxation of gain in such exchange until the seller resells its limited partnership units or exchanges its limited partnership units for the REIT’s common stock. By offering the ability to defer taxation, the Trust may gain a competitive advantage in acquiring desired properties over other buyers who cannot offer this benefit. In addition, investing in the operating partnership, rather than directly in the Trust, may be more attractive to certain institutional or other investors due to their business or tax structure. If an investor is interested in making a substantial investment in our operating partnership, the structure provides the Trust the flexibility to accommodate different terms for each investment, while applicable tax laws generally restrict a REIT from charging different fee rates among its shareholders. Finally, if the Trust’s shares become publicly traded, the former property seller may be able to achieve liquidity for the investment in order to pay taxes.

Operating Partnership

Sterling Properties, LLLP, was formed as a North Dakota limited liability limited partnership in April 2003 to acquire, own and operate properties on the Trust’s behalf. The operating partnership holds a diversified portfolio of multifamily dwellings and commercial properties located principally in the upper and central Midwest United States.

Since formation, the Trust’s focus has consisted of owning and operating income-producing real estate properties. In 2006, the Trust held 23 total properties approximating $56,265 in total assets, in the operating partnership. Between 2007 and 2022, the Trust focused extensively on strengthening the multifamily component of the portfolio, acquiring properties directly or through UPREIT transactions. A majority of these multifamily properties are located in North Dakota. The portfolio has grown to 185 properties, approximating $888,723 in total assets, and book equity, including noncontrolling interests, of approximately $323,466 as of December 31, 2022. As of December 31, 2022, the portfolio contained approximately 11,300 apartment units and 1,498,000 square feet of leasable commercial space.

OUR PEOPLE

We do not have any employees. Instead, we rely on our external Advisor to conduct our day-to-day affairs.

Advisor to the Trust

Sterling Management, LLC, a North Dakota limited liability company formed in November 2002, is the external Advisor to the Trust. The Advisor is responsible for managing our day-to-day affairs and for identifying, acquiring and disposing investments on our behalf.  The Advisor is 100% owned by Trustmark Enterprises, Inc., formerly known as Alloy, a North Dakota corporation (“Trustmark”).  Trustmark is owned in part by Kenneth P. Regan, a Trustee and Chief Executive Officer of the Trust, by James S. Wieland, also a Trustee of the Trust, by Joel S. Thomsen, President of the Trust. In addition, Messrs. Regan, Wieland, Thomsen and Gleave serve on the Advisor’s Board of Governors. The Advisor’s employee base has seen considerable growth, both in number and expertise, since its inception.

Audit and Disclosure Committee

The Audit and Disclosure Committee was established by the Board of Trustees to assist the Board in fulfilling its fiduciary duties and oversight responsibilities. The Audit and Disclosure Committee assists the Board by overseeing the integrity of the Trust’s financial statements, financial reporting and disclosure processes, internal accounting and financial controls and the annual independent audit of the Trust’s financial statements. The Audit and Disclosure Committee also oversees the establishment and maintenance of processes to assure the Trust’s compliance with all applicable laws, regulations, and Trust policy, including compliance with filing requirements under the Exchange Act and the rules and regulations promulgated thereunder. In performing its work, it is the Audit and Disclosure Committee’s responsibility to foster free and open means of communication between the Trustees, the independent auditors and the Trust’s financial managers. Our Audit and Disclosure Committee is currently comprised of Trustees Timothy A. Hunt (Chair of the Committee), Ann L. Christenson, Timothy L. Haugen, Michelle L. Korsmo, and Mark T. Polovitz.

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Board of Trustees and Executive Officers

The Trust operates under the direction of our Board of Trustees, the members of which are accountable to both the Trust and its shareholders. The Trustees are elected annually by our shareholders.  In addition, the Board has a duty to supervise our relationship with the Advisor and evaluate the performance of and fees paid to the Advisor on an annual basis. The Advisory Agreement was approved by the Board of Trustees (including all the independent trustees) on March 24, 2022, effective April 1, 2022 until March 31, 2023. The Board of Trustees has provided investment guidance for the Advisor to follow and must approve each investment recommended by the Advisor. Currently, the Advisor has eight members on the Board, six of whom are independent.

Although the Trust has executive officers, it does not have any paid employees. The President, Chief Executive Officer, Chief Investment Officer, Chief Financial Officer and Treasurer, and General Counsel and Secretary of the Trust, are also officers, employees, owners, or governors of our Advisor. Among others, such executive officers oversee the Advisor’s day-to-day operations with respect to the Trust. However, when doing so, such executive officers are acting on behalf of the Advisor in performing the Advisor’s obligations under the Advisory Agreement. Generally, the only services performed by the Trust’s executive officers are those required by law or regulation, such as executing documents as required by North Dakota law and providing certifications required by the federal securities laws.

Organizational Structure

On January 1, 2021, the advisor was acquired by Trustmark Enterprises, Inc. in an equity transfer.

The following chart shows the relationship structure with the advisor:

(1) As of December 31, 2022, the Advisor was owned 100% by Trustmark Enterprises, Inc. Trustmark was owned in part by the Trust’s Chief Executive Officer and Trustee Kenneth P. Regan (36.23%), by Trustee James S. Wieland (25.15%), by President Joel S. Thomsen (20.00%).  Messrs. Regan and Thomsen, serve as officers of the Advisor. Messrs. Regan, Wieland, and Thomsen, serve on the Advisor’s Board of Governors.

(2) Sterling Management, LLC serves as Advisor to both the Trust and the operating partnership. The Advisor does not own any of our shares. Messrs. Regan and Wieland beneficially own approximately 1.43% and 2.76%, respectively, of our shares as of December 31, 2022.

(3) The Trust controls the operating partnership as the general partner and owns approximately 36.60% of the operating partnership as of December 31, 2022. Messrs. Regan and Wieland beneficially owned and had voting power over approximately 16.41% and 5.12%, respectively, of the Operating Partnership as of December 31, 2022.

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CORE INVESTMENT OBJECTIVES AND STRATEGY

Investment Objectives

The Trust’s primary investment objectives are to:

● Acquire quality real estate properties or interests in real estate properties that can provide stable cash flow for distribution to our shareholders, preservation of capital and realization of long-term capital appreciation upon the sale of such properties,

● Offer an investment option in which the value of the common shares is correlated to real estate as an asset class rather than traditional asset classes such as stocks and bonds; and

● Provide a hedge against inflation through use of month-to-month rentals or short-term and long-term lease arrangements with rental properties tenants.

The Trust may change the investment objectives only with the approval of holders of a majority of the outstanding common shares.

Investment Guidance

The Board of Trustees has provided investment guidance to the Advisor to direct the investment strategy of the Trust. Changes to the investment guidance must be approved by the Board. The Advisor has been authorized to execute:

● Commercial and multifamily real estate property acquisitions and dispositions,

● Investments in other real estate related assets, in each case so long as such investments are approved by our Board,

● Acquisitions of property or land for the purposes of future development; and

● Capital investments in the portfolio’s current properties through capital improvements.

The Board will have ultimate oversight over the Trust’s investments and may change from time to time the scope of authority delegated to the Advisor with respect to acquisition and disposition transactions.

Investment Strategy

Sterling’s current investment strategy and focus is on multifamily properties. Our Advisor monitors industry trends and invests in property believed to provide the most favorable return balanced with risk. We attempt to manage our real estate portfolio by evaluating changes or trends in the industries in which our tenants operate, the creditworthiness of our tenants and changes or trends in the area demographics surrounding our properties for evidence that our properties will continue to meet our investment objectives of cash flow, preservation of capital and capital appreciation. There is no current plan for the existing commercial properties (industrial, medical, office and retail) regarding retention, acquisition, or disposition.

The Trust will primarily invest in existing or newly developed real estate properties. The Trust may also invest in interests in real estate properties by acquiring direct ownership or ownership interests with other investors, including affiliates of the Advisor, through holding company structures or joint ventures, real estate partnerships, tenant-in-common deals, REITs, or other collective investment vehicles. The Trust may also invest in other real estate property types, including undeveloped land or other development opportunities if the land is acquired for the purpose of producing rental or other operating income in the future. The properties the Trust primarily invests in have existing rent and expense schedules, or the properties are newly constructed with predictable cash flows.

Most current acquisitions are in or near metropolitan areas. However, there is no limitation on the geographic areas in which we may acquire targeted investments.

The Trust may also acquire portfolios of real estate properties held by individual owners and real estate properties held by funds, including hedge funds. It is anticipated that such property owners will primarily sell the properties in exchange for limited partnership interests of the operating partnership.

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SEGMENT DATA

We report our results in two reportable segments: residential and commercial properties. Our residential properties include multifamily. Our commercial properties include retail, office, industrial and medical properties. We assess and measure operating results based on the non-GAAP financial measurement of net operating income (“NOI”), which we define as total real estate segment revenues less real estate expenses (which consist of real estate taxes, property management fees, utilities, repairs and maintenance, insurance and direct administrative costs). We believe NOI is an important measure of operating performance even though it should not be considered an alternative to net income or cash flow from operating activities. NOI is unaffected by financing, depreciation, amortization, legal and professional fees and certain general and administrative expenses.

COMPETITION

Our properties are located in highly competitive real estate markets. The number of competitive properties in a particular area could have a material adverse effect on our ability to lease space and the amount of rent we can charge at our properties. We compete with many property owners, such as corporations, limited partnerships, individual owners, other real estate investment trusts, insurance companies and pension funds.

Our competition also consists of other owners and developers of multifamily and commercial properties who are trying to attract tenants to their properties. This competition influences our ability to acquire properties and the prices that we may pay for those properties. We believe, however, that the diversity of our investments, the experience and abilities of our management and the quality of our assets affords us some competitive advantages that have in the past, and should in the future, allow us to operate our business successfully despite the competitive nature of our business.

Generally, there are multifamily and other similar commercial properties within relatively close proximity to each of our properties. The majority of our retail properties are restaurants and pharmacies. In addition to competitor retail properties with similar business models, we and our tenants face increasing competition from outlet malls, internet shopping websites, discount shopping clubs, catalog companies, direct mail and telemarketing.

ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION

As an owner of real estate, we are subject to various environmental laws, rules and regulations adopted by various governmental bodies or agencies. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid hazardous materials, the remediation of contaminated property associated with the disposal of solid and hazardous materials and other health and safety-related concerns. Under these laws, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances released at a property and may be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred in connection with any contamination. We could be subject to liability in the form of fines or damages for noncompliance with these laws and regulations, and some environmental laws create a lien on a contaminated site in favor of the government for damages and costs it incurs in connection with the contamination. Some of these laws and regulations may impose joint and several liability on residents, owners, or operators for the costs of investigation or remediation of contaminated properties, regardless of fault or the legality of the original disposal. In addition, the presence of these substances, or the failure to properly remediate these substances, may adversely affect our ability to sell or rent the property or to use the property as collateral for future borrowing. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require material expenditures by us.

In addition, we are subject to many other laws and governmental regulations applicable to our properties, and changes in the laws and regulations, or in their interpretation by agencies and the courts, occur frequently. Under the Americans with Disabilities Act of 1990 (the “ADA”), all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. The Fair Housing Amendments Act of 1988 (the “FHAA”) requires apartment communities first occupied after March 13, 1991, to be accessible to the handicapped and prohibits housing discrimination based upon familial status.

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The Housing for Older Persons Act (“HOPA”) provides age-based discrimination exceptions for housing developments qualifying as housing for older persons. Non-compliance with ADA, FHAA or HOPA could result in the imposition of fines, awards of damages to private litigants, payment of attorneys’ fees and other costs to plaintiffs, substantial litigation costs and substantial costs of remediation. We believe our properties which are subject to ADA, FHAA and/or HOPA are substantially in compliance with their present requirements.

Compliance with these laws, rules, and regulations has not had a material adverse effect on our business, assets, or results of operations, financial condition, or ability to pay dividends. We do not believe our existing portfolio as of December 31, 2022 will require us to incur material expenditures to comply with these laws and regulations. However, we cannot assure that future laws, ordinances, or regulations will not impose any material liability, or that the current environmental condition of our properties will not be affected by the operations of tenants, by the existing condition of the land, by operations in the vicinity of the properties, such as the presence of underground storage tanks, or by the activities of unrelated third parties.

AVAILABLE INFORMATION

We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy and information statements and all amendments to these filings with the Securities and Exchange Commission (“SEC”). The public may read any materials filed by us with the SEC on the internet site maintained by the SEC at www.sec.gov. We also maintain an internet site at www.smftrust.com, which includes the reports and other documents we file with the SEC. These reports are available as soon as reasonably practicable after such material is electronically filed or furnished to the SEC. This reference to our website is not intended to incorporate information found on the website into this filing.

ITEM 1A. RISK FACTORS

Risks Related to Sterling Real Estate Trust

Our results are dependent on amounts received from the leasing and resale of investments, which are subject to market and economic changes. If income is insufficient to meet our capital needs, our ability to carry out our business plans could be adversely affected.

Our purpose is to acquire and hold real estate investments as long-term investments. The primary income that will be generated by us will be the profits, if any, from the operation or holding of the real estate and upon the resale of the investments. If circumstances arise which cause an investment to become undesirable or remain at its current value or decrease in value, we may generate less income than anticipated.

Our success is based on continuing to locate and hold suitable real estate investments, and failure of our Advisor to locate additional suitable properties or the unsuccessful operation of our existing real estate investments could adversely affect our operations and our ability to pay dividends.

Our ability to achieve our investment objectives and to pay dividends to our shareholders and distributions to unitholders is dependent upon the performance of our Advisor in locating suitable investments and appropriate financing arrangements for us as well as on the successful management of our properties after acquisition. We currently own, through the operating partnership, the properties described under Item 2 — Properties.  We cannot be sure our Advisor will be successful in locating suitable investments on financially attractive terms, or be certain that operation of the properties will avoid the risks attendant to real estate acquisitions, such as:

● The risk properties may not perform in accordance with expectations, including projected occupancy and rental rates.

● The risk we may have underestimated the cost of improvements or repairs required to bring or keep an acquired property up to or at standards established for its intended use or its intended market position.

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We may have to make expedited decisions on whether to invest in certain properties, including prior to receipt of detailed information.

We may be required to make expedited decisions in order to effectively compete for the acquisition of desirable properties and other assets. In such cases, our Advisor and Board of Trustees may not have access to detailed information regarding real estate investments at the time of making an investment decision to pay a non-refundable deposit and to proceed with an acquisition. In addition, the actual time period during which our Advisor will be allowed to conduct due diligence may be limited. Therefore, there can be no assurance our Advisor and Board of Trustees will have knowledge of all circumstances that may adversely affect an investment.

We may change our investment and operational policies without shareholder consent, and such changes could increase our exposure to additional risks.

Generally, the Board of Trustees may change our investment and operational policies, including our policies with respect to investments, acquisitions, growth, operations, indebtedness, capitalization and distributions, at any time without the consent of our shareholders, which could result in our making investments different from, and possibly riskier than investments made in the past. A change in our investment policies may, among other things, increase our exposure to interest rate risk, default risk and commercial real estate market fluctuations, all of which could materially affect our ability to achieve our investment objectives.

There can be no assurance dividends or distributions will be paid or increase over time.

There are many factors that can affect the availability and timing of cash dividends to our shareholders and distributions to unitholders.  Dividends and distributions will be based principally on cash available from our real estate and other investments. The amount of cash available for dividends will be affected by many factors, such as our ability to acquire profitable real estate investments, successfully manage our real estate properties, our operating expenses, and general economic conditions. We can give no assurance we will be able to pay or maintain dividends or distributions or that dividends or distributions will increase over time.

Dividends may include a return of capital, and shareholders may be required to recognize capital gain on distributions.

Dividends payable to shareholders may include a return of capital. To the extent dividends exceed cash flow from operations, a shareholder’s basis in our shares will be reduced and, to the extent dividends exceed a shareholder’s basis, the shareholder may recognize capital gain and be required to make tax payments.

We depend on certain executive officers and trustees, and the loss of such persons may delay or hinder our ability to carry out our investment strategies.

Our future success substantially depends on the active participation of James Wieland, one of our trustees, Kenneth Regan, Chief Executive Officer and a trustee, Joel Thomsen, President, Damon Gleave, Chief Financial Officer and Treasurer, and Barry Schmiess, Chief Investment Officer. Messrs. Wieland, Regan, and Thomsen are also governors and owners of our Advisor. Messrs. Wieland, and Regan, have over 40 years of extensive experience each in the commercial real estate industry, and have been instrumental in setting our strategic direction, operating our business and arranging necessary financing, and through the Advisor, in locating desirable real estate investments and were serving as property manager, managing our properties. Losing the services of Messrs. Wieland, Regan, Thomsen, Gleave, or Schmiess without replacing their position with someone of the same competence and experience, could have a material adverse effect on our ability to successfully carry out our investment strategies and achieve our investment objectives. There can be no guarantee they will remain affiliated with us. See “Risks Related to Conflicts of Interest”.

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Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data, or causing operational disruption. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation, and damage to our investor relationships. As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by Sterling Management and service providers.   Our and Sterling Management’s processes, procedures and internal controls that are designed to mitigate cybersecurity risks and cyber intrusions do not guarantee that a cyber incident will not occur or that our financial results, operations, or confidential information will not be negatively impacted by such an incident.

We are not required to comply with certain reporting requirements, including those relating to auditor’s attestation reports on the effectiveness of our system of internal control over financial reporting, accounting standards and disclosure about our executive compensation, that apply to other public companies.

So long as our shares of common stock are not traded on a securities exchange, we will be deemed to be a “non-accelerated filer” under the Exchange Act, and as a non-accelerated filer, we will be exempt from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. In addition, so long as we are externally managed by the Advisor and we do not directly compensate our executive officers, or reimburse the Advisor or its affiliates for salaries, bonuses, benefits and severance payments for persons who also serve as one of our executive officers or as an executive officer of the Advisor, we do not have any executive compensation.

Many of our costs, such as operating and general and administrative expenses, real estate acquisition, and constructions costs, could be adversely impacted by period of heightened inflation.

A sustained or further increase in inflation could have an adverse impact on our operating expenses incurred in connection with, among others, the property-related services such as repairs and maintenance, janitorial, utilities, security and insurance. Our operating expenses may be recoverable through commercial lease arrangements.

Risks Related to Our Structure

Our shareholders may experience dilution if we or our operating partnership issues additional securities.

Our shareholders do not have preemptive rights to any shares issued by us in the future. If we sell or issue additional shares in the future to raise capital, pursuant to a dividend reinvestment plan or in exchange for limited partnership units pursuant to our operating partnership’s Limited Liability Limited Partnership Agreement (“LLLP Agreement”), our shareholders will experience dilution of their equity investment. In addition, if our operating partnership sells additional securities or issues additional securities in connection with a property acquisition transaction, we would, and indirectly our shareholders would, experience dilution in their equity position.

Our securityholders have limited control over our operation, and the Board of Trustees has the sole power to appoint and terminate the Advisor.

Our Board of Trustees has the authority to determine our major policies, including our policies regarding financing, growth, investment strategies, debt capitalization, REIT qualification, distribution, and to take certain actions including acquiring or disposing of real estate and real estate related investments, dividend declaration and the election or removal of the Advisor. Our securityholders do not have the right to remove the Advisor but have the right to elect and remove trustees.

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Under our Third Amended and Restated Declaration of Trust, our trustees may not do the following without the approval of the holders of a majority of the outstanding common shares of beneficial interest:

● Amend the Third Amended and Restated Declaration of Trust, except for amendments which do not adversely affect the rights, preference and privileges of shareholders.

● Sell all or substantially all of our assets other than in the ordinary course of business or in connection with a liquidation and dissolution.

● Conduct a merger or other reorganization of the trust; or

● Dissolve or liquidate us.

Our shareholders have the right, without the concurrence of the Board of Trustees, to terminate the trust and liquidate our assets or amend the Third Amended and Restated Declaration of Trust.

Shareholders have no role in determining our investments and must rely on our Advisor and oversight by the Board of Trustees.

For future acquisitions or dispositions, the Board of Trustees has the authority to approve investment acquisitions or dispositions without shareholder approval. Therefore, shareholders will not be able to evaluate the terms of future investment acquisitions or dispositions, their economic merit or other relevant financial data before we acquire or sell investments. Shareholders must rely entirely on the oversight of our Board of Trustees, the management ability of our Advisor and the performance of the property managers.

We may issue securities with more favorable terms than the outstanding shares without shareholder approval.

Under our Third Amended and Restated Declaration of Trust, our Board of Trustees has the authority to establish more than one class or series of shares and to fix the relative preferences and rights regarding conversion, voting powers, restrictions, limitations as to dividends and other distributions, and terms or conditions of redemption of such different classes or series without shareholder approval. Thus, our Board could authorize the issuance of a class or series of shares with terms and conditions that could have priority as to dividends and amounts payable upon liquidation over the rights of the holders of our outstanding common shares of beneficial interest. Such class or series of shares could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might otherwise provide a premium price to holders of our shares, even if it would be in the best interest of our shareholders.

Shareholders could incur current tax liability on dividends they elect to reinvest in our shares, and may have to use separate funds to pay their tax liability.

Shareholders that participate in our dividend reinvestment plan will be deemed to have received, and for income tax purposes will be taxed on, the amount reinvested in shares to the extent the amount reinvested was not a tax-free return of capital. In addition, our shareholders will be treated for tax purposes as having received an additional dividend to the extent the shares are purchased at a discount to fair market value. As a result, unless shareholders are a tax-exempt entity, they may have to use funds from other sources to pay their tax liability on the value of the shares received.

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There may be conflicts of interest between us and our shareholders on one side and our operating partnership and its limited partners on the other side.

Our trustees and officers have duties to us and our shareholders in connection with their management of us. At the same time, we, as general partner will have duties to our operating partnership and its limited partners in connection with the management of the operating partnership. Our duties as general partner of the operating partnership may come into conflict with the duties of our trustees and officers to us and our shareholders. The LLLP Agreement of our operating partnership expressly limits our liability for monetary damages by providing we will not be liable for losses sustained, liabilities incurred or benefits not derived if we acted in good faith. In addition, our operating partnership is required to indemnify us and our trustees and officers from and against any and all claims arising from operations of our operating partnership, unless it is established: (1) the act or omission was material and committed in bad faith or was the result of active and deliberate dishonesty; (2) the indemnified party received an improper personal benefit in money, property or services; or (3) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe the act or omission was unlawful. The LLLP Agreement also provides that we will not be held responsible for any misconduct or negligence on the part of any agent appointed by us in good faith.

There is no public trading market for our shares, nor do we expect one to develop, which may negatively impact our shareholders’ ability to sell their shares and the price at which shares may be sold.

There is no public market for our shares and there is no assurance one may develop. In addition, the price shareholders may receive for the sale of their shares is likely to be less than the proportionate value of our investments. If our shareholders are able to find a buyer for their shares, they may have to sell them at a substantial discount from the price they purchased the shares. Consequently, shareholders may not be able to liquidate their investments in the event of emergency or for any other reason. Therefore, shareholders should consider our securities as illiquid and a long-term investment and should be prepared to hold their shares for an indefinite period of time.

The estimated value of our common stock is based on a number of assumptions and estimates that may not be accurate and is also subject to a number of limitations.

The current estimated value of our common stock as of January 1, 2023, is approximately $23.00 per share. The methodology used by our Board to determine this value was based on estimates of the value of our real estate investments, cash and other assets and debt and other liabilities as of a date certain and certain additional information. No formal valuation has been undertaken by us. Our valuation process involves a number of estimates, assumptions and subjective judgments that may not be accurate and complete. Further, different parties using different assumptions and estimates could derive a different estimated value per share, which could be significantly different from our estimated value per share. The estimated value per share may not represent current market values or fair values as determined in accordance with U.S. generally accepted accounting principles. A shareholder should not rely on the estimated value per share as being an accurate or precise measure of the then-current value of the shares of our common stock in making a decision to buy or sell shares of our common stock, including whether to reinvest dividends by participating in the dividend reinvestment plan and whether to request redemption pursuant to our share redemption program.

Risks Related to Our Status as a REIT and Related Federal Income Tax Matters

If we fail to continue to qualify as a REIT, we would incur additional tax liabilities that would adversely affect our operations and our ability to make distributions and could result in a number of other negative consequences.

Although our management believes we are organized, have operated, and will be able to continue to be organized and to operate in such a manner to qualify as a real estate investment trust (REIT), as that term is defined under the Internal Revenue Code, we may not have been organized, may not have operated, or may not be able to continue to be organized or to operate in a manner to have qualified or remain qualified as a REIT. Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial or administrative interpretations. Even a technical or inadvertent mistake could endanger our REIT status.

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The determination that we qualify as a REIT requires an ongoing analysis of various factual matters and circumstances, some of which may not be within our control, regarding our organization and ownership, distributions of our income and the nature and diversification of our income and assets. The fact we hold substantially all of our assets through our operating partnership and our ongoing reliance on factual determinations, such as determinations related to the valuation of our assets, further complicates the application of the REIT requirements for us.

If we lose our REIT qualification, we will face income tax consequences that will reduce substantially our available cash for dividends and investments for each of the years involved because:

● We would be subject to federal corporate income taxation on our taxable income, including any applicable alternative minimum tax, and could be subject to increased state and local taxes.

● We would not be allowed a deduction for dividends paid to shareholders in computing our taxable income; and

● Unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.

The increased taxes could reduce the value of the shares as well as cash available for dividends to shareholders and investments in additional assets. In addition, if we fail to continue to qualify as a REIT, we will not be required to pay dividends to shareholders. Our failure to continue to qualify as a REIT also could impair our ability to expand our business and to raise capital.

As a REIT, we may be subject to tax liabilities that reduce our cash flow.

Even if we continue to qualify as a REIT for federal income tax purposes, we may be subject to federal and state taxes on our income or property, including the following:

● To continue to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (which is determined without regard to the dividends-paid deduction or net capital gains) to our shareholders. If we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to corporate income tax on the undistributed income. In such situation, shareholders will be treated as having received the undistributed income and having paid the tax directly, but tax-exempt shareholders, such as charities or qualified pension plans, will receive no benefit from any deemed tax payments.

● We may be subject to state and local taxes on our income or property, either directly or indirectly, because of the taxation of our operating partnership or of other entities through which we indirectly own our assets.

● If we have net income from the sale of foreclosure property we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate.

● If we sell a property, other than foreclosure property, we hold primarily for sale to customers in the ordinary course of business, our gain will be subject to the 100% “prohibited transaction” tax.

● We will be subject to a 4% nondeductible excise tax on the amount, if any, by which the distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income, and 100% of our undistributed income from prior years.

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We may be forced to borrow funds on a short-term basis, to sell assets or to issue securities to meet the REIT minimum distribution requirement or for working capital purposes.

To qualify as a REIT, in general, we must distribute to our shareholders at least 90% of our net taxable income each year, excluding capital gains. However, we could be required to include earnings in our net taxable income before we actually receive the related cash. If we do not have sufficient cash to pay the necessary dividends to preserve our REIT status for any year or to avoid taxation, we may need to borrow funds, to sell assets or to issue additional securities even if the then-prevailing market conditions are not favorable for such actions.  In addition, we will require a minimum amount of cash to fund our daily operations. Due to the REIT distribution requirements, we may be forced to make distributions when we otherwise would use the cash to fund our working capital needs. Therefore, we may be forced to borrow funds, to sell assets or to issue additional securities at certain times for our working capital needs.

If our operating partnership does not qualify as a partnership, its income may be subject to taxation, and we would no longer qualify as a REIT.

The Internal Revenue Code classifies “publicly traded partnerships” as associations taxable as corporations (rather than as partnerships), unless substantially all of their taxable income consists of specified types of passive income. We structured our operating partnership to be classified as a partnership for federal income tax purposes. However, no assurance can be given the IRS will not challenge our position or will classify our operating partnership as a “publicly traded partnership” for federal income tax purposes. To minimize this risk, we have placed certain restrictions on the transfer and/or redemption of partnership units in the LLLP Agreement. If the IRS would assert successfully our operating partnership should be treated as a “publicly traded partnership” and substantially all of the operating partnership’s gross income did not consist of the specified types of passive income, the Internal Revenue Code would treat the operating partnership as an association taxable as a corporation. In such event, we would cease to qualify as a REIT. In addition, the imposition of a corporate tax on the operating partnership would reduce the amount of distributions the operating partnership could make to us and, in turn, reduce the amount of cash available to us to pay dividends to our shareholders.

We have transfer restrictions on our shares that may limit offers to acquire substantial amounts of the Trust’s shares at a premium.

To qualify as a REIT, our shares must be beneficially owned by 100 or more persons and no more than 50% of the value of our issued and outstanding shares may be owned directly or indirectly by five or fewer individuals. Currently, Third Amended and Restated Declaration of Trust prohibits transfers of our shares that would result in: (1) our shares being beneficially owned by fewer than 100 persons, (2) five or fewer individuals, including natural persons, private foundations, specified employee benefit plans and trusts, and charitable trusts, owning more than 50% of our shares, applying broad attribution rules imposed by the federal income tax laws, or (3) before our shares qualify as a class of publicly-offered securities, 25% or more of our shares being owned by ERISA investors. If a shareholder acquires shares in excess of the ownership limits or in violation of the restrictions on transfer, we:

● May consider the transfer to be void ab initio.

● May not reflect the transaction on our books.

● May institute legal action to enjoin the transaction.

● May redeem such excess shares.

● Automatically transfer any excess shares to a charitable trust for the benefit of a charitable beneficiary.

If such excess shares are transferred to a trust for the benefit of a charitable beneficiary, the charitable trustee shall sell the excess shares and the shareholder will be paid the net proceeds from the sale equal to the lesser of: (1) the price paid by the shareholder or the “market price” of our shares if no value was paid or (2) the price per share received by the charitable trustee.

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If shares are acquired in violation of the ownership limits or the restrictions on transfer described above:

● Transferee may lose its power to dispose of the shares; and

● Transferee may incur a loss from the sale of such shares if the fair market price decreases.

These limitations may have the effect of preventing a change of control or takeover of us by a third party, even if the change in control or takeover would be in the best interest of our shareholders.

Complying with REIT requirements may restrict our ability to operate in a way to maximize profits.

To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders, and the ownership of our common shares. For example, we may be required to pay dividends to our shareholders at disadvantageous times, including when we do not have readily available funds. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Complying with REIT requirements may force us to forego or liquidate otherwise attractive investments which could negatively impact shareholder value.

To qualify as a REIT, at the end of each calendar quarter, at least 75% of our assets must consist of cash, cash items, government securities and qualified real estate assets. The remainder of our investments in securities (other than government securities and qualified real estate assets), in general, cannot include more than 10% of the voting securities of any one issuer or more than 10% of the value of the outstanding securities of any one issuer. In addition, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25% of the value of our assets may be represented by securities of one or more taxable REIT subsidiaries. Therefore, we may be required to liquidate otherwise attractive investments or may be forced to forego attractive investments to satisfy these requirements. Such action or inaction could be adverse to our shareholder interests.

Gains from asset sales may be subject to a 100% prohibited transaction tax, which tax could reduce the Trust’s available assets and reduce shareholder value.

We may have to sell assets from time to time to satisfy our REIT distribution requirements and other REIT requirements or for other purposes. The IRS may posit one or more asset sales may be “prohibited transactions.” If we are deemed to have engaged in a “prohibited transaction,” our gain from such sale would be subject to a 100% tax. The Internal Revenue Code sets forth a safe harbor for REITs that wish to sell property without risking the imposition of the 100% tax, but we cannot assure you we will be able to qualify for the safe harbor. We will use reasonable efforts to avoid the 100% tax and we do not intend to hold assets in a manner to cause their dispositions to be treated as “prohibited transactions,” but we cannot assure you the IRS will not challenge our position, especially if we make frequent sales or sales of assets in which we have short holding periods. Payment of a 100% tax would adversely affect our results of operations.

Ordinary dividends payable by REITs generally are taxed at the higher ordinary income rate which could reduce the net cash received by shareholders.

The maximum U.S. federal income tax rate for “qualified dividends” payable by U.S. corporations to individual U.S. shareholders currently is 20%.  In addition, the 3.8% tax on net investment income may apply to such dividends. In general, ordinary dividends payable by REITs to its individual U.S. shareholders, however, are generally not eligible for the reduced rates and generally are taxed at ordinary income rates (for REIT dividends received after December 31, 2017, the maximum individual income tax rate currently is 37%, but the current maximum, effective federal income tax rate as to REIT dividends may be reduced to 29.6% because of a partial deduction that may apply with respect to REIT dividends; in addition, the 3.8% tax on net investment income may apply to REIT dividends). It is also possible tax legislation that has or may be enacted might increase this rate differential. The differing treatment of dividends received from REITs and other corporations might cause individual investors to view an investment in REITs as less attractive related to other corporations which might be detrimental to our ability to raise additional funds through the sale of our common shares.

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Changes in legislative or other actions affecting REITs may adversely affect our status as a REIT.

The rules dealing with U.S. federal income taxation are constantly under review by the legislative process, the IRS and the U.S. Treasury Department. Changes to tax laws (which changes may apply retroactively) could adversely affect us or our shareholders. Furthermore, new legislation, regulations, administrative interpretations or court decisions could change the federal income tax laws with respect to our qualification as a REIT or the federal income tax consequences of our qualification. We cannot predict whether, when, in what forms, or with what effective dates, the laws applicable to us or our shareholders may be changed.

Our Board of Trustees may revoke our REIT election without shareholder approval, and we would no longer be required to make distributions of our net income.

Our Board of Trustees can revoke or otherwise terminate our REIT election without the approval of our shareholders if our Board determines it is not in our best interest to continue to qualify as a REIT. In such case, we would become subject to U.S. federal income tax on our taxable income, and we no longer would be required to distribute most of our net income to our shareholders, which may reduce the total return to our shareholders and affect the value of the shares.

Risks Related to Tax-Exempt Investors

Common shares may not be a suitable investment for tax-exempt investors.

There are special considerations that apply to investing in common shares on behalf of a trust, pension, profit sharing or 401(k) plans, health or welfare plans, trusts, individual retirement accounts (IRAs), or Keogh plans. If you are investing the assets of any of the above in common shares, you should satisfy yourself:

● Your investment is consistent with your fiduciary obligations under applicable law, including common law, ERISA and the Internal Revenue Code.

● Your investment is made in accordance with the documents and instruments that govern the trust, plan or IRA, including any investment policy.

● Your investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Internal Revenue Code.

● Your investment will not impair the liquidity of the trust, plan or IRA.

● Your investment will not produce “unrelated business taxable income” for the trust, plan or IRA.

● You will be able to value the assets of the trust, plan or IRA annually in accordance with ERISA requirements and applicable provisions of the trust, plan, or IRA; and

● Your investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

We have not evaluated, and will not evaluate, whether an investment in us is suitable for any particular trust, plan, or IRA.

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Under certain circumstances, tax-exempt shareholders may be subject to unrelated business taxable income, which could adversely affect such shareholders.

Neither ordinary nor capital gain distributions with respect to our common shares nor gain from the sale of our common shares, in general, should constitute unrelated business taxable income to tax-exempt shareholders. The following, however, are some exceptions to this rule:

● Under certain circumstances, part of the income and gain recognized by certain qualified employee pension trusts with respect to our common shares may be treated as unrelated business taxable income if our common shares are held predominately by qualified employee pension trusts (which we do not expect to be the case).

● Part of the income and gain recognized by a tax-exempt shareholder with respect to common shares would constitute unrelated business taxable income if the tax-exempt shareholder incurs debt to acquire the common shares; and

● Part or all of the income or gain recognized with respect to our common shares held by social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from federal income taxation under Sections 501(c)(7), (9), (17), or (20) of the Internal Revenue Code may be treated as unrelated business taxable income.

Therefore, tax-exempt shareholders are not assured all dividends received from the trust will be tax-exempt.

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Risks Related to Our Relationship with the Advisor and Its Affiliates

We depend on our Advisor for the successful operations of the REIT, and if required, we may not be able to find a suitable replacement advisor.

Our ability to achieve our investment objectives is dependent upon the successful performance of our Advisor in locating attractive acquisitions, advising on dispositions of real estate properties and other real estate related assets, advising on any financing arrangements and other administrative tasks to operate our business. If the Advisor suffers or is distracted by adverse financial and operational problems in connection with its operations unrelated to us or for any reason, it may be unable to allocate a sufficient amount of time and resources to our operations. If this occurs, our ability to achieve our investment objectives or pay dividends to our shareholders may be adversely affected. Any adversity experienced by the Advisor or problems in our relationship with the Advisor could also adversely impact the operation of our properties and, consequently, our cash flow and ability to pay dividends to shareholders.

Either we or the Advisor can terminate the Advisory Agreement upon 60 days written notice to the other party for any reason, or we can terminate the Advisory Agreement immediately for cause or material breach of the Advisory Agreement. In addition, the Board of Trustees may determine not to renew the Advisory Agreement in any year. If this occurs, we would need to find another advisor to provide us with day-to-day management services or engage employees to provide these services directly to us, which would likely be difficult to do and may be costly. There can be no assurances we would be able to find a suitable replacement advisor or suitable employees or enter into agreements for such services on acceptable terms.

The termination or replacement of the Advisor could trigger a default or repayment event under financings.

Lenders providing financing for our acquired properties may include provisions in the mortgage loan documentation that state the termination or replacement of the Advisor is an event of default or an event triggering acceleration of the repayment of the loan in full. Even though we will attempt to have such provisions excluded from the loan documents, the lenders may still require them to be included. In addition, the termination or replacement of the Advisor could trigger an event of default under any credit agreement governing a line of credit we may obtain. If an event of default or repayment event occurs with respect to any of our properties, our ability to achieve our investment objectives could be materially adversely affected.

The Advisor may not be able to retain its key employees, which could adversely affect our ability to carry out our investment strategies.

We depend on the Advisor’s key officers, employees and governors. However, none of these individuals have an employment agreement with the Advisor and the loss of any or all of such person’s services and the Advisor’s inability to find, or any delay in finding, replacements with equivalent skills and experience, could adversely impact our ability to successfully carry out our investment strategies and achieve our investment objectives.

Our future success also depends on the Advisor’s and its affiliates’ ability to identify, hire, train and retain highly qualified real estate, managerial, financial, marketing, and technical personnel to provide the services to us pursuant to the Advisory Agreement and any other written services agreement, including any property management agreements. Competition for such personnel is intense, and the Advisor or its affiliates may not be able to attract, assimilate or retain such personnel in the future. The inability to attract and retain the necessary personnel could have a material adverse effect on our business and results of operations.

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Risks Related to Investments in Real Estate

Insufficient geographic diversity of our real estate investments could adversely affect our operating results if economic changes impact real estate markets where we own significant assets.

Geographic concentration of our properties may expose us to economic downturns in those areas where our properties are located. A recession in any area where we own several properties or interests in properties could adversely affect our ability to generate or increase operating revenues, locate, and retain financially sound tenants or dispose of unproductive properties. In addition, it could have an adverse impact on our tenant’s ability to meet their obligations to us. Likewise, we may be required to lower our rental rates to attract desirable tenants in such an environment. Currently, the majority of our properties are located in North Dakota and Minnesota, and we hold several properties in Fargo, North Dakota and Moorhead, Minnesota. To the extent weak economic or real estate conditions affect North Dakota, Minnesota, or other markets in which we own properties more severely than other areas of the country, our financial performance could be negatively impacted.

We may invest in and develop undeveloped real property, which requires us to pay expenses prior to receiving any income on the property.

We have the discretion to invest up to 10% of our total assets in undeveloped property. When we invest in undeveloped property, such property does not generate operating revenue while costs are incurred to develop the property and may generate other expenses including property taxes and insurance. In addition, construction and development of such properties may not be completed within budget or as scheduled and projected rental levels may not be achieved. In addition to the risks of real estate investments in general, an investment in undeveloped property is subject to additional risks, including the expense and delay which may be associated with rezoning the land for a higher use and the development and environmental concerns of governmental entities and/or community groups. Therefore, we will not generate income on such property until development is completed and we begin leasing the property.

We may acquire multiple properties in a single transaction, which may adversely affect our operations through the inclusion of less desirable investments or financing requirements greater than we would otherwise be willing to incur.

Periodically, we may acquire multiple properties in a single transaction. Portfolio acquisitions are more complex and expensive than single property acquisitions, and the risk a multiple property acquisition does not close may be greater than in a single property acquisition. Portfolio acquisitions may also result in us owning investments in geographically dispersed markets, placing additional demands on our ability to manage the properties in the portfolio. In addition, a seller may require a group of properties be purchased as a package even though we may not want to purchase one or more properties in the portfolio. In these situations, if we are unable to identify another person or entity to acquire the unwanted properties, we may be required to operate or attempt to dispose of these properties. To acquire multiple properties in a single transaction we may be required to accumulate a large amount of cash. We would expect the returns we can earn on such cash to be less than the ultimate returns in real property and therefore, accumulating such cash could reduce the funds available for dividends. Any of the foregoing events may increase the risk of adverse business results and negatively affect our results of operations.

We may invest in co-ventures, where our co-venture partners, co-tenants or other partners in co-ownership arrangements could take actions that decrease the value of a real estate investment and lower our overall return.

We may enter into joint ventures, tenant-in-common investments or other co-ownership arrangements with our Advisor, its affiliates, our trustees, or third parties having investment objectives similar to ours in the acquisition of real estate investments. In such arrangements, we may be acquiring non-controlling interests in or sharing responsibility for managing the affairs of the investment. In such event, we would not be in a position to exercise sole decision-making authority. Investments such as these may, under certain circumstances, involve risks not present where another party is not involved, including the possibility that partners or co-investees might become bankrupt or fail to fund their required capital contributions. Co-investees may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives.

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Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the co-investee would have full control over the joint venture. Disputes between us and co-investees may result in litigation or arbitration that would increase our expenses and prevent our management and the Advisor from focusing their time and effort on our business. Consequently, actions by or disputes with co-investees might result in subjecting additional risk to properties owned by the investment. In addition, we may in certain circumstances be liable for the actions of our co-investees. Any of these risks could subject us to liabilities in excess of those contemplated and reduce our returns on that investment.

We could experience difficulties or delays renewing leases or re-leasing space, which will increase our costs to maintain such properties without receiving income.

We derive a significant portion of our net income from rent received from our tenants. Our properties include both residential as well as commercial properties. If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely rental payments. If lease defaults occur, we may experience delays in enforcing our rights as landlord. Also, if our tenants decide not to renew their leases, terminate early or default on their lease, we may not be able to re-let the space or may experience delays in finding suitable replacement tenants. Even if tenants decide to renew or lease new space, the terms of renewals or new leases, including the cost of required renovations or concessions to tenants, particularly commercial tenants, may be less favorable to us than current lease terms. As a result, our net income and ability to pay dividends to shareholders could be materially adversely affected. Further, if one of our properties cannot be leased on terms and conditions favorable to us, the property may not be marketable at a suitable price without substantial capital improvements, alterations, or at all.

We could face potential adverse effects if a commercial tenant is unable to make timely rental payments, declares bankruptcy or become insolvent.

If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely rental payments. Delayed rental payments could adversely affect cash flow available for dividends. If a commercial tenant declares bankruptcy or becomes insolvent, it may adversely affect the income produced by our properties. If a tenant defaults, we may experience delays and incur substantial costs in enforcing our rights as landlord. However, if a tenant files for bankruptcy, we cannot evict the tenant solely because of such bankruptcy. If a court authorizes the commercial tenant to reject and terminate its lease with us, our claim against the tenant for unpaid future rent would be subject to a statutory cap that might be substantially less than the remaining rent actually owed under the lease. In addition, it is unlikely a bankrupt tenant would pay in full amounts it owes us under a lease. Additionally, we may be required to incur additional costs in the form of tenant improvements and leasing commissions in our efforts to lease the space to a new tenant, as well as lower our rental rates to reflect any decline in market rents. This shortfall could adversely affect our cash flow and results of operations.

Investments in real estate are illiquid, and we may not be able to resell a property on terms favorable to us.

We intend to hold real estate properties until such time as our Advisor determines a sale or other disposition appears to be advantageous or when our shareholders approve our termination and liquidation. Because real estate investments are relatively illiquid, it could be difficult for us to promptly sell one or more of our real estate properties on favorable terms. This may be a result of economic conditions, availability of financing, interest rates and other factors beyond our control. This may limit our ability to change our portfolio promptly in response to adverse changes in the performance of any such property or economic or market trends. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. Real estate investments by their nature are often difficult or time consuming to liquidate. In addition, federal tax laws imposing a 100% excise tax on gains from sales of certain types of property sales by a REIT (generally, property viewed as being purchased for resale, rather than investment) could limit our ability to sell properties and may affect our ability to sell properties without adversely affecting returns to our shareholders. These restrictions could adversely affect our ability to achieve our investment objectives.

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Valuations and appraisals of our investments may not necessarily correspond to realizable value.

We value our real estate properties initially at cost, which we expect to represent fair value at that time. After acquisition, valuations may include appraisals of our properties periodically. The valuation methodologies used to value our real estate properties will involve subjective judgments regarding such factors as comparable sales, rental and operating expense data, the capitalization and/or discount rate and projections of future rent and expenses based on appropriate analysis. Although we believe our valuation procedures are designed to determine the accurate fair value of our assets, appraisals and valuations of our real estate properties and other investments assets will be only estimates of fair value and therefore may not correspond to realizable value upon a sale of those assets.

Uninsured losses related to real estate investments may adversely affect our results of operation.

We purchase, and we may be required by lenders of mortgage loans or other financings to obtain, certain insurance coverage on our real estate investments. Either the property manager or the Advisor selects policy specifications and insured limits which it believes to be appropriate and adequate given the risk of loss, the cost of the coverage and industry practice. The nature of the tenants at the properties we hold may expose us and our operations to an increase in liability for personal injuries or other losses. There can be no assurance that such insurance will be sufficient to cover potential liabilities. Some of our policies may be subject to limitations involving large deductibles or co-payments and policy limits which may not be sufficient to cover losses. Furthermore, insurance against certain risks, such as terrorism, flood, and toxic mold, may be unavailable or available at commercially unreasonable rates or in amounts less than the full market value or replacement cost of the properties. There can be no assurance particular risks that are currently insurable, will continue to be insurable on an economical basis or current levels of coverage will continue to be available. If a loss occurs that is partially or completely uninsured, we may lose all or part of our investment in a property as well as the anticipated future cash flows from such properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged. We may also be liable for any uninsured or underinsured personal injury, death, or property damage claims, which could result in decreased dividends to shareholders.

We may acquire a property or properties “AS IS,” which increases the risk of an investment that requires us to remedy defects or costs without recourse to the prior owner.

We may acquire real estate properties “as is” with only limited representations and warranties from the property seller regarding matters affecting the condition, use and ownership of the property. As a result, if defects in the property (including any building on the property) or other matters adversely affecting the property are discovered, we may not be able to pursue a claim for any or all damage against the property seller. Such a situation could negatively affect our results of operations.

We rely on affiliated and outside property managers to properly manage and lease our properties.

The Advisor and an affiliate of the Advisor serve as our principal property managers, and the Advisor has hired and intends to hire other affiliates and/or third parties to serve as additional property managers, to manage our properties and act as leasing agents to lease vacancies in our real estate properties. These property managers will have significant decision-making authority with respect to the management of our properties. Our ability to direct and control how our properties are managed may be limited. We will not, and the Advisor will not as to its affiliates and third-party property managers, supervise any of the property managers or any of their respective personnel on a day-to-day basis. Thus, the success of our business may depend in large part on the ability of our property managers to manage the day-to-day operations and their ability to lease vacancies in our properties. Any adversity experienced by our property managers could adversely impact the operation and profitability of our properties and, consequently, our ability to achieve our investment objectives.

21

Risks Related with Our Indebtedness and Financing

Market conditions could adversely affect our ability to obtain financing.

As a REIT, we are required to distribute at least 90% of our taxable income (excluding net capital gains) to our shareholders in each taxable year, and thus our ability to retain internally generated cash is limited. Accordingly, our ability to acquire properties or to make capital improvements to or remodel properties can depend on our ability to obtain debt or equity financing from third parties or the sellers of properties or to sell other properties. Market fluctuations and disruptions in the credit markets could significantly affect our ability to access capital. Reductions in our available borrowing capacity, or inability to establish a credit facility when required or when business conditions warrant, could then limit the number, size and quality of properties we could acquire or the amount of improvements we could make on acquired properties, which could materially affect our ability to achieve our investment objectives and may result in price or value decreases of our real estate assets.

Derivatives and hedging activity could adversely affect cash flow.

In the normal course of business, we use derivatives to manage our exposure to interest rate volatility on debt instruments, including hedging for future debt issuances. At other times we may utilize derivatives to decrease our exposure to floating interest rates. There can be no assurance that these hedging arrangements will have the desired beneficial impact.  These arrangements, which can include a number of counterparties, may expose us to additional risks, including failure of any of our counterparties to perform under these contracts, and may involve extensive costs, such as transaction fees or breakage costs, if we terminate them.  No strategy can completely insulate us from the risks associated with interest rate volatility.

The phase out of LIBOR and transition to SOFR as a benchmark interest rate could have adverse effects.

In 2018, the Alternative Reference Rate Committee identified the Secured Overnight Financing Rate (“SOFR”) as the alternative to LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, published by the Federal Reserve Bank of New York. By the end of 2023, it is expected that no new contracts will reference LIBOR and will instead use SOFR. Due to the broad use of LIBOR as a reference rate, all financial market participants, including the Company, are impacted by the risks associated with this transition and therefore it could adversely affect our operations and cash flows.

We could face difficulties in refinancing loans involving balloon payment obligations.

Some of our mortgage loans require us to make a lump-sum or “balloon” payment at maturity. Our ability to make a balloon payment at maturity could be uncertain and may depend upon our ability to obtain additional financing, to refinance the debt or our ability to sell the particular property. If we try and refinance the debt, we may not be able to obtain terms as favorable as the original loan. Based on current market interest rates, the interest rate obtained upon refinancing in subsequent years may be higher than the original loan. If we are not able to refinance the debt, or obtain acceptable terms, we may be required to sell the mortgaged property at a time which may not permit realization of the maximum return on such property. The effect of a refinancing or sale could affect the rate of return to shareholders and the projected time of disposition of our assets.

Lenders may require restrictive covenants relating to our operations, which may adversely affect our flexibility and our ability to achieve our investment objectives.

Mortgage loans obtained by us could impose restrictions that affect our distribution and operating policies, our ability to incur additional debt and our ability to resell interests in the property. Loan documents may contain covenants that limit our ability to further mortgage the property, discontinue insurance coverage, replace the Advisor or the property manager, or terminate certain operating or lease agreements related to the property. Such restrictions may limit our ability to achieve our investment objectives.

22

Increases in interest rates on variable rate debt incurred and new financings by us will reduce cash available for dividends.

Increases in interest rates on any variable rate debt incurred or new financings would increase our interest costs, which could reduce our cash flows and our ability to pay dividends to our shareholders. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments in properties at times which may not permit realization of the maximum return on such investments.

Complying with REIT requirements may limit our ability to hedge liabilities through tax-efficient means, which may adversely affect our results of operations.

We have entered into a number of hedging transactions and may enter into additional such transactions. Hedging transactions could take a variety of forms, including interest rate swaps or cap agreements, options, futures contracts, forward rate agreements, or similar financial instruments. The REIT provisions of the Code substantially limit our ability to hedge liabilities. Because we conduct substantially all of our operations through our operating partnership, any income from a hedging transaction entered into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets will not constitute gross income to us for purposes of the 75% or 95% gross income test. As a result, we may be required to limit the operating partnership’s use of advantageous hedging techniques or to implement hedges through certain taxable corporations. This could increase the costs and risks of hedging activities. We intend to structure any hedging transaction in a manner that does not jeopardize our ability to qualify as a REIT.

Risks Related to Other Investments

Investments in other real estate related investments could involve higher risks than investment in real estate properties, which could adversely affect our operations and ability to make dividend payments.

We are permitted to invest in other real estate assets.  We can invest in real estate equity, debt, and derivative securities.  These assets can be quite risky, illiquid, and volatile and the value of these assets could cause the value of our shares to fluctuate and could result in losses that materially adversely affect our results of operations.

Risks Related to Conflicts of Interest

We are subject to several conflicts of interest arising out of our relationships with our affiliates, including our Advisor and its affiliates.

There are conflicts of interest in our relationship with the Advisor and its affiliates and several trustees, which could adversely affect our operations and business operations.

We are subject to potential conflicts of interest arising out of our relationships with the Advisor, its affiliates, and certain trustees. Conflicts of interest may arise among a trustee or the Advisor and its respective affiliates, on the one hand, and us and our shareholders, on the other hand. As a result of these conflicts, the trustee or Advisor may favor its own interests or the interests of its affiliates over the interest of our shareholders or operating partnership.

Division of Loyalty/Allocation of time and effort

Several of our officers and/or trustees serve as officers, governors, and owners of one or more entities (certain of which are affiliated with our Advisor or trustees), property managers, tenants of our properties, brokerage companies and other real estate entities owning real estate investments. As a result, these individuals owe duties to these other entities and their investors, which may conflict with the duties that they owe to us and our shareholders. Their loyalties to these other entities and investors could result in action or inaction detrimental to our business or result in conflicts relating to the allocation of their time and services, which could harm implementation of our business strategy and investment and leasing opportunities.

23

Allocation of investment opportunities

The Advisor and its affiliates are or may become committed to the management of other business ventures. Accordingly, there may be conflicts of interest between our investments and other investments or business ventures in which the Advisor and its affiliates are participants. In addition, the Advisor and its officers will advise other investment programs that invest in commercial real estate properties and real estate related assets in which we may be interested. Therefore, the Advisor could face conflicts of interest in allocating and determining which programs will have the opportunity to acquire and participate in such investments as they become available. As a result, other investment programs advised by the Advisor may compete with us with respect to investors and certain investments we may want to acquire.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

General

Our policy is to acquire assets with an intention to hold these assets as long-term investments seeking income and capital appreciation through an increase in value of our real estate portfolio, as well as increased revenue as a result of higher rent. These types of investments are the core of our strategy of creating shareholder value. We currently own and maintain a portfolio of real estate diversified by geographical location and by type and size.

The majority of our real estate investments are managed by a third party. Property management firms usually receive between 2% and 5% of gross rent collection for their services. Substantially all of our commercial revenues consist of base rents received under leases having terms ranging from month-to-month to over 25 years. More than half of our existing commercial property leases as of December 31, 2022 contain “step up” rental clauses providing for annual increases in the base rental payments of approximately 1.0% to 3.0% each year during the term of the lease.

Properties

As of December 31, 2022, we owned 185 properties located in 12 states, containing approximately 11,300 apartment units and 1,498,000 square feet of leasable commercial space. The residential and commercial portfolio of properties includes a diversified mixture of multifamily, single, and multi-tenant retail and office buildings as well as industrial and medical facility properties. The majority of the properties are located in the largest cities in the states of North Dakota and Minnesota.

As of December 31, 2022, approximately 78.8% (based on cost) of the properties were apartment communities. Most multifamily dwelling properties are leased to a variety of tenants under short-term leases of less than a year.

As of December 31, 2022, approximately 21.2% (based on cost) of the properties were comprised of industrial, office, retail and medical commercial properties. Most commercial properties are leased to a variety of tenants under long-term leases.

The following information applies to all of our operating properties:

● We believe all of our properties are adequately covered by insurance and suitable for their intended purposes.

● Our properties are located in markets where we are subject to competition in attracting new tenants and retaining current tenants; and

● Depreciation is provided on a straight-line basis over the estimated useful lives of the buildings.

24

The below table sets forth certain information regarding each of our properties owned, including unconsolidated affiliates, as of December 31, 2022 (in thousands, except units or leasable sq. ft.).

			# of			Physical
			Units or			Occupancy
		Year	Leasable		Total	at December
Property	Location	Acquired	Sq. Ft		Investment	31, 2022
Bluemont Lakes Financial Center	Fargo, ND	2004	31,750	$	5,255	81.17	%
Amberwood	Grand Forks, ND	2016	96		4,147	94.67	%
Applebee’s Neighborhood Bar & Grill	Coon Rapids, MN	2010	5,576		2,442	100.00	%
Arbor	Bismarck, ND	2013	12		696	98.49	%
Arbor II	Bismarck, ND	2013	12		700	96.52	%
Arbor III	Bismarck, ND	2013	12		696	97.80	%
Ashbury	Fargo, ND	2013 & 2016	61		4,139	99.52	%
Auburn II	Fargo, ND	2007	24		1,111	98.45	%
Autumn Ridge	Grand Forks, ND	2004	144		10,418	95.50	%
Barrett Arms	Crookston, MN	2014	24		1,281	94.35	%
Bayview	Fargo, ND	2007	100		6,083	92.18	%
Bell Plaza* (FKA Northland Plaza)	Bloomington, MN	2015	299,660		51,421	65.57	%
Belmont	Bismarck, ND	2020	26		1,601	88.55	%
Berkshire	Fargo, ND	2008	12		525	97.96	%
Betty Ann	Fargo, ND	2009	24		1,012	97.58	%
Biolife Plasma Center	Bismarck, ND	2008	11,671		2,881	100.00	%
Biolife Plasma Center	Grand Forks, ND	2008	13,190		2,944	100.00	%
Biolife Plasma Center	Janesville, WI	2008	12,225		2,388	100.00	%
Biolife Plasma Center	Mankato, MN	2008	13,181		4,149	100.00	%
Biolife Plasma Center	Marquette, MI	2008	11,737		3,215	100.00	%
Biolife Plasma Center	Onalaska, WI	2008	12,180		2,531	100.00	%
Biolife Plasma Center	Oshkosh, WI	2008	12,191		2,297	100.00	%
Biolife Plasma Center	Sheboygan, WI	2008	13,230		2,654	100.00	%
Biolife Plasma Center	Stevens Point, WI	2008	13,190		2,595	100.00	%
Birchwood I	Fargo, ND	2017	12		468	98.78	%
Birchwood II	Fargo, ND	2017	54		2,881	96.96	%
Bradbury	Bismarck, ND	2018	96		6,093	93.48	%
Briar Pointe	Fargo, ND	2021	30		1,935	97.61	%
Bridgeport	Fargo, ND	2016	120		8,420	98.71	%
Bristol Park	Grand Forks, ND	2016	80		5,837	92.84	%
Brookfield	Fargo, ND	2008	72		2,680	95.90	%
Brownstone	Fargo, ND	2021	72		4,390	96.91	%
Cambridge (FKA 44th Street)	Fargo, ND	2013	42		2,558	99.37	%
Candlelight	Fargo, ND	2012	66		2,214	93.73	%
Carling Manor	Grand Forks, ND	2008	12		838	95.34	%
Carlton Place	Fargo, ND	2008	213		9,072	93.54	%
Carr	Fargo, ND	2017	18		874	99.13	%
Cedars 4	Fargo, ND	2018	18		1,245	97.23	%
Chandler 1802	Grand Forks, ND	2014	24		1,434	96.12	%
Chandler 1834	Grand Forks, ND	2018	12		710	91.43	%
Chandler 1866	Grand Forks, ND	2005	12		384	98.71	%
Chandler 1898	Grand Forks, ND	2022	12		512	100.00	%
Cherry Creek (FKA Village)	Grand Forks, ND	2008	35		2,008	96.95	%
Cityside	Fargo, ND	2018	36		1,396	89.43	%
Columbia Park Village	Grand Forks, ND	2020	12		648	91.03	%
Columbia West	Grand Forks, ND	2008	70		4,487	93.12	%
Country Club	Fargo, ND	2011	40		1,843	95.04	%
Countryside	Fargo, ND	2011	24		951	97.20	%
Courtyard	St. Louis Park, MN	2013	151		9,252	93.37	%
Dairy Queen	Dickinson, ND	2012	2,811		1,331	100.00	%
Dairy Queen	Moorhead, MN	2011	2,712		1,186	100.00	%
Dairy Queen	Apple Valley, MN	2018	5,348		1,673	-	%
Dakota Manor	Fargo, ND	2014	54		2,865	96.57	%
Danbury	Fargo, ND	2007	135		7,547	94.53	%
Dellwood Estates	Anoka, MN	2013	132		12,320	97.50	%
Deer Park	Hutchinson, MN	2022	138		15,091	95.99	%
Desoto Estates	Grand Forks, ND	2022	68		6,111	98.06	%

25

Desoto Townhomes	Grand Forks, ND	2022	24	3,338	95.85	%
Diamond Bend	Mandan, ND	2022	78	10,971	92.53	%
Eagle Run	West Fargo, ND	2010	144	7,067	96.38	%
Eagle Sky I	Bismarck, ND	2016	20	1,604	96.23	%
Eagle Sky II	Bismarck, ND	2016	20	1,680	94.72	%
East Bridge	Fargo, ND	2017	58	6,490	96.18	%
Eastbrook	Bismarck, ND	2020	24	1,381	87.84	%
Echo Manor	Hutchinson, MN	2014	30	1,198	99.04	%
Eide Bailly Building***	Fargo, ND	2007	74,646	9,331	100.00	%
Emerald Court	Fargo, ND	2008	24	1,144	98.00	%
Essex	Fargo, ND	2017	18	928	87.97	%
Evergreen Terrace	Omaha, NE	2020	144	8,798	95.30	%
Fairview	Bismarck, ND	2008	84	5,467	95.34	%
Family Dollar Store	Mandan, ND	2010	9,100	874	100.00	%
First International Bank & Trust	Moorhead, MN	2011	3,510	1,037	100.00	%
Flagstone	Fargo, ND	2021	120	7,792	97.00	%
Flickertail	Fargo, ND	2008	180	8,151	92.73	%
Forest Avenue	Fargo, ND	2013	20	815	99.19	%
Four Points Office Building	Fargo, ND	2007	12,383	1,494	100.00	%
Foxtail Creek Townhomes	Fargo, ND	2020	30	1,488	96.21	%
Galleria III	Fargo, ND	2010	18	1,144	93.18	%
Garden Grove	Bismarck, ND	2016	95	7,274	92.78	%
Gate City Bank	Grand Forks, ND	2008	17,406	2,200	100.00	%
Georgetown	Fridley, MN	2014	468	33,586	89.63	%
Glen Pond	Eagan, MN	2011	528	44,377	95.38	%
Goldmark Office Park	Fargo, ND	2007	124,613	23,692	100.00	%
Grand Forks Marketplace**	Grand Forks, ND	2003	182,522	26,710	78.04	%
Granger Court	Fargo, ND	2013	59	2,841	96.07	%
Great American Insurance Building	Fargo, ND	2005	15,000	2,360	100.00	%
Guardian Building Products	Fargo, ND	2012	100,600	3,760	100.00	%
Hannifin	Bismarck, ND	2013	14	789	93.51	%
Harrison Richfield	Grand Forks, ND	2007	140	7,915	94.13	%
Hartford	Fargo, ND	2018	30	1,426	92.51	%
Hawn	Fargo, ND	2020	48	2,557	97.89	%
Highland Meadows	Bismarck, ND	2011	144	10,629	96.92	%
Hunter’s Run I	Fargo, ND	2007	12	483	97.71	%
Hunter’s Run II	Fargo, ND	2008	12	518	95.04	%
Huntington	Fargo, ND	2015	10	439	99.18	%
Islander	Fargo, ND	2011	24	1,407	96.76	%
Jadestone	Fargo, ND	2017	18	898	83.60	%
Kennedy	Fargo, ND	2013	12	813	99.62	%
Library Lane	Grand Forks, ND	2007	60	3,003	91.22	%
Madison (FKA Columbine)	Grand Forks, ND	2015	12	740	95.54	%
Maple Ridge	Omaha, NE	2008	174	10,822	96.57	%
Maplewood	Maplewood, MN	2014	240	17,626	94.12	%
Maplewood Bend	Fargo, ND	2009 and 2010	183	7,637	96.69	%
Martha Alice	Fargo, ND	2009	24	1,055	97.03	%
Mayfair (FKA Colony Manor)	Grand Forks, ND	2008	24	1,319	91.99	%
Midtown Plaza	Minot, ND	2004	17,808	1,345	77.48	%
Monticello	Fargo, ND	2013	18	989	97.25	%
Montreal Courts	Little Canada, MN	2013	444	30,686	94.51	%
Morningside	Fargo, ND	2018	17	803	98.40	%
Newgate	Bismarck, ND	2022	46	2,473	89.52	%
Oak Court	Fargo, ND	2008	81	3,118	96.48	%
Oakview Townhomes (FKA Arrowhead)	Grand Forks, ND	2017	82	6,004	97.75	%
O'Reilly Auto Store	Mandan, ND	2010	6,300	706	100.00	%
Oxford	Fargo, ND	2021	144	10,219	97.54	%
Pacific Park I	Fargo, ND	2013	30	1,064	95.51	%
Pacific Park II	Fargo, ND	2013	39	1,182	94.54	%
Pacific South	Fargo, ND	2013	15	607	96.37	%
Park Circle	Fargo, ND	2017	18	937	99.56	%
Parkview Arms	Bismarck, ND	2015	62	4,850	92.80	%
Parkway Office (FKA Echelon Building)	Fargo, ND	2006	17,000	1,954	100.00	%
Parkwest Gardens	West Fargo, ND	2014	142	8,292	96.10	%
Parkwood	Fargo, ND	2008	40	1,462	97.77	%
Pebble Creek	Bismarck, ND	2008	70	3,396	95.86	%

26

Pinehurst	Fargo, ND	2021	210	14,982	95.31	%
Plumtree	Fargo, ND	2017	18	939	99.76	%
Prairiewood Court I & II	Fargo, ND	2006 and 2007	60	2,434	90.98	%
Prairiewood Meadows	Fargo, ND	2012	88	5,290	93.30	%
Prose	Fort Worth, TX	2022	270	55,690	75.19	%
Quail Creek	Springfield, MO	2015	164	11,236	95.51	%
Redpath	White Bear Lake, MN	2016	25,817	4,017	100.00	%
Robinwood	Coon Rapids, MN	2014	120	8,399	93.70	%
Rosedale Estates	Roseville, MN	2014	360	26,637	90.13	%
Rosegate	Fargo, ND	2008	90	3,608	94.55	%
Rosser	Bismarck, ND	2020	24	1,468	95.21	%
Roughrider	Grand Forks, ND	2016	12	699	92.64	%
Saddlebrook	West Fargo, ND	2008	60	1,804	97.04	%
Sage Park (FKA Brighton Village)	New Brighton, MN	2014	240	17,840	94.88	%
Sargent	Fargo, ND	2017	36	1,734	94.51	%
Schrock	Fargo, ND	2013	18	811	98.63	%
SE Maple Grove, LLC****	Maple Grove, MN	2021	161	32,079	59.28	%
SE Savage, LLC****	Savage, MN	2021	190	36,794	94.32	%
Sheridan Pointe	Fargo, ND	2013	48	2,945	94.96	%
Sierra Ridge	Bismarck, ND	2006 and 2011	136	11,165	97.83	%
Somerset	Fargo, ND	2008	75	4,027	96.32	%
Southgate	Fargo, ND	2007	162	6,581	98.26	%
Southview III	Grand Forks, ND	2011	18	776	89.31	%
Southview Village	Fargo, ND	2007	72	3,648	97.62	%
Spring	Fargo, ND	2013	25	1,053	98.80	%
Stanford Court	Grand Forks, ND	2013	96	4,864	90.35	%
Stonefield	Bismarck, ND	2014	192	30,096	97.87	%
Stony Brook	Omaha, NE	2009	148	11,599	95.45	%
Summerfield	Fargo, ND	2015	18	862	97.58	%
Summit Point	Fargo, ND	2015	87	7,005	97.86	%
Sunchase	Fargo, ND	2017	36	1,878	98.01	%
Sunset Ridge	Bismarck, ND	2008 and 2010	180	12,471	96.59	%
Sunview	Grand Forks, ND	2008	36	2,073	95.77	%
Sunwood Estates	Fargo, ND	2007	80	4,452	92.81	%
Thunder Creek	Fargo, ND	2018	57	5,391	94.37	%
Titan Machinery	Bismarck, ND	2015	22,293	3,448	100.00	%
Titan Machinery	Dickinson, ND	2012	17,760	1,790	100.00	%
Titan Machinery	Fargo, ND	2012	29,800	3,336	100.00	%
Titan Machinery	Marshall, MN	2011	67,600	5,081	100.00	%
Titan Machinery	Minot, ND	2012	23,690	2,630	100.00	%
Titan Machinery	North Platte, NE	2016	18,910	1,769	100.00	%
Titan Machinery	Sioux City, IA	2013	36,332	4,567	100.00	%
Trustmark	Fargo, ND	2020	45,755	13,425	100.00	%
Twin Oaks	Hutchinson, MN	2014	80	4,470	97.75	%
Twin Parks	Fargo, ND	2008	66	2,596	98.76	%
Valley Homes Duplexes	Grand Forks, ND	2015	24	2,572	93.45	%
Valley View	Golden Valley, MN	2014	72	7,820	98.99	%
Village Park	Fargo, ND	2008	60	2,416	98.82	%
Village West	Fargo, ND	2008	80	2,987	95.82	%
Walgreens	Alexandria, LA	2009	14,560	4,296	100.00	%
Walgreens	Batesville, AR	2009	14,820	7,616	100.00	%
Walgreens	Denver, CO	2011	13,390	5,210	100.00	%
Walgreens	Fayetteville, AR	2009	14,550	5,810	100.00	%
Walgreens	Laurel, MS	2010	14,820	4,542	100.00	%
Washington	Grand Forks, ND	2016	17	745	94.30	%
Wells Fargo Building	Duluth, MN	2007	95,961	10,801	55.24	%
West Oak	Fargo, ND	2017	18	869	97.94	%
Westcourt	Fargo, ND	2014	64	3,710	93.43	%
Westside	Hawley, MN	2010	14	544	90.67	%
Westwind	Fargo, ND	2008	18	633	91.87	%
Westwood Estates	Fargo, ND	2008	200	8,277	93.58	%
Willow Park	Fargo, ND	2008	102	6,767	94.94	%
Wolf Creek	Fargo, ND	2020	54	5,364	99.18	%
Woodland Pines (FKA Fredericksburg)	Omaha, NE	2018	173	13,250	95.21	%
* 70.00% ownership interest

27

** 66.67% ownership interest

*** 50.00% ownership interest

**** 60% ownership interest

Geography

Of our 185 properties, 142 are located in North Dakota, with 89 being located in the greater Fargo, North Dakota and Moorhead, Minnesota metropolitan statistical area. The North Dakota region generated approximately 51.9% of our rental revenue for the year ended December 31, 2022.

The following table presents the total real estate investment amount by state and annual rental revenue by state, as of the year ended December 31, 2022 (in thousands):

	Real Estate				Rental
State	Investment		%		Revenue		%
North Dakota	$	510,127	52.5	%	$	70,132	51.9	%
Minnesota		305,463	34.6	%		51,314	38.0	%
Other		155,558	16.0	%		13,614	10.1	%
	$	971,148	103.1	%	$	135,060	100.0	%

Economy

The North Dakota workforce is concentrated in agricultural, energy, information technology, aerospace sciences and medical sciences. According to the U.S. Census Bureau, the 2022 estimated combined population of the Fargo, West Fargo and Moorhead metro area was 210,903 people.

The following chart depicts the difference in unemployment rates between North Dakota and the national average for 2022:

	Jan		Feb		Mar		Apr		May		Jun		Jul		Aug		Sep		Oct		Nov		Dec
National (1)	4.0	%	3.8	%	3.6	%	3.6	%	3.6	%	3.6	%	3.5	%	3.7	%	3.5	%	3.7	%	3.6	%	3.5	%
North Dakota (1)	3.1	%	2.9	%	2.9	%	2.8	%	2.6	%	2.5	%	2.3	%	2.3	%	2.2	%	2.3	%	2.3	%	2.3	%

(1) Seasonally adjusted

Source: Bureau of Labor Statistics

Acquisitions and Dispositions

We had eight acquisitions and five dispositions of property during the year ended December 31, 2022. We had five acquisitions and two dispositions of property during the year ended December 31, 2021. We had nine acquisitions and three dispositions of property during the year ended December 31, 2020.

Capitalization rates are a key decision-making item used by the Board. In making acquisitions, the Board currently targets capitalization rates between 6.0 to 10.0%, depending on the amount of risk involved. For those properties with greater risk, the Board targets greater capitalization rates (9.0% or greater). For those properties exhibiting less risk, a lower capitalization risk is acceptable. For potential acquisitions, the Board also requires an adequate spread between the financing on the property and the capitalization rate. Capitalization rates for acquisitions are calculated using projected net operating income divided by the investment. Net operating income is calculated by taking GAAP net income and adding back depreciation, amortization, and interest expense. Capitalization rates for dispositions are calculated in the same way with the exception of using historical, rather than projected, net operating income. The market has seen an increase in investors, driving up overall acquisition prices, thus lowering capitalization rates below the target thresholds set by the Board.

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We use historical occupancy, rental income, and expenses to calculate projected net operating income for potential real estate investments. For residential properties, we make various assumptions about future rents, occupancy levels, and expenses based on historical financial information and our assessment of the property’s future potential. The projected NOI for residential acquisitions is typically based on historical occupancy and expenses over a three-to-five year period. When historical information is unavailable, market vacancy and credit loss factors are estimated.

For commercial and residential properties, assumptions regarding rental income and expenses are based on the terms of the in-place leases and available historical financial information which is then used to generate projected net operating income.

Numerous estimates and assumptions are necessary to generate projected net operating income for potential commercial and residential acquisitions, and there is no guarantee actual net operating income will equal projected net operating income.

Tenants

Our tenants are varied and consist of individuals and national, regional, and local businesses. Our commercial properties generally attract a mix of tenants. In 2022, 2021 and 2020, no single tenant represented more than 10% of our revenues. We have investments in several types of real estate, including multifamily, retail, office, industrial, and medical. Within our office, retail, and industrial properties, we have over 100 tenants who operate in numerous industries, including restaurants, pharmacy, medical, financing, banking, insurance, professional services, technology, wholesale and direct retail.

Lease Expirations

The vast majority of residential leases are for one-year periods. The following table lists a summary, as of December 31, 2022, of lease expirations on non-residential properties scheduled to occur during each of the ten calendar years from 2023 to 2032 and thereafter, assuming that tenants exercise no renewal options or early termination rights.  Base rents do not include CAM (common area maintenance).  

The table is based on leases on December 31, 2022 for our non-residential properties including our unconsolidated affiliates (in thousands, except leasable area data).

	# of Leases	Gross	% of Gross		Expiring		% of Total
Lease Expiration Year	Expiring	Leasable Area	Leasable Area		Base Rent		Base Rent
Month-to-Month	0	—	0.00	%	$	—	0.00	%
2023	7	23,335	1.81	%		234,781	1.05	%
2024	19	156,445	12.16	%		828,540	3.72	%
2025	13	142,130	11.05	%		831,440	3.73	%
2026	11	150,378	11.69	%		1,136,265	5.10	%
2027	13	128,878	10.02	%		2,695,716	12.09	%
2028	7	69,390	5.39	%		1,038,051	4.65	%
2029	5	86,532	6.73	%		484,989	2.17	%
2030	13	147,113	11.43	%		1,994,416	8.94	%
2031	3	111,196	8.64	%		1,314,405	5.89	%
2032	8	181,795	14.13	%		1,668,691	7.48	%
Thereafter	7	89,384	6.95	%		10,072,420	45.18	%
Leased Total	106	1,286,576	100.00	%	$	22,299,714	100.00	%

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Mortgage Notes Secured by the Properties

On December 31, 2022, we had $508,305 in mortgage notes payable with respect to our properties. Principal payments on these notes are payable as follows (in thousands):

Years ending December 31,	Amount
2023	$	53,341
2024		22,376
2025		53,130
2026		45,546
2027		77,845
Thereafter		256,067
	$	508,305

Insurance

We believe we have adequate property damage, fire loss and liability insurance on all of our properties with reputable, commercially rated companies. We also believe our insurance policies contain commercially reasonable deductibles and limits, adequate to cover our properties. We expect to maintain this type of insurance coverage and to obtain similar coverage with respect to any additional properties we acquire in the near future. Further, we have title insurance relating to our properties in an aggregate amount we believe to be adequate.

Regulations

Our properties, as well as any other properties we may acquire in the future, are subject to various federal, state, and local laws, ordinances and regulations. They include, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. We believe we have all permits and approvals necessary under current law to operate our properties.

ITEM 3. LEGAL PROCEEDINGS

The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business.  While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material effect on the financial statements of the Company.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common shares of beneficial interest are not listed on any national exchange or over-the-counter market or quoted on any national securities market, and we currently do not have plans to list or have our common shares quoted.

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Shareholders and Unit Holders

As of March 14, 2023, we had 10,947,790, common shares of beneficial interests outstanding, held by a total of 1,122 common shareholders and no outstanding options or warrants to purchase our common shares.

In addition, as of March 14, 2023, there were approximately 18,687,896 limited partnership units of our operating partnership outstanding held by approximately 529 limited partners. Pursuant to the exchange rights under the LLLP Agreement of the operating partnership, we have the option, upon redemption requests by the holders of the limited partnership units, to acquire the limited partnership units by paying the holders with our common shares of beneficial interest in lieu of delivering cash. The numbers of common shareholders and limited partners is based on the Company’s records. There is no public trading market for our common shares or the limited partnership units of our Operating Partnership.

Quarterly Dividend Data

We have declared and intend to continue to declare regular quarterly dividends to our common shareholders. Because all of our operations are conducted through our operating partnership, our ability to pay dividends depends on the operating partnership’s ability to make distributions to us and its other limited partners. We pay declared dividends quarterly, whereby the dividend attributable to a calendar quarter would be paid during the first month of the next quarter. Dividends will be paid to common shareholders as of the record dates selected by the Board of Trustees. We intend to make dividends sufficient to satisfy the requirements for qualification as a REIT for federal tax purposes.

The following tables show the dividends we have declared (including the total amount paid on a per share basis, paid in cash, reinvested in shares of our common stock pursuant to the Dividend Reinvestment Plan, and the total amount paid) during the last two fiscal years (in thousands, except per share data).

	Dividends Per				Reinvested
2022 Quarter Ended	Common Share		Cash		via DRP		Total Dividends
December 31	$	0.287500	$	1,146	$	1,962	$	3,108	(a)​
September 30	$	0.287500		1,097		1,973		3,070
June 30	$	0.287500		1,127		1,910		3,037
March 31	$	0.287500		1,130		1,877		3,007
			$	4,500	$	7,722	$	12,222

	Dividends Per				Reinvested
2021 Quarter Ended	Common Share		Cash		via DRP		Total Dividends
December 31	$	0.265000	$	1,024	$	1,716	$	2,740	(a)​
September 30	$	0.265000		927		1,780		2,707
June 30	$	0.265000		928		1,743		2,671
March 31	$	0.265000		963		1,679		2,642
			$	3,842	$	6,918	$	10,760

(a) Fourth quarter dividends paid on January 17^th of the following year, for the year ended December 31, 2022. Fourth Quarter dividends were paid on January 18^th of the following year, for the year ended December 31, 2021.

The Trust expects that future dividends will be maintained at least at the present rate, unless there are changes in our results of operations, our general financial condition, general economic conditions, or the Board determines other action prudent.

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Sale of Securities

During the year ended December 31, 2022, the Operating Partnership issued approximately 560,000 limited partnership units valued at $23 per unit for an aggregate consideration of $12,870, for the purchase of real estate investments. The units were sold to accredited investors unaffiliated with the Operating Partnership in private placement transactions exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) of such Act. Limited Partners may request, in accordance with the requirements of the redemptions plans, the redemption of their limited partnership units for cash or the exchange of their limited partnership units for common shares of the Trust in lieu of cash for the redemption on a basis of one limited partnership unit for one common share. At the sole and absolute discretion of the Operating partnership, and so long as our redemption plans exist and applicable conditions and limitations are satisfied, the Trust may, acting for itself or in its capacity as General Partner of the Operating Partnership, elect to redeem or exchange such limited partnership units.

Other Sales

During the years ended December 31, 2022, 2021 and 2020, there were no common shares of the Trust issued in exchange for limited partnership units of the operating partnership.

Redemptions of Securities

Set forth below is information regarding common shares and limited partnership units redeemed during the year ended December 31, 2022

			Average		Total Number of	Total Number of	Approximate Dollar Value of
	Total Number	Total Number	Price		Shares Redeemed	Units Redeemed	Shares (or Units) that May
	of Common	of Limited	Paid per		as Part of	as Part of	Yet Be Redeemed Under
	Shares	Partner Units	Common		Publicly Announced	Publicly Announced	Publicly Announced
Period	Redeemed	Redeemed	Share/Unit		Plans or Programs	Plans or Programs	Plans or Programs
October 1-31, 2022	1,000	—	$	21.85	1,501,000	1,147,000	$	14,870
November 1-30, 2022	1,000	4,000	$	21.85	1,502,000	1,151,000	$	14,750
December 1-31, 2022	—	3,000	$	21.85	1,502,000	1,154,000	$	14,684
Total	2,000	7,000

For the year ended December 31, 2022, the Trust redeemed all shares or units for which we received redemption requests.  In addition, for the year ended December 31, 2022, all common shares and units redeemed were redeemed as part of the publicly announced plans.

The Amended and Restated Share Redemption Plan, effective January 1, 2022, permits us to repurchase common shares held by our shareholders and limited partnership units held by partners of our Operating Partnership, up to an aggregate amount of $55,000 worth of shares and units, upon request by the holders after they have held them for at least one year and subject to other conditions and limitations described in the plan. The amount remaining to be redeemed as of December 31, 2022, was $14,684. The redemption price for such shares and units redeemed under the plan was fixed at $21.85 per share or unit, which became effective January 1, 2022. The redemption plan will terminate in the event the shares become listed on any national securities exchange, the subject of bona fide quotes on any inter-dealer quotation system or electronic communications network or are the subject of bona fide quotes in the pink sheets. Additionally, the Board, in its sole discretion, may terminate, amend or suspend the redemption plan at any time if it determines to do so is in our best interest.

ITEM 6. SELECTED FINANCIAL DATA

None.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this section and elsewhere in this Form 10-K constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Please see “Note Regarding Forward-Looking Statements” and “Risk Factors” for more information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance.

Introduction

The following discussion should be read in conjunction with the financial statements and related notes included under Part II, Item 8 of this Annual Report on Form 10-K.

Our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") within this section is focused on the years ended December 31, 2022 and 2021, including year-to-year comparisons between these years. Our MD&A for the year ended December 31, 2020, including year-to-year comparisons between 2021 and 2020, can be found in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

Overview

Sterling Real Estate Trust d/b/a Sterling Multifamily Trust (“Sterling”, “the Trust” or “the Company”) is a registered, but unincorporated business trust organized in North Dakota in December 2002.  Sterling has elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code, which requires that 75% of the assets of a REIT must consist of real estate assets and that 75% of its gross income must be derived from real estate. The net income of the REIT is allocated in accordance with the stock ownership in the same fashion as a regular corporation.  Our real estate portfolio consisted of 185 properties containing 11,300 apartment units and approximately 1,498,000 square feet of leasable commercial space as of December 31, 2022. The portfolio has a net book value of real estate investments (cost less accumulated depreciation) of approximately $776,299, which includes construction in progress. Sterling’s current acquisition strategy and focus is on multifamily apartment properties.

Critical Accounting Policies and Estimates

Below are the accounting policies and estimates that management believe are critical to the preparation of the audited consolidated financial statements included in this Report. Certain accounting policies used in the preparation of these consolidated financial statements are particularly important for an understanding of the financial position and results of operations presented in the historical consolidated financial statements included in this Report. A summary of significant accounting policies is also provided in the aforementioned notes to our consolidated financial statements (see note 2 to the audited consolidated financial statements). These policies require the application of judgment and assumptions by management and, as a result, are subject to a degree of uncertainty. Due to this uncertainty, actual results could differ materially from estimates calculated and utilized by management.

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Impairment of Real Estate Investments

The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each reporting period, the Trust separately determines whether impairment indicators exist for each property.

Examples of situations considered to be impairment indicators include, but are not limited to:

o A substantial decline or negative cash flows;

o Continued low occupancy rates;

o Continued difficulty in leasing space;

o Significant financially troubled tenants;

o A change in plan to sell a property prior to the end of its useful life or holding period;

o A significant decrease in market price not in line with general market trends; and

o Any other quantitative or qualitative events or factors deemed significant by the Trust’s management or Board of Trustees.

If the presence of one or more impairment indicators as described above is identified with respect to an investment property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered to be impaired when the estimated future undiscounted cash flows are less than its current carrying value.  When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes complex or subjective assumptions which include, but are not limited to:

o Projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, demographics, holding period and property location;

o Projected capital expenditures;

o Projected cash flows from the eventual disposition of an operating property using a property specific capitalization rate;

o Comparable selling prices; and

o Property specific discount rates for fair value estimates as necessary.

To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its fair value. Based on evaluation, there was one impairment loss of $561 during the year ended December 31, 2022. There were no impairment losses during the years ended December 31, 2021 and 2020.

There have been no material changes in our Critical Accounting Policies as disclosed in Note 2 to our financial statements for the year ended December 31, 2022 included elsewhere in this report.

Acquisition of Real Estate Investments

The Company allocates the purchase price of properties that meet the definition of an asset acquisition to net tangible and identified intangible assets acquired based on their relative fair values. In making estimates of relative fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing, and leasing activities in estimating the relative fair value of the tangible and intangible assets acquired.

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REIT Status

We operate in a manner intended to enable us to continue to qualify as a REIT under Sections 856-860 of the Internal Revenue Code. Under those sections, a REIT which distributes at least 90% of its REIT taxable income, excluding net capital gains, as a distribution to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We intend to distribute to our shareholders 100% of our taxable income. Therefore, no provision for Federal income taxes is required. If we fail to distribute the required amount of income to our shareholders, we would fail to qualify as a REIT and substantial adverse tax consequences may result

Principal Business Activity

The operating partnership currently directly owns 185 properties. Of these, 143 are residential properties located in North Dakota, Minnesota, Missouri, Nebraska and Texas and are principally multifamily apartment buildings. The remaining 42 are commercial properties primarily located in North Dakota with others located in Arkansas, Colorado, Iowa, Louisiana, Michigan, Minnesota, Mississippi, Nebraska and Wisconsin. The commercial properties include retail, office, industrial, and medical properties.  The Trust’s mix of properties is 78.8% residential and 21.2% commercial (based on cost) with a total carrying value of $776,299 at December 31, 2022. Currently our focus is limited to multifamily apartment properties. We will consider unsolicited offers for purchase of commercial properties on a case-by-case basis.

The following table represents the number of properties the Trust owns in each state as of December 31, 2022:

Residential Property	Location	No. of Properties	Units
	North Dakota	122	7,187
	Minnesota	15	3,040
	Missouri	1	164
	Nebraska	4	639
	Texas	1	270
		143	11,300
Commercial Property	Location	No. of Properties	Sq. Ft
	North Dakota	20	772,000
	Arkansas	2	28,000
	Colorado	1	17,000
	Iowa	1	33,000
	Louisiana	1	15,000
	Michigan	1	12,000
	Minnesota	9	524,000
	Mississippi	1	15,000
	Nebraska	1	19,000
	Wisconsin	5	63,000
		42	1,498,000

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Management Highlights

● Increased revenues from rental operations by $5,736 or 4.4% for the year ended December 31, 2022, compared to the year ended December 31, 2021.

● Eight properties with a total cost of $94,844 were acquired during the year ended December 31, 2022.

● Disposed of two residential and three commercial properties during the year ended December 31, 2022.

● Declared dividends aggregating $1.1500 per common share for the year ended December 31, 2022.

Results of Operations for the Years Year Ended December 31, 2022 and 2021

	Year ended December 31, 2022						Year ended December 31, 2021
	Residential		Commercial		Total		Residential		Commercial		Total
	(unaudited)						(unaudited)
	(in thousands)						(in thousands)
Real Estate Revenues	$	113,968	$	21,092	$	135,060	$	107,284	$	22,040	$	129,324
Real Estate Expenses
Real Estate Taxes		11,734		2,511		14,245		10,778		2,928		13,706
Property Management		13,778		789		14,567		12,907		1,217		14,124
Utilities		10,901		1,274		12,175		9,031		1,104		10,135
Repairs and Maintenance		24,479		1,812		26,291		21,571		1,956		23,527
Insurance		3,755		105		3,860		3,167		110		3,277
Total Real Estate Expenses		64,647		6,491		71,138		57,454		7,315		64,769
Net Operating Income	$	49,321	$	14,601		63,922	$	49,830	$	14,725		64,555
Interest						19,994						18,142
Depreciation and amortization						24,679						22,203
Administration of REIT						5,247						4,381
Other income						(10,530)						(4,609)
Net Income					$	24,532					$	24,438
Net Income Attributed to:
Noncontrolling Interest					$	15,611					$	15,644
Sterling Real Estate Trust					$	8,921					$	8,794
Dividends per share (1)					$	1.1500					$	1.0600
Earnings per share					$	0.8400					$	0.8700
Weighted average number of common shares						10,632						10,160

(1) Does not take into consideration the amounts distributed by the operating partnership to limited partners.

Revenues

Property revenues totaled approximately $135,060 for the year ended December 31, 2022, which constituted an increase of approximately $5,736 or 4.4% compared to the same period in 2021. Residential property revenues increased approximately $6,684 and commercial property revenues decreased approximately $948.

The following table illustrates the occupancy percentage for the periods ended indicated:

	December 31,		December 31,
	2022		2021
Residential occupancy	93.2	%	94.8	%
Commercial occupancy	87.0	%	80.7	%

Residential revenues for the year ended December 31, 2022, increased $6,684 or 6.2%, in comparison to the same period in 2021. Residential properties acquired since January 1, 2021, contributed approximately $5,232 to the increase in total

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residential revenues. The remaining increase is due to decreased rental incentives caused by increased renewals and general market rent increases at our stabilized properties. Residential revenues comprised 84.4% of total revenues for the year ended December 31, 2022 compared to 83.0% of total revenues for the year ended December 31, 2021. Residential economic occupancy year-over-year decreased 1.6%, during the year ended December 31, 2022.

For the year ended December 31, 2022, total commercial revenues decreased $948 or 4.3%, in comparison to the same period in 2021. The decrease was primarily attributed to the disposition of three commercial properties which accounts for $772 of the decrease during the year ended December 31, 2022 The remaining difference in commercial revenues is related to early termination fees which decreased $173 for the year ended December 31, 2022, as compared to the same period in 2021. The early termination fees will vary from year to year and are dependent on operational leases on commercial properties.

Expenses

Residential expenses from operations of $64,647 during the year ended December 31, 2022 increased $7,193 or 12.5% in comparison to the same period in 2021. The increase is attributed to an increase in repairs and maintenance expense of $2,908 or 13.5%. Properties acquired since January 1, 2021, attributed $937 to the increase in repairs and maintenance expense. Additionally, increased project and upgrade costs, that are considered to be deferred maintenance costs from the year ended 2021, due to COVID-19 restrictions attribute to the increase in repairs and maintenance expense during the year ended December 31, 2022. The increase is also attributed to an increase in property management fees of $871 or 6.7%, an increase in utility expense of $1,870 or 20.7%, as well as an increase in real estate taxes of $956 or 8.9%. The main reason for the increases in property management fees, utility expenses and real estate taxes is related to the properties acquired since January 1, 2021, which account for $665, $559 and $529 of the increase, respectively.

Commercial expenses from operations of $6,491 during the year ended December 31, 2022 decreased $824 or 11.3% in comparison to the same period in 2021. For the year ended December 31, 2022 property management fees decreased by $428 or 35.2%. The decrease is also attributable to a decrease in advertising and marketing expenses in an office building located in Minneapolis, Minnesota in efforts to lease up vacant space. The decrease is also attributed to a decrease in real estate taxes of $417 or 14.2%, due to a property in Minneapolis, Minnesota receiving a real estate tax refund and property in Fargo, ND whose tenant is responsible for real estate taxes in 2022.

Interest expense of $19,994 during the year ended December 31, 2022 increased $1,852 or 10.2% in comparison to the same period in 2021. Interest expense related to financing activities increased by $1,677 during 2022. One property in Minnesota had a secondary mortgage taken out which attributes to $1,036 of the increase. Capitalized interest expense related to construction in progress decreased $154 during the year ended December 31, 2022.

Depreciation and amortization expense of $24,679 during the year ended December 31, 2022 increased $2,476 or 11.2% in comparison to the same period in 2021. Properties acquired since January 1, 2021, contributed approximately $2,122 to the increase in depreciation expense, which is offset by $206 of reduced depreciation expense related to the disposition of four properties during the year ended December 31, 2022. Amortization expense will continue to decrease as lease intangibles become fully amortized but will increase upon acquisitions of intangible assets. Depreciation and amortization expense as a percentage of rental income for the years ended December 31, 2022 and 2021 were relatively consistent at 18.3% and 17.2%, respectively.

REIT administration expenses of $5,249 for the year ended December 31, 2022, increased $866 or 19.8% in comparison to the same period in 2021, which is attributed to two joint venture’s development fee of $600 in 2022, and an increase in REIT advisory fees paid of $335.

Other income of $10,530 for the year ended December 31, 2022 increased $5,921 or 128.5% in comparison to the same period in 2021. The increase is primarily attributed to the sale of three commercial and two residential properties for $11,090 in 2022 as compared to only one commercial and one residential properties in 2021 for $1,710. This is offset by the increase in net loss allocations from Sterling’s ownership in six joint ventures for $2,078 in 2022.

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Furthermore, the increase is offset by the Trust receiving $1,000 from related parties, in reimbursement for expenses paid that were associated with capital projects in 2021.

Construction in Progress and Development Projects

The Trust capitalizes direct and certain indirect project costs incurred during the development period such as construction, insurance, architectural, legal, interest and other financing costs, and real estate taxes. At such time as the development is considered substantially complete, the capitalization of certain indirect costs such as real estate taxes, interest, and financing costs cease, all project-related costs included in construction in process are reclassified to land and building and other improvements.

Construction in progress as of December 31, 2022, consists primarily of construction at several residential properties located in North Dakota and Minnesota. The Prairiewood Meadows construction consists of the re-development of one building due to a fire, a new clubhouse for residents, and parking lot repairs. Current expectations are that the projects will be completed in the first quarter of 2023, and the current budget approximates $3,683, of which $3,085 has been incurred and is included in construction in progress. The Rosedale Estates project is primarily related to a new parking structure. Current expectations are the project will be completed in the first quarter of 2024, and the current budget is approximately $5,142, of which $129 has been incurred and is included in construction in progress. Remaining construction in progress projects are primarily related to building and roof system, roof replacements on multiple residential properties, residential exterior window systems, and new deck systems on multiple residential properties.

The Trust has two on-going developments through ventures in unconsolidated affiliates.

Park Hill Apartments, currently being developed in Dallas, Texas, is expected to be completed in the third quarter of 2023 and the current project budget approximates $53,138 of which $37,714 has been incurred as of December 31, 2022.

Kessler Apartments, currently being developed in Fort Worth, Texas is expected to be completed in the third quarter of 2024 and the current project budget approximates $55,000 of which $8,709 has been incurred as of December 31, 2022.

Funds From Operations (FFO)

Funds From Operations (FFO) applicable to common shares and limited partnership units means net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.

Historical cost accounting for real estate assets implicitly assumes the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. The term Funds From Operations (FFO) was created to address this problem. It was intended to be a standard supplemental measure of REIT operating performance that excluded historical cost depreciation from — or “added back” to — GAAP net income.

Our management believes this non-GAAP measure is useful to investors because it provides supplemental information that facilitates comparisons to prior periods and for the evaluation of financial results. Management uses this non-GAAP measure to evaluate our financial results, develop budgets and manage expenditures. The method used to produce non-GAAP results is not computed according to GAAP, is likely to differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Management encourages the review of the reconciliation of this non-GAAP financial measure to the comparable GAAP results.

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Since the introduction of the definition of FFO, the term has come to be widely used by REITs. In the view of National Association of Real Estate Investment Trusts (“NAREIT”), the use of the definition of FFO (combined with the primary GAAP presentations required by the Securities and Exchange Commission) has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making it easier than before to compare the results of one REIT with another.

While FFO applicable to common shares and limited partnership units are widely used by REITs as performance metrics, all REITs do not use the same definition of FFO or calculate FFO in the same way. The FFO reconciliation presented here is not necessarily comparable to FFO presented by other real estate investment trusts. FFO should also not be considered as an alternative to net income as determined in accordance with GAAP as a measure of a real estate investment trust’s performance, but rather should be considered as an additional, supplemental measure, and should be viewed in conjunction with net income as presented in the consolidated financial statements included in this report. FFO applicable to common shares and limited partnership units does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of sufficient cash flow to fund a real estate investment trust’s needs or its ability to service indebtedness or to pay dividends to shareholders.

The following tables include calculations of FFO, and the reconciliations to net income, for the years ended December 31, 2022, 2021 and 2020, respectively. We believe these calculations are the most comparable GAAP financial measure (in thousands):

Reconciliation of Net Income Attributable to Sterling to FFO Applicable to Common Shares and Limited Partnership Units

	Year ended December 31, 2022			Year ended December 31, 2021			Year ended December 31, 2020
			Weighted Avg			Weighted Avg			Weighted Avg
			Shares and			Shares and			Shares and
	Amount		Units	Amount		Units	Amount		Units
	(unaudited)
	(in thousands, except per share data)
Net Income attributable to Sterling Real Estate Trust	$	8,921	10,632	$	8,794	10,160	$	9,405	9,694
Add back:
Noncontrolling Interest - Operating Partnership Units		15,628	18,626		15,783	18,235		17,645	18,187
Depreciation & Amortization from continuing operations		24,679			22,203			21,214
Pro rata share of unconsolidated affiliate depreciation and amortization		3,312			718			380
Loss on impairment of real estate investments		561			—			—
Subtract:
Gain on sale of depreciable real estate		(11,090)			(1,710)			(3,383)
Funds from operations applicable to common shares and limited partnership units (FFO)	$	42,011	29,258	$	45,788	28,395	$	45,261	27,881

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Liquidity and Capital Resources

Evaluation of Liquidity

We continually evaluate our liquidity and ability to fund future operations, debt obligations, and any repurchase requests. As part of our analysis, we consider among other items, the credit quality of tenants and lease expirations.

Our principal demands for funds will be for the: (i) acquisition of real estate and real estate-related investments, (ii) payment of acquisition related expenses and operating expenses, (iii) payment of dividends/distributions, (iv) payment of principal and interest on current and any future outstanding indebtedness, (v) redemptions of our securities under our redemption plans and (vi) capital improvements, development projects, and property related expenditures. Generally, we expect to meet cash needs for the payment of operating expenses and interest on outstanding indebtedness from cash flow from operations. We expect to pay dividends/distributions and any repurchase requests to our shareholders and the unit holders of our operating partnership from cash flow from operations; however, we may use other sources to fund dividends/distributions and repurchases, as necessary.

At December 31, 2022, our unrestricted cash resources consisted of cash and cash equivalents totaling $3,257. Our unrestricted cash reserves can be used for working capital needs and other commitments. In addition, we had unencumbered properties with a gross book value of $107,577, which could potentially be used as collateral to secure additional financing in future periods.

The Trust has a $4,915 variable rate (SOFR plus 2.00%) line of credit agreement with Bremer Bank, which expires in December 2026; and a $5,000 variable rate (SOFR plus 2.00%) line of credit agreement with Bremer Bank, which expires December 2026. The lines of credit are secured by specific properties. At December 31, 2022, the Bremer lines of credit secured one letter of credit totaling $50, leaving $8,857 available and unused under the agreements. The Trust anticipates renewing the line of credit expiring in the next 12 months to continue to hold it as a cash resource to the Trust.

The sale of our securities and issuance of limited partnership units of the operating partnership in exchange for property acquisitions and sale of additional common or preferred shares is also expected to be a source of long-term capital for us.

During the year ended December 31, 2022, we did not sell any common shares in private placements. During the year ended December 31, 2022, we issued 342,000 and 177,000 common shares under the dividend reinvestment plan and optional share purchases, respectively which raised gross proceeds of $11,531. During the year ended December 31, 2021, we did not sell any common shares in private placements. During the year ended December 31, 2021, we issued 363,000 and 203,000 common shares under the dividend reinvestment plan and as optional share purchases, respectively which raised gross proceeds of $10,952.

Additionally, to reduce our cash investment and liquidity needs, the Trust utilizes the UPREIT structure whereby we can acquire property in whole or in part by issuing partnership units in lieu of cash payments. During the year end December 31, 2022, the operating partnership issued approximately 560,000 limited partnership units of the operating partnership valued at $23.00 per unit for an aggregate consideration of approximately $12,870 for the purchase of real estate investments. During the year end December 31, 2021, the Trust issued approximately 144,000 limited partnership units of the operating partnership valued at $20.00 per unit for an aggregate consideration of approximately $2,883 for the purchase of real estate investments.

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The Board of Trustees, acting as general partner for the operating partnership, determined an estimate of fair value for the limited partnership units exchanged through the UPREIT structure. In determining this value, the Board relied upon their experience with, and knowledge about, the Trust’s real estate portfolio and debt obligations. The Board typically determines the fair value on an annual basis. The Trustees determine the fair value, in their sole discretion and use data points to guide their determination which is typically based on a consensus of opinion. Thus, the Trust does not employ any specific valuation methodology or formula. Rather, the Board looks to available data and information, which is often adjusted and weighted to comport more closely with the assets held by the Trust at the time of valuation. The principal valuation methodology utilized is the NAV calculation/direct capitalization method. The information made available to the Board is assembled by the Trust’s Advisor. In addition, the Board considers how the price chosen will affect existing share and unit values, redemption prices, dividend coverage ratios, yield percentages, dividend reinvestment factors, and future UPREIT transactions, among other considerations and information. The fair value was not determined based on, nor intended to comply with, fair value standards under US GAAP and the value may not be indicative of the price we would get for selling our assets in their current condition. At this time, no shares are held in street name accounts and the Trust is not subject to FINRA’s specific pricing requirements set out in Rule 2340 or otherwise.

As with any valuation methodology, the methodologies utilized by the Board in reaching an estimate of the value of the shares and limited partnership units are based upon a number of estimates, assumptions, judgments or opinions that may, or may not, prove to be correct.  The use of different estimates, assumptions, judgments, or opinions would likely have resulted in significantly different estimates of the value of the shares and limited partnership units.  In addition, the Board’s estimate of share and limited partnership unit value is not based on the book values of our real estate, as determined by GAAP, as our book value for most real estate is based on the amortized cost of the property, subject to certain adjustments.

Cash on hand, together with cash from operations and access to the lines of credit is expected to provide sufficient capital to meet the Company’s needs for at least the next 12 months and as appropriate, we will use cash flows from operations, net proceeds from share offerings, debt proceeds, and proceeds from the disposition of real estate investments to meet long term liquidity demands.

Credit Quality of Tenants

We are exposed to credit risk within our tenant portfolio, which can reduce our results of operations and cash flow from operations if our tenants are unable to pay their rent. Tenants experiencing financial difficulties may become delinquent on their rent or default on their leases and, if they file for bankruptcy protection, may reject our lease in bankruptcy court, resulting in reduced cash flow. This may negatively impact net asset values and require us to incur impairment charges. Even if a default has not occurred and a tenant is continuing to make the required lease payments, we may restructure or renew leases on less favorable terms, or the tenant’s credit profile may deteriorate, which could affect the value of the leased asset and could in turn require us to incur impairment charges.

To mitigate credit risk on commercial properties, we have historically looked to invest in assets that we believe are critically important to our tenant’s operations and have attempted to diversify our portfolio by tenant, tenant industry and geography. We also monitor all of our properties’ performance through review of rent delinquencies as a precursor to a potential default, meetings with tenant management and review of tenants’ financial statements and compliance with financial covenants. When necessary, our asset management process includes restructuring transactions to meet the evolving needs of tenants, refinancing debt and selling properties, as well as protecting our rights when tenants default or enter into bankruptcy.

Lease Expirations and Occupancy

Our residential leases are for a term of one year or less. The Advisor, with the assistance of our property managers, actively manages our real estate portfolio and begins discussing options with tenants in advance of scheduled lease expirations. In certain cases, we may obtain lease renewals from our tenants; however, tenants may elect to move out at the end of their term. In the cases where tenants elect not to renew, we may seek replacement tenants or try to sell the property.

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Cash Flow Analysis

Our objectives are to generate sufficient cash flow over time to provide shareholders with increasing dividends and to seek investments with potential for strong returns and capital appreciation throughout varying economic cycles. We have funded 100% of dividends paid with operating cash flows. In setting a dividend rate, we focus primarily on expected returns from investments we have already made to assess the sustainability of a particular dividend rate over time.

	Year Ended
	December 31,
	2022		2021
	(in thousands)
Net cash flows provided by operating activities	$	40,770	$	45,055
Net cash flows used in investing activities	$	(107,960)	$	(59,141)
Net cash flows provided by financing activities	$	19,114	$	47,107

Operating Activities

Our real estate properties generate cash flow in the form of rental revenues, which is reduced by interest payments, direct lease costs and property-level operating expenses. Property-level operating expenses consist primarily of property management fees including salaries and wages of property management personnel, utilities, cleaning, repairs, insurance, security and building maintenance cost, and real estate taxes. Additionally, we incur general and administrative expenses, advisory fees, acquisition and disposition expenses and financing fees.

Net cash provided by operating activities was $40,770 and $45,053 for the years ended December 31, 2022 and 2021, respectively, which consists primarily of net income from property operations, adjusted for non-cash depreciation and amortization.

Investing Activities

Our investing activities generally consist of real estate-related transactions (purchases and sales of properties) and payments of capitalized property-related costs such as intangible assets.  

Net cash used in investing activities was $107,960 and $59,119 for the years ended the year ended December 31, 2022 and 2021, respectively (this does not include the value of UPREIT units issued in connection with investing activities). For the years ended December 31, 2022 and 2021, cash flows used in investing activities related specifically to the acquisition of properties and capital expenditures was $91,600 and $53,900, respectively. For the years ended December 31, 2022 and 2021, cash flows used in investing activities related to the purchase of securities was $29,130 and $-, respectively. Proceeds received from the sale of real estate investments during the years ended December 31, 2022 and 2021, offset this amount by $25,463 and $5,610, respectively.

Financing Activities

Our financing activities generally consist of funding property purchases by raising proceeds and securing mortgage notes payable as well as paying dividends, paying syndication costs, and making principal payments on mortgage notes payable.

Net cash provided by financing activities was $19,114 and $47,107, respectively, for the years ended December 31, 2022 and 2021. During the year ended December 31, 2022, we paid $25,310 in dividends and distributions, redeemed $2,077 of shares and units, received $26,500 from a note payable, received $37,569 from new mortgage notes payable, and made mortgage principal payments of $22,231. For the year ended December 31, 2021, we paid $22,622 in dividends and distributions, redeemed $5,566 of shares and units, received $116,180 from new mortgage notes payable, and made mortgage principal payments of $43,641.

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Dividends and Distributions

Common Stock

We declared cash dividends to our shareholders during the period from January 1, 2022, to December 31, 2022 totaling $12,222 or $1.1500 per share, of which $4,507 was cash dividends and $7,715 were reinvested through the dividend reinvestment plan. The cash dividends were paid with the $40,770 from our cash flows from operations.

We declared cash dividends to our shareholders during the period from January 1, 2021, to December 31, 2021 totaling $10,761 or $1.0600 per share, of which $3,842 was cash dividends and $6,918 were reinvested through the dividend reinvestment plan. The cash dividends were paid with the $45,053 from our cash flows from operations.

We continue to provide cash dividends to our shareholders from cash generated by our operations.  The following chart summarizes the sources of our cash used to pay dividends. Our primary source of cash is cash flow provided by operating activities from our investments as presented in our cash flow statement.  We also include distributions from unconsolidated affiliates to the extent that the underlying real estate operations in these entities generate these cash flows and the gain on sale of properties relates to net profits from the sale of certain properties. Our presentation is not intended to be an alternative to our consolidated statement of cash flows and does not present all sources and uses of our cash.

The following table presents certain information regarding our dividend coverage:

	Year Ended
	December 31,
	2022		2021
	(in thousands)
Cash flows provided by operations (includes net income of $24,532 and $24,438, respectively)	$	40,770	$	45,055
Distributions in excess of earnings received from unconsolidated affiliates		504		—
Gain on sales of real estate and non-real estate investments		10,529		1,710
Dividends declared		(12,222)		(10,760)
Excess	$	39,581	$	36,005

Limited Partnership Units

The operating partnership agreement provides that our operating partnership will distribute to the partners (subject to certain limitations) cash from operations on a quarterly basis (or more frequently, if we so elect) in accordance with the percentage interests of the partners. We determine the amounts of such distributions in our sole discretion.

For the year ended December 31, 2022, we declared quarterly distributions totaling $21,482 to holders of limited partnership units in our operating partnership, which we paid on April 15, July 15, and October 17, 2022, and January 17, 2023. Distributions were paid at a rate of $0.2875 per unit per quarter, which is equal to the per share distribution rate paid to the common shareholders.

For the year ended December 31, 2021, we declared quarterly distributions totaling $19,319 to holders of limited partnership units in our operating partnership, which we paid on April 15, July 15, October 15, 2021, and January 18, 2022. Distributions were paid at a rate of $0.2650 per unit per quarter, which is equal to the per share distribution rate paid to the common shareholders.

43

Sources of Dividends and Distributions

For the year ended December 31, 2022, we paid aggregate dividends of $11,854, which were paid with cash flows provided by operating activities. Our funds from operations, or FFO, was $42,011, therefore, our management believes our distribution policy is sustainable over time. For the year ended December 31, 2021, we paid aggregate dividends of $10,629 which were paid with cash flows provided by operating activities. Our FFO was $45,788 for the year ended December 31, 2021. For a further discussion of FFO, including a reconciliation of FFO to net income, see “Funds from Operations” above.

Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting pronouncements, see Note 2, Principal Activity and Significant Accounting Policies— Recently Issued Accounting Pronouncements, to the consolidated financial statements that are a part of this Annual Report on Form 10-K.

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Recent Developments

On January 17, 2023, we paid a dividend or distribution of $0.2875 per share on our common shares of beneficial interest or limited partnership units, to common shareholders and limited unit holders of record on December 31, 2022.

We have evaluated subsequent events through the date of this filing. We are not aware of any other subsequent events which would require recognition or disclosure in the consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Trust is exposed to certain risk arising from both its business operations and economic conditions and principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Trust manages economic risks, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities. The principal material financial market risk to which we are exposed, is interest-rate risk, which the Trust manages through the use of derivative financial instruments. Specifically, the Trust enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. During the year ended December 31, 2022, the Trust used 12 interest rate swaps to hedge the variable cash flows associated with market interest rate risk. These swaps have an aggregated notional amount of $106,033 for the year ended December 31, 2022. We do not enter into derivative instruments for trading or speculative purposes. The interest rate swaps expose us to credit risk in the event of non-performance by the counterparty under the terms of the agreement.

As of December 31, 2022, The Trust had $106,033 of variable-rate borrowings, with the total outstanding balance fixed through interest rate swaps. Even though our goal is to maintain a fairly low exposure to interest rate risk, we may become vulnerable to significant fluctuations in interest rates on any future repricing or refinancing of our fixed or variable rate debt or future debt.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements included in this Annual Report are listed in Item 15 and begin immediately after the signature pages.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Sterling Real Estate Trust’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of Sterling Real Estate Trust’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Report. Based on the evaluation, Sterling Real Estate Trust’s Chief Executive Officer and Chief Financial Officer have concluded that Sterling Real Estate Trust’s disclosure controls and procedures were effective to ensure that information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

45

Report of Management on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining a comprehensive system of internal control over financial reporting to provide reasonable assurance of the proper authorization of transactions, the safeguarding of assets and the reliability of the financial records. Our internal control system was designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements.  The system of internal control over financial reporting provides for appropriate division of responsibility and is documented by written policies and procedures that are communicated to employees.  The framework upon which management relied in evaluating the effectiveness of our internal control over financial reporting was set forth in Internal Controls – Integrated Framework (2013) published by the Committee of Sponsoring Organization of the Treadway Commission.

Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the U.S. Our internal control over financial reporting includes those policies and procedures that:

i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets,

ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the U.S., and that our receipts and expenditures are being made only in accordance with authorization of our management and trustees; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2022. However, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in our business or other conditions, or that the degree of compliance with our policies or procedures may deteriorate.

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Inherent Limitations of Disclosure Controls and Procedures and Internal Control over Financial Reporting

There are inherent limitations to the effectiveness of any control system. A control system, no matter how well conceived and operated, can provide only reasonable assurance that its objectives are met. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with the policies and procedures may deteriorate.  

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the fourth quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

The information required in Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and Director Independence), and Item 14 (Principal Accountant Fees and Services) is incorporated by reference to our definitive proxy statement for the 2023 Annual Meeting of Shareholders to be filed with the SEC or filed by amendment to this Annual Report on or before May 1, 2023.

47

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) The financial statements listed below are included in this report

Reports of Independent Registered Public Accounting Firms (PCAOB ID Number 49 and PCAOB ID Number 23)

Consolidated Financial Statements

Consolidated Balance Sheets at December 31, 2022 and 2021

Consolidated Statements of Operations and Other Comprehensive Income for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2022, 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020

Notes to Consolidated Financial Statements

Real Estate and Accumulated Depreciation (Schedule III)

(a)(3) Exhibits

See the Exhibit Index filed as part of this Annual Report on Form 10-K.

ITEM 16. FORM 10-K SUMMARY

Not applicable.

48

STERLING REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2022 AND 2021,

AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS AND

OTHER COMPREHENSIVE INCOME, SHAREHOLDERS’ EQUITY AND CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2022, 2021 AND 2020,

INCLUDING NOTES

and

REPORTS OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

49

STERLING REAL ESTATE TRUST AND SUBSIDIARIES

	PAGE
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS	51
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets	55
Consolidated Statements of Operations and Other Comprehensive Income	56
Consolidated Statements of Shareholders’ Equity	57
Consolidated Statements of Cash Flows	58
Notes to Consolidated Financial Statements	60
Real Estate and Accumulated Depreciation (Schedule III)	85

50

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Trustees of Sterling Real Estate Trust

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sterling Real Estate Trust and its subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and other comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and the related notes to the consolidated financial statements and schedule (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.Evaluation of real estate investments for impairment

The Company’s real estate investments and related intangible assets were $776.3 million and $5.3 million, respectively, as of December 31, 2022. As described in Note 2, the Company performs impairment testing on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of its real estate investments may not be recoverable. As part of the Company’s impairment indicator analysis, management considers numerous potential indicators of impairment of operating properties. These indicators could include a substantial decline in or continued low occupancy rate, continued difficulty in leasing space, significant financially troubled tenants, a change in plan to sell a property prior to the end of its useful life or holding period, a significant decrease in market price not in line with general market trends, and any other quantitative or qualitative events or factors deemed significant by the Trust’s management or board of trustees. The Company identified indicators of impairment for certain real estate investments and, in such cases, further assessed the assets for recoverability by comparing the net carrying value to estimated future cash flows on an undiscounted basis.

51

We identified the determination of the existence of impairment indicators for the Company’s real estate investments and related intangible assets as a critical audit matter because of the significant judgments made by management, including the evaluation of the impact of the factors described above. Auditing management’s judgments used in the determination of impairment indicators involved a high degree of auditor judgment and increased audit effort. Further, auditing the Company’s undiscounted cash flow model required a high degree of auditor judgment and increased audit effort as estimates underlying the calculation, including terminal capitalization rates, were based on assumptions affected by expected future market and economic conditions.

Our audit procedures related to the Company’s evaluation of real estate investments for impairment included the following, among others.

We tested the underlying data used in management’s analysis for completeness and accuracy, agreed such data to source documents and the underlying accounting records and evaluated management’s conclusions around potential indicators of impairment.

We evaluated the accuracy of management’s conclusions around potential indicators of impairment by developing an independent expectation of potential impairment indicators on a property by property basis, considering information such as historical trends, current year property level operating performance, and changes in expected hold periods, among others, and compared our expectation to management’s analysis.

For the Company’s real estate investments that were assessed by management using an undiscounted cash flow model, we inspected relevant industry data to consider market conditions. Further, we tested that the significant assumptions utilized in estimating property undiscounted cash flows, such as terminal capitalization rates, were within an observable market range.

Evaluation of purchase price allocation of real estate acquisitions

As described in Note 2 and 19 to the consolidated financial statements, the transaction consideration exchanged in the Company’s real estate acquisitions during 2022 amounted to $94.8 million. The transactions were accounted for as asset acquisitions and resulted in the Company recording approximately $9.9 million of land and land improvements, approximately $83.6 million of building and improvements and approximately $1.3 million of other net assets and assumed liabilities. Management allocates the purchase price in an asset acquisition to the assets acquired and liabilities assumed based upon their estimated relative fair values at the date of the acquisition.

We identified the allocation of the purchase price to the assets acquired and liabilities assumed in the asset acquisitions referred to above as a critical audit matter because of the significant judgments made by management when determining the estimates of fair value of certain assets acquired. Auditing management’s estimates and judgments involved a high degree of auditor judgment and increased audit effort, including the use of valuation specialists, due to the impact these estimates have on the allocation of the purchase price.

Our audit procedures related to the allocation of the purchase price to the assets acquired and liabilities assumed in the asset acquisitions referred to above included the following, among others:

● We obtained and read the purchase agreements.

● We tested the underlying data used in management’s fair value estimates for completeness and accuracy and agreed the inputs to source documents.

● We utilized valuation specialists to assist in performing the following procedures:

o Evaluated the appropriateness of the valuation methodology utilized by management to estimate fair value.

o Obtained independently sourced market data for certain significant assumptions, including comparable land sales, market rent, discount rates and capitalization rates, among others, and compared them to management’s estimates.

o Assessed the reasonableness and recalculated management’s allocation of the purchase price to the assets acquired and liabilities assumed.

52

/s/ RSM US LLP

We have served as the Company’s auditor since 2021.

Minneapolis, Minnesota

March 15, 2023

PCAOB ID: 49

53

Report of Independent Registered Public Accounting Firm 

To the Shareholders, the Audit and Disclosure Committee, and the Board of Trustees of Sterling Real Estate Trust:

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of operations and other comprehensive income, shareholders’ equity and cash flows of Sterling Real Estate Trust (the "Company") for the year ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Baker Tilly US, LLP

We served as the Company’s auditor from 2013 until 2021.

Chicago, Illinois

March 31, 2021

54

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

STERLING REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

as of December 31, 2022 and 2021

	December 31,		December 31,
	2022		2021
	(in thousands)
ASSETS
Real estate investments
Land and land improvements	$	129,682	$	125,338
Building and improvements		834,356		763,003
Construction in progress		7,110		8,361
Real estate investments		971,148		896,702
Less accumulated depreciation		(194,849)		(179,155)
Real estate investments, net		776,299		717,547
Cash and cash equivalents		3,257		51,507
Restricted deposits		9,323		9,149
Investment in securities		29,371		—
Investment in unconsolidated affiliates		29,423		18,658
Notes receivable		8,448		7,457
Lease intangible assets, less accumulated amortization		5,290		6,246
Other assets, net		27,312		10,302
Total Assets	$	888,723	$	820,866
LIABILITIES
Mortgage notes payable, net	$	506,167	$	493,142
Notes payable		26,500		—
Lines of credit		1,008		—
Dividends payable		8,493		7,567
Tenant security deposits payable		6,368		5,225
Lease intangible liabilities, less accumulated amortization		646		811
Accrued expenses and other liabilities		16,075		18,604
Total Liabilities		565,257		525,349
COMMITMENTS and CONTINGENCIES - Note 17
SHAREHOLDERS' EQUITY
Beneficial interest		123,996		116,856
Noncontrolling interest
Operating partnership		183,048		176,954
Partially owned properties		2,640		2,657
Accumulated other comprehensive income (loss)		13,782		(950)
Total Shareholders' Equity		323,466		295,517
	$	888,723	$	820,866

See Notes to Consolidated Financial Statements

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 and 2020

	Year Ended
	December 31,
	2022		2021		2020
	(in thousands, except per share data)
Income from rental operations
Real estate rental income	$	135,060	$	129,324	$	124,616
Expenses
Expenses from rental operations
Operating expenses		56,893		51,063		47,071
Real estate taxes		14,245		13,706		12,498
Depreciation and amortization		24,679		22,203		21,214
Interest		19,994		18,142		17,097
		115,811		105,114		97,880
Loss on impairment of property		561		—		—
Administration of REIT		5,247		4,381		4,217
Total expenses		121,619		109,495		102,097
Income from operations		13,441		19,829		22,519
Other income
Equity in (losses) gains of unconsolidated affiliates		(2,339)		(261)		263
Other income		1,293		1,935		455
Gain on sale or conversion of real estate investments		11,090		1,710		3,383
Gain on involuntary conversion		1,047		1,225		360
Total other income		11,091		4,609		4,461
Net income	$	24,532	$	24,438	$	26,980
Net income attributable to noncontrolling interest:
Operating partnership		15,628		15,783		17,645
Partially owned properties		(17)		(139)		(70)
Net income attributable to Sterling Real Estate Trust	$	8,921	$	8,794	$	9,405
Net income attributable to Sterling Real Estate Trust per common share, basic and diluted	$	0.84	$	0.87	$	0.97
Comprehensive income:
Net income	$	24,532	$	24,438	$	26,980
Other comprehensive gain (loss) - change in fair value of interest rate swaps		14,732		855		(1,842)
Comprehensive income		39,264		25,293		25,138
Comprehensive income attributable to noncontrolling interest		24,989		16,193		16,373
Comprehensive income attributable to Sterling Real Estate Trust	$	14,275	$	9,100	$	8,765
Weighted average common shares outstanding, basic and diluted		10,632		10,160		9,694

See Notes to Consolidated Financial Statements

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

				Accumulated				Noncontrolling
				Distributions		Total		Interest				Accumulated
	Common	Paid-in		in Excess of		Beneficial		Operating		Partially Owned		Comprehensive
	Shares	Capital		Earnings		Interest		Partnership		Properties		Income (Loss)		Total
	(in thousands)
BALANCE AT DECEMBER 31, 2019	9,436	$	131,261	$	(28,888)	$	102,373	$	174,221	$	2,416	$	37	$	279,047
Shares issued under trustee compensation plan	3		64		—		64		—		—		—		64
Contribution of assets in exchange for the issuance of noncontrolling interest shares	—		—		—		—		10,293		—		—		10,293
Shares/units redeemed	(127)		(2,321)		—		(2,321)		(1,216)		—		—		(3,537)
Dividends and distributions declared	—		—		(10,256)		(10,256)		(19,322)		—		—		(29,578)
Dividends reinvested - stock dividend	356		6,511		—		6,511		—		—		—		6,511
Issuance of shares under optional purchase plan	187		3,590		—		3,590		—		—		—		3,590
Change in fair value of interest rate swaps	—		—		—		—		—		—		(1,842)		(1,842)
Net income	—		—		9,405		9,405		17,645		(70)		—		26,980
BALANCE AT DECEMBER 31, 2020	9,855	$	139,105	$	(29,739)	$	109,366	$	181,621	$	2,346	$	(1,805)	$	291,528
Shares issued pursuant to trustee compensation plan	3		57		—		57		—		—		—		57
Contribution of assets in exchange for the issuance of noncontrolling interest shares	—		—		—		—		2,883		—		—		2,883
Shares/units redeemed	(82)		(1,552)		—		(1,552)		(4,014)		—		—		(5,566)
Dividends and distributions declared	—		—		(10,761)		(10,761)		(19,319)		—		—		(30,080)
Dividends reinvested - stock dividend	363		6,888		—		6,888		—		—		—		6,888
Issuance of shares under optional purchase plan	203		4,064		—		4,064		—		—		—		4,064
Change in fair value of interest rate swaps	—		—		—		—		—		—		855		855
Contributions from consolidated real estate entity noncontrolling interests	—		—		—		—		—		450		—		450
Net income	—		—		8,794		8,794		15,783		(139)		—		24,438
BALANCE AT DECEMBER 31, 2021	10,342	$	148,562	$	(31,706)	$	116,856	$	176,954	$	2,657	$	(950)	$	295,517
Shares issued pursuant to trustee compensation plan	3		65		—		65		—		—		—		65
Contribution of assets in exchange for the issuance of noncontrolling interest shares	—		—		—		—		12,870		—		—		12,870
Shares/units redeemed	(53)		(1,155)		—		(1,155)		(922)		—		—		(2,077)
Dividends and distributions declared	—		—		(12,222)		(12,222)		(21,482)		—		—		(33,704)
Dividends reinvested - stock dividend	341		7,468		—		7,468		—		—		—		7,468
Issuance of shares under optional purchase plan	177		4,063		—		4,063		—		—		—		4,063
Change in fair value of interest rate swaps	—		—		—		—		—		—		14,732		14,732
Net income	—		—		8,921		8,921		15,628		(17)		—		24,532
BALANCE AT DECEMBER 31, 2022	10,810	$	159,003	$	(35,007)	$	123,996	$	183,048	$	2,640	$	13,782	$	323,466

See Notes to Consolidated Financial Statements

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 and 2020

	Year Ended
	December 31,
	2022		2021		2020
	(in thousands)
OPERATING ACTIVITIES
Net income	$	24,532	$	24,438	$	26,980
Adjustments to reconcile net income to net cash provided by operating activities
Gain on sale or conversion of real estate investments		(11,090)		(1,710)		(3,383)
Loss on impairment of property		561		—
Gain on involuntary conversion		(1,047)		(1,225)		(360)
Change in fair value of securities		(322)		—
Equity in loss (gain) of unconsolidated affiliates		2,339		261		(263)
Distributions of earnings of unconsolidated affiliates		261		233		361
Allowance for uncollectible accounts receivable		(281)		(667)		540
Depreciation		22,161		20,918		19,770
Amortization		2,518		1,285		1,418
Amortization of debt issuance costs		675		608		634
Effects on operating cash flows due to changes in
Other assets		(209)		807		(177)
Tenant security deposits payable		1,143		349		328
Accrued expenses and other liabilities		(471)		(242)		(1,159)
NET CASH PROVIDED BY OPERATING ACTIVITIES		40,770		45,055		44,689
INVESTING ACTIVITIES
Gross purchase of securities		(29,130)		-		-
Proceeds from maturity of securities		81		-		-
Purchase of real estate investment properties		(81,974)		(35,915)		(13,377)
Capital expenditures and tenant improvements		(9,623)		(18,007)		(31,136)
Proceeds from sale of real estate investments and non-real estate investments		25,463		5,610		12,502
Proceeds from involuntary conversion		1,579		4,095		1,288
Investment in unconsolidated affiliates		(13,869)		(9,493)		(2,264)
Distributions in excess of earnings received from unconsolidated affiliates		504		—		422
Notes receivable issued net of payments received		(991)		(5,431)		(726)
NET CASH USED IN INVESTING ACTIVITIES		(107,960)		(59,141)		(33,291)
FINANCING ACTIVITIES
Payments for financing, debt issuance		(408)		(1,283)		(484)
Payments on investment certificates and subordinated debt		—		(25)		(100)
Principal payments on special assessments payable		—		—		(498)
Proceeds from issuance of mortgage notes payable and subordinated debt		37,569		116,180		71,175
Principal payments on mortgage notes payable		(22,231)		(43,641)		(48,553)
Advances on lines of credit		1,008		818,689		30,964
Payments on lines of credit		—		(818,689)		(30,964)
Proceeds from notes payable		26,500		—		—
Proceeds from issuance of shares under optional purchase plan		4,063		4,064		3,590
Shares/units redeemed		(2,077)		(5,566)		(3,537)
Dividends/distributions paid		(25,310)		(22,622)		(22,738)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES		19,114		47,107		(1,145)
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS		(48,076)		33,021		10,253
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF PERIOD		60,656		27,635		17,382
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF PERIOD	$	12,580	$	60,656	$	27,635
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF PERIOD
Cash and cash equivalents	$	3,257	$	51,507	$	11,716
Restricted deposits		9,323		9,149		15,919
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS, END OF PERIOD	$	12,580	$	60,656	$	27,635

See Notes to Consolidated Financial Statements

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 and 2020 (Continued)

	Year Ended
	December 31,
	2022		2021		2020
	(in thousands)
SCHEDULE OF CASH FLOW INFORMATION
Cash paid during the period for interest, net of capitalized interest	$	19,305	$	17,332	$	16,491
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Dividends reinvested	$	7,468	$	6,888	$	6,511
Dividends declared and not paid		3,108		2,740		2,608
UPREIT distributions declared and not paid		5,385		4,827		4,838
Shares issued pursuant to trustee compensation plan		65		57		64
Acquisition of assets in exchange for the issuance of noncontrolling interest units in UPREIT		12,870		2,883		10,293
Increase in land improvements due to increase in special assessments payable		219		235		231
Unrealized gain (loss) on interest rate swaps		14,732		855		(1,842)
Acquisition of assets through assumption of debt and liabilities		406		569		6,193
Capitalized interest and real estate taxes related to construction in progress		91		250		644

See Notes to Consolidated Financial Statements

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

Note 1 – Organization

Sterling Real Estate Trust, d/b/a Sterling Multifamily Trust (“Sterling”, “the Trust” or “the Company”) is a registered, but unincorporated business trust organized in North Dakota in December 2002.  Sterling has elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code.

Sterling previously established an operating partnership (“Sterling Properties, LLLP”) and transferred all of its assets and liabilities to the operating partnership in exchange for general partnership units. As the general partner, Sterling has management responsibility for all activities of the operating partnership. As of December 31, 2022 and 2021, Sterling owned approximately 36.60% and 36.22%, respectively, of the operating partnership.

NOTE 2 – PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Sterling and all subsidiaries for which we maintain a controlling interest.

The accompanying consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”).

Principles of Consolidation

The consolidated financial statements include the accounts of Sterling, Sterling Properties, LLLP, and wholly owned limited liability companies and partially-owned limited liability companies. All significant intercompany transactions and balances have been eliminated in consolidation.

As of December 31, 2022, the Trust owned approximately 36.60% of the partnership interests (“OP Units”) of the Operating Partnership. The remaining OP Units, consisting exclusively of limited partner interests, are held by persons who contributed their interests in properties to the Operating Partnership in exchange for OP Units. Under the LLLP Agreement and the redemptions plans, these persons have the right to request the Operating Partnership redeem their OP Units following a specified restricted period. All redemptions are at the sole discretion of the Trust, acting for itself or in its capacity as General Partner of the Operating Partnership, and further subject to the conditions and limitations of the LLLP Agreement and redemption plans, as the same may be amended or modified from time to time. If the Trust accepts a redemption request, the redemption of OP Units shall be made in cash in an amount equal to the fair value of an equivalent number of common shares of the Trust. In lieu of delivering cash, however, the Trust, as the Operating Partnership’s general partner, may, at its option and in its sole and absolute discretion, choose to acquire any OP Units so tendered by issuing common shares in exchange for the tendered OP Units. If the Trust so chooses, its common shares will be exchanged for OP Units on a one-for-one basis. This one-for-one exchange ratio is subject to adjustment to prevent dilution. With each such exchange or redemption, the Trust’s percentage ownership in the Operating Partnership will increase. In addition, whenever the Trust issues common or other classes of its shares, it contributes the net proceeds it receives from the issuance to the Operating Partnership and the Operating Partnership issues to the Trust an equal number of OP Units or other partnership interests having preferences and rights that mirror the preferences and rights of the shares issued. This structure is commonly referred to as an umbrella partnership REIT or “UPREIT.”

Additionally, we evaluate the need to consolidate affiliates based on standards set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”).  In determining whether we have a requirement to consolidate the accounts of an entity, management considers factors such as our ownership interest, our authority to make decisions and contractual and substantive participating rights of the limited partners and shareholders, as well as whether the entity is a variable interest entity (“VIE”) for which we have both: a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and b) the obligation to absorb losses or the right to receive benefits from the VIE that could be potentially significant to the VIE.

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

In instances where the Trust determines that it is not the primary beneficiary of a VIE or the Trust does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Trust will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Trust’s operations but instead its share of operations will be reflected as equity in earnings (loss) of unconsolidated entity on its consolidated statements of operations and comprehensive loss. Additionally, the Trust’s net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. See Note 5 for additional details regarding variable interest entities where the Trust uses the equity method of investing.

The operating partnership meets the criteria as a variable interest entity (“VIE”). The Trust’s sole significant asset is its investment in the operating partnership. The Trust is the primary beneficiary of the Operating Partnership and accordingly consolidated the Operating Partnership. As a result, substantially all of the Trust’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Trust’s debt is an obligation of the Operating Partnership, and the Trust guarantees the unsecured debt obligations of the Operating Partnership. The Trust may acquire property using a reverse like-kind exchange structure (a “Reverse 1031 Like-Kind Exchange”) under the Code to defer taxable gains on the subsequent sale of real estate property. As such, the acquired property (the “Parked Property”) remains in the possession of a VIE whose legal equity interests are owned by a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the subsequent sale transaction and the Reverse 1031 Like-Kind Exchange are completed. Although the VIE is legally owned by the qualified intermediary, the Trust retains essentially all of the legal and economic benefits and obligations related to the VIE (which holds the legal title to the Parked Property prior to the completion of the Reverse 1031 Like-Kind Exchange) and, as its designated manager, has the key decision-making power over the Parked Property. The VIE (including the Parked Property) is included in the Trust’s consolidated financial statements as a consolidated VIE until legal title is transferred to the Trust upon completion of the Reverse 1031 Like-Kind Exchange.

Concentration of Credit Risk

Our cash balances are maintained in various bank deposit accounts. The bank deposit amounts in these accounts may exceed federally insured limits at various times throughout the year.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Real Estate Investments

Real estate investments are recorded at cost less accumulated depreciation.  Ordinary repairs and maintenance are expensed as incurred.

The Trust allocates the purchase price of each acquired investment property accounted for as an asset acquisition based upon the relative acquisition date fair value of the individual assets acquired and liabilities assumed, which generally include (i) land, (ii) building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above and below market lease intangibles, and (v) assumed financing that is determined to be above or below market, if any. Transaction costs related to acquisitions accounted for as asset acquisitions are capitalized as incurred and included as a cost of the building in the accompanying balance sheet.

Furniture and fixtures are stated at cost less accumulated depreciation. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for routine maintenance and repairs, which do not add to the value or extend useful lives, are charged to expense as incurred.

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

Depreciation is provided for over the estimated useful lives of the individual assets using the straight-line method over the following estimated useful lives:

Buildings and improvements	40 years
Furniture, fixtures and equipment	5-9 years

The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each reporting period, the Trust separately determines whether impairment indicators exist for each property.

Examples of situations considered to be impairment indicators include, but are not limited to:

o a substantial decline or negative cash flows;

o continued low occupancy rates;

o continued difficulty in leasing space;

o significant financially troubled tenants;

o a change in plan to sell a property prior to the end of its useful life or holding period;

o a significant decrease in market price not in line with general market trends; and

o any other quantitative or qualitative events or factors deemed significant by the Trust’s management or Board of Trustees.

If the presence of one or more impairment indicators as described above is identified with respect to an investment property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered to be impaired when the estimated future undiscounted cash flows are less than its current carrying value.  When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes complex or subjective assumptions which include, but are not limited to:

o projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, demographics, holding period and property location;

o projected capital expenditures;

o projected cash flows from the eventual disposition of an operating property using a property specific capitalization rate;

o comparable selling prices; and

o property specific discount rates for fair value estimates as necessary.

To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its fair value for impairment of real estate investments.

Based on evaluation, there were was one impairment loss of $561 during the year ended December 31, 2022. There were no impairment losses during the years ended December 2021 and 2020.

Cash and Cash Equivalents and Restricted Deposits

We classify highly liquid investments with a maturity of three months or less when purchased as cash equivalents. Restricted deposits include funds escrowed for tenant security deposits, real estate tax, insurance and mortgage escrows and escrow deposits required by lenders on certain properties to be used for future building renovations or tenant improvements. As of December 31, 2022 and December 31, 2021, the Trust did not hold any U.S. Treasury Bills ‘Securities’ in cash and cash equivalents. As of December 31, 2022, all U.S. Treasury Bills are classified as Level 1 investments in the fair value hierarchy.

Investments in U.S. Treasury Bills

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

Treasury Bills are short-term debt obligations with maturities of one year or less issued by the U.S. Treasury Department and backed by the U.S. Government. Treasury Bills yield no interest, but are issued at a discount to the redemption price. We classify our investments in U.S. Treasury Bills as investments in securities. We use quoted market prices to determine the fair value of our investments in U.S. Treasury Bills.

Investment in Unconsolidated Affiliates

We account for unconsolidated affiliates using the equity method of accounting per guidance established under ASC 323, Investments – Equity Method and Joint Ventures (“ASC 323”). The equity method of accounting requires the investment to be initially recorded at cost and subsequently adjusted for our share of equity in the affiliates’ earnings (losses), contributions and distributions. We evaluate the carrying amount of the investments for impairment in accordance with ASC 323. Unconsolidated affiliates are reviewed for potential impairment if the carrying amount of the investment exceeds its fair value. An impairment charge is recorded when an impairment is deemed to be other-than-temporary. To determine whether impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until the carrying amount is fully recovered. The evaluation of an investment in an affiliate for potential impairment can require our management to exercise significant judgments. No impairment losses were recorded related to the unconsolidated affiliates for the years ended December 31, 2022, 2021 and 2020.

Other Assets

Other assets are comprised of the following as of December 31, 2022 and 2021:

	December 31, 2022		December 31, 2021
	(in thousands)
Due from related party	$	50	$	336
Accounts receivable, net		5,821		5,342
Insurance claim receivable		3,846		145
Fair value of interest rate swap		13,782		698
Other assets		181		192
Financing fees, less accumulated amortization		86		18
Lease costs, less accumulated amortization		1,799		2,065
Prepaid expenses		1,747		1,506
Total other assets, net	$	27,312	$	10,302

Note receivable,

Notes receivable are issued periodically and are secured and interest bearing. The Trust has one note receivable for a commercial tenant  bearing a 6.5% per annum interest rate which matures in 2025.

Accrued Expenses and Other liabilities

Accrued Expenses and other liabilities are comprised of the following as of December 31, 2022 and 2021:

	December 31, 2022		December 31, 2021
	(in thousands)
Special assessments payable	$	647	$	690
Due to related party		1,408		473
Accounts payable - trade		2,340		3,272
Retainage payable		3		86

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

Fair value of interest rate swap		—		1,648
Deferred insurance proceeds		2		476
Accrued interest expense		1,318		1,323
Accrued real estate taxes		7,275		6,653
Accrued unearned rent		2,936		3,055
Other liabilities		146		928
Total accrued expenses and other liabilities	$	16,075	$	18,604

Debt Issuance Costs

We amortize external debt issuance costs related to notes and mortgage notes using the effective interest rate method, over the life term of the related debt. We record debt issuance costs net of amortization, on our consolidated balance sheets as an offset to their related debt. We record debt issuance costs related to revolving lines of credit as financing fees in other assets, regardless of whether a balance on the line of credit is outstanding. We record the amortization of all debt issuance costs as interest expense.

Noncontrolling Interest

A noncontrolling interest in a subsidiary (minority interest) is in most cases an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements and separate from the parent company’s equity.  In addition, consolidated net income is required to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest, and the amount of consolidated net income attributable to the parent and the noncontrolling interest are required to be disclosed on the face of the consolidated statements of operations and other comprehensive income.  

Operating Partnership: Interests in the operating partnership held by limited partners are represented by operating partnership units.  The operating partnership’s income is allocated to holders of units based upon the ratio of their holdings to the total units outstanding during the period. Capital contributions, distributions, syndication costs, and profits and losses are allocated to noncontrolling interests in accordance with the terms of the operating partnership agreement.

Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Trust that are not wholly owned by the Trust.  The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interest in partially owned properties in the consolidated statements of operations and other comprehensive income.

Federal Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code, as amended. A REIT calculates taxable income like other domestic corporations, with the major difference being a REIT is entitled to a deduction for dividends paid. A REIT is generally required to distribute each year at least 90% of its taxable income. If it chooses to retain the remaining 10% of taxable income, it may do so, but it will be subject to a corporate tax on such income. REIT shareholders are taxed on REIT distributions similar to corporate distributions.

A summary of the tax characterization of the dividends paid to shareholders of the Company’s common stock for the years ended December 31, 2022, 2021 and 2020 follows:

	Tax Year Ended December 31,
	Dividend		%		Dividend		%		Dividend		%
	2022		2022		2021		2021		2020		2020
Tax status
Ordinary income	$	0.6374	55.43	%	$	0.9833	92.76	%	$	0.8994	84.95	%
Capital gain		—	—	%		0.0767	7.24	%		—	—	%
Return of capital		0.5126	44.57	%		—	—	%		0.1593	15.05	%
	$	1.1500	100.00	%	$	1.0600	100.00	%	$	1.0587	100.00	%

64

STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

We intend to continue to qualify as a REIT and, provided we maintain such status, will not be taxed on the portion of the income that is distributed to shareholders. In addition, we intend to distribute all our taxable income; therefore, no provisions or liabilities for income taxes have been recorded in the consolidated financial statements.

Sterling conducts its business activity as an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) through its Operating Partnership – Sterling Properties, LLLP. The Operating Partnership is organized as a limited liability limited partnership. Income or loss is allocated to the partners in accordance with the provisions of the Internal Revenue Code 704(b) and 704(c). UPREIT status allows non-recognition of gain by an owner of appreciated real estate if that owner contributes the real estate to a partnership in exchange for a partnership interest. The conversion of a partnership interest to shares of beneficial interest in the REIT will be a taxable event to the limited partner.

We follow ASC Topic 740, Income Taxes, to recognize, measure, present and disclose in our consolidated financial statements uncertain tax positions that we have taken or expect to take on a tax return. As of December 31, 2022 and 2021 we did not have any liabilities for uncertain tax positions that we believe should be recognized in our consolidated financial statements. We are no longer subject to Federal and State tax examinations by tax authorities for years before 2019.

The operating partnership has elected to record related interest and penalties, if any, as income tax expense on the consolidated statements of operations and other comprehensive income.

Revenue Recognition

We record base rents on a straight-line basis. The monthly base rent income according to the terms of our leases is adjusted with the purpose that average monthly rent is recorded for each tenant over the term of its lease. The straight-line rent adjustment increased revenue by $302 and $550 for the years ended December 31, 2022 and 2021, respectively. The straight-line receivable balance included in receivables on the consolidated balance sheets as of December 31, 2022 and 2021, was $3,756 and $3,569, respectively. We receive payments for expense reimbursements from substantially all our multi-tenant commercial tenants throughout the year based on estimated. The Trust is the lessor for its residential and commercial leases. Leases are analyzed on an individual basis to determine lease classification. As of December 31, 2022, all leases analyzed under the Trust’s lease classification process were determined to be operating leases.

Earnings per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders (the “numerator”) by the weighted average number of common shares outstanding (the “denominator”) during the period. Sterling had no dilutive potential common shares as of December 31, 2022, 2021 and 2020 and therefore, basic earnings per common share was equal to diluted earnings per common share for both periods. As the calculation does not include net income attributable to the Operating Partnership, Operating Partnership Units are not included in the calculation, and does not have any impact on earnings per share.

For the years ended December 31, 2022, 2021 and 2020, Sterling’s denominators for the basic and diluted earnings per common share were approximately 10,632,000, 10,160,000, and 9,694,000, respectively.

Reclassifications

Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year’s presentation.  These reclassifications have not changed the results of operations or equity.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements.

65

STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

NOTE 3 – segment reporting

We report our results in two reportable segments: residential and commercial properties. Our residential properties include multifamily properties. Our commercial properties include retail, office, industrial, and medical properties. We assess and measure operating results based on net operating income (“NOI”), which we define as total real estate revenues less real estate expenses (which consist of real estate taxes, property management fees, utilities, repairs and maintenance, insurance and direct administrative costs). We believe NOI is an important measure of operating performance even though it should not be considered an alternative to net income or cash flow from operating activities.

Segment Revenues and Net Operating Income

The revenues and net operating income for the reportable segments (residential and commercial) are summarized as follows for the years ended December 31, 2022, 2021 and 2020, along with reconciliations to the consolidated financial statements. Segment assets are also reconciled to Total Assets as reported in the consolidated financial statements for the years ended December 31, 2022 and 2021.

	Year ended December 31, 2022						Year ended December 31, 2021						Year ended December 31, 2020
	Residential		Commercial		Total		Residential		Commercial		Total		Residential		Commercial		Total
	(in thousands)						(in thousands)						(in thousands)
Income from rental operations	$	113,968	$	21,092	$	135,060	$	107,284	$	22,040	$	129,324	$	98,576	$	26,040	$	124,616
Expenses from rental operations		64,647		6,491		71,138		57,454		7,315		64,769		52,686		6,883		59,569
Net operating income	$	49,321	$	14,601	$	63,922	$	49,830	$	14,725	$	64,555	$	45,890	$	19,157	$	65,047
Depreciation and amortization						24,679						22,203						21,214
Interest						19,994						18,142						17,097
Administration of REIT						5,247						4,381						4,217
Other income						(10,530)						(4,609)						(4,461)
Net income					$	24,532					$	24,438					$	26,980

Segment Assets and Accumulated Depreciation

As of December 31, 2022	Residential		Commercial		Total
	(in thousands)
Real estate investments	$	779,424	$	191,724	$	971,148
Accumulated depreciation		(147,115)		(47,734)		(194,849)
Total real estate investments, net	$	632,309	$	143,990	$	776,299
Lease intangible assets, less accumulated amortization		839		4,451		5,290
Cash and cash equivalents						3,257
Restricted deposits						9,323
Investment in securities						29,371
Investment in unconsolidated affiliates						29,423
Notes receivable						8,448
Other assets, net						27,312
Total Assets					$	888,723

66

STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

As of December 31, 2021	Residential		Commercial		Total
	(in thousands)
Real estate investments	$	692,722	$	203,980	$	896,702
Accumulated depreciation		(133,100)		(46,055)		(179,155)
Total real estate investments, net	$	559,622	$	157,925	$	717,547
Lease intangible assets, less accumulated amortization		—		6,246		6,246
Cash and cash equivalents						51,507
Restricted deposits						9,149
Investment in unconsolidated affiliates						18,658
Notes receivable						7,457
Other assets, net						10,302
Total Assets					$	820,866

NOTE 4 - RESTRICTED DEPOSITS AND FUNDED RESERVES

	As of December 31,		As of December 31,
	2022		2021
	(in thousands)
Tenant security deposits	$	6,242	$	5,165
Real estate tax and insurance escrows		1,336		1,355
Replacement reserves		1,745		1,791
Other funded reserves		—		838
	$	9,323	$	9,149

NOTE 5 – Investment in unconsolidated affiliates

			Total Investment in Unconsolidated Affiliates at
Unconsolidated Affiliates	Date Acquired	Trust Ownership Interest	December 31, 2022		December 31, 2021
Banner Building	2007	66.67%	$	(614)	$	60
Grand Forks INREIT, LLC	2003	50%		4,961		2,493
SE Savage, LLC	2019	60%		1,660		2,946
SE Maple Grove, LLC	2019	60%		1,836		2,823
SE Rogers, LLC	2020	60%		2,413		2,986
ST Oak Cliff, LLC	2021	70%		9,098		4,324
SE Brooklyn Park, LLC	2021	60%		2,914		3,026
SE Fossil Creek, LLC	2022	70%		7,155		-
			$	29,423	$	18,658

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 a balance at December 31, 2022 and 2021 of $6,951 and $6,329, respectively. The Trust is jointly and severally liable for the full mortgage balance.

The operating partnership is a 50% owner of a 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 non-recourse first mortgage with a balance at December 31, 2022 and 2021 of $9,520 and $9,794, respectively. The Trust is jointly and severally liable for the full mortgage balance.

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

The Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The property is encumbered by a first mortgage with a balance of $30,726 at December 31, 2022. The Trust is jointly and severally liable for the full mortgage balance. At December 31, 2021, the property was encumbered by a first mortgage of $26,210, and a second mortgage to Sterling Properties, LLLP of $6,129. Additionally, at December 31, 2022, SE Savage, LLC has an outstanding Promissory Note with Sterling Properties, LLLP, for $1,397, and is an unsecured obligation of SE Savage, LLC. The note is considered to be additional at-risk funds to the Operating Partnership, in SE Savage, LLC, and is included in Notes Receivable on the Consolidated Balance Sheet at December 31, 2022.

The Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The entity is encumbered by a first mortgage with a balance at both December 31, 2022 and December 31, 2021 of $24,788.  The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance at December 31, 2022 and December 31, 2021 of $3,643 and $727, respectively.

The Operating Partnership owns a 60% interest in a limited liability company that is currently developing a multifamily property. The LLC holds land located in Rogers, Minnesota, with total assets of $32,864 and $22,847 at December 31, 2022 and December 31, 2021, respectively.  The entity encumbered by a first mortgage has a balance of $25,742 and $15,688 at December 31, 2022 and December 31, 2021, respectively. The Company is jointly and severally liable for the full mortgage balance. The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance at December 31, 2022 of $2,938.

The Operating Partnership owns a 70% interest in a limited liability company, with a related party. The entity is currently developing a multifamily property. As of December 31, 2022, the Operating Partnership has contributed $9,300 in cash to the entity. The entity holds land located in Dallas, Texas with total assets of $40,404 and $7,394 at December 31, 2022 and December 31, 2021, respectively. The entity is encumbered by a construction mortgage with a balance of $23,409 at December 31, 2022. There was no balance outstanding related to the construction mortgage at December 31, 2021. The Company is jointly and severally liable for the full mortgage balance.

The Operating Partnership owns a 60% interest in a limited liability company, with an unrelated third party. The entity is currently developing a multifamily property. The entity is located in Brooklyn Park, Minnesota, with total assets of $30,490 and $5,478 at December 31, 2022 and December 31, 2021, respectively. The entity is encumbered by a first mortgage that has a balance of $24,448 at December 31, 2022.  There was no balance outstanding related to the first mortgage at December 31, 2021. The Company is jointly and severally liable for the full mortgage balance.

During the second quarter of 2022, the Operating Partnership entered into a joint venture arrangement. Through the joint venture, the Operating Partnership owns a 70% interest in a limited liability company, with a related party. The entity is currently developing a multifamily property. As of December 31, 2022, the Operating Partnership has contributed $7,190 in cash to the entity. The entity holds land located in Fort Worth, Texas with total assets of $11,083 at December 31, 2022.

The following is a summary of the financial position of the unconsolidated affiliates at December 31, 2022 and 2021.

	December 31, 2022		December 31, 2021
	(in thousands)
ASSETS
Real estate investments	$	218,747	$	134,839
Accumulated depreciation		(16,490)		(10,940)
		202,257		123,899
Cash and cash equivalents		3,093		1,131
Restricted deposits		1,034		650
Intangible assets, less accumulated amortization		542		41
Other assets, net		827		909
Total Assets	$	207,753	$	126,630

68

STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

LIABILITIES
Mortgage notes payable, net	$	152,246	$	87,996
Tenant security deposits payable		192		108
Accrued expenses and other liabilities		8,217		8,029
Total Liabilities	$	160,655	$	96,133
SHAREHOLDERS' EQUITY
Total Shareholders' Equity	$	47,098	$	30,497
Total liabilities and shareholders' equity	$	207,753	$	126,630

The following is a summary of results of operations of the unconsolidated affiliates for the years ended the years ended December 31, 2022, 2021 and 2020.

	The year ended December 31,
	2022		2021		2020
	(in thousands)
Income from rental operations	$	9,545	$	4,746	$	3,001
Expenses from rental operations		3,668		1,632		928
Net operating income	$	5,877	$	3,114	$	2,073
Depreciation and Amortization		5,678		1,248		688
Interest		4,148		2,275		970
Other Income		(91)		-		(24)
Net (loss) income	$	(3,858)	$	(409)	$	439

NOTE 6 - Lease intangibles

The following table summarizes the net value of other intangible assets and liabilities and the accumulated amortization for each class of intangible:

	Lease		Accumulated		Lease
As of December 31, 2022	Intangibles		Amortization		Intangibles, net
Lease Intangible Assets	(in thousands)
In-place leases	$	15,528	$	(10,960)	$	4,568
Above-market leases		1,897		(1,175)		722
	$	17,425	$	(12,135)	$	5,290
Lease Intangible Liabilities
Below-market leases	$	(2,379)	$	1,733	$	(646)

	Lease		Accumulated		Lease
As of December 31, 2021	Intangibles		Amortization		Intangibles, net
Lease Intangible Assets	(in thousands)
In-place leases	$	15,455	$	(10,381)	$	5,074
Above-market leases		2,617		(1,445)		1,172
	$	18,072	$	(11,826)	$	6,246
Lease Intangible Liabilities
Below-market leases	$	(2,525)	$	1,714	$	(811)

69

STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

The estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter is as follows:

	Intangible		Intangible
Years ending December 31,	Assets		Liabilities
	(in thousands)
2023	$	1,597	$	151
2024		757		151
2025		757		151
2026		606		80
2027		498		42
Thereafter		1,075		71
	$	5,290	$	646

The weighted average amortization period for the intangible assets (in-place leases, above-market leases) and intangible liabilities (below-market leases) acquired as of December 31, 2022 was 2.9 years.

The portion of the purchase price allocated to acquire above and below market lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment to rental income. Amortization pertaining to above market lease intangibles of $145, $154, and $186 for the years ended December 31, 2022, 2021 and 2020, respectively, was recorded as a reduction to income from rental operations. Amortization pertaining to below market lease intangibles of $164, $183, and $213 for the years ended December 31, 2022, 2021 and 2020, respectively, was recorded as an increase to income from rental operations.

NOTE 7 – LINES OF CREDIT

We have a $4,915 variable rate (floating SOFR plus 2.00%) line of credit agreement with Bremer Bank, which expires in December 2026; and a $5,000 variable rate (floating SOFR plus 2.00%) line of credit agreement with Bremer Bank, which expires December 2026. The lines of credit are secured by specific properties. At December 31, 2022, the Bremer line of credit secures one letter of credit totaling $50, leaving $8,857 available and unused under the agreements. These operating lines are designed to enhance treasury management activities and more effectively manage cash balances. As of December 31, 2022 and December 31, 2021, there was a balance of $1,008 and $-, respectively.

Certain lines of credit agreements include covenants that, in part, impose maintenance of certain debt service coverage, debt to net worth ratios, and debt yield ratios. As of December 31, 2022 and 2021, no properties were out of compliance.

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

NOTE 8 - NOTES PAYABLE

On December 29, 2022, the Trust entered into a $26,500 note payable. The note payable bears interest at a rate of one percentage point under the “Prime Rate” as published in the Wall Street Journal, with principal plus accrued and unpaid interest due and payable on February 1, 2023. The Borrower may prepay the New Promissory Note without penalty. As of December 31, 2021, the Trust did not have any outstanding balances on notes payable.

The following table summarizes the Company’s mortgage notes payable.  

	Principal Balance At
	December 31,		December 31,
	2022		2021
	(in thousands)
Fixed rate mortgage notes payable (a)	$	508,305	$	490,413
Variable rate mortgage notes payable		-		5,237
Mortgage notes payable		508,305		495,650
Less unamortized debt issuance costs		2,138		2,508
	$	506,167	$	493,142

(a) Includes $106,033 and $108,734 of variable rate mortgage debt that was swapped to a fixed rate as of December 31, 2022 and 2021, respectively.

As of December 31, 2022, we had 115 fixed rate mortgage loan with effective interest rates ranging from 2.43% to 6.85% per annum, and a weighted average effective interest rate of 3.79% per annum.

As of December 31, 2021, we had 114 fixed rate and one variable rate mortgage loan with effective interest rates ranging from 2.09% to 6.85% per annum, and a weighted average effective interest rate of 3.83% per annum on fixed rate loans and 2.10% per annum on variable rate loans.

The majority of the Company’s mortgages payable require monthly payments of principal and interest. Certain mortgages require reserves for real estate taxes and certain other costs. Mortgages are secured by the respective properties, assignment of rents, business assets, deeds to secure debt, deeds of trust and/or cash deposits with the lender. Additionally, certain mortgage note agreements include covenants that, in part, impose maintenance of certain debt service coverage and debt to worth ratios. As of December 31, 2022, eight loans were out of compliance due to increased repair and maintenance costs related to unit renovations and increased utility costs. The loans were secured by various properties with a total outstanding balance of $17,687. Annual waivers were received from the lenders on all loans out of compliance as of December 31, 2022. As of December 31, 2021, five loans were out of compliance due increased repair and maintenance costs related to unit renovations, bad debt allowance, and increased vacancies in the North Dakota and Minnesota markets. The loans were secured by various properties with a total outstanding balance of $9,915. Annual waivers were received from the lenders on all loans out of compliance as of December 31, 2021.

We are required to make the following principal payments on our outstanding mortgage notes payable for each of the five succeeding fiscal years and thereafter as follows:

Years ending December 31,	Amount
	(in thousands)
2023	$	53,341
2024		22,376
2025		53,130
2026		45,546
2027		77,845
Thereafter		256,067
Total payments	$	508,305

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

NOTE 9 – DERIVATIVES AND HEDGING ACTIVITIES

As part of our interest rate risk management strategy, we have used interest rate derivatives to manage our exposure to interest rate movements and add stability to interest expense. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Trust making fixed rate payments over the life of the agreement without exchange of the underlying notional amount.

As of December 31, 2022, the Trust used 12 interest rate swaps to hedge the variable cash flows associated with variable rate debt. Changes in fair value of the derivatives that are designated and that qualify as cash flow hedges are recorded in “Accumulated other comprehensive (loss) income” and are reclassified into interest expense as interest payments are made on the Company’s variable rate debt. During the next 12 months, the Trust estimates that an additional $2,311 will be reclassified as a decrease to interest expense.

The following table summarizes the Trust’s interest rate swaps designated as cash flow hedges as of December 31, 2022:

			Fixed
Effective Date		Notional	Interest Rate	Maturity Date
November 1, 2019	$	6,575	3.15%	November 1, 2029
November 1, 2019	$	4,572	3.28%	November 1, 2029
January 10, 2020	$	2,979	3.39%	January 10, 2030
July 1, 2020	$	4,743	2.79%	June 10, 2030
December 2, 2020	$	12,362	2.91%	December 2, 2027
July 1, 2021	$	25,678	2.99%	July 1, 2031
November 10, 2021	$	28,047	3.54%	August 1, 2029
December 1, 2021	$	10,813	3.32%	December 1, 2031
August 15, 2022	$	1,491	3.07%	June 15, 2030
August 15, 2022	$	2,888	3.07%	June 15, 2030
August 15, 2022	$	1,614	2.94%	June 15, 2030
August 15, 2022	$	4,271	2.94%	June 15, 2030

The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:

	Number of Instruments			Notional
Interest Rate Derivatives	December 31, 2022	December 31, 2021		December 31, 2022		December 31, 2021
Interest rate swaps	12	12	$	106,033	$	108,734

The table below presents the estimated fair value of the Company’s derivative financial instruments as well as their classification in the accompanying consolidated balance sheets. The valuation techniques are described in Note 10 to the consolidated financial statements.

Derivatives designated as	December 31, 2022			December 31, 2021
cash flow hedges:	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Interest rate swaps	Other assets, net	$	13,782	Other assets, net	$	698
Interest rate swaps	Accrued expenses and other liabilities	$	—	Accrued expenses and other liabilities	$	1,648

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

The following table presents the effect of the Company’s derivative financial instruments on the accompanying consolidated statements of operations and other comprehensive income (loss) for the years ended December 31, 2022 and 2021:

			Location of Gain
		Amount of (Gain)/Loss	Reclassified from
Derivatives in		Recognized in Other	Accumulated other		Amount of (Gain)/Loss
Cash Flow Hedging		Comprehensive Income	Comprehensive Income		Reclassified from
Relationships		on Derivatives	(AOCI) into Income		AOCI into Income
		2022			2022
Interest rate swaps	$	(14,732)	Interest expense	$	94
		2021			2021
Interest rate swaps	$	(855)	Interest expense	$	670

Credit-risk-related Contingent Features

The Trust has agreements with each of its derivative counterparties that contain a provision whereby if the Trust defaults on the related indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Trust could also be declared in default on its corresponding derivative obligation. As of December 31, 2022, the termination value of derivatives in a liability position was $0 and the termination value of derivatives in an asset position was $13,782. As December 31, 2022, the Trust has pledged the properties related to the loans which are hedged as collateral.

NOTE 10 - FAIR VALUE MEASUREMENT

The following table presents the carrying value and estimated fair value of the Company’s financial instruments:

	December 31, 2022				December 31, 2021
	Carrying				Carrying
	Value		Fair Value		Value		Fair Value
	(in thousands)
Financial assets:
Investment in securities	$	29,371	$	29,371	$	—	$	—
Notes receivable	$	8,448	$	9,789	$	7,457	$	9,840
Derivative assets	$	13,782	$	13,782	$	698	$	698
Financial liabilities:
Mortgage notes payable	$	508,305	$	466,245	$	495,650	$	508,285
Derivative liabilities	$	—	$	—	$	1,648	$	1,648

The carrying values shown in the table are included in the consolidated balance sheets under the captions indicated in Note 10. ASC 820-10 established a three-level valuation hierarchy for fair value measurement.  Management uses these valuation techniques to establish the fair value of the assets at the measurement date. These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s assumptions.

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

These two types of inputs create the following fair value hierarchy:

● Level 1 – Quoted prices for identical instruments in active markets.

● Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose significant inputs are observable.

● Level 3 – Instruments whose significant inputs are unobservable.

The guidance requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Recurring Fair Value Measurements

The following table presents the Trust’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.

	Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2022
Derivative assets	$	—	$	13,782	$	—	$	13,782
December 31, 2021
Derivative assets	$	—	$	698	$	—	$	698
Derivative liabilities	$	—	$	1,648	$	—	$	1,648

Derivatives: The fair value of interest rate swaps is determined using a discounted cash flow analysis on the expected future cash flows of the derivative.

The Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements.

Fair Value Disclosures

The following table presents the Company’s financial assets and liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which they fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.

	Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2022
U.S. Treasury Bills	$	29,371	$	—	$	—	$	29,371
Mortgage notes payable	$	—	$	—	$	466,245	$	466,245
Notes receivable	$	—	$	—	$	9,789	$	9,789
December 31, 2021
Mortgage notes payable	$	—	$	—	$	508,285	$	508,285
Notes receivable	$	—	$	—	$	9,840	$	9,840

U.S. Treasury Bills: The Trust estimates the fair value of its Treasury Bills by using quoted market prices.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

Mortgage notes payable: The Trust estimates the fair value of its mortgage notes payable by discounting the future cash flows of each instrument at rates currently offered to the Trust for similar debt instruments of comparable maturities by the Trust’s lenders. The rates used range from 5.75% to 6.00% and from 3.25% to 3.35% December 31, 2022 and 2021, respectively.

Notes receivable: The Trust estimates the fair value of its notes receivable by discounting future cash flows of each instrument at rates currently offered to the Trust for similar note instruments of comparable maturities by the Trust’s lenders. The fair value rate ranged from 3.25% to 7.25% December 31, 2021 and 2022, respectively.

NOTE 11 – NONCONTROLLING INTEREST OF UNITHOLDERS IN OPERATING PARTNERSHIP

As of December 31, 2022 and 2021, outstanding limited partnership units totaled 18,730,000 and 18,212,000, respectively. Total aggregate distributions per unit for the years ended December 31, 2022, 2021 and 2020 were $1.1500, $1.0600 and $1.0587,  respectively. The operating partnership declared fourth quarter distributions of $5,385 and $4,827, to limited partners payable in January 2023 and 2022, respectively.  

During the year ended December 31, 2022, there were no limited partnership units of the operating partnership exchanged for common shares of the trust.

Provided the Trust’s redemption plan exists, and subject to the conditions and limitations contained in such redemption plan (including, without limitation, applicable holding periods and ownership limitations), and further subject to the conditions and limitations set forth in the LLLP Agreement of the Operating Partnership, a Limited Partner may request the redemption of its limited partnership units for cash (a “Redemption Request”) or the exchange of its limited partnership units for Sterling common shares (an “Exchange Request”). Such request must be made in accordance with the redemption plan. Upon receipt of any Redemption or Exchange Request, as the case may be, the Trust may, at its sole and absolute discretion, acting for itself or as General Partner of the Operating Partnership, elect to redeem or exchange such limited partnership units. The Trust may, in its sole discretion, terminate, amend or suspend the redemption plan if such action is determined to be in the best interest of the Operating Partnership.

NOTE 12 – REDEMPTION PLANS

Our Board of Trustees has approved redemption plans that enable our shareholders to sell their common shares and the partners of our operating partnership to sell their limited partnership units to us, after they have held the securities for at least one year and subject to other conditions and limitations described in the plans.

Our redemption plans currently provide that the maximum amount that can be redeemed under the plan is $55,000 worth of securities. As of December 31, 2022, there were $14,684 worth of securities left to be redeemed under the redemption plan. Currently, the fixed redemption price is $21.85 per share or unit under the plans which price became effective January 1, 2022. Prior to January 1, 2022, the redemption price was $19.00 per share or unit under the plan. Prior to January 1, 2021, the redemption price was $18.25 per share or unit under the plan.

We may redeem securities under the plans provided the aggregate total has not been exceeded if we have sufficient funds to do so. The plans will terminate in the event the shares become listed on any national securities exchange, the subject of bona fide quotes on any inter-dealer quotation system or electronic communications network or are the subject of bona fide quotes in the pink sheets. Additionally, the Board, in its sole discretion, may terminate, amend or suspend the redemption plans, either or both of them, if it determines to do so in its sole discretion.

During the years ended December 31, 2022, 2021 and 2020, the Company redeemed 53,000, 82,000 and 127,000 common shares valued at $1,155, $1,552 and $2,321, respectively. In addition, during the years ended December 31, 2022, 2021 and 2020, the Company redeemed 42,000, 211,000 and 66,000 units valued at $922, $4,014 and $1,216, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

NOTE 13 – BENEFICIAL INTEREST

We are authorized to issue 100,000,000 common shares of beneficial interest with $0.01 par value and 50,000,000 preferred shares with $0.01 par value, which collectively represent the beneficial interest of Sterling. As of December 31, 2022 and 2021, there were 10,810,000 and 10,342,000 common shares outstanding. We had no preferred shares outstanding as of either date.

Dividends paid to holders of common shares were $1.1500 per share, $1.0600 per share and $1.0587 per share for the years ended December 31, 2022, 2021 and 2020, respectively.

NOTE 14 – DIVIDEND REINVESTMENT PLAN

Our Board of Trustees approved a dividend reinvestment plan to provide existing holders of our common shares with a convenient method to purchase additional common shares without payment of brokerage commissions, fees or service charges. On July 20, 2012, we registered with the Securities Exchange Commission 2,000,000 common shares to be issued under the plan on Form S-3D, which automatically became effective on July 20, 2012. On July 11, 2017, we registered with the Securities Exchange Commission an additional 2,000,000 common shares to be issued under the plan on Form S-3D, which automatically became effective on July 11, 2017. On November 3, 2020, we registered with the Securities Exchange Commission an additional 2,000,000 common shares to be issued under the plan on Form S-3D, which automatically became effective on November 3, 2020.

Under this plan, eligible shareholders may elect to have all or a portion (but not less than 25%) of the cash dividends they receive automatically reinvested in our common shares. If an eligible shareholder elects to reinvest cash dividends under the plan, the shareholder may also make additional optional cash purchases of our common shares, not to exceed $10 per fiscal quarter without our prior approval. The purchase price per common share under the plan equals 95% of the estimated value per common share for dividend reinvestments and equals 100% of the estimated value per common share for additional optional cash purchases, as determined by our Board of Trustees. In addition, eligible shareholders may not in any calendar year purchase or receive via transfer more than $40 additional optional cash purchases of Common Shares.

The estimated value per common share was $23.00 and $20.00 at December 31, 2022 and 2021, respectively.

Therefore, the purchase price per common share for dividend reinvestments was $21.85 and $19.00 and for additional optional cash purchases was $23.00 and $20.00 at December 31, 2022 and 2021, respectively. The Board, in its sole discretion, may amend, suspend or terminate the plan at any time, without the consent of shareholders, upon a ten-day notice to participants.

In the year ended December 31, 2022, 342,000 shares were issued pursuant to dividend reinvestments and 177,000 shares were issued pursuant to additional optional cash purchases under the plan. In the year ended December 31, 2021, 363,000 shares were issued pursuant to dividend reinvestments and 203,000 shares were issued pursuant to additional optional cash purchases under the plan. In the year ended December 31, 2020, 356,000 shares were issued pursuant to dividend reinvestments and 187,000 shares were issued pursuant to additional optional cash purchases under the plan.

NOTE 15 – RELATED PARTY TRANSACTIONS

Effective January 1, 2021, Trustmark Enterprises, Inc. was formed to act as the holding company for Sterling Management, LLC and GOLDMARK Property Management, Inc. In connection with this restructuring transaction, the owners of Trustmark Enterprises, Inc. indirectly own Sterling Management, LLC and GOLDMARK Property Management, Inc. Trustmark Enterprises, Inc. is owned in part by the Trust’s Chief Executive Officer and Trustee Mr. Kenneth P. Regan, by Trustee Mr. James S. Wieland, and by President Joel S.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

Thomsen. In addition, Mr. Regan serves as the Executive Chairman of the Advisor, and Messrs. Wieland, and Thomsen serve on the Board of Governors of both the Advisor and GOLDMARK Property Management, Inc.

Sterling Management, LLC (the “Advisor”), is a North Dakota limited liability company formed in November 2002. The Advisor is responsible for managing day-to-day affairs, overseeing capital projects, and identifying, acquiring, and disposing investments on behalf of the trust.

GOLDMARK Property Management, Inc., is a North Dakota corporation formed in 1981. GOLDMARK Property Management, Inc. performs property management services for the Trust.

We have a historical and ongoing relationship with Bell Bank. Bell Bank has provided the Trust certain financial services throughout the relationship. Mr. Wieland, a Trustee, also serves as a Board Member of Bell Bank. Mr. Wieland could have an indirect material interest in any such engagement and related transactions.

The Trust has a historical and ongoing relationship with Trumont Group and Trumont Construction. Trumont Group provides development services for current joint venture projects in which the Operating Partnership is an investor. Trumont Construction has been engaged to construct the properties associated with these joint ventures. Mr. Regan, Chief Executive Officer and trustee, is a partner in both Trumont Group and Trumont Construction and has a direct material interest in any engagement or related transaction, the Trust enters into, with these entities.

Property Management Fee

During the years ended December 31, 2022, 2021 and 2020, we paid property management and administrative fees to GOLDMARK Property Management, Inc. of $13,833, $12,836, and $12,796, respectively. Management fees which approximate 5% of net collected rents, account for $5,499, $5,271, and $4,851 of these fees during the years ended December 31, 2022, 2021 and 2020. In addition, during the years ended December 31, 2022, 2021, and 2020, we paid repair and maintenance expenses, and payroll related expenses to GOLDMARK Property Management, Inc. totaling $7,744, $6,536, and $6,549, respectively

Advisory Agreement

We are an externally managed trust and as such, although we have a Board of Trustees and executive officers responsible for our management, we have no paid employees. The Advisor may receive fees related to management of the Trust, acquiring, disposing, or developing real estate property, project management fees, and financing fees related to lending relationships, under the Advisory Agreement, which must be renewed on an annual basis and approved by a majority of the independent trustees. The Advisory Agreement was approved by the Board of Trustees (including all the independent Trustees) on March 24, 2022, and is effective until March 31, 2023.

The below table summarizes the fees incurred to our Advisor.

	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Fee:
Advisory	$	3,683	$	3,348	$	3,116
Acquisition	$	1,321	$	375	$	708
Disposition	$	703	$	146	$	319
Financing	$	83	$	224	$	133
Project Management	$	450	$	572	$	365

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

The below table summarizes the fees payable to our Advisor.

	Payable at
	December 31,		December 31,
	2022		2021
	(in thousands)
Fee:
Advisory	$	632	$	296
Acquisition	$	387	$	-
Development	$	-	$	79
Disposition	$	72	$	-
Financing	$	-	$	38
Project Management	$	12	$	98

Operating Partnership Units Issued in Connection with Acquisitions

During the year ended December 31, 2022, 510,000 Operating Partnership units were issued to an entity affiliated with Messrs. Regan and Wieland, two of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $11,741.

During the year ended December 31, 2021, there were no Operating Partnership units issued directly or indirectly, to affiliated entities.  

During the year ended December 31, 2020, 208,000 Operating Partnership units were issued to an entity affiliated with Messrs. Regan and Wieland, two of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $4,671.

Commissions

During the years ended December 31, 2022, 2021 and 2020, we incurred real estate commissions of $567, $312, and $633, respectively, to GOLDMARK Commercial Real Estate, Inc., in which Messrs. Regan and Wieland jointly own a controlling interest. As of December 31, 2022, there were commissions of $183 payable to GOLDMARK Commercial Real Estate. As of December 2021 and 2020, there were no unpaid commissions to GOLDMARK Commercial Real Estate.

During the years ended December 31, 2022, 2021 and 2020, we incurred real estate commissions of $418, $217, and $308, respectively to GOLDMARK Property Management. As of December 31, 2022, there were commissions of $92 payable to GOLDMARK Property Management. As of December 31, 2021 and 2020 there were no unpaid commissions to GOLDMARK Property Management.

Rental Income

During the years ended December 31, 2022, 2021 and 2020, we received rental income of $130, $106, and $85, respectively, under an operating lease agreement with our Advisor.

During the years ended December 31, 2022, 2021 and 2020, we received no rental income, $19, and $57, respectively, under an operating lease agreement with GOLDMARK Commercial Real Estate, Inc.

During the years ended December 31, 2022, 2021 and 2020, we received rental income of $267, $294, and $268, respectively, under operating lease agreements with GOLDMARK Property Management, Inc.

During the years ended December 31, 2022, 2021 and 2020, we received rental income of $859, $404, and $484, respectively, under operating lease agreements with Bell Bank.

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

Other operational costs

During the years ended December 31, 2022, 2021 and 2020, the Trust incurred $207, $276, and $240, respectively, for general costs related to business operations as well as capital expenditures related to construction in progress that were paid to related parties. At December 31, 2022 and 2021, there were no operational outstanding liabilities and $128, respectively.

During the years ended December 31, 2022 and 2020, the Trust received did not receive related parties reimbursement for expenses paid that were associated with capital projects. During the year ended December 31, 2021, the Trust received $1,000 from related parties for reimbursement for expenses paid that were associated with capital projects. No reimbursements for operational receivables were received during the year ended December 31, 2022. At December 31, 2022, operational receivables outstanding due from related parties was $50 and $336, respectively.

Debt Financing

At December 31, 2022 and 2021, the Trust had $64,123 and $66,365, respectively, of outstanding principal on loans entered into with Bell Bank. During the years ended December 31, 2022, 2021 and 2020, the Trust incurred interest expense on debt held with Bell Bank of $2,480, $2,508, and $2,438, respectively. Accrued interest at December 31, 2022 and 2021, related to this debt was $130 and $148, respectively.

A December 31, 2022 and 2021, the Trust had $26,500 and $-, respectively, of outstanding principal on notes payable entered into with Bell Bank. During the years ended December 31, 2022, 2021 and 2020, the Trust did not incur interest expense on note payable held with Bell Bank.

Mezzanine Financing

The Trust offers mezzanine financing to joint ventures, see note 5 for investment in unconsolidated affiliates.

As of December 31, 2022 and 2021, Sterling issued $5,854 and $6,855, respectively, in second mortgage financing to related entities.

During the years ended December 31, 2022 and 2021, the Trust earned interest income of $350 and $212, respectively, related to the second mortgage financing. No interest income was earned during the year ended December 31, 2020.

Insurance Services

The Trust retains insurance services from Bell Insurance. Policies provided by these services provide insurance coverage for the Trust’s Commercial segment as well as Director and Officer general and liability coverage. At December 31, 2022, 2021, and 2020 total premiums incurred for this policy were $48, $166 and $118, respectively.

Tenant Improvement Arrangements

During the year ended December 31, 2021, the Trust paid $2,782 in tenant improvement costs associated with a lease agreement with Trustmark Enterprises, Inc. There were no tenant improvement costs incurred during the years ended December 31, 2022 and 2020. At December 31, 2022, no costs were owed to related parties for tenant improvement costs.

Development Arrangements

Effective August 25, 2021, The Trust purchased a 70% interest in ST Oak Cliff Dallas, LLC. The purpose of the entity is to develop and construct a 318-unit multifamily property located in Dallas, Texas. The partnering investee, TG Oak Cliff Dallas, LLC is owned in part by Kenneth P. Regan, the Trust’s Chief Executive Officer and Trustee. Mr. Regan is also a partner in Trumont Group, the developer

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

engaged by ST Oak Cliff Dallas, LLC to oversee the development of the property. Further, Mr. Regan is also a partner in Trumont Construction, the company who was engaged to oversee the day-to-day construction operations of the property.

During the years ended December 31, 2022 and 2021, the Trust incurred and paid $411 and $256, respectively, in development fees to Trumont Group. No such fees were paid during the year ended December 31, 2020. At December 31, 2022 the Trust owed $- and $51, respectively, in development fees to Trumont Group.

During the years ended December 31, 2022 and 2021, the Trust incurred and paid $799 and $71, respectively, in construction fees to Trumont Construction. No such fees were paid during the year ended December 31, 2020. At December 31, 2022 the Trust owed $71 and $29, respectively, in construction fees to Trumont Construction.

During the years ended December 31, 2022 and 2021, the Trust incurred and paid $639 and $41, respectively, in general construction costs to Trumont Construction. No such fees were paid during the year ended December 31, 2020. At December 31, 2022 there was $81 of general construction costs were owed to Trumont Construction. At December 31, 2021, no general construction costs were owed to Trumont Construction.

NOTE 16 - RENTALS UNDER OPERATING LEASES / RENTAL INCOME

Residential apartment units are rented to individual tenants with lease terms of one year or less.

Commercial properties are leased to tenants under terms expiring at various dates through 2038. Lease terms often include renewal options.

As of December 31, 2022, we derived 84.4% of our revenues from residential leases that are generally for terms of one-year or less. The residential leases may include lease income related to such items as parking, storage and non-refundable deposits that we treat as a single lease component because amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore we subsequently recognize lease income over the lease term on a straight-line basis.  Residential leases are renewable upon consent of both parties on an annual or monthly basis.

As of December 31, 2022, we derived 15.6% of our revenues from commercial leases primarily under long-term lease agreements.  Substantially all commercial leases contain fixed escalations, or, in some instances, changes based on the Consumer Price Index, which occur at specified times during the term of the lease. In certain commercial leases, variable lease income, such as percentage rent, is recognized when rents are earned. We recognize rental income and rental abatements from our commercial leases on a straight-line basis over the lease term. Recognition of rental income commences when control of the leased space has been transferred to the tenant.

We recognize variable income from pass-through expenses on an accrual basis over the periods in which the expenses were incurred. Pass-through expenses are comprised of real estate taxes, operating expenses and common area maintenance costs which are reimbursed by tenants in accordance with specific allowable costs per tenant lease agreements. When we pay pass-through expenses, subject to reimbursement by the tenant, they are included within operating expenses, excluding real estate taxes, and reimbursements are included within “real estate rental income” along with the associated base rent in the accompanying consolidated financial statements.

We record base rents on a straight-line basis. The monthly base rent income according to the terms of our leases is adjusted so that an average monthly rent is recorded for each tenant over the term of its lease. The straight-line rent adjustment increased revenue by $302 for the year ended December 31, 2022, and increased revenue by $550 for the year ended December 31, 2021. The straight-line receivable balance included in other assets on the consolidated balance sheets as of the years ended December 31, 2022 and 2021 was $3,756 and $3,569 respectively. We receive payments for expense reimbursements from substantially all our multi-tenant commercial tenants throughout the year based on estimates.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

Lease income related to the Trust’s operating leases is comprised of the following:

	Year ended December 31, 2022
	Residential		Commercial		Total
	(in thousands)
Lease income related to fixed lease payments	$	109,769	$	16,091	$	125,860
Lease income related to variable lease payments		—		4,510		4,510
Other (a)		(804)		332		(472)
Lease Income (b)	$	108,965	$	20,933	$	129,898

(a) For the year ended December 31, 2022, “Other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements.

(b) Excludes other rental income for the year ended December 31, 2022, of $5,162, which is accounted for under the revenue recognition standard.

	Year ended December 31, 2021
	Residential		Commercial		Total
	(in thousands)
Lease income related to fixed lease payments	$	103,039	$	16,490	$	119,529
Lease income related to variable lease payments		—		4,576		4,576
Other (c)		(538)		630		92
Lease Income (d)	$	102,501	$	21,696	$	124,197

(c) For the year ended December 31, 2021, “Other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements.

(d) Excludes other rental income for the year ended December 31, 2021, of $5,127, which is accounted for under the revenue recognition standard.

Commercial space is rented under long-term agreements. Minimum future rentals on non-cancelable operating leases as of December 31, 2022 are as follows:

Years ending December 31,	Amount
	(in thousands)
2023	$	15,216
2024		14,940
2025		14,556
2026		13,156
2027		11,719
Thereafter		42,734
	$	112,321

NOTE 17 - COMMITMENTS AND CONTINGENCIES

Environmental Matters

Federal law (and the laws of some states in which we own or may acquire properties) imposes liability on a landowner for the presence on the premises of hazardous substances or wastes (as defined by present and future federal and state laws and regulations). This liability is without regard to fault or knowledge of the presence of such substances and may be imposed jointly and severally upon all succeeding landowners. If such hazardous substance is discovered on a property acquired by us, we could incur liability for the removal of the substances and the cleanup of the property.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

There can be no assurance that we would have effective remedies against prior owners of the property. In addition, we may be liable to tenants and may find it difficult or impossible to sell the property either prior to or following such a cleanup.

Risk of Uninsured Property Losses

We maintain property damage, fire loss, and liability insurance. However, there are certain types of losses (generally of a catastrophic nature) which may be either uninsurable or not economically insurable. Such excluded risks may include war, earthquakes, tornados, certain environmental hazards, and floods. Should such events occur, (i) we might suffer a loss of capital invested, (ii) tenants may suffer losses and may be unable to pay rent for the spaces, and (iii) we may suffer a loss of profits which might be anticipated from one or more properties.

Litigation

The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business.  While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the outcome of such matters will not have a material effect on the consolidated financial statements of the Trust.

NOTE 18 – DISPOSITIONS

During the year ended December 31, 2022, the Operating Partnership sold five properties. We sold a retail property located in Savage, Minnesota for a sale price of $2,700 and recognized a gain of $1,328 in March 2022. We sold a residential property located in Moorhead, Minnesota for a sale price of $6,400 and recognized a gain of $2,012 in May 2022. We sold an office property located in Edina, Minnesota for a sale price of $15,320 and recognized a gain of $6,728 in August 2022. We sold a residential property located in East Grand Forks, MN for a sale price of $1,200 and recognized a loss of $171 in September 2022. We sold a retail property located in Bloomington, Minnesota for a sale price of $2,888 and recognized a gain of $1,193 in December 2022.

During the year ended December 31, 2021, the Operating Partnership sold two properties. We sold a retail property located in Waite Park, Minnesota, for a sale price of $900 and recognized a gain of $2 in April 2021. We sold a residential property located in Moorhead, Minnesota, for a sale price of $4,950 and recognized a gain of $1,708 in June 2021.

During the year ended December 31, 2020, the Operating Partnership sold three properties. We sold a retail property located in Apple Valley, Minnesota, for a sale price of $3,670 and recognized a gain of $1,456 in March 2020. We sold an office property located in St. Cloud, Minnesota, for a sale price of $2,050 and recognized a gain of $1 in May 2020. We sold an office property located in Bismarck, North Dakota for a sale price of $7,000 and recognized a gain of $1,926 in December 2020.

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STERLING REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

NOTE 19 –ACQUISITIONS

The Company acquired the following properties during the year ended December 31, 2022.

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres	Total Acquisition Cost
2/28/22	Deer Park	Hutchinson, MN	Apartment Complex	138 units	$	15,073
5/31/22	Desoto Estates	Grand Forks, ND	Apartment Complex	68 units		5,863
5/31/22	Desoto Townhomes	Grand Forks, ND	Townhomes	24 units		3,226
5/31/22	Desoto Apartments	East Grand Forks, MN	Apartment Complex	24 units		1,230
6/10/22	Diamond Bend	Mandan, ND	Apartment Complex	78 units		10,919
9/13/22	Newgate Apartments	Bismarck, ND	Apartment Complex	46 units		2,444
12/1/22	Chandler 1898	Grand Forks, ND	Apartment Complex	12 units		498
12/29/22	Prose Fossil Creek	Fort Worth, TX	Apartment Complex	270 units		55,591
					$	94,844

The acquisition of Prose Fossil Creek was made utilizing a Reverse 1031 Like-Kind Exchange that was entered into at closing. As such, as of December 29, 2022, Prose Fossil Creek is in the possession of a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the sale transaction and the Reverse 1031 Like-Kind Exchange are completed. The Trust retains essentially all of the legal and economic benefits and obligations related to Prose Fossil Creek prior to the completion of the Reverse 1031 Like-Kind Exchange. Accordingly, Prose Fossil Creek is included in the Trust’s consolidated financial statements as a consolidated VIE until legal title is transferred to the Trust upon completion of the Reverse 1031 Like-Kind Exchange.

Total consideration given for acquisitions the year ended December 31, 2022 was completed through issuing approximately 560,000 limited partnership units of the operating partnership valued at $23.00 per unit for an aggregate consideration of approximately $12,870. The value of units issued in exchange for property is determined through a value established annually by our Board of Trustees and reflects the fair value at the time of issuance.

The Company acquired the following properties during the year ended December 31, 2021.

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres		Purchase Price
6/1/21	Flagstone	Fargo, ND	Apartment Complex	120 units	$	7,723
6/1/21	Brownstone	Fargo, ND	Apartment Complex	72 units		4,362
6/1/21	Briar Pointe	Fargo, ND	Apartment Complex	30 units		1,929
7/1/21	Oxford	Fargo, ND	Apartment Complex	144 units		10,066
7/1/21	Pinehurst	Fargo, ND	Apartment Complex	210 units		14,718
					$	38,798

Total consideration given for acquisitions the year ended December 31, 2021 was completed through issuing approximately 144,000 limited partnership units of the operating partnership valued at $20.00 per unit for an aggregate consideration of approximately $2,883. The value of units issued in exchange for property is determined through a value established annually by our Board of Trustees and reflects the fair value at the time of issuance.

The Company acquired the following properties during the year ended December 31, 2020.

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres		Acquisition Price
1/12/20	Wolf Creek	Fargo, ND	Apartment complex	54 units	$	5,227
1/31/20	Columbia Park Village	Grand Forks, ND	Apartment complex	12 units		642
3/1/20	Belmont East & West	Bismarck, ND	Apartment complex	5,348 sq. ft.		1,568

83

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

(Dollar amounts in thousands, except share and per share data)

3/1/20	Eastbrook	Bismarck, ND	Apartment complex	24 units		1,358
3/1/20	Hawn	Fargo, ND	Apartment complex	48 units		2,524
3/1/20	Rosser	Bismarck, ND	Apartment complex	24 units		1,359
8/28/20	Trustmark (a)	Fargo, ND	Office building	units		6,588
9/15/20	Foxtail Townhomes	Fargo, ND	Apartment complex	30 units		1,434
12/17/20	Evergreen Terrace	Omaha, NE	Apartment complex	144 units		2,970
					$	23,670

Total consideration given for acquisitions during the year ended December 31, 2020, was completed through issuing approximately 535,000 limited partnership units of the operating partnership valued at $19.25 per unit for an aggregate consideration of approximately $10,293.  The value of units issued in exchange for property is determined through a value established annually by our Board of Trustees and reflects the fair value at the time of issuance.

In 2022, cash flows were reclassified to updated presentation resulting prior period to be updated to align with reclassification. The following table summarizes the allocation of the purchase price, before prorations, the Company recorded in conjunction with the acquisitions discussed above:

	Year Ended
	December 31,
	2022		2021		2020
Real estate investment acquired	$	93,515	$	39,344	$	29,775
Acquired lease intangible assets		1,732		-		46
Assumed Assets		3		23		38
Total Assets Acquired	$	95,250	$	39,367	$	29,859
Other liabilities		(406)		(569)		(6,189)
Net assets acquired		94,844		38,798		23,670
Equity/limited partnership unit consideration		(12,870)		(2,883)		(10,293)
Net cash consideration	$	81,974	$	35,915	$	13,377

NOTE 20 - SUBSEQUENT EVENTS

On January 1, 2023, Damon K. Gleave and Michael P. Carlson owned shares in Trustmark Enterprises, Inc.

On January 13, 2023, the Trust obtained financing on a residential property for $27,500.

On January 13, 2023, the Trust paid off a note for $26,500 with Bell Bank that was set to mature on February 1, 2023.

On January 17, 2023, we paid a dividend or distribution of $0.2875 per share on our common shares of beneficial interest or limited partnership units, to common shareholders and limited unit holders of record on December 31, 2022.

On February 24, 2023, Barry L. Schmeiss resigned as Chief Investment Officer of the Trust.

Pending acquisitions and dispositions are subject to numerous conditions and contingencies and there are no assurances that the transactions will be completed.

We have evaluated subsequent events through the date of this filing. We are not aware of any other subsequent events which would require recognition or disclosure in the consolidated financial statements.

84

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SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(Dollar amounts in thousands)

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Industrial				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Guardian Building Products	Fargo, ND	$	2,487	$	820	$	2,554	$	60	$	(94)	$	880	$	2,460	$	3,340	$	641	08/29/2012		40
Titan Machinery	Bismarck, ND		2,069		950		1,395		32		—		982		1,395		2,377		279	01/28/2015		40
Titan Machinery	Dickinson, ND		1,816		354		1,096		400		—		754		1,096		1,850		297	07/30/2012		40
Titan Machinery	Fargo, ND		2,471		781		1,947		515		—		1,296		1,947		3,243		499	10/30/2012		40
Titan Machinery	Marshall, MN		4,674		300		3,648		81		—		381		3,648		4,029		1,026	11/01/2011		40
Titan Machinery	Minot, ND		—		618		1,654		—		—		618		1,654		2,272		431	08/01/2012		40
Titan Machinery	North Platte, NE		—		325		1,269		—		—		325		1,269		1,594		223	01/29/2016		40
Titan Machinery	Sioux City, IA		3,699		315		2,472		—		—		315		2,472		2,787		572	10/25/2013		40
Total		$	17,216	$	4,463	$	16,035	$	1,088	$	(94)	$	5,551	$	15,941	$	21,492	$	3,968

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Land				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Taco Bell	Denver, CO	$	389	$	669	$	—	$	—	$	—	$	669	$	—	$	669	$	—	06/14/2011
West 80	Rochester, MN		—		1,364		—		—		—		1,364		—		1,364		—	08/29/2016
Total		$	389	$	2,033	$	—	$	—	$	—	$	2,033	$	—	$	2,033	$	—

85

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SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(Dollar amounts in thousands)

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Medical				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Bio-Life	Bismarck, ND	$	2,091	$	306	$	2,255	$	11	$	123	$	317	$	2,378	$	2,695	$	968	01/03/2008	9	-	40
Bio-Life	Grand Forks, ND		2,150		457		2,230		1		158		458		2,388		2,846		994	01/03/2008	10	-	40
Bio-Life	Janesville, WI		1,786		250		1,857		—		123		250		1,980		2,230		819	01/03/2008	9	-	40
Bio-Life	Mankato, MN		2,271		390		2,111		280		1,154		670		3,265		3,935		1,273	01/03/2008	11	-	40
Bio-Life	Marquette, MI		—		213		2,793		—		123		213		2,916		3,129		1,170	01/03/2008	9	-	40
Bio-Life	Onalaska, WI		1,723		208		1,853		—		323		208		2,176		2,384		880	01/03/2008	11	-	40
Bio-Life	Oshkosh, WI		1,773		293		1,705		—		146		293		1,851		2,144		785	01/03/2008	10	-	40
Bio-Life	Sheboygan, WI		2,022		623		1,611		—		248		623		1,859		2,482		768	01/03/2008	10	-	40
Bio-Life	Stevens Point, WI		1,935		119		2,184		—		123		119		2,307		2,426		941	01/03/2008	9	-	40
Total		$	15,751	$	2,859	$	18,599	$	292	$	2,521	$	3,151	$	21,120	$	24,271	$	8,598

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Residential				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Amberwood	Grand Forks, ND	$	2,376	$	426	$	3,304	$	3	$	178	$	429	$	3,482	$	3,911	$	552	09/13/2016	20	-	40
Arbor I/400	Bismarck, ND		350		73		516		4		65		77		581		658		142	06/04/2013		40
Arbor II/404	Bismarck, ND		358		73		538		6		43		79		581		660		128	11/01/2013		40
Arbor III/406	Bismarck, ND		356		71		536		7		43		78		579		657		128	11/01/2013		40
Ashbury	Fargo, ND		2,287		314		3,774		26		25		340		3,799		4,139		578	12/19/2016		40
Auburn II	Fargo, ND		825		105		883		12		87		117		970		1,087		372	03/23/2007	20	-	40
Autumn Ridge	Grand Forks, ND		5,162		1,072		8,875		44		67		1,116		8,942		10,058		3,687	08/16/2004	9	-	40
Barrett Arms	Crookston, MN		723		37		1,001		—		177		37		1,178		1,215		241	01/02/2014		40
Bayview	Fargo, ND		2,350		284		3,447		59		2,020		343		5,467		5,810		1,455	12/31/2007	20	-	40
Belmont East and West	Bismarck, ND		742		167		1,424		2		8		169		1,432		1,601		102	03/1/2020		40
Berkshire	Fargo, ND		401		31		406		7		53		38		459		497		155	03/31/2008	20	-	40
Betty Ann	Fargo, ND		421		74		738		6		140		80		878		958		267	08/31/2009		40
Birchwood 1	Fargo, ND		228		72		342		4		42		76		384		460		46	12/01/2017		40
Birchwood 2	Fargo, ND		1,342		234		2,099		52		288		286		2,387		2,673		290	12/01/2017		40
Bradbury Apartments	Bismarck, ND		1,791		1,049		4,922		—		81		1,049		5,003		6,052		532	10/24/2018		40
Briar Pointe	Fargo, ND		1,283		384		1,551		—		—		384		1,551		1,935		61	06/01/2021		40
Bridgeport	Fargo, ND		4,839		613		7,676		14		61		627		7,737		8,364		1,174	12/19/2016		40
Bristol Park	Grand Forks, ND		2,801		985		3,976		—		779		985		4,755		5,740		804	02/01/2016		40
Brookfield	Fargo, ND		1,945		228		1,958		30		318		258		2,276		2,534		761	08/01/2008	20	-	40

86

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SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(Dollar amounts in thousands)

Brownstone	Fargo, ND	2,891	780	3,610	—	—	780	3,610	4,390	143	06/01/2021		40
Cambridge (FKA 44th Street)	Fargo, ND	1,614	333	1,845	4	237	337	2,082	2,419	480	02/06/2013		40
Candlelight	Fargo, ND	1,583	613	1,221	(326)	589	287	1,810	2,097	412	11/30/2012		40
Carling Manor	Grand Forks, ND	498	69	656	1	61	70	717	787	250	03/31/2008		40
Carlton Place	Fargo, ND	5,885	703	7,070	96	714	799	7,784	8,583	2,576	09/01/2008	20	-	40
Carr	Fargo, ND	583	66	759	4	41	70	800	870	116	01/17/2017		40
Cedars 4	Fargo, ND	—	134	1,068	—	29	134	1,097	1,231	111	12/31/2018		40
Chandler 1802	Grand Forks, ND	613	133	1,114	—	108	133	1,222	1,355	256	01/02/2014		40
Chandler 1834	Grand Forks, ND	399	112	552	—	39	112	591	703	61	09/1/2018		40
Chandler 1866	Grand Forks, ND	318	31	270	—	59	31	329	360	130	01/03/2005	20	-	40
Chandler 1898	Grand Forks, ND	—	114	357	—	—	114	357	471	1	12/1/2022		40
Cherry Creek (FKA Village)	Grand Forks, ND	—	173	1,435	1	274	174	1,709	1,883	534	11/01/2008		40
Cityside Apartments	Fargo, ND	676	192	1,129	6	62	198	1,191	1,389	126	11/30/2018		40
Columbia Park Village I	Grand Forks, ND	295	102	546	—	—	102	546	648	41	01/31/2020		40
Columbia West	Grand Forks, ND	2,379	294	3,367	1	591	295	3,958	4,253	1,298	09/01/2008	20	-	40
Country Club	Fargo, ND	1,006	252	1,252	2	240	254	1,492	1,746	410	05/02/2011	20	-	40
Countryside	Fargo, ND	593	135	677	—	68	135	745	880	203	05/02/2011		40
Courtyard	St. Louis Park, MN	2,865	2,270	5,681	—	794	2,270	6,475	8,745	1,466	09/03/2013	5	-	40
Dakota Manor	Fargo, ND	1,391	249	2,236	20	182	269	2,418	2,687	486	08/07/2014		40
Danbury	Fargo, ND	4,572	381	5,869	211	653	592	6,522	7,114	2,317	12/31/2007	20	-	40
Dellwood Estates	Anoka, MN	6,177	844	9,924	—	861	844	10,785	11,629	2,468	05/31/2013		40
Deer Park	Hutchinson, MN	8,838	1,784	12,545	—	—	1,784	12,545	14,329	287	02/28/2022		40
Desoto Estates	Grand Forks, ND	4,155	955	4,869	—	—	955	4,869	5,824	81	05/31/2022		40
Desoto Townhomes	Grand Forks, ND	1,589	464	2,767	—	—	464	2,767	3,231	46	05/31/2022		40
Diamond Bend	Mandan, ND	6,825	722	9,789	—	—	722	9,789	10,511	143	06/10/2022		40
Eagle Run	West Fargo, ND	3,659	576	5,787	128	180	704	5,967	6,671	1,822	08/12/2010		40
Eagle Sky I	Bismarck, ND	801	115	1,292	—	104	115	1,396	1,511	248	03/01/2016		40
Eagle Sky II	Bismarck, ND	801	135	1,279	—	173	135	1,452	1,587	245	03/01/2016		40
East Bridge	Fargo, ND	3,143	792	5,396	1	301	793	5,697	6,490	770	07/03/2017		40
Eastbrook	Bismarck, ND	639	145	1,233	—	—	145	1,233	1,378	87	01/31/2020		40
Echo Manor	Hutchinson, MN	911	141	875	—	118	141	993	1,134	215	01/02/2014	20	-	40
Emerald Court	Fargo, ND	—	66	830	11	180	77	1,010	1,087	340	03/31/2008	20	-	40
Essex	Fargo, ND	525	212	642	—	68	212	710	922	98	06/01/2017		40
Evergreen Terrace	Omaha, NE	5,060	820	7,573	—	84	820	7,657	8,477	399	12/17/2020		40
Fairview	Bismarck, ND	2,502	267	3,978	39	918	306	4,896	5,202	1,527	12/31/2008	20	-	40
Flagstone	Fargo, ND	5,110	1,535	6,258	—	—	1,535	6,258	7,793	248	06/01/2021		40
Flickertail	Fargo, ND	4,799	426	5,590	76	1,674	502	7,264	7,766	2,132	12/31/2008		40
Forest Avenue	Fargo, ND	324	61	637	8	64	69	701	770	166	02/06/2013		40
Foxtail Creek Townhomes	Fargo, ND	—	267	1,221	—	—	267	1,221	1,488	71	09/15/2020		40
Galleria III	Fargo, ND	667	118	681	2	292	120	973	1,093	237	11/09/2010		40
Garden Grove	Bismarck, ND	4,089	606	6,073	—	168	606	6,241	6,847	1,050	05/04/2016	5	-	40
Georgetown on the River	Fridley, MN	16,522	4,620	23,833	8	4,117	4,628	27,950	32,578	5,451	12/19/2014	5	-	40
Glen Pond	Eagan, MN	35,566	3,761	20,569	38	960	3,799	21,529	25,328	5,842	12/02/2011	20	-	40
Glen Pond Addition	Eagan, MN	6,056	876	15,408	—	—	876	15,408	16,284	899	09/30/2020		40

87

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SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(Dollar amounts in thousands)

Granger Court I	Fargo, ND	1,908	279	1,926	25	301	304	2,227	2,531	479	06/04/2013	20	-	40
Hannifin	Bismarck, ND	403	81	607	5	52	86	659	745	147	11/01/2013		40
Harrison and Richfield	Grand Forks, ND	4,904	756	6,346	7	321	763	6,667	7,430	2,578	07/01/2007	5	-	40
Hartford Apartments	Fargo, ND	833	154	1,233	—	14	154	1,247	1,401	132	10/1/2018		40
Hawn	Fargo, ND	1,491	280	2,277	—	—	280	2,277	2,557	161	03/01/2020		40
Highland Meadows	Bismarck, ND	5,440	1,532	8,513	—	457	1,532	8,970	10,502	1,271	05/01/2017	5	-	40
Hunters Run I	Fargo, ND	473	50	419	5	(2)	55	417	472	163	03/23/2007		40
Hunters Run II	Fargo, ND	430	44	441	2	—	46	441	487	160	07/01/2008		40
Huntington	Fargo, ND	314	86	309	4	15	90	324	414	60	08/04/2015		40
Islander	Fargo, ND	732	98	884	49	115	147	999	1,146	270	07/01/2011		40
Jadestone	Fargo, ND	498	212	554	—	127	212	681	893	90	06/01/2017		40
Kennedy	Fargo, ND	354	84	588	7	91	91	679	770	161	02/06/2013	20	-	40
Library Lane	Grand Forks, ND	2,006	301	2,332	16	189	317	2,521	2,838	937	10/01/2007	20	-	40
Madison	Grand Forks, ND	272	95	497	—	100	95	597	692	102	09/01/2015		40
Maple Ridge	Omaha, NE	7,749	766	5,608	59	3,715	825	9,323	10,148	2,582	08/01/2008	20	-	40
Maplewood	Maplewood, MN	8,556	3,120	11,655	—	2,411	3,120	14,066	17,186	2,537	12/19/2014	5	-	40
Maplewood Bend I, II, III. IV, V, VI, VII, VIII & Royale	Fargo, ND	4,235	783	5,839	1	491	784	6,330	7,114	1,899	01/01/2009	20	-	40
Martha Alice	Fargo, ND	421	74	738	6	183	80	921	1,001	279	08/31/2009	20	-	40
Mayfair	Grand Forks, ND	—	80	1,043	4	123	84	1,166	1,250	394	07/01/2008	20	-	40
Monticello	Fargo, ND	544	60	752	14	111	74	863	937	184	11/08/2013	20	-	40
Montreal Courts	Little Canada, MN	16,802	5,809	19,565	15	3,605	5,824	23,170	28,994	4,961	10/02/2013	5	-	40
Morningside Apartments	Fargo, ND	458	85	673	—	42	85	715	800	71	11/30/2018		40
Newgate	Bismarck, ND	1,503	538	1,755	—	—	538	1,755	2,293	15	09/13/2022		40
Oak Court	Fargo, ND	2,502	270	2,210	29	436	299	2,646	2,945	899	04/30/2008	28	-	40
Oakview Townhomes	Grand Forks, ND	3,473	822	4,698	1	471	823	5,169	5,992	767	01/11/2017		40
Oxford	Fargo, ND	6,679	1,655	8,563	—	—	1,655	8,563	10,218	321	07/01/2021		40
Pacific Park I	Fargo, ND	526	95	777	3	130	98	907	1,005	205	02/06/2013		40
Pacific Park II	Fargo, ND	450	111	865	4	140	115	1,005	1,120	225	02/06/2013		40
Pacific South	Fargo, ND	278	58	459	2	16	60	475	535	114	02/06/2013		40
Park Circle	Fargo, ND	547	196	716	7	17	203	733	936	102	06/01/2017		40
Parkview Arms	Bismarck, ND	—	373	3,845	—	365	373	4,210	4,583	784	05/13/2015	5	-	40
Parkwest Gardens	West Fargo, ND	3,010	713	5,712	39	1,390	752	7,102	7,854	1,396	06/30/2014	20	-	40
Parkwood	Fargo, ND	—	126	1,143	14	23	140	1,166	1,306	407	08/01/2008		40
Pebble Creek	Bismarck, ND	3,588	260	2,818	31	(62)	291	2,756	3,047	958	03/19/2008	20	-	40
Pinehurst	Fargo, ND	9,716	2,368	12,614	—	—	2,368	12,614	14,982	473	07/01/2021		40
Plumtree	Fargo, ND	516	100	782	—	29	100	811	911	114	05/01/2017		40
Prairiewood Courts	Fargo, ND	—	308	1,730	28	143	336	1,873	2,209	725	09/01/2006	20	-	40
Prairiewood Meadows	Fargo, ND	3,781	736	852	11	367	747	1,219	1,966	232	09/30/2012		40
Prose Fossil Creek	Fort Worth, TX	—	5,451	46,811	—	—	5,451	46,811	52,262	98	12/29/2022		40
Quail Creek	Springfield, MO	5,317	1,529	7,396	—	1,656	1,529	9,052	10,581	1,537	02/03/2015	5	-	40
Robinwood	Coon Rapids, MN	4,129	1,380	6,133	—	711	1,380	6,844	8,224	1,333	12/19/2014		40
Rosedale Estates	Roseville, MN	13,916	4,680	20,591	—	836	4,680	21,427	26,107	4,289	12/19/2014	5	-	40
Rosegate	Fargo, ND	2,888	251	2,978	49	132	300	3,110	3,410	1,136	04/30/2008	20	-	40
Rosser	Bismarck, ND	688	156	1,216	—	86	156	1,302	1,458	88	03/01/2020		40

88

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SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(Dollar amounts in thousands)

Roughrider	Grand Forks, ND		373		100		448		—		117		100		565		665		93	08/01/2016	5	-	40
Saddlebrook	West Fargo, ND		1,306		148		1,262		203		105		351		1,367		1,718		462	12/31/2008		40
Sage Park	New Brighton, MN		9,307		2,520		13,985		—		1,061		2,520		15,046		17,566		3,031	12/19/2014	5	-	40
Sargent	Fargo, ND		940		164		1,529		4		17		168		1,546		1,714		233	01/10/2017		40
Schrock	Fargo, ND		425		71		626		3		66		74		692		766		152	06/04/2013		40
Sheridan Pointe	Fargo, ND		1,976		292		2,387		21		39		313		2,426		2,739		547	10/01/2013		40
Sierra Ridge	Bismarck, ND		6,575		754		8,795		151		863		905		9,658		10,563		2,987	09/01/2006		40
Somerset	Fargo, ND		—		300		3,400		43		57		343		3,457		3,800		1,235	07/01/2008		40
Southgate	Fargo, ND		4,744		803		5,267		20		64		823		5,331		6,154		2,015	07/01/2007	20	-	40
Southview III	Grand Forks, ND		—		99		522		1		116		100		638		738		170	08/01/2011		40
Southview Villages	Fargo, ND		2,376		268		2,483		16		645		284		3,128		3,412		1,012	10/01/2007	20	-	40
Spring	Fargo, ND		429		76		822		75		24		151		846		997		210	02/06/2013	20	-	40
Stanford Court	Grand Forks, ND		—		291		3,866		—		454		291		4,320		4,611		997	02/06/2013	20	-	40
Stonefield-Phase I	Bismarck, ND		7,500		2,804		11,060		227		802		3,031		11,862		14,893		2,273	08/01/2014	20	-	40
Stonefield-Phase II	Bismarck, ND		4,766		1,201		3,678		486		5,754		1,687		9,432		11,119		1,345	10/23/2014		40
Stonefield-Phase III	Bismarck, ND		—		1,079		—		238		—		1,317		—		1,317		—	10/23/2014
Stonybrook	Omaha, NE		6,124		1,439		8,003		—		1,574		1,439		9,577		11,016		3,088	01/20/2009	20	-	40
Summerfield	Fargo, ND		469		129		599		6		82		135		681		816		120	08/04/2015		40
Summit Point	Fargo, ND		3,284		681		5,434		22		449		703		5,883		6,586		1,020	10/01/2015	20	-	40
Sunchase	Fargo, ND		1,011		181		1,563		14		86		195		1,649		1,844		234	05/01/2017		40
Sunset Ridge	Bismarck, ND		10,813		1,759		9,560		36		145		1,795		9,705		11,500		3,234	06/06/2008	9	-	40
Sunview	Grand Forks, ND		—		144		1,578		2		241		146		1,819		1,965		587	12/31/2008	20	-	40
Sunwood	Fargo, ND		2,491		358		3,252		38		541		396		3,793		4,189		1,304	07/01/2007	20	-	40
Thunder Creek	Fargo, ND		2,645		633		4,063		1		551		634		4,614		5,248		525	03/1/2018	25	-	40
Twin Oaks	Hutchinson, MN		5,203		816		3,245		—		149		816		3,394		4,210		692	10/01/2014		40
Twin Parks	Fargo, ND		—		119		2,072		43		227		162		2,299		2,461		757	10/01/2008	20	-	40
Valley Homes Duplexes	Grand Forks, ND		998		356		1,668		1		418		357		2,086		2,443		390	01/22/2015		40
Valley View	Golden Valley, MN		4,107		1,190		6,076		—		458		1,190		6,534		7,724		1,274	12/19/2014	5	-	40
Village Park	Fargo, ND		609		219		1,932		51		80		270		2,012		2,282		725	04/30/2008		40
Village West	Fargo, ND		2,154		357		2,274		61		126		418		2,400		2,818		836	04/30/2008		40
Washington	Grand Forks, ND		350		74		592		—		75		74		667		741		108	05/04/2016		40
Westcourt	Fargo, ND		2,294		287		2,914		28		195		315		3,109		3,424		702	01/02/2014	5	-	40
West Oak	Fargo, ND		608		85		692		47		36		132		728		860		116	01/17/2017		40
Westside	Hawley, MN		456		59		360		—		99		59		459		518		127	02/01/2010		40
Westwind	Fargo, ND		561		49		455		1		95		50		550		600		206	04/30/2008	20	-	40
Westwood	Fargo, ND		3,108		597		6,341		91		764		688		7,105		7,793		2,378	06/05/2008	20	-	40
Willow Park	Fargo, ND		3,228		288		5,286		39		799		327		6,085		6,412		1,943	12/31/2008		40
Wolf Creek	Fargo, ND		2,979		1,082		4,210		—		28		1,082		4,238		5,320		319	01/12/2020		40
Woodland Pines	Omaha, NE		6,047		842		10,596		—		1,372		842		11,968		12,810		1,199	11/30/2018		40
Total		$	400,085	$	93,455	$	588,087	$	3,013	$	57,599	$	96,468	$	645,686	$	742,154	$	122,246

89

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SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(Dollar amounts in thousands)

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Office				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
32nd Avenue	Fargo, ND	$	4,763	$	635	$	3,298	$	87	$	1,226	$	722	$	4,524	$	5,246	$	1,651	03/16/2004	3	-	40
Bell Plaza	Bloomington, MN		30,662		6,912		34,672		—		4,635		6,912		39,307		46,219		11,707	08/13/2015	3	-	40
Trustmark	Fargo, ND		6,915		2,089		4,718		14		6,298		2,103		11,016		13,119		712	08/28/2020		40
First International Bank & Trust	Moorhead, MN		—		210		712		5		88		215		800		1,015		295	05/13/2011	10	-	40
Four Points	Fargo, ND		—		70		1,238		—		175		70		1,413		1,483		520	10/18/2007	5	-	40
Gate City	Grand Forks, ND		—		382		893		1		810		383		1,703		2,086		405	03/31/2008		40
Goldmark Office Park	Fargo, ND		12,362		1,160		11,788		65		8,832		1,225		20,620		21,845		5,289	07/01/2007	1	-	40
Great American Bldg	Fargo, ND		1,064		511		1,290		22		447		533		1,737		2,270		760	02/01/2005	28	-	40
Midtown Plaza	Minot, ND		1,103		30		1,213		—		97		30		1,310		1,340		565	01/01/2004	5	-	40
Parkway office building (FKA Echelon)	Fargo, ND		1,619		278		1,491		42		82		320		1,573		1,893		611	05/15/2007	9	-	40
Redpath	White Bear Lake, MN		2,849		1,195		1,787		—		—		1,195		1,787		2,982		309	02/01/2016		40
Wells Fargo Center	Duluth, MN		—		600		7,195		(115)		2,740		485		9,935		10,420		3,537	07/11/2007	4	-	40
Total		$	61,337	$	14,072	$	70,295	$	121	$	25,430	$	14,193	$	95,725	$	109,918	$	26,361

90

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SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(Dollar amounts in thousands)

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Retail				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Applebees	Coon Rapids, MN		—		750		875		8		—		758		875		1,633		281	03/09/2010		40
Dairy Queen	Apple Valley, MN		1,898		845		828		—		—		845		828		1,673		90	09/17/2018		40
Dairy Queen	Dickinson, ND		—		329		658		1		—		330		658		988		181	01/19/2012		40
Dairy Queen	Moorhead, MN		—		243		787		2		—		245		787		1,032		230	05/13/2011		20
Family Dollar	Mandan, ND		—		166		649		—		54		166		703		869		198	12/14/2010		40
OReilly	Mandan, ND		—		115		449		—		27		115		476		591		138	12/14/2010		40
Walgreens	Alexandria, LA		548		1,090		2,973		—		—		1,090		2,973		4,063		969	12/18/2009	28	-	40
Walgreens	Batesville, AR		4,623		472		6,405		—		—		472		6,405		6,877		2,162	07/09/2009		40
Walgreens	Denver, CO		2,984		2,349		2,358		—		—		2,349		2,358		4,707		683	06/14/2011		40
Walgreens	Fayetteville, AR		3,474		636		4,732		—		—		636		4,732		5,368		1,597	07/09/2009		40
Walgreens	Laurel, MS		—		1,280		2,984		—		—		1,280		2,984		4,264		933	07/30/2010		40
Total		$	13,527	$	8,275	$	23,698	$	11	$	81	$	8,286	$	23,779	$	32,065	$	7,462
Grand Totals		$	508,305	$	125,157	$	716,714	$	4,525	$	85,537	$	129,682	$	802,251	$	931,933	$	168,635

91

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SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(Dollar amounts in thousands)

Notes:

(a) The costs capitalized subsequent to acquisition is net of dispositions.

(b) The changes in total real estate investments for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):

	2022		2021		2020
Balance at January 1,	$	896,702	$	845,288	$	802,028
Purchase of real estate investments		103,252		63,299		57,799
Sale and disposal of real estate investment		(26,960)		(8,184)		(15,467)
Property held for sale		—		1,578		(1,578)
Provision for asset impairment		(561)		—		—
Construction in progress not yet placed in service		(1,285)		(5,279)		2,506
Balance at December 31,	$	971,148	$	896,702	$	845,288

(c) The changes in accumulated depreciation for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):

	2022		2021		2020
Balance at January 1,	$	179,155	$	160,575	$	146,316
Depreciation expense		22,161		20,917		19,770
Property held for sale		—		749		(749)
Sale and disposal of real estate investment		(6,467)		(3,086)		(4,762)
Balance at December 31,	$	194,849	$	179,155	$	160,575

(d) The aggregate cost of our real estate for federal income tax purposes is $763,298.

92

Exhibit Index

		Filed	Incorporated by reference
Exhibit		here		Period		Filing
number	Exhibit Description	with	Form	ending	Exhibit	Date
3.1	Articles of Organization of Sterling Real Estate Trust filed December 3, 2002		10-12G		3.1	03/10/11
3.2	Amendment to Articles of Organization of Sterling Real Estate Trust dated August 1, 2014		8-K		5.02	06/24/14
3.3	Amended and Restated Bylaws dated June 2, 2020		8-K		3.1	06/03/20
4.1	Sterling Third Amended and Restated Declaration of Trust dated June 23, 2016		8-K		4.1	06/29/16
4.2	Amended and Restated Share Redemption Plan effective January 1, 2021		8-K		99.1	09/29/21
4.3	Amended and Restated Unit Repurchase Plan effective January 1, 2021		8-K		99.2	09/29/21
4.4	Description of Registrant’s Securities		10-K	12/31/2019	4.11	03/13/20
10.1	Third Amended and Restated Agreement of Limited Liability Limited Partnership of Sterling Properties, LLLP dated January 1, 2014		8-K		5.04	06/24/14
10.2	Amended and Restated Dividend Reinvestment Plan effective June 25, 2020		8-K		10.3	06/30/20
10.3	Amendment to Certificate of Limited Liability Partnership of Sterling Properties, LLLP dated August 1, 2014		8-K		5.03	06/24/14
10.4	Form of Secured Promissory Note (15-Year Note) dated as of December 19, 2014		8-K		10.3	12/23/14
10.5	Form of Secured Promissory Note (10-Year Note) dated as of December 19, 2014		8-K		10.4	12/23/14
10.6	Form of Mortgage, Security Agreement and Fixture Filing dated as of December 19, 2014		8-K		10.5	12/23/14
10.7	Form of Promissory Note dated as of December 19, 2014		8-K		10.6	12/23/14
10.8	Form of Mortgage dated as of December 19, 2014		8-K		10.7	12/23/14
10.9	Form of Commercial Security Agreement dated as of December 19, 2014		8-K		10.8	12/23/14
10.10	Amended and Restated Sterling Real Estate Trust Independent Trustee Common Shares Plan approved June 18, 2015		8-K		10.1	06/23/15
10.11	Form of Promissory Note dated as of August 13, 2015		8-K		10.2	08/18/15
10.12	Form of Mortgage, Security Agreement and Fixture Filing dated as of August 13, 2015		8-K		10.3	08/18/15
10.13	Amendment No. 1 to Amended and Restated Independent Trustee Stock Plan		8-K		99.3	04/04/18
10.14	Amended and Restated Sterling Real Estate Trust Independent Trustee Common Shares Plan dated March 25, 2021		8-K		10.1	03/31/21
10.15	Eleventh Amended and Restated Advisory Agreement, dated April 1, 2022		8-K		10.1	03/29/22
10.16	Bell Bank Promissory Note, dated December 29, 2022 between Bell Bank and Sterling Properties, LLLP, together with commercial Guaranty of Sterling Real Estate Trust, dated December 29, 2022		8-K		10.1	01/04/23
16.1	Letter of Baker Tilly US, LLP dated March 31, 2021 to the SEC regarding statements in Item 4.01(a)		8-K		16.1	03/31/21
21.1	Subsidiaries of Registrant	X
23.1	Consent of Independent Registered Public Accounting Firm - RSM, LLP	X
23.2	Consent of Independent Registered Public Accounting Firm - Baker Tilly US, LLP	X
31.1	Section 302 Certification of Chief Executive Officer	X
31.2	Section 302 Certification of Chief Financial Officer	X
32.1	Section 906 Certification of Chief Executive Officer and Chief Financial Officer	X
101	The following materials from Sterling Real Estate Trust’s Annual Report on Form 10-K for the year ended December 31, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2022 and 2020; (ii) Consolidated Statements of Operations and Comprehensive Income for years ended December 31, 2022, 2021 and 2020; (iii) Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020, and; (v) Notes to Consolidated Financial Statements	X
104	Cover Page Interactive Data File, formatted in IXBRL and contained in Exhibit 101	X

93

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 15, 2023

STERLING REAL ESTATE TRUST
By:	/s/ Kenneth P. Regan
	Kenneth P. Regan
	Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Kenneth P. Regan (Kenneth P. Regan)	Chief Executive Officer and Trustee (Principal Executive Officer)	March 15, 2023
/s/ Damon K. Gleave (Damon K. Gleave)	Chief Financial Officer and Treasurer (Principal Financial Officer)	March 15, 2023
/s/ Lance R. Wolf (Lance R. Wolf)	Chairman of the Board of Trustees	March 15, 2023
/s/ Ann L. Christenson (Ann L. Christenson)	Trustee	March 15, 2023
/s/ Timothy L. Haugen (Timothy L. Haugen)	Trustee	March 15, 2023
/s/ Timothy A. Hunt (Timothy A. Hunt)	Trustee	March 15, 2023
/s/ Michelle L. Korsmo (Michelle L. Korsmo)	Trustee	March 15, 2023
/s/ Mark T. Polovitz (Mark T. Polovitz)	Trustee	March 15, 2023
/s/ James S. Wieland (James S. Wieland)	Trustee	March 15, 2023

94

EX-21.1

Exhibit 21.1

		JURISDICTION
	NAME OF SUBSIDIARY	OF FORMATION
*	Sterling Properties, LLLP	North Dakota
	Bayview Apartments, LLC	North Dakota
	Bridgeport Apartments, LLC	North Dakota
	Candlelight Apartments, LLC	Delaware
	Columbia West Apartments, LLC	North Dakota
	Courtyard Apartments LLC	Minnesota
	Dellwood Estates LLC	Minnesota
	Flickertail Apartments, LLC	North Dakota
	Garden Grove Apartments LLC	North Dakota
**	Grand Forks INREIT, LLC	North Dakota
	INREIT Alexandria, LLC	Delaware
	INREIT Batesville, LLC	North Dakota
	INREIT BL Marquette, LLC	North Dakota
	INREIT Fayetteville, LLC	North Dakota
	INREIT Fed-3 LLC	North Dakota
	INREIT Laurel, LLC	Delaware
	INREIT Maple Ridge, LLC	North Dakota
	INREIT Stonybrook, LLC	Delaware
	Maplewood Bend Apartments LLC	North Dakota
	Montreal Courts Apartments LLC	Minnesota
	Pebble Creek Apartments LLC	North Dakota
	Richfield Harrison Apartments, LLC	North Dakota
***	SE Brooklyn Park	Minnesota
****	SE Fossil Creek	Texas
***	SE Maple Grove, LLC	Minnesota
***	SE Rogers, LLC	Minnesota
***	SE Savage, LLC	Minnesota
****	SE St Oak Cliff	Texas
	Sterling Quail Creek, LLC	Missouri
	Sterling Georgetown, LLC	Minnesota
	Sterling Highland, LLC	North Dakota
****	Sterling Northland, LLC	Minnesota
	Sterling Parkwest, LLC	North Dakota
	Sterling Stonefield I, LLC	North Dakota
	Sunwood Estates, LLC	North Dakota
	Twin Oaks Apartments, LLC	Minnesota
	Twin Parks, LLC	North Dakota
	Willow Park Apartments, LLC	North Dakota
*	36.22% ownership as of December 31, 2022
**	50% ownership as of December 31, 2022
***	60% ownership as of December 31, 2022
****	70% ownership as of December 31, 2022

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Nos. 333-182768, 333-219243 and 333-249812) on Forms S-3 of Sterling Real Estate Trust of our report dated March 15, 2023, relating to the consolidated financial statements of Sterling Real Estate Trust, appearing in this Annual Report on Form 10-K of Sterling Real Estate Trust for the year ended December 31, 2022.

/s/ RSM US LLP

Minneapolis, Minnesota

March 15, 2023

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-3D (File Nos. 333-182768, 333-219243, and 333-249812) of Sterling Real Estate Trust of our report dated March 31, 2021, with respect to the financial statements and schedule of Sterling Real Estate Trust, included in this Annual Report (Form 10-K) for the year ended December 31, 2022.

/s/ Baker Tilly US, LLP

Chicago, Illinois

March 15, 2023

EX-31.1

Exhibit 31.1

OFFICER’S CERTIFICATE

PURSUANT TO SECTION 302

I, Kenneth P. Regan, certify that:

1.     I have reviewed this Annual Report on Form 10-K for Sterling Real Estate Trust;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 15, 2023

By:	/s/ Kenneth P. Regan
	Kenneth P. Regan
	Chief Executive Officer

EX-31.2

Exhibit 31.2

OFFICER’S CERTIFICATE

PURSUANT TO SECTION 302

I, Damon K. Gleave, certify that:

1. I have reviewed this Annual Report on Form 10-K for Sterling Real Estate Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 15, 2023

By:	/s/ Damon K. Gleave
	Damon K. Gleave
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Sterling Real Estate Trust (the “Company”) for the annual period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

26,
Dated: March 15, 2023	By:	/s/ Kenneth P. Regan
		Kenneth P. Regan
		Chief Executive Officer
Dated: March 15, 2023	By:	/s/ Damon K. Gleave
		Damon K. Gleave
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Mar. 14, 2023	Jun. 30, 2022
Document And Entity Information [Abstract]
Entity Registrant Name	Sterling Real Estate Trust
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	000-54295
Entity Incorporation, State or Country Code	ND
Entity Tax Identification Number	90-0115411
Entity Address, Address Line One	4340 18th Ave South Ste. 200
Entity Address, City or Town	Fargo
Entity Address, State or Province	ND
Entity Address, Postal Zip Code	58103
City Area Code	701
Local Phone Number	353-2720
Title of 12(b) Security	Common Shares of Beneficial Interest, par value $0.01 per share
No Trading Symbol Flag	true
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float				$ 0
Entity Common Stock, Shares Outstanding			10,947,790
Entity Central Index Key	0001412502
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Auditor Name	RSM US LLP	Baker Tilly US, LLP
Auditor Firm ID	49	23
Auditor Location	Minneapolis, Minnesota	Chicago, Illinois

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
ASSETS
Land and land improvements	$ 129,682	$ 125,338
Building and improvements	834,356	763,003
Construction in progress	7,110	8,361
Real estate investments	971,148	896,702
Less accumulated depreciation	(194,849)	(179,155)
Real estate investments, net	776,299	717,547
Cash and cash equivalents	3,257	51,507
Restricted deposits	9,323	9,149
Investment in securities	29,371
Investment in unconsolidated affiliates	29,423	18,658
Notes receivable	8,448	7,457
Lease intangible assets, less accumulated amortization	5,290	6,246
Other assets, net	27,312	10,302
Total Assets	888,723	820,866
LIABILITIES
Mortgage notes payable, net	506,167	493,142
Notes payable	26,500
Lines of credit	1,008
Dividends payable	8,493	7,567
Tenant security deposits payable	6,368	5,225
Lease intangible liabilities, less accumulated amortization	646	811
Accrued expenses and other liabilities	16,075	18,604
Total Liabilities	565,257	525,349
COMMITMENTS and CONTINGENCIES - Note 17
SHAREHOLDERS' EQUITY
Beneficial interest	123,996	116,856
Operating partnership	183,048	176,954
Partially owned properties	2,640	2,657
Accumulated other comprehensive income (loss)	13,782	(950)
Total Shareholders' Equity	323,466	295,517
Total liabilities and shareholders' equity	$ 888,723	$ 820,866

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CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income from rental operations
Real estate rental income	$ 135,060	$ 129,324	$ 124,616
Expenses from rental operations
Operating expenses	56,893	51,063	47,071
Real estate taxes	14,245	13,706	12,498
Depreciation and amortization	24,679	22,203	21,214
Interest	19,994	18,142	17,097
Total expenses from rental operations	115,811	105,114	97,880
Loss on impairment of property	561
Administration of REIT
Administration of REIT	5,247	4,381	4,217
Total expenses	121,619	109,495	102,097
Income from operations	13,441	19,829	22,519
Other income
Equity in (losses) gains of unconsolidated affiliates	(2,339)	(261)	263
Other income	1,293	1,935	455
Gain on sale or conversion of real estate investments	11,090	1,710	3,383
Gain on involuntary conversion	1,047	1,225	360
Total other income	11,091	4,609	4,461
Net (loss) income	24,532	24,438	26,980
Net income attributable to noncontrolling interest in operating partnership	15,628	15,783	17,645
Net income attributable to noncontrolling interest in partially owned properties	(17)	(139)	(70)
Net income attributable to Sterling Real Estate Trust	$ 8,921	$ 8,794	$ 9,405
Net income attributable to Sterling Real Estate Trust per common share, basic	$ 0.84	$ 0.87	$ 0.97
Net income attributable to Sterling Real Estate Trust per common share, diluted	$ 0.84	$ 0.87	$ 0.97
Comprehensive income:
Net income	$ 24,532	$ 24,438	$ 26,980
Other comprehensive gain (loss) - change in fair value of interest rate swaps	14,732	855	(1,842)
Comprehensive income	39,264	25,293	25,138
Comprehensive income attributable to noncontrolling interest	24,989	16,193	16,373
Comprehensive income attributable to Sterling Real Estate Trust	$ 14,275	$ 9,100	$ 8,765
Weighted average Common Shares outstanding, basic	10,632,000	10,160,000	9,694,000
Weighted average Common Shares outstanding, diluted	10,632,000	10,160,000	9,694,000

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Shares	Paid-in Capital	Accumulated Distributions in Excess of Earnings	Total Beneficial Interest	Noncontrolling Interest in Operating Partnership	Noncontrolling Interest in Partially Owned Properties	Accumulated Other Comprehensive Income (Loss)	Total
Beginning Balance at Dec. 31, 2019		$ 131,261	$ (28,888)	$ 102,373	$ 174,221	$ 2,416	$ 37	$ 279,047
Beginning Balance (in shares) at Dec. 31, 2019	9,436,000
Shares issued under trustee compensation plan		64		64				64
Shares issued under trustee compensation plan (in shares)	3,000
Contribution of assets in exchange for the issuance of noncontrolling interest shares					10,293			10,293
Shares/units redeemed		(2,321)		(2,321)	(1,216)			(3,537)
Shares/units redeemed (in shares)	(127,000)
Dividends and distributions declared			(10,256)	(10,256)	(19,322)			(29,578)
Dividends reinvested - stock dividend		6,511		6,511				$ 6,511
Dividends reinvested - stock dividend (in shares)	356,000							356,000
Issuance of shares under optional purchase plan		3,590		3,590				$ 3,590
Issuance of shares under optional purchase plan (in shares)	187,000
Change in fair value of interest rate swaps							(1,842)	(1,842)
Net income			9,405	9,405	17,645	(70)		26,980
Ending balance at Dec. 31, 2020		139,105	(29,739)	109,366	181,621	2,346	(1,805)	291,528
Ending balance (in shares) at Dec. 31, 2020	9,855,000
Shares issued under trustee compensation plan		57		57				57
Shares issued under trustee compensation plan (in shares)	3,000
Contribution of assets in exchange for the issuance of noncontrolling interest shares					2,883			2,883
Shares/units redeemed		(1,552)		(1,552)	(4,014)			(5,566)
Shares/units redeemed (in shares)	(82,000)
Dividends and distributions declared			(10,761)	(10,761)	(19,319)			(30,080)
Dividends reinvested - stock dividend		6,888		6,888				$ 6,888
Dividends reinvested - stock dividend (in shares)	363,000							363,000
Issuance of shares under optional purchase plan		4,064		4,064				$ 4,064
Issuance of shares under optional purchase plan (in shares)	203,000
Change in fair value of interest rate swaps							855	855
Contributions from consolidated real estate entity noncontrolling interests						450		450
Net income			8,794	8,794	15,783	(139)		24,438
Ending balance at Dec. 31, 2021		148,562	(31,706)	116,856	176,954	2,657	(950)	$ 295,517
Ending balance (in shares) at Dec. 31, 2021	10,342,000							10,342,000
Shares issued under trustee compensation plan		65		65				$ 65
Shares issued under trustee compensation plan (in shares)	3,000
Contribution of assets in exchange for the issuance of noncontrolling interest shares					12,870			12,870
Shares/units redeemed		(1,155)		(1,155)	(922)			(2,077)
Shares/units redeemed (in shares)	(53,000)
Dividends and distributions declared			(12,222)	(12,222)	(21,482)			(33,704)
Dividends reinvested - stock dividend		7,468		7,468				$ 7,468
Dividends reinvested - stock dividend (in shares)	341,000							342,000
Issuance of shares under optional purchase plan		4,063		4,063				$ 4,063
Issuance of shares under optional purchase plan (in shares)	177,000
Change in fair value of interest rate swaps							14,732	14,732
Net income			8,921	8,921	15,628	(17)		24,532
Ending balance at Dec. 31, 2022		$ 159,003	$ (35,007)	$ 123,996	$ 183,048	$ 2,640	$ 13,782	$ 323,466
Ending balance (in shares) at Dec. 31, 2022	10,810,000							10,810,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
OPERATING ACTIVITIES
Net income	$ 24,532	$ 24,438	$ 26,980
Adjustments to reconcile net income to net cash provided by operating activities
Gain on sale or conversion of real estate investments	(11,090)	(1,710)	(3,383)
Loss on impairment of property	561
Gain on involuntary conversion	(1,047)	(1,225)	(360)
Change in fair value of securities	(322)
Equity in loss (gain) of unconsolidated affiliates	2,339	261	(263)
Distributions of earnings of unconsolidated affiliates	261	233	361
Allowance for uncollectible accounts receivable	(281)	(667)	540
Depreciation	22,161	20,918	19,770
Amortization	2,518	1,285	1,418
Amortization of debt issuance costs	675	608	634
Effects on operating cash flows due to changes in
Other assets	(209)	807	(177)
Tenant security deposits payable	1,143	349	328
Accrued expenses and other liabilities	(471)	(242)	(1,159)
NET CASH PROVIDED BY OPERATING ACTIVITIES	40,770	45,055	44,689
INVESTING ACTIVITIES
Gross purchase of securities	(29,130)
Proceeds from maturity of securities	81
Purchase of real estate investment properties	(81,974)	(35,915)	(13,377)
Capital expenditures and tenant improvements	(9,623)	(18,007)	(31,136)
Proceeds from sale of real estate investments and non-real estate investments	25,463	5,610	12,502
Proceeds from involuntary conversion	1,579	4,095	1,288
Investment in unconsolidated affiliates	(13,869)	(9,493)	(2,264)
Distributions in excess of earnings received from unconsolidated affiliates	504		422
Notes receivable issued net of payments received	(991)	(5,431)	(726)
NET CASH USED IN INVESTING ACTIVITIES	(107,960)	(59,141)	(33,291)
FINANCING ACTIVITIES
Payments for financing, debt issuance	(408)	(1,283)	(484)
Payments on investment certificates and subordinated debt		(25)	(100)
Principal payments on special assessments payable			(498)
Proceeds from issuance of mortgage notes payable and subordinated debt	37,569	116,180	71,175
Principal payments on mortgage notes payable	(22,231)	(43,641)	(48,553)
Advances on lines of credit	1,008	818,689	30,964
Payments on lines of credit		(818,689)	(30,964)
Proceeds from notes payable	26,500
Proceeds from issuance of shares under optional purchase plan	4,063	4,064	3,590
Shares/units redeemed	(2,077)	(5,566)	(3,537)
Dividends/distributions paid	(25,310)	(22,622)	(22,738)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES	19,114	47,107	(1,145)
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS	(48,076)	33,021	10,253
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF PERIOD	60,656	27,635	17,382
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF PERIOD	$ 12,580	$ 60,656	$ 27,635

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CONSOLIDATED STATEMENTS OF CASH FLOWS - Supplemental Disclosures - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF PERIOD
Cash and cash equivalents	$ 3,257	$ 51,507	$ 11,716
Restricted deposits	9,323	9,149	15,919
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS, END OF PERIOD	12,580	60,656	27,635
SCHEDULE OF CASH FLOW INFORMATION
Cash paid during the period for interest, net of capitalized interest	19,305	17,332	16,491
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Dividends reinvested	7,468	6,888	6,511
Dividends declared and not paid	3,108	2,740	2,608
UPREIT distributions declared and not paid	5,385	4,827	4,838
Shares issued pursuant to trustee compensation plan	65	57	64
Acquisition of assets in exchange for the issuance of noncontrolling interest units in UPREIT	12,870	2,883	10,293
Increase in land improvements due to increase in special assessments payable	219	235	231
Unrealized gain (loss) on interest rate swaps	14,732	855	(1,842)
Acquisition of assets through assumption of debt and liabilities	406	569	6,193
Capitalized interest and real estate taxes related to construction in progress	$ 91	$ 250	$ 644

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ORGANIZATION

12 Months Ended

Dec. 31, 2022

ORGANIZATION

ORGANIZATION

Note 1 – Organization

Sterling Real Estate Trust, d/b/a Sterling Multifamily Trust (“Sterling”, “the Trust” or “the Company”) is a registered, but unincorporated business trust organized in North Dakota in December 2002.  Sterling has elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code.

Sterling previously established an operating partnership (“Sterling Properties, LLLP”) and transferred all of its assets and liabilities to the operating partnership in exchange for general partnership units. As the general partner, Sterling has management responsibility for all activities of the operating partnership. As of December 31, 2022 and 2021, Sterling owned approximately 36.60% and 36.22%, respectively, of the operating partnership.

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PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2022

PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Sterling and all subsidiaries for which we maintain a controlling interest.

The accompanying consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”).

Principles of Consolidation

The consolidated financial statements include the accounts of Sterling, Sterling Properties, LLLP, and wholly owned limited liability companies and partially-owned limited liability companies. All significant intercompany transactions and balances have been eliminated in consolidation.

As of December 31, 2022, the Trust owned approximately 36.60% of the partnership interests (“OP Units”) of the Operating Partnership. The remaining OP Units, consisting exclusively of limited partner interests, are held by persons who contributed their interests in properties to the Operating Partnership in exchange for OP Units. Under the LLLP Agreement and the redemptions plans, these persons have the right to request the Operating Partnership redeem their OP Units following a specified restricted period. All redemptions are at the sole discretion of the Trust, acting for itself or in its capacity as General Partner of the Operating Partnership, and further subject to the conditions and limitations of the LLLP Agreement and redemption plans, as the same may be amended or modified from time to time. If the Trust accepts a redemption request, the redemption of OP Units shall be made in cash in an amount equal to the fair value of an equivalent number of common shares of the Trust. In lieu of delivering cash, however, the Trust, as the Operating Partnership’s general partner, may, at its option and in its sole and absolute discretion, choose to acquire any OP Units so tendered by issuing common shares in exchange for the tendered OP Units. If the Trust so chooses, its common shares will be exchanged for OP Units on a one-for-one basis. This one-for-one exchange ratio is subject to adjustment to prevent dilution. With each such exchange or redemption, the Trust’s percentage ownership in the Operating Partnership will increase. In addition, whenever the Trust issues common or other classes of its shares, it contributes the net proceeds it receives from the issuance to the Operating Partnership and the Operating Partnership issues to the Trust an equal number of OP Units or other partnership interests having preferences and rights that mirror the preferences and rights of the shares issued. This structure is commonly referred to as an umbrella partnership REIT or “UPREIT.”

Additionally, we evaluate the need to consolidate affiliates based on standards set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”).  In determining whether we have a requirement to consolidate the accounts of an entity, management considers factors such as our ownership interest, our authority to make decisions and contractual and substantive participating rights of the limited partners and shareholders, as well as whether the entity is a variable interest entity (“VIE”) for which we have both: a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and b) the obligation to absorb losses or the right to receive benefits from the VIE that could be potentially significant to the VIE.

In instances where the Trust determines that it is not the primary beneficiary of a VIE or the Trust does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Trust will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Trust’s operations but instead its share of operations will be reflected as equity in earnings (loss) of unconsolidated entity on its consolidated statements of operations and comprehensive loss. Additionally, the Trust’s net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. See Note 5 for additional details regarding variable interest entities where the Trust uses the equity method of investing.

The operating partnership meets the criteria as a variable interest entity (“VIE”). The Trust’s sole significant asset is its investment in the operating partnership. The Trust is the primary beneficiary of the Operating Partnership and accordingly consolidated the Operating Partnership. As a result, substantially all of the Trust’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Trust’s debt is an obligation of the Operating Partnership, and the Trust guarantees the unsecured debt obligations of the Operating Partnership. The Trust may acquire property using a reverse like-kind exchange structure (a “Reverse 1031 Like-Kind Exchange”) under the Code to defer taxable gains on the subsequent sale of real estate property. As such, the acquired property (the “Parked Property”) remains in the possession of a VIE whose legal equity interests are owned by a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the subsequent sale transaction and the Reverse 1031 Like-Kind Exchange are completed. Although the VIE is legally owned by the qualified intermediary, the Trust retains essentially all of the legal and economic benefits and obligations related to the VIE (which holds the legal title to the Parked Property prior to the completion of the Reverse 1031 Like-Kind Exchange) and, as its designated manager, has the key decision-making power over the Parked Property. The VIE (including the Parked Property) is included in the Trust’s consolidated financial statements as a consolidated VIE until legal title is transferred to the Trust upon completion of the Reverse 1031 Like-Kind Exchange.

Concentration of Credit Risk

Our cash balances are maintained in various bank deposit accounts. The bank deposit amounts in these accounts may exceed federally insured limits at various times throughout the year.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Real Estate Investments

Real estate investments are recorded at cost less accumulated depreciation.  Ordinary repairs and maintenance are expensed as incurred.

The Trust allocates the purchase price of each acquired investment property accounted for as an asset acquisition based upon the relative acquisition date fair value of the individual assets acquired and liabilities assumed, which generally include (i) land, (ii) building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above and below market lease intangibles, and (v) assumed financing that is determined to be above or below market, if any. Transaction costs related to acquisitions accounted for as asset acquisitions are capitalized as incurred and included as a cost of the building in the accompanying balance sheet.

Furniture and fixtures are stated at cost less accumulated depreciation. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for routine maintenance and repairs, which do not add to the value or extend useful lives, are charged to expense as incurred.

Depreciation is provided for over the estimated useful lives of the individual assets using the straight-line method over the following estimated useful lives:

Buildings and improvements	40 years
Furniture, fixtures and equipment	5-9 years

The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each reporting period, the Trust separately determines whether impairment indicators exist for each property.

Examples of situations considered to be impairment indicators include, but are not limited to:

o a substantial decline or negative cash flows;

o continued low occupancy rates;

o continued difficulty in leasing space;

o significant financially troubled tenants;

o a change in plan to sell a property prior to the end of its useful life or holding period;

o a significant decrease in market price not in line with general market trends; and

o any other quantitative or qualitative events or factors deemed significant by the Trust’s management or Board of Trustees.

If the presence of one or more impairment indicators as described above is identified with respect to an investment property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered to be impaired when the estimated future undiscounted cash flows are less than its current carrying value.  When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes complex or subjective assumptions which include, but are not limited to:

o projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, demographics, holding period and property location;

o projected capital expenditures;

o projected cash flows from the eventual disposition of an operating property using a property specific capitalization rate;

o comparable selling prices; and

o property specific discount rates for fair value estimates as necessary.

To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its fair value for impairment of real estate investments.

Based on evaluation, there were was one impairment loss of $561 during the year ended December 31, 2022. There were no impairment losses during the years ended December 2021 and 2020.

Cash and Cash Equivalents and Restricted Deposits

We classify highly liquid investments with a maturity of three months or less when purchased as cash equivalents. Restricted deposits include funds escrowed for tenant security deposits, real estate tax, insurance and mortgage escrows and escrow deposits required by lenders on certain properties to be used for future building renovations or tenant improvements. As of December 31, 2022 and December 31, 2021, the Trust did not hold any U.S. Treasury Bills ‘Securities’ in cash and cash equivalents. As of December 31, 2022, all U.S. Treasury Bills are classified as Level 1 investments in the fair value hierarchy.

Investments in U.S. Treasury Bills

Treasury Bills are short-term debt obligations with maturities of one year or less issued by the U.S. Treasury Department and backed by the U.S. Government. Treasury Bills yield no interest, but are issued at a discount to the redemption price. We classify our investments in U.S. Treasury Bills as investments in securities. We use quoted market prices to determine the fair value of our investments in U.S. Treasury Bills.

Investment in Unconsolidated Affiliates

We account for unconsolidated affiliates using the equity method of accounting per guidance established under ASC 323, Investments – Equity Method and Joint Ventures (“ASC 323”). The equity method of accounting requires the investment to be initially recorded at cost and subsequently adjusted for our share of equity in the affiliates’ earnings (losses), contributions and distributions. We evaluate the carrying amount of the investments for impairment in accordance with ASC 323. Unconsolidated affiliates are reviewed for potential impairment if the carrying amount of the investment exceeds its fair value. An impairment charge is recorded when an impairment is deemed to be other-than-temporary. To determine whether impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until the carrying amount is fully recovered. The evaluation of an investment in an affiliate for potential impairment can require our management to exercise significant judgments. No impairment losses were recorded related to the unconsolidated affiliates for the years ended December 31, 2022, 2021 and 2020.

Other Assets

Other assets are comprised of the following as of December 31, 2022 and 2021:

	December 31, 2022		December 31, 2021
	(in thousands)
Due from related party	$	50	$	336
Accounts receivable, net		5,821		5,342
Insurance claim receivable		3,846		145
Fair value of interest rate swap		13,782		698
Other assets		181		192
Financing fees, less accumulated amortization		86		18
Lease costs, less accumulated amortization		1,799		2,065
Prepaid expenses		1,747		1,506
Total other assets, net	$	27,312	$	10,302

Note receivable,

Notes receivable are issued periodically and are secured and interest bearing. The Trust has one note receivable for a commercial tenant  bearing a 6.5% per annum interest rate which matures in 2025.

Accrued Expenses and Other liabilities

Accrued Expenses and other liabilities are comprised of the following as of December 31, 2022 and 2021:

	December 31, 2022		December 31, 2021
	(in thousands)
Special assessments payable	$	647	$	690
Due to related party		1,408		473
Accounts payable - trade		2,340		3,272
Retainage payable		3		86

Fair value of interest rate swap		—		1,648
Deferred insurance proceeds		2		476
Accrued interest expense		1,318		1,323
Accrued real estate taxes		7,275		6,653
Accrued unearned rent		2,936		3,055
Other liabilities		146		928
Total accrued expenses and other liabilities	$	16,075	$	18,604

Debt Issuance Costs

We amortize external debt issuance costs related to notes and mortgage notes using the effective interest rate method, over the life term of the related debt. We record debt issuance costs net of amortization, on our consolidated balance sheets as an offset to their related debt. We record debt issuance costs related to revolving lines of credit as financing fees in other assets, regardless of whether a balance on the line of credit is outstanding. We record the amortization of all debt issuance costs as interest expense.

Noncontrolling Interest

A noncontrolling interest in a subsidiary (minority interest) is in most cases an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements and separate from the parent company’s equity.  In addition, consolidated net income is required to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest, and the amount of consolidated net income attributable to the parent and the noncontrolling interest are required to be disclosed on the face of the consolidated statements of operations and other comprehensive income.  

Operating Partnership: Interests in the operating partnership held by limited partners are represented by operating partnership units.  The operating partnership’s income is allocated to holders of units based upon the ratio of their holdings to the total units outstanding during the period. Capital contributions, distributions, syndication costs, and profits and losses are allocated to noncontrolling interests in accordance with the terms of the operating partnership agreement.

Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Trust that are not wholly owned by the Trust.  The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interest in partially owned properties in the consolidated statements of operations and other comprehensive income.

Federal Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code, as amended. A REIT calculates taxable income like other domestic corporations, with the major difference being a REIT is entitled to a deduction for dividends paid. A REIT is generally required to distribute each year at least 90% of its taxable income. If it chooses to retain the remaining 10% of taxable income, it may do so, but it will be subject to a corporate tax on such income. REIT shareholders are taxed on REIT distributions similar to corporate distributions.

A summary of the tax characterization of the dividends paid to shareholders of the Company’s common stock for the years ended December 31, 2022, 2021 and 2020 follows:

	Tax Year Ended December 31,
	Dividend		%		Dividend		%		Dividend		%
	2022		2022		2021		2021		2020		2020
Tax status
Ordinary income	$	0.6374	55.43	%	$	0.9833	92.76	%	$	0.8994	84.95	%
Capital gain		—	—	%		0.0767	7.24	%		—	—	%
Return of capital		0.5126	44.57	%		—	—	%		0.1593	15.05	%
	$	1.1500	100.00	%	$	1.0600	100.00	%	$	1.0587	100.00	%

We intend to continue to qualify as a REIT and, provided we maintain such status, will not be taxed on the portion of the income that is distributed to shareholders. In addition, we intend to distribute all our taxable income; therefore, no provisions or liabilities for income taxes have been recorded in the consolidated financial statements.

Sterling conducts its business activity as an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) through its Operating Partnership – Sterling Properties, LLLP. The Operating Partnership is organized as a limited liability limited partnership. Income or loss is allocated to the partners in accordance with the provisions of the Internal Revenue Code 704(b) and 704(c). UPREIT status allows non-recognition of gain by an owner of appreciated real estate if that owner contributes the real estate to a partnership in exchange for a partnership interest. The conversion of a partnership interest to shares of beneficial interest in the REIT will be a taxable event to the limited partner.

We follow ASC Topic 740, Income Taxes, to recognize, measure, present and disclose in our consolidated financial statements uncertain tax positions that we have taken or expect to take on a tax return. As of December 31, 2022 and 2021 we did not have any liabilities for uncertain tax positions that we believe should be recognized in our consolidated financial statements. We are no longer subject to Federal and State tax examinations by tax authorities for years before 2019.

The operating partnership has elected to record related interest and penalties, if any, as income tax expense on the consolidated statements of operations and other comprehensive income.

Revenue Recognition

We record base rents on a straight-line basis. The monthly base rent income according to the terms of our leases is adjusted with the purpose that average monthly rent is recorded for each tenant over the term of its lease. The straight-line rent adjustment increased revenue by $302 and $550 for the years ended December 31, 2022 and 2021, respectively. The straight-line receivable balance included in receivables on the consolidated balance sheets as of December 31, 2022 and 2021, was $3,756 and $3,569, respectively. We receive payments for expense reimbursements from substantially all our multi-tenant commercial tenants throughout the year based on estimated. The Trust is the lessor for its residential and commercial leases. Leases are analyzed on an individual basis to determine lease classification. As of December 31, 2022, all leases analyzed under the Trust’s lease classification process were determined to be operating leases.

Earnings per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders (the “numerator”) by the weighted average number of common shares outstanding (the “denominator”) during the period. Sterling had no dilutive potential common shares as of December 31, 2022, 2021 and 2020 and therefore, basic earnings per common share was equal to diluted earnings per common share for both periods. As the calculation does not include net income attributable to the Operating Partnership, Operating Partnership Units are not included in the calculation, and does not have any impact on earnings per share.

For the years ended December 31, 2022, 2021 and 2020, Sterling’s denominators for the basic and diluted earnings per common share were approximately 10,632,000, 10,160,000, and 9,694,000, respectively.

Reclassifications

Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year’s presentation.  These reclassifications have not changed the results of operations or equity.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements.

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SEGMENT REPORTING

12 Months Ended

Dec. 31, 2022

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 3 – segment reporting

We report our results in two reportable segments: residential and commercial properties. Our residential properties include multifamily properties. Our commercial properties include retail, office, industrial, and medical properties. We assess and measure operating results based on net operating income (“NOI”), which we define as total real estate revenues less real estate expenses (which consist of real estate taxes, property management fees, utilities, repairs and maintenance, insurance and direct administrative costs). We believe NOI is an important measure of operating performance even though it should not be considered an alternative to net income or cash flow from operating activities.

Segment Revenues and Net Operating Income

The revenues and net operating income for the reportable segments (residential and commercial) are summarized as follows for the years ended December 31, 2022, 2021 and 2020, along with reconciliations to the consolidated financial statements. Segment assets are also reconciled to Total Assets as reported in the consolidated financial statements for the years ended December 31, 2022 and 2021.

	Year ended December 31, 2022						Year ended December 31, 2021						Year ended December 31, 2020
	Residential		Commercial		Total		Residential		Commercial		Total		Residential		Commercial		Total
	(in thousands)						(in thousands)						(in thousands)
Income from rental operations	$	113,968	$	21,092	$	135,060	$	107,284	$	22,040	$	129,324	$	98,576	$	26,040	$	124,616
Expenses from rental operations		64,647		6,491		71,138		57,454		7,315		64,769		52,686		6,883		59,569
Net operating income	$	49,321	$	14,601	$	63,922	$	49,830	$	14,725	$	64,555	$	45,890	$	19,157	$	65,047
Depreciation and amortization						24,679						22,203						21,214
Interest						19,994						18,142						17,097
Administration of REIT						5,247						4,381						4,217
Other income						(10,530)						(4,609)						(4,461)
Net income					$	24,532					$	24,438					$	26,980

Segment Assets and Accumulated Depreciation

As of December 31, 2022	Residential		Commercial		Total
	(in thousands)
Real estate investments	$	779,424	$	191,724	$	971,148
Accumulated depreciation		(147,115)		(47,734)		(194,849)
Total real estate investments, net	$	632,309	$	143,990	$	776,299
Lease intangible assets, less accumulated amortization		839		4,451		5,290
Cash and cash equivalents						3,257
Restricted deposits						9,323
Investment in securities						29,371
Investment in unconsolidated affiliates						29,423
Notes receivable						8,448
Other assets, net						27,312
Total Assets					$	888,723

As of December 31, 2021	Residential		Commercial		Total
	(in thousands)
Real estate investments	$	692,722	$	203,980	$	896,702
Accumulated depreciation		(133,100)		(46,055)		(179,155)
Total real estate investments, net	$	559,622	$	157,925	$	717,547
Lease intangible assets, less accumulated amortization		—		6,246		6,246
Cash and cash equivalents						51,507
Restricted deposits						9,149
Investment in unconsolidated affiliates						18,658
Notes receivable						7,457
Other assets, net						10,302
Total Assets					$	820,866

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RESTRICTED DEPOSITS AND FUNDED RESERVES

12 Months Ended

Dec. 31, 2022

RESTRICTED DEPOSITS AND FUNDED RESERVES

RESTRICTED DEPOSITS AND FUNDED RESERVES

NOTE 4 - RESTRICTED DEPOSITS AND FUNDED RESERVES

	As of December 31,		As of December 31,
	2022		2021
	(in thousands)
Tenant security deposits	$	6,242	$	5,165
Real estate tax and insurance escrows		1,336		1,355
Replacement reserves		1,745		1,791
Other funded reserves		—		838
	$	9,323	$	9,149

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INVESTMENT IN UNCONSOLIDATED AFFILIATES

12 Months Ended

Dec. 31, 2022

INVESTMENT IN UNCONSOLIDATED AFFILIATES

INVESTMENT IN UNCONSOLIDATED AFFILIATES

NOTE 5 – Investment in unconsolidated affiliates

			Total Investment in Unconsolidated Affiliates at
Unconsolidated Affiliates	Date Acquired	Trust Ownership Interest	December 31, 2022		December 31, 2021
Banner Building	2007	66.67%	$	(614)	$	60
Grand Forks INREIT, LLC	2003	50%		4,961		2,493
SE Savage, LLC	2019	60%		1,660		2,946
SE Maple Grove, LLC	2019	60%		1,836		2,823
SE Rogers, LLC	2020	60%		2,413		2,986
ST Oak Cliff, LLC	2021	70%		9,098		4,324
SE Brooklyn Park, LLC	2021	60%		2,914		3,026
SE Fossil Creek, LLC	2022	70%		7,155		-
			$	29,423	$	18,658

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 a balance at December 31, 2022 and 2021 of $6,951 and $6,329, respectively. The Trust is jointly and severally liable for the full mortgage balance.

The operating partnership is a 50% owner of a 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 non-recourse first mortgage with a balance at December 31, 2022 and 2021 of $9,520 and $9,794, respectively. The Trust is jointly and severally liable for the full mortgage balance.

The Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The property is encumbered by a first mortgage with a balance of $30,726 at December 31, 2022. The Trust is jointly and severally liable for the full mortgage balance. At December 31, 2021, the property was encumbered by a first mortgage of $26,210, and a second mortgage to Sterling Properties, LLLP of $6,129. Additionally, at December 31, 2022, SE Savage, LLC has an outstanding Promissory Note with Sterling Properties, LLLP, for $1,397, and is an unsecured obligation of SE Savage, LLC. The note is considered to be additional at-risk funds to the Operating Partnership, in SE Savage, LLC, and is included in Notes Receivable on the Consolidated Balance Sheet at December 31, 2022.

The Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The entity is encumbered by a first mortgage with a balance at both December 31, 2022 and December 31, 2021 of $24,788.  The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance at December 31, 2022 and December 31, 2021 of $3,643 and $727, respectively.

The Operating Partnership owns a 60% interest in a limited liability company that is currently developing a multifamily property. The LLC holds land located in Rogers, Minnesota, with total assets of $32,864 and $22,847 at December 31, 2022 and December 31, 2021, respectively.  The entity encumbered by a first mortgage has a balance of $25,742 and $15,688 at December 31, 2022 and December 31, 2021, respectively. The Company is jointly and severally liable for the full mortgage balance. The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance at December 31, 2022 of $2,938.

The Operating Partnership owns a 70% interest in a limited liability company, with a related party. The entity is currently developing a multifamily property. As of December 31, 2022, the Operating Partnership has contributed $9,300 in cash to the entity. The entity holds land located in Dallas, Texas with total assets of $40,404 and $7,394 at December 31, 2022 and December 31, 2021, respectively. The entity is encumbered by a construction mortgage with a balance of $23,409 at December 31, 2022. There was no balance outstanding related to the construction mortgage at December 31, 2021. The Company is jointly and severally liable for the full mortgage balance.

The Operating Partnership owns a 60% interest in a limited liability company, with an unrelated third party. The entity is currently developing a multifamily property. The entity is located in Brooklyn Park, Minnesota, with total assets of $30,490 and $5,478 at December 31, 2022 and December 31, 2021, respectively. The entity is encumbered by a first mortgage that has a balance of $24,448 at December 31, 2022.  There was no balance outstanding related to the first mortgage at December 31, 2021. The Company is jointly and severally liable for the full mortgage balance.

During the second quarter of 2022, the Operating Partnership entered into a joint venture arrangement. Through the joint venture, the Operating Partnership owns a 70% interest in a limited liability company, with a related party. The entity is currently developing a multifamily property. As of December 31, 2022, the Operating Partnership has contributed $7,190 in cash to the entity. The entity holds land located in Fort Worth, Texas with total assets of $11,083 at December 31, 2022.

The following is a summary of the financial position of the unconsolidated affiliates at December 31, 2022 and 2021.

	December 31, 2022		December 31, 2021
	(in thousands)
ASSETS
Real estate investments	$	218,747	$	134,839
Accumulated depreciation		(16,490)		(10,940)
		202,257		123,899
Cash and cash equivalents		3,093		1,131
Restricted deposits		1,034		650
Intangible assets, less accumulated amortization		542		41
Other assets, net		827		909
Total Assets	$	207,753	$	126,630

LIABILITIES
Mortgage notes payable, net	$	152,246	$	87,996
Tenant security deposits payable		192		108
Accrued expenses and other liabilities		8,217		8,029
Total Liabilities	$	160,655	$	96,133
SHAREHOLDERS' EQUITY
Total Shareholders' Equity	$	47,098	$	30,497
Total liabilities and shareholders' equity	$	207,753	$	126,630

The following is a summary of results of operations of the unconsolidated affiliates for the years ended the years ended December 31, 2022, 2021 and 2020.

	The year ended December 31,
	2022		2021		2020
	(in thousands)
Income from rental operations	$	9,545	$	4,746	$	3,001
Expenses from rental operations		3,668		1,632		928
Net operating income	$	5,877	$	3,114	$	2,073
Depreciation and Amortization		5,678		1,248		688
Interest		4,148		2,275		970
Other Income		(91)		-		(24)
Net (loss) income	$	(3,858)	$	(409)	$	439

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LEASE INTANGIBLES

12 Months Ended

Dec. 31, 2022

LEASE INTANGIBLES

LEASE INTANGIBLES

NOTE 6 - Lease intangibles

The following table summarizes the net value of other intangible assets and liabilities and the accumulated amortization for each class of intangible:

	Lease		Accumulated		Lease
As of December 31, 2022	Intangibles		Amortization		Intangibles, net
Lease Intangible Assets	(in thousands)
In-place leases	$	15,528	$	(10,960)	$	4,568
Above-market leases		1,897		(1,175)		722
	$	17,425	$	(12,135)	$	5,290
Lease Intangible Liabilities
Below-market leases	$	(2,379)	$	1,733	$	(646)

	Lease		Accumulated		Lease
As of December 31, 2021	Intangibles		Amortization		Intangibles, net
Lease Intangible Assets	(in thousands)
In-place leases	$	15,455	$	(10,381)	$	5,074
Above-market leases		2,617		(1,445)		1,172
	$	18,072	$	(11,826)	$	6,246
Lease Intangible Liabilities
Below-market leases	$	(2,525)	$	1,714	$	(811)

The estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter is as follows:

	Intangible		Intangible
Years ending December 31,	Assets		Liabilities
	(in thousands)
2023	$	1,597	$	151
2024		757		151
2025		757		151
2026		606		80
2027		498		42
Thereafter		1,075		71
	$	5,290	$	646

The weighted average amortization period for the intangible assets (in-place leases, above-market leases) and intangible liabilities (below-market leases) acquired as of December 31, 2022 was 2.9 years.

The portion of the purchase price allocated to acquire above and below market lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment to rental income. Amortization pertaining to above market lease intangibles of $145, $154, and $186 for the years ended December 31, 2022, 2021 and 2020, respectively, was recorded as a reduction to income from rental operations. Amortization pertaining to below market lease intangibles of $164, $183, and $213 for the years ended December 31, 2022, 2021 and 2020, respectively, was recorded as an increase to income from rental operations.

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LINES OF CREDIT

12 Months Ended

Dec. 31, 2022

LINES OF CREDIT

LINES OF CREDIT

NOTE 7 – LINES OF CREDIT

We have a $4,915 variable rate (floating SOFR plus 2.00%) line of credit agreement with Bremer Bank, which expires in December 2026; and a $5,000 variable rate (floating SOFR plus 2.00%) line of credit agreement with Bremer Bank, which expires December 2026. The lines of credit are secured by specific properties. At December 31, 2022, the Bremer line of credit secures one letter of credit totaling $50, leaving $8,857 available and unused under the agreements. These operating lines are designed to enhance treasury management activities and more effectively manage cash balances. As of December 31, 2022 and December 31, 2021, there was a balance of $1,008 and $-, respectively.

Certain lines of credit agreements include covenants that, in part, impose maintenance of certain debt service coverage, debt to net worth ratios, and debt yield ratios. As of December 31, 2022 and 2021, no properties were out of compliance.

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NOTES PAYABLE

12 Months Ended

Dec. 31, 2022

NOTES PAYABLE.

MORTGAGE NOTES PAYABLE

NOTE 8 - NOTES PAYABLE

On December 29, 2022, the Trust entered into a $26,500 note payable. The note payable bears interest at a rate of one percentage point under the “Prime Rate” as published in the Wall Street Journal, with principal plus accrued and unpaid interest due and payable on February 1, 2023. The Borrower may prepay the New Promissory Note without penalty. As of December 31, 2021, the Trust did not have any outstanding balances on notes payable.

The following table summarizes the Company’s mortgage notes payable.  

	Principal Balance At
	December 31,		December 31,
	2022		2021
	(in thousands)
Fixed rate mortgage notes payable (a)	$	508,305	$	490,413
Variable rate mortgage notes payable		-		5,237
Mortgage notes payable		508,305		495,650
Less unamortized debt issuance costs		2,138		2,508
	$	506,167	$	493,142

(a) Includes $106,033 and $108,734 of variable rate mortgage debt that was swapped to a fixed rate as of December 31, 2022 and 2021, respectively.

As of December 31, 2022, we had 115 fixed rate mortgage loan with effective interest rates ranging from 2.43% to 6.85% per annum, and a weighted average effective interest rate of 3.79% per annum.

As of December 31, 2021, we had 114 fixed rate and one variable rate mortgage loan with effective interest rates ranging from 2.09% to 6.85% per annum, and a weighted average effective interest rate of 3.83% per annum on fixed rate loans and 2.10% per annum on variable rate loans.

The majority of the Company’s mortgages payable require monthly payments of principal and interest. Certain mortgages require reserves for real estate taxes and certain other costs. Mortgages are secured by the respective properties, assignment of rents, business assets, deeds to secure debt, deeds of trust and/or cash deposits with the lender. Additionally, certain mortgage note agreements include covenants that, in part, impose maintenance of certain debt service coverage and debt to worth ratios. As of December 31, 2022, eight loans were out of compliance due to increased repair and maintenance costs related to unit renovations and increased utility costs. The loans were secured by various properties with a total outstanding balance of $17,687. Annual waivers were received from the lenders on all loans out of compliance as of December 31, 2022. As of December 31, 2021, five loans were out of compliance due increased repair and maintenance costs related to unit renovations, bad debt allowance, and increased vacancies in the North Dakota and Minnesota markets. The loans were secured by various properties with a total outstanding balance of $9,915. Annual waivers were received from the lenders on all loans out of compliance as of December 31, 2021.

We are required to make the following principal payments on our outstanding mortgage notes payable for each of the five succeeding fiscal years and thereafter as follows:

Years ending December 31,	Amount
	(in thousands)
2023	$	53,341
2024		22,376
2025		53,130
2026		45,546
2027		77,845
Thereafter		256,067
Total payments	$	508,305

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DERIVATIVES AND HEDGING ACTIVITIES

12 Months Ended

Dec. 31, 2022

DERIVATIVES AND HEDGING ACTIVITIES

DERIVATIVES AND HEDGING ACTIVITIES

NOTE 9 – DERIVATIVES AND HEDGING ACTIVITIES

As part of our interest rate risk management strategy, we have used interest rate derivatives to manage our exposure to interest rate movements and add stability to interest expense. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Trust making fixed rate payments over the life of the agreement without exchange of the underlying notional amount.

As of December 31, 2022, the Trust used 12 interest rate swaps to hedge the variable cash flows associated with variable rate debt. Changes in fair value of the derivatives that are designated and that qualify as cash flow hedges are recorded in “Accumulated other comprehensive (loss) income” and are reclassified into interest expense as interest payments are made on the Company’s variable rate debt. During the next 12 months, the Trust estimates that an additional $2,311 will be reclassified as a decrease to interest expense.

The following table summarizes the Trust’s interest rate swaps designated as cash flow hedges as of December 31, 2022:

			Fixed
Effective Date		Notional	Interest Rate	Maturity Date
November 1, 2019	$	6,575	3.15%	November 1, 2029
November 1, 2019	$	4,572	3.28%	November 1, 2029
January 10, 2020	$	2,979	3.39%	January 10, 2030
July 1, 2020	$	4,743	2.79%	June 10, 2030
December 2, 2020	$	12,362	2.91%	December 2, 2027
July 1, 2021	$	25,678	2.99%	July 1, 2031
November 10, 2021	$	28,047	3.54%	August 1, 2029
December 1, 2021	$	10,813	3.32%	December 1, 2031
August 15, 2022	$	1,491	3.07%	June 15, 2030
August 15, 2022	$	2,888	3.07%	June 15, 2030
August 15, 2022	$	1,614	2.94%	June 15, 2030
August 15, 2022	$	4,271	2.94%	June 15, 2030

The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:

	Number of Instruments			Notional
Interest Rate Derivatives	December 31, 2022	December 31, 2021		December 31, 2022		December 31, 2021
Interest rate swaps	12	12	$	106,033	$	108,734

The table below presents the estimated fair value of the Company’s derivative financial instruments as well as their classification in the accompanying consolidated balance sheets. The valuation techniques are described in Note 10 to the consolidated financial statements.

Derivatives designated as	December 31, 2022			December 31, 2021
cash flow hedges:	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Interest rate swaps	Other assets, net	$	13,782	Other assets, net	$	698
Interest rate swaps	Accrued expenses and other liabilities	$	—	Accrued expenses and other liabilities	$	1,648

The following table presents the effect of the Company’s derivative financial instruments on the accompanying consolidated statements of operations and other comprehensive income (loss) for the years ended December 31, 2022 and 2021:

			Location of Gain
		Amount of (Gain)/Loss	Reclassified from
Derivatives in		Recognized in Other	Accumulated other		Amount of (Gain)/Loss
Cash Flow Hedging		Comprehensive Income	Comprehensive Income		Reclassified from
Relationships		on Derivatives	(AOCI) into Income		AOCI into Income
		2022			2022
Interest rate swaps	$	(14,732)	Interest expense	$	94
		2021			2021
Interest rate swaps	$	(855)	Interest expense	$	670

Credit-risk-related Contingent Features

The Trust has agreements with each of its derivative counterparties that contain a provision whereby if the Trust defaults on the related indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Trust could also be declared in default on its corresponding derivative obligation. As of December 31, 2022, the termination value of derivatives in a liability position was $0 and the termination value of derivatives in an asset position was $13,782. As December 31, 2022, the Trust has pledged the properties related to the loans which are hedged as collateral.

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FAIR VALUE MEASUREMENT

12 Months Ended

Dec. 31, 2022

FAIR VALUE MEASUREMENT

FAIR VALUE MEASUREMENT

NOTE 10 - FAIR VALUE MEASUREMENT

The following table presents the carrying value and estimated fair value of the Company’s financial instruments:

	December 31, 2022				December 31, 2021
	Carrying				Carrying
	Value		Fair Value		Value		Fair Value
	(in thousands)
Financial assets:
Investment in securities	$	29,371	$	29,371	$	—	$	—
Notes receivable	$	8,448	$	9,789	$	7,457	$	9,840
Derivative assets	$	13,782	$	13,782	$	698	$	698
Financial liabilities:
Mortgage notes payable	$	508,305	$	466,245	$	495,650	$	508,285
Derivative liabilities	$	—	$	—	$	1,648	$	1,648

The carrying values shown in the table are included in the consolidated balance sheets under the captions indicated in Note 10. ASC 820-10 established a three-level valuation hierarchy for fair value measurement.  Management uses these valuation techniques to establish the fair value of the assets at the measurement date. These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s assumptions.

These two types of inputs create the following fair value hierarchy:

● Level 1 – Quoted prices for identical instruments in active markets.

● Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose significant inputs are observable.

● Level 3 – Instruments whose significant inputs are unobservable.

The guidance requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Recurring Fair Value Measurements

The following table presents the Trust’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.

	Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2022
Derivative assets	$	—	$	13,782	$	—	$	13,782
December 31, 2021
Derivative assets	$	—	$	698	$	—	$	698
Derivative liabilities	$	—	$	1,648	$	—	$	1,648

Derivatives: The fair value of interest rate swaps is determined using a discounted cash flow analysis on the expected future cash flows of the derivative.

The Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements.

Fair Value Disclosures

The following table presents the Company’s financial assets and liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which they fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.

	Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2022
U.S. Treasury Bills	$	29,371	$	—	$	—	$	29,371
Mortgage notes payable	$	—	$	—	$	466,245	$	466,245
Notes receivable	$	—	$	—	$	9,789	$	9,789
December 31, 2021
Mortgage notes payable	$	—	$	—	$	508,285	$	508,285
Notes receivable	$	—	$	—	$	9,840	$	9,840

U.S. Treasury Bills: The Trust estimates the fair value of its Treasury Bills by using quoted market prices.

Mortgage notes payable: The Trust estimates the fair value of its mortgage notes payable by discounting the future cash flows of each instrument at rates currently offered to the Trust for similar debt instruments of comparable maturities by the Trust’s lenders. The rates used range from 5.75% to 6.00% and from 3.25% to 3.35% December 31, 2022 and 2021, respectively.

Notes receivable: The Trust estimates the fair value of its notes receivable by discounting future cash flows of each instrument at rates currently offered to the Trust for similar note instruments of comparable maturities by the Trust’s lenders. The fair value rate ranged from 3.25% to 7.25% December 31, 2021 and 2022, respectively.

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NONCONTROLLING INTEREST OF UNITHOLDERS IN OPERATING PARTNERSHIP

12 Months Ended

Dec. 31, 2022

NONCONTROLLING INTEREST OF UNITHOLDERS IN OPERATING PARTNERSHIP

NONCONTROLLING INTEREST OF UNITHOLDERS IN OPERATING PARTNERSHIP

NOTE 11 – NONCONTROLLING INTEREST OF UNITHOLDERS IN OPERATING PARTNERSHIP

As of December 31, 2022 and 2021, outstanding limited partnership units totaled 18,730,000 and 18,212,000, respectively. Total aggregate distributions per unit for the years ended December 31, 2022, 2021 and 2020 were $1.1500, $1.0600 and $1.0587,  respectively. The operating partnership declared fourth quarter distributions of $5,385 and $4,827, to limited partners payable in January 2023 and 2022, respectively.  

During the year ended December 31, 2022, there were no limited partnership units of the operating partnership exchanged for common shares of the trust.

Provided the Trust’s redemption plan exists, and subject to the conditions and limitations contained in such redemption plan (including, without limitation, applicable holding periods and ownership limitations), and further subject to the conditions and limitations set forth in the LLLP Agreement of the Operating Partnership, a Limited Partner may request the redemption of its limited partnership units for cash (a “Redemption Request”) or the exchange of its limited partnership units for Sterling common shares (an “Exchange Request”). Such request must be made in accordance with the redemption plan. Upon receipt of any Redemption or Exchange Request, as the case may be, the Trust may, at its sole and absolute discretion, acting for itself or as General Partner of the Operating Partnership, elect to redeem or exchange such limited partnership units. The Trust may, in its sole discretion, terminate, amend or suspend the redemption plan if such action is determined to be in the best interest of the Operating Partnership.

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REDEMPTION PLANS

12 Months Ended

Dec. 31, 2022

REDEMPTION PLANS

REDEMPTION PLANS

NOTE 12 – REDEMPTION PLANS

Our Board of Trustees has approved redemption plans that enable our shareholders to sell their common shares and the partners of our operating partnership to sell their limited partnership units to us, after they have held the securities for at least one year and subject to other conditions and limitations described in the plans.

Our redemption plans currently provide that the maximum amount that can be redeemed under the plan is $55,000 worth of securities. As of December 31, 2022, there were $14,684 worth of securities left to be redeemed under the redemption plan. Currently, the fixed redemption price is $21.85 per share or unit under the plans which price became effective January 1, 2022. Prior to January 1, 2022, the redemption price was $19.00 per share or unit under the plan. Prior to January 1, 2021, the redemption price was $18.25 per share or unit under the plan.

We may redeem securities under the plans provided the aggregate total has not been exceeded if we have sufficient funds to do so. The plans will terminate in the event the shares become listed on any national securities exchange, the subject of bona fide quotes on any inter-dealer quotation system or electronic communications network or are the subject of bona fide quotes in the pink sheets. Additionally, the Board, in its sole discretion, may terminate, amend or suspend the redemption plans, either or both of them, if it determines to do so in its sole discretion.

During the years ended December 31, 2022, 2021 and 2020, the Company redeemed 53,000, 82,000 and 127,000 common shares valued at $1,155, $1,552 and $2,321, respectively. In addition, during the years ended December 31, 2022, 2021 and 2020, the Company redeemed 42,000, 211,000 and 66,000 units valued at $922, $4,014 and $1,216, respectively.

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BENEFICIAL INTEREST

12 Months Ended

Dec. 31, 2022

BENEFICIAL INTEREST

BENEFICIAL INTEREST

NOTE 13 – BENEFICIAL INTEREST

We are authorized to issue 100,000,000 common shares of beneficial interest with $0.01 par value and 50,000,000 preferred shares with $0.01 par value, which collectively represent the beneficial interest of Sterling. As of December 31, 2022 and 2021, there were 10,810,000 and 10,342,000 common shares outstanding. We had no preferred shares outstanding as of either date.

Dividends paid to holders of common shares were $1.1500 per share, $1.0600 per share and $1.0587 per share for the years ended December 31, 2022, 2021 and 2020, respectively.

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DIVIDEND REINVESTMENT PLAN

12 Months Ended

Dec. 31, 2022

DIVIDEND REINVESTMENT PLAN

DIVIDEND REINVESTMENT PLAN

NOTE 14 – DIVIDEND REINVESTMENT PLAN

Our Board of Trustees approved a dividend reinvestment plan to provide existing holders of our common shares with a convenient method to purchase additional common shares without payment of brokerage commissions, fees or service charges. On July 20, 2012, we registered with the Securities Exchange Commission 2,000,000 common shares to be issued under the plan on Form S-3D, which automatically became effective on July 20, 2012. On July 11, 2017, we registered with the Securities Exchange Commission an additional 2,000,000 common shares to be issued under the plan on Form S-3D, which automatically became effective on July 11, 2017. On November 3, 2020, we registered with the Securities Exchange Commission an additional 2,000,000 common shares to be issued under the plan on Form S-3D, which automatically became effective on November 3, 2020.

Under this plan, eligible shareholders may elect to have all or a portion (but not less than 25%) of the cash dividends they receive automatically reinvested in our common shares. If an eligible shareholder elects to reinvest cash dividends under the plan, the shareholder may also make additional optional cash purchases of our common shares, not to exceed $10 per fiscal quarter without our prior approval. The purchase price per common share under the plan equals 95% of the estimated value per common share for dividend reinvestments and equals 100% of the estimated value per common share for additional optional cash purchases, as determined by our Board of Trustees. In addition, eligible shareholders may not in any calendar year purchase or receive via transfer more than $40 additional optional cash purchases of Common Shares.

The estimated value per common share was $23.00 and $20.00 at December 31, 2022 and 2021, respectively.

Therefore, the purchase price per common share for dividend reinvestments was $21.85 and $19.00 and for additional optional cash purchases was $23.00 and $20.00 at December 31, 2022 and 2021, respectively. The Board, in its sole discretion, may amend, suspend or terminate the plan at any time, without the consent of shareholders, upon a ten-day notice to participants.

In the year ended December 31, 2022, 342,000 shares were issued pursuant to dividend reinvestments and 177,000 shares were issued pursuant to additional optional cash purchases under the plan. In the year ended December 31, 2021, 363,000 shares were issued pursuant to dividend reinvestments and 203,000 shares were issued pursuant to additional optional cash purchases under the plan. In the year ended December 31, 2020, 356,000 shares were issued pursuant to dividend reinvestments and 187,000 shares were issued pursuant to additional optional cash purchases under the plan.

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2022

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 15 – RELATED PARTY TRANSACTIONS

Effective January 1, 2021, Trustmark Enterprises, Inc. was formed to act as the holding company for Sterling Management, LLC and GOLDMARK Property Management, Inc. In connection with this restructuring transaction, the owners of Trustmark Enterprises, Inc. indirectly own Sterling Management, LLC and GOLDMARK Property Management, Inc. Trustmark Enterprises, Inc. is owned in part by the Trust’s Chief Executive Officer and Trustee Mr. Kenneth P. Regan, by Trustee Mr. James S. Wieland, and by President Joel S.

Thomsen. In addition, Mr. Regan serves as the Executive Chairman of the Advisor, and Messrs. Wieland, and Thomsen serve on the Board of Governors of both the Advisor and GOLDMARK Property Management, Inc.

Sterling Management, LLC (the “Advisor”), is a North Dakota limited liability company formed in November 2002. The Advisor is responsible for managing day-to-day affairs, overseeing capital projects, and identifying, acquiring, and disposing investments on behalf of the trust.

GOLDMARK Property Management, Inc., is a North Dakota corporation formed in 1981. GOLDMARK Property Management, Inc. performs property management services for the Trust.

We have a historical and ongoing relationship with Bell Bank. Bell Bank has provided the Trust certain financial services throughout the relationship. Mr. Wieland, a Trustee, also serves as a Board Member of Bell Bank. Mr. Wieland could have an indirect material interest in any such engagement and related transactions.

The Trust has a historical and ongoing relationship with Trumont Group and Trumont Construction. Trumont Group provides development services for current joint venture projects in which the Operating Partnership is an investor. Trumont Construction has been engaged to construct the properties associated with these joint ventures. Mr. Regan, Chief Executive Officer and trustee, is a partner in both Trumont Group and Trumont Construction and has a direct material interest in any engagement or related transaction, the Trust enters into, with these entities.

Property Management Fee

During the years ended December 31, 2022, 2021 and 2020, we paid property management and administrative fees to GOLDMARK Property Management, Inc. of $13,833, $12,836, and $12,796, respectively. Management fees which approximate 5% of net collected rents, account for $5,499, $5,271, and $4,851 of these fees during the years ended December 31, 2022, 2021 and 2020. In addition, during the years ended December 31, 2022, 2021, and 2020, we paid repair and maintenance expenses, and payroll related expenses to GOLDMARK Property Management, Inc. totaling $7,744, $6,536, and $6,549, respectively

Advisory Agreement

We are an externally managed trust and as such, although we have a Board of Trustees and executive officers responsible for our management, we have no paid employees. The Advisor may receive fees related to management of the Trust, acquiring, disposing, or developing real estate property, project management fees, and financing fees related to lending relationships, under the Advisory Agreement, which must be renewed on an annual basis and approved by a majority of the independent trustees. The Advisory Agreement was approved by the Board of Trustees (including all the independent Trustees) on March 24, 2022, and is effective until March 31, 2023.

The below table summarizes the fees incurred to our Advisor.

	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Fee:
Advisory	$	3,683	$	3,348	$	3,116
Acquisition	$	1,321	$	375	$	708
Disposition	$	703	$	146	$	319
Financing	$	83	$	224	$	133
Project Management	$	450	$	572	$	365

The below table summarizes the fees payable to our Advisor.

	Payable at
	December 31,		December 31,
	2022		2021
	(in thousands)
Fee:
Advisory	$	632	$	296
Acquisition	$	387	$	-
Development	$	-	$	79
Disposition	$	72	$	-
Financing	$	-	$	38
Project Management	$	12	$	98

Operating Partnership Units Issued in Connection with Acquisitions

During the year ended December 31, 2022, 510,000 Operating Partnership units were issued to an entity affiliated with Messrs. Regan and Wieland, two of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $11,741.

During the year ended December 31, 2021, there were no Operating Partnership units issued directly or indirectly, to affiliated entities.  

During the year ended December 31, 2020, 208,000 Operating Partnership units were issued to an entity affiliated with Messrs. Regan and Wieland, two of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $4,671.

Commissions

During the years ended December 31, 2022, 2021 and 2020, we incurred real estate commissions of $567, $312, and $633, respectively, to GOLDMARK Commercial Real Estate, Inc., in which Messrs. Regan and Wieland jointly own a controlling interest. As of December 31, 2022, there were commissions of $183 payable to GOLDMARK Commercial Real Estate. As of December 2021 and 2020, there were no unpaid commissions to GOLDMARK Commercial Real Estate.

During the years ended December 31, 2022, 2021 and 2020, we incurred real estate commissions of $418, $217, and $308, respectively to GOLDMARK Property Management. As of December 31, 2022, there were commissions of $92 payable to GOLDMARK Property Management. As of December 31, 2021 and 2020 there were no unpaid commissions to GOLDMARK Property Management.

Rental Income

During the years ended December 31, 2022, 2021 and 2020, we received rental income of $130, $106, and $85, respectively, under an operating lease agreement with our Advisor.

During the years ended December 31, 2022, 2021 and 2020, we received no rental income, $19, and $57, respectively, under an operating lease agreement with GOLDMARK Commercial Real Estate, Inc.

During the years ended December 31, 2022, 2021 and 2020, we received rental income of $267, $294, and $268, respectively, under operating lease agreements with GOLDMARK Property Management, Inc.

During the years ended December 31, 2022, 2021 and 2020, we received rental income of $859, $404, and $484, respectively, under operating lease agreements with Bell Bank.

Other operational costs

During the years ended December 31, 2022, 2021 and 2020, the Trust incurred $207, $276, and $240, respectively, for general costs related to business operations as well as capital expenditures related to construction in progress that were paid to related parties. At December 31, 2022 and 2021, there were no operational outstanding liabilities and $128, respectively.

During the years ended December 31, 2022 and 2020, the Trust received did not receive related parties reimbursement for expenses paid that were associated with capital projects. During the year ended December 31, 2021, the Trust received $1,000 from related parties for reimbursement for expenses paid that were associated with capital projects. No reimbursements for operational receivables were received during the year ended December 31, 2022. At December 31, 2022, operational receivables outstanding due from related parties was $50 and $336, respectively.

Debt Financing

At December 31, 2022 and 2021, the Trust had $64,123 and $66,365, respectively, of outstanding principal on loans entered into with Bell Bank. During the years ended December 31, 2022, 2021 and 2020, the Trust incurred interest expense on debt held with Bell Bank of $2,480, $2,508, and $2,438, respectively. Accrued interest at December 31, 2022 and 2021, related to this debt was $130 and $148, respectively.

A December 31, 2022 and 2021, the Trust had $26,500 and $-, respectively, of outstanding principal on notes payable entered into with Bell Bank. During the years ended December 31, 2022, 2021 and 2020, the Trust did not incur interest expense on note payable held with Bell Bank.

Mezzanine Financing

The Trust offers mezzanine financing to joint ventures, see note 5 for investment in unconsolidated affiliates.

As of December 31, 2022 and 2021, Sterling issued $5,854 and $6,855, respectively, in second mortgage financing to related entities.

During the years ended December 31, 2022 and 2021, the Trust earned interest income of $350 and $212, respectively, related to the second mortgage financing. No interest income was earned during the year ended December 31, 2020.

Insurance Services

The Trust retains insurance services from Bell Insurance. Policies provided by these services provide insurance coverage for the Trust’s Commercial segment as well as Director and Officer general and liability coverage. At December 31, 2022, 2021, and 2020 total premiums incurred for this policy were $48, $166 and $118, respectively.

Tenant Improvement Arrangements

During the year ended December 31, 2021, the Trust paid $2,782 in tenant improvement costs associated with a lease agreement with Trustmark Enterprises, Inc. There were no tenant improvement costs incurred during the years ended December 31, 2022 and 2020. At December 31, 2022, no costs were owed to related parties for tenant improvement costs.

Development Arrangements

Effective August 25, 2021, The Trust purchased a 70% interest in ST Oak Cliff Dallas, LLC. The purpose of the entity is to develop and construct a 318-unit multifamily property located in Dallas, Texas. The partnering investee, TG Oak Cliff Dallas, LLC is owned in part by Kenneth P. Regan, the Trust’s Chief Executive Officer and Trustee. Mr. Regan is also a partner in Trumont Group, the developer

engaged by ST Oak Cliff Dallas, LLC to oversee the development of the property. Further, Mr. Regan is also a partner in Trumont Construction, the company who was engaged to oversee the day-to-day construction operations of the property.

During the years ended December 31, 2022 and 2021, the Trust incurred and paid $411 and $256, respectively, in development fees to Trumont Group. No such fees were paid during the year ended December 31, 2020. At December 31, 2022 the Trust owed $- and $51, respectively, in development fees to Trumont Group.

During the years ended December 31, 2022 and 2021, the Trust incurred and paid $799 and $71, respectively, in construction fees to Trumont Construction. No such fees were paid during the year ended December 31, 2020. At December 31, 2022 the Trust owed $71 and $29, respectively, in construction fees to Trumont Construction.

During the years ended December 31, 2022 and 2021, the Trust incurred and paid $639 and $41, respectively, in general construction costs to Trumont Construction. No such fees were paid during the year ended December 31, 2020. At December 31, 2022 there was $81 of general construction costs were owed to Trumont Construction. At December 31, 2021, no general construction costs were owed to Trumont Construction.

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RENTALS UNDER OPERATING LEASES / RENTAL INCOME

12 Months Ended

Dec. 31, 2022

RENTALS UNDER OPERATING LEASES / RENTAL INCOME

RENTALS UNDER OPERATING LEASES / RENTAL INCOME

NOTE 16 - RENTALS UNDER OPERATING LEASES / RENTAL INCOME

Residential apartment units are rented to individual tenants with lease terms of one year or less.

Commercial properties are leased to tenants under terms expiring at various dates through 2038. Lease terms often include renewal options.

As of December 31, 2022, we derived 84.4% of our revenues from residential leases that are generally for terms of one-year or less. The residential leases may include lease income related to such items as parking, storage and non-refundable deposits that we treat as a single lease component because amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore we subsequently recognize lease income over the lease term on a straight-line basis.  Residential leases are renewable upon consent of both parties on an annual or monthly basis.

As of December 31, 2022, we derived 15.6% of our revenues from commercial leases primarily under long-term lease agreements.  Substantially all commercial leases contain fixed escalations, or, in some instances, changes based on the Consumer Price Index, which occur at specified times during the term of the lease. In certain commercial leases, variable lease income, such as percentage rent, is recognized when rents are earned. We recognize rental income and rental abatements from our commercial leases on a straight-line basis over the lease term. Recognition of rental income commences when control of the leased space has been transferred to the tenant.

We recognize variable income from pass-through expenses on an accrual basis over the periods in which the expenses were incurred. Pass-through expenses are comprised of real estate taxes, operating expenses and common area maintenance costs which are reimbursed by tenants in accordance with specific allowable costs per tenant lease agreements. When we pay pass-through expenses, subject to reimbursement by the tenant, they are included within operating expenses, excluding real estate taxes, and reimbursements are included within “real estate rental income” along with the associated base rent in the accompanying consolidated financial statements.

We record base rents on a straight-line basis. The monthly base rent income according to the terms of our leases is adjusted so that an average monthly rent is recorded for each tenant over the term of its lease. The straight-line rent adjustment increased revenue by $302 for the year ended December 31, 2022, and increased revenue by $550 for the year ended December 31, 2021. The straight-line receivable balance included in other assets on the consolidated balance sheets as of the years ended December 31, 2022 and 2021 was $3,756 and $3,569 respectively. We receive payments for expense reimbursements from substantially all our multi-tenant commercial tenants throughout the year based on estimates.

Lease income related to the Trust’s operating leases is comprised of the following:

	Year ended December 31, 2022
	Residential		Commercial		Total
	(in thousands)
Lease income related to fixed lease payments	$	109,769	$	16,091	$	125,860
Lease income related to variable lease payments		—		4,510		4,510
Other (a)		(804)		332		(472)
Lease Income (b)	$	108,965	$	20,933	$	129,898

(a) For the year ended December 31, 2022, “Other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements.

(b) Excludes other rental income for the year ended December 31, 2022, of $5,162, which is accounted for under the revenue recognition standard.

	Year ended December 31, 2021
	Residential		Commercial		Total
	(in thousands)
Lease income related to fixed lease payments	$	103,039	$	16,490	$	119,529
Lease income related to variable lease payments		—		4,576		4,576
Other (c)		(538)		630		92
Lease Income (d)	$	102,501	$	21,696	$	124,197

(c) For the year ended December 31, 2021, “Other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements.

(d) Excludes other rental income for the year ended December 31, 2021, of $5,127, which is accounted for under the revenue recognition standard.

Commercial space is rented under long-term agreements. Minimum future rentals on non-cancelable operating leases as of December 31, 2022 are as follows:

Years ending December 31,	Amount
	(in thousands)
2023	$	15,216
2024		14,940
2025		14,556
2026		13,156
2027		11,719
Thereafter		42,734
	$	112,321

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2022

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 17 - COMMITMENTS AND CONTINGENCIES

Environmental Matters

Federal law (and the laws of some states in which we own or may acquire properties) imposes liability on a landowner for the presence on the premises of hazardous substances or wastes (as defined by present and future federal and state laws and regulations). This liability is without regard to fault or knowledge of the presence of such substances and may be imposed jointly and severally upon all succeeding landowners. If such hazardous substance is discovered on a property acquired by us, we could incur liability for the removal of the substances and the cleanup of the property.

There can be no assurance that we would have effective remedies against prior owners of the property. In addition, we may be liable to tenants and may find it difficult or impossible to sell the property either prior to or following such a cleanup.

Risk of Uninsured Property Losses

We maintain property damage, fire loss, and liability insurance. However, there are certain types of losses (generally of a catastrophic nature) which may be either uninsurable or not economically insurable. Such excluded risks may include war, earthquakes, tornados, certain environmental hazards, and floods. Should such events occur, (i) we might suffer a loss of capital invested, (ii) tenants may suffer losses and may be unable to pay rent for the spaces, and (iii) we may suffer a loss of profits which might be anticipated from one or more properties.

Litigation

The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business.  While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the outcome of such matters will not have a material effect on the consolidated financial statements of the Trust.

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DISPOSITIONS

12 Months Ended

Dec. 31, 2022

DISPOSITIONS

DISPOSITIONS

NOTE 18 – DISPOSITIONS

During the year ended December 31, 2022, the Operating Partnership sold five properties. We sold a retail property located in Savage, Minnesota for a sale price of $2,700 and recognized a gain of $1,328 in March 2022. We sold a residential property located in Moorhead, Minnesota for a sale price of $6,400 and recognized a gain of $2,012 in May 2022. We sold an office property located in Edina, Minnesota for a sale price of $15,320 and recognized a gain of $6,728 in August 2022. We sold a residential property located in East Grand Forks, MN for a sale price of $1,200 and recognized a loss of $171 in September 2022. We sold a retail property located in Bloomington, Minnesota for a sale price of $2,888 and recognized a gain of $1,193 in December 2022.

During the year ended December 31, 2021, the Operating Partnership sold two properties. We sold a retail property located in Waite Park, Minnesota, for a sale price of $900 and recognized a gain of $2 in April 2021. We sold a residential property located in Moorhead, Minnesota, for a sale price of $4,950 and recognized a gain of $1,708 in June 2021.

During the year ended December 31, 2020, the Operating Partnership sold three properties. We sold a retail property located in Apple Valley, Minnesota, for a sale price of $3,670 and recognized a gain of $1,456 in March 2020. We sold an office property located in St. Cloud, Minnesota, for a sale price of $2,050 and recognized a gain of $1 in May 2020. We sold an office property located in Bismarck, North Dakota for a sale price of $7,000 and recognized a gain of $1,926 in December 2020.

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ACQUISITIONS

12 Months Ended

Dec. 31, 2022

ACQUISITIONS

ACQUISITIONS

NOTE 19 –ACQUISITIONS

The Company acquired the following properties during the year ended December 31, 2022.

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres	Total Acquisition Cost
2/28/22	Deer Park	Hutchinson, MN	Apartment Complex	138 units	$	15,073
5/31/22	Desoto Estates	Grand Forks, ND	Apartment Complex	68 units		5,863
5/31/22	Desoto Townhomes	Grand Forks, ND	Townhomes	24 units		3,226
5/31/22	Desoto Apartments	East Grand Forks, MN	Apartment Complex	24 units		1,230
6/10/22	Diamond Bend	Mandan, ND	Apartment Complex	78 units		10,919
9/13/22	Newgate Apartments	Bismarck, ND	Apartment Complex	46 units		2,444
12/1/22	Chandler 1898	Grand Forks, ND	Apartment Complex	12 units		498
12/29/22	Prose Fossil Creek	Fort Worth, TX	Apartment Complex	270 units		55,591
					$	94,844

The acquisition of Prose Fossil Creek was made utilizing a Reverse 1031 Like-Kind Exchange that was entered into at closing. As such, as of December 29, 2022, Prose Fossil Creek is in the possession of a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the sale transaction and the Reverse 1031 Like-Kind Exchange are completed. The Trust retains essentially all of the legal and economic benefits and obligations related to Prose Fossil Creek prior to the completion of the Reverse 1031 Like-Kind Exchange. Accordingly, Prose Fossil Creek is included in the Trust’s consolidated financial statements as a consolidated VIE until legal title is transferred to the Trust upon completion of the Reverse 1031 Like-Kind Exchange.

Total consideration given for acquisitions the year ended December 31, 2022 was completed through issuing approximately 560,000 limited partnership units of the operating partnership valued at $23.00 per unit for an aggregate consideration of approximately $12,870. The value of units issued in exchange for property is determined through a value established annually by our Board of Trustees and reflects the fair value at the time of issuance.

The Company acquired the following properties during the year ended December 31, 2021.

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres		Purchase Price
6/1/21	Flagstone	Fargo, ND	Apartment Complex	120 units	$	7,723
6/1/21	Brownstone	Fargo, ND	Apartment Complex	72 units		4,362
6/1/21	Briar Pointe	Fargo, ND	Apartment Complex	30 units		1,929
7/1/21	Oxford	Fargo, ND	Apartment Complex	144 units		10,066
7/1/21	Pinehurst	Fargo, ND	Apartment Complex	210 units		14,718
					$	38,798

Total consideration given for acquisitions the year ended December 31, 2021 was completed through issuing approximately 144,000 limited partnership units of the operating partnership valued at $20.00 per unit for an aggregate consideration of approximately $2,883. The value of units issued in exchange for property is determined through a value established annually by our Board of Trustees and reflects the fair value at the time of issuance.

The Company acquired the following properties during the year ended December 31, 2020.

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres		Acquisition Price
1/12/20	Wolf Creek	Fargo, ND	Apartment complex	54 units	$	5,227
1/31/20	Columbia Park Village	Grand Forks, ND	Apartment complex	12 units		642
3/1/20	Belmont East & West	Bismarck, ND	Apartment complex	5,348 sq. ft.		1,568

3/1/20	Eastbrook	Bismarck, ND	Apartment complex	24 units		1,358
3/1/20	Hawn	Fargo, ND	Apartment complex	48 units		2,524
3/1/20	Rosser	Bismarck, ND	Apartment complex	24 units		1,359
8/28/20	Trustmark (a)	Fargo, ND	Office building	units		6,588
9/15/20	Foxtail Townhomes	Fargo, ND	Apartment complex	30 units		1,434
12/17/20	Evergreen Terrace	Omaha, NE	Apartment complex	144 units		2,970
					$	23,670

Total consideration given for acquisitions during the year ended December 31, 2020, was completed through issuing approximately 535,000 limited partnership units of the operating partnership valued at $19.25 per unit for an aggregate consideration of approximately $10,293.  The value of units issued in exchange for property is determined through a value established annually by our Board of Trustees and reflects the fair value at the time of issuance.

In 2022, cash flows were reclassified to updated presentation resulting prior period to be updated to align with reclassification. The following table summarizes the allocation of the purchase price, before prorations, the Company recorded in conjunction with the acquisitions discussed above:

	Year Ended
	December 31,
	2022		2021		2020
Real estate investment acquired	$	93,515	$	39,344	$	29,775
Acquired lease intangible assets		1,732		-		46
Assumed Assets		3		23		38
Total Assets Acquired	$	95,250	$	39,367	$	29,859
Other liabilities		(406)		(569)		(6,189)
Net assets acquired		94,844		38,798		23,670
Equity/limited partnership unit consideration		(12,870)		(2,883)		(10,293)
Net cash consideration	$	81,974	$	35,915	$	13,377

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2022

SUBSEQUENT EVENTS.

SUBSEQUENT EVENTS

NOTE 20 - SUBSEQUENT EVENTS

On January 1, 2023, Damon K. Gleave and Michael P. Carlson owned shares in Trustmark Enterprises, Inc.

On January 13, 2023, the Trust obtained financing on a residential property for $27,500.

On January 13, 2023, the Trust paid off a note for $26,500 with Bell Bank that was set to mature on February 1, 2023.

On January 17, 2023, we paid a dividend or distribution of $0.2875 per share on our common shares of beneficial interest or limited partnership units, to common shareholders and limited unit holders of record on December 31, 2022.

On February 24, 2023, Barry L. Schmeiss resigned as Chief Investment Officer of the Trust.

Pending acquisitions and dispositions are subject to numerous conditions and contingencies and there are no assurances that the transactions will be completed.

We have evaluated subsequent events through the date of this filing. We are not aware of any other subsequent events which would require recognition or disclosure in the consolidated financial statements.

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Schedule III - Real Estate and Accumulated Depreciation - By Property

12 Months Ended

Dec. 31, 2022

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Industrial				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Guardian Building Products	Fargo, ND	$	2,487	$	820	$	2,554	$	60	$	(94)	$	880	$	2,460	$	3,340	$	641	08/29/2012		40
Titan Machinery	Bismarck, ND		2,069		950		1,395		32		—		982		1,395		2,377		279	01/28/2015		40
Titan Machinery	Dickinson, ND		1,816		354		1,096		400		—		754		1,096		1,850		297	07/30/2012		40
Titan Machinery	Fargo, ND		2,471		781		1,947		515		—		1,296		1,947		3,243		499	10/30/2012		40
Titan Machinery	Marshall, MN		4,674		300		3,648		81		—		381		3,648		4,029		1,026	11/01/2011		40
Titan Machinery	Minot, ND		—		618		1,654		—		—		618		1,654		2,272		431	08/01/2012		40
Titan Machinery	North Platte, NE		—		325		1,269		—		—		325		1,269		1,594		223	01/29/2016		40
Titan Machinery	Sioux City, IA		3,699		315		2,472		—		—		315		2,472		2,787		572	10/25/2013		40
Total		$	17,216	$	4,463	$	16,035	$	1,088	$	(94)	$	5,551	$	15,941	$	21,492	$	3,968

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Land				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Taco Bell	Denver, CO	$	389	$	669	$	—	$	—	$	—	$	669	$	—	$	669	$	—	06/14/2011
West 80	Rochester, MN		—		1,364		—		—		—		1,364		—		1,364		—	08/29/2016
Total		$	389	$	2,033	$	—	$	—	$	—	$	2,033	$	—	$	2,033	$	—

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Medical				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Bio-Life	Bismarck, ND	$	2,091	$	306	$	2,255	$	11	$	123	$	317	$	2,378	$	2,695	$	968	01/03/2008	9	-	40
Bio-Life	Grand Forks, ND		2,150		457		2,230		1		158		458		2,388		2,846		994	01/03/2008	10	-	40
Bio-Life	Janesville, WI		1,786		250		1,857		—		123		250		1,980		2,230		819	01/03/2008	9	-	40
Bio-Life	Mankato, MN		2,271		390		2,111		280		1,154		670		3,265		3,935		1,273	01/03/2008	11	-	40
Bio-Life	Marquette, MI		—		213		2,793		—		123		213		2,916		3,129		1,170	01/03/2008	9	-	40
Bio-Life	Onalaska, WI		1,723		208		1,853		—		323		208		2,176		2,384		880	01/03/2008	11	-	40
Bio-Life	Oshkosh, WI		1,773		293		1,705		—		146		293		1,851		2,144		785	01/03/2008	10	-	40
Bio-Life	Sheboygan, WI		2,022		623		1,611		—		248		623		1,859		2,482		768	01/03/2008	10	-	40
Bio-Life	Stevens Point, WI		1,935		119		2,184		—		123		119		2,307		2,426		941	01/03/2008	9	-	40
Total		$	15,751	$	2,859	$	18,599	$	292	$	2,521	$	3,151	$	21,120	$	24,271	$	8,598

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Residential				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Amberwood	Grand Forks, ND	$	2,376	$	426	$	3,304	$	3	$	178	$	429	$	3,482	$	3,911	$	552	09/13/2016	20	-	40
Arbor I/400	Bismarck, ND		350		73		516		4		65		77		581		658		142	06/04/2013		40
Arbor II/404	Bismarck, ND		358		73		538		6		43		79		581		660		128	11/01/2013		40
Arbor III/406	Bismarck, ND		356		71		536		7		43		78		579		657		128	11/01/2013		40
Ashbury	Fargo, ND		2,287		314		3,774		26		25		340		3,799		4,139		578	12/19/2016		40
Auburn II	Fargo, ND		825		105		883		12		87		117		970		1,087		372	03/23/2007	20	-	40
Autumn Ridge	Grand Forks, ND		5,162		1,072		8,875		44		67		1,116		8,942		10,058		3,687	08/16/2004	9	-	40
Barrett Arms	Crookston, MN		723		37		1,001		—		177		37		1,178		1,215		241	01/02/2014		40
Bayview	Fargo, ND		2,350		284		3,447		59		2,020		343		5,467		5,810		1,455	12/31/2007	20	-	40
Belmont East and West	Bismarck, ND		742		167		1,424		2		8		169		1,432		1,601		102	03/1/2020		40
Berkshire	Fargo, ND		401		31		406		7		53		38		459		497		155	03/31/2008	20	-	40
Betty Ann	Fargo, ND		421		74		738		6		140		80		878		958		267	08/31/2009		40
Birchwood 1	Fargo, ND		228		72		342		4		42		76		384		460		46	12/01/2017		40
Birchwood 2	Fargo, ND		1,342		234		2,099		52		288		286		2,387		2,673		290	12/01/2017		40
Bradbury Apartments	Bismarck, ND		1,791		1,049		4,922		—		81		1,049		5,003		6,052		532	10/24/2018		40
Briar Pointe	Fargo, ND		1,283		384		1,551		—		—		384		1,551		1,935		61	06/01/2021		40
Bridgeport	Fargo, ND		4,839		613		7,676		14		61		627		7,737		8,364		1,174	12/19/2016		40
Bristol Park	Grand Forks, ND		2,801		985		3,976		—		779		985		4,755		5,740		804	02/01/2016		40
Brookfield	Fargo, ND		1,945		228		1,958		30		318		258		2,276		2,534		761	08/01/2008	20	-	40

Brownstone	Fargo, ND	2,891	780	3,610	—	—	780	3,610	4,390	143	06/01/2021		40
Cambridge (FKA 44th Street)	Fargo, ND	1,614	333	1,845	4	237	337	2,082	2,419	480	02/06/2013		40
Candlelight	Fargo, ND	1,583	613	1,221	(326)	589	287	1,810	2,097	412	11/30/2012		40
Carling Manor	Grand Forks, ND	498	69	656	1	61	70	717	787	250	03/31/2008		40
Carlton Place	Fargo, ND	5,885	703	7,070	96	714	799	7,784	8,583	2,576	09/01/2008	20	-	40
Carr	Fargo, ND	583	66	759	4	41	70	800	870	116	01/17/2017		40
Cedars 4	Fargo, ND	—	134	1,068	—	29	134	1,097	1,231	111	12/31/2018		40
Chandler 1802	Grand Forks, ND	613	133	1,114	—	108	133	1,222	1,355	256	01/02/2014		40
Chandler 1834	Grand Forks, ND	399	112	552	—	39	112	591	703	61	09/1/2018		40
Chandler 1866	Grand Forks, ND	318	31	270	—	59	31	329	360	130	01/03/2005	20	-	40
Chandler 1898	Grand Forks, ND	—	114	357	—	—	114	357	471	1	12/1/2022		40
Cherry Creek (FKA Village)	Grand Forks, ND	—	173	1,435	1	274	174	1,709	1,883	534	11/01/2008		40
Cityside Apartments	Fargo, ND	676	192	1,129	6	62	198	1,191	1,389	126	11/30/2018		40
Columbia Park Village I	Grand Forks, ND	295	102	546	—	—	102	546	648	41	01/31/2020		40
Columbia West	Grand Forks, ND	2,379	294	3,367	1	591	295	3,958	4,253	1,298	09/01/2008	20	-	40
Country Club	Fargo, ND	1,006	252	1,252	2	240	254	1,492	1,746	410	05/02/2011	20	-	40
Countryside	Fargo, ND	593	135	677	—	68	135	745	880	203	05/02/2011		40
Courtyard	St. Louis Park, MN	2,865	2,270	5,681	—	794	2,270	6,475	8,745	1,466	09/03/2013	5	-	40
Dakota Manor	Fargo, ND	1,391	249	2,236	20	182	269	2,418	2,687	486	08/07/2014		40
Danbury	Fargo, ND	4,572	381	5,869	211	653	592	6,522	7,114	2,317	12/31/2007	20	-	40
Dellwood Estates	Anoka, MN	6,177	844	9,924	—	861	844	10,785	11,629	2,468	05/31/2013		40
Deer Park	Hutchinson, MN	8,838	1,784	12,545	—	—	1,784	12,545	14,329	287	02/28/2022		40
Desoto Estates	Grand Forks, ND	4,155	955	4,869	—	—	955	4,869	5,824	81	05/31/2022		40
Desoto Townhomes	Grand Forks, ND	1,589	464	2,767	—	—	464	2,767	3,231	46	05/31/2022		40
Diamond Bend	Mandan, ND	6,825	722	9,789	—	—	722	9,789	10,511	143	06/10/2022		40
Eagle Run	West Fargo, ND	3,659	576	5,787	128	180	704	5,967	6,671	1,822	08/12/2010		40
Eagle Sky I	Bismarck, ND	801	115	1,292	—	104	115	1,396	1,511	248	03/01/2016		40
Eagle Sky II	Bismarck, ND	801	135	1,279	—	173	135	1,452	1,587	245	03/01/2016		40
East Bridge	Fargo, ND	3,143	792	5,396	1	301	793	5,697	6,490	770	07/03/2017		40
Eastbrook	Bismarck, ND	639	145	1,233	—	—	145	1,233	1,378	87	01/31/2020		40
Echo Manor	Hutchinson, MN	911	141	875	—	118	141	993	1,134	215	01/02/2014	20	-	40
Emerald Court	Fargo, ND	—	66	830	11	180	77	1,010	1,087	340	03/31/2008	20	-	40
Essex	Fargo, ND	525	212	642	—	68	212	710	922	98	06/01/2017		40
Evergreen Terrace	Omaha, NE	5,060	820	7,573	—	84	820	7,657	8,477	399	12/17/2020		40
Fairview	Bismarck, ND	2,502	267	3,978	39	918	306	4,896	5,202	1,527	12/31/2008	20	-	40
Flagstone	Fargo, ND	5,110	1,535	6,258	—	—	1,535	6,258	7,793	248	06/01/2021		40
Flickertail	Fargo, ND	4,799	426	5,590	76	1,674	502	7,264	7,766	2,132	12/31/2008		40
Forest Avenue	Fargo, ND	324	61	637	8	64	69	701	770	166	02/06/2013		40
Foxtail Creek Townhomes	Fargo, ND	—	267	1,221	—	—	267	1,221	1,488	71	09/15/2020		40
Galleria III	Fargo, ND	667	118	681	2	292	120	973	1,093	237	11/09/2010		40
Garden Grove	Bismarck, ND	4,089	606	6,073	—	168	606	6,241	6,847	1,050	05/04/2016	5	-	40
Georgetown on the River	Fridley, MN	16,522	4,620	23,833	8	4,117	4,628	27,950	32,578	5,451	12/19/2014	5	-	40
Glen Pond	Eagan, MN	35,566	3,761	20,569	38	960	3,799	21,529	25,328	5,842	12/02/2011	20	-	40
Glen Pond Addition	Eagan, MN	6,056	876	15,408	—	—	876	15,408	16,284	899	09/30/2020		40

Granger Court I	Fargo, ND	1,908	279	1,926	25	301	304	2,227	2,531	479	06/04/2013	20	-	40
Hannifin	Bismarck, ND	403	81	607	5	52	86	659	745	147	11/01/2013		40
Harrison and Richfield	Grand Forks, ND	4,904	756	6,346	7	321	763	6,667	7,430	2,578	07/01/2007	5	-	40
Hartford Apartments	Fargo, ND	833	154	1,233	—	14	154	1,247	1,401	132	10/1/2018		40
Hawn	Fargo, ND	1,491	280	2,277	—	—	280	2,277	2,557	161	03/01/2020		40
Highland Meadows	Bismarck, ND	5,440	1,532	8,513	—	457	1,532	8,970	10,502	1,271	05/01/2017	5	-	40
Hunters Run I	Fargo, ND	473	50	419	5	(2)	55	417	472	163	03/23/2007		40
Hunters Run II	Fargo, ND	430	44	441	2	—	46	441	487	160	07/01/2008		40
Huntington	Fargo, ND	314	86	309	4	15	90	324	414	60	08/04/2015		40
Islander	Fargo, ND	732	98	884	49	115	147	999	1,146	270	07/01/2011		40
Jadestone	Fargo, ND	498	212	554	—	127	212	681	893	90	06/01/2017		40
Kennedy	Fargo, ND	354	84	588	7	91	91	679	770	161	02/06/2013	20	-	40
Library Lane	Grand Forks, ND	2,006	301	2,332	16	189	317	2,521	2,838	937	10/01/2007	20	-	40
Madison	Grand Forks, ND	272	95	497	—	100	95	597	692	102	09/01/2015		40
Maple Ridge	Omaha, NE	7,749	766	5,608	59	3,715	825	9,323	10,148	2,582	08/01/2008	20	-	40
Maplewood	Maplewood, MN	8,556	3,120	11,655	—	2,411	3,120	14,066	17,186	2,537	12/19/2014	5	-	40
Maplewood Bend I, II, III. IV, V, VI, VII, VIII & Royale	Fargo, ND	4,235	783	5,839	1	491	784	6,330	7,114	1,899	01/01/2009	20	-	40
Martha Alice	Fargo, ND	421	74	738	6	183	80	921	1,001	279	08/31/2009	20	-	40
Mayfair	Grand Forks, ND	—	80	1,043	4	123	84	1,166	1,250	394	07/01/2008	20	-	40
Monticello	Fargo, ND	544	60	752	14	111	74	863	937	184	11/08/2013	20	-	40
Montreal Courts	Little Canada, MN	16,802	5,809	19,565	15	3,605	5,824	23,170	28,994	4,961	10/02/2013	5	-	40
Morningside Apartments	Fargo, ND	458	85	673	—	42	85	715	800	71	11/30/2018		40
Newgate	Bismarck, ND	1,503	538	1,755	—	—	538	1,755	2,293	15	09/13/2022		40
Oak Court	Fargo, ND	2,502	270	2,210	29	436	299	2,646	2,945	899	04/30/2008	28	-	40
Oakview Townhomes	Grand Forks, ND	3,473	822	4,698	1	471	823	5,169	5,992	767	01/11/2017		40
Oxford	Fargo, ND	6,679	1,655	8,563	—	—	1,655	8,563	10,218	321	07/01/2021		40
Pacific Park I	Fargo, ND	526	95	777	3	130	98	907	1,005	205	02/06/2013		40
Pacific Park II	Fargo, ND	450	111	865	4	140	115	1,005	1,120	225	02/06/2013		40
Pacific South	Fargo, ND	278	58	459	2	16	60	475	535	114	02/06/2013		40
Park Circle	Fargo, ND	547	196	716	7	17	203	733	936	102	06/01/2017		40
Parkview Arms	Bismarck, ND	—	373	3,845	—	365	373	4,210	4,583	784	05/13/2015	5	-	40
Parkwest Gardens	West Fargo, ND	3,010	713	5,712	39	1,390	752	7,102	7,854	1,396	06/30/2014	20	-	40
Parkwood	Fargo, ND	—	126	1,143	14	23	140	1,166	1,306	407	08/01/2008		40
Pebble Creek	Bismarck, ND	3,588	260	2,818	31	(62)	291	2,756	3,047	958	03/19/2008	20	-	40
Pinehurst	Fargo, ND	9,716	2,368	12,614	—	—	2,368	12,614	14,982	473	07/01/2021		40
Plumtree	Fargo, ND	516	100	782	—	29	100	811	911	114	05/01/2017		40
Prairiewood Courts	Fargo, ND	—	308	1,730	28	143	336	1,873	2,209	725	09/01/2006	20	-	40
Prairiewood Meadows	Fargo, ND	3,781	736	852	11	367	747	1,219	1,966	232	09/30/2012		40
Prose Fossil Creek	Fort Worth, TX	—	5,451	46,811	—	—	5,451	46,811	52,262	98	12/29/2022		40
Quail Creek	Springfield, MO	5,317	1,529	7,396	—	1,656	1,529	9,052	10,581	1,537	02/03/2015	5	-	40
Robinwood	Coon Rapids, MN	4,129	1,380	6,133	—	711	1,380	6,844	8,224	1,333	12/19/2014		40
Rosedale Estates	Roseville, MN	13,916	4,680	20,591	—	836	4,680	21,427	26,107	4,289	12/19/2014	5	-	40
Rosegate	Fargo, ND	2,888	251	2,978	49	132	300	3,110	3,410	1,136	04/30/2008	20	-	40
Rosser	Bismarck, ND	688	156	1,216	—	86	156	1,302	1,458	88	03/01/2020		40

Roughrider	Grand Forks, ND		373		100		448		—		117		100		565		665		93	08/01/2016	5	-	40
Saddlebrook	West Fargo, ND		1,306		148		1,262		203		105		351		1,367		1,718		462	12/31/2008		40
Sage Park	New Brighton, MN		9,307		2,520		13,985		—		1,061		2,520		15,046		17,566		3,031	12/19/2014	5	-	40
Sargent	Fargo, ND		940		164		1,529		4		17		168		1,546		1,714		233	01/10/2017		40
Schrock	Fargo, ND		425		71		626		3		66		74		692		766		152	06/04/2013		40
Sheridan Pointe	Fargo, ND		1,976		292		2,387		21		39		313		2,426		2,739		547	10/01/2013		40
Sierra Ridge	Bismarck, ND		6,575		754		8,795		151		863		905		9,658		10,563		2,987	09/01/2006		40
Somerset	Fargo, ND		—		300		3,400		43		57		343		3,457		3,800		1,235	07/01/2008		40
Southgate	Fargo, ND		4,744		803		5,267		20		64		823		5,331		6,154		2,015	07/01/2007	20	-	40
Southview III	Grand Forks, ND		—		99		522		1		116		100		638		738		170	08/01/2011		40
Southview Villages	Fargo, ND		2,376		268		2,483		16		645		284		3,128		3,412		1,012	10/01/2007	20	-	40
Spring	Fargo, ND		429		76		822		75		24		151		846		997		210	02/06/2013	20	-	40
Stanford Court	Grand Forks, ND		—		291		3,866		—		454		291		4,320		4,611		997	02/06/2013	20	-	40
Stonefield-Phase I	Bismarck, ND		7,500		2,804		11,060		227		802		3,031		11,862		14,893		2,273	08/01/2014	20	-	40
Stonefield-Phase II	Bismarck, ND		4,766		1,201		3,678		486		5,754		1,687		9,432		11,119		1,345	10/23/2014		40
Stonefield-Phase III	Bismarck, ND		—		1,079		—		238		—		1,317		—		1,317		—	10/23/2014
Stonybrook	Omaha, NE		6,124		1,439		8,003		—		1,574		1,439		9,577		11,016		3,088	01/20/2009	20	-	40
Summerfield	Fargo, ND		469		129		599		6		82		135		681		816		120	08/04/2015		40
Summit Point	Fargo, ND		3,284		681		5,434		22		449		703		5,883		6,586		1,020	10/01/2015	20	-	40
Sunchase	Fargo, ND		1,011		181		1,563		14		86		195		1,649		1,844		234	05/01/2017		40
Sunset Ridge	Bismarck, ND		10,813		1,759		9,560		36		145		1,795		9,705		11,500		3,234	06/06/2008	9	-	40
Sunview	Grand Forks, ND		—		144		1,578		2		241		146		1,819		1,965		587	12/31/2008	20	-	40
Sunwood	Fargo, ND		2,491		358		3,252		38		541		396		3,793		4,189		1,304	07/01/2007	20	-	40
Thunder Creek	Fargo, ND		2,645		633		4,063		1		551		634		4,614		5,248		525	03/1/2018	25	-	40
Twin Oaks	Hutchinson, MN		5,203		816		3,245		—		149		816		3,394		4,210		692	10/01/2014		40
Twin Parks	Fargo, ND		—		119		2,072		43		227		162		2,299		2,461		757	10/01/2008	20	-	40
Valley Homes Duplexes	Grand Forks, ND		998		356		1,668		1		418		357		2,086		2,443		390	01/22/2015		40
Valley View	Golden Valley, MN		4,107		1,190		6,076		—		458		1,190		6,534		7,724		1,274	12/19/2014	5	-	40
Village Park	Fargo, ND		609		219		1,932		51		80		270		2,012		2,282		725	04/30/2008		40
Village West	Fargo, ND		2,154		357		2,274		61		126		418		2,400		2,818		836	04/30/2008		40
Washington	Grand Forks, ND		350		74		592		—		75		74		667		741		108	05/04/2016		40
Westcourt	Fargo, ND		2,294		287		2,914		28		195		315		3,109		3,424		702	01/02/2014	5	-	40
West Oak	Fargo, ND		608		85		692		47		36		132		728		860		116	01/17/2017		40
Westside	Hawley, MN		456		59		360		—		99		59		459		518		127	02/01/2010		40
Westwind	Fargo, ND		561		49		455		1		95		50		550		600		206	04/30/2008	20	-	40
Westwood	Fargo, ND		3,108		597		6,341		91		764		688		7,105		7,793		2,378	06/05/2008	20	-	40
Willow Park	Fargo, ND		3,228		288		5,286		39		799		327		6,085		6,412		1,943	12/31/2008		40
Wolf Creek	Fargo, ND		2,979		1,082		4,210		—		28		1,082		4,238		5,320		319	01/12/2020		40
Woodland Pines	Omaha, NE		6,047		842		10,596		—		1,372		842		11,968		12,810		1,199	11/30/2018		40
Total		$	400,085	$	93,455	$	588,087	$	3,013	$	57,599	$	96,468	$	645,686	$	742,154	$	122,246

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Office				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
32nd Avenue	Fargo, ND	$	4,763	$	635	$	3,298	$	87	$	1,226	$	722	$	4,524	$	5,246	$	1,651	03/16/2004	3	-	40
Bell Plaza	Bloomington, MN		30,662		6,912		34,672		—		4,635		6,912		39,307		46,219		11,707	08/13/2015	3	-	40
Trustmark	Fargo, ND		6,915		2,089		4,718		14		6,298		2,103		11,016		13,119		712	08/28/2020		40
First International Bank & Trust	Moorhead, MN		—		210		712		5		88		215		800		1,015		295	05/13/2011	10	-	40
Four Points	Fargo, ND		—		70		1,238		—		175		70		1,413		1,483		520	10/18/2007	5	-	40
Gate City	Grand Forks, ND		—		382		893		1		810		383		1,703		2,086		405	03/31/2008		40
Goldmark Office Park	Fargo, ND		12,362		1,160		11,788		65		8,832		1,225		20,620		21,845		5,289	07/01/2007	1	-	40
Great American Bldg	Fargo, ND		1,064		511		1,290		22		447		533		1,737		2,270		760	02/01/2005	28	-	40
Midtown Plaza	Minot, ND		1,103		30		1,213		—		97		30		1,310		1,340		565	01/01/2004	5	-	40
Parkway office building (FKA Echelon)	Fargo, ND		1,619		278		1,491		42		82		320		1,573		1,893		611	05/15/2007	9	-	40
Redpath	White Bear Lake, MN		2,849		1,195		1,787		—		—		1,195		1,787		2,982		309	02/01/2016		40
Wells Fargo Center	Duluth, MN		—		600		7,195		(115)		2,740		485		9,935		10,420		3,537	07/11/2007	4	-	40
Total		$	61,337	$	14,072	$	70,295	$	121	$	25,430	$	14,193	$	95,725	$	109,918	$	26,361

																					Life on
																					which
								Costs													depreciation
								capitalized												Date of	on latest
				Initial cost				subsequent				Gross Amount at which								Construction	income
Retail				to company				to acquisition (a)				carried at close of period								or	statement is
Property	Physical Location	Encumbrances		Land		Buildings		Land		Buildings		Land		Buildings		Total		Depreciation		Acquisition	computed
Applebees	Coon Rapids, MN		—		750		875		8		—		758		875		1,633		281	03/09/2010		40
Dairy Queen	Apple Valley, MN		1,898		845		828		—		—		845		828		1,673		90	09/17/2018		40
Dairy Queen	Dickinson, ND		—		329		658		1		—		330		658		988		181	01/19/2012		40
Dairy Queen	Moorhead, MN		—		243		787		2		—		245		787		1,032		230	05/13/2011		20
Family Dollar	Mandan, ND		—		166		649		—		54		166		703		869		198	12/14/2010		40
OReilly	Mandan, ND		—		115		449		—		27		115		476		591		138	12/14/2010		40
Walgreens	Alexandria, LA		548		1,090		2,973		—		—		1,090		2,973		4,063		969	12/18/2009	28	-	40
Walgreens	Batesville, AR		4,623		472		6,405		—		—		472		6,405		6,877		2,162	07/09/2009		40
Walgreens	Denver, CO		2,984		2,349		2,358		—		—		2,349		2,358		4,707		683	06/14/2011		40
Walgreens	Fayetteville, AR		3,474		636		4,732		—		—		636		4,732		5,368		1,597	07/09/2009		40
Walgreens	Laurel, MS		—		1,280		2,984		—		—		1,280		2,984		4,264		933	07/30/2010		40
Total		$	13,527	$	8,275	$	23,698	$	11	$	81	$	8,286	$	23,779	$	32,065	$	7,462
Grand Totals		$	508,305	$	125,157	$	716,714	$	4,525	$	85,537	$	129,682	$	802,251	$	931,933	$	168,635

Notes:

(a) The costs capitalized subsequent to acquisition is net of dispositions.

(b) The changes in total real estate investments for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):

	2022		2021		2020
Balance at January 1,	$	896,702	$	845,288	$	802,028
Purchase of real estate investments		103,252		63,299		57,799
Sale and disposal of real estate investment		(26,960)		(8,184)		(15,467)
Property held for sale		—		1,578		(1,578)
Provision for asset impairment		(561)		—		—
Construction in progress not yet placed in service		(1,285)		(5,279)		2,506
Balance at December 31,	$	971,148	$	896,702	$	845,288

(c) The changes in accumulated depreciation for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):

	2022		2021		2020
Balance at January 1,	$	179,155	$	160,575	$	146,316
Depreciation expense		22,161		20,917		19,770
Property held for sale		—		749		(749)
Sale and disposal of real estate investment		(6,467)		(3,086)		(4,762)
Balance at December 31,	$	194,849	$	179,155	$	160,575

(d) The aggregate cost of our real estate for federal income tax purposes is $763,298.

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PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2022

PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Sterling and all subsidiaries for which we maintain a controlling interest.

The accompanying consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”).

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Sterling, Sterling Properties, LLLP, and wholly owned limited liability companies and partially-owned limited liability companies. All significant intercompany transactions and balances have been eliminated in consolidation.

As of December 31, 2022, the Trust owned approximately 36.60% of the partnership interests (“OP Units”) of the Operating Partnership. The remaining OP Units, consisting exclusively of limited partner interests, are held by persons who contributed their interests in properties to the Operating Partnership in exchange for OP Units. Under the LLLP Agreement and the redemptions plans, these persons have the right to request the Operating Partnership redeem their OP Units following a specified restricted period. All redemptions are at the sole discretion of the Trust, acting for itself or in its capacity as General Partner of the Operating Partnership, and further subject to the conditions and limitations of the LLLP Agreement and redemption plans, as the same may be amended or modified from time to time. If the Trust accepts a redemption request, the redemption of OP Units shall be made in cash in an amount equal to the fair value of an equivalent number of common shares of the Trust. In lieu of delivering cash, however, the Trust, as the Operating Partnership’s general partner, may, at its option and in its sole and absolute discretion, choose to acquire any OP Units so tendered by issuing common shares in exchange for the tendered OP Units. If the Trust so chooses, its common shares will be exchanged for OP Units on a one-for-one basis. This one-for-one exchange ratio is subject to adjustment to prevent dilution. With each such exchange or redemption, the Trust’s percentage ownership in the Operating Partnership will increase. In addition, whenever the Trust issues common or other classes of its shares, it contributes the net proceeds it receives from the issuance to the Operating Partnership and the Operating Partnership issues to the Trust an equal number of OP Units or other partnership interests having preferences and rights that mirror the preferences and rights of the shares issued. This structure is commonly referred to as an umbrella partnership REIT or “UPREIT.”

Additionally, we evaluate the need to consolidate affiliates based on standards set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”).  In determining whether we have a requirement to consolidate the accounts of an entity, management considers factors such as our ownership interest, our authority to make decisions and contractual and substantive participating rights of the limited partners and shareholders, as well as whether the entity is a variable interest entity (“VIE”) for which we have both: a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and b) the obligation to absorb losses or the right to receive benefits from the VIE that could be potentially significant to the VIE.

In instances where the Trust determines that it is not the primary beneficiary of a VIE or the Trust does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Trust will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Trust’s operations but instead its share of operations will be reflected as equity in earnings (loss) of unconsolidated entity on its consolidated statements of operations and comprehensive loss. Additionally, the Trust’s net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. See Note 5 for additional details regarding variable interest entities where the Trust uses the equity method of investing.

The operating partnership meets the criteria as a variable interest entity (“VIE”). The Trust’s sole significant asset is its investment in the operating partnership. The Trust is the primary beneficiary of the Operating Partnership and accordingly consolidated the Operating Partnership. As a result, substantially all of the Trust’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Trust’s debt is an obligation of the Operating Partnership, and the Trust guarantees the unsecured debt obligations of the Operating Partnership. The Trust may acquire property using a reverse like-kind exchange structure (a “Reverse 1031 Like-Kind Exchange”) under the Code to defer taxable gains on the subsequent sale of real estate property. As such, the acquired property (the “Parked Property”) remains in the possession of a VIE whose legal equity interests are owned by a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the subsequent sale transaction and the Reverse 1031 Like-Kind Exchange are completed. Although the VIE is legally owned by the qualified intermediary, the Trust retains essentially all of the legal and economic benefits and obligations related to the VIE (which holds the legal title to the Parked Property prior to the completion of the Reverse 1031 Like-Kind Exchange) and, as its designated manager, has the key decision-making power over the Parked Property. The VIE (including the Parked Property) is included in the Trust’s consolidated financial statements as a consolidated VIE until legal title is transferred to the Trust upon completion of the Reverse 1031 Like-Kind Exchange.

Concentration of Credit Risk

Concentration of Credit Risk

Our cash balances are maintained in various bank deposit accounts. The bank deposit amounts in these accounts may exceed federally insured limits at various times throughout the year.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Real Estate Investments

Real Estate Investments

Real estate investments are recorded at cost less accumulated depreciation.  Ordinary repairs and maintenance are expensed as incurred.

The Trust allocates the purchase price of each acquired investment property accounted for as an asset acquisition based upon the relative acquisition date fair value of the individual assets acquired and liabilities assumed, which generally include (i) land, (ii) building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above and below market lease intangibles, and (v) assumed financing that is determined to be above or below market, if any. Transaction costs related to acquisitions accounted for as asset acquisitions are capitalized as incurred and included as a cost of the building in the accompanying balance sheet.

Furniture and fixtures are stated at cost less accumulated depreciation. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for routine maintenance and repairs, which do not add to the value or extend useful lives, are charged to expense as incurred.

Depreciation is provided for over the estimated useful lives of the individual assets using the straight-line method over the following estimated useful lives:

Buildings and improvements	40 years
Furniture, fixtures and equipment	5-9 years

The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each reporting period, the Trust separately determines whether impairment indicators exist for each property.

Examples of situations considered to be impairment indicators include, but are not limited to:

o a substantial decline or negative cash flows;

o continued low occupancy rates;

o continued difficulty in leasing space;

o significant financially troubled tenants;

o a change in plan to sell a property prior to the end of its useful life or holding period;

o a significant decrease in market price not in line with general market trends; and

o any other quantitative or qualitative events or factors deemed significant by the Trust’s management or Board of Trustees.

If the presence of one or more impairment indicators as described above is identified with respect to an investment property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered to be impaired when the estimated future undiscounted cash flows are less than its current carrying value.  When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes complex or subjective assumptions which include, but are not limited to:

o projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, demographics, holding period and property location;

o projected capital expenditures;

o projected cash flows from the eventual disposition of an operating property using a property specific capitalization rate;

o comparable selling prices; and

o property specific discount rates for fair value estimates as necessary.

To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its fair value for impairment of real estate investments.

Based on evaluation, there were was one impairment loss of $561 during the year ended December 31, 2022. There were no impairment losses during the years ended December 2021 and 2020.

Cash and Cash Equivalents and Restricted Deposits

Cash and Cash Equivalents and Restricted Deposits

We classify highly liquid investments with a maturity of three months or less when purchased as cash equivalents. Restricted deposits include funds escrowed for tenant security deposits, real estate tax, insurance and mortgage escrows and escrow deposits required by lenders on certain properties to be used for future building renovations or tenant improvements. As of December 31, 2022 and December 31, 2021, the Trust did not hold any U.S. Treasury Bills ‘Securities’ in cash and cash equivalents. As of December 31, 2022, all U.S. Treasury Bills are classified as Level 1 investments in the fair value hierarchy.

Investments in U.S. Treasury Bills

Investments in U.S. Treasury Bills

Treasury Bills are short-term debt obligations with maturities of one year or less issued by the U.S. Treasury Department and backed by the U.S. Government. Treasury Bills yield no interest, but are issued at a discount to the redemption price. We classify our investments in U.S. Treasury Bills as investments in securities. We use quoted market prices to determine the fair value of our investments in U.S. Treasury Bills.

Investment in Unconsolidated Affiliates

Investment in Unconsolidated Affiliates

We account for unconsolidated affiliates using the equity method of accounting per guidance established under ASC 323, Investments – Equity Method and Joint Ventures (“ASC 323”). The equity method of accounting requires the investment to be initially recorded at cost and subsequently adjusted for our share of equity in the affiliates’ earnings (losses), contributions and distributions. We evaluate the carrying amount of the investments for impairment in accordance with ASC 323. Unconsolidated affiliates are reviewed for potential impairment if the carrying amount of the investment exceeds its fair value. An impairment charge is recorded when an impairment is deemed to be other-than-temporary. To determine whether impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until the carrying amount is fully recovered. The evaluation of an investment in an affiliate for potential impairment can require our management to exercise significant judgments. No impairment losses were recorded related to the unconsolidated affiliates for the years ended December 31, 2022, 2021 and 2020.

Other Assets

Other Assets

Other assets are comprised of the following as of December 31, 2022 and 2021:

	December 31, 2022		December 31, 2021
	(in thousands)
Due from related party	$	50	$	336
Accounts receivable, net		5,821		5,342
Insurance claim receivable		3,846		145
Fair value of interest rate swap		13,782		698
Other assets		181		192
Financing fees, less accumulated amortization		86		18
Lease costs, less accumulated amortization		1,799		2,065
Prepaid expenses		1,747		1,506
Total other assets, net	$	27,312	$	10,302

Note receivable

Note receivable,

Notes receivable are issued periodically and are secured and interest bearing. The Trust has one note receivable for a commercial tenant  bearing a 6.5% per annum interest rate which matures in 2025.

Accrued Expenses and Other liabilities

Accrued Expenses and Other liabilities

Accrued Expenses and other liabilities are comprised of the following as of December 31, 2022 and 2021:

	December 31, 2022		December 31, 2021
	(in thousands)
Special assessments payable	$	647	$	690
Due to related party		1,408		473
Accounts payable - trade		2,340		3,272
Retainage payable		3		86

Fair value of interest rate swap		—		1,648
Deferred insurance proceeds		2		476
Accrued interest expense		1,318		1,323
Accrued real estate taxes		7,275		6,653
Accrued unearned rent		2,936		3,055
Other liabilities		146		928
Total accrued expenses and other liabilities	$	16,075	$	18,604

Debt Issuance Costs

Debt Issuance Costs

We amortize external debt issuance costs related to notes and mortgage notes using the effective interest rate method, over the life term of the related debt. We record debt issuance costs net of amortization, on our consolidated balance sheets as an offset to their related debt. We record debt issuance costs related to revolving lines of credit as financing fees in other assets, regardless of whether a balance on the line of credit is outstanding. We record the amortization of all debt issuance costs as interest expense.

Noncontrolling Interest

Noncontrolling Interest

A noncontrolling interest in a subsidiary (minority interest) is in most cases an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements and separate from the parent company’s equity.  In addition, consolidated net income is required to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest, and the amount of consolidated net income attributable to the parent and the noncontrolling interest are required to be disclosed on the face of the consolidated statements of operations and other comprehensive income.  

Operating Partnership: Interests in the operating partnership held by limited partners are represented by operating partnership units.  The operating partnership’s income is allocated to holders of units based upon the ratio of their holdings to the total units outstanding during the period. Capital contributions, distributions, syndication costs, and profits and losses are allocated to noncontrolling interests in accordance with the terms of the operating partnership agreement.

Partially Owned Properties: The Trust reflects noncontrolling interests in partially owned properties on the balance sheet for the portion of properties consolidated by the Trust that are not wholly owned by the Trust.  The earnings or losses from those properties attributable to the noncontrolling interests are reflected as noncontrolling interest in partially owned properties in the consolidated statements of operations and other comprehensive income.

Federal Income Taxes

Federal Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code, as amended. A REIT calculates taxable income like other domestic corporations, with the major difference being a REIT is entitled to a deduction for dividends paid. A REIT is generally required to distribute each year at least 90% of its taxable income. If it chooses to retain the remaining 10% of taxable income, it may do so, but it will be subject to a corporate tax on such income. REIT shareholders are taxed on REIT distributions similar to corporate distributions.

A summary of the tax characterization of the dividends paid to shareholders of the Company’s common stock for the years ended December 31, 2022, 2021 and 2020 follows:

	Tax Year Ended December 31,
	Dividend		%		Dividend		%		Dividend		%
	2022		2022		2021		2021		2020		2020
Tax status
Ordinary income	$	0.6374	55.43	%	$	0.9833	92.76	%	$	0.8994	84.95	%
Capital gain		—	—	%		0.0767	7.24	%		—	—	%
Return of capital		0.5126	44.57	%		—	—	%		0.1593	15.05	%
	$	1.1500	100.00	%	$	1.0600	100.00	%	$	1.0587	100.00	%

We intend to continue to qualify as a REIT and, provided we maintain such status, will not be taxed on the portion of the income that is distributed to shareholders. In addition, we intend to distribute all our taxable income; therefore, no provisions or liabilities for income taxes have been recorded in the consolidated financial statements.

Sterling conducts its business activity as an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) through its Operating Partnership – Sterling Properties, LLLP. The Operating Partnership is organized as a limited liability limited partnership. Income or loss is allocated to the partners in accordance with the provisions of the Internal Revenue Code 704(b) and 704(c). UPREIT status allows non-recognition of gain by an owner of appreciated real estate if that owner contributes the real estate to a partnership in exchange for a partnership interest. The conversion of a partnership interest to shares of beneficial interest in the REIT will be a taxable event to the limited partner.

We follow ASC Topic 740, Income Taxes, to recognize, measure, present and disclose in our consolidated financial statements uncertain tax positions that we have taken or expect to take on a tax return. As of December 31, 2022 and 2021 we did not have any liabilities for uncertain tax positions that we believe should be recognized in our consolidated financial statements. We are no longer subject to Federal and State tax examinations by tax authorities for years before 2019.

The operating partnership has elected to record related interest and penalties, if any, as income tax expense on the consolidated statements of operations and other comprehensive income.

Revenue Recognition

Revenue Recognition

We record base rents on a straight-line basis. The monthly base rent income according to the terms of our leases is adjusted with the purpose that average monthly rent is recorded for each tenant over the term of its lease. The straight-line rent adjustment increased revenue by $302 and $550 for the years ended December 31, 2022 and 2021, respectively. The straight-line receivable balance included in receivables on the consolidated balance sheets as of December 31, 2022 and 2021, was $3,756 and $3,569, respectively. We receive payments for expense reimbursements from substantially all our multi-tenant commercial tenants throughout the year based on estimated. The Trust is the lessor for its residential and commercial leases. Leases are analyzed on an individual basis to determine lease classification. As of December 31, 2022, all leases analyzed under the Trust’s lease classification process were determined to be operating leases.

Earnings per Common Share

Earnings per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders (the “numerator”) by the weighted average number of common shares outstanding (the “denominator”) during the period. Sterling had no dilutive potential common shares as of December 31, 2022, 2021 and 2020 and therefore, basic earnings per common share was equal to diluted earnings per common share for both periods. As the calculation does not include net income attributable to the Operating Partnership, Operating Partnership Units are not included in the calculation, and does not have any impact on earnings per share.

For the years ended December 31, 2022, 2021 and 2020, Sterling’s denominators for the basic and diluted earnings per common share were approximately 10,632,000, 10,160,000, and 9,694,000, respectively.

Reclassifications

Reclassifications

Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year’s presentation.  These reclassifications have not changed the results of operations or equity.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying Consolidated Financial Statements.

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PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2022

PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES

Summary of Estimated Useful Life

Buildings and improvements	40 years
Furniture, fixtures and equipment	5-9 years

Schedule of other assets

	December 31, 2022		December 31, 2021
	(in thousands)
Due from related party	$	50	$	336
Accounts receivable, net		5,821		5,342
Insurance claim receivable		3,846		145
Fair value of interest rate swap		13,782		698
Other assets		181		192
Financing fees, less accumulated amortization		86		18
Lease costs, less accumulated amortization		1,799		2,065
Prepaid expenses		1,747		1,506
Total other assets, net	$	27,312	$	10,302

Schedule of accrued expenses and other liabilities

	December 31, 2022		December 31, 2021
	(in thousands)
Special assessments payable	$	647	$	690
Due to related party		1,408		473
Accounts payable - trade		2,340		3,272
Retainage payable		3		86

Fair value of interest rate swap		—		1,648
Deferred insurance proceeds		2		476
Accrued interest expense		1,318		1,323
Accrued real estate taxes		7,275		6,653
Accrued unearned rent		2,936		3,055
Other liabilities		146		928
Total accrued expenses and other liabilities	$	16,075	$	18,604

Schedule of Tax Status

	Tax Year Ended December 31,
	Dividend		%		Dividend		%		Dividend		%
	2022		2022		2021		2021		2020		2020
Tax status
Ordinary income	$	0.6374	55.43	%	$	0.9833	92.76	%	$	0.8994	84.95	%
Capital gain		—	—	%		0.0767	7.24	%		—	—	%
Return of capital		0.5126	44.57	%		—	—	%		0.1593	15.05	%
	$	1.1500	100.00	%	$	1.0600	100.00	%	$	1.0587	100.00	%

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SEGMENT REPORTING (Tables)

12 Months Ended

Dec. 31, 2022

SEGMENT REPORTING

Summary of Segment Revenues and Net Operating Income

	Year ended December 31, 2022						Year ended December 31, 2021						Year ended December 31, 2020
	Residential		Commercial		Total		Residential		Commercial		Total		Residential		Commercial		Total
	(in thousands)						(in thousands)						(in thousands)
Income from rental operations	$	113,968	$	21,092	$	135,060	$	107,284	$	22,040	$	129,324	$	98,576	$	26,040	$	124,616
Expenses from rental operations		64,647		6,491		71,138		57,454		7,315		64,769		52,686		6,883		59,569
Net operating income	$	49,321	$	14,601	$	63,922	$	49,830	$	14,725	$	64,555	$	45,890	$	19,157	$	65,047
Depreciation and amortization						24,679						22,203						21,214
Interest						19,994						18,142						17,097
Administration of REIT						5,247						4,381						4,217
Other income						(10,530)						(4,609)						(4,461)
Net income					$	24,532					$	24,438					$	26,980

Summary of Segment Assets and Accumulated Depreciation

As of December 31, 2022	Residential		Commercial		Total
	(in thousands)
Real estate investments	$	779,424	$	191,724	$	971,148
Accumulated depreciation		(147,115)		(47,734)		(194,849)
Total real estate investments, net	$	632,309	$	143,990	$	776,299
Lease intangible assets, less accumulated amortization		839		4,451		5,290
Cash and cash equivalents						3,257
Restricted deposits						9,323
Investment in securities						29,371
Investment in unconsolidated affiliates						29,423
Notes receivable						8,448
Other assets, net						27,312
Total Assets					$	888,723

As of December 31, 2021	Residential		Commercial		Total
	(in thousands)
Real estate investments	$	692,722	$	203,980	$	896,702
Accumulated depreciation		(133,100)		(46,055)		(179,155)
Total real estate investments, net	$	559,622	$	157,925	$	717,547
Lease intangible assets, less accumulated amortization		—		6,246		6,246
Cash and cash equivalents						51,507
Restricted deposits						9,149
Investment in unconsolidated affiliates						18,658
Notes receivable						7,457
Other assets, net						10,302
Total Assets					$	820,866

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RESTRICTED DEPOSITS AND FUNDED RESERVES (Tables)

12 Months Ended

Dec. 31, 2022

RESTRICTED DEPOSITS AND FUNDED RESERVES

Schedule of restricted deposits

	As of December 31,		As of December 31,
	2022		2021
	(in thousands)
Tenant security deposits	$	6,242	$	5,165
Real estate tax and insurance escrows		1,336		1,355
Replacement reserves		1,745		1,791
Other funded reserves		—		838
	$	9,323	$	9,149

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INVESTMENT IN UNCONSOLIDATED AFFILIATES (Tables)

12 Months Ended

Dec. 31, 2022

INVESTMENT IN UNCONSOLIDATED AFFILIATES

Schedule of investments in unconsolidated real estate ventures

			Total Investment in Unconsolidated Affiliates at
Unconsolidated Affiliates	Date Acquired	Trust Ownership Interest	December 31, 2022		December 31, 2021
Banner Building	2007	66.67%	$	(614)	$	60
Grand Forks INREIT, LLC	2003	50%		4,961		2,493
SE Savage, LLC	2019	60%		1,660		2,946
SE Maple Grove, LLC	2019	60%		1,836		2,823
SE Rogers, LLC	2020	60%		2,413		2,986
ST Oak Cliff, LLC	2021	70%		9,098		4,324
SE Brooklyn Park, LLC	2021	60%		2,914		3,026
SE Fossil Creek, LLC	2022	70%		7,155		-
			$	29,423	$	18,658

Schedule of financial information of unconsolidated entities

The following is a summary of the financial position of the unconsolidated affiliates at December 31, 2022 and 2021.

	December 31, 2022		December 31, 2021
	(in thousands)
ASSETS
Real estate investments	$	218,747	$	134,839
Accumulated depreciation		(16,490)		(10,940)
		202,257		123,899
Cash and cash equivalents		3,093		1,131
Restricted deposits		1,034		650
Intangible assets, less accumulated amortization		542		41
Other assets, net		827		909
Total Assets	$	207,753	$	126,630

LIABILITIES
Mortgage notes payable, net	$	152,246	$	87,996
Tenant security deposits payable		192		108
Accrued expenses and other liabilities		8,217		8,029
Total Liabilities	$	160,655	$	96,133
SHAREHOLDERS' EQUITY
Total Shareholders' Equity	$	47,098	$	30,497
Total liabilities and shareholders' equity	$	207,753	$	126,630

The following is a summary of results of operations of the unconsolidated affiliates for the years ended the years ended December 31, 2022, 2021 and 2020.

	The year ended December 31,
	2022		2021		2020
	(in thousands)
Income from rental operations	$	9,545	$	4,746	$	3,001
Expenses from rental operations		3,668		1,632		928
Net operating income	$	5,877	$	3,114	$	2,073
Depreciation and Amortization		5,678		1,248		688
Interest		4,148		2,275		970
Other Income		(91)		-		(24)
Net (loss) income	$	(3,858)	$	(409)	$	439

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LEASE INTANGIBLES (Tables)

12 Months Ended

Dec. 31, 2022

LEASE INTANGIBLES

Schedule of Intangible Assets and Liabilities and Accumulated Amortization

	Lease		Accumulated		Lease
As of December 31, 2022	Intangibles		Amortization		Intangibles, net
Lease Intangible Assets	(in thousands)
In-place leases	$	15,528	$	(10,960)	$	4,568
Above-market leases		1,897		(1,175)		722
	$	17,425	$	(12,135)	$	5,290
Lease Intangible Liabilities
Below-market leases	$	(2,379)	$	1,733	$	(646)

	Lease		Accumulated		Lease
As of December 31, 2021	Intangibles		Amortization		Intangibles, net
Lease Intangible Assets	(in thousands)
In-place leases	$	15,455	$	(10,381)	$	5,074
Above-market leases		2,617		(1,445)		1,172
	$	18,072	$	(11,826)	$	6,246
Lease Intangible Liabilities
Below-market leases	$	(2,525)	$	1,714	$	(811)

Schedule of Estimated Aggregate Amortization of Lease Intangible Assets and Liabilities

	Intangible		Intangible
Years ending December 31,	Assets		Liabilities
	(in thousands)
2023	$	1,597	$	151
2024		757		151
2025		757		151
2026		606		80
2027		498		42
Thereafter		1,075		71
	$	5,290	$	646

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NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2022

NOTES PAYABLE.

Schedule of Mortgage Notes Payable

	Principal Balance At
	December 31,		December 31,
	2022		2021
	(in thousands)
Fixed rate mortgage notes payable (a)	$	508,305	$	490,413
Variable rate mortgage notes payable		-		5,237
Mortgage notes payable		508,305		495,650
Less unamortized debt issuance costs		2,138		2,508
	$	506,167	$	493,142

(a) Includes $106,033 and $108,734 of variable rate mortgage debt that was swapped to a fixed rate as of December 31, 2022 and 2021, respectively.

Scheduled Maturities of Mortgage Notes Payable

Years ending December 31,	Amount
	(in thousands)
2023	$	53,341
2024		22,376
2025		53,130
2026		45,546
2027		77,845
Thereafter		256,067
Total payments	$	508,305

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DERIVATIVES AND HEDGING ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2022

DERIVATIVES AND HEDGING ACTIVITIES

Schedule of interest rate swaps

The following table summarizes the Trust’s interest rate swaps designated as cash flow hedges as of December 31, 2022:

			Fixed
Effective Date		Notional	Interest Rate	Maturity Date
November 1, 2019	$	6,575	3.15%	November 1, 2029
November 1, 2019	$	4,572	3.28%	November 1, 2029
January 10, 2020	$	2,979	3.39%	January 10, 2030
July 1, 2020	$	4,743	2.79%	June 10, 2030
December 2, 2020	$	12,362	2.91%	December 2, 2027
July 1, 2021	$	25,678	2.99%	July 1, 2031
November 10, 2021	$	28,047	3.54%	August 1, 2029
December 1, 2021	$	10,813	3.32%	December 1, 2031
August 15, 2022	$	1,491	3.07%	June 15, 2030
August 15, 2022	$	2,888	3.07%	June 15, 2030
August 15, 2022	$	1,614	2.94%	June 15, 2030
August 15, 2022	$	4,271	2.94%	June 15, 2030

The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:

	Number of Instruments			Notional
Interest Rate Derivatives	December 31, 2022	December 31, 2021		December 31, 2022		December 31, 2021
Interest rate swaps	12	12	$	106,033	$	108,734

Schedule of the estimated fair value of derivatives

Derivatives designated as	December 31, 2022			December 31, 2021
cash flow hedges:	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Interest rate swaps	Other assets, net	$	13,782	Other assets, net	$	698
Interest rate swaps	Accrued expenses and other liabilities	$	—	Accrued expenses and other liabilities	$	1,648

Schedule of the effect of the derivatives

			Location of Gain
		Amount of (Gain)/Loss	Reclassified from
Derivatives in		Recognized in Other	Accumulated other		Amount of (Gain)/Loss
Cash Flow Hedging		Comprehensive Income	Comprehensive Income		Reclassified from
Relationships		on Derivatives	(AOCI) into Income		AOCI into Income
		2022			2022
Interest rate swaps	$	(14,732)	Interest expense	$	94
		2021			2021
Interest rate swaps	$	(855)	Interest expense	$	670

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FAIR VALUE MEASUREMENT (Tables)

12 Months Ended

Dec. 31, 2022

FAIR VALUE MEASUREMENT

Carrying Value and Estimated Fair Value of Company's Financial Instruments

	December 31, 2022				December 31, 2021
	Carrying				Carrying
	Value		Fair Value		Value		Fair Value
	(in thousands)
Financial assets:
Investment in securities	$	29,371	$	29,371	$	—	$	—
Notes receivable	$	8,448	$	9,789	$	7,457	$	9,840
Derivative assets	$	13,782	$	13,782	$	698	$	698
Financial liabilities:
Mortgage notes payable	$	508,305	$	466,245	$	495,650	$	508,285
Derivative liabilities	$	—	$	—	$	1,648	$	1,648

Schedule of Fair Value of Liabilities on Recurring Basis

	Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2022
Derivative assets	$	—	$	13,782	$	—	$	13,782
December 31, 2021
Derivative assets	$	—	$	698	$	—	$	698
Derivative liabilities	$	—	$	1,648	$	—	$	1,648

Fair Value of Company's Financial Assets and Liabilities

	Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2022
U.S. Treasury Bills	$	29,371	$	—	$	—	$	29,371
Mortgage notes payable	$	—	$	—	$	466,245	$	466,245
Notes receivable	$	—	$	—	$	9,789	$	9,789
December 31, 2021
Mortgage notes payable	$	—	$	—	$	508,285	$	508,285
Notes receivable	$	—	$	—	$	9,840	$	9,840

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RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2022

RELATED PARTY TRANSACTIONS

Schedule of fees incurred and payable to Advisor

	Year Ended December 31,
	2022		2021		2020
	(in thousands)
Fee:
Advisory	$	3,683	$	3,348	$	3,116
Acquisition	$	1,321	$	375	$	708
Disposition	$	703	$	146	$	319
Financing	$	83	$	224	$	133
Project Management	$	450	$	572	$	365

The below table summarizes the fees payable to our Advisor.

	Payable at
	December 31,		December 31,
	2022		2021
	(in thousands)
Fee:
Advisory	$	632	$	296
Acquisition	$	387	$	-
Development	$	-	$	79
Disposition	$	72	$	-
Financing	$	-	$	38
Project Management	$	12	$	98

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RENTALS UNDER OPERATING LEASES / RENTAL INCOME (Tables)

12 Months Ended

Dec. 31, 2022

RENTALS UNDER OPERATING LEASES / RENTAL INCOME

Schedule of lease Income related to the Company's operating leases

	Year ended December 31, 2022
	Residential		Commercial		Total
	(in thousands)
Lease income related to fixed lease payments	$	109,769	$	16,091	$	125,860
Lease income related to variable lease payments		—		4,510		4,510
Other (a)		(804)		332		(472)
Lease Income (b)	$	108,965	$	20,933	$	129,898

(a) For the year ended December 31, 2022, “Other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements.

(b) Excludes other rental income for the year ended December 31, 2022, of $5,162, which is accounted for under the revenue recognition standard.

	Year ended December 31, 2021
	Residential		Commercial		Total
	(in thousands)
Lease income related to fixed lease payments	$	103,039	$	16,490	$	119,529
Lease income related to variable lease payments		—		4,576		4,576
Other (c)		(538)		630		92
Lease Income (d)	$	102,501	$	21,696	$	124,197

(c) For the year ended December 31, 2021, “Other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements.

(d) Excludes other rental income for the year ended December 31, 2021, of $5,127, which is accounted for under the revenue recognition standard.

Schedule of future minimum rental income

Years ending December 31,	Amount
	(in thousands)
2023	$	15,216
2024		14,940
2025		14,556
2026		13,156
2027		11,719
Thereafter		42,734
	$	112,321

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ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2022

ACQUISITIONS

Schedule of acquisition date fair values, before prorations recorded in conjunction with acquisitions

	Year Ended
	December 31,
	2022		2021		2020
Real estate investment acquired	$	93,515	$	39,344	$	29,775
Acquired lease intangible assets		1,732		-		46
Assumed Assets		3		23		38
Total Assets Acquired	$	95,250	$	39,367	$	29,859
Other liabilities		(406)		(569)		(6,189)
Net assets acquired		94,844		38,798		23,670
Equity/limited partnership unit consideration		(12,870)		(2,883)		(10,293)
Net cash consideration	$	81,974	$	35,915	$	13,377

Real Estate Property Acquisitions 2022

ACQUISITIONS

Schedule of acquisitions

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres	Total Acquisition Cost
2/28/22	Deer Park	Hutchinson, MN	Apartment Complex	138 units	$	15,073
5/31/22	Desoto Estates	Grand Forks, ND	Apartment Complex	68 units		5,863
5/31/22	Desoto Townhomes	Grand Forks, ND	Townhomes	24 units		3,226
5/31/22	Desoto Apartments	East Grand Forks, MN	Apartment Complex	24 units		1,230
6/10/22	Diamond Bend	Mandan, ND	Apartment Complex	78 units		10,919
9/13/22	Newgate Apartments	Bismarck, ND	Apartment Complex	46 units		2,444
12/1/22	Chandler 1898	Grand Forks, ND	Apartment Complex	12 units		498
12/29/22	Prose Fossil Creek	Fort Worth, TX	Apartment Complex	270 units		55,591
					$	94,844

Real Estate Property Acquisitions 2021

ACQUISITIONS

Schedule of acquisitions

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres		Purchase Price
6/1/21	Flagstone	Fargo, ND	Apartment Complex	120 units	$	7,723
6/1/21	Brownstone	Fargo, ND	Apartment Complex	72 units		4,362
6/1/21	Briar Pointe	Fargo, ND	Apartment Complex	30 units		1,929
7/1/21	Oxford	Fargo, ND	Apartment Complex	144 units		10,066
7/1/21	Pinehurst	Fargo, ND	Apartment Complex	210 units		14,718
					$	38,798

Real Estate Property Acquisitions 2020

ACQUISITIONS

Schedule of acquisitions

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres		Acquisition Price
1/12/20	Wolf Creek	Fargo, ND	Apartment complex	54 units	$	5,227
1/31/20	Columbia Park Village	Grand Forks, ND	Apartment complex	12 units		642
3/1/20	Belmont East & West	Bismarck, ND	Apartment complex	5,348 sq. ft.		1,568

3/1/20	Eastbrook	Bismarck, ND	Apartment complex	24 units		1,358
3/1/20	Hawn	Fargo, ND	Apartment complex	48 units		2,524
3/1/20	Rosser	Bismarck, ND	Apartment complex	24 units		1,359
8/28/20	Trustmark (a)	Fargo, ND	Office building	units		6,588
9/15/20	Foxtail Townhomes	Fargo, ND	Apartment complex	30 units		1,434
12/17/20	Evergreen Terrace	Omaha, NE	Apartment complex	144 units		2,970
					$	23,670

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Organization - Additional Information (Details)	Dec. 31, 2022	Dec. 31, 2021
ORGANIZATION
Ownership in operating partnership (as a percent)	36.60%	36.22%

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Principal Activity and Significant Accounting Policies - Principles of Consolidation (Details)	Dec. 31, 2022	Dec. 31, 2021
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Ownership in operating partnership (as a percent)	36.60%	36.22%

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Principal Activity and Significant Accounting Policies - Real Estate Investments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Real Estate Investments
Loss on impairment of property	$ 561	$ 0	$ 0
Impairment losses related to the unconsolidated affiliates	$ 0	$ 0	$ 0
Building and improvements
Real Estate Investments
Estimated useful life	40 years
Furniture and fixtures | Minimum
Real Estate Investments
Estimated useful life	5 years
Furniture and fixtures | Maximum
Real Estate Investments
Estimated useful life	9 years

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Principal Activity and Significant Accounting Policies - Other Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Due from related party	$ 50	$ 336
Accounts receivable, net	5,821	5,342
Insurance claim receivable	3,846	145
Fair value of interest rate swap	13,782	698
Other assets	181	192
Financing fees, less accumulated amortization	86	18
Lease costs, less accumulated amortization	1,799	2,065
Prepaid expenses	1,747	1,506
Other Assets, Total	$ 27,312	$ 10,302

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Principal Activity and Significant Accounting Policies - Note receivable (Details)	Dec. 31, 2022 item
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Interest rate (as a percent)	6.50%
Number of note receivable	1

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Principal Activity and Significant Accounting Policies - Accrued Expenses and Other liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Special assessments payable	$ 647	$ 690
Due to related party	1,408	473
Accounts payable - trade	2,340	3,272
Retainage payable	3	86
Fair value of interest rate swap		1,648
Deferred insurance proceeds	2	476
Accrued interest expense	1,318	1,323
Accrued real estate taxes	7,275	6,653
Accrued unearned rent	2,936	3,055
Other liabilities	146	928
Total accrued expenses and other liabilities	$ 16,075	$ 18,604

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Principal Activity and Significant Accounting Policies - Federal Income Taxes (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Taxable income to be distributed	90.00%
Retainable taxable income	10.00%
Tax characterization of dividends paid
Ordinary income	$ 0.6374	$ 0.9833	$ 0.8994
Capital Gain		0.0767
Return of capital	0.5126		0.1593
Total	$ 1.1500	$ 1.0600	$ 1.0587
Ordinary income (as a percent)	55.43%	92.76%	84.95%
Capital Gain (as a percent)		7.24%
Return of capital (as a percent)	44.57%		15.05%
Total (as a percent)	100.00%	100.00%	100.00%
Provisions or liabilities for income taxes	$ 0

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Principal Activity and Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Revenue Recognition
(Decrease)/Increase in revenue due to straight - line adjustment	$ 302	$ 550
Straight - line receivable	$ 3,756	$ 3,569

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Principal Activity and Significant Accounting Policies - Earnings Per Common Share (Details) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Earnings per Common Share
Dilutive potential common shares	0	0	0
Weighted average common shares outstanding, basic	10,632,000	10,160,000	9,694,000
Weighted average common shares outstanding, diluted	10,632,000	10,160,000	9,694,000

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Segment Reporting - Additional Information (Details)	12 Months Ended
	Dec. 31, 2022 segment
SEGMENT REPORTING
Number of reportable segments	2

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Segment Reporting - Summary of Segment Revenues and Net Operating Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
SEGMENT REPORTING
Income from rental operations	$ 135,060	$ 129,324	$ 124,616
Expenses from rental operations	71,138	64,769	59,569
Net operating income	63,922	64,555	65,047
Depreciation and amortization	24,679	22,203	21,214
Interest	19,994	18,142	17,097
Administration of REIT	5,247	4,381	4,217
Other income	(10,530)	(4,609)	(4,461)
Net (loss) income	24,532	24,438	26,980
Residential
SEGMENT REPORTING
Income from rental operations	113,968	107,284	98,576
Expenses from rental operations	64,647	57,454	52,686
Net operating income	49,321	49,830	45,890
Commercial
SEGMENT REPORTING
Income from rental operations	21,092	22,040	26,040
Expenses from rental operations	6,491	7,315	6,883
Net operating income	$ 14,601	$ 14,725	$ 19,157

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Segment Reporting - Summary of Segment Assets and Accumulated Depreciation (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
SEGMENT REPORTING
Real estate investments	$ 971,148	$ 896,702	$ 845,288	$ 802,028
Accumulated depreciation	(194,849)	(179,155)	(160,575)	$ (146,316)
Total real estate investments, net	776,299	717,547
Lease intangible assets, less accumulated amortization	5,290	6,246
Cash and cash equivalents	3,257	51,507	11,716
Restricted deposits	9,323	9,149	$ 15,919
Investment in securities	29,371
Investment in unconsolidated affiliates	29,423	18,658
Notes receivable	8,448	7,457
Other assets, net	27,312	10,302
Other assets, net		10,302
Total Assets	888,723	820,866
Residential
SEGMENT REPORTING
Real estate investments	779,424	692,722
Accumulated depreciation	(147,115)	(133,100)
Total real estate investments, net	632,309	559,622
Lease intangible assets, less accumulated amortization	839
Commercial
SEGMENT REPORTING
Real estate investments	191,724	203,980
Accumulated depreciation	(47,734)	(46,055)
Total real estate investments, net	143,990	157,925
Lease intangible assets, less accumulated amortization	$ 4,451	$ 6,246

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Restricted Deposits And Funded Reserves - Summary of Restricted Deposits and Funded Reserves (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
RESTRICTED DEPOSITS AND FUNDED RESERVES
Tenant security deposits	$ 6,242	$ 5,165
Real estate tax and insurance escrows	1,336	1,355
Replacement reserves	1,745	1,791
Other funded reserves		838
Restricted deposits, Total	$ 9,323	$ 9,149	$ 15,919

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Investment in Unconsolidated Affiliates - Total investments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Aug. 25, 2021
Investment in Unconsolidated Affiliates
Investment in unconsolidated affiliates	$ 29,423	$ 18,658
ST Oak Cliff, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)			70.00%
Operating Partnership
Investment in Unconsolidated Affiliates
Investment in unconsolidated affiliates	$ 29,423	18,658
Operating Partnership | Banner Building
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	66.67%
Investment in unconsolidated affiliates		60
Investment in unconsolidated affiliates	$ (614)
Operating Partnership | Grand Forks Market Place Retail Center
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	50.00%
Investment in unconsolidated affiliates	$ 4,961	2,493
Operating Partnership | SE Savage, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	60.00%
Investment in unconsolidated affiliates	$ 1,660	2,946
Operating Partnership | SE Maple Grove, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	60.00%
Investment in unconsolidated affiliates	$ 1,836	2,823
Operating Partnership | SE Rogers
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	60.00%
Investment in unconsolidated affiliates	$ 2,413	2,986
Operating Partnership | ST Oak Cliff, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	70.00%
Investment in unconsolidated affiliates	$ 9,098	4,324
Operating Partnership | SE Brooklyn Park, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	60.00%
Investment in unconsolidated affiliates	$ 2,914	$ 3,026
Operating Partnership | SE Fossil Creek, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	70.00%
Investment in unconsolidated affiliates	$ 7,155

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Investment in Unconsolidated Affiliates - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Aug. 25, 2021 item
SE Savage, LLC | First Mortgage
Investment in Unconsolidated Affiliates
Mortgage balance	$ 30,726	$ 26,210
SE Savage, LLC | Second Mortgage
Investment in Unconsolidated Affiliates
Mortgage balance		6,129
SE Savage, LLC | Promissory Note
Investment in Unconsolidated Affiliates
Face amount of debt	1,397
SE Maple Grove, LLC | First Mortgage
Investment in Unconsolidated Affiliates
Mortgage balance	24,788	24,788
SE Maple Grove, LLC | Second Mortgage
Investment in Unconsolidated Affiliates
Mortgage balance	3,643	727
SE Rogers
Investment in Unconsolidated Affiliates
Assets of unconsolidated investee	32,864	22,847
Mortgage balance	23,409
SE Rogers | First Mortgage
Investment in Unconsolidated Affiliates
Mortgage balance	25,742	15,688
ST Oak Cliff, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)			70.00%
Number of units | item			318
Assets of unconsolidated investee	40,404	7,394
Mortgage balance	0
SE Brooklyn Park, LLC
Investment in Unconsolidated Affiliates
Assets of unconsolidated investee	30,490	5,478
SE Brooklyn Park, LLC | First Mortgage
Investment in Unconsolidated Affiliates
Mortgage balance	24,448	0
Sterling Properties LLLP | Second Mortgage
Investment in Unconsolidated Affiliates
Mortgage balance	2,938
SE Fossil Creek, LLC
Investment in Unconsolidated Affiliates
Assets of unconsolidated investee	$ 11,083
Operating Partnership | Banner Building
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	66.67%
Mortgage balance	$ 6,951	6,329
Operating Partnership | Grand Forks Market Place Retail Center
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	50.00%
Percentage of interest	100.00%
Mortgage balance	$ 9,520	$ 9,794
Operating Partnership | SE Savage, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	60.00%
Operating Partnership | SE Maple Grove, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	60.00%
Operating Partnership | SE Rogers
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	60.00%
Operating Partnership | ST Oak Cliff, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	70.00%
Operating Partnership | SE Brooklyn Park, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	60.00%
Operating Partnership | Sterling Properties LLLP
Investment in Unconsolidated Affiliates
Cash contribution	$ 9,300
Operating Partnership | SE Fossil Creek, LLC
Investment in Unconsolidated Affiliates
Ownership interest (as a percent)	70.00%
Cash contribution	$ 7,190

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Investment in Unconsolidated Affiliates - Summary of financial position (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
ASSETS
Real estate investments	$ 971,148	$ 896,702	$ 845,288	$ 802,028
Accumulated depreciation	(194,849)	(179,155)	(160,575)	(146,316)
Total real estate investments, net	776,299	717,547
Cash and cash equivalents	3,257	51,507	11,716
Restricted deposits	9,323	9,149	15,919
Intangible assets, less accumulated amortization	5,290	6,246
Other assets, net	27,312	10,302
Total Assets	888,723	820,866
LIABILITIES
Tenant security deposits payable	6,368	5,225
Accrued expenses and other liabilities	16,075	18,604
Total Liabilities	565,257	525,349
SHAREHOLDERS' EQUITY
Total Shareholders' Equity	323,466	295,517	$ 291,528	$ 279,047
Total liabilities and shareholders' equity	888,723	820,866
Unconsolidated Affiliates
ASSETS
Real estate investments	218,747	134,839
Accumulated depreciation	(16,490)	(10,940)
Total real estate investments, net	202,257	123,899
Cash and cash equivalents	3,093	1,131
Restricted deposits	1,034	650
Intangible assets, less accumulated amortization	542	41
Other assets, net	827	909
Total Assets	207,753	126,630
LIABILITIES
Mortgage notes payable, net	152,246	87,996
Tenant security deposits payable	192	108
Accrued expenses and other liabilities	8,217	8,029
Total Liabilities	160,655	96,133
SHAREHOLDERS' EQUITY
Total Shareholders' Equity	47,098	30,497
Total liabilities and shareholders' equity	$ 207,753	$ 126,630

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Investment in Unconsolidated Affiliates - Summary of results of operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Investment in Unconsolidated Affiliates
Income from rental operations	$ 135,060	$ 129,324	$ 124,616
Expenses from rental operations	115,811	105,114	97,880
Income from operations	13,441	19,829	22,519
Depreciation and amortization	24,679	22,203	21,214
Interest	19,994	18,142	17,097
Other Income	1,293	1,935	455
Net (loss) income	24,532	24,438	26,980
Unconsolidated Affiliates
Investment in Unconsolidated Affiliates
Income from rental operations	9,545	4,746	3,001
Expenses from rental operations	3,668	1,632	928
Income from operations	5,877	3,114	2,073
Depreciation and amortization	5,678	1,248	688
Interest	4,148	2,275	970
Other Income	(91)		(24)
Net (loss) income	$ (3,858)	$ (409)	$ 439

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Lease Intangibles - Schedule of Intangible Assets and Liabilities and Accumulated Amortization (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Intangible Assets
Lease Intangibles	$ 17,425	$ 18,072
Accumulated Amortization	(12,135)	(11,826)
Total	5,290	6,246
Intangible Liabilities
Below-market lease	(2,379)	(2,525)
Below-market lease, accumulated amortization	1,733	1,714
Below-market lease, net	(646)	(811)
Amortization expense	2,518	1,285	$ 1,418
Amortization of Below Market Lease	164	183	213
In-place leases
Intangible Assets
Lease Intangibles	15,528	15,455
Accumulated Amortization	(10,960)	(10,381)
Total	4,568	5,074
Above-market leases
Intangible Assets
Lease Intangibles	1,897	2,617
Accumulated Amortization	(1,175)	(1,445)
Total	722	1,172
Intangible Liabilities
Amortization expense	$ 145	$ 154	$ 186

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Lease Intangibles - Schedule of Estimated Aggregate Amortization Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Intangible Assets
2023	$ 1,597
2024	757
2025	757
2026	606
2027	498
Thereafter	1,075
Total	5,290	$ 6,246
Intangible Liabilities
2023	151
2024	151
2025	151
2026	80
2027	42
Thereafter	71
Total	$ 646	$ 811
Amortization period	2 years 10 months 24 days

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Lines of Credit - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) property item	Dec. 31, 2021 USD ($) property
Lines of Credit
Line of credit outstanding	$ 1,008
Number of properties out of compliance with debt covenant | property	0	0
Bremer Bank
Lines of Credit
Number of letters of credit secured | item	1
Letters of credit total	$ 50
Unused line of credit	8,857
Line of credit outstanding	1,008
Bremer Bank Agreement One
Lines of Credit
Agreed line of credit	$ 4,915
Expiration date	Dec. 01, 2026
Bremer Bank Agreement One | SOFR
Lines of Credit
Variable interest rate of line of credit	2.00%
Bremer Bank Agreement Two
Lines of Credit
Agreed line of credit	$ 5,000
Expiration date	Dec. 01, 2026
Bremer Bank Agreement Two | SOFR
Lines of Credit
Variable interest rate of line of credit	2.00%

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Notes Payable - Summary (Details) $ in Thousands		12 Months Ended
	Dec. 29, 2022 USD ($)	Dec. 31, 2022 USD ($) item loan	Dec. 31, 2021 USD ($) item loan
MORTGAGE NOTES PAYABLE
Long-term debt, gross		$ 508,305
Mortgage Notes Payable
MORTGAGE NOTES PAYABLE
Long-term debt, gross		508,305	$ 495,650
Less unamortized debt issuance costs		2,138	2,508
Long-term debt, net		$ 506,167	$ 493,142
Number of mortgage loans out of compliance | loan		8	5
Outstanding balance of loans out of compliance, in aggregate		$ 17,687	$ 9,915
Notes Payable to Banks
MORTGAGE NOTES PAYABLE
Face amount of debt	$ 26,500
Notes Payable to Banks | Prime Rate
MORTGAGE NOTES PAYABLE
Basis reduction on variable rate (as a percent)	1.00%
Fixed rate mortgage notes payable | Mortgage Notes Payable
MORTGAGE NOTES PAYABLE
Long-term debt, gross		508,305	490,413
Debt swapped from variable to fixed rate		$ 106,033	$ 108,734
Number of mortgage loans | item		115	114
Fixed rate mortgage notes payable | Mortgage Notes Payable | Minimum
MORTGAGE NOTES PAYABLE
Effective interest rate (as a percent)		2.43%	2.09%
Fixed rate mortgage notes payable | Mortgage Notes Payable | Maximum
MORTGAGE NOTES PAYABLE
Effective interest rate (as a percent)		6.85%	6.85%
Fixed rate mortgage notes payable | Mortgage Notes Payable | Weighted Average
MORTGAGE NOTES PAYABLE
Effective interest rate (as a percent)		3.79%	3.83%
Variable rate mortgage notes payable | Mortgage Notes Payable
MORTGAGE NOTES PAYABLE
Long-term debt, gross			$ 5,237
Number of mortgage loans | item			1
Variable rate mortgage notes payable | Mortgage Notes Payable | Weighted Average
MORTGAGE NOTES PAYABLE
Effective interest rate (as a percent)			2.10%

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Notes Payable - Scheduled Maturities of Mortgage Notes Payable (Details) $ in Thousands	Dec. 31, 2022 USD ($)
NOTES PAYABLE.
2023	$ 53,341
2024	22,376
2025	53,130
2026	45,546
2027	77,845
Thereafter	256,067
Total payments	$ 508,305

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Derivatives and Hedging Activities - Other (Details) - Interest rate swap $ in Thousands	Dec. 31, 2022 USD ($) instrument	Dec. 31, 2021 instrument
Derivatives and Hedging Activities
Estimated amount to be reclassified over the next 12 months, as a decrease to interest expense | $	$ 2,311
Designated as Hedging Instrument | Cash Flow Hedging
Derivatives and Hedging Activities
Number of instruments | instrument	12	12

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Derivatives and Hedging Activities - Summary (Details) - Designated as Hedging Instrument - Cash Flow Hedging $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) instrument	Dec. 31, 2021 USD ($) instrument
Interest rate swap
Derivatives and Hedging Activities
Notional amount	$ 106,033	$ 108,734
Number of instruments | instrument	12	12
Interest Rate Swap, one, November 2029
Derivatives and Hedging Activities
Notional amount	$ 6,575
Fixed interest rate (as a percent)	3.15%
Derivative maturity date	Nov. 01, 2029
Interest Rate Swap, two, November 2029
Derivatives and Hedging Activities
Notional amount	$ 4,572
Fixed interest rate (as a percent)	3.28%
Derivative maturity date	Nov. 01, 2029
Interest Rate Swap, January 2030
Derivatives and Hedging Activities
Notional amount	$ 2,979
Fixed interest rate (as a percent)	3.39%
Derivative maturity date	Jan. 10, 2030
Interest Rate Swap, one, June 2030
Derivatives and Hedging Activities
Notional amount	$ 4,743
Fixed interest rate (as a percent)	2.79%
Derivative maturity date	Jun. 10, 2030
Interest Rate Swap, December 2027
Derivatives and Hedging Activities
Notional amount	$ 12,362
Fixed interest rate (as a percent)	2.91%
Derivative maturity date	Dec. 02, 2027
Interest Rate Swap, July 2031
Derivatives and Hedging Activities
Notional amount	$ 25,678
Fixed interest rate (as a percent)	2.99%
Derivative maturity date	Jul. 01, 2031
Interest Rate Swap, August 2029
Derivatives and Hedging Activities
Notional amount	$ 28,047
Fixed interest rate (as a percent)	3.54%
Derivative maturity date	Aug. 01, 2029
Interest Rate Swap, Dec 2031
Derivatives and Hedging Activities
Notional amount	$ 10,813
Fixed interest rate (as a percent)	3.32%
Derivative maturity date	Dec. 01, 2031
Interest Rate Swap, two, June 2030
Derivatives and Hedging Activities
Notional amount	$ 1,491
Fixed interest rate (as a percent)	3.07%
Derivative maturity date	Jun. 15, 2030
Interest Rate Swap, three, June 2030
Derivatives and Hedging Activities
Notional amount	$ 2,888
Fixed interest rate (as a percent)	3.07%
Derivative maturity date	Jun. 15, 2030
Interest Rate Swap, four, June 2030
Derivatives and Hedging Activities
Notional amount	$ 1,614
Fixed interest rate (as a percent)	2.94%
Derivative maturity date	Jun. 15, 2030
Interest Rate Swap, five, June 2030
Derivatives and Hedging Activities
Notional amount	$ 4,271
Fixed interest rate (as a percent)	2.94%
Derivative maturity date	Jun. 15, 2030

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Derivatives and Hedging Activities - Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Other assets, net
Derivatives and Hedging Activities
Fair value, derivative assets	$ 13,782	$ 698
Accrued expenses and other liabilities
Derivatives and Hedging Activities
Fair value, derivative liabilities		$ 1,648

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Derivatives and Hedging Activities - Gain-Loss (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Derivatives and Hedging Activities
Amount of (Gain)/Loss Recognized in Other Comprehensive Income on Derivatives	$ (14,732)	$ (855)	$ 1,842
Interest expense
Derivatives and Hedging Activities
Amount of (Gain)/Loss Recognized in Other Comprehensive Income on Derivatives	94	670
Interest rate swap
Derivatives and Hedging Activities
Amount of (Gain)/Loss Recognized in Other Comprehensive Income on Derivatives	$ (14,732)	$ (855)

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Derivatives and Hedging Activities - Credit-Risk Related Contingent Features (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Credit-risk-related Contingent Features
Termination value of interest rate derivatives in liability position	$ 0
Termination value of interest rate derivatives in asset position	$ 13,782

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Fair Value Measurement - Carrying Value and Estimated Fair Value of Company's Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Financial assets:
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets, Net Amount	Other Assets, Net Amount
Financial liabilities:
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Accrued Liabilities Current And Noncurrent	Accrued Liabilities Current And Noncurrent
Carrying Value
Financial assets:
Investment in securities	$ 29,371
Notes receivable	8,448	$ 7,457
Derivative assets	13,782	698
Financial liabilities:
Mortgage notes payable	508,305	495,650
Derivative liabilities		1,648
Fair Value
Financial assets:
Investment in securities	29,371
Notes receivable	9,789	9,840
Derivative assets	13,782	698
Financial liabilities:
Mortgage notes payable	$ 466,245	508,285
Derivative liabilities		$ 1,648

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Fair Value Measurement - Schedule of Fair Value of Assets on Recurring Basis (Details) - Recurring - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value Measurements
Derivative assets	$ 13,782	$ 698
Derivative liabilities		1,648
Level 2
Fair Value Measurements
Derivative assets	$ 13,782	698
Derivative liabilities		$ 1,648

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Fair Value Measurement - Fair Value of Company's Financial Assets and Liabilities (Details) - Fair Value - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value Measurements
U.S. Treasury Bills	$ 29,371
Mortgage notes payable	466,245	$ 508,285
Notes receivable	9,789	9,840
Level 1
Fair Value Measurements
U.S. Treasury Bills	29,371
Level 3
Fair Value Measurements
Mortgage notes payable	466,245	508,285
Notes receivable	$ 9,789	$ 9,840

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Fair Value Measurement - Additional Information (Details) - Measurement Input, Discount Rate	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Minimum
Fair Value Disclosures
Discount rates used to estimate fair value of mortgages and notes payable	5.75	3.25
Receivables, measurement input	3.25	3.25
Maximum
Fair Value Disclosures
Discount rates used to estimate fair value of mortgages and notes payable	6.00	3.35
Receivables, measurement input	7.25	7.25

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Noncontrolling Interest of Unitholders in Operating Partnership - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Noncontrolling Interest
Distributions per unit	$ 1.1500	$ 1.0600	$ 1.0587
Limited Partnership [Member]
Noncontrolling Interest
Total units	18,730,000	18,212,000
Units converted by limited partners into common shares	0
Operating Partnership
Noncontrolling Interest
Declared distributions	$ 5,385	$ 4,827

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Redemption Plans - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Jan. 01, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Redemption plans
Redemption of shares, value		$ 2,077	$ 5,566	$ 3,537
Redemption Plans [Member]
Redemption plans
Amount of securities redemption		55,000
Remaining securities to be redeemed		$ 14,684
Redemption price of securities	$ 21.85		$ 19.00	$ 18.25
Redemption of shares		53,000	82,000	127,000
Redemption of shares, value		$ 1,155	$ 1,552	$ 2,321
Additional redemption of units		42,000	211,000	66,000
Additional redemption of units, value		$ 922	$ 4,014	$ 1,216

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Beneficial Interest - Additional Information (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Beneficial Interest
Common shares, outstanding	10,810,000	10,342,000
Preferred shares, outstanding	0	0
Dividends paid	$ 1.1500	$ 1.0600	$ 1.0587
Total Beneficial Interest
Beneficial Interest
Common shares, authorized	100,000,000
Common shares, par value	$ 0.01
Preferred shares, authorized	50,000,000
Preferred shares, par value	$ 0.01

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Dividend Reinvestment Plan - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Nov. 03, 2020	Jul. 11, 2017	Jul. 20, 2012
DIVIDEND REINVESTMENT PLAN
Common shares to be issued				2,000,000	2,000,000	2,000,000
Minimum percentage of cash dividends	25.00%
Maximum additional cash purchase of common shares per fiscal quarter	$ 10
Percentage estimated value for dividend reinvestments	95.00%
Percentage estimated value for additional optional cash purchases	100.00%
Maximum amount of optional additional shares available for purchase	$ 40
Estimated value per common share	$ 23.00	$ 20.00
Purchase price per common share for dividend reinvestments	21.85	19.00
Purchase price per common share additional optional cash purchases	$ 23.00	$ 20.00
Notice period to participants	10 days
Shares issued pursuant to dividend reinvestments	342,000	363,000	356,000
Shares issued pursuant to additional optional cash purchases under the plan	177,000	203,000	187,000

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Related Party Transactions - Property Management and Board of Trustee Fees (Details) - GOLDMARK Property Management - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Related Party Transactions
Management fee, amount paid	$ 13,833	$ 12,836	$ 12,796
Management fees paid expressed as a percentage of net collected rents	5.00%
Management fees as percent of net collected rents	$ 5,499	5,271	4,851
Repair and maintenance related payroll and payroll related expenses	$ 7,744	$ 6,536	$ 6,549

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Related Party Transactions - Advisory Agreement and Other (Details)	12 Months Ended
	Dec. 31, 2022 USD ($) employee shares	Dec. 31, 2021 USD ($) shares	Dec. 31, 2020 USD ($) shares	Aug. 25, 2021 item
Related Party Transactions
Number of paid employees | employee	0
Received reimbursement for expenses paid	$ 0	$ 1,000,000	$ 0
Operation receivables outstanding	50,000	336,000
Rental income	125,860,000	119,529,000
Interest income	350,000	212,000	0
Costs and expenditures incurred due to construction in progress	207,000	276,000	240,000
Operational liabilities outstanding	0	128,000
Due to related party	1,408,000	473,000
Outstanding receivable from related party	50,000	336,000
Insurance receivable	3,846,000	145,000
Tenant improvement costs associated with lease agreement		2,782,000
Tenant improvement costs			0
Due to related parties tenant improvement costs		0
Mezzanine Financing
Related Party Transactions
Loan to related party	5,854,000	6,855,000
Sterling Management, LLC
Related Party Transactions
Advisory management fees	3,683,000	3,348,000	3,116,000
Advisory management fees outstanding	632,000	296,000
Acquisition fees	1,321,000	375,000	708,000
Acquisition fees outstanding	387,000
Development fees outstanding		79,000
Disposition fees	703,000	146,000	319,000
Disposition fees outstanding	72,000
Financing fees	83,000	224,000	133,000
Financing fees outstanding		38,000
Project management fee	450,000	572,000	365,000
Project management fee outstanding	12,000	98,000
Rental income	130,000	106,000	85,000
GOLDMARK Property Management
Related Party Transactions
Real estate commissions	418,000	217,000	308,000
Real estate commissions outstanding	92,000	0	0
Rental income	267,000	294,000	268,000
GOLDMARK Commercial Real Estate
Related Party Transactions
Real estate commissions	567,000	312,000	633,000
Real estate commissions outstanding	183,000	0	0
Rental income	$ 0	19,000	$ 57,000
Entity Affiliated With Messrs Regan and Wieland
Related Party Transactions
Number of operating partnership (OP) units issued in connection with the acquisition of various properties | shares	510,000		208,000
Value of operating partnership (OP) units issued in connection with the acquisition of various properties	$ 11,741,000		$ 4,671,000
Trumont Group, LLC
Related Party Transactions
Development fee	411,000	256,000	0
Development fees outstanding		51,000
Trumont Construction, LLC
Related Party Transactions
Construction fees	799,000	71,000	0
Construction fees payable	71,000	29,000
General construction costs	639,000	41,000	0
General construction costs payable	81,000	0
Bell Bank
Related Party Transactions
Rental income	859,000	404,000	484,000
Outstanding on principal loans	64,123,000	66,365,000
Interest expense incurred	2,480,000	2,508,000	2,438,000
Accrued interest	130,000	148,000
Total premiums paid	48,000	$ 166,000	$ 118,000
Bell Bank | Notes Payable to Banks
Related Party Transactions
Notes payable related to parties.	$ 26,500,000
Affiliated Entities
Related Party Transactions
Number of operating partnership (OP) units issued in connection with the acquisition of various properties | shares		0
ST Oak Cliff, LLC
Related Party Transactions
Ownership interest (as a percent)				70.00%
Number of units | item				318

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Rentals Under Operating Leases / Rental Income - Other (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Revenue from leases
(Decrease)/Increase in revenue due to straight - line adjustment	$ 302	$ 550
Straight - line receivable	$ 3,756	$ 3,569
Commercial Property
Revenue from leases
Operating lease expiration year	2038
Percentage of revenue from leases primarily under long-term lease agreements	15.60%
Residential Property
Revenue from leases
Percentage of revenue from leases that are generally for terms of one year or less	84.40%
Residential Property | Maximum
Revenue from leases
Term of lease	1 year

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Rentals Under Operating Leases / Rental Income - Lease Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Lease income:
Lease income related to fixed lease payments	$ 125,860	$ 119,529
Lease income related to variable lease payments	4,510	4,576
Other	(472)	92
Lease income	$ 129,898	$ 124,197
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]	Real Estate Revenue Net	Real Estate Revenue Net
Rental income accounted for under revenue recognition standard:
Other rental income	$ 5,162	$ 5,127
Residential
Lease income:
Lease income related to fixed lease payments	109,769	103,039
Other	(804)	(538)
Lease income	108,965	102,501
Commercial
Lease income:
Lease income related to fixed lease payments	16,091	16,490
Lease income related to variable lease payments	4,510	4,576
Other	332	630
Lease income	$ 20,933	$ 21,696

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Rentals Under Operating Leases / Rental Income- Future minimum rental income (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Future minimum rental income:
2023	$ 15,216
2024	14,940
2025	14,556
2026	13,156
2027	11,719
Thereafter	42,734
Total	$ 112,321

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Dispositions (Details)	1 Months Ended										12 Months Ended
	Dec. 31, 2022 USD ($)	Sep. 30, 2022 USD ($)	Aug. 31, 2022 USD ($)	May 31, 2022 USD ($)	Mar. 31, 2022 USD ($)	Jun. 30, 2021 USD ($)	Apr. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)	May 31, 2020 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($) property	Dec. 31, 2020 USD ($)
Dispositions
Gain on sale of real estate											$ 11,090,000	$ 1,710,000	$ 3,383,000
Disposed of by Sale
Dispositions
Number of dispositions											5	3
Property, Savage, MN | Disposed of by Sale
Dispositions
Proceeds from sale of real estate investments					$ 2,700,000
Gain on sale of real estate					$ 1,328,000
Moorhead, Minnesota | Disposed of by Sale
Dispositions
Proceeds from sale of real estate investments				$ 6,400,000
Gain on sale of real estate				$ 2,012,000
Property, Edina Minnesota | Disposed of by Sale
Dispositions
Proceeds from sale of real estate investments			$ 15,320,000
Gain on sale of real estate			$ 6,728,000
Property, East Grand Forks, MN | Disposed of by Sale
Dispositions
Proceeds from sale of real estate investments		$ 1,200,000
Gain on sale of real estate		$ 171,000
Property, Bloomington, MN Member | Disposed of by Sale
Dispositions
Proceeds from sale of real estate investments	$ 2,888,000
Gain on sale of real estate	$ 1,193,000
Retail Property, Waite Park, Minnesota | Disposed of by Sale
Dispositions
Sale price							$ 900,000
Gain on sale of real estate							$ 2,000
Residential Property, Moorhead, Minnesota | Disposed of by Sale
Dispositions
Sale price						$ 4,950,000
Gain on sale of real estate						$ 1,708,000
Retail Property, Apple Valley, MN | Disposed of by Sale
Dispositions
Proceeds from sale of real estate investments										$ 3,670,000
Gain on sale of real estate										$ 1,456,000
Retail Property, St, Cloud, Minnesota | Disposed of by Sale
Dispositions
Proceeds from sale of real estate investments									$ 2,050,000
Gain on sale of real estate									$ 1,000
Retail Property, Bismarck, ND | Disposed of by Sale
Dispositions
Proceeds from sale of real estate investments								$ 7,000,000
Gain on sale of real estate								$ 1,926,000

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Acquisitions - Purchases, Current Year (Details) $ / shares in Units, $ in Thousands							12 Months Ended
	Dec. 29, 2022 USD ($) item	Dec. 01, 2022 USD ($) item	Sep. 13, 2022 USD ($) item	Jun. 10, 2022 USD ($) item	May 31, 2022 USD ($) item	Feb. 28, 2022 USD ($) item	Dec. 31, 2022 USD ($) $ / shares shares	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Acquisitions
Acquisition price							$ 94,844	$ 38,798	$ 23,670
Real Estate Property Acquisitions 2022
Acquisitions
Acquisition price							$ 12,870
Aggregate number of limited partnership units issued for acquisition | shares							560,000
Price per limited partnership unit issued for acquisition, price one | $ / shares							$ 23.00
Deer Park, Hutchinson, MN
Acquisitions
Units acquired | item						138
Acquisition price						$ 15,073
Desota Estates, Grand Forks, ND
Acquisitions
Units acquired | item					68
Acquisition price					$ 5,863
Desota Townhomes, Grand Forks, ND
Acquisitions
Units acquired | item					24
Acquisition price					$ 3,226
Desota Apartments, East Grand Forks, MN
Acquisitions
Units acquired | item					24
Acquisition price					$ 1,230
Diamond Bend, Mandan, ND
Acquisitions
Units acquired | item				78
Acquisition price				$ 10,919
Newgate Apartments, Bismarck, ND
Acquisitions
Units acquired | item			46
Acquisition price			$ 2,444
Chandler 1898, Grand Forks, ND
Acquisitions
Units acquired | item		12
Acquisition price		$ 498
Prose Fossil Creek, Fort Worth, TX
Acquisitions
Units acquired | item	270
Acquisition price	$ 55,591

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Acquisitions - Purchases, Prior Year (Details) $ / shares in Units, $ in Thousands			12 Months Ended
	Jul. 01, 2021 USD ($) item	Jun. 01, 2021 USD ($) item	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($)
Acquisitions
Acquisition price			$ 94,844	$ 38,798	$ 23,670
Real Estate Property Acquisitions 2021
Acquisitions
Acquisition price				$ 2,883
Aggregate number of limited partnership units issued for acquisition | shares				144,000
Price per limited partnership unit issued for acquisition, price one | $ / shares				$ 20.00
Flagstone, Fargo, ND
Acquisitions
Units acquired | item		120
Acquisition price		$ 7,723
Brownstone, Fargo, ND
Acquisitions
Units acquired | item		72
Acquisition price		$ 4,362
Briar Pointe, Fargo, ND
Acquisitions
Units acquired | item		30
Acquisition price		$ 1,929
Oxford Fargo, ND
Acquisitions
Units acquired | item	144
Acquisition price	$ 10,066
Pinehurst Fargo, ND
Acquisitions
Units acquired | item	210
Acquisition price	$ 14,718

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Acquisitions - Purchases, Second Prior Year (Details) $ / shares in Units, $ in Thousands							12 Months Ended
	Dec. 17, 2020 USD ($) item	Sep. 15, 2020 USD ($) item	Aug. 28, 2020 USD ($)	Mar. 01, 2020 USD ($) ft² item	Jan. 31, 2020 USD ($) item	Jan. 12, 2020 USD ($) item	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($) $ / shares shares
ACQUISITIONS
Acquisition price							$ 94,844	$ 38,798	$ 23,670
Real Estate Property Acquisitions 2020
ACQUISITIONS
Aggregate number of limited partnership units issued for acquisition | shares									535,000
Price per limited partnership unit issued for acquisition, price one | $ / shares									$ 19.25
Aggregate value of limited partnership units issued for acquisition									$ 10,293
Wolf Creek, Fargo, ND
ACQUISITIONS
Units acquired | item						54
Acquisition price						$ 5,227
Columbia Park Village, Grand Forks, ND
ACQUISITIONS
Units acquired | item					12
Acquisition price					$ 642
Belmont East & West, Bismarck, ND
ACQUISITIONS
Acquisition price				$ 1,568
Area of the property purchased | ft²				5,348
Eastbrook, Bismarck, ND
ACQUISITIONS
Units acquired | item				24
Acquisition price				$ 1,358
Hawn, Fargo, ND
ACQUISITIONS
Units acquired | item				48
Acquisition price				$ 2,524
Rosser, Bismarck, ND
ACQUISITIONS
Units acquired | item				24
Acquisition price				$ 1,359
Trustmark Fargo, ND
ACQUISITIONS
Acquisition price			$ 6,588
Foxtail Townhomes, Fargo, ND
ACQUISITIONS
Units acquired | item		30
Acquisition price		$ 1,434
Evergreen Terrace, Omaha, NE
ACQUISITIONS
Units acquired | item	144
Acquisition price	$ 2,970

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Acquisitions - Summary of Acquisition Date Fair Values (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Acquisition date fair values
Real estate investment acquired	$ 776,299	$ 717,547
Acquired lease intangible assets	5,290	6,246
Total Assets	888,723	820,866
Asset Acquisitions
Acquisition date fair values
Real estate investment acquired	93,515	39,344	$ 29,775
Acquired lease intangible assets	1,732		46
Assumed assets	3	23	38
Total Assets	95,250	39,367	29,859
Other liabilities	(406)	(569)	(6,189)
Net assets acquired	94,844	38,798	23,670
Equity/limited partnership unit consideration	(12,870)	(2,883)	(10,293)
Net cash consideration	$ 81,974	$ 35,915	$ 13,377

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Subsequent Events - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
	Jan. 17, 2023	Jan. 13, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 29, 2022
Subsequent Events
Dividend or distribution paid			$ 1.1500	$ 1.0600	$ 1.0587
Notes Payable to Banks
Subsequent Events
Residential property financing value						$ 26,500
Subsequent Event
Subsequent Events
Dividend or distribution paid	$ 0.2875
Subsequent Event | Residential Property Financing
Subsequent Events
Residential property financing value		$ 27,500
Subsequent Event | Notes Payable to Banks
Subsequent Events
Repayments of Notes Payable		$ 26,500

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Schedule III - Real Estate and Accumulated Depreciation - By Property (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
SEC Schedule III, Real Estate and Accumulated Depreciation
Encumbrances	$ 508,305
Initial cost to company, Land	125,157
Initial cost to company, Buildings	716,714
Costs capitalized subsequent to acquisition, Land	4,525
Costs capitalized subsequent to acquisition, Buildings	85,537
Gross Amount at which carried at close of period, Land	129,682
Gross Amount at which carried at close of period, Buildings	802,251
Gross Amount at which carried at close of period, Total	931,933
Depreciation	168,635
Industrial Property
SEC Schedule III, Real Estate and Accumulated Depreciation
Encumbrances	17,216
Initial cost to company, Land	4,463
Initial cost to company, Buildings	16,035
Costs capitalized subsequent to acquisition, Land	1,088
Costs capitalized subsequent to acquisition, Buildings	(94)
Gross Amount at which carried at close of period, Land	5,551
Gross Amount at which carried at close of period, Buildings	15,941
Gross Amount at which carried at close of period, Total	21,492
Depreciation	$ 3,968
Industrial Property | Guardian Building Products
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,487
Initial cost to company, Land	820
Initial cost to company, Buildings	2,554
Costs capitalized subsequent to acquisition, Land	60
Costs capitalized subsequent to acquisition, Buildings	(94)
Gross Amount at which carried at close of period, Land	880
Gross Amount at which carried at close of period, Buildings	2,460
Gross Amount at which carried at close of period, Total	3,340
Depreciation	$ 641
Date of Construction or Acquisition	Aug. 29, 2012
Life on which depreciation on latest income statement is computed	40 years
Industrial Property | Titan Machinery, Bismarck, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 2,069
Initial cost to company, Land	950
Initial cost to company, Buildings	1,395
Costs capitalized subsequent to acquisition, Land	32
Gross Amount at which carried at close of period, Land	982
Gross Amount at which carried at close of period, Buildings	1,395
Gross Amount at which carried at close of period, Total	2,377
Depreciation	$ 279
Date of Construction or Acquisition	Jan. 28, 2015
Life on which depreciation on latest income statement is computed	40 years
Industrial Property | Titan Machinery, Dickinson, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Dickinson, ND
Encumbrances	$ 1,816
Initial cost to company, Land	354
Initial cost to company, Buildings	1,096
Costs capitalized subsequent to acquisition, Land	400
Gross Amount at which carried at close of period, Land	754
Gross Amount at which carried at close of period, Buildings	1,096
Gross Amount at which carried at close of period, Total	1,850
Depreciation	$ 297
Date of Construction or Acquisition	Jul. 30, 2012
Life on which depreciation on latest income statement is computed	40 years
Industrial Property | Titan Machinery, Fargo, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,471
Initial cost to company, Land	781
Initial cost to company, Buildings	1,947
Costs capitalized subsequent to acquisition, Land	515
Gross Amount at which carried at close of period, Land	1,296
Gross Amount at which carried at close of period, Buildings	1,947
Gross Amount at which carried at close of period, Total	3,243
Depreciation	$ 499
Date of Construction or Acquisition	Oct. 30, 2012
Life on which depreciation on latest income statement is computed	40 years
Industrial Property | Titan Machinery, Marshall, MN
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Marshall, MN
Encumbrances	$ 4,674
Initial cost to company, Land	300
Initial cost to company, Buildings	3,648
Costs capitalized subsequent to acquisition, Land	81
Gross Amount at which carried at close of period, Land	381
Gross Amount at which carried at close of period, Buildings	3,648
Gross Amount at which carried at close of period, Total	4,029
Depreciation	$ 1,026
Date of Construction or Acquisition	Nov. 01, 2011
Life on which depreciation on latest income statement is computed	40 years
Industrial Property | Titan Machinery, Minot, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Minot, ND
Initial cost to company, Land	$ 618
Initial cost to company, Buildings	1,654
Gross Amount at which carried at close of period, Land	618
Gross Amount at which carried at close of period, Buildings	1,654
Gross Amount at which carried at close of period, Total	2,272
Depreciation	$ 431
Date of Construction or Acquisition	Aug. 01, 2012
Life on which depreciation on latest income statement is computed	40 years
Industrial Property | Titan Machinery, North Platte, NE
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	North Platte, NE
Initial cost to company, Land	$ 325
Initial cost to company, Buildings	1,269
Gross Amount at which carried at close of period, Land	325
Gross Amount at which carried at close of period, Buildings	1,269
Gross Amount at which carried at close of period, Total	1,594
Depreciation	$ 223
Date of Construction or Acquisition	Jan. 29, 2016
Life on which depreciation on latest income statement is computed	40 years
Industrial Property | Titan Machinery, Sioux City, IA
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Sioux City, IA
Encumbrances	$ 3,699
Initial cost to company, Land	315
Initial cost to company, Buildings	2,472
Gross Amount at which carried at close of period, Land	315
Gross Amount at which carried at close of period, Buildings	2,472
Gross Amount at which carried at close of period, Total	2,787
Depreciation	$ 572
Date of Construction or Acquisition	Oct. 25, 2013
Life on which depreciation on latest income statement is computed	40 years
Land Property
SEC Schedule III, Real Estate and Accumulated Depreciation
Encumbrances	$ 389
Initial cost to company, Land	2,033
Gross Amount at which carried at close of period, Land	2,033
Gross Amount at which carried at close of period, Total	$ 2,033
Land Property | Taco Bell
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Denver, CO
Encumbrances	$ 389
Initial cost to company, Land	669
Gross Amount at which carried at close of period, Land	669
Gross Amount at which carried at close of period, Total	$ 669
Date of Construction or Acquisition	Jun. 14, 2011
Land Property | West 80
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Rochester, MN
Initial cost to company, Land	$ 1,364
Gross Amount at which carried at close of period, Land	1,364
Gross Amount at which carried at close of period, Total	$ 1,364
Date of Construction or Acquisition	Aug. 29, 2016
Medical Property
SEC Schedule III, Real Estate and Accumulated Depreciation
Encumbrances	$ 15,751
Initial cost to company, Land	2,859
Initial cost to company, Buildings	18,599
Costs capitalized subsequent to acquisition, Land	292
Costs capitalized subsequent to acquisition, Buildings	2,521
Gross Amount at which carried at close of period, Land	3,151
Gross Amount at which carried at close of period, Buildings	21,120
Gross Amount at which carried at close of period, Total	24,271
Depreciation	$ 8,598
Medical Property | Bio-Life, Bismarck, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 2,091
Initial cost to company, Land	306
Initial cost to company, Buildings	2,255
Costs capitalized subsequent to acquisition, Land	11
Costs capitalized subsequent to acquisition, Buildings	123
Gross Amount at which carried at close of period, Land	317
Gross Amount at which carried at close of period, Buildings	2,378
Gross Amount at which carried at close of period, Total	2,695
Depreciation	$ 968
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Bismarck, ND | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	9 years
Medical Property | Bio-Life, Bismarck, ND | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Medical Property | Bio-Life, Grand Forks, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 2,150
Initial cost to company, Land	457
Initial cost to company, Buildings	2,230
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	158
Gross Amount at which carried at close of period, Land	458
Gross Amount at which carried at close of period, Buildings	2,388
Gross Amount at which carried at close of period, Total	2,846
Depreciation	$ 994
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Grand Forks, ND | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	10 years
Medical Property | Bio-Life, Grand Forks, ND | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Medical Property | Bio-Life, Janesville, WI
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Janesville, WI
Encumbrances	$ 1,786
Initial cost to company, Land	250
Initial cost to company, Buildings	1,857
Costs capitalized subsequent to acquisition, Buildings	123
Gross Amount at which carried at close of period, Land	250
Gross Amount at which carried at close of period, Buildings	1,980
Gross Amount at which carried at close of period, Total	2,230
Depreciation	$ 819
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Janesville, WI | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	9 years
Medical Property | Bio-Life, Janesville, WI | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Medical Property | Bio-Life, Mankato, MN
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Mankato, MN
Encumbrances	$ 2,271
Initial cost to company, Land	390
Initial cost to company, Buildings	2,111
Costs capitalized subsequent to acquisition, Land	280
Costs capitalized subsequent to acquisition, Buildings	1,154
Gross Amount at which carried at close of period, Land	670
Gross Amount at which carried at close of period, Buildings	3,265
Gross Amount at which carried at close of period, Total	3,935
Depreciation	$ 1,273
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Mankato, MN | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	11 years
Medical Property | Bio-Life, Mankato, MN | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Medical Property | Bio-Life, Marquette, MI
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Marquette, MI
Initial cost to company, Land	$ 213
Initial cost to company, Buildings	2,793
Costs capitalized subsequent to acquisition, Buildings	123
Gross Amount at which carried at close of period, Land	213
Gross Amount at which carried at close of period, Buildings	2,916
Gross Amount at which carried at close of period, Total	3,129
Depreciation	$ 1,170
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Marquette, MI | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	9 years
Medical Property | Bio-Life, Marquette, MI | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Medical Property | Bio-Life, Onalaska, WI
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Onalaska, WI
Encumbrances	$ 1,723
Initial cost to company, Land	208
Initial cost to company, Buildings	1,853
Costs capitalized subsequent to acquisition, Buildings	323
Gross Amount at which carried at close of period, Land	208
Gross Amount at which carried at close of period, Buildings	2,176
Gross Amount at which carried at close of period, Total	2,384
Depreciation	$ 880
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Onalaska, WI | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	11 years
Medical Property | Bio-Life, Onalaska, WI | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Medical Property | Bio-Life, Oshkosh, WI
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Oshkosh, WI
Encumbrances	$ 1,773
Initial cost to company, Land	293
Initial cost to company, Buildings	1,705
Costs capitalized subsequent to acquisition, Buildings	146
Gross Amount at which carried at close of period, Land	293
Gross Amount at which carried at close of period, Buildings	1,851
Gross Amount at which carried at close of period, Total	2,144
Depreciation	$ 785
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Oshkosh, WI | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	10 years
Medical Property | Bio-Life, Oshkosh, WI | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Medical Property | Bio-Life, Sheboygan, WI
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Sheboygan, WI
Encumbrances	$ 2,022
Initial cost to company, Land	623
Initial cost to company, Buildings	1,611
Costs capitalized subsequent to acquisition, Buildings	248
Gross Amount at which carried at close of period, Land	623
Gross Amount at which carried at close of period, Buildings	1,859
Gross Amount at which carried at close of period, Total	2,482
Depreciation	$ 768
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Sheboygan, WI | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	10 years
Medical Property | Bio-Life, Sheboygan, WI | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Medical Property | Bio-Life, Stevens Point, WI
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Stevens Point, WI
Encumbrances	$ 1,935
Initial cost to company, Land	119
Initial cost to company, Buildings	2,184
Costs capitalized subsequent to acquisition, Buildings	123
Gross Amount at which carried at close of period, Land	119
Gross Amount at which carried at close of period, Buildings	2,307
Gross Amount at which carried at close of period, Total	2,426
Depreciation	$ 941
Date of Construction or Acquisition	Jan. 03, 2008
Medical Property | Bio-Life, Stevens Point, WI | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	9 years
Medical Property | Bio-Life, Stevens Point, WI | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property
SEC Schedule III, Real Estate and Accumulated Depreciation
Encumbrances	$ 400,085
Initial cost to company, Land	93,455
Initial cost to company, Buildings	588,087
Costs capitalized subsequent to acquisition, Land	3,013
Costs capitalized subsequent to acquisition, Buildings	57,599
Gross Amount at which carried at close of period, Land	96,468
Gross Amount at which carried at close of period, Buildings	645,686
Gross Amount at which carried at close of period, Total	742,154
Depreciation	$ 122,246
Residential Property | Amberwood
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 2,376
Initial cost to company, Land	426
Initial cost to company, Buildings	3,304
Costs capitalized subsequent to acquisition, Land	3
Costs capitalized subsequent to acquisition, Buildings	178
Gross Amount at which carried at close of period, Land	429
Gross Amount at which carried at close of period, Buildings	3,482
Gross Amount at which carried at close of period, Total	3,911
Depreciation	$ 552
Date of Construction or Acquisition	Sep. 13, 2016
Residential Property | Amberwood | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Amberwood | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Arbor I/400
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 350
Initial cost to company, Land	73
Initial cost to company, Buildings	516
Costs capitalized subsequent to acquisition, Land	4
Costs capitalized subsequent to acquisition, Buildings	65
Gross Amount at which carried at close of period, Land	77
Gross Amount at which carried at close of period, Buildings	581
Gross Amount at which carried at close of period, Total	658
Depreciation	$ 142
Date of Construction or Acquisition	Jun. 04, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Arbor II/404
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 358
Initial cost to company, Land	73
Initial cost to company, Buildings	538
Costs capitalized subsequent to acquisition, Land	6
Costs capitalized subsequent to acquisition, Buildings	43
Gross Amount at which carried at close of period, Land	79
Gross Amount at which carried at close of period, Buildings	581
Gross Amount at which carried at close of period, Total	660
Depreciation	$ 128
Date of Construction or Acquisition	Nov. 01, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Arbor III/406
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 356
Initial cost to company, Land	71
Initial cost to company, Buildings	536
Costs capitalized subsequent to acquisition, Land	7
Costs capitalized subsequent to acquisition, Buildings	43
Gross Amount at which carried at close of period, Land	78
Gross Amount at which carried at close of period, Buildings	579
Gross Amount at which carried at close of period, Total	657
Depreciation	$ 128
Date of Construction or Acquisition	Nov. 01, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Ashbury
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,287
Initial cost to company, Land	314
Initial cost to company, Buildings	3,774
Costs capitalized subsequent to acquisition, Land	26
Costs capitalized subsequent to acquisition, Buildings	25
Gross Amount at which carried at close of period, Land	340
Gross Amount at which carried at close of period, Buildings	3,799
Gross Amount at which carried at close of period, Total	4,139
Depreciation	$ 578
Date of Construction or Acquisition	Dec. 19, 2016
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Auburn II
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 825
Initial cost to company, Land	105
Initial cost to company, Buildings	883
Costs capitalized subsequent to acquisition, Land	12
Costs capitalized subsequent to acquisition, Buildings	87
Gross Amount at which carried at close of period, Land	117
Gross Amount at which carried at close of period, Buildings	970
Gross Amount at which carried at close of period, Total	1,087
Depreciation	$ 372
Date of Construction or Acquisition	Mar. 23, 2007
Residential Property | Auburn II | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Auburn II | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Autumn Ridge
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 5,162
Initial cost to company, Land	1,072
Initial cost to company, Buildings	8,875
Costs capitalized subsequent to acquisition, Land	44
Costs capitalized subsequent to acquisition, Buildings	67
Gross Amount at which carried at close of period, Land	1,116
Gross Amount at which carried at close of period, Buildings	8,942
Gross Amount at which carried at close of period, Total	10,058
Depreciation	$ 3,687
Date of Construction or Acquisition	Aug. 16, 2004
Residential Property | Autumn Ridge | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	9 years
Residential Property | Autumn Ridge | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Barrett Arms
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Crookston, MN
Encumbrances	$ 723
Initial cost to company, Land	37
Initial cost to company, Buildings	1,001
Costs capitalized subsequent to acquisition, Buildings	177
Gross Amount at which carried at close of period, Land	37
Gross Amount at which carried at close of period, Buildings	1,178
Gross Amount at which carried at close of period, Total	1,215
Depreciation	$ 241
Date of Construction or Acquisition	Jan. 02, 2014
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Bayview
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,350
Initial cost to company, Land	284
Initial cost to company, Buildings	3,447
Costs capitalized subsequent to acquisition, Land	59
Costs capitalized subsequent to acquisition, Buildings	2,020
Gross Amount at which carried at close of period, Land	343
Gross Amount at which carried at close of period, Buildings	5,467
Gross Amount at which carried at close of period, Total	5,810
Depreciation	$ 1,455
Date of Construction or Acquisition	Dec. 31, 2007
Residential Property | Bayview | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Bayview | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Belmont East and West
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 742
Initial cost to company, Land	167
Initial cost to company, Buildings	1,424
Costs capitalized subsequent to acquisition, Land	2
Costs capitalized subsequent to acquisition, Buildings	8
Gross Amount at which carried at close of period, Land	169
Gross Amount at which carried at close of period, Buildings	1,432
Gross Amount at which carried at close of period, Total	1,601
Depreciation	$ 102
Date of Construction or Acquisition	Mar. 01, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Berkshire
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 401
Initial cost to company, Land	31
Initial cost to company, Buildings	406
Costs capitalized subsequent to acquisition, Land	7
Costs capitalized subsequent to acquisition, Buildings	53
Gross Amount at which carried at close of period, Land	38
Gross Amount at which carried at close of period, Buildings	459
Gross Amount at which carried at close of period, Total	497
Depreciation	$ 155
Date of Construction or Acquisition	Mar. 31, 2008
Residential Property | Berkshire | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Berkshire | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Betty Ann
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 421
Initial cost to company, Land	74
Initial cost to company, Buildings	738
Costs capitalized subsequent to acquisition, Land	6
Costs capitalized subsequent to acquisition, Buildings	140
Gross Amount at which carried at close of period, Land	80
Gross Amount at which carried at close of period, Buildings	878
Gross Amount at which carried at close of period, Total	958
Depreciation	$ 267
Date of Construction or Acquisition	Aug. 31, 2009
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Birchwood 1
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 228
Initial cost to company, Land	72
Initial cost to company, Buildings	342
Costs capitalized subsequent to acquisition, Land	4
Costs capitalized subsequent to acquisition, Buildings	42
Gross Amount at which carried at close of period, Land	76
Gross Amount at which carried at close of period, Buildings	384
Gross Amount at which carried at close of period, Total	460
Depreciation	$ 46
Date of Construction or Acquisition	Dec. 01, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Birchwood 2
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,342
Initial cost to company, Land	234
Initial cost to company, Buildings	2,099
Costs capitalized subsequent to acquisition, Land	52
Costs capitalized subsequent to acquisition, Buildings	288
Gross Amount at which carried at close of period, Land	286
Gross Amount at which carried at close of period, Buildings	2,387
Gross Amount at which carried at close of period, Total	2,673
Depreciation	$ 290
Date of Construction or Acquisition	Dec. 01, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Bradbury Apartments
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 1,791
Initial cost to company, Land	1,049
Initial cost to company, Buildings	4,922
Costs capitalized subsequent to acquisition, Buildings	81
Gross Amount at which carried at close of period, Land	1,049
Gross Amount at which carried at close of period, Buildings	5,003
Gross Amount at which carried at close of period, Total	6,052
Depreciation	$ 532
Date of Construction or Acquisition	Oct. 24, 2018
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Briar Pointe
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,283
Initial cost to company, Land	384
Initial cost to company, Buildings	1,551
Gross Amount at which carried at close of period, Land	384
Gross Amount at which carried at close of period, Buildings	1,551
Gross Amount at which carried at close of period, Total	1,935
Depreciation	$ 61
Date of Construction or Acquisition	Jun. 01, 2021
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Bridgeport
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 4,839
Initial cost to company, Land	613
Initial cost to company, Buildings	7,676
Costs capitalized subsequent to acquisition, Land	14
Costs capitalized subsequent to acquisition, Buildings	61
Gross Amount at which carried at close of period, Land	627
Gross Amount at which carried at close of period, Buildings	7,737
Gross Amount at which carried at close of period, Total	8,364
Depreciation	$ 1,174
Date of Construction or Acquisition	Dec. 19, 2016
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Bristol Park
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 2,801
Initial cost to company, Land	985
Initial cost to company, Buildings	3,976
Costs capitalized subsequent to acquisition, Buildings	779
Gross Amount at which carried at close of period, Land	985
Gross Amount at which carried at close of period, Buildings	4,755
Gross Amount at which carried at close of period, Total	5,740
Depreciation	$ 804
Date of Construction or Acquisition	Feb. 01, 2016
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Brookfield
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,945
Initial cost to company, Land	228
Initial cost to company, Buildings	1,958
Costs capitalized subsequent to acquisition, Land	30
Costs capitalized subsequent to acquisition, Buildings	318
Gross Amount at which carried at close of period, Land	258
Gross Amount at which carried at close of period, Buildings	2,276
Gross Amount at which carried at close of period, Total	2,534
Depreciation	$ 761
Date of Construction or Acquisition	Aug. 01, 2008
Residential Property | Brookfield | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Brookfield | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Brownstone
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,891
Initial cost to company, Land	780
Initial cost to company, Buildings	3,610
Gross Amount at which carried at close of period, Land	780
Gross Amount at which carried at close of period, Buildings	3,610
Gross Amount at which carried at close of period, Total	4,390
Depreciation	$ 143
Date of Construction or Acquisition	Jun. 01, 2021
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Cambridge (FKA 44th Street)
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,614
Initial cost to company, Land	333
Initial cost to company, Buildings	1,845
Costs capitalized subsequent to acquisition, Land	4
Costs capitalized subsequent to acquisition, Buildings	237
Gross Amount at which carried at close of period, Land	337
Gross Amount at which carried at close of period, Buildings	2,082
Gross Amount at which carried at close of period, Total	2,419
Depreciation	$ 480
Date of Construction or Acquisition	Feb. 06, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Candlelight
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,583
Initial cost to company, Land	613
Initial cost to company, Buildings	1,221
Costs capitalized subsequent to acquisition, Land	(326)
Costs capitalized subsequent to acquisition, Buildings	589
Gross Amount at which carried at close of period, Land	287
Gross Amount at which carried at close of period, Buildings	1,810
Gross Amount at which carried at close of period, Total	2,097
Depreciation	$ 412
Date of Construction or Acquisition	Nov. 30, 2012
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Carling Manor
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 498
Initial cost to company, Land	69
Initial cost to company, Buildings	656
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	61
Gross Amount at which carried at close of period, Land	70
Gross Amount at which carried at close of period, Buildings	717
Gross Amount at which carried at close of period, Total	787
Depreciation	$ 250
Date of Construction or Acquisition	Mar. 31, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Carlton Place
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 5,885
Initial cost to company, Land	703
Initial cost to company, Buildings	7,070
Costs capitalized subsequent to acquisition, Land	96
Costs capitalized subsequent to acquisition, Buildings	714
Gross Amount at which carried at close of period, Land	799
Gross Amount at which carried at close of period, Buildings	7,784
Gross Amount at which carried at close of period, Total	8,583
Depreciation	$ 2,576
Date of Construction or Acquisition	Sep. 01, 2008
Residential Property | Carlton Place | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Carlton Place | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Carr
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 583
Initial cost to company, Land	66
Initial cost to company, Buildings	759
Costs capitalized subsequent to acquisition, Land	4
Costs capitalized subsequent to acquisition, Buildings	41
Gross Amount at which carried at close of period, Land	70
Gross Amount at which carried at close of period, Buildings	800
Gross Amount at which carried at close of period, Total	870
Depreciation	$ 116
Date of Construction or Acquisition	Jan. 17, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Cedars 4
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Initial cost to company, Land	$ 134
Initial cost to company, Buildings	1,068
Costs capitalized subsequent to acquisition, Buildings	29
Gross Amount at which carried at close of period, Land	134
Gross Amount at which carried at close of period, Buildings	1,097
Gross Amount at which carried at close of period, Total	1,231
Depreciation	$ 111
Date of Construction or Acquisition	Dec. 31, 2018
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Chandler 1802
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 613
Initial cost to company, Land	133
Initial cost to company, Buildings	1,114
Costs capitalized subsequent to acquisition, Buildings	108
Gross Amount at which carried at close of period, Land	133
Gross Amount at which carried at close of period, Buildings	1,222
Gross Amount at which carried at close of period, Total	1,355
Depreciation	$ 256
Date of Construction or Acquisition	Jan. 02, 2014
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Chandler 1834
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 399
Initial cost to company, Land	112
Initial cost to company, Buildings	552
Costs capitalized subsequent to acquisition, Buildings	39
Gross Amount at which carried at close of period, Land	112
Gross Amount at which carried at close of period, Buildings	591
Gross Amount at which carried at close of period, Total	703
Depreciation	$ 61
Date of Construction or Acquisition	Sep. 01, 2018
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Chandler 1866
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 318
Initial cost to company, Land	31
Initial cost to company, Buildings	270
Costs capitalized subsequent to acquisition, Buildings	59
Gross Amount at which carried at close of period, Land	31
Gross Amount at which carried at close of period, Buildings	329
Gross Amount at which carried at close of period, Total	360
Depreciation	$ 130
Date of Construction or Acquisition	Jan. 03, 2005
Residential Property | Chandler 1866 | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Chandler 1866 | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Chandler 1898
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Initial cost to company, Land	$ 114
Initial cost to company, Buildings	357
Gross Amount at which carried at close of period, Land	114
Gross Amount at which carried at close of period, Buildings	357
Gross Amount at which carried at close of period, Total	471
Depreciation	$ 1
Date of Construction or Acquisition	Dec. 01, 2022
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Cherry Creek (FKA Village)
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Initial cost to company, Land	$ 173
Initial cost to company, Buildings	1,435
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	274
Gross Amount at which carried at close of period, Land	174
Gross Amount at which carried at close of period, Buildings	1,709
Gross Amount at which carried at close of period, Total	1,883
Depreciation	$ 534
Date of Construction or Acquisition	Nov. 01, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Cityside Apartments
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 676
Initial cost to company, Land	192
Initial cost to company, Buildings	1,129
Costs capitalized subsequent to acquisition, Land	6
Costs capitalized subsequent to acquisition, Buildings	62
Gross Amount at which carried at close of period, Land	198
Gross Amount at which carried at close of period, Buildings	1,191
Gross Amount at which carried at close of period, Total	1,389
Depreciation	$ 126
Date of Construction or Acquisition	Nov. 30, 2018
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Columbia Park Village I
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 295
Initial cost to company, Land	102
Initial cost to company, Buildings	546
Gross Amount at which carried at close of period, Land	102
Gross Amount at which carried at close of period, Buildings	546
Gross Amount at which carried at close of period, Total	648
Depreciation	$ 41
Date of Construction or Acquisition	Jan. 31, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Columbia West
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 2,379
Initial cost to company, Land	294
Initial cost to company, Buildings	3,367
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	591
Gross Amount at which carried at close of period, Land	295
Gross Amount at which carried at close of period, Buildings	3,958
Gross Amount at which carried at close of period, Total	4,253
Depreciation	$ 1,298
Date of Construction or Acquisition	Sep. 01, 2008
Residential Property | Columbia West | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Columbia West | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Country Club
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,006
Initial cost to company, Land	252
Initial cost to company, Buildings	1,252
Costs capitalized subsequent to acquisition, Land	2
Costs capitalized subsequent to acquisition, Buildings	240
Gross Amount at which carried at close of period, Land	254
Gross Amount at which carried at close of period, Buildings	1,492
Gross Amount at which carried at close of period, Total	1,746
Depreciation	$ 410
Date of Construction or Acquisition	May 02, 2011
Residential Property | Country Club | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Country Club | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Countryside
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 593
Initial cost to company, Land	135
Initial cost to company, Buildings	677
Costs capitalized subsequent to acquisition, Buildings	68
Gross Amount at which carried at close of period, Land	135
Gross Amount at which carried at close of period, Buildings	745
Gross Amount at which carried at close of period, Total	880
Depreciation	$ 203
Date of Construction or Acquisition	May 02, 2011
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Courtyard
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	St. Louis Park, MN
Encumbrances	$ 2,865
Initial cost to company, Land	2,270
Initial cost to company, Buildings	5,681
Costs capitalized subsequent to acquisition, Buildings	794
Gross Amount at which carried at close of period, Land	2,270
Gross Amount at which carried at close of period, Buildings	6,475
Gross Amount at which carried at close of period, Total	8,745
Depreciation	$ 1,466
Date of Construction or Acquisition	Sep. 03, 2013
Residential Property | Courtyard | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Courtyard | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Dakota Manor
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,391
Initial cost to company, Land	249
Initial cost to company, Buildings	2,236
Costs capitalized subsequent to acquisition, Land	20
Costs capitalized subsequent to acquisition, Buildings	182
Gross Amount at which carried at close of period, Land	269
Gross Amount at which carried at close of period, Buildings	2,418
Gross Amount at which carried at close of period, Total	2,687
Depreciation	$ 486
Date of Construction or Acquisition	Aug. 07, 2014
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Danbury
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 4,572
Initial cost to company, Land	381
Initial cost to company, Buildings	5,869
Costs capitalized subsequent to acquisition, Land	211
Costs capitalized subsequent to acquisition, Buildings	653
Gross Amount at which carried at close of period, Land	592
Gross Amount at which carried at close of period, Buildings	6,522
Gross Amount at which carried at close of period, Total	7,114
Depreciation	$ 2,317
Date of Construction or Acquisition	Dec. 31, 2007
Residential Property | Danbury | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Danbury | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Dellwood Estates
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Anoka, MN
Encumbrances	$ 6,177
Initial cost to company, Land	844
Initial cost to company, Buildings	9,924
Costs capitalized subsequent to acquisition, Buildings	861
Gross Amount at which carried at close of period, Land	844
Gross Amount at which carried at close of period, Buildings	10,785
Gross Amount at which carried at close of period, Total	11,629
Depreciation	$ 2,468
Date of Construction or Acquisition	May 31, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Deer Park
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Hutchinson, MN
Encumbrances	$ 8,838
Initial cost to company, Land	1,784
Initial cost to company, Buildings	12,545
Gross Amount at which carried at close of period, Land	1,784
Gross Amount at which carried at close of period, Buildings	12,545
Gross Amount at which carried at close of period, Total	14,329
Depreciation	$ 287
Date of Construction or Acquisition	Feb. 28, 2022
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Desoto Estates
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 4,155
Initial cost to company, Land	955
Initial cost to company, Buildings	4,869
Gross Amount at which carried at close of period, Land	955
Gross Amount at which carried at close of period, Buildings	4,869
Gross Amount at which carried at close of period, Total	5,824
Depreciation	$ 81
Date of Construction or Acquisition	May 31, 2022
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Desoto Townhomes
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 1,589
Initial cost to company, Land	464
Initial cost to company, Buildings	2,767
Gross Amount at which carried at close of period, Land	464
Gross Amount at which carried at close of period, Buildings	2,767
Gross Amount at which carried at close of period, Total	3,231
Depreciation	$ 46
Date of Construction or Acquisition	May 31, 2022
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Diamond Bend
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Mandan, ND
Encumbrances	$ 6,825
Initial cost to company, Land	722
Initial cost to company, Buildings	9,789
Gross Amount at which carried at close of period, Land	722
Gross Amount at which carried at close of period, Buildings	9,789
Gross Amount at which carried at close of period, Total	10,511
Depreciation	$ 143
Date of Construction or Acquisition	Jun. 10, 2022
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Eagle Run
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	West Fargo, ND
Encumbrances	$ 3,659
Initial cost to company, Land	576
Initial cost to company, Buildings	5,787
Costs capitalized subsequent to acquisition, Land	128
Costs capitalized subsequent to acquisition, Buildings	180
Gross Amount at which carried at close of period, Land	704
Gross Amount at which carried at close of period, Buildings	5,967
Gross Amount at which carried at close of period, Total	6,671
Depreciation	$ 1,822
Date of Construction or Acquisition	Aug. 12, 2010
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Eagle Sky I
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 801
Initial cost to company, Land	115
Initial cost to company, Buildings	1,292
Costs capitalized subsequent to acquisition, Buildings	104
Gross Amount at which carried at close of period, Land	115
Gross Amount at which carried at close of period, Buildings	1,396
Gross Amount at which carried at close of period, Total	1,511
Depreciation	$ 248
Date of Construction or Acquisition	Mar. 01, 2016
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Eagle Sky II
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 801
Initial cost to company, Land	135
Initial cost to company, Buildings	1,279
Costs capitalized subsequent to acquisition, Buildings	173
Gross Amount at which carried at close of period, Land	135
Gross Amount at which carried at close of period, Buildings	1,452
Gross Amount at which carried at close of period, Total	1,587
Depreciation	$ 245
Date of Construction or Acquisition	Mar. 01, 2016
Life on which depreciation on latest income statement is computed	40 years
Residential Property | East Bridge
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 3,143
Initial cost to company, Land	792
Initial cost to company, Buildings	5,396
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	301
Gross Amount at which carried at close of period, Land	793
Gross Amount at which carried at close of period, Buildings	5,697
Gross Amount at which carried at close of period, Total	6,490
Depreciation	$ 770
Date of Construction or Acquisition	Jul. 03, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Eastbrook
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 639
Initial cost to company, Land	145
Initial cost to company, Buildings	1,233
Gross Amount at which carried at close of period, Land	145
Gross Amount at which carried at close of period, Buildings	1,233
Gross Amount at which carried at close of period, Total	1,378
Depreciation	$ 87
Date of Construction or Acquisition	Jan. 31, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Echo Manor
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Hutchinson, MN
Encumbrances	$ 911
Initial cost to company, Land	141
Initial cost to company, Buildings	875
Costs capitalized subsequent to acquisition, Buildings	118
Gross Amount at which carried at close of period, Land	141
Gross Amount at which carried at close of period, Buildings	993
Gross Amount at which carried at close of period, Total	1,134
Depreciation	$ 215
Date of Construction or Acquisition	Jan. 02, 2014
Residential Property | Echo Manor | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Echo Manor | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Emerald Court
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Initial cost to company, Land	$ 66
Initial cost to company, Buildings	830
Costs capitalized subsequent to acquisition, Land	11
Costs capitalized subsequent to acquisition, Buildings	180
Gross Amount at which carried at close of period, Land	77
Gross Amount at which carried at close of period, Buildings	1,010
Gross Amount at which carried at close of period, Total	1,087
Depreciation	$ 340
Date of Construction or Acquisition	Mar. 31, 2008
Residential Property | Emerald Court | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Emerald Court | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Essex
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 525
Initial cost to company, Land	212
Initial cost to company, Buildings	642
Costs capitalized subsequent to acquisition, Buildings	68
Gross Amount at which carried at close of period, Land	212
Gross Amount at which carried at close of period, Buildings	710
Gross Amount at which carried at close of period, Total	922
Depreciation	$ 98
Date of Construction or Acquisition	Jun. 01, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Evergreen Terrace
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Omaha, NE
Encumbrances	$ 5,060
Initial cost to company, Land	820
Initial cost to company, Buildings	7,573
Costs capitalized subsequent to acquisition, Buildings	84
Gross Amount at which carried at close of period, Land	820
Gross Amount at which carried at close of period, Buildings	7,657
Gross Amount at which carried at close of period, Total	8,477
Depreciation	$ 399
Date of Construction or Acquisition	Dec. 17, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Fairview
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 2,502
Initial cost to company, Land	267
Initial cost to company, Buildings	3,978
Costs capitalized subsequent to acquisition, Land	39
Costs capitalized subsequent to acquisition, Buildings	918
Gross Amount at which carried at close of period, Land	306
Gross Amount at which carried at close of period, Buildings	4,896
Gross Amount at which carried at close of period, Total	5,202
Depreciation	$ 1,527
Date of Construction or Acquisition	Dec. 31, 2008
Residential Property | Fairview | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Fairview | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Flagstone
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 5,110
Initial cost to company, Land	1,535
Initial cost to company, Buildings	6,258
Gross Amount at which carried at close of period, Land	1,535
Gross Amount at which carried at close of period, Buildings	6,258
Gross Amount at which carried at close of period, Total	7,793
Depreciation	$ 248
Date of Construction or Acquisition	Jun. 01, 2021
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Flickertail
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 4,799
Initial cost to company, Land	426
Initial cost to company, Buildings	5,590
Costs capitalized subsequent to acquisition, Land	76
Costs capitalized subsequent to acquisition, Buildings	1,674
Gross Amount at which carried at close of period, Land	502
Gross Amount at which carried at close of period, Buildings	7,264
Gross Amount at which carried at close of period, Total	7,766
Depreciation	$ 2,132
Date of Construction or Acquisition	Dec. 31, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Forest Avenue
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 324
Initial cost to company, Land	61
Initial cost to company, Buildings	637
Costs capitalized subsequent to acquisition, Land	8
Costs capitalized subsequent to acquisition, Buildings	64
Gross Amount at which carried at close of period, Land	69
Gross Amount at which carried at close of period, Buildings	701
Gross Amount at which carried at close of period, Total	770
Depreciation	$ 166
Date of Construction or Acquisition	Feb. 06, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Foxtail Creek Townhomes
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Initial cost to company, Land	$ 267
Initial cost to company, Buildings	1,221
Gross Amount at which carried at close of period, Land	267
Gross Amount at which carried at close of period, Buildings	1,221
Gross Amount at which carried at close of period, Total	1,488
Depreciation	$ 71
Date of Construction or Acquisition	Sep. 15, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Galleria III
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 667
Initial cost to company, Land	118
Initial cost to company, Buildings	681
Costs capitalized subsequent to acquisition, Land	2
Costs capitalized subsequent to acquisition, Buildings	292
Gross Amount at which carried at close of period, Land	120
Gross Amount at which carried at close of period, Buildings	973
Gross Amount at which carried at close of period, Total	1,093
Depreciation	$ 237
Date of Construction or Acquisition	Nov. 09, 2010
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Garden Grove
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 4,089
Initial cost to company, Land	606
Initial cost to company, Buildings	6,073
Costs capitalized subsequent to acquisition, Buildings	168
Gross Amount at which carried at close of period, Land	606
Gross Amount at which carried at close of period, Buildings	6,241
Gross Amount at which carried at close of period, Total	6,847
Depreciation	$ 1,050
Date of Construction or Acquisition	May 04, 2016
Residential Property | Garden Grove | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Garden Grove | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Georgetown on the River
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fridley, MN
Encumbrances	$ 16,522
Initial cost to company, Land	4,620
Initial cost to company, Buildings	23,833
Costs capitalized subsequent to acquisition, Land	8
Costs capitalized subsequent to acquisition, Buildings	4,117
Gross Amount at which carried at close of period, Land	4,628
Gross Amount at which carried at close of period, Buildings	27,950
Gross Amount at which carried at close of period, Total	32,578
Depreciation	$ 5,451
Date of Construction or Acquisition	Dec. 19, 2014
Residential Property | Georgetown on the River | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Georgetown on the River | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Glen Pond
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Eagan, MN
Encumbrances	$ 35,566
Initial cost to company, Land	3,761
Initial cost to company, Buildings	20,569
Costs capitalized subsequent to acquisition, Land	38
Costs capitalized subsequent to acquisition, Buildings	960
Gross Amount at which carried at close of period, Land	3,799
Gross Amount at which carried at close of period, Buildings	21,529
Gross Amount at which carried at close of period, Total	25,328
Depreciation	$ 5,842
Date of Construction or Acquisition	Dec. 02, 2011
Residential Property | Glen Pond | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Glen Pond | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Glen Pond Addition
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Eagan, MN
Encumbrances	$ 6,056
Initial cost to company, Land	876
Initial cost to company, Buildings	15,408
Gross Amount at which carried at close of period, Land	876
Gross Amount at which carried at close of period, Buildings	15,408
Gross Amount at which carried at close of period, Total	16,284
Depreciation	$ 899
Date of Construction or Acquisition	Sep. 30, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Granger Court I
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,908
Initial cost to company, Land	279
Initial cost to company, Buildings	1,926
Costs capitalized subsequent to acquisition, Land	25
Costs capitalized subsequent to acquisition, Buildings	301
Gross Amount at which carried at close of period, Land	304
Gross Amount at which carried at close of period, Buildings	2,227
Gross Amount at which carried at close of period, Total	2,531
Depreciation	$ 479
Date of Construction or Acquisition	Jun. 04, 2013
Residential Property | Granger Court I | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Granger Court I | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Hannifin
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 403
Initial cost to company, Land	81
Initial cost to company, Buildings	607
Costs capitalized subsequent to acquisition, Land	5
Costs capitalized subsequent to acquisition, Buildings	52
Gross Amount at which carried at close of period, Land	86
Gross Amount at which carried at close of period, Buildings	659
Gross Amount at which carried at close of period, Total	745
Depreciation	$ 147
Date of Construction or Acquisition	Nov. 01, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Harrison and Richfield
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 4,904
Initial cost to company, Land	756
Initial cost to company, Buildings	6,346
Costs capitalized subsequent to acquisition, Land	7
Costs capitalized subsequent to acquisition, Buildings	321
Gross Amount at which carried at close of period, Land	763
Gross Amount at which carried at close of period, Buildings	6,667
Gross Amount at which carried at close of period, Total	7,430
Depreciation	$ 2,578
Date of Construction or Acquisition	Jul. 01, 2007
Residential Property | Harrison and Richfield | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Harrison and Richfield | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Hartford Apartments
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 833
Initial cost to company, Land	154
Initial cost to company, Buildings	1,233
Costs capitalized subsequent to acquisition, Buildings	14
Gross Amount at which carried at close of period, Land	154
Gross Amount at which carried at close of period, Buildings	1,247
Gross Amount at which carried at close of period, Total	1,401
Depreciation	$ 132
Date of Construction or Acquisition	Oct. 01, 2018
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Hawn
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,491
Initial cost to company, Land	280
Initial cost to company, Buildings	2,277
Gross Amount at which carried at close of period, Land	280
Gross Amount at which carried at close of period, Buildings	2,277
Gross Amount at which carried at close of period, Total	2,557
Depreciation	$ 161
Date of Construction or Acquisition	Mar. 01, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Highland Meadows
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 5,440
Initial cost to company, Land	1,532
Initial cost to company, Buildings	8,513
Costs capitalized subsequent to acquisition, Buildings	457
Gross Amount at which carried at close of period, Land	1,532
Gross Amount at which carried at close of period, Buildings	8,970
Gross Amount at which carried at close of period, Total	10,502
Depreciation	$ 1,271
Date of Construction or Acquisition	May 01, 2017
Residential Property | Highland Meadows | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Highland Meadows | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Hunters Run I
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 473
Initial cost to company, Land	50
Initial cost to company, Buildings	419
Costs capitalized subsequent to acquisition, Land	5
Costs capitalized subsequent to acquisition, Buildings	(2)
Gross Amount at which carried at close of period, Land	55
Gross Amount at which carried at close of period, Buildings	417
Gross Amount at which carried at close of period, Total	472
Depreciation	$ 163
Date of Construction or Acquisition	Mar. 23, 2007
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Hunters Run II
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 430
Initial cost to company, Land	44
Initial cost to company, Buildings	441
Costs capitalized subsequent to acquisition, Land	2
Gross Amount at which carried at close of period, Land	46
Gross Amount at which carried at close of period, Buildings	441
Gross Amount at which carried at close of period, Total	487
Depreciation	$ 160
Date of Construction or Acquisition	Jul. 01, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Huntington
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 314
Initial cost to company, Land	86
Initial cost to company, Buildings	309
Costs capitalized subsequent to acquisition, Land	4
Costs capitalized subsequent to acquisition, Buildings	15
Gross Amount at which carried at close of period, Land	90
Gross Amount at which carried at close of period, Buildings	324
Gross Amount at which carried at close of period, Total	414
Depreciation	$ 60
Date of Construction or Acquisition	Aug. 04, 2015
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Islander
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 732
Initial cost to company, Land	98
Initial cost to company, Buildings	884
Costs capitalized subsequent to acquisition, Land	49
Costs capitalized subsequent to acquisition, Buildings	115
Gross Amount at which carried at close of period, Land	147
Gross Amount at which carried at close of period, Buildings	999
Gross Amount at which carried at close of period, Total	1,146
Depreciation	$ 270
Date of Construction or Acquisition	Jul. 01, 2011
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Jadestone
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 498
Initial cost to company, Land	212
Initial cost to company, Buildings	554
Costs capitalized subsequent to acquisition, Buildings	127
Gross Amount at which carried at close of period, Land	212
Gross Amount at which carried at close of period, Buildings	681
Gross Amount at which carried at close of period, Total	893
Depreciation	$ 90
Date of Construction or Acquisition	Jun. 01, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Kennedy
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 354
Initial cost to company, Land	84
Initial cost to company, Buildings	588
Costs capitalized subsequent to acquisition, Land	7
Costs capitalized subsequent to acquisition, Buildings	91
Gross Amount at which carried at close of period, Land	91
Gross Amount at which carried at close of period, Buildings	679
Gross Amount at which carried at close of period, Total	770
Depreciation	$ 161
Date of Construction or Acquisition	Feb. 06, 2013
Residential Property | Kennedy | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Kennedy | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Library Lane
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 2,006
Initial cost to company, Land	301
Initial cost to company, Buildings	2,332
Costs capitalized subsequent to acquisition, Land	16
Costs capitalized subsequent to acquisition, Buildings	189
Gross Amount at which carried at close of period, Land	317
Gross Amount at which carried at close of period, Buildings	2,521
Gross Amount at which carried at close of period, Total	2,838
Depreciation	$ 937
Date of Construction or Acquisition	Oct. 01, 2007
Residential Property | Library Lane | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Library Lane | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Madison
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 272
Initial cost to company, Land	95
Initial cost to company, Buildings	497
Costs capitalized subsequent to acquisition, Buildings	100
Gross Amount at which carried at close of period, Land	95
Gross Amount at which carried at close of period, Buildings	597
Gross Amount at which carried at close of period, Total	692
Depreciation	$ 102
Date of Construction or Acquisition	Sep. 01, 2015
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Maple Ridge
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Omaha, NE
Encumbrances	$ 7,749
Initial cost to company, Land	766
Initial cost to company, Buildings	5,608
Costs capitalized subsequent to acquisition, Land	59
Costs capitalized subsequent to acquisition, Buildings	3,715
Gross Amount at which carried at close of period, Land	825
Gross Amount at which carried at close of period, Buildings	9,323
Gross Amount at which carried at close of period, Total	10,148
Depreciation	$ 2,582
Date of Construction or Acquisition	Aug. 01, 2008
Residential Property | Maple Ridge | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Maple Ridge | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Maplewood
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Maplewood, MN
Encumbrances	$ 8,556
Initial cost to company, Land	3,120
Initial cost to company, Buildings	11,655
Costs capitalized subsequent to acquisition, Buildings	2,411
Gross Amount at which carried at close of period, Land	3,120
Gross Amount at which carried at close of period, Buildings	14,066
Gross Amount at which carried at close of period, Total	17,186
Depreciation	$ 2,537
Date of Construction or Acquisition	Dec. 19, 2014
Residential Property | Maplewood | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Maplewood | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Maplewood Bend I, II, III. IV, V, VI, VII, VIII & Royale
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 4,235
Initial cost to company, Land	783
Initial cost to company, Buildings	5,839
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	491
Gross Amount at which carried at close of period, Land	784
Gross Amount at which carried at close of period, Buildings	6,330
Gross Amount at which carried at close of period, Total	7,114
Depreciation	$ 1,899
Date of Construction or Acquisition	Jan. 01, 2009
Residential Property | Maplewood Bend I, II, III. IV, V, VI, VII, VIII & Royale | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Maplewood Bend I, II, III. IV, V, VI, VII, VIII & Royale | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Martha Alice
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 421
Initial cost to company, Land	74
Initial cost to company, Buildings	738
Costs capitalized subsequent to acquisition, Land	6
Costs capitalized subsequent to acquisition, Buildings	183
Gross Amount at which carried at close of period, Land	80
Gross Amount at which carried at close of period, Buildings	921
Gross Amount at which carried at close of period, Total	1,001
Depreciation	$ 279
Date of Construction or Acquisition	Aug. 31, 2009
Residential Property | Martha Alice | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Martha Alice | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Mayfair
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Initial cost to company, Land	$ 80
Initial cost to company, Buildings	1,043
Costs capitalized subsequent to acquisition, Land	4
Costs capitalized subsequent to acquisition, Buildings	123
Gross Amount at which carried at close of period, Land	84
Gross Amount at which carried at close of period, Buildings	1,166
Gross Amount at which carried at close of period, Total	1,250
Depreciation	$ 394
Date of Construction or Acquisition	Jul. 01, 2008
Residential Property | Mayfair | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Mayfair | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Monticello
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 544
Initial cost to company, Land	60
Initial cost to company, Buildings	752
Costs capitalized subsequent to acquisition, Land	14
Costs capitalized subsequent to acquisition, Buildings	111
Gross Amount at which carried at close of period, Land	74
Gross Amount at which carried at close of period, Buildings	863
Gross Amount at which carried at close of period, Total	937
Depreciation	$ 184
Date of Construction or Acquisition	Nov. 08, 2013
Residential Property | Monticello | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Monticello | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Montreal Courts
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Little Canada, MN
Encumbrances	$ 16,802
Initial cost to company, Land	5,809
Initial cost to company, Buildings	19,565
Costs capitalized subsequent to acquisition, Land	15
Costs capitalized subsequent to acquisition, Buildings	3,605
Gross Amount at which carried at close of period, Land	5,824
Gross Amount at which carried at close of period, Buildings	23,170
Gross Amount at which carried at close of period, Total	28,994
Depreciation	$ 4,961
Date of Construction or Acquisition	Oct. 02, 2013
Residential Property | Montreal Courts | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Montreal Courts | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Morningside Apartments
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 458
Initial cost to company, Land	85
Initial cost to company, Buildings	673
Costs capitalized subsequent to acquisition, Buildings	42
Gross Amount at which carried at close of period, Land	85
Gross Amount at which carried at close of period, Buildings	715
Gross Amount at which carried at close of period, Total	800
Depreciation	$ 71
Date of Construction or Acquisition	Nov. 30, 2018
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Newgate
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 1,503
Initial cost to company, Land	538
Initial cost to company, Buildings	1,755
Gross Amount at which carried at close of period, Land	538
Gross Amount at which carried at close of period, Buildings	1,755
Gross Amount at which carried at close of period, Total	2,293
Depreciation	$ 15
Date of Construction or Acquisition	Sep. 13, 2022
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Oak Court
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,502
Initial cost to company, Land	270
Initial cost to company, Buildings	2,210
Costs capitalized subsequent to acquisition, Land	29
Costs capitalized subsequent to acquisition, Buildings	436
Gross Amount at which carried at close of period, Land	299
Gross Amount at which carried at close of period, Buildings	2,646
Gross Amount at which carried at close of period, Total	2,945
Depreciation	$ 899
Date of Construction or Acquisition	Apr. 30, 2008
Residential Property | Oak Court | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	28 years
Residential Property | Oak Court | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Oakview Townhomes
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 3,473
Initial cost to company, Land	822
Initial cost to company, Buildings	4,698
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	471
Gross Amount at which carried at close of period, Land	823
Gross Amount at which carried at close of period, Buildings	5,169
Gross Amount at which carried at close of period, Total	5,992
Depreciation	$ 767
Date of Construction or Acquisition	Jan. 11, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Oxford
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 6,679
Initial cost to company, Land	1,655
Initial cost to company, Buildings	8,563
Gross Amount at which carried at close of period, Land	1,655
Gross Amount at which carried at close of period, Buildings	8,563
Gross Amount at which carried at close of period, Total	10,218
Depreciation	$ 321
Date of Construction or Acquisition	Jul. 01, 2021
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Pacific Park I
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 526
Initial cost to company, Land	95
Initial cost to company, Buildings	777
Costs capitalized subsequent to acquisition, Land	3
Costs capitalized subsequent to acquisition, Buildings	130
Gross Amount at which carried at close of period, Land	98
Gross Amount at which carried at close of period, Buildings	907
Gross Amount at which carried at close of period, Total	1,005
Depreciation	$ 205
Date of Construction or Acquisition	Feb. 06, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Pacific Park II
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 450
Initial cost to company, Land	111
Initial cost to company, Buildings	865
Costs capitalized subsequent to acquisition, Land	4
Costs capitalized subsequent to acquisition, Buildings	140
Gross Amount at which carried at close of period, Land	115
Gross Amount at which carried at close of period, Buildings	1,005
Gross Amount at which carried at close of period, Total	1,120
Depreciation	$ 225
Date of Construction or Acquisition	Feb. 06, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Pacific South
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 278
Initial cost to company, Land	58
Initial cost to company, Buildings	459
Costs capitalized subsequent to acquisition, Land	2
Costs capitalized subsequent to acquisition, Buildings	16
Gross Amount at which carried at close of period, Land	60
Gross Amount at which carried at close of period, Buildings	475
Gross Amount at which carried at close of period, Total	535
Depreciation	$ 114
Date of Construction or Acquisition	Feb. 06, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Park Circle
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 547
Initial cost to company, Land	196
Initial cost to company, Buildings	716
Costs capitalized subsequent to acquisition, Land	7
Costs capitalized subsequent to acquisition, Buildings	17
Gross Amount at which carried at close of period, Land	203
Gross Amount at which carried at close of period, Buildings	733
Gross Amount at which carried at close of period, Total	936
Depreciation	$ 102
Date of Construction or Acquisition	Jun. 01, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Parkview Arms
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Initial cost to company, Land	$ 373
Initial cost to company, Buildings	3,845
Costs capitalized subsequent to acquisition, Buildings	365
Gross Amount at which carried at close of period, Land	373
Gross Amount at which carried at close of period, Buildings	4,210
Gross Amount at which carried at close of period, Total	4,583
Depreciation	$ 784
Date of Construction or Acquisition	May 13, 2015
Residential Property | Parkview Arms | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Parkview Arms | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Parkwest Gardens
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	West Fargo, ND
Encumbrances	$ 3,010
Initial cost to company, Land	713
Initial cost to company, Buildings	5,712
Costs capitalized subsequent to acquisition, Land	39
Costs capitalized subsequent to acquisition, Buildings	1,390
Gross Amount at which carried at close of period, Land	752
Gross Amount at which carried at close of period, Buildings	7,102
Gross Amount at which carried at close of period, Total	7,854
Depreciation	$ 1,396
Date of Construction or Acquisition	Jun. 30, 2014
Residential Property | Parkwest Gardens | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Parkwest Gardens | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Parkwood
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Initial cost to company, Land	$ 126
Initial cost to company, Buildings	1,143
Costs capitalized subsequent to acquisition, Land	14
Costs capitalized subsequent to acquisition, Buildings	23
Gross Amount at which carried at close of period, Land	140
Gross Amount at which carried at close of period, Buildings	1,166
Gross Amount at which carried at close of period, Total	1,306
Depreciation	$ 407
Date of Construction or Acquisition	Aug. 01, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Pebble Creek
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 3,588
Initial cost to company, Land	260
Initial cost to company, Buildings	2,818
Costs capitalized subsequent to acquisition, Land	31
Costs capitalized subsequent to acquisition, Buildings	(62)
Gross Amount at which carried at close of period, Land	291
Gross Amount at which carried at close of period, Buildings	2,756
Gross Amount at which carried at close of period, Total	3,047
Depreciation	$ 958
Date of Construction or Acquisition	Mar. 19, 2008
Residential Property | Pebble Creek | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Pebble Creek | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Pinehurst
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 9,716
Initial cost to company, Land	2,368
Initial cost to company, Buildings	12,614
Gross Amount at which carried at close of period, Land	2,368
Gross Amount at which carried at close of period, Buildings	12,614
Gross Amount at which carried at close of period, Total	14,982
Depreciation	$ 473
Date of Construction or Acquisition	Jul. 01, 2021
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Plumtree
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 516
Initial cost to company, Land	100
Initial cost to company, Buildings	782
Costs capitalized subsequent to acquisition, Buildings	29
Gross Amount at which carried at close of period, Land	100
Gross Amount at which carried at close of period, Buildings	811
Gross Amount at which carried at close of period, Total	911
Depreciation	$ 114
Date of Construction or Acquisition	May 01, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Prairiewood Courts
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Initial cost to company, Land	$ 308
Initial cost to company, Buildings	1,730
Costs capitalized subsequent to acquisition, Land	28
Costs capitalized subsequent to acquisition, Buildings	143
Gross Amount at which carried at close of period, Land	336
Gross Amount at which carried at close of period, Buildings	1,873
Gross Amount at which carried at close of period, Total	2,209
Depreciation	$ 725
Date of Construction or Acquisition	Sep. 01, 2006
Residential Property | Prairiewood Courts | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Prairiewood Courts | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Prairiewood Meadows
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 3,781
Initial cost to company, Land	736
Initial cost to company, Buildings	852
Costs capitalized subsequent to acquisition, Land	11
Costs capitalized subsequent to acquisition, Buildings	367
Gross Amount at which carried at close of period, Land	747
Gross Amount at which carried at close of period, Buildings	1,219
Gross Amount at which carried at close of period, Total	1,966
Depreciation	$ 232
Date of Construction or Acquisition	Sep. 30, 2012
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Prose Fossil Creek
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fort Worth, TX
Initial cost to company, Land	$ 5,451
Initial cost to company, Buildings	46,811
Gross Amount at which carried at close of period, Land	5,451
Gross Amount at which carried at close of period, Buildings	46,811
Gross Amount at which carried at close of period, Total	52,262
Depreciation	$ 98
Date of Construction or Acquisition	Dec. 29, 2022
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Quail Creek
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Springfield, MO
Encumbrances	$ 5,317
Initial cost to company, Land	1,529
Initial cost to company, Buildings	7,396
Costs capitalized subsequent to acquisition, Buildings	1,656
Gross Amount at which carried at close of period, Land	1,529
Gross Amount at which carried at close of period, Buildings	9,052
Gross Amount at which carried at close of period, Total	10,581
Depreciation	$ 1,537
Date of Construction or Acquisition	Feb. 03, 2015
Residential Property | Quail Creek | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Quail Creek | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Robinwood
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Coon Rapids, MN
Encumbrances	$ 4,129
Initial cost to company, Land	1,380
Initial cost to company, Buildings	6,133
Costs capitalized subsequent to acquisition, Buildings	711
Gross Amount at which carried at close of period, Land	1,380
Gross Amount at which carried at close of period, Buildings	6,844
Gross Amount at which carried at close of period, Total	8,224
Depreciation	$ 1,333
Date of Construction or Acquisition	Dec. 19, 2014
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Rosedale Estates
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Roseville, MN
Encumbrances	$ 13,916
Initial cost to company, Land	4,680
Initial cost to company, Buildings	20,591
Costs capitalized subsequent to acquisition, Buildings	836
Gross Amount at which carried at close of period, Land	4,680
Gross Amount at which carried at close of period, Buildings	21,427
Gross Amount at which carried at close of period, Total	26,107
Depreciation	$ 4,289
Date of Construction or Acquisition	Dec. 19, 2014
Residential Property | Rosedale Estates | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Rosedale Estates | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Rosegate
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,888
Initial cost to company, Land	251
Initial cost to company, Buildings	2,978
Costs capitalized subsequent to acquisition, Land	49
Costs capitalized subsequent to acquisition, Buildings	132
Gross Amount at which carried at close of period, Land	300
Gross Amount at which carried at close of period, Buildings	3,110
Gross Amount at which carried at close of period, Total	3,410
Depreciation	$ 1,136
Date of Construction or Acquisition	Apr. 30, 2008
Residential Property | Rosegate | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Rosegate | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Rosser
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 688
Initial cost to company, Land	156
Initial cost to company, Buildings	1,216
Costs capitalized subsequent to acquisition, Buildings	86
Gross Amount at which carried at close of period, Land	156
Gross Amount at which carried at close of period, Buildings	1,302
Gross Amount at which carried at close of period, Total	1,458
Depreciation	$ 88
Date of Construction or Acquisition	Mar. 01, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Roughrider
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 373
Initial cost to company, Land	100
Initial cost to company, Buildings	448
Costs capitalized subsequent to acquisition, Buildings	117
Gross Amount at which carried at close of period, Land	100
Gross Amount at which carried at close of period, Buildings	565
Gross Amount at which carried at close of period, Total	665
Depreciation	$ 93
Date of Construction or Acquisition	Aug. 01, 2016
Residential Property | Roughrider | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Roughrider | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Saddlebrook
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	West Fargo, ND
Encumbrances	$ 1,306
Initial cost to company, Land	148
Initial cost to company, Buildings	1,262
Costs capitalized subsequent to acquisition, Land	203
Costs capitalized subsequent to acquisition, Buildings	105
Gross Amount at which carried at close of period, Land	351
Gross Amount at which carried at close of period, Buildings	1,367
Gross Amount at which carried at close of period, Total	1,718
Depreciation	$ 462
Date of Construction or Acquisition	Dec. 31, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Sage Park
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	New Brighton, MN
Encumbrances	$ 9,307
Initial cost to company, Land	2,520
Initial cost to company, Buildings	13,985
Costs capitalized subsequent to acquisition, Buildings	1,061
Gross Amount at which carried at close of period, Land	2,520
Gross Amount at which carried at close of period, Buildings	15,046
Gross Amount at which carried at close of period, Total	17,566
Depreciation	$ 3,031
Date of Construction or Acquisition	Dec. 19, 2014
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Sage Park | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Sargent
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 940
Initial cost to company, Land	164
Initial cost to company, Buildings	1,529
Costs capitalized subsequent to acquisition, Land	4
Costs capitalized subsequent to acquisition, Buildings	17
Gross Amount at which carried at close of period, Land	168
Gross Amount at which carried at close of period, Buildings	1,546
Gross Amount at which carried at close of period, Total	1,714
Depreciation	$ 233
Date of Construction or Acquisition	Jan. 10, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Schrock
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 425
Initial cost to company, Land	71
Initial cost to company, Buildings	626
Costs capitalized subsequent to acquisition, Land	3
Costs capitalized subsequent to acquisition, Buildings	66
Gross Amount at which carried at close of period, Land	74
Gross Amount at which carried at close of period, Buildings	692
Gross Amount at which carried at close of period, Total	766
Depreciation	$ 152
Date of Construction or Acquisition	Jun. 04, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Sheridan Pointe
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,976
Initial cost to company, Land	292
Initial cost to company, Buildings	2,387
Costs capitalized subsequent to acquisition, Land	21
Costs capitalized subsequent to acquisition, Buildings	39
Gross Amount at which carried at close of period, Land	313
Gross Amount at which carried at close of period, Buildings	2,426
Gross Amount at which carried at close of period, Total	2,739
Depreciation	$ 547
Date of Construction or Acquisition	Oct. 01, 2013
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Sierra Ridge
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 6,575
Initial cost to company, Land	754
Initial cost to company, Buildings	8,795
Costs capitalized subsequent to acquisition, Land	151
Costs capitalized subsequent to acquisition, Buildings	863
Gross Amount at which carried at close of period, Land	905
Gross Amount at which carried at close of period, Buildings	9,658
Gross Amount at which carried at close of period, Total	10,563
Depreciation	$ 2,987
Date of Construction or Acquisition	Sep. 01, 2006
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Somerset
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Initial cost to company, Land	$ 300
Initial cost to company, Buildings	3,400
Costs capitalized subsequent to acquisition, Land	43
Costs capitalized subsequent to acquisition, Buildings	57
Gross Amount at which carried at close of period, Land	343
Gross Amount at which carried at close of period, Buildings	3,457
Gross Amount at which carried at close of period, Total	3,800
Depreciation	$ 1,235
Date of Construction or Acquisition	Jul. 01, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Southgate
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 4,744
Initial cost to company, Land	803
Initial cost to company, Buildings	5,267
Costs capitalized subsequent to acquisition, Land	20
Costs capitalized subsequent to acquisition, Buildings	64
Gross Amount at which carried at close of period, Land	823
Gross Amount at which carried at close of period, Buildings	5,331
Gross Amount at which carried at close of period, Total	6,154
Depreciation	$ 2,015
Date of Construction or Acquisition	Jul. 01, 2007
Residential Property | Southgate | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Southgate | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Southview III
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Initial cost to company, Land	$ 99
Initial cost to company, Buildings	522
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	116
Gross Amount at which carried at close of period, Land	100
Gross Amount at which carried at close of period, Buildings	638
Gross Amount at which carried at close of period, Total	738
Depreciation	$ 170
Date of Construction or Acquisition	Aug. 01, 2011
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Southview Villages
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,376
Initial cost to company, Land	268
Initial cost to company, Buildings	2,483
Costs capitalized subsequent to acquisition, Land	16
Costs capitalized subsequent to acquisition, Buildings	645
Gross Amount at which carried at close of period, Land	284
Gross Amount at which carried at close of period, Buildings	3,128
Gross Amount at which carried at close of period, Total	3,412
Depreciation	$ 1,012
Date of Construction or Acquisition	Oct. 01, 2007
Residential Property | Southview Villages | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Southview Villages | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Spring
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 429
Initial cost to company, Land	76
Initial cost to company, Buildings	822
Costs capitalized subsequent to acquisition, Land	75
Costs capitalized subsequent to acquisition, Buildings	24
Gross Amount at which carried at close of period, Land	151
Gross Amount at which carried at close of period, Buildings	846
Gross Amount at which carried at close of period, Total	997
Depreciation	$ 210
Date of Construction or Acquisition	Feb. 06, 2013
Residential Property | Spring | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Spring | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Stanford Court
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Initial cost to company, Land	$ 291
Initial cost to company, Buildings	3,866
Costs capitalized subsequent to acquisition, Buildings	454
Gross Amount at which carried at close of period, Land	291
Gross Amount at which carried at close of period, Buildings	4,320
Gross Amount at which carried at close of period, Total	4,611
Depreciation	$ 997
Date of Construction or Acquisition	Feb. 06, 2013
Residential Property | Stanford Court | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Stanford Court | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Stonefield-Phase I
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 7,500
Initial cost to company, Land	2,804
Initial cost to company, Buildings	11,060
Costs capitalized subsequent to acquisition, Land	227
Costs capitalized subsequent to acquisition, Buildings	802
Gross Amount at which carried at close of period, Land	3,031
Gross Amount at which carried at close of period, Buildings	11,862
Gross Amount at which carried at close of period, Total	14,893
Depreciation	$ 2,273
Date of Construction or Acquisition	Aug. 01, 2014
Residential Property | Stonefield-Phase I | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Stonefield-Phase I | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Stonefield-Phase II
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 4,766
Initial cost to company, Land	1,201
Initial cost to company, Buildings	3,678
Costs capitalized subsequent to acquisition, Land	486
Costs capitalized subsequent to acquisition, Buildings	5,754
Gross Amount at which carried at close of period, Land	1,687
Gross Amount at which carried at close of period, Buildings	9,432
Gross Amount at which carried at close of period, Total	11,119
Depreciation	$ 1,345
Date of Construction or Acquisition	Oct. 23, 2014
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Stonefield-Phase III
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Initial cost to company, Land	$ 1,079
Costs capitalized subsequent to acquisition, Land	238
Gross Amount at which carried at close of period, Land	1,317
Gross Amount at which carried at close of period, Total	$ 1,317
Date of Construction or Acquisition	Oct. 23, 2014
Residential Property | Stonybrook
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Omaha, NE
Encumbrances	$ 6,124
Initial cost to company, Land	1,439
Initial cost to company, Buildings	8,003
Costs capitalized subsequent to acquisition, Buildings	1,574
Gross Amount at which carried at close of period, Land	1,439
Gross Amount at which carried at close of period, Buildings	9,577
Gross Amount at which carried at close of period, Total	11,016
Depreciation	$ 3,088
Date of Construction or Acquisition	Jan. 20, 2009
Residential Property | Stonybrook | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Stonybrook | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Summerfield
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 469
Initial cost to company, Land	129
Initial cost to company, Buildings	599
Costs capitalized subsequent to acquisition, Land	6
Costs capitalized subsequent to acquisition, Buildings	82
Gross Amount at which carried at close of period, Land	135
Gross Amount at which carried at close of period, Buildings	681
Gross Amount at which carried at close of period, Total	816
Depreciation	$ 120
Date of Construction or Acquisition	Aug. 04, 2015
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Summit Point
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 3,284
Initial cost to company, Land	681
Initial cost to company, Buildings	5,434
Costs capitalized subsequent to acquisition, Land	22
Costs capitalized subsequent to acquisition, Buildings	449
Gross Amount at which carried at close of period, Land	703
Gross Amount at which carried at close of period, Buildings	5,883
Gross Amount at which carried at close of period, Total	6,586
Depreciation	$ 1,020
Date of Construction or Acquisition	Oct. 01, 2015
Residential Property | Summit Point | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Summit Point | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Sunchase
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,011
Initial cost to company, Land	181
Initial cost to company, Buildings	1,563
Costs capitalized subsequent to acquisition, Land	14
Costs capitalized subsequent to acquisition, Buildings	86
Gross Amount at which carried at close of period, Land	195
Gross Amount at which carried at close of period, Buildings	1,649
Gross Amount at which carried at close of period, Total	1,844
Depreciation	$ 234
Date of Construction or Acquisition	May 01, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Sunset Ridge
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bismarck, ND
Encumbrances	$ 10,813
Initial cost to company, Land	1,759
Initial cost to company, Buildings	9,560
Costs capitalized subsequent to acquisition, Land	36
Costs capitalized subsequent to acquisition, Buildings	145
Gross Amount at which carried at close of period, Land	1,795
Gross Amount at which carried at close of period, Buildings	9,705
Gross Amount at which carried at close of period, Total	11,500
Depreciation	$ 3,234
Date of Construction or Acquisition	Jun. 06, 2008
Residential Property | Sunset Ridge | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	9 years
Residential Property | Sunset Ridge | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Sunview
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Initial cost to company, Land	$ 144
Initial cost to company, Buildings	1,578
Costs capitalized subsequent to acquisition, Land	2
Costs capitalized subsequent to acquisition, Buildings	241
Gross Amount at which carried at close of period, Land	146
Gross Amount at which carried at close of period, Buildings	1,819
Gross Amount at which carried at close of period, Total	1,965
Depreciation	$ 587
Date of Construction or Acquisition	Dec. 31, 2008
Residential Property | Sunview | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Sunview | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Sunwood
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,491
Initial cost to company, Land	358
Initial cost to company, Buildings	3,252
Costs capitalized subsequent to acquisition, Land	38
Costs capitalized subsequent to acquisition, Buildings	541
Gross Amount at which carried at close of period, Land	396
Gross Amount at which carried at close of period, Buildings	3,793
Gross Amount at which carried at close of period, Total	4,189
Depreciation	$ 1,304
Date of Construction or Acquisition	Jul. 01, 2007
Residential Property | Sunwood | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Sunwood | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Thunder Creek
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,645
Initial cost to company, Land	633
Initial cost to company, Buildings	4,063
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	551
Gross Amount at which carried at close of period, Land	634
Gross Amount at which carried at close of period, Buildings	4,614
Gross Amount at which carried at close of period, Total	5,248
Depreciation	$ 525
Date of Construction or Acquisition	Mar. 01, 2018
Residential Property | Thunder Creek | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	25 years
Residential Property | Thunder Creek | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Twin Oaks
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Hutchinson, MN
Encumbrances	$ 5,203
Initial cost to company, Land	816
Initial cost to company, Buildings	3,245
Costs capitalized subsequent to acquisition, Buildings	149
Gross Amount at which carried at close of period, Land	816
Gross Amount at which carried at close of period, Buildings	3,394
Gross Amount at which carried at close of period, Total	4,210
Depreciation	$ 692
Date of Construction or Acquisition	Oct. 01, 2014
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Twin Parks
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Initial cost to company, Land	$ 119
Initial cost to company, Buildings	2,072
Costs capitalized subsequent to acquisition, Land	43
Costs capitalized subsequent to acquisition, Buildings	227
Gross Amount at which carried at close of period, Land	162
Gross Amount at which carried at close of period, Buildings	2,299
Gross Amount at which carried at close of period, Total	2,461
Depreciation	$ 757
Date of Construction or Acquisition	Oct. 01, 2008
Residential Property | Twin Parks | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Twin Parks | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Valley Homes Duplexes
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 998
Initial cost to company, Land	356
Initial cost to company, Buildings	1,668
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	418
Gross Amount at which carried at close of period, Land	357
Gross Amount at which carried at close of period, Buildings	2,086
Gross Amount at which carried at close of period, Total	2,443
Depreciation	$ 390
Date of Construction or Acquisition	Jan. 22, 2015
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Valley View
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Golden Valley, MN
Encumbrances	$ 4,107
Initial cost to company, Land	1,190
Initial cost to company, Buildings	6,076
Costs capitalized subsequent to acquisition, Buildings	458
Gross Amount at which carried at close of period, Land	1,190
Gross Amount at which carried at close of period, Buildings	6,534
Gross Amount at which carried at close of period, Total	7,724
Depreciation	$ 1,274
Date of Construction or Acquisition	Dec. 19, 2014
Residential Property | Valley View | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Valley View | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Village Park
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 609
Initial cost to company, Land	219
Initial cost to company, Buildings	1,932
Costs capitalized subsequent to acquisition, Land	51
Costs capitalized subsequent to acquisition, Buildings	80
Gross Amount at which carried at close of period, Land	270
Gross Amount at which carried at close of period, Buildings	2,012
Gross Amount at which carried at close of period, Total	2,282
Depreciation	$ 725
Date of Construction or Acquisition	Apr. 30, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Village West
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,154
Initial cost to company, Land	357
Initial cost to company, Buildings	2,274
Costs capitalized subsequent to acquisition, Land	61
Costs capitalized subsequent to acquisition, Buildings	126
Gross Amount at which carried at close of period, Land	418
Gross Amount at which carried at close of period, Buildings	2,400
Gross Amount at which carried at close of period, Total	2,818
Depreciation	$ 836
Date of Construction or Acquisition	Apr. 30, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Washington
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Encumbrances	$ 350
Initial cost to company, Land	74
Initial cost to company, Buildings	592
Costs capitalized subsequent to acquisition, Buildings	75
Gross Amount at which carried at close of period, Land	74
Gross Amount at which carried at close of period, Buildings	667
Gross Amount at which carried at close of period, Total	741
Depreciation	$ 108
Date of Construction or Acquisition	May 04, 2016
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Westcourt
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,294
Initial cost to company, Land	287
Initial cost to company, Buildings	2,914
Costs capitalized subsequent to acquisition, Land	28
Costs capitalized subsequent to acquisition, Buildings	195
Gross Amount at which carried at close of period, Land	315
Gross Amount at which carried at close of period, Buildings	3,109
Gross Amount at which carried at close of period, Total	3,424
Depreciation	$ 702
Date of Construction or Acquisition	Jan. 02, 2014
Residential Property | Westcourt | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Residential Property | Westcourt | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | West Oak
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 608
Initial cost to company, Land	85
Initial cost to company, Buildings	692
Costs capitalized subsequent to acquisition, Land	47
Costs capitalized subsequent to acquisition, Buildings	36
Gross Amount at which carried at close of period, Land	132
Gross Amount at which carried at close of period, Buildings	728
Gross Amount at which carried at close of period, Total	860
Depreciation	$ 116
Date of Construction or Acquisition	Jan. 17, 2017
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Westside
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Hawley, MN
Encumbrances	$ 456
Initial cost to company, Land	59
Initial cost to company, Buildings	360
Costs capitalized subsequent to acquisition, Buildings	99
Gross Amount at which carried at close of period, Land	59
Gross Amount at which carried at close of period, Buildings	459
Gross Amount at which carried at close of period, Total	518
Depreciation	$ 127
Date of Construction or Acquisition	Feb. 01, 2010
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Westwind
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 561
Initial cost to company, Land	49
Initial cost to company, Buildings	455
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	95
Gross Amount at which carried at close of period, Land	50
Gross Amount at which carried at close of period, Buildings	550
Gross Amount at which carried at close of period, Total	600
Depreciation	$ 206
Date of Construction or Acquisition	Apr. 30, 2008
Residential Property | Westwind | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Westwind | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Westwood
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 3,108
Initial cost to company, Land	597
Initial cost to company, Buildings	6,341
Costs capitalized subsequent to acquisition, Land	91
Costs capitalized subsequent to acquisition, Buildings	764
Gross Amount at which carried at close of period, Land	688
Gross Amount at which carried at close of period, Buildings	7,105
Gross Amount at which carried at close of period, Total	7,793
Depreciation	$ 2,378
Date of Construction or Acquisition	Jun. 05, 2008
Residential Property | Westwood | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	20 years
Residential Property | Westwood | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Willow Park
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 3,228
Initial cost to company, Land	288
Initial cost to company, Buildings	5,286
Costs capitalized subsequent to acquisition, Land	39
Costs capitalized subsequent to acquisition, Buildings	799
Gross Amount at which carried at close of period, Land	327
Gross Amount at which carried at close of period, Buildings	6,085
Gross Amount at which carried at close of period, Total	6,412
Depreciation	$ 1,943
Date of Construction or Acquisition	Dec. 31, 2008
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Wolf Creek
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 2,979
Initial cost to company, Land	1,082
Initial cost to company, Buildings	4,210
Costs capitalized subsequent to acquisition, Buildings	28
Gross Amount at which carried at close of period, Land	1,082
Gross Amount at which carried at close of period, Buildings	4,238
Gross Amount at which carried at close of period, Total	5,320
Depreciation	$ 319
Date of Construction or Acquisition	Jan. 12, 2020
Life on which depreciation on latest income statement is computed	40 years
Residential Property | Woodland Pines
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Omaha, NE
Encumbrances	$ 6,047
Initial cost to company, Land	842
Initial cost to company, Buildings	10,596
Costs capitalized subsequent to acquisition, Buildings	1,372
Gross Amount at which carried at close of period, Land	842
Gross Amount at which carried at close of period, Buildings	11,968
Gross Amount at which carried at close of period, Total	12,810
Depreciation	$ 1,199
Date of Construction or Acquisition	Nov. 30, 2018
Life on which depreciation on latest income statement is computed	40 years
Office Property
SEC Schedule III, Real Estate and Accumulated Depreciation
Encumbrances	$ 61,337
Initial cost to company, Land	14,072
Initial cost to company, Buildings	70,295
Costs capitalized subsequent to acquisition, Land	121
Costs capitalized subsequent to acquisition, Buildings	25,430
Gross Amount at which carried at close of period, Land	14,193
Gross Amount at which carried at close of period, Buildings	95,725
Gross Amount at which carried at close of period, Total	109,918
Depreciation	$ 26,361
Office Property | 32nd Avenue
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 4,763
Initial cost to company, Land	635
Initial cost to company, Buildings	3,298
Costs capitalized subsequent to acquisition, Land	87
Costs capitalized subsequent to acquisition, Buildings	1,226
Gross Amount at which carried at close of period, Land	722
Gross Amount at which carried at close of period, Buildings	4,524
Gross Amount at which carried at close of period, Total	5,246
Depreciation	$ 1,651
Date of Construction or Acquisition	Mar. 16, 2004
Office Property | 32nd Avenue | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	3 years
Office Property | 32nd Avenue | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Office Property | Bell Plaza
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Bloomington, MN
Encumbrances	$ 30,662
Initial cost to company, Land	6,912
Initial cost to company, Buildings	34,672
Costs capitalized subsequent to acquisition, Buildings	4,635
Gross Amount at which carried at close of period, Land	6,912
Gross Amount at which carried at close of period, Buildings	39,307
Gross Amount at which carried at close of period, Total	46,219
Depreciation	$ 11,707
Date of Construction or Acquisition	Aug. 13, 2015
Office Property | Bell Plaza | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	3 years
Office Property | Bell Plaza | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Office Property | Trustmark
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 6,915
Initial cost to company, Land	2,089
Initial cost to company, Buildings	4,718
Costs capitalized subsequent to acquisition, Land	14
Costs capitalized subsequent to acquisition, Buildings	6,298
Gross Amount at which carried at close of period, Land	2,103
Gross Amount at which carried at close of period, Buildings	11,016
Gross Amount at which carried at close of period, Total	13,119
Depreciation	$ 712
Date of Construction or Acquisition	Aug. 28, 2020
Life on which depreciation on latest income statement is computed	40 years
Office Property | First International Bank & Trust
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Moorhead, MN
Initial cost to company, Land	$ 210
Initial cost to company, Buildings	712
Costs capitalized subsequent to acquisition, Land	5
Costs capitalized subsequent to acquisition, Buildings	88
Gross Amount at which carried at close of period, Land	215
Gross Amount at which carried at close of period, Buildings	800
Gross Amount at which carried at close of period, Total	1,015
Depreciation	$ 295
Date of Construction or Acquisition	May 13, 2011
Office Property | First International Bank & Trust | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	10 years
Office Property | First International Bank & Trust | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Office Property | Four Points
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Initial cost to company, Land	$ 70
Initial cost to company, Buildings	1,238
Costs capitalized subsequent to acquisition, Buildings	175
Gross Amount at which carried at close of period, Land	70
Gross Amount at which carried at close of period, Buildings	1,413
Gross Amount at which carried at close of period, Total	1,483
Depreciation	$ 520
Date of Construction or Acquisition	Oct. 18, 2007
Office Property | Four Points | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Office Property | Four Points | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Office Property | Gate City
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Grand Forks, ND
Initial cost to company, Land	$ 382
Initial cost to company, Buildings	893
Costs capitalized subsequent to acquisition, Land	1
Costs capitalized subsequent to acquisition, Buildings	810
Gross Amount at which carried at close of period, Land	383
Gross Amount at which carried at close of period, Buildings	1,703
Gross Amount at which carried at close of period, Total	2,086
Depreciation	$ 405
Date of Construction or Acquisition	Mar. 31, 2008
Life on which depreciation on latest income statement is computed	40 years
Office Property | Goldmark Office Park
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 12,362
Initial cost to company, Land	1,160
Initial cost to company, Buildings	11,788
Costs capitalized subsequent to acquisition, Land	65
Costs capitalized subsequent to acquisition, Buildings	8,832
Gross Amount at which carried at close of period, Land	1,225
Gross Amount at which carried at close of period, Buildings	20,620
Gross Amount at which carried at close of period, Total	21,845
Depreciation	$ 5,289
Date of Construction or Acquisition	Jul. 01, 2007
Office Property | Goldmark Office Park | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	1 year
Office Property | Goldmark Office Park | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Office Property | Great American Bldg
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,064
Initial cost to company, Land	511
Initial cost to company, Buildings	1,290
Costs capitalized subsequent to acquisition, Land	22
Costs capitalized subsequent to acquisition, Buildings	447
Gross Amount at which carried at close of period, Land	533
Gross Amount at which carried at close of period, Buildings	1,737
Gross Amount at which carried at close of period, Total	2,270
Depreciation	$ 760
Date of Construction or Acquisition	Feb. 01, 2005
Office Property | Great American Bldg | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	28 years
Office Property | Great American Bldg | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Office Property | Midtown Plaza
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Minot, ND
Encumbrances	$ 1,103
Initial cost to company, Land	30
Initial cost to company, Buildings	1,213
Costs capitalized subsequent to acquisition, Buildings	97
Gross Amount at which carried at close of period, Land	30
Gross Amount at which carried at close of period, Buildings	1,310
Gross Amount at which carried at close of period, Total	1,340
Depreciation	$ 565
Date of Construction or Acquisition	Jan. 01, 2004
Office Property | Midtown Plaza | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	5 years
Office Property | Midtown Plaza | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Office Property | Parkway office building (FKA Echelon)
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fargo, ND
Encumbrances	$ 1,619
Initial cost to company, Land	278
Initial cost to company, Buildings	1,491
Costs capitalized subsequent to acquisition, Land	42
Costs capitalized subsequent to acquisition, Buildings	82
Gross Amount at which carried at close of period, Land	320
Gross Amount at which carried at close of period, Buildings	1,573
Gross Amount at which carried at close of period, Total	1,893
Depreciation	$ 611
Date of Construction or Acquisition	May 15, 2007
Office Property | Parkway office building (FKA Echelon) | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	9 years
Office Property | Parkway office building (FKA Echelon) | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Office Property | Redpath
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	White Bear Lake, MN
Encumbrances	$ 2,849
Initial cost to company, Land	1,195
Initial cost to company, Buildings	1,787
Gross Amount at which carried at close of period, Land	1,195
Gross Amount at which carried at close of period, Buildings	1,787
Gross Amount at which carried at close of period, Total	2,982
Depreciation	$ 309
Date of Construction or Acquisition	Feb. 01, 2016
Life on which depreciation on latest income statement is computed	40 years
Office Property | Wells Fargo Center
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Duluth, MN
Initial cost to company, Land	$ 600
Initial cost to company, Buildings	7,195
Costs capitalized subsequent to acquisition, Land	(115)
Costs capitalized subsequent to acquisition, Buildings	2,740
Gross Amount at which carried at close of period, Land	485
Gross Amount at which carried at close of period, Buildings	9,935
Gross Amount at which carried at close of period, Total	10,420
Depreciation	$ 3,537
Date of Construction or Acquisition	Jul. 11, 2007
Office Property | Wells Fargo Center | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	4 years
Office Property | Wells Fargo Center | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Retail Property
SEC Schedule III, Real Estate and Accumulated Depreciation
Encumbrances	$ 13,527
Initial cost to company, Land	8,275
Initial cost to company, Buildings	23,698
Costs capitalized subsequent to acquisition, Land	11
Costs capitalized subsequent to acquisition, Buildings	81
Gross Amount at which carried at close of period, Land	8,286
Gross Amount at which carried at close of period, Buildings	23,779
Gross Amount at which carried at close of period, Total	32,065
Depreciation	$ 7,462
Retail Property | Applebees, Coon Rapids, MN
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Coon Rapids, MN
Initial cost to company, Land	$ 750
Initial cost to company, Buildings	875
Costs capitalized subsequent to acquisition, Land	8
Gross Amount at which carried at close of period, Land	758
Gross Amount at which carried at close of period, Buildings	875
Gross Amount at which carried at close of period, Total	1,633
Depreciation	$ 281
Date of Construction or Acquisition	Mar. 09, 2010
Life on which depreciation on latest income statement is computed	40 years
Retail Property | Dairy Queen, Apple Valley, MN
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Apple Valley, MN
Encumbrances	$ 1,898
Initial cost to company, Land	845
Initial cost to company, Buildings	828
Gross Amount at which carried at close of period, Land	845
Gross Amount at which carried at close of period, Buildings	828
Gross Amount at which carried at close of period, Total	1,673
Depreciation	$ 90
Date of Construction or Acquisition	Sep. 17, 2018
Life on which depreciation on latest income statement is computed	40 years
Retail Property | Dairy Queen, Dickinson, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Dickinson, ND
Initial cost to company, Land	$ 329
Initial cost to company, Buildings	658
Costs capitalized subsequent to acquisition, Land	1
Gross Amount at which carried at close of period, Land	330
Gross Amount at which carried at close of period, Buildings	658
Gross Amount at which carried at close of period, Total	988
Depreciation	$ 181
Date of Construction or Acquisition	Jan. 19, 2012
Life on which depreciation on latest income statement is computed	40 years
Retail Property | Dairy Queen, Moorhead, MN
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Moorhead, MN
Initial cost to company, Land	$ 243
Initial cost to company, Buildings	787
Costs capitalized subsequent to acquisition, Land	2
Gross Amount at which carried at close of period, Land	245
Gross Amount at which carried at close of period, Buildings	787
Gross Amount at which carried at close of period, Total	1,032
Depreciation	$ 230
Date of Construction or Acquisition	May 13, 2011
Life on which depreciation on latest income statement is computed	20 years
Retail Property | Family Dollar, Mandan, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Mandan, ND
Initial cost to company, Land	$ 166
Initial cost to company, Buildings	649
Costs capitalized subsequent to acquisition, Buildings	54
Gross Amount at which carried at close of period, Land	166
Gross Amount at which carried at close of period, Buildings	703
Gross Amount at which carried at close of period, Total	869
Depreciation	$ 198
Date of Construction or Acquisition	Dec. 14, 2010
Life on which depreciation on latest income statement is computed	40 years
Retail Property | OReilly, Mandan, ND
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Mandan, ND
Initial cost to company, Land	$ 115
Initial cost to company, Buildings	449
Costs capitalized subsequent to acquisition, Buildings	27
Gross Amount at which carried at close of period, Land	115
Gross Amount at which carried at close of period, Buildings	476
Gross Amount at which carried at close of period, Total	591
Depreciation	$ 138
Date of Construction or Acquisition	Dec. 14, 2010
Life on which depreciation on latest income statement is computed	40 years
Retail Property | Walgreens, Alexandria, LA
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Alexandria, LA
Encumbrances	$ 548
Initial cost to company, Land	1,090
Initial cost to company, Buildings	2,973
Gross Amount at which carried at close of period, Land	1,090
Gross Amount at which carried at close of period, Buildings	2,973
Gross Amount at which carried at close of period, Total	4,063
Depreciation	$ 969
Date of Construction or Acquisition	Dec. 18, 2009
Retail Property | Walgreens, Alexandria, LA | Minimum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	28 years
Retail Property | Walgreens, Alexandria, LA | Maximum
SEC Schedule III, Real Estate and Accumulated Depreciation
Life on which depreciation on latest income statement is computed	40 years
Retail Property | Walgreens, Batesville, AR
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Batesville, AR
Encumbrances	$ 4,623
Initial cost to company, Land	472
Initial cost to company, Buildings	6,405
Gross Amount at which carried at close of period, Land	472
Gross Amount at which carried at close of period, Buildings	6,405
Gross Amount at which carried at close of period, Total	6,877
Depreciation	$ 2,162
Date of Construction or Acquisition	Jul. 09, 2009
Life on which depreciation on latest income statement is computed	40 years
Retail Property | Walgreens, Denver, CO
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Denver, CO
Encumbrances	$ 2,984
Initial cost to company, Land	2,349
Initial cost to company, Buildings	2,358
Gross Amount at which carried at close of period, Land	2,349
Gross Amount at which carried at close of period, Buildings	2,358
Gross Amount at which carried at close of period, Total	4,707
Depreciation	$ 683
Date of Construction or Acquisition	Jun. 14, 2011
Life on which depreciation on latest income statement is computed	40 years
Retail Property | Walgreens, Fayetteville, AR
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Fayetteville, AR
Encumbrances	$ 3,474
Initial cost to company, Land	636
Initial cost to company, Buildings	4,732
Gross Amount at which carried at close of period, Land	636
Gross Amount at which carried at close of period, Buildings	4,732
Gross Amount at which carried at close of period, Total	5,368
Depreciation	$ 1,597
Date of Construction or Acquisition	Jul. 09, 2009
Life on which depreciation on latest income statement is computed	40 years
Retail Property | Walgreens, Laurel, MS
SEC Schedule III, Real Estate and Accumulated Depreciation
Physical Location	Laurel, MS
Initial cost to company, Land	$ 1,280
Initial cost to company, Buildings	2,984
Gross Amount at which carried at close of period, Land	1,280
Gross Amount at which carried at close of period, Buildings	2,984
Gross Amount at which carried at close of period, Total	4,264
Depreciation	$ 933
Date of Construction or Acquisition	Jul. 30, 2010
Life on which depreciation on latest income statement is computed	40 years

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Schedule III - Real Estate and Accumulated Depreciation - Changes in Real Estate Investments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Beginning balance	$ 896,702	$ 845,288	$ 802,028
Purchase of real estate investments	103,252	63,299	57,799
Sale and disposal of real estate investment	(26,960)	(8,184)	(15,467)
Property held for sale		1,578	(1,578)
Provision for asset impairment	(561)	0	0
Construction in progress not yet placed in service	(1,285)	(5,279)	2,506
Ending balance	$ 971,148	$ 896,702	$ 845,288

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Schedule III - Real Estate and Accumulated Depreciation - Changes in Accumulated Depreciation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Beginning balance	$ 179,155	$ 160,575	$ 146,316
Depreciation expense	22,161	20,917	19,770
Property held for sale		749	(749)
Sale and disposal of real estate investment	(6,467)	(3,086)	(4,762)
Ending balance	$ 194,849	$ 179,155	$ 160,575