Sterling Real Estate Trust

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. Additionally, commercial revenue may also include the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. More than half of our existing commercial property leases as of December 31, 2025 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, 2025, we owned 175 properties located in 12 states, containing approximately 12,295 apartment units and 1,159,000 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, 2025, approximately 83.9% (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, 2025, approximately 16.1% (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.

The below table sets forth certain information regarding each of our properties owned, including unconsolidated affiliates, as of December 31, 2025 (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, 2025

Amberwood · Grand Forks, ND · 2016 · 96 · 3,319 · 100.00

Arbor · Bismarck, ND · 2013 · 12 · 510 · 100.00

Arbor II · Bismarck, ND · 2013 · 12 · 489 · 100.00

Arbor III · Bismarck, ND · 2013 · 12 · 543 · 75.00

Ashbury · Fargo, ND · 2013 & 2016 · 61 · 3,545 · 91.80

Auburn II · Fargo, ND · 2007 · 24 · 688 · 95.83

Autumn Ridge · Grand Forks, ND · 2004 · 144 · 5,700 · 97.92

Barrett Arms · Crookston, MN · 2014 · 24 · 885 · 100.00

Bayview · Fargo, ND · 2007 · 100 · 3,967 · 93.00

Bell Plaza* (FKA Northland Plaza) · Bloomington, MN · 2015 · 299,671 · 31,851 · 83.55

Belmont · Bismarck, ND · 2020 · 26 · 1,389 · 92.31

Berkshire · Fargo, ND · 2008 · 12 · 382 · 100.00

Betty Ann · Fargo, ND · 2009 · 24 · 780 · 87.50

Biolife Plasma Center · Bismarck, ND · 2008 · 11,737 · 1,557 · 100.00

Biolife Plasma Center · Janesville, WI · 2008 · 12,225 · 1,271 · 100.00

Biolife Plasma Center · Mankato, MN · 2008 · 12,965 · 2,402 · 100.00

Biolife Plasma Center · Marquette, MI · 2008 · 11,737 · 1,749 · 100.00

Biolife Plasma Center · Onalaska, WI · 2008 · 12,180 · 1,347 · 100.00

Biolife Plasma Center · Oshkosh, WI · 2008 · 12,191 · 1,230 · 100.00

Biolife Plasma Center · Sheboygan, WI · 2008 · 12,965 · 1,584 · 100.00

Biolife Plasma Center · Stevens Point, WI · 2008 · 13,190 · 1,320 · 100.00

Birchwood I · Fargo, ND · 2017 · 18 · 480 · 100.00

Birchwood II · Fargo, ND · 2017 · 48 · 2,607 · 92.59

Bluemont Lakes Financial Center · Fargo, ND · 2004 · 31,307 · 3,257 · 88.51

Bradbury · Bismarck, ND · 2018 · 96 · 5,242 · 95.83

Briar Pointe · Fargo, ND · 2021 · 30 · 1,758 · 96.67

Bridgeport · Fargo, ND · 2016 · 120 · 7,007 · 95.83

Bristol Park · Grand Forks, ND · 2016 · 80 · 4,742 · 96.25

Brookfield · Fargo, ND · 2008 · 72 · 1,634 · 98.61

Brownstone · Fargo, ND · 2021 · 72 · 4,312 · 97.22

Cambridge (FKA 44th Street) · Fargo, ND · 2013 · 42 · 1,796 · 88.10

Candlelight · Fargo, ND · 2012 · 66 · 1,838 · 92.42

Carling Manor · Grand Forks, ND · 2008 · 12 · 535 · 100.00

Carlton Place · Fargo, ND · 2008 · 213 · 6,043 · 92.02

Carr · Fargo, ND · 2017 · 18 · 698 · 88.89

Cedars 4 · Fargo, ND · 2018 · 18 · 1,094 · 77.78

Chandler 1802 · Grand Forks, ND · 2014 · 24 · 1,009 · 91.67

Chandler 1834 · Grand Forks, ND · 2018 · 12 · 616 · 100.00

Chandler 1866 · Grand Forks, ND · 2005 · 12 · 232 · 100.00

Chandler 1898 · Grand Forks, ND · 2022 · 12 · 570 · 91.67

Cherry Creek (FKA Village) · Grand Forks, ND · 2008 · 35 · 2,038 · 68.57

Cobalt · Fort Worth, TX · 2022 · 270 · 49,807 · 88.20

Columbia West · Grand Forks, ND · 2008 · 70 · 2,676 · 95.71

Country Club · Fargo, ND · 2011 · 40 · 1,241 · 95.00

Countryside · Fargo, ND · 2011 · 24 · 824 · 91.67

Dairy Queen · Dickinson, ND · 2012 · 2,811 · 757 · 100.00

Dairy Queen · Moorhead, MN · 2011 · 2,712 · 757 · 100.00

Dakota Manor · Fargo, ND · 2014 · 54 · 2,437 · 92.59

Danbury · Fargo, ND · 2007 · 134 · 5,060 · 97.01

Deer Park · Hutchinson, MN · 2022 · 138 · 13,315 · 94.93

Dellwood Estates · Anoka, MN · 2013 · 132 · 8,777 · 96.21

• Sterling Highland, LLC North Dakota⁴
• Sterling Parkwest, LLC North Dakota⁴
• Sterling Pointe Apartments, LLC North Dakota⁴
• Sterling Quail Creek, LLC Missouri⁴
• Sterling Stonefield I, LLC North Dakota⁴
• Sunwood Estates, LLC North Dakota⁴
• Twin Oaks Apartments, LLC Minnesota⁴
• Willow Park Apartments, LLC North Dakota⁴

• Our shareholders may experience dilution if we or our Operating Partnership issues additional securities.
• Our securityholders have limited control over our operation, and the Board of Trustees has the sole power to appoint and terminate the Advisor.
• Shareholders have no role in determining our investments and must rely on our Advisor and oversight by the Board of Trustees.
• We may issue securities with more favorable terms than the outstanding shares without shareholder approval.
• 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.
• 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.
• 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.
• 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.
• 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.
• As a REIT, we may be subject to tax liabilities that reduce our cash flow.
• 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.
• 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.
• We have transfer restrictions on our shares that may limit offers to acquire substantial amounts of the Trust’s shares at a premium.
• Complying with REIT requirements may restrict our ability to operate in a way to maximize profits.
• Complying with REIT requirements may force us to forego or liquidate otherwise attractive investments which could negatively impact shareholder value.
• 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.
• Ordinary dividends payable by REITs generally are taxed at the higher ordinary income rate which could reduce the net cash received by shareholders.
• Changes in legislative or other actions affecting REITs may adversely affect our status as a REIT.
• 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.
• Risks Related to Tax-Exempt Investors
• Common shares may not be a suitable investment for tax-exempt investors.
• Under certain circumstances, tax-exempt shareholders may be subject to unrelated business taxable income, which could adversely affect such shareholders.
• Risks Related to Our Relationship with the Advisor and Its Affiliates
• We depend on our Advisor for the day-to-day management and successful operations of the REIT, and if required, we may not be able to find a suitable replacement advisor.
• The termination or replacement of the Advisor could trigger a default or repayment event under financings.
• The Advisor may not be able to retain its key employees, which could adversely affect our ability to carry out our investment strategies.
• 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.
• We may invest in and develop undeveloped real property, which requires us to pay expenses prior to receiving any income on 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.
• 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 could experience difficulties or delays renewing leases or re-leasing space, which will increase our costs to maintain such properties without receiving income.
• We could face potential adverse effects if a commercial tenant is unable to make timely rental payments, declares bankruptcy or become insolvent.
• Investments in real estate are illiquid, and we may not be able to resell a property on terms favorable to us.
• Valuations and appraisals of our investments may not necessarily correspond to realizable value.
• Uninsured losses related to real estate investments may adversely affect our results of operation.
• 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 rely on affiliated and outside property managers to properly manage and lease our properties.
• Risks Related with Our Indebtedness and Financing
• Market conditions could adversely affect our ability to obtain financing.
• 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.
• We could face difficulties in refinancing loans involving balloon payment obligations.
• Lenders may require restrictive covenants relating to our operations, which may adversely affect our flexibility and our ability to achieve our investment objectives.
• Increases in interest rates on variable rate debt incurred and new financings by us will reduce cash available for dividends.
• Complying with REIT requirements may limit our ability to hedge liabilities through tax-efficient means, which may adversely affect our results of operations.
• 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.
• Risks Related to Conflicts of Interest
• 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.
• Division of Loyalty/Allocation of time and effort
• Allocation of investment opportunities