UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

FORM 1-K

ANNUAL REPORT PURSUANT TO REGULATION A OF THE SECURITIES ACT OF 1933

For the Fiscal Year ended December 31, 2025

YS RE RAF I LLC 

(Exact name of issuer as specified in its charter)

(844) 943-5378

Registrant’s telephone number, including area code

Common Shares 

(Title of each class of securities issued pursuant to Regulation A)

TABLE OF CONTENTS

YS RE RAF I LLC

The Company makes statements in this Annual Report that are forward-looking statements within the meaning of the federal securities laws. The words “believe,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “seek,” “may,” and similar expressions or statements regarding future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the Company’s actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that it expresses or implies in this Annual Report or in the information incorporated by reference into this Annual Report.

The forward-looking statements included in this Annual Report are based upon current expectations, plans, estimates, assumptions 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 the Company’s control. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, its actual results and performance could differ materially from those set forth in the forward- looking statements. Factors which could have a material adverse effect on the Company’s operations and future prospects include, but are not limited to:

Any of the assumptions underlying forward-looking statements could be inaccurate. You are cautioned not to place undue reliance on any forward-looking statements included in this Annual Report. All forward-looking statements are made as of the date of this Annual Report and the risk that actual results will differ materially from the expectations expressed in this Annual Report will increase with the passage of time. Except as otherwise required by the federal securities laws, neither the Company, the Manager, the Sponsor, nor any of their affiliates undertakes any obligation to publicly update or revise any forward-looking statements after the date of this Annual Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Annual Report, including, without limitation, the risks described and incorporated by reference hereby under “Risk Factors,” the inclusion of such forward-looking statements should not be regarded as a representation by the Company or any other person that the objectives and plans set forth in this Annual Report will be achieved.

Item 1. Business

The Company

YS RE RAF I LLC is a Delaware limited liability company formed on May 10, 2021 to originate, invest in and manage a diversified portfolio of commercial real estate properties. We use the net proceeds from our shares offering to acquire commercial real estate properties, commercial real estate loans, as well as commercial real estate debt securities and other real estate-related assets. We may make our investments through majority-owned subsidiaries, some of which may have rights to receive preferred economic returns. The use of the terms “YS RE RAF I LLC”, the “Company”, “we”, “us” or “our” in this Annual Report refer YS RE RAF I LLC unless the context indicates otherwise.

We elected to be taxed as a real estate investment trust, or REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ending December 31, 2022. As of December 31, 2025, our portfolio was comprised of approximately $18,883,654 of commercial real estate properties and commercial mortgage loans that are intended to align with our investment objectives. We have attempted to diversify our portfolio by investment type, investment size and investment risk with the goal of attaining a portfolio of real estate assets that provide attractive and stable returns to our investors. We make our investments by acquiring portfolios of assets, other mortgage REITs or companies with investment objectives similar to ours or through the acquisition of individual loan or securities assets.

Willow Asset Management LLC (“Willow Wealth”, Formerly known as Yieldstreet Asset LLC), a Delaware limited liability company, is our investment advisor (in such capacity, the "Manager"). As our Manager, it manages our day-to-day operations and our portfolio of commercial real estate assets, commercial real estate loans and other real estate-related assets. Our Manager also has the authority to make all of the decisions regarding our investments, subject to the limitations in the operating agreement of the Company (the “Operating Agreement”) and the direction and oversight of our Manager’s investment committee. Our Manager also provides asset management, marketing, investor relations and other administrative services on our behalf. Our Manager is a wholly-owned subsidiary of our sponsor, Willow Asset Management Inc., a Delaware corporation ("Sponsor") which owns an online investment platform at www.willowwealth.com (the "Platform").

Through March 31, 2026, we raised approximately $44.18 million in capital from approximately 4,000 investors. Although we do not intend to list our common shares for trading on a stock exchange or other trading market, we have adopted a redemption plan designed to provide our shareholders with limited liquidity on a quarterly basis for their investment in our shares. Through December 31, 2025, we have redeemed approximately $5.6 million under the plan.

Effective August 8, 2024, however, Willow Asset Management LLC determined to indefinitely suspend the share redemption plan of the Company, in accordance with the terms of the Operating Agreement. Additionally, the Company will no longer accept new investors. The suspension of redemptions and proscription of new investors were made in connection with the Company’s determination, based on the current market conditions in the commercial real estate market, to discontinue and wind-down the Company. The Company plans to sell its assets in a manner intended to maximize returns to investors and estimates the wind-down process is expected to take two to three years. The Company will provide shareholders with written notice of updates from time to time related to the wind-down process. All liquidation and sale proceeds, net of expenses and fees as described in the Offering Circular and the Operating Agreement, will be distributed pro rata to shareholders.

Investment Strategy

We engage in real estate investment opportunities across the capital structure including but not limited to first mortgage loans, subordinate mortgage loans, mezzanine loans, loan participations, preferred equity, equity and other real estate and real estate-related investments. The Company works with and invested alongside partners with established track records. The Manager’s real estate team has experience investing across different cycles, property types and risk profiles. The Company’s equity investments focus on properties with significant possibilities for capital appreciation, such as those requiring development, redevelopment or repositioning, those located in markets with high growth potential and those available from sellers who are distressed or face time-sensitive deadlines. The Company’s debt investments will emphasized the payment of current returns to investors and the preservation of invested capital and sought capital appreciation from its investments. In connection with our winding down, the Company may invest in commercial real estate-related debt securities (including CMBS, CDOs, CRE CLOs and REIT senior unsecured debt) and other real estate-related assets. The Company's portfolio of investments is secured primarily by U.S. based collateral.

Investment Objectives

The Company’s primary investment objective was capital appreciation with a secondary objective of creating current income.

The Company may also seek to realize growth in the value of its investments by timing their liquidation to maximize value.

There can be no assurance that the Company will attain these objectives or that the value of the Company’s assets will not decrease. Furthermore, within the Company’s investment objectives and policies, the Manager has substantial discretion with respect to the selection of specific investments and the purchase and sale of the Company’s assets.

Our primary investment types are as follows:

We believe that these investment types are complementary to each other due to overlapping sources of investment opportunities and common reliance on real estate fundamentals and application of similar portfolio management skills to maximize value and to protect capital.

Competition

Our net income depends, in large part, on our ability to manage and liquidate our investments. We compete with many other entities engaged in real estate investment activities, including individuals, corporations, bank and insurance company investment accounts, other REITs, private real estate funds, and other entities engaged in real estate investment activities as well as online lending platforms that compete with the Platform, many of which have greater financial resources and lower costs of capital available to them than we have. In addition, there are numerous REITs with asset acquisition objectives similar to ours, and others may be organized in the future, which may increase competition for the investments suitable for us. Competitive variables include market presence and visibility, amount of capital to be invested per project and underwriting standards. To the extent that a competitor is willing to risk larger amounts of capital in a particular transaction or to employ more liberal underwriting standards when evaluating potential investments than we are, our investment volume and profit margins for our investment portfolio could be impacted. Our competitors may also be willing to accept lower returns on their investments and may drive down market prices. Although we believe that we are well positioned to compete effectively in each facet of our business, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition in the future that could limit our ability to conduct our business effectively or liquidate assets without realizing a loss.

Risk Factors

We face risks and uncertainties that could affect us and our business as well as the real estate industry generally. These risks are outlined under the heading “Risk Factors” contained in our Offering Circular dated and filed with the SEC on February 25, 2022, which may be accessed here, as the same may be updated from time to time by our future filings under Regulation A. In addition, new risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. These risks could result in a decrease in the value of our common shares.

In addition, we call your attention to the following additional risk factor:

We may not be able to sell our properties on terms we consider favorable and we expect investors will have a negative return on their Shares.

We are in the process of winding down the Company and liquidating our assets. To the extent we are not able to sell our assets on terms or at prices we deem favorable, the return to investors may be substantially lower than the current NAV. Moreover, selling commercial real estate takes time, and in the industry’s current environment, we may not be able to wait for the best offer or price we might be able to otherwise obtain had more favorable market conditions prevailed. This may negatively affect the return on investment for our Shares. As a result, the distributed value of our Shares is expected to be lower than the price paid by our investors, resulting in a loss and negative return.

Our Investments

As of December 31, 2025, we held the following investments. See “Recent Developments” below for recent updates on our investments.

Distributions

While we are under no obligation to do so, we may declare periodic distributions as circumstances dictate. We expect to authorize and declare distributions based on daily record dates or at irregular times based on the liquidity progress of our wind-down plans.

Any distributions we make are at the discretion of our Manager, and are based on, among other factors, our present and reasonably projected future cash flow. Distributions are paid to shareholders as of the record dates selected by our Manager. In addition, the payment of distributions is governed by the REIT distribution requirements, which generally require that we make aggregate annual distributions to our shareholders of at least 90% of our REIT taxable income, computed without regard to the dividends paid deduction and excluding net capital gain.

Moreover, even if we make the required minimum distributions under the REIT rules, we are subject to federal income and excise taxes on our undistributed taxable income and gains. As a result, our Manager may make additional distributions, beyond the minimum REIT distribution, to avoid such taxes.

Any distributions that we make directly impacts our NAV, by reducing the amount of our assets. Over the course of your investment, your distributions plus the change in NAV per share (either positive or negative) will produce your total return.

Our distributions will generally constitute a return of capital to the extent that they exceed our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. To the extent that a distribution is treated as a return of capital for U.S. federal income tax purposes, it will reduce a holder’s adjusted tax basis in the holder’s shares, and to the extent that it exceeds the holder’s adjusted tax basis will be treated as gain resulting from a sale or exchange of such shares.

There were no distributions for the fiscal years ended December 31, 2025 and 2024.

Redemption Plan

We previously adopted a redemption plan whereby, on a quarterly basis, a shareholder could obtain liquidity as described in detail in our Offering Circular, which may be accessed here. Our Manager may in its sole discretion, amend, suspend, or terminate the redemption plan at any time, including to protect our operations and our non-redeemed shareholders, to prevent an undue burden on our liquidity, to preserve our status as a REIT, following any material decrease in our NAV, or for any other reason. In accordance with such right, effective August 8, 2024, our Manager determined to indefinitely suspend the share redemption plan of the Company.

For the years ended December 31, 2025 and 2024, there were no redemptions under the plan.

Sources of Operating Revenues and Cash Flows

We generate revenues from net interest income on our commercial real estate investments, as well as cash flow distributions and equity in earnings from our investments in unconsolidated joint ventures. Our income is primarily derived through the difference between revenue and the cost at which we are able to finance our investments. We may also seek to acquire investments which generate attractive returns without any leverage.

Outlook and Recent Trends

For more information regarding market conditions, please see the Shareholder Letter.

Our Strategy

The Company plans to sell its assets in a manner intended to maximize returns to investors and estimates the wind-down process is expected to take two to three years. The Company will provide shareholders with written notice of updates from time to time related to the wind-down process. All liquidation and sale proceeds, net of expense and fees as described in the Offering Circular and the Operating Agreement, will be distributed pro rata to shareholders.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

Our accounting policies have been established to conform with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the consolidated financial statements.

We believe the following critical accounting policies govern the significant judgments and estimates used in the preparation of our consolidated financial statements. Please refer to Note 2 —Summary of Significant Accounting Policies, included in the consolidated financial statements contained in this report below for a more thorough discussion of our accounting policies and procedures. We consider our critical accounting policies to be the following:

Principles of Consolidation

Certain of our investments are considered “majority-owned subsidiaries” within the meaning of the Investment Company Act of 1940. Our ownership interest in an investee referred to as such does not necessarily exceed 50% of the capital of the investee, and the definition under the Investment Company Act differs from the considerations provided by GAAP for whether an investee should be consolidated. We analyze our investments to determine whether they should be consolidated using the voting interest and variable interest models provided by generally accepted accounting principles. See Note 2 - Summary of Significant Accounting Policies, Principles of Consolidation in our consolidated financial statements for further detail.

As of December 31, 2025, the Company does not consolidate any separate legal entities in which we own equity interests. We generally consolidate variable interest entities (“VIE”) where the Company is the primary beneficiary of a VIE in which we have a variable interest and voting interest entities where the Company is the majority owner or otherwise controls the voting interest entity.

As of December 31, 2025, the Company did not hold any investments in entities which are considered to be variable interest entities based on the determination that we have substantive participating rights in all of the limited partnerships or similar legal entities which may have otherwise been considered variable interest entities.

Fair Value Disclosures

We are required to disclose an estimate of fair value of our financial instruments for which it is practicable to estimate the value. The fair value of a financial instrument is the amount at which such financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. For certain of our financial instruments, fair values are not readily available since there are no active trading markets as characterized by current exchanges by willing parties.

We determine the fair value of certain investments in accordance with the fair value hierarchy that requires an entity to maximize the use of observable inputs.

As of December 31, 2025, the Company’s financial instruments consist of cash and cash equivalents, three joint venture equity investments, one mortgage loan, one participation in a mortgage loan and accounts receivable. The carrying values of cash and cash equivalents, and accounts receivable are reasonable estimates of their fair value. The aggregate fair value of our investments is based on unobservable Level 3 inputs which management has determined to be its best estimate of current market values. The methods utilized generally included a discounted cash flow method (an income approach). Significant inputs and assumptions include the market based interest or preferred return rate, loan to value ratios, and expected repayment and prepayment dates.

As a result of this assessment, as of December 31, 2025, management estimated the fair value of our investments to be $18,833,654. See Note 4, Fair Value of Financial Instruments in our consolidated financial statements.

Results of Operations

Revenue

For the year ended December 31, 2025, we incurred a net unrealized and realized loss of $5,807,511 versus $11,405,966 for the year ended December 31, 2024 representing a 49% decrease in net loss. The loss in both years was driven by significant deterioration in the value of our real estate assets, though the impact in 2025 was less pronounced than in 2024.

Interest Income from Investments

For the year ended December 31, 2025, we earned interest income of $822,585 from investments in commercial mortgage loans versus $934,349 for the year ended 2024, a 12% decrease primarily driven by paydowns of our debt assets.

Expenses

Professional Fees and other Expenses

For year ended December 31, 2025, we incurred professional fees and other expenses of $555,311 versus $716,512 for the year ended December 31, 2024, a decrease of 23%, primarily driven by decreased administration fees associated with operating our business.

Asset Management Fees

For year ended December 31, 2025, we incurred asset management fees of $325,200 versus $432,614 for the year ended December 31, 2024, a decrease of 25%, resulting from a lower value of assets managed by our Manager in 2025.

Liquidity and Capital Resources

We require capital to fund our investment activities and operating expenses. Our capital sources may include, cash flow from operations, net proceeds from asset repayments and sales, borrowings under credit facilities, other term borrowings and securitization financing transactions.

We receive distributions from our investments that represent cash flow from operations from the investment. For the year ended in December 31, 2025 we received cash distributions of $0 versus $134,279 for the year ended December 31, 2024, a 100% decrease resulting from reduced cash flows from our real estate joint ventures in 2025.

We currently have no outstanding debt and have not received any commitments from any lenders to provide us with financing. Our Manager may from time to time modify our leverage policy in its discretion in light of then-current economic conditions, relative costs of debt and equity capital, market values of our assets, general conditions in the market for debt and equity securities, growth and acquisition opportunities or other factors.

In addition to making investments in accordance with our investment objectives, we use our capital resources to make certain payments to our Manager. During our organization and offering stage, these payments included payments for reimbursement of certain organization and offering expenses. In addition, borrowers and real estate sponsors may make payments to our sponsor or its affiliates in connection with the selection or purchase of investments. The amount of the asset management fee may vary from time to time, and we will publicly report any changes in the asset management fee. During the year ended December 31, 2025, asset management fees of $325,200 have been incurred. As of December 31, 2025, $74,273 of asset management fees remain payable to the Manager.

Cash Flows

The following presents our statement of cash flows for the year ended December 31, 2025:

Off-Balance Sheet Arrangements

As of December 31, 2025, we had no off-balance sheet arrangements.

Related Party Arrangements

For further information regarding “Related Party Arrangements,” please see “Item 5 - Interest of Management and Others in Certain Transactions” and Note 7, Related Party Arrangements in Item 7, Consolidated financial statements.

Recent Developments

Effective August 8, 2024, our Manager determined to indefinitely suspend our share redemption plan, in accordance with the terms of the Operating Agreement. Additionally, the Company will no longer accept new investors. The suspension of redemptions and proscription of new investors were made in connection with the Company’s determination, based on the current market conditions in the commercial real estate market, to discontinue and wind-down the Company. The Company plans to sell its assets in a manner intended to maximize returns to investors and estimates the wind-down process is expected to take two to three years. The Company will provide shareholders with written notice of updates from time to time related to the wind-down process. All liquidation and sale proceeds, net of expenses and fees as described in the Offering Circular and the Operating Agreement, will be distributed pro rata to shareholders.

Item 3. Directors and Officers

Our Manager

We operate under the direction of our Manager, which is responsible for directing the management of our business and affairs, managing our day-to-day affairs, and implementing our investment strategy. Our Manager has established an investment committee that makes decisions with respect to all acquisitions and dispositions. Our Manager and its officers and directors are not required to devote all of their time to our business and are only required to devote such time to our affairs as their duties require.

We follow investment guidelines adopted by our Manager and the investment and borrowing policies set forth in our Offering Circular, which may be accessed here, unless they are modified by our Manager. Our Manager may establish further written policies on investments and borrowings and will monitor our administrative procedures, investment operations and performance to ensure that the policies are fulfilled. Our Manager may change our investment objectives at any time without approval of our shareholders.

Our Manager performs its duties and responsibilities pursuant to our operating agreement. Our Manager maintains a contractual, as opposed to a fiduciary relationship, with us and our shareholders. Furthermore, we have agreed to limit the liability of our Manager and to indemnify our Manager against certain liabilities.

Board of Managers and Executive Officers of the Company

The Board of Managers of the Company (the “Board of Managers”) monitors and performs an oversight role with respect to the business and affairs of the Company. However, the Manager, rather than the Board of Managers or any executive officer of the Company, manages the day-to-day operations of the Company and the Company’s investment portfolio. The Company will not pay any compensation to any member of the Board of Managers nor to any executive officer of the Company.

The following persons are the members of the Board of Managers of the Company; Mitchell Rosen and Ted Yarbrough. The following persons are the executive officers of the Company; (i) Mitchell Rosen, Chief Executive Officer, and (ii) Stephen Ferrara, Chief Financial Officer. The address for each member of the Board of Managers and for each executive officer of the Company is c/o Willow Asset Management LLC, 245 Fifth Avenue, 21st Floor, New York, NY 10016. Below is a description of the experiences and qualifications of the members of the Board of Managers and executive officers of the Company.

Mitchell Rosen. Mr. Rosen is responsible for the real estate investment vertical at Sponsor. Prior to joining Sponsor, Mr. Rosen worked at Brigade Capital Management, a credit focused alternative asset management firm, where he spent more than 5 years focusing on CMBS/CRE debt investing. Prior to Brigade, Mr. Rosen spent almost 9 years at Marathon Asset Management working on both the direct lending program on transitional properties as well as the head credit analyst for their CMBS business. Mr. Rosen entered the real estate lending arena as an analyst at Capital Trust, Inc., a publicly traded commercial mortgage REIT focusing on the mezzanine debt lending space. Mr. Rosen has a Bachelor of Business Administration from Emory University.

Ted Yarbrough. Mr. Yarbrough serves as the Chief Investment Officer at Willow Wealth. He is responsible for all investment origination, underwriting, and risk management of the $1.5+ billion Willow Wealth portfolio, across a variety of alternative assets classes, including real estate, specialty finance, private credit, art, third party funds, and structured notes. Prior to joining Willow Wealth, Mr. Yarbrough held various leadership positions across various banking and markets platforms at Citi Group such as Global Head of Securitized Products, Global Head of Structured Finance, Chief Investment Officer of the Global Spread Products division, and Global Co-Head of Institutional Credit Management. In these roles, Ted was responsible for capital markets, financing and risk management across a broad array of alternative asset classes, including real estate, consumer and commercial receivables, equipment, transportation, project finance, infrastructure, and renewable energy, and oversaw asset portfolios in excess of $100 billion.

Stephen Ferrara. Mr. Ferrara has served as Chief Financial Officer and chief accounting officer of the Company since August 2024. Prior to joining Willow Wealth he was an Associate Director at Point72 Asset Management, managing teams in both Fund Administration and Treasury. Most recently, he was the Controller and Chief Compliance Officer at Ocean Park Investments.  Mr. Ferrara started his career in public accounting at Deloitte, where he spent 6 years, leaving as a manager. He is registered as a CPA in the State of Connecticut and has a Bachelor of Science degree in accounting and finance from Bryant University.

Compensation of Executive Officers

We do not currently have any employees nor do we currently intend to hire any employees who will be compensated directly by us. Some of the executive officers of our Sponsor also serves as an executive officer of our Manager. Each of these individuals receives compensation for his services, including services performed for us on behalf of our Manager, from our Sponsor. As executive officers of our Manager, these individuals serve to manage our day-today affairs, oversee the review, selection and recommendation of investment opportunities, service acquired investments and monitor the performance of these investments to ensure that they are consistent with our investment objectives. Although we indirectly bear some of the costs of the compensation paid to these individuals, through fees and reimbursements we pay to our Manager, we do not pay any compensation directly to these individuals.

Compensation of our Manager

For information regarding the compensation of our Manager, please see “Management Compensation” in our Offering Circular here.

Item 4. Security Ownership of Management and Certain Securityholders

Principal Shareholders

The following table sets forth the beneficial ownership of our outstanding shares as of December 31, 2025 for each person or group that holds more than 5% of the outstanding shares, or for each manager and executive officer of the Company, and for each director and executive officer of our Manager and for the directors and executive officers of our Manager as a group, to the Company’s knowledge.

Transfer Agent

DST Systems, Inc. acts as our transfer agent. Shareholder inquiries may be made to them at support@willowwealth.com.

Item 5. Interest of Management and Others in Certain Transactions

For further details, please see Note 7, Related Party Arrangements in Item 7, Consolidated financial statements.

Item 6. Other Information

Shareholder Letter

Dear Shareholders,

Thank you once again for your interest in the REIT. We appreciate and value the trust and confidence you have placed with us through your investment.

Entering 2025, the conditions for a recovery appeared to be assembling. A new administration had materially shifted the policy tone in Washington, the Federal Reserve had initiated its easing cycle, and a substantial overhang of uninvested capital was widely expected to move off the sidelines. What followed was a year that delivered on some of those expectations while falling short on the ones that matter most to our portfolio. Tariff-driven trade disruption pushed mid-year inflation back toward 3.1% per CBRE’s 2025 Midyear Review, constraining the Federal Reserve’s ability to ease further and keeping the 10-year Treasury yield anchored near 4.3% at year-end — essentially unchanged from where it began. The escalating conflict in the Middle East compounded this uncertainty, injecting sustained volatility into energy markets and global capital flows that dampened institutional conviction at precisely the moment broader deployment was anticipated. For leveraged real estate owners, the cost of capital did not improve in any meaningful way. That is the lens through which 2025 must be understood.

Within that environment, the data did produce a set of developments that warrant careful distinction from the headline noise. Full-year U.S. CRE transaction volume rose approximately 14% over 2024 per CBRE, the first increase in transaction count since 2021, with JLL confirming global volumes up 19% — the strongest year since 2021. The 2025 tax legislation preserved and selectively enhanced real estate’s favorable treatment under the tax code, providing durable structural support for asset values. More fundamentally, the supply cycle that has pressured our holdings for the better part of three years is demonstrably turning: multifamily deliveries declined 26% year-over-year per Cushman & Wakefield, office construction starts reached 25-plus-year lows, and national office absorption turned positive in the second half of the year for the first time since the onset of the pandemic — ending twelve consecutive quarters of negative demand. These are not cosmetic improvements. They reflect a genuine and measurable shift in the structural supply-demand balance that underpins long-term real estate value. The lag between that shift and its translation into operating performance, however, remains the central challenge for this portfolio.

At the asset level, conditions remain under stress. National multifamily vacancy closed 2025 at 9.3% per Cushman & Wakefield’s Q4 2025 U.S. Multi-family report, unchanged from 2024 and a direct consequence of the elevated delivery volumes that characterized the back half of the supply cycle. Concessions remain a competitive necessity, and capital deployment to maintain asset quality is ongoing. On expenses, there is modest but real relief — insurance costs outside catastrophe-prone markets have moderated, and growth in real estate taxes and payroll has slowed. These improvements; however, do not bridge the gap. Cash flow across a number of assets continues to fall short of debt service coverage, and the replacement cost of expiring interest rate caps remains a material and ongoing burden. We are in active dialogue with our lending partners on each of these situations, and we will continue to prioritize extension of runway wherever the economics support it.

Heading into 2026, the structural signals are constructive — CBRE’s H2 2025 Cap Rate Survey identifies early indications of a new cycle forming, and a tightening supply pipeline should, over time, support occupancy recovery. But we are disciplined about the distinction between improving conditions and resolved ones. Trade policy remains unsettled, the Middle East conflict shows no clear path to resolution, and the Federal Reserve’s ability to provide further accommodation is constrained by inflation dynamics that have proven more persistent than anticipated. The assets under pressure today require more than a better backdrop — they require rates to move, credit markets to remain open, and sufficient time for fundamental improvement to compound into stabilized cash flows.

As highlighted last year, the REIT is in the process of winding down. No additional capital will be raised and our focus continues to be ensuring the best outcome on each and every investment in the portfolio.

We appreciate your continued trust.

Sincerely, 

Mitch Rosen

Item 7. Consolidated financial statements

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF YS RE RAF I LLC

Independent Auditor's Report

To the Board of Directors
YS RE RAF I, LLC

Opinion

We have audited the consolidated financial statements of YS RE RAF I, LLC (the "Company"), which comprise the consolidated balance sheet as of December 31, 2025, and the related consolidated statements of operations, changes in members' equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively referred to as the "consolidated financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of YS RE RAF I, LLC as of December 31, 2025, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other Matter

The consolidated financial statements of YS RE RAF, LLC for the year ended December 31, 2024, were audited by another auditor who expressed an unmodified opinion on those statements on April 30, 2025.

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Parsippany, New Jersey

April 30, 2026

YS RE RAF I LLC

Consolidated Balance Sheets 

As of December 31, 2025 and 2024

(Amounts in US dollars, except share data)

The accompanying notes are an integral part of these consolidated financial statements.

YS RE RAF I LLC

Consolidated Statements of Operations

For the Years Ended December 31, 2025 and 2024

(Amounts in US dollars)

The accompanying notes are an integral part of these consolidated financial statements.

YS RE RAF I LLC

Consolidated Statements of Changes in Members’ Equity 

For the Years Ended December 31, 2025 and 2024

(Amounts in US dollars)

The accompanying notes are an integral part of these consolidated financial statements.

YS RE RAF I LLC

Consolidated Statements of Cash Flows 

For the Years Ended December 31, 2025 and 2024

(Amounts in US dollars)

The accompanying notes are an integral part of these consolidated financial statements.

YS RE RAF I LLC 

For the Years Ended December 31, 2025 and 2024 

Notes to Consolidated financial statements

YS RE RAF I LLC (the “Fund” or the “Company”), a Delaware limited liability company, was formed on May 10, 2021 and commenced operations on February 24, 2022. The Fund’s shares are not publicly traded. The Company’s primary investment objective is capital appreciation with a secondary objective of creating current income.

We have elected to be taxed as a Real Estate Investment Trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ending December 31, 2022.

The Fund seeks to achieve its investment objective by primarily investing in real estate investment opportunities across the capital structure including first mortgage loans, subordinate mortgage loans, mezzanine loans, loan participations, preferred equity and equity and other real estate and real estate-related investments. The Fund intends to work with and invest alongside partners with established track records as investment opportunities present themselves. Thus, the Fund may directly or indirectly invest in a wide variety of commercial properties including office, industrial, retail, hospitality, recreation and leisure and single-tenant, multifamily and other real properties. These properties may be existing, income-producing properties, newly constructed properties or properties under development.

Willow Asset Management LLC (the “Manager” or "Managing Member") serves as the investment adviser of the Fund pursuant to the operating agreement (the “Operating Agreement”). The Manager is a Delaware limited liability company that is registered as an investment adviser with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940 (the “Advisers Act”). The Manager also serves as the Fund’s administrator, and in such capacity provides, or arranges for the provision of, the administration services necessary for the Fund to operate. The Manager, in its capacity as the Fund’s administrator, expects to retain one or more sub-administrators from time to time to provide certain administrative services to the Fund on its behalf.

The Fund’s initial and subsequent offering of its common shares (the “Offering”) is being conducted as a continuous offering pursuant to Rule 251(d)(3) of Regulation A (“Regulation A”) of the Securities Act of 1933, as amended (the “Securities Act”), meaning that while the offering of securities is continuous, active sales of securities may happen sporadically over the term of an Offering. A maximum of $75,000,000 of the Fund’s common shares may be sold to the public in its Offering in any given 12-month period. However, each Offering is subject to qualification by the SEC. The Manager has the authority to issue an unlimited number of common shares, subject to the maximum amount allowed by Regulation A and our total shares authorized.

A taxable REIT subsidiary (“TRS”) is an entity that is taxable as a corporation in which the REIT owns, directly or indirectly, an equity interest, including stock, and that elects, together with the REIT, to be treated as a TRS under the Internal Revenue Code. The Fund formed YS RE TRS I LLC (the “TRS”), a Delaware limited liability company, on February 23, 2022. For the years ended December 31, 2025 and 2024, there have been no activities conducted through the TRS.

Effective August 8, 2024, Willow Asset Management LLC determined to indefinitely suspend the share redemption plan of the Company, in accordance with the terms of the Operating Agreement. Additionally, the Company will no longer accept new investors. The suspension of redemptions and proscription of new investors are being made in connection with the Company’s determination, based on the current market conditions in the commercial real estate market, to discontinue and wind-down the Company. The Company plans to sell its assets in a manner intended to maximize returns to investors and estimates the wind-down process will take two to three years. The Company will provide shareholders with written notice of updates from time to time related to the wind-down process. All liquidation and sale proceeds, net of expenses and fees as described in the Offering Circular and the Operating Agreement, will be distributed pro rata to shareholders. The Manager intends to continue actively managing its existing investments in real estate. As such, liquidation is not imminent and these consolidated financial statements are presented on a going concern basis.

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting and conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Principles of Consolidation

The Fund performs an analysis to determine if an entity is a variable interest entity (“VIE”) or a voting interest entity (“VOE”). Assessing whether an entity is a VIE or a VOE involves judgment and analysis. Factors considered in this assessment include the entity’s legal organization, the entity’s capital structure and equity ownership, and any related party or de facto agent implications of the Fund’s involvement with the entity. Investments that are determined to be VIEs are consolidated if the Fund is the primary beneficiary (“PB”) of the entity. Upon the occurrence of certain events (such as contributions and redemptions, either by the Fund, or third parties, or amendments to the governing documents of the Fund’s investment products), management reviews and reconsiders its previous conclusion regarding the status of an entity as a VIE or a VOE. Additionally, management continually reconsiders whether the Fund is deemed to be a VIE’s PB that consolidates such entity.

Consolidation of Variable Interest Entities: The Fund consolidates entities when it owns, directly or indirectly, a majority interest in the entity or is otherwise able to control the entity. The Fund consolidates VIE’s in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, if the Fund is the primary beneficiary of the VIE as determined by its power to direct the VIE’s activities and the obligation to absorb its losses or the right to receive its benefits, which are potentially significant to the VIE. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.

Consolidation of Voting Interest Entities: The Fund is required to consolidate an investee to the extent that it can exert control over the financial and operating policies of the investee, which generally exists if there is a greater than 50% voting equity interest.

The Fund consolidates its investment in the TRS. All intercompany balances and transactions have been eliminated in consolidation.

Estimates

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

Cash and Cash Equivalents

The Fund defines cash equivalents as securities that are readily convertible into known amounts of cash and near maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less from the date of purchase would qualify, with limited exceptions. The Fund deems that certain money market funds, U.S. Treasury bills, repurchase agreements, and other high-quality, short-term debt securities would qualify as cash equivalents. Cash equivalents would be classified as Level 1 as carrying amount approximates its fair value. As of December 31, 2025 and 2024, cash balances are presented on the Consolidated Balance Sheets and there were $17,230 and $55,740 in cash and $312,871 and $481,038 cash equivalents held, respectively.

Investments in Equity Method Investees

If it is determined that the Fund does not have a controlling interest in a joint venture through its financial interest in a VIE or through voting interest in a voting interest entity and the Fund has the ability to exert significant influence, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize the Fund’s share of net earnings or losses of the affiliate as they occur, with losses limited to the extent of the Fund’s investment in, advances to, and commitments to the investee. The Fund has elected to adopt ASC 825-10-15-4, – Financial Instruments, Fair Value Option for its equity method investments. As a result, the Fund recorded its equity method investments using the fair value option and recorded the investments at fair value each reporting period, with changes in fair value recorded to the income statement. The Fund determined the fair values internally and followed the valuation specific guidance within ASC 820-10-35.

Investment Transactions and Investment Income

Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in management's judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on non-accrual designated investments may be recognized as income or applied to principal depending upon management's judgment.

Expense Recognition

Expenses include management fees and may include professional fees, including but not limited to insurance expenses, legal fees, audit and tax service expenses and other general and administrative expenses. Expenses are recorded on an accrual basis.

Distributions

Distributions to common shareholders, which are determined in accordance with the plan of distribution set forth in the Fund’s offering circular and with federal income tax regulations, are recorded on the ex-dividend date.

Income Taxes

The Fund intends to be treated as a REIT, for U.S. federal income tax purposes. As a result of such qualification, the Fund generally would not be subject to federal corporate income taxes on its taxable income that is distributed to owners of equity therein. Instead, such distributions generally would be taxable to the equity owners of the Fund as ordinary and/or capital gain dividends to the extent of the Fund’s earning and profits (“E&P”) and depending on the character of income at the Fund level. Among other requirements to qualify as a REIT, the Fund must make distributions to its equity owners of at least 90% of their annual ordinary taxable income. If the Fund fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes as a corporation, unless the Internal Revenue Service grants relief under certain statutory provisions. The character of income and gains that the Fund will distribute is determined in accordance with income tax regulations that may differ from GAAP.

As a result of the formation of the TRS and subsequent acquisitions during the years ended December 31, 2023 and 2022, the Fund expects to record income tax expense or benefit with respect to our entity that is taxed as a TRS under provisions similar to those applicable to regular corporations and not under the REIT provisions. There was no TRS activity for the years ended December 31, 2025 and 2024. Accordingly, no income tax expense was recorded for the years ended December 31, 2025 and 2024. No material provisions have been made for federal income taxes in the accompanying consolidated financial statements during the year ended December 31, 2025 and 2024. No gross deferred tax assets or liabilities have been recorded as of December 31, 2025 and 2024.

As of December 31, 2025 and 2024, all tax periods from 2022 and after remain open to examination by the major taxing authorities in all jurisdictions where we are subject to taxation.

The following unconsolidated subsidiaries are considered significant subsidiaries under SEC Regulation S-X Rule  4-08(g) as of December 31, 2025 and 2024. As of and for the years ended December 31, 2025 and 2024, the condensed financial position and results of operations of the Fund’s material investments are summarized below:

*Reflected as of December 11, 2024, the date of sale of the investment.

**Reflected for the period ended December 11, 2024, the date of sale of the investment.

The Fund follows guidance in ASC 820, Fair Value Measurement, where fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Fair value should be determined based on assumptions that market participants would use in pricing the asset or liability, not assumptions specific to the entity.

Fair value measurements are determined quarterly within a framework that establishes a three-tier hierarchy which classifies fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity.

Unobservable inputs are inputs that reflect the Fund’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available. In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value, as follows:

Level 1 – Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level 1 are publicly-traded securities in an active market.

Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. The types of investments that would generally be included in this category include publicly traded securities with restrictions on disposition, and certain convertible securities; and

Level 3 – Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to, the price at which the investment was acquired, the nature of the investment, local market conditions, valuations for comparable companies, current and projected operating performance and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant judgment. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed. Investments that are included in this category generally are privately held debt, equity, and certain convertible securities.

The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, whether the investment is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the investment. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of estimating fair value, those estimated values may be materially higher or lower than if the fair value was determined using observable inputs. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

An investment level within the fair value hierarchy is based on the lowest level input, individually or in the aggregate, that is significant to fair value measurement. The valuation techniques used by the Fund to measure fair value during the year ended December 31, 2025 and 2024 maximized the use of observable inputs and minimized the use of unobservable inputs. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk or liquidity associated with investing in those securities.

The following table presents the fair value measurement of investments by major class of investments as of December 31, 2025 and 2024 according to the fair value hierarchy:

The changes of fair value of investments for which the Fund has used Level 3 inputs to determine the fair value are as follows:

The following table summarizes the significant unobservable inputs the Fund used to value its investments categorized within Level 3 as of December 31, 2025 and 2024. In addition to the techniques and inputs noted in the table below, according to the Fund’s valuation policy, other valuation techniques and methodologies when determining the Fund’s fair value measurements may be used. The below table is not intended to be all - inclusive, but rather provide information on the significant unobservable inputs as they relate to the Fund’s determination of fair values.

⁽¹⁾ The weighted average is calculated by multiplying the unobservable input by the weight of each investment over the sum of the fair value of the underlying investments.

The Fund utilized the income approach to determine the fair value of the Level 3 assets. The income approach is an analysis whereby expected cash flows of the investment are discounted to determine a present value using various inputs including a discount rate and an exit cap rate. Significant increases or decreases in the inputs would result in an increase or decrease in the fair value measurement.

The Fund’s shares are not currently listed on any securities exchange. To purchase shares, an account must be established using the online investment portal, which is accessible through www.willowwealth.com and complete and execute a subscription agreement for a specific dollar amount equal to or greater than the then applicable minimum permitted subscription amount.

The Fund's shares are offered directly by the Fund, and the Fund has not retained an underwriter, dealer manager or broker dealer in connection with the offer and sale of the shares offered. The minimum permitted subscription amount will initially be $1,000 of the shares, although the Fund may waive or increase or decrease this minimum permitted subscription amount from time to time in the Fund’s discretion. Effective August 8, 2024, the Company is no longer accepting new investors.

Transactions in shares of common stock were as follows during the years ended December 31, 2025 and 2024:

The Fund has adopted an “opt out” distribution reinvestment plan (the “Distribution Reinvestment Plan”) pursuant to which shareholders will automatically have the full amount of any distributions declared in respect of the shares reinvested in additional shares, which shall entitle the holders of such shares to all of the same rights as shares purchased in this Offering, unless a shareholder elects to opt out participation in the Distribution Reinvestment Plan. Purchases of shares pursuant to the Distribution Reinvestment Plan are subject to the same restrictions on eligibility set forth in the Offering Circular.

Shareholders who elect not to participate in the Distribution Reinvestment Plan will automatically receive payment in cash or in kind, as applicable, of any distributions declared by the Manager. Shareholders who participate in the Distribution Reinvestment Plan are free to revoke participation in the Distribution Reinvestment Plan through the platform at any time. Such revocations typically take effect within two business days following the date of election. Additionally, the Manager may, at any time in its sole discretion, terminate or suspend the Distribution Reinvestment Plan in respect of all or a portion of the shareholders.

Distributions to common shareholders are recorded on the ex-dividend date. As of December 31, 2025 and 2024, the Fund has not declared or paid any distributions.

Investment Advisory

Under the operating agreement of the Fund, the Manager is entitled to a management fee (the “Management Fee”). The Management Fee is calculated at an annual rate of 1.5% of the average NAV of the Fund at the end of each of the two immediately preceding quarters. The Management Fee is payable quarterly in arrears. The Management Fee may be suspended, or waived, in whole or in part, in the sole discretion of the Manager. All or any portion of the Management Fee which is so deferred, suspended or waived will be deferred without interest and may be payable in any succeeding quarter as the Manager may determine in its sole discretion. For the years ended December 31, 2025 and 2024, the Fund incurred expenses in the amount of $325,200 and $432,614, respectively.

Other Operating Expenses

The Fund will reimburse the Manager for out-of-pocket expenses paid by the Manager to third parties who provide services to the Fund, including without limitation the Transfer Agent and the Fund’s independent accountants. Such reimbursements will not include the Manager’s overhead, payroll, utilities, technology costs or similar expenses payable by the Manager in connection with its business operations. The Manager may, in its sole discretion, suspend or waive, in whole or in part, the reimbursement by the Fund of all or any portion of any such operating expenses incurred by the Manager on behalf of the Fund.

Notes Payable on Short Term Borrowings

The Fund executed a Loan and Security Agreement with YS ST Notes LLC (which is owned and operated by Willow Wealth Inc.) dated March 15, 2022, in the amount of $20,000,000, maturing on December 31, 2028. Advances from the note were used to fund the purchase of the Fund’s investments in real estate joint ventures. The advances were collateralized and pledged as a security interest for a portion of the Fund’s investment in Real Estate Joint Ventures. Repayments are to be made monthly until all advances are paid in full. Interest is accrued at the rate of 10% per annum. As of December 31, 2025 and 2024, there were no outstanding notes payable.

In the normal course of business, the Fund invests in financial instruments and enters into financial transactions where risk of potential loss may exist from things such as changes in the market (market risk) or failure or inability of the other party to a transaction to perform (credit and counterparty risk). See below for a detailed description of select principal risks.

Credit Risk: Credit risk is the risk that one or more fixed income securities in our portfolio will decline in price or fail to pay interest or principal when due as a result of a decline in the financial status of the issuer of the security. Credit risk is increased when a portfolio security is downgraded or the perceived creditworthiness of the issuer deteriorates. To the extent that the Fund invests in below investment grade securities, the Fund will be exposed to a greater amount of credit risk than a fund that only invests in investment grade securities. In addition, to the extent the Fund uses credit derivatives, such use will expose the Fund to additional risk in the event that the bonds underlying the derivatives default and/or the counterparty fails to perform. The degree of credit risk depends on the issuer's financial condition and on the terms of the securities.

Although the Fund expects to invest in investments that are directly or indirectly secured by collateral, the Fund may be exposed to losses resulting from default and foreclosure of any such investments in which the Fund has invested. Therefore, the value of underlying collateral, the creditworthiness of borrowers and the priority of liens are each of great importance in determining the value of the investments. No guarantee can be made regarding the adequacy of the protection of our security in the investments in which the Fund invests. Moreover, in the event of foreclosure or default, the Fund may assume direct ownership of any assets collateralizing such defaulted investments where we are the lender of record. The liquidation proceeds upon the sale of such assets may not satisfy the entire outstanding balance of principal and interest on such investments, resulting in a loss. Any costs or delays involved in the effectuation of processing foreclosures or liquidation of the assets collateralizing such investments will further reduce proceeds associated therewith and, consequently, increase possible losses. In addition, no assurances can be made that borrowers or third parties will not assert claims in connection with foreclosure proceedings or otherwise, or that such claims will not interfere with the enforcement of our rights.

Investing involves the possibility of the Fund's investments being subject to potential losses arising from material is representation or omission on the part of borrowers or issuers whose investments the Fund holds, either directly or indirectly through participation agreements. The investments may also be subject to fraudulent behavior by an originator, a joint venture partner, manager or other service provider. Such inaccuracy or incompleteness of representations or fraudulent behavior may adversely affect the valuation of our investments and, in the case of investments, may adversely affect the ability of the relevant investment to perfect or effectuate a lien on the collateral securing the loan. The quality of the Fund's investments is subject to the accuracy of representations made by the underlying issuers. The Fund will rely upon the accuracy and completeness of representations made by borrowers, issuers, originators, other counterparties, joint venture partners, managers and other service providers and cannot guarantee that the Fund will detect occurrences of fraud. Under certain circumstances, payments by borrowers or issuers to the Fund may be reclaimed if any such payment is later determined to have been a fraudulent conveyance or a preferential distribution.

Concentration Risk: To the extent that Fund's portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.

Liquidity Risk: The Fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the Fund may have to sell them at a loss.

Market Risk: Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.

Risks Related to the Fund’s REIT Status: The Fund expects to operate so as to qualify as a REIT under the Code. However, qualification as a REIT involves the application of highly technical and complex Code provisions for which only a limited number of judicial or administrative interpretations exist. Notwithstanding the availability of cure provisions in the Code, various compliance requirements could be failed and could jeopardize the Fund’s REIT status.

Illiquid Investment Risk: Many of the Fund’s investments are illiquid, including the Fund’s private commercial real estate investments. A variety of factors could make it difficult for the Fund to dispose of any of its illiquid assets on acceptable terms even if a disposition is in the best interests of the Fund’s stockholders. The Fund cannot predict whether it will be able to sell any asset for the price or on the terms set by it or whether any price or other terms offered by a prospective purchaser would be acceptable to the Fund. The Fund also cannot predict the length of time needed to find a willing purchaser and to close the sale of an asset. The Fund may be required to expend cash to correct defects or to make improvements before an asset can be sold, and there can be no assurance that it will have cash available to correct those defects or to make those improvements. As a result, the Fund’s ability to sell investments in response to changes in economic and other conditions could be limited. Limitations on the Fund’s ability to respond to adverse changes in the performance of its investments may have a material adverse effect on the Fund’s business, financial condition and results of operations and the Fund’s ability to make distributions.

Wind-down and Negative Distribution Risk: Management is in the process of winding down the Fund and liquidating its assets. While we continue to actively manage the remaining assets of the fund, we may not able to sell its assets on terms or at prices we deem favorable and the return to investors may be substantially lower than the current NAV. Moreover, selling commercial real estate takes time, and in the industry’s current environment, we may not be able to wait for the best offer or price we might be able to otherwise obtain had more favorable market conditions prevailed. This may negatively affect the return on investment for our Shares. As a result, the distributed value of our Shares is expected to be lower than the price paid by our investors, resulting in a loss and negative return.

In the normal course of business, the Fund enters into contracts that contain a variety of indemnification provisions. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty. The Fund is unable to estimate any potential future payment amounts and expects the risk of any such loss to be remote, accordingly no accrual has been made for a liability as of December 31, 2025 and 2024.

The Manager has evaluated subsequent events through April 30, 2026, the date these consolidated financial statements were available to be issued and has determined that there are no subsequent events, other than those disclosed below, that require adjustment to, or disclosure in, the consolidated financial statements.

Item 8. Exhibits

INDEX OF EXHIBITS

*            Filed previously

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, NY on April 30, 2026.

Pursuant to the requirements of Regulation A, this Semiannual Report has been signed below by the following persons on behalf of the issuer in the capacities and on the dates indicated.

Exhibit 99.1

NORFOLK COMMERCE SPE, LLC 

* * * * * 

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT

AUDITOR’S REPORT AS OF AND FOR THE YEARS ENDED DECEMBER

31, 2025 AND 2024

NORFOLK COMMERCE SPE, LLC

AS OF AND FOR THE YEARS ENDED

DECEMBER 31, 2025 AND 2024

TABLE OF CONTENTS  

Independent Auditor's Report

To Management 

Norfolk Commerce SPE, LLC

Opinion

We have audited the consolidated financial statements of Norfolk Commerce SPE, LLC, which comprise the consolidated statement of financial condition as of December 31, 2025, and the related consolidated statements of operations, changes in members' equity, and cash flows for the year then ended and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Norfolk Commerce SPE LLC as of December 31, 2025, and the results of their operations, and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of Norfolk Commerce SPE, LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other Matter - Prior Year Financial Statements

The consolidated financial statements of Norfolk Commerce SPE, LLC for the year ended December 31, 2024 were audited by another auditor who expressed an unmodified opinion on those statements on April 30, 2025.

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Norfolk Commerce SPE LLC's ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

/s/ CohnReznick LLP

Bethesda, Maryland
April 29, 2026

NORFOLK COMMERCE SPE, LLC

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31, 2025 AND DECEMBER 31, 2024

LIABILITIES & MEMBER'S EQUITY

The accompanying notes are an integral part of these financial statements.

NORFOLK COMMERCE SPE, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The accompanying notes are an integral part of these financial statements.

NORFOLK COMMERCE SPE, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The accompanying notes are an integral part of these financial statements.

NORFOLK COMMERCE SPE, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The accompanying notes are an integral part of these financial statements.

NORFOLK COMMERCE SPE, LLC

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

Norfolk Commerce SPE LLC (the Company) was formed as a limited liability company in Delaware on March 10, 2022. Shortly after, on April 14, 2022, the Company acquired three commercial buildings (the Properties) in Norfolk, Virginia, through three wholly owned subsidiaries. The Properties were constructed between 1983 and 1990 and provide a total of 262,000 square feet: 203,000 square feet dedicated to office space and 59,000 square feet for warehouse use. The Properties are managed by Heritage Capital Management LLC, an affiliated management company (Note 5). The Company shall continue in perpetuity until the liquidation and dissolution of the Company pursuant to its limited liability agreement.

a)            Basis of Presentation - The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies, if any, at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

b)            Principles of Consolidation – The consolidated financial statements include the accounts of Norfolk Commerce SPE LLC and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

c)            Cash and Cash Equivalents - The Company considers all highly liquid, short- term investments with an original maturity of three months or less at the time of purchase to be cash equivalents.

d)            Accounts Receivable - Tenants - Accounts receivable consists of rent due from tenants. The Company maintains an allowance for doubtful accounts for estimated losses from the inability of tenants to make required payments under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. As of December 31, 2025 and 2024, respectively, the allowance for doubtful accounts is $0. The Company maintains allowances for credit losses. These allowances reflect the Company's estimate of the amount of receivables that they will be unable to collect based upon historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. The estimate could require change based upon changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowances.

e)            Revenue Recognition - Rental revenue includes base rents as well as certain tenant reimbursements (such as property taxes and maintenance costs). In accordance with ASC 842, Leases, base rental revenue is recognized on a straight-line basis over lease terms (Note 7). Reimbursement revenue is earned in the same period as the expenses are incurred. Advanced rent is classified as deferred revenue on the statement of financial condition, until it is earned over the leas term. Additional rents provided for in the leases, primarily reimbursements of certain property operating costs, are non-lease components that are not the predominant activity within the contract. The Company combines certain lease and non-lease components of its operating lease. Non-lease components are recognized together with fixed base rent within rental income in the statement of operations, as variable lease income is recognized in the same period as the related expenses are incurred. During 2025 and 2024, variable income from non-lease components included in rental income totaled $417,772 and $482,805, respectively.

f)            Depreciation and Amortization - Land, building and building improvements, and equipment (Rental Properties) are carried at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred. Expenditures for major additions and improvements are capitalized. Depreciation is computed on the straight-line method at rates adequate to allocate the cost of the assets over their expected useful lives, which ranges from 5 to 39 years. Tenant improvements are amortized over the shorter of the lease term or their expected useful life.

g)            Impairment of Rental Properties - In accordance with ASC 360, Impairment or Disposal of Long-Lived Assets, rental properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the rental property’s carrying amount over its undiscounted cash flows and the terminal value. Impairment analyses are based on current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to the financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. Based on such assessment, no impairments of the Properties were identified for the years ended December 31, 2025 and 2024.

h)            Debt Issuance Costs - Debt issuance costs related to the mortgage payable consists of fees and direct costs incurred in obtaining such financing. These costs are presented as a reduction of mortgage payable liability and are amortized over the term of the loan agreement (Note 5). Amortization of $66,815 and $67,907 for the years ended December 31, 2025 and 2024, respectively.

i)            Brokerage Commissions - Costs to lease the rental property are capitalized and amortized over the terms of the related leases. Amortization expense for the years ended December 31, 2025 and 2024 are $40,018 and $0, respectively. Accumulated amortization at December 31, 2025 and 2024 are $40,018 and $0, respectively. At December 31, 2025, future amortization of brokerage commissions is as follows:

j)            Income Taxes - The Company operates as a limited liability company and is taxed as a partnership. As such, the Company is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its members on their respective income tax returns. Accordingly, these financial statements do not reflect a provision for federal and state income taxes. The Company files information returns as required with the Internal Revenue Service and other taxing authorities. The Company follows the guidance in ASC 740, Income Taxes which prescribes a comprehensive model for recognizing, measuring, presenting, and disclosing in the financial statements uncertain tax positions that the Company has taken or expects to take in its income tax returns. Management believes that it has appropriate support for the positions taken on the Company’s tax returns.

Restricted cash includes utility and escrow deposits. Per the mortgage agreement (Note 4), an escrow account held by the lender collects funds for property taxes, insurance, and various reserves (replacement, repairs, interest).

On April 14, 2022, The Company obtained a $22,912,000 mortgage from Eagle Bank to purchase the properties. The mortgage was interest-only with the principal due at maturity. The loan was secured by the properties and was to mature on April 14, 2027. The interest rate was 3.75% until April 14, 2025, when it becomes equal to the Month Term Secured Overnight Financing Rate (SOFT) plus a 3.5% margin. In July 2025, The Company secured a $24,000,000 loan with RGA Reinsurance Company and repaid the loan from Eagle Bank. The new loan bears annual interest at a fixed rate of 6.17%. Monthly interest-only payments are required from September 2025 through August 2028. From September 2028 through July 2032, monthly payments of principal and interest are due in the amount of $146,526. The remaining balance is due in full on August 1, 2032, the loan’s maturity date. In connection with the refinance, The Company paid $465,538 in lender and third-party fees. Interest expense for the years ended December 31, 2025 and 2024 were $1,332,190 and $873,520, respectively. The Company is in compliance with all the covenants.

The Company has entered into the following transactions with related parties for the years ended December 31, 2025 and 2024:

The Company maintains its cash balances at various financial institutions. At December 31, 2025, the balances were in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limits. The Company’s operations are concentrated in one region, which exposes the Company to potential losses and unforeseen economic conditions that could have an adverse effect on its operations.

As of December 31, 2025, the Company held 24 non-cancelable operating leases, which expire on various dates from March 2026 through May 2035, and provide for monthly payments plus reimbursements of certain operating costs.

In accordance with ASC 842, Leases, total expected rental income is recognized over the lease terms on a straight-line basis. At December 31, 2025 and 2024, the deferred rent asset of $838,346 and $234,109, respectively, represents the excess of recognized rental income over actual rent collected.

The following is a summary of minimum future base rentals under the non-cancellable operating leases as of December 31, 2025:

The preceding minimum future rentals do not include other charges for reimbursement of operating costs.

The Company has commercial general liability coverage on the Properties, with limits of liability customary within the industry. The Company believes the coverage is adequate given the relative risk of loss and the cost of the coverage.

Capital Contribution and Withdrawals - Each member of the company has contributed capital to the Company and thereafter may make additional capital contributions to the Company in accordance with the terms of the Limited Liability Agreement. Without limitation, no member shall, upon dissolution of the Company or otherwise, be required to restore any deficit in such member’s capital account. No member shall be entitled to withdraw from the Company.

Profit and Loss Sharing - At least quarterly, or otherwise at such other times as the Manager determines with Willow Wealth’s approval, all available cash shall be distributed to the members in accordance with the limited liability company agreement. Allocations of profits or losses are allocated among the members in a manner such that the capital account of each member, immediately after making such allocation, is, as nearly as possible, equal to the distributions that would be made to such member if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their gross asset value, all company liabilities were satisfied (limited with respect to each nonrecourse liability to the adjusted gross asset value of the asset securing such liability), and the net assets of the company were distributed to the members immediately after making such allocation; provided, however, that in calculating such target capital account amounts there shall be added back to each member’s capital account its share of partnership minimum gain, if any, and partner nonrecourse debt minimum gain, if any.

The Company has evaluated subsequent events through April 29, 2026, the date these financial statements were available to be issued and has determined that there are no subsequent events.

Exhibit 99.2

ALTERRA OWNER, LLC

FINANCIAL STATEMENTS AND

INDEPENDENT AUDITOR'S REPORT

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

ALTERRA OWNER, LLC 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

TABLE OF CONTENTS

Independent Auditor's Report

To the Management
Alterra Owner, LLC

Opinion

We have audited the financial statements of Alterra Owner, LLC, which comprise the statement of financial condition as of December 31, 2025 and the related statements of operations, changes in member's equity, and cash flows for the year then ended, and the related notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Alterra Owner, LLC as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Alterra Owner, LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other Matter - Prior Year Financial Statements

The financial statements of Alterra Owner, LLC for the year ended December 31, 2024 were audited by another auditor who expressed an unmodified opinion on those statements on April 30, 2025.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Alterra Owner, LLC's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ CohnReznick LLP

Bethesda, Maryland
April 29, 2026

ALTERRA OWNER, LLC 

STATEMENTS OF FINANCIAL CONDITION 

AS OF DECEMBER 31, 2025 AND 2024

See notes to financial statements

ALTERRA OWNER, LLC

STATEMENTS OF OPERATIONS 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

See notes to financial statements

ALTERRA OWNER, LLC 

STATEMENTS OF CHANGES IN MEMBER’S EQUITY 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

See notes to financial statements

ALTERRA OWNER, LLC 

STATEMENTS OF CASH FLOWS 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

See notes to the financial statements

ALTERRA OWNER, LLC 

(A Deleware Limited Liability Company) 

NOTES TO FINANCIAL STATEMENTS 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024

ALTERRA OWNER, LLC (A Delaware Limited Liability Company), ( “the Company”) commenced operations pursuant to its limited liability company agreement ("Agreement") on March 4, 2022. The Company was formed by YS ITC REQ II, LLC and YS ITC REQ II A, LLC (collectively referred to as the "Willow Wealth Members") and InterCapital Group (“Sponsor”, “Managing Members” or “GP”), via Alterra JV, LLC, its sole member, to acquire Alterra Apartments in Tuscon, AZ. Alterra Apartments is a 416-unit, Class-B apartment complex built in 1987. Amenities at the property include outdoor pool, playground, fitness center, dog park, soccer field, etc. Willow Wealth members and Willow Wealth Sponsor acquired the property with the business plan to perform renovations to unit interiors and common areas to garner rental premiums, ultimately increasing net investment income at the property. Property and construction management services are provided by Dayrise Residential LLC ("Dayrise"), an affiliate of the Sponsor.

The Company shall continue in perpetuity until the liquidation and dissolution of the Company pursuant to the Agreement.

Basis of Presentation

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the reporting periods and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Rental Property

Rental property is carried at cost, net of accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of rental property are capitalized. Maintenance and repair expenses are charged to expense as incurred.

Depreciation is recognized using straight-line method for financial reporting purposes at the end of the year.

ALTERRA OWNER, LLC 

(A Deleware Limited Liability Company) 

NOTES TO FINANCIAL STATEMENTS 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024

Rental property is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the rental property’s carrying amount over its Undiscounted Cash Flows and the Terminal Value. Impairment analyses are based on current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to the financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. Management believes that there are no indications that suggest the rental property should be impaired as of both December 31, 2025 and 2024.

Restricted Cash

The restricted cash includes balances in escrow accounts maintained with mortgage lender for the purpose of tax payments, insurance payments, replacement reserve, repairs reserve and interest reserve pursuant to the mortgage loan agreement. The Company held restricted cash in the amount of $663,650 and $744,224 as of December 31, 2025, and December 31, 2024, respectively.

Accounts receivable

Accounts receivable consists of rent due from tenants. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. As of December 31, 2025 and 2024, respectively, the allowance for doubtful accounts is $0.

We maintain allowances for credit losses. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowances.

Derivative Instruments and Hedging Activities

The Company managed market risk on its variable rate debt by entering an interest rate swap to fix the rate on debt for varying periods through debt maturity. These interest rate swaps are accounted for as derivative instruments and, pursuant to Accounting Standards Codification (ASC) Topic 815, Derivatives and Hedging, are recorded on the balance sheets at fair value. The Company’s swap is not designated as a hedge, therefore changes in the fair value are recognized in earnings.

Deferred Financing Costs Related to Mortgage Note Payable

Deferred financing costs related to mortgage note payable consists of fees and direct costs incurred in obtaining such financing. These costs are presented as a reduction of our mortgage note payable liability and are amortized based upon the effective yield method using an imputed interest rate over the terms of the loan agreement as a component of “interest and debt expense”.

Revenue Recognition

The Company leases multi-family apartment units to tenants through operating leases expiring over the next 12 months. The leases require fixed minimum monthly payments over the terms of the lease and charges for ancillary services provided by the property.

Rental revenue includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease.

ALTERRA OWNER, LLC 

(A Deleware Limited Liability Company) 

NOTES TO FINANCIAL STATEMENTS 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024

Tenant reimbursement income includes revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses, such as electricity, water, pet, trash, and monthly statement fees of the property. This revenue is earned in the same period as the expenses are incurred. Interest income includes the cash inflows from the interest rate swap.

Income Taxes

The Company operates as a limited liability company and is taxed as a partnership. As such, the Company is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns. The Company files U.S. federal and state partnership tax returns which generally remain open to examination by Federal taxing authorities for a period of three years. The Company has no federal or state tax examinations in process as of December 31, 2025.

The Company follows the guidance in the Financial Accounting Standards Board ASC topic related to Uncertainty in Income Taxes which prescribes a comprehensive model for recognizing, measuring, presenting, and disclosing in the financial statements uncertain tax positions that the Company has taken or expects to take in its income tax returns. Management believes that it has appropriate support for the positions taken on the Company’s tax returns.

The Company has entered the following transactions with related parties for the year ended December 31, 2025:

The Company has entered the following transactions with related parties for the year ended December 31, 2024:

Additionally, per the management agreement, Dayrise performs construction management services with respect to capital improvements and/or repairs or casualty/insurance repairs at the property. Dayrise will be paid a fee equal to five percent (5%) of the costs actually incurred and expressly set forth in a construction budget for these services approved by Willow Wealth in writing in advance.

ALTERRA OWNER, LLC 

(A Deleware Limited Liability Company) 

NOTES TO FINANCIAL STATEMENTS 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024

As of December 31, 2025 and 2024, amounts due to affiliates totaled $85,000 in each period, representing an acquisition fee payable upon closing, and are included in due to affiliates on the Statement of Financial Condition.

On March 4, 2022, the Company obtained a $64,000,000 mortgage secured by the property. The mortgage matured on April 1, 2025. The loan agreement allows for two one year extensions on the loan maturity if certian criteria are met. On January 9, 2026, the mortgage agreement was amended and extended to July 1, 2027 (See Note 10). The mortgage bears interest at a rate of term Secured Overnight Financing Rate (SOFR) forward currency rate plus 3.35% margin spread. Interest-only payments are due monthly until maturity. For the years ended December 31, 2025 and 2024, interest of $4,990,499 and $5,917,868, respectively, was incurred. At December 31, 2025 and 2024, interest of $3,332,132 and $298,563, respectively, remains payable and is included in accounts payable and accrued expenses on the consolidated balance sheet. Pursuant to the loan, certain covenants may restrict the sale of assets and limit future borrowings. Management was not in compliance with the mortgage loan's covenants as of December 31, 2025. An affiliate of the Sponsor has executed completion and payment guarantees in connection with the loan agreement. The Company entered into an interest rate cap to manage its interest rate risk on SOFR. The interest rate swap expired on April 1, 2025. In conjunction with amended mortgage agreement on January 9, 2026, the mortgage balance was increased to $65,500,000. Additional proceeds were used to purchase an interest rate cap through maturity for $1,810,000 with a strike price of 1.5% on SOFR. Additionally on January 9, 2026, $1,148,805 of cash from the Company was deposited into an interest reserve restricted by the lender.

ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices(unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value.

Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.

Financial Assets Measured at Fair Value

ALTERRA OWNER, LLC 

(A Deleware Limited Liability Company) 

NOTES TO FINANCIAL STATEMENTS 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024

Financial Liabilities Not Measured at Fair Value

Financial liabilities not measured at fair value in our financial statements include mortgage note. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current.

The following is a summary of the carrying amounts and fair value of these financial instruments as of December 31, 2025 and December 31, 2024.

The Company managed market risk on its variable rate debt by entering an interest rate swap to fix the rate of debt. The interest rate swap is accounted for as derivative instrument and, pursuant to ASC Topic 815, Derivatives and Hedging is recorded on the balance sheet at fair value.

As of December 31, 2024, the Company had interest rate swaps with an aggregate notional amount of $64,000,000 that were not designated as hedges. The interest rate swap expired on April 1, 2025. For the years ended December 31, 2025, and December 31, 2024, the Company has recognized unrealized gain (loss) of $0 and $(1,404,613), respectively, from the recognition of interest rate swap at fair value. The table below provides additional details on the Company’s interest rate swaps.

Insurance

The Company has commercial general liability coverage on the property, with limits of liability customary within the industry. The Company believes the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and, in consultation with our insurance advisors, the Company believes the Property is adequately insured.

Other Commitments and Contingencies

There are no other significant commitments and contingencies.

Cash

The Company's cash and restricted cash are maintained at financial institutions which, at times, may exceed federally insured limits. The Company has not experienced any losses on such accounts and management believes the credit risk to be minimal.

ALTERRA OWNER, LLC 

(A Deleware Limited Liability Company) 

NOTES TO FINANCIAL STATEMENTS 

FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024

Geographic area

The Company's operations are concentrated in one region, which exposes the Company to potential losses and unforeseen economic conditions that could have an adverse effect on its operations.

The Company has evaluated subsequent events through April 29, 2026, the date these financial statements were available to be issued. On January 9, 2026, the Company amended its mortgage loan agreement with the lender. The amendment increased the total loan commitment from $64,000,000 to $65,500,000. The additional proceeds are to be made available to the Borrower for the payment of costs and expenses incurred in connection with purchasing a new Interest Rate Protection Agreement.

Except as described above, the Company did not identify any additional subsequent events requiring disclosure.

******

Exhibit 99.3

AVION OWNER, LLC

FINANCIAL STATEMENTS AND

INDEPENDENT AUDITOR'S REPORT

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

AVION OWNER, LLC

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

TABLE OF CONTENTS

Independent Auditor's Report

To the Management of
Avion Owner, LLC

Opinion

We have audited the financial statements of Avion Owner, LLC, which comprise the statement of financial condition as of December 31, 2025, and the related statements of operations, changes in member's equity, and cash flows for the year then ended, and the related notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Avion Owner, LLC as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Avion Owner, LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other Matter - Prior Year Financial Statements

The financial statements of Avion Owner, LLC for the year ended December 31, 2024 were audited by another auditor who expressed an unmodified opinion on those statements on April 30, 2025.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Avion Owner, LLC's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ CohnReznick LLP

Bethesda, Maryland
April 29, 2026

AVION OWNER, LLC

STATEMENTS OF FINANCIAL CONDITION 

AS OF DECEMBER 31, 2025 AND 2024