RREEF Property Trust Swings to Deeper Loss Amid Rising Interest Costs

TL;DR

**RREEF Property Trust is bleeding cash with widening losses and shrinking equity; get out now before it gets worse.**

AI Summary

RREEF Property Trust, Inc. reported a net loss of $257 thousand for the three months ended June 30, 2025, a significant increase from the $11 thousand net loss in the same period of 2024. For the six months ended June 30, 2025, the net loss was $1,055 thousand, compared to a net income of $54 thousand in the prior year. Total revenues remained relatively flat, at $10,420 thousand for the three months ended June 30, 2025, versus $10,417 thousand in 2024, and $20,520 thousand for the six months ended June 30, 2025, up slightly from $20,332 thousand in 2024. Operating expenses increased to $7,190 thousand for the three months ended June 30, 2025, from $7,411 thousand in 2024, and decreased slightly to $14,619 thousand for the six months ended June 30, 2025, from $14,634 thousand in 2024. A key change was the increase in interest expense to $3,484 thousand for the three months ended June 30, 2025, from $3,192 thousand in 2024, and to $6,860 thousand for the six months ended June 30, 2025, from $6,490 thousand in 2024. The company's total assets decreased to $388,412 thousand as of June 30, 2025, from $397,986 thousand at December 31, 2024, primarily due to a reduction in investment in real estate assets, net, from $378,531 thousand to $369,807 thousand. Stockholders' equity also declined significantly to $73,299 thousand from $95,113 thousand over the same period, driven by net losses and common stock redemptions totaling $23,870 thousand for the six months ended June 30, 2025. The company continues its Fourth Public Offering, aiming to raise up to $2,000,000 in various classes of common stock.

Why It Matters

RREEF Property Trust's escalating net losses and declining stockholders' equity signal potential challenges for investors, particularly with the significant increase in interest expense. The reduction in net real estate assets and substantial common stock redemptions, totaling $23,870 thousand in six months, suggest a lack of investor confidence or a strategic shift in capital management. This performance could impact the company's ability to attract new capital through its ongoing Fourth Public Offering, potentially hindering future growth and competitive positioning in the real estate investment trust market. Employees might face pressure if financial performance continues to deteriorate, while customers could see impacts on property maintenance or development if capital becomes constrained. The broader market may view this as a cautionary tale for non-traded REITs in a rising interest rate environment.

Risk Assessment

Risk Level: high — The company reported a net loss of $1,055 thousand for the six months ended June 30, 2025, a significant deterioration from a $54 thousand net income in the prior year. Stockholders' equity decreased by over 22% from $95,113 thousand at December 31, 2024, to $73,299 thousand at June 30, 2025, indicating substantial capital erosion. Furthermore, the company redeemed $23,870 thousand of common stock during the six months ended June 30, 2025, far exceeding the $7,870 thousand raised from common stock issuance, signaling net capital outflow.

Analyst Insight

Investors should consider divesting from RREEF Property Trust given the accelerating net losses, declining equity, and significant common stock redemptions. The increasing interest expense and shrinking real estate asset base suggest a challenging operational environment. Monitor the success of the Fourth Public Offering closely, as continued capital outflows could further destabilize the company's financial position.

Financial Highlights

debt To Equity

4.30

revenue

$10,420

operating Margin

-27.72%

total Assets

$388,412

total Debt

$289,972

net Income

-$257

eps

N/A

gross Margin

N/A

cash Position

$5,621

revenue Growth

0.03%

Revenue Breakdown

Key Numbers

• $1,055 — Net Loss (six months) (Increased from $54 thousand net income in prior year)
• $257 — Net Loss (three months) (Increased from $11 thousand net loss in prior year)
• $73,299 — Total Stockholders' Equity (Decreased from $95,113 thousand at Dec 31, 2024)
• $3,484 — Interest Expense (three months) (Increased from $3,192 thousand in prior year)
• $6,860 — Interest Expense (six months) (Increased from $6,490 thousand in prior year)
• $369,807 — Investment in real estate assets, net (Decreased from $378,531 thousand at Dec 31, 2024)
• $23,870 — Redemption of common stock (six months) (Significant capital outflow compared to $7,870 thousand from issuance)
• $388,412 — Total Assets (Decreased from $397,986 thousand at Dec 31, 2024)

Key Players & Entities

• RREEF Property Trust, Inc. (company) — registrant and REIT
• RREEF Property Operating Partnership, LP (company) — Company's operating partnership
• RREEF America L.L.C. (company) — Company's sponsor and advisor
• DWS Distributors, Inc. (company) — Dealer Manager for public offerings
• Federal Home Loan Mortgage Corporation (company) — sponsor of CMBS Trust
• Freddie Mac (company) — sponsor of CMBS Trust
• $2,000,000 (dollar_amount) — maximum offering amount in Fourth Public Offering
• $350,000 (dollar_amount) — maximum offering amount in Reg D Private Offering
• $300,000 (dollar_amount) — maximum offering amount in Reg S Private Offering
• NASDAQ's Mutual Fund Quotation System (market) — platform for NAV per share publication

FAQ

Risk Factors

• Increased Interest Expense [medium — financial]: Interest expense increased to $3,484 thousand for the three months ended June 30, 2025, from $3,192 thousand in the prior year. For the six-month period, it rose to $6,860 thousand from $6,490 thousand. This increase in borrowing costs negatively impacts net income.
• Net Loss Deterioration [high — financial]: The company reported a net loss of $257 thousand for the three months ended June 30, 2025, a significant increase from a $11 thousand net loss in the same period of 2024. The six-month net loss was $1,055 thousand, a substantial shift from a $54 thousand net income in the prior year.
• Declining Stockholders' Equity [high — financial]: Total stockholders' equity declined significantly to $73,299 thousand from $95,113 thousand as of December 31, 2024. This decrease is attributed to net losses and common stock redemptions totaling $23,870 thousand for the six months ended June 30, 2025.
• Reduction in Real Estate Assets [medium — financial]: Total assets decreased to $388,412 thousand as of June 30, 2025, from $397,986 thousand at December 31, 2024. This was primarily driven by a reduction in investment in real estate assets, net, from $378,531 thousand to $369,807 thousand.
• Common Stock Redemptions [medium — financial]: The company experienced significant capital outflow due to common stock redemptions totaling $23,870 thousand for the six months ended June 30, 2025. This outflow contrasts with capital raised through stock issuances.
• Ongoing Public Offering [medium — market]: The company continues its Fourth Public Offering, aiming to raise up to $2,000,000 in various classes of common stock. The success of this offering is crucial for capital replenishment and future investments.
• Reliance on Advisor [low — operational]: The company's sponsor and advisor is RREEF America L.L.C. The company's business is substantially conducted through its Operating Partnership, managed by RREEF America. Dependence on this relationship could pose an operational risk.
• REIT Qualification [medium — regulatory]: The company has elected to qualify as a real estate investment trust (REIT). Maintaining REIT status requires adherence to specific income, asset, and distribution tests, failure of which could result in adverse tax consequences.

Industry Context

The real estate investment trust (REIT) sector is sensitive to interest rate movements and economic cycles. Companies like RREEF Property Trust, Inc. typically focus on specific property types (e.g., office, industrial, retail) and geographic locations. Current trends include a focus on logistics and data centers, while office and retail sectors face ongoing challenges due to remote work and e-commerce shifts.

Regulatory Implications

As a REIT, RREEF Property Trust, Inc. must comply with strict IRS regulations regarding income, assets, and distributions to maintain its tax-advantaged status. Changes in real estate regulations, zoning laws, or environmental standards can also impact property operations and valuations.

What Investors Should Do

1. Monitor interest expense trends closely.
2. Evaluate the success of the Fourth Public Offering.
3. Assess the strategy behind the reduction in real estate assets.
4. Analyze the drivers of common stock redemptions.

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reporting period for the 10-Q, showing increased net losses and declining equity.
• 2024-12-31: End of Fiscal Year 2024 — Balance sheet comparison point, showing higher total assets and stockholders' equity.
• 2023-08-10: Commencement of Fourth Public Offering — Ongoing capital raising effort to support the company's operations and investments.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-generating real estate. (RREEF Property Trust, Inc. has elected to qualify as a REIT, which has specific tax and operational requirements.)

Operating Partnership

A partnership through which the REIT conducts its business operations. The REIT is typically the general partner. (RREEF Property Trust, Inc. conducts substantially all of its business through its Operating Partnership.)

Variable Interest Entity (VIE)

An entity where either the equity is not sufficient to finance its activities, or the equity investors cannot direct the entity's activities, and the equity investors do not have the characteristics of a voting interest entity. (The company consolidates VIEs where it is the primary beneficiary, impacting its financial statements.)

Net Asset Value (NAV)

The net value of an investment company's assets, minus its liabilities. For a REIT, it represents the value of its real estate holdings and other assets. (NAV per share is important for investors to assess the underlying value of their investment in the trust.)

Common Stock Redemptions

The act of a company buying back its own shares from shareholders. (Significant redemptions of common stock by RREEF Property Trust, Inc. have contributed to a decrease in stockholders' equity.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, RREEF Property Trust, Inc. has shifted from a net income of $54 thousand to a net loss of $1,055 thousand. While total revenues saw a slight increase from $20,332 thousand to $20,520 thousand, operating expenses remained relatively stable. However, a significant increase in interest expense, from $6,490 thousand to $6,860 thousand, coupled with a substantial $23,870 thousand in common stock redemptions, has led to a sharp decline in stockholders' equity from $95,113 thousand to $73,299 thousand.

Filing Documents

• rpt-20250630.htm (10-Q) — 2006KB
• rpt-2025q2xex31x1.htm (EX-31.1) — 11KB
• rpt-2025q2xex31x2.htm (EX-31.2) — 11KB
• rpt-2025q2xex32x1.htm (EX-32.1) — 7KB
• 0001542447-25-000087.txt ( ) — 10465KB
• rpt-20250630.xsd (EX-101.SCH) — 69KB
• rpt-20250630_cal.xml (EX-101.CAL) — 68KB
• rpt-20250630_def.xml (EX-101.DEF) — 372KB
• rpt-20250630_lab.xml (EX-101.LAB) — 707KB
• rpt-20250630_pre.xml (EX-101.PRE) — 545KB
• rpt-20250630_htm.xml (XML) — 2044KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Unaudited Financial Statements

Item 1. Unaudited Financial Statements 3 Consolidated Balance Sheets 3 Consolidated Statements of Operations 4 Consolidated Statements of Stockholders' Equity 5 Consolidated Statements of Cash Flows 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 40

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 59

Controls and Procedures

Item 4. Controls and Procedures 60

— OTHER INFORMATION

PART II — OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 61

Risk Factors

Item 1A. Risk Factors 61

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 61

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 62

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 62

Other Information

Item 5. Other Information 62

Exhibits

Item 6. Exhibits 63

Signatures

Signatures 64 2 Table of Contents PART I FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS RREEF PROPERTY TRUST, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) June 30, 2025 (unaudited) December 31, 2024 ASSETS Investment in real estate assets, net $ 369,807 $ 378,531 Investment in marketable securities 120 122 Cash and cash equivalents 5,621 7,157 Restricted cash — 1,349 Receivables, net of allowance for doubtful accounts of $ 60 and $ 75 , respectively 7,566 6,513 Deferred leasing costs, net of amortization of $ 1,950 and $ 2,866 , respectively 2,363 1,870 Prepaid and other assets 2,935 2,444 Total assets $ 388,412 $ 397,986 LIABILITIES AND STOCKHOLDERS' EQUITY Line of credit, net $ 87,510 $ 74,705 Mortgage loans payable, net 188,462 188,628 Accounts payable and accrued expenses 7,157 7,363 Due to affiliates 17,135 17,383 Note to affiliate, net of unamortized discount of zero and $ 79 , respectively 5,383 5,304 Acquired below market lease intangibles, less accumulated amortization of $ 11,084 and $ 10,851 , respectively 7,251 7,484 Other liabilities 2,215 2,006 Total liabilities 315,113 302,873 Stockholders' Equity: Class A common stock, 3,430,457 and 3,892,473 issued and outstanding, respectively 34 39 Class D common stock, 1,961,301 and 2,074,126 issued and outstanding, respectively 20 21 Class I common stock, 9,377,806 and 9,864,714 issued and outstanding, respectively 94 99 Class M-I common stock, 514,137 and 505,917 issued and outstanding, respectively 5 5 Class N common stock, 600,916 and 600,293 issued and outstanding, respectively 6 6 Class T common stock, 37,853 and 51,236 issued and outstanding, respectively — 1 Class T2 common stock, 731,853 and 690,528 issued and outstanding, respectively 7 7 Class Z common stock, 149,944 and 75,000 issued and outstanding, respectively 1 1 Additional paid in capital 193,302 206,837 Deficit ( 120,170 ) ( 111,903 ) Total stockholders' equity 73,299 95,113 Total liabilities and stockholders' e

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (Unaudited) (in thousands except share and per share data) NOTE 1 — ORGANIZATION RREEF Property Trust, Inc. (the "Company") was formed on February 7, 2012 as a Maryland corporation and has elected to qualify as a real estate investment trust ("REIT") for federal income tax purposes. Substantially all of the Company's business is conducted through RREEF Property Operating Partnership, LP, the Company's operating partnership (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. RREEF Property OP Holder, LLC, a wholly-owned subsidiary of the Company, is the limited partner of the Operating Partnership. The Company's sponsor and advisor is RREEF America L.L.C. ("RREEF America"). The Company invests in a diversified portfolio consisting primarily of high-quality, income-producing commercial real estate located in the United States, including, without limitation, office, industrial, retail and residential properties ("Real Estate Properties"). The Company also invests in common and preferred stock of REITs and other real estate companies ("Real Estate Equity Securities") and in debt investments backed principally by real estate ("Real Estate Loans" and, together with Real Estate Equity Securities, "Real Estate-Related Assets"). The Company raises capital through a combination of public and private offerings of its shares of common stock. On January 3, 2013, the Company commenced its initial public offering, which continued until June 30, 2016 (the "Initial Public Offering"). On July 12, 2016, the Company commenced its second public offering, which continued until January 8, 2020 (the "Second Public Offering"). On January 8, 2020, the Company commenced its third public offering, which continued until August 10, 2023 (the "Third Public Offering"). On August 10, 2023, the Company commenced its fourth public offering, which is currently ongoing (the "Fourth Pub

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued June 30, 2025 (Unaudited) (in thousands, except share and per share data) ZRPTIX, ZRPTTX, ZRPTDX, ZRPTMX, ZRPTUX, and ZRPTNX, respectively. The Company's NAV per share for its Class S shares will be available on the Company's website and via NASDAQ's Mutual Fund Quotation System once the first sale of shares for the share class has occurred. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"), the authoritative reference for U.S. generally accepted accounting principles ("GAAP"). There have been no significant changes to the Company's significant accounting policies during the six months ended June 30, 2025. The interim financial data as of June 30, 2025 and for the three and six months ended June 30, 2025 and 2024 is unaudited. In the Company's opinion, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Principles of Consolidation The Company consolidates all entities in which it has a controlling financial interest through majority ownership or voting rights and variable interest entities whereby the Company is the primary beneficiary. In determining whether the Company has a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, the Company considers whether the entity is a variable interes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued June 30, 2025 (Unaudited) (in thousands, except share and per share data) meet the definition of a business. If the real estate and related leases in an acquisition are determined to be an asset and not a business, then the acquisition related costs would be capitalized onto the consolidated balance sheets. Otherwise, such costs will be expensed upon completion of the transaction. The Company assesses the carrying values of real estate investments whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable, such as a reduction in the expected holding period of a property. A real estate investment is potentially impaired if the undiscounted cash flows to be realized over the expected hold period are less than the real estate investment's carrying amount. In this case, an impairment loss will be recorded to the extent that the estimated fair value is lower than the real estate investment's carrying amount. The estimated fair value is determined primarily using information contained within independent appraisals obtained quarterly by the Company from its independent valuation agent. Real estate investments that are expected to be disposed of are valued at the lower of carrying amount or estimated fair value less costs to sell. During the three and six months ended June 30, 2025 and 2024, the Company recorded no impairment charges. CMBS Trust In October 2022, the Company purchased all of the Class D certificates and certain interest-only certificates of commercial mortgage backed securities ("CMBS") securitized through a trust (the "CMBS Trust") sponsored by the Federal Home Loan Mortgage Corporation ("Freddie Mac"). The Class D certificates purchased by the Company represented the most subordinate tranche of the CMBS Trust which come with controlling class powers and therefore the Company consolidated the CMBS Trust in its entirety. The Com

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued June 30, 2025 (Unaudited) (in thousands, except share and per share data) Included in offering costs are (1) distribution fees paid on a trailing basis at the rate of (a) 0.50 % per annum on the NAV of the outstanding Class A Shares, (b) 1.00 % per annum on the NAV of the outstanding Class T Shares, and (c) 0.85 % per annum on the NAV of the outstanding Class S and Class T2 Shares, and (2) dealer manager fees paid on a trailing basis at the rate of 0.55 % per annum on the NAV of the outstanding Class A and Class I Shares (collectively, the "Trailing Fees"). The Trailing Fees are computed daily based on the respective NAV of each share class as of the beginning of each day and paid monthly. However, at each reporting date, the Company accrues an estimate for the amount of Trailing Fees that ultimately may be paid on the outstanding shares. Such estimate reflects the maximum amount of underwriting compensation that could be paid based on the amount of capital raised as of the reporting date for the primary portion of each separate public offering. Changes in this estimate will be recorded prospectively as an adjustment to additional paid-in capital. As of June 30, 2025 and December 31, 2024, the Company has accrued $ 16,583 and $ 17,015 , respectively, in Trailing Fees to be payable in the future, which was included in due to affiliates on the consolidated balance sheets. Revenue Recognition In accordance with FASB Topic 842, Leases (ASC 842), and related ASU's that amended or clarified certain provisions of ASC 842, the Company elected a practical expedient to not separate lease and non-lease components of a lease and instead accounts for them as a single component if two criteria are met: (i) the timing and pattern of transfer of the non-lease component(s) and associated lease component are the same, and (ii) the lease component, if accounted for separately, would be classified as an operating lease. Th

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