ThZeal - The Zeal

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

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

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

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

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

As of May 9, 2023, the Registrant had 9,021,998 outstanding shares of common stock, consisting of 6,826,196 Class A-I shares and 2,195,802 Class F-I shares.

See accompanying notes to unaudited condensed consolidated financial statements.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation.

These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company's financial position, results of operations and cash flows have been included. The Company's results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year or any other future period.

Principles of Consolidation

The Company consolidates all entities that it controls through either majority ownership or voting rights. In addition, the Company consolidates all variable interest entities ("VIEs") of which it is considered the primary beneficiary. VIEs are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as the primary beneficiary and is generally the entity with (i) the power to direct the activities that most significantly affect the VIE's economic performance, and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.

The Operating Partnership is considered to be a VIE. The Company consolidates this entity as it has the ability to direct the most significant activities of the entities such as purchases, dispositions, financings, budgets, and overall operating plans.

The accompanying condensed consolidated financial statements include the accounts of the Company and the Company's subsidiary partnerships. Third party unitholders of Operating Partnership's share of the assets, liabilities and operations of the Operating Partnership is included in non-controlling interest as equity of the Company. The noncontrolling interest is generally computed based on third party unit-holders ownership percentage.

Noncontrolling interests in the Operating Partnership represent units of the Operating Partnership that are held by third parties, including the Adviser, and units of the Operating Partnership issued to the Adviser under the Advisory Agreement. Units of the Operating Partnership may be redeemed for cash, or at our option, common shares of the Company on a one-for-one basis. Since the number of common shares outstanding is equal to the number of units of the Operating Partnership owned by us, the redemption value of each common unit of the Operating Partnership is equal to the market value of each common share and distributions paid to each unitholder is equivalent to dividends paid to common stockholders, per respective share class. As of March 31, 2023 and December 31, 2022, non-controlling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount $98.2 million and $97.7 million, respectively, and a redemption value of $100.4 million and $100.0 million, respectively, based on the redemption price of our shares as of the balance sheet dates.

Cash and Cash Equivalents

Cash and cash equivalents represent cash held in banks, cash on hand, and liquid investments with original maturities of three months or less. The Company may have bank balances in excess of federally insured amounts; however, the Company deposits its cash and cash equivalents with high credit-quality institutions to minimize credit risk exposure. The Company did not hold cash equivalents at March 31, 2023 and December 31, 2022.

Fair Value Measurements

Under normal market conditions, the fair value of an investment is the amount that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). The Company uses a hierarchical framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment, and the state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the following levels within the fair value hierarchy:

Level 1 — quoted prices are available in active markets for identical investments as of the measurement date. The Company does not adjust the quoted price for these investments.

Level 2 — quoted prices are available in markets that are not active or model inputs are based on inputs that are either directly or indirectly observable as of the measurement date.

Level 3 — pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the investment. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2. 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.

The Company has elected the fair value option ("FVO") for investments in real estate debt as the Company believes fair value provides a more accurate depiction of these assets value. The Company generally determines the fair value of its investments in real estate debt by utilizing third-party pricing service providers whenever available. The inputs used to in determining the fair value of the Company's investments in real estate debt are considered Level 3.

Certain of the Company’s investments in real estate debt are unlikely to have readily available market quotations. In such cases, the Company will generally determine the initial value based on the acquisition price of such investment if acquired by the Company or the par value of such investment if originated by the Company. Following the initial measurement, the Company will determine fair value by utilizing or reviewing certain of the following (i) market yield data, (ii) discounted cash flow modeling, (iii) collateral asset performance, (iv) local or macro real estate performance, (v) capital market conditions, (vi) debt yield or loan-to-value ratios, and (vii) borrower financial condition and performance. The loans acquired or originated by the Company during the three months ended March 31, 2023 are held at the acquisition or par amount, which approximate fair value as of March 31, 2023.

The following table details the Company's assets measured at fair value on a recurring basis ($ in thousands):


	March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Investments in real estate debt	$	—	$	—	$	58,675	$	58,675

There were two assets acquired during the three months ended March 31, 2023 for an aggregate amount of $58.7 million and no other activity related to assets designated as Level 3.

As of December 31, 2022, the Company did not hold any assets at fair value.

Investment Property and Lease Intangibles

Acquisitions of properties are accounted for utilizing the acquisition method and, accordingly, the results of operations of acquired properties will be included in the Company's results of operations from their respective dates of acquisition. The Company will utilize a report from an independent appraiser to record the purchase of identifiable assets acquired and liabilities assumed such as land, buildings and improvements, equipment and identifiable intangible assets and liabilities such as amounts related to in-place leases, acquired above- and below-market leases, tenant relationships, asset retirement obligations and mortgage loans payable.

The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals.

The estimated fair value of acquired in-place leases is the costs the Company would have incurred to lease the properties to the occupancy level of the properties at the date of acquisition. Such estimates include the fair value of leasing commissions, legal costs, and other direct costs that would be incurred to lease the properties to such occupancy levels. Additionally, the Company evaluates the time period over which such occupancy levels would be achieved. Such evaluation includes an estimate of the net market-based rental revenues and net operating costs (primarily consisting of real estate taxes, insurance and utilities) that would be incurred during the lease-up period. Acquired in-place leases as of the date of acquisition are amortized over the remaining lease terms. The amortization of in-place lease intangibles is recorded in depreciation and amortization expense on the Company’s condensed consolidated statements of operations.

Acquired above- and below-market lease values are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the in-place leases and the Company's estimate of fair market value lease rates for the corresponding in-place leases. The capitalized above- and below-market lease values are amortized as adjustments to rental revenue over the remaining terms of the respective leases, which include periods covered by bargain renewal options, if applicable. Should a tenant terminate its lease, the unamortized portion of the in-place lease value will be charged to amortization expense and the unamortized portion of out-of-market lease value will be charged to rental revenue.

The Company's investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated useful lives of the assets as follows:


Description		Depreciable Life
Buildings		40 - 50 years
Buildings and land improvements		15 years
Lease intangibles and leasehold improvements		Lease term

Significant improvements to properties are capitalized, whereas, repairs and maintenance expenses at the Company's properties are expensed as incurred and included in real estate operating expense on the Company’s condensed consolidated statements of operations. When an asset is sold, the cost and related accumulated depreciation are removed from the accounts with the resulting gain or loss reflected in the Company's results of operations for the period.

Real estate assets will be evaluated for impairment on a quarterly basis. The Company will consider the following factors when performing its impairment analysis: (1) management, having the authority to approve the action, commits to a plan to sell the asset; (2) significant negative industry and economic outlook or trends; (3) expected material costs necessary to extend the life or operate the real estate asset; and (4) its ability to hold and dispose of the real estate asset in the ordinary course of business. A real estate asset is considered impaired when the sum of estimated future undiscounted cash flows to be generated by the real estate asset over the estimated remaining holding period is less than the carrying value of such real estate asset. An impairment charge is recorded equal to the excess of the carrying value of the real estate asset over the fair value. When determining the fair value of a real estate asset, the Company makes certain assumptions including, but not limited to, consideration of projected operating cash flows, comparable selling prices and projected cash flows from the eventual disposition of the real estate asset based upon its estimate of a capitalization rate and discount rate.

Investments in Real Estate Debt

The Company's investments in real estate debt consist of loans secured by real estate. The Company has elected the FVO for its investments in real estate debt. As such, the unrealized gain or loss associated with holding these investments at fair value are recorded as a component of income from investments in real estate debt on the Company's condensed consolidated statement of operations. No unrealized gain or loss was recognized for the three months ended March 31, 2023.

Interest income from the Company’s investments in real estate debt is recognized over the life of each investment using the effective interest method and is recorded on the accrual basis. Recognition of premiums and discounts associated with these investments is deferred and recorded over the term of the investment as an adjustment to yield. Upfront costs and fees related to items for which the FVO is elected are recognized in earnings as incurred and are not deferred. Interest income, upfront costs and fees are recorded as components of income from investments in real estate debt on the Company’s condensed consolidated statements of operations.

Revenue Recognition

The Company's rental revenue consists of base rent and tenant reimbursement income arising from tenant leases at the Company's properties under operating leases. Base rent is recognized on a straight-line basis over the life of the lease, including any rent step ups or abatements. The Company accounts for base rental revenue (lease component) and common area expense reimbursement (non-lease component) as one lease component under ASC 842. Additionally, the Company also includes the non-components of its leases, such as the reimbursement of utilities, insurance and real estate taxes, within this lease component.

The Company evaluates the collectability of receivables related to rental revenue on an individual lease basis. Management exercises judgment in assessing collectability and considers the length of time a receivable has been outstanding, tenant creditworthiness, payment history, available information about the financial condition of the tenant, and current economic trends, among other factors. Tenant receivables that are deemed uncollectible are recognized as a reduction to rental revenue.

Income Taxes

The Company intends to make an election to be taxed as a REIT under Sections 856 through 860 of the Code commencing with its taxable year ending December 31, 2023. If the Company qualifies for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes its taxable income to its stockholders. REITs are subject to a number of other organizational and operational requirements. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and U.S. federal income and excise taxes on its undistributed income.

Earnings per Share of Common Stock

Basic earnings per share of common stock is computed by dividing net income or loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income or loss for the period by the weighted average number of shares of common stock and common stock equivalents outstanding (unless their effect is anti-dilutive) for the period. As there were no common stock equivalents outstanding during the three months ended March 31, 2023 and the period from February 18, 2022 (date of initial capitalization) through March 31, 2022 the calculation of basic and diluted earnings per share are equal.

Organization and Offering Expenses

The Adviser has agreed that it and/or its affiliates will advance organization and offering expenses on behalf of the Company (including legal, accounting, and other expenses attributable to the Company's organization, but excluding upfront selling commissions, dealer manager fees and stockholder servicing fees) through December 22, 2023, the first anniversary of the escrow break for the Offering. The Company will reimburse the Adviser and its affiliates for all such advanced expenses ratably over a 60-month period beginning on December 22, 2023.

Organization costs are expensed as incurred and recorded as expenses on the Company's condensed consolidated statement of operations and offering costs are charged to equity as such amounts are incurred. At March 31, 2023, the Adviser and its affiliates had incurred organization and offering costs on the Company's behalf of $6.7 million, consisting of offering costs of $5.2 million and organization costs of $1.5 million. As of December 31, 2022, the Adviser and its affiliates had incurred $6.6 million of organization and offering costs on the Company's behalf, consisting of $5.1 million of offering costs and $1.5 million of organization costs. Such costs became the Company's liability on December 22, 2022, the date on which the proceeds from the Offering were released from escrow. These organization and offering costs are recorded as a component of due to affiliates on the Company's condensed consolidated balance sheet.

Apollo Global Securities, LLC (the "Dealer Manager"), a registered broker-dealer affiliated with the Adviser, serves as the dealer manager for the Offering. The Dealer Manager is entitled to receive selling commissions and dealer manager fees based on the transaction price of each applicable class of shares sold in the primary offering. The Dealer Manager is also entitled to receive a stockholder servicing fee based on the aggregate NAV of the Company’s outstanding Class S shares, Class D shares, Class F-S shares and Class F-D shares.

The following table details the selling commissions, dealer manager fees, and stockholder servicing fees for each applicable share class as of March 31, 2023:


	Class S Shares	Class D Shares	Class I Shares		Class F-S Shares	Class F-D Shares	Class F-I Shares		Class A-I Shares		Class A-II Shares		Class A-III Shares
Selling commissions and dealer manager fees (% of transaction price)	up to 3.5%	up to 1.5%		—	up to 3.5%	up to 1.5%		—		—		—		—
Stockholder servicing fee (% of NAV)	0.85%	0.25%		—	0.85%	0.25%		—		—		—		—

For Class S shares and Class F-S shares sold in the primary offering, investors will pay upfront selling commissions of up to 3% and dealer manager fees of up to 0.5% of the transaction price; however, such amounts may vary at certain participating broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. For Class D shares and Class F-D shares sold in the primary offering, investors will pay upfront selling commissions of up to 1.5% of the transaction price.

The Dealer Manager, as the dealer manager for the Offering, is entitled to receive stockholder servicing fees of 0.85% per annum of the aggregate NAV for Class S shares and Class F-S shares. For Class D shares and Class F-D shares, a charge of 0.25% per annum of the aggregate NAV will be charged for stockholder servicing fees.

The Dealer Manager intends to enter into agreements with selected dealers that agree to distribute the Company's shares in the Offering, which will provide, among other things, for the reallowance of the full amount of the selling commissions and stockholder servicing fees to such selected dealers. The Company will cease paying the stockholder servicing fee with respect to any Class S share, Class D share, Class F-S share, or Class F-D share held in a shareholder's account at the end of the month in which the total selling commissions, dealer manager fees and stockholder servicing fees paid with respect to such shares would exceed, in the aggregate, 8.75% of the gross proceeds from the sale of such share. The Company will accrue the cost of the stockholder servicing fee as an offering cost at the time each Class S share, Class F-S share, Class D share, and Class F-D share is sold during the primary offering. There will not be a stockholder servicing fee, upfront selling commission or dealer manager fee with respect to Class I shares, Class F-I shares, Class A-I shares, Class A-II shares, and Class A-III shares. The Company will accrue the full cost of the stockholder servicing fee as an offering cost at the time of each Class S share, Class D share, Class F-S share, and Class F-D share sale during the primary offering. As of March 31, 2023, the Company had not sold any of those share classes and as such has not accrued for any stockholder servicing fees.

Recent Accounting Pronouncements

Any recently issued accounting pronouncements have been excluded as they either are not relevant to the Company or they are not expected to have a material impact on the Company's condensed consolidated financial statements.

Note 6 - Intangibles

The Company did not have any intangible assets as of December 31, 2022. The gross carrying amount and accumulated amortization of the Company's intangible assets consisted of the following as of March 31, 2023 ($ in thousands):


	March 31, 2023
Intangible assets:
In place lease intangibles	$	7,051
Above market lease intangibles		176
Total intangible assets		7,227
Accumulated amortization:
In-place lease amortization		(97	)
Above-market lease amortization		(2	)
Total intangible assets	$	7,128

The estimated future amortization on the Company's intangibles for each of the next five years and thereafter as of March 31, 2023 is as follows ($ in thousands):


	In-Place Lease Intangibles		Above-Market Intangibles
2023 (remaining)	$	349	$	9
2024		465		12
2025		465		12
2026		465		12
2027		465		12
Thereafter		4,745		117
	$	6,954	$	174

Pursuant to the Advisory Agreement between the Company and the Operating Partnership, on the one hand, and the Adviser, on the other hand, the Adviser is responsible for sourcing, evaluating and monitoring the Company's investment opportunities and making decisions related to the acquisition, management, financing and disposition of the Company's assets, in accordance with the Company's investment objectives, guidelines, policies and limitations, subject to oversight by the Company's board of directors.

The Special Limited Partner holds a performance participation interest in the Operating Partnership that entitles it to receive an allocation from the Operating Partnership on Class S shares, Class D shares, and Class I shares equal to 12.5% of the annual Total Return, subject to a 5% annual Hurdle Amount and a High Water Mark, with a Catch-Up (each term as defined in the Operating Partnership limited partnership agreement). On Class F-S shares, Class F-D shares, and Class F-I shares, the Special Limited Partner is entitled to receive an allocation equal to 9.0% of the annual Total Return, subject to a 5% annual Hurdle Amount and a High Water Mark, with a Catch-Up (each term as defined in the Operating Partnership limited partnership agreement). Such allocation will accrue monthly and be made annually. There will not be a performance participation interest with respect to Class A-I shares, Class A-II shares, Class A-III shares, and Class E shares. The performance participation interest will be paid, at the Adviser's election, in cash, Class E shares, Class E units of the Operating Partnership or any combination thereof.

The Company may retain certain of the Adviser's affiliates for necessary services relating to the Company's investments or its operations, including but not limited to any accounting and audit services (including valuation support services), account management services, administrative services, data management services, information technology services, finance/budget services, legal services, operational services, risk management services, tax services, treasury services, construction, special servicing, leasing, development, coordinating closing and post-closing procedures, property oversight, statutory services, and other property management services, as well as services related to mortgage servicing, group purchasing, healthcare, consulting/brokerage, capital markets/credit origination, broker-dealer services, underwriting, placing, syndicating, structuring, arranging, debt advisory services and other similar services, loan servicing, property, title and/or other types of insurance, title agency services, management consulting and other similar operational matters. Any fees paid to the Adviser's affiliates for any such services will not reduce the management fee or performance participation allocation. Any such arrangements will be at market terms and rates.

In addition, the Dealer Manager serves as the dealer manager for the Offering. The Dealer Manager is a registered broker-dealer affiliated with the Adviser. The Company entered into an agreement (the "Dealer Manager Agreement") with the Dealer Manager in connection with the Offering. Subject to the terms of the Dealer Manager Agreement, the Company's obligations to pay stockholder servicing fees with respect to the Class S shares, Class D shares, Class F-S shares, and Class F-D shares sold in the Offering shall survive until such shares are no longer outstanding (including because such shares have converted into Class I shares or Class F-I shares).

The Dealer Manager is entitled to receive selling commissions of up to 3.0%, and dealer manager fees of up to 0.5%, of the transaction price of each Class S share and Class F-S share sold in the primary offering; however, such amounts may vary at certain participating broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. Participating broker-dealers are third-party broker-dealers engaged by the Dealer Manager to participate in the distribution of shares of the Company's common stock. The Dealer Manager is also entitled to receive selling commissions of up to 1.5% of the transaction price of each Class D share and Class F-D share sold in the primary offering. The Dealer Manager also receives a stockholder servicing fee of 0.85% and 0.25% per annum of the aggregate NAV of the Company's outstanding Class S

and F-S shares and Class D and F-D shares, respectively. The Dealer Manager intends to enter into agreements with selected dealers that agree to distribute the Company's shares in the Offering, which will provide, among other things, for the reallowance of the full amount of the selling commissions and stockholder servicing fees to such selected dealers. The Company will cease paying the stockholder servicing fee with respect to any Class S share, Class D share, Class F-S share, or Class F-D share held in a shareholder's account at the end of the month in which the total selling commissions, dealer manager fees and stockholder servicing fees paid with respect to such shares would exceed, in the aggregate, 8.75% of the gross proceeds from the sale of such share. The Company will accrue the cost of the stockholder servicing fee as an offering cost at the time each Class S share, Class F-S share, Class D share, and Class F-D share is sold during the primary offering. There will not be a stockholder servicing fee, upfront selling commission or dealer manager fee with respect to Class I shares, Class F-I shares, Class A-I shares, Class A-II shares, and Class A-III shares.

The Company may also offer Class E shares, which will only be available to certain of Apollo's affiliates and employees, in one or more private placements. These shares are not being offered to the public pursuant to the Offering and will not incur any upfront selling costs, ongoing servicing costs, management fee or performance participation allocation.

On February 18, 2022, the Company was capitalized with a $0.2 million investment by Apollo ARIS Holdings LLC, an indirect wholly-owned subsidiary of Apollo, in exchange for 10,000 shares of Class I common stock. On November 11, 2022, 10,000 shares of Class I common stock held by Apollo ARIS Holdings LLC were exchanged for 10,000 shares of Class F-I common stock.

On November 29, 2022, the Company issued 5,000,000 Class A-I units of the Operating Partnership to an affiliate of Apollo for the aggregate consideration of $100.0 million.

Due to Affiliates

The following table details the Company's expenses that are due to its Adviser:


	March 31, 2023		December 31, 2022
Organization and offering	$	6,685	$	6,620
General and administrative		2,783		1,678
Accrued management fee		165		—
Total	$	9,633	$	8,298

Organization and Offering Expenses

The Adviser has advanced $6.7 million of organization and offering expenses (including legal, accounting, and other expenses attributable to the Company's organization, but excluding upfront selling commissions, dealer manager fees and stockholder servicing fees) on behalf of the Company through March 31, 2023. The Adviser will continue to advance the Company's organization and offering expenses on behalf of the Company through December 22, 2023, the first anniversary of the escrow break for the Offering. The Company will reimburse the Adviser for all such advanced costs ratably over a 60 month period beginning on December 22, 2023.

General and Administrative Expenses

The Adviser has agreed that it and/or its affiliates will advance certain general and administrative expenses on behalf of the Company through December 22, 2023, the first anniversary of the escrow break for the Offering. The Adviser has advanced $2.8 million of general and administrative expenses on the Company's behalf as of March 31, 2023. The Adviser will continue to advance certain of the Company's general and administrative expenses through December 22, 2023, the first anniversary of the escrow break for the Offering. The Company will reimburse the Adviser for all such advanced costs ratably over a 60 month period beginning on December 22, 2023.

Accrued Management Fee

The Adviser is entitled to a management fee equal to 1.25% of NAV per annum, payable monthly on Class S shares, Class D shares, and Class I shares. The Adviser will be paid a management fee equal to 1.0% of NAV per annum, payable monthly on Class F-S shares, Class F-D shares, Class F-I shares, and Class A-I shares. The Adviser will be paid a management fee equal to 1.0% of NAV for Class A-II shares per annum payable monthly; and provided that, for the period of April 1, 2023 through September 1, 2026, this management fee will be reduced to 0.92% of NAV for Class A-II shares per annum payable monthly. The Adviser will be paid a management fee equal to 1.0% of NAV for Class A-III shares per annum payable monthly; and provided that, for the period of April 1, 2023 through January 2, 2027, this management fee will be reduced to 0.85% of NAV for Class A-III shares per annum payable monthly. The management fee will be paid, at the Adviser's election, in cash, Class E shares, Class E units of the Operating Partnership or any combination thereof.

During the three months ended March 31, 2023, the Company issued approximately 3,862 unregistered Class E shares and approximately 7,801 unregistered Class E units of the Operating Partnership to the Adviser as payment for management fees as of March 31, 2023. The shares issued to the Adviser for payment of the management fee were issued at the applicable NAV per share at the end of each month for which the fee was earned, in reliance upon the exemption from registration set forth in Section 4(a)(2) of the Securities Act. The Adviser did not submit any repurchase requests for any shares or units of the Operating Partnership previously issued as payment for the management fee as of three months ended March 31, 2023.

Note 11 - Equity

Authorized Capital

The Company is authorized to issue preferred stock and ten classes of common stock consisting of Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares, Class A-I shares, Class A-II shares, Class A-III shares, and Class E shares. The differences among the classes of common stock relate to upfront selling commissions, dealer manager fees, and ongoing stockholder servicing fees, as well as varying management and performance participation fees. See "Note 9 - Related Party Transactions" for additional information.

As of March 31, 2023 and December 31, 2022, the Company had the following classes of common stock authorized, issued and outstanding:


	March 31, 2023				December 31, 2022
Classification	Shares Authorized		Shares Issued and Outstanding		Shares Authorized		Shares Issued and Outstanding
Preferred Stock, $0.01 par value per share		100,000,000		—		100,000,000		—
Class S Shares, $0.01 par value per share		100,000,000		—		100,000,000		—
Class D Shares, $0.01 par value per share		100,000,000		—		100,000,000		—
Class I Shares, $0.01 par value per share		100,000,000		—		100,000,000		—
Class F-S Shares, $0.01 par value per share		100,000,000		—		100,000,000		—
Class F-D Shares, $0.01 par value per share		100,000,000		—		100,000,000		—
Class F-I Shares, $0.01 par value per share		100,000,000		4,826,464		100,000,000		1,823,750
Class A-I Shares, $0.01 par value per share		100,000,000		—		100,000,000		—
Class A-II Shares, $0.01 par value per share		100,000,000		—		100,000,000		—
Class A-III Shares, $0.01 par value per share		100,000,000		—		100,000,000		—
Class E Shares, $0.01 par value per share		100,000,000		3,862		100,000,000		—
Total		1,100,000,000		4,830,326		1,100,000,000		1,823,750

Common Stock

The following table details the movement in the Company's outstanding shares of common stock for the three months ended March 31, 2023:


	Beginning balance, December 31, 2022		Common stock issued		Ending balance, March 31, 2023
Class F-I		1,823,750		3,002,714		4,826,464
Class E		—		3,862		3,862

The following table details the movement in the Company's outstanding shares of common stock for the period from February 18, 2022 (date of initial capitalization) to March 31, 2022:

Share Class

Beginning balance, February 18, 2022

Common stock issued

Ending balance, March 31, 2022

Class I

10,000

—

10,000

As of March 31, 2023, the Company had not issued any Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class A-I shares, Class A-II shares, Class A-III shares.

Non-Controlling Interests - Operating Partnership Unitholders

Units of the Operating Partnership are subject to the same fees as the corresponding classes of common stock and do not have any preferential rights relative to the Company's interest in the Operating Partnership.

On December 22, 2022, the Company issued 5,000,000 Class A-I units of the Operating Partnership to an affiliate of Apollo for the aggregate consideration of $100.0 million in a private placement.

On March 1, 2023, the Company issued 7,801 Class E units of the Operating Partnership to the Adviser for the management fee earned on the 5,000,000 Class A-I units of the Operating Partnership units mentioned above for January and February.

Note 13 - Segment Reporting

The Company operates in two reportable segments: Real Estate and Real Estate Debt. The Company allocates resources and evaluates results based off of the performance of each segment individually. The Company believes that Segment Net Operating Income is the key performance metric that captures the unique operating characteristics of each segment.

The following table provides the total assets and financial results by segment for the three months ended March 31, 2023:


	Real Estate			Real Estate Debt		Other Corporate		Total
Total Assets	$	49,663		$	58,859	$	90,487	$	199,009
									—
Revenue									—
Rental revenue	$	993		$	—	$	—	$	993
Total revenues		993			—		—		993
Expenses
Rental property operating		(92	)		—		—		(92	)
Total segment expenses		(92	)		—		—		(92	)
Income from investments in real estate debt		—			735		—		735
Segment net operating income	$	901		$	735	$	—	$	1,636
Depreciation and amortization	$	(283	)	$	—	$	—	$	(283	)
General and administrative									(1,105	)
Management fee									(399	)
Other income, net									834
Net income								$	683
Net income attributable to non-controlling interests in ARIS OP								$	348
Net income attributable to ARIS stockholders								$	335

The Company had no investments and therefore operated in one reportable segment as of December 31, 2022.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References herein to "Apollo Realty Income Solutions," "ARIS," "Company," "we," "us," or "our" refer to Apollo Realty Income Solutions, Inc. and its subsidiaries unless the context specifically requires otherwise.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical data, this discussion contains forward-looking statements about our business, operations, and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in Part I. Item 1A - "Risk Factors" in our Annual Report on Form 10-K filed with the SEC on March 10, 2023.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology such as "believe", "expect", "anticipate", "estimate", "plan", "continue", "intend", "should", "may" or similar expressions, or the negatives thereof. These may include our financial projections and estimates and their underlying assumptions, statements about plans, objectives and expectations with respect to future operations, statements with respect to acquisitions, statements regarding future performance and statements regarding identified but not yet closed acquisitions. Such forward-looking statements are inherently uncertain and there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. We believe these factors also include but are not limited to those described under the section entitled "Risk Factors" in our Annual Report on Form 10-K filed with the SEC on March 10, 2023, and any such updated factors included in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document (or our prospectus and other filings). Except as otherwise required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

We are a Maryland corporation formed on September 8, 2021. We were formed to invest primarily in a portfolio of diversified income-oriented commercial real estate in the United States. We are an externally advised, perpetual-life corporation that intends to qualify as a REIT for U.S. federal income tax purposes. We were formed to directly and indirectly acquire real estate and real estate-related assets and, to a lesser extent, commercial real estate debt. Our investment objectives are to invest in assets that will enable us to:

There can be no assurance that we will achieve our investment objectives. Our investments in primarily a portfolio of diversified institutional quality, income-oriented commercial real estate primarily in the United States will focus on a range of asset types. These may include office, hotel, industrial, multifamily and retail assets, as well as others, including, without limitation, healthcare, student housing, life sciences, hospitality, senior living, data centers, manufactured housing and storage properties. Our real estate debt or real estate-related debt securities investments will focus on non-distressed public and private real estate debt, including, but not limited to, commercial mortgage-backed securities, mortgages, loans, mezzanine and other forms of debt, and may also include preferred equity.

We intend to qualify as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2023. We plan to own all or substantially all of our assets through the Operating Partnership.

Our board of directors will, at all times, have ultimate oversight and policy-making authority over us, including responsibility for governance, financial controls, compliance and disclosure. However, pursuant to the Advisory Agreement between us and the Operating Partnership, on the one hand, and the Adviser, on the other hand, we have delegated to the Adviser the authority to source, evaluate and monitor our investment opportunities and make decisions related to the acquisition, management, financing and disposition of our assets, in accordance with our investment objectives, guidelines, policies and limitations, subject to oversight by our board of directors.

We have registered with the SEC the Offering of up to $5.0 billion in shares of common stock, consisting of up to $4.0 billion in shares in our primary offering and up to $1.0 billion in shares pursuant to our distribution reinvestment plan. The share classes have different upfront selling commissions and ongoing stockholder servicing fees, as well as varying management and performance participation fees. See "Note 9 - Related Party Transactions" to our condensed consolidated financial statements for additional information. As of December 22, 2022, we had satisfied the minimum offering requirement and our board of directors authorized the release of proceeds from escrow. We intend to continue selling shares in the Offering on a monthly basis.

As of May 9, 2023, we had received net proceeds of approximately $181.0 million from the sale of 9,021,998 shares of our common stock in the Offering. We have contributed the net proceeds from the Offering to our Operating Partnership in exchange for a corresponding number of Class F-I units of the Operating Partnership and Class A-I units of the Operating Partnership. Our Operating Partnership has used some of the net proceeds to make investments in real estate and real estate debt and for other general corporate purposes as further described below under "Portfolio".

We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from acquiring properties or real estate debt.

The following table provides information regarding our portfolio of real estate properties as of March 31, 2023 ($ in thousands):

The following table summarizes our investments in real estate debt as of March 31, 2023 ($ in thousands):

We commenced operations on December 22, 2022, the date on which we had satisfied the minimum offering requirements and our board of directors authorized the release of proceeds from escrow for the Offering. As of December 31, 2022, we had not made any investments. Due to our investments in real estate and real estate debt during the three months ended March 31, 2023, our result of operations for the three months ended March 31, 2023 and December 31, 2022 are not comparable.

The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2023, and December 31, 2022 ($ in thousands):

Rental Revenue, Rental Property Operating Expenses, Depreciation and Amortization

During the three months ended March 31, 2023, rental revenues, rental property operating expenses, and depreciation and amortization were recognized as a result of our acquisition of a property during the quarter.

During the three months ended March 31, 2023, general and administrative expenses were $1.1 million, and consisted primarily of legal fees, accounting fees, and other professional services. The decrease from the $1.7 million of general and administrative expenses recognized during the three months ended December 31, 2022, was due to the recognition of all expenses incurred prior to our breaking of escrow, which occurred on December 22, 2022.

During the three months ended March 31, 2023, we incurred no organization costs. The decrease from the $1.5 million of organization costs recognized during the three months ended December 31, 2022 was due to the recognition of all organization expenses incurred prior to our breaking of escrow, which occurred on December 22, 2022. See "Note 2 - Summary of Significant Accounting Policies" to our condensed consolidated financial statements for additional information.

During the three months ended March 31, 2023, income from investments in real estate debt were recognized as a result of our making two investments in real estate debt during the quarter. The income primarily relates to interest income and the recognition of an upfront fee.

Other income primarily consists of interest earned on our cash balances. The increase is caused by increased cash holdings during the three months ended March 31, 2023 as compared to December 31, 2022 due to increased cash held from capital raising.

The Adviser's management fee waiver expired upon the acquisition of our first investment and during the three months ended March 31, 2023, we began recording the management fees on a monthly basis based on NAV.

NAV per share is calculated in accordance with the valuation guidelines approved by our board of directors. Our total NAV presented in the following tables includes the NAV of our Class F-I shares, Class E shares and partnership interests in the Operating Partnership held by parties

other than the Company. The following table provides a breakdown of the major components of our total NAV as of March 31, 2023 ($ and shares/units in thousands):

The following table provides a breakdown of our total NAV and NAV per share/unit by class as of March 31, 2023 ($ and shares/units in thousands, except per share/unit data):

Consistent with our disclosure in our prospectus regarding our NAV calculation, our investments in real estate are initially valued at cost. In the future, as we establish new values for our real estate investments, we will provide information on key assumptions used in the discounted cash flow methodology and a sensitivity analysis related thereto.

The following table reconciles stockholders' equity and the Operating Partnership unitholders' capital per our condensed consolidated balance sheet to our NAV ($ in thousands):

The following details the adjustments to reconcile GAAP stockholders' equity to our NAV:

Our primary needs for liquidity and capital resources are to fund our investments, to make distributions to our stockholders, to repurchase shares of our common stock pursuant to our share repurchase plan, to pay our offering costs, operating fees and expenses and to pay interest on any outstanding indebtedness we may incur. We anticipate our offering and operating fees and expenses will include, among other things, the management fee we will pay to the Adviser, the performance participation allocation that the Operating Partnership will pay to the Special Limited Partner, stockholder servicing fees we will pay to the Dealer Manager, legal, audit and valuation expenses, federal and state filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution expenses and fees related to acquiring, financing, appraising and managing our properties. We do not have any office or personnel expenses as we do not have any employees.

The Adviser has advanced on our behalf organization and offering costs of $6.7 million and general and administrative expenses of $2.8 million as of March 31, 2023. The Adviser will continue to advance organization and offering costs and certain general and administrative expenses on our behalf until December 22, 2023. We will reimburse the Adviser ratably over a 60-month period beginning on December 22, 2023.

Over time, we generally intend to fund our cash needs for items other than asset acquisitions from operations. We expect our cash needs for acquisitions will be funded primarily from the sale of shares of our common stock and through the assumption or incurrence of debt.

Although we have not received any commitments from lenders, we may decide to incur indebtedness to fund acquisitions, to repurchase shares pursuant to our share repurchase plan and for any other corporate purpose. If we decide to incur indebtedness, we expect that it would afford us borrowing availability to fund repurchases. As our assets increase, however, it may not be commercially feasible, or we may not be able to secure adequate borrowings to fund share repurchases.

Other potential future sources of capital include secured or unsecured financings from banks or other lenders and proceeds from the sale of assets or equity issuances by the Operating Partnership or the sale of beneficial interests in specific Delaware statutory trusts holding real properties, including properties placed by the Operating Partnership or affiliates of Apollo. If necessary, we may use financings or other sources of capital to fund share repurchases or in the event of unforeseen significant capital expenditures. We have not yet identified any sources for these types of financings.

The following table provides a breakdown of the net change in our cash and cash equivalents ($ in thousands):

Cash flows provided by operating activities were approximately $1.7 million for the three months ended March 31, 2023, primarily as a result of income generated on our investments and outstanding cash balances.

Cash flows used in investing activities were $102.9 million for the three months ended March 31, 2023, relating to our investments in real estate and real estate debt.

Cash flows provided by financing activities were $60.1 million for the three months ended March 31, 2023, primarily due to $60.2 million of proceeds from the issuance of our common stock net of offering costs.

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. There have been no material changes to our Critical Accounting Policies described in our Annual Report on Form 10-K filed with the SEC on March 10, 2023.

See Note 2 - Summary of Significant Accounting Policies to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion concerning recent accounting pronouncements.

We may be exposed to interest rate changes primarily as a result of long-term debt we may use to maintain liquidity, fund capital expenditures, repurchase shares of our common stock and expand our investment portfolio and operations. Market fluctuations in real estate financing may affect the availability and cost of funds needed to expand our investment portfolio. In addition, restrictions upon the availability of real estate financing or high interest rates for real estate loans could adversely affect our ability to dispose of real estate in the future. We will seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. We may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. Also, we will be exposed to both credit risk and market risk.

Credit risk is the failure of the counterparty to perform under the terms of a derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We will seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties.

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. With regard to variable rate financing, we will assess our interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We will maintain risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding and forecasted debt obligations as well as our potential offsetting hedge positions. While this hedging strategy will be designed to minimize the impact on our net income and funds from operations from changes in interest rates, our overall returns may be reduced.

As of March 31, 2023, we did not have any indebtedness or derivative contracts and therefore the risks associated with those instruments.

The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company's management, including its Co-Chief Executive Officers ("Co-CEOs") and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q was made under the supervision and with the participation of our management, including our Co-CEOs and CFO. Based upon this evaluation, our Co-CEOs and CFO have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Co-CEOs and CFO, as appropriate to allow timely decisions regarding required disclosure.

There have been no material changes to the risk factors previously disclosed under Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022.

From time to time, we may be involved in various claims and legal action arising in the ordinary course of business. As of March 31, 2023, we were not involved in any material legal proceedings.

For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022, and under the heading "Risk Factors" in our prospectus dated April 20, 2023, as supplemented.

During the three months ended March 31, 2023, we sold equity securities that were not registered under the Securities Act. As described in Note 9 - Related Party Transactions to our condensed consolidated financial statements, the Adviser is entitled to an annual management fee payable monthly in cash, shares of common stock, or units of the Operating Partnership, in each case at the Adviser's election. For the three months ended March 31, 2023, the Adviser elected to receive its management fee in Class E shares and Class E units of the Operating Partnership. In connection with the Adviser's election, we issued approximately 3,862 Class E shares and approximately 7,801 Class E units of the Operating Partnership to the Adviser in March 2023 in satisfaction of the January 2023 and February 2023 management fee. These issuances were made in reliance upon the exemption from registration set forth in Section 4(a)(2) of the Securities Act.

On June 29, 2022, the Registration Statement on Form S-11 (File No. 333-264456) for the Offering was declared effective under the Securities Act. The offering price for each class of our common stock is determined monthly and is made available on our website and in prospectus supplement filings.

As of March 31, 2023, we received net proceeds of $96.6 million from the Offering. The following table summarizes certain information about the Offering proceeds therefrom (in thousands):

We intend to use the net proceeds from the Offering to (i) make investments in accordance with our investment strategy and policies, (ii) reduce borrowings and repay indebtedness incurred under various financing agreements we may enter into and (iii) fund repurchases under our share repurchase plan.

We have adopted a share repurchase plan, whereby on a monthly basis, stockholders may request that we repurchase all or any portion of their shares. We may choose to repurchase all, some or none of the shares that have been requested to be repurchased at the end of any particular month, in our discretion, subject to any limitations in the share repurchase plan. The aggregate NAV of total repurchases of Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares, Class A-I shares, Class A-II shares, Class A-III shares and Class E shares will be limited to 2% of the aggregate NAV per month and 5% of the aggregate NAV per calendar quarter. Shares would be repurchased at a price equal to the transaction price on the applicable repurchase date. Due to the illiquid nature of investments in real estate, we may not have sufficient liquid resources to fund repurchase requests and has established limitations on the amount of funds we may use for repurchases during any calendar month and quarter. Further, our board of directors may modify or suspend the share repurchase plan.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on


Maryland	87-2557571
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
9 West 57th Street, 42nd Floor, New York, NY	10019
(Address of principal executive offices)	(Zip Code)


		Page
PART I	Financial Information	1
Item 1.	Financial Statements	1
	Condensed Consolidated Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	1
	Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2023 and the period February 18, 2022 (Date of Initial Capitalization) to March 31, 2022	2
	Condensed Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2023 a nd the period February 18, 2022 (Date of Initial Capitalization) to March 31, 2022	3
	Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2023 and the period February 18, 2022 (Date of Initial Capitalization) to March 31, 2022	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	22

PART II	Other Information	22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosure	23
Item 5.	Other Information	23
Item 6.	Exhibits	23
	Signatures	25


	March 31, 2023			December 31, 2022
Assets
Investments in real estate, net	$	41,801		$	—
Investments in real estate debt, at fair value		58,675			—
Cash and cash equivalents		90,487			131,589
Other assets		8,046			5,000
Total assets(1)	$	199,009		$	136,589
Liabilities and Equity
Due to affiliates	$	9,633		$	8,298
Other liabilities		102			—
Total liabilities(1)		9,735			8,298
Commitments and contingencies (See Note 12)
Equity
Preferred stock, $0.01 par value per share, 100,000,000 shares authorized at March 31, 2023 and December 31, 2022, and none issued and outstanding		—			—
Common stock, $0.01 par value per share (See Note 11 - Equity)		48			18
Additional paid-in capital		91,481			31,367
Accumulated deficit		(480	)		(815	)
Total stockholders' equity		91,049			30,570
Non-controlling interest attributable to ARIS OP unitholders		98,225			97,721
Total equity		189,274			128,291
Total liabilities and equity	$	199,009		$	136,589


	Three Months Ended March 31, 2023			For the Period February 18, 2022 (date of initial capitalization) through March 31, 2022
Cash flows from operating activities
Net income	$	683		$	—
Adjustments to reconcile net loss to net cash provided by operating activities:
Management fee		234
Depreciation and amortization		283
Straight line rent amortization		(651	)
Changes in assets and liabilities:
Other assets		(266	)		—
Due to affiliates		1,270			—
Other liabilities		102			—
Net cash provided by operating activities		1,655			—
Cash flows from investing activities:
Acquisitions of real estate		(44,214	)		—
Origination and acquisition of real estate debt		(58,675	)		—
Net cash used in investing activities		(102,889	)		—
Cash flows from financing activities:
Proceeds from issuance of common stock		60,150			200
Contributions from non-controlling interests		—			—
Offering costs paid		(18	)		—
Net cash provided by financing activities		60,132			200
Net change in cash and cash equivalents		(41,102	)		200
Cash and cash equivalents, beginning of period		131,589			—
Cash and cash equivalents, end of period	$	90,487		$	200
Non-cash investing and financing activities
Accrued offering costs due to affiliate	$	(65	)	$	—


	March 31, 2023
Building and building improvements	$	40,495
Land and land improvements		1,492
Total		41,987
Accumulated depreciation		(186	)
Investment in real estate, net	$	41,801

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company


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


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


	Three Months Ended March 31, 2023		For the Period February 18, 2022 (date of initial capitalization) through March 31, 2022
Revenues
Rental revenue	$	993	$	—
Total revenues		993		—
Expenses
Rental property operating	$	92	$	—
General and administrative		1,105		—
Management fee		399		—
Depreciation and amortization		283		—
Total expenses	$	1,879	$	—
Other income
Income from investments in real estate debt		735		—
Other income		834		—
Total other income		1,569		—
Net Income	$	683	$	—
Net income attributable to non-controlling interests in ARIS OP	$	348	$	—
Net income attributable to ARIS stockholders	$	335	$	—
Net income per share of common stock, basic and diluted	$	0.10	$	—
Weighted-average shares of common stock outstanding, basic and diluted		3,248,791		—


	Common Stock
	Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity			Non-Controlling Interest		Total Equity

Balance at December 31, 2022		1,824	$	18	$	31,367		$	(815	)	$	30,570		$	97,721	$	128,291
Common stock issued		3,006		30		60,197			—			60,227			—		60,227
Offering costs		—		—		(83	)		—			(83	)		—		(83	)
Contributions from non-controlling interest		—		—		—			—			—			156		156
Net income		—		—		—			335			335			348		683
Balance at March 31, 2023		4,830	$	48	$	91,481		$	(480	)	$	91,049		$	98,225	$	189,274


	Common Stock
	Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity			Non-Controlling Interest		Total Equity
February 18, 2022 (date of initial capitalization)		10	$	—	$	200		$	—		$	200		$	—	$	200
Net income		—		—		—			—			—			—		—
Balance at March 31, 2022		10	$	—	$	200		$	—		$	200		$	—	$	200


	March 31, 2023		December 31, 2022
Real estate intangibles, net	$	7,128	$	—
Straight-line rent receivable		651		—
Interest receivable		184		—
Deposits		—		5,000
Other		83		—
Total	$	8,046	$	5,000


	Three Months Ended March 31,
	2023
Fixed lease payments	$	904
Variable lease payments		91
Lease Revenue	$	995
Above-market lease amortization		(2	)
Rental Revenue	$	993


Year	Future Minimum Rents
2023 (remaining)	$	2,268
2024		3,106
2025		3,207
2026		3,311
2027		3,419
2028		3,530
Thereafter		38,192
Total	$	57,033


	March 31, 2023
Accounts payable and accrued expenses	$	34
Real estate taxes payable		68
Total	$	102


Commercial Mortgage Loan Portfolio
#	Property Type	Number of Positions		Coupon	Maturity Date	Cost Basis		Fair Value
1	Industrial		1	SOFR+4.00%	March 7, 2026	$	30,405	$	30,405
2	Multifamily		1	SOFR+4.35%	October 1, 2024	$	28,270	$	28,270


	Apollo Realty Income Solutions, Inc.

May 10, 2023	By:	/s/ Philip Mintz
		Philip Mintz
		Co-President, Co-Chief Executive Officer and Director
		(Co-Principal Executive Officer)

May 10, 2023	By:	/s/Randy Anderson
		Randy Anderson
		Co-President, Co-Chief Executive Officer and Director
		(Co-Principal Executive Officer)

May 10, 2023	By:	/s/ John Calace
		John Calace Chief Financial Officer, Treasurer and Secretary
		(Principal Financial Officer and Principal Accounting Officer)


	Three Months Ended March 31, 2023		Three Months Ended December 31, 2022
Revenues
Rental revenue	$	993	$	—
Total revenues		993		—
Expenses
Rental property operating	$	92	$	—
General and administrative		1,105		1,678
Organization expenses		—		1,487
Management fee		399		—
Depreciation and amortization		283		—
Total expenses	$	1,879	$	3,165
Other income
Income from investments in real estate debt		735		—
Other income		834		114
Total other income		1,569		114
Net income (loss)	$	683	$	(3,051	)


Components of NAV	March 31, 2023
Investments in real estate	$	49,214
Investments in real estate debt		58,675
Cash		90,487
Other assets		267
Other liabilities		(102	)
Management fee payable		(165	)
Net asset value	$	198,376
Number of outstanding shares/units		9,838


NAV Per Share/Unit	Class F-I Shares		Class E Shares		Third-party Operating Partnership Class A-I Units(1)		Third-party Operating Partnership Class E Units(1)		Total
Net asset value	$	97,288	$	78	$	100,853	$	157	$	198,376
Number of outstanding shares/units		4,826		4		5,000		8		9,838
NAV per share/unit as of March 31, 2023	$	20.16	$	20.18	$	20.17	$	20.18


Reconciliation of Stockholders' Equity to NAV	March 31, 2023
Stockholders' equity under U.S. GAAP	$	189,274
Adjustments:
Advanced organization and offering costs and advanced operating expenses		9,468
Accumulated depreciation and amortization		(366	)
NAV	$	198,376


	Class F-I Shares
Offering proceeds:
Shares sold		4,826
Gross offering proceeds	$	96,625
Selling commissions and dealer manager fees		—
Accrued stockholder servicing fees		—
Net offering proceeds	$	96,625


Exhibit Number		Description
3.1		Third Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Registrant's Quarterly Current Report on Form 8-K filed on December 23, 2022)
3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form S-11 as filed by the Registrant with the Securities and Exchange Commission on June 7, 2022)


4.1		Amended and Restated Share Repurchase Plan (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on November 29, 2022)
4.2		Amended and Restated Distribution Reinvestment Plan (incorporated by reference to Exhibit 4.2 to the Registrant's Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form S-11, as Filed by the Registrant with the Securities and Exchange Commission on April 7, 2023)
4.3		Form of Subscription Agreements
10.1		Second Amended and Restated Advisory Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on February 21, 2023)
10.2		Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.6 to the Registrant's Annual Report on Form 10-K filed on March 10, 2023)
10.3		Trademark License Agreement (filed as Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q filed on August, 10, 2022 and incorporated herein by reference)
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officers and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*		Inline XBRL Taxonomy Extension Schema
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase
104*		Cover Page Interactive Data File (embedded with the Inline XBRL document)

*		Filed herewith