Wellings Real Estate Income Fund: 2025 Annual Report Deep Dive

Wellings Real Estate Income Fund (“WREIF” or “the Fund”) is a Delaware statutory trust structured as an externally managed, non-diversified closed-end management investment company. Having elected Business Development Company (BDC) status under the Investment Company Act of 1940, it invests primarily in private commercial real estate through equity positions in special-purpose entities (LLCs and LPs) across five main asset classes:

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• Manufactured housing communities (MHCs)
• Self-storage facilities
• Industrial real estate
• Recreational vehicle (RV) parks
• Multifamily residences

Adviser Wellings Capital Management, LLC, a registered investment adviser, manages the Fund’s day-to-day operations. The Adviser’s leadership includes Paul Moore (CEO) and Benjamin Kahle (COO).

Investment Objectives WREIF seeks to:

1. Preserve investors’ capital
2. Make regular distributions
3. Realize income and appreciation

To qualify as a BDC, at least 70% of total assets must be investment-grade portfolio company securities as defined by the 1940 Act; WREIF targets 80% in real estate and real estate-related assets.

Portfolio Highlights (As of March 31, 2025)

Category	Cost	Fair Value	% of Total Net Assets
Common equity & LP/LLC interests	$32.06M	$37.50M	39.1%
Preferred equity & LP/LLC interests	$40.80M	$41.78M	43.6%
Short-term investments	$18.40M	$18.40M	19.2%
Total	$91.26M	$97.68M	102.0%

Largest Positions

• Crystal View Capital Fund IV, L.P. (Self-storage & MHC JV, $16.25M fair value)
• AE WC Odessa Holdco LLC (Multifamily preferred, $12.49M)
• Fairbridge Credit LLC (Multifamily preferred, $5.02M)
• Riparian Baltimore SFR Investors I LLC (Single-family equity, $5.36M)

Recent Additions

• AE WC Odessa Holdco LLC (11/2024), $12.49M
• SROA Capital Fund VIII Co-Investment (9/2024), $1.34M

Financial Results (Fiscal Year Ended March 31, 2025)

Income

• Total investment income: $5.68M (2024: $3.52M)
• Dividend & fee income: $4.88M to WREIF’s equity positions
• Interest income (short-term instruments): $0.80M

Expenses

• Total operating expenses: $2.82M (2024: $2.31M)
• Management fee (1.25% of invested capital): $0.68M
• Incentive fee (20% of net investment income beyond 10% annual hurdle): $0.68M
• Professional, administrative, and board fees: $1.47M

Net Investment Income

• 2025: $2.86M
• 2024: $1.21M (138% YoY growth)

Unrealized Appreciation

• +$3.42M in net unrealized gains

Net Change in Net Assets

• +$6.28M (2024: +$3.99M)
• NAV per share: $1,053.01 (2024: $1,024.87)
• Shares outstanding: 78,500 (2024: 57,585)

Cash Flows & Capital Activity

• Net cash used in operations: $30.49M
• Proceeds from share sales: $19.76M
• Capital contributions: $19.76M
• Distributions issued: $2.03M
• Distribution reinvestment: $1.48M
• Net assets rose from $59.02M to $82.66M (WREIF only)
• Non-controlling interests in two consolidated subsidiaries: $13.12M

Distribution Policy

WREIF targets a 5–8% annual distribution yield, payable monthly, funded by income from portfolio positions. The Fund offer s a RIPor reinvestment. Distributions are determined solely by the Board and may be paid from sources other than operating income, including offering proceeds or borrowings.

Fee Structure

• Management Fee: 1.25% of invested capital, payable monthly
• Incentive Fee: 20% of net investment income above a 10% annual hurdle + 20% of cumulative realized gains

Total expense ratio was ~2.8% (excluding incentive fees on unrealized gains).

Liquidity & Capital Raising

• Shares offered in a continuous private placement to accredited investors, minimum $50K subscription
• Potential liquidity via Board-approved hapter of a “Liquidity Event”under at a future date
• No public secondary market—Suitability restricted to long-term investors

Risks & Considerations

1. Limited track record as a BDC; Adviser has no prior BDC management history
2. Concentrated portfolio—Higher volatility and less diversification
3. Illiquidity—Private investments lack secondary markets
4. High fees—Combined management and incentive fees may reduce net returns
5. Valuation uncertainty—Valuations based on Level 3 inputs and Adviserstimates
6. Subscription & distribution risks—Reliance on further capital raises and ability to pay distributions
7. Regulatory constraints—1940 Act restrictions on affiliate transactions, leverage (70% qualifying asset test)

Outlook

WREIF has grown assets from $200K at inception to $95.78M including consolidated subsidiaries. With a diversified mix of real estate assets and targeted value-add strategy, WREIF seeks stable cash distributions and NAV appreciation. However, investors must accept illiquidity, private market valuation risks, and the Adviseree structure.

To learn more: Read the full review and analysis of Wellings Real Estate Income FundY 2025 10-K —Click here ➡️