# EDGAR Filing Document

**Accession Number:** 0002066337
**File Stem:** 0001999371-26-010741
**Filing Date:** 2026-5
**Character Count:** 117704
**Document Hash:** 49aeec77acef517a454e6cb1a53bc21d
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001999371-26-010741.hdr.sgml**: 20260514

**ACCESSION NUMBER**: 0001999371-26-010741

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 59

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260514

**DATE AS OF CHANGE**: 20260514

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CNL Strategic Residential Credit, Inc.
- **CENTRAL INDEX KEY:** 0002066337
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE INVESTMENT TRUSTS [6798]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 333001463
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-56755
- **FILM NUMBER:** 26979825

**BUSINESS ADDRESS:**
- **STREET 1:** 450 SOUTH ORANGE AVE
- **STREET 2:** SUITE 1400
- **CITY:** ORLANDO
- **STATE:** FL
- **ZIP:** 32801
- **BUSINESS PHONE:** 4076501000

**MAIL ADDRESS:**
- **STREET 1:** 450 SOUTH ORANGE AVE
- **STREET 2:** SUITE 1400
- **CITY:** ORLANDO
- **STATE:** FL
- **ZIP:** 32801

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

---

| | |
|:---|:---|
| **FORM 10-Q** | **FORM 10-Q** |
| ☒ | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

**For the quarterly period ended March 31, 2026**

 **OR**

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

**For the transition period from ______ to ______**

**Commission file number: 000-56755**

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**<br> **(Exact name of registrant as specified in its charter)**<br>

---

| | |
|:---|:---|
| **Maryland** | **33-3001463** |
| **(State or other jurisdiction of**<br> **incorporation or organization)**<br>| **(I.R.S. Employer**<br> **Identification No.)**<br>|
| **CNL Center at City Commons**<br> **450 South Orange Avenue, Ste 1400**<br> **Orlando, Florida**<br>| **32801** |
| **(Address of principal executive offices)** | **(Zip Code)** |
| **Registrant's telephone number, including area code (407) 650-1000** | **Registrant's telephone number, including area code (407) 650-1000** |

---

**Securities registered pursuant to Section 12(b) of the Act:**

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| N/A | N/A | N/A |

---

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, a 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.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☒

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 11, 2026, the Company had 966,038 Class E shares and 47,392 Class FA shares.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**INDEX**

---

| | | |
|:---|:---|:---|
|  |  | Page |
| [PART I.](#rcred10qa001) | [FINANCIAL INFORMATION](#rcred10qa001) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1.](#rcred10qa002) | [Financial Statements](#rcred10qa002) |  |
|  | [Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025](#rcred10qa003) | 2 |
|  | [Consolidated Statement of Operations for the Three Months Ended March 31, 2026 (unaudited)](#rcred10qa004) | 3 |
|  | [Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2026 and the period from January 21, 2025 (date of formation) to March 31, 2025 (unaudited)](#rcred10qa005) | 4 |
|  | [Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2026 (unaudited)](#rcred10qa006) | 5 |
|  | [Notes to Consolidated Financial Statements (unaudited)](#rcred10qa007) | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 2.](#rcred10qa008) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#rcred10qa008) | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 3.](#rcred10qa009) | [Quantitative and Qualitative Disclosures About Market Risk](#rcred10qa009) | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 4.](#rcred10qa010) | [Controls and Procedures](#rcred10qa010) | 27 |
| [PART II.](#rcred10qa011) | [OTHER INFORMATION](#rcred10qa011) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1.](#rcred10qa012) | [Legal Proceedings](#rcred10qa012) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1A.](#rcred10qa013) | [Risk Factors](#rcred10qa013) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 2.](#rcred10qa014) | [Unregistered Sales of Equity Securities and Use of Proceeds](#rcred10qa014) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 3.](#rcred10qa015) | [Defaults Upon Senior Securities](#rcred10qa015) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 4.](#rcred10qa016) | [Mine Safety Disclosures](#rcred10qa016) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 5.](#rcred10qa017) | [Other Information](#rcred10qa018) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 6.](#rcred10qa019) | [Exhibits](#rcred10qa019) | 28 |
| [Exhibit Index](#rcred10qa020) |  | 29 |
| [Signatures](#rcred10qa021) |  | 31 |

---

**PART I. FINANCIAL INFORMATION**

**Item 1. FINANCIAL STATEMENTS**

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

 **CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **March 31, <br> 2026<br> (unaudited)** | **December 31,<br> 2025** |
| **ASSETS** |  |  |
| Residential mortgage loans - at fair value | $27422517 | $— |
| Preferred equity and other - at fair value | 6555211 |  |
| Cash | 6504898 | 203272 |
| Restricted cash | 5000000 |  |
| Receivables | 340212 | 66 |
| Deferred financing costs | 51600 | 68487 |
| Prepaids and other assets | 144636 |  |
| Due from related parties | 1130308 |  |
| &nbsp;&nbsp;&nbsp;Total assets | $47149382 | $271825 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| Liabilities: |  |  |
| Repurchase agreement, net of deferred financing costs of $412,331 (Note 4) | $21627313 | $— |
| Accounts payable and accrued liabilities | 639391 | 68675 |
| &nbsp;&nbsp;&nbsp;Total liabilities | 22266704 | 68675 |
| Commitments and contingencies (Note 8) |  |  |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock, $0.001 par value, 100,000,000 shares authorized and unissued |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.001 par value per share (Note 9) | 998 | 8 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital, in excess of par | 24940188 | 199992 |
| &nbsp;&nbsp;&nbsp;(Accumulated deficit) retained earnings | (58508) | 3150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 24882678 | 203150 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $47149382 | $271825 |

---

See accompanying notes to consolidated financial statements.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

 **CONSOLIDATED STATEMENT OF OPERATIONS**

**(UNAUDITED)**

---

| | |
|:---|:---|
|  | **Three Months Ended <br> March 31,**<br>**2026** |
| **Interest Income, net:** |  |
| &nbsp;&nbsp;&nbsp;Interest income | 225560 |
| &nbsp;&nbsp;&nbsp;Interest expense | 161696 |
| **Net Interest Income** | 63864 |
| **Other Income/(Loss), net:** |  |
| &nbsp;&nbsp;&nbsp;Distribution income | 240560 |
| &nbsp;&nbsp;&nbsp;Unrealized loss on residential mortgage loans, preferred equity and other and derivatives | (61658) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Other Income/(Loss), net** | 178902 |
| **Operating Expenses:** |  |
| &nbsp;&nbsp;&nbsp;Professional services | 547294 |
| &nbsp;&nbsp;&nbsp;Investment expenses | 142257 |
| &nbsp;&nbsp;&nbsp;Director fees and expenses | 125995 |
| &nbsp;&nbsp;&nbsp;General and administrative | 37157 |
| &nbsp;&nbsp;&nbsp;Custodian fees | 8237 |
| &nbsp;&nbsp;&nbsp;Other expenses | 3570 |
| &nbsp;&nbsp;&nbsp;Organization expense | 1836 |
| &nbsp;&nbsp;&nbsp;Base management fees | 1448 |
| &nbsp;&nbsp;&nbsp;Total return incentive fees | 792 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Operating Expenses** | 868586 |
| Expense support | 892239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Operating Expenses** | (23653) |
| Income tax expense |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Income** | $266419 |
| **Earnings per common share** | $0.40 |
| **Weighted average number of shares of common stock outstanding (basic and diluted)** | 667982 |

---

See accompanying notes to consolidated financial statements.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY**

**(UNAUDITED)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | **Total**<br> **Stockholders'<br>Equity** |
|  | **Number**<br> **of Shares**  | **Par**<br> **Value** | <br>**Additional Paid-In<br> Capital** | <br>**Accumulated Deficit** | **Total**<br> **Stockholders'<br>Equity** |
| Balance as of January 1, 2026 | 8000 | $8 | $199992 | $3150 | $203150 |
| Net income |  |  |  | 266419 | 266419 |
| Issuance of common stock | 989967 | 990 | 24744960 |  | 24745950 |
| Distributions declared<sup>(1)</sup> |  |  |  | (328077) | (328077) |
| Offering costs |  |  | (4764) |  | (4764) |
| Balance at March 31, 2026 | 997967 | $998 | $24940188 | $(58508) | $24882678 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | **Total**<br> **Stockholders'<br> Equity** |
|  | **Number**<br> **of Shares**  | **Par**<br> **Value** | <br>**Additional Paid-In<br> Capital** | <br>**Accumulated Deficit** | **Total**<br> **Stockholders'<br> Equity** |
| Balance as of January 21, 2025 |  | $— | $— | $— | $— |
| Net income |  |  |  |  |  |
| Issuance of common stock | 8000 | 8 | 199992 |  | 200000 |
| Balance as of March 31, 2025 | 8000 | $8 | $199992 | $— | $200000 |

---

**FOOTNOTES:**

<sup>(1)</sup> Distributions declared for the quarter ended March 31, 2026 at $0.17 per share of Class E common stock (the "Class E shares") and Class FA common stock (the "Class FA shares") on February 25, 2026 and March 26, 2026.

See accompanying notes to consolidated financial statements.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

 **CONSOLIDATED STATEMENT OF CASH FLOWS**

**(UNAUDITED)**

---

| | |
|:---|:---|
|  | **Three Months Ended <br> March 31, <br> 2026** |
| **Operating Activities:** |  |
| Net income | $266419 |
| Adjustments to reconcile net income to net cash used in operating activities: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net amortization of discounts on mortgage loans | (1386) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net unrealized loss on mortgage loans, preferred equity and other and derivative contracts | 61658 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred financing costs | 54428 |
| Net change in: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in receivables | (580706) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in prepaid and other assets | (13125) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in due from related parties | (1132927) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in accounts payable and accrued liabilities | 368930 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (976709) |
| **Investing Activities:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of residential mortgage loans | (23406962) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from residential mortgage loans | 193598 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of preferred equity and other | (6614984) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distribution income from preferred equity and other | 240560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (29587788) |
| **Financing Activities:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock | 24745950 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions paid | (328077) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Principal payments on repurchase agreement | (162046) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowings under line of credit | 6700000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of line of credit | (6700000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from investments sold under agreement to repurchase | 17860527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred financing costs | (248086) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Offering costs paid in connection with issuance of common stock | (2145) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 41866123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net increase in cash and restricted cash | 11301626 |
| Cash and restricted cash, beginning of period | 203272 |
| Cash and restricted cash, end of period | $11504898 |
| Supplemental disclosure of cash flow information and non-cash investing activities: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $27982 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Securities subject to repurchase agreement | $4341163 |
| Amounts incurred but not paid (including amounts due to related parties): |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued but unpaid organization and offering costs | $(3327) |

---

See accompanying notes to consolidated financial statements.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

**1.** **Organization** 

CNL Strategic Residential Credit, Inc. (the "Company") is a Maryland corporation formed on January 21, 2025. The Company and its subsidiaries are externally managed by CNL Residential Credit Manager, LLC, (the "Advisor"), an affiliate of CNL Financial Group, LLC, and by Balbec Capital Management, L.P. (the "Sub-Advisor" and together with the Advisor, the "Advisors"), an affiliate of Balbec Capital, L.P. The Advisors are registered as investment advisers under the Investment Advisors Act of 1940, as amended.

The Company has entered into an advisory agreement (as the same may be amended or restated from time to time, the "Advisory Agreement") with the Advisor, pursuant to which the Advisor is responsible for the overall management of the Company's activities. The Company has also entered into an administrative services agreement (as the same may be amended or restated from time to time, the "Administrative Services Agreement") with the Advisor, pursuant to which the Advisor will provide administrative services to the Company. The Company and the Advisor have entered into a sub-advisory agreement (as the same may be amended or restated from time to time, the "Sub-Advisory Agreement") with the Sub-Advisor, pursuant to which the Sub-Advisor is responsible for the day-to-day management of the Company's assets.

The Company's investment strategy is to acquire, finance and manage a diversified portfolio of primarily U.S. performing and re-performing whole loan mortgages, mortgage servicing rights ("MSRs") and residential mortgage-backed securities ("RMBS").

On March 26, 2025 (date of capitalization), the Company was capitalized with investments of $100,000 by the Advisor and $100,000 by an affiliate of the Sub-Advisor.

In September 2025, the Company commenced a private offering of its shares of common stock in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), to investors who are accredited investors (as defined in Regulation D under the Securities Act) (the "Private Offering"). On January 29, 2026, the Company held an initial closing for Class E shares and Class FA shares in the Private Offering. As of March 31, 2026, the Company has raised aggregate gross proceeds of approximately $24,745,950 in the Private Offering.

**2.** **Summary of Significant Accounting Policies** 

***Basis of Presentation and Consolidation***

The accompanying financial statements have been prepared in accordance with principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company.

The consolidated financial statements of the Company include the direct wholly owned subsidiaries that were formed to facilitate the Company's investment strategy. All intercompany accounts and transactions have been eliminated. In addition, the Company consolidates entities established to facilitate transactions related to the acquisition and securitization of residential whole loans.

The Company consolidates all entities in which it has a controlling financial interest through majority ownership or voting rights and variable interest entities for which it 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, it considers whether the entity is a variable interest entity ("VIE") and whether the Company is the primary beneficiary. The Company is the primary beneficiary of a VIE when it has (i) the power to direct the most significant activities impacting the economic performance of the VIE and (ii) the obligation to absorb losses or receive benefits significant to the VIE. Entities that do not qualify as VIEs are generally considered voting interest entities ("VOEs") and are evaluated for consolidation under the voting interest model. VOEs are consolidated when the Company controls the entity through a majority voting interest or other means.

***Use of Estimates***

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods and the disclosure of contingent liabilities.

***Cash and Restricted Cash***

Cash consists of cash on deposit with financial institutions. The Company deposits its cash with highly-rated banking corporations and, at times, cash deposits may exceed the insured limits under applicable law.

There was approximately $5,000,000 in restricted cash as of March 31, 2026. Restricted cash represents the cash liquidity requirement of the Company (as guarantor) under the master repurchase agreement (together with the related transaction documents, the "Repurchase Agreement") entered into by RCRED Craftsman Administrator, LLC ("Craftsman"), an indirect, wholly-owned special-purpose subsidiary of the Company, with Goldman Sachs Bank USA ("Goldman Sachs").

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

***Fair Value Measurements***

The Company reports various investments at fair value in accordance with Accounting Standards Codification ("ASC") 820, *Fair Value Measurement*. A fair value measurement represents the price at which an orderly transaction would occur between willing market participants at the measurement date. This definition of fair value focuses on exit price and prioritizes the use of market-based inputs over entity-specific inputs when determining fair value. In addition, the framework for measuring fair value establishes a three-level hierarchy for fair value measurements based upon the observability of inputs to the valuation of an asset or liability as of the measurement date. See Note 7, *Fair Value Measurements f*or further discussion on fair value measurements*.*

 

The Company accounts for any purchases or sales of investments on a trade date basis. At the time of disposition, realized gains or losses on sales of investment are determined based on a specific identification basis and will be recorded as a component of "Realized gain (loss) on residential mortgage loans, preferred equity and other and derivatives" in the consolidated statements of operations.

*Residential Mortgage Loans and Preferred Equity and Other, at Fair Value*

 ****

The Company's investments in residential mortgage loans and preferred equity and other are recorded using the fair value option in ASC Topic 825 - *Financial Instruments*, and therefore recorded at fair value in the consolidated balance sheets. Changes in fair value are reported in "Unrealized loss on residential mortgage loans, preferred equity and other and derivatives" in the consolidated statements of operations.

*Derivative Financial Instruments, at Fair Value*

The Company uses interest rate future derivative instruments to economically hedge a portion of its exposure to market risks, including interest rate risk. Derivatives are accounted for in accordance with ASC 815, *Derivatives and Hedging*, which requires recognition of all derivatives as either assets or liabilities at fair value on the consolidated balance sheets. These derivative financial instrument contracts are not designated as hedges for U.S. GAAP purposes; therefore, all changes in fair value are reported in "Unrealized loss on residential mortgage loans, preferred equity and other and derivatives" in the consolidated statements of operations. See Note 5, *Derivative Financial Instruments* for further information.

***Revenue Recognition***

*Residential Mortgage Loans*

 

Interest income on residential mortgage loans is recognized using the effective interest method over the life of the loans. Interest income recognition is suspended when residential mortgage loans are placed on non-accrual status. Generally, residential mortgage loans and commercial mortgage loans are placed on non-accrual status when delinquent for more than ninety (90) days or when determined not to be probable of full collection. Interest accrued, but not collected, at the date residential mortgage loans are placed on non-accrual status is reversed against interest income and subsequently recognized only to the extent it is received in cash or until it qualifies for return to accrual status. Interest received after the loan becomes past due or impaired is used to reduce the outstanding loan principal balance.

*Preferred Equity and Other*

Distribution income from preferred equity and other is recognized when earned.

*Cash*

Interest income on money market and Insured Cash Sweep accounts is recorded on an accrual basis to the extent that the Company earns interest on cash deposited.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

***Organization and Offering Expenses***

The Advisor and Sub-Advisor have agreed to advance organization and offering expenses associated with one or more of the Company's offerings, including its Private Offering (including legal, accounting, and other expenses attributable to the organization, but excluding upfront selling commissions, dealer manager fees and shareholder servicing fees). Organization and offering expenses are recorded to the accompanying balance sheets only to the extent the Company receives gross proceeds and they do not exceed 1.5% of the cumulative gross proceeds from its offerings.

When recorded by the Company, organizational expenses are expensed as incurred, and offering expenses are charged to shareholders' equity as incurred. Any amount due to the Advisor but not paid are recognized as a liability on the balance sheet.

See Note 7, *Related Party Arrangements* for further information.

***Repurchase Agreement***

At times, the Company finances purchases of residential mortgage loans through the use of a repurchase agreement. The repurchase agreement is treated as collateralized financing transactions, which expire within approximately two years or less and are carried at their contractual amounts. Interest paid and accrued in accordance with repurchase agreements is recorded as interest expense.

***Deferred Financing Costs***

 ****

Financing costs, including upfront fees, commitment fees and legal fees related to borrowings (as further described in Note 4, *Financing Arrangements*) are deferred and amortized over the life of the related financing arrangement using the effective yield method. The amortization of deferred financing costs is included in interest expense in the Company's consolidated statements of operations.

***Net Income (Loss) Per Share***

Basic net income (loss) per common share is determined by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

***Distributions***

The Company's board of directors has declared and intends to continue to declare distributions based on monthly record dates. The Company's distributions are paid in the same month as the declared record date. Distributions are made on all classes of the Company's shares at the same time.

The Company has adopted a distribution reinvestment plan that provides for reinvestment of distributions on behalf of stockholders at the stockholders' election for all share classes except for Class E.

***Income Taxes***

Prior to January 1, 2026, the Company was subject to U.S. federal and state income taxes as a taxable corporation. The Company intends to elect to be taxed as a REIT under the Internal Revenue Code commencing with its taxable year ending December 31, 2026 and generally will not be subject to U.S. federal corporate income taxes on its taxable income to the extent it annually distributes its net taxable income to its stockholders and maintains its qualification as a REIT.

In connection with that election, RCRED TRS Holding, Inc. ("TRS"), a wholly owned corporate subsidiary organized in 2025 elected taxable REIT subsidiary status effective January 1, 2026. TRS is subject to U.S. federal, state and local income taxes. Accordingly, beginning in 2026, the Company's income tax provision will primarily relate to taxes incurred by TRS and certain state and local taxes. No tax provision was recognized for the three months ended March 31, 2026 due to minimal operations resulting in an immaterial tax expense.

The Company has not yet filed its initial tax return.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

***Risks and Uncertainties***

The Company's investment activities expose it to various types of risks that are associated with the financial instruments in which it invests. The significant types of financial risks to which the Company is exposed to include, but are not limited to credit risk, interest risk, liquidity risk and prepayment risk. Certain aspects of those risks are addressed below.

 

*Credit Risk*

 ****

Investment portfolios with debt instruments are subject to credit risk. Financial strength and solvency of a debtor influence credit risk. In addition, lack or inadequacy of collateral or credit enhancement for a debt instrument may affect its credit risk. Credit risk may change over the life of an instrument.

*Interest Rate Risk*

The Company is subject to interest rate risk, and typically the value of interest bearing securities (residential mortgage loans) will change inversely with changes in interest rates. As interest rates rise, the market value of fixed income securities tends to decrease and vice versa.

Subject to maintaining its qualification as a REIT and maintaining its exclusion from regulation as an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), the Company may utilize various derivative instruments and other hedging instruments to mitigate interest rate risk.

*Liquidity Risk*

 

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities or contingent liabilities. Among other things liquidity could be impaired by an inability to access secured and unsecured sources of financing or selling.

*Prepayment Risk*

The frequency at which prepayments occur on residential mortgage loans will be affected by a variety of factors including the prevailing level of interest rates as well as economic, demographic, tax, social, legal, and other factors. Generally, mortgage obligors tend to prepay their mortgages when prevailing mortgage rates fall below the interest rates on their mortgage loans. The adverse effects of prepayments may impact the Company in two ways. First, particular investments may experience outright losses, as in the case of an interest-only security in an environment of faster actual or anticipated prepayments. Second, particular investments may underperform relative to the financial instruments that the Company may have constructed to reduce specific financial risks for these investments, resulting in a loss to the Company.

***Segment Reporting***

Operating segments are defined as a component of a public entity that engages in business activities from which it may recognize revenues and incur expenses, has operating results that are regularly reviewed by the public entity's chief operating decision maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information available. The Company's CODM is its Chief Financial Officer. The Company has determined it currently operates in a single operating segment and has one reportable segment, which is to acquire, invest in, and finance mortgage-related assets. The CODM reviews net income on its portfolio of residential mortgage loans, residential mortgage loans in securitization trusts, RMBS, and other assets as presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. Net income as used by the CODM in this context is consistent with that presented within the Company's consolidated financial statements. Segment assets are reflected on the accompanying Balance Sheet as "total assets" and significant segment expenses are listed on the accompanying statement of operations.

***Recently Issued Accounting Standards Updates***

 ****

In November 2024, the FASB issued ASU 2024-03, *Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses* (or "ASU 2024-03"). The amendments in ASU 2024-03 primarily require entities to disclose additional details regarding certain expenses on both an annual and interim basis. ASU 2024-03 is effective for public business entities for fiscal years beginning after December 15, 2026. Early adoption is permitted. The Company does not expect that the adoption of ASU 2024-03 will have a significant impact on its consolidated financial statement disclosures.

**3.** **Residential Mortgage Loans - at Fair Value** 

Residential mortgage loans are measured at fair value. The following table sets forth the cost, unpaid principal balance, net premium on mortgage loans purchased, fair value, weighted average interest rate and weighted average remaining contractual maturity of the Company's residential mortgage loan portfolio as of March 31, 2026:

---

| | |
|:---|:---|
|  | **March 31, <br> 2026** |
| Cost | $27748125 |
| Unpaid principal balance | $27856676 |
| Net discount on mortgage loans purchased | (300763) |
| Change in fair value | (133396) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair Value | $27422517 |
| Weighted average interest rate | 6.72% |
| Weighted average remaining contractual maturity (years) | 29.1 |

---

**4.** **Financing Arrangements** 

*Line of Credit*

 

On December 31, 2025, the Company and Valley National Bank, a Tennessee banking corporation, (referred to as "Valley National Bank") entered into a loan and security agreement (the "Loan Agreement") for a revolving line of credit (the "Line of Credit") for up to $15,000,000, subject to the Company's available borrowing base. The available borrowing base will be equal to 100% of the amount held with the Company's escrow agent, UMB Bank, N.A. The Company is required to pay interest on any borrowed amounts under the Line of Credit at a rate per year equal to the term secured overnight financing rate plus 2.75%.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

Advances under the Line of Credit shall be repaid upon the earlier of the following: (i) 90 days from the date such advance was made and (ii) the Line of Credit maturity date. Unless extended, the Line of Credit has a maturity date of December 31, 2026. In connection with the Line of Credit, the Company paid a commitment fee to Valley National Bank of $37,500 plus the payment of Valley National Bank's expenses associated with the Line of Credit of $31,175 in January 2026. The unamortized commitment fee and deferred costs are included in "Deferred financing cost, net" in the Company's consolidated balance sheets as of March 31, 2026.

The Company may prepay, without penalty, all or any part of the borrowings under the Loan Agreement at any time. Under the Loan Agreement, the Company is required to comply with certain covenants including the requirement to provide certain financial and compliance reports to Valley National Bank. As described in the Loan Agreement, the Company is required to maintain cash accounts with Valley National Bank, including to repay outstanding borrowings with proceeds from the Company's offering as they are swept at the end of the month, as a pledge of collateral to pay down the outstanding debt to the extent there are any borrowings outstanding under the Loan Agreement.

The Company had borrowed and repaid $6,700,000 under the Line of Credit for the period ended March 31, 2026. No amounts under the Line of Credit were outstanding as of March 31, 2026. No cash collateral was pledged as of March 31, 2026.

*Repurchase Agreement*

On January 30, 2026, Craftsman, an indirect, wholly-owned special-purpose financing subsidiary of the Company, entered into the "Repurchase Agreement", with Goldman Sachs, to finance the acquisition by Craftsman of eligible loans as more particularly described in the Repurchase Agreement. The Repurchase Agreement provides for asset purchases by Goldman Sachs for a maximum amount of up to $400 million. Advances under the Repurchase Agreement accrue interest at a per annum rate equal to the Term SOFR (as defined in the Repurchase Agreement) plus a price differential margin as agreed upon by Goldman Sachs and Craftsman for each transaction. The maturity date of the facility is January 30, 2028, unless extended or earlier terminated in accordance with the terms of the Repurchase Agreement. In connection with the Repurchase Agreement, the Company provided a Guaranty (the "Guaranty"), which may become full recourse to the Company upon the occurrence of certain events as described in the Guaranty. The Repurchase Agreement and the Guaranty contain representations, warranties, covenants, events of default and indemnities that are customary for agreements of their type. The Guaranty requires that the Company's cash liquidity shall not at any time fall below (i) for the six months following January 30, 2026, $5,000,000 and (ii) thereafter, $10,000,000.

In connection with the Repurchase Agreement, the Company incurred legal fees in connection with the Repurchase Agreement of $449,872. The unamortized commitment fee and deferred costs are included in "Deferred financing cost, net" in the Company's consolidated balance sheets as of March 31, 2026.

Amounts available to be borrowed under the Repurchase Agreement are dependent upon the fair value of the securities pledged as collateral, which fluctuates with changes in interest rates, type of security and liquidity conditions within the bank, mortgage finance and real estate industries. If the fair value of the pledged securities declines, lenders will typically require the Company to post additional collateral or pay down borrowings to re-establish agreed upon collateral requirements ("margin calls"). If the fair value of the pledge securities increases, lenders may release collateral back to the Company. As of March 31, 2026, the Company had met all margin call requirements and was in compliance with all covenants.

The following table summarizes certain characteristics of the Repurchase Agreement as of March 31, 2026:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Asset Based Financing** | **Asset Based Financing** | | **Portfolio Pledged as Collateral** | **Portfolio Pledged as Collateral** | **Portfolio Pledged as Collateral** | **Portfolio Pledged as Collateral** |
|  | **Principal** | **Weighted Average Interest Rate** | <br>**Maturity Date** | **Collateral Type** | **Principal** | **Fair Value** | **Weighted Average Interest Rate** |
| Repurchase agreement | $22039644.00 | 5.53% (SOFR + 1.65% - 1.90%) | 1/30/2028 | Residential mortgage loans | $26607350.00 | $26191338.00 | 6.69% |

---

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

**5.** **Derivative Financial Instruments** 

The Company hedges a portion of its interest rate exposure by entering into interest rate futures contracts. Interest rate futures contracts are exchange-traded agreements that can be settled in cash based on interest rate movements at a future date. Due to the fact that interest rate futures contracts are exchange traded, there is minimal counterparty risk because the clearing house guarantees against default.

The unrealized gain or loss is equal to the value of the contract on the period-end date and changes to the value are recorded in net changes in unrealized gain or loss on investments in the consolidated statement of operations.

Notional amounts are the underlying reference amounts to indices or equities upon which the fair value of the derivative contracts traded by the Company are based. While notional amounts do not represent the current fair value and are not necessarily indicative of the future cash flows of the Company's derivative contracts, the underlying price changes in relation to the variables specified by the notional amounts affect the fair value of these derivative financial instruments.

The following table sets forth the derivative instruments presented on the consolidated balance sheet and notional amounts as of March 31, 2026:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Derivatives<br> Not <br> Designated as <br> Hedging <br> Instruments** | **Number of Contracts** | **Assets<sup>(1)</sup>** | **Liabilities** | **Short Exposure** |
| March 31, 2026 | Interest rate futures | 3 | $131511 | $– $– $| 25310000 |

---

The gains and losses arising from these derivative instruments in the consolidated statement of operations for the three months ended March 31, 2026 are set forth as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Derivatives Not Designated as <br> Hedging Instruments** | **Net Realized Gains (Losses) on Derivative Instruments** | **Net Change in Unrealized Appreciation (Depreciation) on Derivative Instruments<sup>(2)</sup>** |
| March 31, 2026 | Interest rate futures | $– $| 131511 |

---

**FOOTNOTES:**

<sup>(1)</sup> Amounts related to the interest rate futures held by the Company are recorded at fair value and included in prepaid and other assets in the accompanying consolidated balance sheets.

<sup>(2)</sup> Amounts related to the interest rate futures held by the Company are recorded at fair value and included in unrealized loss on investments, net in the accompanying consolidated statement of operations.

**6.** **Fair Value Measurement** 

*Definition and Hierarchy* 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable or unobservable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on
market data obtained from sources independent of the reporting entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Unobservable inputs are inputs that reflect the reporting entity's own assumptions.

 

A fair value hierarchy for inputs is implemented in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs are used when available. The availability of valuation techniques and the ability to attain observable inputs can vary from investment to investment and are affected by a wide variety of factors, including the type of investment, whether the investment is newly issued and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the transaction.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

The fair value hierarchy is categorized into three broad levels based on the inputs as follows:

 

*Level 1 -* Valuations based on unadjusted, quoted prices in active markets for identical assets and liabilities.

 

*Level 2 -* Valuations based on quoted prices in an inactive market, or whose values are based on models - but the inputs to those models are observable either directly or indirectly for substantially the full term of the assets and liabilities. Level 2 inputs include (i) quoted prices for similar assets in active markets; (ii) quoted prices for identical or similar assets in markets that are not active; (iii) inputs that are derived principally from or corroborated by observable market data by correlation or other means; and (iv) inputs other than quoted prices that are observable for the assets.

*Level 3* - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls are determined based on the lowest level of input that is significant to the fair value measurement. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. The availability of observable inputs is affected by a variety of factors. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each asset.

The Company's board of directors is responsible for determining in good faith the fair value of the Company's Level 3 investments in accordance with the Company's valuation policy and procedures approved by the board of directors, based on, among other factors, the input of the Advisor, the Sub-Advisor, the Company's audit committee, and independent third-party valuation firms. The determination of the fair value of the Company's Level 3 assets requires judgment, which include assets for which market prices are not available.

For most of the Company's assets, market prices will not be available. Due to the inherent uncertainty of determining the fair value of assets that do not have a readily available market value, the fair value of the assets may differ significantly from the values that would have been used had a readily available market value existed for such assets, and the differences could be material. Furthermore, through the valuation process, the Company's board of directors may determine that the fair value of the Company's Level 3 assets differs materially from the values that were provided by independent valuation firms.

For financial reporting purposes, the Company follows a fair value hierarchy established under GAAP that is used to determine the fair value of financial instruments. This hierarchy prioritizes relevant market inputs in order to determine an "exit price" at the measurement date, or the price at which an asset could be sold or a liability could be transferred in an orderly process that is not a forced liquidation or distressed sale. Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2 inputs are observable inputs other than quoted prices for an asset or liability that are obtained through corroboration with observable market data. Level 3 inputs are unobservable inputs (e.g., the Company's own data or assumptions) that are used when there is little, if any, relevant market activity for the asset or liability required to be measured at fair value.

In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured.

*Valuation Techniques and Inputs*

 

Following are descriptions of the valuation methodologies used to measure the Company's assets and liabilities measured at fair value:

 

*Residential Mortgage Loans* - The Company recognizes residential mortgage loans at fair value. Residential mortgage loans are initially reported at cost based on the purchase price when acquired. In subsequent periods, after reviewing actual results, the anticipated future cash flows are updated by the teams that monitor the investments and a discounted cash flow ("DCF") is performed using the applicable market discount rate as of the reporting date which is determined based on actual performance, recent transactions, and market conditions in each jurisdiction. Residential mortgage loans are categorized as Level 3 in the fair value hierarchy.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

*Preferred Equity and Other -* Where the Company holds an investment in the preferred equity and other of an unconsolidated special-purpose entity the preferred equity and other investment may be based on an evaluation of the net assets of the entity, whereby the assets and liabilities of the entity are valued based on each underlying investment with the entity, incorporating valuations that consider financing and sales transactions with third parties. Preferred equity and other is categorized as Level 3 in the fair value hierarchy.

*Futures Contracts* - Futures contracts that are traded on an exchange are valued at their last reported sales price as of the valuation date. Listed futures contracts are categorized in Level 1 of the fair value hierarchy.

The following table sets forth information about the Company's financial assets and liabilities measured at fair value as of March 31, 2026:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of March 31, 2026** | **As of March 31, 2026** | **As of March 31, 2026** | **As of March 31, 2026** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Assets, at fair value |  |  |  |  |
| Residential mortgage loans, at fair value | $— | $— | $27422517 | $27422517 |
| Preferred equity and other, at fair value |  |  | 6555211 | 6555211 |
| Other assets, at fair value<sup>(1)</sup> | 131511 |  |  | 131511 |
| Total assets, at fair value | $131511 | $— | $33977728 | $34109239 |

---

**FOOTNOTES:**

<sup>(1)</sup> Represents unrealized gain on interest futures contracts.

The following table provides a reconciliation of investments for which Level 3 inputs were used in determining fair value for the three months ended March 31, 2026:

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** |
|  | **Residential Mortgage Loans** | **Preferred Equity and Other** | **Total** |
| Fair value balance as of January 1, 2026 | $— | $— | $— |
| Additions | 27748125 | 6614984 | 34363109 |
| Discount amortization, net | 1386 |  | 1386 |
| Disposals | (193598) |  | (193598) |
| Net change in unrealized depreciation | (133396) | (59773) | (193169) |
| Fair value balance as of March 31, 2026 | $27422517 | $6555211 | $33977728 |

---

The ranges of unobservable inputs used in the fair value measurement of the Company's Level 3 investments as of March 31, 2026 were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **As of March 31, 2026** | **As of March 31, 2026** | **As of March 31, 2026** | **As of March 31, 2026** | **As of March 31, 2026** | **As of March 31, 2026** |
| **Investment** | **Fair Value** | **Principal Valuation Technique** | **Unobservable Inputs** | **Range of Input Values** | **Impact to<br> Valuation from <br> an Increase in <br> Input** |
| Residential mortgage loans, at fair value | $27422517 | Discounted Cash Flow | Discount Rate | 7.2% | Decrease |
|  |  |  | Expected Life | 4 years | Decrease |
| Preferred equity and other, at fair value | 6555211 | Discounted Cash Flow | Discount Rate | 9.0% | Decrease |
|  |  |  | Expected Life | 7.8 years | Decrease |
|  |  |  | Prepayment rate (CPR) | 6.4% | Decrease |
|  |  |  | Default Rate (CDR) | 0.1% | Decrease |
|  | $33977728 |  |  |  |  |

---

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

**7.** **Related Party Arrangements** 

***Equity Transactions***

On March 26, 2025, the Company was capitalized through the purchase by the Advisor of 4,000 Class E shares for an aggregate purchase price of $100,000 and by Balbec Capital Holdings, L.P. ("Balbec"), an affiliate of the Company's Sub-Advisor, of 4,000 Class E shares for an aggregate purchase price of $100,000. On January 29, 2026, the Company held an initial closing for its Private Offering. The initial closing included purchases of 96,000 Class E shares for an aggregate purchase price of $2.4 million from each of the Advisor and Balbec.

When recorded by the Company, operational expenses are expensed as incurred. Any amount due to the Advisor and Sub-Advisor but not paid are recognized as a liability on the balance sheet.

***Preferred Equity and Other Purchases***

 ****

In January 2026, the Company invested $6,614,984 in three special-purpose entities managed by Bungalow Residential, LLC or Bungalow Funding, LLC that acquire MSR participation interests for Federal Home Loan Mortgage Corporation mortgage loans for specified Servicing Concentration Risk ("SCR") pools in exchange for an upfront cash payment. Bungalow Residential, LLC and Bungalow Funding, LLC are affiliates of Balbec.

 **

***Organizational and Offering Expenses Waiver***

 **

In order to maximize cash available for investment during the launch of the Company, the Advisor and Sub-Advisor have provided written notice to the Company of their agreement to waive, the organization and offering reimbursement related to January 2026 cumulative gross proceeds of $367,589 to which they are entitled under the Advisory Agreement and Sub-Advisory Agreement, respectively.

 **

***Distributions***

 **

Individuals and entities affiliated with the Advisor and Sub-Advisor owned approximately 236,000 shares as of March 31, 2026. These individuals and entities received distributions from the Company of approximately $78,667 during the three months ended March 31, 2026.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

***Summary of Related Party Fees and Expenses***

 ****

*Organization and Offering Reimbursement*

 

The Company reimburses the Advisor and the Sub-Advisor, along with their respective affiliates, for the organization and offering costs (other than selling commissions and dealer manager fees) they have incurred on the Company's behalf only to the extent that such expenses do not exceed 1.5% of the cumulative gross proceeds from the Private Offering.

As of March 31, 2026, the Advisor and Sub-Advisor in the aggregate have incurred organization and offering expenses on the Company's behalf of approximately $279,843 and $1,037,432, respectively. These organization and offering expenses are not recorded on the accompanying consolidated balance sheets because of the limit of 1.5% of the cumulative gross proceeds from the Private Offering.

 

*Base Management Fees*

 

The Company pays each of the Advisor and the Sub-Advisor 50% of the total base management fee for their services under the Advisory Agreement and Sub-Advisory Agreement subject to any reduction or deferral of any such fees pursuant to the expense support and conditional reimbursement agreement between the Company, the Advisor and the Sub-Advisor, as amended, (the "Expense Support and Conditional Reimbursement Agreement"). The management fee shall be calculated for each share class at an annual rate of (i) 1.25% of NAV for Class A common stock (the "Class A shares"), Class I common stock (the "Class I shares"), Class D common stock (the "Class D shares") and Class T common stock (the "Class T shares")(collectively, the "Non-Founder Shares"), and (ii) 1.00% of NAV for the Class FA shares (collectively, the "Founder Shares") in each case, per annum and payable monthly in arrears and before giving effect to any accruals for the management fee, stockholder servicing fees and total return incentive fee. No management fee will be payable with respect to Class E shares.

*Total Return Incentive Fees*

 

The Company also pays each of the Advisor and the Sub-Advisor 50% of the total return incentive fee for their services under the Advisory Agreement and the Sub-Advisory Agreement.

The total return incentive fee is based on the Total Return to Stockholders (as defined below) for each share class in any calendar year, payable annually in arrears. The Company will accrue (but not pay) the total return incentive fee on a monthly basis, to the extent that it is earned on an annualized basis. The Company will perform a final reconciliation of the total return incentive fee calculation at the completion of each calendar year and the total return incentive fee shall be due and payable to the Advisor no later than ninety (90) calendar days following the end of the applicable calendar year. The total return incentive fee may be reduced or deferred by the Advisor and the Sub-Advisor under the Advisory Agreement, Sub-Advisory Agreement and the Expense Support and Conditional Reimbursement Agreement described below.

For purposes of this calculation, "Total Return to Stockholders" for each annualized period is calculated for each share class as (i) the change in the net asset value for such share class over such applicable period plus (ii) total distributions for such share class over such applicable period. The terms "Total Return to Non-founder Stockholders" and "Total Return to Founder Stockholders" mean the Total Return to Stockholders specifically attributable to each particular share class of Non-Founder Shares or Founder Shares, as applicable.

The total return incentive fee for each share class is calculated as follows:

&nbsp;&nbsp;&nbsp;&nbsp;• No total return incentive fee will be payable in any calendar year in which the annualized Total Return
to Stockholders of a particular share class does not exceed 6 % (the "Annual Preferred Return"). No total return incentive
fee will be payable with respect to Class E shares.

&nbsp;&nbsp;&nbsp;&nbsp;• As it relates to the Non-Founder Shares, all of the Total Return to Stockholders with respect to each
particular share class of Non-Founder Shares, if any, that exceeds the Annual Preferred Return, but is less than or equal to 7.06 %, or
the "Non-founder breakpoint," in any calendar year, will be payable to the Advisor. 15 % of the Total Return to Non-founder
Stockholders of a particular share class of Non-Founder Shares, calculated at each share class level based on the Total Return
to Stockholders on Non-Founder Shares, if any, that exceeds the Non-founder breakpoint.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

&nbsp;&nbsp;&nbsp;&nbsp;• As it relates to Founder Shares, all of the Total Return to Founder Stockholders with respect to each
particular share class of Founder Shares, if any, that exceeds the Annual Preferred Return, but is less than or equal to 6.86 %, or the
"founder breakpoint," in any calendar year, will be payable to the Advisor. 12.50 % of the Total Return to Founder Stockholders
of Founder Shares, calculated at each share class level based on the Total Return to Stockholders on Founder Shares, if any, that exceeds
the founder breakpoint

&nbsp;&nbsp;&nbsp;&nbsp;• For purposes of calculating the Total Return to Stockholders, the change in the Company's net asset
value is subject to a High Water Mark. The "High Water Mark" is equal to the highest year-end net asset value, for each share
class of the Company since inception, adjusted for any special distributions resulting from the sale of the Company's assets, provided
such adjustment is approved by the Company's board of directors. If, as of each calendar year end, the Company's net asset
value for the applicable share class is (A) above the High Water Mark, then, for such calendar year, the Total Return to Stockholders
calculation will include the increase in the Company's net asset value for such share class in excess of the High Water Mark, and
(B) if the Company's net asset value for the applicable share class is below the High Water Mark, for such calendar year, (i) any
increase in the Company's per share net asset value will be disregarded in the calculation of Total Return to Stockholders for such
share class while (ii) any decrease in the Company's per share net asset value will be included in the calculation of Total
Return to Stockholders for such share class. For the year ending December 31, 2026, the High Water Marks which will apply to the incentive
fee calculation with be $24.75 for Class FA, A, T, D and I shares.

*Expense Support and Conditional Reimbursement*

 

The Company entered into the Expense Support and Conditional Reimbursement Agreement with the Advisor and Sub-Advisor, which became effective on May 6, 2025, pursuant to which each of the Advisor and the Sub-Advisor agrees to reduce the payment of base management fees, total return incentive fees and the reimbursements of reimbursable expenses due to the Advisor and the Sub-Advisor under the Advisory Agreement and the Sub-Advisory Agreement, as applicable, to the extent that the Company's annual regular cash distributions exceed its annual net income (with certain adjustments). The amount of such expense support is equal to the annual (calendar year) excess, if any, of (a) the distributions (as defined in the Expense Support and Conditional Reimbursement Agreement) declared and paid (net of the Company's distribution reinvestment plan) to shareholders minus (b) the available operating funds, as defined in the Expense Support and Conditional Reimbursement Agreement (the "Expense Support"). For the calendar year ending December 31, 2026, the Expense Support amount may be equal to any negative available operating funds.

The Expense Support amount is borne equally by the Advisor and the Sub-Advisor and is calculated as of the last business day of the calendar year. Until the Expense Support and Conditional Reimbursement Agreement is terminated, the Advisor and Sub-Advisor shall equally conditionally reduce the payment of fees and reimbursements of reimbursable expenses in an amount equal to the conditional waiver amount (as defined in and subject to limitations described in the Expense Support and Conditional Reimbursement Agreement). The term of the Expense Support and Conditional Reimbursement Agreement initial term of three years and will automatically renew for successive one year terms. Expense support is paid by the Advisor and Sub-Advisor annually in arrears.

If, on the last business day of the calendar year, the annual (calendar year) year-to-date available operating funds exceeds the sum of the annual (calendar year) year-to-date distributions paid per share class (the "Excess Operating Funds"), the Company uses such Excess Operating Funds to pay the Advisor and the Sub-Advisor all or a portion of the outstanding unreimbursed Expense Support amounts for each share class, as applicable, subject to certain conditions (the "Conditional Reimbursements") as described further in the Expense Support and Conditional Reimbursement Agreement. The Company's obligation to make Conditional Reimbursements shall automatically terminate and be of no further effect three years following the date which the Expense Support amount was provided and to which such Conditional Reimbursement relates, as described further in the Expense Support and Conditional Reimbursement Agreement.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

*Administrative Services Fees*

 

The Company pays the Advisor administrative services fees at an annual rate of 0.25% per annum of the NAV for each share class of the Company's common stock. Administrative services fees are payable monthly in arrears.

*Master Servicing Fees*

 

PRP Advisors LLC, an affiliate of Balbec, is the master servicer for the Company's residential mortgage loans and receives a fee for its services. The Company pays the Sub-Advisor for these fees at an annual rate of 0.25% per annum, calculated monthly based on the prior month's fair value of residential mortgage loans, paid quarterly in arrears.

Related party fees and expenses incurred for the three months ended March 31, 2026 are summarized below:

---

| | | |
|:---|:---|:---|
| <br>**Related Party** | <br>**Source Agreement & Description** | **Three Months <br> Ended March 31,**<br>**2026** |
| Advisor and Sub-Advisor | &nbsp;&nbsp;&nbsp;&nbsp;Advisory Agreement and Sub-Advisory Agreement:<br> Organization reimbursement<sup>(1)</sup> | $1836 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Offering reimbursement | 4764 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Base management fees<sup>(1)</sup> | 1448 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Total return incentive fees<sup>(1)</sup> | 792 |
| Advisor and Sub-Advisor | Amended and Restated Expense Support and Conditional Reimbursement Agreement: <br>Expense support  | 892239 |
| Advisor | &nbsp;&nbsp;&nbsp;&nbsp;Administrative Services Agreement:<br> Administrative services fees<sup>(1)</sup> | 15747 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Advisory Agreement:<br> Operating, administrative and compliance services<sup>(1)</sup> | 202397 |
| Sub-Advisor | &nbsp;&nbsp;&nbsp;&nbsp;Master Servicing Agreement:<br> Master servicing fees<sup>(1)</sup> | 6292 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Sub-Advisory Agreement:<br> Operating services<sup>(1)</sup> | 23240 |

---

**<u>FOOTNOTE:</u>**

(1) Expenses subject to Expense Support, if applicable.

The following table presents amounts due (to) from related parties net as of March 31, 2026:

---

| | |
|:---|:---|
|  | **March 31, <br> 2026** |
| Due from related parties: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expense support | $892239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from affiliate | 126995 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from advisor | 151056 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total due from related parties | 1170290 |
| Due to related parties: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total return incentive fees | $(792) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Base management fees | (1061) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Organization and offering expenses | (3327) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued administrative services fee | (5270) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued master servicing fee | (6292) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to advisor | (23240) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total due to related parties | (39982) |
| Due from related parties, net | $1130308 |

---

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

**8.** **Commitments and Contingencies** 

The Company routinely enters into forward flow agreements with sellers, representing commitments to purchase qualifying accounts monthly within specified ranges and for an agreed minimum time period and price (as a percentage of face value). As of March 31, 2026, the Company had approximately $82,031,754 in commitments with US counter-parties to purchase US mortgage loans.

During the three months ended March 31, 2026, RCRED Georgian 2026 Trust executed three forward trade contracts with Barclays Bank PLC ("Barclays") to purchase residential mortgage whole loans with an aggregate unpaid principal balance of $4,659,665 within 90 days unless mutually agreed to by RCRED Georgian 2026 Trust and Barclays from the date the residential mortgage whole loans were purchased.

See Note 7, *Related Party Transactions* for information on contingent amounts due to the Advisor and Sub-Advisor for the reimbursement of organization and offering costs with respect to the Private Offering.

As of March 31, 2026, the Company is not subject to any material litigation nor is the Company aware of any material litigation threatened against it.

**9.** **Equity** 

As of January 21, 2025, the Company was authorized to issue 1,000,000,000 shares of common stock, $0.001 par value per share, currently classified as Class E shares, Class FA shares, Class A shares, Class T shares, Class D shares, and Class I shares. As of January 21, 2025, the Company was authorized to issue 100,000,000 shares of preferred stock.

The Class E shares, Class FA shares, Class A shares, Class T shares, Class D shares, and Class I shares, all of which are collectively referred to herein as shares of common stock, have identical rights and privileges, including identical voting rights, but have differing fees that are payable on a class-specific basis. The per share amount of distributions on Class E shares, Class FA shares, Class A shares, Class T shares, Class D shares, and Class I shares will likely differ because of different class-specific expenses and distribution and stockholder servicing fees for each share class.

The following table describes the number of shares of each class of the Company's common stock authorized and issued and outstanding as of March 31, 2026 and December 31, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of** | **As of** | **As of** | **As of** |
|  | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** |
|  | **Shares <br> Authorized** | **Shares Issued and<br> Outstanding** | **Shares <br> Authorized** | **Shares Issued and<br> Outstanding** |
| Class E | 50000000 | 966038 | 50000000 | 8000 |
| Class FA | 100000000 | 31929 | 100000000 |  |
| Class A | 200000000 |  | 200000000 |  |
| Class T | 200000000 |  | 200000000 |  |
| Class D | 200000000 |  | 200000000 |  |
| Class I | 250000000 |  | 250000000 |  |

---

**10.** **Subsequent Events** 

***Distributions***

In April 2026, the Company's board of directors declared a monthly cash distribution on the outstanding shares of all classes of common stock of record on May 26, 2026 of $0.166667 per share for both Class E shares and Class FA shares.

**CNL STRATEGIC RESIDENTIAL CREDIT, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**THREE MONTHS ENDED MARCH 31, 2026**

***Offerings***

In April 2026, the Company's board of directors approved new per share offering prices for each share class in the Private Offering. The new offering prices are effective as of April 30, 2026. The following table provides the new offering prices and applicable upfront selling commissions and dealer manager fees for each share class available in the Private Offering:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Class E** | **Class FA** | **Class A** | **Class T** | **Class D** | **Class I** |
| **Effective April 30, 2026:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Offering Price, Per Share | $24.94 | $24.76 | $27.06 | $25.99 | $24.76 | $24.76 |
| &nbsp;&nbsp;&nbsp;Selling Commissions, Per Share |  |  | 1.62 | 0.78 |  |  |
| &nbsp;&nbsp;&nbsp;Dealer Manager Fees, Per Share |  |  | 0.68 | 0.45 |  |  |

---

***Capital Transactions***

During the period April 1, 2026 through May 11, 2026, the Company received additional net proceeds from the Private Offering and distribution reinvestment plan of the following (in thousands except per share data):

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Proceeds from Private Offering** | **Proceeds from Private Offering** | **Proceeds from Private Offering** | **Proceeds from Private Offering** | **Distribution Reinvestment Plan** | **Distribution Reinvestment Plan** | **Total** | **Total** | **Total** |
| <br>**Share Class** | **Shares** | **Gross Proceeds** | **Sales Load** | **Net Proceeds to Company** | **Shares** | **Net Proceeds to Company** | **Shares** | **Net Proceeds to Company** | **Average Net Proceeds per Share** |
| Class FA | 15408 | $381500 | $— | $381500 | 55 | $1354 | 15463 | $382854 | $24.76 |
|  | 15408 | $381500 | $— | $381500 | 55 | $1354 | 15463 | $382854 | $24.76 |

---

***Investments***

In April 2026, the Company invested $2,608,662 in preferred equity and other in entities that acquire MSR participation interests. In April 2026, the Company purchased $17,647,096 in residential mortgage whole loans.

***Repurchase Agreement***

In April 2026 and May 2026, Craftsman drew an additional $11,111,654 on the Repurchase Agreement to purchase additional securities. In April 2026, Craftsman received proceeds of $4,713,420 for securities under the Repurchase Agreement.

***Forward Trades***

In April 2026 and May 2026, RCRED Georgian 2026 Trust executed three forward trade contracts with Barclays to purchase residential mortgage whole loans with an aggregate unpaid principal balance of $11,087,078 within 90 days unless mutually agreed to by RCRED Georgian 2026 Trust and Barclays from the date the residential mortgage whole loans were purchased.

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

The following discussion is based on the unaudited consolidated financial statements as of March 31, 2026 and December 31, 2025, and for the three months ended March 31, 2026. Amounts as of December 31, 2025 included in the unaudited consolidated statements of assets and liabilities have been derived from the audited consolidated financial statements as of that date. This information should be read in conjunction with the accompanying unaudited consolidated financial statements and the notes thereto, as well as the audited consolidated financial statements, notes and management's discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2025 (our "Form 10-K"). Capitalized terms used in this Item 2 have the same meaning as in the accompanying unaudited financial statements unless otherwise defined herein.

**Statement Regarding Forward Looking Information**

In this quarterly report for the quarterly period ended March 31, 2026 (this "Form 10-Q"), references to "Company," "we," "us," or "our business" refer to CNL Strategic Residential Credit, Inc. and its subsidiaries; references to the "Advisor" refer to CNL Residential Credit Manager, LLC, an affiliate of CNL Financial Group, LLC; references to the "Sub-Advisor" refer to Balbec Capital Management, L.P., an affiliate of Balbec Capital, L.P.

Certain statements in this Form 10-Q contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. Some of the statements in this Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this Form 10-Q may include statements as to:

&nbsp;&nbsp;&nbsp;&nbsp;• our future operating results;

&nbsp;&nbsp;&nbsp;&nbsp;• our business prospects and the prospects of the assets in which we may invest;

&nbsp;&nbsp;&nbsp;&nbsp;• the impact of the investments that we expect to make;

&nbsp;&nbsp;&nbsp;&nbsp;• our ability to raise sufficient capital to execute our investment strategy;

&nbsp;&nbsp;&nbsp;&nbsp;• our ability to source adequate investment opportunities to efficiently deploy capital;

&nbsp;&nbsp;&nbsp;&nbsp;• our expected financing arrangements;

&nbsp;&nbsp;&nbsp;&nbsp;• the effect of global and national economic and market conditions generally upon our operating results,
including, but not limited to, changes with respect to inflation, interest rate changes and supply chain disruptions, and changes in government
rules, tax policy, government agencies, regulations and fiscal and trade policies;

&nbsp;&nbsp;&nbsp;&nbsp;• the adequacy of our cash resources, financing sources and working capital;

&nbsp;&nbsp;&nbsp;&nbsp;• the timing and amount of cash flows, distributions and dividends, if any, from our investments;

&nbsp;&nbsp;&nbsp;&nbsp;• our contractual arrangements and relationships with third parties;

&nbsp;&nbsp;&nbsp;&nbsp;• actual and potential conflicts of interest with the Advisor, the Sub-Advisor or any of their respective
affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;• the dependence of our future success on the general economy and its effect on the assets in which we may
invest;

&nbsp;&nbsp;&nbsp;&nbsp;• our use of financial leverage;

&nbsp;&nbsp;&nbsp;&nbsp;• the ability of the Advisor and the Sub-Advisor to locate suitable investments for us and to manage and
administer our investments;

&nbsp;&nbsp;&nbsp;&nbsp;• the ability of the Advisor, the Sub-Advisor or their respective affiliates to attract and retain highly
talented professionals;

&nbsp;&nbsp;&nbsp;&nbsp;• our ability to structure investments in a tax-efficient manner and the effect of changes to tax legislation
and our tax position; and

&nbsp;&nbsp;&nbsp;&nbsp;• the tax status of the assets in which we may invest.

Our forward-looking statements are not guarantees of our future performance and shareholders are cautioned not to place undue reliance on any forward-looking statements. While we believe our forward-looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances. As with any projection or forecast, forward-looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise, and may not be realized. Our forward-looking statements are based on our current expectations and a variety of risks, uncertainties and other factors, many of which are beyond our ability to control or accurately predict.

Important factors that could cause our actual results to vary materially from those expressed or implied in our forward-looking statements include, but are not limited to, the factors listed and described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the "Risk Factors" sections of the Company's documents filed from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, our Form 10-K and this Form 10-Q.

All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements. Forward-looking statements speak only as of the date on which they are made; we undertake no obligation to, and expressly disclaim any obligation to, update or revise forward-looking statements to reflect new information, changed assumptions, the occurrence of subsequent events, or changes to future operating results over time unless otherwise required by law.

**Overview**

We are a recently formed real estate finance company. Our investment strategy is to acquire, finance and manage a diversified portfolio of primarily U.S. performing and re-performing whole mortgage loans, MSRs and RMBS. Our overall objective is to generate attractive risk-adjusted returns with high current income for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles. Our specific investment objectives are to construct a diversified residential credit portfolio that will enable us to:

&nbsp;&nbsp;&nbsp;&nbsp;◦ provide current income in the form of regular, stable cash distributions to achieve an attractive distribution
rate;

&nbsp;&nbsp;&nbsp;&nbsp;◦ preserve and protect invested capital by focusing on residential credit assets that are primarily amortizing
and thus provide current cash-flow; and

&nbsp;&nbsp;&nbsp;&nbsp;◦ mitigate downside risk through conservative loan-to-value ("LTV") ratios and effectively manage
any interest rate and credit sensitivities.

We cannot assure investors that we will achieve our investment objectives.

We intend to elect and qualify to be taxed as a REIT under the Internal Revenue Code commencing with our taxable year ending December 31, 2026.

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. Pursuant to the Advisory Agreement and the Sub-Advisory Agreement, however, we have delegated to the Advisor, and the Advisor in turn has delegated to the Sub-Advisor, subject to the oversight of the Advisor, 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, strategy and guidelines, policies and limitations, subject to oversight by our board of directors.

**Liquidity and Capital Resources**

*General*

Our primary use of cash will be for (i) acquisition of residential mortgage loans, MSRs, RMBS, and other residential debt investments, (ii) the cost of operations (including the management fee and the total return incentive fee), (iii) debt service of any borrowings, (iv) periodic repurchases, including under our share purchase plan, and (v) cash distributions (if any) to the holders of our shares to the extent authorized by our board of directors and declared by us.

In light of the current economic environment, impacted by high interest rates, record inflationary pressures, a rise in energy prices and the impact of the recent public health crises, natural disasters and geopolitical events on the global economy, we are closely monitoring overall liquidity levels to be in a position to enact changes to ensure adequate liquidity going forward.

As of March 31, 2026 and December 31, 2025, we had cash of approximately $6,504,898 and $203,272, respectively.

***Sources of Liquidity and Capital Resources***

*Offerings.* We received approximately $24,745,950 in net proceeds during the three months ended March 31, 2026, from the Private Offering.

*Investments*. We received approximately $17,860,527 in proceeds from securities sold under agreement to repurchase during the three months ended March 31, 2026.

*Borrowings.* We borrowed and repaid $6,700,000 during the three months ended March 31, 2026.

***Uses of Liquidity and Capital Resources***

*Investments.* We purchased approximately $23,406,962 and $6,614,984 of residential mortgage loans and preferred equity, respectively, during the three months ended March 31, 2026.

*Distributions.* We paid distributions to our stockholders of approximately $328,077 during the three months ended March 31, 2026.

*Principal Payments.* We paid approximately $162,046 in principal payments on repurchase agreement during the three months ended March 31, 2026.

*Deferred Financing Costs.* We paid approximately $248,086 in deferred financing costs during the three months ended March 31, 2026.

**Results of Operations**

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

The following table summarizes our operating results for the three months ended March 31, 2026:

---

| | |
|:---|:---|
|  | **Three Months Ended**<br> **March 31,**<br>**2026** |
| Interest income | $225560 |
| Interest expense | (161696) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 63864 |
| Other income/(loss), net | 178902 |
| Operating expenses | (868586) |
| Expense support | 892239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net operating expenses | (23653) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income | $266419 |

---

***Net Interest Income***

The following table summarizes our Net interest income for the three months ended March 31, 2026:

---

| | |
|:---|:---|
|  | **Three Months Ended**<br> **March 31,**<br>**2026** |
| Interest income |  |
| &nbsp;&nbsp;&nbsp;Residential mortgage loans | $176853 |
| &nbsp;&nbsp;&nbsp;Cash | 48707 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 225560 |
| Interest expense |  |
| Repurchase agreement | 117201 |
| Line of credit | 44495 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 161696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income | $63864 |

---

For the three months ended March 31, 2026, we generated $176,853 for interest income driven by purchases of residential mortgage loans during February and March 2026. As of March 31, 2026, the weighted average interest rate of residential mortgage loans was 6.72%. We utilized the repurchase agreement primarily to purchase additional residential mortgage loans during February and March 2026. As of March 31, 2026, the weighted average interest rate for the repurchase agreement was 5.53% (SOFR + 1.65% - 1.90%).

***Other Income/(Loss), net***

The following table summarizes our Other Income/(Loss), net for the three months ended March 31, 2026:

---

| | |
|:---|:---|
|  | **Three Months Ended**<br> **March 31,**<br>**2026** |
| Other Income/(Loss), net |  |
| &nbsp;&nbsp;&nbsp;Distribution income | $240560 |
| &nbsp;&nbsp;&nbsp;Unrealized loss on residential mortgage loans, preferred equity and other and derivatives | (61658) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Income/(Loss), net | $178902 |

---

For the three months ended March 31, 2026, the Company generated $240,560 of distribution income driven by purchases of preferred equity and other in January 2026.

The following table summarizes components of unrealized loss on residential mortgage loans, preferred equity and other and derivatives for the three months ended March 31, 2026:

---

| | |
|:---|:---|
|  | **Three Months Ended<br> March 31,**<br>**2026** |
| Unrealized loss on residential mortgage loans | $(133396) |
| Unrealized loss on preferred equity and other | (59773) |
| Unrealized gain on interest rate futures | 131511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total unrealized loss on residential mortgage loans, preferred equity and other and derivatives | $(61658) |

---

 ****

***Net Operating Expenses***

The following table summarizes our operating expenses for the three months ended March 31, 2026:

---

| | |
|:---|:---|
|  | **Three Months Ended**<br> **March 31,**<br>**2026** |
| Professional services | $547294 |
| Investment expenses | 142257 |
| Director fees and expenses | 125995 |
| General and administrative | 37157 |
| Custodian fees | 8237 |
| Other expenses | 3570 |
| Organization expense | 1836 |
| Base management fees | 1448 |
| Total return incentive fees | 792 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expenses | 868586 |
| Expense support | 892239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net operating expenses | $(23653) |

---

We consider the following expense categories to be relatively fixed in the near term: general and administrative services and director fees and expenses. Variable operating expenses include professional services, investment expenses, base management fees and total return incentive fees. We expect these variable operating expenses to increase either in connection with the growth in our asset base (investments expenses, total return incentive fees and base management fees), the number of stockholders and open accounts (custodian fees) and the complexity of our investment processes and capital structure (professional services). Expense support was recorded to cover expenses and cash distributions during the three months ended March 31, 2026 in accordance with the Expense Support and Conditional Reimbursement Agreement.

**Hedging Activities**

As of March 31, 2026, we had not entered into any derivatives or other financial instruments. With respect to any potential financings, general increases in interest rates over time may cause the interest expense associated with our borrowings to increase, and the value of our debt investments to decline. We may seek to stabilize our financing costs as well as any potential decline in our assets by entering into derivatives, swaps or other financial products in an attempt to hedge our interest rate risk. In the event we pursue any assets outside of the U.S. we may have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. We may in the future, enter into derivatives or other financial instruments in an attempt to hedge any such foreign currency exchange risk. It is difficult to predict the impact hedging activities may have on our results of operations.

**Seasonality**

We do not anticipate that seasonality will have a significant effect on our results of operations.

**Critical Accounting Policies and Use of Estimates**

Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all of the decisions and assessments upon which our financial statements are based are reasonable at the time made and based upon information available to us at that time. Our critical accounting policies and accounting estimates will be expanded over time as we continue to implement our business and operating strategy. Our significant accounting policies are described in *Part I—Item 1. "Financial Statements– Notes to Consolidated Financial Statements (unaudited)—Note 2. Summary of Significant Accounting Policies."*

**Item 3. Quantitative and Qualitative Disclosures About Market Risks**

Market risk is the exposure to loss resulting from changes in interest rates, commodity prices, equity prices, real estate values and other market-based risks. We expect that our primary market risk exposure will be credit risk, interest rate risk, liquidity risk, prepayment risk and extension risk.

We will seek to manage these risks while, at the same time, seeking to provide an opportunity to stockholders to realize attractive returns through ownership of our shares. Many of these risks have been magnified due to the continuing uncertainties caused by the recent geopolitical events; however, while we continue to monitor the geopolitical events, its impact on such risks remains uncertain and difficult to predict.

**Credit Risk**

We assume credit risk through our investment in mortgage loans and other mortgage-related assets. Credit losses on mortgage loans can occur for many reasons, including: fraud; poor underwriting; poor servicing practices; weak economic conditions; increases in payments required to be made by borrowers; declines in the value of real estate; declining rents on residential rental properties; natural disasters, including the effects of climate change (including flooding, drought, wildfires, and severe weather) and other natural events; uninsured property loss; over-leveraging of the borrower; costs of remediation of environmental conditions, such as indoor mold; changes in zoning or building codes and the related costs of compliance; acts of war or terrorism; changes in legal protections for lenders and other changes in law or regulation; and personal events affecting borrowers, such as reduction in income, job loss, divorce or health problems. In addition, the amount and timing of credit losses could be affected by loan modifications, delays in the liquidation process, documentation errors and other action by servicers. Weakness in the U.S. economy or the housing market could cause our credit losses to increase beyond levels that we currently anticipate.

In addition, rising interest rates may increase the credit risks associated with certain residential whole mortgage loans. This is especially true if the interest rate is adjustable for many of the loans that we may acquire or at the securitization entity we may sponsor in the future. In addition, the loans we pledge to secure loan financing lines may have adjustable interest rates. Accordingly, when short-term interest rates rise, required monthly payments from homeowners will rise under the terms of these adjustable-rate mortgages, and this may increase borrower delinquencies and defaults.

Within a securitization of residential whole mortgage loans, various securities are created, each of which has varying degrees of credit risk. We may own the securities in which there is more (or the most) concentrated credit risk associated with the underlying residential whole mortgage loans. In general, losses on an asset securing a loan or loan included as collateral to a securitization will be borne first by the owner of the property (i.e., the owner will first lose any equity invested in the property) and, thereafter, by the first loss security holder, and then by holders of more senior securities. In the event the losses incurred upon default on the loan exceed any classes in which we invest, we may not be able to recover all of our investment in the securities we hold. In addition, if the underlying properties have been overvalued by the originating appraiser or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related security, then the first-loss securities may suffer a total loss of principal, followed by losses on the second-loss and then third-loss securities (or other residential securities that we own). In addition, with respect to residential securities we own, we may be subject to risks associated with the determination by a loan servicer to discontinue servicing advances (advances of mortgage interest payments not made by a delinquent borrower) if they deem continued advances to be unrecoverable, which could reduce the value of these securities or impair our ability to project and realize future cash flows from these securities.

Investments in subordinated RMBS involve greater credit risk than the senior classes of the issue or series. Many of the default-related risks of whole mortgage loans will be magnified in subordinated securities. Default risks may be further pronounced in the case of RMBS by, or evidencing an interest in, a relatively small or less diverse pool of underlying mortgage loans. Certain subordinated securities absorb all losses from default before any other class of securities is at risk, particularly if such securities have been issued with little or no credit enhancement or equity. In addition, principal payments on subordinated securities may be subject to a "lockout" period in which some or all of the principal payments are directed to the related senior securities. This lock-out period may be for a set period of time and/or may be determined based on pool performance criteria such as losses and delinquencies. Such securities therefore possess some of the attributes typically associated with equity investments. We believe any potential defaults on the underlying collateral will be minor as the underlying loans had significant equity at the time of deal closing, leading many borrowers with large incentives to reperform. In cases where that is not possible, we believe the recovery of the unpaid principal balance of the loan is likely given the low LTV ratio of the collateral.

**Interest Rate Risk**

Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. A significant portion of our assets and liabilities, including our whole mortgage loans, investment securities, loan financing lines, and security repurchase facilities, are interest earning or interest bearing and, as a result, we are subject to risks arising from fluctuations in the prevailing levels of market interest rates. In addition, our financing arrangements, if any, may have a variable rate component or include rates which reset monthly and add additional risk due to fluctuations in market interest rates. Any excess cash and cash equivalents of ours are invested in instruments earning short-term market interest rates.

Subject to qualifying and maintaining our qualification as a REIT and maintaining our exclusion from regulation as an investment company under the Investment Company Act, we may utilize various derivative instruments and other hedging instruments to mitigate interest rate risk.

**Liquidity Risk**

An insufficient secondary market may prevent the liquidation of an asset or limit the funds that can be generated from selling an asset. A portion of our assets are designated as illiquid and may be subject to high liquidity risk.

**Prepayment Risk**

The frequency at which prepayments occur on loans held, MSRs, and loans underlying RMBS will be affected by a variety of factors, including the prevailing level of interest rates as well as economic, demographic, tax, social, legal and other factors. Generally, mortgage obligors tend to prepay their mortgage loans when prevailing mortgage rates fall below the interest rates on their mortgage loans.

Generally, whole mortgage loans and RMBS purchased at a premium are adversely affected by faster than anticipated prepayments, and whole mortgage loans and RMBS purchased at a discount are adversely affected by slower than anticipated prepayments. The adverse effects of prepayments may impact us in two ways. First, particular investments may experience outright losses, as in the case of an interest-only security in an environment of faster actual or anticipated prepayments. Second, particular investments may underperform relative to the financial instruments that the Advisor and the Sub-Advisor may have constructed to reduce specific financial risks for these investments, resulting in a loss to us. In particular, prepayments (at par) may limit the potential upside of many whole mortgage loans and RMBS to their principal or par amounts, whereas their corresponding hedges, if any, often have the potential for unlimited loss.

**Extension Risk**

The Sub-Advisor computes the projected weighted average life of our investments based on assumptions regarding the rate at which the borrowers will prepay the underlying mortgage loans. In general, when fixed rate or adjustable-rate or hybrid mortgage loans or other mortgage-related assets are acquired via borrowings, we may, but are not required to, enter into an interest rate swap agreement or other economic hedging instrument that attempts to fix our borrowing costs for a period close to the anticipated average life of the fixed rate portion of the related assets, in each case subject to qualifying and maintaining our qualification as a REIT and maintaining our exclusion from regulation as an investment company under the Investment Company Act. This strategy is designed to protect us from rising interest rates as the borrowing costs are managed to maintain a net interest spread for the duration of the fixed rate portion of the related assets. However, if prepayment rates decrease in a rising interest rate environment, the life of the fixed rate portion of the related assets could extend beyond the term of the swap agreement or other hedging instrument. This could have an adverse impact on our results of operations, as borrowing costs would no longer be fixed after the end of the hedging instrument while the income earned on the fixed and adjustable-rate or hybrid assets would remain fixed. In extreme situations, we may be forced to sell assets to maintain adequate liquidity, which could cause us to incur losses.

**Concentration of Credit Risk**

In the normal course of business, we may hold our cash balances with financial institutions, which at times may exceed federally insured limits. We are subject to credit risk to the extent any financial institution with which we conduct business is unable to fulfill contractual obligations on our behalf. Management will monitor the financial condition of such financial institutions and does not anticipate any losses from these counterparties.

**Item 4. Controls and Procedures**

*Evaluation of Disclosure Controls and Procedures* 

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based upon that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of the end of the period covered by this Form 10-Q to provide reasonable assurance that information required to be disclosed by us in the reports we filed under the Securities Exchange Act of 1934, as amended ("Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the relevant SEC rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

*Management's Report on Internal Control Over Financial Reporting* 

During the most recent fiscal quarter, there were no changes in internal control over financial reporting (as defined under Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

**PART II. OTHER INFORMATION**

**Item 1. Legal Proceedings**

We may from time to time be a party to legal proceedings which arise in the ordinary course of our business. Management is not aware of any current or pending legal proceedings to which we or any of our subsidiaries are a party or to which any of our property is subject, the outcome of which would, in management's judgment based on information currently available, have a material adverse effect on our results of operations or financial condition, nor is management aware of any such legal proceedings contemplated by governmental authorities.

**Item 1A. Risk Factors**

There have been no material changes in our assessment of our risk factors from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

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

*Unregistered Sales of Equity Securities*

We were capitalized through the purchase by the Advisor and Sub-Advisor of 8,000 shares of Class E shares for the aggregate consideration of $200,000 in March 2025.

In September 2025, we commenced a private offering of Class E, Class FA, Class A, Class T, Class D and Class I shares (the "Private Offering") exempt from the registration requirements pursuant to Rule 506(b) under Regulation D of the Securities Act of 1933, as amended (the "Securities Act"). The shares of common stock are offered through our managing dealer, CNL Securities Corp., a registered broker dealer and an affiliate of the Advisor.

On January 29, 2026, we held an initial closing for the Private Offering and issued 966,038 Class E shares and 14,200 Class FA shares at a purchase price of $25.00 per each share for aggregate gross offering proceeds of approximately $24.5 million. We did not pay any selling commissions or managing dealer fees for the Class E shares or Class FA shares issued in the initial closing. The initial closing included purchases of $2.4 million for Class E shares from each of the Advisor and Balbec, an affiliate of the Sub-Advisor, for an aggregate total investment of $2.5 million from each of the Advisor and Balbec.

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

None.

**Item 5. Other Information**

None.

**Item 6. Exhibits**

The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this report.

**EXHIBIT INDEX**

**Exhibits**

The following exhibits are filed or incorporated as part of this Form 10-Q for CNL Strategic Residential Credit, Inc.:

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 3.1 | [Articles of Amendment and Restatement of CNL Strategic Residential Credit, Inc. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 (File No. 000-56755) filed with the SEC on June 2, 2025).](http://www.sec.gov/Archives/edgar/data/2066337/000199937125007032/ex3-1.htm) |
| 3.2 | [Bylaws of CNL Strategic Residential Credit, Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form 10 (File No. 000-56755) filed with the SEC on June 2, 2025).](http://www.sec.gov/Archives/edgar/data/2066337/000199937125007032/ex3-2.htm) |
| 4.1 | [Amended and Restated Distribution Reinvestment Plan of CNL Strategic Residential Credit, Inc. (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 000-56755) filed with the SEC on September 24, 2025).](http://www.sec.gov/Archives/edgar/data/2066337/000199937125013955/ex4-1.htm) |
| 4.2 | [Share Repurchase Plan of CNL Strategic Residential Credit, Inc. (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form 10 (File No. 000-56755) filed with the SEC on June 2, 2025).](http://www.sec.gov/Archives/edgar/data/2066337/000199937125007032/ex4-2.htm) |
| 10.1 | [Amended and Restated Advisory Agreement by and between CNL Strategic Residential Credit, Inc. and CNL Residential Credit Manager, LLC, dated as of March 10, 2026 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-56755) filed with the SEC on March 12, 2026).](http://www.sec.gov/Archives/edgar/data/2066337/000199937126005720/ex10-1.htm) |
| 10.2 | [Amendment No. 1 to the Expense Support and Conditional Reimbursement Agreement by and among CNL Strategic Residential Credit, Inc., CNL Residential Credit Manager, LLC and Balbec Capital Management, L.P. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-56755) filed with the SEC on February 27, 2026)](http://www.sec.gov/Archives/edgar/data/2066337/000199937126004609/ex10-1.htm). |
| 10.3 | [Amendment No. 2 to the Expense Support and Conditional Reimbursement Agreement by and among CNL Strategic Residential Credit, Inc., CNL Residential Credit Manager, LLC and Balbec Capital Management, L.P. (incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K (File No. 000-56755) filed with the SEC on March 30, 2026).](http://www.sec.gov/Archives/edgar/data/2066337/000199937126007206/ex10-6.htm) |
| 10.4 | [Amended and Restated Managing Dealer Agreement by and between CNL Strategic Residential Credit, Inc., CNL Residential Credit Manager, LLC and CNL Securities Corp. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 000-56755) filed with the SEC on March 12, 2026).](http://www.sec.gov/Archives/edgar/data/2066337/000199937126005720/ex10-2.htm) |
| 10.5 | [Form of Participating Broker-Dealer Agreement (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 000-56755) filed with the SEC on March 12, 2026).](http://www.sec.gov/Archives/edgar/data/2066337/000199937126005720/ex10-3.htm) |
| 10.6 | [Master Repurchase Agreement dated January 30, 2026, by and between RCRED Craftsman Administrator, LLC, as Seller, and Goldman Sachs Bank USA, as purchaser (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 000-56755) filed with the SEC on February 3, 2026).](http://www.sec.gov/Archives/edgar/data/2066337/000199937126002486/ex10-1.htm) |
| 10.7 | [Guaranty, dated January 30, 2026, made by CNL Strategic Residential Credit, Inc. for the benefit of Goldman Sachs Bank USA (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 000-56755) filed with the SEC on February 3, 2026).](http://www.sec.gov/Archives/edgar/data/2066337/000199937126002486/ex10-2.htm) |

---

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 31.1\* | [Certification of Chief Executive Officer of CNL Strategic Residential Credit, Inc., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex31-1.htm) |
| 31.2\* | [Certification of Chief Financial Officer of CNL Strategic Residential Credit, Inc., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ex31-2.htm) |
| 32.1\* | [Certification of Chief Executive Officer and Chief Financial Officer of CNL Strategic Residential Credit, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex32-1.htm) |
| 101\* | The following materials from CNL Strategic Residential Credit, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in iXBRL (Inline eXtensible Business Reporting Language); (i) Consolidated Balance Sheets, (ii) Consolidated Statement of Operations, (iii) Consolidated Statements of Stockholders' Equity, (iv) Consolidated Statement of Cash Flows, and (vi) Notes to the Consolidated Financial Statements. |
| 104\* | Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document) |

---

\* Filed herewith

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the 14<sup>th</sup> day of May 2026.

---

| | |
|:---|:---|
| CNL STRATEGIC RESIDENTIAL CREDIT, INC. | CNL STRATEGIC RESIDENTIAL CREDIT, INC. |
| By: | /s/ Chirag J. Bhavsar |
|  | CHIRAG J. BHAVSAR |
|  | Chief Executive Officer |
|  | (Principal Executive Officer) |
| By: | /s/ Tammy J. Tipton |
|  | TAMMY J. TIPTON |
|  | Chief Financial Officer |
|  | (Principal Financial and Accounting Officer) |

---

## Exhibit 31.1

[CNL Strategic Residential Credit, Inc. 10-Q](rcred-10q_033126.htm)

**EXHIBIT 31.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**

**PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Chirag J. Bhavsar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNL Strategic Residential Credit, Inc. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have [Language omitted in accordance with SEC Release No. 34-47986]:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC Release No. 34-47986];

c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: May 14, 2026 | By: | /s/ Chirag J. Bhavsar |
|  |  | Chirag J. Bhavsar |
|  |  | Chief Executive Officer<br> (Principal Executive Officer) |

---

## Exhibit 31.2

[CNL Strategic Residential Credit, Inc. 10-Q](rcred-10q_033126.htm)

**EXHIBIT 31.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER**

**PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Tammy J. Tipton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNL Strategic Residential Credit, Inc. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have [Language omitted in accordance with SEC Release No. 34-47986]:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC Release No. 34-47986];

c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: May 14, 2026 | By: | /s/ Tammy J. Tipton |
|  |  | Tammy J. Tipton |
|  |  | Chief Financial Officer<br> (Principal Financial and Accounting Officer) |

---

## Exhibit 32.1

[CNL Strategic Residential Credit, Inc. 10-Q](rcred-10q_033126.htm)

**EXHIBIT 32.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER**

**PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the quarterly report of CNL Strategic Residential Credit, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2026, as filed with the United States Securities and Exchange Commission on the date hereof (the "Report"), I, Chirag J. Bhavsar, Chief Executive Officer and Tammy J. Tipton, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of the operations of the Company.

---

| | |
|:---|:---|
| Date: May 14, 2026 | /s/ Chirag J. Bhavsar |
|  | Chirag J. Bhavsar |
|  | Chief Executive Officer<br> (Principal Executive Officer) |
| Date: May 14, 2026 | /s/ Tammy J. Tipton |
|  | Tammy J. Tipton |
|  | Chief Financial Officer<br> (Principal Financial and Accounting Officer) |

---