FS Credit Real Estate Income Trust Inc.

03/13/2026 | Press release | Distributed by Public on 03/13/2026 12:35

Annual Report for Fiscal Year Ending DECEMBER 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations (in thousands, except share and per share amounts).
The information contained in this section should be read in conjunction with our consolidated financial statements and related notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in Part I Item 1A - "Risk Factors" in this Annual Report on Form 10-K.
Introduction
We were incorporated under the general corporation laws of the State of Maryland on November 7, 2016 and formally commenced investment operations on September 13, 2017. We are managed by FS Real Estate Advisor pursuant to an advisory agreement between us and FS Real Estate Advisor. FS Real Estate Advisor is a subsidiary of our sponsor, Future Standard, a national sponsor of alternative investment funds designed for the individual investor. FS Real Estate Advisor has engaged Rialto to act as its sub-adviser. We are currently conducting a public offering of up to $2,750,000 of our Class T, Class S, Class D, Class M and Class I shares of common stock pursuant to a registration statement on Form S-11 filed with the SEC consisting of up to $2,400,000 in shares in our primary offering and up to $350,000 in shares pursuant to our distribution reinvestment plan. We are also conducting a private offering of our Class I common stock to certain accredited investors.
We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2017. We intend to be an investment vehicle of indefinite duration focused on real estate debt investments and other real estate-related assets. The shares of common stock are generally intended to be sold and repurchased by us on a continuous basis. We intend to conduct our operations so that we are not required to register under the 1940 Act.
Our primary investment objectives are to: provide current income in the form of regular, stable cash distributions to achieve an attractive distribution yield; preserve and protect invested capital; realize appreciation in NAV from proactive investment management and asset management; and provide an investment alternative for stockholders seeking to allocate a portion of their long-term investment portfolios to commercial real estate debt.
Our investment strategy is to originate, acquire and manage a portfolio of senior loans secured by commercial real estate primarily in the United States. We are focused on senior floating-rate mortgage loans, but we may also invest in other real estate-related assets, including: (i) other commercial real estate mortgage loans, including fixed-rate loans, subordinated loans, B-Notes, mezzanine loans and participations in commercial mortgage loans; and (ii) commercial real estate securities, including CMBS, unsecured debt of listed and non-listed REITs, collateralized debt obligations and equity or equity-linked securities. To a lesser extent we may invest in warehouse loans secured by commercial or residential mortgages, credit loans to commercial real estate companies, residential mortgage-backed securities, or RMBS, and portfolios of single-family home mortgages.
The success of our activities is affected by general economic and market conditions, including, among others, interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws and trade barriers. These factors could affect the level and volatility of securities prices and the liquidity of our investments. Volatility or illiquidity could impair our profitability or result in losses. These factors also could adversely affect the availability or cost of our leverage, which would result in lower returns. Future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.
Macroeconomic Environment
CRE market sentiment improved in Q4 2025, supported by 175 basis points (bps) of Fed rate cuts since September 2024 and a rebound in transaction activity. Property values have largely stabilized, and limited new construction has helped restore supply-demand balance across most sectors. However, valuation uncertainty persists, particularly in the office sector, where older, less amenitized assets continue to face structural challenges. A $1.7 trillion maturity wall over the next two years also presents refinancing risk, especially for borrowers with loans previously extended or modified.
In this environment, senior CRE debt remains attractive for its income potential and downside protection, but the outlook is not without risk. Tight cap rate spreads leave little room for pricing error, and any macroeconomic deterioration could pressure valuations and borrower performance. While loan delinquencies appear to be leveling off, distress remains elevated in certain sectors, and workouts may continue to weigh on lender returns. As the market transitions into a new cycle, disciplined underwriting and selectivity will be critical to navigating both the opportunities and risks ahead.
Portfolio Overview
Loan Portfolio Overview
The following table details activity in our loans receivable portfolio for the years ended December 31, 2025 and 2024:
For the Year Ended December 31,
2025 2024
Loan fundings(1)
$ 2,400,194 $ 1,403,335
Loan repayments(2)(3)
(1,853,203) (1,419,698)
Total net fundings (repayments) $ 546,991 $ (16,363)
__________________________
(1) Includes new loan originations and additional fundings made under existing loans.
(2) Excludes payment held by servicer and recorded as "Receivable for investments sold and repaid" as of the years ended December 31, 2025 and 2024.
(3) Inclusive of $66,869 of amortized cost for a loan modification accounted for as a new loan for GAAP purposes. Effective on September 19, 2024, a new collateral secured loan with a new unrelated borrower was entered into from a previously owned risk rated 4 senior loan with a principal balance of $74,299. As a part of the new agreement, the new borrower agreed to pay the Company an amount equal to $7,430 in principal balance. The new loan has a risk rating of 3 as of December 31, 2024.
The following table details overall statistics for our loans receivable portfolio as of December 31, 2025 and 2024:
December 31,
2025 2024
Number of loans 140 145
Principal balance $ 7,845,350 $ 7,507,083
Net book value $ 7,764,337 $ 7,402,810
Unfunded loan commitments(1)
$ 332,562 $ 254,768
Weighted-average cash coupon(2)
+3.31%
+3.50%
Weighted-average all-in yield(2)(3)
+3.41%
+3.68%
Weighted-average maximum maturity (years)(4)
2.5 2.4
__________________________
(1) We may be required to provide funding when requested by the borrower in accordance with the terms of the underlying agreements.
(2) Our floating rate loans are expressed as a spread over SOFR. In addition to cash coupon, all-in yield includes accretion of discount (amortization of premium) and accrual of exit fees. For loans placed on non-accrual, the interest rate used in calculating weighted-average cash coupon and weighted-average all-in yield is 0%.
(3) As of December 31, 2025 and 2024, the one-month SOFR rate was 3.69% and 4.50%, respectively.
(4) Maximum maturity assumes all extension options are exercised by the borrowers; however loans may be repaid prior to such date.
The following table provides details of our loan receivable, held-for-investment portfolio, on a loan-by-loan basis, as of December 31, 2025:
Loan Type
Origination Date(1)
Total Loan Principal Balance Net Book Value
Cash Coupon(2)
All-in Yield(2)
Maximum Maturity(3)
Location Property Type
LTV(1)
Multifamily
1 Senior Loan 6/9/2022 $ 365,110 $ 358,849 $ 360,142 +3.30% +3.35% 6/9/2027 Various Multifamily 74 %
2 Senior Loan 7/14/2023 156,500 156,500 156,654 +3.40% +3.44% 7/9/2028 Various Multifamily 69 %
3 Senior Loan 6/8/2022 144,160 144,160 144,980 +3.89% +4.03% 6/9/2027 New York, NY Multifamily 73 %
4 Senior Loan 6/4/2025 135,200 135,200 135,192 +2.55% +2.55% 6/9/2030 Chicago, IL Multifamily 74 %
5 Senior Loan 11/20/2025 118,000 118,000 117,976 +2.25% +2.26% 12/9/2030 Las Colinas, TX Multifamily 73 %
6 Senior Loan 5/26/2022 108,500 102,037 102,590 +3.40% +3.55% 6/9/2027 Mesa, AZ Multifamily 67 %
7 Senior Loan 12/21/2021 93,900 90,796 90,781 +3.80% +3.80% 1/9/2027 Houston, TX Multifamily 76 %
8 Senior Loan 11/18/2024 92,500 92,500 88,190 +2.50% +4.86% 12/5/2026 Queens, NY Multifamily 75 %
9 Senior Loan 5/13/2022 89,500 89,500 89,857 +4.25% +4.36% 5/9/2027 New York, NY Multifamily 58 %
10 Senior Loan 2/4/2022 89,000 89,000 88,961 +3.85% +4.16% 2/1/2026 Temecula, CA Multifamily 75 %
11 Senior Loan 7/20/2022 85,690 81,375 81,553 +3.65% +3.72% 8/9/2027 Phoenix, AZ Multifamily 61 %
12 Senior Loan 4/29/2022 85,000 85,000 84,940 +3.55% +3.55% 5/6/2027 Reseda, CA Multifamily 69 %
13 Senior Loan 5/13/2022 83,885 83,885 84,220 +4.25% +4.36% 5/9/2027 New York, NY Multifamily 60 %
14 Senior Loan 2/14/2025 75,000 75,000 74,982 +3.00% +3.01% 2/9/2030 Davenport, FL Multifamily 70 %
15 Senior Loan 12/15/2021 73,620 73,620 73,447 +3.10% +3.10% 12/9/2026 Sunny Isles Beach, FL Multifamily 74 %
16 Senior Loan 12/24/2025 69,600 69,600 69,575 +2.75% +2.76% 1/9/2031 Venice, FL Multifamily 74 %
17 Senior Loan 4/26/2022 68,498 66,424 66,360 +3.82% +3.82% 5/9/2027 Tucson, AZ Multifamily 68 %
18 Senior Loan 9/10/2021 68,291 68,291 68,133 +3.15% +3.15% 10/9/2027 Richardson, TX Multifamily 68 %
19 Senior Loan 4/27/2022 67,940 65,443 65,523 +4.00% +4.00% 5/9/2027 Indianapolis, IN Multifamily 79 %
Loan Type
Origination Date(1)
Total Loan Principal Balance Net Book Value
Cash Coupon(2)
All-in Yield(2)
Maximum Maturity(3)
Location Property Type
LTV(1)
20 Senior Loan 2/28/2022 $ 66,869 $ 66,869 $ 66,869 5.25% 5.25% 9/9/2028 Atlanta, GA Multifamily 68 %
21 Senior Loan 10/2/2025 66,428 66,428 66,405 +3.25% +3.27% 10/9/2030 Jacksonville, FL Multifamily 83 %
22 Senior Loan 12/24/2025 66,100 66,100 66,075 +2.85% +2.86% 1/9/2031 Venice, FL Multifamily 74 %
23 Senior Loan 4/26/2021 66,000 66,000 65,938 +3.40% +3.40% 5/9/2026 Las Vegas, NV Multifamily 72 %
24 Senior Loan 7/29/2021 62,500 62,500 62,477 +3.50% +3.50% 8/9/2026 Maitland, FL Multifamily 72 %
25 Senior Loan 8/2/2021 58,947 58,947 59,138 +2.91% +3.03% 8/9/2027 Austin, TX Multifamily 73 %
26 Senior Loan 5/12/2022 58,165 57,148 57,146 +3.35% +3.35% 5/9/2027 Aurora, CO Multifamily 80 %
27 Senior Loan 12/17/2025 58,100 58,100 58,075 +2.80% +2.82% 1/9/2031 Indian Land, SC Multifamily 76 %
28 Senior Loan 4/13/2022 57,168 56,730 56,625 5.50% 5.99% 5/9/2027 Houston, TX Multifamily 78 %
29 Senior Loan 2/17/2022 55,400 53,746 53,839 +4.10% +4.16% 3/9/2027 Indianapolis, IN Multifamily 80 %
30 Senior Loan 12/21/2022 55,000 55,000 55,069 +3.95% +4.03% 12/9/2027 San Bernardino, CA Multifamily 66 %
31 Senior Loan 12/19/2024 54,500 54,500 54,480 +3.30% +3.32% 1/14/2030 New York, NY Multifamily 61 %
32 Senior Loan 8/17/2022 54,283 54,283 54,318 +2.50% +2.55% 9/9/2027 Austin, TX Multifamily 62 %
33 Senior Loan 12/13/2024 54,075 54,075 53,998 +3.50% +3.57% 12/9/2028 Jacksonville, FL Multifamily 74 %
34 Senior Loan 3/7/2022 53,135 50,936 50,933 +3.50% +3.55% 3/9/2027 Humble, TX Multifamily 75 %
35 Senior Loan 3/22/2022 50,750 50,750 50,750 +3.60% +3.60% 4/9/2027 Humble, TX Multifamily 72 %
36 Senior Loan 12/15/2021 49,000 49,000 48,950 +3.45% +3.50% 12/9/2026 Charleston, SC Multifamily 77 %
37 Senior Loan 6/23/2021 48,944 48,944 48,870 +2.91% +2.92% 7/9/2026 Roswell, GA Multifamily 75 %
38 Senior Loan 7/29/2021 47,500 47,500 47,485 +3.50% +3.50% 8/9/2026 Clearwater, FL Multifamily 79 %
39 Senior Loan 12/10/2025 47,000 47,000 46,975 +2.50% +2.60% 12/9/2030 Justin, TX Multifamily 74 %
40 Senior Loan 11/23/2021 45,445 45,445 45,444 +3.05% +3.13% 12/9/2026 Dallas, TX Multifamily 69 %
41 Senior Loan 2/7/2025 44,320 41,700 41,685 +2.65% +2.67% 2/9/2030 Jacksonville, FL Multifamily 65 %
42 Senior Loan 8/9/2021 44,000 44,000 43,991 +2.50% +2.50% 3/9/2030 Philadelphia, PA Multifamily 79 %
43 Senior Loan 8/25/2022 44,000 44,000 44,447 +3.50% +3.81% 9/9/2027 McKinney, TX Multifamily 53 %
44 Senior Loan 12/10/2024 43,100 35,955 35,938 +3.00% +3.02% 12/9/2029 Jacksonville, FL Multifamily 49 %
45 Senior Loan 8/19/2021 43,000 43,000 42,967 +2.80% +3.06% 11/9/2026 Omaha, NE Multifamily 75 %
46 Senior Loan 7/28/2021 42,801 42,801 42,732 +3.11% +3.12% 8/9/2026 Sandy Springs, GA Multifamily 77 %
47 Senior Loan 8/9/2021 42,660 42,522 42,455 +3.16% +3.17% 8/9/2026 Southaven, MS Multifamily 57 %
48 Senior Loan 3/14/2022 42,000 40,680 40,840 +3.50% +3.60% 4/9/2027 Dallas, TX Multifamily 76 %
49 Senior Loan 7/21/2021 41,100 41,100 41,039 +2.91% +2.92% 8/9/2026 Evanston, IL Multifamily 77 %
50 Senior Loan 11/10/2021 40,799 40,194 39,833 +4.10% +4.30% 11/9/2027 Various Multifamily 70 %
51 Senior Loan 8/25/2021 40,799 40,799 40,740 +3.50% +3.50% 9/9/2026 Cypress, TX Multifamily 69 %
52 Senior Loan 3/29/2023 40,193 40,193 40,193 +2.25% +2.25% 10/9/2027 Various Multifamily 57 %
53 Senior Loan 6/24/2021 38,600 38,600 38,599 +4.86% +5.22% 1/9/2027 Austin, TX Multifamily 76 %
54 Senior Loan 11/4/2021 37,300 37,300 37,101 +3.45% +3.45% 11/1/2026 Boca Raton, FL Multifamily 81 %
55 Senior Loan 4/29/2022 37,135 36,006 36,045 +3.75% +3.95% 5/9/2027 Euless, TX Multifamily 80 %
56 Senior Loan 12/21/2021 32,200 32,200 32,112 +2.90% +2.90% 1/9/2027 Hackensack, NJ Multifamily 68 %
57 Senior Loan 5/8/2025 31,500 31,500 31,479 +2.65% +2.67% 5/9/2030 New York, NY Multifamily 66 %
58 Senior Loan 1/28/2022 31,229 31,229 31,361 +3.81% +3.94% 9/9/2026 Dallas, TX Multifamily 82 %
59 Senior Loan 3/31/2025 31,172 31,172 28,756 +1.25% +3.20% 6/1/2029 New York, NY Multifamily 97 %
60 Senior Loan 11/23/2021 30,506 30,506 30,505 +3.05% +3.13% 12/9/2026 Dallas, TX Multifamily 69 %
61 Senior Loan 12/16/2021 29,500 29,500 29,497 +3.55% +3.55% 1/9/2027 Fort Worth, TX Multifamily 72 %
62 Senior Loan 6/20/2025 28,534 25,550 25,531 +2.75% +2.79% 7/9/2030 Las Vegas, NV Multifamily 65 %
63 Senior Loan 12/15/2021 28,400 27,592 27,591 +3.30% +3.40% 12/15/2026 Arlington, TX Multifamily 79 %
64 Senior Loan 1/28/2022 24,489 24,489 24,591 +3.81% +3.94% 9/9/2026 Mesquite, TX Multifamily 78 %
65 Senior Loan 1/28/2022 22,149 22,149 22,232 +3.81% +3.94% 9/9/2026 Dallas, TX Multifamily 85 %
66 Senior Loan 8/26/2021 20,955 20,755 20,818 +3.21% +3.26% 9/9/2026 Seattle, WA Multifamily 69 %
67 Senior Loan 7/20/2021 20,136 19,650 19,670 +3.50% +3.60% 8/9/2026 Las Vegas, NV Multifamily 72 %
68 Senior Loan 11/18/2024 18,750 18,750 18,282 +3.00% +4.21% 10/5/2027 Atlanta, GA Multifamily 63 %
69 Mezz Loan 6/8/2022 15,840 15,840 15,930 +7.50% +7.64% 6/9/2027 New York, NY Multifamily 81 %
70 Mezz Loan 2/14/2020 15,000 15,000 14,615 +5.90% +5.90% 12/5/2026 Queens, NY Multifamily 75 %
71 Senior Loan 11/18/2024 13,444 13,444 13,114 +3.25% +4.33% 11/9/2026 Kent, WA Multifamily 87 %
72 Senior Loan 3/25/2021 12,500 12,500 12,502 +3.36% +3.42% 4/9/2026 Lithonia, GA Multifamily 67 %
73 Senior Loan 3/19/2021 12,200 12,200 12,277 +5.00% +5.15% 4/9/2026 Brooklyn, NY Multifamily 85 %
74 Senior Loan 11/18/2024 11,044 11,044 11,116 +3.00% +3.45% 6/1/2027 Hollywood, FL Multifamily 61 %
75 Mezz Loan 5/12/2022 5,785 5,785 5,785 +10.50% +10.50% 5/9/2027 Aurora, CO Multifamily 86 %
Subtotal Multifamily $ 4,302,343 $ 4,254,886 $ 4,250,284
Loan Type
Origination Date(1)
Total Loan Principal Balance Net Book Value
Cash Coupon(2)
All-in Yield(2)
Maximum Maturity(3)
Location Property Type
LTV(1)
Hospitality
76 Senior Loan 4/28/2022 $ 195,000 $ 195,000 $ 195,482 +3.25% +3.31% 5/9/2027 New York, NY Hospitality 70 %
77 Senior Loan 11/15/2022 146,200 146,200 146,200 +4.46% +4.46% 11/9/2027 Nashville, TN Hospitality 52 %
78 Senior Loan 2/24/2025 130,000 130,000 129,983 +3.65% +3.66% 3/9/2028 San Diego, CA Hospitality 49 %
79 Senior Loan 11/26/2024 102,500 102,500 102,505 +3.25% +3.36% 12/9/2029 Cambridge, MA Hospitality 70 %
80 Senior Loan 2/5/2025 90,000 90,000 90,000 +3.60% +3.66% 2/9/2030 New York, NY Hospitality 43 %
81 Senior Loan 9/8/2022 87,000 87,000 87,013 +4.25% +4.32% 9/9/2027 Washington, DC Hospitality 52 %
82 Senior Loan 11/3/2022 73,000 63,000 63,171 +3.75% +3.80% 11/9/2029 Adairsville, GA Hospitality 45 %
83 Senior Loan 5/20/2022 62,373 62,373 62,371 +4.15% +4.15% 5/9/2027 Montauk, NY Hospitality 80 %
84 Senior Loan 12/19/2025 49,000 49,000 48,975 +3.10% +3.12% 1/9/2031 Miami, FL Hospitality 48 %
85 Senior Loan 1/7/2022 38,000 38,000 38,249 +3.75% +3.93% 3/9/2027 Miami, FL Hospitality 49 %
86 Senior Loan 6/28/2019 25,400 25,400 25,479 +4.50% +4.61% 7/9/2026 Davis, CA Hospitality 72 %
87 Senior Loan 7/18/2018 22,500 22,500 22,563 +5.36% +5.36% 1/31/2026 Gaithersburg, MD Hospitality 80 %
88 Senior Loan 6/27/2024 14,986 14,986 14,818 +2.25% +2.68% 2/6/2027 Mesa, AZ Hospitality 66 %
89 Senior Loan 6/27/2024 12,995 12,995 12,914 +3.25% +3.56% 6/18/2026 Macon, GA Hospitality 62 %
Subtotal Hospitality $ 1,048,954 $ 1,038,954 $ 1,039,723
Office
90 Senior Loan 12/17/2025 150,000 150,000 149,975 +2.70% +2.71% 1/9/2031 New York, NY Office 57 %
91 Senior Loan 3/31/2022 125,470 108,149 108,143 +3.65% +3.65% 4/9/2028 Addison, TX Office 67 %
92 Senior Loan 12/31/2025 98,470 77,740 77,715 +2.75% +2.76% 1/9/2031 Coral Gables, FL Office 64 %
93 Senior Loan 11/13/2025 83,000 65,623 65,598 +3.60% +3.70% 11/9/2030 Miami, FL Office 46 %
94 Senior Loan 12/22/2021 81,500 76,272 76,825 +4.75% +4.86% 1/9/2027 Dallas, TX Office 62 %
95 Senior Loan 10/30/2025 67,860 58,500 58,476 +2.80% +2.81% 11/9/2030 Coral Gables, FL Office 63 %
96 Senior Loan 3/12/2021 52,250 35,010 34,994 +5.86% +5.86% 3/9/2026 San Francisco, CA Office 65 %
97 Senior Loan 11/1/2021 47,913 47,913 47,808 +3.81% +3.81% 11/9/2026 Fort Lauderdale, FL Office 67 %
98 Senior Loan 1/28/2022 43,650 37,567 37,663 +5.00% +5.06% 2/9/2027 Milwaukee, WI Office 59 %
99 Senior Loan 2/18/2022 40,240 25,740 25,728 +3.90% +3.90% 3/9/2028 Atlanta, GA Office 60 %
100 Senior Loan 11/30/2021 36,810 36,284 36,363 +5.00% +5.41% 12/9/2026 Memphis, TN Office 70 %
101 Senior Loan 5/4/2021 30,000 26,578 26,703 7.50% 7.61% 3/9/2028 Richardson, TX Office 65 %
102 Senior Loan 12/18/2020 28,440 25,289 25,287 +4.61% +4.61% 1/9/2026 Rockville, MD Office 69 %
103 Senior Loan 5/28/2021 26,500 26,500 26,477 +5.11% +5.12% 6/9/2026 Austin, TX Office 57 %
104 Senior Loan 6/27/2024 3,912 3,912 3,632 +1.90% +3.37% 8/1/2029 Bronx, NY Office 41 %
Subtotal Office $ 916,015 $ 801,077 $ 801,387
Industrial
105 Senior Loan 12/30/2024 108,875 100,182 100,163 +2.55% +2.56% 1/9/2030 Sunrise, FL Industrial 48 %
106 Senior Loan 1/20/2023 102,733 84,733 84,733 +3.70% +3.70% 2/9/2028 Various Industrial 64 %
107 Senior Loan 4/2/2025 80,270 56,985 57,016 +2.40% +2.49% 4/9/2030 Bayonne, NJ Industrial 44 %
108 Senior Loan 8/15/2024 79,790 75,002 74,987 +2.75% +2.76% 9/9/2029 Various Industrial 67 %
109 Senior Loan 12/19/2025 64,700 59,700 59,675 +2.50% +2.51% 1/9/2031 Sparks, NV Industrial 52 %
110 Senior Loan 12/11/2025 62,800 58,000 57,980 +2.40% +2.41% 1/9/2031 Detroit, MI Industrial 67 %
111 Senior Loan 2/25/2025 48,500 40,011 40,018 +3.50% +3.60% 3/9/2030 Sandy Springs, GA Industrial 65 %
112 Senior Loan 9/29/2025 45,000 39,923 39,900 +2.70% +2.73% 10/9/2030 Valley Cottage, NY Industrial 60 %
113 Senior Loan 10/8/2025 43,571 42,550 42,550 +2.70% +2.70% 10/9/2030 Gilbert, AZ Industrial 60 %
114 Senior Loan 4/27/2021 37,250 34,430 34,346 +3.26% +3.57% 5/9/2027 Jamaica, NY Industrial 61 %
115 Senior Loan 12/23/2025 35,800 33,600 33,580 +2.75% +2.76% 1/9/2031 Atlanta, GA Industrial 54 %
116 Senior Loan 4/27/2022 31,300 29,821 29,782 +4.30% +4.30% 5/9/2027 Morrow, GA Industrial 62 %
117 Senior Loan 6/10/2025 27,200 23,158 23,150 +2.75% +2.77% 6/9/2030 Delanco, NJ Industrial 63 %
118 Senior Loan 1/17/2025 22,540 22,540 22,522 +2.50% +2.53% 2/9/2030 Glen Allen, VA Industrial 55 %
119 Senior Loan 3/28/2024 20,265 20,265 20,439 +3.00% +3.13% 4/9/2029 Various Industrial 61 %
120 Mezz Loan 2/21/2020 18,102 18,102 18,102 10.00% 10.00% 3/1/2030 Various Industrial 70 %
121 Senior Loan 2/26/2021 17,706 17,706 17,650 +3.36% +3.68% 3/9/2027 Elizabeth, NJ Industrial 57 %
122 Senior Loan 2/16/2024 14,700 14,700 14,699 +3.00% +3.31% 3/9/2029 Cedar Hill, TX Industrial 57 %
123 Mezz Loan 1/20/2023 11,415 9,415 9,415 +5.20% +5.20% 2/9/2028 Various Industrial 64 %
Subtotal Industrial $ 872,517 $ 780,823 $ 780,707
Loan Type
Origination Date(1)
Total Loan Principal Balance Net Book Value
Cash Coupon(2)
All-in Yield(2)
Maximum Maturity(3)
Location Property Type
LTV(1)
Mixed Use
124 Senior Loan 12/18/2025 $ 235,000 $ 210,000 $ 209,975 +2.85% +2.85% 1/9/2031 New York, NY Mixed Use 32 %
125 Senior Loan 12/9/2025 113,000 108,400 108,375 +2.55% +2.56% 12/9/2030 Northridge, CA Mixed Use 57 %
126 Senior Loan 12/4/2023 110,000 110,000 110,172 +2.90% +3.30% 12/9/2028 Washington, DC Mixed Use 59 %
127 Senior Loan 11/13/2025 69,650 55,182 55,158 +2.70% +2.71% 11/9/2030 Burlington, MA Mixed Use 65 %
128 Mezz Loan 10/20/2022 30,842 30,670 30,680 +6.50% +6.50% 2/6/2026 Philadelphia, PA Mixed Use 68 %
129 Senior Loan 2/19/2020 16,600 13,000 12,996 +3.75% +3.75% 3/9/2026 West Hollywood, CA Mixed Use 71 %
Subtotal Mixed Use $ 575,092 $ 527,252 $ 527,356
Retail
130 Senior Loan 6/30/2022 106,000 100,000 99,860 +4.15% +4.15% 7/9/2027 Lynwood, CA Retail 61 %
131 Senior Loan 5/2/2025 81,000 78,212 78,212 +3.00% +3.00% 5/9/2030 Westminster, CO Retail 59 %
132 Senior Loan 12/19/2024 70,045 58,200 58,186 +3.60% +3.61% 1/9/2030 Chula Vista, CA Retail 68 %
133 Senior Loan 11/20/2025 58,600 58,600 58,575 +3.25% +3.26% 12/9/2030 Yonkers, NY Retail 63 %
134 Senior Loan 3/11/2021 30,000 30,000 29,985 +4.61% +4.67% 3/9/2026 Colleyville, TX Retail 58 %
135 Senior Loan 6/27/2024 3,548 3,548 3,516 +3.00% +3.15% 1/2/2027 Brooklyn, NY Retail 49 %
136 Senior Loan 6/27/2024 2,918 2,918 2,888 +3.25% +3.34% 8/1/2027 New York, NY Retail 13 %
137 Senior Loan 6/27/2024 2,744 2,744 2,735 +3.00% +3.19% 4/1/2026 Corona, NY Retail 32 %
138 Senior Loan 6/27/2024 1,036 1,036 1,023 +3.25% +3.65% 7/28/2027 New York, NY Retail 13 %
Subtotal Retail $ 355,891 $ 335,258 $ 334,980
Various
139 Senior Loan 11/7/2025 91,000 91,000 91,000 +2.70% +2.70% 11/9/2030 Santa Barbara, CA Various 61 %
Self Storage
140 Senior Loan 1/28/2021 16,100 16,100 16,170 +5.38% +5.67% 2/9/2026 Philadelphia, PA Self Storage 79 %
Total/Weighted Average $ 8,177,912 $ 7,845,350 $ 7,841,607 3.31 % 3.41 % 66 %
CECL reserve (77,270)
Loans receivable, net $ 7,764,337
__________________________
(1) Date loan was originated or acquired by us, and the LTV, as of such date. Dates and LTV are not updated for subsequent loan modifications or upsizes.
(2) The weighted-average cash coupon and all-in yield are expressed as a spread over the relevant floating benchmark rate, which is SOFR. In addition to cash coupon, all-in yield includes accretion of discount (amortization of premium) and accrual of exit fees For loans placed on non-accrual, the interest rate used in calculating weighted-average cash coupon and weighted-average all-in yield is 0%.
(3) Maximum maturity assumes all extension options are exercised by the borrower, however loans may be repaid prior to such date.
Results of Operations
The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2025, 2024 and 2023:
Year Ended December 31,
2025 2024 2023
Net interest income
Interest income $ 625,442 $ 748,815 $ 745,516
Less: Interest expense (387,848) (450,828) (426,418)
Interest income on mortgage loans held in securitization trusts 148,001 89,331 24,374
Less: Interest expense on mortgage obligations issued by securitization trusts (130,065) (78,513) (21,139)
Net interest income 255,530 308,805 322,333
Other expenses
Management fee 37,381 37,922 34,884
Performance fee - 16,141 23,356
General and administrative expenses 46,773 46,147 41,183
Real estate operating expenses 33,261 11,149 6,268
Depreciation and amortization 20,387 15,384 7,336
Interest expense on real estate 8,056 9,251 9,105
Less: Expense limitation (1,589) (139) (148)
Add: Expense recoupment to sponsor 338 - 753
Net other expenses 144,607 135,855 122,737
Other income (loss)
Credit loss expense, net 13,157 (20,517) (65,613)
Real estate operating income 48,192 25,298 20,303
Net change in unrealized gain (loss) on interest rate cap (2,617) (3,899) (2,543)
Net realized gain (loss) on mortgage-backed securities, fair value option 111 359 -
Net realized gain (loss) on extinguishment of debt - 273 261
Net realized gain (loss) on real estate, net 3,909 357 -
Net change in unrealized gain (loss) on mortgage-backed securities, fair value option (1,157) 762 433
Net unrealized gain (loss) on mortgage loans and obligations held in securitization trusts 1,094 1,692 299
Net unrealized gain (loss) on real estate, held-for-sale (2,834) - -
Total other income (loss) 59,855 4,325 (46,860)
Net income before taxes 170,778 177,275 152,736
Income tax expense (869) (2,261) (2,533)
Net income 169,909 175,014 150,203
Preferred stock dividends (15) (15) (15)
Net income attributable to FS Credit Real Estate Income Trust, Inc. $ 169,894 $ 174,999 $ 150,188
Net Interest Income
Net interest income is generated on our interest-earning assets less related interest-bearing liabilities. The decrease in interest income and interest expense was primarily attributable to lower average index rates and a lower average loan balance for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The increase in interest income on mortgage loans held in securitization trusts, and interest expense on mortgage obligations issued by securitization trusts was attributable to the consolidation of securitization vehicles.
Other Expenses
Other expenses include management and performance fees payable to FS Real Estate Advisor and general and administrative expenses. General and administrative expenses include administrative services expenses and fees, auditing and professional fees, independent director fees, transfer agent fees, loan servicing expenses and other costs associated with operating our business. The increase in other expenses for the year ended December 31, 2025 as compared to the year ended December 31, 2024 can primarily be attributed to the increase in real estate operating expenses and depreciation and amortization as a result of the acquisition of real estate properties through foreclosure during 2025 and the second half of 2024.
Expense Limitation
We have entered into an Expense Limitation Agreement with FS Real Estate Advisor and Rialto pursuant to which FS Real Estate Advisor and Rialto have agreed to waive reimbursement of or pay, on a quarterly basis, our annualized ordinary operating expenses for such quarter to the extent such expenses exceed 1.5% per annum of our average net assets attributable to each of our classes of common stock. Ordinary operating expenses for each class of common stock consist of all ordinary expenses attributable to
such class, including administration fees, transfer agent fees, fees paid to our board of directors, loan servicing expenses, administrative services expenses and fees, and related costs associated with legal, regulatory compliance and investor relations, but excluding the following: (a) management fees and performance fees paid to FS Real Estate Advisor pursuant to the Advisory Agreement, (b) interest expense and other financing costs, (c) taxes, (d) distribution or shareholder servicing fees and (e) unusual, unexpected and/or nonrecurring expenses. We will repay FS Real Estate Advisor or Rialto on a quarterly basis any ordinary operating expenses previously waived or paid, but only if the reimbursement would not cause the then-current expense limitation, if any, to be exceeded. In addition, the reimbursement of expenses will be made only if payable not more than three years from the end of the fiscal quarter in which the expenses were paid or waived.
As of December 31, 2025 and 2024, we had $0 and $139, respectively, of reimbursements due from FS Real Estate Advisor and Rialto.
During the year ended December 31, 2025, we accrued $338 for expense recoupments payable to FS Real Estate Advisor and Rialto. As of December 31, 2025, $77 expense recoupments were paid to FS Real Estate Advisor and Rialto. As of December 31, 2025, $261 in expense recoupments were payable to FS Real Estate Advisor and Rialto.
Credit Loss Expense, Net
During the years ended December 31, 2025 and 2024, our expected credit loss reserve decreased by $13,157 and increased by $20,517, respectively. The decrease was primarily driven by the macroeconomic assumptions utilized in determining our general current expected credit loss ("CECL") reserve. Credit loss expenses relate to changes in the Company's general and specific CECL reserves for the Company's Loans receivable, held-for-investment and Mortgage-backed securities, held-to-maturity portfolios, and the credit loss allowance associated with the Company's Mortgage-backed securities available-for-sale.
Results for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023
Refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024filed with the SEC on March 21, 2025 for discussion of our consolidated results of operations for the year ended December 31, 2024compared to the year ended December 31, 2023, which specific discussion is incorporated herein by reference.
Non-GAAP Financial Measures
Funds from Operations and Modified Funds from Operations
We use Funds from Operations ("FFO"), a widely accepted non-GAAP financial metric, to evaluate our performance. FFO provides a supplemental measure to compare our performance and operations to other REITs. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts ("NAREIT") has promulgated a standard known as FFO, which it believes more accurately reflects the operating performance of a REIT. As defined by NAREIT, FFO means net income computed in accordance with GAAP, excluding gains (or losses) from sales of operating property, plus depreciation and amortization and after adjustments for unconsolidated entities. In addition, NAREIT has further clarified the FFO definition to add-back impairment write-downs of depreciable real estate or of investments in unconsolidated entities that are driven by measurable decreases in the fair value of depreciable real estate and to exclude the earnings impacts of cumulative effects of accounting changes. We have adopted the NAREIT definition for computing FFO.
Due to the unique features of publicly registered, non-listed REITs, the Institute for Portfolio Alternatives ("IPA"), an industry trade group, published a standardized non-GAAP financial measure known as Modified Funds from Operations ("MFFO"), which the IPA has promulgated as a supplemental measure for publicly registered non-listed REITs and which may be another appropriate supplemental measure to reflect the operating performance of a non-listed REIT.
The IPA defines MFFO as FFO adjusted for acquisition fees and expenses, amounts relating to straight line rents and amortization of premiums or accretion of discounts on debt investments, non-recurring impairments of real estate-related investments, mark-to-market adjustments included in net income, non-recurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures.
Because MFFO may be a recognized measure of operating performance within the non-listed REIT industry, MFFO and the adjustments used to calculate it may be useful in order to evaluate our performance against other non-listed REITs. Like FFO, MFFO is not equivalent to our net income or loss as determined under GAAP, as detailed in the table below, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we continue to acquire a significant amount of investments.
Our presentation of FFO and MFFO may not be comparable to other similarly titled measures presented by other REITs. We believe that the use of FFO and MFFO provides a more complete understanding of our operating performance to stockholders and to management, and when compared year over year, reflects the impact on our operations from trends in operating costs, general and administrative expenses, and interest costs. Neither FFO nor MFFO is intended to be an alternative to "net income" or to "cash flows
from operating activities" as determined by GAAP as a measure of our capacity to pay distributions. Management uses FFO and MFFO to compare our operating performance to that of other REITs and to assess our operating performance.
Neither the SEC, any other regulatory body nor NAREIT has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, the SEC, another regulatory body or NAREIT may decide to standardize the allowable adjustments across the non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO.
Our FFO and MFFO are calculated for the years ended December 31, 2025, 2024 and 2023 as follows:
Year Ended December 31,
2025 2024 2023
Net income (GAAP) $ 169,909 $ 175,014 $ 150,203
Adjustments to arrive at funds from operations:
Real estate depreciation and amortization 20,387 15,384 7,336
Funds from operations $ 190,296 $ 190,398 $ 157,539
Adjustments to arrive at modified funds from operations:
Accretion of discount on mortgage-backed securities held-to-maturity (2,142) (2,960) (6,750)
Straight-line rental income (120) (2,033) (3,147)
Net change in unrealized (gain) loss on interest rate cap 2,617 3,899 2,543
Credit loss expense, net (13,157) 20,517 65,613
Net change in unrealized (gain) loss on mortgage-backed securities, fair value option 1,157 (762) (433)
Unrealized (gain) loss on mortgage loans and obligations held in securitization trusts, net (1,094) (1,692) (299)
Unrealized (gain) loss on real estate, held-for-sale 2,834 - -
Modified funds from operations $ 180,391 $ 207,367 $ 215,066
NAV per Share
FS Real Estate Advisor calculates our NAV per share in accordance with the valuation guidelines approved by our board of directors for the purposes of establishing a price for shares sold in our public offering as well as establishing a repurchase price for shares repurchased pursuant to our Share Repurchase Plan.
In general, our investments are valued by FS Real Estate Advisor based on market quotations, at amortized cost or at fair value determined in accordance with GAAP. In accordance with the valuation guidelines approved by our board of directors, FS Real Estate Advisor calculates our NAV per share for each class of our common stock as of the last calendar day of each month. For purposes of calculating our NAV, FS Real Estate Advisor uses the following valuation methods:
•Commercial real estate debt classified as held-for-investment is valued at amortized cost, net of unamortized acquisition premiums or discounts, loan fees, and origination costs. Mortgage-backed securities are classified as held-to-maturity when we intend to and can hold such securities until maturity and are valued at amortized cost, net of unamortized acquisition premium or discount. Our general CECL reserve is not considered impairment and is excluded from our NAV calculation consistent with other unrealized gains (losses) for investments expected to be held to maturity pursuant to our existing policy for calculating NAV. We recognize such potential credit losses in the NAV calculation if and when a loan is deemed impaired. Impairment is indicated when it is deemed probable that we will not be able to collect all amounts due to us pursuant to the contractual terms of the loan. If a loan is determined to be impaired, the loan is written down through a loan specific reserve. See Note 2 to our consolidated financial statements included herein for additional information regarding our accounting for impaired loans, including significant judgments and assumptions included. At least quarterly, FS Real Estate Advisor, with assistance from our sub-adviser, evaluates for impairment each loan classified as held-for-investment.
•Mortgage-backed securities that we do not classify as held-to-maturity are reported at fair value. On a monthly basis, FS Real Estate Advisor values such securities using quotations obtained from an independent third-party pricing service, which provides prevailing bid and ask prices that are screened for validity by the third-party pricing service on the valuation date. For securities for which there is no readily available market quotations, FS Real Estate Advisor values the security using current market data and a valuation provided by an independent third-party valuation firm. Each investment is valued by FS Real Estate Advisor no less frequently than quarterly.
•Purchased commercial real estate properties are initially valued at cost, which is expected to represent fair value at that time. FS Real Estate Advisor, with assistance from our sub-adviser, expects to receive an appraisal performed by an independent third-party appraisal firm on each property purchased prior to or upon acquisition. Foreclosed properties are initially measured at fair value by the adviser. Each property will then be valued by an independent third party monthly, commencing with the month subsequent to acquisition. Properties accounted for as held-for-investment are reported at fair value, while
properties accounted for as held-for-sale are reported at fair value less estimated costs to sell. The independent third-party valuation firm will provide a monthly valuation for each property using the discounted cash flow methodology (income approach) as a primary methodology, although other industry standard methodologies may be used, including the sales comparison and replacement cost approaches. Further, the independent third-party valuation firm will provide an annual valuation for each property, which will be consistent with its monthly valuation but will also reflect (i) property specific factors such as property income, cash flow forecasts, capital improvements and key performance indicators (e.g. occupancy rates) and (ii) market specific factors such as discount rates, capitalization rates and market sale transactions.
•Liabilities include repurchase agreements payable, credit facility payable, collateralized loan obligations, mortgage obligations, fees payable to FS Real Estate Advisor and the dealer manager, accounts payable, accrued operating expenses, any portfolio-level credit facilities, and other liabilities. All liabilities are valued at amounts payable, net of unamortized premium or discount, and net of unamortized debt issuance costs. Liabilities related to stockholder servicing fees allocable to Class T, Class S, Class D and Class M shares are only included in the NAV calculation for those classes. Liabilities related to the base management fee is a class-specific expense for Class T, Class S, Class D, Class M and Class I shares, and the performance fee is a class-specific expense for Class T, Class S, Class D, Class M, Class I and Class Y shares. Class I PCRs will not be treated as a liability unless and until Class I shares are issuable pursuant to our advisory agreement and the Class I PCR agreement.
Loans receivable and mortgage-backed securities held-to-maturity are valued at amortized cost, consistent with how they are recorded in accordance with GAAP, as these instruments are intended to be held-to-maturity. Liabilities are valued at amortized cost as these obligations are expected to be satisfied at their carrying value. See Note 9 to our consolidated financial statements included herein for additional information including a comparison of our carrying value and an estimate of the fair value of our loans receivable held-for-investment, mortgage-backed securities held-to-maturity, repurchase agreements payable, credit facility payable, collateralized loan obligations, and mortgage note payable.
The following table provides a breakdown of the major components of our total NAV as of December 31, 2025:
Components of NAV December 31, 2025
Cash and cash equivalents $ 265,361
Restricted cash 87,224
Loans receivable 7,841,607
Mortgage-backed securities held-to-maturity 30,110
Mortgage-backed securities, at fair value 201,618
Interest receivable 72,964
Investments in real estate, held-for-investment 460,266
Investments in real estate, held-for-sale 223,167
Receivable for investment sold and repaid 19,833
Other assets 9,062
Mortgage loans held in securitization trusts, at fair value 2,654,570
Repurchase agreements payable, net (2,663,928)
Credit facility payable, net (1,042,958)
Collateralized loan obligations, net (2,510,160)
Mortgage note payable, net (124,700)
Accrued servicing fees(1)
(1,974)
Other liabilities (98,370)
Mortgage obligations issued by securitization trusts, at fair value (2,408,636)
Net asset value $ 3,015,056
_______________________
(1) See Reconciliation of Stockholders' Equity to NAV below for an explanation of the differences between the stockholder servicing fees accrued for purposes of NAV and the amount accrued under GAAP.
The following table provides a breakdown of our total NAV and NAV per share by share class as of December 31, 2025:
NAV per Share Class F Class Y Class T Class S Class D Class M Class I Total
Net asset value $ 14,699 $ 20,175 $ 17,114 $ 1,668,711 $ 9,182 $ 95,499 $ 1,189,676 $ 3,015,056
Number of outstanding shares 583,372 843,658 695,928 67,157,395 372,610 3,864,662 49,713,386 123,231,011
NAV per share as of December 31, 2025 $ 25.1960 $ 23.9138 $ 24.5916 $ 24.8478 $ 24.6437 $ 24.7109 $ 23.9307
The following table details the weighted average discount rate and exit capitalization rate by property type, which are the key assumptions used in the discounted cash flow valuations as of December 31, 2025:
Property Type Discount Rate Exit Capitalization Rate
Office 7.5% 6.4%
Multifamily 7.3% 5.6%
Discount rate and exit capitalization rate are the key assumptions used in the discounted cash flow valuation of our investments in real estate. A change in these assumptions would impact the calculation of the value of our real estate investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
Input Hypothetical Change Office Investment Values Multifamily Investment Values
Discount Rate 0.25% decrease 1.9 % 2.0 %
(weighted average) 0.25% increase (1.9) % (1.9) %
Exit Capitalization Rate 0.25% decrease 2.6 % 3.0 %
(weighted average) 0.25% increase (2.4) % (2.7) %
The following table sets forth a reconciliation of our stockholders' equity to our NAV as of December 31, 2025:
Reconciliation of Stockholders' Equity to NAV December 31, 2025
Total stockholders' equity under GAAP $ 2,816,706
Preferred stock (125)
Total stockholders' equity, net of preferred stock, under GAAP 2,816,581
Adjustments:
Accrued stockholder servicing fees(1)
90,972
General CECL reserve(2)
78,194
Unrealized real estate appreciation(3)
(9,834)
Accumulated depreciation and amortization(4)
46,737
Other adjustments(5)
(7,594)
Net asset value $ 3,015,056
_______________________
(1) Stockholder servicing fees only apply to Class T, Class S, Class D and Class M shares. Under GAAP, we accrue future stockholder servicing fees in an amount equal to our best estimate of fees payable to FS Investment Solutions, LLC ("FS Investment Solutions") at the time such shares are sold. For purposes of NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis. As a result, the estimated liability for the future stockholder servicing fees, which are accrued at the time each share is sold, will have no effect on the NAV of any class.
(2) Our loans receivable held-for-investment and mortgage-backed securities held-for-investment balances include a general CECL reserve in our GAAP consolidated financial statements. For purposes of calculating our NAV, our general CECL reserve is excluded. We recognize a specific CECL reserve in the NAV calculation if and when a loan is deemed impaired, as described above.
(3) Our investment in real estate is presented at its depreciated cost basis in our GAAP consolidated financial statements. As such, any increases or decreases in the fair market value of our investment in real estate is not included in our GAAP results. For purposes of calculating our NAV, our investment in real estate is recorded at fair value.
(4) We depreciate our investment in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization are not recorded for purposes of determining our NAV.
(5) Includes (i) straight-line rent receivables, which are recorded in accordance with GAAP but not recorded for purposes of determining our NAV, (ii) increases or decreases in the fair market value of our interest rate cap, which is recorded in accordance with GAAP but not recorded for purposes of determining our NAV. For purposes of calculating our NAV, the interest rate cap is amortized over its term, and (iii) other adjustments.
Limits on the Calculation of Our Per Share NAV
Although our primary goal in establishing our valuation guidelines is to produce a valuation that represents a fair and accurate estimate of the value of our investments, the methodologies used are based on judgments, assumptions and opinions about future events that may or may not prove to be correct, and if different judgments, assumptions or opinions were used, a different estimate would likely result. Furthermore, our published per share NAV may not fully reflect certain extraordinary events because we may not be able to immediately quantify the financial impact of such events on our portfolio. FS Real Estate Advisor monitors our portfolio between valuations to determine whether there have been any extraordinary events that may have materially changed the estimated market value of the portfolio, such as significant market events or disruptions or force majeure events. If required by applicable securities law, we will promptly disclose the occurrence of such event in a prospectus supplement and FS Real Estate Advisor will analyze the impact of such extraordinary event on our portfolio and determine, in coordination with third-party valuation services, the appropriate adjustment to be made to our NAV. We will not, however, retroactively adjust NAV. To the extent that the extraordinary events may result in a material change in value of a specific investment, FS Real Estate Advisor will order a new valuation of the investment, which will be prepared by a third-party valuation service. It is not known whether any resulting disparity will benefit stockholders whose shares are or are not being repurchased or purchasers of our common stock. In calculating the number of shares outstanding used in calculating our NAV, we include the number of estimated Class I shares, if any, issuable to the adviser and the sub-adviser pursuant to the PCR Agreement based on the achievement of the Performance Conditions (as defined in the PCR Agreement), which estimate we will true up following the issuance of such Class I shares pursuant to the PCR Agreement.
We include no discounts to our NAV for the illiquid nature of our shares, including the limitations on the ability to sell shares under our Share Repurchase Plan and our ability to suspend or terminate our Share Repurchase Plan at any time. Our NAV generally does not consider exit costs that would likely be incurred if our assets and liabilities were liquidated or sold. While we may use market pricing concepts to value individual components of our NAV, our per share NAV is not derived from the market pricing information of open-end real estate funds listed on stock exchanges.
We do not represent, warranty or guarantee that:
•a stockholder would be able to realize the NAV per share for the class of shares a stockholder owns if the stockholder attempts to sell its shares;
•a stockholder would ultimately realize distributions per share equal to per share NAV upon a liquidation of our assets and settlement of our liabilities or upon any other liquidity event;
•shares of our common stock would trade at per share NAV on a national securities exchange;
•a third party in an arm's-length transaction would offer to purchase all or substantially all of our shares of common stock at NAV;
•NAV would equate to a market price for an open-end real estate fund; and
•NAV would represent the fair value of our assets less liabilities under GAAP.
Review of our Policies
Our board of directors, including our independent directors, has reviewed our policies described in this Annual Report on Form 10-K and our registration statement and determined that they are in the best interests of our stockholders because: (i) they increase the likelihood that we will be able to originate, acquire and manage a diversified portfolio of senior loans secured by commercial real estate, thereby reducing risk in our portfolio; (ii) there are sufficient loan underwriting opportunities with the attributes that we seek; (iii) our executive officers, director, affiliates of our adviser and sub-adviser have expertise with the type of real estate investments we seek; and (iv) our borrowings will enable us to originate and acquire loan assets and earn revenue more quickly, thereby increasing our likelihood of generating income for our stockholders and preserving stockholder capital.
Liquidity and Capital Resources
As of December 31, 2025, we had $352,585 in cash and cash equivalents, which we and our wholly owned subsidiaries held in custodial accounts. In addition, as of December 31, 2025, we had $2,737,956 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of December 31, 2025, we had unfunded loan commitments of $332,562. We maintain sufficient cash on hand and available borrowings to fund such unfunded commitments should the need arise.
We will obtain the funds required to purchase or originate investments and conduct our operations from the net proceeds of our public offering, the private placement of our Class I shares and any future offerings we may conduct, from secured and unsecured borrowings from banks and other lenders, and from any undistributed funds from operations. Our principal demands for funds will be for asset acquisitions/originations, the payment of operating expenses and distributions, the payment of interest on any outstanding
indebtedness and repurchases of our common stock pursuant to our Share Repurchase Plan. Generally, cash needs for items other than asset acquisitions/originations will be met from operations, and cash needs for asset acquisitions/originations will be funded by public offerings of our shares and debt financings. However, there may be a delay between the sale of our shares and our purchase/originations of assets, which could result in a delay in the benefits to our stockholders of returns generated from our investment operations. Our leverage may not exceed 300% of our total net assets (as defined in our charter) as of the date of any borrowing unless a majority of our independent directors vote to approve any borrowing in excess of this amount. Our board of directors will continue to review our ratio of leverage to total net assets on a quarterly basis, as required by our charter.
December 31,
2025 2024
Debt-to-equity ratio(1)
2.3x 2.1x
Leverage-to-net assets ratio(2)
2.1x 2.0x
_______________________
(1) Represents (i) total gross outstanding debt agreements less cash on our consolidated balance sheets (ii) total stockholder's equity, in each case, at period end.
(2) Represents (i) total gross outstanding debt agreements (ii) total net asset value (as defined in our charter), in each case, at period end. See NAV per share section within Item 2 for a reconciliation between our stockholder's equity to net asset value.
If we are unable to continue to raise substantial funds in our public offering, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments we make and the value of an investment in us will fluctuate with the performance of the specific assets we acquire. We have certain fixed operating expenses, including certain expenses as a publicly offered REIT, regardless of whether we are able to raise substantial funds in our public offering. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.
Potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders or proceeds from the sale of assets or collection of loans receivable.
In addition to making investments in accordance with our investment objectives, we expect to use our capital resources to make certain payments to FS Real Estate Advisor and FS Investment Solutions, the dealer manager for our public offering. During the offering stage of our public offering, these payments will include payments to FS Real Estate Advisor and its affiliates for reimbursement of certain organization and offering expenses. We will reimburse FS Real Estate Advisor for the organization and offering costs it or Rialto incurs on our behalf only to the extent that the reimbursement would not cause the selling commissions, dealer manager fees, accountable due diligence expenses, stockholder servicing fees and the other organization and offering expenses borne by us to exceed 15.0% of the gross offering proceeds from the primary offering as the amount of proceeds increases. FS Real Estate Advisor may be reimbursed for any organization and offering expenses that it or Rialto has incurred on our behalf, up to a cap of 0.75% of gross proceeds raised. Future Standard funded our offering costs in the amount of $29,961 for the period from November 7, 2016 (Inception) to December 31, 2025. Through December 31, 2025, we reimbursed $26,948 to FS Real Estate Advisor for offering expenses previously funded. As of December 31, 2025, $3,013 of offering expenses previously funded remained subject to reimbursement to FS Real Estate Advisor and Rialto.
Subject to the limitations in the advisory agreement and sub-advisory agreement, we expect to make payments to FS Real Estate Advisor in connection with the management of our assets and costs incurred by FS Real Estate Advisor and Rialto in providing services to us. The advisory agreement has a one-year term but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of FS Real Estate Advisor and our board of directors. On November 12, 2025, our board of directors approved the renewal of the advisory agreement effective as of December 1, 2025 for an additional one-year term expiring December 1, 2026. For a discussion of the compensation to be paid to FS Real Estate Advisor and FS Investment Solutions, see Note 7 to our consolidated financial statements included herein.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash:
Year Ended December 31,
2025 2024 2023
Cash flows from operating activities $ 190,638 $ 236,726 $ 256,752
Cash flows used in investing activities (331,284) (291,645) (566,619)
Cash flows from financing activities 402,691 (110,542) 364,250
Net increase (decrease) in cash and cash equivalents and restricted cash $ 262,045 $ (165,461) $ 54,383
Cash flows from operating activities decreased $46,088 during the year ended December 31, 2025 compared to the corresponding period in 2024 due to an overall decrease of net interest income and a corresponding increase to other expenses. Cash flows from operating activities decreased $20,026 during the year ended December 31, 2024 compared to the corresponding period in 2023 due to increased cash flow from our loan receivable portfolio.
Cash flows used in investing activities decreased $39,639 during the year ended December 31, 2025 compared to the corresponding period in 2024 primarily due to the net increase of $1,063,728in origination and fundings of loans receivables offset by a net increase in principal collections from loans receivable, held-for-investment of $768,298. Cash flows used in investing activities increased $274,974 during the year ended December 31, 2024 compared to the corresponding period in 2023 primarily due to the net increase of $165,899 in origination and fundings of loans receivables offset by a net increase in principal collections from loans receivable, held-for-investment of $482,297.
Cash flows from financing activities increased $513,233 during the year ended December 31, 2025 compared to the corresponding period in 2024 and decreased $474,792 during the year ended December 31, 2024 compared to the corresponding period in 2023.
During the year ended December 31, 2025, cash flows from financing activities were primarily driven by proceeds of $445,868 from the issuance of common stock and proceeds from borrowings under our financing arrangements of $4,385,054, partially offset by (i) repurchases of common stock of $492,727, (ii) repayments of $3,781,394 on borrowings under our financing arrangements and (iii) payment of $109,089 in stockholder distributions.
During the year ended December 31, 2024, cash flows from financing activities were primarily driven by proceeds of $429,545 from the issuance of common stock and proceeds from borrowings under our financing arrangements of $2,684,780, partially offset by (i) repurchases of common stock of $533,331, (ii) repayments of $2,545,867 on borrowings under our financing arrangements and (iii) payment of $109,881 in stockholder distributions.
During the year ended December 31, 2023, cash flows from financing activities were primarily driven by proceeds of $803,854 from the issuance of common stock and proceeds from borrowings under our financing arrangements of $1,029,660, partially offset by (i) repurchases of common stock of $378,802, (ii) repayments of $969,223 on borrowings under our financing arrangements and (iii) payment of $97,679 in stockholder distributions.
We utilize our credit and repurchase facilities primarily to finance our loan originations on a short-term basis prior to loan securitizations, including through CLOs. The timing, size, and frequency of our securitizations impact the balances of these borrowings, and produce some fluctuations. The following table provides additional information regarding the balances of our borrowings:
Quarter Ended Quarterly Average Unpaid Principal Balance End of Period Unpaid Principal Balance Maximum Unpaid Principal Balance at Any Month-End
December 31, 2025 $ 2,894,173 $ 3,735,493 $ 3,735,493
September 30, 2025 $ 2,595,015 $ 2,465,384 $ 2,621,542
June 30, 2025 $ 2,655,737 $ 2,642,231 $ 2,685,156
March 31, 2025 $ 2,186,617 $ 2,553,029 $ 2,553,029
December 31, 2024 $ 1,649,194 $ 1,713,307 $ 1,714,728
Critical Accounting Policies and Estimates
Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies and estimates are those that require the application of management's most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, management also will utilize available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.
Current Expected Credit Losses: The CECL reserve required under Accounting Standard Updated 2016-13, applies to our loans receivable, held-for-investment and our mortgage-backed securities held-to-maturity, which are carried at amortized cost, including future funding commitments and accrued interest receivable related to those loans and securities. CECL requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. Considering the lack of historical company data related to any realized loan losses since its inception, we elected to estimate our general CECL reserve by using a probability-weighted analytical model that considers the likelihood of default and loss-given-default for each individual loan. The credit loss model utilizes historical loss rates derived from a third party commercial real estate loan
database with historical loan loss data beginning in 1998. We provide specific loan-level inputs which include LTV, principal balances, property type, location, coupon, origination year, term, subordination, expected repayment dates and property net operating income. We also consider qualitative and environmental factors, including, but not limited to, macroeconomic forecasts and business conditions and trends, concentration of credit and changes in the level of such concentrations. The reasonable and supportable forecast period is followed by an immediate reversion period back to historical loss rates.
We consider our internal risk rating of each loan as the primary credit quality indicator underlying the assessment. FS Real Estate Advisor and Rialto perform a quarterly review of our portfolio of loans. In connection with this review, FS Real Estate Advisor and Rialto assess the risk factors of each loan and assign a risk rating based on a variety of factors, including, without limitation, LTV, debt yield, property type, geographic and local market dynamics, physical condition, cash flow volatility, leasing and tenant profile, loan structure and exit plan and project sponsorship. Based on a 5-point scale, our loans are rated "1" through "5," from less risk to greater risk, which ratings are defined as follows:
Loan Risk Rating Summary Description
1
Very Low Risk
2
Low Risk
3
Medium Risk
4
High Risk/Potential for Loss
5
Impaired/Loss Likely and/or Foreclosure is Probable
Impairment is indicated when it is deemed probable that we will not be able to collect all amounts due to us pursuant to the contractual terms of the loan. If a loan is determined to be impaired, we record the impairment as a specific CECL reserve. For determining a specific CECL reserve, financial instruments are assessed outside of the CECL model on an individual basis. For collateral dependent loans that we determine foreclosure of the collateral is probable, we measure the expected losses based on the differences between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral dependent loans where we determine foreclosure is not probable, a practical expedient to estimate expected losses is applied using the difference between the collateral's fair value (less estimated costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by FS Real Estate Advisor and Rialto. Actual losses, if any, could ultimately differ from these estimates.
See Note 2 to our consolidated financial statements included herein for additional information regarding our current expected credit loss reserve and our significant accounting policies.
Related Party Transactions
Compensation of FS Real Estate Advisor, Rialto and the Dealer Manager
Pursuant to the advisory agreement, FS Real Estate Advisor is entitled to an annual base management fee equal to 1.25% of the NAV for our Class T, Class S, Class D, Class M and Class I shares and a performance fee in an amount equal to 10.0% of the Core Earnings for the immediately preceding quarter, subject to a hurdle rate, expressed as a rate of return on average adjusted capital, equal to 1.625% per quarter, or an annualized hurdle rate of 6.5%. We also reimburse FS Real Estate Advisor and Rialto for their actual cost incurred on providing administrative services to us, including the allocable portion of compensation and related expenses of certain personnel providing such administrative services. Further, origination fees of up to 1.0% of the loan amount for first lien, subordinated or mezzanine debt or preferred equity financing may be retained by Rialto or FS Real Estate Advisor. FS Real Estate Advisor has also received compensation for the structuring and negotiation of certain financing arrangements. Pursuant to the advisory agreement, we will reimburse FS Real Estate Advisor and its affiliates for expenses incurred relating to our organization and continuous public offering, including the allocable portion of compensation and related expenses of certain personnel of Future Standard related thereto. FS Real Estate Advisor previously agreed to advance all of our organization and offering expenses until we raised $250,000 of gross proceeds from our public offering. In April 2020, FS Real Estate Advisor and Rialto agreed to defer the recoupment of any organization and offering expenses that may be reimbursable by us under the advisory agreement with respect to gross proceeds raised in the offering in excess of $250,000 until FS Real Estate Advisor, in its sole discretion, determined that we had achieved economies of scale sufficient to ensure that we could bear a reasonable level of expenses in relation to our income. We began reimbursing FS Real Estate Advisor in September 2020 and, as such, FS Real Estate Advisor may be reimbursed for any organization and offering expenses that it or Rialto has incurred on our behalf, up to a cap of 0.75% of gross proceeds raised after such time.
The dealer manager for our continuous public offering is FS Investment Solutions, which is an affiliate of FS Real Estate Advisor. Under the Dealer Manager Agreement, FS Investment Solutions is entitled to receive upfront selling commissions and dealer manager fees in connection with the sale of shares of common stock in our continuous public offering. FS Investment Solutions anticipates that all of the selling commissions and dealer manager fees will be reallowed to participating broker-dealers, unless a particular broker-dealer declines to accept some portion of the dealer manager fee they are otherwise eligible to receive. FS Investment Solutions is also entitled to receive stockholder servicing fees, which accrue daily and are paid on a monthly basis. FS Investment Solutions will reallow such stockholder servicing fees to participating broker-dealers, servicing broker-dealers and financial institutions (including bank trust departments) and will waive (pay back to us) stockholder servicing fees to the extent a broker-dealer or financial institution is not eligible or otherwise declines to receive all or a portion of such fees.
For the year ended December 31, 2025, the ratio of the cost of raising equity capital to the gross amount of equity capital raised was approximately 4.33%.
See Note 7 to our consolidated financial statements included herein for additional information regarding our related party transactions and relationships, including a description of the fees and amounts due to FS Real Estate Advisor, compensation of FS Investment Solutions, capital contributions by Future Standard and Rialto, our Expense Limitation Agreement with Future Standard and our purchase of a mortgage loan from an affiliate of Rialto.
FS Investment Solutions also serves or served as the placement agent for our private offerings pursuant to placement agreements. FS Investment Solutions does not receive any compensation pursuant to these agreements.
FS Credit Real Estate Income Trust Inc. published this content on March 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 13, 2026 at 18:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]