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Overview

Overview

FS Credit Real Estate Income Trust

Seeks to deliver an alternative source of income by investing in commercial real estate debt

Share classes

Class I   |  Class S

Seeking to

preserve capital

Since inception, FS Credit Real Estate Income Trust has served as a source of preservation in a traditional portfolio by generating a steady level of income with a low level of volatility.

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Past performance is not indicative of future results. An investment in FS Credit REIT is not a direct investment in real estate and has material differences from a direct investment in real estate, including those related to fees and expenses, liquidity and tax treatment.

Source: Bloomberg. FS Credit REIT is not traded on an exchange. The beginning value of Class I is the NAV per share as of the share class’s inception date on January 5, 2018. The ending value is the transaction price as of June 1, 2022 (which generally equals the prior month’s NAV). The S&P 500 Total Return Index is a widely used barometer of U.S. stock market performance. The key applicable risk of the S&P 500 Total Return Index is the volatility that comes with exposure to the stock market. The S&P 500 Total Return Index is a float-adjusted market cap-weighted index. The S&P 500 Total Return Index is calculated by taking the sum of the adjusted market capitalization of all S&P 500 stocks and then dividing it with an index divisor, which is a proprietary figure developed by Standard & Poor’s. The Bloomberg Barclays U.S. Aggregate Bond Index is weighted according to market capitalization. The Bloomberg Barclays U.S. Aggregate Bond Index is the most commonly used benchmark for determining the relative performance of bond or fixed income portfolios. The Bloomberg Barclays U.S. Aggregate Bond Index is also a major indicator for the overall health of the fixed income investing market. An investment cannot be made directly in an index. The illustration assumes reinvestment of distributions pursuant to FS Credit REIT’s share repurchase program. Indexes are shown for illustrative purposes only. Indexes are meant to illustrate general market performance. Each asset class is suitable for specific investor objectives, which vary greatly.

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FS Credit Real Estate Income Trust seeks to provide:

Income

Invests in commercial real estate debt with a primary objective to generate income

Alternative source of income

6.64%

Annualized distribution rate for Class I1

Preservation

Focuses on commercial real estate debt with the goal to manage volatility and preserve capital

Managing volatility

0.22

Modified duration (years)2

0.72%

Standard deviation3

Diversification

Complements a traditional fixed income portfolio

Invested in private debt

97.0%

Private real estate debt

As with any investment, investors should make sure they consider the key risks before investing. In the case of commercial mortgages, loans are subject to illiquidity risk and default risk. There is also no assurance that commercial real estate investments will provide regular, stable distributions.

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  • The annualized distribution rate shown is expressed as a percentage equal to the projected annualized distribution amount per share (which is calculated by annualizing the most recent monthly cash distribution per share as of the date indicated, without compounding), divided by the net asset value per share. For the three months ended March 31, 2022, 100% of FS Credit REIT’s distributions were funded through net investment income.
  • Duration is a measure of how sensitive a fixed income investment’s price is to a change in interest rates and is expressed as a number of years.
  • Standard deviation measures the degree to which an investment’s returns deviate from its historical average (mean). It is most commonly used in finance as a way to compare the volatility of returns between investments. The higher an investment’s standard deviation, the higher the volatility of its returns. FS Credit REIT calculates standard deviation based on Class I (1/31/2018–4/30/2022) monthly returns since inception, then annualized by multiplying by the square root of 12. We do not fair value our mortgage loans, which are reviewed for impairment and held at cost.

Why commercial real estate debt investing?

Investors in commercial real estate debt serve as lenders to property owners to help purchase, renovate or repurpose a property. An investor’s return is largely driven by the interest income paid on the loan (or other form of debt) and retains a degree of insulation. That is, commercial real estate debt investors are paid ahead of property owners, which is important if there is a change in the amount of income a property generates or the value of a property.

FS Credit Real Estate Income Trust provides a differentiated way to invest in a $5.1T commercial real estate debt market opportunity by investing primarily in floating rate senior loans secured by commercial real estate properties across the U.S.*

Floating rate senior loans

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* U.S. Federal Reserve, as of March 31, 2022. Commercial mortgage loans are illiquid and may not have a secondary market. Consider the key risks before investing. While commercial loans are secured by a first-priority mortgage, they are subject to the risk of default. Although senior loans may be prioritized in payment, as represented in the image, there is no assurance that the valuation of the property that is collateral will be correct, thus, there is risk in investing in senior secured loans.

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Tax advantage

The Tax Cuts and Jobs Act of 2017 introduced a change to the taxation of ordinary REIT dividends.1 REITs are generally not taxed at the corporate level to the extent they distribute all of their taxable income as dividends. The tax law provided a 20% deduction on ordinary REIT dividends. As a result, REIT investors may receive higher after-tax income compared to the prior tax law.

Hypothetical REIT distributions under new tax law:

6.0%

Distribution rate

6.7%

Tax-equivalent distribution rate2

Assumes a 37% tax bracket

The information displayed in this section has not been approved for use by the state of New Jersey and Ohio.

FS Credit REIT’s failure to qualify or remain qualified to be taxed as a REIT would adversely affect the NAV and the amount of cash available for distribution to stockholders.

  • Dividends that are not declared as capital gain dividends or qualified dividend income.
  • Tax-equivalent distribution rate reflects the distribution rate required under the prior tax law in order for an investor to receive the same after-tax income under the new tax law. For example, a REIT’s annualized distribution rate would need to be 6.7% under the prior tax law in order for investors to receive the same amount of after-tax income as a REIT with an annualized distribution rate of 6.0% under the new tax law.

FS Credit Real Estate Income Trust seeks to deliver an alternative source of income by investing in commercial real estate debt

Industry-leading managers

FS Investments logo

FS Investments has extensive experience designing and managing institutional-quality funds for the broader investing public, and Rialto provides a distinct competitive advantage as a leading real estate investment manager.

Rialto Capital Management logo

Rialto Capital Management is a real estate investment and asset management company with a competitive advantage through its access to information.

Learn more about our partnership  

A diversified portfolio of commercial real estate debt

Investing in commercial real estate debt may offer a differentiated way to invest in real estate and provide an alternative source of income and diversification at a time when both are hard to find.

Investment type

Characteristics

Property types

Geography

Representative loans

1 New York state self-storage portfolio Various, NY
2 South Carolina industrial portfolio Various, SC
3 Memphis office park Memphis, TN
4 Newark area industrial building Newark, NJ
5 East Nashville multifamily Nashville, TN
6 Oakland mixed-use property Oakland, CA
7 Downtown Austin office building Austin, TX
8 Tallahassee multifamily portfolio Tallahassee, FL
9 Los Angeles County mixed-use complex (paid in full) Hawthorne, CA
10 Jersey City apartment complex (paid in full) Jersey City, NJ

All portfolio data as of 4/30/2022.

Top 5 states

Los Angeles, CA  |  Mixed use

Los Angeles County mixed-use complex (paid in full)

Nashville, TN  |  Multifamily

East Nashville multifamily

Oakland, CA  |  Mixed use

Oakland, mixed use property

View loan profiles brochure

Literature

Fact sheet
Historical NAV
Brochure
Loan profiles brochure
Subscription agreement
See all literature  

See more details on FS Credit Real Estate Income Trust  

Share classes

Class I   |  Class S

View important disclosures

Investing in FS Credit REIT involves significant risk, including the risk of a substantial loss of investment. The following are some of the risks an investment in FS Credit REIT’s common stock involves; however, you should carefully consider all of the information found in the section of FS Credit REIT’s prospectus entitled “Risk Factors” before deciding to invest in shares of FS Credit REIT’s common stock.

  • FS Credit REIT has a limited operating history and no established financing sources, other than the WF-1 Facility and the GS-1 Facility, and will rely on FS Real Estate Advisor to conduct its operations. FS Real Estate Advisor has a limited operating history and has limited experience operating a public company.
  • This is a “blind pool” offering. FS Credit REIT has only made limited investments to date and you will not have the opportunity to evaluate future investments before it makes them.
  • The purchase and repurchase price for shares of FS Credit REIT’s common stock is generally based on the prior month’s NAV (subject to material changes as described herein), and is not based on any public trading market. Because the valuation of investments is inherently subjective, the NAV may not accurately reflect the actual price at which its assets could be liquidated on any given day.
  • Since there is no public trading market for shares of FS Credit REIT’s common stock, repurchase of shares by FS Credit REIT will likely be the only way to dispose of your shares. FS Credit REIT’s share repurchase plan will provide stockholders with the opportunity to request that FS Credit REIT repurchases their shares on a monthly basis. However, FS Credit REIT is not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular month in its discretion. In addition, repurchases will be subject to available liquidity and other significant restrictions. Further, FS Credit REIT’s board of directors may modify or suspend the share repurchase plan if it deems such action to be in its best interest and the best interest of its stockholders. As a result, shares should be considered as having only limited liquidity and at times may be illiquid. Finally, FS Credit REIT is not obligated by its charter or otherwise to effect a liquidity event at any time.
  • FS Credit REIT cannot guarantee that it will make distributions, and if it does such distributions from sources other than cash flow from operations, including, without limitation, the sale of assets, borrowings, return of capital or offering proceeds, and we have no limits on the amounts we may pay from such sources. Funding distributions from sources other than cash flow from operations is likely to occur in early stages of the offering before proceeds from the offering are fully invested.
  • FS Credit REIT has no employees and is dependent on its adviser and the sub-adviser to conduct its operations. FS Credit REIT’s adviser and the sub-adviser will face conflicts of interest as a result of, among other things, the obligation to allocate investment opportunities among us and other investment vehicles, the allocation of time of their investment professionals and the substantial fees and expenses that it will pay to the adviser and its affiliates.
  • This is a “best efforts” offering. If FS Credit REIT is not able to raise a substantial amount of capital in the near term, its ability to achieve its investment objectives could be adversely affected.
  • There are limits on the ownership and transferability of FS Credit REIT’s shares.
  • FS Credit REIT’s failure to qualify or remain qualified to be taxed as a REIT would adversely affect the NAV and the amount of cash available for distribution to stockholders.
Overview

Offerings

Opportunity

Approach

Managers

Portfolio

Featured loans

Literature

Performance

Class I

Class S

Literature

Offering materials

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An investment in any fund sponsored by FS Investments involves a high degree of risk and may be considered speculative. Investors are advised to consider the investment objectives, risks, and charges and expenses of the applicable fund carefully before investing. For funds offering shares to new investors, the applicable fund’s prospectus contains this and other information. Investors may obtain a copy of the applicable fund’s prospectus free of charge at www.fsinvestments.com or by contacting FS Investments at 201 Rouse Boulevard, Philadelphia, PA 19112 or by phone at 877-628-8575. Investors should read and carefully consider all information found in the applicable fund’s prospectus and other reports filed with the U.S. Securities and Exchange Commission (SEC) before investing.

This is neither an offer to sell nor a solicitation of an offer to buy the securities described herein. An offering is made only by a prospectus, which must be made available to you in connection with any offering. No offering is made to New York investors except by a prospectus filed with the Department of Law of the State of New York.

Individual investors and endowments may have different investment horizons, liquidity needs and risk tolerances. In addition, fees that may be incurred by an investor in any of the funds sponsored by FS Investments may be different than fees incurred by an endowment investing in similar assets as those in which the funds invest.

FS Investment Solutions, LLC | 201 Rouse Boulevard | Philadelphia, PA 19112

877-628-8575 | Member FINRA/SIPC

© 2022 FS Investments

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Important notice

This site and the materials herein are directed only to certain types of investors and to persons in jurisdictions where FS Credit REIT is authorized for distribution.

Complete information about investing in shares of FS Credit REIT is available in the prospectus.

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