falseQ20001690536--12-31The June 30, 2022 and December 31, 2021 consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse to the Company. As of June 30, 2022 and December 31, 2021, assets of the VIEs totaled $4,033,871 and $2,347,510, respectively, and liabilities of the VIEs totaled $3,197,715 and $1,887,944, respectively. See Note 10 for further details.Comprised solely of unrealized gain (loss) on mortgage-backed securities, available for sale.Book value represents the face amount, net of deferred financing costs.Stockholder servicing fees only apply to Class T, Class S, Class D and Class M shares. Under GAAP, the Company accrues future stockholder servicing fees in an amount equal to its best estimate of fees payable to FS Investment Solutions at the time such shares are sold. For purposes of NAV, the Company recognizes 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.Cash flows from operating activities are supported by expense support payments from FS Real Estate Advisor and Rialto pursuant to the Company’s expense limitation agreement. 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Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM
10-Q
 
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
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:
000-56163
 
 
FS Credit Real Estate Income Trust, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
Maryland
 
81-4446064
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
   
201 Rouse Boulevard
Philadelphia, Pennsylvania
 
19112
(Address of principal executive offices)
 
(Zip Code)
(215495-1150
(Registrant’s telephone number, including area code)
 
 
Securities registered pursuant to Section 12(b) of the Exchange Act: None.
 
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, 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  
       
Non-accelerated filer
     Smaller reporting company  
       
         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  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
As of August 5, 2022 there were 
903,286
 outstanding shares of Class F common stock, 
906,648 outstanding shares of Class Y common stock, 1,569,512 outstanding shares of Class T common stock, 49,187,066 outstanding shares of Class S common stock, 729,640 outstanding shares of Class D common stock, 4,027,392 outstanding shares of Class M common stock and 28,555,816 outstanding shares of Class I common stock.
 
 
 

Table of Contents
TABLE OF CONTENTS
 
 
  
 
  
Page
 
PART I—FINANCIAL INFORMATION
  
ITEM 1.
  
  
 
1
 
  
  
 
1
 
  
  
 
2
 
  
  
 
3
 
  
  
 
4
 
  
  
 
6
 
  
  
 
7
 
ITEM 2.
  
  
 
41
 
ITEM 3.
  
  
 
56
 
ITEM 4.
  
  
 
58
 
PART II—OTHER INFORMATION
  
ITEM 1.
  
  
 
58
 
ITEM 1A.
  
  
 
58
 
ITEM 2.
  
  
 
59
 
ITEM 3.
  
  
 
59
 
ITEM 4.
  
  
 
59
 
ITEM 5.
  
  
 
59
 
ITEM 6.
  
  
 
60
 
  
  
 
62
 

Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
FS Credit Real Estate Income Trust, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
 
    
June 30, 2022
(Unaudited)
   
December 31,
2021
 
Assets
                
Cash and cash equivalents
   $ 75,659     $ 46,798  
Restricted cash
     19,111       39,010  
Loans receivable,
held-for-investment
     6,538,370       3,841,868  
Mortgage-backed securities
held-to-maturity
     78,942       37,862  
Mortgage-backed securities
available-for-sale,
at fair value
     153,274       44,518  
Investment in real estate, net
     160,711       —    
Receivable for investments sold and repaid
     52,959       6,625  
Interest receivable
     14,904       6,861  
Deferred financing costs
     647       658  
Other assets
     40,835       194  
    
 
 
   
 
 
 
Total assets
(1)
   $ 7,135,412     $ 4,024,394  
    
 
 
   
 
 
 
Liabilities
                
Collateralized loan obligations (net of deferred financing costs of $27,057 and $16,701, respectively)
   $ 3,193,515     $ 1,886,382  
Repurchase agreements payable (net of deferred financing costs of $3,278 and $1,958, respectively)
     1,175,651       903,010  
Credit facilities payable (net of deferred financing costs of $8,666 and $2,230, respectively)
     692,472       196,960  
Mortgage note payable (net of deferred financing costs of $2,132 and $0, respectively)
     122,568       —    
Due to related party
     92,665       48,514  
Interest payable
     7,922       2,591  
Payable for shares repurchased
     19,250       4,227  
Other liabilities
     10,139       9,370  
    
 
 
   
 
 
 
Total liabilities
(1)
     5,314,182       3,051,054  
    
 
 
   
 
 
 
Commitments and contingencies (See Note 11)
                
Stockholders’ equity
                
Preferred stock, $0.01 par value, 50,000,000 shares authorized, 125 and 125 issued and outstanding, respectively
     —         —    
Class F common stock, $0.01 par value, 125,000,000 shares authorized, 904,792 and 902,878 issued and outstanding, respectively
     9       9  
Class Y common stock, $0.01 par value, 125,000,000 shares authorized, 906,648 and 906,648 issued and outstanding, respectively
     9       9  
Class T common stock, $0.01 par value, 125,000,000 shares authorized, 1,508,682 and 1,407,377 issued and outstanding, respectively
     15       14  
Class S common stock, $0.01 par value, 125,000,000 shares authorized, 44,602,788 and 22,823,721 issued and outstanding, respectively
     446       228  
Class D common stock, $0.01 par value, 125,000,000 shares authorized, 680,347 and 642,162 issued and outstanding, respectively
     7       6  
Class M common stock, $0.01 par value, 125,000,000 shares authorized, 3,701,528 and 2,876,736 issued and outstanding, respectively
     37       29  
Class I common stock, $0.01 par value, 300,000,000 shares authorized, 24,516,086 and 11,366,687 issued and outstanding, respectively
     245       114  
Additional
paid-in
capital
     1,820,033       969,558  
Accumulated other comprehensive income (loss)
     (3,192     86  
Retained earnings
     3,621       3,287  
    
 
 
   
 
 
 
Total stockholders’ equity
     1,821,230       973,340  
    
 
 
   
 
 
 
Total liabilities and stockholders’ equity
   $ 7,135,412     $ 4,024,394  
    
 
 
   
 
 
 
 
(1)
The June 30, 2022 and December 31, 2021 consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse to the Company. As of June 30, 2022 and December 31, 2021, assets of the VIEs totaled $4,033,871 and $2,347,510, respectively, and liabilities of the VIEs totaled $3,197,715 and $1,887,944, respectively. See Note 10 for further details.
See notes to unaudited consolidated financial statements.
 
1

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except share and per share amounts)
 
    
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
    
2022
   
2021
   
2022
   
2021
 
Net interest income
                                
Interest income
   $ 68,877     $ 16,039     $ 114,861     $ 27,755  
Less: Interest expense
     (29,184     (4,981     (45,399     (7,810
    
 
 
   
 
 
   
 
 
   
 
 
 
Net interest income
     39,693       11,058       69,462       19,945  
    
 
 
   
 
 
   
 
 
   
 
 
 
Other expenses
                                
Management and performance fees
     5,351       1,708       9,348       3,281  
General and administrative expenses
     5,783       1,394       9,326       2,799  
Less: Expense limitation
     —         —         —         (56
Add: Expense recoupment to sponsor
     1,460       390       2,770       390  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net other expenses
     12,594       3,492       21,444       6,414  
    
 
 
   
 
 
   
 
 
   
 
 
 
Other income (loss)
                                
Net change in unrealized gain (loss) on interest rate cap
     (1,449     —         (1,449     —    
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other income (loss)
     (1,449     —         (1,449     —    
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income
     25,650       7,566       46,569       13,531  
Preferred stock dividends
     (4     (4     (8     (8
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income attributable to FS Credit Real Estate Income Trust, Inc.
   $ 25,646     $ 7,562     $ 46,561     $ 13,523  
    
 
 
   
 
 
   
 
 
   
 
 
 
Per share information—basic and diluted
                                
Net income per share of common stock (earnings per share)
   $ 0.36     $ 0.41     $ 0.75     $ 0.82  
    
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average common stock outstanding
     71,346,254       18,511,402       61,767,077       16,566,229  
    
 
 
   
 
 
   
 
 
   
 
 
 
 
 
See notes to unaudited consolidated financial statements.
 
2

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Unaudited Consolidated Statements of Comprehensive Income
(in thousands)
 
    
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
    
2022
   
2021
    
2022
   
2021
 
Net income
   $ 25,650     $ 7,566      $ 46,569     $ 13,531  
Other comprehensive income
                                 
Net change in unrealized gain (loss) on mortgage-backed securities
available-for-sale
     (2,867     80        (3,278     80  
    
 
 
   
 
 
    
 
 
   
 
 
 
Total other comprehensive income (loss)
     (2,867     80        (3,278     80  
    
 
 
   
 
 
    
 
 
   
 
 
 
Comprehensive income
   $ 22,783     $ 7,646      $ 43,291     $ 13,611  
    
 
 
   
 
 
    
 
 
   
 
 
 
 
 
 
See notes to unaudited consolidated financial statements.
 
3

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Unaudited Consolidated Statements of Changes in Equity
(in thousands)
 
   
Par Value
                         
   
Common
Stock
Class F
   
Common
Stock
Class Y
   
Common
Stock
Class T
   
Common
Stock
Class S
   
Common
Stock
Class D
   
Common
Stock
Class M
   
Common
Stock
Class I
   
Additional
Paid-In

Capital
   
Accumulated
Other
Comprehensive
Income (Loss)
(1)
   
Retained
Earnings
(Accumulated
Deficit)
   
Total
Stockholders’
Equity
 
Three Months Ended June 30, 2022
                                                                                       
Balance as of March 31, 2022
  $ 9     $ 9     $ 14     $ 331     $ 7     $ 32     $ 182     $ 1,383,218     $ (325   $ 4,665     $ 1,388,142  
Common stock issued
    —         —         1       121       —         6       64       479,929       —         —         480,121  
Distributions declared
    —         —         —         —         —         —         —         —         —         (26,690     (26,690
Proceeds from distribution reinvestment plan
    —         —         —         3       —         —         2       12,516       —         —         12,521  
Redemptions of common stock
    —         —         —         (9     —         (1     (3     (32,584     —         —         (32,597
Stockholder servicing fees
    —         —         —         —         —         —         —         (24,799     —         —         (24,799
Offering costs
    —         —         —         —         —         —         —         (3,598     —         —         (3,598
Performance contingent rights issued
    —         —         —         —         —         —         —         5,351       —         —         5,351  
Net income
    —         —         —         —         —         —         —         —         —         25,650       25,650  
Dividends on preferred stock
    —         —         —         —         —         —         —         —         —         (4     (4
Other comprehensive loss
    —         —         —         —         —         —         —         —         (2,867     —         (2,867
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022
  $ 9     $ 9     $ 15     $ 446     $ 7     $ 37     $ 245     $ 1,820,033     $ (3,192   $ 3,621     $ 1,821,230  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Three Months Ended June 30, 2021
                                                                                       
Balance as of March 31, 2021
  $ 9     $ 1     $ 13     $ 72     $ 5     $ 22     $ 30     $ 361,358     $ —       $ 1,825     $ 363,335  
Common stock issued
    —         9       —         28       1       3       10       125,421       —         —         125,472  
Distributions declared
    —         —         —         —         —         —         —         —         —         (7,573     (7,573
Proceeds from distribution reinvestment plan
    —         —         —         1       —         —         1       2,910       —         —         2,912  
Redemptions of common stock
    —         (1     —         —         —         (1     —         (1,790     —         —         (1,792
Stockholder servicing fees
    —         —         —         —         —         —         —         (6,146     —         —         (6,146
Offering costs
    —         —         —         —         —         —         —         (363     —         —         (363
Net income
    —         —         —         —         —         —         —         —         —         7,566       7,566  
Dividends on preferred stock
    —         —         —         —         —         —         —         —         —         (4     (4
Other comprehensive income
    —         —         —         —         —         —         —         —         80       —         80  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
  $ 9     $ 9     $ 13     $ 101     $ 6     $ 24     $ 41     $ 481,390     $ 80     $ 1,814     $ 483,487  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Comprised solely of unrealized gain (loss) on mortgage-backed securities, available for sale.
See notes to unaudited consolidated financial statements.
 
4

Table of Contents
   
Par Value
                         
   
Common
Stock
Class F
   
Common
Stock
Class Y
   
Common
Stock
Class T
   
Common
Stock
Class S
   
Common
Stock
Class D
   
Common
Stock
Class M
   
Common
Stock
Class I
   
Additional
Paid-In

Capital
   
Accumulated
Other
Comprehensive
Income (Loss)
(1)
   
Retained
Earnings
(Accumulated
Deficit)
   
Total
Stockholders’
Equity
 
Six Months Ended June 30, 2022
                                                                                       
Balance as of December 31, 2021
  $ 9     $ 9     $ 14     $ 228     $ 6     $ 29     $ 114     $ 969,558     $ 86     $ 3,287     $ 973,340  
Common stock issued
    —         —         1       226       1       9       136       929,771       —         —         930,144  
Distributions declared
    —         —         —         —         —         —         —         —         —         (46,227     (46,227
Proceeds from distribution reinvestment plan
    —         —         —         5       —         —         3       21,887       —         —         21,895  
Redemptions of common stock
    —         —         —         (13     —         (1     (8     (56,749     —         —         (56,771
Stockholder servicing fees
    —         —         —         —         —         —         —         (46,428     —         —         (46,428
Offering costs
    —         —         —         —         —         —         —         (6,999     —         —         (6,999
Performance contingent rights issued
    —         —         —         —         —         —         —         8,993       —         —         8,993  
Net income
    —         —         —         —         —         —         —         —         —         46,569       46,569  
Dividends on preferred stock
    —         —         —         —         —         —         —         —         —         (8     (8
Other comprehensive loss
    —         —         —         —         —         —         —         —         (3,278     —         (3,278
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022
  $ 9     $ 9     $ 15     $ 446     $ 7     $ 37     $ 245     $ 1,820,033     $ (3,192   $ 3,621     $ 1,821,230  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Six Months Ended June 30, 2021
                                                                                       
Balance as of December 31, 2020
  $ 9     $ 1     $ 12     $ 58     $ 5     $ 20     $ 22     $ 303,783     $ —       $ 1,802     $ 305,712  
Common stock issued
    —         9       1       42       1       5       18       187,841       —         —         187,917  
Distributions declared
    —         —         —         —         —         —         —         —         —         (13,511     (13,511
Proceeds from distribution reinvestment plan
    —         —         —         1       —         —         1       5,152       —         —         5,154  
Redemptions of common stock
    —         (1     —         —         —         (1     —         (5,231     —         —         (5,233
Stockholder servicing fees
    —         —         —         —         —         —         —         (9,476     —         —         (9,476
Offering costs
    —         —         —         —         —         —         —         (679     —         —         (679
Net income
    —         —         —         —         —         —         —         —         —         13,531       13,531  
Dividends on preferred stock
    —         —         —         —         —         —         —         —         —         (8     (8
Other comprehensive income
    —         —         —         —         —         —         —         —         80       —         80  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
  $ 9     $ 9     $ 13     $ 101     $ 6     $ 24     $ 41     $ 481,390     $ 80     $ 1,814     $ 483,487  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Comprised solely of unrealized gain (loss) on mortgage-backed securities, available for sale.
See notes to unaudited consolidated financial statements.
 
5

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
 
    
Six Months Ended
June 30,
 
    
2022
   
2021
 
Cash flows from operating activities
                
Net income
   $ 46,569     $ 13,531  
Adjustments to reconcile net income to net cash provided by (used in) operating activities
                
Performance contingent rights issued
     8,993       —    
Amortization of deferred fees on loans and debt securities
     (2,020     (731
Amortization of deferred financing costs and discount
     4,268       1,503  
Net change in unrealized loss on interest rate cap
     1,449       —    
Changes in assets and liabilities
                
Reimbursement due from sponsor
     —         444  
Interest receivable
     (8,043     (873
Other assets
     (8,999     15,876  
Due to related party
     1,397       8,866  
Interest payable
     5,331       463  
Other liabilities
     (20     (6,041
    
 
 
   
 
 
 
Net cash provided by (used in) operating activities
     48,925       33,038  
    
 
 
   
 
 
 
Cash flows used in investing activities
                
Origination and fundings of loans receivable,
held-for-investment
     (3,084,586     (1,018,208
Principal collections from loans receivable,
held-for-investment
     342,702       96,067  
Exit and extension fees received on loans receivable,
held-for-investment
     769       335  
Purchases of mortgage-backed securities
available-for-sale
     (112,073     (19,575
Principal repayments of mortgage-backed securities
available-for-sale
     62       —    
Purchases of mortgage-backed securities
held-to-maturity
     (40,804     —    
Acquisition of real estate
     (193,802     —    
    
 
 
   
 
 
 
Net cash provided by (used in) investing activities
     (3,087,732     (941,381
    
 
 
   
 
 
 
Cash flows from financing activities
                
Issuance of common stock
     930,144       187,917  
Redemptions of common stock
     (41,748     (6,210
Stockholder distributions paid
     (22,216     (7,816
Stockholder servicing fees
     (3,674     (994
Offering costs paid
     (8,334     (679
Borrowing under mortgage note payable
     124,700       —    
Borrowings under repurchase agreements
     1,586,790       690,482  
Repayments under repurchase agreements
     (1,312,829     (612,790
Borrowings under credit facilities
     879,823       156,000  
Repayments under credit facilities
     (377,875     (121,000
Proceeds from issuance of collateralized loan obligations
     1,407,120       646,935  
Repayment of collateralized loan obligations
     (89,631     —    
Payment of deferred financing costs
     (24,501     (9,374
    
 
 
   
 
 
 
Net cash provided by (used in) financing activities
     3,047,769       922,471  
    
 
 
   
 
 
 
Total increase (decrease) in cash, cash equivalents and restricted cash
     8,962       14,128  
Cash, cash equivalents and restricted cash at beginning of period
     85,808       17,874  
    
 
 
   
 
 
 
Cash, cash equivalents and restricted cash at end of period
   $ 94,770     $ 32,002  
    
 
 
   
 
 
 
Supplemental disclosure of cash flow information and
non-cash
financial activities
                
Payments of interest
   $ 35,800     $ 5,844  
    
 
 
   
 
 
 
Accrued stockholder servicing fee
   $ 42,754     $ 8,482  
    
 
 
   
 
 
 
Distributions payable
   $ 5,059     $ 1,663  
    
 
 
   
 
 
 
Reinvestment of stockholder distributions
   $ 21,895     $ 5,154  
    
 
 
   
 
 
 
Payable for shares repurchased
   $ 19,250     $ 553  
    
 
 
   
 
 
 
Loan principal payments held by servicer
   $ 52,959     $ —    
    
 
 
   
 
 
 
Loan transferred from loans receivable,
held-for-investment
to loans receivable,
held-for-sale
   $ —       $ 24,397  
    
 
 
   
 
 
 
See notes to unaudited consolidated financial statements.
 
6

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements
(in thousands, except share and per share amounts)
Note 1. Principal Business and Organization
FS Credit Real Estate Income Trust, Inc., or the Company, was incorporated under the general corporation laws of the State of Maryland on November 7, 2016 and formally commenced investment operations on September 13, 2017. The Company is currently conducting a public offering of up to $2,750,000 of its 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 Securities and Exchange Commission, or SEC, consisting of up to $2,500,000 in shares in its primary offering and up to $250,000 in shares pursuant to its distribution reinvestment plan. The Company also previously conducted private offerings of its Class F common stock and Class Y common stock. The Company is managed by FS Real Estate Advisor, LLC, or FS Real Estate Advisor, a subsidiary of the Company’s sponsor, Franklin Square Holdings, L.P., which does business as FS Investments, or FS Investments, a national sponsor of alternative investment funds designed for the individual investor. FS Real Estate Advisor has engaged Rialto Capital Management, LLC, or Rialto, to act as its
sub-adviser.
The Company has elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2017. The Company intends 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 the Company on a continuous basis. The Company intends to conduct its operations so that it is not required to register under the Investment Company Act of 1940, as amended, or the 1940 Act.
The Company’s primary investment objectives are to: provide current income in the form of regular, stable cash distributions to achieve an attractive dividend yield; preserve and protect invested capital; realize appreciation in net asset value, or 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 with lower volatility than public real estate companies.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation:
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The unaudited consolidated financial statements include both the Company’s accounts and the accounts of its wholly owned subsidiaries and variable interest entities, or VIEs, of which the Company is the primary beneficiary, as of June 30, 2022. All significant intercompany transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The Company has evaluated the impact of subsequent events through the date the unaudited consolidated financial statements were issued.
Reclassifications:
Certain amounts in the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2021 and the audited consolidated financial statements as of and for the year ended December 31, 2021 have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2022. The reclassifications did not affect the Company’s financial position, results of operations, or cash flows.
Use of Estimates:
The preparation of the unaudited consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, as of the date of the financial statements and the
 
7

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
 
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation:
Financial Accounting Standards Board, or FASB, Accounting Standards Codification Topic 810—Consolidation, or ASC Topic 810, provides guidance on the identification of a VIE (an entity for which control is achieved through means other than voting rights) and the determination of which business enterprise, if any, should consolidate the VIE. An entity is considered a VIE if any of the following applies: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.
The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis. Refer to Note 10 for additional discussion of the Company’s VIEs.
Cash, Cash Equivalents and Restricted Cash:
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company invests its cash in overnight institutional money market funds. The Company’s uninvested cash is maintained with high credit quality financial institutions, which are members of the Federal Deposit Insurance Corporation. Restricted cash primarily represents cash held in an account to fund additional collateral interests within the Company’s collateralized loan obligations.
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in the Company’s unaudited consolidated statements of cash flows:
 
    
June 30,
 
    
2022
    
2021
 
Cash and cash equivalents
   $ 75,659      $ 13,318  
Restricted cash
     19,111        18,684  
    
 
 
    
 
 
 
Total cash, cash equivalents and restricted cash
   $ 94,770      $ 32,002  
    
 
 
    
 
 
 
Loans Receivable and Provision for Loan Losses:
The Company originates and purchases commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost. The Company is required to periodically evaluate each of these loans for possible impairment. Impairment is indicated when it is deemed probable that the Company will not be able to collect all amounts due to it pursuant to the contractual terms of the loan. If a loan is determined to be impaired, the Company writes down the loan
 
8

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
 
through a charge to the provision for loan losses. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective 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.
Loans that the Company originates or purchases that the Company is unable to hold, or intends to sell or otherwise dispose of, in the foreseeable future are classified as
held-for-sale
and are carried at the lower of amortized cost or fair value.
FS Real Estate Advisor and Rialto perform a quarterly review of the Company’s 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,
loan-to-value
ratio, or 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, the Company’s 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: A loan that has a risk of realizing a principal loss
5    Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss
Mortgage-backed Securities:
The Company designates its mortgage-backed securities as
held-to-maturity
or
available-for-sale
depending on the investment strategy and ability to hold such securities to maturity. Mortgage-backed securities are classified as
held-to-maturity
when the Company intends to, and has the ability to hold until maturity.
Held-to-maturity
securities are stated at amortized cost on the consolidated balance sheets. Mortgage-backed securities the Company does not hold for the purpose of selling in the near-term or may dispose of prior to maturity, are classified as
available-for
sale and are reported at fair value on the consolidated balance sheets with changes in fair value recorded in other comprehensive income.
The Company regularly monitors its mortgage-backed securities to ensure investments that may be other-than-temporarily impaired are timely identified, properly valued and charged against earnings in the proper period. The determination that a security has incurred an other-than-temporary decline in value requires the judgment of management. Assessment factors include, but are not limited to, the length of time and the extent to which the market value has been less than amortized cost, the financial condition and rating of the issuer, and the intent to sell or whether it is more likely than not that the Company will be required to sell.
Real Estate:
In accordance with the guidance for business combinations, the Company determines whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, the Company accounts for the transaction as an asset acquisition. The guidance for business combinations states that when substantially all the fair value of the gross assets to be acquired is concentrated in a single identifiable asset or group of similar
 
9

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
 
identifiable assets, the asset or set of assets is not a business. The one property acquisition to date has been accounted for as an asset acquisition.
Upon the acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-market” and “below-market” leases, acquired
in-place
leases, other identified intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as other available market information. Estimates of future cash flows are based on several factors including the historical operating results, known and anticipated trends and market and economic conditions. The Company capitalizes acquisition-related costs associated with asset acquisitions.
The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records acquired
in-place
lease values based on the Company’s evaluation of the specific characteristics of each tenant’s lease. The Company will record acquired above-market and below-market leases at their fair values which represents the present value of the difference between contractual rents of acquired leases and market rents at the time of the acquisition for the remaining lease term, discounted for tenant credit risks. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired
in-place
leases that may have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. Based on its acquisition to date, the Company’s allocation to customer relationship intangible assets has not been material.
Intangible assets and intangible liabilities are recorded as a component of other assets and other liabilities, respectively, on the Company’s consolidated balance sheets. The amortization of acquired above-market and below-market leases is recorded as an adjustment to rental revenue on the Company’s Consolidated statements of operations. The amortization of
in-place
leases is recorded as an adjustment to depreciation and amortization expense on the Company’s consolidated statements of operations.
The cost of buildings and improvements includes the purchase price of the Company’s properties and any acquisition-related costs, along with any subsequent improvements to such properties. The Company’s investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated useful lives of the assets as follows:
 
Description
  
Depreciable Life
Building    30 to 42 years
Building and land improvements    2 to 20 years
Furniture, fixtures and equipment    1 to 10 years
Tenant improvements    Shorter of estimated useful life or lease term
Lease intangibles    Over lease term
The Company’s management reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. Since cash flows on real estate properties are considered to be “long-lived assets to be held and used” on an undiscounted basis to determine whether an asset has been impaired, the Company’s strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If the Company’s strategy changes or market conditions otherwise
 
10

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
 
dictate an earlier sale date, an impairment loss may be recognized and such loss could be material to the Company’s results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value. During the periods presented, no such impairment occurred.
Fair Value of Financial Instruments:
Accounting Standards Codification Topic 820,
 Fair Value Measurements and Disclosures
, or ASC Topic 820, defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements under GAAP. Specifically, this guidance defines fair value based on exit price, or the price that would be received upon the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date.
ASC Topic 820 also establishes a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring financial instruments. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument, and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination, as follows:
 
 
Level 1:
Generally includes only unadjusted quoted prices that are available in active markets for identical financial instruments as of the reporting date.
 
 
Level 2:
Pricing inputs include quoted prices in active markets for similar instruments, quoted prices in less active or inactive markets for identical or similar instruments where multiple price quotes can be obtained, and other observable inputs, such as interest rates, yield curves, credit risks, and default rates.
 
 
Level 3:
Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2.
The estimated value of each asset reported at fair value using Level 3 inputs is determined by an internal committee composed of members of senior management of FS Real Estate Advisor.
Certain of the Company’s assets are reported at fair value either (i) on a recurring basis, as of each
quarter-end,
or (ii) on a nonrecurring basis, as a result of impairment or other events. The Company generally values its assets recorded at fair value by either (i) discounting expected cash flows based on assumptions regarding the collection of principal and interest and estimated market rates, or (ii) obtaining assessments from third-party dealers. For collateral-dependent loans that are identified as impaired, the Company measures impairment by comparing FS Real Estate Advisor’s estimation of fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These valuations may 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.
The Company is also required by GAAP to disclose fair value information about financial instruments that are not otherwise reported at fair value in the Company’s consolidated balance sheets, to the extent it is
 
11

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
 
practicable to estimate a fair value for those instruments. These disclosure requirements exclude certain financial instruments and all
non-financial
instruments.
The following methods and assumptions are used to estimate the fair value of other classes of financial instruments, for which it is practicable to estimate that value:
 
   
Cash and cash equivalents: The carrying amount of cash on deposit and in money market funds approximates fair value.
 
   
Restricted cash: The carrying amount of restricted cash approximates fair value.
 
   
Loans receivable
held-for-investment,
net: The fair values for these loans were estimated by FS Real Estate Advisor based on discounted cash flow methodology taking into consideration factors, including capitalization rates, discount rates, leasing, occupancy rates, availability and cost of financing, exit plan, sponsorship, actions of other lenders, and indications of market value from other market participants.
 
   
Mortgage-backed securities
available-for-sale:
The fair values for these investments were based on indicative deal quotes.
 
   
Mortgage-backed securities
held-to-maturity:
The fair values for these investments were estimated by FS Real Estate Advisor based on a discounted cash flow methodology pursuant to which a discount rate or market yield is used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Significant increases or decreases in the discount rate or market yield would result in a decrease or increase in the fair value measurement.
 
   
Collateralized loan obligations, repurchase agreements payable, credit facilities payable, and mortgage note payable: The fair values for these instruments were estimated based on the rate at which similar credit facilities would have currently been priced.
Deferred Financing Costs:
Deferred financing costs include issuance and other costs related to the Company’s debt obligations. The deferred financing costs related to the Company’s collateralized loan obligations, repurchase agreements, and mortgage note payable, are recorded as a reduction in the net book value of the related liability on the Company’s consolidated balance sheets. Deferred financing costs related to the Company’s revolving credit facilities and facilities that are undrawn as of the reporting date are recorded as an asset on the Company’s consolidated balance sheets. These costs are amortized as interest expense using the straight-line method over the term of the related obligation, which approximates the effective interest method.
Revenue Recognition:
Security transactions are accounted for on the trade date. The Company records interest income from its loans receivable portfolio on an accrual basis to the extent that the Company expects to collect such amounts. The Company does not accrue as a receivable interest or dividends on loans and securities if there is reason to doubt the collectability of such income. Discounts or premiums associated with the investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, the Company reviews and, if appropriate, makes adjustments to its cash flow projections. The Company records dividend income on the
ex-dividend
date. Any loan origination fees to which the Company is entitled, loan exit fees, original issue discount and market discount are capitalized and such amounts are amortized as interest income over the respective term of the investment. Upon the prepayment of a loan or
 
12

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
 
security, any unamortized loan origination fees to which the Company is entitled are recorded as fee income. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.
Loans are considered past due when payments are not made in accordance with the contractual terms. The Company does not accrue as receivable interest on loans if it is not probable that such income will be collected. Loans are placed on
non-accrual
status when full repayment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Interest payments received on
non-accrual
loans are generally recognized as interest income on a cash basis. Recognition of interest income on
non-performing
loans on an accrual basis is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms.
Rental revenue primarily consists of base rent arising from tenant leases at the Company’s properties. Base rent is recognized on a straight-line basis over the life of the lease, including any rent increases or rent abatement. The Company begins to recognize revenue upon the acquisition of the related property or when a tenant takes possession of the leased space. Other rental revenues include amounts due from tenants for costs related to common area maintenance, real estate taxes, and other recoverable costs included in lease agreements.
The Company evaluates the collectability of receivables related to rental revenue on an individual lease basis. In making this determination, the Company considers the length of time a receivable has been outstanding, tenant credit-worthiness, payment history, available information about the financial condition of the tenant, and current economic trends, among other factors. Tenant receivables that are deemed uncollectible are recognized as a reduction to rental revenue.
Organization Costs:
Organization costs include, among other things, the cost of incorporating, including the cost of legal services and other fees pertaining to the Company’s organization. These costs are expensed as incurred and recorded as a component of general and administrative expenses on the Company’s consolidated statements of operations.
Offering Costs:
Offering costs primarily include, among other things, marketing expenses and printing, legal and due diligence fees and other costs pertaining to the Company’s continuous public offering of shares of its common stock, including the preparation of the registration statement and salaries and direct expenses of FS Real Estate Advisor’s personnel, employees of its respective affiliates and others while engaged in such activities. The Company charges offering costs against additional
paid-in
capital on the consolidated balance sheets as it raises proceeds in its continuous public offering in excess of $250,000. In April 2020, FS Real Estate Advisor agreed not to seek reimbursement of organization and offering costs previously incurred until such time as it determined that the Company had achieved economies of scale sufficient to ensure that it could bear a reasonable level of expenses in relation to its income. The Company 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 the Company’s behalf, up to a cap of 0.75% of gross proceeds raised after such time. During the period from November 7, 2016 (Inception) to June 30, 2022, the Company incurred offering costs of $18,494, which were paid on its behalf by FS Investments (see Note 7).
Income Taxes:
The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, commencing with its taxable year ended December 31, 2017. In order to maintain its status as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders. As a REIT, the
 
13

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
 
Company generally will not be subject to federal income tax on income that it distributes to stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions.​​​​​​​
Uncertainty in Income Taxes
: The Company evaluates each of its tax positions to determine if they meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in the unaudited consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in the unaudited consolidated statements of operations. During the six months ended June 30, 2022 and 2021, the Company did not incur any interest or penalties and none are accrued at June 30, 2022.
Stockholder Servicing Fees:
The Company follows the guidance in Accounting Standards Codification Topic 405,
Liabilities
, when accounting for stockholder servicing fees. The Company will pay stockholder servicing fees over time on its shares of Class T, Class S, Class D and Class M common stock as described in Note 7. The Company records stockholder servicing fees as a reduction to additional
paid-in
capital and records the related liability in an amount equal to its best estimate of the fees payable in relation to the shares of Class T, Class S, Class D and Class M common stock on the date such shares are issued. The liability will be reduced over time, as the fees are paid to the dealer manager, or adjusted if the fees are no longer payable.
Derivative Instruments
: The Company uses interest rate caps to manage risks from fluctuations in interest rates. The Company has not designated any of these contracts as fair value or cash flow hedges for accounting purposes. The Company records its derivatives on its consolidated balance sheets at fair value and such amounts are included in Other assets. Any changes in the fair value of these derivatives are recorded in earnings.
The valuation of the Company’s interest rate caps is determined based on assumptions that management believes market participants would use in pricing, using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of June 30, 2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Recent Accounting Pronouncements:
In June 2016, the FASB issued ASU
2016-13,
Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326)
, or ASU
2016-13.
ASU
2016-13
significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU
2016-13
will replace the “incurred loss”
 
14

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
 
model under existing guidance with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances for
available-for-sale
debt securities rather than reduce the carrying amount, as they do today under the other than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. In November 2019, the FASB issued ASU
2019-10,
Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instrument (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates,
which deferred the effective date of ASU
2016-13
for smaller reporting companies until fiscal years beginning after December 15, 2022. While the Company, as a smaller reporting company, continues to evaluate the impact of this update on its unaudited consolidated financial statements, the Company expects that the adoption will result in an increased amount of provisions for potential loan losses as well as the recognition of such provisions earlier in the credit cycle. The Company currently does not have any provision for loan losses recorded on the consolidated financial statements.​​​​​​​
​​​​​​​
Note 3. Loans Receivable
The following table details overall statistics for the Company’s loans receivable portfolio as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022
(Unaudited)
   
December 31, 2021
 
Number of loans
     135       102  
Principal balance
   $ 6,539,424     $ 3,843,110  
Net book value
   $ 6,538,370     $ 3,841,868  
Unfunded loan commitments
(1)
   $ 610,703     $ 414,818  
Weighted-average cash coupon
(2)
     +3.82     +3.68
Weighted-average
all-in
yield
(2)
     +3.87     +3.73
Weighted-average maximum maturity (years)
(3)
     4.4       4.5  
 
(1)
The Company may be required to provide funding when requested by the borrowers in accordance with the terms of the underlying agreements.
(2)
The Company’s floating rate loans are indexed to the London Interbank Offered Rate, or LIBOR, and the Secured Overnight Financing Rate, or SOFR. In addition to cash coupon,
all-in
yield includes accretion of discount (amortization of premium) and accrual of exit fees.
(3)
Maximum maturity assumes all extension options are exercised by the borrowers; however, loans may be repaid prior to such date.
 
15

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 3. Loans Receivable (continued)
 
For the six months ended June 30, 2022 and 2021, the activity in the Company’s loan portfolio, was as follows:
 
    
For the Six Months Ended
June 30,
 
    
2022
    
2021
 
Balance at beginning of period
   $ 3,841,868      $ 700,149  
Loan fundings
     3,084,586        1,018,208  
Loan repayments
     (389,036      (96,067
Amortization of deferred fees on loans
     1,721        460  
Exit and extension fees received on loans
     (769      (335
    
 
 
    
 
 
 
Balance at end of period
   $ 6,538,370      $ 1,622,415  
    
 
 
    
 
 
 
The following tables detail the property type and geographic location of the properties securing the loans in the Company’s loans receivable,
held-for-investment
portfolio as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Property Type
  
Net Book
Value
    
Percentage
   
Net Book
Value
    
Percentage
 
Multifamily
   $ 4,204,627        64   $ 2,192,346        57
Office
     689,413        11     430,084        11
Hospitality
     534,181        8     223,847        6
Retail
     368,555        6     277,044        7
Industrial
     359,275        5     348,071        9
Self Storage
     214,890        3     236,921        6
Various
     99,295        2     65,910        2
Mixed Use
     68,134        1     67,645        2
    
 
 
    
 
 
   
 
 
    
 
 
 
Total
   $ 6,538,370        100   $ 3,841,868        100
    
 
 
    
 
 
   
 
 
    
 
 
 
 
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Geographic Location
(1)
  
Net Book
Value
    
Percentage
   
Net Book
Value
    
Percentage
 
South
   $ 3,137,981        48   $ 2,270,087        59
West
     1,301,765        20     637,142        17
Northeast
     1,301,761        20     646,761        16
Various
     435,978        7     65,910        2
Midwest
     360,885        5     221,968        6
    
 
 
    
 
 
   
 
 
    
 
 
 
Total
   $ 6,538,370        100   $ 3,841,868        100
    
 
 
    
 
 
   
 
 
    
 
 
 
 
(1)
As defined by the United States Department of Commerce, Bureau of the Census.
Loan Risk Rating
As further described in Note 2, 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,
loan-to-value
ratio, or LTV, debt
 
16

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 3. Loans Receivable (continued)
 
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, the Company’s loans are rated “1” through “5”, from less risk to greater risk, which ratings are defined in Note 2.
The following table allocates the net book value of the Company’s loans receivable,
held-for-investment
portfolio based on the Company’s internal risk ratings:
 
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Risk Rating
  
Number of
Loans
    
Net Book
Value
    
Percentage
   
Number of
Loans
    
Net Book
Value
    
Percentage
 
1
     —        $ —          —         —        $ —          —    
2
     —          —          —         —          —          —    
3
     135        6,538,370        100     102        3,841,868        100
4
     —          —          —         —          —          —    
5
     —          —          —         —          —          —    
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Total
     135      $ 6,538,370        100     102      $ 3,841,868        100
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
The Company did not have any impaired loans,
non-accrual
loans, or loans in maturity default within the loans receivable,
held-for-investment
portfolio as of June 30, 2022 and December 31, 2021.
Note 4. Mortgage Backed Securities
Mortgage-backed securities,
available-for-sale
Commercial mortgage-backed securities, or CMBS, classified as
available-for-sale
are reported at fair value on the consolidated balance sheets with changes in fair value recorded in other comprehensive income.
The table below summarizes various attributes of the Company’s investments in
available-for-sale
CMBS as of June 30, 2022 and December 31, 2021, respectively.
 
                  
Gross Unrealized
          
Weighted Average
 
    
Outstanding
Face Amount
    
Amortized
Cost Basis
    
Gains
    
Losses
   
Fair

Value
    
Coupon
   
Remaining
Duration
(years)
 
June 30, 2022 (Unaudited)
                                                            
CMBS,
available-for-sale
   $ 159,543      $ 156,467      $ 185      $ (3,378   $ 153,274        6.69     13.4  
December 31, 2021
                                                            
CMBS,
available-for-sale
   $ 44,580      $ 44,432      $ 99      $ (13   $ 44,518        6.58     15.1  
 
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Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 4. Mortgage Backed Securities (continued)
 
The following table presents the gross unrealized losses and estimated fair value of any
available-for-sale
securities that were in an unrealized loss position as of June 30, 2022 and December 31, 2021, respectively.
 
    
Estimated Fair Value
    
Unrealized Losses
 
    
Securities with a
loss less than
12 months
    
Securities with a
loss greater than

12 months
    
Securities with a
loss less than

12 months
    
Securities with a
loss greater than
12 months
 
June 30, 2022 (Unaudited)
                                   
CMBS,
available-for-sale
   $ 131,072      $         $ (3,378    $     
December 31, 2021
                                   
CMBS,
available-for-sale
   $ 905      $         $ (13    $     
As of June 30, 2022 and December 31, 2021, there were twelve securities and one security, respectively, with unrealized losses reflected in the table above. After evaluating the securities and recording adjustments for credit losses, the Company concluded that the remaining unrealized losses reflected above were noncredit-related and would be recovered from the securities’ estimated future cash flows. The Company considered a number of factors in reaching this conclusion, including that it did not intend to sell the securities, it was not considered more likely than not that the Company would be forced to sell the securities prior to recovering its amortized cost, and there were no material credit events that would have caused the Company to otherwise conclude that it would not recover the cost of the securities.
Mortgage-backed securities,
held-to-maturity
The table below summarizes various attributes of the Company’s investments in
held-to-maturity
CMBS as of June 30, 2022 and December 31, 2021, respectively.
 
    
Net Carrying
Amount
(Amortized
Cost)
    
Gross
Unrecognized
Holding
Gains
    
Gross
Unrecognized
Holding
Losses
    
Fair Value
 
June 30, 2022 (Unaudited)
                                   
CMBS, held-to-maturity
   $ 78,942                          $ 78,942  
December 31, 2021
                                   
CMBS, held-to-maturity
   $ 37,862                          $ 37,862  
The table below summarizes the maturities of the Company’s investments in
held-to-maturity
CMBS as of June 30, 2022 and December 31, 2021, respectively:
 
    
Total
    
Less than
1 year
    
1-3 years
    
3-5
years
    
More than
5 years
 
June 30, 2022 (Unaudited)
                                            
CMBS,
held-to-maturity
   $ 78,942                          $ 38,145      $ 40,797  
December 31, 2021
                                            
CMBS,
held-to-maturity
   $ 37,862                          $ 37,862            
 
18

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
 
Note 5. Real Estate
Investment in real estate, net, consisted of the following as of June 30, 2022:
 
    
June 30, 2022
(Unaudited)
 
Building and building improvements
   $ 120,461  
Land and land improvements
     39,186  
Furniture, fixtures and equipment
     1,064  
    
 
 
 
Real estate, net
   $ 160,711  
    
 
 
 
No real estate was owned as of December 31, 2021.
Acquisition
On June 23, 2022, the Company acquired 555 Aviation, a 260,000
square foot creative office building located in El Segundo, California. The property was built in 1966 and was renovated in 2017 to convert the property into a creative office building, including LEED Gold certification, a glass façade and an interior open-air atrium. The property sits on 13 acres and is located in a growing Los Angeles sub-market of El Segundo near Los Angeles International Airport. The property is currently
 100% leased to three tenants. The following table details the purchase price allocation for the property acquired. As of June 30, 2022, this was the only property held by the Company.
 
    
Amount
 
Building and building improvements
   $ 120,461  
Land and land improvements
     39,186  
Furniture, fixtures and equipment
     1,064  
In-place
lease intangibles
     33,091  
    
 
 
 
Net purchase price
   $ 193,802  
    
 
 
 
The weighted average amortization period for the acquired
in-place
lease intangibles for the property acquired during the three months ended June 30, 2022 was approximately nine years.
 
19

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
 
Note 6. Financing Arrangements
The following tables present summary information with respect to the Company’s outstanding financing arrangements as of June 30, 2022 and December 31, 2021.
 
   
As of June 30, 2022 (Unaudited)
 
Arrangement
(1)
 
Rate
(2)
   
Amount
Outstanding
   
Amount
Available
   
Maturity Date
   
Carrying
Amount of
Collateral
   
Fair Value
of Collateral
 
Collateralized Loan Obligations
                                               
2019-FL1
Notes
   
+
1.20
% -
2.50
%
(3)
    $ 238,034     $ —         December 18, 2036     $ 336,297     $ 335,994  
2021-FL2
Notes
    +
1.22
% -
3.45
%
(3)
      646,935       —         May 5, 2038       782,721       782,945  
2021-FL3
Notes
    +1.25% - 2.85%
(3)
      928,483       —         November 4, 2036       1,133,690       1,134,805  
2022-FL4
Notes
    +1.90% - 4.75%
(
6
)
      842,662       —         January 31, 2039       1,077,266       1,078,595  
2022-FL5
Notes
    +2.30% - 5.41%
(
6
)
      570,112       —         June 17, 2037       662,474       662,328  
           
 
 
   
 
 
           
 
 
   
 
 
 
              3,226,226       —                 3,992,448       3,994,667  
Repurchase Agreements
                                               
WF-1
Facility
    +2.15% - 2.50%
(
4
)
      495,250       154,750       August 30, 2023       496,652       496,554  
GS-1
Facility
   
+1.75% - 2.75%
(
5
)
      221,273       128,727       January 26, 2023       225,183       224,481  
BB-1
Facility
    +1.55% - 1.95%
(
6
)
      388,107       311,893       February 22, 2024       378,788       379,719  
RBC Facility
    +1.35%       74,299       —         N/A       —         —    
           
 
 
   
 
 
           
 
 
   
 
 
 
              1,178,929       595,370               1,100,623       1,100,754  
Revolving Credit Facility
                                               
CNB Facility
    +2.25%
(
7
)
      50,000       50,000       June 7, 2023       —         —    
MM-1
Facility
    +2.03%
(
8
)
(9
)
      651,138       348,862       September 20, 2029       642,251       642,380  
           
 
 
   
 
 
           
 
 
   
 
 
 
              701,138       398,862               642,251       642,380  
Mortgage Loan
                                               
Natixis Loan
    +2.15%
(
8
)
      124,700       2,000       July 9, 2025       160,711       160,711  
           
 
 
   
 
 
           
 
 
   
 
 
 
Total
         
$
5,230,993
 
 
$
996,232
 
         
$
5,896,033
 
 
$
5,898,512
 
           
 
 
   
 
 
           
 
 
   
 
 
 
 
(1)
The carrying amount outstanding under the facilities approximates their fair value.
(2)
The rates are expressed over the relevant floating benchmark rates, which include USD LIBOR, Term SOFR, and SOFR Average (compounded average of SOFR over a rolling
30-day
period).
(3)
USD LIBOR is subject to a 0.00% floor.
(4)
Benchmark rate is subject to a 0.00% floor. LIBOR or SOFR benchmark rate is selected with respect to a transaction as set forth in the related transaction confirmation for the underlying transaction.
(5)
Term SOFR is subject to a 0.00% floor.
GS-1
and Goldman Sachs may mutually agree on rates outside this range or a different floor on an asset by asset basis.
(
6
)
USD LIBOR, Term SOFR or SOFR Average (compounded average of SOFR over a rolling
30-day
period), subject to a 0.00% floor.
(7)
Term SOFR is subject to a
0.50%
floor. The CNB Facility is subject to a credit spread adjustment of 0.10%, which was implemented as a result of the facility’s transition from USD LIBOR to Term SOFR.
(8)
Term SOFR is subject to a 0.00% floor.
(9)
The MM-1 Facility is subject to a credit spread adjustment of 0.11%, which was implemented as a result of the facility’s transition from USD LIBOR to Term SOFR.
 
20

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 6. Financing Arrangements (continued)
 
 
 
As of December 31, 2021
 
Arrangement
(1)
 
Rate
(2)
 
 
Amount
Outstanding
 
 
Amount
Available
 
 
Maturity Date
 
 
Carrying
Amount of
Collateral
 
 
Fair Value
of Collateral
 
Collateralized Loan Obligation
 
 
 
 
 
 
2019-FL1
Notes
   
+1.20% - 2.50%
(3)
    $ 327,665     $ —         December 18, 2036     $ 424,665     $ 424,877  
2021-FL2
Notes
   
+1.22% - 3.45%
(3)
      646,935       —         May 5, 2038       740,083       741,226  
2021-FL3
Notes
   
+1.25% - 2.85%
(3)
      928,483       —         November 4, 2036       1,133,620       1,135,775  
           
 
 
   
 
 
           
 
 
   
 
 
 
              1,903,083       —                 2,298,368       2,301,878  
Repurchase Agreements
                                               
WF-1
Facility
   
+2.15% - 2.50%
(
4
)
      218,912       131,088       August 30, 2022       225,276       225,181  
GS-1
Facility
   
+1.75% - 2.75%
(
5
)
      212,005       37,995       January 26, 2022       212,677       212,574  
BB-1
Facility
   
+1.55% - 1.95%
      442,535       7,465       February 22, 2024       444,261       444,375  
RBC Facility
    +1.35%       31,516       —         N/A       —         —    
           
 
 
   
 
 
           
 
 
   
 
 
 
              904,968       176,548               882,214       882,130  
Revolving Credit Facility
                                               
CNB Facility
    +2.25%
(
6
)
      6,000       49,000       June 7, 2023       —         —    
MM-1
Facility
    +2.10%
(3)
      193,190       6,810       September 20, 2029       193,076       193,346  
           
 
 
   
 
 
           
 
 
   
 
 
 
              199,190       55,810               193,076       193,346  
           
 
 
   
 
 
           
 
 
   
 
 
 
Total
         
$
3,007,241
 
 
$
232,358
 
         
$
3,373,658
 
 
$
3,377,354
 
           
 
 
   
 
 
           
 
 
   
 
 
 
 
(1)
The carrying amount outstanding under the facilities approximates their fair value.
(2)
The rates are expressed over the relevant floating benchmark rates, which include USD LIBOR.
(3)
USD LIBOR is subject to a 0.00% floor.
(4)
USD LIBOR is subject to a 0.00% floor. As of December 31, 2021, six transactions under the
WF-1
facility are using term SOFR as the reference rate, subject to the rates specified in their applicable transaction confirmations.
(5)
USD LIBOR is subject to a 0.50% floor.
GS-1
and Goldman Sachs, may mutually agree on rates outside this range or a different LIBOR floor on an asset by asset basis.
(
6
)
USD LIBOR is subject to a 0.50% floor.
The Company’s average borrowings and weighted average interest rate, including the effect of
non-usage
fees, for the six months ended June 30, 2022 were $3,672,968 and 2.22%, respectively. The Company’s average borrowings and weighted average interest rate, including the effect of
non-usage
fees, for the year ended December 31, 2021 were $1,346,445 and 1.69%, respectively.
Under its financing arrangements, the Company has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar financing arrangements. The Company was in compliance with all covenants required by its financing arrangements as of June 30, 2022 and December 31, 2021.
 
21

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 6. Financing Arrangements (continued)
 
Maturities
The Company generally requires the amount outstanding on debt obligations to be paid down before the financing arrangement’s respective maturity date. The following table sets forth the Company’s repayment schedule for secured financings based on the maturity date of each financing arrangement:
 
    
Collateralized Loan
Obligations
    
Repurchase
Agreements
    
Revolving Credit
Facility
    
Mortgage Loan
    
Total
 
2022
   $         $ 495,250      $         $         $ 495,250  
2023
               221,273        50,000                  271,273  
2024
               388,107                            388,107  
2025
                                   124,700        124,700  
2026
                                                 
Thereafter
     3,226,226        74,299        651,138                  3,951,663  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 3,226,226      $ 1,178,929      $ 701,138      $ 124,700      $ 5,230,993  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Collateralized Loan Obligations
The Company financed certain pools of loans through collateralized loan obligations, which include
2019-FL1,
2021-FL2,
2021-FL3,
2022-FL4,
and
2022-FL5,
or collectively, the CLOs. The following table outlines the number of loans and the principal balance of the collateralized pool of interests for each CLO.
 
    
As of June 30, 2022
(Unaudited)
 
Collateralized Loan Obligation
  
Total Loans
    
Principal
 
2019-FL1
Notes
     16      $ 336,601  
2021-FL2
Notes
     28        782,978  
2021-FL3
Notes
     26        1,134,028  
2022-FL4
Notes
     23        1,077,573  
2022-FL5
Notes
     23        662,599  
    
 
 
    
 
 
 
Total
     116      $ 3,993,779  
    
 
 
    
 
 
 
The Company incurred issuance costs and discount related to the collateralization of the CLO Notes, which are amortized to interest expense over the remaining life of the loans. The following table outlines the issuance costs and discount to be amortized.
 
    
As of June 30, 2022
(Unaudited)
 
Collateralized Loan Obligation
  
Issuance Costs and
Discount to be Amortized
 
2019-FL1
Notes
   $ 2,790  
2021-FL2
Notes
     5,438  
2021-FL3
Notes
     6,482  
2022-FL4
Notes
     7,066  
2022-FL5
Notes
     5,281  
    
 
 
 
Total
   $ 27,057  
    
 
 
 
 
22

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 6. Financing Arrangements (continued)
 
2022-FL5
Notes
On June 16, 2022, the Company issued $570,112 of collateralized loan obligation notes, or the CLO5 Transaction, through the
Sub-REIT
and a wholly-owned financing subsidiary of the
Sub-REIT,
FS Rialto
2022-FL5
Issuer, LLC, a Delaware limited liability company, as issuer.
Repurchase Agreements
WF-1
Facility
On August 30, 2017, the Company’s indirect wholly owned, special-purpose financing subsidiary, FS CREIT Finance
WF-1
LLC, or
WF-1,
as seller, entered into a Master Repurchase and Securities Contract, or, as amended, the
WF-1
Repurchase Agreement, and together with the related transaction documents, the
WF-1
Facility, with Wells Fargo, as buyer, to finance the acquisition and origination of commercial real estate whole loans or senior controlling participation interests in such loans. The maximum amount of financing available under the
WF-1
Facility as of June 30, 2022 is $650,000. Each transaction under the
WF-1
Facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate. On February 11, 2022, the
WF-1
Repurchase Agreement was amended to temporarily increase the maximum amount of financing available from $350,000 to $650,000 until May 11, 2022. On May 12, 2022, the
WF-1
 Repurchase Agreement was amended to extend the temporary increase of $
650,000
 maximum amount of financing available until September 30, 2022 and to extend the maturity date and availability period, in each case, from August 30, 2022 to August 30, 2023. 
The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $1,367 of deferred financing costs had yet to be amortized to interest expense.
GS-1
Facility
On January 26, 2018, the Company’s indirect wholly-owned, special-purpose financing subsidiary, FS CREIT Finance
GS-1
LLC, or
GS-1,
as seller, entered into an Uncommitted Master Repurchase and Securities Contract Agreement, or, as amended, the
GS-1
Repurchase Agreement, and together with the related transaction documents, the
GS-1
Facility with Goldman Sachs, as buyer, to finance the acquisition and origination of whole, performing senior commercial or multifamily floating-rate mortgage loans secured by first liens on office, retail, industrial, hospitality, multifamily or other commercial properties. The maximum amount of financing available under the
GS-1
Facility as of June 30, 2022 is $350,000. Each transaction under the
GS-1
Facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate.
On January 26, 2022, the
GS-1
Repurchase Agreement was amended to extend the availability period to January 26, 2023, with an option to extend one additional year to January 26, 2024. After the end of the availability period,
GS-1
may exercise an option to commence a
one-year
amortization period, so long as certain conditions are met. During the amortization period, certain changes to the terms of the
GS-1
Facility would apply, including an increase to the rate charged on each asset financed under the
GS-1
Facility. The maximum amount of financing available increased from $250,000 to $350,000 with a temporary additional increase to $500,000 that was available until the closing of the CLO4 Transaction.
The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $335 of deferred financing costs had yet to be amortized to interest expense.
 
23

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 6. Financing Arrangements (continued)
 
BB-1
Facility
On February 22, 2021, the Company’s indirect wholly owned, special-purpose financing subsidiary, FS CREIT Finance
BB-1
LLC, or
BB-1,
entered into a Master Repurchase Agreement, or the
BB-1
Repurchase Agreement, and together with the related transaction documents, the
BB-1
Facility, as seller, with Barclays Bank PLC, or Barclays, as purchaser, to finance the acquisition and origination of whole, performing senior commercial or multifamily floating-rate mortgage loans secured by first liens on office, retail, industrial, hospitality, multifamily, self-storage and manufactured housing property (or a combination of the foregoing, including associated parking structures). The maximum amount of financing available under the BB-1 Facility as of June 30, 2022 was $700,000. Each transaction under the
BB-1
Facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate. On June 7, 2022, the
BB-1
Loan Agreement was amended to, among other things, increase the maximum committed facility amount to $700,000.
The initial availability period of the
BB-1
Facility is three years.
BB-1
may extend the availability period for a
one-year
term extension, so long as certain conditions are met. After the end of the availability period,
BB-1
 
may exercise an option to commence a
one-year
amortization period up to two times, so long as certain conditions are met. During the amortization period, certain of the terms of the
BB-1
Facility will be modified, including a requirement to pay down a certain amount of the outstanding purchase price of each asset financed under the
BB-1
Facility.


The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $1,576 of deferred financing costs had yet to be amortized to interest expense.
RBC Facility
On March 2, 2020, the Company’s wholly-owned subsidiary, FS CREIT Investments LLC, or FS CREIT Investments, as seller, entered into a Master Repurchase Agreement, or the RBC Facility, with Royal Bank of Canada, or RBC, as buyer, to enable FS CREIT Investments to execute repurchase transactions of securities and financial instruments on an
asset-by-asset
basis. Each transaction under the RBC Facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and pricing rate.
Revolving Credit Facilities
CNB Facility
On August 22, 2019, the Company and FS CREIT Finance Holdings LLC, or Finance Holdings, a direct wholly owned subsidiary of the Company, each as a borrower, entered into a Loan and Security Agreement, or the CNB Loan Agreement, and together with the related transaction documents, the CNB Facility, with City National Bank, or CNB, as administrative agent and lender. The maximum committed facility amount under the CNB Facility as of June 30, 2022 was $100,000. Borrowings under the CNB Facility are subject to compliance with a borrowing base calculated based on the Company’s stockholder subscriptions and certain cash and assets held directly by the Company.
Borrowed amounts under the CNB facility must be repaid no later than 180 days after the funding date of such borrowing. In addition, the borrowers pay a
non-utilization
fee quarterly in arrears in an amount equal to
 
24

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 6. Financing Arrangements (continued)
 
0.375% per annum on the daily unused portion of the maximum facility amount. The CNB Facility matures on June 7, 2023, with an option to extend for up to three additional terms not longer than 364 days each, subject to CNB’s consent.
On May 5, 2022, the CNB Loan Agreement was amended to, among other things, (i) increase the maximum committed facility amount from $55,000 to $100,000, (ii) introduce a new borrowing condition requiring collateral coverage of 1.4 times for each dollar borrowed in excess of $50,000, and (iii) transition the benchmark rate from LIBOR to SOFR, resulting in an interest rate of SOFR plus a spread of 2.25% plus a credit spread adjustment of 0.10%.
The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $647 of deferred financing costs had yet to be amortized to interest expense.
MM-1
Facility
On September 20, 2021, FS CREIT Finance
MM-1
LLC, or
MM-1,
an indirect wholly-owned, special-purpose financing subsidiary of the Company, entered into a Loan and Servicing Agreement, or the
MM-1
Loan
 
Agreement, and together with the related transaction documents, the
MM-1
Facility, by and among Finance Holdings,
MM-1,
as borrower and portfolio asset servicer, Massachusetts Mutual Life Insurance Company, or Mass Mutual, and the other lenders from time to time party thereto, or the Lenders, Wells Fargo Bank, N.A., as administrative agent and as collateral custodian, and Mass Mutual, as facility servicer. The maximum committed facility amount under the
MM-1
Facility as of June 30, 2022 is $1,000,000.
Borrowings under the
MM-1
Facility are subject to compliance with a borrowing base calculated based on advance rates applied to the value of
MM-1’s
assets. The
MM-1
Facility provides for a three-year availability period for borrowings, extendable for one additional year (for an additional fee of 0.25%) and an eight-year final maturity. Under the
MM-1
Facility, starting 18 months after the initial closing date, the full interest rate on outstanding loans will be payable on 85% of the commitments, or the Minimum Usage Amount, regardless of usage. The
MM-1
Facility also has an unused commitment fee of 0.30% per annum payable on: (i) during the first 18 months after the closing date, the unused commitment amounts and (ii) thereafter, the unused commitment amounts in excess of the Minimum Usage Amount. On February 23, 2022, the
MM-1
Repurchase Agreement was amended to exercise the accordion option to increase the maximum committed facility amount from $200,000 to $250,000. On March 4, 2022 the
MM-1
Repurchase Agreement was further amended to increase the maximum committed facility amount from $250,000 to $500,000, and reduce the applicable interest spread from 2.10% to 2.05% per annum.
On April 27, 2022, the
MM-1
Repurchase Agreement was amended and restated to provide for an increase of the maximum committed facility amount from $500,000 to $1,000,000, and a change of interest rate from LIBOR plus a spread of 2.05% to Term SOFR plus a spread of 2.025% plus a credit spread adjustment of 0.11%.
The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $8,666 of deferred financing costs had yet to be amortized to interest expense.
 
25

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 6. Financing Arrangements (continued)
 

Mortgage Loan
Natixis Loan
On June 23, 2022, FS CREIT 555 Aviation LLC, an indirect wholly-owned subsidiary of the Company, entered into a mortgage loan related to its purchase of 555 Aviation (see Note 5). The maximum amount of financing under the facility as of June 30, 2022 is $
126,700. The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $2,132 of deferred financing costs had yet to be amortized to interest expense.
Note 7. Related Party Transactions
Compensation of FS Real Estate Advisor and the Dealer Manager
Pursuant to the third amended and restated advisory agreement dated as of December 15, 2021 or the advisory agreement, FS Real Estate Advisor
is entitled to a base management fee equal to 1.25% of the NAV for the Company’s Class T, Class S, Class D, Class M and Class I shares, payable quarterly in arrears. The payment of all or any portion of the base management fee accrued with respect to any quarter may be deferred by FS Real
Estate Advisor, without interest, and may be taken in any such other quarter as FS Real Estate Advisor may determine. In calculating the Company’s
base management fee, the Company will use its NAV before giving effect to accruals for such fee, stockholder servicing fees or distributions payable on its shares. The base management fee is a class-specific expense. No base management fee is paid on the Company’s Class F or Class Y shares.
FS
 
Real Estate Advisor is also entitled to the performance fee calculated and payable quarterly in arrears in an amount equal to 10.0% of the Company’s Core Earnings (as defined below) 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%. As a result, FS Real Estate Advisor does not earn a performance fee
for any quarter until the Company’s Core Earnings for such quarter exceed the hurdle rate of 1.625%. For purposes of the performance fee, “adjusted capital” means cumulative net proceeds generated from sales of the Company’s common stock other than Class F common stock (including proceeds from the Company’s distribution reinvestment plan) reduced for distributions from
non-liquidating
dispositions of the Company’s investments paid to stockholders and amounts paid for share repurchases pursuant to the Company’s share repurchase plan. Once the Company’s Core Earnings in any quarter exceed the hurdle rate, FS Real Estate Advisor will be entitled to a
“catch-up”
fee equal to the amount of Core Earnings in excess of the hurdle rate, until the Company’s Core Earnings for such quarter equal 1.806%, or 7.222% annually, of adjusted capital. Thereafter, FS Real Estate Advisor is entitled to receive 10.0% of the Company’s Core Earnings.
For purposes of calculating the performance fee, “Core Earnings” means: the net income (loss) attributable to stockholders of Class Y, Class T, Class S, Class D, Class M and Class I shares, computed in accordance with GAAP (provided that net income (loss) attributable to Class Y stockholders shall be reduced by an amount equal to the base management fee that would have been paid if Class Y shares were subject to such fee), including realized gains (losses) not otherwise included in GAAP net income (loss) and excluding
(i) non-cash
equity compensation expense, (ii) the performance fee, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other similar
non-cash
items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, and
(v) one-time
events pursuant to changes in GAAP and certain material
non-cash
income or expense items, in each case after discussions between FS Real Estate Advisor and the Company’s independent directors and
 
2
6

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 7. Related Party Transactions (continued)
 
approved
by a majority of the Company’s independent directors. The performance fee is a class-specific expense. No performance fee is paid on the Company’s Class F shares.
Pursuant to the advisory agreement, the base management fee and performance fee may be paid, at FS Real Estate Advisor’s election, in (i) cash, (ii) Class I shares, (iii) performance-contingent rights Class I share awards, or Class I PCRs, or (iv) any combination of cash, Class I shares or Class I PCRs.
Under the form of Class I PCR agreement to be entered into between the Company, FS Real Estate Advisor and Rialto, or the Adviser Entities, the PCR Agreement, management and performance fees may be payable to the Adviser Entities in the form of Class I PCRs to the extent that distributions paid to stockholders in the applicable fiscal quarter exceed the Company’s Adjusted Core Earnings. “Adjusted Core Earnings” means: the net income (loss) attributable to stockholders, computed in accordance with GAAP, including (A) realized gains (losses) not otherwise included in GAAP net
income (loss), (B) stockholder servicing fees, and (C) reimbursements for organization and offering expenses, and excluding
(i) non-cash
equity compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains or losses or other similar
non-cash
items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, and
(iv) one-time
events pursuant to changes in GAAP and certain material
non-cash
income or expense items. Thereafter, Class I PCRs may become
issuable in the
form of Class I shares upon the achievement of the following conditions in any fiscal quarter following the initial issuance of the Class I PCRs, together, the Performance Conditions: (a) Adjusted Core Earnings for the quarter exceed distributions paid to stockholders during such quarter (such difference, the “Excess Distributable Income”) and (b) the annualized distribution yield on the Class I Shares (measured over such quarter) is at least at the yield target determined by management given then-current market conditions, the Yield Target. The initial Yield Target will be a 6.0% annualized yield on the Class I shares.
On the last day of any fiscal quarter in which the Company achieves the Performance Conditions (the “Performance Achievement Date”), the Company will issue to the Adviser Entities the number of Class I shares equal in value to the Excess Distributable Income for such quarter in respect of any outstanding Class I PCRs. The Adviser Entities, and their respective affiliates and employees, may not request repurchase by the Company of any Class I shares issued under the PCR Agreement for a period of six (6) months from the date of issuance. Thereafter, upon ten days’ written notice to the Company by the Adviser Entities, the Company must repurchase any Class I shares requested to be repurchased by the Adviser Entities at the most recently published transaction price per Class I share; provided that no repurchase shall be permitted that would jeopardize the Company’s qualification as a REIT or violate Maryland law. If, prior to the Performance Achievement Date, (i) the New Advisory Agreement is terminated in accordance with Section 12(b) of the New Advisory Agreement (other than Section 12(b)(iii) thereof) or (ii) the
sub-advisory
agreement is terminated in accordance with Section 9(b) thereof (other than Section 9(b)(v) thereof), any rights related to the Class I PCRs evidenced thereby by the terminated party as of the date of such termination shall immediately vest and the Company shall issue the number of Class I shares issuable upon such vesting. If, prior to the Performance Achievement Date, either of the Adviser Entities resigns as the adviser or
sub-adviser,
respectively, of the Company, then any rights related to the Class I PCRs evidenced thereby as of the date of such resignation shall remain outstanding and Class I shares issuable in respect thereof shall be issued upon achievement of the Performance Conditions.
FS Real Estate Advisor has engaged Rialto as
sub-adviser
to originate loans and other investments on behalf of the Company, and FS Real Estate Advisor oversees the
sub-adviser’s
origination activities. In connection with these activities, 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 the
sub-adviser
or FS Real Estate Advisor. Such origination fees
 
27

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 7. Related Party Transactions (continued)
 
will be retained only to the extent they are paid by the borrower, either directly to Rialto or FS Real Estate Advisor or indirectly through the Company. During the six months ended June 30, 2022 and 2021, $24,328 and $9,682, respectively, in origination fees were paid directly by the borrowers to FS Real Estate Advisor or Rialto and not to the Company.
The Company reimburses FS Real Estate Advisor and Rialto for their actual costs incurred in providing administrative services to the Company. FS Real Estate Advisor and Rialto are required to allocate the cost of such services to the Company based on objective factors such as total assets, revenues and/or time allocations. At least annually, the Company’s board of directors reviews the amount of the administrative services expenses reimbursable to FS Real Estate Advisor and Rialto to determine whether such amounts are reasonable in relation to the services provided. The Company will not reimburse FS Real Estate Advisor or Rialto for any services for which it receives a separate fee or for any administrative expenses allocated to employees to the extent they serve as executive officers of the Company.
FS Investments funded the Company’s organization and offering costs in the amount of $18,737 for the period from November 7, 2016
(Inception) to June 30, 2022. These expenses include legal, accounting, printing, mailing and filing fees and expenses, due diligence expenses of participating broker-dealers supported by detailed and itemized invoices, costs in connection with preparing sales materials, design and website expenses, fees and expenses of the Company’s transfer agent, fees to attend retail seminars sponsored by participating broker-dealers and reimbursements for customary travel, lodging, and meals, but excluding selling commissions, dealer manager fees and stockholder servicing fees. Under the advisory agreement, FS Real Estate Advisor agreed to advance all of the Company’s organization and offering expenses on the Company’s behalf until it raised $250,000 of gross proceeds from its public offering.
FS
Real Estate Advisor and Rialto agreed to defer the recoupment of any organization and offering expenses that may be reimbursable by the Company 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 the Company had achieved economies of scale sufficient to ensure that it could bear a reasonable level of expenses in relation to its income. The Company 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 the Company’s behalf, up to a cap of 0.75% of gross proceeds raised after such time. During the six months ended June 30, 2022, the Company paid $6,999 to FS Real Estate Advisor for offering costs previously funded. As of June 30, 2022, $9,076 of offering expenses previously funded remained subject to reimbursement to FS Real Estate Advisor and Rialto.
The following table describes the fees and expenses accrued under the advisory agreement during the six months ended June 30, 2022 and 2021:
 
           
Three Months
Ended

June 30,
   
Six Months
Ended

June 30,
 
Related Party
 
Source Agreement
 
Description
 
2022
   
2021
   
2022
   
2021
 
FS Real Estate Advisor
  Advisory Agreement   Base Management Fee
(1)
  $ 5,351     $ 1,285     $ 9,196     $ 2,321  
FS Real Estate Advisor
  Advisory Agreement   Performance Fee
(2)
  $        $ 423     $ 152     $ 960  
FS Real Estate Advisor
  Advisory Agreement   Administrative Services Expenses
(3)
  $ 3,565     $ 652     $ 5,224     $ 1,448  
 
(1)
During the six months ended June 30, 2022, FS Real Estate Advisor received $2,007 in cash and $8,993 of performance contingent rights were issued as payment for management fees. During the six months ended 
 
28

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 7. Related Party Transactions (continued)
 
 
June 30, 2022 and 2021, $2,007 and $1,804, respectively, in base management fees were paid to FS Real Estate Advisor. As of June 30, 2022, there were no base management fees payable to FS Real Estate Advisor.
(2)
During the six months ended June 30, 2022 and 2021, $557 and $800, respectively, in performance fees were paid to FS Real Estate Advisor. As of June 30, 2022, there were no performance fees payable to FS Real Estate Advisor.
(3)
During the six months ended June 30, 2022 and 2021, $4,796 and $1,270, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by FS Real Estate Advisor and Rialto and the remainder related to other reimbursable expenses. These amounts are recorded as general and administrative expenses on the accompanying unaudited consolidated statements of operations.
The dealer manager
 
for the Company’s continuous public offering is FS Investment Solutions, LLC, or FS Investment Solutions, which is an affiliate of FS Real Estate Advisor. Under the amended and restated dealer manager agreement dated as of August 17, 2018, or the dealer manager agreement, FS Investment Solutions is entitled to receive upfront selling commissions of up to
 
3.0
%, and upfront dealer manager fees of
 
0.5
% of the transaction price of each Class T share sold in the primary offering, however such amounts may vary at certain participating broker-dealers provided
that the sum will not exceed
3.5
% of the transaction price (subject to reductions for certain categories of purchasers). FS Investment Solutions is entitled to receive upfront selling commissions of up to
3.5%
of the transaction price per Class S share sold in the primary offering (subject to reductions for certain categories of purchasers). The dealer manager anticipates that all of the selling commissions and dealer manager fees will be re-allowed 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. Pursuant to the dealer manager agreement, the Company also reimburses FS Investment Solutions or participating broker-dealers for bona fide due diligence expenses, provided that total organization and offering expenses shall not exceed
 15
% of the gross proceeds in the Company’s public offering.
No selling commissions or dealer manager fees are payable on the sale of Class D, Class M, Class I, Class F or Class Y shares or on shares of any class sold pursuant to the Company’s distribution reinvestment plan.
Subject to the limitations described below, the Company pays FS Investment Solutions stockholder servicing fees for ongoing services rendered to stockholders by participating broker-dealers or by broker-dealers servicing stockholders’ accounts, referred to as servicing broker-dealers:
 
   
with respect to the Company’s outstanding Class T shares equal to 0.85% per annum of the aggregate NAV of its outstanding Class T shares, consisting of an advisor stockholder servicing fee of 0.65% per annum and a dealer stockholder servicing fee of 0.20% per annum; however, with respect to Class T shares sold through certain participating broker-dealers, the advisor stockholder servicing fee and the dealer stockholder servicing fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such shares;
 
   
with respect to the Company’s outstanding Class S shares equal to 0.85% per annum of the aggregate NAV of its outstanding Class S shares;
 
   
with respect to the Company’s outstanding Class D shares equal to 0.3% per annum of the aggregate NAV of its outstanding Class D shares; and
 
   
with respect to the Company’s outstanding Class M shares equal to 0.3% per annum of the aggregate NAV of its outstanding Class M shares.
 
29

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 7. Related Party Transactions (continued)
 
The Company does not pay a stockholder servicing fee with respect to its Class I, Class F or Class Y shares. The dealer manager reallows some or all of the stockholder servicing fees to participating broker-dealers, servicing broker-dealers and financial institutions (including bank trust departments) for ongoing stockholder services performed by such broker-dealers, and waives (pays back to the Company) 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.
The Company will cease paying stockholder servicing fees with respect to any Class D, Class M, Class S and Class T shares held in a stockholder’s account at the end of the month in which the total underwriting compensation from the upfront selling commissions, dealer manager fees and stockholder servicing fees, as applicable, paid with respect to such account would exceed 1.25%, 7.25%, 8.75% and 8.75%, respectively (or a lower limit for shares sold by certain participating broker-dealers or financial institutions) of the gross proceeds from the sale of shares in such account. These amounts are referred to as the sales charge cap. At the end of such month that the sales charge cap is reached, each Class D, Class M, Class S or Class T share in such account will
 
convert into a number of Class I shares (including any fractional shares) with an equivalent aggregate NAV as such share.

In
addition, the Company will cease paying stockholder servicing fees on each Class D share, Class M share, Class S share and Class T share held in a stockholder’s account and each such share will convert to Class I shares on the earlier to occur of the following: (i) a listing of Class I shares on a national securities exchange; (ii) the sale or other disposition of all or substantially all of the Company’s assets or the Company’s merger or
consolidation with or into another entity in a transaction in which holders of Class D, Class M, Class S or Class T shares receive cash and/or shares of stock that are listed on a national securities exchange; or (iii) the date following the completion of the Company’s public offering on which, in the aggregate, underwriting compensation from all sources in connection with the Company’s public offering, including selling commissions, dealer
manager fees, stockholder servicing fees and other underwriting compensation, is equal to 10% of the gross proceeds from its primary offering.
The Company accrues future stockholder servicing fees in an amount equal to its best estimate of fees payable to FS Investment Solutions at the time such shares are sold. As of June 30, 2022 and December 31, 2021, the Company accrued $91,206 and $48,514, respectively, of stockholder servicing fees payable to FS Investment Solutions. FS Investment Solutions has entered into agreements with selected dealers distributing the Company’s shares in the public offering, which provide, among other things, for the
re-allowance
of the full amount of the selling commissions and dealer manager fee and all or a portion of the stockholder servicing fees received by FS Investment Solutions to such selected dealers.
FS Investment Solutions also serves or served as the placement agent for the Company’s private offerings of Class F and Class Y shares pursuant to placement agreements. FS Investment Solutions does not receive any compensation pursuant to these agreements.
Expense Limitation
The Company has entered into an amended and restated expense limitation agreement with FS Real Estate Advisor and Rialto, or the expense limitation agreement, pursuant to which FS Real Estate Advisor and Rialto have agreed to waive reimbursement of or pay, on a quarterly basis, the Company’s annualized ordinary operating expenses for such quarter to the extent such expenses exceed 1.5% per annum of its average net
assets
 
30

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 7. Related Party Transactions (continued)
 
a
ttributable to each of its classes of common stock. The Company 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.
FS Real Estate Advisor and Rialto each agreed to waive the recoupment of any amounts that may be subject to conditional reimbursement during the quarterly period ended March 31, 2020. To the extent that the conditions to recoupment are satisfied in a future quarter (prior to the expiration of the three-year period for reimbursement set forth in the expense limitation agreement), such expenses may be subject to conditional recoupment in accordance with the terms of the expense limitation agreement.
During the period from September 13, 2017 (Commencement of Operations) to June 30, 2022, the Company accrued $5,839 for reimbursement of expenses that FS Real Estate Advisor and Rialto paid or waived, including
$0 in reimbursements for the six months ended June 30, 2022. During the
period from September 13, 2017 (Commencement of Operations) to June 30, 2022, the Company received $5,839 in cash reimbursements from FS Real Estate Advisor.
During the six months ended June 30, 2022, $482 of expense recoupments were paid to FS Real Estate Advisor and Rialto. As of June 30, 2022 and December 31, 2021, $1,460 and $62, respectively, of expense recoupments were payable to FS Real Estate Advisor and Rialto and $257 of expense reimbursements received from FS Real Estate Advisor and Rialto were eligible for recoupment.
 
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Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 7. Related Party Transactions (continued)
 
The following table reflects the amounts paid or waived by FS Real Estate Advisor and Rialto under the expense limitation agreement and the expiration date for future possible reimbursements by the Company:
 
For the Three Months Ended
  
Amount of
Expense
Reimbursement
    
Recoupable
Amount
    
Recoupment
paid or
payable to
sponsor
    
Expired
Amount
    
Recoupment eligibility expiration
 
June 30, 2022
   $         $         $         $           N/A  
March 31, 2022
     —          —          —          —          N/A  
December 31, 2021
     —          —          —          —          N/A  
September 30, 2021
     —          —          —          —          N/A  
June 30, 2021
     —          —          —          —          N/A  
March 31, 2021
     56        56        —          —          March 31, 2024  
December 31, 2020
     444        201        243        —          December 31, 2023  
September 30, 2020
     397        —          397        —          September 30, 2023  
June 30, 2020
     182        —          182        —          June 30, 2023  
March 31, 2020
     —          —          —          —          N/A  
December 31, 2019
     500        —          500        —          December 31, 2022  
September 30, 2019
     491        —          491        —          September 30, 2022  
June 30, 2019
     420        —          420        —          Expired June 30, 2022  
March 31, 2019
     537        —          537        —          Expired March 31, 2022  
December 31, 2018
     709        —          62        647        Expired December 31, 2021  
September 30, 2018
     645        —          8        637        Expired September 30, 2021  
June 30, 2018
     561        —          390        171        Expired June 30, 2021  
March 31, 2018
     356        —          —          356        Expired March 31, 2021  
December 31, 2017
     377        —          —          377        Expired December 31, 2020  
September 30, 2017
     164        —          —          164        Expired September 30, 2020  
    
 
 
    
 
 
    
 
 
    
 
 
          
     $ 5,839      $ 257      $ 3,230      $ 2,352           
    
 
 
    
 
 
    
 
 
    
 
 
          
Capital Contributions and Commitments
In December 2016, pursuant to a private placement, Michael C. Forman and David J. Adelman, principals of FS Investments, contributed an aggregate of $200 to purchase 8,000 Class F shares at the price of $25.00 per share. These individuals will not tender these shares of common stock for repurchase as long as FS Real Estate Advisor remains the Company’s adviser. FS Investments is controlled by Mr. Forman, the Company’s president and chief executive officer, and Mr. Adelman.
As of June 30, 2022, the ownership in the Company’s Class F Shares by FS Real Estate Advisor and Rialto (and each of their respective affiliates and designees) was $22,221 and $388, respectively.
RIAL
2022-FL8
Transaction
In the second quarter of 2022, the Company purchased $36,000 of the Class E Notes mortgage-backed securities in a transaction in which an affiliate of Rialto is the issuer of the notes. These securities are accounted for as available-for-sale.
 
 
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Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
 
Note 8. Stockholders’ Equity
Below is a summary of transactions with respect to shares of the Company’s common stock during the six months ended June 30, 2022 and 2021:
 
   
Shares
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2021
    902,878       906,648       1,407,377       22,823,721       642,162       2,876,736       11,366,687       40,926,209  
Issuance of common stock
                      113,913       22,528,563       59,993       1,052,345       13,557,720       37,312,534  
Reinvestment of distributions
    14,613                20,616       516,751       7,279       31,546       266,637       857,442  
Redemptions of common stock
    (12,699              (31,495     (1,266,247     (18,465     (131,950     (818,042     (2,278,898
Transfers in or out
                      (1,729              (10,622     (127,149     143,084       3,584  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022
    904,792       906,648       1,508,682       44,602,788       680,347       3,701,528       24,516,086       76,820,871  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Amount
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2021
  $ 22,138     $ 22,371     $ 33,862     $ 531,150     $ 15,945     $ 66,836     $ 279,008     $ 971,310  
Issuance of common stock
                      2,846       567,895       1,501       26,392       331,510       930,144  
Reinvestment of distributions
    366                515       13,021       182       1,295       6,516       21,895  
Redemptions of common stock
    (318              (787     (31,901     (462     (3,307     (19,996     (56,771
Transfers in or out
                      (44              (265     (3,190     3,499           
Accrued stockholder servicing fees
(1)
                      (113     (44,812     (15     (1,488              (46,428
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022
  $ 22,186     $ 22,371     $ 36,279     $ 1,035,353     $ 16,886     $ 86,538     $ 600,537     $ 1,820,150  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Shares
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2020
    912,469       137,116       1,245,658       5,778,640       546,298       1,971,039       2,171,528       12,762,748  
Issuance of common stock
             843,659       67,299       4,222,421       90,823       436,462       1,844,519       7,505,183  
Reinvestment of distributions
    15,638                20,142       106,935       6,249       23,427       32,784       205,175  
Redemptions of common stock
    (10,270     (74,127     (20,042     (36,438              (42,670     (26,490     (210,037
Transfers in or out
    (6,392              (3,664     (1,684     (42,355              55,285       1,190  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
    911,445       906,648       1,309,393       10,069,874       601,015       2,388,258       4,077,626       20,264,259  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
33

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 8. Stockholders’ Equity (continued)
 
   
Amount
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2020
  $ 22,378     $ 3,449     $ 29,971     $ 134,705     $ 13,573     $ 46,154     $ 53,597     $ 303,827  
Issuance of common stock
             20,749       1,690       106,853       2,282       10,996       45,347       187,917  
Reinvestment of distributions
    392                505       2,705       157       590       805       5,154  
Redemptions of common stock
    (258     (1,827     (503     (922              (1,072     (651     (5,233
Transfers in or out
    (160              (92     (43     (1,065              1,360           
Accrued stockholder servicing fees
(1)
                      (57     (8,674     (18     (727              (9,476
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
  $ 22,352     $ 22,371     $ 31,514     $ 234,624     $ 14,929     $ 55,941     $ 100,458     $ 482,189  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Stockholder servicing fees only apply to Class T, Class S, Class D and Class M shares. Under GAAP, the Company accrues future stockholder servicing fees in an amount equal to its best estimate of fees payable to FS Investment Solutions at the time such shares are sold. For purposes of NAV, the Company recognizes 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.
Share Repurchase Plan
The Company has adopted an amended and restated share repurchase plan, or share repurchase plan, whereby on a monthly basis, stockholders may request that the Company repurchase all or any portion of their shares. The repurchase of shares is limited to no more than 2% of the Company’s aggregate NAV per month of all classes of shares then participating in the share repurchase plan and no more than 5% of the Company’s aggregate
NAV per calendar quarter of all classes of shares then participating in the share repurchase plan, which
means that in any
12-month
period, the
Company limits repurchases to approximately 20% of the total NAV of all classes of shares then participating in the share repurchase plan. The Company’s board of directors may modify, suspend or terminate the share repurchase plan if it deems such action to be in the Company’s best interest and the best interest of its stockholders. During the six months ended June 30, 2022 and 2021, the Company repurchased 2,278,898 and 210,037, respectively, shares of common stock under its share repurchase plan representing a total of $56,771 and $5,233, respectively. The Company had no unfulfilled repurchase requests during the three months ended June 30, 2022 or 2021, respectively.
Distribution Reinvestment Plan
Pursuant to the Company’s distribution reinvestment plan, holders of shares of any class of the Company’s common stock may elect to have their cash distributions reinvested in additional shares of the Company’s common stock. The purchase price for shares pursuant to the distribution reinvestment plan will be equal to the transaction price for such shares at the time the distribution is payable.
Distributions
The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its stockholders each year to comply with the REIT provisions of the Code. Dividends are paid first to the holders of the Company’s Series A preferred stock at the rate of 12.0% per annum plus all accumulated and unpaid dividends thereon, and then to the holders of the Company’s common stock. All distributions will be made at the discretion of the Company’s
 
34

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 8. Stockholders’ Equity (continued)
 
board of directors and will depend upon its taxable income, financial condition, maintenance of REIT status, applicable law, and other factors that the Company’s board of directors deems relevant.
The following table reflects the cash distributions per share that the Company paid on its common stock during the six months ended June 30, 2022:
 
Record Date
  
Class F
    
Class Y
    
Class T
    
Class S
    
Class D
    
Class M
    
Class I
 
January 28, 2022
   $ 0.1610      $ 0.1610      $ 0.1173      $ 0.1173      $ 0.1288      $ 0.1288      $ 0.1350  
February 25, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
March 30, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
April 28, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
May 27, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
June 29, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 0.9660      $ 0.9660      $ 0.7038      $ 0.7038      $ 0.7728      $ 0.7728      $ 0.8100  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
The following table reflects the amount of cash distributions that the Company paid on its common stock during the six months ended June 30, 2022, and 2021:
 
    
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
    
2022
    
2021
    
2022
    
2021
 
Distributions:
                                   
Paid or payable in cash
   $ 14,169      $ 4,661      $ 24,332      $ 8,357  
Reinvested in shares
     12,521        2,912        21,895        5,154  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total distributions
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
    
 
 
    
 
 
    
 
 
    
 
 
 
Source of distributions:
                                   
Cash flows from operating activities
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
Offering proceeds
                                       
    
 
 
    
 
 
    
 
 
    
 
 
 
Total sources of distributions
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
    
 
 
    
 
 
    
 
 
    
 
 
 
Net cash provided by (used in) operating activities
(1)
   $ 27,196      $ 9,619      $ 48,925      $ 33,038  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
Cash flows from operating activities are supported by expense support payments from FS Real Estate Advisor and Rialto pursuant to the Company’s expense limitation agreement. See Note 7 for additional information regarding the Company’s expense limitation agreement.
The Company currently declares and pays regular cash distributions on a monthly basis. The Company’s board of directors previously authorized regular monthly cash distributions for July 2022 for each class of its outstanding common stock in the net distribution amounts per share set forth below:
 
Class F
 
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
 
$0.1610   $ 0.1610     $ 0.1173     $ 0.1173     $ 0.1288     $ 0.1288     $ 0.1350  
The distributions for each class of outstanding common stock have been or will be paid monthly to stockholders of record as of the monthly record dates previously determined by the Company’s board of
 
35

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 8. Stockholders’ Equity (continued)
 
directors. These distributions have been or will be paid in cash or reinvested in shares of the Company’s common stock for stockholders participating in the Company’s distribution reinvestment plan.
Note 9. Fair Value of Financial Instruments
The following table presents the Company’s financial assets carried at fair value in the consolidated balance sheets by its level in the fair value hierarchy:
 
    
June 30, 2022 (Unaudited)
    
December 31, 2021
 
    
Total
    
Level 1
    
Level 2
    
Level 3
    
Total
    
Level 1
    
Level 2
    
Level 3
 
Mortgage-backed securities
available-for-sale
   $ 153,274      $         $ 153,274      $         $ 44,518      $         $ 44,518      $     
Interest rate cap
   $ 2,518      $         $ 2,518      $         $         $         $         $     
As discussed in Note 2, GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate that value. The following table details the carrying amount, face amount, and fair value of the financial instruments described in Note 2: 
 
   
June 30, 2022 (Unaudited)
   
December 31, 2021
 
   
Book Value
   
Face
Amount
   
Fair Value
   
Book Value
   
Face
Amount
   
Fair Value
 
Financial Assets
                                               
Cash, cash equivalents and restricted cash
  $ 94,770     $ 94,770     $ 94,770     $ 85,808     $ 85,808     $ 85,808  
Loans
receivable—held-for-investment
(1)
  $ 6,538,370     $ 6,539,424     $ 6,541,502     $ 3,841,868     $ 3,843,110     $ 3,844,685  
Mortgage-backed securities
held-to-maturity
  $ 78,942     $ 159,543     $ 78,942     $ 37,862     $ 50,300     $ 37,862  
Financial Liabilities
                                               
Repurchase agreements
(2)
  $ 1,175,651     $ 1,178,929     $ 1,178,929     $ 903,010     $ 904,968     $ 904,968  
Credit facilities
  $ 692,472     $ 701,138     $ 701,138     $ 196,960     $ 199,190     $ 199,190  
Collateralized loan obligations
(2)
  $ 3,193,515     $ 3,220,572     $ 3,220,572     $ 1,886,382     $ 1,903,083     $ 1,903,083  
Mortgage note payable
(2)
  $ 122,568     $ 124,700     $ 124,700     $        $        $     
 
(1)
Book value of loans receivable represents the face amount, net of unamortized loan fees and costs and accrual of exit fees, as applicable.
(2)
Book value represents the face amount, net of deferred financing costs.
Estimates of fair value for cash, cash equivalents and restricted cash are measured using observable, quoted market prices, or Level 1 inputs. Estimates of fair value for loans receivable, mortgage-backed securities
held-to-maturity,
repurchase obligations, credit facility obligations and the collateralized loan obligations are measured using unobservable inputs, or Level 3 inputs.
 
36

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
 
Note 10. Variable Interest Entities
Consolidated Variable Interest Entities
The Company has financed a portion of its loans through CLOs, which are considered VIEs. The Company has a controlling financial interest in the CLOs and, therefore, consolidates them on its balance sheets because the Company has both (i) the power to direct activities of the CLOs that most significantly affect the CLOs’ economic performance and (ii) the obligation to absorb losses and the right to receive benefits of the CLOs that could potentially be significant to the CLOs.
The following table details the assets and liabilities of the Company’s consolidated CLOs as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022
(Unaudited)
    
December 31, 2021
 
Assets:
                 
Restricted cash
   $ 4,153      $ 37,364  
Loans receivable,
held-for-investment
     3,992,448        2,298,367  
Interest receivable
     9,576        5,154  
Other assets
     27,694        6,625  
    
 
 
    
 
 
 
Total assets
   $ 4,033,871      $ 2,347,510  
    
 
 
    
 
 
 
Liabilities
                 
Collateralized loan obligations (net of deferred financing costs of $27,057 and $16,701, respectively)
   $ 3,193,515      $ 1,886,382  
Interest payable
     3,988        1,357  
Other liabilities
     212        205  
    
 
 
    
 
 
 
Total liabilities
   $ 3,197,715      $ 1,887,944  
    
 
 
    
 
 
 
Assets held by the CLOs are restricted and can be used only to settle obligations of the CLOs. The liabilities are
non-recourse
to the Company and can only be satisfied from the assets of the CLOs.
Non-Consolidated
Variable Interest Entities
The Company invested $67,005 in subordinated positions of CMBS trusts which are considered VIEs. The Company is not the primary beneficiary of the VIEs because it does not have the power to direct the activities that most significantly affect the VIEs’ economic performance, nor does it provide guarantees or recourse to the VIEs other than standard representations and warranties and, therefore, does not consolidate the VIEs on its balance sheets. The Company has classified its investment in the CMBS as
held-to-maturity
debt securities that are included on the Company’s consolidated balance sheets and are part of the Company’s ongoing other-than-temporary impairment review. The Company’s maximum exposure to loss of the securities are limited to its book value of $78,942 as of June 30, 2022.
The Company is not obligated to provide, nor has it provided financial support to these consolidated and
non-consolidated
VIEs.
 
37

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
 
Note 11. Commitments and Contingencies
The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management of FS Real Estate Advisor has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.
The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be party to certain legal proceedings in the ordinary course of business. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect on its financial condition or results of operations.
See Note 7 for a discussion of the Company’s commitments to FS Real Estate Advisor and its affiliates (including FS Investments) for the reimbursement of organization and offering costs funded by FS Investments and for the reimbursement of amounts paid or waived by FS Real Estate Advisor and Rialto under the expense limitation agreement.
Note 12. Intangibles
The gross carrying amount and accumulated amortization of the Company’s real estate related intangible assets consisted of the following as of June 30, 2022:
 
    
June 30, 2022
 
Intangible assets
(1)
        
In-place
lease intangibles
   $ 33,091  
    
 
 
 
Total intangible assets
   $ 33,091  
    
 
 
 
 
(1)
Included in Other assets in the Company’s consolidated balance sheets.
No intangible assets or liabilities related to the Company’s real estate investments existed as of December 31, 2021.
The following table details the Company’s future amortization of intangible assets for each of the next five years and thereafter:
 
    
Amortization
 
2022 (remaining)
   $ 1,907  
2023
     3,814  
2024
     3,814  
2025
     3,814  
2026
     3,806  
2027
     3,803  
Thereafter
     12,133  
    
 
 
 
Total
   $ 33,091  
    
 
 
 
 
38

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
 
Note 13. Derivative Instrument
The Company has entered into an interest rate cap contract in order to limit its exposure against the variability of future interest rates on its variable interest rate borrowing. The Company has not designated this derivative as a hedge for accounting purposes. The Company has not entered into a master netting arrangement with its third-party counterparty and does not offset on its consolidated balance sheets the fair value amount recorded for its derivative instrument. The table below provides additional information regarding the
Company’s derivative instrument as of June 30, 2022. The Company did not hold any interest rate caps as of December 31, 2021.
 
Type of Derivative
  
Notional Amount
    
Strike
   
Effective Date
    
Maturity Date
    
Fair Value
(1)
 
Interest Rate Cap
   $ 126,700        2.25     June 21, 2022        July 09, 2024      $ 2,518  
 
(1)
Included in Other assets in the Company’s consolidated balance sheets.
The following table details the fair value of the Company’s derivative financial instrument:
 
Type of Derivative
  
Realized/Unrealized
Gain (Loss)
    
Location of
Gain (Loss)
Recognized
in Net
Income
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
 
    2022    
   
    2021    
    
    2022    
   
    2021    
 
Interest Rate Cap
     Unrealized Loss        (1   $ (1,449   $         $ (1,449   $     
 
(1)
Included in Other income (loss) in the Company’s consolidated statements of operations
Note 14. Subsequent Events
The following is a discussion of material events that have occurred subsequent to June 30, 2022 through the issuance of the unaudited consolidated financial statements.
Barclay Revolving Credit Facility
On August 1, 2022, the Company, as borrower, entered into a senior secured revolving credit facility, or the Senior Secured Revolving Credit Facility with Barclays, as administrative agent, and the lenders party thereto.
The Senior Secured Revolving Credit Facility provides for borrowings, subject to a borrowing base calculation, in an aggregate maximum committed amount of up to $310,000, with an option for the Company to request, at one or more times, that existing and/or new lenders, at their election, provide up to $155,000 of additional commitments. The Senior Secured Revolving Credit Facility will mature on August 1, 2025, subject to options for the Company to request that lenders, at their election, provide up to two one-year maturity extensions. In connection with the closing of the Senior Secured Revolving Credit Facility, the Company repaid all outstanding borrowings and all other obligations under, and concurrently terminated, the CNB Facility.
Borrowings under the Senior Secured Revolving Credit Facility bear interest, at the Company’s election, at either a base rate plus a spread of 1.25%
per annum or one-, three- or six-month Term SOFR plus a spread of
 2.25%
per annum and a credit spread adjustment of 0.10% per annum. In each case, the spread will increase by
0.25% on the 30th day any loan remains outstanding and an additional
0.25
% on the 60th day any loan remains outstanding.
The Company will pay a commitment fee of 0.25% per annum on undrawn availability for each day on which over 50% of the maximum committed amount is undrawn and 0.35% per annum on undrawn availability for each day on which 50% or less of the maximum committed amount is undrawn.
 
39

Table of Contents
FS Credit Real Estate Income Trust, Inc.
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)
Note 14. Subsequent Events (continued)
 
In connection with the Senior Secured Revolving Credit Facility, the Company has made certain representations and warranties and must comply with various covenants and reporting requirements customary for facilities of this type. In addition, the Company must comply with the following financial covenants, in each case, measured as of the last day of each fiscal quarter: (a) a minimum fixed charge coverage ratio for the prior four fiscal quarters of not less than 1.50 to 1.00, (b) minimum tangible net worth not less than the sum of (i) $1,367,009 plus (ii) 75% of net cash proceeds from any offering of the Company’s capital stock after the closing date of the Senior Secured Revolving Credit Facility minus (iii) 50% of any cash used by the Company to repurchase any of its capital stock after the closing date of the Senior Secured Revolving Credit Facility, (c) minimum liquidity not less than $10,000, (d) a maximum debt to equity ratio for the prior four fiscal quarters of not greater than 3.50 to 1.00, and (e) an interest coverage ratio (calculated using earnings of assets contributing to the borrowing base) for the prior four fiscal quarters of not less than 1.50 to 1.00.
The Senior Secured Revolving Credit Facility contains events of default customary for facilities of this type. Upon the occurrence of an event of default, Barclays, at the instruction of the lenders, may terminate the commitments and declare outstanding borrowings and all other obligations under the Senior Secured Revolving Credit Facility immediately due and payable.
The Company’s obligations under the Senior Secured Revolving Credit Facility are guaranteed by certain of the Company’s subsidiaries. The Company’s obligations under the Senior Secured Revolving Credit Facility are secured by a first priority security interest in substantially all of the assets of the Company and the subsidiary guarantors thereunder.
Status of Offerings
As of August
5
,
 2022, the Company has issued 92,410,687 shares of common stock (consisting of 2,629,044 shares of Class F common stock, 1,036,671 shares of Class Y common stock, 1,685,871 shares of Class T common stock, 51,221,317 shares of Class S common stock, 783,331 shares of Class D common stock, 4,502,874 shares of Class M common stock and 30,551,579 shares of Class I common stock), including shares issued pursuant to its distribution reinvestment plan, for gross proceeds of $2,306,777.
 
40

Table of Contents
Item 2.
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 the unaudited consolidated financial statements and related notes thereto appearing elsewhere in this Quarterly Report on
Form 10-Q. In
this report, “we,” “us” and “our” refer to FS Credit Real Estate Income Trust, Inc.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on
Form 10-Q contains
forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), regarding, among other things, our business, including, in particular, statements about our plans, strategies and objectives. You can generally identify forward-looking statements by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. These statements include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds, and are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control. Although we believe the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate and our actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved. We undertake no duty to update or revise forward-looking statements, except as required by law.
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 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 $2,500,000 in shares in our primary offering and up to $250,000 in shares pursuant to our distribution reinvestment plan. We also previously conducted private offerings of our Class F common stock and Class Y common stock. 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, FS Investments, 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 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 dividend yield; preserve and protect invested capital; realize appreciation in net asset value, or NAV, from proactive 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 with lower volatility than public real estate companies.
 
41

Table of Contents
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 commercial mortgage-backed securities, or 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.
Portfolio Overview
Loan Portfolio Overview
The following table details activity in our loans receivable portfolio for the six months ended June 30, 2022 and 2021:
 
    
Three Months Ended
June 30,
    
Six Months Ended June 30,
 
    
2022
    
2021
    
2022
    
2021
 
Loan fundings
(1)
   $ 2,042,818      $ 793,678      $ 3,084,586      $ 1,018,208  
Loan repayments
     (154,561      (72,182      (389,036      (96,067
  
 
 
    
 
 
    
 
 
    
 
 
 
Total net fundings
   $ 1,888,257      $ 721,496      $ 2,695,550      $ 922,141  
  
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
Includes new loan originations and additional fundings made under existing loans.
The following table details overall statistics for our loans receivable portfolio as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022
(Unaudited)
   
December 31,
2021
 
Number of loans
     135       102  
Principal balance
   $ 6,539,424     $ 3,843,110  
Net book value
   $ 6,538,370     $ 3,841,868  
Unfunded loan commitments
(1)
   $ 610,703     $ 414,818  
Weighted-average cash coupon
(2)
     +3.82     +3.68
Weighted-average
all-in
yield
(2)
     +3.87     +3.73
Weighted-average maximum maturity (years)
(3)
     4.4       4.5  
 
(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 indexed to LIBOR and SOFR. In addition to cash coupon,
all-in
yield includes accretion of discount (amortization of premium) and accrual of exit fees.
(3)
Maximum maturity assumes all extension options are exercised by the borrower; however loans may be repaid prior to such date.
 
42

Table of Contents
The following table provides details of our loan receivable,
held-for-investment
portfolio, on a
loan-by-loan
basis, as of June 30, 2022:
 
   
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)
 
1
  Senior Loan     6/9/2022     $ 365,611     $ 336,733     $ 336,683       +3.30     +3.30     6/9/2027     Various   Multifamily     74
2
  Senior Loan     4/28/2022       195,000       195,000       194,980       +4.65     +4.76     5/9/2027     New York, NY   Hospitality     70
3
  Senior Loan     12/7/2021       175,000       150,783       150,767       +3.60     +3.60     12/9/2026     Miami, FL   Retail     38
4
  Mezz Loan     10/1/2021       150,000       99,949       99,295       10.00     10.26     4/1/2026     Various   Various     93
5
  Senior Loan     6/8/2022       144,160       144,160       144,175       +3.89     +4.14     6/9/2027     New York, NY   Multifamily     73
6
  Senior Loan     10/12/2021       130,747       130,747       130,747       +3.00     +3.00     6/9/2026     Philadelphia, PA   Multifamily     69
7
  Senior Loan     3/31/2022       120,470       81,979       81,962       +4.30     +4.31     4/9/2027     Addison, TX   Office     67
8
  Senior Loan     9/9/2021       118,265       118,265       118,250       +3.20     +3.20     9/9/2026     Various, NY   Self Storage     70
9
  Senior Loan     6/14/2022       111,100       97,500       97,475       +3.80     +3.81     6/9/2027     San Jose, CA   Office     39
10
  Senior Loan     3/10/2022       110,150       90,577       90,549       +5.00     +5.01     4/9/2027     Santa Clara, CA   Office     62
11
  Senior Loan     5/26/2022       108,500       97,172       97,157       +3.40     +3.59     6/9/2027     Mesa, AZ   Multifamily     67
12
  Senior Loan     6/30/2022       106,000       100,000       99,985       +4.15     +4.15     7/9/2027     Lynwood, CA   Retail     61
13
  Senior Loan     5/18/2022       105,000       105,000       105,000       +3.50     +3.50     6/9/2027     New Rochelle, NY   Multifamily     61
14
  Senior Loan     1/13/2022       103,600       91,942       91,915       +3.55     +3.56     1/9/2027     Austin, TX   Multifamily     80
15
  Senior Loan     6/28/2022       100,000       100,000       99,975       +3.15     +3.16     7/9/2027     Fayetteville, NC   Multifamily     76
16
  Senior Loan     12/30/2021       95,000       95,000       94,983       +4.20     +4.21     1/9/2027     San Diego, CA   Hospitality     58
17
  Senior Loan     12/21/2021       93,900       72,888       72,873       +3.80     +3.81     1/9/2027     Houston, TX   Multifamily     76
18
  Senior Loan     5/13/2022       93,500       84,327       84,308       +4.25     +4.40     5/9/2027     New York, NY   Multifamily     60
19
  Senior Loan     4/29/2022       90,000       90,000       90,000       +3.55     +3.55     5/6/2027     Reseda, CA   Multifamily     69
20
  Senior Loan     5/13/2022       89,500       76,173       76,153       +4.25     +4.40     5/9/2027     New York, NY   Multifamily     58
21
  Senior Loan     2/4/2022       89,000       89,000       89,180       +3.75     +3.75     2/1/2025     Temecula, CA   Multifamily     75
22
  Senior Loan     12/15/2021       85,000       81,800       81,779       +3.35     +3.36     12/9/2026     Sunny Isles, FL   Multifamily     74
23
  Senior Loan     5/12/2021       85,000       85,000       85,036       3.00     +3.05     5/9/2026     Detroit, MI   Industrial     73
24
  Senior Loan     3/9/2022       84,000       78,077       78,077       +3.55     +3.55     3/9/2027     Temple Hills, MD   Multifamily     75
25
  Senior Loan     12/23/2021       83,400       73,028       73,005       +4.45     +4.46     1/9/2027     Westminster, CO   Retail     65
26
  Senior Loan     12/22/2021       81,500       54,000       54,049       +4.75     +4.93     1/9/2027     Farmers Branch, TX   Office     62
27
  Senior Loan     2/28/2022       75,000       72,250       72,250       +3.85     +3.85     3/9/2027     Atlanta, GA   Multifamily     68
28
  Senior Loan     9/10/2021       71,201       66,900       66,879       +3.25     +3.26     10/9/2026     Richardson, TX   Multifamily     68
29
  Senior Loan     4/26/2022       69,350       63,340       63,309       +3.72     +3.74     5/9/2027     Tucson, AZ   Multifamily     68
30
  Senior Loan     4/26/2021       68,100       66,000       65,984       +3.15     +3.16     5/9/2026     North Las Vegas, NV   Multifamily     72
31
  Senior Loan     4/27/2022       67,940       57,720       57,702       +4.00     +4.06     5/9/2027     Indianapolis, IN   Multifamily     79
32
  Senior Loan     12/21/2021       65,450       65,450       65,433       +4.35     +4.36     1/9/2027     Dallas, TX   Hospitality     58
33
  Senior Loan     4/15/2021       64,460       62,657       62,641       +2.80     +2.81     5/9/2026     Lawrenceville, GA   Multifamily     75
34
  Senior Loan     5/20/2022       63,001       62,039       62,031       4.15     +4.15     5/9/2027     Montauk, NY   Hospitality     80
35
  Senior Loan     4/13/2022       62,650       53,400       53,369       +3.90     +3.92     5/9/2027     Houston, TX   Multifamily     78
36
  Senior Loan     7/29/2021       62,500       62,500       62,497       +3.10     +3.10     8/9/2026     Maitland, FL   Multifamily     72
37
  Senior Loan     7/22/2021       62,100       60,100       60,082       +3.30     +3.31     8/9/2026     Nashville, TN   Multifamily     75
38
  Senior Loan     8/2/2021       60,130       58,445       58,425       +2.80     +2.81     8/9/2026     Austin, TX   Multifamily     73
39
  Senior Loan     2/15/2022       58,750       56,020       55,998       +3.50     +3.51     3/9/2027     Antioch, TN   Multifamily     79
40
  Senior Loan     5/12/2022       58,165       53,885       53,870       +3.35     +3.36     5/9/2027     Denver, CO   Multifamily     80
41
  Senior Loan     1/7/2022       58,000       53,275       53,321       +4.25     +4.43     11/9/2026     Miami, FL   Hospitality     49
42
  Senior Loan     8/13/2021       57,500       51,311       51,292       +3.10     +3.19     9/9/2026     Various, FL   Industrial     68
43
  Senior Loan     6/23/2022       57,000       48,498       48,475       +4.75     +4.85     7/9/2027     Seattle, WA   Multifamily     68
44
  Senior Loan     6/18/2021       56,000       56,000       55,992       +3.50     +3.51     7/9/2026     Chicago, IL   Multifamily     77
45
  Senior Loan     11/5/2021       55,960       48,644       48,636       +3.10     +3.10     11/9/2026     Houston, TX   Industrial     74
46
  Senior Loan     2/17/2022       55,400       46,186       46,180       +4.10     +4.20     3/9/2027     Indianapolis, IN   Multifamily     80
47
  Senior Loan     11/10/2021       54,476       45,522       45,531       +3.75     +4.10     11/9/2026     Fayetteville, AR   Multifamily     70
48
  Senior Loan     3/7/2022       53,885       46,879       46,879       +3.50     +3.59     3/9/2027     Humble, TX   Multifamily     75
49
  Senior Loan     8/9/2021       53,160       51,333       51,315       +3.15     +3.16     8/9/2026     Philadelphia, PA   Multifamily     79
50
  Senior Loan     6/16/2022       52,280       44,280       44,270       +3.80     +3.81     7/9/2027     Jacksonville, FL   Multifamily     71
51
  Senior Loan     3/12/2021       52,250       30,961       30,946       +5.75     +5.75     3/9/2026     San Francisco, CA   Office     65
52
  Senior Loan     7/7/2021       52,200       44,970       44,952       +3.00     +3.00     7/9/2026     Austin, FL   Multifamily     74
53
  Senior Loan     3/22/2022       50,750       50,750       50,750       +3.60     +3.60     4/9/2027     Humble, TX   Multifamily     72
54
  Senior Loan     2/18/2022       49,240       33,480       33,458       +3.90     +3.92     3/9/2027     Atlanta, GA   Office     60
55
  Senior Loan     4/26/2022       49,125       43,525       43,508       +4.05     +4.15     5/9/2027     Decatur, GA   Multifamily     72
56
  Senior Loan     12/15/2021       49,000       49,000       48,979       +3.45     +3.46     12/9/2026     Ladson, SC   Multifamily     77
57
  Senior Loan     6/23/2021       48,944       45,421       45,403       +2.80     +2.80     7/9/2026     Roswell, GA   Multifamily     75
 
43

Table of Contents
   
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)
 
58
  Senior Loan     11/1/2021     $ 48,907     $ 44,798     $ 44,778       +3.70     +3.71     11/9/2026     Fort Lauderdale, FL   Office     67
59
  Senior Loan     11/23/2021       47,600       39,401       39,388       +3.05     +3.06     12/9/2026     Dallas, TX   Multifamily     69
60
  Senior Loan     7/29/2021       47,500       47,500       47,497       +3.10     +3.10     8/9/2026     Clearwater, FL   Multifamily     79
61
  Senior Loan     8/3/2021       46,500       46,500       46,490       +3.10     +3.11     8/9/2026     San Antonio, TX   Multifamily     72
62
  Senior Loan     4/6/2022       46,500       44,000       43,976       +3.50     +3.52     4/9/2027     Atlanta, GA   Multifamily     79
63
  Senior Loan     12/17/2021       46,100       36,500       36,499       +4.30     +4.40     1/9/2027     Seattle, WA   Office     53
64
  Senior Loan     6/4/2021       45,000       45,000       44,981       +3.20     +3.21     6/9/2026     Dallas, TX   Multifamily     69
65
  Senior Loan     1/28/2022       43,650       34,045       34,051       +4.00     +4.15     2/9/2027     Milwaukee, WI   Office     59
66
  Senior Loan     7/28/2021       43,350       41,420       41,402       +3.00     +3.01     8/9/2026     Sandy Springs, GA   Multifamily     77
67
  Senior Loan     8/19/2021       43,000       43,000       42,981       +3.10     +3.11     9/9/2026     Omaha, NE   Multifamily     75
68
  Senior Loan     8/9/2021       42,660       37,695       37,684       +3.05     +3.06     8/9/2026     Southaven, MS   Multifamily     57
69
  Senior Loan     11/1/2021       42,300       40,006       39,986       +3.50     +3.52     11/9/2026     Doraville, GA   Multifamily     82
70
  Senior Loan     3/14/2022       42,000       40,200       40,206       +3.50     +3.67     4/9/2027     Dallas, TX   Multifamily     76
71
  Senior Loan     8/25/2021       41,395       40,404       40,385       +3.15     +3.17     9/9/2026     Cypress, TX   Multifamily     69
72
  Senior Loan     7/21/2021       41,300       38,954       38,943       +2.80     +2.81     8/9/2026     Evanston, IL   Multifamily     77
73
  Senior Loan     10/28/2021       40,200       36,351       36,330       +3.00     +3.02     11/9/2026     Dallas, TX   Multifamily     74
74
  Senior Loan     4/27/2021       39,050       35,177       35,167       +3.15     +3.16     5/9/2026     Jamaica, NY   Industrial     61
75
  Senior Loan     8/31/2021       38,700       35,207       35,188       +3.10     +3.10     9/9/2026     Colorado Springs, CO   Multifamily     68
76
  Senior Loan     6/24/2021       38,600       36,000       35,983       +3.75     +3.77     7/9/2026     Austin, TX   Multifamily     76
77
  Senior Loan     8/3/2021       38,500       38,500       38,490       +3.10     +3.11     8/9/2026     San Antonio, TX   Multifamily     72
78
  Senior Loan     11/30/2021       38,310       34,418       34,468       +4.45     +4.70     12/9/2026     Memphis, TN   Office     70
79
  Senior Loan     4/9/2019       38,000       38,000       37,998       +3.75     +3.75     4/9/2024     New York City, NY   Mixed Use     75
80
  Senior Loan     11/4/2021       37,300       35,920       35,920       +3.35     +3.85     11/1/2024     Boca Raton, FL   Multifamily     81
81
  Senior Loan     4/29/2022       37,136       34,136       34,126       +3.75     +3.85     5/9/2027     Euless, TX   Multifamily     80
82
  Senior Loan     11/5/2021       36,325       32,675       32,654       +3.10     +3.12     11/9/2026     Mesquite, TX   Multifamily     73
83
  Senior Loan     12/21/2021       36,000       36,000       35,979       +3.45     +3.47     1/9/2027     Hackensack, NJ   Multifamily     68
84
  Senior Loan     1/7/2022       36,000       36,000       36,000       +3.80     +3.80     1/9/2027     Jupiter, FL   Office     72
85
  Senior Loan     3/29/2021       35,880       33,939       33,923       +3.60     +3.60     4/9/2026     Arlington, TX   Multifamily     80
86
  Senior Loan     5/28/2021       35,785       31,085       31,068       +5.00     +5.02     6/9/2026     Austin, TX   Office     57
87
  Senior Loan     2/27/2020       35,641       33,521       33,524       +3.15     +3.15     3/9/2025     Various, SC   Industrial     72
88
  Senior Loan     6/22/2021       34,500       31,328       31,317       +3.60     +3.60     7/9/2026     Tallahassee, FL   Multifamily     74
89
  Senior Loan     12/3/2021       34,327       34,327       34,318       +3.45     +3.46     12/9/2026     Various, NY   Self Storage     63
90
  Senior Loan     12/16/2021       33,000       30,796       30,775       +3.55     +3.57     1/9/2027     Fort Worth, TX   Multifamily     72
91
  Senior Loan     11/23/2021       32,000       26,379       26,367       +3.05     +3.07     12/9/2026     Dallas, TX   Multifamily     69
92
  Senior Loan     3/11/2021       32,000       30,000       29,991       +4.50     +4.51     3/9/2026     Colleyville, TX   Retail     58
93
  Senior Loan     4/27/2022       31,800       22,800       22,786       +4.30     +4.32     5/9/2027     Morrow, GA   Industrial     62
94
  Senior Loan     1/28/2022       31,229       31,229       31,233       +3.70     +3.81     9/9/2026     Dallas, TX   Multifamily     82
95
  Senior Loan     12/29/2020       31,128       28,191       28,344       +3.75     +3.93     1/9/2026     Brooklyn, NY   Multifamily     60
96
  Senior Loan     5/4/2021       30,000       19,659       19,652       +5.55     +5.56     5/9/2026     Richardson, TX   Office     65
97
  Senior Loan     6/28/2019       28,500       28,500       28,641       +5.35     +5.52     7/9/2024     Davis, CA   Hospitality     72
98
  Senior Loan     12/18/2020       28,440       24,738       24,735       +4.50     +4.50     1/9/2026     Rockville, MD   Office     69
99
  Senior Loan     12/15/2021       28,400       26,199       26,187       +3.30     +3.32     12/9/2026     Arlington, TX   Multifamily     79
100
  Senior Loan     11/18/2021       27,387       27,387       27,375       +3.60     +3.61     12/9/2026     Brooklyn, NY   Self Storage     70
101
  Senior Loan     1/20/2021       25,250       22,563       22,551       +4.75     +4.75     2/9/2026     Laguna Hills, CA   Office     63
102
  Senior Loan     3/31/2021       25,250       25,250       25,238       +3.20     +3.22     4/9/2026     Tempe, AZ   Multifamily     77
103
  Senior Loan     6/25/2021       25,000       23,898       23,887       +3.05     +3.06     7/9/2026     Austin, TX   Multifamily     68
104
  Senior Loan     5/28/2021       24,700       23,087       23,077       +3.50     +3.52     6/9/2026     Jacksonville, FL   Industrial     61
105
  Senior Loan     1/28/2022       24,489       24,489       24,490       +3.70     +3.81     9/9/2026     Mesquite, TX   Multifamily     78
106
  Senior Loan     7/18/2018       22,650       22,650       22,712       +5.25     +5.37     8/9/2023     Gaithersburg, MD   Hospitality     80
107
  Senior Loan     12/10/2020       22,300       17,183       17,172       +5.25     +5.25     1/9/2026     Fox Hills, CA   Office     55
108
  Senior Loan     1/28/2022       22,149       22,149       22,149       +3.70     +3.81     9/9/2026     Dallas, TX   Multifamily     85
109
  Senior Loan     8/26/2021       21,805       20,009       19,990       +3.10     +3.13     9/9/2026     Seattle, WA   Multifamily     69
110
  Senior Loan     7/13/2021       21,350       21,350       21,332       +3.40     +3.43     8/9/2026     Grand Prairie, TX   Multifamily     72
111
  Senior Loan     7/20/2021       21,136       18,259       18,257       +3.25     +3.36     8/9/2026     Las Vegas, NV   Multifamily     72
112
  Senior Loan     8/6/2021       20,000       20,000       20,013       +3.10     +3.25     8/9/2026     Sandy Springs, GA   Multifamily     74
113
  Senior Loan     5/10/2021       19,200       17,776       17,760       +3.50     +3.53     5/9/2026     University City, PA   Multifamily     70
114
  Senior Loan     12/3/2021       18,828       18,828       18,820       +3.45     +3.46     12/9/2026     Various, NY   Self Storage     63
115
  Senior Loan     2/26/2021       18,589       17,491       17,482       +3.25     +3.25     3/9/2026     Newark, NJ   Industrial     57
116
  Mezz Loan     2/21/2020       18,102       18,102       18,101       10.00     10.00     3/1/2030     Various, SC   Industrial     70
117
  Senior Loan     2/19/2020       18,000       14,400       14,406       +3.50     +3.49     3/9/2025     Los Angeles, CA   Mixed Use     71
 
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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)
 
118
  Senior Loan     6/16/2021     $ 17,500     $ 16,376     $ 16,366       +3.25     +3.25     7/9/2026       Everett, WA       Multifamily       69
119
  Senior Loan     10/22/2019       17,500       15,643       15,730       +4.50     +4.66     11/9/2024       Oakland, CA       Mixed Use       70
120
  Senior Loan     9/23/2021       16,300       14,828       14,844       +4.25     +4.56     9/9/2026       Various, NJ       Multifamily       77
121
  Senior Loan     1/28/2021       16,100       16,100       16,127       +4.50     +4.63     2/9/2026       Philadelphia, PA       Self Storage       79
122
  Mezz Loan     6/8/2022       15,840       15,840       15,842       +7.50     +7.75     6/9/2027       New York, NY       Multifamily       81
123
  Senior Loan     6/16/2021       15,406       14,780       14,770       +3.25     +3.25     7/9/2026       Everett, WA       Multifamily       71
124
  Mezz Loan     2/14/2020       15,000       15,000       15,000       +7.50     +7.50     12/5/2026       Queens, NY       Multifamily       75
125
  Senior Loan     11/17/2020       14,550       13,548       13,543       +4.00     +4.00     12/9/2025       Vista, CA       Industrial       54
126
  Senior Loan     3/25/2021       13,405       12,019       12,024       +3.25     +3.36     4/9/2026       Lithonia, GA       Multifamily       67
127
  Senior Loan     3/19/2021       12,718       12,718       12,736       +3.95     +4.14     4/9/2026       Brooklyn, NY       Multifamily       85
128
  Senior Loan     1/28/2022       12,092       12,092       12,088       +3.70     +3.82     9/9/2026       Duncanville, TX       Multifamily       83
129
  Senior Loan     3/7/2018       12,050       12,050       12,080       +5.00     +5.17     9/7/2022       Las Vegas, NV       Hospitality       71
130
  Senior Loan     11/17/2020       11,010       10,636       10,631       +4.00     +4.02     12/9/2025       Miramar, CA       Industrial       65
131
  Senior Loan     6/11/2018       8,000       8,000       8,040       4.50     +4.61     3/9/2024       Miami, FL       Retail       68
132
  Senior Loan     2/17/2021       7,000       7,000       7,010       +3.85     +4.04     3/9/2026       Brooklyn, NY       Multifamily       81
133
  Senior Loan     6/11/2018       6,750       6,750       6,767       +4.25     +4.35     6/9/2023       Miami, FL       Retail       61
134
  Mezz Loan     5/12/2022       5,785       5,785       5,785       +10.50     +10.50     5/9/2027       Denver, CO       Multifamily       86
135
  Mezz Loan     4/6/2022       5,049       5,049       5,049       +11.00     +11.00     4/9/2027       Atlanta, GA       Multifamily       88
     
 
 
   
 
 
   
 
 
             
Total/Weighted Average
 
  $ 7,150,123     $ 6,539,424     $ 6,538,370       +3.82     +3.87        
 
 
 
   
 
 
   
 
 
             
 
(1)
Date loan was originated or acquired by us, and the
loan-to-value,
or 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 rates, which include USD LIBOR and SOFR. In addition to cash coupon,
all-in
yield include accretion of discount (amortization of premium) and accrual of exit fees.
(3)
Maximum maturity assumes all extension options are exercised by the borrower, however loans may be repaid prior to such date.
Real Estate Portfolio Overview
On June 23, 2022, we acquired 555 Aviation, a 260,000 square foot creative office building located in El Segundo, California. The property was built in 1966 and was renovated in 2017 to convert the property into a creative office building, including LEED Gold certification, a glass façade and an interior
open-air
atrium. The property sits on 13 acres and is located in a growing Los Angeles
sub-market
of El Segundo near Los Angeles International Airport. The property is currently 100% leased to three tenants.
Subsequent Activity
During the period from July 1, 2022 through August 5, 2022, we closed on four senior floating-rate mortgage loans of which $309,225 was funded at closing.
 
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Results of Operations
The following table sets forth information regarding our consolidated results of operations for the three and six months ended June 30, 2022 and 2021:
 
    
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
    
2022
    
2021
    
2022
    
2021
 
Net interest income
           
Interest income
   $ 68,877      $ 16,039      $ 114,861      $ 27,755  
Less: Interest expense
     (29,184      (4,981      (45,399      (7,810
  
 
 
    
 
 
    
 
 
    
 
 
 
Net interest income
     39,693        11,058        69,462        19,945  
  
 
 
    
 
 
    
 
 
    
 
 
 
Other expenses
           
Management and performance fees
     5,351        1,708        9,348        3,281  
General and administrative expenses
     5,783        1,394        9,326        2,799  
Less: Expense limitation
     —          —          —          (56
Add: Expense recoupment to sponsor
     1,460        390        2,770        390  
  
 
 
    
 
 
    
 
 
    
 
 
 
Net other expenses
     12,594        3,492        21,444        6,414  
  
 
 
    
 
 
    
 
 
    
 
 
 
Other income (loss)
           
Net change in unrealized gain (loss) on interest rate cap
     (1,449      —          (1,449      —    
  
 
 
    
 
 
    
 
 
    
 
 
 
Total other income (loss)
     (1,449      —          (1,449      —    
  
 
 
    
 
 
    
 
 
    
 
 
 
Net income
     25,650        7,566        46,569        13,531  
Preferred stock dividends
     (4      (4      (8      (8
  
 
 
    
 
 
    
 
 
    
 
 
 
Net income attributable to FS Credit Real Estate Income Trust, Inc.
   $ 25,646      $ 7,562      $ 46,561      $ 13,523  
  
 
 
    
 
 
    
 
 
    
 
 
 
Net Interest Income
Net interest income is generated on our interest-earning assets less related interest-bearing liabilities. The increase in interest income was attributable to debt investments acquired or originated in our portfolio and
non-recurring
prepayment fee income. The increase in interest expense was attributable to an increase in borrowings in order to support our investment activities.
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, 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 can primarily be attributed to the increase of our management fee and various general and administrative expenses related to the growth of our net assets.
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,
 
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transfer agent fees, fees paid to our board of directors, loan servicing expenses, administrative services expenses, and related costs associated with legal, regulatory compliance and investor relations, but excluding the following: (a) advisory fees, (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.
FS Real Estate Advisor and Rialto each agreed to waive the recoupment of any amounts that may be subject to conditional reimbursement during the quarterly period ended June 30, 2022. To the extent that the conditions to recoupment are satisfied in a future quarter (prior to the expiration of the three-year period for reimbursement set forth in the expense limitation agreement), such expenses may be subject to conditional recoupment in accordance with the terms of the expense limitation agreement.
During the period from September 13, 2017 (Commencement of Operations) to June 30, 2022, we accrued $5,839 for reimbursement of expenses that FS Real Estate Advisor and Rialto paid or waived, including $0 in reimbursements for the six months ended June 30, 2022. During the period from September 13, 2017 (Commencement of Operations) to June 30, 2022, we received $5,839 in cash reimbursements from FS Real Estate Advisor.
During the six months ended June 30, 2022, $482 of expense recoupments were paid to FS Real Estate Advisor and Rialto. As of June 30, 2022 and December 31, 2021, $1,460 and $0, respectively, of expense recoupments were payable to FS Real Estate Advisor and Rialto and $257 of expense reimbursements received from FS Real Estate Advisor and Rialto were eligible for recoupment.
Valuation of mortgage debt
Commercial real estate debt 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 8 to our unaudited consolidated financial statements included herein for additional information regarding a comparison of our carrying value and an estimate of the fair value of our commercial real estate debt, mortgage-backed securities
held-to-maturity,
repurchase agreements payable, credit facility payable, and collateralized loan obligations.
Non-GAAP
Financial Measures
Funds from Operations and Modified Funds from Operations
We use Funds from Operations, or 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, or 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, or IPA, an industry trade group, published a standardized
non-GAAP
financial measure known as Modified
 
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Funds from Operations, or 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 three and six months ended June 30, 2022 and 2021 as follows:
 
    
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
    
    2022    
    
    2021    
    
2022
    
2021
 
Net income (GAAP)
   $ 25,650      $ 7,566      $ 46,569      $ 13,531  
  
 
 
    
 
 
    
 
 
    
 
 
 
Funds from operations
   $ 25,650      $ 7,566      $ 46,569      $ 13,531  
  
 
 
    
 
 
    
 
 
    
 
 
 
Adjustments to arrive at modified funds from operations:
           
Accretion of discount on mortgage-backed securities
held-to-maturity
     (152)        (137)        (299)        (271)  
Net unrealized loss on interest rate cap
     (1,449)        —          (1,449)        —    
  
 
 
    
 
 
    
 
 
    
 
 
 
Modified funds from operations
   $ 24,049      $ 7,429      $ 44,821      $ 13,260  
  
 
 
    
 
 
    
 
 
    
 
 
 
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.
 
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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, as applicable, unless the loans are 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 charge to the provision for loan losses. See Note 2 to our unaudited 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 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.
 
   
Mortgage-backed securities that we do not hold for the purpose of selling in the near-term or may dispose of prior to maturity, are classified as
available-for-sale
and 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 investments for which a third-party pricing service is unable to obtain quoted prices, FS Real Estate Advisor obtains bid and ask prices directly from dealers who make a market in such securities. In all such cases, securities are valued at the
mid-point
of the average bid and ask prices obtained from such sources.
 
   
Investments in real estate will initially be 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 prior to or upon acquisition. Each property will then be valued by an independent third-party appraisal firm no less frequently than annually. FS Real Estate Advisor will update the valuations of our properties for each month in which we do not receive an appraisal report from a third-party appraisal firm. Such monthly update valuations will be based on the then most recent appraisals provided by a third-party appraisal firm, current market data and other relevant information.
 
   
Liabilities include repurchase agreements payable, credit facility payable, collateralized loan 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 advisory fees allocable to Class T, Class S, Class D, Class M, Class I and Class Y shares are only included in the NAV calculation for those classes.
Commercial real estate debt 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 8 to our unaudited consolidated financial statements included herein for additional information including a comparison of our carrying value and an estimate of the fair value of our commercial real estate debt, mortgage-backed securities
held-to-maturity,
repurchase agreements payable, credit facility payable, and collateralized loan obligations.
 
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The following table provides a breakdown of the major components of our total NAV as of June 30, 2022:
 
Components of NAV
  
June 30, 2022
 
Cash and cash equivalents
   $ 75,659  
Restricted cash
     19,111  
Loans receivable
     6,538,370  
Mortgage-backed securities
held-to-maturity
     78,942  
Mortgage-backed securities
available-for-sale,
at fair value
     153,274  
Interest receivable
     14,904  
Deferred financing costs
     647  
Investment in real estate
     160,711  
Receivable for investment sold and repaid
     52,959  
Other assets
     42,284  
Repurchase agreements payable, net of deferred financing costs
     (1,175,651
Credit facility payable
     (692,472
Collateralized loan obligations, net of deferred financing costs
     (3,193,515
Mortgage note, net of deferred financing costs
     (122,568
Accrued servicing fees
(1)
     (831
Other liabilities
     (38,894
  
 
 
 
Net asset value
   $ 1,912,930  
  
 
 
 
 
(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 June 30, 2022:
 
NAV per Share
 
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Net asset value
  $ 22,599     $ 22,082     $ 37,627     $ 1,122,659     $ 17,168     $ 92,705     $ 598,090     $ 1,912,930  
Number of outstanding shares
    904,792       906,648       1,508,682       44,602,788       680,347       3,701,528       24,516,086       76,820,871  
 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
NAV per share as of June 30, 2022
  $ 24.9767     $ 24.3557     $ 24.9404     $ 25.1698     $ 24.9734     $ 25.0450     $ 24.4031    
 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
The following table sets forth a reconciliation of our stockholders’ equity to our NAV as of June 30, 2022:
 
Reconciliation of Stockholders’ Equity to NAV
  
June 30, 2022
 
Total stockholders’ equity under GAAP
   $ 1,821,230  
Preferred stock
     (125
  
 
 
 
Total stockholders’ equity, net of preferred stock, under GAAP
     1,821,105  
Adjustments:
  
Accrued stockholder servicing fees
(1)
     90,376  
Net change in unrealized (gain) loss on interest rate cap
     1,449  
  
 
 
 
Net asset value
   $ 1,912,930  
  
 
 
 
 
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(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 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.
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. Further, in determining the number of shares outstanding used in the calculation of our NAV per share for each
month-end
that coincides with the end of a fiscal quarter, we include the number of Class I shares that have been or will be issued to the adviser and
sub-adviser
for the quarter with respect to any outstanding Class I PCRs (see Note 7 to our unaudited consolidated financial statements included herein) based on the achievement of certain performance criteria. For each
month-end
that is not the end of a fiscal quarter, solely for purposes of calculating NAV per share, we include an estimated number of Class I shares, if any, that would have been issued to the adviser and
sub-adviser
in connection with any outstanding Class I PCRs based on our estimated Excess Distributable Income as of such date.
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.
 
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Review of our Policies
Our board of directors, including our independent directors, has reviewed our policies described in this Quarterly Report on Form
10-Q
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 June 30, 2022, we had $75,659 in cash and cash equivalents, which we and our wholly owned subsidiaries held in custodial accounts. In addition, as of June 30, 2022, we had $996,232 in borrowings available under our financing arrangements, subject to certain limitations. As of June 30, 2022, we had unfunded loan commitments of $610,703. 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 Y 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.
As of June 30, 2022, our ratio of leverage to total net assets was 280%. 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.
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 will 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
 
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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 has agreed to advance all of our organization and offering expenses on our behalf until we had raised $250,000 of gross proceeds in 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 have 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. As of June 30, 2022, we reimbursed $9,418 to FS Real Estate Advisor for organization and offering expenses previously funded.
During our acquisition and development stage, subject to the limitations in the advisory agreement and
sub-advisory
agreement, we expect to make payments to FS Real Estate Advisor in connection with the management of our assets and costs incurred by FS Real Estate Advisor and Rialto in providing services to us. The advisory agreement has a
one-year
term but may be renewed for an unlimited number of successive
one-year
periods upon the mutual consent of FS Real Estate Advisor and our board of directors. On August 12, 2021, our board of directors approved the renewal of the advisory agreement effective as of August 17, 2021 for an additional
one-year
term expiring August 17, 2022. For a discussion of the compensation to be paid to FS Real Estate Advisor and FS Investment Solutions, see Note 7 to our unaudited consolidated financial statements included herein.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash ($ in thousands):
 
    
Six Months Ended
June 30, 2022
 
    
2022
    
2021
 
Cash flows from operating activities
   $ 48,925      $ 33,038  
Cash flows used in investing activities
     (3,087,732      (941,381
Cash flows from financing activities
     3,047,769        922,471  
  
 
 
    
 
 
 
Net increase (decrease) in cash and cash equivalents and restricted cash
   $ 8,962      $ 14,128  
  
 
 
    
 
 
 
Cash flows provided by operating activities increased $15,887 during the six months ended June 30, 2022 compared to the corresponding period in 2021 due to increased performance contingent rights and increased interest payable.
Cash flows used in investing activities increased $2,146,351 during the six months ended June 30, 2022 compared to the corresponding period in 2021 primarily due to the net increase of $2,066,378 in origination and fundings of loans receivables offset by a net increase in principal collections from loans receivable,
held-for-investment
of $246,635. Purchases of mortgage-backed securities
available-for-sale
increased $92,498. During the six months ended June 30, 2022, we also acquired real estate and related intangibles for $193,802.
Cash flows provided by financing activities increased $2,125,298 during the six months ended June 30, 2022 compared to the corresponding period in 2021 primarily due to a net increase in borrowings of $1,458,471 and the increase in issuance of common stock of $742,227.
 
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COVID-19
Developments
The novel coronavirus, or
COVID-19,
pandemic has evolved from its emergence in early 2020, so has its global impact. Many countries have
re-instituted,
or strongly encouraged, varying levels of quarantines and restrictions on travel and in some cases have at times limited operations of certain businesses and taken other restrictive measures designed to help slow the spread of
COVID-19
and its variants. Governments and businesses have also instituted vaccine mandates and testing requirements for employees. While vaccine availability and uptake has increased, the longer-term macro-economic effects on global supply chains, inflation, labor shortages and wage increases continue to impact many industries. Moreover, with the potential for new strains of
COVID-19
to emerge, governments and businesses may
re-impose
aggressive measures to help slow its spread in the future. For this reason, among others, as the
COVID-19
pandemic continues, the potential global impacts are uncertain and difficult to assess.
Portfolio Update
As of June 30, 2022, our portfolio continues to perform, generating consistent current income with low volatility; further, we had not recorded any impairments in our loan portfolio. In addition, 100% of our loan portfolio was current as of June 30, 2022.
Our portfolio remains well diversified by geography and property type, with multifamily and industrial representing 69% of the portfolio compared to 14% for hospitality and retail as of June 30, 2022. The pipeline for new deal activity remains strong, backed by a diverse mix of property types.
Broadly, our lending strategy focused on originating short-term (2–3 years), floating-rate, senior loans has helped preserve investor capital while providing a natural turnover of the portfolio. The short-term nature of our typical loans allows us to regularly adjust the portfolio to current market conditions. As of June 30, 2022, approximately 97% of our portfolio consisted of investments sourced after July 2020.
Critical Accounting 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 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. As we execute our expected operating plans, we will describe additional critical accounting policies in the notes to our financial statements in addition to those discussed below.
Loans Receivable and Provision for Loan Losses:
We originate and purchase commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost. We are required to periodically evaluate each of these loans for possible impairment. 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 write down the loan through a charge to the provision for loan losses. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective 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
 
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other factors deemed necessary by FS Real Estate Advisor and Rialto. Actual losses, if any, could ultimately differ from these estimates. 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: A loan that has a risk of realizing a principal loss
5    Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss
Revenue Recognition:
Security transactions are accounted for on the trade date. We record interest income on an accrual basis to the extent that we expect to collect such amounts. We do not accrue as a receivable interest or dividends on loans and securities if there is reason to doubt the collectability of such income. Any loan origination fees, original issue discount, market discount and exit fees are capitalized and such amounts are amortized as interest income over the respective term of the investment. Upon the prepayment of a loan or security, any unamortized loan origination fees to which we are entitled are recorded as fee income. We will record prepayment premiums on loans and securities as fee income when we receive such amounts. We record dividend income on the
ex-dividend
date.
Loans are considered past due when payments are not made in accordance with the contractual terms. We do not accrue as receivable interest on loans if it is not probable that such income will be collected. Management places loans on
non-accrual
status when full repayment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Interest payments received on
non-accrual
loans are generally recognized as interest income on a cash basis. Recognition of interest income on
non-performing
loans on an accrual basis is resumed when it is probable that we will be able to collect amounts due according to the contractual terms.
See Note 2 to our unaudited consolidated financial statements included herein for additional information regarding our significant accounting estimates.
Related Party Transactions
Compensation of FS Real Estate Advisor 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 based on our performance. 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. 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 FS Investments 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
 
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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.
See Note 7 to our unaudited 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 FS Investments and Rialto, our expense limitation agreement with FS Investments 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 of Class F and Class Y shares pursuant to placement agreements. FS Investment Solutions does not receive any compensation pursuant to these agreements.
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
We are subject to financial market risks, including changes in interest rates. As of June 30, 2022, 97% of the outstanding principal of our debt investments were floating-rate investments. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to any variable rate investments we may hold and to declines in the value of any fixed rate investments we may hold. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. To the extent that a substantial portion of our investments may be in variable rate investments, an increase in interest rates beyond this threshold would make it easier for us to meet or exceed our performance fee hurdle rate and may result in a substantial increase in our net investment income and the amount of performance fees payable to FS Real Estate Advisor.
Pursuant to the terms of the FS Rialto
2019-FL1
Notes,
2021-FL2
Notes,
2021-FL3
Notes,
2022-FL4
Notes,
2022-FL5
Notes,
WF-1
Facility, the
GS-1
Facility, the
BB-1
Facility, the CNB Facility, the Natixis loan, and the
MM-1
Facility, borrowings are at a floating-rate based on LIBOR, and the pricing rate for any specific transaction executed under the RBC Facility may be charged, pursuant to the terms agreed for that transaction, at a floating-rate based on LIBOR. To the extent that any present or future credit facilities or other financing arrangements that we or any of our subsidiaries enter into are based on a floating interest rate, we will be subject to risks relating to changes in market interest rates. In periods of rising interest rates, when we have debt outstanding, our cost of funds would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments.
We may seek to limit the impact of rising interest rates on earnings and cash flows through the use of derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets.
 
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The following table shows the effect over a twelve-month period of changes in interest rates on our interest income, interest expense, and net interest income, assuming no changes in the composition of our investment portfolio, including the accrual status of our investments, and our financing arrangements in effect as of June 30, 2022:
 
Basis Point Changes in Interest Rates
  
Increase
(Decrease)
in Interest
Income
    
Increase
(Decrease)
in Interest
Expense
    
Increase
(Decrease)
in Net
Interest
Income
    
Percentage
Change in
Net
Interest
Income
 
Down 50 basis points
(1)
   $ (32,026    $ (25,628    $ (6,398   
 
(3.1
)% 
Down 25 basis points
(1)
   $ (16,157    $ (12,839    $ (3,318   
 
(1.6
)% 
No change
     —          —          —          —    
Up 25 basis points
   $ 16,305      $ 12,839      $ 3,466     
 
1.7
Up 50 basis points
   $ 32,682      $ 25,678      $ 7,004     
 
3.4
 
(1)
Decrease in rates assumes the applicable benchmark rate does not decrease below 0%.
 
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Item 4.
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by
 
Rule 13a-15(b)
 
under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2022.
Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Exchange Act
 
Rules 13a-15(f)
 
or
 
15d-15(f))
 
that occurred during the three-month period ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
 
Item 1.
Legal Proceedings.
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material adverse effect upon our financial condition or results of operations.
 
Item 1A.
Risk Factors.
In addition to the other information set forth in this Quarterly Report on Form
 
10-Q,
 
you should carefully consider the risk factors that appeared under Item 1A. “Risk Factors” in our most recent Annual Report on
 
Form 10-K,
 
as supplemented by our quarterly report on Form
 
10-Q.
 
Except as disclosed below, there are no material changes from the risk factors included within our most recent Annual Report on Form
 
10-K
 
for the year ended December 31, 2021.
Risks Related to Investments in Real Property
Lease terminations or tenant defaults at our real property investments could adversely affect the income produced by these properties, which could harm our operating performance and ability to pay distributions to our stockholders.
The success of our real property investments will depend in large part on the financial viability of our tenants, and accordingly, any change in their business, including as a result of economic events, financial markets, natural disasters or public health or pandemic crises, could adversely affect the income produced by our properties. Our tenants may terminate the lease, fail to make rental payments, decline to extend or renew their lease upon expiration, or declare bankruptcy, any such action would result in loss of rental payments. In addition, in the case of termination or default, we may be unable to attract desirable tenants or lease the property for the amount previously collected. The expenses associated with owning such properties, including debt payments, real estate taxes, maintenance, and insurance, are generally fixed and do not decrease when revenues decrease.
 
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Economic and regulatory changes that impact the real estate market could adversely affect our real property investments and overall financial performance.
We are subject to risks generally attributable to the ownership of real property, including a downturn in market conditions, adverse real estate trends such as increasing vacancy rates and declining rental rates, financial instability by our tenants, and changes in government rules and regulations. Any of these factors could have an adverse effect on our investments in real property and our financial performance.
We may be adversely affected by trends in the office real estate sector.
Driven in part by the
COVID-19
pandemic, many companies are moving toward telecommuting policies and there may be a decline for the demand for office space in the future. The continuation of work-from-home and other policies could lead to an overall decrease in demand for office spaces, and thereby impact the financial performance of our investments in office properties. This would have an adverse effect on our financial condition and ability to make expected distributions to our stockholders.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
Share Repurchase Program
We have adopted a share repurchase plan, whereby on a monthly basis, stockholders may request that we repurchase all or any portion of their shares. The repurchase of shares is limited to no more than 2% of our aggregate NAV per month of all classes of shares then participating in our share repurchase plan and no more than 5% of our aggregate NAV per calendar quarter of all classes of shares then participating in our share repurchase plan, which means that in
any 12-month
period, we limit repurchases to approximately 20% of the total NAV of all classes of shares then participating in the share repurchase plan.
During the three months ended June 30, 2022, we repurchased shares of our common stock in the following amounts, which represented all of the share repurchase requested received for the same period:
 
Period
  
Total Number
of Shares
Purchased
    
Average
Price Paid
per Share
    
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
    
Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
(1)
 
April
1 - April
30, 2022
     202,898      $ 25.10        202,898        —    
May
1 - May
31, 2022
     465,115      $ 25.00        465,115        —    
June
1 - June
30, 2022
     637,024      $ 24.92        637,024        —    
    
 
 
             
 
 
    
 
 
 
Total
     1,305,037                 1,305,037        —    
    
 
 
             
 
 
    
 
 
 
 
(1)
Repurchases are limited as described above.
 
Item 3.    Defaults
upon Senior Securities.
Not applicable.
 
Item 4.
Mine Safety Disclosures.
Not applicable.
 
Item 5.
Other Information.
Not applicable.
 
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Item 6.
Exhibits.
 
3.1    Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 of the Registrant’s Registration Statement on Form S-11, as filed by the Registrant with the SEC on September 7, 2017).
   
3.2    Articles of Amendment (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on August 17, 2018).
   
3.3    Second Articles of Amendment (incorporated by reference to Exhibit 3.3 of the Registrant’s Quarterly Report on Form 10-Q, as filed by the Registrant with the SEC on August 14, 2019).
   
3.4    Third Articles of Amendment (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on April 28, 2022).
   
3.5    Bylaws (incorporated by reference to Exhibit 3.2 of the Registrant’s Registration Statement on Form S-11, as filed by the Registrant with the SEC on February 13, 2017).
   
4.1    Amended and Restated Distribution Reinvestment Plan (incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-11, as filed by the Registrant with the SEC on May 3, 2022).
   
10.1    Amended and Restated Independent Director Compensation Policy (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on April 28, 2022).
   
10.2    Amended and Restated Loan and Servicing Agreement, dated as of April 27, 2022, between FS CREIT Finance MM-1 LLC and Mass Mutual (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on April 29, 2022).
   
10.3    Sixth Amendment to Loan and Security Agreement dated as of May 5, 2022, among FS Credit Real Estate Income Trust, Inc., FS CREIT Finance Holdings LLC, the lenders party thereto and City National Bank (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on May 9, 2022).
   
10.4    Amendment No. 9 to Master Repurchase and Securities Contract dated as of May 12, 2022 among FS CREIT Finance WF-1 LLC, FS Credit Real Estate Income Trust, Inc., and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.11 of the Registrant’s Registration Statement on Form S-11, as filed by the Registrant with the SEC on May 3, 2022).
   
10.5    Sixth Amendment to Master Repurchase Agreement dated as of June 7, 2022, between FS CREIT Finance BB-1 LLC and Barclays Bank PLC (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on June 9, 2022).
   
10.6    Second Amendment to Guaranty dated as of June 7, 2022, between FS Credit Real Estate Income Trust, Inc. and Barclays Bank PLC (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on June 9, 2022).
   
10.7    Indenture dated as of June 16, 2022, by and among FS Rialto 2022-FL5 Issuer, LLC, Wilmington Trust, National Association, Computershare Trust Company, National Association and FS Credit Real Estate Income Trust, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on June 21, 2022).
   
31.1*    Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
60

Table of Contents
31.2*    Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1+    Certification of Chief Executive Officer and Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS*    Inline XBRL Instance Document.
   
101.SCH*    Inline XBRL Taxonomy Extension Schema
Document.
   
101.CAL*    Inline XBRL Taxonomy Extension Calculation Linkbase Document.
   
101.LAB*    Inline XBRL Taxonomy Extension Labels Linkbase Document.
   
101.PRE*    Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
101.DEF*    Inline XBRL Taxonomy Extension Definition Linkbase Document.
   
104*    Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
*
Filed herewith
 
+
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act or the Exchange Act.
 
61

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized on August 15, 2022.
 
FS CREDIT REAL ESTATE INCOME TRUST, INC.
   
By:   /s/ MICHAEL C. FORMAN
   
Michael C. Forman
Chief Executive Officer
(Principal Executive Officer)
   
By:   /s/ EDWARD T. GALLIVAN, JR.
   
Edward T. Gallivan, Jr.
Chief Financial Officer
(Principal Accounting and Financial Officer)
 
62

Exhibit 31.1

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael C. Forman, certify that:

 

  1.

I have reviewed this Quarterly Report on Form 10-Q of FS Credit Real Estate Income Trust, Inc.

 

  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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  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.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  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 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: August 15, 2022

 

/s/ MICHAEL C. FORMAN

Michael C. Forman
Chief Executive Officer

Exhibit 31.2

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Edward T. Gallivan, Jr., certify that:

 

  1.

I have reviewed this Quarterly Report on Form 10-Q of FS Credit Real Estate Income Trust, Inc.

 

  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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  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.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  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 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: August 15, 2022

 

/s/ EDWARD T. GALLIVAN, JR.

Edward T. Gallivan, Jr.
Chief Financial Officer

Exhibit 32.1

CERTIFICATION

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 on Form 10-Q of FS Credit Real Estate Income Trust, Inc. (the “Company”) for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), Michael C. Forman, as Chief Executive Officer of the Company, and Edward T. Gallivan, Jr., as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

 

   

the Form 10-Q of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

 

   

the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 15, 2022

 

/s/ MICHAEL C. FORMAN

Michael C. Forman
Chief Executive Officer

/s/ EDWARD T. GALLIVAN, JR.

Edward T. Gallivan, Jr.
Chief Financial Officer

v3.22.2.2
Cover Page - shares
6 Months Ended
Jun. 30, 2022
Aug. 05, 2022
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2022  
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q2  
Entity Registrant Name FS Credit Real Estate Income Trust, Inc.  
Entity Central Index Key 0001690536  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Ex Transition Period true  
Entity Address, State or Province PA  
Entity Interactive Data Current Yes  
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 000-56163  
Entity Tax Identification Number 81-4446064  
Entity Incorporation, State or Country Code MD  
Entity Address, Address Line One 201 Rouse Boulevard  
Entity Address, City or Town Philadelphia  
Entity Address, Postal Zip Code 19112  
City Area Code 215  
Local Phone Number 495-1150  
Common Class F [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   903,286
Common Class Y [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   906,648
Common Class T [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   1,569,512
Common Class S [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   49,187,066
Common Class D [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   729,640
Common Class M [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   4,027,392
Common Class I [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   28,555,816

v3.22.2.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Assets    
Cash and cash equivalents $ 75,659 $ 46,798
Restricted cash 19,111 39,010
Loans receivable, held-for-investment 6,538,370 3,841,868
Mortgage-backed securities held-to-maturity 78,942 37,862
Mortgage-backed securities available-for-sale, at fair value 153,274 44,518
Investment in real estate, net 160,711  
Receivable for investments sold and repaid 52,959 6,625
Interest receivable 14,904 6,861
Deferred financing costs 647 658
Other assets 40,835 194
Total assets [1] 7,135,412 4,024,394
Liabilities    
Collateralized loan obligations (net of deferred financing costs of $23,158 and $16,701, respectively) 3,193,515 1,886,382
Repurchase agreements payable (net of deferred financing costs of $2,116 and $1,958, respectively) 1,175,651 903,010
Credit facilities payable (net of deferred financing costs of $4,280 and $2,230, respectively) 692,472 196,960
Mortgage note payable (net of deferred financing costs of $2,132 and $0, respectively) 122,568  
Due to related party 92,665 48,514
Interest payable 7,922 2,591
Payable for shares repurchased 19,250 4,227
Other liabilities 10,139 9,370
Total liabilities [1] 5,314,182 3,051,054
Commitments and contingencies (See Note 10)
Stockholders' equity    
Preferred stock, $0.01 par value, 50,000,000 shares authorized, 125 and 125 issued and outstanding, respectively
Additional paid-in capital 1,820,033 969,558
Accumulated other comprehensive income (loss) (3,192) 86
Retained earnings 3,621 3,287
Total stockholders' equity 1,821,230 973,340
Total liabilities and stockholders' equity 7,135,412 4,024,394
Common Class F [Member]    
Stockholders' equity    
Common stock, value 9 9
Common Class Y [Member]    
Stockholders' equity    
Common stock, value 9 9
Common Class T [Member]    
Stockholders' equity    
Common stock, value 15 14
Common Class S [Member]    
Stockholders' equity    
Common stock, value 446 228
Common Class D [Member]    
Stockholders' equity    
Common stock, value 7 6
Common Class M [Member]    
Stockholders' equity    
Common stock, value 37 29
Common Class I [Member]    
Stockholders' equity    
Common stock, value $ 245 $ 114
[1] The June 30, 2022 and December 31, 2021 consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse to the Company. As of June 30, 2022 and December 31, 2021, assets of the VIEs totaled $4,033,871 and $2,347,510, respectively, and liabilities of the VIEs totaled $3,197,715 and $1,887,944, respectively. See Note 10 for further details.

v3.22.2.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Deferred financing costs $ 647 $ 658
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 50,000,000 50,000,000
Preferred stock, shares issued 125 125
Preferred stock, shares outstanding 125 125
VIE Assets [1] $ 7,135,412 $ 4,024,394
VIE Liabilities [1] 5,314,182 3,051,054
Variable Interest Entity, Primary Beneficiary [Member]    
VIE Assets 4,033,871 2,347,510
VIE Liabilities 3,197,715 1,887,944
Repurchase agreements payable [Member]    
Deferred financing costs 3,278 1,958
Collateralized Loan Obligations [Member]    
Deferred financing costs 27,057 16,701
Credit facilities payable [Member]    
Deferred financing costs 8,666 2,230
Mortgage note payable [Member]    
Deferred financing costs $ 2,132 $ 0
Common Class F [Member]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 904,792 902,878
Common stock, shares outstanding 904,792 902,878
Common Class Y [Member]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 906,648 906,648
Common stock, shares outstanding 906,648 906,648
Common Class T [Member]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 1,508,682 1,407,377
Common stock, shares outstanding 1,508,682 1,407,377
Common Class S [Member]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 44,602,788 22,823,721
Common stock, shares outstanding 44,602,788 22,823,721
Common Class D [Member]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 680,347 642,162
Common stock, shares outstanding 680,347 642,162
Common Class M [Member]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 125,000,000 125,000,000
Common stock, shares issued 3,701,528 2,876,736
Common stock, shares outstanding 3,701,528 2,876,736
Common Class I [Member]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 300,000,000 300,000,000
Common stock, shares issued 24,516,086 11,366,687
Common stock, shares outstanding 24,516,086 11,366,687
[1] The June 30, 2022 and December 31, 2021 consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse to the Company. As of June 30, 2022 and December 31, 2021, assets of the VIEs totaled $4,033,871 and $2,347,510, respectively, and liabilities of the VIEs totaled $3,197,715 and $1,887,944, respectively. See Note 10 for further details.

v3.22.2.2
Unaudited Consolidated Statements of Operations - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Net interest income        
Interest income $ 68,877 $ 16,039 $ 114,861 $ 27,755
Less: Interest expense (29,184) (4,981) (45,399) (7,810)
Net interest income 39,693 11,058 69,462 19,945
Other expenses        
Management and performance fees 5,351 1,708 9,348 3,281
General and administrative expenses 5,783 1,394 9,326 2,799
Less: Expense limitation       (56)
Add: Expense recoupment to sponsor 1,460 390 2,770 390
Net other expenses 12,594 3,492 21,444 6,414
Other income (loss)        
Net change in unrealized gain (loss) on interest rate cap (1,449)   (1,449)  
Total other income (loss) (1,449)   (1,449)  
Net income 25,650 7,566 46,569 13,531
Preferred stock dividends (4) (4) (8) (8)
Net income attributable to FS Credit Real Estate Income Trust, Inc. $ 25,646 $ 7,562 $ 46,561 $ 13,523
Per share information—basic and diluted        
Net income per share of common stock (earnings per share), Basic $ 0.36 $ 0.41 $ 0.75 $ 0.82
Net income per share of common stock (earnings per share, Diluted $ 0.36 $ 0.41 $ 0.75 $ 0.82
Weighted average common stock outstanding, Basic 71,346,254 18,511,402 61,767,077 16,566,229
Weighted average common stock outstanding, Diluted 71,346,254 18,511,402 61,767,077 16,566,229

v3.22.2.2
Unaudited Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Statement of Comprehensive Income [Abstract]        
Net income $ 25,650 $ 7,566 $ 46,569 $ 13,531
Other comprehensive income        
Net change in unrealized gain (loss) on mortgage-backed securities available-for-sale (2,867) 80 (3,278) 80
Total other comprehensive income (loss) (2,867) 80 (3,278) 80
Comprehensive income $ 22,783 $ 7,646 $ 43,291 $ 13,611

v3.22.2.2
Unaudited Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Total
Common Class Y [Member]
Common Class T [Member]
Common Class S [Member]
Common Class D [Member]
Common Class M [Member]
Common Class I [Member]
Common Stock [Member]
Common Stock [Member]
Common Class F [Member]
Common Stock [Member]
Common Class F [Member]
Par Value [Member]
Common Stock [Member]
Common Class Y [Member]
Common Stock [Member]
Common Class Y [Member]
Par Value [Member]
Common Stock [Member]
Common Class T [Member]
Common Stock [Member]
Common Class T [Member]
Par Value [Member]
Common Stock [Member]
Common Class S [Member]
Common Stock [Member]
Common Class S [Member]
Par Value [Member]
Common Stock [Member]
Common Class D [Member]
Common Stock [Member]
Common Class D [Member]
Par Value [Member]
Common Stock [Member]
Common Class M [Member]
Common Stock [Member]
Common Class M [Member]
Par Value [Member]
Common Stock [Member]
Common Class I [Member]
Common Stock [Member]
Common Class I [Member]
Par Value [Member]
Additional Paid-In Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
[1]
Retained Earnings (Accumulated Deficit) [Member]
Balance at beginning of period, amount at Dec. 31, 2020 $ 305,712             $ 303,827 $ 22,378 $ 9 $ 3,449 $ 1 $ 29,971 $ 12 $ 134,705 $ 58 $ 13,573 $ 5 $ 46,154 $ 20 $ 53,597 $ 22 $ 303,783   $ 1,802
Common stock issued 187,917 $ 9 $ 1 $ 42 $ 1 $ 5 $ 18 187,917 0   20,749   1,690   106,853   2,282   10,996   45,347   187,841    
Distributions declared (13,511)                                               (13,511)
Proceeds from distribution reinvestment plan 5,154     1     1 5,154 392   0   505   2,705   157   590   805   5,152    
Redemptions of common stock (5,233) (1)       (1)   (5,233) (258)   (1,827)   (503)   (922)   0   (1,072)   (651)   (5,231)    
Stockholder servicing fees (9,476)                                           (9,476)    
Offering costs (679)                                           (679)    
Net income 13,531                                               13,531
Dividends on preferred stock (8)                                               (8)
Other comprehensive income (loss) 80                                             $ 80  
Balance at end of period, amount at Jun. 30, 2021 483,487             482,189 22,352 9 22,371 9 31,514 13 234,624 101 14,929 6 55,941 24 100,458 41 481,390 80 1,814
Balance at beginning of period, amount at Mar. 31, 2021 363,335                 9   1   13   72   5   22   30 361,358   1,825
Common stock issued 125,472 9   28 1 3 10                               125,421    
Distributions declared (7,573)                                               (7,573)
Proceeds from distribution reinvestment plan 2,912     1     1                               2,910    
Redemptions of common stock (1,792) $ (1)       (1)                                 (1,790)    
Stockholder servicing fees (6,146)                                           (6,146)    
Offering costs (363)                                           (363)    
Net income 7,566                                               7,566
Dividends on preferred stock (4)                                               (4)
Other comprehensive income (loss) 80                                             80  
Balance at end of period, amount at Jun. 30, 2021 483,487             482,189 22,352 9 22,371 9 31,514 13 234,624 101 14,929 6 55,941 24 100,458 41 481,390 80 1,814
Balance at beginning of period, amount at Dec. 31, 2021 973,340             971,310 22,138 9 22,371 9 33,862 14 531,150 228 15,945 6 66,836 29 279,008 114 969,558 86 3,287
Common stock issued 930,144   1 226 $ 1 9 136 930,144 0   0   2,846   567,895   1,501   26,392   331,510   929,771    
Distributions declared (46,227)                                               (46,227)
Proceeds from distribution reinvestment plan 21,895     5     3 21,895 366   0   515   13,021   182   1,295   6,516   21,887    
Redemptions of common stock (56,771)     (13)   (1) (8) (56,771) (318)   0   (787)   (31,901)   (462)   (3,307)   (19,996)   (56,749)    
Stockholder servicing fees (46,428)                                           (46,428)    
Offering costs (6,999)                                           (6,999)    
Performance contingent rights issued 8,993                                           8,993    
Net income 46,569                                               46,569
Dividends on preferred stock (8)                                               (8)
Other comprehensive income (loss) (3,278)                                             (3,278)  
Balance at end of period, amount at Jun. 30, 2022 1,821,230             1,820,150 22,186 9 22,371 9 36,279 15 1,035,353 446 16,886 7 86,538 37 600,537 245 1,820,033 (3,192) 3,621
Balance at beginning of period, amount at Mar. 31, 2022 1,388,142                 9   9   14   331   7   32   182 1,383,218 (325) 4,665
Common stock issued 480,121   $ 1 121   6 64                               479,929    
Distributions declared (26,690)                                               (26,690)
Proceeds from distribution reinvestment plan 12,521     3     2                               12,516    
Redemptions of common stock (32,597)     $ (9)   $ (1) $ (3)                               (32,584)    
Stockholder servicing fees (24,799)                                           (24,799)    
Offering costs (3,598)                                           (3,598)    
Performance contingent rights issued 5,351                                           5,351    
Net income 25,650                                               25,650
Dividends on preferred stock (4)                                               (4)
Other comprehensive income (loss) (2,867)                                             (2,867)  
Balance at end of period, amount at Jun. 30, 2022 $ 1,821,230             $ 1,820,150 $ 22,186 $ 9 $ 22,371 $ 9 $ 36,279 $ 15 $ 1,035,353 $ 446 $ 16,886 $ 7 $ 86,538 $ 37 $ 600,537 $ 245 $ 1,820,033 $ (3,192) $ 3,621
[1] Comprised solely of unrealized gain (loss) on mortgage-backed securities, available for sale.

v3.22.2.2
Unaudited Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Cash flows from operating activities    
Net income $ 46,569 $ 13,531
Adjustments to reconcile net income to net cash provided by (used in) operating activities    
Performance contingent rights issued 8,993  
Amortization of deferred fees on loans and debt securities (2,020) (731)
Amortization of deferred financing costs and discount 4,268 1,503
Net change in unrealized loss on interest rate cap 1,449  
Changes in assets and liabilities    
Reimbursement due from sponsor   444
Interest receivable (8,043) (873)
Other assets (8,999) 15,876
Due to related party 1,397 8,866
Interest payable 5,331 463
Other liabilities (20) (6,041)
Net cash provided by (used in) operating activities [1] 48,925 33,038
Cash flows used in investing activities    
Origination and fundings of loans receivable, held-for-investment (3,084,586) (1,018,208)
Principal collections from loans receivable, held-for-investment 342,702 96,067
Exit and extension fees received on loans receivable, held-for-investment 769 335
Purchases of mortgage-backed securities available-for-sale (112,073) (19,575)
Principal repayments of mortgage-backed securities available-for-sale 62  
Purchases of mortgage-backed securities held-to-maturity (40,804)  
Acquisition of real estate (193,802)  
Net cash provided by (used in) investing activities (3,087,732) (941,381)
Cash flows from financing activities    
Issuance of common stock 930,144 187,917
Redemptions of common stock (41,748) (6,210)
Stockholder distributions paid (22,216) (7,816)
Stockholder servicing fees (3,674) (994)
Offering costs paid (8,334) (679)
Borrowing under mortgage note payable 124,700  
Borrowings under repurchase agreements 1,586,790 690,482
Repayments under repurchase agreements (1,312,829) (612,790)
Borrowings under credit facilities 879,823 156,000
Repayments under credit facilities (377,875) (121,000)
Proceeds from issuance of collateralized loan obligations 1,407,120 646,935
Repayment of collateralized loan obligations (89,631)  
Payment of deferred financing costs (24,501) (9,374)
Net cash provided by (used in) financing activities 3,047,769 922,471
Total increase (decrease) in cash, cash equivalents and restricted cash 8,962 14,128
Cash, cash equivalents and restricted cash at beginning of period 85,808 17,874
Cash, cash equivalents and restricted cash at end of period 94,770 32,002
Supplemental disclosure of cash flow information and non-cash financial activities    
Payments of interest 35,800 5,844
Accrued stockholder servicing fee 42,754 8,482
Distributions payable 5,059 1,663
Reinvestment of stockholder distributions 21,895 5,154
Payable for shares repurchased 19,250 553
Loan principal payments held by servicer $ 52,959  
Loan transferred from loans receivable, held-for-investment to loans receivable, held-for-sale   $ 24,397
[1] Cash flows from operating activities are supported by expense support payments from FS Real Estate Advisor and Rialto pursuant to the Company’s expense limitation agreement. See Note 7 for additional information regarding the Company’s expense limitation agreement.

v3.22.2.2
Principal Business and Organization
6 Months Ended
Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Principal Business and Organization
Note 1. Principal Business and Organization
FS Credit Real Estate Income Trust, Inc., or the Company, was incorporated under the general corporation laws of the State of Maryland on November 7, 2016 and formally commenced investment operations on September 13, 2017. The Company is currently conducting a public offering of up to $2,750,000 of its 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 Securities and Exchange Commission, or SEC, consisting of up to $2,500,000 in shares in its primary offering and up to $250,000 in shares pursuant to its distribution reinvestment plan. The Company also previously conducted private offerings of its Class F common stock and Class Y common stock. The Company is managed by FS Real Estate Advisor, LLC, or FS Real Estate Advisor, a subsidiary of the Company’s sponsor, Franklin Square Holdings, L.P., which does business as FS Investments, or FS Investments, a national sponsor of alternative investment funds designed for the individual investor. FS Real Estate Advisor has engaged Rialto Capital Management, LLC, or Rialto, to act as its
sub-adviser.
The Company has elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2017. The Company intends 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 the Company on a continuous basis. The Company intends to conduct its operations so that it is not required to register under the Investment Company Act of 1940, as amended, or the 1940 Act.
The Company’s primary investment objectives are to: provide current income in the form of regular, stable cash distributions to achieve an attractive dividend yield; preserve and protect invested capital; realize appreciation in net asset value, or 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 with lower volatility than public real estate companies.

v3.22.2.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2022
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Note 2. Summary of Significant Accounting Policies
Basis of Presentation:
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The unaudited consolidated financial statements include both the Company’s accounts and the accounts of its wholly owned subsidiaries and variable interest entities, or VIEs, of which the Company is the primary beneficiary, as of June 30, 2022. All significant intercompany transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The Company has evaluated the impact of subsequent events through the date the unaudited consolidated financial statements were issued.
Reclassifications:
Certain amounts in the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2021 and the audited consolidated financial statements as of and for the year ended December 31, 2021 have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2022. The reclassifications did not affect the Company’s financial position, results of operations, or cash flows.
Use of Estimates:
The preparation of the unaudited consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, as of the date of the financial statements and the
 
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation:
Financial Accounting Standards Board, or FASB, Accounting Standards Codification Topic 810—Consolidation, or ASC Topic 810, provides guidance on the identification of a VIE (an entity for which control is achieved through means other than voting rights) and the determination of which business enterprise, if any, should consolidate the VIE. An entity is considered a VIE if any of the following applies: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.
The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis. Refer to Note 10 for additional discussion of the Company’s VIEs.
Cash, Cash Equivalents and Restricted Cash:
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company invests its cash in overnight institutional money market funds. The Company’s uninvested cash is maintained with high credit quality financial institutions, which are members of the Federal Deposit Insurance Corporation. Restricted cash primarily represents cash held in an account to fund additional collateral interests within the Company’s collateralized loan obligations.
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in the Company’s unaudited consolidated statements of cash flows:
 
    
June 30,
 
    
2022
    
2021
 
Cash and cash equivalents
   $ 75,659      $ 13,318  
Restricted cash
     19,111        18,684  
    
 
 
    
 
 
 
Total cash, cash equivalents and restricted cash
   $ 94,770      $ 32,002  
    
 
 
    
 
 
 
Loans Receivable and Provision for Loan Losses:
The Company originates and purchases commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost. The Company is required to periodically evaluate each of these loans for possible impairment. Impairment is indicated when it is deemed probable that the Company will not be able to collect all amounts due to it pursuant to the contractual terms of the loan. If a loan is determined to be impaired, the Company writes down the loan
 
through a charge to the provision for loan losses. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective 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.
Loans that the Company originates or purchases that the Company is unable to hold, or intends to sell or otherwise dispose of, in the foreseeable future are classified as
held-for-sale
and are carried at the lower of amortized cost or fair value.
FS Real Estate Advisor and Rialto perform a quarterly review of the Company’s 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,
loan-to-value
ratio, or 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, the Company’s 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: A loan that has a risk of realizing a principal loss
5    Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss
Mortgage-backed Securities:
The Company designates its mortgage-backed securities as
held-to-maturity
or
available-for-sale
depending on the investment strategy and ability to hold such securities to maturity. Mortgage-backed securities are classified as
held-to-maturity
when the Company intends to, and has the ability to hold until maturity.
Held-to-maturity
securities are stated at amortized cost on the consolidated balance sheets. Mortgage-backed securities the Company does not hold for the purpose of selling in the near-term or may dispose of prior to maturity, are classified as
available-for
sale and are reported at fair value on the consolidated balance sheets with changes in fair value recorded in other comprehensive income.
The Company regularly monitors its mortgage-backed securities to ensure investments that may be other-than-temporarily impaired are timely identified, properly valued and charged against earnings in the proper period. The determination that a security has incurred an other-than-temporary decline in value requires the judgment of management. Assessment factors include, but are not limited to, the length of time and the extent to which the market value has been less than amortized cost, the financial condition and rating of the issuer, and the intent to sell or whether it is more likely than not that the Company will be required to sell.
Real Estate:
In accordance with the guidance for business combinations, the Company determines whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, the Company accounts for the transaction as an asset acquisition. The guidance for business combinations states that when substantially all the fair value of the gross assets to be acquired is concentrated in a single identifiable asset or group of similar
identifiable assets, the asset or set of assets is not a business. The one property acquisition to date has been accounted for as an asset acquisition.
Upon the acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-market” and “below-market” leases, acquired
in-place
leases, other identified intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as other available market information. Estimates of future cash flows are based on several factors including the historical operating results, known and anticipated trends and market and economic conditions. The Company capitalizes acquisition-related costs associated with asset acquisitions.
The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records acquired
in-place
lease values based on the Company’s evaluation of the specific characteristics of each tenant’s lease. The Company will record acquired above-market and below-market leases at their fair values which represents the present value of the difference between contractual rents of acquired leases and market rents at the time of the acquisition for the remaining lease term, discounted for tenant credit risks. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired
in-place
leases that may have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. Based on its acquisition to date, the Company’s allocation to customer relationship intangible assets has not been material.
Intangible assets and intangible liabilities are recorded as a component of other assets and other liabilities, respectively, on the Company’s consolidated balance sheets. The amortization of acquired above-market and below-market leases is recorded as an adjustment to rental revenue on the Company’s Consolidated statements of operations. The amortization of
in-place
leases is recorded as an adjustment to depreciation and amortization expense on the Company’s consolidated statements of operations.
The cost of buildings and improvements includes the purchase price of the Company’s properties and any acquisition-related costs, along with any subsequent improvements to such properties. The Company’s investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated useful lives of the assets as follows:
 
Description
  
Depreciable Life
Building    30 to 42 years
Building and land improvements    2 to 20 years
Furniture, fixtures and equipment    1 to 10 years
Tenant improvements    Shorter of estimated useful life or lease term
Lease intangibles    Over lease term
The Company’s management reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. Since cash flows on real estate properties are considered to be “long-lived assets to be held and used” on an undiscounted basis to determine whether an asset has been impaired, the Company’s strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If the Company’s strategy changes or market conditions otherwise
 
dictate an earlier sale date, an impairment loss may be recognized and such loss could be material to the Company’s results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value. During the periods presented, no such impairment occurred.
Fair Value of Financial Instruments:
Accounting Standards Codification Topic 820,
 Fair Value Measurements and Disclosures
, or ASC Topic 820, defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements under GAAP. Specifically, this guidance defines fair value based on exit price, or the price that would be received upon the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date.
ASC Topic 820 also establishes a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring financial instruments. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument, and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination, as follows:
 
 
Level 1:
Generally includes only unadjusted quoted prices that are available in active markets for identical financial instruments as of the reporting date.
 
 
Level 2:
Pricing inputs include quoted prices in active markets for similar instruments, quoted prices in less active or inactive markets for identical or similar instruments where multiple price quotes can be obtained, and other observable inputs, such as interest rates, yield curves, credit risks, and default rates.
 
 
Level 3:
Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2.
The estimated value of each asset reported at fair value using Level 3 inputs is determined by an internal committee composed of members of senior management of FS Real Estate Advisor.
Certain of the Company’s assets are reported at fair value either (i) on a recurring basis, as of each
quarter-end,
or (ii) on a nonrecurring basis, as a result of impairment or other events. The Company generally values its assets recorded at fair value by either (i) discounting expected cash flows based on assumptions regarding the collection of principal and interest and estimated market rates, or (ii) obtaining assessments from third-party dealers. For collateral-dependent loans that are identified as impaired, the Company measures impairment by comparing FS Real Estate Advisor’s estimation of fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These valuations may 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.
The Company is also required by GAAP to disclose fair value information about financial instruments that are not otherwise reported at fair value in the Company’s consolidated balance sheets, to the extent it is
 
practicable to estimate a fair value for those instruments. These disclosure requirements exclude certain financial instruments and all
non-financial
instruments.
The following methods and assumptions are used to estimate the fair value of other classes of financial instruments, for which it is practicable to estimate that value:
 
   
Cash and cash equivalents: The carrying amount of cash on deposit and in money market funds approximates fair value.
 
   
Restricted cash: The carrying amount of restricted cash approximates fair value.
 
   
Loans receivable
held-for-investment,
net: The fair values for these loans were estimated by FS Real Estate Advisor based on discounted cash flow methodology taking into consideration factors, including capitalization rates, discount rates, leasing, occupancy rates, availability and cost of financing, exit plan, sponsorship, actions of other lenders, and indications of market value from other market participants.
 
   
Mortgage-backed securities
available-for-sale:
The fair values for these investments were based on indicative deal quotes.
 
   
Mortgage-backed securities
held-to-maturity:
The fair values for these investments were estimated by FS Real Estate Advisor based on a discounted cash flow methodology pursuant to which a discount rate or market yield is used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Significant increases or decreases in the discount rate or market yield would result in a decrease or increase in the fair value measurement.
 
   
Collateralized loan obligations, repurchase agreements payable, credit facilities payable, and mortgage note payable: The fair values for these instruments were estimated based on the rate at which similar credit facilities would have currently been priced.
Deferred Financing Costs:
Deferred financing costs include issuance and other costs related to the Company’s debt obligations. The deferred financing costs related to the Company’s collateralized loan obligations, repurchase agreements, and mortgage note payable, are recorded as a reduction in the net book value of the related liability on the Company’s consolidated balance sheets. Deferred financing costs related to the Company’s revolving credit facilities and facilities that are undrawn as of the reporting date are recorded as an asset on the Company’s consolidated balance sheets. These costs are amortized as interest expense using the straight-line method over the term of the related obligation, which approximates the effective interest method.
Revenue Recognition:
Security transactions are accounted for on the trade date. The Company records interest income from its loans receivable portfolio on an accrual basis to the extent that the Company expects to collect such amounts. The Company does not accrue as a receivable interest or dividends on loans and securities if there is reason to doubt the collectability of such income. Discounts or premiums associated with the investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, the Company reviews and, if appropriate, makes adjustments to its cash flow projections. The Company records dividend income on the
ex-dividend
date. Any loan origination fees to which the Company is entitled, loan exit fees, original issue discount and market discount are capitalized and such amounts are amortized as interest income over the respective term of the investment. Upon the prepayment of a loan or
 
security, any unamortized loan origination fees to which the Company is entitled are recorded as fee income. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.
Loans are considered past due when payments are not made in accordance with the contractual terms. The Company does not accrue as receivable interest on loans if it is not probable that such income will be collected. Loans are placed on
non-accrual
status when full repayment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Interest payments received on
non-accrual
loans are generally recognized as interest income on a cash basis. Recognition of interest income on
non-performing
loans on an accrual basis is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms.
Rental revenue primarily consists of base rent arising from tenant leases at the Company’s properties. Base rent is recognized on a straight-line basis over the life of the lease, including any rent increases or rent abatement. The Company begins to recognize revenue upon the acquisition of the related property or when a tenant takes possession of the leased space. Other rental revenues include amounts due from tenants for costs related to common area maintenance, real estate taxes, and other recoverable costs included in lease agreements.
The Company evaluates the collectability of receivables related to rental revenue on an individual lease basis. In making this determination, the Company considers the length of time a receivable has been outstanding, tenant credit-worthiness, payment history, available information about the financial condition of the tenant, and current economic trends, among other factors. Tenant receivables that are deemed uncollectible are recognized as a reduction to rental revenue.
Organization Costs:
Organization costs include, among other things, the cost of incorporating, including the cost of legal services and other fees pertaining to the Company’s organization. These costs are expensed as incurred and recorded as a component of general and administrative expenses on the Company’s consolidated statements of operations.
Offering Costs:
Offering costs primarily include, among other things, marketing expenses and printing, legal and due diligence fees and other costs pertaining to the Company’s continuous public offering of shares of its common stock, including the preparation of the registration statement and salaries and direct expenses of FS Real Estate Advisor’s personnel, employees of its respective affiliates and others while engaged in such activities. The Company charges offering costs against additional
paid-in
capital on the consolidated balance sheets as it raises proceeds in its continuous public offering in excess of $250,000. In April 2020, FS Real Estate Advisor agreed not to seek reimbursement of organization and offering costs previously incurred until such time as it determined that the Company had achieved economies of scale sufficient to ensure that it could bear a reasonable level of expenses in relation to its income. The Company 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 the Company’s behalf, up to a cap of 0.75% of gross proceeds raised after such time. During the period from November 7, 2016 (Inception) to June 30, 2022, the Company incurred offering costs of $18,494, which were paid on its behalf by FS Investments (see Note 7).
Income Taxes:
The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, commencing with its taxable year ended December 31, 2017. In order to maintain its status as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders. As a REIT, the
 
Company generally will not be subject to federal income tax on income that it distributes to stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions.​​​​​​​
Uncertainty in Income Taxes
: The Company evaluates each of its tax positions to determine if they meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in the unaudited consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in the unaudited consolidated statements of operations. During the six months ended June 30, 2022 and 2021, the Company did not incur any interest or penalties and none are accrued at June 30, 2022.
Stockholder Servicing Fees:
The Company follows the guidance in Accounting Standards Codification Topic 405,
Liabilities
, when accounting for stockholder servicing fees. The Company will pay stockholder servicing fees over time on its shares of Class T, Class S, Class D and Class M common stock as described in Note 7. The Company records stockholder servicing fees as a reduction to additional
paid-in
capital and records the related liability in an amount equal to its best estimate of the fees payable in relation to the shares of Class T, Class S, Class D and Class M common stock on the date such shares are issued. The liability will be reduced over time, as the fees are paid to the dealer manager, or adjusted if the fees are no longer payable.
Derivative Instruments
: The Company uses interest rate caps to manage risks from fluctuations in interest rates. The Company has not designated any of these contracts as fair value or cash flow hedges for accounting purposes. The Company records its derivatives on its consolidated balance sheets at fair value and such amounts are included in Other assets. Any changes in the fair value of these derivatives are recorded in earnings.
The valuation of the Company’s interest rate caps is determined based on assumptions that management believes market participants would use in pricing, using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of June 30, 2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Recent Accounting Pronouncements:
In June 2016, the FASB issued ASU
2016-13,
Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326)
, or ASU
2016-13.
ASU
2016-13
significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU
2016-13
will replace the “incurred loss”
model under existing guidance with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances for
available-for-sale
debt securities rather than reduce the carrying amount, as they do today under the other than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. In November 2019, the FASB issued ASU
2019-10,
Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instrument (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates,
which deferred the effective date of ASU
2016-13
for smaller reporting companies until fiscal years beginning after December 15, 2022. While the Company, as a smaller reporting company, continues to evaluate the impact of this update on its unaudited consolidated financial statements, the Company expects that the adoption will result in an increased amount of provisions for potential loan losses as well as the recognition of such provisions earlier in the credit cycle. The Company currently does not have any provision for loan losses recorded on the consolidated financial statements.​​​​​​​

v3.22.2.2
Loans Receivable
6 Months Ended
Jun. 30, 2022
Receivables [Abstract]  
Loans Receivable
Note 3. Loans Receivable
The following table details overall statistics for the Company’s loans receivable portfolio as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022
(Unaudited)
   
December 31, 2021
 
Number of loans
     135       102  
Principal balance
   $ 6,539,424     $ 3,843,110  
Net book value
   $ 6,538,370     $ 3,841,868  
Unfunded loan commitments
(1)
   $ 610,703     $ 414,818  
Weighted-average cash coupon
(2)
     +3.82     +3.68
Weighted-average
all-in
yield
(2)
     +3.87     +3.73
Weighted-average maximum maturity (years)
(3)
     4.4       4.5  
 
(1)
The Company may be required to provide funding when requested by the borrowers in accordance with the terms of the underlying agreements.
(2)
The Company’s floating rate loans are indexed to the London Interbank Offered Rate, or LIBOR, and the Secured Overnight Financing Rate, or SOFR. In addition to cash coupon,
all-in
yield includes accretion of discount (amortization of premium) and accrual of exit fees.
(3)
Maximum maturity assumes all extension options are exercised by the borrowers; however, loans may be repaid prior to such date.
 
For the six months ended June 30, 2022 and 2021, the activity in the Company’s loan portfolio, was as follows:
 
    
For the Six Months Ended
June 30,
 
    
2022
    
2021
 
Balance at beginning of period
   $ 3,841,868      $ 700,149  
Loan fundings
     3,084,586        1,018,208  
Loan repayments
     (389,036      (96,067
Amortization of deferred fees on loans
     1,721        460  
Exit and extension fees received on loans
     (769      (335
    
 
 
    
 
 
 
Balance at end of period
   $ 6,538,370      $ 1,622,415  
    
 
 
    
 
 
 
The following tables detail the property type and geographic location of the properties securing the loans in the Company’s loans receivable,
held-for-investment
portfolio as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Property Type
  
Net Book
Value
    
Percentage
   
Net Book
Value
    
Percentage
 
Multifamily
   $ 4,204,627        64   $ 2,192,346        57
Office
     689,413        11     430,084        11
Hospitality
     534,181        8     223,847        6
Retail
     368,555        6     277,044        7
Industrial
     359,275        5     348,071        9
Self Storage
     214,890        3     236,921        6
Various
     99,295        2     65,910        2
Mixed Use
     68,134        1     67,645        2
    
 
 
    
 
 
   
 
 
    
 
 
 
Total
   $ 6,538,370        100   $ 3,841,868        100
    
 
 
    
 
 
   
 
 
    
 
 
 
 
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Geographic Location
(1)
  
Net Book
Value
    
Percentage
   
Net Book
Value
    
Percentage
 
South
   $ 3,137,981        48   $ 2,270,087        59
West
     1,301,765        20     637,142        17
Northeast
     1,301,761        20     646,761        16
Various
     435,978        7     65,910        2
Midwest
     360,885        5     221,968        6
    
 
 
    
 
 
   
 
 
    
 
 
 
Total
   $ 6,538,370        100   $ 3,841,868        100
    
 
 
    
 
 
   
 
 
    
 
 
 
 
(1)
As defined by the United States Department of Commerce, Bureau of the Census.
Loan Risk Rating
As further described in Note 2, 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,
loan-to-value
ratio, or 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, the Company’s loans are rated “1” through “5”, from less risk to greater risk, which ratings are defined in Note 2.
The following table allocates the net book value of the Company’s loans receivable,
held-for-investment
portfolio based on the Company’s internal risk ratings:
 
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Risk Rating
  
Number of
Loans
    
Net Book
Value
    
Percentage
   
Number of
Loans
    
Net Book
Value
    
Percentage
 
1
     —        $ —          —         —        $ —          —    
2
     —          —          —         —          —          —    
3
     135        6,538,370        100     102        3,841,868        100
4
     —          —          —         —          —          —    
5
     —          —          —         —          —          —    
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Total
     135      $ 6,538,370        100     102      $ 3,841,868        100
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
The Company did not have any impaired loans,
non-accrual
loans, or loans in maturity default within the loans receivable,
held-for-investment
portfolio as of June 30, 2022 and December 31, 2021.

v3.22.2.2
Mortgage-Backed Securities
6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
Mortgage-Backed Securities
Note 4. Mortgage Backed Securities
Mortgage-backed securities,
available-for-sale
Commercial mortgage-backed securities, or CMBS, classified as
available-for-sale
are reported at fair value on the consolidated balance sheets with changes in fair value recorded in other comprehensive income.
The table below summarizes various attributes of the Company’s investments in
available-for-sale
CMBS as of June 30, 2022 and December 31, 2021, respectively.
 
                  
Gross Unrealized
          
Weighted Average
 
    
Outstanding
Face Amount
    
Amortized
Cost Basis
    
Gains
    
Losses
   
Fair

Value
    
Coupon
   
Remaining
Duration
(years)
 
June 30, 2022 (Unaudited)
                                                            
CMBS,
available-for-sale
   $ 159,543      $ 156,467      $ 185      $ (3,378   $ 153,274        6.69     13.4  
December 31, 2021
                                                            
CMBS,
available-for-sale
   $ 44,580      $ 44,432      $ 99      $ (13   $ 44,518        6.58     15.1  
 
The following table presents the gross unrealized losses and estimated fair value of any
available-for-sale
securities that were in an unrealized loss position as of June 30, 2022 and December 31, 2021, respectively.
 
    
Estimated Fair Value
    
Unrealized Losses
 
    
Securities with a
loss less than
12 months
    
Securities with a
loss greater than

12 months
    
Securities with a
loss less than

12 months
    
Securities with a
loss greater than
12 months
 
June 30, 2022 (Unaudited)
                                   
CMBS,
available-for-sale
   $ 131,072      $ —        $ (3,378    $ —    
December 31, 2021
                                   
CMBS,
available-for-sale
   $ 905      $ —        $ (13    $ —    
As of June 30, 2022 and December 31, 2021, there were twelve securities and one security, respectively, with unrealized losses reflected in the table above. After evaluating the securities and recording adjustments for credit losses, the Company concluded that the remaining unrealized losses reflected above were noncredit-related and would be recovered from the securities’ estimated future cash flows. The Company considered a number of factors in reaching this conclusion, including that it did not intend to sell the securities, it was not considered more likely than not that the Company would be forced to sell the securities prior to recovering its amortized cost, and there were no material credit events that would have caused the Company to otherwise conclude that it would not recover the cost of the securities.
Mortgage-backed securities,
held-to-maturity
The table below summarizes various attributes of the Company’s investments in
held-to-maturity
CMBS as of June 30, 2022 and December 31, 2021, respectively.
 
    
Net Carrying
Amount
(Amortized
Cost)
    
Gross
Unrecognized
Holding
Gains
    
Gross
Unrecognized
Holding
Losses
    
Fair Value
 
June 30, 2022 (Unaudited)
                                   
CMBS, held-to-maturity
   $ 78,942        —          —        $ 78,942  
December 31, 2021
                                   
CMBS, held-to-maturity
   $ 37,862        —          —        $ 37,862  
The table below summarizes the maturities of the Company’s investments in
held-to-maturity
CMBS as of June 30, 2022 and December 31, 2021, respectively:
 
    
Total
    
Less than
1 year
    
1-3 years
    
3-5
years
    
More than
5 years
 
June 30, 2022 (Unaudited)
                                            
CMBS,
held-to-maturity
   $ 78,942        —          —        $ 38,145      $ 40,797  
December 31, 2021
                                            
CMBS,
held-to-maturity
   $ 37,862        —          —        $ 37,862        —    

v3.22.2.2
Real Estate
6 Months Ended
Jun. 30, 2022
Real Estate [Abstract]  
Real Estate
Note 5. Real Estate
Investment in real estate, net, consisted of the following as of June 30, 2022:
 
    
June 30, 2022
(Unaudited)
 
Building and building improvements
   $ 120,461  
Land and land improvements
     39,186  
Furniture, fixtures and equipment
     1,064  
    
 
 
 
Real estate, net
   $ 160,711  
    
 
 
 
No real estate was owned as of December 31, 2021.
Acquisition
On June 23, 2022, the Company acquired 555 Aviation, a 260,000
square foot creative office building located in El Segundo, California. The property was built in 1966 and was renovated in 2017 to convert the property into a creative office building, including LEED Gold certification, a glass façade and an interior open-air atrium. The property sits on 13 acres and is located in a growing Los Angeles sub-market of El Segundo near Los Angeles International Airport. The property is currently
 100% leased to three tenants. The following table details the purchase price allocation for the property acquired. As of June 30, 2022, this was the only property held by the Company.
 
    
Amount
 
Building and building improvements
   $ 120,461  
Land and land improvements
     39,186  
Furniture, fixtures and equipment
     1,064  
In-place
lease intangibles
     33,091  
    
 
 
 
Net purchase price
   $ 193,802  
    
 
 
 
The weighted average amortization period for the acquired
in-place
lease intangibles for the property acquired during the three months ended June 30, 2022 was approximately nine years.

v3.22.2.2
Financing Arrangements
6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
Financing Arrangements
Note 6. Financing Arrangements
The following tables present summary information with respect to the Company’s outstanding financing arrangements as of June 30, 2022 and December 31, 2021.
 
   
As of June 30, 2022 (Unaudited)
 
Arrangement
(1)
 
Rate
(2)
   
Amount
Outstanding
   
Amount
Available
   
Maturity Date
   
Carrying
Amount of
Collateral
   
Fair Value
of Collateral
 
Collateralized Loan Obligations
                                               
2019-FL1
Notes
   
+
1.20
% -
2.50
%
(3)
    $ 238,034     $ —         December 18, 2036     $ 336,297     $ 335,994  
2021-FL2
Notes
    +
1.22
% -
3.45
%
(3)
      646,935       —         May 5, 2038       782,721       782,945  
2021-FL3
Notes
    +1.25% - 2.85%
(3)
      928,483       —         November 4, 2036       1,133,690       1,134,805  
2022-FL4
Notes
    +1.90% - 4.75%
(
6
)
      842,662       —         January 31, 2039       1,077,266       1,078,595  
2022-FL5
Notes
    +2.30% - 5.41%
(
6
)
      570,112       —         June 17, 2037       662,474       662,328  
           
 
 
   
 
 
           
 
 
   
 
 
 
              3,226,226       —                 3,992,448       3,994,667  
Repurchase Agreements
                                               
WF-1
Facility
    +2.15% - 2.50%
(
4
)
      495,250       154,750       August 30, 2023       496,652       496,554  
GS-1
Facility
   
+1.75% - 2.75%
(
5
)
      221,273       128,727       January 26, 2023       225,183       224,481  
BB-1
Facility
    +1.55% - 1.95%
(
6
)
      388,107       311,893       February 22, 2024       378,788       379,719  
RBC Facility
    +1.35%       74,299       —         N/A       —         —    
           
 
 
   
 
 
           
 
 
   
 
 
 
              1,178,929       595,370               1,100,623       1,100,754  
Revolving Credit Facility
                                               
CNB Facility
    +2.25%
(
7
)
      50,000       50,000       June 7, 2023       —         —    
MM-1
Facility
    +2.03%
(
8
)
(9
)
      651,138       348,862       September 20, 2029       642,251       642,380  
           
 
 
   
 
 
           
 
 
   
 
 
 
              701,138       398,862               642,251       642,380  
Mortgage Loan
                                               
Natixis Loan
    +2.15%
(
8
)
      124,700       2,000       July 9, 2025       160,711       160,711  
           
 
 
   
 
 
           
 
 
   
 
 
 
Total
         
$
5,230,993
 
 
$
996,232
 
         
$
5,896,033
 
 
$
5,898,512
 
           
 
 
   
 
 
           
 
 
   
 
 
 
 
(1)
The carrying amount outstanding under the facilities approximates their fair value.
(2)
The rates are expressed over the relevant floating benchmark rates, which include USD LIBOR, Term SOFR, and SOFR Average (compounded average of SOFR over a rolling
30-day
period).
(3)
USD LIBOR is subject to a 0.00% floor.
(4)
Benchmark rate is subject to a 0.00% floor. LIBOR or SOFR benchmark rate is selected with respect to a transaction as set forth in the related transaction confirmation for the underlying transaction.
(5)
Term SOFR is subject to a 0.00% floor.
GS-1
and Goldman Sachs may mutually agree on rates outside this range or a different floor on an asset by asset basis.
(
6
)
USD LIBOR, Term SOFR or SOFR Average (compounded average of SOFR over a rolling
30-day
period), subject to a 0.00% floor.
(7)
Term SOFR is subject to a
0.50%
floor. The CNB Facility is subject to a credit spread adjustment of 0.10%, which was implemented as a result of the facility’s transition from USD LIBOR to Term SOFR.
(8)
Term SOFR is subject to a 0.00% floor.
(9)
The MM-1 Facility is subject to a credit spread adjustment of 0.11%, which was implemented as a result of the facility’s transition from USD LIBOR to Term SOFR.
 
 
 
As of December 31, 2021
 
Arrangement
(1)
 
Rate
(2)
 
 
Amount
Outstanding
 
 
Amount
Available
 
 
Maturity Date
 
 
Carrying
Amount of
Collateral
 
 
Fair Value
of Collateral
 
Collateralized Loan Obligation
 
 
 
 
 
 
2019-FL1
Notes
   
+1.20% - 2.50%
(3)
    $ 327,665     $ —         December 18, 2036     $ 424,665     $ 424,877  
2021-FL2
Notes
   
+1.22% - 3.45%
(3)
      646,935       —         May 5, 2038       740,083       741,226  
2021-FL3
Notes
   
+1.25% - 2.85%
(3)
      928,483       —         November 4, 2036       1,133,620       1,135,775  
           
 
 
   
 
 
           
 
 
   
 
 
 
              1,903,083       —                 2,298,368       2,301,878  
Repurchase Agreements
                                               
WF-1
Facility
   
+2.15% - 2.50%
(
4
)
      218,912       131,088       August 30, 2022       225,276       225,181  
GS-1
Facility
   
+1.75% - 2.75%
(
5
)
      212,005       37,995       January 26, 2022       212,677       212,574  
BB-1
Facility
   
+1.55% - 1.95%
      442,535       7,465       February 22, 2024       444,261       444,375  
RBC Facility
    +1.35%       31,516       —         N/A       —         —    
           
 
 
   
 
 
           
 
 
   
 
 
 
              904,968       176,548               882,214       882,130  
Revolving Credit Facility
                                               
CNB Facility
    +2.25%
(
6
)
      6,000       49,000       June 7, 2023       —         —    
MM-1
Facility
    +2.10%
(3)
      193,190       6,810       September 20, 2029       193,076       193,346  
           
 
 
   
 
 
           
 
 
   
 
 
 
              199,190       55,810               193,076       193,346  
           
 
 
   
 
 
           
 
 
   
 
 
 
Total
         
$
3,007,241
 
 
$
232,358
 
         
$
3,373,658
 
 
$
3,377,354
 
           
 
 
   
 
 
           
 
 
   
 
 
 
 
(1)
The carrying amount outstanding under the facilities approximates their fair value.
(2)
The rates are expressed over the relevant floating benchmark rates, which include USD LIBOR.
(3)
USD LIBOR is subject to a 0.00% floor.
(4)
USD LIBOR is subject to a 0.00% floor. As of December 31, 2021, six transactions under the
WF-1
facility are using term SOFR as the reference rate, subject to the rates specified in their applicable transaction confirmations.
(5)
USD LIBOR is subject to a 0.50% floor.
GS-1
and Goldman Sachs, may mutually agree on rates outside this range or a different LIBOR floor on an asset by asset basis.
(
6
)
USD LIBOR is subject to a 0.50% floor.
The Company’s average borrowings and weighted average interest rate, including the effect of
non-usage
fees, for the six months ended June 30, 2022 were $3,672,968 and 2.22%, respectively. The Company’s average borrowings and weighted average interest rate, including the effect of
non-usage
fees, for the year ended December 31, 2021 were $1,346,445 and 1.69%, respectively.
Under its financing arrangements, the Company has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar financing arrangements. The Company was in compliance with all covenants required by its financing arrangements as of June 30, 2022 and December 31, 2021.
Maturities
The Company generally requires the amount outstanding on debt obligations to be paid down before the financing arrangement’s respective maturity date. The following table sets forth the Company’s repayment schedule for secured financings based on the maturity date of each financing arrangement:
 
    
Collateralized Loan
Obligations
    
Repurchase
Agreements
    
Revolving Credit
Facility
    
Mortgage Loan
    
Total
 
2022
   $ —        $ 495,250      $ —        $ —        $ 495,250  
2023
     —          221,273        50,000        —          271,273  
2024
     —          388,107        —          —          388,107  
2025
     —          —          —          124,700        124,700  
2026
     —          —          —          —          —    
Thereafter
     3,226,226        74,299        651,138        —          3,951,663  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 3,226,226      $ 1,178,929      $ 701,138      $ 124,700      $ 5,230,993  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Collateralized Loan Obligations
The Company financed certain pools of loans through collateralized loan obligations, which include
2019-FL1,
2021-FL2,
2021-FL3,
2022-FL4,
and
2022-FL5,
or collectively, the CLOs. The following table outlines the number of loans and the principal balance of the collateralized pool of interests for each CLO.
 
    
As of June 30, 2022
(Unaudited)
 
Collateralized Loan Obligation
  
Total Loans
    
Principal
 
2019-FL1
Notes
     16      $ 336,601  
2021-FL2
Notes
     28        782,978  
2021-FL3
Notes
     26        1,134,028  
2022-FL4
Notes
     23        1,077,573  
2022-FL5
Notes
     23        662,599  
    
 
 
    
 
 
 
Total
     116      $ 3,993,779  
    
 
 
    
 
 
 
The Company incurred issuance costs and discount related to the collateralization of the CLO Notes, which are amortized to interest expense over the remaining life of the loans. The following table outlines the issuance costs and discount to be amortized.
 
    
As of June 30, 2022
(Unaudited)
 
Collateralized Loan Obligation
  
Issuance Costs and
Discount to be Amortized
 
2019-FL1
Notes
   $ 2,790  
2021-FL2
Notes
     5,438  
2021-FL3
Notes
     6,482  
2022-FL4
Notes
     7,066  
2022-FL5
Notes
     5,281  
    
 
 
 
Total
   $ 27,057  
    
 
 
 
2022-FL5
Notes
On June 16, 2022, the Company issued $570,112 of collateralized loan obligation notes, or the CLO5 Transaction, through the
Sub-REIT
and a wholly-owned financing subsidiary of the
Sub-REIT,
FS Rialto
2022-FL5
Issuer, LLC, a Delaware limited liability company, as issuer.
Repurchase Agreements
WF-1
Facility
On August 30, 2017, the Company’s indirect wholly owned, special-purpose financing subsidiary, FS CREIT Finance
WF-1
LLC, or
WF-1,
as seller, entered into a Master Repurchase and Securities Contract, or, as amended, the
WF-1
Repurchase Agreement, and together with the related transaction documents, the
WF-1
Facility, with Wells Fargo, as buyer, to finance the acquisition and origination of commercial real estate whole loans or senior controlling participation interests in such loans. The maximum amount of financing available under the
WF-1
Facility as of June 30, 2022 is $650,000. Each transaction under the
WF-1
Facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate. On February 11, 2022, the
WF-1
Repurchase Agreement was amended to temporarily increase the maximum amount of financing available from $350,000 to $650,000 until May 11, 2022. On May 12, 2022, the
WF-1
 Repurchase Agreement was amended to extend the temporary increase of $
650,000
 maximum amount of financing available until September 30, 2022 and to extend the maturity date and availability period, in each case, from August 30, 2022 to August 30, 2023. 
The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $1,367 of deferred financing costs had yet to be amortized to interest expense.
GS-1
Facility
On January 26, 2018, the Company’s indirect wholly-owned, special-purpose financing subsidiary, FS CREIT Finance
GS-1
LLC, or
GS-1,
as seller, entered into an Uncommitted Master Repurchase and Securities Contract Agreement, or, as amended, the
GS-1
Repurchase Agreement, and together with the related transaction documents, the
GS-1
Facility with Goldman Sachs, as buyer, to finance the acquisition and origination of whole, performing senior commercial or multifamily floating-rate mortgage loans secured by first liens on office, retail, industrial, hospitality, multifamily or other commercial properties. The maximum amount of financing available under the
GS-1
Facility as of June 30, 2022 is $350,000. Each transaction under the
GS-1
Facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate.
On January 26, 2022, the
GS-1
Repurchase Agreement was amended to extend the availability period to January 26, 2023, with an option to extend one additional year to January 26, 2024. After the end of the availability period,
GS-1
may exercise an option to commence a
one-year
amortization period, so long as certain conditions are met. During the amortization period, certain changes to the terms of the
GS-1
Facility would apply, including an increase to the rate charged on each asset financed under the
GS-1
Facility. The maximum amount of financing available increased from $250,000 to $350,000 with a temporary additional increase to $500,000 that was available until the closing of the CLO4 Transaction.
The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $335 of deferred financing costs had yet to be amortized to interest expense.
 
BB-1
Facility
On February 22, 2021, the Company’s indirect wholly owned, special-purpose financing subsidiary, FS CREIT Finance
BB-1
LLC, or
BB-1,
entered into a Master Repurchase Agreement, or the
BB-1
Repurchase Agreement, and together with the related transaction documents, the
BB-1
Facility, as seller, with Barclays Bank PLC, or Barclays, as purchaser, to finance the acquisition and origination of whole, performing senior commercial or multifamily floating-rate mortgage loans secured by first liens on office, retail, industrial, hospitality, multifamily, self-storage and manufactured housing property (or a combination of the foregoing, including associated parking structures). The maximum amount of financing available under the BB-1 Facility as of June 30, 2022 was $700,000. Each transaction under the
BB-1
Facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate. On June 7, 2022, the
BB-1
Loan Agreement was amended to, among other things, increase the maximum committed facility amount to $700,000.
The initial availability period of the
BB-1
Facility is three years.
BB-1
may extend the availability period for a
one-year
term extension, so long as certain conditions are met. After the end of the availability period,
BB-1
 
may exercise an option to commence a
one-year
amortization period up to two times, so long as certain conditions are met. During the amortization period, certain of the terms of the
BB-1
Facility will be modified, including a requirement to pay down a certain amount of the outstanding purchase price of each asset financed under the
BB-1
Facility.

The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $1,576 of deferred financing costs had yet to be amortized to interest expense.
RBC Facility
On March 2, 2020, the Company’s wholly-owned subsidiary, FS CREIT Investments LLC, or FS CREIT Investments, as seller, entered into a Master Repurchase Agreement, or the RBC Facility, with Royal Bank of Canada, or RBC, as buyer, to enable FS CREIT Investments to execute repurchase transactions of securities and financial instruments on an
asset-by-asset
basis. Each transaction under the RBC Facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and pricing rate.
Revolving Credit Facilities
CNB Facility
On August 22, 2019, the Company and FS CREIT Finance Holdings LLC, or Finance Holdings, a direct wholly owned subsidiary of the Company, each as a borrower, entered into a Loan and Security Agreement, or the CNB Loan Agreement, and together with the related transaction documents, the CNB Facility, with City National Bank, or CNB, as administrative agent and lender. The maximum committed facility amount under the CNB Facility as of June 30, 2022 was $100,000. Borrowings under the CNB Facility are subject to compliance with a borrowing base calculated based on the Company’s stockholder subscriptions and certain cash and assets held directly by the Company.
Borrowed amounts under the CNB facility must be repaid no later than 180 days after the funding date of such borrowing. In addition, the borrowers pay a
non-utilization
fee quarterly in arrears in an amount equal to
 
0.375% per annum on the daily unused portion of the maximum facility amount. The CNB Facility matures on June 7, 2023, with an option to extend for up to three additional terms not longer than 364 days each, subject to CNB’s consent.
On May 5, 2022, the CNB Loan Agreement was amended to, among other things, (i) increase the maximum committed facility amount from $55,000 to $100,000, (ii) introduce a new borrowing condition requiring collateral coverage of 1.4 times for each dollar borrowed in excess of $50,000, and (iii) transition the benchmark rate from LIBOR to SOFR, resulting in an interest rate of SOFR plus a spread of 2.25% plus a credit spread adjustment of 0.10%.
The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $647 of deferred financing costs had yet to be amortized to interest expense.
MM-1
Facility
On September 20, 2021, FS CREIT Finance
MM-1
LLC, or
MM-1,
an indirect wholly-owned, special-purpose financing subsidiary of the Company, entered into a Loan and Servicing Agreement, or the
MM-1
Loan
 
Agreement, and together with the related transaction documents, the
MM-1
Facility, by and among Finance Holdings,
MM-1,
as borrower and portfolio asset servicer, Massachusetts Mutual Life Insurance Company, or Mass Mutual, and the other lenders from time to time party thereto, or the Lenders, Wells Fargo Bank, N.A., as administrative agent and as collateral custodian, and Mass Mutual, as facility servicer. The maximum committed facility amount under the
MM-1
Facility as of June 30, 2022 is $1,000,000.
Borrowings under the
MM-1
Facility are subject to compliance with a borrowing base calculated based on advance rates applied to the value of
MM-1’s
assets. The
MM-1
Facility provides for a three-year availability period for borrowings, extendable for one additional year (for an additional fee of 0.25%) and an eight-year final maturity. Under the
MM-1
Facility, starting 18 months after the initial closing date, the full interest rate on outstanding loans will be payable on 85% of the commitments, or the Minimum Usage Amount, regardless of usage. The
MM-1
Facility also has an unused commitment fee of 0.30% per annum payable on: (i) during the first 18 months after the closing date, the unused commitment amounts and (ii) thereafter, the unused commitment amounts in excess of the Minimum Usage Amount. On February 23, 2022, the
MM-1
Repurchase Agreement was amended to exercise the accordion option to increase the maximum committed facility amount from $200,000 to $250,000. On March 4, 2022 the
MM-1
Repurchase Agreement was further amended to increase the maximum committed facility amount from $250,000 to $500,000, and reduce the applicable interest spread from 2.10% to 2.05% per annum.
On April 27, 2022, the
MM-1
Repurchase Agreement was amended and restated to provide for an increase of the maximum committed facility amount from $500,000 to $1,000,000, and a change of interest rate from LIBOR plus a spread of 2.05% to Term SOFR plus a spread of 2.025% plus a credit spread adjustment of 0.11%.
The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $8,666 of deferred financing costs had yet to be amortized to interest expense.
Mortgage Loan
Natixis Loan
On June 23, 2022, FS CREIT 555 Aviation LLC, an indirect wholly-owned subsidiary of the Company, entered into a mortgage loan related to its purchase of 555 Aviation (see Note 5). The maximum amount of financing under the facility as of June 30, 2022 is $
126,700. The Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. As of June 30, 2022, $2,132 of deferred financing costs had yet to be amortized to interest expense.

v3.22.2.2
Related Party Transactions
6 Months Ended
Jun. 30, 2022
Related Party Transactions [Abstract]  
Related Party Transactions
Note 7. Related Party Transactions
Compensation of FS Real Estate Advisor and the Dealer Manager
Pursuant to the third amended and restated advisory agreement dated as of December 15, 2021 or the advisory agreement, FS Real Estate Advisor
is entitled to a base management fee equal to 1.25% of the NAV for the Company’s Class T, Class S, Class D, Class M and Class I shares, payable quarterly in arrears. The payment of all or any portion of the base management fee accrued with respect to any quarter may be deferred by FS Real
Estate Advisor, without interest, and may be taken in any such other quarter as FS Real Estate Advisor may determine. In calculating the Company’s
base management fee, the Company will use its NAV before giving effect to accruals for such fee, stockholder servicing fees or distributions payable on its shares. The base management fee is a class-specific expense. No base management fee is paid on the Company’s Class F or Class Y shares.
FS
 
Real Estate Advisor is also entitled to the performance fee calculated and payable quarterly in arrears in an amount equal to 10.0% of the Company’s Core Earnings (as defined below) 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%. As a result, FS Real Estate Advisor does not earn a performance fee
for any quarter until the Company’s Core Earnings for such quarter exceed the hurdle rate of 1.625%. For purposes of the performance fee, “adjusted capital” means cumulative net proceeds generated from sales of the Company’s common stock other than Class F common stock (including proceeds from the Company’s distribution reinvestment plan) reduced for distributions from
non-liquidating
dispositions of the Company’s investments paid to stockholders and amounts paid for share repurchases pursuant to the Company’s share repurchase plan. Once the Company’s Core Earnings in any quarter exceed the hurdle rate, FS Real Estate Advisor will be entitled to a
“catch-up”
fee equal to the amount of Core Earnings in excess of the hurdle rate, until the Company’s Core Earnings for such quarter equal 1.806%, or 7.222% annually, of adjusted capital. Thereafter, FS Real Estate Advisor is entitled to receive 10.0% of the Company’s Core Earnings.
For purposes of calculating the performance fee, “Core Earnings” means: the net income (loss) attributable to stockholders of Class Y, Class T, Class S, Class D, Class M and Class I shares, computed in accordance with GAAP (provided that net income (loss) attributable to Class Y stockholders shall be reduced by an amount equal to the base management fee that would have been paid if Class Y shares were subject to such fee), including realized gains (losses) not otherwise included in GAAP net income (loss) and excluding
(i) non-cash
equity compensation expense, (ii) the performance fee, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other similar
non-cash
items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, and
(v) one-time
events pursuant to changes in GAAP and certain material
non-cash
income or expense items, in each case after discussions between FS Real Estate Advisor and the Company’s independent directors and
 
approved
by a majority of the Company’s independent directors. The performance fee is a class-specific expense. No performance fee is paid on the Company’s Class F shares.
Pursuant to the advisory agreement, the base management fee and performance fee may be paid, at FS Real Estate Advisor’s election, in (i) cash, (ii) Class I shares, (iii) performance-contingent rights Class I share awards, or Class I PCRs, or (iv) any combination of cash, Class I shares or Class I PCRs.
Under the form of Class I PCR agreement to be entered into between the Company, FS Real Estate Advisor and Rialto, or the Adviser Entities, the PCR Agreement, management and performance fees may be payable to the Adviser Entities in the form of Class I PCRs to the extent that distributions paid to stockholders in the applicable fiscal quarter exceed the Company’s Adjusted Core Earnings. “Adjusted Core Earnings” means: the net income (loss) attributable to stockholders, computed in accordance with GAAP, including (A) realized gains (losses) not otherwise included in GAAP net
income (loss), (B) stockholder servicing fees, and (C) reimbursements for organization and offering expenses, and excluding
(i) non-cash
equity compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains or losses or other similar
non-cash
items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, and
(iv) one-time
events pursuant to changes in GAAP and certain material
non-cash
income or expense items. Thereafter, Class I PCRs may become
issuable in the
form of Class I shares upon the achievement of the following conditions in any fiscal quarter following the initial issuance of the Class I PCRs, together, the Performance Conditions: (a) Adjusted Core Earnings for the quarter exceed distributions paid to stockholders during such quarter (such difference, the “Excess Distributable Income”) and (b) the annualized distribution yield on the Class I Shares (measured over such quarter) is at least at the yield target determined by management given then-current market conditions, the Yield Target. The initial Yield Target will be a 6.0% annualized yield on the Class I shares.
On the last day of any fiscal quarter in which the Company achieves the Performance Conditions (the “Performance Achievement Date”), the Company will issue to the Adviser Entities the number of Class I shares equal in value to the Excess Distributable Income for such quarter in respect of any outstanding Class I PCRs. The Adviser Entities, and their respective affiliates and employees, may not request repurchase by the Company of any Class I shares issued under the PCR Agreement for a period of six (6) months from the date of issuance. Thereafter, upon ten days’ written notice to the Company by the Adviser Entities, the Company must repurchase any Class I shares requested to be repurchased by the Adviser Entities at the most recently published transaction price per Class I share; provided that no repurchase shall be permitted that would jeopardize the Company’s qualification as a REIT or violate Maryland law. If, prior to the Performance Achievement Date, (i) the New Advisory Agreement is terminated in accordance with Section 12(b) of the New Advisory Agreement (other than Section 12(b)(iii) thereof) or (ii) the
sub-advisory
agreement is terminated in accordance with Section 9(b) thereof (other than Section 9(b)(v) thereof), any rights related to the Class I PCRs evidenced thereby by the terminated party as of the date of such termination shall immediately vest and the Company shall issue the number of Class I shares issuable upon such vesting. If, prior to the Performance Achievement Date, either of the Adviser Entities resigns as the adviser or
sub-adviser,
respectively, of the Company, then any rights related to the Class I PCRs evidenced thereby as of the date of such resignation shall remain outstanding and Class I shares issuable in respect thereof shall be issued upon achievement of the Performance Conditions.
FS Real Estate Advisor has engaged Rialto as
sub-adviser
to originate loans and other investments on behalf of the Company, and FS Real Estate Advisor oversees the
sub-adviser’s
origination activities. In connection with these activities, 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 the
sub-adviser
or FS Real Estate Advisor. Such origination fees
will be retained only to the extent they are paid by the borrower, either directly to Rialto or FS Real Estate Advisor or indirectly through the Company. During the six months ended June 30, 2022 and 2021, $24,328 and $9,682, respectively, in origination fees were paid directly by the borrowers to FS Real Estate Advisor or Rialto and not to the Company.
The Company reimburses FS Real Estate Advisor and Rialto for their actual costs incurred in providing administrative services to the Company. FS Real Estate Advisor and Rialto are required to allocate the cost of such services to the Company based on objective factors such as total assets, revenues and/or time allocations. At least annually, the Company’s board of directors reviews the amount of the administrative services expenses reimbursable to FS Real Estate Advisor and Rialto to determine whether such amounts are reasonable in relation to the services provided. The Company will not reimburse FS Real Estate Advisor or Rialto for any services for which it receives a separate fee or for any administrative expenses allocated to employees to the extent they serve as executive officers of the Company.
FS Investments funded the Company’s organization and offering costs in the amount of $18,737 for the period from November 7, 2016
(Inception) to June 30, 2022. These expenses include legal, accounting, printing, mailing and filing fees and expenses, due diligence expenses of participating broker-dealers supported by detailed and itemized invoices, costs in connection with preparing sales materials, design and website expenses, fees and expenses of the Company’s transfer agent, fees to attend retail seminars sponsored by participating broker-dealers and reimbursements for customary travel, lodging, and meals, but excluding selling commissions, dealer manager fees and stockholder servicing fees. Under the advisory agreement, FS Real Estate Advisor agreed to advance all of the Company’s organization and offering expenses on the Company’s behalf until it raised $250,000 of gross proceeds from its public offering.
FS
Real Estate Advisor and Rialto agreed to defer the recoupment of any organization and offering expenses that may be reimbursable by the Company 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 the Company had achieved economies of scale sufficient to ensure that it could bear a reasonable level of expenses in relation to its income. The Company 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 the Company’s behalf, up to a cap of 0.75% of gross proceeds raised after such time. During the six months ended June 30, 2022, the Company paid $6,999 to FS Real Estate Advisor for offering costs previously funded. As of June 30, 2022, $9,076 of offering expenses previously funded remained subject to reimbursement to FS Real Estate Advisor and Rialto.
The following table describes the fees and expenses accrued under the advisory agreement during the six months ended June 30, 2022 and 2021:
 
           
Three Months
Ended

June 30,
   
Six Months
Ended

June 30,
 
Related Party
 
Source Agreement
 
Description
 
2022
   
2021
   
2022
   
2021
 
FS Real Estate Advisor
  Advisory Agreement   Base Management Fee
(1)
  $ 5,351     $ 1,285     $ 9,196     $ 2,321  
FS Real Estate Advisor
  Advisory Agreement   Performance Fee
(2)
  $ —       $ 423     $ 152     $ 960  
FS Real Estate Advisor
  Advisory Agreement   Administrative Services Expenses
(3)
  $ 3,565     $ 652     $ 5,224     $ 1,448  
 
(1)
During the six months ended June 30, 2022, FS Real Estate Advisor received $2,007 in cash and $8,993 of performance contingent rights were issued as payment for management fees. During the six months ended 
 
 
June 30, 2022 and 2021, $2,007 and $1,804, respectively, in base management fees were paid to FS Real Estate Advisor. As of June 30, 2022, there were no base management fees payable to FS Real Estate Advisor.
(2)
During the six months ended June 30, 2022 and 2021, $557 and $800, respectively, in performance fees were paid to FS Real Estate Advisor. As of June 30, 2022, there were no performance fees payable to FS Real Estate Advisor.
(3)
During the six months ended June 30, 2022 and 2021, $4,796 and $1,270, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by FS Real Estate Advisor and Rialto and the remainder related to other reimbursable expenses. These amounts are recorded as general and administrative expenses on the accompanying unaudited consolidated statements of operations.
The dealer manager
 
for the Company’s continuous public offering is FS Investment Solutions, LLC, or FS Investment Solutions, which is an affiliate of FS Real Estate Advisor. Under the amended and restated dealer manager agreement dated as of August 17, 2018, or the dealer manager agreement, FS Investment Solutions is entitled to receive upfront selling commissions of up to
 
3.0
%, and upfront dealer manager fees of
 
0.5
% of the transaction price of each Class T share sold in the primary offering, however such amounts may vary at certain participating broker-dealers provided
that the sum will not exceed
3.5
% of the transaction price (subject to reductions for certain categories of purchasers). FS Investment Solutions is entitled to receive upfront selling commissions of up to
3.5%
of the transaction price per Class S share sold in the primary offering (subject to reductions for certain categories of purchasers). The dealer manager anticipates that all of the selling commissions and dealer manager fees will be re-allowed 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. Pursuant to the dealer manager agreement, the Company also reimburses FS Investment Solutions or participating broker-dealers for bona fide due diligence expenses, provided that total organization and offering expenses shall not exceed
 15
% of the gross proceeds in the Company’s public offering.
No selling commissions or dealer manager fees are payable on the sale of Class D, Class M, Class I, Class F or Class Y shares or on shares of any class sold pursuant to the Company’s distribution reinvestment plan.
Subject to the limitations described below, the Company pays FS Investment Solutions stockholder servicing fees for ongoing services rendered to stockholders by participating broker-dealers or by broker-dealers servicing stockholders’ accounts, referred to as servicing broker-dealers:
 
   
with respect to the Company’s outstanding Class T shares equal to 0.85% per annum of the aggregate NAV of its outstanding Class T shares, consisting of an advisor stockholder servicing fee of 0.65% per annum and a dealer stockholder servicing fee of 0.20% per annum; however, with respect to Class T shares sold through certain participating broker-dealers, the advisor stockholder servicing fee and the dealer stockholder servicing fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such shares;
 
   
with respect to the Company’s outstanding Class S shares equal to 0.85% per annum of the aggregate NAV of its outstanding Class S shares;
 
   
with respect to the Company’s outstanding Class D shares equal to 0.3% per annum of the aggregate NAV of its outstanding Class D shares; and
 
   
with respect to the Company’s outstanding Class M shares equal to 0.3% per annum of the aggregate NAV of its outstanding Class M shares.
 
The Company does not pay a stockholder servicing fee with respect to its Class I, Class F or Class Y shares. The dealer manager reallows some or all of the stockholder servicing fees to participating broker-dealers, servicing broker-dealers and financial institutions (including bank trust departments) for ongoing stockholder services performed by such broker-dealers, and waives (pays back to the Company) 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.
The Company will cease paying stockholder servicing fees with respect to any Class D, Class M, Class S and Class T shares held in a stockholder’s account at the end of the month in which the total underwriting compensation from the upfront selling commissions, dealer manager fees and stockholder servicing fees, as applicable, paid with respect to such account would exceed 1.25%, 7.25%, 8.75% and 8.75%, respectively (or a lower limit for shares sold by certain participating broker-dealers or financial institutions) of the gross proceeds from the sale of shares in such account. These amounts are referred to as the sales charge cap. At the end of such month that the sales charge cap is reached, each Class D, Class M, Class S or Class T share in such account will
 
convert into a number of Class I shares (including any fractional shares) with an equivalent aggregate NAV as such share.

In
addition, the Company will cease paying stockholder servicing fees on each Class D share, Class M share, Class S share and Class T share held in a stockholder’s account and each such share will convert to Class I shares on the earlier to occur of the following: (i) a listing of Class I shares on a national securities exchange; (ii) the sale or other disposition of all or substantially all of the Company’s assets or the Company’s merger or
consolidation with or into another entity in a transaction in which holders of Class D, Class M, Class S or Class T shares receive cash and/or shares of stock that are listed on a national securities exchange; or (iii) the date following the completion of the Company’s public offering on which, in the aggregate, underwriting compensation from all sources in connection with the Company’s public offering, including selling commissions, dealer
manager fees, stockholder servicing fees and other underwriting compensation, is equal to 10% of the gross proceeds from its primary offering.
The Company accrues future stockholder servicing fees in an amount equal to its best estimate of fees payable to FS Investment Solutions at the time such shares are sold. As of June 30, 2022 and December 31, 2021, the Company accrued $91,206 and $48,514, respectively, of stockholder servicing fees payable to FS Investment Solutions. FS Investment Solutions has entered into agreements with selected dealers distributing the Company’s shares in the public offering, which provide, among other things, for the
re-allowance
of the full amount of the selling commissions and dealer manager fee and all or a portion of the stockholder servicing fees received by FS Investment Solutions to such selected dealers.
FS Investment Solutions also serves or served as the placement agent for the Company’s private offerings of Class F and Class Y shares pursuant to placement agreements. FS Investment Solutions does not receive any compensation pursuant to these agreements.
Expense Limitation
The Company has entered into an amended and restated expense limitation agreement with FS Real Estate Advisor and Rialto, or the expense limitation agreement, pursuant to which FS Real Estate Advisor and Rialto have agreed to waive reimbursement of or pay, on a quarterly basis, the Company’s annualized ordinary operating expenses for such quarter to the extent such expenses exceed 1.5% per annum of its average net
assets
a
ttributable to each of its classes of common stock. The Company 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.
FS Real Estate Advisor and Rialto each agreed to waive the recoupment of any amounts that may be subject to conditional reimbursement during the quarterly period ended March 31, 2020. To the extent that the conditions to recoupment are satisfied in a future quarter (prior to the expiration of the three-year period for reimbursement set forth in the expense limitation agreement), such expenses may be subject to conditional recoupment in accordance with the terms of the expense limitation agreement.
During the period from September 13, 2017 (Commencement of Operations) to June 30, 2022, the Company accrued $5,839 for reimbursement of expenses that FS Real Estate Advisor and Rialto paid or waived, including
$0 in reimbursements for the six months ended June 30, 2022. During the
period from September 13, 2017 (Commencement of Operations) to June 30, 2022, the Company received $5,839 in cash reimbursements from FS Real Estate Advisor.
During the six months ended June 30, 2022, $482 of expense recoupments were paid to FS Real Estate Advisor and Rialto. As of June 30, 2022 and December 31, 2021, $1,460 and $62, respectively, of expense recoupments were payable to FS Real Estate Advisor and Rialto and $257 of expense reimbursements received from FS Real Estate Advisor and Rialto were eligible for recoupment.
 
The following table reflects the amounts paid or waived by FS Real Estate Advisor and Rialto under the expense limitation agreement and the expiration date for future possible reimbursements by the Company:
 
For the Three Months Ended
  
Amount of
Expense
Reimbursement
    
Recoupable
Amount
    
Recoupment
paid or
payable to
sponsor
    
Expired
Amount
    
Recoupment eligibility expiration
 
June 30, 2022
   $ —        $ —        $ —        $ —          N/A  
March 31, 2022
     —          —          —          —          N/A  
December 31, 2021
     —          —          —          —          N/A  
September 30, 2021
     —          —          —          —          N/A  
June 30, 2021
     —          —          —          —          N/A  
March 31, 2021
     56        56        —          —          March 31, 2024  
December 31, 2020
     444        201        243        —          December 31, 2023  
September 30, 2020
     397        —          397        —          September 30, 2023  
June 30, 2020
     182        —          182        —          June 30, 2023  
March 31, 2020
     —          —          —          —          N/A  
December 31, 2019
     500        —          500        —          December 31, 2022  
September 30, 2019
     491        —          491        —          September 30, 2022  
June 30, 2019
     420        —          420        —          Expired June 30, 2022  
March 31, 2019
     537        —          537        —          Expired March 31, 2022  
December 31, 2018
     709        —          62        647        Expired December 31, 2021  
September 30, 2018
     645        —          8        637        Expired September 30, 2021  
June 30, 2018
     561        —          390        171        Expired June 30, 2021  
March 31, 2018
     356        —          —          356        Expired March 31, 2021  
December 31, 2017
     377        —          —          377        Expired December 31, 2020  
September 30, 2017
     164        —          —          164        Expired September 30, 2020  
    
 
 
    
 
 
    
 
 
    
 
 
          
     $ 5,839      $ 257      $ 3,230      $ 2,352           
    
 
 
    
 
 
    
 
 
    
 
 
          
Capital Contributions and Commitments
In December 2016, pursuant to a private placement, Michael C. Forman and David J. Adelman, principals of FS Investments, contributed an aggregate of $200 to purchase 8,000 Class F shares at the price of $25.00 per share. These individuals will not tender these shares of common stock for repurchase as long as FS Real Estate Advisor remains the Company’s adviser. FS Investments is controlled by Mr. Forman, the Company’s president and chief executive officer, and Mr. Adelman.
As of June 30, 2022, the ownership in the Company’s Class F Shares by FS Real Estate Advisor and Rialto (and each of their respective affiliates and designees) was $22,221 and $388, respectively.
RIAL
2022-FL8
Transaction
In the second quarter of 2022, the Company purchased $36,000 of the Class E Notes mortgage-backed securities in a transaction in which an affiliate of Rialto is the issuer of the notes. These securities are accounted for as available-for-sale.

v3.22.2.2
Stockholder's Equity
6 Months Ended
Jun. 30, 2022
Equity [Abstract]  
Stockholders' Equity
Note 8. Stockholders’ Equity
Below is a summary of transactions with respect to shares of the Company’s common stock during the six months ended June 30, 2022 and 2021:
 
   
Shares
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2021
    902,878       906,648       1,407,377       22,823,721       642,162       2,876,736       11,366,687       40,926,209  
Issuance of common stock
    —         —         113,913       22,528,563       59,993       1,052,345       13,557,720       37,312,534  
Reinvestment of distributions
    14,613       —         20,616       516,751       7,279       31,546       266,637       857,442  
Redemptions of common stock
    (12,699     —         (31,495     (1,266,247     (18,465     (131,950     (818,042     (2,278,898
Transfers in or out
    —         —         (1,729     —         (10,622     (127,149     143,084       3,584  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022
    904,792       906,648       1,508,682       44,602,788       680,347       3,701,528       24,516,086       76,820,871  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Amount
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2021
  $ 22,138     $ 22,371     $ 33,862     $ 531,150     $ 15,945     $ 66,836     $ 279,008     $ 971,310  
Issuance of common stock
    —         —         2,846       567,895       1,501       26,392       331,510       930,144  
Reinvestment of distributions
    366       —         515       13,021       182       1,295       6,516       21,895  
Redemptions of common stock
    (318     —         (787     (31,901     (462     (3,307     (19,996     (56,771
Transfers in or out
    —         —         (44     —         (265     (3,190     3,499       —    
Accrued stockholder servicing fees
(1)
    —         —         (113     (44,812     (15     (1,488     —         (46,428
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022
  $ 22,186     $ 22,371     $ 36,279     $ 1,035,353     $ 16,886     $ 86,538     $ 600,537     $ 1,820,150  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Shares
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2020
    912,469       137,116       1,245,658       5,778,640       546,298       1,971,039       2,171,528       12,762,748  
Issuance of common stock
    —         843,659       67,299       4,222,421       90,823       436,462       1,844,519       7,505,183  
Reinvestment of distributions
    15,638       —         20,142       106,935       6,249       23,427       32,784       205,175  
Redemptions of common stock
    (10,270     (74,127     (20,042     (36,438     —         (42,670     (26,490     (210,037
Transfers in or out
    (6,392     —         (3,664     (1,684     (42,355     —         55,285       1,190  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
    911,445       906,648       1,309,393       10,069,874       601,015       2,388,258       4,077,626       20,264,259  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Amount
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2020
  $ 22,378     $ 3,449     $ 29,971     $ 134,705     $ 13,573     $ 46,154     $ 53,597     $ 303,827  
Issuance of common stock
    —         20,749       1,690       106,853       2,282       10,996       45,347       187,917  
Reinvestment of distributions
    392       —         505       2,705       157       590       805       5,154  
Redemptions of common stock
    (258     (1,827     (503     (922     —         (1,072     (651     (5,233
Transfers in or out
    (160     —         (92     (43     (1,065     —         1,360       —    
Accrued stockholder servicing fees
(1)
    —         —         (57     (8,674     (18     (727     —         (9,476
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
  $ 22,352     $ 22,371     $ 31,514     $ 234,624     $ 14,929     $ 55,941     $ 100,458     $ 482,189  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Stockholder servicing fees only apply to Class T, Class S, Class D and Class M shares. Under GAAP, the Company accrues future stockholder servicing fees in an amount equal to its best estimate of fees payable to FS Investment Solutions at the time such shares are sold. For purposes of NAV, the Company recognizes 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.
Share Repurchase Plan
The Company has adopted an amended and restated share repurchase plan, or share repurchase plan, whereby on a monthly basis, stockholders may request that the Company repurchase all or any portion of their shares. The repurchase of shares is limited to no more than 2% of the Company’s aggregate NAV per month of all classes of shares then participating in the share repurchase plan and no more than 5% of the Company’s aggregate
NAV per calendar quarter of all classes of shares then participating in the share repurchase plan, which
means that in any
12-month
period, the
Company limits repurchases to approximately 20% of the total NAV of all classes of shares then participating in the share repurchase plan. The Company’s board of directors may modify, suspend or terminate the share repurchase plan if it deems such action to be in the Company’s best interest and the best interest of its stockholders. During the six months ended June 30, 2022 and 2021, the Company repurchased 2,278,898 and 210,037, respectively, shares of common stock under its share repurchase plan representing a total of $56,771 and $5,233, respectively. The Company had no unfulfilled repurchase requests during the three months ended June 30, 2022 or 2021, respectively.
Distribution Reinvestment Plan
Pursuant to the Company’s distribution reinvestment plan, holders of shares of any class of the Company’s common stock may elect to have their cash distributions reinvested in additional shares of the Company’s common stock. The purchase price for shares pursuant to the distribution reinvestment plan will be equal to the transaction price for such shares at the time the distribution is payable.
Distributions
The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its stockholders each year to comply with the REIT provisions of the Code. Dividends are paid first to the holders of the Company’s Series A preferred stock at the rate of 12.0% per annum plus all accumulated and unpaid dividends thereon, and then to the holders of the Company’s common stock. All distributions will be made at the discretion of the Company’s
board of directors and will depend upon its taxable income, financial condition, maintenance of REIT status, applicable law, and other factors that the Company’s board of directors deems relevant.
The following table reflects the cash distributions per share that the Company paid on its common stock during the six months ended June 30, 2022:
 
Record Date
  
Class F
    
Class Y
    
Class T
    
Class S
    
Class D
    
Class M
    
Class I
 
January 28, 2022
   $ 0.1610      $ 0.1610      $ 0.1173      $ 0.1173      $ 0.1288      $ 0.1288      $ 0.1350  
February 25, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
March 30, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
April 28, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
May 27, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
June 29, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 0.9660      $ 0.9660      $ 0.7038      $ 0.7038      $ 0.7728      $ 0.7728      $ 0.8100  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
The following table reflects the amount of cash distributions that the Company paid on its common stock during the six months ended June 30, 2022, and 2021:
 
    
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
    
2022
    
2021
    
2022
    
2021
 
Distributions:
                                   
Paid or payable in cash
   $ 14,169      $ 4,661      $ 24,332      $ 8,357  
Reinvested in shares
     12,521        2,912        21,895        5,154  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total distributions
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
    
 
 
    
 
 
    
 
 
    
 
 
 
Source of distributions:
                                   
Cash flows from operating activities
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
Offering proceeds
     —          —          —          —    
    
 
 
    
 
 
    
 
 
    
 
 
 
Total sources of distributions
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
    
 
 
    
 
 
    
 
 
    
 
 
 
Net cash provided by (used in) operating activities
(1)
   $ 27,196      $ 9,619      $ 48,925      $ 33,038  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
Cash flows from operating activities are supported by expense support payments from FS Real Estate Advisor and Rialto pursuant to the Company’s expense limitation agreement. See Note 7 for additional information regarding the Company’s expense limitation agreement.
The Company currently declares and pays regular cash distributions on a monthly basis. The Company’s board of directors previously authorized regular monthly cash distributions for July 2022 for each class of its outstanding common stock in the net distribution amounts per share set forth below:
 
Class F
 
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
 
$0.1610   $ 0.1610     $ 0.1173     $ 0.1173     $ 0.1288     $ 0.1288     $ 0.1350  
The distributions for each class of outstanding common stock have been or will be paid monthly to stockholders of record as of the monthly record dates previously determined by the Company’s board of
 
directors. These distributions have been or will be paid in cash or reinvested in shares of the Company’s common stock for stockholders participating in the Company’s distribution reinvestment plan.

v3.22.2.2
Fair Value of Financial Instruments
6 Months Ended
Jun. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
Note 9. Fair Value of Financial Instruments
The following table presents the Company’s financial assets carried at fair value in the consolidated balance sheets by its level in the fair value hierarchy:
 
    
June 30, 2022 (Unaudited)
    
December 31, 2021
 
    
Total
    
Level 1
    
Level 2
    
Level 3
    
Total
    
Level 1
    
Level 2
    
Level 3
 
Mortgage-backed securities
available-for-sale
   $ 153,274      $ —        $ 153,274      $ —        $ 44,518      $ —        $ 44,518      $ —    
Interest rate cap
   $ 2,518      $ —        $ 2,518      $ —        $ —        $ —        $ —        $ —    
As discussed in Note 2, GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate that value. The following table details the carrying amount, face amount, and fair value of the financial instruments described in Note 2: 
 
   
June 30, 2022 (Unaudited)
   
December 31, 2021
 
   
Book Value
   
Face
Amount
   
Fair Value
   
Book Value
   
Face
Amount
   
Fair Value
 
Financial Assets
                                               
Cash, cash equivalents and restricted cash
  $ 94,770     $ 94,770     $ 94,770     $ 85,808     $ 85,808     $ 85,808  
Loans
receivable—held-for-investment
(1)
  $ 6,538,370     $ 6,539,424     $ 6,541,502     $ 3,841,868     $ 3,843,110     $ 3,844,685  
Mortgage-backed securities
held-to-maturity
  $ 78,942     $ 159,543     $ 78,942     $ 37,862     $ 50,300     $ 37,862  
Financial Liabilities
                                               
Repurchase agreements
(2)
  $ 1,175,651     $ 1,178,929     $ 1,178,929     $ 903,010     $ 904,968     $ 904,968  
Credit facilities
  $ 692,472     $ 701,138     $ 701,138     $ 196,960     $ 199,190     $ 199,190  
Collateralized loan obligations
(2)
  $ 3,193,515     $ 3,220,572     $ 3,220,572     $ 1,886,382     $ 1,903,083     $ 1,903,083  
Mortgage note payable
(2)
  $ 122,568     $ 124,700     $ 124,700     $ —       $ —       $ —    
 
(1)
Book value of loans receivable represents the face amount, net of unamortized loan fees and costs and accrual of exit fees, as applicable.
(2)
Book value represents the face amount, net of deferred financing costs.
Estimates of fair value for cash, cash equivalents and restricted cash are measured using observable, quoted market prices, or Level 1 inputs. Estimates of fair value for loans receivable, mortgage-backed securities
held-to-maturity,
repurchase obligations, credit facility obligations and the collateralized loan obligations are measured using unobservable inputs, or Level 3 inputs.

v3.22.2.2
Variable Interest Entities
6 Months Ended
Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Variable Interest Entities
Note 10. Variable Interest Entities
Consolidated Variable Interest Entities
The Company has financed a portion of its loans through CLOs, which are considered VIEs. The Company has a controlling financial interest in the CLOs and, therefore, consolidates them on its balance sheets because the Company has both (i) the power to direct activities of the CLOs that most significantly affect the CLOs’ economic performance and (ii) the obligation to absorb losses and the right to receive benefits of the CLOs that could potentially be significant to the CLOs.
The following table details the assets and liabilities of the Company’s consolidated CLOs as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022
(Unaudited)
    
December 31, 2021
 
Assets:
                 
Restricted cash
   $ 4,153      $ 37,364  
Loans receivable,
held-for-investment
     3,992,448        2,298,367  
Interest receivable
     9,576        5,154  
Other assets
     27,694        6,625  
    
 
 
    
 
 
 
Total assets
   $ 4,033,871      $ 2,347,510  
    
 
 
    
 
 
 
Liabilities
                 
Collateralized loan obligations (net of deferred financing costs of $27,057 and $16,701, respectively)
   $ 3,193,515      $ 1,886,382  
Interest payable
     3,988        1,357  
Other liabilities
     212        205  
    
 
 
    
 
 
 
Total liabilities
   $ 3,197,715      $ 1,887,944  
    
 
 
    
 
 
 
Assets held by the CLOs are restricted and can be used only to settle obligations of the CLOs. The liabilities are
non-recourse
to the Company and can only be satisfied from the assets of the CLOs.
Non-Consolidated
Variable Interest Entities
The Company invested $67,005 in subordinated positions of CMBS trusts which are considered VIEs. The Company is not the primary beneficiary of the VIEs because it does not have the power to direct the activities that most significantly affect the VIEs’ economic performance, nor does it provide guarantees or recourse to the VIEs other than standard representations and warranties and, therefore, does not consolidate the VIEs on its balance sheets. The Company has classified its investment in the CMBS as
held-to-maturity
debt securities that are included on the Company’s consolidated balance sheets and are part of the Company’s ongoing other-than-temporary impairment review. The Company’s maximum exposure to loss of the securities are limited to its book value of $78,942 as of June 30, 2022.
The Company is not obligated to provide, nor has it provided financial support to these consolidated and
non-consolidated
VIEs.

v3.22.2.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Note 11. Commitments and Contingencies
The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management of FS Real Estate Advisor has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.
The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be party to certain legal proceedings in the ordinary course of business. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect on its financial condition or results of operations.
See Note 7 for a discussion of the Company’s commitments to FS Real Estate Advisor and its affiliates (including FS Investments) for the reimbursement of organization and offering costs funded by FS Investments and for the reimbursement of amounts paid or waived by FS Real Estate Advisor and Rialto under the expense limitation agreement.

v3.22.2.2
Intangibles
6 Months Ended
Jun. 30, 2022
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
Intangibles
Note 12. Intangibles
The gross carrying amount and accumulated amortization of the Company’s real estate related intangible assets consisted of the following as of June 30, 2022:
 
    
June 30, 2022
 
Intangible assets
(1)
        
In-place
lease intangibles
   $ 33,091  
    
 
 
 
Total intangible assets
   $ 33,091  
    
 
 
 
 
(1)
Included in Other assets in the Company’s consolidated balance sheets.
No intangible assets or liabilities related to the Company’s real estate investments existed as of December 31, 2021.
The following table details the Company’s future amortization of intangible assets for each of the next five years and thereafter:
 
    
Amortization
 
2022 (remaining)
   $ 1,907  
2023
     3,814  
2024
     3,814  
2025
     3,814  
2026
     3,806  
2027
     3,803  
Thereafter
     12,133  
    
 
 
 
Total
   $ 33,091  
    
 
 
 

v3.22.2.2
Derivative Instruments
6 Months Ended
Jun. 30, 2022
Summary of Derivative Instruments [Abstract]  
Derivative Instruments
Note 13. Derivative Instrument
The Company has entered into an interest rate cap contract in order to limit its exposure against the variability of future interest rates on its variable interest rate borrowing. The Company has not designated this derivative as a hedge for accounting purposes. The Company has not entered into a master netting arrangement with its third-party counterparty and does not offset on its consolidated balance sheets the fair value amount recorded for its derivative instrument. The table below provides additional information regarding the
Company’s derivative instrument as of June 30, 2022. The Company did not hold any interest rate caps as of December 31, 2021.
 
Type of Derivative
  
Notional Amount
    
Strike
   
Effective Date
    
Maturity Date
    
Fair Value
(1)
 
Interest Rate Cap
   $ 126,700        2.25     June 21, 2022        July 09, 2024      $ 2,518  
 
(1)
Included in Other assets in the Company’s consolidated balance sheets.
The following table details the fair value of the Company’s derivative financial instrument:
 
Type of Derivative
  
Realized/Unrealized
Gain (Loss)
    
Location of
Gain (Loss)
Recognized
in Net
Income
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
 
    2022    
   
    2021    
    
    2022    
   
    2021    
 
Interest Rate Cap
     Unrealized Loss        (1   $ (1,449   $ —        $ (1,449   $ —    
 
(1)
Included in Other income (loss) in the Company’s consolidated statements of operations

v3.22.2.2
Subsequent Events
6 Months Ended
Jun. 30, 2022
Subsequent Events [Abstract]  
Subsequent Events
Note 14. Subsequent Events
The following is a discussion of material events that have occurred subsequent to June 30, 2022 through the issuance of the unaudited consolidated financial statements.
Barclay Revolving Credit Facility
On August 1, 2022, the Company, as borrower, entered into a senior secured revolving credit facility, or the Senior Secured Revolving Credit Facility with Barclays, as administrative agent, and the lenders party thereto.
The Senior Secured Revolving Credit Facility provides for borrowings, subject to a borrowing base calculation, in an aggregate maximum committed amount of up to $310,000, with an option for the Company to request, at one or more times, that existing and/or new lenders, at their election, provide up to $155,000 of additional commitments. The Senior Secured Revolving Credit Facility will mature on August 1, 2025, subject to options for the Company to request that lenders, at their election, provide up to two one-year maturity extensions. In connection with the closing of the Senior Secured Revolving Credit Facility, the Company repaid all outstanding borrowings and all other obligations under, and concurrently terminated, the CNB Facility.
Borrowings under the Senior Secured Revolving Credit Facility bear interest, at the Company’s election, at either a base rate plus a spread of 1.25%
per annum or one-, three- or six-month Term SOFR plus a spread of
 2.25%
per annum and a credit spread adjustment of 0.10% per annum. In each case, the spread will increase by
0.25% on the 30th day any loan remains outstanding and an additional
0.25
% on the 60th day any loan remains outstanding.
The Company will pay a commitment fee of 0.25% per annum on undrawn availability for each day on which over 50% of the maximum committed amount is undrawn and 0.35% per annum on undrawn availability for each day on which 50% or less of the maximum committed amount is undrawn.
In connection with the Senior Secured Revolving Credit Facility, the Company has made certain representations and warranties and must comply with various covenants and reporting requirements customary for facilities of this type. In addition, the Company must comply with the following financial covenants, in each case, measured as of the last day of each fiscal quarter: (a) a minimum fixed charge coverage ratio for the prior four fiscal quarters of not less than 1.50 to 1.00, (b) minimum tangible net worth not less than the sum of (i) $1,367,009 plus (ii) 75% of net cash proceeds from any offering of the Company’s capital stock after the closing date of the Senior Secured Revolving Credit Facility minus (iii) 50% of any cash used by the Company to repurchase any of its capital stock after the closing date of the Senior Secured Revolving Credit Facility, (c) minimum liquidity not less than $10,000, (d) a maximum debt to equity ratio for the prior four fiscal quarters of not greater than 3.50 to 1.00, and (e) an interest coverage ratio (calculated using earnings of assets contributing to the borrowing base) for the prior four fiscal quarters of not less than 1.50 to 1.00.
The Senior Secured Revolving Credit Facility contains events of default customary for facilities of this type. Upon the occurrence of an event of default, Barclays, at the instruction of the lenders, may terminate the commitments and declare outstanding borrowings and all other obligations under the Senior Secured Revolving Credit Facility immediately due and payable.
The Company’s obligations under the Senior Secured Revolving Credit Facility are guaranteed by certain of the Company’s subsidiaries. The Company’s obligations under the Senior Secured Revolving Credit Facility are secured by a first priority security interest in substantially all of the assets of the Company and the subsidiary guarantors thereunder.
Status of Offerings
As of August
5
,
 2022, the Company has issued 92,410,687 shares of common stock (consisting of 2,629,044 shares of Class F common stock, 1,036,671 shares of Class Y common stock, 1,685,871 shares of Class T common stock, 51,221,317 shares of Class S common stock, 783,331 shares of Class D common stock, 4,502,874 shares of Class M common stock and 30,551,579 shares of Class I common stock), including shares issued pursuant to its distribution reinvestment plan, for gross proceeds of $2,306,777.

v3.22.2.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2022
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation:
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The unaudited consolidated financial statements include both the Company’s accounts and the accounts of its wholly owned subsidiaries and variable interest entities, or VIEs, of which the Company is the primary beneficiary, as of June 30, 2022. All significant intercompany transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The Company has evaluated the impact of subsequent events through the date the unaudited consolidated financial statements were issued.
Reclassifications
Reclassifications:
Certain amounts in the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2021 and the audited consolidated financial statements as of and for the year ended December 31, 2021 have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2022. The reclassifications did not affect the Company’s financial position, results of operations, or cash flows.
Use of Estimates
Use of Estimates:
The preparation of the unaudited consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, as of the date of the financial statements and the
 
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
Principles of Consolidation:
Financial Accounting Standards Board, or FASB, Accounting Standards Codification Topic 810—Consolidation, or ASC Topic 810, provides guidance on the identification of a VIE (an entity for which control is achieved through means other than voting rights) and the determination of which business enterprise, if any, should consolidate the VIE. An entity is considered a VIE if any of the following applies: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.
The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis. Refer to Note 10 for additional discussion of the Company’s VIEs.
Cash, Cash Equivalents and Restricted Cash
Cash, Cash Equivalents and Restricted Cash:
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company invests its cash in overnight institutional money market funds. The Company’s uninvested cash is maintained with high credit quality financial institutions, which are members of the Federal Deposit Insurance Corporation. Restricted cash primarily represents cash held in an account to fund additional collateral interests within the Company’s collateralized loan obligations.
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in the Company’s unaudited consolidated statements of cash flows:
 
    
June 30,
 
    
2022
    
2021
 
Cash and cash equivalents
   $ 75,659      $ 13,318  
Restricted cash
     19,111        18,684  
    
 
 
    
 
 
 
Total cash, cash equivalents and restricted cash
   $ 94,770      $ 32,002  
    
 
 
    
 
 
 
Loans Receivable and Provision for Loan Losses
Loans Receivable and Provision for Loan Losses:
The Company originates and purchases commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost. The Company is required to periodically evaluate each of these loans for possible impairment. Impairment is indicated when it is deemed probable that the Company will not be able to collect all amounts due to it pursuant to the contractual terms of the loan. If a loan is determined to be impaired, the Company writes down the loan
 
through a charge to the provision for loan losses. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective 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.
Loans that the Company originates or purchases that the Company is unable to hold, or intends to sell or otherwise dispose of, in the foreseeable future are classified as
held-for-sale
and are carried at the lower of amortized cost or fair value.
FS Real Estate Advisor and Rialto perform a quarterly review of the Company’s 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,
loan-to-value
ratio, or 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, the Company’s 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: A loan that has a risk of realizing a principal loss
5    Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss
Mortgage backed securities
Mortgage-backed Securities:
The Company designates its mortgage-backed securities as
held-to-maturity
or
available-for-sale
depending on the investment strategy and ability to hold such securities to maturity. Mortgage-backed securities are classified as
held-to-maturity
when the Company intends to, and has the ability to hold until maturity.
Held-to-maturity
securities are stated at amortized cost on the consolidated balance sheets. Mortgage-backed securities the Company does not hold for the purpose of selling in the near-term or may dispose of prior to maturity, are classified as
available-for
sale and are reported at fair value on the consolidated balance sheets with changes in fair value recorded in other comprehensive income.
The Company regularly monitors its mortgage-backed securities to ensure investments that may be other-than-temporarily impaired are timely identified, properly valued and charged against earnings in the proper period. The determination that a security has incurred an other-than-temporary decline in value requires the judgment of management. Assessment factors include, but are not limited to, the length of time and the extent to which the market value has been less than amortized cost, the financial condition and rating of the issuer, and the intent to sell or whether it is more likely than not that the Company will be required to sell.
Real Estate
Real Estate:
In accordance with the guidance for business combinations, the Company determines whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, the Company accounts for the transaction as an asset acquisition. The guidance for business combinations states that when substantially all the fair value of the gross assets to be acquired is concentrated in a single identifiable asset or group of similar
identifiable assets, the asset or set of assets is not a business. The one property acquisition to date has been accounted for as an asset acquisition.
Upon the acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-market” and “below-market” leases, acquired
in-place
leases, other identified intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as other available market information. Estimates of future cash flows are based on several factors including the historical operating results, known and anticipated trends and market and economic conditions. The Company capitalizes acquisition-related costs associated with asset acquisitions.
The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records acquired
in-place
lease values based on the Company’s evaluation of the specific characteristics of each tenant’s lease. The Company will record acquired above-market and below-market leases at their fair values which represents the present value of the difference between contractual rents of acquired leases and market rents at the time of the acquisition for the remaining lease term, discounted for tenant credit risks. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired
in-place
leases that may have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. Based on its acquisition to date, the Company’s allocation to customer relationship intangible assets has not been material.
Intangible assets and intangible liabilities are recorded as a component of other assets and other liabilities, respectively, on the Company’s consolidated balance sheets. The amortization of acquired above-market and below-market leases is recorded as an adjustment to rental revenue on the Company’s Consolidated statements of operations. The amortization of
in-place
leases is recorded as an adjustment to depreciation and amortization expense on the Company’s consolidated statements of operations.
The cost of buildings and improvements includes the purchase price of the Company’s properties and any acquisition-related costs, along with any subsequent improvements to such properties. The Company’s investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated useful lives of the assets as follows:
 
Description
  
Depreciable Life
Building    30 to 42 years
Building and land improvements    2 to 20 years
Furniture, fixtures and equipment    1 to 10 years
Tenant improvements    Shorter of estimated useful life or lease term
Lease intangibles    Over lease term
The Company’s management reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. Since cash flows on real estate properties are considered to be “long-lived assets to be held and used” on an undiscounted basis to determine whether an asset has been impaired, the Company’s strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If the Company’s strategy changes or market conditions otherwise
dictate an earlier sale date, an impairment loss may be recognized and such loss could be material to the Company’s results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value. During the periods presented, no such impairment occurred.
Fair Value of Financial Instruments
Fair Value of Financial Instruments:
Accounting Standards Codification Topic 820,
 Fair Value Measurements and Disclosures
, or ASC Topic 820, defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements under GAAP. Specifically, this guidance defines fair value based on exit price, or the price that would be received upon the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date.
ASC Topic 820 also establishes a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring financial instruments. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument, and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination, as follows:
 
 
Level 1:
Generally includes only unadjusted quoted prices that are available in active markets for identical financial instruments as of the reporting date.
 
 
Level 2:
Pricing inputs include quoted prices in active markets for similar instruments, quoted prices in less active or inactive markets for identical or similar instruments where multiple price quotes can be obtained, and other observable inputs, such as interest rates, yield curves, credit risks, and default rates.
 
 
Level 3:
Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2.
The estimated value of each asset reported at fair value using Level 3 inputs is determined by an internal committee composed of members of senior management of FS Real Estate Advisor.
Certain of the Company’s assets are reported at fair value either (i) on a recurring basis, as of each
quarter-end,
or (ii) on a nonrecurring basis, as a result of impairment or other events. The Company generally values its assets recorded at fair value by either (i) discounting expected cash flows based on assumptions regarding the collection of principal and interest and estimated market rates, or (ii) obtaining assessments from third-party dealers. For collateral-dependent loans that are identified as impaired, the Company measures impairment by comparing FS Real Estate Advisor’s estimation of fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These valuations may 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.
The Company is also required by GAAP to disclose fair value information about financial instruments that are not otherwise reported at fair value in the Company’s consolidated balance sheets, to the extent it is
 
practicable to estimate a fair value for those instruments. These disclosure requirements exclude certain financial instruments and all
non-financial
instruments.
The following methods and assumptions are used to estimate the fair value of other classes of financial instruments, for which it is practicable to estimate that value:
 
   
Cash and cash equivalents: The carrying amount of cash on deposit and in money market funds approximates fair value.
 
   
Restricted cash: The carrying amount of restricted cash approximates fair value.
 
   
Loans receivable
held-for-investment,
net: The fair values for these loans were estimated by FS Real Estate Advisor based on discounted cash flow methodology taking into consideration factors, including capitalization rates, discount rates, leasing, occupancy rates, availability and cost of financing, exit plan, sponsorship, actions of other lenders, and indications of market value from other market participants.
 
   
Mortgage-backed securities
available-for-sale:
The fair values for these investments were based on indicative deal quotes.
 
   
Mortgage-backed securities
held-to-maturity:
The fair values for these investments were estimated by FS Real Estate Advisor based on a discounted cash flow methodology pursuant to which a discount rate or market yield is used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Significant increases or decreases in the discount rate or market yield would result in a decrease or increase in the fair value measurement.
 
   
Collateralized loan obligations, repurchase agreements payable, credit facilities payable, and mortgage note payable: The fair values for these instruments were estimated based on the rate at which similar credit facilities would have currently been priced.
Deferred Financing Costs
Deferred Financing Costs:
Deferred financing costs include issuance and other costs related to the Company’s debt obligations. The deferred financing costs related to the Company’s collateralized loan obligations, repurchase agreements, and mortgage note payable, are recorded as a reduction in the net book value of the related liability on the Company’s consolidated balance sheets. Deferred financing costs related to the Company’s revolving credit facilities and facilities that are undrawn as of the reporting date are recorded as an asset on the Company’s consolidated balance sheets. These costs are amortized as interest expense using the straight-line method over the term of the related obligation, which approximates the effective interest method.
Revenue Recognition
Revenue Recognition:
Security transactions are accounted for on the trade date. The Company records interest income from its loans receivable portfolio on an accrual basis to the extent that the Company expects to collect such amounts. The Company does not accrue as a receivable interest or dividends on loans and securities if there is reason to doubt the collectability of such income. Discounts or premiums associated with the investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, the Company reviews and, if appropriate, makes adjustments to its cash flow projections. The Company records dividend income on the
ex-dividend
date. Any loan origination fees to which the Company is entitled, loan exit fees, original issue discount and market discount are capitalized and such amounts are amortized as interest income over the respective term of the investment. Upon the prepayment of a loan or
 
security, any unamortized loan origination fees to which the Company is entitled are recorded as fee income. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.
Loans are considered past due when payments are not made in accordance with the contractual terms. The Company does not accrue as receivable interest on loans if it is not probable that such income will be collected. Loans are placed on
non-accrual
status when full repayment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Interest payments received on
non-accrual
loans are generally recognized as interest income on a cash basis. Recognition of interest income on
non-performing
loans on an accrual basis is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms.
Rental revenue primarily consists of base rent arising from tenant leases at the Company’s properties. Base rent is recognized on a straight-line basis over the life of the lease, including any rent increases or rent abatement. The Company begins to recognize revenue upon the acquisition of the related property or when a tenant takes possession of the leased space. Other rental revenues include amounts due from tenants for costs related to common area maintenance, real estate taxes, and other recoverable costs included in lease agreements.
The Company evaluates the collectability of receivables related to rental revenue on an individual lease basis. In making this determination, the Company considers the length of time a receivable has been outstanding, tenant credit-worthiness, payment history, available information about the financial condition of the tenant, and current economic trends, among other factors. Tenant receivables that are deemed uncollectible are recognized as a reduction to rental revenue.
Organization Costs
Organization Costs:
Organization costs include, among other things, the cost of incorporating, including the cost of legal services and other fees pertaining to the Company’s organization. These costs are expensed as incurred and recorded as a component of general and administrative expenses on the Company’s consolidated statements of operations.
Offering Costs
Offering Costs:
Offering costs primarily include, among other things, marketing expenses and printing, legal and due diligence fees and other costs pertaining to the Company’s continuous public offering of shares of its common stock, including the preparation of the registration statement and salaries and direct expenses of FS Real Estate Advisor’s personnel, employees of its respective affiliates and others while engaged in such activities. The Company charges offering costs against additional
paid-in
capital on the consolidated balance sheets as it raises proceeds in its continuous public offering in excess of $250,000. In April 2020, FS Real Estate Advisor agreed not to seek reimbursement of organization and offering costs previously incurred until such time as it determined that the Company had achieved economies of scale sufficient to ensure that it could bear a reasonable level of expenses in relation to its income. The Company 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 the Company’s behalf, up to a cap of 0.75% of gross proceeds raised after such time. During the period from November 7, 2016 (Inception) to June 30, 2022, the Company incurred offering costs of $18,494, which were paid on its behalf by FS Investments (see Note 7).
Income Taxes
Income Taxes:
The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, commencing with its taxable year ended December 31, 2017. In order to maintain its status as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders. As a REIT, the
 
Company generally will not be subject to federal income tax on income that it distributes to stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions.​​​​​​​
Uncertainty in Income Taxes
Uncertainty in Income Taxes
: The Company evaluates each of its tax positions to determine if they meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in the unaudited consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in the unaudited consolidated statements of operations. During the six months ended June 30, 2022 and 2021, the Company did not incur any interest or penalties and none are accrued at June 30, 2022.
Stockholder Servicing Fees
Stockholder Servicing Fees:
The Company follows the guidance in Accounting Standards Codification Topic 405,
Liabilities
, when accounting for stockholder servicing fees. The Company will pay stockholder servicing fees over time on its shares of Class T, Class S, Class D and Class M common stock as described in Note 7. The Company records stockholder servicing fees as a reduction to additional
paid-in
capital and records the related liability in an amount equal to its best estimate of the fees payable in relation to the shares of Class T, Class S, Class D and Class M common stock on the date such shares are issued. The liability will be reduced over time, as the fees are paid to the dealer manager, or adjusted if the fees are no longer payable.
Derivative Instruments
Derivative Instruments
: The Company uses interest rate caps to manage risks from fluctuations in interest rates. The Company has not designated any of these contracts as fair value or cash flow hedges for accounting purposes. The Company records its derivatives on its consolidated balance sheets at fair value and such amounts are included in Other assets. Any changes in the fair value of these derivatives are recorded in earnings.
The valuation of the Company’s interest rate caps is determined based on assumptions that management believes market participants would use in pricing, using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. However, as of June 30, 2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Recent Accounting Pronouncements
Recent Accounting Pronouncements:
In June 2016, the FASB issued ASU
2016-13,
Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326)
, or ASU
2016-13.
ASU
2016-13
significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU
2016-13
will replace the “incurred loss”
 
model under existing guidance with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances for
available-for-sale
debt securities rather than reduce the carrying amount, as they do today under the other than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. In November 2019, the FASB issued ASU
2019-10,
Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instrument (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates,
which deferred the effective date of ASU
2016-13
for smaller reporting companies until fiscal years beginning after December 15, 2022. While the Company, as a smaller reporting company, continues to evaluate the impact of this update on its unaudited consolidated financial statements, the Company expects that the adoption will result in an increased amount of provisions for potential loan losses as well as the recognition of such provisions earlier in the credit cycle. The Company currently does not have any provision for loan losses recorded on the consolidated financial statements.​​​​​​​​​​​​​​

v3.22.2.2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2022
Accounting Policies [Abstract]  
Reconciliation of Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in the Company’s unaudited consolidated statements of cash flows:
 
    
June 30,
 
    
2022
    
2021
 
Cash and cash equivalents
   $ 75,659      $ 13,318  
Restricted cash
     19,111        18,684  
    
 
 
    
 
 
 
Total cash, cash equivalents and restricted cash
   $ 94,770      $ 32,002  
    
 
 
    
 
 
 
Summary of Useful Lives of Investments in Real Estate
The cost of buildings and improvements includes the purchase price of the Company’s properties and any acquisition-related costs, along with any subsequent improvements to such properties. The Company’s investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated useful lives of the assets as follows:
 
Description
  
Depreciable Life
Building    30 to 42 years
Building and land improvements    2 to 20 years
Furniture, fixtures and equipment    1 to 10 years
Tenant improvements    Shorter of estimated useful life or lease term
Lease intangibles    Over lease term

v3.22.2.2
Loans Receivable (Tables)
6 Months Ended
Jun. 30, 2022
Receivables [Abstract]  
Summary of Details Overall Statistics for Loans Receivable Portfolio
The following table details overall statistics for the Company’s loans receivable portfolio as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022
(Unaudited)
   
December 31, 2021
 
Number of loans
     135       102  
Principal balance
   $ 6,539,424     $ 3,843,110  
Net book value
   $ 6,538,370     $ 3,841,868  
Unfunded loan commitments
(1)
   $ 610,703     $ 414,818  
Weighted-average cash coupon
(2)
     +3.82     +3.68
Weighted-average
all-in
yield
(2)
     +3.87     +3.73
Weighted-average maximum maturity (years)
(3)
     4.4       4.5  
 
(1)
The Company may be required to provide funding when requested by the borrowers in accordance with the terms of the underlying agreements.
(2)
The Company’s floating rate loans are indexed to the London Interbank Offered Rate, or LIBOR, and the Secured Overnight Financing Rate, or SOFR. In addition to cash coupon,
all-in
yield includes accretion of discount (amortization of premium) and accrual of exit fees.
(3)
Maximum maturity assumes all extension options are exercised by the borrowers; however, loans may be repaid prior to such date.
Summary of Activity in Loan Portfolio
 
For the six months ended June 30, 2022 and 2021, the activity in the Company’s loan portfolio, was as follows:
 
    
For the Six Months Ended
June 30,
 
    
2022
    
2021
 
Balance at beginning of period
   $ 3,841,868      $ 700,149  
Loan fundings
     3,084,586        1,018,208  
Loan repayments
     (389,036      (96,067
Amortization of deferred fees on loans
     1,721        460  
Exit and extension fees received on loans
     (769      (335
    
 
 
    
 
 
 
Balance at end of period
   $ 6,538,370      $ 1,622,415  
    
 
 
    
 
 
 
Schedule of Loan Receivables Acquired By Property
The following tables detail the property type and geographic location of the properties securing the loans in the Company’s loans receivable,
held-for-investment
portfolio as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Property Type
  
Net Book
Value
    
Percentage
   
Net Book
Value
    
Percentage
 
Multifamily
   $ 4,204,627        64   $ 2,192,346        57
Office
     689,413        11     430,084        11
Hospitality
     534,181        8     223,847        6
Retail
     368,555        6     277,044        7
Industrial
     359,275        5     348,071        9
Self Storage
     214,890        3     236,921        6
Various
     99,295        2     65,910        2
Mixed Use
     68,134        1     67,645        2
    
 
 
    
 
 
   
 
 
    
 
 
 
Total
   $ 6,538,370        100   $ 3,841,868        100
    
 
 
    
 
 
   
 
 
    
 
 
 
Schedule of Loan Receivables Acquired By Geographics
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Geographic Location
(1)
  
Net Book
Value
    
Percentage
   
Net Book
Value
    
Percentage
 
South
   $ 3,137,981        48   $ 2,270,087        59
West
     1,301,765        20     637,142        17
Northeast
     1,301,761        20     646,761        16
Various
     435,978        7     65,910        2
Midwest
     360,885        5     221,968        6
    
 
 
    
 
 
   
 
 
    
 
 
 
Total
   $ 6,538,370        100   $ 3,841,868        100
    
 
 
    
 
 
   
 
 
    
 
 
 
 
(1)
As defined by the United States Department of Commerce, Bureau of the Census.
Loans receivable based on internal risk ratings
The following table allocates the net book value of the Company’s loans receivable,
held-for-investment
portfolio based on the Company’s internal risk ratings:
 
    
June 30, 2022 (Unaudited)
   
December 31, 2021
 
Risk Rating
  
Number of
Loans
    
Net Book
Value
    
Percentage
   
Number of
Loans
    
Net Book
Value
    
Percentage
 
1
     —        $ —          —         —        $ —          —    
2
     —          —          —         —          —          —    
3
     135        6,538,370        100     102        3,841,868        100
4
     —          —          —         —          —          —    
5
     —          —          —         —          —          —    
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 
Total
     135      $ 6,538,370        100     102      $ 3,841,868        100
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
 

v3.22.2.2
Mortgage-Backed Securities (Tables)
6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
Schedule of Available-for-sale Securities Reconciliation
The table below summarizes various attributes of the Company’s investments in
available-for-sale
CMBS as of June 30, 2022 and December 31, 2021, respectively.
 
                  
Gross Unrealized
          
Weighted Average
 
    
Outstanding
Face Amount
    
Amortized
Cost Basis
    
Gains
    
Losses
   
Fair

Value
    
Coupon
   
Remaining
Duration
(years)
 
June 30, 2022 (Unaudited)
                                                            
CMBS,
available-for-sale
   $ 159,543      $ 156,467      $ 185      $ (3,378   $ 153,274        6.69     13.4  
December 31, 2021
                                                            
CMBS,
available-for-sale
   $ 44,580      $ 44,432      $ 99      $ (13   $ 44,518        6.58     15.1  
Schedule of Available-for-sale an Unrealized Loss Position
 
The following table presents the gross unrealized losses and estimated fair value of any
available-for-sale
securities that were in an unrealized loss position as of June 30, 2022 and December 31, 2021, respectively.
 
    
Estimated Fair Value
    
Unrealized Losses
 
    
Securities with a
loss less than
12 months
    
Securities with a
loss greater than

12 months
    
Securities with a
loss less than

12 months
    
Securities with a
loss greater than
12 months
 
June 30, 2022 (Unaudited)
                                   
CMBS,
available-for-sale
   $ 131,072      $ —        $ (3,378    $ —    
December 31, 2021
                                   
CMBS,
available-for-sale
   $ 905      $ —        $ (13    $ —    
Summary of Investment Held-to-maturity CMBS
The table below summarizes various attributes of the Company’s investments in
held-to-maturity
CMBS as of June 30, 2022 and December 31, 2021, respectively.
 
    
Net Carrying
Amount
(Amortized
Cost)
    
Gross
Unrecognized
Holding
Gains
    
Gross
Unrecognized
Holding
Losses
    
Fair Value
 
June 30, 2022 (Unaudited)
                                   
CMBS, held-to-maturity
   $ 78,942        —          —        $ 78,942  
December 31, 2021
                                   
CMBS, held-to-maturity
   $ 37,862        —          —        $ 37,862  
Summary of Maturities of Investment Held-to-maturity CMBS
The table below summarizes the maturities of the Company’s investments in
held-to-maturity
CMBS as of June 30, 2022 and December 31, 2021, respectively:
 
    
Total
    
Less than
1 year
    
1-3 years
    
3-5
years
    
More than
5 years
 
June 30, 2022 (Unaudited)
                                            
CMBS,
held-to-maturity
   $ 78,942        —          —        $ 38,145      $ 40,797  
December 31, 2021
                                            
CMBS,
held-to-maturity
   $ 37,862        —          —        $ 37,862        —    

v3.22.2.2
Real Estate (Table)
6 Months Ended
Jun. 30, 2022
Real Estate [Abstract]  
Schedule of Real Estate Properties
Investment in real estate, net, consisted of the following as of June 30, 2022:
 
    
June 30, 2022
(Unaudited)
 
Building and building improvements
   $ 120,461  
Land and land improvements
     39,186  
Furniture, fixtures and equipment
     1,064  
    
 
 
 
Real estate, net
   $ 160,711  
    
 
 
 
Summary of Asset Acquisition The following table details the purchase price allocation for the property acquired. As of June 30, 2022, this was the only property held by the Company.
    
Amount
 
Building and building improvements
   $ 120,461  
Land and land improvements
     39,186  
Furniture, fixtures and equipment
     1,064  
In-place
lease intangibles
     33,091  
    
 
 
 
Net purchase price
   $ 193,802  
    
 
 
 

v3.22.2.2
Financing Arrangements (Tables)
6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
Summary of information of outstanding financing arrangement
The following tables present summary information with respect to the Company’s outstanding financing arrangements as of June 30, 2022 and December 31, 2021.
 
   
As of June 30, 2022 (Unaudited)
 
Arrangement
(1)
 
Rate
(2)
   
Amount
Outstanding
   
Amount
Available
   
Maturity Date
   
Carrying
Amount of
Collateral
   
Fair Value
of Collateral
 
Collateralized Loan Obligations
                                               
2019-FL1
Notes
   
+
1.20
% -
2.50
%
(3)
    $ 238,034     $ —         December 18, 2036     $ 336,297     $ 335,994  
2021-FL2
Notes
    +
1.22
% -
3.45
%
(3)
      646,935       —         May 5, 2038       782,721       782,945  
2021-FL3
Notes
    +1.25% - 2.85%
(3)
      928,483       —         November 4, 2036       1,133,690       1,134,805  
2022-FL4
Notes
    +1.90% - 4.75%
(
6
)
      842,662       —         January 31, 2039       1,077,266       1,078,595  
2022-FL5
Notes
    +2.30% - 5.41%
(
6
)
      570,112       —         June 17, 2037       662,474       662,328  
           
 
 
   
 
 
           
 
 
   
 
 
 
              3,226,226       —                 3,992,448       3,994,667  
Repurchase Agreements
                                               
WF-1
Facility
    +2.15% - 2.50%
(
4
)
      495,250       154,750       August 30, 2023       496,652       496,554  
GS-1
Facility
   
+1.75% - 2.75%
(
5
)
      221,273       128,727       January 26, 2023       225,183       224,481  
BB-1
Facility
    +1.55% - 1.95%
(
6
)
      388,107       311,893       February 22, 2024       378,788       379,719  
RBC Facility
    +1.35%       74,299       —         N/A       —         —    
           
 
 
   
 
 
           
 
 
   
 
 
 
              1,178,929       595,370               1,100,623       1,100,754  
Revolving Credit Facility
                                               
CNB Facility
    +2.25%
(
7
)
      50,000       50,000       June 7, 2023       —         —    
MM-1
Facility
    +2.03%
(
8
)
(9
)
      651,138       348,862       September 20, 2029       642,251       642,380  
           
 
 
   
 
 
           
 
 
   
 
 
 
              701,138       398,862               642,251       642,380  
Mortgage Loan
                                               
Natixis Loan
    +2.15%
(
8
)
      124,700       2,000       July 9, 2025       160,711       160,711  
           
 
 
   
 
 
           
 
 
   
 
 
 
Total
         
$
5,230,993
 
 
$
996,232
 
         
$
5,896,033
 
 
$
5,898,512
 
           
 
 
   
 
 
           
 
 
   
 
 
 
 
(1)
The carrying amount outstanding under the facilities approximates their fair value.
(2)
The rates are expressed over the relevant floating benchmark rates, which include USD LIBOR, Term SOFR, and SOFR Average (compounded average of SOFR over a rolling
30-day
period).
(3)
USD LIBOR is subject to a 0.00% floor.
(4)
Benchmark rate is subject to a 0.00% floor. LIBOR or SOFR benchmark rate is selected with respect to a transaction as set forth in the related transaction confirmation for the underlying transaction.
(5)
Term SOFR is subject to a 0.00% floor.
GS-1
and Goldman Sachs may mutually agree on rates outside this range or a different floor on an asset by asset basis.
(
6
)
USD LIBOR, Term SOFR or SOFR Average (compounded average of SOFR over a rolling
30-day
period), subject to a 0.00% floor.
(7)
Term SOFR is subject to a
0.50%
floor. The CNB Facility is subject to a credit spread adjustment of 0.10%, which was implemented as a result of the facility’s transition from USD LIBOR to Term SOFR.
(8)
Term SOFR is subject to a 0.00% floor.
(9)
The MM-1 Facility is subject to a credit spread adjustment of 0.11%, which was implemented as a result of the facility’s transition from USD LIBOR to Term SOFR.
 
 
 
As of December 31, 2021
 
Arrangement
(1)
 
Rate
(2)
 
 
Amount
Outstanding
 
 
Amount
Available
 
 
Maturity Date
 
 
Carrying
Amount of
Collateral
 
 
Fair Value
of Collateral
 
Collateralized Loan Obligation
 
 
 
 
 
 
2019-FL1
Notes
   
+1.20% - 2.50%
(3)
    $ 327,665     $ —         December 18, 2036     $ 424,665     $ 424,877  
2021-FL2
Notes
   
+1.22% - 3.45%
(3)
      646,935       —         May 5, 2038       740,083       741,226  
2021-FL3
Notes
   
+1.25% - 2.85%
(3)
      928,483       —         November 4, 2036       1,133,620       1,135,775  
           
 
 
   
 
 
           
 
 
   
 
 
 
              1,903,083       —                 2,298,368       2,301,878  
Repurchase Agreements
                                               
WF-1
Facility
   
+2.15% - 2.50%
(
4
)
      218,912       131,088       August 30, 2022       225,276       225,181  
GS-1
Facility
   
+1.75% - 2.75%
(
5
)
      212,005       37,995       January 26, 2022       212,677       212,574  
BB-1
Facility
   
+1.55% - 1.95%
      442,535       7,465       February 22, 2024       444,261       444,375  
RBC Facility
    +1.35%       31,516       —         N/A       —         —    
           
 
 
   
 
 
           
 
 
   
 
 
 
              904,968       176,548               882,214       882,130  
Revolving Credit Facility
                                               
CNB Facility
    +2.25%
(
6
)
      6,000       49,000       June 7, 2023       —         —    
MM-1
Facility
    +2.10%
(3)
      193,190       6,810       September 20, 2029       193,076       193,346  
           
 
 
   
 
 
           
 
 
   
 
 
 
              199,190       55,810               193,076       193,346  
           
 
 
   
 
 
           
 
 
   
 
 
 
Total
         
$
3,007,241
 
 
$
232,358
 
         
$
3,373,658
 
 
$
3,377,354
 
           
 
 
   
 
 
           
 
 
   
 
 
 
 
(1)
The carrying amount outstanding under the facilities approximates their fair value.
(2)
The rates are expressed over the relevant floating benchmark rates, which include USD LIBOR.
(3)
USD LIBOR is subject to a 0.00% floor.
(4)
USD LIBOR is subject to a 0.00% floor. As of December 31, 2021, six transactions under the
WF-1
facility are using term SOFR as the reference rate, subject to the rates specified in their applicable transaction confirmations.
(5)
USD LIBOR is subject to a 0.50% floor.
GS-1
and Goldman Sachs, may mutually agree on rates outside this range or a different LIBOR floor on an asset by asset basis.
(
6
)
USD LIBOR is subject to a 0.50% floor.
Summary of based on the maturity date of each financing arrangement The following table sets forth the Company’s repayment schedule for secured financings based on the maturity date of each financing arrangement:
 
    
Collateralized Loan
Obligations
    
Repurchase
Agreements
    
Revolving Credit
Facility
    
Mortgage Loan
    
Total
 
2022
   $ —        $ 495,250      $ —        $ —        $ 495,250  
2023
     —          221,273        50,000        —          271,273  
2024
     —          388,107        —          —          388,107  
2025
     —          —          —          124,700        124,700  
2026
     —          —          —          —          —    
Thereafter
     3,226,226        74,299        651,138        —          3,951,663  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 3,226,226      $ 1,178,929      $ 701,138      $ 124,700      $ 5,230,993  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Summary of number of loans and the principal balance
The Company financed certain pools of loans through collateralized loan obligations, which include
2019-FL1,
2021-FL2,
2021-FL3,
2022-FL4,
and
2022-FL5,
or collectively, the CLOs. The following table outlines the number of loans and the principal balance of the collateralized pool of interests for each CLO.
 
    
As of June 30, 2022
(Unaudited)
 
Collateralized Loan Obligation
  
Total Loans
    
Principal
 
2019-FL1
Notes
     16      $ 336,601  
2021-FL2
Notes
     28        782,978  
2021-FL3
Notes
     26        1,134,028  
2022-FL4
Notes
     23        1,077,573  
2022-FL5
Notes
     23        662,599  
    
 
 
    
 
 
 
Total
     116      $ 3,993,779  
    
 
 
    
 
 
 
Summary of the issuance costs and discount to be amortized The following table outlines the issuance costs and discount to be amortized.
    
As of June 30, 2022
(Unaudited)
 
Collateralized Loan Obligation
  
Issuance Costs and
Discount to be Amortized
 
2019-FL1
Notes
   $ 2,790  
2021-FL2
Notes
     5,438  
2021-FL3
Notes
     6,482  
2022-FL4
Notes
     7,066  
2022-FL5
Notes
     5,281  
    
 
 
 
Total
   $ 27,057  
    
 
 
 

v3.22.2.2
Related Party Transactions (Tables)
6 Months Ended
Jun. 30, 2022
Related Party Transactions [Abstract]  
Schedule of Related Party Transactions [Table Text Block]
The following table describes the fees and expenses accrued under the advisory agreement during the six months ended June 30, 2022 and 2021:
 
           
Three Months
Ended

June 30,
   
Six Months
Ended

June 30,
 
Related Party
 
Source Agreement
 
Description
 
2022
   
2021
   
2022
   
2021
 
FS Real Estate Advisor
  Advisory Agreement   Base Management Fee
(1)
  $ 5,351     $ 1,285     $ 9,196     $ 2,321  
FS Real Estate Advisor
  Advisory Agreement   Performance Fee
(2)
  $ —       $ 423     $ 152     $ 960  
FS Real Estate Advisor
  Advisory Agreement   Administrative Services Expenses
(3)
  $ 3,565     $ 652     $ 5,224     $ 1,448  
 
(1)
During the six months ended June 30, 2022, FS Real Estate Advisor received $2,007 in cash and $8,993 of performance contingent rights were issued as payment for management fees. During the six months ended 
 
June 30, 2022 and 2021, $2,007 and $1,804, respectively, in base management fees were paid to FS Real Estate Advisor. As of June 30, 2022, there were no base management fees payable to FS Real Estate Advisor.
(2)
During the six months ended June 30, 2022 and 2021, $557 and $800, respectively, in performance fees were paid to FS Real Estate Advisor. As of June 30, 2022, there were no performance fees payable to FS Real Estate Advisor.
(3)
During the six months ended June 30, 2022 and 2021, $4,796 and $1,270, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by FS Real Estate Advisor and Rialto and the remainder related to other reimbursable expenses. These amounts are recorded as general and administrative expenses on the accompanying unaudited consolidated statements of operations.
Schedule Of Expense Reimbursed
The following table reflects the amounts paid or waived by FS Real Estate Advisor and Rialto under the expense limitation agreement and the expiration date for future possible reimbursements by the Company:
 
For the Three Months Ended
  
Amount of
Expense
Reimbursement
    
Recoupable
Amount
    
Recoupment
paid or
payable to
sponsor
    
Expired
Amount
    
Recoupment eligibility expiration
 
June 30, 2022
   $ —        $ —        $ —        $ —          N/A  
March 31, 2022
     —          —          —          —          N/A  
December 31, 2021
     —          —          —          —          N/A  
September 30, 2021
     —          —          —          —          N/A  
June 30, 2021
     —          —          —          —          N/A  
March 31, 2021
     56        56        —          —          March 31, 2024  
December 31, 2020
     444        201        243        —          December 31, 2023  
September 30, 2020
     397        —          397        —          September 30, 2023  
June 30, 2020
     182        —          182        —          June 30, 2023  
March 31, 2020
     —          —          —          —          N/A  
December 31, 2019
     500        —          500        —          December 31, 2022  
September 30, 2019
     491        —          491        —          September 30, 2022  
June 30, 2019
     420        —          420        —          Expired June 30, 2022  
March 31, 2019
     537        —          537        —          Expired March 31, 2022  
December 31, 2018
     709        —          62        647        Expired December 31, 2021  
September 30, 2018
     645        —          8        637        Expired September 30, 2021  
June 30, 2018
     561        —          390        171        Expired June 30, 2021  
March 31, 2018
     356        —          —          356        Expired March 31, 2021  
December 31, 2017
     377        —          —          377        Expired December 31, 2020  
September 30, 2017
     164        —          —          164        Expired September 30, 2020  
    
 
 
    
 
 
    
 
 
    
 
 
          
     $ 5,839      $ 257      $ 3,230      $ 2,352           
    
 
 
    
 
 
    
 
 
    
 
 
          

v3.22.2.2
Stockholder's Equity (Tables)
6 Months Ended
Jun. 30, 2022
Equity [Abstract]  
Summary of Common Stock Transactions
Below is a summary of transactions with respect to shares of the Company’s common stock during the six months ended June 30, 2022 and 2021:
 
   
Shares
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2021
    902,878       906,648       1,407,377       22,823,721       642,162       2,876,736       11,366,687       40,926,209  
Issuance of common stock
    —         —         113,913       22,528,563       59,993       1,052,345       13,557,720       37,312,534  
Reinvestment of distributions
    14,613       —         20,616       516,751       7,279       31,546       266,637       857,442  
Redemptions of common stock
    (12,699     —         (31,495     (1,266,247     (18,465     (131,950     (818,042     (2,278,898
Transfers in or out
    —         —         (1,729     —         (10,622     (127,149     143,084       3,584  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022
    904,792       906,648       1,508,682       44,602,788       680,347       3,701,528       24,516,086       76,820,871  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Amount
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2021
  $ 22,138     $ 22,371     $ 33,862     $ 531,150     $ 15,945     $ 66,836     $ 279,008     $ 971,310  
Issuance of common stock
    —         —         2,846       567,895       1,501       26,392       331,510       930,144  
Reinvestment of distributions
    366       —         515       13,021       182       1,295       6,516       21,895  
Redemptions of common stock
    (318     —         (787     (31,901     (462     (3,307     (19,996     (56,771
Transfers in or out
    —         —         (44     —         (265     (3,190     3,499       —    
Accrued stockholder servicing fees
(1)
    —         —         (113     (44,812     (15     (1,488     —         (46,428
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022
  $ 22,186     $ 22,371     $ 36,279     $ 1,035,353     $ 16,886     $ 86,538     $ 600,537     $ 1,820,150  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Shares
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2020
    912,469       137,116       1,245,658       5,778,640       546,298       1,971,039       2,171,528       12,762,748  
Issuance of common stock
    —         843,659       67,299       4,222,421       90,823       436,462       1,844,519       7,505,183  
Reinvestment of distributions
    15,638       —         20,142       106,935       6,249       23,427       32,784       205,175  
Redemptions of common stock
    (10,270     (74,127     (20,042     (36,438     —         (42,670     (26,490     (210,037
Transfers in or out
    (6,392     —         (3,664     (1,684     (42,355     —         55,285       1,190  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
    911,445       906,648       1,309,393       10,069,874       601,015       2,388,258       4,077,626       20,264,259  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
Amount
 
   
Class F
   
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
   
Total
 
Balance as of December 31, 2020
  $ 22,378     $ 3,449     $ 29,971     $ 134,705     $ 13,573     $ 46,154     $ 53,597     $ 303,827  
Issuance of common stock
    —         20,749       1,690       106,853       2,282       10,996       45,347       187,917  
Reinvestment of distributions
    392       —         505       2,705       157       590       805       5,154  
Redemptions of common stock
    (258     (1,827     (503     (922     —         (1,072     (651     (5,233
Transfers in or out
    (160     —         (92     (43     (1,065     —         1,360       —    
Accrued stockholder servicing fees
(1)
    —         —         (57     (8,674     (18     (727     —         (9,476
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
  $ 22,352     $ 22,371     $ 31,514     $ 234,624     $ 14,929     $ 55,941     $ 100,458     $ 482,189  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Stockholder servicing fees only apply to Class T, Class S, Class D and Class M shares. Under GAAP, the Company accrues future stockholder servicing fees in an amount equal to its best estimate of fees payable to FS Investment Solutions at the time such shares are sold. For purposes of NAV, the Company recognizes 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.
Summary of Cash Distributions Per Share that Paid on its Common Stock
The following table reflects the cash distributions per share that the Company paid on its common stock during the six months ended June 30, 2022:
 
Record Date
  
Class F
    
Class Y
    
Class T
    
Class S
    
Class D
    
Class M
    
Class I
 
January 28, 2022
   $ 0.1610      $ 0.1610      $ 0.1173      $ 0.1173      $ 0.1288      $ 0.1288      $ 0.1350  
February 25, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
March 30, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
April 28, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
May 27, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
June 29, 2022
     0.1610        0.1610        0.1173        0.1173        0.1288        0.1288        0.1350  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 0.9660      $ 0.9660      $ 0.7038      $ 0.7038      $ 0.7728      $ 0.7728      $ 0.8100  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
The following table reflects the amount of cash distributions that the Company paid on its common stock during the six months ended June 30, 2022, and 2021:
 
    
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
    
2022
    
2021
    
2022
    
2021
 
Distributions:
                                   
Paid or payable in cash
   $ 14,169      $ 4,661      $ 24,332      $ 8,357  
Reinvested in shares
     12,521        2,912        21,895        5,154  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total distributions
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
    
 
 
    
 
 
    
 
 
    
 
 
 
Source of distributions:
                                   
Cash flows from operating activities
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
Offering proceeds
     —          —          —          —    
    
 
 
    
 
 
    
 
 
    
 
 
 
Total sources of distributions
   $ 26,690      $ 7,573      $ 46,227      $ 13,511  
    
 
 
    
 
 
    
 
 
    
 
 
 
Net cash provided by (used in) operating activities
(1)
   $ 27,196      $ 9,619      $ 48,925      $ 33,038  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
Cash flows from operating activities are supported by expense support payments from FS Real Estate Advisor and Rialto pursuant to the Company’s expense limitation agreement. See Note 7 for additional information regarding the Company’s expense limitation agreement.
Schedule of Cash Distribution on Class of Common Stock
The Company currently declares and pays regular cash distributions on a monthly basis. The Company’s board of directors previously authorized regular monthly cash distributions for July 2022 for each class of its outstanding common stock in the net distribution amounts per share set forth below:
 
Class F
 
Class Y
   
Class T
   
Class S
   
Class D
   
Class M
   
Class I
 
$0.1610   $ 0.1610     $ 0.1173     $ 0.1173     $ 0.1288     $ 0.1288     $ 0.1350  

v3.22.2.2
Fair Value of Financial Instruments (Tables)
6 Months Ended
Jun. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
The following table presents the Company’s financial assets carried at fair value in the consolidated balance sheets by its level in the fair value hierarchy:
 
    
June 30, 2022 (Unaudited)
    
December 31, 2021
 
    
Total
    
Level 1
    
Level 2
    
Level 3
    
Total
    
Level 1
    
Level 2
    
Level 3
 
Mortgage-backed securities
available-for-sale
   $ 153,274      $ —        $ 153,274      $ —        $ 44,518      $ —        $ 44,518      $ —    
Interest rate cap
   $ 2,518      $ —        $ 2,518      $ —        $ —        $ —        $ —        $ —    
Summary of Carrying Amount, Face Amount, and Fair Value of Financial Instruments The following table details the carrying amount, face amount, and fair value of the financial instruments described in Note 2: 
   
June 30, 2022 (Unaudited)
   
December 31, 2021
 
   
Book Value
   
Face
Amount
   
Fair Value
   
Book Value
   
Face
Amount
   
Fair Value
 
Financial Assets
                                               
Cash, cash equivalents and restricted cash
  $ 94,770     $ 94,770     $ 94,770     $ 85,808     $ 85,808     $ 85,808  
Loans
receivable—held-for-investment
(1)
  $ 6,538,370     $ 6,539,424     $ 6,541,502     $ 3,841,868     $ 3,843,110     $ 3,844,685  
Mortgage-backed securities
held-to-maturity
  $ 78,942     $ 159,543     $ 78,942     $ 37,862     $ 50,300     $ 37,862  
Financial Liabilities
                                               
Repurchase agreements
(2)
  $ 1,175,651     $ 1,178,929     $ 1,178,929     $ 903,010     $ 904,968     $ 904,968  
Credit facilities
  $ 692,472     $ 701,138     $ 701,138     $ 196,960     $ 199,190     $ 199,190  
Collateralized loan obligations
(2)
  $ 3,193,515     $ 3,220,572     $ 3,220,572     $ 1,886,382     $ 1,903,083     $ 1,903,083  
Mortgage note payable
(2)
  $ 122,568     $ 124,700     $ 124,700     $ —       $ —       $ —    
 
(1)
Book value of loans receivable represents the face amount, net of unamortized loan fees and costs and accrual of exit fees, as applicable.
(2)
Book value represents the face amount, net of deferred financing costs.

v3.22.2.2
Variable Interest Entities (Tables)
6 Months Ended
Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of detailed information about the assets and liabilities
The following table details the assets and liabilities of the Company’s consolidated CLOs as of June 30, 2022 and December 31, 2021:
 
    
June 30, 2022
(Unaudited)
    
December 31, 2021
 
Assets:
                 
Restricted cash
   $ 4,153      $ 37,364  
Loans receivable,
held-for-investment
     3,992,448        2,298,367  
Interest receivable
     9,576        5,154  
Other assets
     27,694        6,625  
    
 
 
    
 
 
 
Total assets
   $ 4,033,871      $ 2,347,510  
    
 
 
    
 
 
 
Liabilities
                 
Collateralized loan obligations (net of deferred financing costs of $27,057 and $16,701, respectively)
   $ 3,193,515      $ 1,886,382  
Interest payable
     3,988        1,357  
Other liabilities
     212        205  
    
 
 
    
 
 
 
Total liabilities
   $ 3,197,715      $ 1,887,944  
    
 
 
    
 
 
 

v3.22.2.2
Intangibles (Tables)
6 Months Ended
Jun. 30, 2022
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
Schedule of Finite-Lived Intangible Assets
The gross carrying amount and accumulated amortization of the Company’s real estate related intangible assets consisted of the following as of June 30, 2022:
 
    
June 30, 2022
 
Intangible assets
(1)
        
In-place
lease intangibles
   $ 33,091  
    
 
 
 
Total intangible assets
   $ 33,091  
    
 
 
 
 
(1)
Included in Other assets in the Company’s consolidated balance sheets.
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense
The following table details the Company’s future amortization of intangible assets for each of the next five years and thereafter:
 
    
Amortization
 
2022 (remaining)
   $ 1,907  
2023
     3,814  
2024
     3,814  
2025
     3,814  
2026
     3,806  
2027
     3,803  
Thereafter
     12,133  
    
 
 
 
Total
   $ 33,091  
    
 
 
 

v3.22.2.2
Derivative Instruments (Tables)
6 Months Ended
Jun. 30, 2022
Summary of Derivative Instruments [Abstract]  
Summary of Derivative Instruments
Company’s derivative instrument as of June 30, 2022. The Company did not hold any interest rate caps as of December 31, 2021.
 
Type of Derivative
  
Notional Amount
    
Strike
   
Effective Date
    
Maturity Date
    
Fair Value
(1)
 
Interest Rate Cap
   $ 126,700        2.25     June 21, 2022        July 09, 2024      $ 2,518  
 
(1)
Included in Other assets in the Company’s consolidated balance sheets.
Summary of Fair Value of the Company Derivative Financial Instrument
The following table details the fair value of the Company’s derivative financial instrument:
 
Type of Derivative
  
Realized/Unrealized
Gain (Loss)
    
Location of
Gain (Loss)
Recognized
in Net
Income
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
 
 
    2022    
   
    2021    
    
    2022    
   
    2021    
 
Interest Rate Cap
     Unrealized Loss        (1   $ (1,449   $ —        $ (1,449   $ —    
 
(1)
Included in Other income (loss) in the Company’s consolidated statements of operations

v3.22.2.2
Principal Business and Organization - Additional Information (Detail) - Class T, Class S, Class D, Class M and Class I shares [Member] - Maximum [Member]
6 Months Ended
Jun. 30, 2022
USD ($)
Subsidiary, Sale of Stock [Line Items]  
Common stock value submitted for approval under initial public offering $ 2,750,000,000
Primary Offering [Member]  
Subsidiary, Sale of Stock [Line Items]  
Common stock value submitted for approval under initial public offering 2,500,000,000
Distribution Reinvestment Plan [Member]  
Subsidiary, Sale of Stock [Line Items]  
Common stock value submitted for approval under initial public offering $ 250,000,000

v3.22.2.2
Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Jun. 30, 2021
Dec. 31, 2020
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]        
Cash and cash equivalents $ 75,659 $ 46,798 $ 13,318  
Restricted cash 19,111 39,010 18,684  
Total cash, cash equivalents and restricted cash $ 94,770 $ 85,808 $ 32,002 $ 17,874

v3.22.2.2
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Offering costs incurred $ 18,494  
Percentage of distribution of annual REIT taxable income to stockholders to qualify as REIT 90.00%  
Unrecognized interest or penalties $ 0 $ 0
Minimum Gross Proceeds From Public Offering To Charge Offering Costs $ 250,000  
Percentage of reimbursement revenue 0.75%  
Accrued Unrecognised Interest or Penalties $ 0  

v3.22.2.2
Summary of Significant Accounting Policies - Summary of Useful Lives of Investments in Real Estate (Detail)
6 Months Ended
Jun. 30, 2022
Tenant improvements [Member]  
Disclosure In Tabular Form Of Useful Lives Of Investments In Real Estate [Line Items]  
Depreciable life Shorter of estimated useful life or lease term
Lease intangibles [Member]  
Disclosure In Tabular Form Of Useful Lives Of Investments In Real Estate [Line Items]  
Depreciable life Over lease term
Minimum [Member] | Building [Member]  
Disclosure In Tabular Form Of Useful Lives Of Investments In Real Estate [Line Items]  
Depreciable life 30 years
Minimum [Member] | Building and land improvements [Member]  
Disclosure In Tabular Form Of Useful Lives Of Investments In Real Estate [Line Items]  
Depreciable life 2 years
Minimum [Member] | Furniture, fixtures and equipment [Member]  
Disclosure In Tabular Form Of Useful Lives Of Investments In Real Estate [Line Items]  
Depreciable life 1 year
Maximum [Member] | Building [Member]  
Disclosure In Tabular Form Of Useful Lives Of Investments In Real Estate [Line Items]  
Depreciable life 42 years
Maximum [Member] | Building and land improvements [Member]  
Disclosure In Tabular Form Of Useful Lives Of Investments In Real Estate [Line Items]  
Depreciable life 20 years
Maximum [Member] | Furniture, fixtures and equipment [Member]  
Disclosure In Tabular Form Of Useful Lives Of Investments In Real Estate [Line Items]  
Depreciable life 10 years

v3.22.2.2
Loans Receivable - Summary of Details Overall Statistics for Loans Receivable Portfolio (Detail)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2022
USD ($)
Loans
Dec. 31, 2021
USD ($)
Loans
Jun. 30, 2021
USD ($)
Dec. 31, 2020
USD ($)
Loans and Leases Receivable, Net Amount [Abstract]        
Number of loans | Loans 135 102    
Principal balance $ 6,539,424 $ 3,843,110    
Net book value 6,538,370 3,841,868 $ 1,622,415 $ 700,149
Unfunded loan commitments $ 610,703 $ 414,818    
Weighted-average cash coupon 3.82% 3.68%    
Weighted-average all-in yield 3.87% 3.73%    
Weighted-average maximum maturity (years) 4 years 4 months 24 days 4 years 6 months    

v3.22.2.2
Loans Receivable - Summary of Activity in Loan Portfolio (Detail) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Loans and Leases Receivable, Net Amount [Abstract]    
Balance at beginning of period $ 3,841,868 $ 700,149
Loan fundings 3,084,586 1,018,208
Loan repayments (389,036) (96,067)
Amortization of deferred fees on loans 1,721 460
Exit and extension fees received on loans receivable (769) (335)
Balance at end of period $ 6,538,370 $ 1,622,415

v3.22.2.2
Loans Receivable - Loan Receivables Acquired By Property (Detail) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Jun. 30, 2021
Dec. 31, 2020
Net book value $ 6,538,370 $ 3,841,868 $ 1,622,415 $ 700,149
Percentage 100.00% 100.00%    
Multifamily [Member]        
Net book value $ 4,204,627 $ 2,192,346    
Percentage 64.00% 57.00%    
Office [Member]        
Net book value $ 689,413 $ 430,084    
Percentage 11.00% 11.00%    
Hospitality [Member]        
Net book value $ 534,181 $ 223,847    
Percentage 8.00% 6.00%    
Retail [Member]        
Net book value $ 368,555 $ 277,044    
Percentage 6.00% 7.00%    
Industrial [Member]        
Net book value $ 359,275 $ 348,071    
Percentage 5.00% 9.00%    
Self Storage [Member]        
Net book value $ 214,890 $ 236,921    
Percentage 3.00% 6.00%    
Various [Member]        
Net book value $ 99,295 $ 65,910    
Percentage 2.00% 2.00%    
Mixed-Use [Member]        
Net book value $ 68,134 $ 67,645    
Percentage 1.00% 2.00%    

v3.22.2.2
Loans Receivable - Loan Receivables Acquired By Geographics (Detail) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Jun. 30, 2021
Dec. 31, 2020
Net book value $ 6,538,370 $ 3,841,868 $ 1,622,415 $ 700,149
Percentage 100.00% 100.00%    
South [Member]        
Net book value $ 3,137,981 $ 2,270,087    
Percentage 48.00% 59.00%    
West [Member]        
Net book value $ 1,301,765 $ 637,142    
Percentage 20.00% 17.00%    
Northeast [Member]        
Net book value $ 1,301,761 $ 646,761    
Percentage 20.00% 16.00%    
Various [Member]        
Net book value $ 435,978 $ 65,910    
Percentage 7.00% 2.00%    
Midwest [Member]        
Net book value $ 360,885 $ 221,968    
Percentage 5.00% 6.00%    

v3.22.2.2
Loans Receivable - Summary of loans receivable based on internal risk ratings: (Detail)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2022
USD ($)
Loans
Dec. 31, 2021
USD ($)
Loans
Jun. 30, 2021
USD ($)
Dec. 31, 2020
USD ($)
Loans Receivable Based On Internal Risk Ratings [Line Items]        
Number of loans | Loans 135 102    
Net book value | $ $ 6,538,370 $ 3,841,868 $ 1,622,415 $ 700,149
Percentage 100.00% 100.00%    
Risk Level, Medium [Member]        
Loans Receivable Based On Internal Risk Ratings [Line Items]        
Number of loans | Loans 135 102    
Net book value | $ $ 6,538,370 $ 3,841,868    
Percentage 100.00% 100.00%    

v3.22.2.2
Mortgage-Backed Securities - Schedule of Available-for-sale Securities Reconciliation (Detail) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Dec. 31, 2021
Outstanding Face Amount $ 112,073 $ 19,575  
Fair Value $ 153,274   $ 44,518
Weighted Average Coupon 3.82%   3.68%
CMBS [Member]      
Outstanding Face Amount $ 159,543   $ 44,580
Amortized Cost Basis 156,467   44,432
Gross Unrealize Gains 185   99
Gross Unrealized Losses (3,378)   (13)
Fair Value $ 153,274   $ 44,518
Weighted Average Coupon 6.69%   6.58%
Weighted Average Remaining Duration (years) 13 years 4 months 24 days   15 years 1 month 6 days

v3.22.2.2
Mortgage-Backed Securities - Schedule of Available-for-sale an Unrealized Loss Position (Detail) - Commercial Mortgage Backed Securities [Member] - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Debt Securities Available For Sale Unrealized Loss Position Fair Value [Line Items]    
Securities with a loss less than 12 months $ 131,072 $ 905
Securities with a loss greater than 12 months 0 0
Securities with a loss less than 12 months (3,378) (13)
Securities with a loss greater than 12 months $ 0 $ 0

v3.22.2.2
Mortgage-Backed Securities - Schedule of Available-for-sale an Unrealized Loss Position (Parenthetical) (Detail) - securities
Jun. 30, 2022
Dec. 31, 2021
Commercial Mortgage Backed Securities [Member]    
Debt Securities Available For Sale Unrealized Loss Position Fair Value [Line Items]    
Debt securities available for sale unrealized loss positions number of positions 12 1

v3.22.2.2
Mortgage-Backed Securities - Summary of Investment Held-to-maturity CMBS (Detail) - Commercial Mortgage Backed Securities - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Schedule of Held-to-maturity Securities [Line Items]    
Net Carrying Amount (Amortized Cost) $ 78,942 $ 37,862
Gross Unrecognized Holding Gains 0 0
Gross Unrecognized Holding Losses 0 0
Fair Value $ 78,942 $ 37,862

v3.22.2.2
Mortgage-Backed Securities - Summary of Maturities of Investment Held-to-maturity CMBS (Detail) - Commercial Mortgage Backed Securities - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Schedule of Held-to-maturity Securities [Line Items]    
CMBS, held-to-maturity, Total $ 78,942 $ 37,862
CMBS, held-to-maturity, Less than 1 year 0 0
CMBS, held-to-maturity, 1-3 years 0 0
CMBS, held-to-maturity, 3-5 years 38,145 37,862
CMBS, held-to-maturity, More than 5 years $ 40,797 $ 0

v3.22.2.2
Real Estate - Schedule of Real Estate Properties (Detail)
$ in Thousands
Jun. 30, 2022
USD ($)
Real Estate [Line Items]  
Real estate, net $ 160,711
Building and building improvements [Member]  
Real Estate [Line Items]  
Real estate, net 120,461
Land and land improvements [Member]  
Real Estate [Line Items]  
Real estate, net 39,186
Furniture, fixtures and equipment [Member]  
Real Estate [Line Items]  
Real estate, net $ 1,064

v3.22.2.2
Real Estate - Summary of Asset Acquisition (Detail)
$ in Thousands
6 Months Ended
Jun. 30, 2022
USD ($)
Asset Acquisition [Line Items]  
Net purchase price $ 193,802
Building and building improvements [Member]  
Asset Acquisition [Line Items]  
Net purchase price 120,461
Land and land improvements [Member]  
Asset Acquisition [Line Items]  
Net purchase price 39,186
Furniture, fixtures and equipment [Member]  
Asset Acquisition [Line Items]  
Net purchase price 1,064
In-place lease intangibles [Member]  
Asset Acquisition [Line Items]  
Net purchase price $ 33,091

v3.22.2.2
Real Estate - Additional Information (Detail)
3 Months Ended
Jun. 30, 2022
Jun. 23, 2022
ft²
Tenants
In-place lease intangibles [Member]    
Real Estate [Line Items]    
Acquired finite lived intangible assets weighted average useful lives 9 years  
Creative office building [Member]    
Real Estate [Line Items]    
Area of real estate property | ft²   260,000
Percentage of real estate property leased to lessee   100.00%
Number of tenants to whom the property has been leased | Tenants   3

v3.22.2.2
Financing Arrangements - Summary of Information of Outstanding Financing Arrangement (Detail) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 5,230,993 $ 3,007,241
Amount Available $ 996,232 232,358
Description of variable rate 0.00  
Carrying Amount of Collateral [1] $ 7,135,412 4,024,394
Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral 5,896,033 3,373,658
Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral 5,898,512 3,377,354
Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding 3,226,226 1,903,083
Collateralized Loan Obligations [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral 3,992,448 2,298,368
Collateralized Loan Obligations [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral 3,994,667 2,301,878
Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding 1,178,929 904,968
Amount Available 595,370 176,548
Repurchase Agreements [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral 1,100,623 882,214
Repurchase Agreements [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral 1,100,754 882,130
Revolving Credit Facility [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding 701,138 199,190
Amount Available 398,862 55,810
Revolving Credit Facility [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral 642,251 193,076
Revolving Credit Facility [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral 642,380 193,346
Mortgage Loan [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding 124,700  
2019-FLI Notes [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 238,034 $ 327,665
Description of variable rate +1.20% - 2.50% +1.20% - 2.50%
Maturity Date Dec. 18, 2036 Dec. 18, 2036
2019-FLI Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 336,297 $ 424,665
2019-FLI Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 335,994 $ 424,877
2019-FLI Notes [Member] | Minimum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 1.20 1.20
2019-FLI Notes [Member] | Maximum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 2.50 2.50
2021-FL2 Notes [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 646,935 $ 646,935
Description of variable rate +1.22% - 3.45% +1.22% - 3.45%
Maturity Date May 05, 2038 May 05, 2038
2021-FL2 Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 782,721 $ 740,083
2021-FL2 Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 782,945 $ 741,226
2021-FL2 Notes [Member] | Minimum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 1.22 1.22
2021-FL2 Notes [Member] | Maximum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 3.45 3.45
2021-FL3 Notes [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 928,483 $ 928,483
Description of variable rate +1.25% - 2.85% +1.25% - 2.85%
Maturity Date Nov. 04, 2036 Nov. 04, 2036
2021-FL3 Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 1,133,690 $ 1,133,620
2021-FL3 Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 1,134,805 $ 1,135,775
2021-FL3 Notes [Member] | Minimum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 1.25 1.25
2021-FL3 Notes [Member] | Maximum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 2.85 2.85
2022-FL4 Notes [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 842,662  
Description of variable rate +1.90% - 4.75%  
Maturity Date Jan. 31, 2039  
2022-FL4 Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 1,077,266  
2022-FL4 Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 1,078,595  
2022-FL4 Notes [Member] | Minimum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 1.90  
2022-FL4 Notes [Member] | Maximum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 4.75  
2022-FL5 Notes [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 570,112  
Description of variable rate +2.30% - 5.41%  
Maturity Date Jun. 17, 2037  
2022-FL5 Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 662,474  
2022-FL5 Notes [Member] | Collateralized Loan Obligations [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 662,328  
2022-FL5 Notes [Member] | Minimum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 2.30  
2022-FL5 Notes [Member] | Maximum [Member] | Collateralized Loan Obligations [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 5.41  
WF-1 Facility [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 495,250 $ 218,912
Amount Available $ 154,750 $ 131,088
Description of variable rate +2.15% - 2.50% +2.15% - 2.50%
Maturity Date Aug. 30, 2023 Aug. 30, 2022
WF-1 Facility [Member] | Repurchase Agreements [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 496,652 $ 225,276
WF-1 Facility [Member] | Repurchase Agreements [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 496,554 $ 225,181
WF-1 Facility [Member] | Minimum [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 2.15 2.15
WF-1 Facility [Member] | Maximum [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 2.50 2.50
GS-1 Facility [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 221,273 $ 212,005
Amount Available $ 128,727 $ 37,995
Description of variable rate +1.75% - 2.75% +1.75% - 2.75%
Maturity Date Jan. 26, 2023 Jan. 26, 2022
GS-1 Facility [Member] | Repurchase Agreements [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 225,183 $ 212,677
GS-1 Facility [Member] | Repurchase Agreements [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 224,481 $ 212,574
GS-1 Facility [Member] | Minimum [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 1.75 1.75
GS-1 Facility [Member] | Maximum [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 2.75 2.75
BB-1 Facility [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 388,107 $ 442,535
Amount Available $ 311,893 $ 7,465
Description of variable rate +1.55% - 1.95% +1.55% - 1.95%
Maturity Date Feb. 22, 2024 Feb. 22, 2024
BB-1 Facility [Member] | Repurchase Agreements [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 378,788 $ 444,261
BB-1 Facility [Member] | Repurchase Agreements [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 379,719 $ 444,375
BB-1 Facility [Member] | Minimum [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 1.55 1.55
BB-1 Facility [Member] | Maximum [Member] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Basis for effective rate 1.95 1.95
RBC Facility [Memebr] | Repurchase Agreements [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 74,299 $ 31,516
Description of variable rate +1.35% +1.35%
Basis for effective rate 1.35 1.35
CNB Facility [Member] | Revolving Credit Facility [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 50,000 $ 6,000
Amount Available $ 50,000 $ 49,000
Description of variable rate +2.25% +2.25%
Basis for effective rate 2.25 2.25
Maturity Date Jun. 07, 2023 Jun. 07, 2023
MM-1 Facility [Member] | Revolving Credit Facility [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding $ 651,138 $ 193,190
Amount Available $ 348,862 $ 6,810
Description of variable rate +2.03% +2.10%
Basis for effective rate 2.03 2.10
Maturity Date Sep. 20, 2029 Sep. 20, 2029
MM-1 Facility [Member] | Revolving Credit Facility [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 642,251 $ 193,076
MM-1 Facility [Member] | Revolving Credit Facility [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral 642,380 $ 193,346
Natixis Loan [Member] | Mortgage Loan [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Amount Outstanding 124,700  
Amount Available $ 2,000  
Description of variable rate +2.15%  
Basis for effective rate 2.15  
Maturity Date Jul. 09, 2025  
Natixis Loan [Member] | Mortgage Loan [Member] | Asset Pledged as Collateral without Right [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Carrying Amount of Collateral $ 160,711  
Natixis Loan [Member] | Mortgage Loan [Member] | Asset Pledged as Collateral [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
Fair Value of Collateral $ 160,711  
[1] The June 30, 2022 and December 31, 2021 consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse to the Company. As of June 30, 2022 and December 31, 2021, assets of the VIEs totaled $4,033,871 and $2,347,510, respectively, and liabilities of the VIEs totaled $3,197,715 and $1,887,944, respectively. See Note 10 for further details.

v3.22.2.2
Financing Arrangements - Summary of Information of Outstanding Financing Arrangement (Parenthetical) (Detail)
6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate 0.00  
London Interbank Offered Rate (LIBOR) [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate 0.00 0.00
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate 0.00 0.00
Benchmark Rate [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate 0.00  
WF-1 Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate   0.00
WF-1 Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate   0.00
GS-1 Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate   0.50
GS-1 Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate 0.00 0.50
BB-1 Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate 0.50 0.50
BB-1 Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate 0.50 0.50
Debt instrument credit spread adjustment 0.10%  
MM1 Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]    
Assets Sold under Agreements to Repurchase [Line Items]    
LIBOR rate 0.11  

v3.22.2.2
Financing Arrangements - Summary of Based on the Maturity Date of each Financing Arrangement (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Schedule Of Maturities Of Long Term Debt [Line Items]    
2022 $ 495,250  
2023 271,273  
2024 388,107  
2025 124,700  
2026 0  
Thereafter 3,951,663  
Total 5,230,993 $ 3,007,241
Collateralized Loan Obligations [Member]    
Schedule Of Maturities Of Long Term Debt [Line Items]    
2022 0  
2023 0  
2024 0  
2025 0  
2026 0  
Thereafter 3,226,226  
Total 3,226,226 1,903,083
Repurchase Agreements [Member]    
Schedule Of Maturities Of Long Term Debt [Line Items]    
2022 495,250  
2023 221,273  
2024 388,107  
2025 0  
2026 0  
Thereafter 74,299  
Total 1,178,929 904,968
Revolving Credit Facility [Member]    
Schedule Of Maturities Of Long Term Debt [Line Items]    
2022 0  
2023 50,000  
2024 0  
2025 0  
2026 0  
Thereafter 651,138  
Total 701,138 $ 199,190
Mortgages [Member]    
Schedule Of Maturities Of Long Term Debt [Line Items]    
2022 0  
2023 0  
2024 0  
2025 124,700  
2026 0  
Thereafter 0  
Total $ 124,700  

v3.22.2.2
Financing Arrangements - Summary of Number of Loans and the Principal Balance (Detail)
$ in Thousands
Jun. 30, 2022
USD ($)
Loans
Disclosure In Tabular Form Of Number Of Collateral Loans And Principal Amount Of Obligation [Line Items]  
Total Loans | Loans 116
Principal | $ $ 3,993,779
Collateralized Loan Obligations [Member] | 2019-FLI Notes [Member]  
Disclosure In Tabular Form Of Number Of Collateral Loans And Principal Amount Of Obligation [Line Items]  
Total Loans | Loans 16
Principal | $ $ 336,601
Collateralized Loan Obligations [Member] | 2021-FL2 Notes [Member]  
Disclosure In Tabular Form Of Number Of Collateral Loans And Principal Amount Of Obligation [Line Items]  
Total Loans | Loans 28
Principal | $ $ 782,978
Collateralized Loan Obligations [Member] | 2021-FL3 Notes [Member]  
Disclosure In Tabular Form Of Number Of Collateral Loans And Principal Amount Of Obligation [Line Items]  
Total Loans | Loans 26
Principal | $ $ 1,134,028
Collateralized Loan Obligations [Member] | 2022-FL4 Notes [Member]  
Disclosure In Tabular Form Of Number Of Collateral Loans And Principal Amount Of Obligation [Line Items]  
Total Loans | Loans 23
Principal | $ $ 1,077,573
Collateralized Loan Obligations [Member] | 2022-FL5 Notes [Member]  
Disclosure In Tabular Form Of Number Of Collateral Loans And Principal Amount Of Obligation [Line Items]  
Total Loans | Loans 23
Principal | $ $ 662,599

v3.22.2.2
Financing Arrangements - Summary of the Issuance Costs and Discount to be Amortized (Detail) - Collateralized Loan Obligations [Member]
$ in Thousands
Jun. 30, 2022
USD ($)
Disclosure In Tabular Form Of Unamortized Debt Issuance And Discount For Collateralized Loan Obligation [Line Items]  
Issuance Costs and Discount to be Amortized $ 27,057
2019-FLI Notes [Member]  
Disclosure In Tabular Form Of Unamortized Debt Issuance And Discount For Collateralized Loan Obligation [Line Items]  
Issuance Costs and Discount to be Amortized 2,790
2021-FL2 Notes [Member]  
Disclosure In Tabular Form Of Unamortized Debt Issuance And Discount For Collateralized Loan Obligation [Line Items]  
Issuance Costs and Discount to be Amortized 5,438
2021-FL3 Notes [Member]  
Disclosure In Tabular Form Of Unamortized Debt Issuance And Discount For Collateralized Loan Obligation [Line Items]  
Issuance Costs and Discount to be Amortized 6,482
2022-FL4 Notes [Member]  
Disclosure In Tabular Form Of Unamortized Debt Issuance And Discount For Collateralized Loan Obligation [Line Items]  
Issuance Costs and Discount to be Amortized 7,066
2022-FL5 Notes [Member]  
Disclosure In Tabular Form Of Unamortized Debt Issuance And Discount For Collateralized Loan Obligation [Line Items]  
Issuance Costs and Discount to be Amortized $ 5,281

v3.22.2.2
Financing Arrangements - Additional Information (Detail) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2022
May 05, 2022
Apr. 27, 2022
Mar. 04, 2022
Jun. 30, 2022
Dec. 31, 2021
Jun. 16, 2022
May 12, 2022
Mar. 31, 2022
Feb. 23, 2022
Feb. 11, 2022
Feb. 01, 2022
Jan. 26, 2022
Jul. 07, 2021
Jul. 06, 2021
Assets Sold under Agreements to Repurchase [Line Items]                              
Deferred financing costs $ 647       $ 647 $ 658                  
Long term debt gross 5,230,993       5,230,993 3,007,241                  
Mortgages [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Long term debt gross 124,700       124,700                    
Collateralized Loan Obligations [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Deferred financing costs 27,057       27,057 16,701                  
Well Fargo Securities LLC [Member] | Collateralized Loan Obligations [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Amortization expense od debt issuance cost 1,367                            
WF-1 Facility [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Average borrowings         3,672,968 $ 1,346,445                  
Maximum amount of financing available 650,000       650,000     $ 650,000     $ 350,000        
Increase in amount of financing available 650,000       $ 650,000                    
Weighted Average Rate         2.22% 1.69%                  
GS-1 Facility [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Increase in amount of financing available 350,000       $ 350,000               $ 500,000    
GS-1 Facility [Member] | Collateralized Loan Obligations [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Amortization expense od debt issuance cost         335                    
GS-1 Facility [Member] | Minimum [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Increase in amount of financing available                       $ 250,000      
GS-1 Facility [Member] | Maximum [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Increase in amount of financing available                       $ 350,000      
CNB Facility [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Maximum amount of financing available                           $ 100,000 $ 55,000
Increase in amount of financing available 100,000       $ 100,000                    
CNB Facility [Member] | Collateralized Loan Obligations [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Amortization expense od debt issuance cost 647                            
CNB Facility [Member] | LIBOR [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Unused capacity commitment fee percentage         0.375%                    
2022-FL5 Notes [Member] | Collateralized Loan Obligations [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Long term debt gross             $ 570,112                
BB-1 Facility [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Maximum amount of financing available                 $ 700,000            
Funding period and term of facility         3 years                    
BB-1 Facility [Member] | Collateralized Loan Obligations [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Amortization expense od debt issuance cost 1,576                            
BB-1 Facility [Member] | Maximum [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Increase in amount of financing available                   $ 700,000          
MM-1 Facility [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Maximum amount of financing available 1,000,000   $ 500,000   $ 1,000,000                    
Increase in amount of financing available     $ 1,000,000                        
Unused capacity commitment fee percentage         85.00%                    
Line of Credit Facility, Description     change of interest rate from LIBOR plus a spread of 2.05% to Term SOFR plus a spread of 2.025% plus a credit spread adjustment of 0.11%.                        
MM-1 Facility [Member] | Collateralized Loan Obligations [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Deferred financing costs 8,666       $ 8,666                    
MM-1 Facility [Member] | Minimum [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Increase in amount of financing available       $ 250,000           200,000          
Weighted Average Rate       2.10%                      
MM-1 Facility [Member] | Maximum [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Increase in amount of financing available       $ 500,000           $ 250,000          
Weighted Average Rate       2.05%                      
Amended City National Bank Facility [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Line of credit facility interest rate Description   collateral coverage of 1.4 times for each dollar borrowed in excess of $50,000,                          
Amended City National Bank Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Line of credit facility interest rate Description   2.25% plus a credit spread adjustment of 0.10%.                          
Natixis Loan [Member] | Mortgages [Member]                              
Assets Sold under Agreements to Repurchase [Line Items]                              
Maximum amount of financing available 126,700       126,700                    
Long term debt gross 124,700       124,700                    
Unamortized debt discount and issuance costs $ 2,132       $ 2,132                    

v3.22.2.2
Related Party Transactions - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended 68 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Dec. 08, 2016
Jun. 30, 2022
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Related Party Transaction [Line Items]              
Performance fee percentage         10.00%    
Hurdle rate on average adjusted capital         1.625%    
Annualized hurdle rate         6.50%    
Quarterly core earnings rate         1.806%    
Annualized core earnings rate         7.222%    
Due to Related Parties $ 92,665 $ 48,514   $ 92,665 $ 92,665   $ 92,665
Organization and offering costs             18,737
Recoupment Payable 1,460 62          
Recoupment Amount         257    
Payments to Acquire Mortgage-Backed Securities (MBS), Available-for-Sale         112,073 $ 19,575  
Affiliate of Rialto [Member] | Class E Notes mortgage-backed securities [Member]              
Related Party Transaction [Line Items]              
Payments to Acquire Mortgage-Backed Securities (MBS), Available-for-Sale       36,000      
Class D, Class M, Class I, Class F Or Class Y Shares [Member]              
Related Party Transaction [Line Items]              
Selling commissions or dealer manager fees payable         $ 0    
Common Class F [Member]              
Related Party Transaction [Line Items]              
Performance fee percentage         0.00%    
Investments Owned $ 388     $ 388 $ 388   $ 388
Maximum [Member]              
Related Party Transaction [Line Items]              
Organization and offering expenses reimbursement as percentage of gross proceeds from public offering 15.00%     15.00% 15.00%   15.00%
FS Real Estate Advisor [Member]              
Related Party Transaction [Line Items]              
Base management fee percentage         1.25%    
Base management fee description         equal to 1.25% of the NAV for the Company’s Class T, Class S, Class D, Class M and Class I shares, payable quarterly in arrears.    
Minimum gross proceeds from public offering to reimburse expense         $ 250,000    
Organization and offering expenses reimbursement as percentage of gross proceeds from public offering 0.75%     0.75% 0.75%   0.75%
Due to Related Parties $ 9,076     $ 9,076 $ 9,076   $ 9,076
Investments Owned $ 22,221     $ 22,221 22,221   $ 22,221
Payments To Related Party For Offering Costs Previously Funded         $ 6,999    
FS Real Estate Advisor [Member] | Expense Limitation [Member]              
Related Party Transaction [Line Items]              
Percentage of minimum operating expenses to be waived or paid         1.50%    
FS Real Estate Advisor [Member] | Common Class S [Member]              
Related Party Transaction [Line Items]              
Dealer manager upfront selling commissions fees percentage         3.50%    
Stockholders servicing fee percentage on aggregate NAV of outstanding shares         0.85%    
Stockholder servicing fees percentage 8.75%     8.75% 8.75%   8.75%
FS Real Estate Advisor [Member] | Common Class T [Member]              
Related Party Transaction [Line Items]              
Dealer manager upfront selling commissions fees percentage         3.00%    
Upfront dealer manager fees percentage         0.50%    
Stockholders servicing fee percentage on aggregate NAV of outstanding shares         0.85%    
Advisor stockholders servicing fee percentage on aggregate NAV of outstanding shares         0.65%    
Dealer stockholders servicing fee percentage on aggregate NAV of outstanding shares         0.20%    
Stockholder servicing fees percentage 8.75%     8.75% 8.75%   8.75%
Selling commission and fee maximum percent         3.50%    
FS Real Estate Advisor [Member] | Common Class D [Member]              
Related Party Transaction [Line Items]              
Stockholders servicing fee percentage on aggregate NAV of outstanding shares         0.30%    
Stockholder servicing fees percentage 1.25%     1.25% 1.25%   1.25%
FS Real Estate Advisor [Member] | Common Class M [Member]              
Related Party Transaction [Line Items]              
Stockholders servicing fee percentage on aggregate NAV of outstanding shares         0.30%    
Stockholder servicing fees percentage 7.25%     7.25% 7.25%   7.25%
FS Real Estate Advisor [Member] | Class T, Class T-C and Class M Shares [Member]              
Related Party Transaction [Line Items]              
Stockholder servicing fees percentage 10.00%     10.00% 10.00%   10.00%
FS Real Estate Advisor [Member] | Class T, Class S, Class D and Class M Share [Member]              
Related Party Transaction [Line Items]              
Stockholder servicing fees percentage 10.00%     10.00% 10.00%   10.00%
FS Real Estate Advisor [Member] | Maximum [Member] | Expense Limitation [Member]              
Related Party Transaction [Line Items]              
Period for which reimbursement payable         3 years    
FS Real Estate Advisor and Rialto [Member]              
Related Party Transaction [Line Items]              
Reimbursement expenses due from sponsor         $ 0    
Amount received as reimbursement         5,839    
Recoupment Payable         482    
Rialto [Member]              
Related Party Transaction [Line Items]              
Purchase of floating-rate whole mortgage loan         $ 5,839    
FS Investments and Rialto [Member] | Private Placement [Member]              
Related Party Transaction [Line Items]              
Aggregate proceeds from private placement     $ 200        
Number of common shares issued     8,000        
Common stock, price per share $ 25     $ 25 $ 25   $ 25
FS Investment Solutions [Member]              
Related Party Transaction [Line Items]              
Due to Related Parties $ 91,206 $ 48,514   $ 91,206 $ 91,206   $ 91,206

v3.22.2.2
Related Party Transactions - Summary of Fees and Expenses Accrued under Advisory Agreement (Detail) - Fs Real Estate Advisor [Member] - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Base Management Fees [Member]        
Related Party Transaction [Line Items]        
FS Real Estate Advisor $ 5,351 $ 1,285 $ 9,196 $ 2,321
Performance Fees [Member]        
Related Party Transaction [Line Items]        
FS Real Estate Advisor 0 423 152 960
Administrative Services Expenses [Member]        
Related Party Transaction [Line Items]        
FS Real Estate Advisor $ 3,565 $ 652 $ 5,224 $ 1,448

v3.22.2.2
Related Party Transactions - Summary of Fees and Expenses Accrued under Advisory Agreement (Parenthetical) (Detail) - Fs Real Estate Advisor [Member] - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Related Party Transaction [Line Items]    
Management Fee Payable $ 0  
Cash [Member]    
Related Party Transaction [Line Items]    
Fees and expenses accrued 2,007  
Payment Management Fees [Member]    
Related Party Transaction [Line Items]    
Fees and expenses accrued 8,993  
Base Management Fees [Member]    
Related Party Transaction [Line Items]    
Fees and expenses accrued 2,007 $ 1,804
Performance Fee Payable 0  
Performance Fees [Member]    
Related Party Transaction [Line Items]    
Fees and expenses accrued 557 800
Administrative Services Expenses [Member]    
Related Party Transaction [Line Items]    
Fees and expenses accrued $ 4,796 $ 1,270

v3.22.2.2
Related Party Transactions - Summary of reimbursed by FS Real Estate (Detail) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Jun. 30, 2022
Mar. 31, 2021
Dec. 31, 2020
Sep. 30, 2020
Jun. 30, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Dec. 31, 2021
Schedule Of Expense Reimbursed [Line Items]                                
Expense Reimbursement $ 0 $ 56 $ 444 $ 397 $ 182 $ 500 $ 491 $ 420 $ 537 $ 709 $ 645 $ 561 $ 356 $ 377 $ 164 $ 5,839
Recoupable Amount 0 $ 56 $ 201                         257
Recoupment eligibility expiration   March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020  
Recoupment Paid Or Payable 0   $ 243 $ 397 $ 182 $ 500 $ 491 $ 420 $ 537 $ 62 $ 8 $ 390       3,230
Recoupment Expired Amount $ 0                 $ 647 $ 637 $ 171 $ 356 $ 377 $ 164 $ 2,352

v3.22.2.2
Stockholder's Equity - Summary of Common Stock Transactions (Detail) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Class of Stock [Line Items]        
Balance at beginning of period, amount $ 1,388,142 $ 363,335 $ 973,340 $ 305,712
Issuance of common stock, amount 480,121 125,472 930,144 187,917
Reinvestment of distributions, amount 12,521 2,912 21,895 5,154
Redemptions of common stock, amount (32,597) (1,792) (56,771) (5,233)
Balance at end of period, amount 1,821,230 483,487 1,821,230 483,487
Common Class Y [Member]        
Class of Stock [Line Items]        
Issuance of common stock, amount   9   9
Redemptions of common stock, amount   (1)   (1)
Common Class T [Member]        
Class of Stock [Line Items]        
Issuance of common stock, amount 1   1 1
Common Class S [Member]        
Class of Stock [Line Items]        
Issuance of common stock, amount 121 28 226 42
Reinvestment of distributions, amount 3 1 5 1
Redemptions of common stock, amount (9)   (13)  
Common Class D [Member]        
Class of Stock [Line Items]        
Issuance of common stock, amount   1 1 1
Common Class M [Member]        
Class of Stock [Line Items]        
Issuance of common stock, amount 6 3 9 5
Redemptions of common stock, amount (1) (1) (1) (1)
Common Class I [Member]        
Class of Stock [Line Items]        
Issuance of common stock, amount 64 10 136 18
Reinvestment of distributions, amount 2 $ 1 3 $ 1
Redemptions of common stock, amount $ (3)   $ (8)  
Common Stock [Member]        
Class of Stock [Line Items]        
Balance at beginning of period, shares     40,926,209 12,762,748
Issuance of common stock, shares     37,312,534 7,505,183
Reinvestment of distributions, shares     857,442 205,175
Redemptions of common stock, shares     (2,278,898) (210,037)
Transfers in or out, shares     3,584 1,190
Balance at end of period, shares 76,820,871 20,264,259 76,820,871 20,264,259
Balance at beginning of period, amount     $ 971,310 $ 303,827
Issuance of common stock, amount     930,144 187,917
Reinvestment of distributions, amount     21,895 5,154
Redemptions of common stock, amount     (56,771) (5,233)
Accrued stockholder servicing fees, amount [1]     (46,428) (9,476)
Transfers in or out, amount     0 0
Balance at end of period, amount $ 1,820,150 $ 482,189 $ 1,820,150 $ 482,189
Common Stock [Member] | Common Class F [Member]        
Class of Stock [Line Items]        
Balance at beginning of period, shares     902,878 912,469
Issuance of common stock, shares     0 0
Reinvestment of distributions, shares     14,613 15,638
Redemptions of common stock, shares     (12,699) (10,270)
Transfers in or out, shares     0 (6,392)
Balance at end of period, shares 904,792 911,445 904,792 911,445
Balance at beginning of period, amount     $ 22,138 $ 22,378
Issuance of common stock, amount     0 0
Reinvestment of distributions, amount     366 392
Redemptions of common stock, amount     (318) (258)
Accrued stockholder servicing fees, amount [1]     0 0
Transfers in or out, amount     0 (160)
Balance at end of period, amount $ 22,186 $ 22,352 $ 22,186 $ 22,352
Common Stock [Member] | Common Class Y [Member]        
Class of Stock [Line Items]        
Balance at beginning of period, shares     906,648 137,116
Issuance of common stock, shares     0 843,659
Reinvestment of distributions, shares     0 0
Redemptions of common stock, shares     0 (74,127)
Transfers in or out, shares     0 0
Balance at end of period, shares 906,648 906,648 906,648 906,648
Balance at beginning of period, amount     $ 22,371 $ 3,449
Issuance of common stock, amount     0 20,749
Reinvestment of distributions, amount     0 0
Redemptions of common stock, amount     0 (1,827)
Accrued stockholder servicing fees, amount [1]     0 0
Transfers in or out, amount     0 0
Balance at end of period, amount $ 22,371 $ 22,371 $ 22,371 $ 22,371
Common Stock [Member] | Common Class T [Member]        
Class of Stock [Line Items]        
Balance at beginning of period, shares     1,407,377 1,245,658
Issuance of common stock, shares     113,913 67,299
Reinvestment of distributions, shares     20,616 20,142
Redemptions of common stock, shares     (31,495) (20,042)
Transfers in or out, shares     (1,729) (3,664)
Balance at end of period, shares 1,508,682 1,309,393 1,508,682 1,309,393
Balance at beginning of period, amount     $ 33,862 $ 29,971
Issuance of common stock, amount     2,846 1,690
Reinvestment of distributions, amount     515 505
Redemptions of common stock, amount     (787) (503)
Accrued stockholder servicing fees, amount [1]     (113) (57)
Transfers in or out, amount     (44) (92)
Balance at end of period, amount $ 36,279 $ 31,514 $ 36,279 $ 31,514
Common Stock [Member] | Common Class S [Member]        
Class of Stock [Line Items]        
Balance at beginning of period, shares     22,823,721 5,778,640
Issuance of common stock, shares     22,528,563 4,222,421
Reinvestment of distributions, shares     516,751 106,935
Redemptions of common stock, shares     (1,266,247) (36,438)
Transfers in or out, shares     0 (1,684)
Balance at end of period, shares 44,602,788 10,069,874 44,602,788 10,069,874
Balance at beginning of period, amount     $ 531,150 $ 134,705
Issuance of common stock, amount     567,895 106,853
Reinvestment of distributions, amount     13,021 2,705
Redemptions of common stock, amount     (31,901) (922)
Accrued stockholder servicing fees, amount [1]     (44,812) (8,674)
Transfers in or out, amount     0 (43)
Balance at end of period, amount $ 1,035,353 $ 234,624 $ 1,035,353 $ 234,624
Common Stock [Member] | Common Class D [Member]        
Class of Stock [Line Items]        
Balance at beginning of period, shares     642,162 546,298
Issuance of common stock, shares     59,993 90,823
Reinvestment of distributions, shares     7,279 6,249
Redemptions of common stock, shares     (18,465) 0
Transfers in or out, shares     (10,622) (42,355)
Balance at end of period, shares 680,347 601,015 680,347 601,015
Balance at beginning of period, amount     $ 15,945 $ 13,573
Issuance of common stock, amount     1,501 2,282
Reinvestment of distributions, amount     182 157
Redemptions of common stock, amount     (462) 0
Accrued stockholder servicing fees, amount [1]     (15) (18)
Transfers in or out, amount     (265) (1,065)
Balance at end of period, amount $ 16,886 $ 14,929 $ 16,886 $ 14,929
Common Stock [Member] | Common Class M [Member]        
Class of Stock [Line Items]        
Balance at beginning of period, shares     2,876,736 1,971,039
Issuance of common stock, shares     1,052,345 436,462
Reinvestment of distributions, shares     31,546 23,427
Redemptions of common stock, shares     (131,950) (42,670)
Transfers in or out, shares     (127,149) 0
Balance at end of period, shares 3,701,528 2,388,258 3,701,528 2,388,258
Balance at beginning of period, amount     $ 66,836 $ 46,154
Issuance of common stock, amount     26,392 10,996
Reinvestment of distributions, amount     1,295 590
Redemptions of common stock, amount     (3,307) (1,072)
Accrued stockholder servicing fees, amount [1]     (1,488) (727)
Transfers in or out, amount     (3,190) 0
Balance at end of period, amount $ 86,538 $ 55,941 $ 86,538 $ 55,941
Common Stock [Member] | Common Class I [Member]        
Class of Stock [Line Items]        
Balance at beginning of period, shares     11,366,687 2,171,528
Issuance of common stock, shares     13,557,720 1,844,519
Reinvestment of distributions, shares     266,637 32,784
Redemptions of common stock, shares     (818,042) (26,490)
Transfers in or out, shares     143,084 55,285
Balance at end of period, shares 24,516,086 4,077,626 24,516,086 4,077,626
Balance at beginning of period, amount     $ 279,008 $ 53,597
Issuance of common stock, amount     331,510 45,347
Reinvestment of distributions, amount     6,516 805
Redemptions of common stock, amount     (19,996) (651)
Accrued stockholder servicing fees, amount [1]     0 0
Transfers in or out, amount     3,499 1,360
Balance at end of period, amount $ 600,537 $ 100,458 $ 600,537 $ 100,458
[1] Stockholder servicing fees only apply to Class T, Class S, Class D and Class M shares. Under GAAP, the Company accrues future stockholder servicing fees in an amount equal to its best estimate of fees payable to FS Investment Solutions at the time such shares are sold. For purposes of NAV, the Company recognizes 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.

v3.22.2.2
Stockholder's Equity - Additional Information (Detail) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Dec. 31, 2021
Percentage limited to repurchase of shares to NAV of all classes of shares     20.00%
Shares repurchased under repurchase plan 2,278,898 210,037  
Shares repurchased under repurchase plan, value $ 56,771 $ 5,233  
Maximum [Member]      
Repurchase of shares to NAV of all classes of shares, percentage     5.00%
Minimum [Member]      
Repurchase of shares to NAV of all classes of shares, percentage 2.00%    
Series A Preferred Stock [Member]      
Preferred Stock, Dividend Rate 12.00%    

v3.22.2.2
Stockholder's Equity - Summary of Cash Distributions Per Share that Paid on its Common Stock (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 29, 2022
May 27, 2022
Apr. 28, 2022
Mar. 30, 2022
Feb. 25, 2022
Jan. 28, 2022
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Distributions:                    
Paid or payable in cash             $ 14,169 $ 4,661 $ 24,332 $ 8,357
Reinvested in shares             12,521 2,912 21,895 5,154
Total distributions             26,690 7,573 46,227 13,511
Cash flows from operating activities             26,690 7,573 46,227 13,511
Offering proceeds             0 0 0 0
Total sources of distributions             26,690 7,573 46,227 13,511
Net cash provided by (used in) operating activities [1]             $ 27,196 $ 9,619 $ 48,925 $ 33,038
Common Class F [Member]                    
Dividends Payable [Line Items]                    
Distributions paid per share of common stock $ 0.161 $ 0.161 $ 0.161 $ 0.161 $ 0.161 $ 0.161     $ 0.966  
Common Class Y [Member]                    
Dividends Payable [Line Items]                    
Distributions paid per share of common stock 0.161 0.161 0.161 0.161 0.161 0.161     0.966  
Common Class T [Member]                    
Dividends Payable [Line Items]                    
Distributions paid per share of common stock 0.1173 0.1173 0.1173 0.1173 0.1173 0.1173     0.7038  
Common Class S [Member]                    
Dividends Payable [Line Items]                    
Distributions paid per share of common stock 0.1173 0.1173 0.1173 0.1173 0.1173 0.1173     0.7038  
Common Class D [Member]                    
Dividends Payable [Line Items]                    
Distributions paid per share of common stock 0.1288 0.1288 0.1288 0.1288 0.1288 0.1288     0.7728  
Common Class M [Member]                    
Dividends Payable [Line Items]                    
Distributions paid per share of common stock 0.1288 0.1288 0.1288 0.1288 0.1288 0.1288     0.7728  
Common Class I [Member]                    
Dividends Payable [Line Items]                    
Distributions paid per share of common stock $ 0.135 $ 0.135 $ 0.135 $ 0.135 $ 0.135 $ 0.135     $ 0.81  
[1] Cash flows from operating activities are supported by expense support payments from FS Real Estate Advisor and Rialto pursuant to the Company’s expense limitation agreement. See Note 7 for additional information regarding the Company’s expense limitation agreement.

v3.22.2.2
Stockholder's Equity - Schedule of Cash Distribution On Class of Common Stock (Detail)
1 Months Ended
Jul. 31, 2022
$ / shares
Common Class F [Member]  
Class of Stock [Line Items]  
Distributions declared per share for each class of outstanding common stock $ 0.161
Common Class Y [Member]  
Class of Stock [Line Items]  
Distributions declared per share for each class of outstanding common stock 0.161
Common Class T [Member]  
Class of Stock [Line Items]  
Distributions declared per share for each class of outstanding common stock 0.1173
Common Class S [Member]  
Class of Stock [Line Items]  
Distributions declared per share for each class of outstanding common stock 0.1173
Common Class D [Member]  
Class of Stock [Line Items]  
Distributions declared per share for each class of outstanding common stock 0.1288
Common Class M [Member]  
Class of Stock [Line Items]  
Distributions declared per share for each class of outstanding common stock 0.1288
Common Class I [Member]  
Class of Stock [Line Items]  
Distributions declared per share for each class of outstanding common stock $ 0.135

v3.22.2.2
Fair Value of Financial Instruments - Summary Of Company Financial Instruments Carried At Fair Value In The Consolidated Balance Sheets (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Mortgage-backed securities available-for-sale $ 153,274 $ 44,518
Interest rate cap 2,518 0
Fair Value, Inputs, Level 1 [Member]    
Mortgage-backed securities available-for-sale 0 0
Interest rate cap 0 0
Fair Value, Inputs, Level 2 [Member]    
Mortgage-backed securities available-for-sale 153,274 44,518
Interest rate cap 2,518 0
Fair Value, Inputs, Level 3 [Member]    
Mortgage-backed securities available-for-sale 0 0
Interest rate cap $ 0 $ 0

v3.22.2.2
Fair Value of Financial Instruments - Summary of Carrying Amount, Face Amount, and Fair Value of Financial Instruments (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Mortgage-backed securities held-to-maturity $ 78,942 $ 37,862
Collateralized loan obligations 3,193,515 1,886,382
Reported Value Measurement [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Cash, cash equivalents and restricted cash 94,770 85,808
Loans receivable—held-for-investment [1] 6,538,370 3,841,868
Mortgage-backed securities held-to-maturity 78,942 37,862
Repurchase agreements [2] 1,175,651 903,010
Credit facilities 692,472 196,960
Collateralized loan obligations [2] 3,193,515 1,886,382
Mortgage note payable [2] 122,568 0
Portion at Other than Fair Value Measurement [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Cash, cash equivalents and restricted cash 94,770 85,808
Loans receivable—held-for-investment [1] 6,539,424 3,843,110
Mortgage-backed securities held-to-maturity 159,543 50,300
Repurchase agreements [2] 1,178,929 904,968
Credit facilities 701,138 199,190
Collateralized loan obligations [2] 3,220,572 1,903,083
Mortgage note payable [2] 124,700 0
Estimate of Fair Value Measurement [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Cash, cash equivalents and restricted cash 94,770 85,808
Loans receivable—held-for-investment [1] 6,541,502 3,844,685
Mortgage-backed securities held-to-maturity 78,942 37,862
Repurchase agreements [2] 1,178,929 904,968
Credit facilities 701,138 199,190
Collateralized loan obligations [2] 3,220,572 1,903,083
Mortgage note payable [2] $ 124,700 $ 0
[1] Book value of loans receivable represents the face amount, net of unamortized loan fees and costs and accrual of exit fees, as applicable.
[2] Book value represents the face amount, net of deferred financing costs.

v3.22.2.2
Variable Interest Entities - Schedule of detailed information about the assets and liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Variable Interest Entity [Line Items]    
VIE Assets [1] $ 7,135,412 $ 4,024,394
VIE Liabilities [1] 5,314,182 3,051,054
Variable Interest Entity, Primary Beneficiary [Member]    
Variable Interest Entity [Line Items]    
VIE Assets 4,033,871 2,347,510
VIE Liabilities 3,197,715 1,887,944
Restricted cash [Member] | Variable Interest Entity, Primary Beneficiary [Member]    
Variable Interest Entity [Line Items]    
VIE Assets 4,153 37,364
Loans receivable, held-for-investment [Member] | Variable Interest Entity, Primary Beneficiary [Member]    
Variable Interest Entity [Line Items]    
VIE Assets 3,992,448 2,298,367
Interest receivable [Member] | Variable Interest Entity, Primary Beneficiary [Member]    
Variable Interest Entity [Line Items]    
VIE Assets 9,576 5,154
Other Assets [Member] | Variable Interest Entity, Primary Beneficiary [Member]    
Variable Interest Entity [Line Items]    
VIE Assets 27,694 6,625
Collateralized loan obligation [Member] | Variable Interest Entity, Primary Beneficiary [Member]    
Variable Interest Entity [Line Items]    
VIE Liabilities 3,193,515 1,886,382
Interest payable [Member] | Variable Interest Entity, Primary Beneficiary [Member]    
Variable Interest Entity [Line Items]    
VIE Liabilities 3,988 1,357
Other Liabilities [Member] | Variable Interest Entity, Primary Beneficiary [Member]    
Variable Interest Entity [Line Items]    
VIE Liabilities $ 212 $ 205
[1] The June 30, 2022 and December 31, 2021 consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse to the Company. As of June 30, 2022 and December 31, 2021, assets of the VIEs totaled $4,033,871 and $2,347,510, respectively, and liabilities of the VIEs totaled $3,197,715 and $1,887,944, respectively. See Note 10 for further details.

v3.22.2.2
Variable Interest Entities - Schedule of detailed information about the assets and liabilities (Parenthetical) (Details) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Deferred financing cost [Member]    
Variable Interest Entity [Line Items]    
Deferred Offering Costs $ 27,057 $ 16,701

v3.22.2.2
Variable Interest Entities - Additional Information (Detail) - Variable Interest Entity, Not Primary Beneficiary [Member] - Commercial Mortgage Backed Securities
$ in Thousands
6 Months Ended
Jun. 30, 2022
USD ($)
Variable Interest Entity [Line Items]  
Payments to Acquire Equity Method Investments $ 67,005
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount $ 78,942

v3.22.2.2
Intangibles - Schedule of Finite Lived Intangible Assets (Detail) - Other Noncurrent Assets [Member]
$ in Thousands
Jun. 30, 2022
USD ($)
[1]
Finite-Lived Intangible Assets [Line Items]  
Finite-Lived Intangible Assets, Gross $ 33,091
Leases, Acquired-in-Place [Member]  
Finite-Lived Intangible Assets [Line Items]  
Finite-Lived Intangible Assets, Gross $ 33,091
[1] Included in Other assets in the Company’s consolidated balance sheets.

v3.22.2.2
Intangibles - Schedule of Finite Lived Intangible Assets Future Amortization Expense (Detail)
$ in Thousands
Jun. 30, 2022
USD ($)
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
2022 (remaining) $ 1,907
2023 3,814
2024 3,814
2025 3,814
2026 3,806
2027 3,803
Thereafter 12,133
Total $ 33,091

v3.22.2.2
Derivative Instruments - Summary of Derivative Instruments (Detail) - Interest Rate Cap [Member]
$ in Thousands
6 Months Ended
Jun. 30, 2022
USD ($)
Derivative [Line Items]  
Notional Amount $ 126,700
Strike 2.25%
Effective Date Jun. 21, 2022
Maturity Date Jul. 09, 2024
Fair Value $ 2,518 [1]
[1] Included in Other assets in the Company’s consolidated balance sheets.

v3.22.2.2
Derivative Instruments - Summary of Fair Value of the Company Derivative Financial Instrument (Detail) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Derivative Instruments, Gain (Loss) [Line Items]        
Unrealized Gain (Loss) on Derivatives $ (1,449)   $ (1,449)  
Interest Rate Cap [Member] | Not Designated as Hedging Instrument [Member]        
Derivative Instruments, Gain (Loss) [Line Items]        
Unrealized Gain (Loss) on Derivatives [1] $ (1,449) $ 0 $ (1,449) $ 0
[1] Included in Other income (loss) in the Company’s consolidated statements of operations

v3.22.2.2
Subsequent Events - Additional Information (Detail)
$ in Thousands
6 Months Ended
Aug. 05, 2022
USD ($)
shares
Aug. 01, 2022
USD ($)
Ratio
Jun. 30, 2022
USD ($)
shares
Jun. 30, 2021
USD ($)
Dec. 31, 2021
USD ($)
shares
Subsequent Event [Line Items]          
Common stock shares issued | $     $ 930,144 $ 187,917  
Line of credit facility, remaining borrowing capacity | $     $ 996,232   $ 232,358
Common Class F [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued     904,792   902,878
Common Class Y [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued     906,648   906,648
Common Class T [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued     1,508,682   1,407,377
Common Class S [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued     44,602,788   22,823,721
Common Class D [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued     680,347   642,162
Common Class M [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued     3,701,528   2,876,736
Common Class I [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued     24,516,086   11,366,687
Subsequent Event [Member]          
Subsequent Event [Line Items]          
Common stock shares issued | $ $ 2,306,777        
Subsequent Event [Member] | Barclay Revolving Credit Facility [Member]          
Subsequent Event [Line Items]          
Line of credit facility, maximum borrowing capacity | $   $ 310,000      
Line of credit facility, remaining borrowing capacity | $   $ 155,000      
Debt instrument, term   1 year      
Line of credit facility, expiration date   Aug. 01, 2025      
Percentage of increase decrease in basis spread rate during period   0.25%      
Minimum tangible net | $   $ 1,367,009      
Percentage of net cash proceeds from any offering of the company's capital stock   75.00%      
Percentage of cash used by the company to repurchase any of its capital stock after the closing date   50.00%      
Subsequent Event [Member] | Barclay Revolving Credit Facility [Member] | Minimum [Member]          
Subsequent Event [Line Items]          
Line of credit facility, interest rate during period   1.25%      
Line of credit facility, unused capacity, commitment fee percentage   0.25%      
Percentage of the maximum committed amount is undrawn   50.00%      
Minimum fixed charge coverage ratio | Ratio   1      
Maximum debt to equity ratio | Ratio   1      
Interest coverage ratio | Ratio   1      
Subsequent Event [Member] | Barclay Revolving Credit Facility [Member] | Maximum [Member]          
Subsequent Event [Line Items]          
Line of credit facility, interest rate during period   2.25%      
Line of credit facility, unused capacity, commitment fee percentage   0.35%      
Percentage of the maximum committed amount is undrawn   50.00%      
Minimum fixed charge coverage ratio | Ratio   1.5      
Minimum liquidity amount | $   $ 10,000      
Maximum debt to equity ratio | Ratio   3.5      
Interest coverage ratio | Ratio   1.5      
Subsequent Event [Member] | Common Class F [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued 2,629,044        
Subsequent Event [Member] | Common Stock [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued 92,410,687        
Subsequent Event [Member] | Common Class Y [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued 1,036,671        
Subsequent Event [Member] | Common Class T [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued 1,685,871        
Subsequent Event [Member] | Common Class S [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued 51,221,317        
Subsequent Event [Member] | Common Class D [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued 783,331        
Subsequent Event [Member] | Common Class M [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued 4,502,874        
Subsequent Event [Member] | Common Class I [Member]          
Subsequent Event [Line Items]          
Common stock, shares issued 30,551,579        

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