Fortress Credit REIT Terms Out Its CRE Loan Book in a Nine-Class CLO

An indirect subsidiary took down the entire bottom of the capital stack, and an in-house affiliate will manage the collateral without charging a fee.

September 4, 2026

Fortress Credit Realty Income Trust has moved a portfolio of commercial real estate loans off short-term warehouse funding and into term financing, closing a commercial real estate collateralized loan obligation on August 28.

The transaction was executed through FCR 2026-FL1 Issuer LLC, a newly formed Delaware entity sitting beneath the trust’s subsidiary REIT, FCR CRE SUB-REIT. The issuer sold nine classes of notes secured by mortgage loans and loan participations purchased from subsidiaries of the trust. The senior Class A notes accounted for 58.750% of the aggregate principal amount of all notes at $528.75 million, carrying ratings of Aaa(sf) from Moody’s and AAA(sf) from KBRA.

How the stack priced

The senior class came in at Term SOFR plus 1.50%, with a further 25 basis points added after the July 2031 payment date. Spreads step out down the stack:

• Class A-S — rated AAA(sf) by KBRA, unrated by Moody’s — at 1.70% over the benchmark;
• Class B — AA- — at 2.00%;
• Class C — A- — at 2.35%;
• Class D — BBB — at 2.75%;
• Class E — BBB- — at 3.70%.

Together with the Class A notes, those classes comprise the offered notes. Interest accrues on an actual/360 basis, and the notes mature at par on the August 2043 payment date unless redeemed or repaid sooner.

Beneath the offered notes, the BB- rated Class F at $24.75 million, the B- rated Class G at $22.5 million and the unrated income notes at $67.5 million were acquired in full by FCR 2026-FL1 Investor LLC, an indirect subsidiary of the trust. The income notes carry no stated rate, sit unsecured, and collect whatever cash remains in the payment account after every senior distribution has been made — the residual position in the deal.

Protections tilt to the senior classes

Missing an interest payment on the Class A, A-S or B notes is an event of default. Unpaid interest on the Class C through Class G notes, by contrast, simply capitalizes as deferred interest and is added to principal for as long as a more senior class remains outstanding.

Two note protection tests govern whether interest proceeds can flow to subordinate payments: a minimum par value ratio of 112.32% and a minimum interest coverage ratio of 120.00%. Fail either, and interest proceeds are diverted to redeem the offered notes until the tests are cured.

An in-house manager and a reinvestment window

The vehicle is not a static pool. A 24-month reinvestment period lets the issuer acquire additional mortgage loans, participations or notes in loans, subject to the indenture and to no event of default having occurred.

Collateral management falls to FCR 2026-FL1 CM LLC, another subsidiary of the trust, which will take no fee for the role; a replacement manager would be entitled to 0.15% per annum on the collateral balance. The manager can be removed for cause on the direction of holders of at least two-thirds of each outstanding class, but cannot be removed without cause. Trimont LLC serves as both servicer and special servicer.

Trading warehouse risk for term debt

Where the proceeds went is the part that matters for the trust’s balance sheet. After fees and expenses, the money funded the initial collateral portfolio and repaid amounts owed by the selling subsidiaries under certain pre-closing financings, including repurchase facilities with affiliates of certain of the placement agents. Goldman Sachs, Morgan Stanley and Santander US Capital Markets placed the offered notes under an August 12 agreement — the same three names that appear across the trust’s disclosed repo lines, including the facility covered in Fortress Credit Realty Income Trust Secures $350M Santander Financing Facility.

For a vehicle that has scaled quickly since its 2024 formation, the swap matters more than the headline size. Repurchase facilities are mark-to-market and can be pulled or repriced; CLO liabilities are matched-term and non-recourse to the parent, payable solely from the pledged collateral. The trust built its loan book to roughly $2.6 billion largely on warehouse capacity, as reported in Fortress Credit Realty Income Trust Reports $2.6B Portfolio After First Full Year. Terming out a slice of that book converts short-dated, remargin-exposed debt into fixed-spread financing with a reinvestment window attached.

Wilmington Trust is trustee and Computershare Trust Company serves as note administrator. The notes were sold without registration under the Securities Act.