The non-traded REIT ramped up originations to $2.4 billion while navigating declining rates and rising foreclosure activity across its commercial real estate debt portfolio.

March 16, 2026

Portfolio Composition and Strategy

FS Credit Real Estate Income Trust, Inc., a non-traded real estate investment trust focused on commercial real estate debt, reported full-year 2025 results showing a loan portfolio with a principal balance of approximately $7.85 billion across 140 loans, up from $7.51 billion and 145 loans at the end of 2024.

The Philadelphia-based company, managed by FS Real Estate Advisor and sub-advised by Rialto Capital Management, recorded net income of approximately $169.9 million for the year ended December 31, 2025, compared to $175.0 million in 2024 and $150.2 million in 2023. The decline from the prior year was driven primarily by lower net interest income as benchmark interest rates fell during the period.

The company’s investment strategy centers on originating and acquiring senior floating-rate mortgage loans secured by commercial real estate primarily in the United States. Multifamily properties remained the dominant collateral type, representing 54 percent of the loan portfolio’s net book value at year-end, followed by hospitality at 13 percent, office and industrial each at 10 percent, mixed use at 7 percent, and retail at 4 percent.

Geographically, the South accounted for the largest concentration at 46 percent of the portfolio, with the Northeast at 23 percent, the West at 18 percent, and the Midwest at 5 percent. The weighted-average cash coupon on the portfolio was SOFR plus 3.31 percent, down from SOFR plus 3.50 percent a year earlier, reflecting the broader rate environment as the one-month SOFR rate declined to 3.69 percent from 4.50 percent over the same period.

Loan originations and fundings totaled approximately $2.4 billion during 2025, a significant increase from $1.4 billion in 2024, while repayments came in at roughly $1.85 billion.

Earnings and Financial Performance

Net interest income, the company’s primary revenue driver, declined to $255.5 million from $308.8 million in 2024, reflecting the impact of lower index rates on the predominantly floating-rate portfolio. Interest income fell to $625.4 million from $748.8 million, while interest expense also decreased to $387.8 million from $450.8 million.

The company recorded a net credit loss benefit of $13.2 million for 2025, compared to a credit loss expense of $20.5 million in 2024, as the overall reserve decreased. The CECL reserve on the loan portfolio stood at $77.3 million at year-end, down from $93.7 million a year earlier, driven primarily by improved macroeconomic assumptions used in the general reserve model.

Other expenses increased to $144.6 million from $135.9 million, with the rise largely attributable to higher real estate operating expenses and depreciation costs associated with properties acquired through foreclosure during 2025 and the second half of 2024. Notably, the company reported no performance fee expense for 2025, compared to $16.1 million in 2024.

Foreclosure Activity and Real Estate Holdings

The company acquired four properties through foreclosure during 2025, all multifamily assets, located in New Rochelle, New York; Decatur and Doraville, Georgia; and Philadelphia, Pennsylvania. These acquisitions had a combined fair value of approximately $219.5 million at the time of foreclosure. Three of these properties were classified as held-for-sale with an aggregate carrying value of $223.2 million.

As of year-end, the company held nine loans rated 4 on its five-point risk scale, indicating high risk or potential for loss, with a combined net book value of approximately $491.9 million. Four loans totaling $120.5 million were rated 5, indicating impairment is likely or foreclosure is probable. The amortized cost of loans on non-accrual status decreased to $219.5 million from $318.0 million.

Leverage and Financing

Total outstanding debt stood at approximately $6.38 billion as of December 31, 2025, up from $5.78 billion a year earlier. The company’s debt-to-equity ratio increased to 2.3 times from 2.1 times. Financing arrangements included collateralized loan obligations totaling $2.52 billion, repurchase agreements of $2.67 billion, revolving credit facilities of $1.06 billion, and a $124.7 million mortgage loan.

During the year, the company issued a new CLO, the 2025-FL10 Notes, totaling $890.2 million, while also refinancing and repaying several existing CLO facilities. Subsequent to year-end, the company completed an additional CLO issuance in February 2026.

Capital Activity and Distributions

The company raised approximately $445.9 million through common stock issuances during 2025 while repurchasing $488.8 million in shares. Total distributions to stockholders amounted to $216.5 million, with roughly half paid in cash and half reinvested through the distribution reinvestment plan. All distributions were funded entirely from operating cash flows on an inception-to-date basis.

Net asset value per share for Class S shares, the largest share class by outstanding count, decreased modestly to $24.85 from $25.09 at the start of the year. Total NAV across all share classes was approximately $3.02 billion.

Market Outlook

Management noted that commercial real estate market sentiment improved in the fourth quarter of 2025, supported by 175 basis points of Federal Reserve rate cuts since September 2024 and a recovery in transaction activity. However, the company cautioned that a $1.7 trillion maturity wall over the next two years presents refinancing risk, particularly for borrowers with previously extended or modified loans. The office sector continues to face structural challenges, especially for older, less amenitized assets.

The company is continuing its third public offering and has filed a registration statement for a fourth offering of up to $2.5 billion in shares. As of March 2026, the company had approximately 124.3 million shares outstanding across seven classes.