FS Investments Sponsors a New Nontraded REIT
February 14, 2017 | by James Sprow | Blue Vault
On February 13, FS Investments filed a prospectus with the SEC for FS Credit Real Estate Income Trust, Inc., a nontraded REIT program focused on floating-rate mortgage loans that are secured by first priority mortgages on transitional commercial real estate properties. The REIT may also invest in other real-estate related assets including mortgage loans that are fixed-rate, subordinated, B-Notes, mezzanine loans, and participations in commercial mortgage loans and other commercial real estate securities.
The initial public offering will be on a continuous basis for up to $2.75 billion in shares of common stock, including a DRIP, in any combination of Class T, Class D, Class M, and Class I shares. The share classes have different selling commissions and dealer manager fees, and different ongoing stockholder servicing fees. Class T shares are priced to the public at $26.11 per share with selling commissions, and dealer manager fees totaling $1.11 per share. Class T shares will be subject to stockholder servicing fees of 1% annually for an estimated three years. The other share classes are priced at $25.00 per share with no selling commissions or dealer manager fees. Class D shares and Class M shares are subject to annual stockholder servicing fees of 0.3% annually for a longer period of time. Investors are advised to consider the amount of investment, the length of time intended to hold the shares, and the selling commissions, dealer manager fees, and ongoing stockholder servicing fees attributable to each share class.
The perpetual-life REIT’s common shares will be sold, and be repurchased by the issuer on a continuous basis. The REIT is not obligated by its charter or otherwise to effect a liquidity event within a certain amount of time, but the board of directors may determine at some point in the future, to pursue a liquidity event, via listing, sale or merger.
As soon as reasonably practical, after the end of each business day, after commencement of the offering, the REIT will post to its website, www.fsinvestments.com, the NAV per share for each outstanding share class. The DRIP price for each share class will be the NAV per share for the respective share class of common stock in effect on the date the distribution is payable. The board of directors has adopted valuation guidelines that contain a comprehensive set of methodologies to be used by the REIT advisor in estimating the values of the REIT’s assets and liabilities for the NAV calculation. (The Prospectus at www.SEC.gov contains a detailed explanation of the estimation procedures.)
Shareholders may request on a monthly basis, that the REIT repurchase a portion of their shares pursuant to a share repurchase plan. The REIT is not obligated to repurchase any shares, and the total amount of repurchased shares will be limited to 2.0% of the aggregate NAV per month, and no more than 5.0% of aggregate NAV per calendar quarter.
Learn more about FS Investments on our Sponsor Focus page.
Blue Vault is just what advisors need to size up the different offerings in the nontraded REIT market. Just as importantly, it’s what the industry needs to encourage best practices among REITs.