FS Credit Real Estate Income Trust (FSREI) 424B3 Prospectus supplement

Filed pursuant to Rule 424(b)(3)
File No. 333-264628

FS CREDIT REAL ESTATE INCOME TRUST, INC.

Supplement dated November 15, 2023

to

Prospectus dated April 14, 2023

This supplement (“Supplement”) contains information which amends, supplements or modifies certain information contained in the Prospectus of FS Credit Real Estate Income Trust, Inc. dated April 14, 2023 (as so supplemented and amended, the “Prospectus”). Capitalized and/or defined terms used in this Supplement have the same meanings as in the Prospectus, unless otherwise stated herein.

You should carefully consider the “Risk Factors” beginning on page 35 of the Prospectus before you decide to invest in shares of our common stock.

The purposes of this Supplement are as follows:

• to disclose the transaction price for each class of our common stock as of December 1, 2023;

• to disclose the calculation of our October 31, 2023 net asset value (“NAV”) per share for all share classes;

• to provide a market update;

• to provide updates to our portfolio and our business;

• to provide an update to the status of our current public offering; and

• to include our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

December 1, 2023 Transaction Price

The transaction price for each share class of our common stock for subscriptions accepted as of December 1, 2023 (and repurchases as of November 30, 2023) is as follows:

	Transaction Price (per share)
Class S	$	25.0955
Class T	$	24.8629
Class D	$	24.9135
Class M	$	24.9643
Class I	$	24.2436
Class F*	$	25.2017
Class Y*	$	24.2040

* We are offering Class F and Class Y shares in this offering only pursuant to our distribution reinvestment plan.

The December 1, 2023 transaction price for each of our share classes is equal to such class’s NAV per share as of October 31, 2023. A detailed calculation of the NAV per share is set forth below. No transactions or events have occurred since October 31, 2023 that would have a material impact on our NAV per share. The purchase price of our common stock for each share class equals the transaction price of such class, plus applicable upfront selling commissions and dealer manager fees.

October 31, 2023 NAV per Share

Our adviser calculates the 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. Our NAV per share, which is updated as of the last calendar day of each month, is posted on our website at www.fsinvestments.com and is made available on our toll-free telephone line at 877-628-8575. Please refer to “Net Asset Value Calculation and Valuation Guidelines” in the Prospectus for how our NAV is determined. We have included a breakdown of the components of total NAV and NAV per share for October 31, 2023.

The following table provides a breakdown of the major components of our total NAV as of October 31, 2023 (dollar amounts in thousands):

Components of NAV	October 31, 2023
Loans receivable	$	7,747,173
Investment in real estate		181,562
Mortgage-backed securities held-to-maturity		93,447
Mortgage-backed securities, at fair value		252,669
Cash and cash equivalents		203,826
Restricted cash		17,507
Other assets		48,447
Collateralized loan obligation, net of deferred financing costs		(4,300,327	)
Repurchase agreements payable, net of deferred financing costs		(226,678	)
Credit facility payable, net of deferred financing costs		(839,756	)
Mortgage note, net of deferred financing costs		(123,539	)
Accrued stockholder servicing fees(1)		(1,396	)
Other liabilities		(97,188	)
Net asset value	$	2,955,747
Number of outstanding shares		119,449,303

(1) Stockholder servicing fees only apply to Class S, Class T, Class D and Class M shares. For purposes of NAV, we recognize the stockholder servicing fee as a reduction of NAV on a daily basis as such fee is accrued. Under U.S. generally accepted accounting principles (“GAAP”), we accrue future stockholder servicing fees in an amount equal to our best estimate of fees payable to the dealer manager at the time such shares are sold. As of October 31, 2023, we accrued under GAAP $112,949 of stockholder servicing fees payable to the dealer manager. 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. The dealer manager does not retain any of these stockholder servicing fees, all of which are retained by, or reallowed (paid) to, participating broker-dealers.

The following table provides a breakdown of our total NAV and NAV per share by share class as of October 31, 2023 (dollar amounts in thousands, except per share data):

NAV Per Share	Class S Shares		Class T Shares		Class D Shares		Class M Shares		Class I Shares		Class F Shares		Class Y Shares		Total
Net asset value	$	1,603,187	$	33,201	$	16,378	$	121,054	$	1,141,050	$	18,933	$	21,944	$	2,955,747
Number of outstanding shares		63,883,509		1,335,363		657,376		4,849,081		47,066,071		751,255		906,648		119,449,303
NAV per Share as of October 31, 2023	$	25.0955	$	24.8629	$	24.9135	$	24.9643	$	24.2436	$	25.2017	$	24.2040

Market Update

Ten-Year Treasury yields briefly breached the 5% mark in October before ending the month at 4.93%, a 36bp monthly increase and its highest yield since 2007 as the Fed continued to prepare markets for a higher-for-longer rate environment amid solid economic data and a slow disinflation process. Against this backdrop, the Bloomberg Agg returned -1.48% in October and is down -2.77% year to date, following a historically poor return of -13.01% in 2022.

Recent commercial real estate (CRE) deal trends remained in place throughout the third quarter as transaction volume continued to be depressed amid elevated mortgage rates and a wide gap between buyers and sellers. Deal volume fell at a -53% annual clip in Q3 2023, extending its run of deep double-digit declines for the past four quarters.¹ Volume was negative across all major property types in Q3, though office (-65%) and apartment (-62%) saw the steepest declines while retail (-31%) volume benefitted from several large transactions during the quarter.¹

Commercial property prices continued to fall in September, as the RCA National All-Property Index fell -9.0% from a year earlier and all major property types posted annual declines.¹ On a rolling three-month basis, however, prices are about flat (-0.1%) across the broader Index as recent declines have clearly moderated. Apartment prices continue to lag all other property types but remain nearly 20% above their December 2019 levels.¹

Notably, the fundamentals underpinning most CRE assets (outside of office) remain relatively supportive. A financing environment in which many were concerned about a surge in delinquent borrowers and a liquidity crunch has turned out to be more of a challenge than a crisis. Loan loss rates have risen to an average of 19% through Q3 2023 but remain far below their 28% average for the period from 2015-2019 while the amount of distressed assets remains less than half of those reached during the height of the GFC.¹

Consumer-centric sectors continue to benefit from healthy household spending and muted new construction.

• Echoes of the “retail apocalypse” narrative of the 2010s continue to sap appetite for new construction, resulting in declining vacancies and year-over-year net operating income (NOI) growth that has remained north of 4% since late 2021.¹

In the multifamily and industrial sectors, growth has slowed but secular demand drivers remain firmly in place.

• The industrial sector has long hitched its wagon to growth in e-commerce spending, but more recently the burgeoning trends in supply chain onshoring and manufacturing spending have added new layers of demand.

¹  MSCI Real Capital Analytics, as of September 2023.

• While multifamily rent growth softened in recent quarters due to slower household formation and strong new construction activity, the record-high cost of homeownership remains a massive support for demand.

The market has been concerned coming out of the spring banking stress that some regional banks—many of whom have sizable CRE loan books—would be forced to severely curtail their activity. The Fed’s latest Senior Loan Officer Survey showed a near-unanimous tightening of lending standards among banks. However, thus far, the impact can be better described as a pullback than a retreat.

There remains a significant need for refinancing capital from the debt market. As of mid-year 2023, more than $200 billion in loans was scheduled to mature over the second half of this year, plus roughly $500 billion in each of the following two years.² Banks appear unlikely to grow their balance sheets materially but remain active in a more limited capacity. Ultimately, we see constraints in the lending market rather than a broad retreat, which is returning power to lenders amid growing demand for capital. Leverage has declined from already-low levels, a positive for those lenders able to deploy capital today.

Portfolio Update

We generated positive total returns across all share classes in October (see table below) driven by distributions paid during the month and continued stability in our net asset value.

• The current annualized distribution rate is 7.62% for Class I shares, 7.11% for Class D shares, 7.10% for Class M shares, 6.51% for Class S shares and 6.57% for Class T shares, based on the December 1, 2023 transaction price.

• The tax equivalent distribution rate is 8.52% for Class I shares, 7.95% for Class D shares, 7.93% for Class M shares, 7.27% for Class S shares and 7.34% for Class T shares, based on the December 1, 2023 transaction price.²

We are pleased with the strong positive returns generated for our shareholders year-to-date, especially considering the broader rate-driven volatility experienced across financial markets. Based on the Class I share performance, we have returned 6.23% year-to-date as of October 31, 2023, compared to -2.77% for the Bloomberg Aggregate Bond Index.

Even with the recent rapid rise in Treasury rates across the yield curve, we offer a high level of excess income over short-term rates on both a nominal and real basis. Based on the Class I share, our annualized distribution rate of 7.62% is 221bps above 3-month Treasury bills (T-bills) on a nominal and real yield basis.³ Furthermore, our tax-equivalent annualized distribution rate is 311bps over 3-month T-bills, or 2.8x higher, compared to T-bills when comparing real yields/distribution rates.³

We met 100% of repurchase requests in October 2023.

We believe the portfolio is well positioned to deliver an attractive, high level of income and preserve capital driven by the:

• Debt-focused nature of our strategy, as we believe forward returns in commercial real estate will largely be driven by income generation and property cash flows compared to price appreciation.

²  Tax-equivalent distribution rate reflects the distribution rate required under the prior tax law in order for an investor to receive the same after-tax income under the new tax law. For example, a REIT’s annualized distribution rate would need to be 8.52% under the prior tax law in order for investors to receive the same amount of after-tax income as a REIT with an annualized distribution rate of 7.62% under the new tax law. The distribution rates quoted assume a 37% tax bracket.

³  3-month bill yield as of November 10, 2023.

• High level of equity cushion beneath our loans. We believe the portfolio has been underwritten across property types and geography to appropriately reflect market conditions and the borrower’s business plan. For example, the average loan-to-value (LTV) ratio across our senior loan portfolio was 68% at the time of loan closing as of October 31, 2023.

• Continued strong performance. We have generated positive total returns in 68 out of 70 months; its largest monthly drawdown was just -0.27% in March 2020. Approximately 99.4% of the portfolio was comprised of performing assets as of October 31, 2023.

• Geographically diversified composition of our $8.5 billion portfolio, weighted to multifamily properties.

• The long-term nature of our borrowings, as approximately 96% of our borrowings are financed through match-term, non-mark-to-market facilities.

• Positive impact of higher interest rates for our floating rate loan portfolio, which represented approximately 96% of the portfolio as of October 31, 2023. The portfolio’s duration was just 0.15 years.

• Requirement of nearly all borrowers to purchase rate caps to help protect against rising borrowing costs.

• Available liquidity for new investments. We have maintained a strong liquidity profile which, when combined with the long-term nature of our borrowings, allows us to be a capital provider when many traditional lenders and peers are more constrained in making new loans. As always, we remain disciplined in our underwriting standards as markets seek a new pricing equilibrium.

Status of our Offering

We are currently offering on a continuous basis up to $2.75 billion in shares of common stock, consisting of up to $2.5 billion in shares in our primary offering and up to $250 million in shares pursuant to our distribution reinvestment plan. As of the date of this Supplement, we had issued and sold in the Offering (i) 33,716,272 shares of our common stock (consisting of 15,888,846 Class S shares, 16,564,436 Class I shares, 110,701 Class T shares, 152,143 Class D shares, and 1,000,146 Class M shares) in the primary offering for total proceeds of $834.78 million and (ii) 3,603,144 shares of our common stock (consisting of 1,940,915 Class S shares, 1,491,124 Class I shares, 44,562 Class T shares, 16,628 Class D shares, and 109,915 Class M shares) pursuant to our distribution reinvestment plan for a total value of $89.13 million.

Quarterly Report on Form 10-Q

The Prospectus is hereby supplemented with our Quarterly Report on Form 10-Q, excluding exhibits, for the quarter ended September 30, 2023 that was filed with the SEC on November 13, 2023, a copy of which is attached to this supplement as Appendix A.

APPENDIX A

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 SEPTEMBER 30, 2023

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)

(215) 495-1150

(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 November 10, 2023, there were 751,255 outstanding shares of Class F common stock, 906,648 outstanding shares of Class Y common stock, 1,308,107 outstanding shares of Class T common stock, 64,686,880 outstanding shares of Class S common stock, 647,475 outstanding shares of Class D common stock, 4,896,373 outstanding shares of Class M common stock and 47,527,208 outstanding shares of Class I common stock.

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022		3
	Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022		4
	Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022		5
	Unaudited Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2023 and 2022		6
	Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022		10
	Notes to Unaudited Consolidated Financial Statements		12
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		54
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		70
ITEM 4.	CONTROLS AND PROCEDURES		70
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS		72
ITEM 1A.	RISK FACTORS		72
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		72
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		73
ITEM 4.	MINE SAFETY DISCLOSURES		73
ITEM 5.	OTHER INFORMATION		73
ITEM 6.	EXHIBITS		73
	SIGNATURES		75

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FS Credit Real Estate Income Trust, Inc.

Consolidated Balance Sheets

(in thousands, except share amounts)

	September 30, 2023 (Unaudited)			December 31, 2022
Assets
Cash and cash equivalents	$	166,940		$	183,665
Restricted cash		47,935			17,953
Loans receivable, held-for-investment, net of credit loss allowances of $72,270 and $0		7,665,632			7,350,315
Mortgage-backed securities held-to-maturity, net of credit loss allowances of $71 and $0		74,543			68,559
Mortgage-backed securities, at fair value, credit loss allowances of $9,674 and $0		225,095			159,464
Reimbursement due from sponsor		—			605
Investment in real estate, net		185,176			190,549
Receivable for investments sold and repaid		46,316			922
Interest receivable		35,987			32,240
Other assets		6,155			9,281
Mortgage loans held in securitization trusts, at fair value		330,629			324,263
Total assets(1)	$	8,784,408		$	8,337,816
Liabilities
Collateralized loan obligations, net	$	4,306,272		$	4,336,701
Repurchase agreements payable, net		239,457			756,816
Credit facilities payable, net		839,507			298,544
Mortgage note payable, net		123,480			122,568
Due to related party		116,585			107,692
Interest payable		28,722			19,379
Payable for shares repurchased		27,067			60,488
Other liabilities		40,014			27,278
Mortgage obligations issued by securitization trusts, at fair value		298,170			291,193
Total liabilities(1)		6,019,274			6,020,659
Commitments and contingencies (See Note 11)
Stockholders’ equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 125 and 125 issued and outstanding, respectively		—			—
Class F common stock, $0.01 par value, 125,000,000 shares authorized, 755,420 and 857,710 issued and outstanding, respectively		8			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, 1,378,393 and 1,600,878 issued and outstanding, respectively		14			16
Class S common stock, $0.01 par value, 125,000,000 shares authorized, 64,127,317 and 54,908,336 issued and outstanding, respectively		641			549
Class D common stock, $0.01 par value, 125,000,000 shares authorized, 675,550 and 742,999 issued and outstanding, respectively		7			7
Class M common stock, $0.01 par value, 125,000,000 shares authorized, 4,792,423 and 4,645,072 issued and outstanding, respectively		48			46
Class I common stock, $0.01 par value, 300,000,000 shares authorized, 46,397,317 and 34,011,164 issued and outstanding, respectively		464			340
Additional paid-in capital		2,825,372			2,314,639
Accumulated other comprehensive income (loss)		(8,129	)		(11,906	)
Retained earnings (accumulated deficit)		(53,300	)		13,448
Total stockholders’ equity		2,765,134			2,317,157
Total liabilities and stockholders’ equity	$	8,784,408		$	8,337,816

(1) The September 30, 2023 and December 31, 2022 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 FS Credit Real Estate Income Trust, Inc. As of September 30, 2023 and December 31, 2022, assets of the VIEs totaled $5,892,207 and $5,896,039, respectively, and liabilities of the VIEs totaled $4,616,997 and $4,640,998, respectively. See Note 10 for further details.

See notes to unaudited consolidated financial statements.

3

FS Credit Real Estate Income Trust, Inc.

Unaudited Consolidated Statements of Operations

(in thousands, except share and per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net interest income
Interest income	$	192,867		$	111,575		$	551,164		$	226,436
Less: Interest expense		(110,572	)		(59,107	)		(315,461	)		(104,506	)
Interest income on mortgage loans held in securitization trusts		4,363			—			11,590			—
Less: Interest expense on mortgage obligations issued by securitization trusts		(3,425	)		—			(9,283	)		—
Net interest income		83,233			52,468			238,010			121,930
Other expenses
Management fee		9,092			6,629			25,514			15,825
Performance fee		6,354			3,904			17,742			4,056
General and administrative expenses		10,008			5,685			30,446			14,528
Less: Expense limitation		—			—			(148	)		—
Add: Expense recoupment to sponsor		753			256			753			3,026
Net other expenses		26,207			16,474			74,307			37,435
Other income (loss)
(Increase) decrease in current expected credit loss reserve		101			—			(42,130	)		—
Income (loss) from rental operations, net		(234	)		(1,068	)		(1,931	)		(1,068	)
Net change in unrealized gain on interest rate cap		(762	)		1,758			(1,370	)		309
Net realized gain (loss) on extinguishment of debt		265			—			265			—
Net change in unrealized gain (loss) on mortgage-backed securities, fair value option		45			—			325			—
Unrealized gain (loss) on mortgage loans and obligations held in securitization trusts, net		(213	)		—			(742	)		—
Total other income (loss)		(798	)		690			(45,583	)		(759	)
Net income before taxes		56,228			36,684			118,120			83,736
Income tax expense		(274	)		(348	)		(2,260	)		(831	)
Net income		55,954			36,336			115,860			82,905
Preferred stock dividends		(3	)		(3	)		(11	)		(11	)
Net income attributable to FS Credit Real Estate Income Trust, Inc.	$	55,951		$	36,333		$	115,849		$	82,894
Per share information—basic and diluted
Net income per share of common stock - basic and diluted	$	0.48		$	0.42		$	1.04		$	1.18
Weighted average common stock outstanding - basic and diluted		116,419,969			86,518,645			111,391,684			70,104,149

See notes to unaudited consolidated financial statements.

4

FS Credit Real Estate Income Trust, Inc.

Unaudited Consolidated Statements of Comprehensive Income

(in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022			2023		2022
Net income	$	55,954	$	36,336		$	115,860	$	82,905
Other comprehensive income
Net change in unrealized gain (loss) on mortgage-backed securities available-for-sale		2,242		(382	)		3,777		(3,660	)
Total other comprehensive income (loss)		2,242		(382	)		3,777		(3,660	)
Comprehensive income	$	58,196	$	35,954		$	119,637	$	79,245

See notes to unaudited consolidated financial statements.

5

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 September 30, 2023
Balance as of June 30, 2023	$	7	$	9	$	15		$	617		$	7	$	48		$	435		$	2,697,971		$	(10,371	)	$	(58,235	)	$	2,630,503
Common stock issued		—		—		—			35			—		2			34			171,891			—			—			171,962
Distributions declared		—		—		—			—			—		—			—			—			—			(51,016	)		(51,016	)
Proceeds from distribution reinvestment plan		—		—		—			5			—		—			6			25,185			—			—			25,196
Redemptions of common stock		1		—		(1	)		(16	)		—		(2	)		(11	)		(71,280	)		—			—			(71,309	)
Stockholder servicing fees		—		—		—			—			—		—			—			(4,464	)		—			—			(4,464	)
Offering costs		—		—		—			—			—		—			—			(1,297	)		—			—			(1,297	)
Restricted stock units issued		—		—		—			—			—		—			—			7,366			—			—			7,366
Net income		—		—		—			—			—		—			—			—			—			55,954			55,954
Dividends on preferred stock		—		—		—			—			—		—			—			—			—			(3	)		(3	)
Other comprehensive income		—		—		—			—			—		—			—			—			2,242			—			2,242
Adoption of ASU 2016-13, see Note 2		—		—		—			—			—		—			—			—			—			—			—
Balance as of September 30, 2023	$	8	$	9	$	14		$	641		$	7	$	48		$	464		$	2,825,372		$	(8,129	)	$	(53,300	)	$	2,765,134

6

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 September 30, 2022
Balance as of June 30, 2022	$	9	$	9	$	15	$	446		$	7	$	37		$	245		$	1,820,033		$	(3,192	)	$	3,621		$	1,821,230
Common stock issued		—		—		1		76			—		5			72			381,664			—			—			381,818
Distributions declared		—		—		—		—			—		—			—			—			—			(32,416	)		(32,416	)
Proceeds from distribution reinvestment plan		—		—		—		4			—		1			2			15,936			—			—			15,943
Redemptions of common stock		��		—		—		(10	)		—		(1	)		(7	)		(43,155	)		—			—			(43,173	)
Stockholder servicing fees		—		—		—		—			—		—			—			(15,130	)		—			—			(15,130	)
Offering costs		—		—		—		—			—		—			—			(2,870	)		—			—			(2,870	)
Performance contingent rights issued		—		—		—		—			—		—			—			2,416			—			—			2,416
Net income		—		—		—		—			—		—			—			—			—			36,336			36,336
Dividends on preferred stock		—		—		—		—			—		—			—			—			—			(3	)		(3	)
Other comprehensive loss		—		—		—		—			—		—			—			—			(382	)		—			(382	)
Balance as of September 30, 2022	$	9	$	9	$	16	$	516		$	7	$	42		$	312		$	2,158,894		$	(3,574	)	$	7,538		$	2,163,769

(1) Comprised solely of unrealized gain (loss) on mortgage-backed securities, available for sale.

See notes to unaudited consolidated financial statements

7

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
Nine Months Ended September 30, 2023
Balance as of December 31, 2022	$	9		$	9	$	16		$	549		$	7	$	46		$	340		$	2,314,639		$	(11,906	)	$	13,448		$	2,317,157
Common stock issued		—			—		—			129			—		6			149			685,119			—			—			685,403
Distributions declared		—			—		—			—			—		—			—			—			—			(141,076	)		(141,076	)
Proceeds from distribution reinvestment plan		—			—		—			15			—		1			13			68,641			—			—			68,670
Redemptions of common stock		(1	)		—		(2	)		(52	)		—		(5	)		(38	)		(240,336	)		—			—			(240,434	)
Stockholder servicing fees		—			—		—			—			—		—			—			(18,214	)		—			—			(18,214	)
Offering costs		—			—		—			—			—		—			—			(5,159	)		—			—			(5,159	)
Restricted stock units issued		—			—		—			—			—		—			—			20,682			—						20,682
Net income		—			—		—			—			—		—			—			—			—			115,860			115,860
Dividends on preferred stock		—			—		—			—			—		—			—			—			—			(11	)		(11	)
Other comprehensive income		—			—		—			—			—		—			—			—			3,777			—			3,777
Adoption of ASU 2016-13, see Note 2		—			—		—			—			—		—			—			—			—			(41,521	)		(41,521	)
Balance as of September 30, 2023	$	8		$	9	$	14		$	641		$	7	$	48		$	464		$	2,825,372		$	(8,129	)	$	(53,300	)	$	2,765,134

8

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
Nine Months Ended September 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		—		—		2		302			1		14			208			1,311,435			—			—			1,311,962
Distributions declared		—		—		—		—			—		—			—			—			—			(78,643	)		(78,643	)
Proceeds from distribution reinvestment plan		—		—		—		9			—		1			5			37,823			—			—			37,838
Redemptions of common stock		—		—		—		(23	)		—		(2	)		(15	)		(99,904	)		—			—			(99,944	)
Stockholder servicing fees		—		—		—		—			—		—			—			(61,558	)		—			—			(61,558	)
Offering costs		—		—		—		—			—		—			—			(9,869	)		—			—			(9,869	)
Performance contingent rights issued		—		—		—		—			—		—			—			11,409			—			—			11,409
Net income		—		—		—		—			—		—			—			—			—			82,905			82,905
Dividends on preferred stock		—		—		—		—			—		—			—			—			—			(11	)		(11	)
Other comprehensive loss		—		—		—		—			—		—			—			—			(3,660	)		—			(3,660	)
Balance as of September 30, 2022	$	9	$	9	$	16	$	516		$	7	$	42		$	312		$	2,158,894		$	(3,574	)	$	7,538		$	2,163,769

(1) Comprised solely of unrealized gain (loss) on mortgage-backed securities, available for sale.

See notes to unaudited consolidated financial statements.

9

FS Credit Real Estate Income Trust, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities
Net income	$	115,860		$	82,905
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Performance contingent rights issued		—			11,409
Restricted stock units		20,682			—
Amortization of deferred fees on loans and debt securities		(11,636	)		(3,616	)
Amortization of deferred financing costs and discount		16,059			7,884
Increase in current expected credit loss reserve		42,130			—
Net unrealized (gain) loss on valuation of interest rate cap		1,370			(309	)
Depreciation and amortization		5,501			1,839
Net unrealized (gain) loss on mortgage-backed securities, fair value option		(325	)		—
Net unrealized (gain) loss on mortgage loans and obligations held in securitization trusts		742			—
Changes in assets and liabilities
Reimbursement due from (due to) sponsor		605			—
Interest receivable		(3,747	)		(15,580	)
Other assets		1,756			(9,418	)
Due to related party		753			194
Interest payable		9,343			11,236
Other liabilities		2,526			9,554
Net cash provided by (used in) operating activities		201,619			96,098
Cash flows used in investing activities
Origination and fundings of loans receivable		(1,014,971	)		(3,731,304	)
Principal collections from loans receivable, held-for-investment		586,298			489,846
Exit and extension fees received on loans receivable, held-for-investment		851			472
Purchases of mortgage-backed securities, at fair value		(86,636	)		(150,598	)
Principal repayments of mortgage-backed securities, at fair value		22,387			9,169
Purchases of mortgage-backed securities held-to-maturity		—			(48,536	)
Acquisition of real estate		—			(193,868	)
Capital improvements to real estate		(128	)		—
Net cash provided by (used in) investing activities		(492,199	)		(3,624,819	)
Cash flows from financing activities
Issuance of common stock		685,403			1,311,962
Redemptions of common stock		(273,855	)		(76,046	)
Stockholder distributions paid		(70,506	)		(37,959	)
Stockholder servicing fees paid		(10,074	)		(6,385	)
Offering costs paid		(5,159	)		(11,204	)
Borrowing under mortgage note payable		—			124,700
Borrowings under repurchase agreements		122,261			1,667,021
Repayments under repurchase agreements		(640,322	)		(1,688,409	)
Borrowings under credit facilities		807,084			1,276,366
Repayments under credit facilities		(268,066	)		(771,451	)
Proceeds from issuance of collateralized loan obligations		—			1,971,137
Repayment of collateralized loan obligations		(40,029	)		(109,631	)
Payment of deferred financing costs		(2,900	)		(33,746	)
Net cash provided by (used in) financing activities		303,837			3,616,355
Total increase (decrease) in cash, cash equivalents and restricted cash		13,257			87,634
Cash, cash equivalents and restricted cash at beginning of period		201,618			85,808
Cash, cash equivalents and restricted cash at end of period	$	214,875		$	173,442

10

FS Credit Real Estate Income Trust, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	Nine Months Ended September 30, 2023
	2023			2022
Supplemental disclosure of cash flow information and non-cash financial activities
Payments of interest	$	290,059		$	85,386
Accrued stockholder servicing fee	$	8,140		$	55,173
Distributions payable	$	8,717		$	5,789
Reinvestment of stockholder distributions	$	68,670		$	37,838
Payable for shares repurchased	$	27,067		$	28,125
Loan principal payments held by servicer	$	46,316		$	611
Payable for investments purchased	$	6,663		$	—
Purchase of mortgage loans held in securitization trusts at fair value	$	(6,663	)	$	—
Mortgage obligations issued by securitization trusts, at fair value	$	298,170		$	—

See notes to unaudited consolidated financial statements.

11

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 is also conducting a private offering of its Class I common stock and 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 September 30, 2023. 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 nine months ended September 30, 2023 and the audited consolidated financial statements as of and for the year ended December 31, 2022 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2023.

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

12

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)

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. For the Company’s consolidated securitization VIEs, the third party ownership interests are reflected as liabilities in the Company’s consolidated balance sheet because the beneficial interests payable to these third parties are legally issued in the form of debt. The Company’s presentation of net income attributes earnings to controlling and non-controlling interests. 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. As of September 30, 2023 and 2022, the Company’s investment in overnight institutional money market funds was $138,344 and $49,725, respectively. The Company’s uninvested cash is maintained with high credit quality financial institutions, which are members of the Federal Deposit Insurance Corporation. The Company’s cash is held with major financial institutions and may at times exceed federally insured limits. 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 unaudited consolidated balance sheets to the total amount shown in the Company’s unaudited consolidated statements of cash flows:

	September 30,
	2023		2022
Cash and cash equivalents	$	166,940	$	147,321
Restricted cash		47,935		26,121
Total cash, cash equivalents and restricted cash	$	214,875	$	173,442

13

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)

Loans Receivable: The Company originates and purchases commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost. 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. The Company’s held-for-sale securities are subject to the adoption of ASU 2016-13, as discussed below.

Mortgage-backed Securities: Mortgage-backed securities are classified as held-to-maturity or available-for-sale or accounted for under the fair value option. The Company determines the appropriate classification of its securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. 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. The Company’s remaining mortgage-backed securities are classified as either available-for-sale or accounted for under the fair value option and are reported at fair value on the consolidated balance sheets as components of Mortgage-backed securities, at fair value. The Company elected the fair value option for all mortgage-backed securities acquired during the three and nine months ended September 30, 2023. Changes in fair value for mortgage-backed securities accounted for under the fair value option are recorded in the consolidated statements of operations as a component of Net change in unrealized gain (loss) on mortgage-backed securities, fair value option. The Company chose to elect the fair value option in order to simplify the accounting treatment for its investment securities. The fair value option provides an option to elect fair value as an alternative measurement for selected financial instruments. The fair value option may be elected only upon the occurrence of certain specified events, including when the Company enters into an eligible firm commitment, at initial recognition of the financial instrument, as well as upon a business combination or consolidation of a subsidiary. The election is irrevocable unless a new election event occurs. Prior to the three and nine months ended September 30, 2023, all mortgage-backed securities acquired that were not classified as held-to-maturity were classified as available-for-sale, stated at fair value and the changes in fair value are recorded in other comprehensive income. The Company’s held-to-maturity and available-for-sale securities are subject to the adoption of ASU 2016-13, as discussed below.

Credit Losses: ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), or ASU 2016-13, became effective for the Company on January 1, 2023. ASU 2016-13 significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the previous incurred loss model with a current expected credit loss (“CECL”) model for instruments measured at amortized cost. The CECL model applies to the Company’s loans receivable, held-for-investment and its mortgage-backed securities held-to-maturity which are carried at amortized cost, including future funding commitments and accrued interest receivable related to those loans and securities. However, as permitted by ASC Topic 326, the Company has elected not to measure an allowance for credit losses on accrued interest receivable (which is classified separately on its consolidated balance sheets), but rather write off in a timely manner by reversing interest income and/or cease accruing interest that would likely be uncollectible.

CECL requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. Considering the lack of historical company data related to any realized loan losses since its inception, the Company elected to estimate its general CECL reserve by using a probability-weighted analytical model that considers the likelihood of default and loss-given-default for each individual loan. The credit loss model utilizes historical loss rates derived from a third party commercial

14

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)

real estate loan database with historical loan loss data beginning in 1998. The Company provides specific loan-level inputs which include loan-to-value, principal balances, property type, location, coupon, origination year, term, subordination, expected repayment dates, and property net operating income. The Company also considers qualitative and environmental factors, including, but not limited to, macroeconomic forecasts and business conditions and trends, concentration of credit and changes in the level of such concentrations. The reasonable and supportable forecast period is followed by an immediate reversion period back to historical loss rates.

The Company’s loans typically include commitments to fund incremental proceeds to its borrowers over the life of the loan, which future funding commitments are also subject to the CECL model. The CECL reserve related to future loan fundings is recorded as a component of Other liabilities on its consolidated balance sheets. This CECL reserve is estimated using the same process outlined above for its outstanding loan balances, and changes in this component of the CECL reserve will similarly impact its consolidated net income.

For both the funded and unfunded portions of its loans, the Company considers its internal risk rating of each loan as the primary credit quality indicator underlying the assessment. 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
5	Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss

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 records the impairment as a specific CECL reserve. For determining a specific CECL reserve, financial instruments are assessed outside of the CECL model on an individual basis. For collateral dependent loans that the Company determines foreclosure of the collateral is probable, the Company measures the expected losses based on the differences between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral dependent loans where the Company determine foreclosure is not probable, a practical expedient to estimate expected losses is applied using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the 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.

15

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)

The Company adopted ASU 2016-13 using the modified-retrospective method for all financial assets measured at amortized cost. Prior to its adoption, the Company had no loan loss provisions on its consolidated balance sheets. The Company recorded a cumulative-effect adjustment to the opening retained earnings in its unaudited consolidated statement of changes in equity as of January 1, 2023. The following table details the impact of this adoption:

	Impact of ASU 2016-13 Adoption
Assets:
Loans receivable, held-for-investment
Senior loans	$	35,456
Mezzanine loans		3,963
CECL reserve on Loans receivable, held-for-investment		39,419
CECL reserve on Mortgage-backed securities held-to-maturity		939
Liabilities:
Other liabilities
CECL reserve on unfunded loan commitments		1,163
Total impact of 2016-13 adoption on retained earnings	$	41,521

Separate provisions of ASC Topic 326 apply to the Mortgage-backed securities available-for-sale, which are carried at fair value with unrealized gains and losses reported as a component of Accumulated other comprehensive income (loss). The Company is required to establish an initial credit loss allowance for those available-for-sale securities that are purchased with credit deterioration (“PCD”) by grossing up the amortized cost basis of each security and providing an offsetting credit loss allowance for the difference between expected cash flows and contractual cash flows, both on a present value basis. As of the January 1, 2023 effective date, no such credit loss allowance gross-up was required on available-for-sale debt securities with PCD.

The Company uses a discounted cash flow method to estimate and recognize a credit loss allowance on its available-for-sale securities. The credit loss allowance represents the difference between the security’s amortized cost basis and the present value of expected cash flows. The credit loss allowance is limited to the difference between the security’s fair value and its amortized cost. Changes in the credit loss allowance are recognized immediately in earnings as a component of (Increase) decrease in current expected credit loss reserve.

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 was acquired in 2022 and was accounted for as an asset acquisition.

16

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)

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, below-market, and in-place leases is recorded as an adjustment to rental operations, net, on the Company’s unaudited 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 the impairment model considers real estate properties to be “long-lived assets to be held and used,” cash flows to determine whether an asset has been impaired are undiscounted. Accordingly, 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

17

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)

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 comprised 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.

18

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)

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 Company elected the fair value option for initial and subsequent recognition of the assets and liabilities of its consolidated securitization mortgage loans held in securitization trusts and the related CMBS investments. Interest income and interest expense associated with these loans are presented separately on the unaudited consolidated statements of operations.

The Company separately presents the assets and liabilities of its consolidated securitization loans as individual line items on its consolidated balance sheets. The liabilities of its consolidated securitization loans consist solely of obligations to the bondholders of the related trusts, and are thus presented as a single line item entitled “Mortgage obligations issued by securitization trusts.” The assets of its consolidated securitization loans consist principally of loans. These assets in the aggregate are likewise presented as a single line item entitled “Mortgage loans held in securitization trusts.” The residual difference shown on its unaudited consolidated statements of operations in the line item “Unrealized gain (loss) on mortgage loans and obligations held in securitization trusts” represents the Company’s beneficial interest in the mortgage loans.

The securitization mortgage loan assets as a whole can only be used to settle the obligations of the consolidated mortgage loans. The assets of the Company’s securitization mortgage loans are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective.

The securitization mortgage loans in which the Company invests are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the securitization mortgage loans, the Company maximizes the use of observable inputs over unobservable inputs.

Liabilities of the consolidated mortgage obligations: The Company’s consolidated mortgage obligations generally represent bonds that are not owned by the Company directly. The majority of these are either traded in the marketplace or can be analogized to similar securities that are traded in the marketplace. For these liabilities, pricing is considered to be Level 2, where the valuation is based upon quoted prices for similar instruments traded in active markets. The Company generally utilizes third party pricing service providers for valuing these liabilities. In order to determine whether to utilize the valuations provided by third parties, the Company conducts an ongoing evaluation of their valuation methodologies and processes, as well as a review of the individual valuations themselves. In evaluating third party pricing for reasonableness, the Company considers a variety of factors, including market transaction information for the particular bond, market transaction information for bonds within the same trust, market transaction information for similar bonds, the bond’s ratings and the bond’s subordination levels.

For the minority portion of the Company’s consolidated mortgage obligations which consist of unrated or non-investment grade bonds that are not owned by the Company directly, pricing may be either Level 2 or Level 3. If independent third party pricing similar to that noted above is available, the Company considers the valuation to be Level 2. If such third party pricing is not available, the valuation is generated from model-based techniques that use significant unobservable assumptions, and the Company considers the valuation to be

19

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)

Level 3. For mortgage obligations classified as Level 3, valuation is determined based on discounted expected future cash flows which take into consideration expected duration and yields based on market transaction information, ratings, subordination levels, vintage and current market spread. Mortgage obligations may shift between Level 2 and Level 3 of the fair value hierarchy if the significant fair value inputs used to price the mortgage obligations become or cease to be observable.

Assets of the consolidated mortgage loans: The individual assets of a mortgage loan are inherently incapable of precise measurement given their illiquid nature and the limitations on available information related to these assets. Because the Company’s methodology for valuing these assets does not value the individual assets of a mortgage loan, but rather uses the value of the mortgage obligations as an indicator of the fair value of mortgage loan assets as a whole, the Company has determined that its valuations of mortgage loan assets in their entirety should be classified in Level 3 of the fair value hierarchy.

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 a 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, at fair value : 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.

20

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)

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. Unless the loan is both well secured and in the process of collection, loans are placed on non-accrual status when principal or interest is 120 days or more past due or when repayment of interest and principal is, in our judgment, in doubt. Interest payments received on non-accrual loans are generally recognized as interest income on a cash basis. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. 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. As of September 30, 2023 and December 31, 2022, there were no loans with accrued interest past due 30 days or more, respectively.

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 may reimburse FS Real Estate Advisor and Rialto for any offering expenses that they 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 September 30, 2023, the Company incurred offering costs of $23,659, 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

21

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)

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 nine months ended September 30, 2023 and 2022, the Company did not incur any interest or penalties and none are accrued at September 30, 2023.

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.

Earnings Per Share: The restricted stock units grant Class I shares issued to FS Real Estate Advisor and Rialto for payment of the administrative services fee are considered to be participating securities. The impact of these restricted stock units on basic and diluted earnings per common share (“EPS”) has been calculated using the two-class method whereby earnings are allocated to the restricted stock units based on dividends declared and the restricted stock units’ participation rights in undistributed earnings. As of September 30, 2023 and December 31, 2022, the effects of the two-class method on basic and diluted EPS were not material to the Company’s consolidated financial statements.

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 September 30, 2023, 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.

22

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, net

The following table details overall statistics for the Company’s loans receivable portfolio as of September 30, 2023 and December 31, 2022:

	September 30, 2023 (Unaudited)			December 31, 2022
Number of loans		143			142
Principal balance	$	7,735,561		$	7,350,271
Net book value	$	7,665,632		$	7,350,315
Unfunded loan commitments(1)	$	456,666		$	574,510
Weighted-average cash coupon(2)(3)		+3.90	%		+3.83	%
Weighted-average all-in yield(2)(3)		+3.97	%		+3.90	%
Weighted-average maximum maturity (years)(4)		3.3			4.0

(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 expressed as a spread over the relevant benchmark rates, which include 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) As of September 30, 2023, the one-month SOFR rate was 5.32%. As of December 31, 2022, the one-month LIBOR rate was 4.39% and the one-month SOFR rate was 4.36%.

(4) Maximum maturity assumes all extension options are exercised by the borrowers; however, loans may be repaid prior to such date.

For the nine months ended September 30, 2023 and 2022, the activity in the Company’s loan portfolio, was as follows:

	For the Nine Months Ended September 30,
	2023			2022
Loans receivable at beginning of period	$	7,350,315		$	3,841,868
Loan fundings		1,014,971			3,731,304
Loan repayments		(631,692	)		(483,832	)
Amortization of deferred fees on loans		5,159			2,973
Exit and extension fees received on loans receivable		(851	)		(472	)
Loans receivable at end of period		7,737,902			7,091,841
CECL reserve		(72,270	)		—
Loans receivable, net, at end of period	$	7,665,632		$	7,091,841

23

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, net (continued)

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 September 30, 2023 and December 31, 2022:

	September 30, 2023 (Unaudited)						December 31, 2022
Property Type	Net Book Value			Percentage			Net Book Value		Percentage
Multifamily	$	4,752,761			61	%	$	4,439,830		61	%
Hospitality		1,025,990			13	%		792,305		11	%
Office		678,392			9	%		755,797		10	%
Industrial		573,407			7	%		369,551		5	%
Retail		268,112			4	%		424,374		6	%
Self Storage		200,490			3	%		317,861		4	%
Various		142,919			2	%		156,031		2	%
Mixed Use		95,831			1	%		94,566		1	%
Loans receivable at end of period		7,737,902			100	%		7,350,315		100	%
CECL reserve		(72,270	)					—
Loans receivable, net, at end of period	$	7,665,632					$	7,350,315

	September 30, 2023 (Unaudited)						December 31, 2022
Geographic Location(1)	Net Book Value			Percentage			Net Book Value		Percentage
South	$	3,753,978			49	%	$	3,719,093		51	%
West		1,546,279			20	%		1,487,391		20	%
Northeast		1,430,235			18	%		1,326,408		18	%
Various		688,390			9	%		507,105		7	%
Midwest		319,020			4	%		310,318		4	%
Loans receivable at end of period		7,737,902			100	%		7,350,315		100	%
CECL reserve		(72,270	)					—
Loans receivable, net, at end of period	$	7,665,632					$	7,350,315

(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.

24

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, net (continued)

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:

	September 30, 2023 (Unaudited)								December 31, 2022
Risk Rating	Number of Loans		Net Book Value			Percentage			Number of Loans		Net Book Value		Percentage
1		—	$	—			—			—	$	—		—
2		—		—			—			—		—		—
3		132		7,293,831			95	%		142		7,350,315		100	%
4		10		407,584			5	%		—		—		—
5		1		36,487			—	%		—		—		—
Loans receivable at end of period		143		7,737,902			100	%		142		7,350,315		100	%
CECL reserve				(72,270	)							—
Loans receivable, net, at end of period			$	7,665,632							$	7,350,315

Current Expected Credit Loss Reserve

The CECL reserve required under GAAP reflects the Company’s current estimate of potential credit losses related to the loans and debt securities included in its consolidated balance sheets. The general CECL reserve is measured on a collective basis wherever similar risk characteristics exist within a pool of similar assets. The Company has identified senior loans and mezzanine loans as pools within its loans receivable portfolio. Refer to Note 2 for further discussion of the Company’s CECL reserve.

The following table provides details on the changes in CECL reserve for funded loans by investment pool:

	Senior Loans			Mezzanine Loans			Total
CECL Reserve as of December 31, 2022	$	—		$	—		$	—
CECL reserve recorded on January 1, 2023		35,456			3,963			39,419
Increase (Decrease) in general CECL reserve		1,224			378			1,602
CECL reserve as of March 31, 2023	$	36,680		$	4,341		$	41,021
Increase (Decrease) in general CECL reserve		29,456			1,162			30,618
Increase (Decrease) in specific CECL reserve		2,967			—			2,967
CECL reserve as of June 30, 2023	$	69,103		$	5,503		$	74,606
Increase (Decrease) in general CECL reserve		(2,291	)		(45	)		(2,336	)
Increase (Decrease) in specific CECL reserve		—			—			—
CECL reserve as of September 30, 2023	$	66,812		$	5,458		$	72,270

25

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, net (continued)

The Company’s initial CECL reserve against its loans receivable portfolio of $39,419 recorded on January 1, 2023 is reflected as a direct charge to retained earnings on its unaudited consolidated statements of changes in equity; however subsequent changes to the CECL reserve are recognized through net income on its unaudited consolidated statements of operations. During the three and nine months ended September 30, 2023, the Company recorded a decrease of $2,336 and an increase of $32,851, respectively, in expected credit loss reserve against its loans receivable portfolio, bringing the total CECL reserve to $72,270 as of September 30, 2023.

The Company had one risk-rated 5 senior office loan located in Seattle, WA, originated in December 2021, with an outstanding principal balance of $36,500, amortized cost of $36,487, and an unfunded commitment of $9,600 as of September 30, 2023. The property experienced slower than anticipated leasing activity due to softness in the overall Seattle market office trends. During the three and nine months ended September 30, 2023, the Company recorded a $2,967 specific CECL reserve related to the loan calculated using the loan’s collateral fair value, which was determined by applying a capitalization rate of 7.25% and a discount rate of 9.25%. In May 2023, this loan was placed on non-accrual status and future interest collections will be accounted for under the cost recovery method. The Company did not have any additional impaired loans, non-accrual loans, or loans in maturity default within the loans receivable, held-for-investment portfolio as of September 30, 2023.

The Company’s primary credit quality indicator is its risk ratings, which are further discussed in Note 2. The following table presents the net book value of its loans receivable, held-for-investment portfolio as of September 30, 2023 by year of origination and risk rating:

Risk Rating	Net Book Value of Loans Receivable by Year of Origination September 30, 2023 (Unaudited)
	2023		2022		2021		2020		2019		Prior		Total
1	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2		—		—		—		—		—		—		—
3		639,009		3,758,801		2,704,837		84,303		65,431		41,450		7,293,831
4		—		324,836		49,667		17,669		15,412		—		407,584
5		—		—		36,487		—		—		—		36,487
Loans receivable	$	639,009	$	4,083,637	$	2,790,991	$	101,972	$	80,843	$	41,450	$	7,737,902
CECL reserve														(72,270	)
Loans receivable, net													$	7,665,632

26

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, net (continued)

Current Expected Credit Loss Reserve for Unfunded Loan Commitments

As of September 30, 2023, the Company had unfunded commitments of $456,666. The expected credit losses over the contractual period of its loans are subject to the obligation to extend credit through its unfunded loan commitments. See Note 2 for further discussion of the CECL reserve related to its unfunded loan commitments. The following table provides details on the changes in CECL reserve for unfunded loan commitments by investment pool:

	Unfunded Commitments CECL Reserve September 30, 2023 (Unaudited)
	Senior Loans			Mezzanine Loans			Total
Unfunded Loan Commitments
CECL Reserve as of December 31, 2022	$	—		$	—		$	—
CECL reserve recorded on January 1, 2023		1,129			34			1,163
Increase (Decrease) in CECL reserve		(33	)		1			(32	)
CECL reserve as of March 31, 2023	$	1,096		$	35		$	1,131
Increase (Decrease) in CECL reserve		638			(3	)		635
CECL reserve as of June 30, 2023	$	1,734		$	32		$	1,766
Increase (Decrease) in CECL reserve		(122	)		(8	)		(130	)
CECL reserve as of September 30, 2023	$	1,612		$	24		$	1,636

The Company’s initial CECL reserve against its unfunded loan commitments of $1,163 recorded on January 1, 2023 is reflected as a direct charge to retained earnings on its unaudited consolidated statements of changes in equity; however subsequent changes to the CECL reserve are recognized through net income on the unaudited consolidated statements of operations. During the three and nine months ended September 30, 2023, the Company recorded a decrease of $130 and an increase of $473, respectively, in expected credit loss reserve against its unfunded loan commitments, bringing the Company’s total CECL reserve on its unfunded loan commitments to $1,636 as of September 30, 2023.

Note 4. Mortgage Backed Securities

Mortgage-backed securities, at fair value

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. CMBS accounted for under the fair value option are reported at fair value on the consolidated balance sheets with changes in fair value recorded in the consolidated statements of operations as a component of Net change in unrealized gain (loss) on mortgage-backed securities, fair value option.

27

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 table below summarizes various attributes of the Company’s investments in CMBS reported at fair value as of September 30, 2023 and December 31, 2022, respectively.

								Gross Unrealized							Weighted Average
	Outstanding Face Amount		Amortized Cost Basis		Allowance for Credit Losses			Gains		Losses			Fair Value		Coupon			Remaining Duration (years)
September 30, 2023 (Unaudited)
CMBS, available-for-sale	$	172,392	$	169,739	$	(9,674	)	$	96	$	(8,226	)	$	151,935		10.06	%(1)		14.7
CMBS, fair value option	$	75,830	$	72,835	$	—		$	406	$	(81	)	$	73,160		7.30	%(1)		2.8
December 31, 2022
CMBS, available-for-sale	$	173,207	$	171,369	$	—		$	45	$	(11,950	)	$	159,464		9.18	%(2)		12.7

(1) Calculated using the one-month SOFR rate of 5.32% as of September 30, 2023.

(2) Calculated using the one-month LIBOR rate of 4.39% and the one-month SOFR rate of 4.36% as of December 31, 2022.

As of September 30, 2023, there was one CMBS, available for sale placed on non-accrual status during the quarter with an amortized cost of $14,126. All future interest collections will be accounted for under the cost recovery method.

The Company uses a discounted cash flow method to estimate and recognize an allowance for its available-for sale securities. The following table provides details on the changes in allowance for credit losses for available-for sale securities:

	Nine Months Ended September 30, 2023
Allowance for credit losses at beginning of period	$	—
Additions on securities for which credit losses were not previously recorded		—
(Increase) decrease on securities with previously recorded credit losses		—
Allowance for credit losses as of March 31, 2023		—
Additions on securities for which credit losses were not previously recorded		(6,992	)
(Increase) decrease on securities with previously recorded credit losses		—
Allowance for credit losses as of June 30, 2023		(6,992	)

28

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)

	Nine Months Ended September 30, 2023
Additions on securities for which credit losses were not previously recorded	$	—
(Increase) decrease on securities with previously recorded credit losses		(2,682	)
Allowance for credit losses as of September 30, 2023	$	(9,674	)

The following table presents the gross unrealized losses and estimated fair value of any available-for-sale securities for which an allowance for credit losses has not been recorded that were in an unrealized loss position as of September 30, 2023 and December 31, 2022, 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
September 30, 2023 (Unaudited)
CMBS, available-for-sale	$	175,428	$	97,174	$	(8,312	)	$	(8,183	)
December 31, 2022
CMBS, available-for-sale	$	150,230	$	756	$	(11,889	)	$	(61	)

As of September 30, 2023 and December 31, 2022, there were ten securities and fifteen securities, 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 September 30, 2023 and December 31, 2022, respectively.

	Amortized Cost Basis		Credit Loss Allowance			Net Carrying Amount		Gross Unrecognized Holding Gains		Gross Unrecognized Holding Losses			Fair Value
September 30, 2023 (Unaudited)
CMBS, held-to-maturity	$	74,614	$	(71	)	$	74,543	$	—	$	(7,340	)	$	67,203
December 31, 2022
CMBS, held-to-maturity	$	68,559	$	—		$	68,559	$	—	$	—		$	68,559

29

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 provides details on the changes in CECL reserve for held-to-maturity CMBS:

	September 30, 2023 (Unaudited)
CMBS, held-to-maturity
CECL Reserve as of December 31, 2022	$	—
CECL reserve recorded on January 1, 2023		939
Increase (Decrease) in CECL reserve		(283	)
CECL reserve as of March 31, 2023	$	656
Increase (Decrease) in CECL reserve		(268	)
CECL reserve as of June 30, 2023	$	388
Increase (Decrease) in CECL reserve		(317	)
CECL reserve as of September 30, 2023	$	71

The table below summarizes the maturities of the Company’s investments in held-to-maturity CMBS as of September 30, 2023 and December 31, 2022, respectively:

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
September 30, 2023 (Unaudited)
CMBS, held-to-maturity	$	74,614	$	—	$	44,492	$	30,122	$	—
December 31, 2022
CMBS, held-to-maturity	$	68,559	$	—	$	38,435	$	30,124	$	—

Note 5. Real Estate

Investment in real estate, net, consisted of the following as of September 30, 2023 and December 31, 2022:

	September 30, 2023 (Unaudited)			December 31, 2022
Building and building improvements	$	120,527		$	120,527
Land and land improvements		39,186			39,186
Furniture, fixtures and equipment		1,064			1,064
In-place lease intangibles		33,530			33,402
Total		194,307			194,179
Accumulated depreciation and amortization		(9,131	)		(3,630	)
Real estate, net	$	185,176		$	190,549

30

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 (continued)

The following table details the Company’s future amortization of intangible assets for each of the next five years and thereafter:

	Amortization
2023 (remaining)	$	912
2024		3,814
2025		3,814
2026		3,806
2027		3,803
Thereafter		12,134
Total	$	28,283

The components of rental operations, net on the Company’s unaudited consolidated statements of operations consisted of the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Rental income	$	5,297		$	3,569		$	14,985		$	3,569
Less: depreciation and amortization		(1,835	)		(1,839	)		(5,501	)		(1,839	)
Less: cost of rental operations(1)		(3,696	)		(2,798	)		(11,415	)		(2,798	)
Rental operations, net	$	(234	)	$	(1,068	)	$	(1,931	)	$	(1,068	)

(1) Cost of rental operations during the three and nine months ended September 30, 2023, includes $2,365 and $6,718, respectively, of interest expense related to the mortgage note payable.

Note 6. Financing Arrangements

The following tables present summary information with respect to the Company’s outstanding financing arrangements as of September 30, 2023 and December 31, 2022.

	As of September 30, 2023 (Unaudited)
Arrangement	Weighted  Average Spread(2)			Amount Outstanding(1)		Amount Available		Maturity Date		Carrying Amount of Collateral		Fair Value of Collateral
Collateralized Loan Obligations
2019-FL1 Notes		+1.66	%(2)	$	194,223	$	—		December 18, 2036	$	292,227	$	290,996
2021-FL2 Notes		+1.64	%(2)		640,056		—		May 5, 2038		768,945		761,177
2021-FL3 Notes		+1.61	%(2)		928,483		—		November 4, 2036		1,102,550		1,094,349
2022-FL4 Notes		+2.21	%(5)		837,662		—		January 31, 2039		1,080,659		1,068,520
2022-FL5 Notes		+2.78	%(5)		560,224		—		June 17, 2037		689,919		680,370
2022-FL6 Notes		+2.84	%(5)		552,100		—		August 19, 2037		749,880		742,077
2022-FL7 Notes		+3.18	%(5)		631,042		—		October 17, 2039		814,659		806,603
					4,343,790		—				5,498,839		5,444,092

31

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 September 30, 2023 (Unaudited)
Arrangement	Weighted  Average Spread(2)			Amount Outstanding(1)		Amount Available		Maturity Date		Carrying Amount of Collateral		Fair Value of Collateral
Repurchase Agreements
WF-1 Facility		+1.88	%(3)		48,870		551,130		August 30, 2024		62,596		61,921
GS-1 Facility		+2.83	%(4)		18,781		431,219		January 26, 2025		84,448		83,981
RBC Facility		+1.30	%		29,646		—		N/A		—		—
BB-1 Facility		+1.96	%(5)		11,474		688,526		February 22, 2024		14,801		14,690
MS-1 Facility		+2.65	%(6)		37,537		112,463		October 13, 2025		89,990		88,855
NTX-1 Facility		(3	)		—		250,000		November 10, 2024		—		—
BMO-1 Facility		+2.00	%(3)		80,000		—		March 1, 2024		276,477		276,259
Lucid Facility		+1.15	%(3)		15,867		—		N/A		—		—
					242,175		2,033,338				528,312		525,706
Revolving Credit Facility
MM-1 Facility		+2.14	%(6)(7)		850,000		150,000		September 20, 2029		1,148,927		1,140,393
Barclays Facility		(8	)		—		310,000		August 1, 2025		—		—
					850,000		460,000				1,148,927		1,140,393
Mortgage Loan
Natixis Loan		+2.15	%(6)		124,700		—		July 9, 2025		156,364		184,672
Total				$	5,560,665	$	2,493,338			$	7,332,442	$	7,294,863

(1) The amount outstanding under the facilities approximates their fair value.

(2) The rates are expressed over the relevant floating benchmark rates, which include Term SOFR, and SOFR Average (compounded average of SOFR over a rolling 30-day period).

(3) Benchmark rate is subject to a 0.00% floor. SOFR benchmark rate is selected with respect to a transaction as set forth in the related transaction confirmation for the underlying transaction.

(4) 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.

(5) Term SOFR or SOFR Average (compounded average of SOFR over a rolling 30-day period), subject to a 0.00% floor.

(6) Term SOFR is subject to a 0.00% floor.

(7) The rate applicable under the MM-1 Facility is subject to a credit spread adjustment of 0.11%, which was included when the benchmark transitioned from USD LIBOR to Term SOFR.

(8) Borrowings under the Barclays 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.

32

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, 2022
Arrangement	Weighted Average Interest Rate(2)			Amount Outstanding(1)			Amount Available		Maturity Date		Carrying Amount of Collateral		Fair Value of Collateral
Collateralized Loan Obligations
2019-FL1 Notes		+1.55	%(3)	$	196,785		$	—		December 18, 2036	$	294,751	$	295,040
2021-FL2 Notes		+1.53	%(3)		646,935			—		May 5, 2038		782,767		783,381
2021-FL3 Notes		+1.51	%(3)		928,483			—		November 4, 2036		1,133,769		1,135,195
2022-FL4 Notes		+2.21	%(6)		837,662			—		January 31, 2039		1,081,159		1,080,953
2022-FL5 Notes		+3.05	%(6)		570,112			—		June 17, 2037		689,885		689,246
2022-FL6 Notes		+2.96	%(6)		566,250			—		August 19, 2037		749,837		749,502
2022-FL7 Notes		+3.35	%(6)		637,592			—		October 17, 2039		814,611		814,542
					4,383,819			—				5,546,779		5,547,859
Repurchase Agreements
WF-1 Facility		+2.04	%(4)		375,381			224,619		August 30, 2024		481,146		480,371
GS-1 Facility		+2.40	%(5)		34,519			315,481		January 26, 2023		48,276		47,846
RBC Facility		1.39	%		55,934			—		N/A		85,707		79,274
BB-1 Facility		+2.14	%(6)		186,139			513,861		February 22, 2024		236,783		236,462
MS-1 Facility		+2.86	%(7)		108,263			41,737		October 13, 2025		141,312		140,787
NTX-1 Facility		(4	)		—			187,500		November 10, 2024		—		—
					760,236			1,283,198				993,224		984,740
Revolving Credit Facilities
MM-1 Facility		+2.14	%(7)(8)		310,982			689,018		September 20, 2029		439,431		439,051
Barclays Facility		(9	)		—			310,000		August 1, 2025		—		—
					310,982			999,018				439,431		439,051
Mortgage Loan
Natixis Loan		+2.15	%(7)		124,700	��		2,000		July 9, 2025		158,963		192,039
Total				$	5,579,737		$	2,284,216			$	7,138,397	$	7,163,689

(1) The 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.

33

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)

(7) Term SOFR is subject to a 0.00% floor.

(8) The rate applicable under the MM-1 Facility is subject to a credit spread adjustment of 0.11%, which was included when the benchmark transitioned from USD LIBOR to Term SOFR.

(9) Borrowings under the Barclays 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.

The Company’s average borrowings and weighted average interest rate, including the effect of non-usage fees, for the nine months ended September 30, 2023 were $5,674,603 and 7.12%, respectively. The Company’s average borrowings and weighted average interest rate, including the effect of non-usage fees, for the year ended December 31, 2022 were $4,560,400 and 3.83%, 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 September 30, 2023 and December 31, 2022.

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 outstanding as of September 30, 2023 based on the maturity date of each financing arrangement:

	Collateralized Loan Obligations(1)		Repurchase Agreements		Revolving Credit Facility		Mortgage Loan		Total
2023	$	—	$	—	$	—	$	—	$	—
2024		12,597		140,344		—		—		152,941
2025		103,096		56,318		—		124,700		284,114
2026		556,744		—		—		—		556,744
Thereafter		3,671,353		45,513		850,000		—		4,566,866
Total	$	4,343,790	$	242,175	$	850,000	$	124,700	$	5,560,665

(1) The allocation of repayments under the Company’s collateralized loan obligations is based on the maturity date of each agreement, or the maximum maturity date assuming all extension options are exercised by the borrower if the reinvestment period has expired.

34

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)

Collateralized Loan Obligations

The Company financed certain pools of loans through collateralized loan obligations, which include 2019-FL1, 2021-FL2, 2021-FL3, 2022-FL4, 2022-FL5, 2022-FL6 and 2022-FL7, or collectively, the CLOs. The following table outlines the number of loans, including partial loans, and the principal balance of the collateralized pool of interests for each CLO.

	As of September 30, 2023 (Unaudited)
Collateral Assets	Total Count		Principal Balance
2019-FL1		14	$	292,791
2021-FL2		26		769,064
2021-FL3		30		1,102,723
2022-FL4		25		1,080,841
2022-FL5		25		690,000
2022-FL6		24		750,000
2022-FL7		21		814,814
Total		165	$	5,500,233

Deferred financing costs and discounts related to the collateralization of the CLO notes are amortized to interest expense over the remaining life of the loans. The following table outlines the net book value of the Company’s CLOs on its consolidated balance sheets.

	September 30,
	2023			2022
Face value	$	4,343,790		$	3,772,476
Unamortized deferred financing costs		(27,733	)		(30,649	)
Unamortized discount		(9,785	)		(7,887	)
Net book value	$	4,306,272		$	3,733,940

Repurchase Agreements

The Company has entered into and maintains in effect eight repurchase facilities. The Company, through direct or indirect wholly owned subsidiaries, entered into repurchase agreements with Wells Fargo (the “WF-1 Facility”), Goldman Sachs (the “GS-1 Facility”), Royal Bank of Canada (the “RBC Facility”), Barclays Bank PLC (the “BB-1 Facility”), Morgan Stanley Bank, N.A. (the “MS-1 Facility”), Natixis, New York Branch (the “NTX-1 Facility”), Bank of Montreal (the “BMO-1 Facility”), and Lucid Prime Fund (the “Lucid Facility”). The Company uses repurchase facilities for multiple purposes, including, but not limited to, (i) financing the acquisition and origination of (a) real estate loans or senior controlling participation interests in such loans, (b) pari passu participation interests in mortgage loans and (c) mezzanine loans and, (ii) repurchase transactions of securities and financial instruments. Each repurchase facility is subject to certain representations, warranties, covenants, events of default and indemnities unique to each facility but customary for agreements of this type. Further, the Company has entered into guarantees with respect to each of the repurchase facilities in which the Company guarantees obligations of the facility. Each transaction under each repurchase facility has its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate.

35

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)

The Company incurred deferred financing costs in connection with each repurchase facility, which costs are being amortized to interest expense over the life of that repurchase facility. The following table outlines the net book value of the Company’s repurchase facilities on its consolidated balance sheets.

	September 30,
	2023			2022
Face value	$	242,175		$	883,580
Unamortized deferred financing costs		(2,718	)		(2,976	)
Net book value	$	239,457		$	880,604

WF-1 Facility

On August 24, 2023, FS CREIT Finance WF-1 LLC, an indirect wholly owned special-purpose financing subsidiary of the Company, entered into a Maturity Date and Funding Period Extension Confirmation Letter and Amendment No. 11 to Master Repurchase and Securities Contract, or Eleventh Amendment to Master Repurchase Agreement, amending Master Repurchase and Securities Contract dated as of August 30, 2017 with Wells Fargo Bank, National Association, as buyer. The Eleventh Amendment to Master Repurchase Agreement provides for, among other things, an extension of each of the Maturity Date and the Funding Expiration Date, in each case, from August 30, 2023 to August 30, 2024.

BMO-1 Facility

On August 3, 2023, the Company closed on the 1st Amendment to the Master Repurchase Agreement between Bank of Montreal and FS CREIT Finance BMO-1 LLC. The amendment provides for, among other things, (i) the addition of “component interest,” “component interest documents,” and “component interest note”, (ii) a revision to Schedule 1(b) – Re: Purchased Assets Consisting of Component Interests, and (iii) a revision to Exhibit A – Form of Transaction Request and Confirmation. There are no changes to the economic terms of the agreement.

Revolving Credit Facilities

The Company has entered into, and maintains in effect, two revolving credit facilities, the Barclays Facility and the MM-1 Facility. The Barclays Facility is utilized for purposes of financing the operating expenses and general corporate purposes of the Company and its subsidiaries. The MM-1 Facility is utilized for the purposes of financing the acquisition and origination of commercial mortgage loan assets meeting specified eligibility criteria and concentration limits, pay transaction costs and fund distributions to FS CREIT Finance Holdings, LLC (and ultimately to the Company).

The Company incurred deferred financing costs in connection with each revolving credit facility, which costs are being amortized to interest expense over the life of that facility. The following table details the net book value of the Company’s revolving credit facilities on its consolidated balance sheets.

	September 30,
	2023			2022
Face value	$	850,000		$	704,105
Unamortized deferred financing costs		(10,493	)		(8,383	)
Net book value	$	839,507		$	695,722

36

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 Company incurred deferred financing costs, which are being amortized to interest expense over the life of the facility. The following table details the net book value of the Company’s mortgage loan on its consolidated balance sheets.

	September 30,
	2023			2022
Face value	$	124,700		$	124,700
Unamortized deferred financing costs		(1,220	)		(2,132	)
Net book value	$	123,480		$	122,568

Note 7. Related Party Transactions

Compensation of FS Real Estate Advisor, Rialto and the Dealer Manager

Base Management Fee

Pursuant to the fourth amended and restated advisory agreement dated as of December 1, 2022 or the New 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, the performance fee, the administrative services 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.

Performance Fee

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.

37

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)

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.

Method of Payment

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 Class I PCR agreement 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 (i) realized gains (losses) not otherwise included in GAAP net income (loss), (ii) stockholder servicing fees, and (iii) reimbursements for organization and offering expenses, and excluding (A) non-cash equity compensation expense, (B) non-cash equity based administration fees, (C) depreciation and amortization, (D) 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 (E) 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 then current transaction price per Class I share; provided that no repurchase shall be permitted that would jeopardize the Company’s qualification

38

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)

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.

Administrative Services Fee

On December 1, 2022, the Company and FS Real Estate Advisor entered into the Fourth Amended and Restated Advisory Agreement (the “Advisory Agreement”), which amends and restates the Third Amended and Restated Advisory Agreement, dated December 15, 2021, to replace the reimbursement of administrative service expenses with an administrative services fee equal to 1.0% of the Company’s net asset value per annum attributable to all shares of common stock, before giving effect to any accruals for the base management fee, the performance fee, the administrative services fee, the stockholder servicing fee or any distributions. Under the Advisory Agreement, the administrative services fee will be payable quarterly and in arrears in the cash equivalent number of restricted stock units (“Class I RSUs”) representing the right to receive Class I shares of the Company’s common stock (“Class I shares”) based on the then-current Class I transaction price as of the last day of such quarter. Class I RSUs in payment of the administrative services fee will provide the Adviser the right to receive a number of Class I shares equivalent to the number of Class I RSUs, subject to the terms and conditions set forth in the Class I RSU Agreement.

FS Real Estate Advisor may elect, at a later date, to have the Company repurchase some or all of the Class I shares issued to the Adviser in accordance with the Advisory Agreement, including Class I shares issued pursuant to any Class I RSUs, at a per share price equal to the then-current Class I share transaction price. Such Class I shares will not be subject to the repurchase limits of the Company’s share repurchase plan or any reduction or penalty for an early repurchase, provided that the approval of the Company’s independent directors is required for any repurchase request of FS Real Estate Advisor or Rialto, for Class I shares received as payment for advisory fees that, when combined with any stockholder repurchase requests submitted through the Company’s share purchase plan, would cause the Company to exceed the monthly and quarterly repurchase limitations of its share repurchase plan. The FS Real Estate Advisor will have no registration rights with respect to such Class I shares. Any such Class I shares and Class I RSUs issued to Rialto will have the same rights and conditions as those issued to FS Real Estate Advisor.

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.

39

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)

Class I Restricted Stock Unit Agreement

On December 1, 2022, the Company, FS Real Estate Advisor and Rialto entered into the Class I Restricted Stock Unit Agreement (the “Class I RSU Agreement”). Pursuant to the Class I RSU Agreement, and in accordance with the Advisory Agreement, the administrative services fee will be payable quarterly in arrears on the last day of each quarter in the cash equivalent number of Class I RSUs based on the then-current Class I share transaction price as of the last day of such quarter. On the last day of each quarter, the Company will issue to FS Real Estate Advisor and Rialto the cash equivalent number of Class I RSUs to which each is entitled. Class I RSUs will vest ratably on the first calendar day of the month following the one, two and three-year anniversary of the applicable grant date, provided that (i) 100% of the Adviser’s Class I RSUs will immediately vest upon the nonrenewal or termination of the Advisory Agreement pursuant to Section 12(b)(ii), Section 12(b)(iii) or Section 12(b)(iv) thereof; (ii) 100% of the Sub-Adviser’s Class I RSUs will immediately vest upon the nonrenewal or termination of the sub-advisory agreement between FS Real Estate Advisor and Rialto (the “Sub-Advisory Agreement”) pursuant to Section 9(b)(i), Section 9(b)(iii), Section 9(b)(iv), Section 9(b)(v) or Section 9(b)(vi) thereof; (iii) 100% of the Adviser’s unvested Class I RSUs will be automatically forfeited upon termination of the Advisory Agreement pursuant to Section 12(b)(i) thereof; and (iv) 100% of the Sub-Adviser’s unvested Class I RSUs will be automatically forfeited upon termination of the Sub-Advisory Agreement pursuant to Section 9(b)(ii) thereof. If FS Real Estate Advisor and Rialto resigns as the Company’s adviser or sub-adviser, respectively, then any rights related to the Class I RSUs evidenced thereby as of the date of such resignation will remain outstanding and Class I shares issuable in respect thereof will be issued upon the applicable vesting date. If the Company declares a cash distribution on the Class I shares underlying unvested Class I RSUs, then the Company will credit the account of FS Real Estate Advisor and Rialto with the applicable distribution equivalents, which will be subject to the same vesting and forfeiture restrictions as the Class I RSUs. FS Real Estate Advisor and Rialto, and their respective affiliates and employees, may not request repurchase by the Company of any Class I shares issued under the Class I RSU Agreement for a period of six months from the date of issuance. Thereafter, upon ten days’ written notice to the Company the Company must repurchase any Class I shares requested to be repurchased by FS Real Estate Advisor and Rialto at the most recently published transaction price per Class I share; provided that no repurchase will be permitted that would jeopardize the Company’s qualification as a REIT or violate Maryland law.

Origination Fees

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 nine months ended September 30, 2023 and 2022, $7,418 and $33,237, respectively, in origination fees were paid directly by the borrowers to FS Real Estate Advisor or Rialto and not to the Company. During the nine months ended September 30, 2023 and 2022, $0 and $2,000, respectively, in capital market fees were paid to affiliates of the Company.

40

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)

Offering Costs

FS Investments funded the Company’s offering costs in the amount of $23,902 for the period from November 7, 2016 (Inception) to September 30, 2023. 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.

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. During the nine months ended September 30, 2023, the Company paid $5,159 to FS Real Estate Advisor for offering costs previously funded. As of September 30, 2023, $4,180 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 and sub-advisory agreement during the nine months ended September 30, 2023 and 2022:

			Three Months Ended September 30,				Nine Months Ended September 30,
Related Party	Source Agreement	Description	2023		2022		2023		2022
FS Real Estate Advisor	Advisory Agreement	Base Management Fee(1)	$	9,092	$	6,629	$	25,514	$	15,825
FS Real Estate Advisor	Advisory Agreement	Performance Fee(2)	$	6,354	$	3,904	$	17,742	$	4,056
FS Real Estate Advisor	Advisory Agreement	Administrative Services Expenses(3)	$	—	$	3,434	$	—	$	8,658
FS Real Estate Advisor	Advisory Agreement	Administrative Services Fee(4)	$	7,366	$	—	$	20,682	$	—
FS Real Estate Advisor	Advisory Agreement	Capital Markets Fees	$	—	$	—	$	—	$	2,000
Rialto Capital Management	Sub-Advisory Agreement	Valuation Services Fees(5)	$	108	$	106	$	329	$	299

(1) During the nine months ended September 30, 2023, FS Real Estate Advisor received $23,949, in cash as payment for management fees. During the nine months ended September 2022, FS Real Estate Advisor received $2,007 in cash and $11,409 of performance contingent rights were issued as payment for management fees. As of September 30, 2023 and 2022, there were $9,088 and $0 base management fees payable to FS Real Estate Advisor.

(2) During the nine months ended September 30, 2023 and 2022, $16,160 and $557, respectively, in performance fees were paid to FS Real Estate Advisor. As of September 30, 2023, there were $6,354 performance fees payable to FS Real Estate Advisor.

(3) During the nine months ended September 30, 2022, $7,978, 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.

41

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)

(4) On December 1, 2022, the Company’s method for reimbursing administrative services expense was replaced with an administrative services fee equal to 1.0% of the Company’s net asset value per annum attributable to all shares of common stock, before giving effect to any accruals for the base management fee, the performance fee, the administrative services fee, the stockholder servicing fee or any distributions.

(5) During the nine months ended September 30, 2023 and 2022, $214 and $193, respectively, in valuation fees were paid by the Company to Rialto.

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,

42

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)

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 September 30, 2023 and December 31, 2022, the Company accrued $115,832 and $107,692, 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 I, 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 attributable to each of its classes of common stock. The Company will repay FS Real Estate Advisor or Rialto on

43

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 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.

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 September 30, 2023, the Company accrued $6,592 for reimbursement of expenses that FS Real Estate Advisor and Rialto paid or waived, including $148 in reimbursements for the nine months ended September 30, 2023. During the period from September 13, 2017 (Commencement of Operations) to September 30, 2023, the Company received $6,592 in cash reimbursements from FS Real Estate Advisor. As of September 30, 2023, the Company had $61 of reimbursements due from FS Real Estate Advisor and Rialto.

During the nine months ended September 30, 2023 no expense recoupments were paid to FS Real Estate Advisor and Rialto. As of September 30, 2023, no expense recoupments were payable to FS Real Estate Advisor and Rialto.

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
September 30, 2023	$	—	$	753	$	—	$	—	September 30, 2025
June 30, 2023		61		—		61		—	June 30, 2025
March 31, 2023		87		—		87		—	March 31, 2025
December 31, 2022		605		—		605		—	December 31, 2024
	$	753	$	753	$	753	$	—

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 September 30, 2023, 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 $18,583 and $402, respectively.

44

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)

RIAL 2022-FL8 Transaction

In the second quarter of 2022 and 2023, the Company purchased $36,000 and $15,000, respectively, of 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.

Note 8. Stockholders’ Equity

Below is a summary of transactions with respect to shares of the Company’s common stock during the nine months ended September 30, 2023 and 2022:

	Shares
	Class F			Class Y		Class T			Class S			Class D			Class M			Class I			Total
Balance as of December 31, 2022		857,710			906,648		1,600,878			54,908,336			742,999			4,645,072			34,011,164			97,672,807
Issuance of common stock		—			—		72,725			12,869,916			131,578			734,839			14,478,091			28,287,149
Reinvestment of distributions		22,334			—		33,745			1,484,600			12,790			83,733			1,140,038			2,777,240
Redemptions of common stock		(114,365	)		—		(109,653	)		(5,080,070	)		(37,372	)		(401,787	)		(3,980,011	)		(9,723,258	)
Transfers in or out		(10,259	)		—		(219,302	)		(55,465	)		(174,445	)		(269,434	)		748,035			19,130
Balance as of September 30, 2023		755,420			906,648		1,378,393			64,127,317			675,550			4,792,423			46,397,317			119,033,068
	Amount
	Class F			Class Y		Class T			Class S			Class D			Class M			Class I			Total
Balance as of December 31, 2022	$	21,008		$	22,371	$	38,473		$	1,274,345		$	18,417		$	108,522		$	832,242		$	2,315,378
Issuance of common stock		—			—		1,812			322,941			3,275			18,333			339,042			685,403
Reinvestment of distributions		559			—		838			37,215			318			2,088			27,652			68,670
Redemptions of common stock		(2,862	)		—		(2,723	)		(127,360	)		(929	)		(10,015	)		(96,545	)		(240,434	)
Transfers in or out		(257	)		—		(5,447	)		(1,390	)		(4,338	)		(6,722	)		18,154			—
Accrued stockholder servicing fees(1)		—			—		(49	)		(17,913	)		(16	)		(236	)		—			(18,214	)
Balance as of September 30, 2023	$	18,448		$	22,371	$	32,904		$	1,487,838		$	16,727		$	111,970		$	1,120,545		$	2,810,803

45

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)

	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		—			—		188,212			30,189,475			113,587			1,605,166			20,603,163			52,699,603
Reinvestment of distributions		22,136			—		31,615			877,669			11,074			52,503			503,185			1,498,182
Redemptions of common stock		(74,770	)		—		(33,438	)		(2,268,159	)		(21,931	)		(153,213	)		(1,462,991	)		(4,014,502	)
Transfers in or out		—			—		(1,729	)		—			(18,729	)		(142,726	)		167,368			4,184
Balance as of September 30, 2022		850,244			906,648		1,592,037			51,622,706			726,163			4,238,466			31,177,412			91,113,676
	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		—			—		4,699			760,752			2,840			40,238			503,433			1,311,962
Reinvestment of distributions		554			—		793			22,106			277			1,820			12,288			37,838
Redemptions of common stock		(1,870	)		—		(835	)		(57,119	)		(549	)		(3,840	)		(35,731	)		(99,944	)
Transfers in or out		—			—		(43	)		—			(468	)		(3,580	)		4,091			—
Accrued stockholder servicing fees(1)		—			—		(192	)		(58,903	)		(32	)		(2,431	)		—			(61,558	)
Balance as of September 30, 2022	$	20,822		$	22,371	$	38,284		$	1,197,986		$	18,013		$	99,043		$	763,089		$	2,159,608

(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

46

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)

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 nine months ended September 30, 2023 and 2022, the Company repurchased 9,723,258 and 4,014,502, respectively, shares of common stock under its share repurchase plan representing a total of $240,434 and $99,944, respectively. The Company had no unfulfilled repurchase requests during the nine months ended September 30, 2023 or 2022, 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 nine months ended September 30, 2023:

Record Date	Class F		Class Y		Class T		Class S		Class D		Class M		Class I
January 30, 2023	$	0.1696	$	0.1696	$	0.1259	$	0.1259	$	0.1374	$	0.1374	$	0.1436
February 27, 2023	$	0.1696	$	0.1696	$	0.1259	$	0.1259	$	0.1374	$	0.1374	$	0.1436
March 30, 2023	$	0.1749	$	0.1749	$	0.1312	$	0.1312	$	0.1427	$	0.1427	$	0.1489
April 27, 2023	$	0.1749	$	0.1749	$	0.1312	$	0.1312	$	0.1427	$	0.1427	$	0.1489
May 30, 2023	$	0.1749	$	0.1749	$	0.1312	$	0.1312	$	0.1427	$	0.1427	$	0.1489
June 29, 2023	$	0.1799	$	0.1799	$	0.1362	$	0.1362	$	0.1477	$	0.1477	$	0.1539
July 28, 2023	$	0.1799	$	0.1799	$	0.1362	$	0.1362	$	0.1477	$	0.1477	$	0.1539
August 30, 2023	$	0.1799	$	0.1799	$	0.1362	$	0.1362	$	0.1477	$	0.1477	$	0.1539
September 29, 2023	$	0.1799	$	0.1799	$	0.1362	$	0.1362	$	0.1477	$	0.1477	$	0.1539
Total	$	1.5835	$	1.5835	$	1.1902	$	1.1902	$	1.2937	$	1.2937	$	1.3495

47

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)

The following table reflects the amount of cash distributions that the Company paid on its common stock during the nine months ended September 30, 2023, and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Distributions:
Paid or payable in cash	$	25,820	$	16,473	$	72,406	$	40,805
Reinvested in shares		25,196		15,943		68,670		37,838
Total distributions	$	51,016	$	32,416	$	141,076	$	78,643
Source of distributions:
Cash flows from operating activities	$	51,016	$	32,416	$	141,076	$	78,643
Offering proceeds		—		—		—		—
Total sources of distributions	$	51,016	$	32,416	$	141,076	$	78,643
Net cash provided by (used in) operating activities(1)	$	81,922	$	47,173	$	201,619	$	96,098

(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 October 2023 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
$0.1799	$	0.1799	$	0.1362	$	0.1362	$	0.1477	$	0.1477	$	0.1539

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.

48

FS Credit Real Estate Income Trust, Inc.

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

Note 9. Fair Value of Financial Instruments

The following table presents the Company’s financial assets and liabilities carried at fair value in the consolidated balance sheets by its level in the fair value hierarchy:

	September 30, 2023 (Unaudited)								December 31, 2022
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Financial Assets
Mortgage-backed securities, at fair value	$	225,095	$	—	$	225,095	$	—	$	159,464	$	—	$	159,464	$	—
Mortgage loans held in securitization trusts, at fair value		330,629		—		—		330,629		324,263		—		—		324,263
Interest rate cap		3,246		—		3,246		—		4,616		—		4,616		—
Total	$	558,970	$	—	$	228,341	$	330,629	$	488,343	$	—	$	164,080	$	324,263
Financial Liabilities
Mortgage obligations issued by securitization trusts, at fair value	$	298,170		—	$	298,170		—	$	291,193		—	$	291,193		—

The following table presents the changes in fair value of financial assets which are measured at fair value on a recurring basis using Level 3 inputs to determine fair value for the nine months ended September 30, 2023:

	Mortgage loans held in securitization trusts, at fair value
Fair value at beginning of period	$	324,263
Accretion of discount (amortization of premium)		—
Net realized gain (loss)		—
Net change in unrealized appreciation (depreciation)		6,366
Purchases		—
Sales and repayments		—
Issuances		—
Transfer into Level 3		—
Transfers out of Level 3		—
Consolidation of securitization trusts		—
Deconsolidation of securitization trusts		—
Fair value at end of period	$	330,629
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2023
Included in earnings	$	—
Included in other comprehensive income		—

49

FS Credit Real Estate Income Trust, Inc.

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

Note 9. Fair Value of Financial Instruments (continued)

As of September 30, 2023, the Company utilized a discounted cash flow model, comparable precedent transactions and other market information to quantify Level 3 fair value measurements on a recurring basis. As of September 30, 2023, the key unobservable inputs used in the valuation of mortgage obligations issued by securitization trusts included a blended yield ranging from 12.69% to 16.82% (weighted average blended yield of 14.16%) and a life of 1 to 3.5 years (weighted average life of 2.6 years). Significant increases or decreases in any one of the inputs described above in isolation may result in significantly different fair value of the financial assets and liabilities using such Level 3 inputs.

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:

	September 30, 2023 (Unaudited)						December 31, 2022
	Book Value		Face Amount		Fair Value		Book Value		Face Amount			Fair Value
Financial Assets
Cash, cash equivalents and restricted cash	$	214,875	$	214,875	$	214,875	$	201,618	$	201,618		$	201,618
Loans receivable - held-for-investment(1)	$	7,665,632	$	7,735,561	$	7,655,946	$	7,350,315	$	7,350,271		$	7,339,105
Mortgage-backed securities held-to-maturity	$	74,543	$	80,300	$	67,203	$	68,559	$	80,300		$	68,559
Financial Liabilities
Repurchase agreements(2)	$	239,457	$	242,175	$	242,175	$	756,816	$	760,236		$	760,236
Credit facilities	$	839,507	$	850,000	$	850,000	$	298,544	$	310,982		$	310,982
Collateralized loan obligations(2)(3)	$	4,306,272	$	4,334,005	$	4,334,005	$	4,336,701	$	4,371,684	��	$	4,371,684
Mortgage note payable(2)	$	123,480	$	124,700	$	124,700	$	122,568	$	124,700		$	124,700

(1) Book value of loans receivable represents the face amount, net of CECL reserve, unamortized loan fees and costs and accrual of exit fees, as applicable.

(2) Book value represents the face amount, net of deferred financing costs and discount.

(3) Face value represents the face amount, net of discount.

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 and mortgage obligations are measured using unobservable inputs, or Level 3 inputs.

50

FS Credit Real Estate Income Trust, Inc.

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

Note 9. Fair Value of Financial Instruments (continued)

CMBS, Fair Value Option

As discussed in the “Fair Value of Financial Instruments” section of Note 2 herein, the Company elected the fair value option for certain CMBS mortgage loans in an effort to eliminate an accounting mismatch resulting from consolidation of the related mortgage loans held in securitization trusts. As of September 30, 2023, the fair value and unpaid principal balance of these CMBS, excluding the notional value of interest-only securities and before consolidation of the securitization mortgage loans, were $33,230 and $36,469, respectively. As a result of the consolidation of the mortgage loans, the total fair value balance of $330,629 represents the Company’s economic interest in the asset. The vast majority of this fair value (all except $33,230 at September 30, 2023) is eliminated in consolidation of the related mortgage obligations before arriving at the GAAP balance for the fair value option investment securities.

Note 10. Variable Interest Entities

Consolidated Variable Interest Entities

The following table details the assets and liabilities of the Company’s consolidated variable interest entities as of September 30, 2023 and December 31, 2022:

	September 30, 2023 (Unaudited)		December 31, 2022
Assets:
Restricted cash	$	32,477	$	—
Loans receivable, held-for-investment		5,498,839		5,546,779
Interest receivable		23,228		24,144
Other assets		7,034		853
Mortgage loans held in securitization trusts, at fair value		330,629		324,263
Total assets	$	5,892,207	$	5,896,039
Liabilities
Collateralized loan obligations, net	$	4,306,272	$	4,336,701
Interest payable		12,022		12,631
Other liabilities		533		473
Mortgage obligations issued by securitization trusts, at fair value		298,170		291,193
Total liabilities	$	4,616,997	$	4,640,998

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.

51

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 (continued)

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.

Investment Securities

Mortgage loans and obligations held in securitization trusts consolidated in accordance with ASC 810 are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. The assets and other instruments held by these securitization entities are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the securitization entities do not have any recourse to the general credit of any other consolidated entities, nor to the Company as the primary beneficiary. The mortgage obligations initially represent investment securities on the balance sheet (pre-consolidation). Upon consolidation of the mortgage loans and obligations, the associated investment securities are eliminated, as is the interest income related to those securities.

The inclusion of the assets and liabilities of the mortgage loans and obligations in which the Company is deemed the primary beneficiary has no economic effect on the Company. Its exposure to the obligations of mortgage loans and obligations held in securitization is generally limited to its investment in these entities. The Company is not obligated to provide, nor has provided, any financial support for any of these consolidated structures.

Non-Consolidated Variable Interest Entities

The Company invested in subordinated positions of CMBS trusts which are considered mortgage loans and obligations held in securitization trusts. The Company is not the primary beneficiary of the mortgage loans and obligations because it does not have the power to direct the activities that most significantly affect the mortgage loans and obligations’ economic performance, nor does it provide guarantees or recourse to the mortgage loans and obligations other than standard representations and warranties and, therefore, does not consolidate the mortgage loans and obligations on its balance sheets. The Company has classified its investment in the CMBS as either held-to-maturity or available-for-sale debt securities that are included on the Company’s consolidated balance sheets and are part of the Company’s ongoing impairment review. The Company’s maximum exposure to loss of the securities are limited to its book value of $317,117 as of September 30, 2023.

The Company is not obligated to provide, nor has it provided financial support to these consolidated and non-consolidated mortgage loans and obligations.

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

52

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 (continued)

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. 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 September 30, 2023.

Type of Derivative	Notional Amount		Strike			Effective Date		Maturity Date		Fair Value(1)
Interest Rate Cap	$	126,700		2.25	%		June 21, 2022		July 9, 2024	$	3,246

(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 September 30,					Nine Months Ended September 30,
			2023			2022		2023			2022
Interest Rate Cap	Unrealized Loss	Other income (loss)	$	(762	)	$	1,758	$	(1,370	)	$	309

53

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 are also conducting a private offering of our Class I common stock and 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.

54

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.

The success of our activities is affected by general economic and market conditions, including, among others, interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, and trade barriers. These factors could affect the level and volatility of securities prices and the liquidity of our investments. Volatility or illiquidity could impair our profitability or result in losses. These factors also could adversely affect the availability or cost of our leverage, which would result in lower returns. Future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.

Portfolio Overview

Loan Portfolio Overview

The following table details activity in our loans receivable portfolio for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Loan fundings(1)	$	440,443		$	646,718		$	1,014,971		$	3,731,304
Loan repayments(2)		(247,394	)		(94,796	)		(631,692	)		(483,832	)
Total net fundings	$	193,049		$	551,922		$	383,279		$	3,247,472

(1) Includes new loan originations and additional fundings made under existing loans.

(2) Excludes payment held by servicer during the year ended December 31, 2022.

The following table details overall statistics for our loans receivable portfolio as of September 30, 2023 and December 31, 2022:

	September 30, 2023 (Unaudited)			December 31, 2022
Number of loans		143			142
Principal balance	$	7,735,561		$	7,350,271
Net book value	$	7,665,632		$	7,350,315
Unfunded loan commitments(1)	$	456,666		$	574,510
Weighted-average cash coupon(2)		+3.90	%		+3.83	%
Weighted-average all-in yield(2)		+3.97	%		+3.90	%
Weighted-average maximum maturity (years)(3)		3.3			4.0

(1) We may be required to provide funding when requested by the borrower in accordance with the terms of the underlying agreements.

55

(2) Our floating rate loans are expressed as a spread over 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.

The following table provides details of our loan receivable, held-for-investment portfolio, on a loan-by-loan basis, as of September 30, 2023:

	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		3/7/2018	$	11,000	$	11,000	$	10,987	+5.75%	+5.87%		6/9/2024	Las Vegas, NV	Hospitality	73%
2	Senior Loan		6/11/2018		8,000		8,000		7,999	+5.25%	+5.34%		3/9/2024	Miami, FL	Retail	67%
3	Senior Loan		7/18/2018		22,500		22,500		22,464	+5.36%	+5.53%		8/9/2025	Gaithersburg, MD	Hospitality	73%
4	Senior Loan		4/9/2019		37,000		37,000		36,933	+4.25%	+4.25%		4/9/2025	New York City, NY	Mixed Use	75%
5	Senior Loan		6/28/2019		28,500		28,500		28,498	+5.46%	+5.57%		7/9/2025	Davis, CA	Hospitality	70%
6	Senior Loan		10/22/2019		15,300		15,300		15,412	+5.00%	+5.22%		5/9/2025	Oakland, CA	Mixed Use	74%
7	Mezz Loan		2/14/2020		15,000		15,000		15,000	+7.61%	+7.61%		12/5/2026	Queens, NY	Multifamily	75%
8	Senior Loan		2/19/2020		18,000		14,400		14,402	+3.61%	+3.61%		3/9/2025	Los Angeles, CA	Mixed Use	63%
9	Mezz Loan		2/21/2020		18,102		18,102		18,102	+10.00%	+10.00%		3/1/2030	Various	Industrial	79%
10	Senior Loan		12/10/2020		22,300		17,672		17,669	+5.36%	+5.37%		1/9/2026	Fox Hills, CA	Office	81%
11	Senior Loan		12/18/2020		28,440		24,738		24,737	+4.61%	+4.62%		1/9/2026	Rockville, MD	Office	75%
12	Senior Loan		12/29/2020		11,983		11,808		12,062	+3.86%	+4.03%		1/9/2026	Brooklyn, NY	Multifamily	49%
13	Senior Loan		1/28/2021		16,100		16,100		16,153	+4.61%	+4.74%		2/9/2026	Philadelphia, PA	Self Storage	84%
14	Senior Loan		2/26/2021		18,590		17,706		17,703	+3.36%	+3.37%		3/9/2026	Newark, NJ	Industrial	60%
15	Senior Loan		3/11/2021		32,000		30,000		29,997	+4.61%	+4.70%		3/9/2026	Colleyville, TX	Retail	58%
16	Senior Loan		3/12/2021		52,250		34,251		34,246	+5.86%	+5.87%		3/9/2026	San Francisco, CA	Office	86%
17	Senior Loan		3/19/2021		12,718		12,718		12,768	+4.06%	+4.24%		4/9/2026	Brooklyn, NY	Multifamily	84%
18	Senior Loan		3/25/2021		13,405		12,830		12,855	+3.36%	+3.45%		4/9/2026	Lithonia, GA	Multifamily	72%
19	Senior Loan		3/29/2021		35,880		34,397		34,392	+3.71%	+3.72%		4/9/2026	Arlington, TX	Multifamily	86%
20	Senior Loan		4/15/2021		64,460		64,171		64,164	+2.91%	+2.92%		5/9/2026	Lawrenceville, GA	Multifamily	79%
21	Senior Loan		4/26/2021		68,100		66,000		65,993	+3.26%	+3.27%		5/9/2026	North Las Vegas, NV	Multifamily	72%
22	Senior Loan		4/27/2021		39,050		35,562		35,558	+3.26%	+3.27%		5/9/2026	Jamaica, NY	Industrial	61%
23	Senior Loan		5/4/2021		30,000		24,466		24,463	5.66%	+5.92%		5/9/2026	Richardson, TX	Office	76%
24	Senior Loan		5/10/2021		19,200		17,892		17,886	+3.61%	+3.63%		5/9/2026	University City, PA	Multifamily	71%
25	Senior Loan		5/12/2021		85,000		85,000		85,092	+3.11%	+3.17%		5/9/2026	Detroit, MI	Industrial	75%
26	Senior Loan		5/28/2021		35,785		31,085		31,078	+5.11%	+5.12%		6/9/2026	Austin, TX	Office	57%
27	Senior Loan		6/16/2021		17,500		16,956		16,952	+3.36%	+3.37%		7/9/2026	Everett, WA	Multifamily	82%
28	Senior Loan		6/16/2021		15,406		15,320		15,316	+3.36%	+3.37%		7/9/2026	Everett, WA	Multifamily	78%
29	Senior Loan		6/23/2021		48,944		48,155		48,147	+2.91%	+2.92%		7/9/2026	Roswell, GA	Multifamily	81%
30	Senior Loan		6/24/2021		38,600		38,085		38,077	+3.86%	+3.87%		7/9/2026	Austin, TX	Multifamily	82%
31	Senior Loan		6/25/2021		25,000		24,441		24,437	+3.16%	+3.17%		7/9/2026	Austin, TX	Multifamily	70%
32	Senior Loan		7/7/2021		52,200		47,173		47,165	+3.11%	+3.12%		7/9/2026	Austin, FL	Multifamily	78%
33	Senior Loan		7/13/2021		21,350		21,350		21,342	+3.51%	+3.53%		8/9/2026	Grand Prairie, TX	Multifamily	72%
34	Senior Loan		7/20/2021		21,136		18,828		18,858	3.36%	+3.46%		8/9/2026	Las Vegas, NV	Multifamily	74%
35	Senior Loan		7/21/2021		41,300		40,617		40,613	+2.91%	+2.92%		8/9/2026	Evanston, IL	Multifamily	82%
36	Senior Loan		7/22/2021		62,100		60,858		60,849	+3.41%	+3.42%		8/9/2026	Nashville, TN	Multifamily	76%
37	Senior Loan		7/28/2021		43,350		42,592		42,583	+3.11%	+3.12%		8/9/2026	Sandy Springs, GA	Multifamily	81%
38	Senior Loan		7/29/2021		62,500		62,500		62,498	+3.21%	+3.22%		8/9/2026	Maitland, FL	Multifamily	72%
39	Senior Loan		7/29/2021		47,500		47,500		47,498	+3.21%	+3.22%		8/9/2026	Clearwater, FL	Multifamily	79%
40	Senior Loan		8/2/2021		60,130		58,947		58,934	+2.91%	+2.92%		8/9/2026	Austin, TX	Multifamily	75%
41	Senior Loan		8/3/2021		46,500		46,500		46,501	+3.21%	+3.28%		8/9/2026	San Antonio, TX	Multifamily	73%
42	Senior Loan		8/3/2021		38,500		38,500		38,499	+3.21%	+3.28%		8/9/2026	San Antonio, TX	Multifamily	71%
43	Senior Loan		8/6/2021		20,000		20,000		20,045	+3.21%	+3.31%		8/9/2026	Sandy Springs, GA	Multifamily	74%
44	Senior Loan		8/9/2021		53,160		51,836		51,827	+3.26%	+3.27%		8/9/2026	Philadelphia, PA	Multifamily	80%
45	Senior Loan		8/9/2021		42,660		41,526		41,521	+3.16%	+3.17%		8/9/2026	Southaven, MS	Multifamily	61%

56

	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)
46	Senior Loan		8/13/2021	$	29,817	$	26,475	$	26,503	+3.21%	+3.30%		9/9/2026	Various	Industrial	76%
47	Senior Loan		8/19/2021		43,000		43,000		42,991	+3.21%	+3.22%		9/9/2026	Omaha, NE	Multifamily	75%
48	Senior Loan		8/25/2021		41,395		41,043		41,034	+3.26%	+3.27%		9/9/2026	Cypress, TX	Multifamily	70%
49	Senior Loan		8/26/2021		21,805		21,605		21,596	+3.21%	+3.23%		9/9/2026	Seattle, WA	Multifamily	75%
50	Senior Loan		8/31/2021		37,391		37,391		37,386	+3.21%	+3.31%		9/9/2026	Colorado Springs, CO	Multifamily	74%
51	Senior Loan		9/10/2021		71,201		68,556		68,541	+3.01%	+3.02%		10/9/2026	Richardson, TX	Multifamily	72%
52	Senior Loan		9/23/2021		16,300		15,343		15,421	+4.36%	+4.61%		9/9/2026	Various	Multifamily	82%
53	Mezz Loan		10/1/2021		53,306		53,306		52,929	+10.00%	+10.60%		4/1/2026	Various	Various	93%
54	Senior Loan		10/12/2021		130,747		130,747		130,747	+3.11%	+3.11%		6/9/2026	Philadelphia, PA	Multifamily	67%
55	Senior Loan		10/28/2021		40,200		39,283		39,272	+3.11%	+3.12%		11/9/2026	Dallas, TX	Multifamily	87%
56	Senior Loan		11/1/2021		48,906		47,675		47,665	+3.81%	+3.82%		11/9/2026	Fort Lauderdale, FL	Office	72%
57	Senior Loan		11/1/2021		42,300		41,263		41,253	+3.61%	+3.62%		11/9/2026	Doraville, GA	Multifamily	85%
58	Senior Loan		11/4/2021		37,300		37,300		37,300	+3.45%	+3.95%		11/1/2024	Boca Raton, FL	Multifamily	84%
59	Senior Loan		11/5/2021		55,960		52,367		52,362	+3.21%	+3.22%		11/9/2026	Houston, TX	Industrial	79%
60	Senior Loan		11/5/2021		36,325		35,840		35,825	+3.21%	+3.22%		11/9/2026	Mesquite, TX	Multifamily	81%
61	Senior Loan		11/10/2021		47,162		44,712		44,773	+3.86%	+4.20%		11/9/2026	Fayetteville, AR	Multifamily	71%
62	Senior Loan		11/18/2021		27,387		27,387		27,380	+3.71%	+3.72%		12/9/2026	Brooklyn, NY	Self Storage	70%
63	Senior Loan		11/23/2021		47,600		41,239		41,232	+3.05%	+3.06%		12/9/2026	Dallas, TX	Multifamily	73%
64	Senior Loan		11/23/2021		32,000		27,802		27,796	+3.05%	+3.06%		12/9/2026	Dallas, TX	Multifamily	74%
65	Senior Loan		11/30/2021		38,310		37,193		37,350	+4.45%	+4.70%		12/9/2026	Memphis, TN	Office	74%
66	Senior Loan		12/3/2021		34,327		34,327		34,322	+3.45%	+3.45%		12/9/2026	Various	Self Storage	68%
67	Senior Loan		12/3/2021		18,828		18,828		18,824	+3.45%	+3.46%		12/9/2026	Various	Self Storage	66%
68	Senior Loan		12/15/2021		85,000		81,800		81,788	+3.35%	+3.35%		12/9/2026	Sunny Isles, FL	Multifamily	74%
69	Senior Loan		12/15/2021		49,000		49,000		48,988	+3.45%	+3.46%		12/9/2026	Ladson, SC	Multifamily	77%
70	Senior Loan		12/15/2021		28,400		27,372		27,365	+3.30%	+3.31%		12/9/2026	Arlington, TX	Multifamily	83%
71	Senior Loan		12/16/2021		33,000		31,504		31,492	+3.55%	+3.56%		1/9/2027	Fort Worth, TX	Multifamily	74%
72	Senior Loan		12/17/2021		46,100		36,500		36,487	+4.30%	+4.39%		1/9/2027	Seattle, WA	Office	53%
73	Senior Loan		12/21/2021		65,450		65,450		65,440	+4.35%	+4.36%		1/9/2027	Dallas, TX	Hospitality	58%
74	Senior Loan		12/21/2021		93,900		87,743		87,734	+3.80%	+3.80%		1/9/2027	Houston, TX	Multifamily	94%
75	Senior Loan		12/21/2021		36,000		36,000		35,988	+3.45%	+3.46%		1/9/2027	Hackensack, NJ	Multifamily	71%
76	Senior Loan		12/22/2021		81,500		59,447		59,671	+4.75%	+4.92%		1/9/2027	Farmers Branch, TX	Office	63%
77	Senior Loan		12/23/2021		83,400		74,554		74,537	+4.45%	+4.46%		1/9/2027	Westminster, CO	Retail	70%
78	Senior Loan		12/30/2021		95,000		95,000		94,989	+4.20%	+4.20%		1/9/2027	San Diego, CA	Hospitality	58%
79	Senior Loan		1/7/2022		58,000		56,898		57,065	+4.36%	+4.54%		11/9/2026	Miami, FL	Hospitality	52%
80	Senior Loan		1/7/2022		36,000		36,000		36,000	+3.80%	+3.80%		1/9/2027	Jupiter, FL	Office	72%
81	Senior Loan		1/13/2022		103,600		94,636		94,616	+3.55%	+3.56%		1/9/2027	Austin, TX	Multifamily	83%
82	Senior Loan		1/28/2022		24,489		24,489		24,539	+3.81%	+4.01%		9/9/2026	Mesquite, TX	Multifamily	78%
83	Senior Loan		1/28/2022		43,650		36,581		36,666	+4.00%	+4.13%		2/9/2027	Milwaukee, WI	Office	65%
84	Senior Loan		1/28/2022		22,149		22,149		22,192	+3.81%	+4.01%		9/9/2026	Dallas, TX	Multifamily	85%
85	Senior Loan		1/28/2022		31,229		31,229		31,292	+3.81%	+4.01%		9/9/2026	Dallas, TX	Multifamily	83%
86	Senior Loan		2/4/2022		89,000		89,000		89,738	+3.85%	+3.85%		2/1/2025	Temecula, CA	Multifamily	75%
87	Senior Loan		2/15/2022		58,750		56,943		56,929	+3.50%	+3.51%		3/9/2027	Antioch, TN	Multifamily	80%
88	Senior Loan		2/17/2022		55,400		50,093		50,152	+4.10%	+4.19%		3/9/2027	Indianapolis, IN	Multifamily	87%
89	Senior Loan		2/18/2022		49,240		33,992		33,978	+3.90%	+3.91%		3/9/2027	Atlanta, GA	Office	76%
90	Senior Loan		2/28/2022		75,000		74,299		74,299	+3.85%	+3.85%		3/9/2027	Atlanta, GA	Multifamily	70%
91	Senior Loan		3/7/2022		53,885		50,238		50,299	+3.50%	+3.59%		3/9/2027	Humble, TX	Multifamily	79%
92	Senior Loan		3/9/2022		84,000		80,787		80,787	+3.55%	+3.55%		3/9/2027	Temple Hills, MD	Multifamily	76%
93	Senior Loan		3/10/2022		110,150		90,577		90,559	+5.00%	+5.01%		4/9/2027	Santa Clara, CA	Office	62%
94	Senior Loan		3/14/2022		42,000		40,478		40,576	+3.50%	+3.67%		4/9/2027	Dallas, TX	Multifamily	77%
95	Senior Loan		3/22/2022		50,750		50,750		50,750	+3.60%	+3.60%		4/9/2027	Humble, TX	Multifamily	67%
96	Senior Loan		3/31/2022		120,470		86,552		86,539	+4.30%	+4.30%		4/9/2027	Addison, TX	Office	69%
97	Senior Loan		4/6/2022		46,500		44,462		44,447	+3.50%	+3.51%		4/9/2027	Atlanta, GA	Multifamily	80%
98	Mezz Loan		4/6/2022		5,379		5,379		5,379	+11.00%	+11.00%		4/9/2027	Atlanta, GA	Multifamily	90%
99	Senior Loan		4/13/2022		62,650		56,294		56,275	+3.90%	+3.91%		5/9/2027	Houston, TX	Multifamily	81%
100	Senior Loan		4/26/2022		69,350		63,340		63,321	+3.72%	+3.73%		5/9/2027	Tucson, AZ	Multifamily	68%
101	Senior Loan		4/26/2022		49,125		45,372		45,473	+4.05%	+4.38%		5/9/2027	Decatur, GA	Multifamily	73%
102	Senior Loan		4/27/2022		67,940		63,473		63,506	+4.00%	+4.06%		5/9/2027	Indianapolis, IN	Multifamily	87%
103	Senior Loan		4/27/2022		31,800		28,316		28,307	+4.30%	+4.31%		5/9/2027	Morrow, GA	Industrial	77%

57

	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)
104	Senior Loan		4/28/2022	$	195,000	$	195,000	$	195,196		+4.65%	+4.74%		5/9/2027	New York, NY	Hospitality	70%
105	Senior Loan		4/29/2022		90,000		90,000		90,000		+3.55%	+3.55%		5/6/2027	Reseda, CA	Multifamily	69%
106	Senior Loan		4/29/2022		37,136		35,349		35,383		+3.75%	+3.84%		5/9/2027	Euless, TX	Multifamily	82%
107	Senior Loan		5/12/2022		58,165		56,605		56,595		+3.35%	+3.36%		5/9/2027	Denver, CO	Multifamily	79%
108	Mezz Loan		5/12/2022		5,785		5,785		5,785		+10.50%	+10.50%		5/9/2027	Denver, CO	Multifamily	87%
109	Senior Loan		5/13/2022		93,500		92,469		92,619		+4.25%	+4.39%		5/9/2027	New York, NY	Multifamily	64%
110	Senior Loan		5/13/2022		89,500		86,657		86,800		+4.25%	+4.39%		5/9/2027	New York, NY	Multifamily	63%
111	Senior Loan		5/18/2022		105,000		105,000		105,000		+3.50%	+3.50%		6/9/2027	New Rochelle, NY	Multifamily	61%
112	Senior Loan		5/20/2022		63,000		62,364		62,357		+4.15%	+4.15%		5/9/2027	Montauk, NY	Hospitality	80%
113	Senior Loan		5/26/2022		108,500		100,349		100,450		+3.40%	+3.58%		6/9/2027	Mesa, AZ	Multifamily	68%
114	Senior Loan		6/8/2022		144,160		144,160		144,627		+3.89%	+4.14%		6/9/2027	New York, NY	Multifamily	73%
115	Mezz Loan		6/8/2022		15,840		15,840		15,892		+7.50%	+7.75%		6/9/2027	New York, NY	Multifamily	81%
116	Senior Loan		6/9/2022		365,610		351,276		351,245		3.30%	+3.30%		6/9/2027	Various	Multifamily	75%
117	Senior Loan		6/14/2022		104,630		91,030		91,014		+3.80%	+3.81%		6/9/2027	San Jose, CA	Industrial	36%
118	Senior Loan		6/16/2022		52,280		49,201		49,194		+3.80%	+3.80%		7/9/2027	Jacksonville, FL	Multifamily	77%
119	Senior Loan		6/23/2022		57,000		48,946		48,990		+4.75%	+4.84%		7/9/2027	Seattle, WA	Multifamily	69%
120	Senior Loan		6/28/2022		100,000		100,000		99,983		+3.15%	+3.16%		7/9/2027	Fayetteville, NC	Multifamily	76%
121	Senior Loan		6/30/2022		106,000		100,000		99,989		+4.15%	+4.15%		7/9/2027	Lynwood, CA	Retail	61%
122	Senior Loan		7/7/2022		57,250		55,542		55,590		+4.35%	+4.44%		7/9/2027	Birmingham, AL	Retail	72%
123	Senior Loan		7/15/2022		107,000		85,000		84,980		+3.70%	+3.71%		8/9/2027	Middletown, DE	Industrial	68%
124	Senior Loan		7/20/2022		85,690		80,962		81,028		+3.65%	+3.74%		8/9/2027	Phoenix, AZ	Multifamily	61%
125	Senior Loan		8/4/2022		90,000		90,000		89,990		+3.65%	+3.65%		8/9/2027	Santa Barbara, CA	Various	60%
126	Senior Loan		8/17/2022		55,600		53,404		53,437		+3.85%	+3.94%		9/9/2027	Austin, TX	Multifamily	63%
127	Senior Loan		8/25/2022		45,000		45,000		45,234		+3.50%	+4.00%		9/9/2027	McKinney, TX	Multifamily	53%
128	Senior Loan		9/8/2022		87,000		74,628		74,710		+4.25%	+4.34%		9/9/2027	Washington, DC, MD	Hospitality	53%
129	Senior Loan		9/22/2022		103,552		103,552		103,811		+3.66%	+3.79%		9/1/2024	Various	Self Storage	74%
130	Senior Loan		9/30/2022		40,000		34,500		34,585		+5.00%	+5.27%		10/9/2027	New Orleans, LA	Hospitality	64%
131	Senior Loan		10/3/2022		91,100		81,300		81,284		+4.50%	+4.51%		10/9/2027	Miami, FL	Office	48%
132	Senior Loan		10/13/2022		60,000		54,000		54,048		+4.25%	+4.33%		10/9/2027	Pinehurst, NC	Multifamily	60%
133	Mezz Loan		10/20/2022		31,111		29,084		29,084		+6.50%	+6.50%		10/9/2027	Philadelphia, PA	Mixed Use	15%
134	Senior Loan		11/3/2022		73,000		51,350		51,386		+4.75%	+4.85%		11/9/2027	Adairsville, GA	Hospitality	45%
135	Senior Loan		11/15/2022		146,200		146,200		146,200		+4.21%	+4.21%		11/9/2027	Nashville, TN	Hospitality	51%
136	Senior Loan		12/21/2022		55,000		53,451		53,467		+3.85%	+3.95%		12/9/2027	San Bernardino, CA	Multifamily	67%
137	Senior Loan		1/13/2023		100,000		100,000		100,088		+4.75%	+4.87%		1/13/2025	New York, NY	Hospitality	41%
138	Senior Loan		1/20/2023		138,407		120,407		120,407		+3.70%	+3.70%		2/9/2028	Various	Industrial	95%
139	Mezz Loan		1/20/2023		15,379		13,379		13,379		+5.20%	+5.20%		2/9/2028	Various	Industrial	106%
140	Senior Loan		3/29/2023		48,010		48,010		46,619		+2.25%	+4.19%		10/9/2027	Various	Multifamily	57%
141	Senior Loan		7/14/2023		156,500		156,500		156,491		+4.00%	+4.05%		7/9/2028	Various	Multifamily	69%
142	Senior Loan		7/18/2023		128,000		120,000		120,000		+3.75%	+3.75%		8/9/2026	Jersey City, NJ	Multifamily	55%
143	Senior Loan		7/31/2023		82,000		82,000		82,025		+4.95%	+5.12%		8/9/2028	Berkeley, CA	Hospitality	58%
Total/Weighted Average				$	8,192,227	$	7,735,561	$	7,737,902		+3.90%	+3.97%
CECL Reserve									(72,270	)
Loans receivable, net								$	7,665,632

(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 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.

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Results of Operations

The following table sets forth information regarding our unaudited consolidated results of operations for the nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net interest income
Interest income	$	192,867		$	111,575		$	551,164		$	226,436
Less: Interest expense		(110,572	)		(59,107	)		(315,461	)		(104,506	)
Interest income on mortgage loans held in securitization trusts		4,363			—			11,590			—
Less: Interest expense on mortgage obligations issued by securitization trusts		(3,425	)		—			(9,283	)		—
Net interest income		83,233			52,468			238,010			121,930
Other expenses
Management fee		9,092			6,629			25,514			15,825
Performance fee		6,354			3,904			17,742			4,056
General and administrative expenses		10,008			5,685			30,446			14,528
Less: Expense limitation		—			—			(148	)		—
Add: Expense recoupment to sponsor		753			256			753			3,026
Net other expenses		26,207			16,474			74,307			37,435
Other income (loss)
(Increase) decrease in current expected credit loss reserve		101			—			(42,130	)		—
Income (loss) from rental operations, net		(234	)		(1,068	)		(1,931	)		(1,068	)
Net change in unrealized gain on interest rate cap		(762	)		1,758			(1,370	)		309
Net realized gain (loss) on extinguishment of debt		265			—			265			—
Net change in unrealized gain (loss) on mortgage-backed securities, fair value option		45			—			325			—
Unrealized gain (loss) on mortgage loans and obligations held in securitization trusts, net		(213	)		—			(742	)		—
Total other income (loss)		(798	)		690			(45,583	)		(759	)
Net income before taxes		56,228			36,684			118,120			83,736
Income tax expense		(274	)		(348	)		(2,260	)		(831	)
Net income		55,954			36,336			115,860			82,905
Preferred stock dividends		(3	)		(3	)		(11	)		(11	)
Net income attributable to FS Credit Real Estate Income Trust, Inc.	$	55,951		$	36,333		$	115,849		$	82,894

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

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borrowings in order to support our investment activities. The increase in interest income on mortgage loans held in securitization trusts, and interest expense on mortgage obligations issued by securitization trusts was attributable to the consolidation of securitization vehicles.

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 and fees, 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, transfer agent fees, fees paid to our board of directors, loan servicing expenses, administrative services expenses and fees, and related costs associated with legal, regulatory compliance and investor relations, but excluding the following: (a) management fees and performance fees paid to FS Real Estate Advisor pursuant to the Advisory Agreement, (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 September 30, 2023. 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 September 30, 2023, we accrued $6,592 for reimbursement of expenses that FS Real Estate Advisor and Rialto paid or waived, including $148 in reimbursements for the nine months ended September 30, 2023. During the period from September 13, 2017 (Commencement of Operations) to September 30, 2023, we received $6,592 in cash reimbursements from FS Real Estate Advisor. As of September 30, 2023, we had $0 of reimbursements due from FS Real Estate Advisor and Rialto.

During the nine months ended September 30, 2023, no expense recoupments were paid to FS Real Estate Advisor and Rialto. As of September 30, 2023, no expense recoupments were payable to FS Real Estate Advisor and Rialto.

Changes in current expected credit loss reserve

During the three and nine months ended September 30, 2023, our expected credit loss reserve increased by $101 and $42,130, respectively. The increase reflects a specific CECL reserve on a loan in our portfolio, as well as a more adverse macroeconomic outlook.

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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 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.

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Our FFO and MFFO are calculated for the three and nine months ended September 30, 2023 and 2022 as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net income (GAAP)	$	55,954		$	36,336		$	115,860		$	82,905
Adjustments to arrive at funds from operations:
Real estate depreciation and amortization		1,835			1,839			5,501			1,839
Funds from operations	$	57,789		$	38,175		$	121,361		$	84,744
Adjustments to arrive at modified funds from operations:
Accretion of discount on mortgage-backed securities held-to-maturity		(679	)		(198	)		(6,055	)		(497	)
Straight-line rental income		(547	)		(342	)		(2,877	)		(342	)
Net change in unrealized (gain) loss on interest rate cap		762			(1,758	)		1,370			(309	)
Net change in current expected credit loss reserve		(101	)		—			42,130			—
Net change in unrealized (gain) loss on mortgage-backed securities fair value option		(45	)		—			(325	)		—
Unrealized (gain) loss on mortgage loans and obligations held in securitization trusts, net		213			—			742			—
Modified funds from operations	$	57,392		$	35,877		$	156,346		$	83,596

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.

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. 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. We recorded an initial current expected credit loss (“CECL”) reserve to our loans receivable, held-for-investment and our mortgage-backed securities, held-to-maturity portfolios, as required by GAAP, upon the adoption of ASU 2016-13 on January 1, 2023. Our general CECL reserve is not considered impairment and is excluded from our NAV calculation consistent with other unrealized gains (losses) for investments expected to be held to maturity pursuant to our existing policy for calculating NAV. We recognize such potential credit losses in the NAV calculation if and when a loan is 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 loan specific reserve. See Note 2 to our unaudited consolidated financial statements included herein for additional information regarding our accounting

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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 that we do not classify as held-to-maturity 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 securities for which there is no readily available market quotations, FS Real Estate Advisor will value the security using current market data and a valuation provided by an independent third-party valuation firm. Each investment will be valued by FS Real Estate Advisor no less frequently than quarterly.

• Investments in real estate are initially 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 monthly by the Adviser using current market data and a valuation provided by an independent third-party valuation firm. The independent third-party valuation firm will provide a monthly valuation for each property using the discounted cash flow methodology (income approach) as a primary methodology, although other industry standard methodologies may be used, including the sales comparison and replacement cost approaches. Further, the independent third-party valuation firm will provide an annual valuation for each property, which will be consistent with its monthly valuation but will also reflect (i) property specific factors such as property income, cash flow forecasts, capital improvements and key performance indicators (e.g. occupancy rates) and (ii) market specific factors such as discount rates, capitalization rates and market sale transactions.

• Liabilities include repurchase agreements payable, credit facility payable, collateralized loan obligations, mortgage 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 the base management fee is a class-specific expense for Class T, Class S, Class D, Class M and Class I shares, and the performance fee is a class-specific expense for Class T, Class S, Class D, Class M, Class I and Class Y shares. Class I PCRs will not be treated as a liability unless and until Class I shares are issuable pursuant to the Advisory Agreement and Amended and Restated PCR Agreement.

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 9 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 September 30, 2023:

Components of NAV	September 30, 2023
Cash and cash equivalents	$	166,940
Restricted cash		47,935
Loans receivable, net of specific CECL reserve of $2,967		7,734,935
Mortgage-backed securities held-to-maturity		74,614
Mortgage-backed securities, at fair value		225,095
Interest receivable		35,987
Investment in real estate		184,672
Receivable for investment sold and repaid		46,316
Other assets		1,819
Mortgage loans held in securitization trusts, at fair value		330,629
Repurchase agreements payable, net of deferred financing costs		(239,457	)
Credit facility payable		(839,507	)
Collateralized loan obligations, net of deferred financing costs		(4,306,272	)
Mortgage note, net of deferred financing costs		(123,480	)
Accrued servicing fees(1)		(1,330	)
Other liabilities		(298,170	)
Mortgage loan obligations held in securitization trusts, at fair value		(95,044	)
Net asset value	$	2,945,682

(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 September 30, 2023:

NAV per Share	Class F		Class Y		Class T		Class S		Class D		Class M		Class I		Total
Net asset value	$	19,018	$	21,944	$	34,260	$	1,609,044	$	16,824	$	119,622	$	1,124,970	$	2,945,682
Number of outstanding shares		755,420		906,648		1,378,393		64,127,317		675,550		4,792,423		46,397,317		119,033,068
NAV per share as of September 30, 2023	$	25.1754	$	24.2039	$	24.8547	$	25.0914	$	24.9043	$	24.9607	$	24.2464

Discount rate and exit capitalization rate are the key assumptions used in the discounted cash flow valuation of our investment in real estate. The discount rate and exit capitalization rate assumptions used in the September 30, 2023 investment in real estate valuation were 9.75% and 6.13%, respectively. A change in these assumptions would

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impact the calculation of the value of our real estate investment. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:

Input	Hypothetical Change		Investment in Real Estate Values
Discount Rate		0.25% decrease		+3.4	%
		0.25% increase		(3.3	%)
Exit Capitalization Rate		0.25% decrease		+9.3	%
		0.25% increase		(8.5	%)

The following table sets forth a reconciliation of our stockholders’ equity to our NAV as of September 30, 2023:

Reconciliation of Stockholders’ Equity to NAV	September 30, 2023
Total stockholders’ equity under GAAP	$	2,765,134
Preferred stock		(125	)
Total stockholders’ equity, net of preferred stock, under GAAP		2,765,009
Adjustments:
Accrued stockholder servicing fees(1)		114,503
General CECL reserve(2)		71,010
Unrealized real estate appreciation(3)		(9,635	)
Accumulated depreciation and amortization(4)		9,131
Other adjustments(5)		(4,336	)
Net asset value	$	2,945,682

(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.

(2) Our loans receivable and mortgage-backed securities held-for-investment balances include a general CECL reserve in our GAAP unaudited consolidated financial statements. For purposes of calculating our NAV, our general CECL reserve is excluded. We recognize a specific CECL reserve in the NAV calculation if and when a loan is deemed impaired, as described above.

(3) Our investment in real estate is presented at its depreciated cost basis in our GAAP unaudited consolidated financial statements. As such, any increases or decreases in the fair market value of our investment in real estate is not included in our GAAP results. For purposes of calculating our NAV, our investment in real estate is recorded at fair value.

(4) We depreciate our investment in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of determining our NAV.

(5) Includes (i) straight-line rent receivables, which are recorded in accordance with GAAP but not recorded for purposes of determining our NAV, (ii) increases or decreases in the fair market value of our interest rate cap, which is recorded in accordance with GAAP but not recorded for purposes of determining our NAV. For purposes of calculating our NAV, the interest rate cap is amortized over its term, and (iii) other adjustments.

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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. In calculating the number of shares outstanding used in calculating our NAV, we include the number of estimated Class I shares, if any, issuable to the adviser and the sub-adviser pursuant to the PCR Agreement based on the achievement of the Performance Conditions (as defined in the PCR Agreement), which estimate we will true up following the issuance of such Class I shares pursuant to the PCR Agreement.

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.

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.

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Liquidity and Capital Resources

As of September 30, 2023, we had $166,940 in cash and cash equivalents, which we and our wholly owned subsidiaries held in custodial accounts. In addition, as of September 30, 2023, we had $2,493,338 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of September 30, 2023, we had unfunded loan commitments of $456,666. 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 I 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 September 30, 2023, our ratio of leverage to total net assets was 201%. 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 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 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 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. FS Investments funded our offering costs in the amount of $23,902 for the period from November 7, 2016 (Inception) to September 30, 2023. Through September 30, 2023, we reimbursed $19,479 to FS Real Estate Advisor for offering expenses previously funded. As of September 30, 2023, $4,180 of offering expenses previously funded remained subject to reimbursement to FS Real Estate Advisor and Rialto.

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

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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 10, 2023, our board of directors approved the renewal of the advisory agreement effective as of December 1, 2023 for an additional one-year term expiring December 1, 2024. 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):

	Nine Months Ended September 30, 2023
	2023			2022
Cash flows from operating activities	$	201,619		$	96,098
Cash flows used in investing activities		(492,199	)		(3,624,819	)
Cash flows from financing activities		303,837			3,616,355
Net increase (decrease) in cash and cash equivalents and restricted cash	$	13,257		$	87,634

Cash flows provided by operating activities increased $105,521 during the nine months ended September 30, 2023 compared to the corresponding period in 2022 due to $32,955 increase to net income, $42,130 increase in current expected credit loss reserve, and $20,682 increase to restricted stock units issued.

Cash flows used in investing activities decreased $3,132,620 during the nine months ended September 30, 2023 compared to the corresponding period in 2022 primarily due to the net decrease of $2,716,333 in origination and fundings of loans receivables offset by a net increase in principal collections from loans receivable, held-for-investment of $96,452. Purchases of mortgage-backed securities available-for-sale decreased $63,962, and there were no purchases of mortgage-backed securities held-to-maturity during the nine months ended September 30, 2023.

Cash flows provided by financing activities decreased $3,312,518 during the nine months ended September 30, 2023 compared to the corresponding period in 2022 primarily due to a net decrease in borrowings of 2,138,742 and the decrease in issuance of common stock of $626,559. In addition, there was an increase in the redemptions of common stock of $197,809.

We utilize our credit and repurchase facilities primarily to finance our loan originations on a short-term basis prior to loan securitizations, including through CLOs. The timing, size, and frequency of our securitizations impact the balances of these borrowings, and produce some fluctuations. The following table provides additional information regarding the balances of our borrowings ($ in thousands):

Quarter Ended	Quarterly Average Unpaid Principal Balance		End of Period Unpaid Principal Balance		Maximum Unpaid Principal Balance at Any Month-End
September 30, 2023	$	1,142,991	$	1,092,175	$	1,221,440
June 30, 2023	$	1,158,316	$	1,101,753	$	1,158,043
March 31, 2023	$	1,222,233	$	1,278,135	$	1,308,357
December 31, 2022	$	1,413,499	$	1,015,284	$	1,582,899
September 30, 2022	$	1,692,516	$	1,528,931	$	1,935,464

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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. Refer to the section of our Form 10-K entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” for a full discussion of our critical accounting estimates. Our critical accounting estimates have not materially changed since December 31, 2022, other than an update to the accounting policy for our current expected credit loss reserve. See Note 2 to our unaudited consolidated financial statements included herein for additional information regarding our accounting policy for our current expected credit loss reserve and our other significant accounting estimates.

Related Party Transactions

Compensation of FS Real Estate Advisor, Rialto 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. Further, 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 Rialto or FS Real Estate Advisor. FS Real Estate Advisor has also received compensation for the structuring and negotiation of certain financing arrangements. 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 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.

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FS Investment Solutions also serves or served as the placement agent for our private offerings of Class I, 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 September 30, 2023, 98% 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, 2022-FL6 Notes, 2022-FL7 Notes, the WF-1 Facility, the GS-1 Facility, the BB-1 Facility, the MS-1 Facility, the Barclays Revolving Credit Facility, the BMO-1 Facility, the Lucid 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.

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 September 30, 2023:

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)	$	(39,375	)	$	(26,971	)	$	(12,404	)		(3.7	)%
Down 25 basis points(1)	$	(19,688	)	$	(13,486	)	$	(6,202	)		(1.8	)%
No change		—			—			—			—
Up 25 basis points	$	19,688		$	13,486		$	6,202			1.8	%
Up 50 basis points	$	39,375		$	26,971		$	12,404			3.7	%

(1) Decrease in rates assumes the applicable benchmark rate does not decrease below 0%.

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 September 30, 2023.

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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.

Remediation of Material Weakness

To address the previously reported material weakness in internal control over financial reporting described in Part II, Item 9A of our 2022 Form 10-K, we enhanced existing controls, designed and implemented new controls, and increased dedicated personnel. Based on the actions taken, we determined that the material weakness has been remediated as of September 30, 2023.

Changes in Internal Control Over Financial Reporting

Other than as described in the immediately preceding paragraph, there were no additional changes 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 months ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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. 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, 2022.

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 September 30, 2023, 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)
July 1 - July 31, 2023		763,786	$	24.75		763,786		—
August 1 - August 31, 2023		1,039,180	$	24.90		1,039,180		—
September 1 - September 30, 2023		1,106,110	$	24.47		1,106,110		—
Total		2,909,076				2,909,076		—

(1) Repurchases are limited as described above.

Sale of Unregistered Securities

On July 1, 2023, we received $66,667 relating to the sale and issuance of approximately 2,750 Class I shares to accredited investors at the per share purchase price of $24.24. On August 1, 2023, we received $100,000 relating to the sale and issuance of approximately 4,127 Class I shares to accredited investors at the per share purchase price of $24.23. In each case, the sale of securities was made pursuant to a private placement exempt from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.

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Item 3. Defaults upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Renewal of Advisory Agreement

We previously entered into that certain Fourth Amended and Restated Advisory Agreement dated as of December 1, 2022 (the “Advisory Agreement”) with FS Real Estate Advisor, LLC, our external advisor. On August 10, 2023, our board of directors approved the renewal of the Advisory Agreement effective as of December 1, 2023 for an additional one-year term expiring December 1, 2024. The terms of the Advisory Agreement otherwise remain unchanged.

Renewal of Expense Limitation Agreement

We previously entered into that certain Second Amended and Restated Expense Limitation Agreement dated as of December 1, 2022 (the “Expense Limitation Agreement”) with FS Real Estate Advisor, LLC, our external advisor, and Rialto Capital Management LLC, the sub-advisor to our external advisor. On August 10, 2023, our board of directors approved the renewal of the Expense Limitation Agreement effective as of December 1, 2023 for an additional one-year term expiring December 1, 2024. The terms of the Expense Limitation Agreement otherwise remain unchanged.

Item 6. Exhibits.

3.1	Second 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 October 19, 2022).
10.1	Maturity Date and Funding Period Extension Confirmation Letter and Amendment No.  11 to Master Repurchase and Securities Contract, dated as of August  24, 2023, between FS CREIT Finance WF-1 LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the SEC on August 30, 2023).

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10.2	Amendment No. 1 to Master Repurchase Agreement dated as of August  3, 2023 between FS CREIT Finance BMO-1 LLC, and Bank of Montreal (incorporated by reference to Exhibit 10.2 of the Registrant’s Form 10-Q, as filed by the Registrant with the SEC on August 14, 2023).
31.1*	Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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*	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
104*	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Previously Filed

+ 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.

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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 November 13, 2023.

FS CREDIT REAL ESTATE INCOME TRUST, INC.
By:	/s/ MICHAEL C. FORMAN
	Michael C. Forman Chief Executive Officer (Principal Executive Officer)
By:	/s/ CHRISTOPHER CONDELLES
	Christopher Condelles Chief Financial Officer (Principal Accounting and Financial Officer)

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