FS Credit REIT Review 2026: NAV, Redemptions and Nonaccruals

Updated October 21, 2026: September ended the positive-month streak, and nonaccruals jumped to 7.48%. Per the Form 424B3 filed October 16, 2026, total returns were “modestly negative across all share classes in September”: Class I −0.37%, Class S −0.44%, Class D −0.41%, Class M −0.42%, Class T −0.46%. The fund attributes this primarily to mark-to-market declines tied to higher interest rates and higher assumed capitalization rates on the portfolio's equity positions. NAV per share at September 30 is Class I $23.5219 (August 31: $23.7573; December 31: $23.9307) and Class S $24.4325, which are the November 1 transaction prices, on total NAV of $3,006,055 thousand and 125,047,435 shares. The supplement reports assets on nonaccrual at 7.48% of the portfolio at September 30, including two multifamily loans placed on non-accrual during September, against 2.36% at August 31 (per the September 16 supplement) and 3.07% at July 31. The fund says it is evaluating alternatives for underperforming assets, including real estate it owns after workouts, and opportunities it believes will support “greater NAV stability over time.” The 77 consecutive positive months reported through August are over (our reading); the fund now cites positive returns in 101 of 104 months since inception. It says it met 100% of repurchase requests in August and in September, and the Class I distribution rate is 7.55% at the November 1 price (7.46% at the September 1 price). On October 16 the Wells Fargo repurchase facility (WF-2) was extended to October 18, 2027 at a maximum of $79.3 million (Form 8-K filed October 20). The September-quarter 10-Q is not filed yet; our 3.6 rating rests on the June 10-Q and is unchanged pending it.

Two stories in one 10-Q

Read the front of FS Credit REIT's monthly supplement and you get the story it tells: a long run of positive months (77 through August, until September's −0.37%), every redemption paid, a senior lender with equity cushions beneath its loans. All of that is true. Read the loan notes at the back of the June 10-Q and a second story starts: more borrowers are paying late than at any point in the last year, the fund is lending more against offices, and the reserve for losses went down.

Both matter to a holder, and they matter in a specific order. The exit is open today. Whether it stays open depends on the second story.

This review is built from the fund's filings under CIK 1690536: the June 30, 2026 10-Q, the July 31, August 31 and September 30 NAV supplements, the February 28 supplement, the January 15 distribution 8-K, the June 22 financing 8-K and the FY2025 10-K. Every figure in the CSV above carries its accession number.

The part that works: NAV, returns and an open exit

The reason the NAV barely moves is accounting, and it is worth saying plainly: about 86% of the portfolio is private senior loans "held to maturity at amortized cost and subject to impairment," in the supplement's words. A loan's value in the NAV changes when the fund books a reserve or a loss, not when the building behind it falls in price. That is why the NAV was calm through 2022-2024, and it is why the NAV is the last place stress shows up. It did move in September 2026: Class I fell from $23.7573 to $23.5219 (−0.99%, our arithmetic), and the supplement attributes the negative return primarily to mark-to-market declines on the portfolio's equity positions, not to a reserve on the amortized-cost loans.

The part to watch: late loans up, reserve down

The 10-Q's aging table, at amortized cost:

In six months the late bucket went from about one dollar in sixteen to about one in eight, and $358.8 million appeared in the 30-59 day column from nothing. Over the same six months the allowance for credit losses on loans fell 9.6%; a year earlier, at June 30, 2025, it had been $99.8 million. Some of the 90-day loans are still accruing interest: $189.2 million of them at June 30, down from $308.4 million at year-end. The newest read is in the September 30 supplement: assets on nonaccrual were 7.48% of the portfolio at September 30, 2026, including two multifamily loans placed on non-accrual during September, against 2.36% at August 31 and 3.07% at July 31. The fund says it is working to reduce them by refinancing, taking ownership of the property or selling the loan, and is evaluating alternatives for underperforming assets, including real estate it owns after workouts.

Then there is the table of loans rated 5. The fund's own definition: "Loans are assigned a risk rating of 5 when an impairment or a loss is likely and/or foreclosure is probable." There are eight:

That is $298.7 million of loans the fund itself thinks will probably lose money or end in foreclosure, with no specific reserve on any of them. The 10-Q explains why, and it is not hidden: the allowance "may be zero if the fair value of the collateral on the measurement date exceeds the amortized cost basis of the loan," and the fund estimated those collateral values with capitalization rates of 5.50% to 9.25% and discount rates of 7.50% to 10.50%. In other words, the zero is a bet on the appraisal. Six of the eight are apartment loans originated in 2021 and 2022; four of those are in Georgia and Texas.

None of this means the fund is in trouble. The 10-Q's loan table puts the book's weighted-average loan-to-value at 66%, which leaves equity beneath most loans; Rialto is a specialist in working out exactly these situations; and it has already taken back $631.3 million of real estate that it now owns and manages. What it means is that the stability in the NAV rests on collateral values that have not yet been tested by a sale.

Where the new money went: office

The fund made $1.90 billion of new loans in the first half and was repaid $1.25 billion. Nearly half a billion of the net growth went to office collateral. The July supplement argues that office "appears to be turning a corner"; the fund is putting its money behind that view. It may be right. The oldest loan on the rated-5 list, on a cash basis since September 2024, is a 2021 San Francisco office loan.

The distribution: reduced, and part of it was capital coming back

On January 15 the board approved a reduction in the monthly distribution from the February 26 record date, citing "current and projected base rates, market spreads, portfolio leverage, the pace of capital inflows" among other factors. Class I now receives $0.1479 a month, 7.55% a year at the November 1 price ($23.5219; it was 7.46% at the September 1 price). With 96% of its loans floating-rate at year-end, lower SOFR means lower income, and the cut follows from that.

Two numbers describe how covered the payout is, and they measure different things:

The fund's table is accurate on its own terms: it measures since 2017, not this half. Measured this half, operations covered about nine dollars in ten.

Leverage: high on paper, built not to be called

That is about 2.3 times NAV. What keeps it from being dangerous is the structure: the September 30 supplement says about 94% of borrowings are matched to the life of the loans and about 77% are matched-term and not subject to mark-to-market margin calls (the July supplement said 97% and 82%). The shift in the first half, from repo toward CLOs, pushes further in that direction. In June the Capital One repurchase facility was raised to $750.0 million (8-K of June 25). On October 16 the Wells Fargo repurchase facility (WF-2) was extended to October 18, 2027 with a maximum of $79.3 million (8-K of October 20).

Fees

The 10% performance fee over a 6.5% hurdle is friendlier to investors than the 12.5%-over-5% structure of the big equity NAV REITs.

FS Credit REIT against the rest of the cluster

Its closest relatives are the credit-tilted interval funds, PIMCO's REFLX and the Forum Real Estate Income Fund, and it sits in our real estate debt investment ranking. The opposite end of the liquidity spectrum is Starwood SREIT, where ordinary redemptions have been closed since April.

FAQ

Verdict

FS Credit Real Estate Income Trust keeps its 3.6 out of 5, and the rating now rests more on its structure than on its loans. The structure is excellent: an exit that has paid every request, a NAV that had no negative month until September 2026 (Class I −0.37%), financing designed not to be called, and fees below the category norm. The loans are where the 2026 filings turn: late payments doubled in half a year, the reserve went down instead of up, eight loans the fund expects to lose money on carry no reserve because of how their collateral is valued, new lending leaned into office, and nonaccruals reached 7.48% of the portfolio at September 30.

If you hold it, the exit is open, and that is exactly when the decision is worth making on the filings rather than on the monthly supplement. That is what a Forensic Filing Read does: one vehicle, your position, the 10-Q read line by line before you redeem or stay. The next two things to read yourself are the aging table and the rated-5 list in the September-quarter 10-Q, due in November.

Sources

SEC EDGAR, FS Credit Real Estate Income Trust, Inc., CIK 1690536:

• Form 10-Q, quarter ended June 30, 2026, accession 0001628280-26-057041: NAV per share at June 30, repurchases, sources of distributions, loan activity, aging analysis, risk-rated-5 loans, collateral mix, balance sheet
• Form 424B3 filed October 16, 2026, accession 0001628280-26-066170: September 30, 2026 NAV, September returns, nonaccrual share of 7.48%, distribution rate, financing mix
• Form 424B3 filed September 16, 2026, accession 0001628280-26-062315: August 31, 2026 NAV, 77 consecutive positive months, nonaccrual share of 2.36%
• Form 8-K filed October 20, 2026, accession 0001104659-26-117403: Wells Fargo WF-2 repurchase facility amendment
• Form 424B3 filed August 17, 2026, accession 0001628280-26-057314: July 31, 2026 NAV, distribution rates, performance, nonaccrual share, financing mix
• Form 424B3 filed March 17, 2026, accession 0001628280-26-018519: nonaccrual share at February 28, 2026
• Form 424B3 filed January 15, 2026, accession 0001628280-26-002224: December 31, 2025 NAV per share
• Form 8-K filed January 15, 2026, accession 0001104659-26-004160: distribution reduction
• Form 8-K filed June 25, 2026, accession 0001104659-26-077751: Capital One repurchase facility to $750.0 million
• Forms 8-K of July 1 and July 30, 2026, accessions 0001104659-26-079845 and 0001104659-26-088616: annual meeting without a quorum
• Form 10-K for 2025, accession 0001628280-26-017626: tax character of distributions 2023-2025, floating-rate share
• Advisory Agreement (Exhibit 10.1, fee structure)

Retrieved September 12, 2026 and updated October 21, 2026.