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Two New Finance REITs Launch

FS Credit Real Estate Income Trust, Tremont Mortgage Trust Complete Public Stock Offerings
September 20, 2017
The ranks of alternative CRE lenders continue to grow as two new REITs launched this week: FS Credit Real Estate Income Trust, a nontraded REIT, and Tremont Mortgage Trust, publicly traded on the Nasdaq Exchange.

FS Credit REIT

FS Credit Real Estate Income Trust commenced operations and cut its first two deals. The nontraded REIT continues to offer shares seeking to raise a maximum amount of $2.75 billion.

Already this week, Philadelphia-based FS Credit REIT closed a $34.31 million senior floating-rate mortgage loan secured by a portfolio of seven office buildings totaling 492,559 square feet in Memphis, TN, adjacent to the Federal Express Corp. world headquarters and Southwind PGA Golf Course.

The so-called Southwind loan bears interest at a floating rate of 4.25% over the one-month LIBOR rate with an interest rate floor of 5.3% per annum and an appraised loan to value ratio of 73%. The Southwind loan has an initial 24-month term with three 12-month extensions.

Rob Lawrence, managing director and global head of real estate, manages the REIT in partnership with its sub-adviser, Orlando-based Rialto Capital Management LLC

In addition to the Memphis loan, FS Credit REIT purchased a $9.5 million floating-rate whole mortgage loan from Rialto. The loan is secured by Oxford Point, a 200-unit garden multifamily property built in 2002 with 11 residential buildings on 17 acres in Gulfport, MI.

The Oxford Point loan bears interest at a floating rate of 4.5% over the one-month LIBOR, with an interest rate floor of 4.95% per annum and an appraised loan to value ratio of 72%. The Oxford Point loan matures in March 2018 with a 12-month extension option.

Tremont Mortgage Trust

Tremont Mortgage Trust (Nasdaq: TRMT) also completed its initial public offering of common shares raising gross proceeds of $50 million. There is no word yet on its first deal.

An affiliate of Newton, MA-based The RMR Group (Nasdaq:RMR), Tremont Mortgage intends to focus on financing smaller, middle market deals and transitional CRE debt financing. The REIT will primarily originate and invest in first mortgage loans of less than $50 million.

Since coming out of the chute this week, the REIT’s public shares are trading in a range from $16.21 to $17.94 per share.

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