ThZeal - The Zeal

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Class I common shares of beneficial interest, $0.01 par value per share

Class F-S common shares of beneficial interest, $0.01 par value per share

Class F-D common shares of beneficial interest, $0.01 par value per share

Class F-I common shares of beneficial interest, $0.01 par value per share

Class D-S common shares of beneficial interest, $0.01 par value per share

Class E common shares of beneficial interest, $0.01 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No x

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 x No o

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 x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a

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	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	o

		Emerging growth company	x

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 has filed a report on and attestation to its management’s assessment of the

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.

7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of

the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of

incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period

pursuant to §240.10D-1(b).

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No x

The aggregate market value of the common shares held by non-affiliates of the registrant: There is currently no established

public market for the registrant’s common shares.

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USE OF CERTAIN DEFINED TERMS

In this annual report on Form 10-K (this “Annual Report”), the following terms shall have the meanings set forth

below, except where the context suggests otherwise:

•“we,” “us,” “our,” “FNLR,” and the “Company” refer to Fortress Net Lease REIT, together with its consolidated

subsidiaries;

•“Adviser” refers to FNLR Management LLC, a Delaware limited company, and wholly-owned subsidiary of “FIG

LLC,” a wholly-owned subsidiary of Fortress;

•“Dealer Manager” refers to Independent Brokerage Solutions LLC;

•“Fortress” refers to Fortress Investment Group LLC, a Delaware limited liability company;

•“Fortress Affiliates” means all of Fortress’s affiliates, partners, members, shareholders, officers, directors and

employees. Except where otherwise specifically stated herein, Fortress Affiliates does not include the indirect

owner(s) of Fortress, and any person controlling, controlled by or under common control with such indirect

owner(s) that is not also controlled by Fortress (the “Fortress Owner Group”);

•“Fortress Managed Accounts” means investment companies, pooled investment vehicles and/or other accounts

(including accounts of institutional clients, pension plans, co-investment vehicles and certain high net worth

individuals) that the Adviser and its affiliates manage assets for, or may in the future manage assets for. Except

where otherwise specifically stated herein, Fortress Managed Accounts does not include funds and accounts

managed by a member of the Fortress Owner Group;

•“GAAP” means generally accepted accounting principles in the United States;

•“Initial Share Maximum Amount” means up to $300.0 million in our private offering, which the Company

reserves the right to increase at its discretion, in any combination of Class F-S shares, Class F-D shares, Class F-I

shares, Class B shares, Class C shares and Class D shares;

•“Initial Share Offering Period” means the period from the commencement of our private offering until we accept

subscriptions for the Initial Share Maximum Amount;

•“Operating Partnership” refers to FNLR OP LP, a Delaware limited partnership, a subsidiary of the Company;

•“Operating Partnership Agreement” refers to the Second Amended and Restated Limited Partnership Agreement

of the Operating Partnership, dated November 15, 2024, as amended or restated from time to time;

•“shareholders” refers to holders of our common shares of beneficial interest, par value $0.01 per share (the

“shares” or “common shares”). The Company has offered or is offering twelve class of common shares to the

investors: Class S (“Class S” or the “Class S shares”), Class D (“Class D” or the “Class D shares”), Class I (“Class

I” or the “Class I shares”), Class F-S (“Class F-S” or the “Class F-S shares”), Class F-D (“Class F-D” or the

“Class F-D shares”), Class F-I (“Class F-I” or the “Class F-I shares”), Class F-I X (“Class F-I X” or the “Class F-I

X shares”), Class B-X (“Class B-X” or the “Class B-X shares”), Class C (“Class C” or the “Class C shares”),

Class D-S (“Class D-S” or the “Class D-S shares”), Class D-X (“Class D-X” or the “Class D-X shares”) and Class

E (“Class E” or the “Class E shares”) (each a “class”). References to “Class F-I X” and “Class B-X” represent

Class F-I and Class B shares, respectively, that were purchased during the Initial Share Offering Period and

entitled to a fee waiver while they were outstanding, as described in this Annual Report. As of December 31,

2024, there were no Class F-I X, Class B or Class B-X shares outstanding. All Class F-I X, Class B and Class B-X

shares were automatically converted into Class F-I shares. References to “Class D-X” represents Class D-S shares

(formerly named Class D shares) that were purchased during the Initial Share Offering Period and that are

currently entitled to a fee waiver, as described in this Annual Report. Pursuant to such fee waiver: (i) the Adviser

has waived the management fee for six months for certain investors measured from the applicable Issuance Date;

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements, which relate to future events or the future performance

or financial condition of Fortress Net Lease REIT (the “Company,” “we,” “us,” or “our”). Forward-looking statements can

be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,”

“project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or comparable

terminology, although not all forward-looking statements include these words. We intend such forward-looking statements

to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act

of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the

“Exchange Act”). Some of the statements in this Annual Report constitute forward-looking statements because they relate

to future events or our future performance or financial condition. The forward-looking statements contained in this Annual

Report may include statements as to:

•our future operating results;

•our business prospects and the prospects of the assets in which we may invest;

•the impact of the investments that we expect to make;

•our ability to raise sufficient capital to execute our investment strategy;

•our ability to source adequate investment opportunities to efficiently deploy capital;

•our current and expected financing arrangements and investments;

•the effect of global and national economic and market conditions generally upon our operating results, including,

but not limited to, changes with respect to inflation, interest rate changes and supply chain disruptions, and

changes in government rules, regulations and fiscal policies;

•the adequacy of our cash resources, financing sources and working capital;

•the timing and amount of cash flows, distributions and dividends, if any, from our investments;

•our contractual arrangements and relationships with third parties;

•actual and potential conflicts of interest with the Adviser or any of its affiliates;

•the dependence of our future success on the general economy and its effect on the assets in which we may invest;

•our use of financial leverage;

•the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;

•the ability of the Adviser or its affiliates to attract and retain highly talented professionals;

•our ability to structure investments in a tax-efficient manner and the effect of changes to tax legislation and our

tax position; and

•our tax status and the tax status and attributes of entities and assets in which we may invest.

The forward-looking statements contained in this Annual Report involve risks and uncertainties. Our actual results

could differ materially from those implied or expressed in the forward-looking statements for any reason, including the

factors set forth in “Item 1A. Risk Factors” in this Annual Report. Other factors that could cause our actual results to differ

materially include:

•changes in the economy, particularly those affecting the real estate industry;

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•risks associated with possible disruption in our operations or the economy generally due to terrorism, natural

disasters, epidemics or other events having a broad impact on the economy;

•investing in commercial real estate assets involves certain risks, including but not limited to: tenants’ inability to

pay rent; increases in interest rates and lack of availability of financing; tenant turnover and vacancies; and

changes in supply of or demand for similar properties in a given market;

•adverse conditions in the areas where our investments or the properties underlying such investments are and may

be located and local real estate conditions;

•limitations on our business and our ability to satisfy requirements to maintain our exclusion from registration

under the Investment Company Act of 1940, as amended, or to maintain our qualification as a real estate

investment trust (a “REIT”), for U.S. federal income tax purposes;

•certain economic events may cause our shareholders to request that we repurchase their shares, and if we decide to

satisfy any or all of such requests, our cash flow and our results of operations and financial condition could be

materially adversely affected. Further, our board of trustees may make exceptions to, modify or suspend our share

repurchase plan (including to make exceptions to the repurchase limitations or purchase fewer shares than such

repurchase limitations) if it deems such action to be in our best interest;

•distributions are not guaranteed and may be funded from sources other than cash flow from operations, including,

without limitation, borrowings, offering proceeds (including from sales of our shares or units of our Operating

Partnership), and the sale of our assets, and we have no limits on the amounts we may fund from such sources;

•the purchase and repurchase prices for our shares are generally based on our prior month’s net asset value

(“NAV”) and are not based on any public trading market. The Adviser will value our properties monthly, based on

current material market data and other information deemed relevant, subject to the review and confirmation for

reasonableness by our independent valuation advisor. The valuation of properties is inherently subjective and our

NAV may not accurately reflect the actual price at which our properties could be liquidated on any given day;

•future changes in laws or regulations and conditions in our operating areas;

•our limited opportunities to increase rents under long-term leases with tenants;

•our ability to raise additional funds to enable us to make additional investments and diversify the risk profile of

our portfolio;

•our ability to capitalize on potential investment opportunities, or identify and purchase suitable properties on

attractive terms;

•our ability to integrate newly acquired investments into our existing portfolio or otherwise effectively manage our

assets or growth;

•our ability to accurately identify or adequately evaluate potential risks in volatile investing environments with

limited market liquidity or price transparency;

•the impact of macroeconomic and/or microeconomic developments on our tenants and potential tenants;

•risks associated with the construction and renovation of our properties;

•our ability to adequately maintain properties in accordance with the terms of the applicable leases or agreements;

•the advent of any future epidemics, pandemics, or any other public health crises;

•risks associated with the termination or expiration of leases and tenant defaults, which may be further exacerbated

in the case whereby a single tenant is the counterparty to more than a single property;

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•risks associated with our use of single master leases and the enforceability of any such master leases under

applicable law and/or in bankruptcy proceedings;

•risks associated with investing outside of the United States;

•the incurrence of contingent liabilities as a result of our investments, including our assumption of default risk or

other third-party risks;

•our use of financing arrangements, including seller financing, secured and unsecured leveraged and other one-off

financing solutions, could subject us to financial covenants and other covenants that could restrict our operations;

•our ability to forecast correlations between the value of our portfolio and the direction of exchange rates, interest

rates and the price of securities in order to effectively or appropriately mitigate risks associated with our

investments;

•risks associated with our hedging program, including our use of options and forward trading;

•our ability to accurately predict the pre-determined fixed repurchase price vis-à-vis the fair value of a property as

of a future date;

•certain risks associated with limitations on our remedies under bankruptcy laws;

•our limited rights and liquidity associated with our investments in non-controlling equity positions and other real-

estate related interests;

•system failures and cybersecurity breaches;

•substantial compliance costs that may be required to meet the constantly evolving legal and regulatory landscape

for data protection and privacy;

•competition in our markets, which may prevent our ability to increase the occupancy and rental rates of our

properties;

•potential misconduct and unauthorized conduct from third-party providers;

•substantial capital expenditures that may be required to comply with regulations and/or to obtain necessary

permits and licenses to invest in certain properties;

•our ability to maintain our qualification as a REIT requires us to annually distribute at least 90% of our taxable

income, and therefore, we may not be able to fund future capital needs, including financing for acquisitions, from

our operating cash flow, and may need to rely on third-party sources for capital;

•our properties and properties underlying our investments may have design, construction or other defects or

problems that require unforeseen capital expenditures, special repair or maintenance expenses, or the payment of

damages to third parties, which may also affect their valuations;

•compliance with state and local laws, statutes, regulations and ordinances relating to pollution, the protection of

the environment and human health and safety;

•our ability to obtain insurance for our properties at competitive market rates;

•any limitations on our recourse under purchase and sale agreements to acquire properties;

•risks associated with joint ventures;

•risks associated with litigation or threatened litigation for damages that occur on, or liabilities derived from, the

acquisition, ownership and disposition of our properties;

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•risks associated with our relationship with Fortress and the Adviser; and

•changes to United States federal income tax laws.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable,

any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those

assumptions could also be inaccurate. In light of these and other uncertainties, the inclusion of a forward-looking statement

in this Annual Report should not be regarded as a representation by us that our plans and objectives will be achieved.

You should read this Annual Report and the documents that we reference herein and have filed as exhibits hereto

with the understanding that our actual future results, levels of activity, performance and achievements may be materially

different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These

forward-looking statements speak only as of the date of this Annual Report. Except as required by applicable law, we do

not plan to publicly update or revise any forward-looking statements contained in this Annual Report, whether as a result of

any new information, future events or otherwise.

For more information regarding these and other risks and uncertainties that we face, see the section entitled “Item

1A. Risk Factors” and any such updated factors included in our periodic filings with the Securities and Exchange

Commission (the “SEC”), which are accessible on the SEC’s website at www.sec.gov. These factors should not be

construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this

document.

SUMMARY RISK FACTORS

The following is only a summary of the principal risks that may adversely affect our business, financial condition

and results of operations and cash flows. The following should be read in conjunction with the complete discussion of risk

factors we face, which are set forth below under “Item 1A. Risk Factors.”

Some of the more significant risks relating to our business and ownership of our shares include:

Risks Related to Our Business and Operations

•We are subject to risks related to the ownership of commercial real estate that affect the performance and value of

our properties, including but not limited to risks with respect to the creditworthiness of underlying tenants.

•We have limited opportunities to increase rents under our long-term leases with tenants.

•If we are unable to raise substantial additional funds, we will be limited in the number and type of investments we

make and the value of your investment in us will fluctuate with the performance of the specific assets we acquire.

•We face risks associated with the deployment of our capital.

•We may be unable to successfully integrate new investments and manage our growth.

•The valuation of our investments may not be certain or transparent as a result of the highly volatile environments

we operate in.

•We may be adversely affected by economic conditions and other events or occurrences that negatively affect the

general economy in the United States or in markets in which our properties are geographically concentrated.

•We are subject to certain risks related to incurring contingent liabilities in connection with investments, including

the assumption by us of default risk or other third-party risks.

•Inflation may materially and adversely affect us and our tenants.

•We are subject to certain risks associated with the management of our properties.

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•We may face risks associated with options, including losing our entire investment due to the volatility of the

underlying security or currency.

•Our business and operations could suffer in the event of system failures or cybersecurity breaches.

•Our access to external sources of capital is subject to factors outside of our control.

•The agreements governing our indebtedness may place restrictions on us and our subsidiaries, reducing

operational flexibility and creating default risks.

•Compliance or failure to comply with regulatory requirements could result in substantial costs.

Risks Related to Our Relationship with Fortress, Our Adviser and the Management Agreement

•We depend on the Adviser to select our investments and otherwise conduct our business.

•We pay incentive and management fees and other expenses to our Adviser and the Special Limited Partner, which

payments increase the risk that you will not earn a profit on your investment.

•There are conflicts of interest in our relationships with our Adviser, which could result in outcomes that are not in

our best interests.

•The Adviser or its affiliates may have incentives to favor their respective other accounts and clients and/or

Fortress over us, which may result in conflicts of interest that could be harmful to us.

•We may compete for capital and investment opportunities with other entities managed by our Adviser or its

affiliates, subjecting our Adviser to certain conflicts of interest.

Risks Related to Our Organization and Structure

•Our shareholders generally have limited voting rights.

•Our Declaration of Trust and Bylaws contain provisions that may delay, defer or prevent an acquisition of our

shares or a change of control and that provide Fortress with substantial control of us.

•Conflicts of interest could arise between the interests of our shareholders and the interests of holders of units in

our Operating Partnership, which may impede business decisions that could benefit our shareholders.

Risks Related to Tax Laws and Regulations

•We may fail to qualify as a REIT.

•REIT distribution requirements limit our available cash.

•Complying with REIT requirements may cause us to forgo otherwise attractive business opportunities.

Risks Related to Ownership of Our Shares

•We have a limited operating history and there is no assurance that we will be able to successfully achieve our

investment objectives.

•The cash available for distribution to shareholders may not be sufficient to pay dividends at expected levels, nor

can we assure you of our ability to make distributions in the future.

•Our use of Operating Partnership units as consideration to acquire properties could result in shareholder dilution

or limit our ability to sell such properties.

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•Your ability to have your shares repurchased through our share repurchase plan is limited. We may choose to

repurchase fewer shares than have been requested to be repurchased, or none at all, in our discretion at any time,

and the amount of shares we may repurchase is subject to caps. Further, our board of trustees may make

exceptions to, modify or suspend, our share repurchase plan (including to make exceptions to the repurchase

limitations or purchase fewer shares than such repurchase limitations) if it deems such action to be in our best

interest.

•The amount and source of distributions we may make to our shareholders is uncertain, and we may be unable to

generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the

future.

•There is no public trading market for our shares; therefore, your ability to dispose of your shares will likely be

limited to repurchase by us.

The foregoing risks and other risks are more fully described in the section titled “Item 1A. Risk Factors” in this

Annual Report. If any of these risks actually occur, our business, financial condition, results of operations, cash flows, and

prospects could be materially and adversely affected. As a result, you could lose all or part of your investment in our

common shares.

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PART I

ITEM 1.BUSINESS

Overview

We are a Maryland statutory trust formed on January 24, 2023. The Company is designed to offer individual

investors an ability to access net lease real estate. We are a privately-placed, non-listed, perpetual life REIT. We own all or

substantially all of our assets through the Operating Partnership. We are externally managed by our Adviser, an affiliate of

our sponsor, Fortress. Our principal office is located at 1345 Avenue of the Americas, New York, NY 10105 and our

telephone number is (212) 798-6100.

Our investment strategy is focused primarily on acquiring, owning, financing and leasing a diversified portfolio of

single-tenant commercial real estate properties subject to medium- to long-term net leases with creditworthy and/or

investment grade tenants or guarantors across the United States and, to a lesser extent, Canada, Europe or other

jurisdictions as we see fit. We seek to invest in any and all commercial property types that we deem appropriate, including

retail, office, industrial and any other specialized use assets. The Company generally will not be subject to U.S. federal

income taxes on our taxable income to the extent we annually distribute all of our net taxable income to shareholders and

maintain our qualification as a REIT.

The Adviser

The Adviser serves as our administrator. The Company and Operating Partnership have entered into a

management agreement (as the same may be amended or restated from time to time, the “Management Agreement”) with

the Adviser, pursuant to which the Adviser will manage the Company and the Operating Partnership on a day-to-day basis.

The Company and the Operating Partnership have also entered into an administration agreement (as the same may be

amended or restated from time to time, the “Administration Agreement”) with the Adviser, pursuant to which the Adviser

will provide certain office and administrative services to the Company and the Operating Partnership. See “—Management

Agreement” and “—Administration Agreement” for additional information relating to the Management Agreement and

Administration Agreement.

The Adviser is an affiliate of Fortress and, as such, our Adviser has access to the broader resources of Fortress,

subject to Fortress’s policies and procedures regarding the management of conflicts of interest. See “Item 13. Certain

Relationships and Related Transactions, and Director Independence—Potential Conflicts of Interest” for additional

information relating to our potential conflicts of interest.

Fortress

Fortress Investment Group LLC, a Delaware limited liability company and an affiliate of the Adviser, is a leading

global investment management firm founded in 1998. Fortress offers a range of alternative investment strategies, including

private equity, credit and liquid markets for institutional and private investors around the world. Fortress is headquartered

in New York, with affiliates that have offices in Atlanta, Dallas, Hong Kong, London, Los Angeles, New Canaan, Rome,

San Francisco, Shanghai, Sydney and Tokyo. With over 900 employees worldwide, Fortress has approximately $49.0

billion of assets under management as of September 30, 2024, on behalf of approximately 2,000 institutional clients and

private investors worldwide across a range of real estate and credit, private equity and permanent capital investment

strategies. Our Adviser will draw upon Fortress’s expertise in real estate investing, opportunistic lending, structured credits,

corporate securities and structured finance to identify compelling risk-adjusted investments.

Investment Objective

Our investment objective is to deliver superior risk adjusted returns from a diversified real estate portfolio across

the United States and to a lesser extent, Canada, Europe or other jurisdictions as we see fit. We look to generate a known

and predictable stream of cash flow by investing primarily in single tenant net leased assets, whereby the tenant is

responsible for all property operating expenses, such as maintenance and repairs, real estate taxes and insurances, and

capital expenditures, allowing us to deliver consistent dividends to our shareholders. By utilizing our Adviser’s strong

financial underwriting and understanding of real estate fundamentals and corporate credit, we will attempt to construct a

portfolio that will minimize risks and preserve shareholder capital while also driving shareholder value through consistent

asset appreciation. Through the use of our Adviser’s extensive sourcing platform, we intend to curate a purpose-built

portfolio that offers superior risk adjusted returns when compared to our peers. However, we cannot assure you that we will

achieve our investment objectives. See “Item 1A. Risk Factors—Risks Related to Our Business and Operations.”

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Investment Strategies

Our strategy has been carefully developed based on Fortress’s more than 20 year track record of generating

attractive risk-adjusted yields, as well as preserving and growing investors’ capital, while providing a steady stream of cash

flow to pay regular cash distributions to our shareholders. We believe that Fortress’s extensive experience, including

investing through various economic cycles, will provide our Adviser with a more informed understanding of various

investment strategies appropriate for specific cycles, not just during a bull market, which we believe provides us with a

competitive advantage. Our investments include land, building and leasehold interests in the United States primarily and

are expected to include investments in other jurisdictions as we see fit. We seek to invest in any and all commercial

property types, including retail, office, industrial and any other specialized use assets. These investments could be part of a

sale-leaseback transaction directly with tenants, through a “build-to-suit” property transaction with prospective tenants and/

or by purchasing the assets with leases already in place. We consider asset, tenant and geographic concentrations while

retaining the flexibility to invest as we consider appropriate to generate attractive risk-adjusted yields as well as preserve

and grow investors’ capital. We intend to primarily focus on acquiring assets with five years or more in remaining

weighted average lease terms that are leased to a single tenant. From time to time, we may acquire assets with lease

durations shorter than five years if we believe that the leases can be extended on or prior to, or that the assets can be re-let

to an acceptable tenant upon, lease maturity or may acquire assets that are leased to multiple tenants. We may invest on a

standalone basis and may co-invest in transactions with affiliates of Fortress or third parties.

We utilize our Adviser’s extensive sourcing platform to originate transactions. We seek to establish long-term

relationships with our tenants which often lead to repeat transactions. Additionally, our Adviser has access to over 1,000

active relationships through the broader Fortress Credit Team and many more historic relationships Fortress has built and

cultivated over its more than 20 year history. Fortress Credit Team is a recognized leader in the private lending and

alternative investments space. As of December 31, 2024, the Fortress Credit Team has a global team of approximately 670

people, with expertise in numerous industries. These relationships come with considerable goodwill that we believe will

enable us to source off-market opportunities not available to our peers.

We plan to capitalize on our Adviser’s credit underwriting expertise to acquire assets at attractive yields. We

employ a credit-first approach to understanding the financial wherewithal of a tenant, which we believe gives us a

significant advantage over our peers. We enhance our credit underwriting by leveraging the Fortress Credit and Real Estate

Platform, which is available to the Adviser to assist in underwriting, lease negotiations, asset management and financing.

Fortress has more than 20 years of experience in various forms of credit and real estate investing that form the foundation

of our net lease underwriting approach. As of December 31, 2024, the Fortress Credit Funds have invested over $200

billion across various asset classes, capital structures and credit ratings ranging from investment grade to distressed, with

more than 1,500 borrowers, and have acquired more than $75 billion of total real estate assets in more than 1,000 real estate

transactions. Fortress has more than 139 people globally dedicated to real estate investing.

Fortress is one of the largest alternative asset managers, and we believe we are adept at effectively employing

leverage, utilizing the capital markets and value-enhancing structures where appropriate. Our Adviser has deep-rooted

relationships with various forms of lending institutions and we believe Fortress’s long-established relationship with

national money centers and regional banks is even more valuable in the current economic environment. We also may

employ an interest rate and currency hedging strategy to help protect shareholder value.

Another key to our investment strategy is proactive asset management. The goal of our active monitoring is to

track macro- and micro-economic and industry trends that impact our tenants as well as their financial statements when

available. We believe this will allow us to seize on the opportunities to extend leases based on any opportunities we see

through our monitoring. We also plan to utilize this data to recycle assets if we need to.

We may also invest in loans, preferred equity, and other alternative investments in or primarily secured by real

estate, subject to the limitations imposed by reason of our intention to qualify as a REIT and maintaining our exclusion

from being required to register under the Investment Company Act. We also may to a lesser extent invest in marketable

securities, cash, cash equivalents and other short-term investments to provide a source of liquidity for our anticipated share

repurchase plan, cash management, and other purposes.

Acquisition Strategies

We focus our acquisition activities on real properties and related assets that are primarily located in the United

States but may invest in Canada, Europe or other jurisdictions as we see fit. The assets will be primarily net leased whereby

the tenant is generally responsible for insurance, maintenance and repairs, taxes, and utilities, which we believe will

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generate known and predictable cash flows. In addition, we may acquire multi-tenant properties which will typically (i)

include a dominant anchor tenant, (ii) be a part of an acquisition of a portfolio primarily consisting of single tenant

properties or (iii) be structured to create a synthetic single tenant lease. Other potential investments may include gross

leases, commercial real estate debt and/or equity security investments (including equity in other property companies and

partnerships, stocks of REITs and commercial real estate securitizations), preferred equity investments, vacant buildings

and land (either for future development, renovation or a potential sale-leaseback).

We focus on acquiring assets with five years or more in remaining weighted average lease terms leased to a single

tenant. From time to time, we may acquire assets with lease durations shorter than five years if we believe that the leases

can be extended on or prior to, or that the assets can be re-let to an acceptable tenant upon, lease maturity or may acquire

assets leased to multiple tenants. We may acquire existing buildings or enter into build-to-suit arrangements in which we

develop assets to suit the needs of prospective tenants based on an executed lease.

We seek to invest in any and all commercial property types that we deem appropriate, including retail, office,

industrial and any other specialized use assets. We may also invest in capital assets such as various types of machinery and

equipment. We intend to acquire properties leased to tenants across a broad range of industries. Our strategy is to focus on

acquiring tenants with a strong credit profile by utilizing our credit underwriting expertise while also finding assets with

sound real estate fundamentals. We seek to acquire commercial properties occupied by creditworthy tenants, including

investment-grade rated, non-investment grade rated and unrated public and private companies (collectively referred to

herein as “creditworthy tenants”), that have strong cash generating ability, a strong balance sheet and/or other attractive

financial metrics within their market segment. We believe that a key factor to our success will be our Adviser’s ability to

underwrite a tenant’s credit. Each of our prospective tenants undergoes a comprehensive proprietary credit assessment. Our

Adviser conducts credit analysis by evaluating prospective tenants’ management teams, strategic positioning within their

industries, growth prospects, operating margins, financial leverage and cyclicality for an appropriate balance to ensure

there is adequate downside protection in their business. The credit underwriting process also seeks to assess the strengths,

weaknesses, opportunities and threats to our tenants’ businesses that drive the underlying value proposition of our tenants’

businesses and their ability to create value long-term, including the outlook of the tenant’s market segment and the tenant’s

relationship with its customers and suppliers. By evaluating both traditional credit metrics and the long-term value

proposition of our tenants’ businesses, we seek to maximize predictable, durable and growing cash flows while mitigating

risk in our portfolio.

Joint Ventures

We also may acquire properties in joint ventures with affiliates, including Fortress Managed Accounts, which will

allow the Company and its affiliates to collectively acquire 100% ownership of a property. We will often acquire 100%

interests in properties. In addition, we intend to enter into joint ventures with third parties to source, acquire, develop,

improve or dispose of properties. In certain cases, we may not control the management of joint ventures in which we

invest, but we may have the right to approve major decisions of the joint venture. We will not participate in joint ventures

in which we do not have or share control to the extent that we believe such participation would potentially threaten our

status as a non-investment company exempt from the Investment Company Act. This may prevent us from receiving an

allocation with respect to certain investment opportunities that are suitable for both us and one or more Fortress Managed

Accounts.

Leverage

We regularly employ direct or indirect leverage in a variety of forms through borrowings, derivatives and other

financial instruments as part of our investment program. The greater our total leverage relative to our equity capital base,

the greater the risk of loss and possibility of gain due to market fluctuations in the values of our investments. Leverage can

result in the total loss of capital. Historically, Fortress net lease investments have averaged 55-65% leverage. In certain

instances, where a transaction can support it, we could add more leverage, or in the alternative, utilize lower leverage in our

Adviser’s discretion.

We borrow funds (on a secured or unsecured basis), directly or indirectly through one or more investment

vehicles, to facilitate investments or otherwise in connection with our business. We have obtained and may obtain

additional credit facilities in order to finance investments or pay expenses with borrowings. Financings may take various

forms, and may be entered into with brokers and dealers retained by us. In addition, we may directly or indirectly utilize

seller financing when making investments, and may be assigned existing indebtedness that is not prepayable. The Adviser

is under no obligation to arrange for any affiliate to lend money to us; however, we may borrow funds from affiliates of our

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Adviser without the approval of our board of trustees (the “board” or “board of trustees”). To the extent that any borrowing

is made from, or reimbursement is made to, affiliates of our Adviser, the interest rate thereon may not exceed the prime rate

of JPMorgan Chase Bank plus 3.0% per annum without the approval of a majority of our independent trustees. Moreover,

without the approval of the board of trustees, we are not permitted to incur any indebtedness if such incurrence would

cause our aggregate indebtedness to exceed 75% (measured at the time of incurrence) of the cost of our non-realized

investments.

In addition, in an effort to have enough cash available to repurchase shares pursuant to our share repurchase plan

and to fund investments, we may reserve borrowing capacity under a line of credit to borrow against, in part, to repurchase

shares during periods when we may not have sufficient funds to fund all repurchase requests.

Temporary Strategies

During periods in which the Adviser determines that economic or market conditions are unfavorable to investors

and a defensive strategy would benefit us, we may temporarily depart from our investment strategy without providing

advance notice to, or obtaining the consent of, our shareholders. During these periods, we may deviate from our investment

guidelines and invest all or any portion of our assets in U.S. government securities, including bills, notes and bonds

differing as to maturity and rates of interest that are either issued or guaranteed by the U.S. Treasury or by U.S. government

agencies or instrumentalities; non-U.S. government securities that have received the highest investment grade credit rating;

certificates of deposit issued against funds deposited in a bank or a savings and loan association; commercial paper;

bankers’ acceptances; fixed time deposits; shares of money market funds; credit-linked notes; repurchase agreements with

respect to any of the foregoing; or any other fixed income securities that the Adviser considers consistent with this strategy.

During these periods, we may also determine to pay down certain of our indebtedness and have indebtedness below our

target leverage or we may borrow more to provide for additional liquidity causing us to exceed our target leverage. It is

impossible to predict when, or for how long, the Adviser will use these alternative strategies. There can be no assurance

that such strategies will be successful.

Taxation of the Company

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), for

U.S. federal income tax purposes commencing with our initial taxable year ended December 31, 2024. A REIT is a

company that derives most of its income from real property or real estate mortgages and has elected to be subject to tax as a

REIT. If a corporation elects to be subject to tax as a REIT and qualifies as a REIT, it will generally not be subject to U.S.

federal corporate income taxes on income that it currently distributes to its shareholders. A company’s qualification as a

REIT depends on its ability to meet, on a continuing basis, various complex requirements under the Code relating to,

among other things, the sources of its gross income, the composition and values of its assets, its distribution levels to its

shareholders, and the concentration of ownership of its capital stock.

A privately placed, non-listed, perpetual-life REIT is a REIT whose shares are not listed for trading on a stock

exchange or other securities market. We use the term “perpetual-life REIT” to describe an investment vehicle of indefinite

duration, whose common shares are intended to be sold by the REIT monthly on a continuous basis at a price generally

equal to the REIT’s prior month’s net asset value per share. The net asset value of perpetual-life REITs may be subject to

volatility related to the values of their underlying assets. In our perpetual-life structure, the investors may request that we

repurchase their shares on a monthly basis, but we are not obligated to repurchase any shares and may choose to repurchase

only some, or even none, of the shares that have been requested to be repurchased in any particular month in our discretion.

While we may consider a liquidity event at any time in the future, we are not obligated by the Company’s Third Amended

and Restated Declaration of Trust (as the same may be amended or restated from time to time, the “Declaration of Trust”)

or otherwise to effect a liquidity event at any time.

Fortress Net Lease REIT Structure

FIG LLC

FIG LLC, the direct parent of the Adviser and a wholly-owned subsidiary of Fortress, is registered as an

investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) with the SEC. FIG LLC

and the Adviser operate under a single set of policies and procedures that are reasonably designed to comply with the

requirements of the Advisers Act. The Adviser is a relying advisor pursuant to applicable SEC guidance.

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Operating Partnership

The Operating Partnership was formed on January 3, 2023, to acquire and hold assets on our behalf. We own all

or substantially all of our assets through the Operating Partnership. FNLR GP LLC, a Delaware limited liability company

and our wholly-owned subsidiary, is the sole general partner of the Operating Partnership. The Special Limited Partner, a

wholly-owned subsidiary of Fortress Operating Entity I LP, an affiliate of Fortress, owns a special limited partner interest

in the Operating Partnership. The use of our Operating Partnership to hold all of our assets is referred to as an Umbrella

Partnership Real Estate Investment Trust (“UPREIT”). Using an UPREIT structure may give us an advantage in acquiring

properties from persons who want to defer recognizing a gain for U.S. federal income tax purposes. In addition, each of the

Adviser and the Special Limited Partner may elect to receive units in the Operating Partnership in lieu of cash for the

management fee and performance participation interest, respectively. The Adviser may also elect to receive units in the

Operating Partnership in lieu of cash for all or a portion of certain expense reimbursements. The Adviser and the Special

Limited Partner may put these units back to the Operating Partnership and receive cash, and intend to do so from time to

time, unless our board of trustees determines that any such repurchase for cash would be prohibited by applicable law or

our Declaration of Trust, in which case such Operating Partnership units will be repurchased for common shares.

The following chart shows our current ownership structure and our relationship with FIG LLC, the Adviser, and

their respective affiliates as of the date of this Annual Report.

* Percentages are as of December 31, 2024 and may fluctuate over time.

Management Agreement

Our board of trustees at all times has oversight responsibility for governance, financial controls, compliance and

disclosure with respect to the Company and our Operating Partnership. Pursuant to the Management Agreement, our board

of trustees has delegated to the Adviser the authority to source, evaluate and monitor our investment opportunities and

make decisions related to the acquisition, management, financing and disposition of our assets, in accordance with our

investment objectives, guidelines, policies and limitations, subject to oversight by our board of trustees; provided, however,

that the Adviser’s authority to make investments outside of the scope and criteria provided for within our investment

guidelines (as such guidelines may be amended from time to time by the board of trustees) is subject to limitations and

requires the prior approval of the board of trustees or any duly authorized committee of the board of trustees, as the case

may be. We believe that the Adviser currently has sufficient staff and resources to be capable of fulfilling the duties set

forth in the Management Agreement.

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Services

Under the terms of the Management Agreement, the Adviser is responsible for the following:

•determining the composition of the Company’s and Operating Partnership’s portfolio, the nature and timing of the

changes to the Company’s and Operating Partnership’s portfolios and the manner of implementing such changes;

•making investment decisions for the Company and Operating Partnership, including negotiating the terms of

investments in, and dispositions of, real estate, portfolio securities and other instruments on its behalf;

•monitoring the Company’s and Operating Partnership’s investments;

•engaging and supervising, on the Company’s and Operating Partnership’s behalf, agents and service providers to

assist in making and managing the Company’s and Operating Partnership’s investments;

•determining valuations of real estate and real estate-related assets held by the Company and Operating

Partnership;

•performing due diligence on prospective portfolio investments;

•recommending the appropriate level of leverage and debt financing;

•exercising voting rights in respect of portfolio securities and other investments for the Company and Operating

Partnership;

•serving on, and exercising observer rights for, boards of directors and similar committees of the Company’s and

Operating Partnership’s portfolio investments;

•providing risk management and tax services with respect to the Company’s and the Operating Partnership’s

investments; and

•providing the Company and Operating Partnership with such other investment advisory and related services as the

Company and Operating Partnership may, from time to time, reasonably require for the investment of capital.

The Adviser’s services under the Management Agreement are not exclusive, and it is free to furnish similar

services to other entities so long as its services to the Company and Operating Partnership are not impaired. The above

summary is provided to illustrate the material functions which the Adviser will perform for us and it is not intended to

include all of the services which may be provided to us by the Adviser or third parties.

Term

Unless earlier terminated as described below, the Management Agreement will remain in effect for a period of two

years from May 1, 2023, and year-to-year thereafter if approved annually by a majority of the board of trustees and a

majority of the independent trustees.

Without payment of penalty, the Company may terminate the Management Agreement with the Adviser upon 60

days’ written notice. The decision to terminate the agreement may be made by a majority of the board of trustees. In

addition, without payment of penalty, the Adviser may generally terminate the Management Agreement upon 60 days’

written notice. Notwithstanding the foregoing rights to terminate the Management Agreement, certain provisions relating to

the duties of, and payments to, the Adviser, indemnification by the Company and the Operating Partnership, non-

solicitation and miscellaneous considerations, will survive the termination of the Management Agreement.

For a discussion of the Adviser’s compensation and expense reimbursement, see “—Compensation of the Adviser

and Expense Reimbursement.” For additional discussion of company expenses, see “Item 7. Management’s Discussion and

Analysis of Financial Condition and Results of Operations—Year Ended 2024 Highlights—Expenses.”

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Compensation of the Adviser and Expense Reimbursement

Management Fee

As compensation for its services provided pursuant to the Management Agreement, we pay the Adviser, for Class

S investors, Class D investors and Class I investors, a management fee equal to 1.25% of NAV per annum payable

monthly, and Class F-S investors, Class F-D investors, Class F-I investors, Class D-S investors and Class E investors, a

management fee equal to 1.00% of NAV per annum payable monthly. However, the management fee paid to the Adviser in

respect of any Class F-S shares, Class F-D shares, Class F-I shares, Class B shares, Class C shares, Class D-S shares and

Class E shares that were purchased by a shareholder during the Initial Share Offering Period (including any such shares

issued pursuant to our distribution reinvestment plan during the Initial Share Offering Period and any Class B shares or

Class C shares that were converted into Class F-I shares or Class D-S shares) (collectively, the “Waiver Eligible Shares”) is

waived for six months by the Adviser (measured, in respect of each such shareholder and such shareholder’s Waiver

Eligible Shares, regardless of whether any such shares were purchased on different days, from the later of (i) the day on

which such shareholder first purchased any such shares for cash and (ii) if applicable, the day on which such shares were

released from escrow (and not, for the avoidance of doubt, from the day on which any such shares may have been (x)

issued pursuant to our distribution reinvestment plan, (y) received in connection with a conversion or exchange of other

shares or (z) later acquired); such later date in respect of any investor, the “Issuance Date”); provided, that with respect to

any shareholder who subscribed for shares during the Initial Share Offering Period pursuant to a subscription agreement

that may be drawn down in one or more closings at the Company’s discretion, the “Issuance Date” for purposes of the six

month fee waiver shall be measured, in respect of each Waiver Eligible Shares issued pursuant to such subscription

agreement, from the day on which such Waiver Eligible Share is issued to such shareholder. In addition, the management

fee paid to the Adviser in respect of any Class E shares will be waived by the Adviser for so long as the Company qualifies

as a “publicly offered REIT” for U.S. federal income tax purposes (i.e., a REIT that is required to file annual and periodic

reports with the SEC under the Exchange Act) (a “Publicly Offered REIT”). Any management fee shall be calculated and

paid to the Adviser on a class-by-class basis, based on the NAV of each applicable class of our shares.

Additionally, to the extent that our Operating Partnership issues Operating Partnership units to parties other than

us or any class of Operating Partnership units as determined by us, as sole member of the general partner of the Operating

Partnership, our Operating Partnership will pay the Adviser, for Class S units, Class D units and Class I units, a

management fee equal to 1.25% of the NAV per annum payable monthly, and for Class F-S units, Class F-D units, Class F-

I units, Class D-S units and Class E units, a management fee equal to 1.00% of NAV per annum payable monthly, in each

case attributable to such Operating Partnership units not held by us. However, the management fee paid to the Adviser in

respect of any Class F-S units, Class F-D units, Class F-I units, Class D-S units and Class E units that were issued to parties

other than us during the Initial Share Offering Period (including any such Operating Partnership units issued pursuant to

our distribution reinvestment plan during the Initial Share Offering Period and any Class B units or Class C units that were

converted into Class F-I units or Class D-S units) (collectively, the “Waiver Eligible Units”) will be waived for six months

by the Adviser (measured, in respect of each such unitholder and such unitholder’s Waiver Eligible Units, regardless of

whether any such Operating Partnership units were issued on different days, from the day on which such unitholder was

first issued any such Operating Partnership units for cash (and not, for the avoidance of doubt, from the day on which any

such Operating Partnership units may have been (x) issued pursuant to our distribution reinvestment plan, (y) received in

connection with a conversion or exchange of other Operating Partnership units or shares or (z) later acquired); such date in

respect of any unitholder, the “OP Unit Issuance Date”). In addition, the management fee paid to the Adviser in respect of

any Class E units will be waived by the Adviser for so long as we qualify as a Publicly Offered REIT.

Similar to the calculation of the management fee payable to the Adviser with respect to our shares, any

management fee payable to the Adviser with respect to each class of our Operating Partnership units shall be calculated on

a class-by-class basis, based on the NAV of each applicable class of units.

Further, the Operating Partnership has issued Operating Partnership units, with respect to which no management

fee will be paid to the Adviser, to current or former Fortress affiliates, or current or former employees, officers or directors

of any Fortress affiliate (or family and estate planning vehicles of, and foundations and other charitable organizations

established or sponsored by, any of them).

In calculating our management fee, we will use our NAV before giving effect to accruals for the management fee,

performance participation allocation, ongoing servicing fees or distributions payable on our shares. Our NAV per share for

each class is calculated by EA RESIG, LLC, a subsidiary of Eisner Advisory Group LLC (“Eisner”), a third-party firm that

provides us with certain administrative and accounting services, and such calculation is reviewed and confirmed by the

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Adviser. As part of Eisner’s calculations, Eisner will use inputs provided by the Adviser, including valuation conclusions

that have been reviewed by Empire Valuation Consultants, LLC (“Empire”), our independent valuation advisor. However,

the Adviser is ultimately and solely responsible for determining our NAV and overseeing the process relating to Eisner’s

calculation of our NAV. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities—Calculation and Valuation of Net Asset Value” for more information regarding the

calculation of our NAV per share of each class.

All or a portion of the management fee may be paid, at the Adviser’s election, in cash, Class E shares or Class A

units of our Operating Partnership. The Adviser generally expects to elect to receive Class E shares or Class A units of the

Operating Partnership primarily for the Company’s cash management purposes and alignment of interest, but intends to

have its shares or units repurchased from time to time. Any repurchase requests by the Adviser will be consistent with the

Adviser’s fiduciary duties to us and our shareholders. Our Class E shares and Class A units of our Operating Partnership

obtained by the Adviser will not be subject to the repurchase limits of our share repurchase plan or any early repurchase

deduction, whereby certain classes of our shares (i.e., Class S shares, Class D shares, Class I shares, Class F-S shares, Class

F-D shares, Class F-I shares and Class E shares) that have not been outstanding for at least one year are repurchased at 98%

of the transaction price.

In addition, the Company and the Operating Partnership may, from time to time, offer different classes of shares

or Operating Partnership units which feature a higher or lower management fee or performance participation allocation, as

applicable.

Performance Allocation

So long as the Management Agreement has not been terminated (including by means of non-renewal), the Special

Limited Partner holds a performance participation interest in the Operating Partnership that entitles it to receive an

allocation from (i) Class S units, Class D units and Class I units of the Operating Partnership equal to 12.5% of the Total

Return, subject to a 5% Hurdle Amount and a High Water Mark, with a Catch-Up (each such term as defined below), and

(ii) the Class F-S units, Class F-D units, Class F-I units and Class E units of the Operating Partnership equal to 10% of the

Total Return, subject to a 5% Hurdle Amount and a High Water Mark, with a Catch-Up. Total Return is defined as total

distributions plus the change in the Company’s NAV per share, adjusted for subscriptions and repurchases. However, the

performance participation interest to the Special Limited Partner in respect of any Waiver Eligible Units will be waived for

six months by the Special Limited Partner (measured, in respect of each limited partner and such limited partner’s Waiver

Eligible Units, from the applicable OP Unit Issuance Date and, in respect of any Waiver Eligible Units held by us, either

directly or through the general partner of the Operating Partnership, in a manner consistent with the calculation of the six

month period that is applicable to the corresponding Waiver Eligible Shares that are attributable to such Waiver Eligible

Units). In addition, the Special Limited Partner’s performance participation interest with respect to Class E units of the

Operating Partnership will be waived by the Special Limited Partner so long as we qualify as a Publicly Offered REIT.

Such allocation will be measured on a calendar year basis, made annually and accrued monthly. The Special Limited

Partner will not hold a performance participation interest with respect to Class A units or Class D-S units of the Operating

Partnership.

Specifically, the Special Limited Partner in the aggregate will be allocated a performance participation in an

amount equal to:

•First, if the Total Return for the applicable period exceeds the sum of (i) the Hurdle Amount for that period and

(ii) the Loss Carryforward Amount (as defined herein) (any such excess, “Excess Profits”), 100% of such Excess

Profits until the total amount allocated to the Special Limited Partner equals 12.5% (in the case of the Class S

units, Class D units and Class I units of the Operating Partnership) or 10% (in the case of the Class F-S units,

Class F-D units, Class F-I units and Class E units of the Operating Partnership), as applicable, of the sum of (x)

the Hurdle Amount for that period and (y) any amount allocated to the Special Limited Partner pursuant to this

clause (this is commonly referred to as a “Catch-Up”); and

•Second, to the extent there are remaining Excess Profits, 12.5% (in the case of the Class S units, Class D units and

Class I units of the Operating Partnership) or 10% (in the case of the Class F-S units, Class F-D units, Class F-I

units and Class E units of the Operating Partnership), as applicable, of such remaining Excess Profits. “Total

Return” for any period since the end of the prior calendar year shall equal the sum of:

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•all distributions accrued or paid (without duplication) on the Operating Partnership units outstanding at

the end of such period since the beginning of the then-current calendar year plus

•the change in aggregate NAV of such units since the beginning of the year, before giving effect to (x)

changes resulting solely from the proceeds of issuances of Operating Partnership units, (y) any accrual to

the performance participation interest and (z) applicable ongoing servicing fee expenses (including any

payments made to us for payment of such expenses).

For the avoidance of doubt, the calculation of Total Return will (i) include any appreciation or depreciation in the

NAV of units issued during the then-current calendar year but (ii) exclude the proceeds from the initial issuance of such

units. The performance participation interest allocated to the Special Limited Partner shall be in respect of Class S units,

Class D units, Class I units, Class F-S units, Class F-D units, Class F-I units and Class E units (provided, that the Special

Limited Partner will waive the performance participation interest with respect to Class E units for so long as the Company

qualifies as a Publicly Offered REIT) units only and not, for the avoidance of doubt, Class A units or Class D-S units.

“Hurdle Amount” for any period during a calendar year means that amount that results in a 5% annualized internal

rate of return on the NAV of the Operating Partnership units outstanding at the beginning of the then-current calendar year

and all Operating Partnership units issued since the beginning of the then-current calendar year, taking into account the

timing and amount of all distributions accrued or paid (without duplication) on all such units and all issuances of Operating

Partnership units over the period and calculated in accordance with recognized industry practices. The ending NAV of the

Operating Partnership units used in calculating the internal rate of return will be calculated before giving effect to any

accrual to the performance participation interest and applicable ongoing servicing fee expenses; provided that the

calculation of the Hurdle Amount for any period will exclude any Operating Partnership units repurchased during such

period, which units will be subject to the performance participation allocation upon repurchase as described below.

Except as described in Loss Carryforward Amount below, any amount by which Total Return falls below the

Hurdle Amount will not be carried forward to subsequent periods.

“Loss Carryforward Amount” shall initially equal zero and shall cumulatively increase by the absolute value of

any negative annual Total Return and decrease by any positive annual Total Return; provided that the Loss Carryforward

Amount shall at no time be less than zero and provided further that the calculation of the Loss Carryforward Amount will

exclude the Total Return related to any Operating Partnership units repurchased during such year, which units will be

subject to the performance participation allocation upon repurchase as described below. The effect of the Loss

Carryforward Amount is that the recoupment of past annual Total Return losses will offset the positive annual Total Return

for purposes of the calculation of the Special Limited Partner’s performance participation. This is referred to as a “High

Water Mark.”

The Special Limited Partner will also be allocated a performance participation with respect to all applicable

Operating Partnership units that are repurchased at the end of any month (in connection with repurchases of our shares in

our share repurchase plan) in an amount calculated as described above with the relevant period being the portion of the year

for which such unit was outstanding, and proceeds for any such unit repurchase will be reduced by the amount of any such

performance participation.

Distributions on the performance participation interest may be payable in cash, Class E shares or Class A units at

the election of the Special Limited Partner. If the Special Limited Partner elects to receive such distributions in Operating

Partnership units, the Special Limited Partner may request the Operating Partnership to repurchase such Operating

Partnership units from the Special Limited Partner at a later date. The Operating Partnership will repurchase any such Class

A units for Class E shares or cash (at the Special Limited Partner’s elections) unless our board of trustees determines that

any such repurchase for cash would be prohibited by applicable law or the Operating Partnership Agreement, in which case

such Class A units will be repurchased for Class E shares. Any such repurchase request will not be subject to the Early

Repurchase Deduction or similar repurchase limits that exist under our share repurchase plan or any Mandatory Holding

Period (as defined under “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities —Share Repurchase Plan”).

The NAV of the Operating Partnership calculated on the last trading day of a calendar year shall be the amount

against which changes in NAV is measured during the subsequent calendar year. In our first calendar year of operations,

the performance participation will be prorated for the portion of the calendar year.

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The measurement of the foregoing net assets change is also subject to adjustment by our board of trustees to

account for any unit dividend, unit split, recapitalization or any other similar change in the Operating Partnership’s capital

structure or any distributions made after the commencement of our private offering that the board of trustees deems to be a

return of capital (if such changes are not already reflected in the Operating Partnership’s net assets).

The Special Limited Partner will not be obligated to return any portion of performance participation paid based on

our subsequent performance.

Except with respect to Class A units, changes in our Operating Partnership’s NAV per unit of each class will

generally correspond to changes in our NAV per share of the corresponding class of our common shares. Distributions with

respect to the performance participation interest are calculated from the Operating Partnership’s Total Return over a

calendar year. As a result, the Special Limited Partner may be entitled to receive payments under the performance

participation for a given year even if some of our shareholders who purchased shares during such year experienced a

decline in NAV per share. Similarly, shareholders whose shares are repurchased during a given year may have their shares

repurchased at a lower NAV per share as a result of an accrual for the estimated performance participation at such time,

even if no performance participation allocation for such year is ultimately payable to the Special Limited Partner at the end

of such calendar year.

In the event the Management Agreement is terminated, the Special Limited Partner will be allocated any accrued

performance participation with respect to all Operating Partnership units as of the date of such termination.

The following tables summarize performance allocation and management fee accrued during the year ended

December 31, 2024.


	Year ended December 31, 2024
Performance participation allocation	$1,874
Management fee	3,557
Total	$5,431

Organization and Offering Expense Reimbursement

The Adviser has agreed to advance all of our organization and offering expenses on our behalf (including 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 our escrow agent and transfer agent, fees to attend retail seminars sponsored by participating broker-dealers

and reimbursements for customary travel, lodging, and meals, but excluding the ongoing servicing fees) through November

1, 2024, the first anniversary of the date on which we broke escrow for our private offering. We reimburse the Adviser for

all such advanced expenses ratably over the 60 months following the first anniversary of the date on which we broke

escrow for our private offering, which occurred on November 1, 2023. After November 1, 2024, we reimburse the Adviser

for any organization and offering expenses associated with our private offering that it incurs on our behalf as and when

incurred. The Adviser may elect to receive all or a portion of any such reimbursements in the form of cash, Class E shares

or Class A units of our Operating Partnership. To the extent that the Adviser elects to receive any portion of these

reimbursements in Class E shares or Class A units of our Operating Partnership, we may repurchase such Class E shares or

Class A units of our Operating Partnership from the Adviser at a later date and such repurchases of Class E shares or Class

A units of our Operating Partnership will not be subject to the repurchase limits of our share repurchase plan or any Early

Repurchase Deduction.

Administration Agreement

The Adviser serves as our administrator. Pursuant to the Administration Agreement, the Adviser will perform, or

oversee the performance of, administrative services necessary for our continued operation, which will include providing

office space, equipment and office services, maintaining financial records, preparing reports to shareholders and reports

filed with the SEC (as applicable), and managing the payment of expenses and the performance of administrative and

professional services rendered by others. We believe the Adviser currently has sufficient staff and resources so as to be

capable of fulfilling the duties set forth in the Administration Agreement.

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We will reimburse our Adviser for services performed for us pursuant to the terms of the Administration

Agreement, which will include certain costs and expenses, and for certain organization costs incurred prior to the

commencement of our operations, and for certain offering costs. In addition, we will reimburse the Adviser (or its

affiliates) for an allocable portion of the compensation paid by the Adviser (or its affiliates) to certain individuals who

devote time to our business and affairs and act on our behalf, in each case, based on the applicable percentage of time such

individual allocated, on an estimated basis, to our operations. The Adviser may elect to receive all or a portion of any such

reimbursements in the form of cash, Class E shares of the Company or Class A units of our Operating Partnership. In

addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the

Administration Agreement to an affiliate or to a third party and we will reimburse the Adviser for any services performed

for us by such affiliate or third party. To the extent that the Adviser outsources any of its functions, we will pay the fees

associated with such functions on a direct basis, without profit to the Adviser.

Unless earlier terminated as described below, the Administration Agreement will remain in effect for a period of

two years from the date it first became effective, and will remain in effect from year-to-year thereafter if approved annually

by a majority of the board of trustees and a majority of the independent trustees. We or the Adviser may terminate the

Administration Agreement, without payment of any penalty, upon 60 days’ written notice. Our decision to terminate the

agreement may be made by a majority of the board of trustees.

The Administration Agreement provides that the Adviser and its affiliates’ respective officers, directors, members,

managers, shareholders and employees are entitled to indemnification from us from and against any claims or liabilities,

including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business

and operations or any action taken or omitted on our behalf pursuant to authority granted by the Administration Agreement,

except where attributable to willful misfeasance, bad faith or gross negligence in the performance of such person’s duties

or reckless disregard of such person’s obligations and duties under the Administration Agreement.

Management of Our Operating Partnership

We will hold substantially all of our assets in the Operating Partnership or in subsidiary entities in which the

Operating Partnership owns an interest. For purposes of determining our compliance with the asset and gross income tests

for qualification as a REIT for U.S. federal income tax purposes, our proportionate share of the assets and income of the

Operating Partnership will be deemed to be our assets and income.

FNLR GP LLC, a Delaware limited liability company and our wholly-owned subsidiary, is the sole general

partner of the Operating Partnership. The limited partnership interests in the Operating Partnership are held by the Special

Limited Partner and may be held by controlled subsidiaries of Fortress, current or former affiliates of the Adviser, current

or former employees, officers or directors of Fortress or its affiliates (including eligible family members), and certain

investors who have exchanged property, cash or other assets for limited partnership units.

As the sole general partner of the Operating Partnership, FNLR GP LLC has the exclusive power to manage and

conduct the business of the Operating Partnership. A general partner is accountable to a limited partnership as a fiduciary

and consequently must exercise good faith and integrity in handling partnership affairs. No limited partner of the Operating

Partnership may transact business for the Operating Partnership, or participate in management activities or decisions,

except as provided in the Operating Partnership Agreement and as required by applicable law. FNLR GP LLC may not be

removed as general partner by the limited partners. FNLR GP LLC will at all times have oversight and policy-making

authority, including responsibility for governance, financial controls, compliance and disclosure with respect to the

Operating Partnership. Pursuant to the Management Agreement, we, as sole member of the general partner, have delegated

to the Adviser authority to make decisions related to the management of our and the Operating Partnership’s assets,

including sourcing, evaluating and monitoring our investment opportunities and making decisions related to the

acquisition, management, financing and disposition of our assets, in accordance with our investment objectives, guidelines,

policies and limitations, subject to oversight by our board of trustees.

The Special Limited Partner has expressly acknowledged, and any future limited partners of the Operating

Partnership will expressly acknowledge, that we, as the sole member of FNLR GP LLC, as the general partner of the

Operating Partnership, are acting on behalf of the Operating Partnership, ourselves and our shareholders, collectively.

Neither we nor our board of trustees is under any obligation to give priority to the separate interests of the limited partners

of the Operating Partnership or our shareholders in deciding whether to cause the Operating Partnership to take or decline

to take any actions. If there is a conflict between the interests of our shareholders on the one hand and the Operating

Partnership’s limited partners on the other, we will endeavor in good faith to resolve the conflict in a manner not adverse to

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either our shareholders or the Operating Partnership’s limited partners; provided, however, that for so long as we own a

controlling interest in the Operating Partnership, any conflict that cannot be resolved in a manner not adverse to either our

shareholders or the Operating Partnership’s limited partners may be resolved in favor of our shareholders. We are not liable

under the Operating Partnership Agreement to the Operating Partnership or to any of its limited partners for monetary

damages for losses sustained, liabilities incurred or benefits not derived by such limited partners in connection with such

decisions; provided that we have acted in good faith.

The Operating Partnership Agreement generally requires that the Operating Partnership be operated in a manner

that will enable us to (1) satisfy the requirements for qualification as a REIT for U.S. federal income tax purposes, unless

we have determined not to so qualify in accordance with our Declaration of Trust, and (2) to avoid any income or excise

tax liability imposed by the Code or analogous provisions of state law.

Capital Contributions

We intend to contribute net offering proceeds after payment of fees and expenses attributable to our offering and

operations, to the Operating Partnership as capital contributions. However, we will be deemed to have made capital

contributions in the amount of the gross offering proceeds received from investors, and the Operating Partnership will be

deemed to have simultaneously paid the fees, commissions and other costs associated with our private offering and our

operations.

If the Operating Partnership requires additional funds at any time in excess of capital contributions made by us,

the Operating Partnership may borrow funds from a financial institution or other lenders or we or any of our affiliates may

provide such additional funds through loans, purchase of additional partnership interests or otherwise (which we or such

affiliates will have the option, but not the obligation, of providing). In addition, the Operating Partnership may admit

additional limited partners whose investments may be subject to a different management fee and repurchase limitations if

our board of trustees concludes in good faith that such admittance is in our best interest.

Operating Partnership Units Generally

Operating Partnership units represent an interest as a limited partner in the Operating Partnership. The Operating

Partnership may issue additional Operating Partnership units and classes of Operating Partnership units with rights

different from, and superior to, those of Operating Partnership units of any class, without the consent of the limited partners

or our shareholders. Additionally, the Operating Partnership may issue Operating Partnership units to others that will be

subject to a higher or lower Special Limited Partner participation interest or no participation interest. Further, the Operating

Partnership expects to issue Operating Partnership units, which the Special Limited Partner will not be entitled to a

participation interest, to current or former affiliates of the Adviser or current or former employees, officers or directors of

Fortress or its affiliates. Holders of Operating Partnership units do not have any preemptive rights with respect to the

issuance of additional units.

Limited partners of any class do not have the right to participate in the management of the Operating Partnership.

Limited partners of any class who do not participate in the management of the Operating Partnership, by virtue of their

status as limited partners, generally are not liable for the debts and liabilities of the Operating Partnership beyond the

amount of their capital contributions. The voting rights of the limited partners of any class are generally limited to approval

of specific types of amendments to the Operating Partnership Agreement.

Operating Partnership units, other than the Special Limited Partner interest and general partner interest, are

currently divided into nine classes of units: (a) Class S units, (b) Class D units, (c) Class I units, (d) Class F-S units, (e)

Class F-D units, (f) Class F-I units, (g) Class D-S units, (h) Class E units and (i) Class A units.

Description of Units

In general, the Class S units, Class D units, Class I units, Class F-S units, Class F-D units, Class F-I units, Class

D-S units and Class E units are intended to correspond on a one-for-one basis with our Class S shares, Class D shares,

Class I shares, Class F-S shares, Class F-D shares, Class F-I shares, Class D-S shares and Class E shares, respectively.

When we receive proceeds from the sale of common shares, we will contribute such proceeds to the Operating Partnership

and receive Operating Partnership units that correspond to the classes of our shares sold.

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In general, the units will share in distributions from the Operating Partnership when such distributions are

declared by us, as sole member of the general partner, which decision will be made in our sole discretion. In the case of a

conversion of Operating Partnership units for our shares, such Operating Partnership units shall convert to the

corresponding share class of the Company. Class A units shall convert to Class E shares of the Company. Upon the

Operating Partnership’s liquidation, Class S units, Class D units, Class F-S units, Class F-D units, Class D-S units, Class E

units, and Class A units will automatically convert to Class I units or Class F-I units, as applicable, in each case in

proportion to the NAV per unit of each class, and the resulting Class I units and Class F-I units will share on a unit-by-unit

basis in the assets of the Operating Partnership that are available for distribution, after payment of all liabilities,

establishment of reserves and after payment of any preferred return owed to holders of any Operating Partnership preferred

units and payment of the portion distributable to the holder of the Special Limited Partner interest. In addition, a portion of

the items of income, gain, loss and deduction of the Operating Partnership for U.S. federal income tax purposes will be

allocated to each Operating Partnership unit, regardless of whether any distributions are made by the Operating Partnership.

For each unit, investors generally will be required to contribute money or property, with a net equity value

determined by the general partner. Holders of Operating Partnership units will not be obligated to make additional capital

contributions to the Operating Partnership. Further, these holders will not have the right to make additional capital

contributions to the Operating Partnership or to purchase additional Operating Partnership units without our consent as sole

member of the general partner.

Each class of units, other than the Class A units, may be subject to a management fee as described under “—

Compensation of the Adviser and Expense Reimbursement—Management Fee” and each class of units, other than the

Class A units and Class D-S units, may be subject to a performance participation allocation as described under “—

Compensation of the Adviser and Expense Reimbursement—Performance Allocation.”

The Adviser may elect to receive its management fee in cash, Class E shares or Class A units of the Operating

Partnership, and distributions on the Special Limited Partner’s performance participation allocation may be payable in

cash, Class E shares or Class A units at the election of the Special Limited Partner. See “—Special Limited Partner

Interest” below.

Operating Partnership unitholders (other than us, the Adviser or the Special Limited Partner) after owning one or

more Operating Partnership units for one year, generally may, subject to certain restrictions, exchange such Operating

Partnership units for a corresponding number of our common shares; provided, that Class D-S units that have not been

outstanding for at least two years may not be exchanged or redeemed. Furthermore, the general partner of the Operating

Partnership, in its discretion, and at any time, shall have the right to convert all or any portion of any class of a unitholder’s

Operating Partnership units into the corresponding class of our shares. However, if a corresponding class of our shares does

not exist for an Operating Partnership unit, such Operating Partnership units shall convert to a class of our shares as

determined by us as sole member of the general partner in our discretion so long as the economic terms applicable to such

class of our shares are not materially less favorable than the economic terms of the applicable class of Operating

Partnership units; provided, that Class A units may be converted to Class E shares.

The Adviser and the Special Limited Partner may exchange Class A units for a corresponding number of Class E

shares at any time. The Adviser and the Special Limited Partner will have the option of exchanging Class E shares for an

equivalent aggregate NAV amount of any other respective class of shares.

Special Limited Partner Interest

The Special Limited Partner holds a performance participation interest in the Operating Partnership that entitles it

to receive an allocation from (i) the Class S units, Class D units and Class I units of the Operating Partnership equal to

12.5% of the Total Return, subject to a 5% Hurdle Amount and a High Water Mark, with a Catch-Up, and (ii) the Class F-S

units, Class F-D units, Class F-I units and Class E units of the Operating Partnership equal to 10% of the Total Return,

subject to a 5% Hurdle Amount and a High Water Mark, with a Catch-Up. However, the performance participation interest

to the Special Limited Partner in respect of any Waiver Eligible Units will be waived for six months by the Special Limited

Partner (measured, in respect of each limited partner and such limited partner’s Waiver Eligible Units, from the applicable

OP Unit Issuance Date, and, in respect of any Waiver Eligible Units held by us, either directly or through the general

partner of the Operating Partnership, in a manner consistent with the calculation of the six month period that is applicable

to the corresponding Waiver Eligible Shares that are attributable to such Waiver Eligible Units). In addition, the

performance participation interest to the Special Limited Partner with respect to Class E units will be waived by the Special

Limited Partner for so long as we qualify as a Publicly Offered REIT. Such allocation will be measured on a calendar year

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basis, made annually and accrued monthly. The Special Limited Partner will not hold a performance participation interest

with respect to Class A units or Class D-S units of the Operating Partnership. Distributions on the Special Limited

Partner’s performance participation allocation may be payable in cash, Class E shares or Class A units at the election of the

Special Limited Partner. See “—Compensation of the Adviser and Expense Reimbursement—Performance Allocation” for

more information.

Issuance of Additional Limited Partnership Interests

As sole manager of the sole general partner of the Operating Partnership, we will have the ability to cause the

Operating Partnership to issue additional limited partnership interests (including Operating Partnership units), preferred

partnership interests or convertible securities. We have issued Operating Partnership units, and may issue more in the

future.

Our Operating Partnership allows us to be organized as an UPREIT. A sale of property directly to a REIT is

generally a taxable transaction to the selling property owner. In an UPREIT structure, a seller of appreciated property who

desires to defer taxable gain on the transfer of such property may, subject to meeting applicable tax requirements, transfer

the property to the Operating Partnership in exchange for limited partnership interests (including Operating Partnership

units) on a tax-deferred basis. Being able to offer a seller the opportunity to defer taxation of gain until the seller disposes

of its interest in the Operating Partnership may give us a competitive advantage in acquiring desired properties relative to

buyers who cannot offer this opportunity.

In addition, investing in the Operating Partnership, rather than in our common shares, may be more attractive to

certain institutional or other investors due to their business or tax structure.

Transferability of Interests

Without the consent of a majority in interest of the limited partners of the Operating Partnership, other than any

interests held by us, we may not voluntarily cause FNLR GP LLC to withdraw as the general partner of the Operating

Partnership or withdraw as the sole member of FNLR GP LLC, engage in any merger, consolidation or other business

combination or transfer our general partnership interest in the Operating Partnership (except to a wholly owned subsidiary),

unless: (1) the transaction in which such withdrawal, business combination or transfer results in the limited partners of the

Operating Partnership receiving or having the right to receive an amount of cash, securities or other property equal in value

to the amount they would have received if they had exercised their exchange rights immediately prior to such transaction or

(2) in the case of a merger or other business combination, the successor entity contributes substantially all of its assets to

the Operating Partnership in return for an interest in the Operating Partnership and agrees to assume all obligations of the

general partner of the Operating Partnership.

With certain exceptions, the limited partners may not transfer their interests in the Operating Partnership, in whole

or in part, without our written consent, as sole member of the general partner.

Exculpation

We, as sole member of the general partner, will not be liable to the Operating Partnership or limited partners for

errors in judgment or other acts or omissions not amounting to Disabling Conduct (as defined in the Management

Agreement) with regard to the Operating Partnership Agreement since a provision has been made in the Operating

Partnership Agreement for exculpation of the general partner. Therefore, purchasers of interests in the Operating

Partnership have a more limited right of action than they would have absent the limitation in the Operating Partnership

Agreement.

Indemnification

The Operating Partnership Agreement provides for the indemnification of us, as general partner, by the Operating

Partnership for liabilities we incur in dealings with third parties on behalf of the Operating Partnership. To the extent that

the indemnification provisions purport to include indemnification of liabilities arising under the Securities Act, in the

opinion of the SEC, such indemnification is contrary to public policy and therefore unenforceable.

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Tax Matters

FNLR GP LLC, as the sole general partner of the Operating Partnership, is the Operating Partnership’s partnership

representative and has the authority to make tax elections under the Code on the Operating Partnership’s behalf.

Term

The Company has been established, and is expected to continue, for an indefinite period of time. As part of the

Company’s indefinite term structure, investors may request the repurchase of their shares on a monthly basis (as further

discussed below).

Governmental Regulations

As an owner of real estate, our operations are subject, in certain instances, to supervision and regulation by U.S.

and other governmental authorities, and may be subject to various laws and judicial and administrative decisions imposing

various requirements and restrictions, which include, among other things: (i) federal and state securities laws and

regulations; (ii) federal, state and local tax laws and regulations, (iii) state and local laws relating to real property; and (iv)

federal, state and local environmental laws, ordinances, and regulations.

Compliance with the federal, state and local laws described above has not had a material adverse effect on our

business, assets, results of operations, financial condition and ability to pay distributions, and we do not believe that our

existing portfolio will require us to incur material expenditures to comply with these laws and regulations.

Investment Company Act Considerations

We engage primarily in the business of investing in real estate and conduct our operations, directly and through

wholly or majority-owned subsidiaries, so that neither we nor any of our subsidiaries is required to register as an

investment company under the Investment Company Act. A company is an “investment company” under the Investment

Company Act:

•under Section 3(a)(1)(A), if it is, or holds itself out as being, engaged primarily, or proposes to engage primarily,

in the business of investing, reinvesting or trading in securities; or

•under Section 3(a)(1)(C), if it is engaged, or proposes to engage, in the business of investing, reinvesting, owning,

holding or trading in securities and owns, or proposes to acquire, “investment securities” having a value exceeding

40% of the value of its total assets (exclusive of government securities and cash items) on an unconsolidated basis,

which we refer to as the “40% test.” The term “investment securities” generally includes all securities except U.S.

government securities and securities of majority-owned subsidiaries that are not themselves investment companies

and are not relying on the exemption from the definition of investment company under Section 3(c)(1) or Section

3(c)(7) of the Investment Company Act.

We acquire real estate and real estate-related assets (whether in the form of debt or equity) directly, primarily by

acquiring fee interests in real property. We also will invest in real property indirectly through investments in joint venture

entities, including joint venture entities in which we do not own a controlling interest and joint venture entities in which

affiliated accounts may invest. We will conduct our businesses primarily through the Operating Partnership, a majority-

owned subsidiary, and expect to establish other direct or indirect majority-owned subsidiaries to hold particular assets.

We conduct our operations so that we and most, if not all, of our wholly and majority-owned subsidiaries will

comply with the 40% test. We continuously monitor our holdings on an ongoing basis to determine compliance with this

test. We expect that most, if not all, of our wholly owned and majority-owned subsidiaries will not be relying on

exemptions under either Section 3(c)(1) or 3(c)(7) of the Investment Company Act. Consequently, interests in these

subsidiaries (which are expected to constitute a substantial majority of our assets) generally will not constitute “investment

securities.” Accordingly, we believe that we and most, if not all, of our wholly and majority-owned subsidiaries will not be

considered investment companies under Section 3(a)(1)(C) of the Investment Company Act.

In addition, we believe that neither we nor any of our wholly- or majority-owned subsidiaries are considered an

investment company under Section 3(a)(1)(A) of the Investment Company Act because they do not engage primarily or

hold themselves out as being engaged primarily in the business of investing, reinvesting or trading in securities. Rather, we

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and our wholly- and majority-owned subsidiaries are primarily engaged in non-investment company businesses related to

real estate. Consequently, we conduct our and our wholly- and majority-owned subsidiaries’ respective operations such that

none of them are required to register as an investment company under Section 3(a)(1)(A) of the Investment Company Act.

The Company therefore is not subject to the obligations of a registered investment company and investors in the Company

will not receive the protections afforded by the Investment Company Act to investors in a registered investment company.

The Company is not registered as an investment company under the Investment Company Act in reliance upon

one or more exclusions or exemptions therefrom, including, but not limited to, Section 3(c)(5)(C) of the Investment

Company Act. The SEC and its staff have taken the position that this exemption generally requires that at least 55% of an

entity’s assets be comprised of mortgages and other liens on and interests in real estate, also known as “qualifying assets,”

and at least another 25% of the entity’s assets must be comprised of additional qualifying assets or a broader category of

assets that we refer to as “real estate-related assets” under the Investment Company Act (and no more than 20% of the

entity’s assets may be comprised of miscellaneous assets).

We classify our assets for purposes of our 3(c)(5)(C) exemption based upon no-action positions taken by, and the

interpretive guidance provided by, the SEC and its staff. These no-action positions are based on specific factual situations

that may be substantially different from the factual situations we may face, and a number of these no-action positions were

issued more than 20 years ago. No assurance can be given that the SEC or its staff will concur with our classification of our

assets. In addition, the SEC or its staff may, in the future, issue further guidance that may require us to re-classify our

assets for purposes of the Investment Company Act. If we are required to re-classify our assets, we may no longer be in

compliance with the exemption from the definition of an investment company provided by Section 3(c)(5)(C) of the

Investment Company Act.

For purposes of determining whether we satisfy the 55%/25% test noted above, based on certain no-action letters

issued by the SEC and its staff, we classify our fee interests in real property, held by us directly or through our wholly-

owned or majority-owned subsidiaries, as qualifying assets. In addition, based on no-action letters issued by the SEC and

its staff, we treat our investments in any joint ventures that, in turn, invest in qualifying assets such as real property, as

qualifying assets, but only if we are active in the management and operation of the joint venture and have the right to

approve major decisions by the joint venture; otherwise, they will be classified as real estate-related assets. We will not

participate in joint ventures in which we do not have or share control to the extent that we believe such participation would

potentially threaten our status as a non-investment company exempt from the Investment Company Act. This may prevent

us from receiving an allocation with respect to certain investment opportunities that are suitable for both us and one or

more Fortress Managed Accounts. We expect that no less than 55% of our assets will consist of investments in real

property, including any joint ventures that we control or in which we share control.

Qualifying for an exemption from registration under the Investment Company Act limits our ability to make

certain investments. For example, these restrictions may limit our and our subsidiaries’ ability to invest directly in

mortgage-backed securities that represent less than the entire ownership in a pool of mortgage loans, debt and equity

tranches of securitizations and certain asset-backed securities, non-controlling equity interests in real estate companies or in

assets not related to real estate; however, we and our subsidiaries may invest in such securities to a certain extent.

Although we intend to monitor our portfolio, there can be no assurance that we will be able to maintain this

exemption from registration. A change in the value of any of our assets could negatively affect our ability to maintain our

exemption from regulation under the Investment Company Act. To maintain compliance with the Section 3(c)(5)(C)

exemption, we may be unable to sell assets we would otherwise want to sell and may need to sell assets we would

otherwise wish to retain. In addition, we may have to acquire additional assets that we might not otherwise have acquired

or may have to forego opportunities to acquire assets that we would otherwise want to acquire and would be important to

our investment strategy.

If we are required to register as an investment company under the Investment Company Act, we would become

subject to substantial regulation with respect to our capital structure (including our ability to use borrowings), management,

operations, transactions with affiliated persons (as defined in the Investment Company Act), and portfolio composition,

including disclosure requirements and restrictions with respect to diversification and industry concentration, and other

matters. Compliance with the Investment Company Act would, accordingly, limit our ability to make certain investments

and require us to significantly restructure our business plan, which could materially adversely affect our NAV and our

ability to pay distributions to our shareholders.

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Foreign Ownership

Given that Fortress and the Company qualify as “foreign persons” for purposes of the Committee on Foreign

Investment in the United States or any member agency thereof acting in its capacity as such (“CFIUS”) under the Defense

Production Act of 1950 (as amended, including all implementing regulations thereof, the “DPA” (and, together with

CFIUS laws, rules, regulations, directives and special measures, and any applicable agreements thereunder, the “CFIUS

Regulations”)), certain investments made by the Company may be subject to review under CFIUS Regulations.

The Company may be restricted or prohibited by CFIUS Regulations from making certain investments in U.S.

businesses or disposing of certain investments in U.S. businesses based on national security concerns. If the Company is

permitted to make such investments, the CFIUS Regulations may place restrictions, obligations or conditions on these

investments. Furthermore, other U.S. regulatory bodies may also impose ownership, governance and/or control restrictions

on investments by non-U.S. persons, resulting in limitations on the structure through which investments may be held.

It is expected that investors that are “Foreign Persons” (as defined under CFIUS Regulations) (including Foreign

Persons that are Fortress Affiliates (including, for this purpose, members of the Fortress Owner Group)) will be restricted

from (among other things) accessing, or having governance rights that allow influence over the safekeeping or release of,

personally identifiable information (PII), protected health information (PHI) or other similar information in respect of the

Company’s investments in the possession of Fortress (or otherwise), or from controlling the Company’s investments, in

each case, as determined by Fortress in its discretion and in a manner consistent with its obligations under the letter and

spirit of the CFIUS Regulations.

The Adviser and our board of trustees will be authorized, without the consent of any person, including any

shareholder, to take such action as it reasonably determines to be necessary or advisable to comply with or reduce risk

arising under the CFIUS Regulations.

Additionally, other countries have implemented (or are in the process of implementing) similar “foreign

ownership” regulations that may require governmental approval prior to an investment by the Company, limit the amount

of investment by the Company in a particular company, asset or sector or restrict investment by the Company to a specific

class of securities of a company that have less advantageous terms than the classes available for purchase by nationals.

Certain countries may also require Fortress or the Adviser to obtain additional information from its shareholders or

investors in connection with a particular investment. If such information is not obtained or provided, the Company may not

be able to complete an investment, may be required to dispose of an investment or may be subject to other adverse

consequences as a result.

Any or all of the above factors could have a material adverse effect on the Company’s business, financial

condition, results of operations and prospects, and there can be no assurance that Fortress will be able to (i) obtain all

regulatory approvals or agreements with CFIUS that may be required by or warranted pursuant to CFIUS Regulations or

otherwise that it does not yet have or that it may require in the future, (ii) obtain any necessary modifications to existing

regulatory approvals or agreements with CFIUS, or (iii) maintain required regulatory approvals or agreements with CFIUS.

Regulatory impacts on the Company or a delay in obtaining or failure to obtain any regulatory approvals required by the

CFIUS Regulations or otherwise, or amendments thereto, or delay or failure to satisfy any regulatory conditions or other

applicable requirements could result in an adverse effect on the Company and require attention and resources of Fortress

and its executive officers that might otherwise be devoted to the Company.

U.S. Foreign Corrupt Practices Act

Fortress and the Company intend to comply with the Foreign Corrupt Practices Act of 1977, as amended, and

other anti-corruption laws, anti-bribery laws and regulations, as well as anti-boycott regulations, to which they are subject.

As a result, the Company may decline to participate in transactions that present undue risk under such laws or regulations.

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Competition

We face competition from various entities for investment opportunities, including other REITs, pension funds,

insurance companies, investment funds and companies, partnerships and developers. In addition to third-party competitors,

other programs sponsored by the Adviser and its affiliates, particularly those with investment strategies that overlap with

ours, will seek investment opportunities under Fortress’s prevailing policies and procedures.

In the face of this competition, our Adviser has access to Fortress’s professionals and their industry expertise and

relationships, which we believe provide us with a competitive advantage and help us source, evaluate and compete for

potential investments. We believe these relationships will enable us to compete more effectively for attractive investment

opportunities. However, we may not be able to achieve our business goals or expectations due to the competitive risks that

we face.

Emerging Growth Company

We are and will remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of

2012 (the “JOBS Act”) until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the date of

an initial public offering pursuant to an effective registration statement under the Securities Act, (ii) in which we have total

annual gross revenue of at least $1.235 billion, or (iii) in which we are deemed to be a large accelerated filer, which means

the market value of our shares that is held by non-affiliates exceeds $700 million as of the date of our most recently

completed second fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt

during the prior three-year period. For so long as we remain an “emerging growth company” we are eligible to take

advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are

not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation

requirements of Section 404 of the Sarbanes-Oxley Act. We cannot predict if investors will find our shares less attractive

because we may rely on some or all of these exemptions.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of

the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised

accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting

standards until those standards would otherwise apply to private companies. We will take advantage of the extended

transition period for complying with new or revised accounting standards, which may make it more difficult for investors

and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with

public company effective dates. Also, because we are not a large accelerated filer or an accelerated filer under Section

12b-2 of the Exchange Act, and will not be for so long as our common shares are not traded on a securities exchange, we

will not be subject to auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act even once we are no

longer an emerging growth company.

Human Capital

We do not currently have any employees and do not expect to have any employees. Services necessary for our

business are provided by individuals who are employees of the Adviser or its affiliates pursuant to the terms of the

Management Agreement and Declaration of Trust.

The Private Offering

Subscriptions to purchase our shares may be made on an ongoing basis, but investors may only purchase our

shares pursuant to accepted subscription orders as of the first business day of each month (based on the prior month’s

transaction price), and to be accepted, a subscription request must be received in good order at least five business days prior

to the first business day of the month (unless waived by the Dealer Manager). A subscription order may be canceled at any

time before the time it has been accepted.

The purchase price per share of any class of shares will be equal to the then-current transaction price of such class

of shares, which will generally be our prior month’s NAV per share of the applicable class of shares as of the last calendar

day of such month. Our NAV may vary significantly from one month to the next. We may offer shares of any class at a

price that we believe reflects the NAV per share of the applicable class of shares more appropriately than the prior month’s

NAV per share of the applicable class, including by updating a previously available offering price, in cases where we

believe there has been a material change (positive or negative) to our NAV per share of such class of shares since the end

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of the prior month. In contrast to securities traded on an exchange or over-the-counter, where the price often fluctuates as a

result of, among other things, the supply and demand of securities in the trading market, our NAV will be calculated once

monthly using our valuation methodology, and the price at which we sell new shares of any class and repurchase

outstanding shares of any class will not change depending on the level of demand by investors or the volume of requests

for repurchases.

Generally, within 15 calendar days after the last calendar day of each month, we will determine our NAV per

share for each share class as of the last calendar day of the prior month, which will generally be the transaction price for the

then-current month for such share class. However, in certain circumstances, the transaction price will not be made available

until a later time.

As of December 31, 2024, we issued and sold 80,940,626 common shares in the private offering to accredited

investors (consisting of 2,988,246 Class F-S shares, 40,462,955 Class F-I shares, 35,612,899 Class D-S shares, 1,347,151

Class D-X shares and 529,375 Class E shares).

Subsequent to December 31, 2024, we issued and sold 16,492,965 common shares in the private offering to

accredited investors (consisting of 1,939,135 Class I shares, 3,608,255 Class F-S shares, 10,770,366 Class F-I shares,

170,436 Class D-S shares and 4,772 Class E shares).

Conflicts of Interest

We are subject to conflicts of interest arising out of our relationship with Fortress and its affiliates, including the

Adviser. See “Part I. Item 1A—Risk Factors—Risks Related to Our Relationship with Fortress, Our Adviser and the

Management Agreement” and “Part III. Item 13—Certain Relationships and Related Transactions, and Director

Independence.”

Available Information

Investors may obtain copies of our filings with the SEC, free of charge, from the website maintained by the SEC

at www.sec.gov. In addition, from time to time, we may use our website (https://pws.fortress.com/repurchase-offers-fnlr)

as a distribution channel for company information. Accordingly, investors should monitor this channel, in addition to

following our SEC filings. Our filings with the SEC, however, are the primary source for current, material information

about us. We are providing our website address solely for the information of investors. The information on our website,

however, is not incorporated by reference in or otherwise part of this Annual Report.

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ITEM 1A.RISK FACTORS

You should specifically consider the following material risks in addition to the other information contained in this

Annual Report. The occurrence of any of the following risks might have a material adverse effect on our business and

financial condition. The risks and uncertainties discussed below are not the only ones we face, but do represent those risks

and uncertainties that we believe are most significant to our business, operating results, financial condition, prospects and

forward-looking statements. As used herein, the term “you” refers to our current shareholders or potential investors in our

common shares, as applicable.

Risks Related to Our Business and Operations

We are subject to risks related to the ownership of commercial real estate that could affect the performance and value of

our properties.

Factors beyond our control can affect the performance and value of our properties and may cause the performance

and value of our properties to decline. Our core business is to invest in net leased assets, primarily to single tenants, either

individually or as a portfolio. The investments may include a combination of land, building and/or leasehold interests,

primarily in the United States. However, we may invest in other jurisdictions as our Adviser deems appropriate. We will

seek to invest in any and all commercial property types, including retail, office, industrial and any other specialized use

assets. These investments could be originated as part of a sale-leaseback transaction directly with tenants, through a “build-

to-suit” property transaction with prospective tenants (in which we develop assets to suit the needs of prospective tenants

that are either net-leased at the start of construction or net-leased shortly after completion of construction) and/or by

purchasing the assets with leases already in place.

Accordingly, our performance is subject to risks incident to the ownership of commercial real estate, including:

•inability to collect rents from tenants due to financial hardship, including bankruptcy or insolvency;

•changes in local real estate conditions in the markets where our properties are located, including real

estate taxes and the availability and demand for the properties we own;

•changes in trends and preferences among consumers and tenants that affect the demand for products and

services offered by our tenants or reduce the attractiveness and marketability of our properties to tenants

or cause decreases in market rental rates;

•adverse changes in the general economic climate or in international, national, regional and local

economic conditions;

•inability to renew leases, lease vacant space or re-let space upon expiration or termination of existing

leases thereby increasing or prolonging vacancies, which could adversely affect our financial condition,

cash flows and results of operations;

•environmental risks, including the presence of hazardous or toxic substances on our properties;

•environmental claims arising in respect of real estate acquired with undisclosed or unknown

environmental problems or as to which inadequate reserves had been established;

•the subjectivity of real estate valuations and decreases in such valuations over time;

•illiquidity of real estate investments, which may limit our ability to quickly modify our portfolio in

response to changes in economic or other conditions;

•changes in operating costs and expenses or energy, labor and supply shortages;

•changes in governmental laws and regulations, zoning or other local regulatory restrictions, fiscal

policies or other factors pertaining to local government institutions and the related costs of compliance

which inhibit interest in the markets in which our properties are located;

•negative changes in interest rates and the availability of financing;

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•significant liquidated damages, loss of deposits or other financial or governance penalties if we fail to

consummate transactions or fail to fund capital commitments contemplated by any agreements we make;

•successor liability for investments in existing entities (e.g., buying out a distressed partner or acquiring an

interest in an entity that owns a real property);

•competition from other real estate companies similar to ours and competition for tenants, including

competition based on rental rates, age and location of properties and the quality of maintenance,

insurance and management services;

•acts of God, including natural disasters (such as hurricanes, flooding, wildfires, volcanic eruptions and

earthquakes) and public health crises, which may result in uninsured losses; and

•strikes, riots, social or civil unrest, or acts of war (declared and undeclared) or terrorism, including

consequences of such activities.

We have limited opportunities to increase rents under our long-term leases with tenants, which could impede our

growth and materially and adversely affect us.

We typically lease our properties pursuant to long-term net leases that often have renewal options. Substantially

all of our leases provide for annual rent escalations, but these built-in increases may be less than what we otherwise could

achieve in the market.

Long-term net leases generally provide the tenant greater discretion in using the leased property than ordinary

property leases, such as the right to freely sublease the property (while holding the original tenant liable unless we agree to

swap with an equal or higher tenant), and to make alterations in the leased premises and, in limited circumstances, to

terminate the lease prior to its expiration under specified circumstances. Furthermore, long-term net leases have an

increased risk that contractual rental increases in future years will fail to result in fair market rental rates during those years.

If we do not accurately judge the potential for increases in market rental rates when negotiating these long-term leases,

significant increases in future property operating costs, to the extent not covered under the net leases could result in us

receiving less than fair value from these leases. As a result, income to and distributions from us could be lower than they

would otherwise be if we did not engage in long-term net leases. See “—We may be unable to lease vacant space or renew

leases or re-lease space on favorable terms as leases expire.”

If we are unable to raise substantial additional funds, we will be limited in the number and type of investments we make

and the value of your investment in us will fluctuate with the performance of the specific assets we acquire.

Our private offering is being made on a “best efforts” basis, meaning that the Dealer Manager and participating

broker-dealers are only required to use their best efforts to sell our common shares and have no firm commitment or

obligation to purchase any shares. As a result, the amount of proceeds we raise in our private offering may be substantially

less than the amount we would need to create a diversified portfolio of investments. If we are unable to raise substantial

funds, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments

that we make. Moreover, the potential impact of any single asset’s performance on the overall performance of our portfolio

will increase unless and until we raise sufficient proceeds to diversify the portfolio. Further, we expect to have certain fixed

operating expenses, regardless of whether we are able to raise substantial funds in our private 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 to you.

We face risks associated with the deployment of our capital.

In light of the nature of our continuous offering in relation to our investment strategy and the need to be able to

deploy potentially large amounts of capital quickly to capitalize on potential investment opportunities, if we have difficulty

identifying and purchasing suitable properties on attractive terms, there could be a delay between the time we receive net

proceeds from the sale of our common shares in our private offering or any private offering and the time we invest the net

proceeds. We may also from time to time hold cash pending deployment into investments or have less than our targeted

leverage, which cash or shortfall in target leverage may at times be significant, particularly at times when we are receiving

high amounts of offering proceeds and/or times when there are few attractive investment opportunities. Such cash may be

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held in an account for the benefit of our shareholders that may be invested in money market accounts or other similar

temporary investments, each of which are subject to the management fees.

The business of identifying, structuring and completing real estate and real estate-related transactions is highly

competitive and involves a high degree of uncertainty. In the event we are unable to find suitable investments, such cash

may be maintained for longer periods which would be dilutive to overall investment returns. For example, we will continue

to pay the Adviser the management fee based on our NAV, which includes cash, money market accounts and other similar

temporary investments. This could cause a substantial delay in the time it takes for your investment to realize its full

potential return and could adversely affect our ability to pay regular distributions of cash flow from operations to you. It is

not anticipated that the temporary investment of such cash into money market accounts or other similar temporary

investments pending deployment into investments will generate significant interest, and investors should understand that

such low interest payments on the temporarily invested cash may adversely affect overall returns. In the event we fail to

timely invest the net proceeds of sales of our common shares or do not deploy sufficient capital to meet our targeted

leverage, our results of operations and financial condition may be adversely affected.

In addition, the targeted nature of our investment strategy means that significant amounts of our capital may be

committed to a single investment or group of related investments. Accordingly, we may be obligated to devote future

capital raised in our private offering to such committed investments and unable to pursue other potential investment

opportunities at ideal times, if at all.

Following our initial investment in any investment, we are permitted to invest additional funds in such investment

or could have the opportunity to increase our investment in such investment by investing in additional real estate assets

related thereto (whether for opportunistic reasons, to fund the needs of the investment, as an equity cure under applicable

debt documents or for other reasons). There can be no assurance that we will make follow-on investments or that we will

have sufficient funds to make all or any of such follow-on investments (including an event of default under applicable debt

documents in the event an equity cure cannot be made). Any decision by us not to make follow on investments or our

inability to make such investments could have a substantial adverse effect on a particular real estate asset in need of such

an investment.

If we are unable to successfully integrate new investments and manage our growth, our results of operations and

financial condition may suffer.

We have in the past and may in the future significantly increase the size and/or change the types of investments in

our portfolio. We may be unable to successfully and efficiently integrate newly acquired investments into our existing

portfolio or otherwise effectively manage our assets or growth. In addition, increases in the size of our investment portfolio

and/or changes in our investment focus may place significant demands on our Adviser’s administrative, operational, asset

management, financial and other resources which could lead to decreased efficiency. Any failure to effectively manage

such growth or increase in scale could adversely affect our results of operations and financial condition.

Adverse economic conditions, including the resulting effect on consumer spending, could have a material and adverse

effect on our business, financial condition, results of operations and cash flows.

Our business could be significantly affected by global and national economic and market conditions generally and

by the local economic conditions where our properties are concentrated. A recession, slowdown and/or sustained downturn

in the U.S. real estate market and the markets in which our tenants operate would have a pronounced impact on us, the

value of our assets and our profitability. Reduction in consumer or corporate spending could have a material adverse effect

on our business, financial condition, results of operations and cash flows. Our primary business is to lease properties. When

individuals and companies purchase and produce fewer goods, our tenants have less demand for our properties. We could

also be materially and adversely affected by any overall weakening of, or disruptions in, the financial markets. Specific

risks related to adverse economic conditions, among others, may include:

•increased re-leasing exposure, which may require tenant concessions or reduced rental rates, or the inability to

capture increased rental rates upon the expiration of below-market leases;

•increased levels of tenant defaults under, or non-renewals of, leases; and

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•volatility and uncertainty in equity and credit markets or reduced access to credit that may restrict our ability to

access additional financing for our capital needs, including expansion, acquisition activities, refinancing and other

purposes, on favorable terms or at all.

The length and severity of any economic slowdown or downturn cannot be predicted. As a result, we may see

increases in bankruptcies of our tenants and increased defaults by tenants, and we may experience higher vacancy rates

and delays in re-leasing vacant space. The occurrence of any of the foregoing could have a material and adverse effect on

our business, financial condition, results of operations and cash flows.

Global economic, political and market conditions may adversely affect our business, financial condition and results of

operations, including our revenue growth and profitability.

The current worldwide financial markets situation, as well as various social and political tensions in the United

States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic

events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased

market volatility, may have long-term effects on the United States and worldwide financial markets, and may cause

economic uncertainties or deterioration in the United States and worldwide. For example, the conflict between Russia and

Ukraine, or the ongoing and developing conflicts in the Middle East, and other developing conflicts, and resulting market

volatility, could adversely affect our business, financial condition or results of operations. In response to the conflict

between Russia and Ukraine, the United States and other countries have imposed sanctions or other restrictive actions

against Russia. In addition, other government actions, including sanctions, export controls, tariffs and trade wars (including

with respect to Canada, Mexico, China, Iran or otherwise), could have a material adverse effect on our business, financial

condition, cash flows and results of operations and could cause the market value of our common shares and/or debt

securities to decline. Since the inauguration of U.S. President Donald Trump in January 2025, the U.S. Government has

announced tariff actions against certain imported goods, and has issued an “America First Trade Policy” memorandum that

could lead to additional tariff and trade measures. Additionally, the U.S. Government imposes economic sanctions and

trade restrictions against certain countries and persons from time to time. If the U.S. Government imposes such tariffs,

sanctions, trade restrictions, or other measures against products and materials, it could have a material adverse impact on

our business, financial condition, and results of operations. Some foreign governments, including China, have instituted

retaliatory tariffs on certain U.S. goods and have indicated a willingness to impose additional tariffs on U.S. products.

Global trade disruption, significant introductions of trade barriers and bilateral trade frictions, together with any future

downturns in the global economy resulting therefrom, could adversely affect our performance. We will continue to monitor

developments and seek to manage our investments in a manner consistent with achieving our investment objectives, but

there can be no assurance that we will be successful in doing so.

In addition, the current regulatory environment in the United States and in other countries may be impacted by

future legislative developments. Any significant changes under the Trump administration in, among other things, economic

policy (including with respect to interest rates and foreign trade), the regulation of the investment management industry,

tax law, immigration policy or government entitlement programs could have a material adverse impact on us and our

investments.

The valuation of our investments may not be certain or transparent as a result of the highly volatile environments we

operate in.

Investing in highly volatile environments presents certain inherent risks, including reduced market liquidity,

reduced price transparency and less certainty in core assumptions in respect of a particular investment or an investment

strategy as a whole. While such investment environments provide the opportunity for significant returns, they also present

significant risks, many of which cannot be predicted, managed or hedged against. If we fail to identify or adequately

evaluate potential risks or changes, we may invest at a valuation that is not commensurate with the risk profile of a

particular investment or where we would otherwise not invest were more accurate information available, resulting in

reduced returns or a complete or partial loss of capital. There can be no assurance that we will accurately identify all

potential considerations that may adversely affect the performance of any one or more of our investments or investment

strategies.

Adverse economic conditions and other events or occurrences that negatively affect the general economy in the United

States or in markets in which our properties are geographically concentrated may materially and adversely affect our

results of operations.

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Our operating performance may be impacted by the economic conditions of specific markets in which we have

concentrations of properties. Our revenues from, and the value of, our properties located in geographic markets may be

affected by local or regional real estate conditions (such as an oversupply of or reduced demand for properties) and the

local or regional economic climate. Business layoffs, downsizing, industry slowdowns, changing demographics and other

factors may adversely impact the economic climate in these markets. Because of the number of properties we have located

in certain of our geographic markets, a downturn in their economies or real estate conditions or any decrease in demand for

properties resulting from the regulatory environment, business climate or energy or fiscal problems therein could materially

and adversely affect our and our tenants’ businesses.

We are exposed to general economic conditions, local, regional, national and international economic conditions

and other events and occurrences that negatively affect the markets in which we own properties. For example, if

commercial real estate property values decrease materially it may cause borrowers to default on their mortgages or

negotiate more favorable terms and conditions on their mortgages. All of the foregoing factors may adversely affect the

value of the collateral securing loans and other assets held by us and thereby lower or even eliminate any value to be

derived from a restructuring or liquidation of such investments.

In addition, given that our properties and related assets are expected to primarily be located in the United States, a

downturn in the United States economy, or unfavorable political or economic changes in the United States, could

materially and adversely affect us disproportionately to our competitors whose portfolios are more geographically diverse.

Tenant and industry concentrations may make us more susceptible to adverse events than if our portfolio were more

diversified.

Any adverse change in the financial condition of our tenants we have significant concentrations of now or in the

future, or any downturn in the industries in which our tenants operate, or in any other industry in which we may have a

significant concentration now or in the future, could adversely affect our tenants that are involved in such industries, their

demand for our properties, their ability to renew or re-lease our properties at the same or increased rent, or at all, and their

ability to make rental payments on properties already leased to them.

To the extent that tenants and potential tenants are adversely affected by macro or microeconomic changes, our

properties may experience decreases in demand, higher default rates on leases or other payments and amounts due, or other

adverse results, all of which may have a material and adverse effect on our business, financial condition, results of

operations and cash flows.

We may be unable to lease vacant space or renew leases or re-lease space on favorable terms as leases expire.

We are subject to the risk that, upon the expiration of leases for space located in our properties, leases may not be

renewed by existing tenants at the same or increased rents, or at all, the space may not be re-leased to new tenants or the

terms of renewal or re-leasing (including the cost of required renovations or concessions to tenants) may be less favorable

to us than current lease terms. If our competitors offer space at rental rates below current market rates or below the rental

rates we currently charge our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates

below those we currently charge to retain tenants when our tenants’ leases expire. In addition, there may be certain tenants

who have the ability to sublease properties to third parties without our consent. If a tenant subleases a property to a third

party, the original tenant remains obligated under the lease. However, if one of our existing tenants subleases a property, it

could increase the likelihood that a lease will not be renewed at the end of its term or that the original tenant may default

under its obligations under the lease. In the event of default by a significant number of tenants, we may experience delays

and incur substantial costs in enforcing our rights as landlord, and we may be unable to re-lease spaces. If rental rates for

our properties decrease, our existing tenants do not renew their leases or we do not re-let a significant portion of our

available space and space for which leases expire, our financial condition, results of operations and cash flows, could be

materially and adversely affected.

The vacancy of one or more of our properties could result in us having to incur significant capital expenditures to re-

lease the property.

The loss of a tenant, either through lease expiration or tenant bankruptcy or insolvency, may require us to spend

significant amounts of capital before the property is suitable for a new tenant and cause us to incur significant costs to

source new tenants. In many instances, the leases we enter into or assume through acquisition are for properties that are

specifically suited to the particular business of our tenants. Because these properties have been designed or physically

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modified for a particular tenant, if the current lease is terminated or not renewed, we may be required to renovate the

property at substantial costs, decrease the rent we charge or provide other concessions in order to lease the property to

another tenant.

In addition, in the event we decide to sell certain properties, we may have difficulty selling it to a party other than

the tenant due to the special purpose for which any such property may have been designed or modified. This potential

limitation on our ability to sell a property may limit our ability to quickly modify our portfolio in response to changes in

our tenants’ business prospects, economic or other conditions, including tenant demand, which could materially and

adversely affect our results of operations and financial condition.

We are subject to certain risks associated with construction and renovation of our properties.

We are permitted to acquire direct or indirect interests in underdeveloped real property (which could be non-

income producing), and properties in which we invest may require construction and/or renovation in order to meet tenant

needs. To the extent that we invest in such assets, it will be subject to the risks normally associated with such assets and

construction activities, including the possibility of construction cost overruns and delays due to various factors (including

inclement weather, labor or material shortages, the unavailability of construction and permanent financing and timely

receipt of zoning and other regulatory approvals), the availability of both construction and permanent financing on

favorable terms and market or site deterioration after acquisition. Any unanticipated delays or expenses could have an

adverse effect on our operations and financial condition. Properties under construction or renovation are likely to receive

little or no cash flow from the date of acquisition through the date of completion of such work and would likely continue to

experience operating deficits after the date of completion. In addition, market conditions could change during the course of

construction that make such construction less attractive than at the time it was commenced.

Additionally, the renovation, refurbishment or expansion by us or by a tenant under a mortgaged property

involves risks of cost overruns and non-completion. Estimates of the costs of improvements to bring an acquired property

up to standards established for the market position intended for that property may prove inaccurate. Other risks may

include rehabilitation costs exceeding original estimates, possibly making a project uneconomical and disrupting

subsequent leasing of the property. If such renovation is not completed in a timely manner, or if it costs more than

expected, we or a borrower may experience a prolonged impairment of net operating income.

We are subject to certain risks related to build-to-suit properties including difficulties to sell or re-let upon tenant

defaults or lease terminations and additional risks related to properties under development.

Certain of the properties that we expect to acquire will be designed and built for a particular use or tenant. If we

own a property when the lease terminates and the tenant does not renew its occupancy under the lease, if the tenant

terminates its lease, if the tenant defaults on its lease or if the tenant rejects its lease pursuant to a bankruptcy proceeding,

the property might not be marketable without substantial capital improvements or rent concessions. Improvements could

require the use of cash that would otherwise be distributed to investors. Attempting to sell the property without

improvements may also result in a lower sales price. In the event we are forced to sell a property, we may have difficulty

selling it to a party other than the tenant due to the special purpose for which the related property may have been designed.

Risks related to build-to-suit projects also include the potential for failing to meet an agreed-upon delivery

schedule and cost overruns, which may among other things, cause the total project costs to exceed the original budget. In

some cases, the prospective tenant will bear these risks. However, in other instances, we may be required to bear these

risks, which means that we may have to advance funds to cover cost overruns that we would not be able to recover through

increased rent payments or that we may experience delays in the project that delay commencement of rent. The incurrence

of these costs or any non-occupancy by the tenant upon completion may reduce our returns or result in losses to us.

In addition, in connection with build-to-suit programs and the acquisition of properties under development, we

may enter into purchase and sale arrangements with developers of suitable properties under development or construction

pursuant to which we would be obligated to purchase the property at the completion of construction. We may also engage

in development and construction activities involving existing properties, including the expansion of existing facilities (e.g.,

at the request of a tenant) or the development or build-out of vacant space. We may advance significant amounts in

connection with certain development projects. As a result, we will be subject to potential development risks and

construction delays and the resultant increased costs and risks which could adversely affect our results of operations and

financial condition.

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Certain of our investments may be in the form of ground leases, which provide limited rights to the underlying property.

We may acquire leasehold interests in respect of properties that are the subject of a ground lease, where third party

owners hold the fee interest in those properties (each, a “Fee Owner”). In such cases, our interest in such a property will be

subordinate to the Fee Owner’s interest in that property, and our investment in the leasehold interest will be subject not

only to the potentially competing interests of the Fee Owner, but also to interests held by third parties, such as mortgages or

other liens (e.g., mechanic’s liens) that encumber the Fee Owner’s fee interest and which may be superior and potentially

adverse to our interests. A default by the Fee Owner under any of these competing interests and the enforcement or

foreclosure of those interests by the holders thereof may also result in the termination or impairment of our leasehold

interest. In addition, any bankruptcy or insolvency of the Fee Owner could potentially impair or terminate our leasehold

interest. This risk is increased if the fee interest were itself subject to financing liens. In the event of the Fee Owner’s

bankruptcy, there can be no assurance that a tenant will not acquiesce in a rejection or disaffirmance of the lease by the Fee

Owner or its trustee in bankruptcy, or that the Fee Owner’s bankruptcy trustee will not seek to sell the property free and

clear of the lease. The occurrence of the foregoing could have an adverse effect on our results of operations and financial

condition.

We are subject to certain risks associated with the management of our properties.

Property managers and tenants of net lease properties are responsible for the maintenance and other day-to-day

management of the properties. If a property is not adequately maintained in accordance with the terms of the applicable

lease or agreement, we may incur expenses for deferred maintenance expenditures or other liabilities once the relationship

is terminated. While it is expected that our leases will generally provide for recourse against the tenant in these instances, a

bankrupt or financially troubled tenant may be more likely to defer maintenance and it may be more difficult to enforce

remedies against such a tenant. In addition, to the extent tenants are unable to conduct their operation of the property on a

financially successful basis, their ability to pay rent may be adversely affected. Although we will endeavor to monitor, on

an ongoing basis, compliance by tenants and managers with their obligations and other factors that could affect the

financial performance of its properties, such monitoring may not in all circumstances ascertain or forestall deterioration in

the condition of a property or the financial circumstances of a tenant. The occurrence of the foregoing could have an

adverse effect on our results of operations and financial condition.

Actual or perceived threats associated with epidemics, pandemics or public health crises could have a material adverse

effect on our results of operations and the businesses of our tenants.

Epidemics, pandemics, and other public health crises could materially and adversely affect our ability to pay

distributions, and our and our tenants’ results of operations and liquidity.

The extent to which such epidemics, pandemics and other public health crises may impact our investments and

operations will depend on a variety of factors, including, among others, the duration of the pandemic, information that may

emerge concerning severity, and the actions taken to contain the pandemic or treat the disease, particularly in the markets

in which our properties are located. As a result, the full impact of any pandemic on our business is highly uncertain and

cannot be predicted with confidence. Nevertheless, any future epidemics, pandemics or public health crises could

materially and adversely affect our business, financial condition, liquidity and results of operations, as well as our ability to

pay distributions to our shareholders, for the reasons discussed above.

We are exposed to potential impacts of future climate change and climate change-related risks.

We are exposed to potential physical risks from possible future changes in climate. The real estate assets securing

or related to our investments may be negatively affected by the exposure to environmental conditions such as droughts,

famines, floods, storms, wildfires and other climate change and environmental-related events; although a number of these

risks may be insurable, it is not guaranteed that the insurance coverage may in all cases be adequate and losses connected to

these events may be material. If the frequency of extreme weather events increases due to climate change, our exposure to

these events could increase.

Properties occupied by a single tenant pursuant to a single lease subject us to risk of tenant default.

Our strategy focuses on owning, operating and investing in single-tenant, net leased commercial properties.

Therefore, the financial failure of, or default in payment by, a tenant under its lease is likely to cause a significant or

complete reduction in our rental revenue from that property and possibly a reduction in the value of the property. We may

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also experience difficulty or a significant delay in re-leasing or selling such property. In addition, prolonged and/or

unanticipated vacancies at our properties or a tenant’s inability to fulfill its obligations under its lease may cause us to bear

more direct property level operating expenses (such as property taxes, costs for repairs and replacements, and property

management expenses) than anticipated and may place significant demands on the Adviser’s administrative, operational,

asset management, financial and other resources. This risk is magnified in situations where we lease multiple properties to

a single tenant and the financial failure of the tenant’s business affects more than a single property. A failure or default by

such a tenant could reduce or eliminate rental revenue from multiple properties and reduce the value of such properties,

which could materially and adversely affect our results of operations and financial condition.

There are risks associated with the termination or expiration of leases and tenant defaults.

Our properties are generally expected to be subject to a single tenant occupying 100% of each property. There can

be no assurance that we will be able to retain tenants in any of our respective properties upon the expiration of our leases.

Upon the expiration or early termination of such leases, the availability of the entire building may have an adverse effect on

our ability to achieve the lease terms and rents we might otherwise be able to achieve if space were to turn over in smaller

portions, spread out over a period of time. If the space is suited to the particular needs of a former tenant, then we may have

difficulty finding a new tenant for the space or may need to redevelop such space.

The success of our investments will materially depend on the financial stability of our tenants. A default by a

tenant on its lease payments would cause us to lose the revenue associated with such lease and require us to find an

alternative source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a mortgage.

The Adviser could fail to, or be unable to, discover factors that would indicate a heightened level of uncertainty with

respect to particular key tenants when performing due diligence on prospective investments. An early termination of a lease

by a bankrupt tenant would result in unanticipated expenses to re-let the premises. Tenant defaults thus increase the risk

that we, and hence investors, could suffer a loss.

In addition, if a tenant defaults or goes bankrupt, we would likely experience delays in enforcing our rights as

landlord and could incur substantial costs in protecting our investment and re-letting the property. In the event of a tenant’s

bankruptcy or insolvency, we could be restricted from evicting such tenant solely because of its bankruptcy. However, a

bankruptcy court could potentially authorize the tenant to terminate its leases with us. In such instances, our claim against

the bankrupt tenant for unpaid future rent would be an unsecured prepetition claim subject to statutory limitations, and

therefore such amounts received in bankruptcy are likely to be substantially less than the remaining rent we otherwise

would be owed under the lease. Further, any claim we have for unpaid past rent could be substantially less than the amount

owed. If a lease is terminated, we could be unable to lease property for the rent previously received or sell the investment

without incurring a loss. These events could limit our ability to make distributions and decrease the value of an investment

in us.

We may be concentrated with exposure to a limited number of tenants. We are more likely to experience higher

rates of lease default or termination in the event of a downturn in a particular industry or market than we would if the

tenant base were more diversified. Our revenue from and the value of the investments in our portfolio could be affected by

a number of factors, including a deterioration in the financial condition of a particular tenant and the corresponding

downgrading of its credit rating. These factors could have a material adverse effect on our operating results and financial

condition. Our ability to sell or lease our investments could be difficult due to economic factors beyond our control. If, due

to credit default and/or vacancy, the Company is unable to obtain favorable lease terms for its properties, it could be forced

to sell investments at a loss due to the repositioning expenses likely to be incurred.

There are risks associated with Master Leases, including the enforceability of certain terms in connection with tenant

bankruptcy proceedings.

We expect, in certain cases, to bundle leases to multiple properties together under a single master lease (each, a

“Master Lease”). It is anticipated that such Master Lease agreements may include non-monetary cross-default provisions

and require that all tenants and properties subject to the Master Lease support the rental obligations under the Master Lease

on a joint and several basis. The terms of a Master Lease may also limit tenants’ rights to terminate a Master Lease with

respect to individual properties. While the use of a Master Lease structure may reduce the risks associated with the

financial failure of a single asset or tenant, it may pose other risks to us. For example, tenants may seek to argue that certain

provisions of a Master Lease are not enforceable in general or under certain circumstances. Further, tenants involved in

bankruptcy proceedings may seek to reject their obligations with respect to certain but not all properties under the Master

Lease. We believe that our Master Leases will be enforceable and not rejectable in part, and certain of our Adviser’s

affiliates have been successful in enforcing Master Leases and overcoming bankrupt tenants’ attempts to reject Master

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Leases with respect to some but not all properties subject thereto. Nonetheless, any court’s decision with respect to our

Master Leases would be based on the facts and circumstances that exist at the time that the issues are raised, including the

terms of the Master Lease. In this regard, we may seek to include certain cross-default or other provisions in the Master

Leases that benefit us, as lessor, but that also may be cited by tenants as support for their arguments. There can be no

assurance that a tenant’s argument in any particular instance would not succeed in court. In particular, bankruptcy courts

have broad equitable powers that may result in rulings that favor a tenant’s attempt to reject a Master Lease, and, in turn,

benefit other similarly situated tenants in their attempts to reject their obligations under a Master Lease, resulting in the loss

of revenue from all such properties. The occurrence of any of the foregoing could have a material and adverse effect on our

results of operations and financial condition.

We are subject to certain risks related to difficulties in selling or reletting special use single tenant properties upon

tenant defaults or lease terminations.

We may invest in commercial or industrial properties, including special use single tenant properties. With these

properties, if the current lease is terminated or not renewed, we may be required to renovate the property or to make rent

concessions in order to lease the property to another tenant or sell the property. In addition, we may have difficulty selling

the property to a party other than the tenant due to the special purpose for which the property may have been designed.

These and other limitations may affect our ability to sell or release properties and may adversely affect returns to investors.

Continued government intervention and instability in Europe may adversely affect our business, financial condition and

results of operations, including our revenue growth and profitability.

The already challenged economic and political environment in Europe may be adversely affected by events

outside our control, such as changes in government policies, European Union (the “EU”) directives in the credit sector and

other areas and resulting increase in sovereign debt, political instability, terrorist attacks, social unrest and rioting or

military action affecting Europe and/or other areas abroad and taxation and other political, economic or social

developments in or affecting Europe. Policymakers in many advanced economies have publicly acknowledged the need to

urgently adopt credible strategies to contain public debt and excessive fiscal deficits and later bring them down to more

sustainable levels, which pressures may be acutely present following the conclusion of stimulus measures introduced in

response to the COVID-19 pandemic. The implementation of these policies may restrict economic recovery. Against a

background of increasing unease over the macro/financial implications of sizeable fiscal imbalances, investors have

reduced their investment in many Eurozone countries. Continued reduction in investment flows may restrict economic

recovery. Due to the uncertainty regarding the success of any austerity measures and reforms, new taxes may be imposed

on us and existing taxes may be increased. There can be no assurance that such government intervention, political

instability or additional taxes will not have an adverse effect on our returns.

The need to reduce Europe’s dependency on European Central Bank funding will also increase the likelihood of

deleveraging, reducing some European countries’ loans to the economy. In the context of continued market turmoil,

worsening macroeconomic conditions and increasing unemployment, coupled with declining consumer spending and

business investment and the worsening credit profile of some European corporate and retail borrowers, the value of assets

collateralizing secured loans, including houses and other real estate, could decline significantly. Such a decline could result

in impairment of the value of the loan assets or an increase in the level of non-performing loans, either of which may have

a material adverse effect on our returns.

We are subject to risks investing outside of the United States, including business uncertainties, currency exchange risks

and political, social and economic uncertainty.

We may invest a portion of our net assets in properties or assets located outside the United States. In addition to

business uncertainties and currency exchange risks, such investments may be affected by political, social and economic

uncertainty affecting a country or region. Many real estate markets are not as developed or as efficient as those in the

United States, and as a result, liquidity may be reduced and price volatility may be higher. The legal and regulatory

environment may also be different, particularly as to bankruptcy and reorganization. Financial accounting and auditing

standards and practices may differ, and there may be less publicly available information in respect of such companies. For

a company that keeps accounting records in local currency, inflation accounting rules in some countries require, for both

tax and accounting purposes, that certain assets and liabilities be restated on the company’s balance sheet in order to

express items in terms of a currency of constant purchasing power. As a result, financial data may be materially affected by

restatements for inflation and may not accurately reflect the real condition of real estate and companies. Accordingly, our

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ability to conduct due diligence in connection with an investment and to monitor the investment may be adversely affected

by these factors.

We may be subject to additional risks which include possible adverse political and economic developments,

possible seizure or nationalization of foreign deposits and possible adoption of governmental restrictions which might

adversely affect payment to investors located outside the country of the issuer/property owner, whether from currency

blockage or otherwise. Furthermore, some of the investments and/or the income they generate may be subject to taxes

levied by governments which have the effect of increasing the cost of such investments and reducing the realized gain or

increasing the realized loss on such investments at the time of sale. Income received by us from sources within some

countries may be reduced by withholding and other taxes imposed by such countries. Any such taxes paid by us will reduce

our net income or return from such investments and our ability to make distributions. While we may take these factors into

consideration in making our investment decisions, no assurance can be given that we will be able to fully avoid these risks.

We are subject to certain risks related to incurring contingent liabilities in connection with investments, including the

assumption by us of default risk or other third-party risks.

We may from time to time incur contingent liabilities in connection with an investment. For example, in order to

procure financing in connection with our investment activities, we may enter into agreements pursuant to which we agree

to assume responsibility for default risk or other risk presented by a third party, a warehouse financing vehicle or an

investment vehicle. In addition, in connection with the disposition of an asset by us, we may be required to make certain

representations about such asset, and may also be required to indemnify the purchasers of such asset with respect to certain

matters, including the accuracy of such representations. Any such representations made by us may survive for a period of

time subsequent to the disposition of an asset. We may incur numerous other types of contingent liabilities. There can be

no assurance that we will adequately reserve for our contingent liabilities and that such liabilities will not have an adverse

effect on our business.

The use of seller financing may increase the risks associated with the use of leverage, including the risk of loss of an

investment and the exposure of such investment to adverse economic factors such as deteriorations in overall conditions

in the economy, the real estate markets or in the condition of the particular issuer.

We may directly or indirectly utilize seller financing (i.e., make investments that are financed, in whole or in part,

by borrowing from the sellers of the investments or their affiliates) (and may be assigned existing indebtedness that is not

prepayable) and other one-off financing solutions on a case-by-case basis. Providers of seller financing may be motivated

to sell a particular asset, and may be willing to provide a prospective purchaser of such asset with more favorable pricing

and/or greater amounts of leverage than would otherwise be the case if such purchaser sought financing from unrelated,

third-party providers of leverage. To the extent that we are able to obtain seller financing in connection with a particular

investment, we may seek to employ more leverage than would otherwise be the case in the absence of such seller financing.

While our use of seller financing could increase the potential return to investors to the extent that there are gains associated

with such investment, such use of seller financing will increase risks associated with the use of leverage generally,

including the risks associated with such investment, including the risk of loss of that investment and the exposure of such

investment to adverse economic factors such as deteriorations in overall conditions in the economy, the real estate markets

or in the condition of the particular issuer, which could have an adverse effect on our business, financial condition, results

of operations and cash flows.

We are subject to certain risks related to using secured leverage, including having such parties seeking recourse against

our assets generally, and such recourse may not be limited to any particular investment or asset.

To the extent that we determine to utilize leverage, one or more investments or our other assets may be pledged to

secure the indebtedness. If we become subject to a liability, parties seeking to have the liability satisfied may have recourse

to our assets generally and such recourse may not be limited to any particular investment or asset, such as the loan or

property giving rise to the liability. To the extent we choose to use special purpose entities for individual transactions to

reduce recourse risk, the bona fides of such entities may be subject to later challenge based on a number of theories,

including veil piercing, substantive consolidation and other grounds. We may provide either direct or contingent guarantees

in support of credit facilities used to acquire investments, fund expenses relating to investments and/or in connection with

derivative transactions, and there can be no assurance that such guarantees will not have adverse consequences on our

business, financial condition, results of operations or cash flows.

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There are risks associated with entering into financing arrangements, and such arrangements may contain provisions

that expose us to particular risk of loss.

To the extent that we enter into financing arrangements, such arrangements may contain provisions that expose us

to particular risk of loss. For example, any cross-default provisions could magnify the effect of an individual default. If a

cross-default provision were exercised, this could result in a substantial loss. Also, we or any investment vehicle may, in

the future, enter into financing arrangements that contain financial covenants that could require us to maintain certain

financial ratios. If we or an investment vehicle were to breach the financial covenants contained in any such financing

arrangement, we might be required to repay such debt immediately in whole or in part, together with any attendant costs,

and we might be forced to sell some of our assets to fund such costs. We might also be required to reduce or suspend

distributions to our investors. Such financial covenants may also limit our ability to adopt the financial structure (e.g., by

reducing levels of borrowing) which we would have adopted in the absence of such covenants.

Failure to hedge effectively may materially and adversely affect our financial condition, results of operations, cash

flows, cash available for distribution and our ability to service our debt obligations.

We may from time to time purchase or sell various financial instruments, including interest rate cap or collar

agreements and interest rate swap agreements, when seeking to mitigate risk associated with our investments (e.g., our

exposure to interest rate volatility); however, it is generally impossible to fully hedge an investment given the uncertainty

as to the amount and timing of projected cash flows and investment returns, if any, on our investments. Such investments

may also be used for investment or speculative purposes which can lead to losses on both our investments and the related

transactions. Conversely, there will be times in which we believe that it is not advisable to enter into hedging transactions

and instead elect to remain unhedged against particular types of risks that in other cases we hedge against. Accordingly, we

may be exposed to fluctuations in currencies and other market conditions specific to the underlying asset.

Interest rate hedging agreements also involve specific risks, such as the risk that counterparties may fail to honor

their obligations under these arrangements and that these arrangements may not be effective in reducing our exposure to

interest rate changes. These interest rate hedging arrangements may create additional assets or liabilities from time to time

that may be held or liquidated separately from the underlying property or loan for which they were originally established.

The success of our hedging transactions will be subject to our ability to predict correlations between the value of

the portfolios’ assets and the direction of currency exchange rates, interest rates and securities prices and similar matters.

Therefore, while we may enter into such transactions to seek to reduce perceived risks, unanticipated changes in values

may result in a poorer overall performance than if we had not engaged in any such hedging transaction. In addition, the

degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the

portfolio position being hedged may vary, potentially leaving us with exposure to all or a portion of the risks being hedged.

We may not always be able to obtain hedging from third parties at attractive rates. Accordingly, Fortress or its

affiliates may provide us with hedging services but are under no obligation to do so. To the extent that any hedging

services are provided, Fortress or its affiliates may charge us a service fee of up to 5 basis points on the gross notional

amount of the amount subject to hedging and such services shall not require board of trustees approval.

Hedging may reduce the overall returns on our investments. Failure to hedge effectively may materially adversely

affect our results of operations and financial condition.

We are subject to additional counterparty risks in connection with engaging in private transactions, which are typically

not subject to credit evaluation and regulatory oversight.

We will be subject to various counterparty risks. For example, we may effect a portion of our transactions in

“over-the-counter” or “interdealer” markets or through private transactions. The participants in such markets and the

counterparties in such private transactions are typically not subject to credit evaluation and regulatory oversight as are

members of “exchange based” markets. This may expose us to the risk that a counterparty will not settle a transaction

because of a credit or liquidity problem, thus causing us to suffer losses. In addition, in the case of a default, we could

become subject to adverse market movements while replacement transactions are executed. Such “counterparty risk” is

accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where we have

concentrated our transactions with a single or small group of counterparties. Furthermore, upon the bankruptcy, insolvency

or liquidation of any counterparty, we may be deemed to be a general unsecured creditor of such counterparty and could

suffer a total loss with respect to any positions and/or transactions with such counterparty. In the recent market conditions,

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counterparty risk has substantially increased and is more difficult to predict. In addition to heightened risks of bankruptcy,

in this environment there is a greater risk that counterparties may have their assets frozen or seized as a result of

government intervention or regulation. We are not restricted from dealing with any particular counterparty or from

concentrating any or all of our transactions with a single counterparty. Our ability to transact business with any one or

number of counterparties, the lack of any meaningful and independent evaluation of such counterparties’ financial

capabilities and the absence of a regulated market to facilitate settlement may increase the potential for losses and could

materially and adversely affect our results of operations and financial condition.

We may be affected by our inability to access or renew short-term financing credit facilities in connection with an

anticipated portfolio-level financing.

In some cases, relatively short-term credit facilities may be used to finance the acquisition of assets until a

sufficient quantity of assets is accumulated, at which time the assets are refinanced through portfolio-level financing, which

may include a securitization. As a result, we are subject to the risk that we will not be able to acquire, during the period that

the short-term facilities are available, a sufficient amount of eligible assets for the purposes of a portfolio-level financing.

We also bear the risk that we will not be able to obtain such short-term credit facilities or may not be able to renew any

short-term credit facilities after they expire should we find it necessary to obtain extensions for such short-term credit

facilities to allow more time to seek and acquire the necessary eligible instruments for a long-term financing. Our inability

to renew or extend these short-term credit facilities may require us to seek more costly financing for these assets or to lose

the ability to utilize them in connection with a portfolio-level financing. We may provide guarantees in support of credit

facilities used to acquire assets, and there can be no assurance that any recourse exercised under such guarantees will not

have adverse consequences for us. The occurrence of the foregoing could have an adverse effect on our business, financial

condition, results of operations and cash flows.

We may face risks associated with options, including losing our entire investment due to the volatility of the underlying

security or currency.

As part of our hedging program, we may purchase and sell (“write”) options on securities and currencies on

national and international securities exchanges and in the domestic and international over-the-counter markets. The seller

(“writer”) of an uncovered put option assumes the risk of a decline in the market price of the underlying security or

currency below the exercise price of the option. The seller of a put option which is covered (e.g., the writer has a short

position in the underlying security or currency) assumes the risk of an increase in the market price of the underlying

security or currency above the sales price (in establishing the short position) of the underlying security or currency, plus the

premium received, and gives up the opportunity for gain on the underlying security or currency below the exercise price of

the option. The buyer of a put option assumes the risk of losing its entire investment in the put option. The seller of an

uncovered call option assumes the risk of a theoretically unlimited increase in the market price of the underlying security or

currency above the exercise price of the option. The writer of a call option which is covered (e.g., the writer holds the

underlying security or currency) assumes the risk of a decline in the market price of the underlying security or currency less

the premium received, and gives up the opportunity for gain on the underlying security or currency above the exercise price

of the option. The buyer of a call option assumes the risk of losing its entire investment in the call option.

Options on securities may be cash settled, settled by physical delivery or settled by entering into a closing

purchase transaction. In entering into a closing purchase transaction, we may be subject to the risk of loss to the extent that

the premium paid for entering into such closing purchase transaction exceeds the premium received when the option was

written, which could have an adverse effect on our business, financial conditions, results of operations and cash flows.

We may face risks associated with forward trading, including illiquidity and revenue losses due to disruptions in the

market.

Forward contracts and options thereon, unlike futures contracts, are not traded on exchanges and are not

standardized; rather, banks and dealers act as principals in these markets, negotiating each transaction on an individual

basis. Forward and “cash” trading is substantially unregulated; there is no limitation on daily price movements and

speculative position limits are not applicable. The principals who deal in the forward markets are not required to continue

to make markets in the currencies or commodities they trade and these markets can experience periods of illiquidity,

sometimes of significant duration. There have been periods during which certain participants in these markets have refused

to quote prices for certain currencies or commodities or have quoted prices with an unusually wide spread between the

price at which they were prepared to buy and that at which they were prepared to sell. Disruptions can occur in any market

traded by us due to unusually high trading volume, political intervention or other factors. The imposition of controls by

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governmental authorities might also limit such forward trading, to our possible detriment. The occurrence of any of the

foregoing could have an adverse effect on our business, financial conditions, results of operations and cash flows.

Our performance depends on the collection of rent from our tenants, those tenants’ financial conditions and the ability

of those tenants to maintain their leases.

A substantial portion of our income is derived from rental revenues. As a result, our performance depends on the

collection of rent from our tenants at the properties in our portfolio. Our income would be negatively affected if a

significant number of our tenants at the properties in our portfolio or any major tenants, among other things: (i) fail to make

rental payments when due; (ii) renew leases at lower rates; (iii) decline to extend or renew leases upon expiration; (iv)

become bankrupt or insolvent; (v) experience a downturn in their business, or (vi) downsize operations during the lease and

decide to go-dark on a portion of the facility (although the tenant continues to pay rent over the lease term, the vacancy

could diminish the residual value of the property). Any of these actions could result in the termination of the tenant’s lease

and our loss of rental revenue. The loss of rental revenue from a number of tenants and difficulty replacing such tenants,

particularly in the case of a substantial tenant with leases in multiple locations, may materially and adversely affect our

profitability and our ability to meet our debt and other financial obligations.

We may receive below-market value on predetermined fixed price property investments involving repurchase rights.

In some circumstances, we may grant a tenant a right to repurchase the property it leases from us or may acquire

or invest in a property subject to a right of repurchase. The purchase price may be a predetermined fixed price or based on

the market value at the time of exercise or it may be based on a formula. If a tenant exercises its right to purchase the

property and the property’s market value has increased beyond that price, we could be limited in fully realizing the

appreciation on that property.

Bankruptcy laws may limit our remedies if a tenant becomes bankrupt and rejects the lease and we may be unable to

collect balances due on our leases.

If a tenant becomes bankrupt or insolvent, that could adversely affect the income we receive from the leases we

have with that tenant. Our tenants may experience downturns in their operating results due to adverse changes to their

business or economic conditions, and those tenants that are highly leveraged may have a higher possibility of filing for

bankruptcy or insolvency. We may not be able to evict a tenant solely because of its bankruptcy. On the other hand, a

bankruptcy court might authorize the tenant to terminate its leases with us. If that happens, our claim against the bankrupt

tenant for unpaid future rent would be an unsecured prepetition claim subject to statutory limitations, and therefore such

amounts received in bankruptcy are likely to be substantially less than the remaining rent we otherwise were owed under

the leases. Additionally, any claim we have for unpaid past rent could be substantially less than the amount owed. If the

lease for such a property is rejected in bankruptcy, our revenue would be reduced. To the extent a tenant vacates

specialized space in one of our properties, re-leasing the vacated space could be more difficult than re-leasing less

specialized space. Furthermore, dealing with a tenant bankruptcy or other default may divert management’s attention and

cause us to incur substantial legal and other costs, which could materially and adversely affect our ability to execute our

business strategies. Any such event could have a material and adverse effect on our financial condition, results of

operations, cash flows, cash available for distribution and ability to service our debt obligations.

Some net lease provisions included in the written agreements may be determined unenforceable by a court.

Our rights and obligations with respect to our net leases are governed by written agreements. A court could

determine that one or more provisions of such net leases are unenforceable, including, without limitation, provisions related

to a particular remedy or prepayment provisions. We could be adversely impacted if this were to happen with respect to a

tenant with which it holds a net lease.

We may invest significantly in real estate-related equity, which is subordinate to any indebtedness, but involves different

rights.

We may invest significantly in non-controlling preferred equity positions, common equity and other real estate-

related interests. Preferred equity investments generally rank junior to all existing and future indebtedness, including

commercial mezzanine and mortgage loans, but rank senior to the owners’ common equity. Preferred equity investments

typically pay a dividend rather than interest payments and often have the right for such dividends to accrue if there is

insufficient cash flow to pay currently. These interests are not secured by the underlying real estate, but upon the

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occurrence of a default, the preferred equity provider typically (but not always) has the right to effectuate a change of

control with respect to the ownership of the property. In addition, equity investments may be illiquid or have limited

liquidity due to lock-out periods, limited trading volume or other limitations or prohibitions against their transfer, sale,

pledge or disposition, including any necessary registration with the SEC requiring coordination with the issuer for the sale

of such securities. Our investments in real estate-related equity securities will involve risks relating to the particular issuer

of the equity securities, including the financial condition and business outlook of the issuer. Issuers of real estate-related

equity securities are subject to their own operating and other expenses and may be subject to a management fee and/or

performance-based compensation (e.g., promote), which we as equity holders will indirectly bear. Issuers of real estate-

related common equity securities generally invest in real estate or real estate-related assets and are subject to the inherent

risks associated with real estate discussed in “—Risks Related to Our Business and Operations.”

We may invest in equity of other REITs that invest in real estate or real estate debt as one of their core businesses and

other real estate-related companies, which subjects us to certain risks including those risks associated with an

investment in our common shares.

REITs that invest primarily in real estate or real estate debt are subject to the risks of the real estate market, the

real estate debt market and the securities market.

REITs are dependent upon specialized management skills, have limited diversification and are, therefore, subject

to risks inherent in financing a limited number of projects. REITs may be subject to management fees and other expenses,

and so when we invest in REITs we will bear our proportionate share of the costs of the REITs’ operations. Investing in

REITs and real estate-related companies involves certain unique risks in addition to those risks associated with investing in

the real estate industry in general. The market value of REIT shares and the ability of the REIT to distribute income may be

adversely affected by several factors, including the risks described herein that relate to an investment in our common

shares. REITs depend generally on their ability to generate cash flow to make distributions to shareholders, and certain

REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns

may be made at any time. In addition, distributions received by us from REITs may consist of dividends, capital gains and/

or return of capital. Generally, dividends received by us from REIT shares and distributed to our shareholders will not

constitute “qualified dividend income” eligible for the reduced tax rate applicable to qualified dividend income. In addition,

the performance of a REIT may be affected by changes in the tax laws or by its failure to qualify for the favorable tax

treatment accorded to REITs.

REITs (especially mortgage REITs) are also subject to interest rate risk. Rising interest rates may cause REIT

investors to demand a higher annual yield, which may, in turn, cause a decline in the market price of the equity securities

issued by a REIT.

Investing in certain REITs and real estate-related companies, which often have small market capitalizations, may

also involve the same risks as investing in other small capitalization companies. REITs and real estate-related companies

may have limited financial resources and their securities may trade less frequently and in limited volume and may be

subject to more abrupt or erratic price movements than larger company securities.

Inflation may materially and adversely affect us and our tenants.

Inflation in the United States has recently declined and is expected to remain at its current reduced level in the

near-term. However, rising inflation in the future may materially and adversely affect us and our tenants. Increased

inflation could lead to interest rate increases that could have a negative impact on variable rate debt that we may incur in

the future. During times when inflation is greater than the increases in rent provided by many of our leases, rent increases

will not keep up with the rate of inflation, which could cause the value of our properties to decline. Increased costs may

have an adverse impact on our tenants if increases in their operating expenses exceed increases in revenue, which may

adversely affect the tenants’ ability to pay rent owed to us, which in turn could materially and adversely affect us.

Inflationary expectations or periods of rising inflation could also be accompanied by rising prices of commodities that are

critical to the construction and/or operation of real estate properties. The market value of our investments could potentially

decline in value in times of higher inflation rates. Some of our investments could have income linked to inflation, whether

by regulation or contractual arrangement or other means. However, although inflation could affect both income and

expenses, any increase in income may not be sufficient to cover increases in expenses.

Moreover, as inflation increases, the real value of our investments and distributions therefrom can decline. If we

are unable to increase the revenue and profits of our investments at times of higher inflation, we may not be able to pay out

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higher distributions to shareholders to compensate for the relative decrease in the value of money, thereby affecting the

expected return of investors.

Our business and operations could suffer in the event of system failures or cybersecurity breaches.

Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan

for our internal and hosted information technology systems, our systems are vulnerable to damages from any number of

sources, including energy blackouts, natural disasters, terrorism, war, telecommunication failures and cybersecurity attacks,

such as computer viruses, malware or unauthorized access. Any system failure or accident that causes interruptions in our

operations could result in a material disruption to our business. Even the most well protected information, networks,

systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve

and generally are not recognized until launched against a target, and in some cases are designed to not be detected and, in

fact, may not be detected. We may also incur additional costs to remedy damages caused by such disruptions. Any

compromise of our security could result in a violation of applicable privacy and other laws, unauthorized access to

information of ours and others, significant legal and financial exposure, damage to our reputation among our tenants and

investors generally, loss or misuse of the information and a loss of confidence in our security measures, any of which could

harm our business.

Third parties with which the Adviser does business are also sources of cybersecurity or other technological risk.

The Adviser outsources certain functions and these relationships allow for the storage and processing of the Adviser’s

information, as well as client, counterparty, employee, and borrower information. While the Adviser engages in actions to

reduce its exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss, exposure,

destruction, or other cybersecurity incidents that adversely affects the Adviser’s data, resulting in increased costs and other

consequences as described above.

Actions by our competitors in the markets in which we own properties may decrease or prevent increases in the

occupancy and rental rates of our properties.

We are subject to competition in the leasing of our properties. We compete with other owners and operators of

real estate and real estate developers, some of which have greater financial resources and greater access to debt and equity

capital than we do. Many of our competitors own properties similar to ours in the same markets in which our properties are

located. If one of our properties is nearing the end of the lease term or becomes vacant and our competitors offer space at

rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose existing or

potential tenants and we may be pressured to reduce our rental rates below those we currently charge or to offer substantial

rent concessions to retain tenants when such tenants’ leases expire or to attract new tenants. In addition, if our competitors

sell assets similar to assets we intend to divest in the same markets and/or at valuations below our internal valuations for

comparable assets, we may be unable to divest our assets at favorable pricing or on favorable terms, if at all.

We could be subject to misconduct and unauthorized conduct from third party providers, which could result in litigation

or serious financial harm.

Misconduct by employees of the Adviser or its affiliates or by our third-party service providers could cause us

significant losses. Employee misconduct may include binding us to transactions that present unacceptable risks and

unauthorized activities or concealing unsuccessful activities (which, in either case, may result in unknown and unmanaged

risks or losses). Losses could also result from actions by third-party service providers, including failing to record

transactions or improperly performing custodial, administrative and other responsibilities. In addition, employees and third-

party service providers may improperly use or disclose confidential information, which could result in litigation or serious

financial harm, including limiting our business prospects. There can be no assurance that the measures that we, the Adviser

and its affiliates expect to implement to prevent and detect employee misconduct and to select reliable third-party providers

will be effective in all cases.

Compliance with fire, safety and other land use regulations may require us to make unanticipated expenditures that

materially and adversely affect us.

We are required to operate our properties in compliance with fire and safety regulations, building codes,

environmental regulations, and other land use regulations, as they may be adopted by governmental agencies and bodies

and become applicable to our properties. We may be required to make substantial capital expenditures to comply with

those requirements and may be required to obtain approvals from various authorities with respect to our properties,

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including prior to acquiring a property or when undertaking improvements of any of our existing properties. There can be

no assurance that existing laws and regulatory policies will not adversely affect us or the timing or cost of any future

acquisitions or improvements, or that additional regulations will not be adopted that increase such delays or result in

additional costs. Additionally, failure to comply with any of these requirements could result in the imposition of fines by

governmental authorities or awards of damages to private litigants or other types of liability in which the limited liability

characteristic of business ownership could potentially be ignored, and the Company could suffer a significant loss. While

we intend to only acquire properties that we believe are currently in substantial compliance with all regulatory

requirements, these requirements may change and new requirements may be imposed which would require significant

unanticipated expenditures by us and could materially and adversely affect us.

We may not be able to obtain the necessary permits and licenses to invest in certain properties.

Our ability to invest in certain properties, obtain financing for investments, lease properties to tenants and/or

engage in lending, advisory and broker activities may be subject to the issuance of permits or licenses. We have not applied

for, and do not believe we are currently required to apply for, any licenses or permits, but, to the extent any such licenses or

permits are required or advisable, there can be no assurance as to whether and when such licenses or permits will be

obtained. However, we may, from time to time, apply to obtain licenses or permits at the instruction of our Adviser, and in

certain cases, subject to the discretion of our board of trustees, so long as such actions are deemed to be in the best interest

of the Company. We expect that if we apply for such licenses or permits, this process could be costly and take several

months. Furthermore, we may be subject to various information and other requirements in order to maintain any such

licenses, and there is no assurance that we would satisfy those requirements. In addition, certain of our tenants may be

required to obtain licenses or permits from federal, state or local authorities in order to conduct their operations on our

properties. Although we anticipate that such tenants will be solely responsible for obtaining such licenses or permits, we

may from time to time assist or otherwise support our tenants in obtaining any such required licenses or permits. However,

our leases typically do not provide the tenant the right to terminate the lease due to failure to obtain required licenses or

permits. If we are unable to obtain any necessary permits or licenses for ourselves or on behalf of our tenants in a timely

manner, or at all, we may not be able to pursue certain investment opportunities and we may be required to adapt our

investment strategies accordingly, which may limit the types of properties that we acquire and the tenants with which we

transact. Therefore, our inability to obtain necessary permits or licenses could have a material adverse effect on our

operations.

Our access to external sources of capital is subject to factors outside of our control and could materially and adversely

affect our growth prospects and our ability to take advantage of strategic opportunities, satisfy debt obligations and

make distributions to our shareholders.

In order to maintain our qualification as a REIT, we are generally required under the Code to annually distribute at

least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net

capital gain. In addition, we will be subject to U.S. federal corporate income tax to the extent that we distribute less than

100% of our REIT taxable income, including any net capital gains. Because of these distribution requirements, we may not

be able to fund future capital needs, including acquisition financing, from operating cash flow due to differences in timing

between the actual receipt of cash and inclusion of income for U.S. federal income tax purposes or the effect of

nondeductible capital expenditures, the creation of reserves, certain restrictions on distributions under loan documents or

required debt or amortization payments. Consequently, in order to meet the REIT distribution requirements and maintain

our REIT status and to avoid the payment of income and excise taxes, we may need to borrow funds on a short-term basis

in order to meet the REIT distribution requirements even if the then-prevailing market conditions are not favorable for

these borrowings.

Therefore, we may need to rely on third-party sources to fund our capital needs. We may not be able to obtain

financing on favorable terms or at all. In addition, any additional debt we incur will increase our leverage and debt service

obligations. Our access to third-party sources of capital depends, in part, on:

•general market conditions;

•the market’s perception of our growth potential;

•our current debt levels;

•our current and expected future earnings;

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•our cash flow and dividends; and

•the NAV of our shares.

If we cannot obtain capital from third-party sources, we may not be able to acquire properties when strategic

opportunities exist, meet the capital and operating needs of our existing properties or satisfy our debt service obligations.

To the extent that capital is not available to acquire additional properties, profits may not be realized or their

realization may be delayed, which could result in an earnings stream that is less predictable than some of our competitors

or a failure to meet our projected earnings and distributable cash flow levels in a particular reporting period. Such a failure

to meet our projected earnings and distributable cash flow levels in a particular reporting period could have an adverse

effect on our financial condition and on the NAV of our shares.

The acquisition of properties involves risks that could materially and adversely affect our business, financial condition,

results of operations and cash flows.

We have acquired properties and will continue to acquire properties both through the direct acquisition of real

estate and through the acquisition of entities that own real estate. The acquisition of properties involves risks, including the

risk that we may not be successful in identifying attractive properties or that, once identified, we may not be successful in

consummating an acquisition. We may incur significant transaction expenses, including finder’s fees, in connection with

our acquisition of properties. When we acquire properties in new markets, we may face risks associated with a lack of

market knowledge or understanding of the local economy, forging new business relationships in the area and unfamiliarity

with local government and permitting procedures. The acquired single-tenant net leased property may not perform as

anticipated and any costs for rehabilitation, repositioning, renovation and improvements may exceed our estimates.

Furthermore, the acquired properties or entities may be subject to liabilities, which may be without any recourse, or with

only limited recourse, with respect to unknown liabilities, such as liabilities for clean-up of undisclosed environmental

contaminations, claims by tenants, vendors or other persons dealing with the former owners of the properties, liabilities

incurred in the ordinary course of business and claims for indemnification by general partners, trustees, officers and others

indemnified by the former owners of the properties. As a result, if a liability were asserted against us based on ownership

of any of these entities or properties, then we may have to pay substantial sums to defend or settle it which could materially

and adversely affect our cash flows.

Additionally, there is, and it is expected there will continue to be, significant competition for properties that meet

our investment criteria from other well-capitalized investors, including both publicly traded REITs and private institutional

investment funds, some of which could have greater financial resources and a greater access to debt and equity capital to

acquire properties than we do.

Some of the properties we acquire may be defective and we may experience loss as a result.

Our properties and properties underlying our investments may have design, construction or other defects or

problems that require unforeseen capital expenditures, special repair or maintenance expenses, or the payment of damages

to third parties. Engineering, seismic and other reports on which we rely as part of our pre-acquisition due diligence

investigations of these properties may be inaccurate or deficient, at least in part because defects may be difficult or

impossible to ascertain. Statutory or contractual representations and warranties made by various sellers of properties that

we acquire may not protect us from liabilities arising from property defects. Furthermore, after selling a property in our

portfolio, we may continue to owe a statutory warranty obligation to the purchaser if any latent defects in such property are

subsequently discovered. The occurrence of any of the foregoing could have an adverse effect on our business, financial

conditions, results of operations and cash flows.

Declining real estate valuations and impairment charges could materially and adversely affect our business, financial

condition, results of operations and cash flows.

We continuously monitor events and changes in circumstances, including those resulting from an economic

downturn that could indicate that the carrying value of the real estate and related intangible assets in which we have an

ownership interest may not be recoverable. Examples of such indicators may include a significant decrease in NAV, a

significant adverse change in the extent or manner in which the property is being used or in its physical condition, an

accumulation of costs significantly in excess of the amount originally expected for the acquisition or development, or a

history of operating or cash flow losses.

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When such impairment indicators exist, we review an estimate of the future undiscounted net property cash flows

expected to result from the real estate investment’s use and eventual disposition and compare it to the carrying value of the

property. We consider factors such as future rental rates and occupancy, trends and prospects, leasing demand, competition

and other factors. If our future undiscounted net cash flow evaluation indicates that we are unable to recover the net

carrying value of a real estate investment, an impairment loss is recorded to the extent that the net carrying value exceeds

the estimated fair value of the property. These losses have a direct impact on our net income because recording an

impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated future cash flows

is highly subjective and is based on numerous assumptions, including future occupancy, rental rates, property operating

expenses, capital requirements and holding periods. These assumptions could differ materially from actual results in future

periods. A worsening real estate market may cause us to re-evaluate the assumptions used in our impairment analysis.

Impairment charges could materially and adversely affect our business, financial condition, results of operations and cash

flows.

There are additional risks associated with sale-leaseback transactions.

We invest in sale-leaseback transactions, whereby we lease the properties we purchase back to the sellers of such

properties. A transaction structured as a sale-leaseback could be re-characterized as either a financing or a joint venture,

either of which outcomes could adversely affect us from a business and financial perspective. If the sale-leaseback were re-

characterized as a financing, we may not be considered the owner of the property, and as a result, would have the status of

a creditor in relation to the tenant. In that event, we would have a claim against the tenant for the amounts owed under the

lease, with the claim arguably secured by the property. The tenant/debtor might have the ability to propose a plan

restructuring the term, interest rate and amortization schedule of its outstanding balance. If confirmed by the bankruptcy

court, we could be bound by the new terms, and prevented from foreclosing our lien on the property. If the sale-leaseback

were re-characterized as a joint venture, we and our tenant could be treated as co-venturers with respect to the property. As

a result, we could be held liable, under some circumstances, for debts incurred by the tenant relating to the property. Either

of these outcomes could adversely affect our cash flow and the amount available for distributions to shareholders. Any

sale-leaseback transaction could also be re-characterized as a financing transaction or a loan for U.S. federal income tax

purposes, in which case characterization of the transaction for REIT testing purposes and deductions relating to such

property could be affected.

We are exposed to various environmental risks, which may result in unanticipated losses that could affect our business,

financial condition, results of operations and cash flows.

We are subject to federal, state and local laws, statutes, regulations and ordinances relating to pollution, the

protection of the environment and human health and safety. Under certain environmental laws, a current or previous owner

or operator of real estate may be required to investigate and clean up hazardous or toxic substances, including, without

limitation, asbestos, asbestos-containing materials, lead-based paint, polychlorinated biphenyls, mold or mildew, or waste

or petroleum products, released at a property, and may be held liable to a governmental entity or to third parties for

property damage or personal injuries and for investigation and clean-up costs incurred by the parties in connection with

contamination. These laws often impose liability without regard to whether the owner or operator knew of, or caused, the

contamination, and the liability may be joint and several. The presence of contamination or the failure to remediate

contamination may adversely affect the owner’s ability to sell or lease real estate or to borrow using the real estate as

collateral.

Because certain environmental laws are retroactive, and impose liability on persons who owned a property at the

time it became contaminated, it is possible we could incur clean-up costs or other environmental liabilities even after we

sell the properties. In addition, environmental laws may create liens on contaminated sites in favor of the government for

damages and costs it incurs to address such contamination. If contamination is discovered on our properties, environmental

laws also may impose restrictions on the manner in which the properties may be used or businesses may be operated, and

these restrictions may require substantial expenditures. Moreover, environmental contamination can affect the value of a

property and, therefore, an owner’s ability to borrow funds using the property as collateral or to sell the property on

favorable terms or at all.

Environmental laws that govern the presence, maintenance and removal of asbestos-containing building materials

may impose fines and penalties on building owners or operators for failure to comply with these requirements or expose

such owners and operators to third-party liability for personal injury associated with exposure to asbestos fibers. Such laws

require that building owners or operators properly manage and maintain asbestos, adequately notify or train those that come

into contact with asbestos and undertake special precautions, including removal or other abatement, if asbestos would be

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disturbed. The cost of removing and disposing of any material containing asbestos, if found, may be significant and we

could be liable for related damages, fines and penalties. In addition, third parties may seek recovery from owners or

operators for personal injury associated with exposure to asbestos-containing building materials. Some of the properties

that we may acquire may be known to contain asbestos-containing building materials.

In addition, properties historically used for industrial, manufacturing and commercial purposes are more likely to

contain, or may have contained, underground storage tanks for the storage of petroleum products and other hazardous or

toxic substances. Investing in industrial properties that conduct industrial, manufacturing and commercial activities may

cause us to be subject to increased risk of liabilities under environmental laws and regulations and may adversely affect our

ability to sell or rent a property.

There may also be environmental liabilities associated with our properties of which we are unaware. We expect to

obtain phase I environmental assessments on all properties we acquire upon acquisition. Phase I environmental site

assessments are limited in scope and therefore may not reveal all environmental conditions affecting a property. Therefore,

there could be undiscovered environmental liabilities on the properties we own. Some of the properties that we may acquire

use, or may have used in the past, underground tanks for the storage of petroleum-based products or waste products that

could create a potential for release of hazardous substances or penalties if tanks do not comply with legal standards. Some

of the properties we acquire may contain asbestos-containing materials. Liabilities and costs associated with environmental

contamination at, on, under or emanating from such properties, defending against claims related to alleged or actual

environmental issues, or complying with environmental, health and safety laws could be material and could have a material

and adverse effect on our business, financial condition, results of operations, cash flows, the NAV of our shares and our

ability to satisfy our debt obligations and to make distributions to our shareholders.

In addition, although our leases will generally require our tenants to operate in compliance with all applicable laws

and to indemnify us against any environmental liabilities arising from a tenant’s activities on the property, we could be

subject to strict liability by virtue of our ownership interest. We cannot be sure that our tenants will, or will be able to,

satisfy their indemnification obligations, if any, under our leases. Furthermore, the discovery of environmental liabilities on

any of our properties could lead to significant remediation costs or to other liabilities or obligations attributable to the

tenant of that property or could result in material interference with the ability of our tenants to operate their businesses as

currently operated. Noncompliance with environmental laws or discovery of environmental liabilities could each

individually or collectively affect such tenant’s ability to make payments to us, including rental payments and, where

applicable, indemnification payments. Any occurrence of the foregoing could have an adverse effect on our business,

financial conditions, results of operations and cash flows.

We are exposed to the potential impacts of future climate change and climate change-related risks.

We are exposed to potential physical risks from possible future changes in climate. Our properties may be exposed

to rare catastrophic weather events, such as wildfires, severe storms or floods. If the frequency of extreme weather events

increases due to climate change, our exposure to these events could increase. In addition, we may be adversely impacted by

regulatory changes related to climate change as a result of potential impacts of such changes on the supply chain or stricter

energy efficiency standards for buildings. We cannot provide any assurance that any existing or future regulatory changes

will not materially and adversely impact our business in the future.

We may have to incur additional operational and/or compliance costs if EU regulations on data protection and privacy

have an extraterritorial effect on our business.

Through their participation in the Company, investors may provide to the Adviser or other service providers

“personal data” as such term is defined in Regulation 2016/679/EU on the protection of natural persons with regard to the

processing of personal data and on the free movement of such data. The Adviser and its affiliates are subject to Fortress’s

Privacy Policy pursuant to which the Adviser and its affiliates handle, safeguard and protect such personal data. Investors

should review and be cognizant of the contents of the Adviser’s Privacy Policy. In particular, investors should be aware

that by transferring personal data to the Adviser, they will be transferring it outside of the EU. In addition, the Adviser may

subsequently transfer such personal data to other entities that are also located outside of the EU. A copy of the Adviser’s

The legal and regulatory landscape for data protection and privacy is constantly evolving and recent legislative

changes in the EEA have, among other things, increased the regulatory scrutiny of the handling of personal data by data

controllers and processors, and raised the prospect of sanctions in the event of a personal data breach.

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Although Fortress, the Adviser and the Company are not domiciled in the EEA, certain EEA laws relating to data

protection and privacy may have extraterritorial effect on us, including (i) the General Data Protection Regulation

2016/679/EU on the protection of natural persons with regard to the processing of personal data and on the free movement

of such data (the “GDPR”), the UK General Data Protection Regulation as defined by the Data Protection Act 2018 as

amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019

(the “UK GDPR”) and any national laws supplementing the GDPR or the UK GDPR; (ii) Directive 2002/58/EC on privacy

and electronic communications as implemented under national laws; and (iii) other EEA data protection laws, regulations

or regulatory requirements, guidance and codes of practice issued by any supervisory authority or any applicable national,

international, regional or other data privacy authority, applicable to the processing of personal data (as amended and

supplemented from time to time) (together, along with any other data protection laws, regulations or regulatory

requirements, guidance and codes of practice in any jurisdiction anywhere in the world, “Data Protection Laws”).

In particular, certain Data Protection Laws may apply to the Company’s investment in certain investments, to the

extent Fortress or the Adviser (or any person on the Company’s behalf) processes personal data (as defined under the

GDPR) relating to underlying tenants, obligors or their representatives who are themselves natural persons in the EEA. As

such, the Adviser may be required to implement certain policies and procedures and update agreements, in order to ensure

the Company is compliant with the Data Protection Laws, including relating to the transfer of personal data to countries

outside the EEA in the course of managing such investments. As industry best practices and the implementation of the Data

Protection Laws develop, additional compliance requirements relating to the processing of personal data may also be

imposed on the Company from time to time. In addition, if Fortress, the Adviser or any person processing personal data on

the Company’s behalf, suffers a personal data breach (as defined under the GDPR) or otherwise fails to comply with its

obligations under the Data Protection Laws, the Company (including through its representatives in the EEA) may be

directly or indirectly exposed to claims, investigative or other enforcement actions (including criminal proceedings and

significant administrative fines) brought by the affected individuals and/or the relevant EEA regulatory authorities. Any

costs, expenses, penalties and administrative fines incurred or suffered by the Company in connection with the foregoing,

together with any operational and/or compliance costs associated with ensuring the Company is compliant with the Data

Protection Laws, may ultimately be borne by investors, and can be expected to reduce the returns that would otherwise be

distributable to investors if no processing of personal data was carried out. Additionally, any violations of Data Protection

Laws could delay or prevent potential acquisitions, and could also materially damage our reputation, our brand, our

international expansion efforts, our ability to attract and retain employees, our business and our results of operations.

Insurance on our properties may not adequately cover all losses and uninsured losses could materially and adversely

affect us.

The properties owned by us or underlying our investments are generally expected to be covered by comprehensive

liability, fire, flood and extended insurance coverage. We expect that the insurance carried on our properties will be

adequate in accordance with industry standards. There are, however, types of losses (such as from hurricanes, floods, wars,

terrorist attacks or earthquakes or other natural or man-made disasters or casualty events) which may be uninsurable, or the

cost of insuring against these losses may not be economically justifiable. If an uninsured loss occurs or a loss exceeds

policy limits, we could lose both our invested capital and anticipated revenues from the affected properties, thereby

reducing our cash flow. Such events could also have unforeseeable consequences and could have a material adverse effect

on our investments.

Inflation, changes in building codes and ordinances, environmental considerations, and other factors, including

terrorism or acts of war, may make any insurance proceeds we receive insufficient to repair or replace a property if it is

damaged or destroyed. In that situation, the insurance proceeds received may not be adequate to restore our economic

position with respect to the affected real property. Furthermore, in the event we experience a substantial or comprehensive

loss of one of our properties, we may not be able to rebuild such property to its existing specifications without significant

capital expenditures which may exceed any amounts received pursuant to insurance policies, as reconstruction or

improvement of such a property would likely require significant upgrades to meet zoning and building code requirements.

The loss of our capital investment in or anticipated future returns from our properties due to material uninsured losses

could materially and adversely affect us.

We may obtain only limited representations and warranties when we acquire a property and may only have limited

recourse if our due diligence did not identify issues that may subject us to unknown liabilities or lower the value of our

property, which could adversely affect our financial condition and ability to make distributions to you.

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The seller of a property often sells the property in its “as is” condition on a “where is” basis and “with all faults,”

without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may

contain only limited representations, warranties and indemnifications that will survive for only a limited period after the

closing. Also, many sellers of real estate are single-purpose entities without any other significant assets. The acquisition of,

or purchase of, properties with limited representations and warranties or from undercapitalized sellers increases the risk

that we may lose some or all of our invested capital in the property, lose rental income from that property or may be subject

to unknown liabilities with respect to such properties.

The Adviser will perform due diligence on each investment prior to its acquisition. Regardless of the thoroughness

of the due diligence process, not all circumstances affecting the value of an investment can be ascertained through the due

diligence process. The due diligence process also at times requires the Adviser to rely on limited resources available to the

Adviser, including information provided by the target of the investment and third-party consultants, legal advisors,

accountants and investment banks. As a result, there can be no assurance that the due diligence process will reveal or

highlight all relevant facts that are necessary or helpful in evaluating an investment opportunity. The Adviser’s due

diligence process cannot ensure the Company will not acquire an investment that results in significant losses to the

Company or that the Company will not overpay for an investment, which would cause the Company’s performance to

suffer.

The amount of our debt may subject us to increased risk of loss and could adversely affect our results of operations and

financial condition.

We may incur a significant amount of debt through bank credit facilities (including term loans and revolving

facilities), warehouse facilities and structured financing arrangements, public and private debt or bond issuances (including

through securitizations), repurchase agreements and derivative instruments, in addition to transaction or asset specific

funding arrangements. We may also issue additional debt securities to fund our growth. The percentage and forms of direct

or indirect leverage we employ will vary depending on our available capital, our ability to obtain and access financing

arrangements with lenders, the type of assets we are funding, whether the financing is recourse or non-recourse, debt

restrictions contained in those financing arrangements and the lenders’ and rating agencies’ estimate of the stability of our

investment portfolio’s cash flow. We may significantly increase the amount of leverage we utilize at any time without

approval of our board of trustees. In addition, we may leverage individual assets at substantially higher levels.

If we are unable to refinance our debt on acceptable terms, or at all, we may be forced to dispose of one or more of

our properties on disadvantageous terms, which may result in losses to us and may adversely affect cash available for

distributions to our shareholders. In addition, if then prevailing interest rates or other factors at the time of refinancing

result in higher interest rates upon refinancing, our interest expense would increase, which would materially and adversely

affect our future operating results and liquidity. We may also refinance our debt through equity financings, which may not

be available on acceptable terms or at all and which could be dilutive to our shareholders.

Our substantial outstanding indebtedness, and the limitations imposed on us by our financing agreements, could

have other significant adverse consequences, including the following:

•fluctuations in our net assets;

•we may be required to dedicate a substantial portion of our cash flow (including capital contributions) to paying

principal and interest payments on our indebtedness, reducing the cash flow available to fund our business, to pay

dividends (and investors may be allocated income in excess of cash available for distribution), including those

necessary to maintain our REIT qualification, or to use for other purposes;

•we may be unable to sell assets (including assets held by any investment vehicle) that are pledged to secure an

indebtedness;

•we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things,

adversely affect our ability to capitalize upon emerging acquisition opportunities or meet operational needs;

•we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than

the terms of our original indebtedness;

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•we may violate restrictive covenants in our loan documents, which would entitle the lenders to require us to retain

cash for reserves or to pay down loan balances, and we may be unable to hedge floating rate debt, counterparties

may fail to honor their obligations under our hedge agreements and these agreements may not effectively hedge

interest rate fluctuation risk;

•we may default on our obligations and the lenders or mortgagees may foreclose on our properties that secure their

loans (and in such circumstances the recovery we receive may be significantly diminished as compared to our

expected return of such property investment); and

•during the term of any indebtedness, our returns may be materially reduced by increased costs attributable to

regulatory changes, including a possible gross-up for taxes.

If any one of these events were to occur, our business, financial condition, results of operations, cash flows, the

NAV of our shares and our ability to satisfy our debt obligations and to make distributions to our shareholders could be

materially and adversely affected.

We may incur or increase our mortgage debt by obtaining loans secured by a portfolio of some or all of the real

estate acquired and may borrow under mortgages on properties after they are acquired. Depending on the level of leverage

and decline in value, if mortgage payments are not made when due, one or more of the properties may be lost (and our

investment therein rendered valueless) as a result of foreclosure by the mortgagee(s). A foreclosure may also have

substantial adverse tax consequences for us.

In addition, many of these same issues may also apply to the credit facilities which we have in place. For example,

the loan documents for such facilities may include various coverage ratios, the continued compliance with which may not

be completely within our control. If such coverage ratios are not met, the lenders under such credit facilities may declare

any unfunded commitments to be terminated and declare any amounts outstanding to be due and payable. We may also rely

on short-term financing that would be especially exposed to changes in availability.

Conflicts of interest also have the potential to arise to the extent that a line is used to make an investment that is

later sold in part to co-investors since, to the extent co-investors are not required to act as guarantors under the relevant

facility or pay related costs or expenses, co-investors nevertheless stand to receive the benefit of the use of the line and

neither the Company nor investors generally will be compensated for providing the relevant guarantee(s) or being subject

to the related costs, expenses and/or liabilities.

Although borrowings by us have the potential to enhance overall returns that exceed our cost of funds, they will

further diminish returns (or increase losses on capital) to the extent overall returns are less than our cost of funds. As a

result, the possibilities of profit and loss are increased. Borrowing money to purchase properties provides us with the

advantages of leverage, but exposes us to greater market risks and higher current expenses.

There can be no assurance that a leveraging strategy will be successful, and such strategy may subject us to

increased risk of loss, which could result in the total loss of capital and could adversely affect our results of operations and

financial condition.

We may encounter adverse changes in the credit markets.

Any adverse changes in the global credit markets could make it more difficult for us to obtain favorable financing.

Our ability to generate attractive investment returns for our shareholders will be adversely affected to the extent we are

unable to obtain favorable financing terms. If we are unable to obtain favorable financing terms, we may not be able to

adequately leverage our portfolio, may face increased financing expenses or may face increased restrictions on our

investment activities, any of which would negatively impact our performance.

Our investments are substantially illiquid.

Our ability to dispose of investments could be limited for several reasons. Illiquidity could result from the absence

of an established market for the investments, as well as legal, contractual or other restrictions on their resale by us.

Dispositions of investments could be subject to contractual and other limitations on transfer or other restrictions that would

interfere with subsequent sales of such investments or adversely affect the terms that could be obtained upon any

disposition thereof. In view of these limitations on liquidity, the return of capital and the realization of gains, if any,

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generally will occur only upon the partial or complete disposition of an investment. While an investment could be sold at

any time, it is generally expected that this will not occur until a number of years after the initial investment. Before such

time, there could potentially be no current return on the investment. Furthermore, the expenses of operating the Company

(including the management fee payable to the Adviser or its designee) could potentially exceed its income, thereby

requiring that the difference be paid from the Company’s capital.

Furthermore, the market prices for our assets may fluctuate due to a variety of factors that are inherently difficult

to predict, including, but not limited to, changes in interest rates, prevailing credit spreads, general economic, real estate

and financial market conditions, and domestic or international economic or political events. In times of extreme market

disruption, there may be no market at all for one or more investment assets, potentially resulting in our inability to dispose

of our assets for an indefinite period of time, which could have an adverse effect on our business, financial conditions,

results of operations and cash flows.

The agreements governing our indebtedness may place restrictions on us and our subsidiaries, reducing operational

flexibility and creating default risks, and our failure to comply with all covenants in our existing or future financing

agreements could materially and adversely affect us.

The agreements governing our indebtedness, including the mortgages on our properties and on certain equity

interests in certain property-owning subsidiaries and the mortgages on properties or equity interests that we may incur in

the future may contain covenants that place restrictions on us and our subsidiaries. Risks related to these covenants would

also apply to agreements governing future indebtedness. These covenants may restrict, among other things, our and our

subsidiaries’ ability to:

•incur additional indebtedness (including guarantee obligations);

•incur liens;

•engage in certain fundamental changes, including changes in the nature of the business, mergers, liquidations and

dissolutions;

•sell assets;

•pay dividends and make share repurchases and redemptions (with exceptions for customary REIT distributions

and certain payments to be made with the proceeds of a qualified initial public offering);

•make acquisitions, investments, loans and advances;

•pay certain subordinated indebtedness;

•modify the terms of organizational documents;

•engage in certain transactions with affiliates; and

•enter into negative pledge clauses and clauses restricting subsidiary distributions.

These covenants could impair our ability to grow our business, take advantage of attractive business opportunities

or successfully compete. A breach of any of these covenants or covenants under any other agreements governing our

indebtedness, as well as our inability to make required payments, could result in an event of default under the instruments

governing the applicable indebtedness. Upon the occurrence of an event of default under any of our financing agreements,

the lenders could elect to declare all outstanding debt under such agreements to be immediately due and payable. Capital

obtained from other sources may not be available to us or may be available only on unattractive terms. If we were unable to

repay or refinance the accelerated debt, the lenders could proceed against any assets pledged to secure that debt, including

foreclosing on or requiring the sale of our properties, and our assets may not be sufficient to repay such debt in full. In

addition, financing agreements may contain specific cross-default provisions with respect to specified other indebtedness,

giving the lenders the right to declare a default on its debt and to enforce remedies, including acceleration of the maturity of

such debt upon the occurrence of a default under such other indebtedness. If we default on several of our financing

agreements or any significant financing agreement, we could be materially and adversely affected.

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Covenants in the agreements governing our indebtedness could restrict our ability to make distributions to our

shareholders necessary to maintain our qualification as a REIT, which could materially and adversely affect us and the

NAV of our shares.

Our ability to maintain our qualification as a REIT generally requires us to annually distribute at least 90% of our

REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gain, each year

to our shareholders. If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory

relief provisions, our income for that year and following years for which we do not qualify as a REIT will be taxed at

regular corporate rates, and we would be disqualified from taxation as a REIT for the four taxable years following the year

during which we ceased to qualify as a REIT. Even if we qualify as a REIT for U.S. federal income tax purposes, to the

extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, including net

capital gains, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we

will be subject to a 4% nondeductible excise tax if the actual amount that we distribute or are deemed to have distributed to

our shareholders in a calendar year is less than a minimum amount specified under the Code. Certain of the agreements

governing our existing and future indebtedness may contain, restrictions on our ability to make distributions to our

shareholders, and we may be unable to make distributions necessary for us to avoid U.S. federal corporate income and

excise taxes and maintain our qualification as a REIT without breaching such agreements. If we default under covenants

that restrict our ability to make distributions and are unable to cure the default, refinance the indebtedness or meet payment

obligations, our business, financial condition, results of operations and cash flows generally and, in particular, the amount

of our distributable cash flow could be materially and adversely affected.

The financial covenants in our loan agreements may restrict our operating or acquisition activities, which may harm

our financial condition and operating results.

The financial covenants in our loan agreements may restrict our operating, acquisition and divestiture activities,

which may harm our financial condition and operating results. Our unsecured credit facility and the mortgages on our

properties and on certain equity interests in certain property-owning subsidiaries contain customary negative covenants,

such as those that limit our ability, without the prior consent of the lender, to sell or otherwise transfer any ownership

interest, to further mortgage the applicable property, to enter into leases, or to discontinue insurance coverage. Our ability

to borrow under our unsecured credit facility is subject to compliance with these financial and other covenants, including

restrictions on the maximum availability, which is based on the adjusted net operating income of designated unencumbered

properties, the payment of dividends, and overall restrictions on the amount of indebtedness we can incur. If we breach

covenants in our debt agreements, the lenders could declare a default and require us to repay the debt immediately and, if

the debt is secured, take possession of the property or properties securing the loan.

An increase in market interest rates may materially and adversely affect us and our tenants.

If interest rates increase, so could our interest costs for new debt, including variable-rate debt obligations under

any credit facility or other financing. This increased cost could make the financing of any development or acquisition more

costly. Rising interest rates could limit our ability to refinance existing debt when it matures or cause it to pay higher

interest rates upon refinancing, which would adversely impact liquidity and profitability. Furthermore, the inability to

refinance investments could lead to increased risk as a result of us having a larger and longer-term investment than

expected and reduced diversification. In addition, an increase in interest rates could decrease the access third parties have to

credit or the amount they are willing to pay for the Company’s assets.

The success of any joint venture investments that we may make could be materially and adversely affected by our lack of

sole decision-making authority, our reliance on joint venture partners’ financial condition and liquidity and disputes

between us and our joint venture partners.

We may enter into joint ventures to acquire, develop, improve, or dispose of properties, thereby reducing the

amount of capital required by us to make investments and diversifying our capital sources for growth. We may acquire

non-controlling interests or shared control interests in joint ventures. Even if we have some control in a joint venture, we

would not be in a position to exercise sole decision-making authority regarding the joint venture. There can be no assurance

that we will be able to form new joint ventures, or attract third-party investment or that additional investments in new or

existing ventures to develop or acquire properties will be successful. Further, there can be no assurance that we are able to

realize value from such investments.

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Such joint venture investments involve risks not otherwise present in a wholly owned single-tenant net leased

property or a redevelopment project, including (i) potentially inferior financial capacity, diverging business goals and

strategies and the need for our joint venture partners’ continued cooperation; (ii) the possibility that our joint venture

partners might become bankrupt, default on its obligations, encounter liquidity or insolvency issues, suffer a deterioration

in their creditworthiness, or fail to fund their share of required capital contributions; (iii) our inability to take certain actions

with respect to the joint ventures’ activities that we believe are favorable to us if our joint venture partners do not agree;

(iv) our inability to control the legal entities that have title to the real estate associated with the joint ventures, meaning the

joint venture partners could take actions that subject the property to liabilities in excess of, or other than, those

contemplated; (v) our lenders may not be easily able to sell our joint venture assets and investments or may view them less

favorably as collateral, which could negatively affect our liquidity and capital resources; (vi) our joint venture partners can

take actions that we may not be able to anticipate or prevent, which could result in negative impacts on our debt and equity;

(vii) our joint venture partners could have rights with respect to the disposition of certain investments or the liquidation of

their interest therein; (viii) in certain circumstances, we could be liable for the actions of our joint venture partners; (ix) our

joint venture partners’ business decisions or other actions or omissions may be inconsistent with the business interests or

goals of the Company, may be contrary to the Company’s investment objective, or may result in harm to our reputation or

adversely affect the value of our investments; and (x) our joint venture partners may be in a position to take actions that

could conflict with our ability to maintain our qualification as a REIT.

In addition, the joint venture partner could have authority to remove the Fortress affiliated investment manager of

the joint venture. If such removal were to occur, we would be joint venture partners with a third-party manager, in which

case it could be significantly more difficult for us to implement our investment objective with respect to any of our

investments held through such joint ventures. Under a joint venture arrangement, we and the joint venture partner could

each have preemptive rights in respect of future issuances by the joint venture, which could limit a joint venture’s ability to

attract new third-party capital.

The joint venture partner could from time to time be a joint venture partner or interest holder in another joint

venture or other vehicle in which the Adviser or its affiliates has an interest or otherwise controls. The joint venture partner

could also be entitled to receive payments from, or allocations or performance-based payments (e.g., carried interest) in

respect of, the Company as well as such investments, and in such circumstances, any such amounts could be treated as a

Company expense and will not, even if they have the effect of reducing any retainers or minimum amounts otherwise

payable by the Adviser, be deemed paid to or received by the Adviser or reduce the management fee. Moreover, the

Adviser could receive fees associated with capital invested by a joint venture partner relating to investments in which we

participate. This could be in connection with a joint venture in which we participate or other similar arrangements with

respect to assets or other interests retained by a seller or other commercial counterparty with respect to which the Adviser

performs services. In addition, we are permitted to co-invest with non-affiliated co-investors or partners whose ability to

influence the affairs of the companies in which we invest could be significant and even greater than ours and as such, we

could be required to rely upon the abilities and management expertise of such joint venture partner. It could also potentially

be more difficult for us to sell our interest in any joint venture, partnership or entity with other owners than to sell our

interest in other types of investments (and any such investment could be subject to a buy-sell right, right of first refusal,

right of first offer or other similar right). Under a joint venture arrangement, we and the joint venture partner could be

subject to lock-ups, which could prevent us from disposing of our interests in the joint venture at a time we determine it

would be advantageous to exit. We are permitted to grant joint venture partners approval rights with respect to major

decisions concerning the management and disposition of the investment, which would increase the risk of deadlocks or

unanticipated exits from an investment. A joint venture partner could have a right of first offer, tag-along rights, drag-along

rights, consent rights or other similar rights in respect of any transfers of the ownership interests in the joint venture to third

parties, which could have the effect of making such transfers more complicated or limiting or delaying us from selling our

interest in the applicable investment. A deadlock could delay the execution of the business plan for the investment, require

us to engage in a buy-sell of the venture with the joint venture partner, conduct the forced sale or other liquidation of such

investment or require alternative dispute resolution in order to resolve such deadlock. Additionally, in certain scenarios, we

are permitted to grant joint venture partners the right to put (i.e., sell) their interests in an investment to us, or call (i.e., buy)

our interests in an investment. As a result of these risks, we could be unable to fully realize its expected return on any such

investment.

Any of the foregoing might subject a single-tenant net leased property to liabilities in excess of those

contemplated and could have a material adverse effect on the value of our joint venture investments.

Compliance or failure to comply with regulatory requirements could result in substantial costs.

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Government authorities at all levels are actively involved in the regulation of land use and zoning, environmental

protection and safety, and other matters affecting the ownership, use and operation of real property.

Regulations could be promulgated that could restrict or curtail certain usages of existing structures, or require that

such structures be renovated or altered in some manner. The promulgation and enforcement of such regulations could

increase expenses, and lower the income or rate of return, as well as adversely affect the value of any of our investments.

Operators are also subject to laws governing their relationship with employees, including minimum wage requirements,

overtime, working conditions and work permit requirements. Compliance with, or changes in, these laws could reduce our

revenue and profitability.

Our properties are subject to various federal, state and local regulatory requirements, such as the Federal

Americans with Disabilities Act (the “ADA”) and state and local fire and life safety requirements, building codes and other

land use regulations. Noncompliance could result in the imposition of governmental fines or the award of damages to

private litigants. While we believe that we are currently in material compliance with these regulatory requirements, the

requirements may change or new requirements may be imposed that could require significant unanticipated expenditures

by us that could affect our cash flow and results of operations. If we are required to make substantial modifications to the

properties that we own or acquire, whether to comply with the ADA or other changes in governmental rules and

regulations, our business, financial condition, results of operations, cash flows, the NAV of our shares and our ability to

satisfy our debt obligations and to make distributions to our shareholders could be materially and adversely affected.

Our businesses and the Adviser and its affiliates, as well as the financial services industry generally, are subject to

extensive regulation, including periodic examinations, by governmental agencies and self-regulatory organizations or

exchanges in the United States and other jurisdictions in which they operate relating to, among other things, antitrust law,

anti-money laundering laws, anti-bribery laws, laws relating to foreign officials, privacy laws with respect to client

information and the regulatory oversight of the trading and other investment activities of investment managers, including

the Adviser. Each of the regulatory bodies with jurisdiction over us and the Adviser or its affiliates, has regulatory powers

dealing with many aspects of financial services, including the authority to grant, and in specific circumstances to cancel,

permissions to carry on particular activities. Any failure to comply with these rules and regulations could expose us or the

Adviser to liability or other risks.

Additionally, such oversight and regulation will likely cause us to incur additional expenses, divert the attention of

the Adviser and its personnel and may result in fines if we are deemed to have violated any regulations. Regulation

generally as well as regulation more specifically addressed to the alternative asset management industry, including tax laws

and regulation, could increase the cost of identifying, structuring and completing loan transactions, the profitability of

enterprises and the cost of operating the Company. Additional regulation could also increase the risk of third-party

litigation. The transactional nature of our business exposes us and the Adviser and certain related parties generally to the

risks of third-party litigation. Under the Declaration of Trust, we will generally, to the extent permitted by law, be

responsible for indemnifying the Adviser and certain related parties for losses or obligations they may incur with respect to

such litigation.

We may be subject to litigation or threatened litigation, which may divert management’s time and attention, require us

to pay damages and expenses or restrict the operation of our business.

We may be subject to litigation or threatened litigation for damages that occur on, or liabilities derived from, the

acquisition, ownership and disposition of our properties. In particular, we are subject to the risk of personal injury claims,

employment and labor claims and others. Some of these claims may result in significant defense costs and potentially

significant judgments against us, some of which are not, or cannot be, insured against. Additionally, whether or not any

dispute actually proceeds to litigation, we may be required to devote significant management time and attention to its

successful resolution (through litigation, settlement or otherwise), which would detract from our management’s ability to

focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be

significant, or involve our agreement with terms that restrict the operation of our business. We generally intend to

vigorously defend ourselves; however, we cannot be certain of the ultimate outcomes of such claims or of those that may

arise in the future. Resolution of these types of matters against us may result in our having to pay significant fines,

judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements exceed insured levels, could have

a material adverse effect on our business, financial condition, results of operations, cash flows, the NAV of our shares and

our ability to satisfy our debt obligations and to make distributions to our shareholders. Certain litigation or the resolution

of certain litigation may affect the availability or cost of some of our insurance coverage and could expose us to increased

risks that would be uninsured, or adversely impact our ability to attract officers and trustees, which could have a material

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adverse effect on our business, financial condition, results of operations, cash flows, the NAV of our shares and our ability

to satisfy our debt obligations and to make distributions to our shareholders.

We may use our assets or return of investor’s distributions to pay for existing exculpation and indemnification

obligations.

Certain exculpation provisions contained in the agreements we have entered into may limit the rights of action

otherwise available to us or our investors against certain persons identified under such agreements absent such limitations.

We are also responsible for indemnifying such indemnified persons for any losses incurred by them except to the extent

such persons fail to meet the applicable standard of conduct set forth in such agreements. Liabilities arising from such

indemnification obligations may be material. Any such indemnification obligations would be payable out of our assets and/

or return of distributions previously made to investors.

Investments could become subject to condemnation actions.

Municipalities and other government subdivisions may, in certain circumstances, seek to acquire certain of our

assets through eminent domain proceedings. While we may seek to contest these proceedings which may be costly and may

divert the attention of our management from the operation of the Company, there can be no assurance that a municipality or

other government subdivision will not succeed in acquiring our assets. In such event, there is a risk that we will not receive

adequate compensation for the assets acquired or that we will not be able to recover all charges associated with divesting

these assets which could materially and adversely affect us.

Some of our sales and purchases of real property may be canceled and reclaimed if there is later determined to have

been a fraudulent transaction.

The sale and purchase of real property or trust beneficiary interests therein at fair market value can be canceled or

avoided by a trustee in bankruptcy, corporate reorganization, civil rehabilitation or similar procedure, or by the seller’s

creditors. Even if the purchase price was set at the fair market value of such real property, the transaction may be canceled

under certain circumstances, e.g., if the seller intended to conceal, donate or otherwise dispose of the sale proceeds in a

manner that would harm the seller’s creditors, and the purchaser knew such intention at the time of the transaction. Under

certain circumstances, payments to us may be reclaimed if any such payment or distribution is later determined to have

been a fraudulent conveyance or a preferential payment. The occurrence of the foregoing could have an adverse effect on

our business, financial conditions, results of operations and cash flows.

Sustainability risks may have a greater impact on us than that assessed by the Adviser.

We may be affected by the impact of a number of sustainability factors, also referred to as environmental, social

and governance (“ESG”) factors (such factors, the “sustainability risks”). The reach of sustainability themes may be broad

and the following is therefore not an exhaustive list of all risks related to ESG factors which could have a negative impact

(whether or not material) on the value of an underlying or related real estate asset and therefore adversely impact our

returns.

Our investments may be negatively affected by actions taken to improve the sustainability profile of any of our

properties, as well as our real estate portfolio as a whole, such as energy efficiency, clean energy production and

consumption, waste reduction and water treatment, any of which can impose significant short-term costs. Similarly, social

initiatives and the adherence to high governance standards, for example in the areas of transparency, corporate governance,

management of conflicts of interest and fair remuneration principles may require material investments and effort where

economic returns may be uncertain.

Prospective investors should consider the adverse impacts that our investments may have on sustainability themes:

the failure to support assets which provide a positive contribution to the sustainability factors or to support the generation

of a negative impact may result in a number of negative fallouts ranging from reputational damages and, in some

circumstances, fines and direct economic consequences from ESG related regulatory requirements that range from energy

performance standards to mandatory disclosure.

We may also be negatively impacted (e.g., from a reputational point of view) if we do business with parties who

fail to meet key ESG targets or make misleading statements with respect to ESG related objectives. In the event a counter-

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party of ours, or the real estate underlying an investment of ours, uses manipulation or misinformation to bolster its ESG

claims, we could be negatively impacted through no fault of our own.

Shareholders may differ in their views of whether or how ESG matters should be addressed and, as a result, we

may invest in investments or manage our investments in a manner that does not reflect the beliefs and values of any

particular investor. In considering investment opportunities and making ongoing decisions with respect to our investments,

including decisions relating to follow-on investments, the Adviser may consider certain ESG factors. We may forego

particular investments that do not meet certain ESG criteria or present material ESG risk that we may otherwise have made

if we were seeking to make investments solely on the basis of financial returns. Further, it is possible that our investments

are unable to obtain or realize the intended ESG outcomes.

Climate change and regulations intended to control its impact may affect the value of our real estate portfolio. We

and the Adviser cannot predict the long-term impacts on real estate investments from climate change or related regulations.

Laws enacted to mitigate climate change could increase energy costs, could make some buildings of property owners

obsolete or cause such owners to make material investments in their properties to meet carbon or energy performance

standards, which could materially and adversely affect the value of older properties underlying or relating to our

investments. Climate change may also have indirect effects on property owners by increasing the cost of (or making

unavailable) property insurance. Moreover, compliance with new laws or regulations related to climate change, including

compliance with “green” building codes or tenant preferences for “green” buildings, may cause property owners to incur

additional costs when renovating older properties. There can be no assurance that climate change will not have a material

adverse effect on our assets, operations or business.

There can be no guarantee that the actual impact of the sustainability factors on our returns will not be materially

greater than the impact assessed or expected by the Adviser.

Risks Related to Our Relationship with Fortress, Our Adviser and the Management Agreement

We depend on the Adviser to select our investments and otherwise conduct our business, and any material adverse

change in its financial condition or our relationship with the Adviser could have a material adverse effect on our

business and ability to achieve our investment objectives.

Our success is dependent upon our relationship with, and the performance of, the Adviser in the acquisition and

management of our real estate portfolio and our corporate operations, as well as the persons and firms the Adviser retains

to provide services on our behalf. The Adviser may suffer or become distracted by adverse financial or operational

problems in connection with Fortress’s (or its affiliate’s) businesses and activities unrelated to us and over which we have

no control. Should the Adviser fail to allocate sufficient resources to perform its responsibilities to us for any reason, we

may be unable to achieve our investment objectives or to pay distributions to our shareholders.

The Adviser’s inability to retain the services of key professionals could hurt our performance.

The Adviser’s power to approve the acquisition of a particular investment, finance or refinance any new or

existing investment or dispose of an existing investment rests with the Adviser’s investment committee (the “Investment

Committee”). Accordingly, our success depends to a significant degree upon the contributions of certain key professionals

employed by the Adviser or its affiliates, each of whom would be difficult to replace. There is ever increasing competition

among alternative asset firms, financial institutions, private equity firms, investment advisors, investment managers, real

estate investment companies, real estate investment trusts and other industry participants for hiring and retaining qualified

investment professionals and there can be no assurance that such professionals will continue to be associated with us or the

Adviser, particularly in light of our perpetual-life nature, or that replacements will perform well. If any of these persons

were to cease their association with us, our operating results could suffer. Our future success depends, in large part, upon

the Adviser’s ability to attract and retain highly skilled managerial, operational and marketing professionals. If the Adviser

loses or is unable to obtain the services of highly skilled professionals, our ability to implement our investment strategies

could be delayed or hindered.

We pay incentive and management fees and other expenses to our Adviser and the Special Limited Partner, which

payments increase the risk that you will not earn a profit on your investment.

Pursuant to the Management Agreement, we pay significant fees to our Adviser, and the Special Limited Partner

holds a significant performance participation interest. These payments may reduce our total return.

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The existence of the Special Limited Partner’s (i) 12.5% performance participation interest in the Class S units,

Class D units and Class I units of the Operating Partnership and (ii) 10% performance participation interest in the Class F-S

units, Class F-D units, Class F-I units and Class E units (provided, that the Special Limited Partner will waive the

performance participation interest with respect to Class E units for so long as the Company qualifies as a Publicly Offered

REIT) of the Operating Partnership, each of which is based on our total distributions plus the change in NAV per share,

may create an incentive for the Adviser to make riskier or more speculative investments on our behalf or cause us to use

more leverage than it would otherwise make in the absence of such performance-based payments. In addition, the change in

NAV per share will be based on the value of our investments on the applicable measurement dates and not on realized

gains or losses. As a result, the performance participation interest may receive distributions based on unrealized gains in

certain assets at the time of such distributions and such gains may not be realized when those assets are eventually disposed

of. The Special Limited Partner will not be obligated to return any portion of performance participation allocation due to

the subsequent negative performance. The Special Limited Partner will not hold a performance participation interest with

respect to Class A units or Class D-S units.

In addition, we are required to reimburse the Adviser or its affiliates for certain costs and expenses incurred by it

and its affiliates on our behalf, except those specifically required to be borne by the Adviser under our Management

Agreement. Accordingly, to the extent that the Adviser retains other parties to provide services to us, expenses allocable to

us will increase.

There are conflicts of interest in our relationships with our Adviser, which could result in outcomes that are not in our

best interests.

Our Adviser is a wholly owned subsidiary of FIG LLC, which is a wholly owned subsidiary of Fortress. We are

subject to conflicts of interest arising out of our relationship with our Adviser. Pursuant to the Management Agreement, our

Adviser is obligated to supply us with our management team. However, our Adviser is not obligated to dedicate any

specific personnel exclusively to us, nor are Fortress personnel provided to us by our Adviser obligated to dedicate any

specific portion of their time to the management of our business.

We may acquire or sell properties in which Fortress or its affiliates may have an interest. Although such

acquisitions or dispositions may present conflicts of interest, we nonetheless may pursue and consummate such

transactions, subject to any requirements in our organizational documents, including any required approvals by our

independent trustees. Additionally, we may engage in transactions directly with Fortress, our Adviser or their affiliates,

subject to any requirements in our organizational documents. When we acquire a property from Fortress or one of its

affiliates, or sell a property to Fortress or one of its affiliates, the purchase price we pay to Fortress or one of its affiliates or

the purchase price paid to us by Fortress or one of its affiliates may be higher or lower, respectively, than the purchase

price that would have been paid to or by us if the transaction were the result of arms’ length negotiations with an

unaffiliated third party. Fortress will face conflicts of interest in determining this purchase price and there is no assurance

that any conflict will be resolved in our favor.

Additionally, Fortress sponsors investment funds and intends to sponsor investment funds in the future and the

economic terms of such funds may be more advantageous to Fortress than the economic terms received by the Adviser. For

instance, Fortress and its affiliates may receive asset management performance-based, or other fees from certain accounts

that are higher than the fees and allocation received by the Adviser and Special Limited Partner from the Company. As

such, Fortress may be incentivized to prioritize the acquisition or disposition of any properties by such funds over us.

Fortress also faces conflicts of interest with respect to our continuous offering. As our NAV grows the Adviser’s

management fee will grow as well and there will also be the potential for a larger performance participation allocation. This

may incentivize the Adviser and Fortress to continue our offering even at times when it is not otherwise beneficial to us.

Fortress and certain Fortress Affiliates may face conflicts of interest with respect to services performed for issuers to

which the Company may have exposure as landlord.

Fortress and certain Fortress Affiliates may provide a broad range of financial services to companies that may be

tenants of the Company, including providing arrangement, syndication, origination, structuring and other services to such

companies, and will generally be paid fees for such services, in compliance with applicable law, by the companies. Any

payments received by Fortress or such Fortress Affiliate for providing these services will not be shared with the Company

and may be received before the Company realizes a return on its investment. In addition, the Company may enter into sale-

leaseback transactions with companies to which other Fortress Managed Accounts provide debt financing or in which they

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hold a minority interest. Additionally, Fortress and certain Fortress Affiliates may face conflicts of interest with respect to

services performed for these companies, on the one hand, and recommendations to the Company, on the other hand, and

could, in certain instances, have an incentive not to pursue actions against a company that would be in the Company’s best

interest.

Our Adviser’s liability is limited under the Management Agreement, and we have agreed to indemnify our Adviser

against certain liabilities. As a result, we could experience unfavorable operating results or incur losses for which our

Adviser would not be liable.

Pursuant to the Management Agreement, our Adviser will not assume any responsibility other than to render the

services called for thereunder and will not be responsible for any action of our board of trustees in following or declining to

follow its directives. Our Adviser maintains a contractual relationship with us. Under the terms of the Management

Agreement, our Adviser, its officers, members and personnel, any person controlling or controlled by our Adviser and any

person providing sub-advisory services to our Adviser will not be liable to us, any subsidiary of ours, our trustees, our

shareholders or any subsidiary’s shareholders or partners for acts or omissions performed in accordance with and pursuant

to the Management Agreement, except those resulting from acts or omissions by such persons constituting Disabling

Conduct under the Management Agreement.

In addition, we have agreed to indemnify our Adviser and each of its officers, directors, members, advisers and

employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably

incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf

pursuant to authority granted by the Management Agreement, except where attributable to Disabling Conduct under the

Management Agreement. As a result, we could experience unfavorable operating results or incur losses for which our

Adviser would not be liable.

Termination of the Management Agreement without cause could be difficult and costly and may cause us to be unable

to execute our business plan, which could materially and adversely affect us.

If we fail to renew the Management Agreement or the Management Agreement is terminated, our Adviser’s

obligation to provide us with our executive officers and personnel upon whom we rely for the operation of our business

will end. As a result, the termination of the Management Agreement could materially and adversely affect us and may

inhibit change of control transactions that may be in the interest of our non-Fortress affiliated shareholders.

If our Adviser ceases to be our adviser pursuant to the Management Agreement, counterparties to our agreements may

cease doing business with us.

If our Adviser ceases to be our adviser, it could constitute an event of default or early termination event under

financing and other agreements we may enter into in the future, upon which our counterparties may have the right to

terminate their agreements with us. If our Adviser ceases to be our adviser for any reason, including upon the non-renewal

of the Management Agreement our business and our ability to make distributions to our shareholders may be materially

and adversely affected.

The time and resources that individuals associated with our Adviser devote to us may be diverted, and we may face

additional competition due to, among other things, the fact that neither our Adviser nor its affiliates is prohibited from

raising money for or managing another entity that makes the same types of investments that we target.

Fortress is not prohibited from raising money for and managing future investment entities, in addition to the

Fortress clients, that make the same or similar types of investments as those we target. As a result, the time and resources

that our Adviser devotes to us may be diverted, and during times of intense activity in other investment programs they may

devote less time and resources to our business than is necessary or appropriate. In addition, we may compete with any such

investment entity also managed by the Adviser or its affiliates for the same investors and investment opportunities.

Furthermore, certain members of the Investment Committee are officers of Fortress and will devote a portion of their time

to the operations of Fortress.

The Adviser and its affiliates may face conflicts of interest with respect to services performed for issuers to which we

may have exposure as landlord.

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Our Adviser and its affiliates may provide a broad range of financial services to companies that may be our

tenants, including providing arrangement, syndication, origination, structuring and other services to such companies, and

will generally be paid fees for such services, in compliance with applicable law, by the companies. Any payment received

by our Adviser or its affiliates for providing these services will not be shared with us and may be received before we realize

a return on our investment. In addition, we may enter into sale leaseback transactions with companies to which other

Fortress Managed Accounts provide financing or hold an interest. In the event of a restructuring, such other Fortress

Managed Accounts may be a secured lender of the company and we would be an unsecured lender. Fortress could, in

certain circumstances, have an incentive not to pursue actions against a tenant that would be in our best interest. While

Fortress will seek to resolve any such conflicts in a fair and reasonable manner in accordance with its prevailing policies

and procedures with respect to conflicts resolution among the Fortress Managed Accounts, such transactions are not

required to be presented to our board of trustees for approval (unless otherwise required by our Declaration of Trust or

investment guidelines), and there can be no assurance that any conflicts will be resolved in our favor.

The Adviser or its affiliates may have incentives to favor their respective other accounts and clients and/or Fortress over

us, which may result in conflicts of interest that could be harmful to us.

Because our Adviser and its affiliates manage assets for, or may in the future manage assets for, other Fortress

Managed Accounts, certain conflicts of interest are present. For instance, our Adviser and its affiliates may receive asset

management performance-based, or other fees from certain accounts that are higher than the fees received by our Adviser

from us. In addition, certain members of the Investment Committee and other executives and employees of our Adviser

may hold and receive interests in Fortress and for its affiliates, in addition to cash and carried interest. In these instances, a

portfolio manager for our Adviser may have an incentive to favor the higher fee and/or performance-based fee accounts

over us and/or to favor Fortress. In addition, a conflict of interest exists to the extent our Adviser, its affiliates, or any of

their respective executives, portfolio managers or employees have proprietary or personal investments in other investment

companies or accounts or when certain other investment companies or accounts are investment options in our Adviser’s or

its affiliates’ employee benefit plans. In these circumstances, our Adviser has an incentive to favor these other investment

companies or accounts over us. Our board of trustees will seek to monitor these conflicts but there can be no assurances

that such monitoring will fully mitigate any such conflicts.

Our fee structure may create incentives for our Adviser to make speculative investments or use substantial leverage.

The management fee payable to our Adviser pursuant to the Management Agreement is payable regardless of the

performance of our portfolio, which may reduce our Adviser’s incentive to devote the time and effort increasing our total

return.

The performance participation allocation payable by us to the Special Limited Partner, an affiliate of our Adviser,

may create an incentive for our Adviser to make investments on our behalf that are risky or more speculative than would be

the case in the absence of such payment arrangements. The way in which the performance participation allocation is

determined may encourage our Adviser to use leverage to increase the leveraged return on our investment portfolio. Such a

practice could make such investments more risky than would otherwise be the case, which could result in higher

investment losses, particularly during cyclical economic downturns. Under certain circumstances, the use of substantial

leverage may increase the likelihood of our defaulting on our borrowings, which would be detrimental to holders of our

shares.

Because the management fee and performance participation are based on our NAV, the Adviser may also be

motivated to accelerate acquisitions in order to increase NAV or, similarly, delay or curtail repurchases to maintain a

higher NAV, and the Dealer Manager may also be incentivized to sell more of our common shares to increase aggregate

NAV, which would, in each case, increase amounts payable to the Adviser and the Special Limited Partner, but may make

it more difficult for us to efficiently deploy new capital.

We may compete for capital and investment opportunities with other entities managed by our Adviser or its affiliates,

subjecting our Adviser to certain conflicts of interest.

Our Adviser will experience conflicts of interest in connection with the management of our business affairs

relating to and arising from a number of matters, including: the allocation of investment opportunities by our Adviser and

its affiliates; payment to our Adviser; services that may be provided by our Adviser and its affiliates to issuers in which we

may invest; investments by us and other clients of our Adviser; the formation of additional investment funds managed by

our Adviser; differing recommendations given by our Adviser to us versus other clients; our Adviser’s use of information

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gained from issuers in our portfolio for investments by other clients, subject to applicable law; and restrictions on our

Adviser’s use of “inside information” with respect to potential investments by us.

We do not have the exclusive right to any investment opportunity. Accordingly, Fortress Affiliates are under no

obligation to offer investment opportunities to us and may choose to allocate all or part of any such opportunity to any

Fortress Affiliate or any business in which a Fortress Affiliate has invested. Fortress Affiliates may give advice and

recommend investments to other Fortress Managed Accounts which may differ from advice given to, or investments

recommended or bought for, us, even though the investment objectives of such Fortress Managed Accounts may be the

same or similar.

During the term, Fortress Affiliates may offer additional investment products that are similar to the Company and

Fortress may permit existing or future Fortress Affiliates to have exclusive rights or priority with respect to certain

investment opportunities. As a result, we may not be afforded the chance to participate in attractive investment

opportunities in which other Fortress Affiliates are given the opportunity to participate, or in some cases may be allocated a

small part of an investment opportunity within the investment objectives of ours when other Fortress Affiliates are

allocated a larger portion. We may be prohibited (due to, for example, exclusivity rights granted to other investment funds

or regulatory limitations) from pursuing certain investment opportunities and may find that its ability to participate in any

particular opportunity may be substantially limited. In addition, the creation of new Fortress Managed Accounts may give

rise to additional conflicts of interests that may not be foreseeable.

In making allocation decisions with respect to investment opportunities that could reasonably be expected to fit

the investment objectives of one or more Fortress Affiliates, on the one hand, and us, on the other hand, Fortress anticipates

that it will consider one or more of the following: the objectives and investment program of a Fortress Affiliate, any

exclusive and/or priority rights to investment opportunities that may have been granted to certain Fortress Affiliates, the

expected duration of the investment in light of a Fortress Affiliate’s objectives and investment program, the amount of

available capital (including financing), the magnitude of the investment opportunity, regulatory and tax considerations, the

degree of risk arising from an investment, the expected holding period of an investment, the expected investment return,

the internal source of the investment opportunity, relative liquidity, likelihood of current income and/or such other factors

as Fortress deems to be appropriate. These factors provide substantial discretion to Fortress to resolve conflicts of interest

arising from limited investment opportunities.

Additionally, we may co-invest in and/or compete for investments with the other Fortress Managed Accounts,

subjecting our Adviser and its affiliates to certain conflicts of interest in evaluating the suitability of investment

opportunities and making or recommending investments on our behalf. To mitigate these conflicts, the Adviser will seek to

execute such transactions for all of the participating investment accounts, including us, on a fair and reasonable basis and in

accordance with Fortress’s investment allocation policy in effect at the time (and subject to change).

Fortress’s allocation policy seeks to ensure equitable allocation of investment opportunities between us and/or

other Fortress Managed Accounts.

Our access to confidential information may restrict our ability to take action with respect to some investments, which, in

turn, may negatively affect our results of operations.

We, directly or through our Adviser, may obtain confidential information about the companies that become our

tenants or be deemed to have such confidential information. Our Adviser may come into possession of material, non-public

information through its members, officers, directors, employees, principals or affiliates. In addition, Fortress clients may

invest in entities that manage companies that are our tenants and, as a result, may obtain additional confidential information

about such companies. The possession of such information may, to our detriment, limit the ability of us and our Adviser to

buy or sell a security or otherwise to participate in an investment opportunity. In certain circumstances, employees of our

Adviser or its affiliates may serve as board members or in other capacities for portfolio or potential portfolio companies,

which could restrict our ability to trade in the securities of such companies. For example, if personnel of our Adviser come

into possession of material non-public information with respect to our investments, such personnel will be restricted by our

Adviser’s information-sharing policies and procedures or by law or contract from sharing such information with our

management team, even where the disclosure of such information would be in our best interests or would otherwise

influence decisions taken by the members of our management team with respect to that investment. This conflict and these

procedures and practices may limit the freedom of our Adviser to enter into or exit from potentially profitable investments

for us, which could have an adverse effect on our results of operations. Accordingly, there can be no assurance that we will

be able to fully leverage the resources and industry expertise of our Adviser in the course of its duties. Additionally, there

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may be circumstances in which one or more individuals associated with our Adviser will be precluded from providing

services to us because of certain confidential information available to those individuals or to other parts of our Adviser or

Fortress.

The recommendations given to us by our Adviser may differ from those rendered to their other clients.

Our Adviser and its affiliates may give advice and recommend an investment to other Fortress Managed Accounts

which may differ from advice given to, or investments recommended or bought for, us even though such other clients’

investment objectives may be similar to ours, which could have an adverse effect on our business, financial condition and

results of operations.

The past performance of the Adviser and Fortress are not a predictor of our future results.

This Annual Report includes certain information regarding our Adviser and Fortress, including information

regarding their historical activities, investment experience and relationships with tenants. However, neither the track

record, investment experience, nor the relationships of the Adviser or Fortress should be understood to imply or predict,

whether directly or indirectly, any level of our future performance. Our performance is dependent upon future events and is

therefore inherently uncertain. Past performance cannot be relied upon to predict future events due to a variety of factors,

including, without limitation, varying business strategies, different local and national economic circumstances, different

supply and demand characteristics, varying degrees of competition and varying circumstances pertaining to the real estate

markets.

Risks Related to Our Organization and Structure

Our shareholders generally have limited voting rights.

As permitted by Maryland law, our Declaration of Trust provides that we generally cannot (a) amend our

Declaration of Trust if such amendment would materially and adversely affect the contract rights of our outstanding shares,

or (b) subject to certain exceptions, consolidate, merge, convert, or transfer all or substantially all of our assets, unless the

action is advised by our board of trustees and approved by the affirmative vote of shareholders entitled to cast a majority of

the votes entitled to be cast on the matter.

Our shareholders can also vote on the removal of trustees under limited circumstances and the election of

successor trustees if the vacancy was created by removal of the trustee by shareholder vote, and such other matters as may

be (a) provided in our Bylaws or (b) submitted to a shareholder vote by our board of trustees.

All other matters are subject to the discretion of our board of trustees. Thus, except as set forth above or in any

class or series of our shares and subject to the restrictions on transfer and ownership of our shares contained in our

Declaration of Trust, holders of common shares do not have the right to vote on any matter.

Pursuant to our Declaration of Trust, our board of trustees may, from time to time, change our investment strategy,

including our related operational policies, without providing advance notice to, or obtaining the consent of, our

shareholders.

Pursuant to our Declaration of Trust, our board of trustees may, from time to time, change our investment strategy,

including our related operational policies with respect to investments, indebtedness, capitalization and distributions, at any

time without providing advance notice to, or obtaining the consent of, our shareholders, which could result in us making

investments that are different from, or that provide a lower yield compared to, the types of investments described in this

Annual Report and in our investment guidelines. We may also determine to pay down certain of our indebtedness and have

indebtedness below our target leverage or we may borrow more to provide for additional liquidity causing us to exceed our

target leverage. A change in our investment strategy may, among other things, increase our exposure to real estate market

fluctuations, default risk and interest rate risk, all of which could have a material adverse effect on our business, financial

condition, results of operations, cash flows, the NAV of our shares and our ability to satisfy our debt obligations and to

make distributions to our shareholders.

Our Declaration of Trust and Bylaws contain provisions that may delay, defer or prevent an acquisition of our shares or

a change of control and that provide Fortress with substantial control of us.

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Our Declaration of Trust, with certain exceptions, authorizes our board of trustees to take such actions as are

necessary and desirable to preserve our qualification as a REIT. Unless exception is granted by our board of trustees, no

person may own more than 9.8% in value or in number, whichever is more restrictive, of our outstanding common shares,

or 9.8% in value of the aggregate of our outstanding shares of beneficial interest. These restrictions may have the effect of

delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender

offer or transfer of all or substantially all of our assets) that might provide a premium to the purchase price of our shares for

our shareholders.

Conflicts of interest could arise between the interests of our shareholders and the interests of holders of units in our

Operating Partnership, which may impede business decisions that could benefit our shareholders.

Conflicts of interest could arise as a result of the relationships between us, on the one hand, and our Operating

Partnership or any limited partner thereof, on the other. Our trustees and officers have certain legal duties to us under

applicable Maryland law. At the same time, we, as the sole member of the general partner of our Operating Partnership,

have fiduciary duties and obligations to our Operating Partnership and its limited partners under Delaware law and the

Operating Partnership Agreement in connection with the management of our Operating Partnership. Our duties as sole

member of the general partner of our Operating Partnership and its limited partners may come into conflict with the duties

of our trustees and officers to our Company.

Unless otherwise provided for in a partnership agreement, Delaware law generally requires a general partner of a

Delaware limited partnership to adhere to fiduciary duty standards under which it owes its limited partners the highest

duties of good faith, fairness and loyalty and which generally prohibit such general partner from taking any action or

engaging in any transaction as to which it has a conflict of interest. The Operating Partnership Agreement provides that, in

the event of a conflict between the interests of the shareholders, on the one hand, and the separate interests of the limited

partners of our Operating Partnership, on the other hand, we, in our capacity as the general partner shall endeavor in good

faith to resolve the conflict in a manner not adverse to either the shareholders or the limited partners of our Operating

Partnership and, in the event of such a conflict that cannot be resolved in a manner not adverse to both us, as the sole

member of the general partner, and the shareholders and to the limited partners of our Operating Partnership, may be

resolved in favor of us, as the sole member of the general partner, and the shareholders, and any action or failure to act on

our part as the sole member of the general partner of our Operating Partnership that gives priority to the separate interests

of us, as the sole member of the general partner, or our shareholders that does not result in a violation of the contract rights

of the limited partners under the partnership agreement, does not violate any duty owed by us, as the sole member of the

general partner, to the Operating Partnership and/or its partners or violate the obligation of good faith and fair dealing. The

Operating Partnership Agreement further provides that to the extent that we, in our capacity as the sole member of the

general partner of our Operating Partnership, have duties (including fiduciary duties) and liabilities relating thereto to the

Operating Partnership or the limited partners of the Operating Partnership, we, as the sole member of the general partner,

shall not be liable to the Operating Partnership or to any other partners for all actions taken in good faith.

Our conflicts of interest policy may not be successful in eliminating the influence of future conflicts of interest that may

arise between us and our trustees, officers and employees.

We have adopted a policy that transactions in which our trustees, officers or employees have a material direct or

indirect pecuniary interest must be approved by a majority of our disinterested trustees, subject to certain exceptions as set

forth in the policy. Other than this policy, however, we may not adopt additional formal procedures for the review and

approval of conflict of interest transactions generally. As such, our policies and procedures may not be successful in

eliminating the influence of conflicts of interest.

Our Declaration of Trust contains a provision that expressly permits the Adviser, each of its affiliates and each of our

trustees and officers to pursue transactions that may be competitive with, or complementary to, our business.

Our Declaration of Trust provides that if the Adviser, each of its affiliates and each of our trustees and officers,

acquires knowledge of a potential business opportunity, we renounce any potential interest or expectation in such business

opportunity. Accordingly, the Adviser, each of its affiliates and each of our trustees and officers may exploit any business

opportunity or direct such opportunity to any person or entity other than us, including acquisition opportunities that may be

competitive with, or complementary to, our business. As a result, those acquisition opportunities may not be available to us

and could materially and adversely affect our business, financial condition, results of operations, cash flows, the NAV of

our shares and our ability to satisfy our debt obligations and to make distributions to our shareholders. See “—We may

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compete for capital and investment opportunities with other entities managed by our Adviser or its affiliates, subjecting our

Adviser to certain conflicts of interest.”

Our board of trustees may change our major corporate, investment and financing policies without shareholder approval

and those changes may materially and adversely affect our business, financial condition, results of operations and cash

flows.

Our board of trustees will determine and may alter or eliminate our major corporate policies, including our

acquisition, investment, financing, growth, operations and distribution policies and whether to maintain our status as a

REIT. While our shareholders have the power to remove trustees in certain situations, our shareholders will have limited

direct control over changes in our policies and those changes could materially and adversely affect our business, financial

condition, results of operations, cash flows, the NAV of our shares and our ability to satisfy our debt obligations and to

make distributions to our shareholders.

Risks Related to Tax Laws and Regulations

We may fail to qualify as a REIT.

If we fail to qualify as a REIT, we will not be allowed a deduction for dividends paid to our shareholders in

computing our taxable income and will be subject to U.S. federal income tax at regular corporate rates on all such income.

This would substantially reduce our funds available for distribution to our investors. Unless entitled to relief under certain

provisions of the Code, we also would be disqualified from taxation as a REIT for the four taxable years following the year

during which we ceased to qualify as a REIT.

We intend to operate in a manner that enables us to meet the requirements for qualification and taxation as a

REIT. However, qualification as a REIT involves the application of highly technical and complex Code provisions for

which only limited judicial and administrative authorities exist. Moreover, even a technical or inadvertent mistake could

jeopardize our REIT status. Our qualification as a REIT will depend on our satisfaction of certain asset, income,

investment, organizational, distribution, shareholder ownership, and other requirements on a continuing basis. Our ability

to satisfy the asset tests will depend upon our analysis of the fair market values of our assets, some of which are not

susceptible to a precise determination, and for which we do not obtain independent appraisals. Our compliance with the

REIT annual income and quarterly asset requirements will also depend upon our ability to manage successfully the

composition of our income and assets on an ongoing basis. Moreover, the proper classification of an instrument as debt or

equity for U.S. federal income tax purposes may be uncertain in some circumstances, which could affect the application of

the REIT qualification requirements. Accordingly, there can be no assurance that the IRS will not contend that our interests

in subsidiaries or other issuers constitutes a violation of the REIT requirements. Moreover, future economic, market, legal,

tax, or other considerations may cause us to fail to qualify as a REIT, or our board of trustees may determine to revoke our

REIT status.

REIT distribution requirements limit our available cash.

As a REIT, we will be subject to annual distribution requirements. The Operating Partnership expects to pay

distributions intended to enable us to satisfy our distribution requirements. This will limit the amount of cash available for

other business purposes, including amounts to fund our growth. We will generally be required to distribute annually at least

90% of our “real estate investment trust taxable income,” which is generally equivalent to net taxable ordinary income,

determined without regard to the dividends paid deduction and excluding any net capital gain, in order for our distributed

earnings not to be subject to U.S. federal corporate income tax. In addition, we will be required to distribute 100% of our

taxable income and capital gains in order not to be subject to corporate-level tax on undistributed income. We intend to

make distributions to our shareholders to comply with the requirements applicable to REITs under the Code and to

generally avoid corporate-level tax on undistributed income. However, differences in timing between the recognition of

taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term

basis to make such distributions.

We may be subject to federal, state, and local income taxes in certain circumstances.

Even as a REIT, we may be subject to U.S. federal income and excise taxes in various situations, such as on our

undistributed income. We could also be required to pay a 100% tax on any net income on non-arm’s-length transactions

between us and a taxable REIT subsidiary (“TRS”) and on any net income from sales of assets that are treated as held for

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sale primarily in the ordinary course. State and local tax laws may not conform to the U.S. federal income tax treatment,

and we may be subject to state or local taxation in various state or local jurisdictions in which we own assets or transacts

business. Any taxes imposed on us would reduce our operating cash flow and net income and could negatively impact our

ability to pay dividends and distributions.

Dividends payable by REITs generally do not qualify for the reduced federal income tax rates available for some

dividends.

REITs are entitled to a U.S. federal tax deduction for dividends paid to their shareholders. As compared to other

taxable corporations, this ability to reduce or eliminate the REIT’s taxable income by paying dividends to shareholders is a

principal benefit of maintaining REIT status, generally resulting in a lower combined tax liability of the REIT and its

shareholders as compared to that of the combined tax liability of other taxable corporations and their shareholders.

Notwithstanding this combined benefit, dividends payable by REITs may result in marginally higher taxes to the

shareholder.

C-corporations are generally required to pay U.S. federal income tax on earnings. After tax earnings are then

available for shareholder dividends. The maximum U.S. federal tax rate applicable to income from “qualified dividends”

payable to United States shareholders that are individuals, trusts, or estates is currently 20%, plus the 3.8% Medicare

investment tax surcharge. While dividends payable by REITs are generally not eligible for the qualified dividend reduced

rates, shareholders that are individuals, trusts, or estates, and meet certain requirements, may generally deduct 20% of the

aggregate amount of ordinary dividends from REITs. This deduction is available for taxable years beginning before

January 1, 2026, and will generally cause the maximum tax rate for ordinary dividends from REITs to such shareholders to

be 29.6%, plus the 3.8% Medicare investment tax surcharge.

Complying with the REIT requirements may cause us to forego otherwise attractive business opportunities.

To qualify as a REIT, we will need to continually satisfy tests concerning, among other things, the sources of our

income, the nature and diversification of our assets, the amounts distributed to our shareholders, and the ownership of our

shares. As a result of these tests, we may be required to make distributions to shareholders at disadvantageous times or

when we do not have funds readily available for distribution, forgo otherwise attractive investment opportunities, liquidate

assets in adverse market conditions, or contribute assets to a TRS that is subject to regular corporate federal income tax.

Complying with the REIT requirements may limit our ability to hedge effectively and may cause us to incur tax

liabilities.

The REIT provisions of the Code substantially limit our ability to hedge our assets and liabilities. Any income

from a hedging transaction we enter into to manage risk of interest rate changes with respect to borrowings made or to be

made to acquire or carry real estate assets does not constitute “gross income” for purposes of the 75% or 95% gross income

tests; provided that certain requirements are met. To the extent that we fail to properly identify such transactions as hedges,

or enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-

qualifying income for purposes of both of the gross income tests. As a result of these rules, we may be limited in our ability

to use advantageous hedging techniques, and we may implement those hedges through a TRS or other corporate entity, the

income from which may be subject to U.S. federal income tax, rather than by participating in the arrangements directly or

through pass-through subsidiaries. This could increase the cost of our hedging activities because our TRS would be subject

to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear.

In addition, losses in our TRS will generally not provide any tax benefit, except for being carried forward against future

taxable income in the TRS. No assurance can be given, however, that our hedging activities will not give rise to income

that does not qualify for purposes of either or both of the REIT gross income tests, or that our hedging activities will not

adversely affect our ability to satisfy the REIT qualification requirements.

Changes to U.S. federal income tax laws could materially and adversely affect us and our shareholders.

The present U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by

legislative, judicial, or administrative action at any time, which could affect the U.S. federal income tax treatment of an

investment in our common shares. The United States federal income tax rules dealing with REITs are constantly under

review by persons involved in the legislative process, the IRS, and the United States Treasury Department, which results in

statutory changes as well as frequent revisions to regulations and interpretations. We cannot predict how changes in the tax

laws might affect us and our shareholders. Revisions in federal tax laws and interpretations thereof could significantly and

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negatively affect our ability to qualify as a REIT and the tax considerations relevant to an investment in our common

shares, or could cause us to change our investments and commitments.

Special considerations relating to benefit plan investors.

We intend to conduct our affairs so that our assets should not be deemed to be “plan assets” of any “benefit plan

investor” within the meaning of certain U.S. Department of Labor regulations promulgated under Employee Retirement

Income Security Act of 1974, as amended (“ERISA”), as modified by Section 3(42) of ERISA (the “Plan Asset

Regulations”). In this regard, with respect to each class of shares, the Company intends to limit Benefit Plan Investors’ (as

defined in Plan Asset Regulations) holding of such shares to less than 25% of the total value of each class of shares (as

determined for purposes of the Plan Asset Regulations), but may decline to do so to the extent it determines that such

shares qualify as “publicly-offered securities” within the meaning of the Plan Asset Regulations. Accordingly, the Adviser

will have the power to take certain actions to avoid having the assets of the Company characterized as “plan assets,”

including, without limitation, placing restrictions on share purchases, redemptions and participation in the distribution

reinvestment plan, and requiring a shareholder to dispose of all or part of its shares.

If, notwithstanding our intent, assets of the Company were deemed to be “plan assets” under the Plan Asset

Regulations, this would result, among other things, in (i) the application of the prudence and other fiduciary responsibility

standards of ERISA to investments made by the REIT, and (ii) the possibility that certain transactions in which the

Company might seek to engage could constitute “prohibited transactions” under ERISA and the Code. If a prohibited

transaction occurs for which no exemption is available, the Adviser and/or any other fiduciary that has engaged in the

prohibited transaction could be required to (i) restore to the “benefit plan investor” any profit realized on the transaction

and (ii) reimburse the “benefit plan investor” for any losses suffered by the “benefit plan investor” as a result of the

investment. In addition, each disqualified person (within the meaning of Section 4975 of the Code) involved could be

subject to an excise tax equal to 15% of the amount involved in the prohibited transaction for each year the transaction

continues and, unless the transaction is corrected within statutorily required periods, to an additional tax of 100%.

Fiduciaries of “benefit plan investors” who decide to invest in the REIT could, under certain circumstances, be liable for

prohibited transactions or other violations as a result of their investment in the REIT or as co-fiduciaries for actions taken

by or on behalf of the REIT, the Company or the Adviser. With respect to a “benefit plan investor” that is an individual

retirement account (“IRA”) that invests in the REIT, the occurrence of a prohibited transaction involving the individual

who established the IRA, or his or her beneficiaries, would cause the IRA to lose its tax-exempt status.

The fiduciary of each prospective investor must independently determine that our shares are an appropriate

investment, taking into account the fiduciary’s obligations under ERISA, the Code and applicable provisions under any

other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code,

and the facts and circumstances of each investing Plan investor.

Non-U.S. holders may be subject to U.S. federal income tax upon their receipt of certain distributions from us or upon

their disposition of our shares.

The portion of distributions received by a beneficial owner of interests that is neither a partnership nor a holder of

FNLR’s stock who for U.S. federal income tax purposes is (i) an individual who is a citizen or resident of the United

States, (ii) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in the

United States or under the laws of the United States, or of any state thereof, or the District of Columbia, (iii) an estate, the

income of which is includable in gross income for U.S. federal income tax purposes regardless of its source or (iv) a trust if

(A) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S.

fiduciaries have the authority to control all substantial decisions of the trust, or (B) the trust has a valid election in effect

under applicable the regulations promulgated under the Code (“Treasury Regulations”) to be treated as a U.S. person. (the

“Non-U.S. Holder”) that is: (x) payable out of the Company’s earnings and profits; (y) not attributable to capital gains of

the Company; and (z) not effectively connected with a U.S. trade or business of the Non-U.S. Holder, will be subject to

U.S. withholding tax at the rate of 30% (unless reduced by an applicable tax treaty or under the Code, and the Non-U.S.

Holder provides appropriate documentation regarding its eligibility for treaty benefits). In addition, a repurchase of our

shares, to the extent not treated as a sale or exchange, may be treated as an ordinary dividend that is subject to the same

withholding.

If our shares constitute a U.S. real property interest (“USRPI”), as described below, distributions that we make in

excess of the sum of (i) the shareholder’s proportionate share of our earnings and profits, plus (ii) the shareholder’s basis in

our common shares, will be taxed under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) in the same

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manner as if our common shares had been sold (as described below), and in such case the collection of the tax would be

enforced by a refundable withholding tax at a rate of 15% of the amount by which the distribution exceeds the

shareholder’s share of our earnings and profits.

Subject to certain exceptions discussed below, our shares will be treated as a USRPI if, at any time during a

prescribed testing period, 50% or more of our assets consist of interests in real property located within the United States,

excluding, for this purpose, interests in real property solely in a capacity as a creditor. We expect that 50% or more of our

assets will consist of USRPIs. Even if the foregoing 50% test is met, however, our shares nonetheless will not constitute a

USRPI if we are a “domestically controlled qualified investment entity.” A domestically controlled qualified investment

entity includes a REIT, less than 50% of the value of which is held directly or indirectly by Non-U.S. Holders at all times

during a specified testing period (after applying certain presumptions regarding the ownership of the shares, as described in

the Code). Under final U.S. Treasury Regulations, for purposes of the determination of whether a REIT is a domestically

controlled qualified investment entity, the ownership by non-U.S. persons will be determined by looking through certain

entities including non-publicly traded partnerships, REITs, regulated investment companies, or domestic “C” corporations

owned more than 50% directly or indirectly by foreign persons and by treating qualified foreign pension funds as foreign

persons for this purpose. If we are classified as a USRPI, we cannot predict whether we will be a domestically controlled

qualified investment entity. We further do not expect that our shares will be “regularly traded” for purposes of the FIRPTA

exceptions that apply to certain small shareholders of regularly traded shares.

In addition, regardless of whether our shares are USRPIs, a Non-U.S. Holder that receives a distribution from us

that is attributable to our gains from the disposition of USRPIs (which are expected to include substantially all of the

Company’s assets), including in connection with a repurchase of our shares (whether treated as a distribution or a sale or

exchange), is generally subject to U.S. federal income tax under FIRPTA to the extent such distribution is attributable to

gains from such disposition, regardless of whether the difference between the fair market value and the tax basis of the

USRPI giving rise to such gains is attributable to periods prior to or during such Non-U.S. Holder’s ownership of our

shares, and regardless of the amount of tax basis or gain or loss that the holder has in shares with respect to which the

distribution or repurchase is made.

If we are and continue to be a domestically controlled qualified investment entity, the sale of our common shares

should not be subject to taxation under FIRPTA (except in the case of a repurchase to the extent the repurchase proceeds

are attributable to our gain from USRPIs). No assurance can be given that we will be a domestically controlled qualified

investment entity. If gain on the sale of our shares were subject to taxation under FIRPTA, the Non-U.S. Holder would be

required to file a U.S. federal income tax return and would be subject to the same treatment as a U.S. shareholder with

respect to such gain, and the purchaser of the shares could be required to withhold 15% of the purchase price and remit

such amount to the IRS.

Potential Non-U.S. Holders are urged to consult their tax advisors regarding FIRPTA and other federal, state,

local, and foreign income and other tax considerations relevant to an investment in our shares in light of their particular

investment or tax circumstances.

Our board of trustees is authorized to revoke our REIT election without investors approval, which may cause adverse

consequences to our investors.

The Declaration of Trust authorizes our board of trustees to revoke or otherwise terminate our REIT election,

without the approval of our investors, if it determines that changes to U.S. federal income tax laws and regulations or other

considerations mean it is no longer in our best interests to qualify as a REIT. Our board of trustees has certain legal duties

to us and our investors and could only cause such changes in our tax treatment in good faith. In this event, we would

become subject to U.S. federal income tax on our taxable income and we would no longer be required to distribute most of

our net income to our investors, which may cause a reduction in the total return to our investors.

Risks Related to Ownership of Our Shares

We have a limited operating history and there is no assurance that we will be able to successfully achieve our

investment objectives.

We have a limited operating history and may not be able to achieve our investment objectives. We cannot assure

you that the past experiences of Fortress or the Adviser and its affiliates will be sufficient to allow us to successfully

achieve our investment objectives, and performance and investment profile of other Fortress Managed Accounts or other

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affiliates should not be used as an indicator of our likely performance or investment profile. As a result, an investment in

our common shares may entail more risk than the common shares of beneficial ownership of a REIT with a substantial

operating history.

The cash available for distribution to shareholders may not be sufficient to pay dividends at expected levels, nor can we

assure you of our ability to make distributions in the future. We may use borrowed funds to make distributions.

All distributions will be made at the discretion of our board of trustees and will depend on our earnings, our

financial condition, maintenance of our REIT qualification, limitations under Maryland law and other factors as our board

of trustees may deem relevant from time to time. We may not be able to make distributions in the future. If we borrow to

fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for

distribution from what they otherwise would have been.

Our use of Operating Partnership units as consideration to acquire properties could result in shareholder dilution or

limit our ability to sell such properties, which could have a material adverse effect on our business, financial condition,

results of operations and cash flows.

We may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange

for units in our Operating Partnership, which may result in shareholder dilution. The value attributable to such units will be

determined based on negotiations with the property seller and, therefore, may not reflect the fair market value of such units

if a public market for such units existed. If the value of such units is greater than the value of the related property, your

interest in us may be diluted. Additionally, this acquisition structure may have the effect of, among other things, reducing

the amount of tax depreciation we could deduct over the tax life of the acquired properties and may require that we agree to

protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the

acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These

restrictions could limit our ability to sell properties at a time, or on terms, that would be favorable absent such restrictions,

which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

You may be restricted from acquiring or transferring certain amounts of our shares.

The share ownership restrictions of the Code for REITs and the 9.8% share ownership limit in our Declaration of

Trust may inhibit market activity in our shares and restrict our business combination opportunities.

For us to qualify as a REIT, for every taxable year after the taxable year ended December 31, 2023, not more than

50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (as defined in the

Code to include certain entities) during the last half of a taxable year, and the shares must be beneficially owned by 100 or

more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable

year.

Our Declaration of Trust, with certain exceptions, requires our trustees to take such actions as are necessary and

desirable to preserve our qualification as a REIT. Unless exempted by our board of trustees, our Declaration of Trust

prohibits any person from beneficially or constructively owning (a) more than 9.8% in value or number of shares,

whichever is more restrictive, of our outstanding common shares, (b) more than 9.8% in value or number of shares,

whichever is more restrictive, of any other class or series of our shares outstanding at the time of determination or (c) more

than 9.8% (in value or number of shares, whichever is more restrictive) of our outstanding shares of all classes or series

unless they receive an exemption (prospectively or retroactively) from our board of trustees. Our board of trustees may not

grant an exemption from this restriction to any person if such exemption would result in our failing to qualify as a REIT.

This as well as other restrictions on transferability and ownership will not apply, however, if our board of trustees

determines in good faith that it is no longer in our best interests to continue to qualify as a REIT.

Your interest in us will be diluted if we issue additional shares. Your interest in our assets will also be diluted if the

Operating Partnership issues additional units.

Holders of our shares will not have preemptive rights to any shares we issue in the future. Our Declaration of

Trust authorizes us to issue an unlimited number of shares of beneficial interest, par value $0.01 per share, including an

unlimited number of common shares, of which an unlimited number of shares are classified as Class S shares, an unlimited

number of shares are classified as Class D shares, an unlimited number of shares are classified as Class I shares, an

unlimited number of shares are classified as Class F-S shares, an unlimited number of shares are classified as Class F-D

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shares, an unlimited number of shares are classified as Class F-I shares, an unlimited number of shares are classified as

Class D-S shares, and an unlimited number of shares are classified as Class E shares, and an unlimited number of preferred

shares of beneficial interest, par value $0.01 per share. In addition, our board of trustees may amend our Declaration of

Trust from time to time to decrease the aggregate number of authorized shares or the number of authorized shares of any

class or series without shareholder approval. After a shareholder purchases shares in our private offering, our board of

trustees may elect, without shareholder approval, to: (1) sell additional shares in this or future offerings; (2) issue common

shares or units in our Operating Partnership in private offerings; (3) issue common shares or units in our Operating

Partnership upon the exercise of the options we may grant to our independent trustees, officers, or future employees; (4)

issue common shares or units in our Operating Partnership to the Adviser or the Special Limited Partner, or their

successors or assigns, in payment of an outstanding obligation to pay fees for services rendered to us or the performance

participation allocation; (5) issue common shares or units in our Operating Partnership to sellers of properties we acquire;

or (6) issue equity incentives to certain employees of affiliated service providers or to third parties as satisfaction of

obligations under incentive arrangements. To the extent we issue additional common shares after a shareholder purchases

shares in our private offering, such shareholder’s percentage ownership interest in us will be diluted. Because we hold all

of our assets through the Operating Partnership, to the extent we issue additional units of our Operating Partnership after a

unitholder purchases units of our Operating Partnership in our private offering, such unitholder’s percentage ownership

interest in our assets will be diluted. Because certain classes of the units of our Operating Partnership may, in the discretion

of our board of trustees, be exchanged for common shares, any merger, exchange or conversion between our Operating

Partnership and another entity ultimately could result in the issuance of a substantial number of common shares, thereby

diluting the percentage ownership interest of other shareholders. Because of these and other reasons, our shareholders may

experience substantial dilution in their percentage ownership of our shares or their interests in the underlying assets held by

our Operating Partnership. Operating Partnership units may have different and preferential rights to the claims of common

units of our Operating Partnership which correspond to the common shares held by our shareholders. Certain units in our

Operating Partnership may have different and preferential rights to the terms of the common Operating Partnership units

which correspond to the common shares held by our shareholders.

There is no public trading market for our shares; therefore, your ability to dispose of your shares will likely be limited to

repurchase by us. If you do sell your shares to us, you may receive less than the price you paid.

There is no current public trading market for our shares, and we do not expect that such a market will ever develop

in the future. In our perpetual-life structure, the investor may request that we repurchase their shares on a monthly basis,

but we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that

have been requested to be repurchased in any particular month in our discretion. While we may consider a liquidity event at

any time in the future, we are not obligated by the Declaration of Trust or otherwise to effect a liquidity event at any time.

Therefore, repurchase of shares by us will likely be the only way for you to dispose of your shares. An investment in the

Company should be viewed as an illiquid investment. We expect to repurchase shares at a price equal to the transaction

price of the class of shares being repurchased on the date of repurchase (which will generally be equal to our prior month’s

NAV per share) and not based on the price at which you initially purchased your shares, except that, subject to limited

exceptions, (i) Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares and Class

E shares that have not been outstanding for at least one year will be repurchased at 98% of the transaction price and (ii) in

the case of Class D-S shares, such shares may only be repurchased to the extent they have been outstanding for at least two

years. As a result, you may receive less than the price you paid for your shares when you sell them to us pursuant to our

share repurchase plan. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities—Share Repurchase Plan.”

Your ability to have your shares repurchased through our share repurchase plan is limited. We may choose to

repurchase fewer shares than have been requested to be repurchased, or none at all, in our discretion at any time, and

the amount of shares we may repurchase is subject to caps. Further, our board of trustees may make exceptions to,

modify or suspend our share repurchase plan (including to make exceptions to the repurchase limitations or purchase

fewer shares than such repurchase limitations) if it deems such action to be in our best interest.

We may choose to repurchase fewer shares than have been requested in any particular month to be repurchased

under our share repurchase plan, or none at all, in our discretion at any time. We may repurchase fewer shares than have

been requested to be repurchased due to, among other reasons, in our board of trustees’ discretion, lack of readily available

funds because of adverse market conditions beyond our control, the need to maintain liquidity for our operations or because

we have determined that investing in additional real property or other illiquid investments is a better use of our capital than

repurchasing our shares. In addition, the aggregate NAV of total repurchases of our Class S shares, Class D shares, Class I

shares, Class F-S shares, Class F-D shares, Class F-I shares, Class D-S shares and Class E shares (including repurchases at

certain non-U.S. investor access funds primarily created to hold our shares but excluding any Early Repurchase Deduction

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applicable to the repurchased shares) under our share repurchase plan and redemptions of Class S units, Class D units,

Class I units, Class F-S units, Class F-D units, Class F-I units, Class D-S units, Class E units and Class A units of our

Operating Partnership is limited to no more than 2% of our aggregate NAV per month (measured using the aggregate NAV

attributable to shareholders as of the end of the immediately preceding month) and no more than 5% of our aggregate NAV

per calendar quarter (measured using the average aggregate NAV attributable to shareholders as of the end of the

immediately preceding three months). For the avoidance of doubt, both of these limits are assessed each month in a

calendar quarter. Shares or units issued to the Adviser and its affiliates under our management fee or as reimbursements of

expenses or for the Special Limited Partner’s performance participation interest are not subject to these repurchase

limitations. Further, our board of trustees may make exceptions to, modify or suspend our share repurchase plan (including

to make exceptions to the repurchase limitations, or repurchase fewer shares than such repurchase limitations) if in its

reasonable judgment it deems such action to be in our best interest. Our board of trustees cannot terminate our share

repurchase plan absent a liquidity event which results in our shareholders receiving cash or securities listed on a national

securities exchange or where otherwise required by law. If the full amount of all our shares requested to be repurchased in

any given month are not repurchased, funds will be allocated pro rata based on the total number of shares being

repurchased without regard to class and subject to the volume limitation. All unsatisfied repurchase requests must be

resubmitted after the start of the next month or quarter, or upon the recommencement of the share repurchase plan, as

applicable.

The vast majority of our assets consist of properties that cannot generally be readily liquidated without impacting

our ability to realize full value upon their disposition. Therefore, we may not always have a sufficient amount of cash to

immediately satisfy repurchase requests. Should repurchase requests, in our judgment, place an undue burden on our

liquidity, adversely affect our operations or risk having an adverse impact on the Company as a whole, or should we

otherwise determine that investing our liquid assets in real properties or other illiquid investments rather than repurchasing

our shares is in the best interests of the Company as a whole, then we may choose to repurchase fewer shares than have

been requested to be repurchased (including relative to the 2% monthly limit and 5% quarterly limit under our share

repurchase plan), or none at all. Upon suspension of our share repurchase plan, our share repurchase plan requires our

board of trustees to consider at least quarterly whether the continued suspension of the plan is in the best interest of the

Company and its shareholders; however, we are not required to authorize the recommencement of the share repurchase

plan within any specified period of time. As a result, your ability to have your shares repurchased by us may be limited and

at times you may not be able to liquidate your investment.

Economic events that may cause our shareholders to request that we repurchase their shares may materially adversely

affect our cash flow and our results of operations and financial condition.

Events affecting the economic conditions in the United States and/or elsewhere or globally, such as the general

negative performance of the real estate sector (including as a result of inflation or higher interest rates), actual or perceived

instability in the U.S. banking system, disruptions in the labor market (including labor shortages and unemployment),

market volatility (including volatility as a result of geopolitical events and military conflicts) and increasing inflation, could

cause our shareholders to seek to sell their shares to us pursuant to our share repurchase plan at a time when such events are

adversely affecting the performance of our assets. Even if we decide to satisfy all resulting repurchase requests, our cash

flow could be materially adversely affected. In addition, if we determine to sell assets to satisfy repurchase requests, we

may not be able to realize the return on such assets that we may have been able to achieve had we sold at a more favorable

time, and our results of operations and financial condition, including, without limitation, breadth and diversification of our

portfolio by property type and location, could be materially adversely affected. In addition, a significant volume of

repurchase requests in a given period may cause requests to exceed the 2% monthly and 5% quarterly limits under our

share repurchase plan, resulting in less than the full amount of repurchase requests being satisfied in such period.

We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to

emerging growth companies will make our shares less attractive to investors.

We will be and we will remain an “emerging growth company” as defined in the JOBS Act until the earlier of (a)

the last day of the fiscal year (i) following the fifth anniversary of the date of an initial public offering pursuant to an

effective registration statement under the Securities Act, (ii) in which we have total annual gross revenue of at least $1.235

billion, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our shares that is

held by non-affiliates exceeds $700 million as of the date of our most recently completed second fiscal quarter, and (b) the

date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long

as we remain an “emerging growth company” we may take advantage of certain exemptions from various reporting

requirements that are applicable to other public companies that are not “emerging growth companies” including, but not

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limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley

Act. We cannot predict if investors will find our shares less attractive because we may rely on some or all of these

exemptions.

In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the

extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised

accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting

standards until those standards would otherwise apply to private companies. We will take advantage of the extended

transition period for complying with new or revised accounting standards, which may make it more difficult for investors

and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with

public company effective dates and may result in less investor confidence. Also, because we are not a large accelerated

filer or an accelerated filer under Section 12b-2 of the Exchange Act, and will not be for so long as our common shares are

not traded on a securities exchange, we will not be subject to auditor attestation requirements of Section 404(b) of the

Sarbanes-Oxley Act even once we are no longer an emerging growth company.

The amount and source of distributions we may make to our shareholders is uncertain, and we may be unable to

generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the future.

We have not established a minimum distribution payment level, and our ability to make distributions to our

shareholders may be adversely affected by a number of factors, including the risk factors described in this Annual Report.

We have a limited track record and may not generate sufficient income to make distributions to our shareholders. Our

board of trustees will make determinations regarding distributions based upon, among other factors, our financial

performance, debt service obligations, debt covenants, REIT qualification and tax requirements and capital expenditure

requirements. Among the factors that could impair our ability to make distributions to our shareholders are:

•our inability to invest the proceeds from sales of our shares on a timely basis in income-producing properties;

•our inability to realize attractive risk-adjusted returns on our investments;

•high levels of expenses or reduced revenues that reduce our cash flow or non-cash earnings; and

•defaults in our investment portfolio or decreases in the value of our investments.

As a result, we may not be able to make distributions to our shareholders at any time in the future, and the level of

any distributions we do make to our shareholders may not increase or even be maintained over time, any of which could

materially and adversely affect the value of your investment.

We may not generate sufficient cash flow from operations to fully fund distributions to shareholders. Therefore,

we may fund distributions to our shareholders from sources other than cash flow from operations, including, without

limitation, borrowings, offering proceeds (including from sales of our shares or Operating Partnership units), income from

derivative instruments, the sale of our assets, and repayments of our real estate debt investments. The extent to which we

fund distributions from sources other than cash flow from operations will depend on various factors, including, but not

limited to, the level of participation in our distribution reinvestment plan, the extent to which the Adviser elects to receive

its management fee and/or expense reimbursements in Class E shares or Class A units of our Operating Partnership (in lieu

of cash) or the Special Limited Partner elects to receive its performance allocation in Class A units of our Operating

Partnership (in lieu of cash), how quickly we invest the proceeds from this and any future offering and the performance of

our properties and other investments. Funding distributions from borrowings, offering proceeds (including from sales of

our shares or other securities to Fortress or its affiliates), the sale of our assets or repayments of our real estate debt

investments will result in us having less funds available to purchase properties or other investments. As a result, the return

you realize on your investment may be reduced. Doing so may also negatively impact our ability to generate cash flows.

Likewise, funding distributions from the sale of additional shares or other securities will dilute your interest in us on a

percentage basis and may impact the value of your investment especially if we sell these securities at prices less than the

price you paid for your shares. We may be required to continue to fund our regular distributions from a combination of

some of these sources if our investments fail to perform, if expenses are greater than our revenues or due to numerous other

factors. We cannot predict when, if ever, distribution payments sourced from borrowings and from offering net proceeds

may occur, and an extended period of such payments would likely be unsustainable. We have not established a limit on the

amount of our distributions that may be funded from any of these sources. To the extent we borrow funds to pay

distributions, we would incur borrowing costs (including interest) and these borrowings would require a future repayment.

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The use of these sources for distributions and the ultimate repayment of any liabilities incurred could adversely impact our

ability to pay distributions in future periods, decrease our NAV, decrease the amount of cash we have available for

operations and new investments and materially adversely impact the value of your investment.

We may also defer operating expenses or pay expenses (including the fees of the Adviser or distributions to the

Special Limited Partner) with our shares or Operating Partnership units in order to preserve cash flow for the payment of

distributions. The ultimate repayment of these deferred expenses could adversely affect our operations and reduce the

future return on your investment. We may repurchase shares or redeem Operating Partnership units from the Adviser or the

Special Limited Partner shortly after issuing such units or shares. The payment of expenses in our shares or with Operating

Partnership units will dilute your ownership interest in our portfolio of assets. There is no guarantee any of our operating

expenses will be deferred and the Adviser and Special Limited Partner are under no obligation to receive future fees or

distributions in our shares or Operating Partnership units and may elect to receive such amounts in cash.

Purchases and repurchases of our shares are not made based on the current NAV per share of our shares.

Generally, our transaction price per share and the price at which we make repurchases of our shares will equal the

NAV per share of the applicable class as of the last calendar day of the prior month. The NAV per share, if calculated as of

the date on which you make your subscription request or repurchase request, may be significantly different than the

transaction price you pay or the repurchase price you receive. Certain of our investments or liabilities are subject to high

levels of volatility from time to time and could change in value significantly between the end of the prior month as of

which our NAV is determined and the date that you acquire or repurchase our shares, however the prior month’s NAV per

share will generally continue to be used as the transaction price per share and repurchase price per share. In exceptional

circumstances, we may in our sole discretion, but are not obligated to, offer and repurchase shares at a different price that

we believe reflects the NAV per share of such shares more appropriately than the prior month’s NAV per share, including

by updating a previously available offering price, in cases where we believe there has been a material change (positive or

negative) to our NAV per share since the end of the prior month and we believe an updated price is appropriate. In such

exceptional cases, the transaction price and the repurchase price will not equal our NAV per share as of any time.

Valuations and appraisals of our real estate and real estate debt are estimates of fair value and may not necessarily

correspond to realizable value.

For the purposes of calculating our monthly NAV, our properties will generally initially be valued at cost, which

we expect to represent fair value at that time. Each property will be valued by an independent third-party appraisal firm

annually. Annual appraisals may be delayed for a short period in exceptional circumstances, and we do not intend to obtain

annual appraisals for properties under construction until construction is completed. Thereafter, valuations of properties will

generally be determined by the Adviser based in part on appraisals of each of our properties by independent third-party

appraisal firms at least once per year in accordance with valuation guidelines and expected to be approved by our board of

trustees. The Adviser will value our properties monthly, based on current material market data and other information

deemed relevant, with monthly review and confirmation for reasonableness by our independent valuation advisor.

Investments in real estate debt and other securities with readily available market quotations will be valued

monthly at fair value. Certain investments, such as mortgages, mezzanine loans, preferred equity or private company

investments, are unlikely to have market quotations and thus will generally be fair valued by the Adviser. In the case of

loans acquired by us, such initial value will generally be the acquisition price of such loan. In the case of loans originated

by us, such initial value will generally be the cost of such loan. Each such investment will then be valued by the Adviser no

later than the end of the first full month after we invest in such investment and no less than monthly thereafter.

Additionally, the Adviser may in its discretion consider material market data and other information that becomes available

after the end of the applicable month in valuing our assets and liabilities and calculating our NAV for a particular month.

For more information regarding our valuation process, see “Item 5. Market for Registrant’s Common Equity, Related

Stockholder Matters and Issuer Purchases of Equity Securities—Calculation and Valuation of Net Asset Value.”

Although monthly valuations of our real properties will be reviewed and confirmed for reasonableness by our

independent valuation advisor, such valuations are based on asset- and portfolio-level information provided by the Adviser,

including historical operating revenues and expenses of the properties, lease agreements on the properties, revenues and

expenses of the properties, information regarding recent or planned capital expenditures and any other information relevant

to valuing the real property, which information will not be independently verified by our independent valuation advisor.

Similarly, each month, an independent valuation advisor will review and confirm for reasonableness our monthly

valuations of our real estate debt and other securities for which market quotations are not readily available. However, such

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valuations are based on information provided by the Adviser, which information will not be verified by our independent

valuation advisor. While the independent valuation advisor reviews for reasonableness the assumptions, methodologies and

valuation conclusions applied by the Adviser for our property and certain real estate debt and other securities valuations as

set forth in our valuation guidelines, the independent valuation advisor is not responsible for, and does not calculate, our

NAV, as such responsibility is ultimately and solely the responsibility of the Adviser.

Within the parameters of our valuation guidelines, the valuation methodologies used to value our properties and

certain of our investments will involve subjective judgments and projections and may not be accurate. Valuation

methodologies will also involve assumptions and opinions about future events, which may or may not turn out to be

correct. Valuations and appraisals of our properties and other investments will be only estimates of fair value. Ultimate

realization of the value of an asset depends to a great extent on economic, market and other conditions beyond our control

and the control of the Adviser and our independent valuation advisor. Further, valuations do not necessarily represent the

price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing

buyer and seller. As such, the carrying value of an asset may not reflect the price at which the asset could be sold in the

market, and the difference between carrying value and the ultimate sales price could be material. In addition, accurate

valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that

can be considered in the context of the appraisal. There will be no retroactive adjustment in the valuation of such assets, the

offering price of our shares, the price we paid to repurchase our shares or NAV-based fees we paid to the Adviser and the

Dealer Manager to the extent such valuations prove to not accurately reflect the realizable value of our assets. Because the

price you will pay for shares of our shares in our private offering, and the price at which your shares may be repurchased

by us pursuant to our share repurchase plan are generally based on our prior month’s NAV per share, you may pay more

than reliable value or receive less than realizable value for your investment.

Our NAV per share amounts may change materially if the appraised values of our properties materially change from

prior appraisals or the actual operating results for a particular month differ from what we originally budgeted for that

month.

We anticipate that the annual appraisals of our properties will be conducted on a rolling basis, such that properties

may be appraised at different times but each property would be appraised at least once per year. When these appraisals are

considered by the Adviser for purposes of valuing the relevant property, there may be a material change in our NAV per

share amounts for each class of our shares from those previously reported. In addition, actual operating results for a given

month may differ from what we originally budgeted for that month, which may cause a material increase or decrease in the

NAV per share amounts. We will not retroactively adjust the NAV per share of each class reported for the previous month.

Therefore, because a new annual appraisal may differ materially from the prior appraisal or the actual results from

operations may be better or worse than what we previously budgeted for a particular month, the adjustment to take into

consideration the new appraisal or actual operating results may cause the NAV per share for each class of our shares to

increase or decrease, and such increase or decrease will occur in the month the adjustment is made.

It may be difficult to reflect, fully and accurately, material events that may impact our monthly NAV.

The Adviser’s determination of our monthly NAV per share will be based in part on appraisals of each of our

properties provided annually by independent third-party firms in individual appraisal reports and monthly valuations of our

properties, real estate debt and other securities for which market prices are not readily available provided by the Adviser

(with valuations reviewed by the independent valuation advisor), each in accordance with valuation guidelines approved by

our board of trustees. As a result, our published NAV per share in any given month may not fully reflect any or all changes

in value that may have occurred since the most recent appraisal or valuation. The Adviser will review appraisal reports and

monitor our real estate and real estate debt, and is responsible for notifying the independent valuation advisor of the

occurrence of any property-specific or market-driven event it believes may cause a material valuation change in the real

estate valuation, but it may be difficult to reflect fully and accurately rapidly changing market conditions or material events

that may impact the value of our real estate and real estate debt or liabilities between valuations, or to obtain complete

information regarding any such events in a timely manner. For example, an unexpected termination or renewal of a

material lease, a material increase or decrease in vacancies or an unanticipated structural or environmental event at a

property may cause the value of a property to change materially, yet obtaining sufficient relevant information after the

occurrence has come to light and/or analyzing fully the financial impact of such an event may be difficult to do and may

require some time. As a result, the NAV per share may not reflect a material event until such time as sufficient information

is available and analyzed, and the financial impact is fully evaluated, such that our NAV may be appropriately adjusted in

accordance with our valuation guidelines. Depending on the circumstance, the resulting potential disparity in our NAV may

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be in favor or to the detriment of either shareholders who repurchase their shares, or shareholders who buy new shares, or

existing shareholders.

NAV calculations are not governed by governmental or independent securities, financial or accounting rules or

standards.

The methods used by Eisner to calculate our NAV, including the components used in calculating our NAV, and

our Adviser in its review and confirmation of the calculations in connection therewith, in each case, are not prescribed by

rules of the SEC or any other regulatory agency. Further, there are no accounting rules or standards that prescribe which

components should be used in calculating NAV, and our NAV is not audited by our independent registered public

accounting firm. We publish our NAV solely for purposes of establishing the price at which we sell and repurchase our

shares, and you should not view our NAV as a measure of our historical or future financial condition or performance. The

components and methodology used in calculating our NAV may differ from those used by other companies now or in the

future.

In addition, calculations of our NAV, to the extent that they incorporate valuations of our assets and liabilities, are

not prepared in accordance with GAAP. These valuations may differ from liquidation values that could be realized in the

event that we were forced to sell assets.

Additionally, errors may occur in calculating our NAV, which could impact the price at which we sell and

repurchase our shares and the amount of the Adviser’s management fee and the Special Limited Partner’s performance

participation interests. The Adviser has implemented certain policies and procedures to address such errors in NAV

calculations. If such errors were to occur, the Adviser, depending on the circumstances surrounding each error and the

extent of any impact the error has on the price at which our shares were sold or repurchased or on the amount of the

Adviser’s management fee or the Special Limited Partner’s performance participation interests, may determine in its sole

discretion to take certain corrective actions in response to such errors, including, subject to the Company’s policies and

procedures, making adjustments to prior NAV calculations. You should carefully review the disclosure of our valuation

policies and how NAV will be calculated under “Item 5. Market for Registrant’s Common Equity, Related Stockholder

Matters and Issuer Purchases of Equity Securities—Calculation and Valuation of Net Asset Value.”

You may have current tax liability on distributions you elect to reinvest in our shares.

If you participate in our distribution reinvestment plan, you will be deemed to have received, and for U.S. federal

income tax purposes will generally be taxed on, the amount reinvested in our shares to the extent the amount reinvested

was not a tax-free return of capital. Therefore, you may be forced to use funds from other sources to pay your tax liability

on the reinvested dividends.

Our success and possibility of returns depend on our ability to identify and select appropriate investments, and there is

no assurance that investors will receive return on their capital.

Our success depends on the ability of the Adviser to identify and select appropriate investments, as well as our

ability to acquire, lease, manage and dispose of those investments. In connection therewith, although the Adviser may

identify certain prospective investment opportunities in entities in which affiliates have or are concurrently making an

investment, the terms of any such Fortress Affiliate’s investment may restrict us from investing in such entities as a result

of its potential status as an affiliate of the entity or of another investor. There can be no assurance that we will achieve our

investment or performance objectives, including the identification of suitable investment opportunities and the achievement

of targeted returns, or that we will be able to fully invest our committed capital. The possibility of partial or total loss of our

capital exists and no assurance can be given that investors will receive a return of their capital. Moreover, the returns and

the performance of other Fortress Managed Accounts or other affiliates are not indicative of our future returns or

performance.

Investors do not have the protections provided under the Investment Company Act.

While we may be considered similar to an investment company, we are not required to be and are not registered as

such under the Investment Company Act in reliance upon an exemption thereunder and, accordingly, the provisions of the

Investment Company Act (which may provide certain regulatory safeguards to investors) are not applicable to the

shareholders.

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Certain of our confidentiality provisions may limit an investor’s access to information and may require investors to also

maintain confidentiality.

Subject to certain exceptions, investors will be required to keep information relating to the Company confidential.

Except as permitted by us or as required by applicable law, all information, documents, reports, understandings,

agreements and other arrangements between and among our partners, and all other non-public information received from,

or otherwise relating to, us, any of our partners or any investment, will be confidential, and investors must use their

reasonable best efforts not to disclose or otherwise release to any other party such matters without our written consent. To

protect the sensitive nature of such confidential information, we will have the right to keep confidential from investors any

information that we reasonably believe to be in the nature of trade secrets, legally privileged materials related to a claim or

other information the disclosure of which we in good faith believe is not in our best interest or could damage us or our

investments or which we are required by law or by agreement with a third-party to keep confidential. In addition, we will

not provide and will not be required to provide access to information pertaining to us or our investments if we, in our

discretion, desire or seek to protect such information in connection with privileged information. To the extent that investors

are provided with information which is subsequently found to be subject to privileged information, the value of assets held

by us and the strategy in respect of such assets may be adversely affected.

ITEM 1B.UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 1C.CYBERSECURITY

Our operations are highly dependent on the information systems and technology of Fortress, the indirect affiliate

of our Adviser, which has implemented a cybersecurity management program. Below are details Fortress has provided to

us regarding its cybersecurity program that are relevant to us. The Company uses Fortress's cybersecurity program to

assess, identify and mange material cybersecurity risks affecting the Company and its operations.

Cybersecurity Processes and Risk Assessment

Fortress’s cybersecurity program is focused on (i) protecting the confidentiality of business, client, investors in its

funds and its employee information; (ii) maintaining the security and availability of systems and data; (iii) supporting

compliance with applicable laws and regulations; (iv) documenting cybersecurity incidents and its responses; and (v)

notification of cybersecurity incidents to, and communications with, appropriate internal and external parties.

Fortress has implemented an information security governance policy governing cybersecurity risk, which is

designed to facilitate the protection of sensitive or confidential business, client, investor and any employee information that

it stores or processes, and the maintenance of critical services and systems. Fortress’s cybersecurity program is managed by

Fortress’s Chief Information Security Officer and Fortress’s Chief Technology Officer (together, “Fortress IT

Management”), who report to Fortress’s Chief Financial Officer. Fortress IT Management and their team are responsible

for implementing Fortress’s monitoring and alert response processes, vulnerability management, changes made to its

critical systems, including software and network changes, and various other technological and administrative safeguards.

These processes and systems are designed to protect against unauthorized access of information, including by cyber-

attacks, and Fortress’s policy and processes include, as appropriate, encryption, data loss prevention technology,

authentication technology, entitlement management, access control, anti-virus and anti-malware software, and transmission

of data over private networks. Fortress’s processes and systems aim to prevent or mitigate two main types of cybersecurity

risk: first, cybersecurity risks associated with its physical and digital devices and infrastructure and second, cybersecurity

risks associated with third parties, such as people and organizations who have access to its devices, infrastructure or

confidential or sensitive information. The cybersecurity-control principles that form the basis of Fortress’s cybersecurity

program are informed by the National Institute of Standards and Technology Cybersecurity Framework.

Fortress’s cybersecurity program includes review and assessment by third parties of the cybersecurity processes

and systems. These third parties assess and report on Fortress’s deployment of cybersecurity best practices and industry

frameworks and help to identify areas for continued focus and improvement. Annual penetration testing of its network,

including critical systems and systems that store confidential or sensitive information, is conducted with third party

consultants and vulnerabilities are reviewed by Fortress IT Management for remediation. When Fortress engages vendors

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and other third-party partners who will have access to sensitive data or client systems and facilities, its infrastructure

technology team assesses their cybersecurity programs and processes.

Fortress also provides its employees with cybersecurity awareness training at onboarding and annually, as well as

interim security reminders and alerts. Fortress conducts regular phishing tests and provides additional training as

appropriate.

Governance and Oversight of Cybersecurity Risks

Fortress has developed an incident response framework to identify, assess and manage cybersecurity events. The

framework is managed and implemented by Fortress’s Enterprise Security Steering Committee (the "ESSC"), a cross-

functional management committee that includes its General Counsel, Chief Financial Officer, Chief Operating Officer,

Chief Compliance Officer, Chief Human Resources Officer and Fortress IT Management. The ESSC is responsible for

gathering information with respect to a cybersecurity incident, assessing its severity and potential responses, as well as

communicating with business heads and senior management, as appropriate. This framework contemplates conducting

simulated cybersecurity incident response exercises with members of senior management on an interim basis in

coordination with external cyber counsel.

Fortress’s cybersecurity program, which is overseen by the ESSC, is managed by an internal team that is

responsible for enterprise-wide cybersecurity strategy, policies, engineering and processes. The team is led by Fortress’s

Chief Technology Officer, who has over 30 years of experience advising on technology strategy, including digital

transformation, cybersecurity, business analytics and infrastructure, and Fortress’s Chief Information Security Officer, who

has over 20 years of experience in the information technology field with a focus on IT risk governance and management,

information security, incident response capabilities and assessing effectiveness of controls. The ESSC meets regularly and

forms cross-enterprise teams, as needed, to manage and implement key policies and initiatives of Fortress’s cybersecurity

program.

The Company's board of trustees has delegated the primary responsibility for oversight and review of guidelines

and policies with respect to risk assessment and risk management to an audit committee of the board of trustees (the “Audit

Committee”). The Company's CFO periodically reports to the Audit Committee as well as the full board of trustees as

appropriate, on cybersecurity matters. Such reporting includes updates on Fortress’s cybersecurity program, the external

threat environment and Fortress’s programs to address and mitigate the risks associated with the evolving cybersecurity

threat environment. These reports also include updates on Fortress’s preparedness, prevention, detection, responsiveness

and recovery with respect to cyber incidents.

Impact of Cybersecurity Risks

We are not aware of any cybersecurity risks that are reasonably likely to materially affect our business. However,

future incidents could have a material impact on our business strategy, results of operations or financial condition. For

additional discussion of the risks posed by cybersecurity threats, see “Part I. Item 1A. Risk Factors—Risks Related to Our

Business and Operations—Our business and operations could suffer in the event of system failures or cybersecurity

breaches.”

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PART II

ITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There is no public market for our shares currently, nor can we give any assurance that one will develop. Our

outstanding shares are offered and sold in transactions exempt from registration under the Securities Act under Section

4(a)(2) and Regulation D promulgated thereunder. See “—Recent Sales of Unregistered Securities” for more information.

Offering of Common Shares

Subscriptions to purchase our common shares may be made on an ongoing basis, but investors may only purchase

our common shares pursuant to accepted subscription orders as of the first business day of each month (based on the prior

month’s transaction price), and to be accepted, a subscription request must be received in good order at least five business

days prior to the first business day of the month (unless waived by the Dealer Manager). A subscription order may be

canceled at any time before the time it has been accepted. As of December 31, 2024, we have received aggregate proceeds

of $814.1 million from the sale of our common shares.

Each class of common shares has different upfront transaction fees and ongoing shareholder servicing fees. Other

than the differences in upfront transaction fees and ongoing shareholder servicing fees, each class of common shares has

the same economic and voting rights.

The Dealer Manager, an affiliate of the Adviser, serves as the dealer manager for our private offering. No upfront

selling fees will be paid to the Company or Dealer Manager with respect to the Class S shares, Class D shares, Class I

shares, Class F-S shares, Class F-D shares, Class F-I shares, Class D-S shares and Class E shares. However, for Class S

shares, Class D shares, Class F-S shares and Class F-D shares that are purchased through certain financial intermediaries,

those financial intermediaries may directly charge transaction or other fees, including upfront placement fees or brokerage

commissions, limited to a percent of the transaction price. The following table details the upfront transaction fees and

ongoing shareholder servicing fees:


	Class S Shares	Class D Shares	Class I Shares	Class F-S Shares	Class F-D Shares	Class F-I Shares	Class D-S Shares	Class E Shares
Transaction Fees	Up to 3.50%	Up to 1.50%	—	Up to 3.50%	Up to 1.50%	—	—	—
Shareholder servicing fee (% of NAV)	0.85%	0.25%	—	0.85%	0.25%	—	—	—

The purchase price per share of each class will be equal to the then-current transaction price, which will generally

be our prior month’s NAV per share for such class as of the last calendar day of such month. Our NAV for each class of

shares will be based on the net asset value of our investments (including real estate debt and other securities), the addition

of any other assets (such as cash on hand), and the deductions of any liabilities (including the allocation/accrual of any

performance participation to the Special Limited Partners and the deduction of any ongoing service fees specifically

applicable to such class of shares). See “—NAV and NAV Per Share Calculation” and “—Relationship between NAV and

Our Transaction Price” for more information about the calculation of NAV per share and the relationship to the transaction

price.

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The following table presents our monthly NAV per share for each class of our common shares for the period of

September 28, 2023 (Inception) through December 31, 2024:


	Class S	Class D	Class I	Class F-S	Class F-D	Class F-I	Class F-I X	Class B-X	Class C(1)	Class D-S(2)	Class D-X	Class E(4)
November 30, 2023(3)	$—	$—	$—	$—	$—	$—	$10.0099	$10.0099	$10.0099	$—	$—	$10.0099
December 31, 2023	$—	$—	$—	$—	$—	$—	$10.0125	$10.0038	$10.0076	$—	$—	$10.0130
January 31, 2024	$—	$—	$—	$—	$—	$—	$10.0282	$10.0226	$10.0237	$—	$10.0259	$10.0291
February 29, 2024	$—	$—	$—	$—	$—	$—	$10.0493	$10.0344	$10.0424	$—	$10.0431	$10.0517
March 31, 2024	$—	$—	$—	$—	$—	$10.0433	$10.0645	$10.0495	$—	$—	$10.0566	$10.0661
April 30, 2024	$—	$—	$—	$—	$—	$10.0313	$10.0715	$10.0565	$—	$10.0622	$10.0622	$10.0724
May 31, 2024	$—	$—	$—	$—	$—	$10.0301	$10.0803	$—	$—	$10.0624	$10.0709	$10.0810
June 30, 2024	$—	$—	$—	$—	$—	$10.0299	$10.0938	$—	$—	$10.0676	$10.0844	$10.0941
July 31, 2024	$—	$—	$—	$—	$—	$10.0338	$10.1123	$—	$—	$10.0774	$10.1024	$10.1114
August 31, 2024	$—	$—	$—	$—	$—	$10.0427	$—	$—	$—	$10.0932	$10.1265	$10.1342
September 30, 2024	$—	$—	$—	$10.0989	$—	$10.1098	$—	$—	$—	$10.1719	$10.2121	$10.2188
October 31, 2024	$—	$—	$—	$10.1055	$—	$10.1422	$—	$—	$—	$10.2240	$10.2595	$10.2695
November 30, 2024	$—	$—	$—	$10.1055	$—	$10.1481	$—	$—	$—	$10.2416	$10.2859	$10.2695
December 31, 2024	$—	$—	$—	$10.1525	$—	$10.1894	$—	$—	$—	$10.2950	$10.3486	$10.3499

(1) As of December 31, 2024, pursuant to the terms of the Class C shares and Class D shares, all outstanding Class C

shares were automatically converted into Class D shares.

(2) Class D shares were renamed to Class D-S shares effective November 14, 2024.

(3)The Company satisfied the minimum offering requirement on November 1, 2023; therefore, shares were not issued

until such date. As such, NAV per share presentation begins in November 2023.

(4)Class E shares are classified as Redeemable common stock.

Holders

As of March 28, 2025, there were 113 holders of record of our Class I shares, 413 holders of record of our Class

F-S shares, 2,162 holders of record of our Class F-I shares, 880 holders of record of our Class D-S shares, 1 holder of

record of our Class D-X shares and 48 holders of record of our Class E shares.

Calculation and Valuation of Net Asset Value

Our NAV for each class of shares is determined by the Adviser based on the net asset values of our investments

(including real estate debt and other securities), the addition of any other assets (such as cash on hand), and the deduction

of any liabilities, including the allocation/accrual of any performance participation to the Special Limited Partner, and will

also include the deduction of any class-specific items, such as ongoing servicing fees, that are specifically applicable to

such class of shares, in all cases as described below.

Our board of trustees, including a majority of our independent trustees, has adopted valuation guidelines that

contain a comprehensive set of methodologies to be used by the Adviser and our independent valuation advisor in

connection with estimating the values of our assets and liabilities for purposes of our NAV calculation. These guidelines

are intended to produce a fair and accurate estimate of the price that would be received for our investments in an arm’s-

length transaction between a willing buyer and a willing seller in possession of all material information about our

investments. Our independent valuation advisor will review our valuation guidelines and methodologies related to

investments in real property and real estate debt and other securities (as described below) with the Adviser and our board of

trustees initially and will review any material changes to the valuation guidelines and methodologies on an ongoing basis.

Our board of trustees will not be involved in the monthly valuation of our assets and liabilities, but will periodically receive

and review such information about the valuation of our assets and liabilities as it deems necessary to exercise its oversight

responsibility. From time to time, our board of trustees, including a majority of our independent trustees, may adopt

changes to the valuation guidelines if it (1) determines that such changes are likely to result in a more accurate reflection of

NAV or a more efficient or less costly procedure for the determination of NAV without having a material adverse effect on

the accuracy of such determination or (2) otherwise reasonably believes a change is appropriate for the determination of

NAV.

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Our NAV per share for each class of shares will be calculated by Eisner, and such calculation will be reviewed

and confirmed by the Adviser. With the approval of our board of trustees, including a majority of our independent trustees,

we have engaged Empire, an independent third-party valuation firm, to serve as our independent valuation advisor with

respect to our real properties, leases and certain real estate debt and other securities, which will review monthly internal

valuations of real properties, leases and certain real estate debt and other securities prepared by the Adviser. Pursuant to our

valuation services agreement with our independent valuation advisor, each valuation confirmation report for our assets will

be addressed solely to assist Eisner in calculating our NAV and our Adviser in its review and confirmation of the

calculations in connection therewith. Pursuant to our valuation services agreement with our independent valuation advisor,

the independent valuation advisor will review the Adviser’s monthly valuations. Based in part on these valuations and

third-party appraisals (which we do not presently expect to be reviewed by the independent valuation advisor), the Adviser

will render a final valuation in order for Eisner to calculate our NAV. The appraisals for our property investments

performed by independent third-party appraisal firms will be one of several components considered by the Adviser in

determining the value of our properties that will be used when Eisner calculates our NAV per share for each class of shares.

Our independent valuation advisor may be replaced at any time, in accordance with agreed-upon notice requirements,

by a majority vote of our board of trustees, including a majority of our independent trustees. Our independent valuation

advisor will discharge its responsibilities in accordance with our valuation guidelines.

We have agreed to pay fees to our independent valuation advisor upon its delivery to us of its review reports. We have

also agreed to indemnify our independent valuation advisor against certain liabilities arising out of this engagement. The

compensation we pay to our independent valuation advisor will not be based on the estimated values of our assets and

liabilities or any confirmation thereof.

Our independent valuation advisor and certain of the independent third-party appraisers have provided, and are

expected to continue to provide, real estate appraisal, appraisal management and real estate valuation advisory services to

Fortress and its affiliates and have received, and are expected to continue to receive, fees in connection with such services.

Our independent valuation advisor and certain of the independent third-party appraisers and their respective affiliates may

from time to time in the future perform other commercial real estate and financial advisory services for Fortress and its

affiliates, or in transactions related to the properties that are the subjects of the valuations being performed for us, or

otherwise, so long as such other services do not adversely affect the independence of the independent valuation advisor or

the applicable appraiser as certified in the applicable appraisal report.

Valuation of Investments

Consolidated Properties

For the purposes of calculating our monthly NAV, our properties will initially be valued at cost, which we expect

to represent fair value at that time, subject to any variation pursuant to our valuation guidelines. In accordance with GAAP,

we determine whether the acquisition of a property qualifies as an asset acquisition or business combination. We initially

capitalize acquisition-related costs associated with asset acquisitions and expense such costs associated with business

combinations.

Each property will be valued by an independent third-party appraisal firm no less frequently than annually.

Annual appraisals may be delayed for a short period in exceptional circumstances, and we do not intend to obtain annual

appraisals for properties under construction until construction is completed. Each third-party appraisal is performed in

accordance with the Uniform Standards of Professional Appraisal Practice, or the similar industry standard for the country

where the property appraisal is conducted. Upon conclusion of the appraisal, the independent third-party appraisal firm

prepares a written report with an estimated range of gross market value of the property. Concurrent with the appraisal

process, the Adviser values each property and, taking into account the appraisal, among other factors, determines the

appropriate valuation within the range provided by the independent third-party appraisal firm. Each appraisal must be

reviewed, approved and signed by an individual with the professional designation of a Member of the Appraisal Institute

or, for international appraisals, a public or other certified expert for real estate valuations. We believe our policy of

obtaining appraisals by independent third parties will meaningfully enhance the accuracy of our NAV calculation. Any

appraisal provided by an independent third-party appraisal firm will be performed in accordance with our valuation

guidelines.

The Adviser will value our properties monthly, based on current material market data and other information

deemed relevant, with review and confirmation for reasonableness by our independent valuation advisor. We anticipate that

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the annual appraisals of our properties may be conducted on a rolling basis, such that properties may be appraised at

different times but each would be appraised at least annually. When an annual appraisal is received, our valuations will fall

within the range of the third-party appraisal; however, updates to valuations thereafter may be outside of the range of

values provided in the most recent third-party appraisal (subject to a review for reasonableness by the independent

valuation advisor). Although monthly reviews of each of our real property valuations will be performed by our independent

valuation advisor in the interim 11 months except the month an appraisal is conducted, such reviews are based on asset and

portfolio level information provided by the Adviser, including historical or forecasted operating revenues and expenses of

the properties, lease agreements on the properties, revenues and expenses of the properties, information regarding recent or

planned estimated capital expenditures, the then-most recent annual third-party appraisals, and any other information

relevant to valuing the real estate property, which information will not be independently verified by our independent

valuation advisor.

The Adviser will monitor our properties for events that the Adviser believes may be expected to have a material

impact on the most recent estimated values of such property, and will notify our independent valuation advisor of such

events. If, in the opinion of the Adviser, an event becomes known to the Adviser (including through communication with

our independent valuation advisor) that is likely to have any material impact on previously provided estimated values of the

affected properties, the Adviser may adjust the valuation of such properties, subject to the review and confirmation for

reasonableness of our independent valuation advisor. If deemed appropriate by the Adviser or our independent valuation

advisor, any necessary adjustment will be determined as soon as practicable. Annual appraisals may also trigger an

adjustment in the value of a property when received.

For example, a valuation adjustment may be appropriate to reflect the occurrence of an unexpected property-

specific event such as a termination or renewal of a material lease, a material change in vacancies, an unanticipated

structural or environmental event at a property or a significant capital market event that may cause the value of a wholly-

owned property to change materially. Valuation adjustments may also be appropriate to reflect the occurrence of broader

market-driven events identified by the Adviser or our independent valuation advisor which may impact more than a

specific property. Any such adjustments will be estimates of the market impact of specific events as they occur, based on

assumptions and judgments that may or may not prove to be correct, and may also be based on the limited information

readily available at that time.

In general, we expect that any adjustments to appraised values will be calculated promptly after a determination

that a material change has occurred and the financial effects of such change are quantifiable by the Adviser. However,

rapidly changing market conditions or material events may not be immediately reflected in our monthly NAV. The

resulting potential disparity in our NAV may be detrimental to shareholders whose shares are repurchased or new

purchasers of our common shares, depending on whether our published NAV per share for such class is overstated or

understated.

Real estate appraisals will be reported on a free and clear basis (for example, without taking into consideration any

mortgage on the property), irrespective of any property-level financing that may be in place. We expect to use the income

capitalization approach (direct capitalization or discounted cash flows) as the primary methodology to value properties. In

the direct capitalization method, a capitalization rate is applied to the forward 12 months net operating income of each

property to derive fair value. In the discounted cash flow methodology, a property’s value is calculated by discounting the

estimated cash flows and the anticipated terminal value of the subject property, using market-supported discount rates and

terminal capitalization rates. Consistent with industry practices, the income approach may incorporate subjective judgments

regarding comparable rental and operating expense data, capitalization or discount rate, and projections of future rent and

expenses based on appropriate evidence as well as the residual value of the asset as components in determining value.

Other methodologies that may also be used to value properties include sales comparisons and cost approaches. Under the

sales comparison approach, the Adviser or the independent third-party appraiser develops an opinion of value by

comparing the subject property to similar, recently sold properties in the surrounding or competing area.

Under the cost approach, the value of a property is derived by adding the estimated land value to the current cost

of constructing a replacement of the improvements and then subtracting the amount of value depreciation in the structures

from all causes. Because the appraisals performed by third parties, the estimated value within the range of values provided

by third-party-appraisal firms, and the updates to the valuation of our properties made by the Adviser involve subjective

judgments, the estimated fair value of our assets that will be included in our NAV may not reflect the liquidation value or

net realizable value of our properties.

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In conducting their investigations and analyses, our independent valuation advisor and other independent third-

party appraisal firms will take into account customary and accepted financial and commercial procedures and

considerations as they deem relevant, which may include, without limitation, the review of documents, materials and

information relevant to valuing the property that are provided by us, such as (i) historical or forecasted operating revenues

and expenses of the property; (ii) lease agreements on the property; (iii) budgeted revenues and expenses of the property;

(iv) information regarding recent or planned estimated capital expenditures; and (v) any other information relevant to

valuing the real estate property. Although our independent valuation advisor may review information supplied or otherwise

made available by us for reasonableness, it will assume and rely upon the accuracy and completeness of all such

information and of all information supplied or otherwise made available to it by any other party, and will not undertake any

duty or responsibility to verify independently any of such information. Our independent valuation advisor will not make or

obtain an independent valuation or appraisal of any of our other assets or liabilities (contingent or otherwise) other than our

real properties and certain of our real estate debt and other securities. With respect to operating or financial forecasts and

other information and data to be provided to or otherwise to be reviewed by or discussed with our independent valuation

advisor, our independent valuation advisor will assume that such forecasts and other information and data were reasonably

prepared in good faith on bases reflecting currently available estimates and judgments of our management and the Adviser,

and will rely upon the Adviser to advise our independent valuation advisor promptly if any material information previously

provided becomes inaccurate or was required to be updated during the period of review.

In performing their analyses, the Adviser, our independent valuation advisor and other independent third-party

appraisal firms will make numerous other assumptions with respect to industry performance, general business, economic

and regulatory conditions and other matters, many of which are beyond its control and our control, as well as certain factual

matters. For example, our independent valuation advisor and other independent third-party appraisal firms will assume that

we have clear and marketable title to each real estate property valued, that no title defects exist unless specifically informed

to the contrary, that improvements were made in accordance with law, that no hazardous materials are present or were

present previously, that no deed restrictions exist, and that no changes to zoning ordinances or regulations governing use,

density or shape are pending or being considered. Furthermore, our independent valuation advisor’s review, opinions and

conclusions will necessarily be based upon market, economic, financial and other circumstances and conditions existing

prior to the valuation, and any material change in such circumstances and conditions may affect our independent valuation

advisor’s review and conclusions. Our independent valuation advisor’s review reports may contain other assumptions,

qualifications and limitations set forth in the respective appraisal reports that qualify the review, opinions and conclusions

set forth therein. As such, the carrying values of our real properties may not reflect the price at which the properties could

be sold in the market, and the difference between carrying values and the ultimate sales prices could be material. In

addition, accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market

transactions that can be considered in the context of the appraisal.

Pursuant to our valuation services agreement with our independent valuation advisor, each valuation confirmation

report for our assets will be addressed solely to us to assist Eisner in calculating our NAV, and our Adviser in its review

and confirmation of the calculations in connection therewith. Such valuation confirmation reports and appraisal reports,

respectively, relating to our properties will not be addressed to the public, will not contain any conclusion regarding our

NAV, and may not be relied upon by any other person to establish an estimated value of our common shares and will not

constitute a recommendation to any person to purchase or sell any common shares. In preparing appraisal reports,

independent third-party appraisal firms will not be requested to solicit third-party indications of interest for our common

shares or any of our properties in connection with possible purchases thereof or the acquisition of all or any part of us.

In cases in which our net equity interests in certain properties have no or only a nominal net asset value due to

factors such as cash flow performance or marketability, as reasonably determined by the Adviser, the Adviser may exclude

such properties from the review by our independent valuation advisor and from valuation by the independent third-party

appraisal firm.

The Adviser’s valuation of each other investment’s liabilities, including any third-party incentive fee payments or

investment level debt, deal terms and structure will not be reviewed by our independent valuation advisor or appraised.

Eisner will then incorporate such adjusted valuations into our NAV, which will then be reviewed and confirmed by the

Adviser.

Unconsolidated Properties Held Through Joint Ventures

Unconsolidated properties held through joint ventures generally will be valued in a manner that is consistent with

the guidelines described above for consolidated properties. Once the value of a property held by the joint venture and the

fair value of any other assets and liabilities of the joint venture are determined, the value of our interest in the joint venture

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would then be determined by the Adviser using a hypothetical liquidation calculation to value our interest in the joint

venture, which would generally be a percentage of the joint venture’s NAV, subject to the terms of the joint venture.

Unconsolidated properties held in a joint venture that acquires multiple properties over time may be valued as a single

investment. The valuation of our interest in joint ventures prepared by the Adviser will not be reviewed by our independent

valuation advisor.

Valuation of Real Estate Debt and Other Securities

In general, real estate debt and other securities will be valued by the Adviser based on market quotations or at fair

value determined in accordance with GAAP. GAAP defines fair value as the price that would be received to sell an asset or

be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement

date.

Readily available market quotations

Market quotations may be obtained from third-party pricing service providers or, if not available from third-party

pricing service providers, broker-dealers for certain of our real estate debt and other securities. When reliable market

quotations for real estate debt and other securities are available from multiple sources, the Adviser will use commercially

reasonable efforts to use two or more quotations and will value such investments based on the average of the quotations

obtained. However, to the extent that one or more of the quotations received is determined in good faith by the Adviser to

not be reliable, the Adviser may disregard such quotation if the average of the remaining quotations is determined in good

faith to be reliable by the Adviser. Securities that are traded publicly on an exchange or other public market (stocks,

exchange traded derivatives and securities convertible into publicly-traded securities, such as warrants) will be valued at

the closing price of such securities in the principal market in which the security trades.

No readily available market quotations

If market quotations are not readily available (or are otherwise not reliable for a particular investment), the fair

value will be determined in good faith by the Adviser. Due to the inherent uncertainty of these estimates, estimates of fair

value may differ from the values that would have been used had a ready market for these investments existed and the

differences could be material. Market quotes are considered not readily available in circumstances where there is an

absence of current or reliable market-based data (e.g., trade information, bid/ask information, or broker-dealer quotations).

Certain investments, such as mortgages, mezzanine loans, preferred equity or private company investments, are

unlikely to have market quotations.

In the case of loans acquired by us, such initial value will generally be the acquisition cost of such loan. In the

case of loans originated by us, such initial value will generally be the cost of such loan. Each such investment will then be

valued by the Adviser within the first full month after we make such investment and no less frequently than monthly

thereafter in accordance with the procedures set forth in the immediately following paragraph.

To conduct its initial monthly valuations of such loan investments, the Adviser will initially determine if there is

adequate collateral real estate value supporting such investments and whether the investment’s yield approximates market

yield. If the market yield is estimated to approximate the investment’s yield, then such investment is valued at its par value.

If the market yield is not estimated to approximate the investment’s yield, the Adviser will project the expected cash flows

of the investment based on its contractual terms and discount such cash flows back to the valuation date based on an

estimated market yield.

Market yield is estimated as of each monthly valuation date based on a variety of inputs regarding the collateral

asset(s) performance, local/macro real estate performance, and capital market conditions, in each case as determined in

good faith by the Adviser. These factors may include, but are not limited to: purchase price/par value of such real estate

debt or other difficult to value securities; debt yield, capitalization rates, loan-to-value ratio, and replacement cost of the

collateral asset(s); borrower financial condition, reputation, and indications of intent (e.g., pending repayments, extensions,

defaults, etc.); and known transactions or other price discovery for comparable debt investments. In the absence of

collateral real estate value supporting such securities, the Adviser will consider the residual value to its securities,

following repayment of any senior debt or other obligations of the collateral asset(s). Our independent valuation advisor

will generally review and confirm the reasonableness of the valuation of our real estate debt investments without readily

available market quotations upon the Adviser’s initial valuation of such investment and each month thereafter.

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Our board of trustees has delegated to the Adviser the responsibility for monitoring significant events that may

materially affect the values of our real estate debt and other securities investments and for determining whether the value of

the applicable investments should be re-evaluated in light of such significant events. Except as otherwise provided in our

valuation guidelines, the valuation of our real estate debt and other securities will not be reviewed by our independent

valuation advisor or appraised.

Liabilities

We will include the fair value of our liabilities as part of our NAV calculation. We expect that these liabilities will

include the fees payable to the Adviser and the Dealer Manager, any accrued performance participation allocation to the

Special Limited Partner, accounts payable, accrued operating expenses, property-level mortgages, any portfolio-level credit

facilities and other liabilities. All liabilities will be valued using widely accepted methodologies specific to each type of

liability. Liabilities related to class-specific ongoing servicing fees and, when and as applicable, any class-specific

management fees and class-specific accruals/allocations of the Special Limited Partner’s performance participation interest

will be allocable to a specific class of shares and will only be included in the NAV calculation for that class, as described

below. Our debt will be valued at fair value in accordance with GAAP. For purposes of calculating our NAV, the

organization and offering expenses paid by the Adviser through the first anniversary of the date on which we broke escrow

for our private offering will not be recognized as expenses or as a component of equity and reflected in our NAV until we

reimburse the Adviser for these costs. The Adviser’s valuation of each investment’s liabilities, including any third-party

incentive fee payments or investment-level debt, deal terms and structure will not be reviewed by the independent valuation

advisor or appraised.

NAV and NAV Per Share Calculation

Our NAV will be calculated for each of these classes by Eisner. Our board of trustees, including a majority of our

independent trustees, may replace Eisner with another party, including our Adviser, if it is deemed appropriate to do so.

The Adviser is ultimately and solely responsible for reviewing and confirming our NAV, and overseeing the process

around the calculation of our NAV, in each case, as performed by Eisner.

Each class will have an undivided interest in our assets and liabilities, other than class-specific ongoing servicing

fees, and when and as applicable, any class-specific management fees and class-specific accruals/allocations of the Special

Limited Partner’s performance participation interest. In accordance with the valuation guidelines, Eisner calculates our

NAV per share for each class as of the last calendar day of each month, using a process that reflects several components

(each as described above), including the estimated fair value of (1) each of our properties based in part upon individual

appraisal reports provided periodically by third-party independent appraisal firms, as finally determined and updated

monthly by the Adviser, with review and confirmation for reasonableness by our independent valuation advisor, (2) our

real estate debt and other securities for which third-party market quotes are available, (3) our other real estate debt and

other securities, if any, and (4) our other assets and liabilities. Because class-specific ongoing servicing fees, and when and

as applicable, any class-specific management fees and class-specific accruals/allocations of the Special Limited Partner’s

performance participation interest that are allocable to a specific class of shares will only be included in the NAV

calculation for that class, the NAV per share for our share classes may differ.

Our Operating Partnership has classes of units that are each economically equivalent to a corresponding class of

shares. Accordingly, on the last day of each month, the NAV per Operating Partnership unit of such units equals the NAV

per share of the corresponding class. To the extent our Operating Partnership has classes of units that do not correspond to

a class of our shares, such units will be valued in a manner consistent with these guidelines. The NAV of our Operating

Partnership on the last calendar day of each month equals the sum of the NAVs of each outstanding Operating Partnership

unit on such day.

Our NAV for each class of shares will be based on the NAVs of our investments (including real estate debt and

other securities), the addition of any other assets (such as cash on hand), and the deduction of any liabilities (including the

allocation/accrual of any performance participation interest to the Special Limited Partner and the deduction of any

ongoing servicing fees and management fees specifically applicable to such class of shares). At the end of each month,

before taking into consideration repurchases or class-specific expense accruals for that month, any change in our aggregate

NAV (whether an increase or decrease) is allocated among each class of shares based on each class’s relative percentage of

the previous aggregate NAV plus issuances of shares that were effective on the first business day of such month. The NAV

calculation is available generally within 15 calendar days after the end of the applicable month.

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Changes in our monthly NAV before class-specific items include, without limitation, accruals of our net portfolio

income, interest expense, unrealized/realized gains and losses on assets, any applicable organization and offering costs and

any expense reimbursements. Changes in our monthly NAV before class-specific items also include material non-recurring

events, such as capital expenditures and material property acquisitions and dispositions occurring during the month.

Notwithstanding anything herein to the contrary, the Adviser may in its discretion consider material market data and other

information that becomes available after the end of the applicable month in valuing our assets and liabilities and calculating

our NAV for a particular month. On an ongoing basis, the Adviser will adjust the accruals to reflect actual operating results

and the outstanding receivable, payable and other account balances resulting from the accumulation of monthly accruals for

which financial information is available.

Following the aggregation of the NAVs of our investments, the addition of any other assets (such as cash on

hand), and the deduction of any other liabilities, Eisner incorporates any class-specific adjustments to our NAV, including

additional issuances and repurchases of our common shares, accruals of class-specific ongoing servicing fees and, as

applicable, any accruals of any class-specific management fees and accruals/allocations of the Special Limited Partner’s

performance participation interest. For each applicable class of shares, the ongoing servicing fee is calculated as a

percentage of the aggregate NAV for such class of shares. At the close of business on the date that is one business day after

each record date for any declared distribution, our NAV for each class will be reduced to reflect the accrual of our liability

to pay any distribution to our shareholders of record of each class as of the record date. NAV per share for each class is

calculated by dividing such class’s NAV at the end of each month by the number of shares outstanding for that class at the

end of such month.

The combination of the Class S NAV, Class D NAV, Class I NAV, Class F-S NAV, Class F-D NAV, Class F-I

NAV, Class D-S NAV, Class D-X NAV and Class E NAV equals the aggregate NAV of our assets, which will consist

almost entirely of the value of our interest in the Operating Partnership, less our liabilities, including liabilities related to

class-specific ongoing servicing fees, management fees, and performance participation accruals/allocations. The value of

our interest in the Operating Partnership is equal to the excess of the aggregate NAV of the Operating Partnership over the

portion thereof that would be distributed to any limited partners other than us if the Operating Partnership were liquidated.

The aggregate NAV of the Operating Partnership is the excess of the value of the Operating Partnership’s assets (including

the fair value of its properties, real estate debt and other securities, cash and other investments) over its liabilities (including

the fair value of its debt, any declared and accrued unpaid distributions, any accrued performance participation allocation

and the expenses attributable to its operations). The Adviser calculates the fair value of the assets and liabilities of the

Operating Partnership as directed by our valuation guidelines based upon values received from various sources, as

described in more detail above.

Relationship between NAV and Our Transaction Price

Purchases and repurchases of our common shares are not made based on the current NAV per share of our

common shares at the time of purchase or repurchase. Generally, our transaction price will equal our prior month’s NAV.

The transaction price will be the price at which we repurchase shares (subject to a potential early redemption discount) and

the price at which we offer shares (subject to any applicable upfront selling commission and dealer manager fees).

Although the transaction price will generally be based on our prior month’s NAV per share, such prior month’s NAV may

be significantly different from the current NAV per share of the applicable class of shares of beneficial interest as of the

date on which your purchase or repurchase occurs.

In addition, we may offer shares of any class at a price that we believe reflects the NAV per share of such shares

more appropriately than the prior month’s NAV per share of the applicable class (including by updating a previously

available offering price) or suspend our offering and/or our share repurchase plan in cases where we believe there has been

a material change (positive or negative) to our NAV per share of such class of shares since the end of the prior month. In

cases where our transaction price is not based on the prior month’s NAV per share, the offering price and repurchase price

will not equal our NAV per share as of any time. The Adviser may determine whether a material change has occurred to

our NAV per share since the end of the prior month and whether to set a transaction price that differs from the previous

month’s NAV per share, and in such cases, has discretion over what such transaction price will be.

Limits on the Calculation of Our NAV Per Share

The overarching principle of our valuation guidelines is to produce reasonable estimated values for each of our

investments (and other assets and liabilities), or the price that would be received for that investment in orderly transactions

between market participants. However, the majority of our assets will consist of real estate properties and, as with any real

estate valuation protocol and as described above, the valuation of our properties (and other assets and liabilities) is based on

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a number of judgments, assumptions and opinions about future events that may or may not prove to be correct. The use of

different judgments, assumptions or opinions would likely result in a different estimate of the value of our real estate

properties (and other assets and liabilities). Any resulting potential disparity in our NAV per share may be in favor of

shareholders whose shares are repurchased, existing shareholders or new purchasers of our common shares, as the case

may be, depending on the circumstances at the time (for cases in which our transaction price is based on NAV). See “Item

1A. Risk Factors—Valuations and appraisals of our real estate and real estate debt are estimates of fair value and may not

necessarily correspond to realizable value,” “—Our NAV per share amounts may change materially if the appraised values

of our properties materially change from prior appraisals or the actual operating results for a particular month differ from

what we originally budgeted for that month” and “—It may be difficult to reflect, fully and accurately, material events that

may impact our monthly NAV.”

Additionally, while the methodologies and procedures contained in our valuation guidelines are designed to

operate reliably within a wide variety of circumstances, it is possible that in certain unanticipated situations or after the

occurrence of certain extraordinary events (such as a significant disruption in relevant markets, a terrorist attack or an act of

nature), our ability to calculate NAV may be impaired or delayed, including, without limitation, circumstances where there

is a delay in accessing or receiving information from vendors or other reporting agents upon which we may rely upon in

determining the monthly value of our NAV. In these circumstances, a more accurate valuation of our NAV could be

obtained by using different assumptions or methodologies. Accordingly, in special situations when, in the Adviser’s

reasonable judgment, the administration of the valuation guidelines would result in a valuation that does not represent a fair

and accurate estimate of the value of our investment, alternative methodologies may be applied; provided that the Adviser

must notify our board of trustees at the next scheduled board meeting of any alternative methodologies utilized and their

impact on the overall valuation of our investment. Notwithstanding the foregoing, our board of trustees may suspend the

offering and/or our share repurchase plan if it determines that the calculation of our NAV is materially incorrect or

unreliable or there is a condition that restricts the valuation of a material portion of our assets.

We include no discounts to our NAV for the illiquid nature of our shares, including the limitations on your ability

to sell shares under our share repurchase plan and our ability to modify or suspend our share repurchase plan at any time.

Our NAV generally does not consider exit costs (e.g., selling costs and commissions and debt prepayment penalties related

to the sale of a property) 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.

Our NAV per share does not represent the amount of our assets less our liabilities in accordance with GAAP. We

do not represent, warrant or guarantee that:

•a shareholder would be able to realize the NAV per share for the class of shares a shareholder owns if the

shareholder attempts to sell its shares;

•a shareholder would ultimately realize distributions per share equal to the NAV per share for the class of shares it

owns upon liquidation of our assets and settlement of our liabilities or a sale of our company;

•our common shares would trade at their NAV per share on a national securities exchange;

•a third party would offer the NAV per share for each class of shares in an arm’s-length transaction to purchase all

or substantially all of our shares; or

•the NAV per share would equate to a market price of an open-ended real estate fund.

Distribution Policy

We declare monthly distributions based on record dates established by our board of trustees and pay such

distributions on a monthly basis and have declared such distributions since November 30, 2023. Our distribution policy has

been set by our board of trustees and is subject to change based on available cash flows. We cannot guarantee the amount

of distributions to be paid, if any. In connection with a distribution to our shareholders, our board of trustees approves a

monthly distribution for a certain dollar amount per share for each class of our shares. We then calculate each shareholder’s

specific distribution amount for the month using applicable record and declaration dates, and your distributions begin to

accrue on the date you are admitted as a shareholder.

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Distributions will generally be made on all classes of our common shares at the same time. The per share amount

of distributions on Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares,

Class D-S shares and Class E shares will likely differ because of adjustment for class-specific items such as ongoing

servicing fees, management fees and accruals/allocations of the performance participation interest. We expect to use the

“record share” method of determining the per share amount of distributions on Class S shares, Class D shares, Class I

shares, Class F-S shares, Class F-D shares, Class F-I shares, Class D-S shares and Class E shares, although our board of

trustees may choose any other method. The “record share” method is one of several distribution calculation methods for

multiple-class funds recommended, but not required, by the American Institute of Certified Public Accountants. Under this

method, the amount to be distributed on our common shares will be increased by the sum of all class-specific ongoing

servicing fees, and as applicable, any class-specific management fees and accruals/allocations of the performance

participation interest, for such period. Such amount will be divided by the number of our common shares outstanding on the

record date. Such per share amount will be reduced for each class of common shares by the per share amount of any class-

specific ongoing servicing fees, and as applicable, any class-specific management fees and accruals/allocations of

performance participation interest allocable to such class, if applicable.

We intend to distribute sufficient income so that we satisfy the requirements for qualification as a REIT. In order

to qualify as a REIT, we will be required to distribute annually to holders of Fortress Net Lease REIT common shares at

least 90% of our “real estate investment trust taxable income,” which, as defined by the Code and the Treasury

Regulations, is generally equivalent to net taxable ordinary income (and could be all cash or a combination of cash and

stock satisfying the requirements of applicable law).

Distributions are authorized at the discretion of our board of trustees, in accordance with our earnings, cash flows

and general financial condition. Our board of trustees’ discretion is directed, in substantial part, by its obligation to cause us

to comply with REIT requirements. We have not established any limit on the amount of proceeds from our private offering

that may be used to fund distributions other than those limits imposed by our organizational documents and Maryland law.

Our board of trustees may delegate to a committee of trustees the power to fix the amount and other terms of a

distribution. In addition, if our board of trustees gives general authorization for a distribution and provides for or

establishes a method or procedure for determining the maximum amount of the distribution, our board of trustees may

delegate to one of our officers the power, in accordance with the general authorization, to fix the amount and other terms of

the distribution.

Beginning on November 30, 2023, we declared monthly distributions for each class of our common shares, which

are generally paid four days after month-end. The net distribution may vary for each class based on the applicable

shareholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the Dealer

Manager for further remittance to the applicable distributor.

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The following table details the total net distribution for each of our share classes for the year ended December 31,

2024:


Record Date	Class S	Class D	Class I	Class F–S	Class F–D	Class F–I	Class F-I X	Class B–X	Class C(1)	Class D–S(2)	Class D-X	Class E
January 31, 2024	$—	$—	$—	$—	$—	$—	$0.0396	$0.0396	$0.0396	$—	$0.0396	$0.0396
February 29, 2024	$—	$—	$—	$—	$—	$—	$0.0439	$0.0439	$0.0439	$—	$0.0439	$0.0439
March 31, 2024	$—	$—	$—	$—	$—	$0.0440	$0.0440	$0.0440	$—	$—	$0.0440	$0.0440
April 30, 2024	$—	$—	$—	$—	$—	$0.0481	$0.0481	$0.0481	$—	$—	$0.0481	$0.0481
May 31, 2024	$—	$—	$—	$—	$—	$0.0481	$0.0481	$—	$—	$0.0481	$0.0481	$0.0481
June 30, 2024	$—	$—	$—	$—	$—	$0.0502	$0.0502	$—	$—	$0.0502	$0.0502	$0.0502
July 31, 2024	$—	$—	$—	$—	$—	$0.0502	$0.0502	$—	$—	$0.0502	$0.0502	$0.0502
August 31, 2024	$—	$—	$—	$—	$—	$0.0502	$—	$—	$—	$0.0502	$0.0502	$0.0502
September 30, 2024	$—	$—	$—	$0.0431	$—	$0.0502	$—	$—	$—	$0.0502	$0.0502	$0.0502
October 31, 2024	$—	$—	$—	$0.0455	$—	$0.0527	$—	$—	$—	$0.0527	$0.0527	$0.0527
November 30, 2024	$—	$—	$—	$0.0456	$—	$0.0528	$—	$—	$—	$0.0528	$0.0528	$0.0528
December 31, 2024	$—	$—	$—	$0.0457	$—	$0.0529	$—	$—	$—	$0.0529	$0.0529	$0.0529
Total	$—	$—	$—	$0.1799	$—	$0.4994	$0.3241	$0.1756	$0.0835	$0.4073	$0.5829	$0.5829

________________

(1)As of December 31, 2024, pursuant to the terms of the Class C shares and Class D shares, all outstanding Class C

shares were automatically converted into Class D shares.

(2)Class D shares were renamed to Class D-S shares effective November 14, 2024.

For the year ended December 31, 2024, we declared net distributions of $33.0 million. The following table

outlines the tax character of our distributions paid in 2024 as a percentage of total distributions.


	Ordinary Income	Capital Gains	Return of Capital
Year ended December 31, 2024	40.86%	—%	59.14%

The Company intends for long-term cumulative distributions to be funded primarily from operating cash flows.

The following table details our distributions declared for the year ended December 31, 2024 ($ in thousands):


	Year Ended December 31, 2024
Distributions	Amount	Percentage
Payable in cash	$21,800	66%
Reinvested in shares	11,240	34%
Total distributions	$33,040	100%
Source of Distributions
Cash flows from operating activities(1)	$33,040	100%
Offering proceeds	—	—%
Total sources of distributions	$33,040	100%
Cash flows from operating activities	$34,102

___________

(1) As of December 31, 2024, our inception to date cash flows from operating activities have funded 100% of our

distributions.

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Distribution Reinvestment Plan

We have adopted a distribution reinvestment plan whereby shareholders will have their cash distributions

automatically reinvested in additional common shares unless they elect to receive their distributions in cash. If you

participate in our distribution reinvestment plan, the cash distributions attributable to the class of shares that you own will

be automatically invested in additional shares of the same class. The purchase price for shares purchased under our

distribution reinvestment plan will be equal to the transaction price for such shares at the time the distribution is payable.

Shareholders will not pay any upfront selling commission, dealer manager fees, or other similar placement fees (together,

the “Upfront Sales Load”) when purchasing shares under our distribution reinvestment plan; however, all outstanding Class

S shares, Class D shares, Class F-S shares and Class F-D shares, including those purchased under our distribution

reinvestment plan, will be subject to ongoing servicing fees. No ongoing servicing fees are paid with respect to Class I

shares, Class F-I shares, Class D-S shares and Class E shares. Participants may terminate their participation in the

distribution reinvestment plan with ten business days’ prior written notice to us.

Share Repurchase Plan

Shareholders may request on a monthly basis that we repurchase all or any portion of their shares pursuant to our

share repurchase plan (the “Share Repurchase Plan”). Under our share repurchase plan, to the extent we choose to

repurchase shares in any particular month, we will only repurchase shares as of the opening of the last business day of that

month (each such date, a “Repurchase Date”). Repurchases will be made at the transaction price in effect on the

Repurchase Date, except that (i) Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-

I shares and Class E shares that have not been outstanding for at least one year will be repurchased in accordance with the

Early Repurchase Deduction and subject to certain limited exceptions and (ii) Class D-S shares that have not been

outstanding for at least two years may not be repurchased. The one-year and two-year holding periods are each measured as

of the first calendar day immediately following the prospective repurchase date. Additionally, any shareholder who has

received Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares, Class D-S

shares, Class D-X shares or Class E shares in exchange for its Operating Partnership units may include the period of time

such shareholder held such Operating Partnership units for purposes of calculating the relevant holding period for such

shares, as applicable.

However, while shareholders may request on a monthly basis that we repurchase all or any portion of their shares

pursuant to our share repurchase plan, we are not obligated to repurchase any shares and may choose to repurchase only

some, or even none, of the shares that have been requested to be repurchased in any particular month in the discretion of

our board of trustees. In addition, our ability to fulfill repurchase requests is subject to a number of limitations. As a result,

share repurchases may not be available each month.

The aggregate NAV of total repurchases of Class S shares, Class D shares, Class I shares, Class F-S shares, Class

F-D shares, Class F-I shares, Class D-S shares and Class E shares (including repurchases at certain non-U.S. investor

access funds primarily created to hold our common shares but excluding any Early Repurchase Deduction applicable to the

repurchased shares) under our share repurchase plan and redemptions of Class S units, Class D units, Class I units, Class F-

S units, Class F-D units, Class F-I units, Class D-S units, Class E units and Class A units of our Operating Partnership is

limited to no more than 2% of our aggregate NAV per month (measured using the aggregate NAV attributable to

shareholders as of the end of the immediately preceding month) and no more than 5% of our aggregate NAV per calendar

quarter (measured using the average aggregate NAV attributable to shareholders as of the end of the immediately preceding

three months). Shares or units issued to the Adviser and its affiliates under our management fee or as reimbursements of

expenses or for the Special Limited Partner’s performance participation interest are not subject to these repurchase

limitations.

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Mandatory Holding Period (Class D-S shares)

Class D-S shares may only be repurchased by us to the extent they have been outstanding for at least two years

(such period with respect to any such shares, a “Mandatory Holding Period”). The Mandatory Holding Period is measured

as of the first calendar day immediately following the prospective repurchase date. Additionally, any shareholder who has

received Class D-S shares in exchange for its Operating Partnership units may include the period of time such shareholder

held such Operating Partnership units for purposes of calculating the holding period for such shares. The Mandatory

Holding Period will not apply to Class D-S shares acquired through our distribution reinvestment plan.

We may, from time to time, waive the Mandatory Holding Period in the following circumstances (subject to the

conditions described below):

•repurchases resulting from death or qualifying disability; or

•in the event that a shareholder’s Class D-S shares are repurchased because the shareholder has failed to maintain

the $500 minimum account balance.

As set forth above, we may waive the Mandatory Holding Period in respect of repurchases of Class D-S shares

resulting from the death or qualifying disability (as such term is defined in Section 72(m)(7) of the Code) of a shareholder

who is a natural person, including such shares held by such shareholder through a trust or an IRA or other retirement or

profit-sharing plan, after (i) in the case of death, receiving written notice from the estate of the shareholder, the recipient of

such shares through bequest or inheritance, or, in the case of a trust, the trustee of such trust, who shall have the sole ability

to request repurchase on behalf of the trust or (ii) in the case of qualified disability, receiving written notice from such

shareholder along with a physician’s certification of disability as defined in Section 72(m)(7) of the Code; provided that the

condition causing the qualifying disability was not pre-existing on the date that the shareholder became a shareholder. We

must receive the written repurchase request within 12 months after the death of the shareholder or the initial determination

of the shareholder’s disability in order for the requesting party to rely on any of the special treatment described above that

may be afforded in the event of the death or disability of a shareholder. In the case of death, such a written request must be

accompanied by a certified copy of the official death certificate of the shareholder. If spouses are joint registered holders of

any Class D-S shares, the request to have such shares repurchased may be made if either of the registered holders dies or

acquires a qualified disability. If the shareholder is not a natural person, such as certain trusts or a partnership, corporation

or other similar entity, the right to waiver of the Mandatory Holding Period upon death or disability does not apply.

In addition, Class D-S shares may be sold to certain feeder vehicles primarily created to hold such shares that in

turn offer interests in such feeder vehicles to non-U.S. persons. For such feeder vehicles and similar arrangements in

certain markets, the Company may agree not to apply the Mandatory Holding Period to the feeder vehicles or underlying

investors, often because of administrative or systems limitations. Further, the Company will not apply the Mandatory

Holding Period on repurchases of any Class D-S shares submitted by discretionary model portfolio management programs

(and similar arrangements) as approved by the Company.

Early Repurchase Deduction

For Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares and Class

E shares, there is no minimum holding period and shareholders holding any such shares can request that the Company

repurchase such shares at any time. However, subject to limited exceptions, Class S shares, Class D shares, Class I shares,

Class F-S shares, Class F-D shares, Class F-I shares and Class E shares that have not been outstanding for at least one year

will be repurchased at 98% of the transaction price (an “Early Repurchase Deduction”) on the applicable repurchase date.

The one-year holding period is measured as of the first calendar day immediately following the prospective repurchase

date. Additionally, any shareholder who has received Class S shares, Class D shares, Class I shares, Class F-S shares, Class

F-D shares, Class F-I shares or Class E shares in exchange for its Operating Partnership units may include the period of

time such shareholder held such Operating Partnership units for purposes of calculating the holding period for such shares

of the Company, as applicable. This Early Repurchase Deduction will also generally apply to minimum account

repurchases. The Early Repurchase Deduction will not apply to (i) Class S shares, Class D shares, Class I shares, Class F-S

shares, Class F-D shares, Class F-I shares and Class E shares acquired through our distribution reinvestment plan and (ii)

Class D-S shares.

The Early Repurchase Deduction will inure indirectly to the benefit of our remaining shareholders and is intended

to offset the trading costs, market impact and other costs associated with short-term trading in our shares. We may, from

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time to time, waive the Early Repurchase Deduction in the following circumstances (subject to the conditions described

below):

•repurchases resulting from death or qualifying disability; or

•in the event that a shareholder’s Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares,

Class F-I shares and/or Class E shares are repurchased because the shareholder has failed to maintain the $500

minimum account balance.

As set forth above, we may waive the Early Repurchase Deduction in respect of repurchases of Class S shares,

Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares and Class E shares resulting from the

death or qualifying disability (as such term is defined in Section 72(m)(7) of the Code) of a shareholder who is a natural

person, including such shares held by such shareholder through a trust or an individual retirement account (IRA) or other

retirement or profit- sharing plan, after (i) in the case of death, receiving written notice from the estate of the shareholder,

the recipient of such shares through bequest or inheritance, or, in the case of a trust, the trustee of such trust, who shall have

the sole ability to request repurchase on behalf of the trust or (ii) in the case of qualified disability, receiving written notice

from such shareholder along with a physician’s certification of disability as defined in Section 72(m)(7) of the Code;

provided that the condition causing the qualifying disability was not pre-existing on the date that the shareholder became a

shareholder. The Company must receive the written repurchase request within 12 months after the death of the shareholder

or the initial determination of the shareholder’s disability in order for the requesting party to rely on any of the special

treatment described above that may be afforded in the event of the death or disability of a shareholder. In the case of death,

such a written request must be accompanied by a certified copy of the official death certificate of the shareholder. If

spouses are joint registered holders of any Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D

shares, Class F-I shares and Class E shares, the request to have such shares repurchased may be made if either of the

registered holders dies or acquires a qualified disability. If the shareholder is not a natural person, such as certain trusts or a

partnership, corporation or other similar entity, the right to waiver of the Early Repurchase Deduction upon death or

disability does not apply.

In addition, Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares

and Class E shares may be sold to certain feeder vehicles primarily created to hold the Company’s shares that in turn offer

interests in such feeder vehicles to non-U.S. persons. For such feeder vehicles and similar arrangements in certain markets,

the Company may agree not to apply the Early Repurchase Deduction to the feeder vehicles or underlying investors, often

because of administrative or systems limitations. Further, the Company will not apply the Early Repurchase Deduction on

repurchases of any Class S shares, Class D shares, Class I shares, Class F-S shares, Class F-D shares, Class F-I shares or

Class E shares submitted by discretionary model portfolio management programs (and similar arrangements) as approved

by the Company.

In the event that we determine to repurchase some but not all of the shares submitted for repurchase during any

month, shares repurchased at the end of the month will be repurchased on a pro rata basis. All unsatisfied repurchase

requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of our share

repurchase plan, as applicable.

We may fund repurchase requests from sources other than cash flow from operations, including, without

limitation, the sale of or repayment under our assets, borrowings or offering proceeds, and we have no limits on the

amounts we may pay from such sources. Should repurchase requests, in our judgment, place an undue burden on our

liquidity, adversely affect our operations or risk having an adverse impact on the Company as a whole, or should we

otherwise determine that investing our liquid assets in real estate or other investments rather than repurchasing our shares is

in the best interests of the Company as a whole, then we may choose to repurchase fewer shares than have been requested

to be repurchased, or none at all. Further, our board of trustees may make exceptions to, modify or suspend our share

repurchase plan if it deems in its reasonable judgment such action to be in our best interest and the best interest of our

shareholders.

Notwithstanding the foregoing, any shares and/or Operating Partnership units held by the Adviser acquired as

payment of the Adviser’s management fee or held by the Special Limited Partner for its performance participation interest

will not be subject to the limits of the Share Repurchase Plan, including the Early Repurchase Deduction. shareholders who

are exchanging any class of shares for an equivalent aggregate NAV of another class of shares will not be subject to, and

such exchanges will not be treated as repurchases for the calculation of, the 2% monthly or 5% quarterly limitations on

repurchases and will not be subject to the Early Repurchase Deduction.

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In the event that both of Joshua Pack and Ahsan Aijaz are no longer actively involved in the affairs of the

Company, a key person event will be deemed to have occurred (a “Key Person Event”) and the Company’s shareholders

will be notified within 10 business days of the occurrence of such Key Person Event. Upon the occurrence of a Key Person

Event, the Company will waive any applicable Early Repurchase Deduction for repurchase requests with respect to shares

that are outstanding at the time of the Key Person Event.

For the year ended December 31, 2024, the Company repurchased 301,666 shares of common shares, which

includes 2,363 Class E shares for a total of $3.0 million. The Company had no unfulfilled repurchase requests during the

year ended December 31, 2024.

Recent Sales of Unregistered Securities

As of December 31, 2024, we issued and sold 80,940,626 common shares in the private offering to accredited

investors (consisting of 2,988,246 Class F-S shares, 40,462,955 Class F-I shares, 35,612,899 Class D-S shares, 1,347,151

Class D-X shares and 529,375 Class E shares). Except as previously reported by the Company on its quarterly report on

Form 10-Q and current reports on Form 8-K, the Company did not sell any securities during the period covered by this

Annual Report that were not registered under the Securities Act.

ITEM 6.[RESERVED]

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ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial statements and notes thereto appearing

elsewhere in this Annual Report. In addition to historical data, this discussion contains forward-looking statements about

our business, operations and financial performance based on current expectations that involve risks, uncertainties and

assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including

but not limited to those discussed under “Cautionary Note Regarding Forward-Looking Statements” and in “Item 1A.-Risk

Factors” in this Annual Report.

References to “Class F-I X” and “Class B-X” in this section represent Class F-I and Class B shares, respectively,

that were purchased during the Initial Share Offering Period and entitled to a fee waiver while they were outstanding, as

described in this Annual Report. As of December 31, 2024, there were no Class F-I X, Class B or Class B-X shares

outstanding. All Class F-I X, Class B and Class B-X shares were automatically converted into Class F-I shares. References

to “Class D-X” represents Class D-S shares (formerly named Class D shares) that were purchased during the Initial Share

Offering Period and that are currently entitled to a fee waiver, as described in this Annual Report. Pursuant to such fee

waiver: (i) the Adviser has waived the management fee for six months for certain investors measured from the applicable

Issuance Date; and (ii) FNLR SLP LLC, the special limited partner of the Operating Partnership, has waived the

performance participation for six months for certain investors measured from the applicable Issuance Date.

Overview

Fortress Net Lease REIT invests primarily in single-tenant, net leased assets. We own all or substantially all of our

assets through the Operating Partnership. FNLR GP LLC is a wholly-owned subsidiary of the Company and is the sole

general partner of the Operating Partnership. We are externally managed by the Company Management, LLC. The

Company’s principal business is the acquisition, ownership, financing and leasing of single-tenant commercial real estate

properties subject to long-term net leases with investment grade and other creditworthy tenants or guarantors, and our

management does not distinguish our principal business, or group our operations, by geography or property type for

purposes of measuring performance. Accordingly, we have only one reportable segment.

The Company was formed on January 24, 2023 (the “Date of Formation”) as a Maryland statutory trust; however,

no activity occurred until we acquired our first property on September 28, 2023 (the “Inception”).

The Company is a non-listed, perpetual life REIT that has elected to be taxed as a REIT under the Code for U.S.

federal income tax purposes. The Company generally will not be subject to U.S. federal income taxes on our taxable

income to the extent we annually distribute all of our net taxable income to shareholders and maintain our qualification as a

REIT.

As of December 31, 2024, we have received aggregate proceeds of $814.1 million from the sale of our common

shares through a private offering. The Company has contributed the proceeds to the Operating Partnership in exchange for

a corresponding number of Operating Partnership units that correspond to the classes of our shares sold. The Operating

Partnership has primarily used the net proceeds to make investments in real estate as further described below under

“Overall Portfolio.” The Company intends to continue selling common shares on a monthly basis.

Market Conditions and Trends

The Company’s businesses are materially affected by conditions in the financial markets and economic conditions

in the United States and, to a lesser extent, elsewhere in the world.

During year ended 2024, the persistence of both elevated inflation and interest rates, in conjunction with

geopolitical uncertainty (including the conflict between Russia and Ukraine, or the ongoing and developing conflicts in the

Middle East, including between Israel and Hamas and other developing conflicts), and uncertainty around future capital

availability continued to weigh on industry deal activity and market valuations.

However, industry transaction volumes increased slightly compared to the previous quarter. Our real estate

business, focused on triple net leases, continued to deploy significant capital. Our investors continue to benefit from the

inflation-mitigating characteristics and long term risk adjusted returns of the net lease structure, including contractually

guaranteed and highly predictable net rent growth and long-duration income flows across the portfolio.

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We are continuing to closely monitor developments related to the macroeconomic factors that have contributed to

market volatility, and to assess the impact of these factors on financial markets and on our business. Our future results may

be adversely affected by slowdowns in fundraising activity and the pace of capital deployment. It remains difficult to

predict the ultimate effects of these events on the financial markets, overall economy, and our financial statements. See

“Item 1A. Risk Factors—Risks Related to Our Business and Operations."

Recent Developments

Since December 31, 2024, through and including the date hereof, we (i) have acquired three industrial properties

located in Arkansas and Ohio, five retail properties located in Washington, three industrial properties located in Texas,

additional land located in Texas, and one retail property in Connecticut for $79.4 million, $26.2 million, $27.5 million,

$1.5 million and $3.8 million respectively and (ii) issued and sold an aggregate of 16,492,965 common shares in our

private offering, resulting in proceeds of $167.7 million (see Note 14 to our consolidated financial statements and the

section titled “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities.”)

New Lender Joinder Agreement supplementing Revolving Credit and Term Loan Facilities

On February 6, 2025, the Operating Partnership, as borrower (the “Borrower”), the Company, as guarantor, the

other guarantors party thereto (together with the Company, the “Guarantors” and, collectively with the Borrower, the

“Loan Parties”), entered into that certain New Lender Joinder Agreement (the “Joinder Agreement”) supplementing the

Credit Agreement (as defined below), with Bank of America, N.A. (“BofA”), as administrative agent (in such capacity, the

“Administrative Agent”) and as the sole L/C Issuer under the Credit Agreement and The Huntington National Bank, as a

new lender thereunder. Pursuant to the Joinder Agreement (i) the aggregate commitments to the revolving credit facility

pursuant to the Credit Agreement increased from $677.5 million to $755.0 million (the “Revolving Credit Facility”) and

(ii) the aggregate outstanding principal amount of the term loan pursuant to the Credit Agreement increased from $122.5 to

$145.0 million (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Credit Facilities”). Subject

to the terms and conditions of the Credit Facilities, all commitments and amounts outstanding under the Credit Facilities

will be due and payable in full on October 17, 2025, unless otherwise extended, as the case may be, including as a result of

the Borrower’s election to request one of the three one-year extensions available under the Credit Agreement. Prior to

October 17, 2025, the Company plans to exercise the first extension option in order to extend the maturity date to October

17, 2026.

Emerging Growth Company Status

We are and will remain an “emerging growth company” as defined in the JOBS Act until the earlier of (a) the last

day of the fiscal year (i) following the fifth anniversary of the date of an initial public offering pursuant to an effective

registration statement under the Securities Act, (ii) in which we have total annual gross revenue of at least $1.235 billion,

or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our shares that is held by

non-affiliates exceeds $700 million as of the date of our most recently completed second fiscal quarter, and (b) the date on

which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as we

remain an “emerging growth company” we are eligible to take advantage of certain exemptions from various reporting