Some of the more significant risks relating to our business, our capital raise and investment in our common shares include:
•We commenced principal operations on January 6, 2025, upon breaking escrow in our ongoing private offering and have limited operations; there is no assurance that we will achieve our investment objectives.
•There is no public trading market for shares of our common stock, and repurchase of shares by us pursuant to our share repurchase plan will likely be the only way to dispose of a stockholder’s shares. As a result, our shares should be considered as having only limited liquidity and at times may be illiquid.
•A stockholder’s ability to have their common shares repurchased through our share repurchase plan is limited. We may choose to repurchase fewer common shares than have been requested to be repurchased, or none at all, in our discretion at any time, and the amount of common shares we may repurchase is subject to caps. Further, our board of directors may make exceptions to, modify or suspend our share repurchase plan if it deems such action to be in our best interest.
•We cannot guarantee that we will make distributions, and if we do, we may fund such distributions from sources other than cash flow from operations, including, without limitation, the sale of or repayments under our investments, borrowings or offering proceeds, and we have no limits on the amounts we may pay from such sources.
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•The purchase and repurchase price for shares of our common stock will generally be based on our prior month’s net asset value (“NAV”) and are not based on any public trading market. The valuations of credit investments and properties are only estimates of fair value and are inherently subjective, and our NAV may not accurately reflect the realizable value of our investments.
•We have no employees and are dependent our Adviser (as defined in Part I below) to conduct our operations.
•Our Adviser will face conflicts of interest as a result of, among other things, the allocation of investment opportunities among us and Other GS Accounts (as defined in Part I below), the allocation of time of its investment professionals and the substantial fees that we will pay to the Adviser which are based in part on our NAV, which the Adviser is ultimately responsible for determining.
•Our private placement, pursuant to which we are raising capital, is being conducted on a “best efforts” basis. If we are not able to raise a substantial amount of capital in the near term, our ability to achieve our investment objectives could be adversely affected.
•There are limits on the ownership and transferability of our shares.
•We do not own the Goldman Sachs name, but we are permitted to use it as part of our corporate name pursuant to a trademark license agreement with an affiliate of Goldman Sachs. Use of the name by other parties or the termination of our trademark license agreement may harm our business.
•Although our investment strategy is to invest in debt related to real estate and in real estate-related assets with a focus on providing current income to investors, an investment in us is not an investment in fixed income. Fixed income has material differences from an investment in us, including those related to vehicle structure, investment objectives and restrictions, risks, fluctuation of principal, safety, guarantees of insurance, fees and expenses, liquidity and tax treatment.
•Our activities may be limited as a result of potentially being deemed to be controlled by The Goldman Sachs Group, Inc., a bank holding company (a “BHC”) and a financial holding company.
•We use repurchase agreements and other debt to finance our investments, which increases our exposure to loss, including due to cross-defaults and cross-collateralization under warehouse repurchase facilities. The use of leverage involves a high degree of financial risk and will increase the exposure of the investments to adverse economic factors.
•Our loans and other investments expose us to risks associated with debt-oriented real estate investments generally. We expect to invest in floating rate debt investments and interest rate fluctuations could reduce our ability to execute on our investment strategy and generate income on our investments and may cause losses.
•Investing in debt related to commercial real estate assets involves certain risks with respect to the underlying properties acting as collateral for the investment, 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.
•The capital markets may experience periods of disruption and instability. Such market conditions may have materially and adversely affected debt and equity capital markets, which may have a negative impact on our business and operations.
•Qualifying as a real estate investment trust (“REIT”) involves highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”). If we fail to qualify as a REIT and no relief provisions apply, our NAV and cash available for distribution to our stockholders could materially decrease. In addition, complying with REIT requirements may cause us to forego otherwise attractive investment opportunities or financing or hedging strategies.
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PART I.
ITEM 1. BUSINESS
The Company
Goldman Sachs Real Estate Finance Trust Inc, a Maryland corporation, was formed on March 8, 2024, to originate, acquire and manage a portfolio of commercial real estate loans secured by high-quality assets located in North America (primarily in the United States). References herein to “we,” “us,” “our,” “GS REFT,” the “REIT,” “our company” and the “Company” refer to Goldman Sachs Real Estate Finance Trust Inc, together with its consolidated subsidiaries, unless the context requires otherwise. Our investment objective is to generate current income and attractive risk-adjusted returns by originating senior secured, floating-rate loans, and, to a lesser extent, B Notes and mezzanine loans (collectively, “junior loans”), collateralized by real property or ownership interests in real property (collectively, “Credit Investments”). We are externally managed by Goldman Sachs & Co. LLC (in its capacity as our adviser, the “Adviser”). The Adviser is an affiliate of The Goldman Sachs Group, Inc. (together with its affiliates, “Goldman Sachs”), a leading global financial institution that delivers a broad range of financial services to a large and diversified client base, and is one of the world’s largest private real estate credit origination platforms. See “Our Adviser, Our Sponsor” below for additional information regarding the experience of Goldman Sachs.
We are conducting a continuous private offering initially of up to $1,000,000,000 in shares of our common stock in our primary offering and up to $250,000,000 in shares pursuant to our distribution reinvestment plan. The offering is being conducted pursuant to the exemption from registration provided by Section 4(a)(2) of the U.S. Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder, and other exemptions of similar import in the laws of the states and other jurisdictions where the offering is being made. We engaged Goldman Sachs & Co. LLC as the placement agent for the private offering (in its capacity as our placement agent, the “Placement Agent”). On January 6, 2025, the Company closed the first sales in the private offering and as of February 12, 2025, had received gross proceeds of $151.3 million from the sale of our common shares through our private offering, which includes $0.6 million attributable to our distribution reinvestment plan. In addition, in connection with the Goldman Sachs Investment as described below under “Sponsor Commitment,” the Company received $25 million.
We intend to qualify as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2025. Our principal executive offices are located at 200 West Street New York, New York 10282, and the telephone number of our principal executive offices is (212) 902-0300.
As of December 31, 2024, we had not acquired any Credit Investments. On January 10, 2025 we acquired our first two Credit Investments.
Goldman Sachs (NYSE: GS) is a leading global financial institution that delivers a broad range of financial services to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, Goldman Sachs is headquartered in New York and maintains offices in all major financial centers around the world.
GS REFT is managed by Goldman Sachs Asset Management Real Estate, which is responsible for all of Goldman Sachs’ private market real estate investing strategies. The business operates as a globally integrated team investing across real estate equity and credit and across the risk spectrum. Goldman Sachs Asset Management Real Estate invests across all sectors with deep expertise across the capital structure, in assets ranging from single properties to large portfolios.
Goldman Sachs Asset Management Real Estate, on behalf of the Adviser, is responsible for sourcing, evaluating and monitoring our investment opportunities and making decisions related to the origination, acquisition, management, financing and disposition of our investments in accordance with our investment objectives, guidelines, policies and limitations, subject to oversight by our board of directors. Pursuant to a sub-advisory agreement with the Adviser, the Securitized Team within Goldman Sachs Asset Management Fixed Income is responsible for
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managing our portfolio of real estate-related securities that are invested in more liquid instruments to preserve flexibility to meet redemption requests over time.
All of the Adviser’s real estate investment activities are overseen by the Goldman Sachs Asset Management Real Estate Investment Committee (the “Investment Committee”). The Investment Committee is responsible for reviewing individual investment opportunities, overseeing the monitoring and harvesting of investments, serving as a sounding board for team members and making decisions with respect to certain other material decisions on our behalf. The investment professionals (excluding legal, compliance, tax, accounting, or credit risk representatives) who serve on the Investment Committee collectively have an average tenure of over 20 years at Goldman Sachs and we expect to benefit from their extensive and varied relevant experiences. These individuals may also serve on other investment committees at Goldman Sachs.
Sponsor Commitment
Goldman Sachs has agreed to purchase from us an aggregate amount of $100 million in our non-voting common stock in increments of $25 million, at a price per share equal to our most recently determined NAV for our non-voting common stock, or if an NAV has yet to be calculated, then $25.00 (the “Goldman Sachs Investment”). The initial purchase was made on the date of the initial closing in our private offering and subsequent purchases will be made upon the first date our NAV reaches each of $500 million, $750 million and $1 billion.
Goldman Sachs has agreed to hold the shares of non-voting common stock issued in respect of the Goldman Sachs Investment until the earlier of (i) the first date that our NAV reaches $1.5 billion and (ii) three years after the initial closing in this offering. Following such date, Goldman Sachs may request quarterly, with respect to the shares issued in respect of the Goldman Sachs Investment, that we repurchase (each, a “GS Repurchase”) a number of non-voting common stock in an amount equal to the amount available under our share repurchase plan’s 5% quarterly cap, but only after we first satisfy repurchase requests from all other common stockholders who have properly submitted a repurchase request for such quarter in accordance with our share repurchase plan. Notwithstanding the foregoing, for so long as Goldman Sachs acts as adviser to us, we will not effect any GS Repurchase during any quarter in which the full amount of all common shares requested to be repurchased by stockholders other than Goldman Sachs under our share repurchase plan is not repurchased or when our share repurchase plan has been suspended.
In addition, subject to certain exceptions, at any time after an initial one-year period following the initial closing in this offering where our common stock owned by Goldman Sachs were to represent 25% or more of our total equity (such percentage referred to herein as the “Goldman Sachs Interest”), we will repurchase an amount of our common stock from Goldman Sachs as may be necessary to cause the Goldman Sachs Interest to remain equal to or less than 24.99% of our total equity.
Investment Objectives
Our investment objectives are the following:
•provide current income in the form of monthly distributions to achieve a stable and attractive distribution yield;
•preserve and protect invested capital by focusing on high-quality assets, downside risk mitigation and portfolio construction; and
•provide portfolio diversification for stockholders seeking lower volatility than publicly traded securities and compelling risk-adjusted returns compared to fixed-income alternatives.
We may not achieve our investment objectives. See “Item 1A. Risk Factors.”
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Investment Strategy
Our investment strategy primarily seeks to originate floating-rate senior and, to a lesser extent, junior loans collateralized by real property or ownership interests in real property that we consider to be well located and owned by well capitalized borrowers. We intend to invest across various property types and markets utilizing the expansive Goldman Sachs network and the Adviser’s local market expertise. GS REFT will seek to invest in loans secured by high-quality assets in gateway and growth markets, including individual assets as well as portfolios. GS REFT will make Credit Investments that we believe provide not only an attractive credit profile and attractive risk-adjusted return, but also meet our diversification objectives across product type, geography, and sponsors. Transitional and physical climate market risk will also be actively tracked to ensure assets are well-positioned. We expect the majority of our Credit Investments to be collateralized by core-plus commercial real estate, or those properties that are generally stabilized with a transitional business plan requiring a moderate level of additional investment for lease-up, renovation or repositioning, which we refer to as transitional assets.
We expect to generate current cash flow by financing transitional assets. The objective is to structure downside-protected investments and employ equity-like underwriting standards to mitigate risk.