Jeffrey Krasnoff
About Jeffrey P. Krasnoff
Jeffrey P. Krasnoff (age 69) serves as a director of FS Credit Real Estate Income Trust, Inc. (FSREI) and has been on the board since February 2017; he is the Chief Executive Officer of Rialto Capital Management, LLC, FSREI’s sub-adviser, and previously co-founded LNR Property Corporation and led its public-to-private transaction in 2005 . He holds a B.A. in Accounting from Duke University and has over three decades of real estate investment, finance and management experience, including prior tenure at KPMG specializing in real estate and M&A . The Board classifies him as an “interested director” (not independent) due to his affiliation with the adviser/sub-adviser .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| LNR Property Corporation | President (since 1997 spin from Lennar); CEO 2002–2007 | 1997–2007 | Led 2005 $4B take-private; expanded loan workout/special servicing operations |
| Lennar Corporation | Executive leading commercial real estate and joint ventures; formed LNR Partners | 1986–1997 | Built CRE and JV businesses pre-spin |
| KPMG (Peat Marwick) | Real estate and M&A specialist | ~10 years (NY & Miami) | Transaction and advisory specialization |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Rialto Capital Management, LLC (FSREI sub-adviser) | Chief Executive Officer | Current | Evaluation/oversight of >$300B real estate assets worldwide |
Board Governance
- Independence: Interested director; not counted among independent directors (independent directors: Buchholz, Boyer, Brown, Connors, Fry, Hankowsky, Schiff) .
- Committees: Not on Audit Committee; Audit Committee members are Connors (Chair), Brown, Fry; Connors designated audit committee financial expert .
- Lead Independent Director: John A. Fry (appointed March 11, 2025) .
- Board Attendance: In FY 2024, Board met 5 times; each director then serving attended ≥75% of meetings .
- Years of Service: Since 2017 .
Fixed Compensation
| Component (FY 2024) | Amount |
|---|---|
| Director Cash Retainer | $0 — FSREI does not pay directors who serve in an executive officer capacity for the Company, FS Real Estate Advisor or Rialto |
| Director Equity (Restricted Shares) | $0 — independent director restricted share grants apply only to independent directors |
| Committee Chair/Lead Fees | $0 — not applicable; not an independent director |
Performance Compensation
| Item | Terms |
|---|---|
| Director Performance-based Awards | None disclosed for interested directors; independent directors receive restricted shares vesting after 1 year; does not apply to Krasnoff |
| Adviser/Sub-adviser Variable Fees (context) | FSREI pays adviser a performance fee: 10% of Core Earnings with a 6.50% annualized hurdle; catch-up to 7.222% of adjusted capital; sub-adviser participates proportionally. Not director pay, but relevant to conflicts/alignments |
Other Directorships & Interlocks
| Company/Institution | Role | Notes |
|---|---|---|
| None disclosed | — | No current public company directorships disclosed in proxy beyond FSREI; historical roles at LNR/Lennar noted above |
Expertise & Qualifications
- Deep commercial and residential real estate investing, lending, special servicing, and portfolio oversight (>$300B evaluated/overseen) .
- Corporate leadership (CEO roles), public-to-private transaction execution, and JV structuring .
- Accounting/M&A technical background (KPMG); B.A. in Accounting (Duke) .
Equity Ownership
| Metric | Apr 1, 2024 | Apr 1, 2025 |
|---|---|---|
| Shares Beneficially Owned | 32,816 | 533,341 |
| Ownership % of Outstanding | <1% (of 123,990,967 shares) | <1% (of 120,484,178 shares) |
| Indirect Ownership Detail | — | Rialto Capital Management, LLC owned 476,183 Class I shares deemed beneficially owned by Mr. Krasnoff |
Related-Party Transactions (Adviser/Sub-adviser Economics – FY 2024)
| Category | Amount ($000s) |
|---|---|
| Base Management Fee | 37,922 |
| Performance Fee | 16,141 |
| Administrative Services Fee | 30,521 |
| Origination Fees (paid by borrowers to adviser/sub-adviser) | 12,109 |
| Stockholder Servicing Fees (dealer manager reallowed to BDs/FIs) | 14,722; Payable at YE: 1,230 |
- Sub-adviser (Rialto) may retain up to 1.0% origination fees on debt or preferred equity financings (paid by borrowers) .
- Sub-adviser provides periodic valuations at $1,000 per valuation; RSU/PCR fee instruments allow payment in Class I shares subject to vesting/performance conditions and repurchase mechanics, aligning advisers with distributions yet introducing conflicts .
Compensation Structure Analysis (Signals)
- External management model concentrates economics at adviser/sub-adviser: recurring base fee, performance fee with hurdle and catch-up, administrative fee, and origination fees .
- Adviser/sub-adviser may elect fees in Class I shares/PCRs/RSUs; repurchase by Company permitted post-6 months at transaction price, with independent director approval if limits breached .
- Independent director compensation is cash/equity retainer structure; not applicable to Krasnoff as interested director .
Risk Indicators & Red Flags
- Not independent; CEO of sub-adviser (Rialto), creating inherent conflicts in oversight of advisory economics and related-party services .
- Significant indirect beneficial ownership via Rialto (476,183 Class I shares), potentially amplifying alignment with sub-adviser outcomes vs. common shareholders .
- Hedging policy: Company lacks specific anti-hedging practices for officers/directors/adviser affiliates, weakening alignment safeguards .
- Sub-adviser’s capacity to receive origination fees and valuation fees on assets managed for FSREI represents ongoing related-party exposure .
- Adviser performance fee includes catch-up feature, which can accelerate adviser compensation once hurdle is met .
- Company explicitly acknowledges inherent conflicts in transactions with adviser/sub-adviser; relies on independent directors to review and deem terms fair and reasonable .
Governance Assessment
- Strengths: Extensive real estate and special servicing expertise; decades of transaction leadership; Board maintains majority independence, established Audit Committee with financial expert; Lead Independent Director structure to balance CEO/Chair duality .
- Concerns: As an interested director and CEO of the sub-adviser, Krasnoff’s role intersects with advisory fee streams, origination fees, and valuation services; absence of a hedging policy further weakens alignment; oversight depends materially on independent directors to mitigate conflicts .
Net-net: Expertise contributes to board understanding of CRE credit and servicing, but independence, fee-linked interlocks, and policy gaps (hedging) are governance risk factors that can affect investor confidence .