PROSPECTUS
Filed Pursuant to Rule 424(b)(2) Registration Statement No. [●]
FAIRWATER REAL ESTATE INVESTMENT TRUST FAIRWATER OPERATING PARTNERSHIP, L.P. (Co-Registrant)
Up to $2,000,000,000
Common Shares of Beneficial Interest ($0.01 par value per share) Preferred Shares of Beneficial Interest ($0.01 par value per share) Senior Debt Securities Subordinated Debt Securities Depositary Shares Warrants Units
Fairwater Real Estate Investment Trust ("Fairwater," the "Company," "we," "us," or "our") and Fairwater Operating Partnership, L.P. (the "Operating Partnership" or "Fairwater OP") may offer and sell from time to time, in one or more offerings, any combination of the securities described in this prospectus having an aggregate initial offering price of up to $2,000,000,000. The securities may be offered in amounts, at prices, and on terms to be determined at the time of each offering, as set forth in one or more prospectus supplements accompanying this prospectus.
Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. Each prospectus supplement may also add to, update, or change the information contained in this prospectus. You should carefully read this prospectus and any applicable prospectus supplement, as well as the documents incorporated by reference herein, before you invest in any of our securities.
Our common shares of beneficial interest are listed on the New York Stock Exchange (the "NYSE") under the ticker symbol "FRWT." On June 13, 2025, the last reported sale price for our common shares on the NYSE was $28.45 per share. Any other securities offered pursuant to this prospectus will be listed on an exchange or quoted on a market only if specified in the applicable prospectus supplement.
Investing in our securities involves risks. See "Risk Factors" beginning on page [●] of this prospectus and in the documents incorporated by reference herein.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
These securities are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
The date of this prospectus is [●], 2025.
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ABOUT THIS PROSPECTUS
This prospectus is part of an automatic shelf registration statement that we filed with the Securities and Exchange Commission (the "SEC") as a "well-known seasoned issuer" as defined in Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"). Under the automatic shelf registration process, Fairwater Real Estate Investment Trust and Fairwater Operating Partnership, L.P. may, from time to time, sell any combination of the securities described in this prospectus in one or more offerings up to a total aggregate initial offering amount of $2,000,000,000. By using an automatic shelf registration statement, we may offer securities at any time and from time to time without the requirement that the SEC declare the registration statement effective prior to selling securities. This prospectus, together with the registration statement of which it forms a part, became effective upon filing with the SEC pursuant to Rule 462(e) under the Securities Act.
This prospectus provides you with a general description of the securities that we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add to, update, or change the information contained in this prospectus. To the extent that any statement that we make in a prospectus supplement is inconsistent with statements made in this prospectus, the statements made in the prospectus supplement will be deemed to modify or supersede those made in this prospectus. You should read both this prospectus and any applicable prospectus supplement, together with the additional information described under "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference," before making an investment decision.
This prospectus does not contain all the information set forth in the registration statement and the exhibits and schedules thereto. For further information about us and the securities offered hereby, we refer you to the registration statement and the exhibits and schedules filed as part of the registration statement. Statements contained in this prospectus about the contents of any contract or any other document are not necessarily complete. If we have filed a copy of such contract or document as an exhibit to the registration statement, you should refer to the copy of such contract or document that has been filed. Each statement regarding a contract or document is qualified in its entirety by reference to the actual contract or document.
You should rely only on the information contained or incorporated by reference in this prospectus and any applicable prospectus supplement. We have not authorized anyone to provide you with different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus, any applicable prospectus supplement, and the documents incorporated by reference herein and therein is accurate only as of the respective dates of those documents. Our business, financial condition, results of operations, and prospects may have changed since those dates.
As used in this prospectus, unless the context otherwise requires, the terms "Fairwater," "we," "us," "our," and the "Company" refer to Fairwater Real Estate Investment Trust and its subsidiaries, including Fairwater Operating Partnership, L.P. (the "Operating Partnership" or "Fairwater OP"). The term "you" refers to a prospective purchaser of securities offered by this prospectus.
Fairwater Real Estate Investment Trust is the sole general partner of Fairwater Operating Partnership, L.P. and, as of March 31, 2025, owned approximately 96.3% of the outstanding common units of the Operating Partnership. As of that date, Fairwater REIT held 134,270,000 common units out of 139,450,000 total common units outstanding in the Operating Partnership, with the remaining 5,180,000 common units (approximately 3.7%) held by third-party limited partners. Because Fairwater REIT is the sole general partner of the Operating Partnership and controls the Operating Partnership, the financial results of the Operating Partnership are consolidated with those of Fairwater REIT for financial reporting purposes.
WHERE YOU CAN FIND MORE INFORMATION
Fairwater Real Estate Investment Trust and Fairwater Operating Partnership, L.P. file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and other information with the SEC. Our SEC filings are available to the public through the SEC's Electronic Data Gathering, Analysis, and Retrieval system ("EDGAR") at www.sec.gov. Our CIK Number is 0001387204, and our Standard Industrial Classification ("SIC") Code is 6798 (Real Estate Investment Trusts).
We also make available, free of charge, on our corporate website at www.fairwaterreit.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. Information on or accessible through our website is not incorporated into, and does not constitute a part of, this prospectus or any prospectus supplement and should not be considered to be part of this prospectus or any prospectus supplement. We have included our website address in this prospectus solely as an inactive textual reference.
Our common shares of beneficial interest are listed and trade on the NYSE under the ticker symbol "FRWT." Reports, proxy statements, and other information concerning Fairwater may also be inspected at the offices of the NYSE.
We have filed with the SEC a registration statement on Form S-3 under the Securities Act with respect to the securities offered by this prospectus. This prospectus, which is a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information with respect to us and our securities, reference is made to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with the SEC, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede information previously incorporated by reference. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this prospectus and prior to the termination of any offering of securities made by this prospectus (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):
1. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 21, 2025;
2. Our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, filed with the SEC on May 2, 2025;
3. Our Current Reports on Form 8-K filed with the SEC since December 31, 2024 (other than information and exhibits furnished and not filed pursuant to Item 2.02 or Item 7.01 of Form 8-K); and
4. The description of our common shares of beneficial interest contained in our registration statement on Form 8-A filed with the SEC, including any amendments or reports filed for the purpose of updating such description, including the description of our common shares contained in Exhibit 4.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Any statement contained in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any other document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We will provide, without charge, to each person, including any beneficial owner, to whom a copy of this prospectus has been delivered, upon written or oral request, a copy of any or all of the documents incorporated herein by reference (other than exhibits to those documents, unless such exhibits are specifically incorporated by reference in such documents). You may request a copy of these filings by writing or telephoning:
Jonathan Delacroix Executive Vice President, General Counsel and Secretary Fairwater Real Estate Investment Trust 7200 Chesapeake Centre Drive, Suite 400 Annapolis, Maryland 21401 Telephone: [●]
We will provide copies of all documents incorporated by reference herein (excluding exhibits, unless such exhibits are specifically incorporated by reference into the documents that this prospectus incorporates) free of charge upon request.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any applicable prospectus supplement, and the documents incorporated by reference herein and therein contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. All statements, other than statements of historical fact, included in or incorporated by reference into this prospectus that address activities, events, or developments that we expect, believe, or anticipate will or may occur in the future are forward-looking statements. Without limiting the foregoing, the words "believes," "expects," "anticipates," "intends," "plans," "estimates," "projects," "forecasts," "may," "will," "should," "could," "would," "seeks," "targets," "pro forma," "potential," and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements.
Forward-looking statements appearing in this prospectus and the documents incorporated by reference herein relate to, among other things:
• our business strategy, including our acquisition, development, and redevelopment activities;
• projected financial results, including estimated revenues, net income, funds from operations ("FFO"), adjusted funds from operations ("AFFO"), net operating income ("NOI"), and other financial metrics;
• our liquidity and capital resources, including our ability to access the capital markets;
• market trends, including trends in the multifamily residential real estate sector in the Mid-Atlantic and Southeastern United States;
• our ability to maintain our qualification as a REIT for U.S. federal income tax purposes;
• our financing plans, including our ability to refinance existing indebtedness and obtain new financing on favorable terms;
• our anticipated distributions to shareholders;
• development and redevelopment activities, including expected completion dates, costs, and stabilization timelines;
• anticipated capital expenditures;
• expected occupancy and rental rates;
• the expected impact of acquisitions or dispositions of properties; and
• the impact of legislative, regulatory, and competitive changes.
These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to:
• general economic and business conditions, both nationally and in the markets in which we operate;
• real estate market conditions, including competition from other multifamily communities and alternative housing options;
• competition for tenants in our markets;
• changes in interest rates and the availability of financing;
• risks associated with the development, acquisition, and disposition of real estate assets;
• changes in tenant demand and preferences;
• governmental regulations and changes in tax, real estate, environmental, and zoning laws;
• environmental matters, including the presence of hazardous substances at our properties;
• insurance costs and coverage;
• the occurrence of natural disasters, pandemics, epidemics, or other public health emergencies;
• the financial condition of our tenants;
• our ability to maintain or increase rental rates;
• our ability to attract and retain qualified personnel;
• changes in accounting principles generally accepted in the United States; and
• other factors described in the "Risk Factors" section of this prospectus, in the documents incorporated by reference herein, and in the applicable prospectus supplement.
We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. All forward-looking statements included in this prospectus and the documents incorporated by reference herein are based on information available to us on the date of such statements. We assume no obligation to update or revise any forward-looking statements to reflect events or circumstances that arise after the date such statements are made or to reflect the occurrence of unanticipated events, except as required by federal securities laws. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of the applicable document.
ABOUT FAIRWATER REAL ESTATE INVESTMENT TRUST
Fairwater Real Estate Investment Trust is a Maryland real estate investment trust that was organized in 2003. We focus on the ownership, operation, acquisition, and development of Class A multifamily residential communities across the Mid-Atlantic and Southeastern United States. Our portfolio is strategically positioned in high-growth markets with strong employment fundamentals, favorable demographic trends, and limited new supply, targeting affluent renters who choose apartment living as a lifestyle preference.
Our Portfolio
As of March 31, 2025, our portfolio comprised 47 multifamily communities totaling approximately 14,800 apartment units located across five states: Maryland, Virginia, North Carolina, Georgia, and Florida. Our communities are situated in desirable suburban and urban infill locations with proximity to major employment centers, transportation corridors, and high-quality retail and lifestyle amenities. We have a demonstrated track record of acquiring well-located properties, enhancing them through targeted capital investment and professional management, and driving strong same-store revenue growth through effective leasing and expense management strategies.
Our Structure
We conduct substantially all of our operations through Fairwater Operating Partnership, L.P. (the "Operating Partnership" or "Fairwater OP"), a Maryland limited partnership. Fairwater Real Estate Investment Trust serves as the sole general partner of the Operating Partnership. As of March 31, 2025, Fairwater REIT owned approximately 96.3% of the outstanding common units of the Operating Partnership, holding 134,270,000 of the 139,450,000 total common units outstanding. The remaining approximately 3.7%, or 5,180,000 common units, were held by third-party limited partners. Our Operating Partnership structure facilitates tax-efficient acquisitions by allowing property owners to contribute their properties to the Operating Partnership in exchange for common units, thereby deferring the recognition of taxable gain.
REIT Status
We have elected to be taxed as a real estate investment trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with our taxable year ended December 31, 2003, and we intend to continue to operate in a manner that permits us to qualify as a REIT. As a REIT, we generally are not subject to U.S. federal income tax on our REIT taxable income to the extent that we distribute such income to our shareholders and satisfy certain other requirements. See "Federal Income Tax Considerations" for a more detailed discussion of the tax treatment of us and our shareholders.
Our Securities
Our common shares of beneficial interest, $0.01 par value per share, are listed on the NYSE under the ticker symbol "FRWT." As of March 31, 2025, there were 134,270,000 common shares outstanding. Based on the closing price of our common shares of $28.45 on June 13, 2025, our equity market capitalization was approximately $3.82 billion.
As of March 31, 2025, there were 4,000,000 shares of our 6.50% Series A Cumulative Redeemable Preferred Shares outstanding, with an aggregate liquidation preference of $100,000,000 ($25.00 per share). The Series A Preferred Shares were issued in June 2024 under our prior shelf registration statement (File No. 333-265410).
Our Indebtedness
As of March 31, 2025, we had the following indebtedness outstanding:
• Senior Unsecured Notes: $750,000,000 aggregate principal amount of senior unsecured notes issued by the Operating Partnership across three series:
• $250,000,000 aggregate principal amount of 3.875% Senior Notes due 2028;
• $300,000,000 aggregate principal amount of 4.250% Senior Notes due 2031; and
• $200,000,000 aggregate principal amount of 5.100% Senior Notes due 2034.
Our senior unsecured notes are rated BBB with a stable outlook by Brindoval Advisory Group and Baa2 with a stable outlook by Pinnacle Rating Services.
• Unsecured Revolving Credit Facility: We maintain a $600,000,000 unsecured revolving credit facility. As of March 31, 2025, $175,000,000 was drawn and $425,000,000 remained undrawn and available (subject to customary borrowing conditions).
• Secured Mortgage Debt: As of March 31, 2025, we had $480,000,000 in secured mortgage debt encumbering certain of our properties.
Our total consolidated debt as of March 31, 2025 was approximately $1,405,000,000, consisting of $750,000,000 of senior unsecured notes, $175,000,000 drawn under our revolving credit facility, and $480,000,000 of secured mortgage debt.
Liquidity
As of March 31, 2025, we had cash and cash equivalents of approximately $42,000,000. Together with the $425,000,000 of available capacity under our revolving credit facility, we believe we have adequate liquidity to fund our ongoing operations and near-term capital needs.
Principal Executive Offices
Our principal executive offices are located at 7200 Chesapeake Centre Drive, Suite 400, Annapolis, Maryland 21401. Our telephone number is [●]. Our website address is www.fairwaterreit.com. Information on or accessible through our website is not incorporated into, and does not constitute a part of, this prospectus or any prospectus supplement.
RISK FACTORS
An investment in our securities involves risks. Before making an investment decision with respect to our securities, you should carefully consider the specific risk factors described in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are incorporated by reference into this prospectus, as well as the risk factors and other information contained in the applicable prospectus supplement. You should also carefully consider the other information contained in or incorporated by reference into this prospectus, including our consolidated financial statements and related notes.
The risks described in our filings with the SEC are not the only risks we face. Additional risks and uncertainties not presently known to us, or that we currently deem to be immaterial, may also adversely affect our business, financial condition, results of operations, cash flows, and the value of our securities. Any of the risks described in our SEC filings, if they were to materialize, could have a material adverse effect on our business, financial condition, results of operations, and prospects, and could cause the value of our securities to decline, in which case you could lose all or part of your investment.
A prospectus supplement relating to a particular offering of securities may identify additional risk factors applicable to that particular offering and the securities being offered thereby. For more information regarding our SEC filings and how to obtain copies of those filings, see "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference."
USE OF PROCEEDS
Unless otherwise described in the applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by this prospectus for general corporate purposes. General corporate purposes may include, but are not limited to:
• the acquisition, development, and redevelopment of multifamily residential communities;
• the repayment or refinancing of outstanding indebtedness, including amounts outstanding under our $600,000,000 unsecured revolving credit facility;
• capital expenditures, including renovation and improvement projects at our existing properties;
• working capital; and
• other general corporate purposes.
Pending the application of the net proceeds for the purposes described above, we may invest the net proceeds in short-term, investment-grade, interest-bearing securities, including money market funds, certificates of deposit, commercial paper, and U.S. government securities, or we may use the net proceeds to temporarily repay borrowings outstanding under our revolving credit facility. As of March 31, 2025, $175,000,000 was drawn under our $600,000,000 unsecured revolving credit facility.
The specific use of proceeds from any particular offering of securities will be described in the applicable prospectus supplement relating to that offering. We will retain broad discretion over the use of the net proceeds from any sale of securities offered by this prospectus, and investors will be relying on the judgment of our management with respect to the application of such net proceeds.
DESCRIPTION OF COMMON SHARES OF BENEFICIAL INTEREST
The following is a summary of the material terms and provisions of our common shares of beneficial interest. This summary does not purport to be complete and is qualified in its entirety by reference to the applicable provisions of Maryland law, our Declaration of Trust, and our Bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part or are incorporated by reference herein. We encourage you to read our Declaration of Trust, our Bylaws, and the applicable provisions of Maryland law for additional information.
General. Our Declaration of Trust authorizes the issuance of common shares of beneficial interest, $0.01 par value per share. As of March 31, 2025, there were 134,270,000 common shares of beneficial interest outstanding. All outstanding common shares are fully paid and nonassessable. Our common shares are listed on the NYSE under the ticker symbol "FRWT."
The transfer agent and registrar for our common shares is Meridian Trust Company, 55 Elm Street, Hartford, Connecticut 06106.
Voting Rights. Each outstanding common share entitles the holder thereof to one vote on all matters submitted to a vote of shareholders, including the election of trustees. Holders of common shares do not have cumulative voting rights in the election of trustees. Accordingly, the holders of a majority of the outstanding common shares can elect all of the trustees then standing for election. Trustees are elected by a plurality of the votes cast at a meeting of shareholders at which a quorum is present. Except as otherwise provided in our Declaration of Trust, our Bylaws, or as required by applicable law, the affirmative vote of holders of a majority of the shares entitled to vote that are present in person or by proxy at an annual or special meeting of shareholders at which a quorum is present is required to approve any matter voted upon by shareholders.
Distributions. Holders of common shares are entitled to receive distributions when and as authorized by the Board of Trustees and declared by Fairwater out of assets legally available for the payment of distributions. Distributions on common shares are subject to the preferential distribution and other rights of holders of any outstanding preferred shares, including the 6.50% Series A Cumulative Redeemable Preferred Shares.
In order to maintain our qualification as a REIT under the Code, we generally must distribute to our shareholders at least 90% of our REIT taxable income annually (determined without regard to the dividends paid deduction and excluding net capital gains). We intend to continue to make regular quarterly distributions to holders of our common shares. However, the amount, timing, and frequency of future distributions will be at the sole discretion of our Board of Trustees and will depend upon various factors, including our actual and projected financial condition, results of operations, cash flows, capital requirements, debt service obligations, the annual distribution requirements under the REIT provisions of the Code, and such other factors as our Board of Trustees deems relevant.
We cannot assure you that we will be able to pay distributions in the future, or that distributions will be maintained at current levels. Any distributions we pay in the future will depend upon our actual results of operations, economic conditions, and other factors that could differ materially from our current expectations.
Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of Fairwater, holders of common shares are entitled to share ratably in the net assets of Fairwater remaining after payment or provision for payment of all debts and other liabilities and after satisfaction of the liquidation preference of any outstanding preferred shares. As of March 31, 2025, our outstanding 6.50% Series A Cumulative Redeemable Preferred Shares have an aggregate liquidation preference of $100,000,000.
Preemptive Rights; Redemption; Conversion
Holders of our common shares do not have preemptive, subscription, conversion, exchange, or redemption rights. Our common shares are not subject to any sinking fund. The rights, preferences, and privileges of holders of our common shares are subject to, and may be adversely affected by, the rights of holders of shares of any series of preferred shares that we may issue in the future.
Restrictions on Ownership and Transfer
In order to assist us in maintaining our qualification as a REIT under the Code, our Declaration of Trust contains certain restrictions on the ownership and transfer of our shares. Subject to certain exceptions, our Declaration of Trust provides that no person may beneficially own or constructively own (as determined by applying the attribution rules under the Code) more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding common shares of beneficial interest or more than 9.8% in value of the outstanding shares of beneficial interest of all classes and series. Our Board of Trustees may, in its sole and absolute discretion, waive the ownership limitations with respect to a particular person, prospectively or retroactively, if the Board determines that such ownership will not jeopardize our qualification as a REIT under the Code and the Board otherwise decides such action is in the best interests of Fairwater.
If any transfer of shares would result in any person beneficially owning or constructively owning shares in excess of the applicable ownership limitations, or would otherwise cause us to fail to qualify as a REIT, such transfer will be void ab initio as to the transfer of that number of shares that would cause the violation, and the intended transferee will acquire no rights in such shares. Instead, the shares that would cause the violation will be automatically transferred to a trust for the exclusive benefit of one or more charitable organizations designated by us, and the purported transferee will have no rights in such shares. The trustee of the trust will have the exclusive right to designate the charitable beneficiary or beneficiaries of the trust. The trustee may sell such shares to a person whose ownership of the shares would not violate the ownership limitations, and the purported transferee will receive from the trustee the lesser of (a) the price paid by the purported transferee for the shares or, if the purported transferee did not give value for the shares, the market price of the shares on the day of the event causing the shares to be transferred to the trust and (b) the price received by the trustee from the sale of the shares.
For a further discussion of the restrictions on ownership and transfer, see "Certain Provisions of Maryland Law and of Our Declaration of Trust and Bylaws — Restrictions on Ownership and Transfer."
Maryland Law — Business Combination and Control Share Acquisition Provisions
For a description of the provisions of Maryland law that may affect the rights of holders of our common shares, see "Certain Provisions of Maryland Law and of Our Declaration of Trust and Bylaws."
DESCRIPTION OF PREFERRED SHARES OF BENEFICIAL INTEREST
The following is a summary of the general terms and provisions of our preferred shares of beneficial interest. The specific terms of any particular series of preferred shares will be described in the applicable prospectus supplement. This summary does not purport to be complete and is qualified in its entirety by reference to the applicable provisions of Maryland law, our Declaration of Trust, and the articles supplementary establishing the terms of the applicable series of preferred shares, copies of which will be filed with the SEC in connection with the offering of such preferred shares.
General. Our Declaration of Trust authorizes the issuance of preferred shares of beneficial interest, $0.01 par value per share, in one or more series. The Board of Trustees is authorized, without shareholder approval, to classify and reclassify any unissued shares of beneficial interest and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications, and terms and conditions of redemption of each series of preferred shares, as set forth in articles supplementary filed with the State Department of Assessments and Taxation of Maryland. The authority of the Board of Trustees to issue preferred shares with such terms as the Board may determine, without shareholder approval, may have the effect of delaying, deferring, or preventing a change in control of Fairwater.
As of March 31, 2025, one series of preferred shares was outstanding: 4,000,000 shares of 6.50% Series A Cumulative Redeemable Preferred Shares, with a liquidation preference of $25.00 per share and an aggregate liquidation preference of $100,000,000.
The specific terms of each new series of preferred shares that we may offer pursuant to this prospectus will be described in the applicable prospectus supplement. We will file the articles supplementary establishing the terms of any new series of preferred shares with the SEC in connection with the offering of such series.
Terms to Be Set Forth in Prospectus Supplement
The prospectus supplement relating to a particular series of preferred shares being offered will include specific information regarding the terms of that series. Such terms will include some or all of the following:
• the designation and number of shares of the series;
• the aggregate liquidation preference of the series;
• the distribution rate or rates (or method of calculation thereof), the distribution period or periods, and the distribution payment date or dates;
• whether distributions on the series are cumulative or non-cumulative and, if cumulative, the date from which distributions will accumulate;
• the redemption provisions, if any, including the dates, prices, and conditions upon which the preferred shares of the series may be redeemed;
• any sinking fund or similar provisions;
• any conversion or exchange rights, including the conversion or exchange price (or the method of calculating the conversion or exchange price), the conversion or exchange period, and the securities or other property into which the preferred shares of the series may be converted or exchanged;
• the voting rights, if any, of the holders of the series;
• whether the preferred shares of the series will be listed on any securities exchange or market;
• any other specific terms, preferences, rights, restrictions, or limitations of the preferred shares of the series; and
• a discussion of any material U.S. federal income tax considerations applicable to the preferred shares of the series.
Outstanding Series A Cumulative Redeemable Preferred Shares
Our 6.50% Series A Cumulative Redeemable Preferred Shares (the "Series A Preferred Shares") were issued in June 2024 under our prior shelf registration statement (File No. 333-265410). As of March 31, 2025, 4,000,000 shares of Series A Preferred Shares were outstanding. The principal terms of the Series A Preferred Shares are as follows:
• Distributions: Holders of the Series A Preferred Shares are entitled to receive cumulative cash distributions at a rate of 6.50% per annum of the $25.00 liquidation preference per share (equivalent to $1.625 per share per annum), payable quarterly in arrears on March 15, June 15, September 15, and December 15 of each year.
• Liquidation Preference: In the event of any voluntary or involuntary liquidation, dissolution, or winding up of Fairwater, the holders of the Series A Preferred Shares are entitled to receive, out of our assets legally available for distribution to shareholders, a liquidation preference of $25.00 per share, plus all accrued and unpaid distributions, before any distribution of assets is made to holders of our common shares or any other class or series of shares ranking junior to the Series A Preferred Shares as to liquidation rights.
• Redemption: The Series A Preferred Shares are redeemable at our option, in whole or in part, at any time on or after June 15, 2029 (or at any time upon the occurrence of a change of control, as defined in the articles supplementary establishing the Series A Preferred Shares), at a redemption price of $25.00 per share, plus all accrued and unpaid distributions to, but excluding, the date of redemption.
• Voting Rights: Holders of the Series A Preferred Shares generally do not have voting rights except as required by applicable law or if distributions on the Series A Preferred Shares are in arrears for six or more quarterly distribution periods (whether or not consecutive), in which case holders of the Series A Preferred Shares (voting together as a single class with holders of any other series of preferred shares having similar voting rights that are then exercisable) will be entitled to elect two additional trustees to our Board of Trustees until all accumulated and unpaid distributions have been paid in full.
• Transfer Agent and Registrar: The transfer agent and registrar for the Series A Preferred Shares is Meridian Trust Company, 55 Elm Street, Hartford, Connecticut 06106.
The foregoing description of the Series A Preferred Shares is a summary only and is qualified in its entirety by reference to the articles supplementary establishing the terms of the Series A Preferred Shares, which are filed as an exhibit to our prior registration statement or incorporated by reference into this prospectus.
DESCRIPTION OF DEBT SECURITIES
The following is a general description of the debt securities that we may offer pursuant to this prospectus. The specific terms of any particular series of debt securities will be described in the applicable prospectus supplement. The following summary does not purport to be complete and is qualified in its entirety by reference to the provisions of the applicable indenture and any supplemental indenture, copies of which have been or will be filed as exhibits to the registration statement of which this prospectus forms a part.
General. Debt securities may be issued from time to time in one or more series by Fairwater Operating Partnership, L.P. and may be guaranteed by Fairwater Real Estate Investment Trust. The debt securities may be senior debt securities or subordinated debt securities. Senior debt securities will be issued under the senior indenture, and subordinated debt securities, if any, will be issued under the subordinated indenture. We refer to the senior indenture and the subordinated indenture individually as an "indenture" and collectively as the "indentures."
The senior debt securities will be issued pursuant to a base indenture, dated as of March 15, 2020 (the "Base Indenture"), between Fairwater Operating Partnership, L.P., as issuer, and Meridian Trust Company, as trustee (55 Elm Street, Hartford, Connecticut 06106), as supplemented from time to time by one or more supplemental indentures. The subordinated debt securities, if any, will be issued pursuant to a separate subordinated indenture between the Operating Partnership and a trustee to be named in the applicable prospectus supplement.
The following is a summary of the material provisions of the indentures and the debt securities that may be issued thereunder. This summary is qualified in its entirety by reference to the actual terms and provisions of the applicable indenture and any supplemental indenture. The forms of the indentures have been filed as exhibits to the registration statement of which this prospectus forms a part, and you should read those documents for provisions that may be important to you.
Existing Senior Unsecured Notes
As of March 31, 2025, the Operating Partnership had $750,000,000 aggregate principal amount of senior unsecured notes outstanding, issued in three series under the Base Indenture:
Our senior unsecured notes are currently rated BBB with a stable outlook by Brindoval Advisory Group and Baa2 with a stable outlook by Pinnacle Rating Services. A credit rating is not a recommendation to buy, sell, or hold securities and may be revised, suspended, or withdrawn at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. There can be no assurance that any credit rating assigned to our debt securities will remain in effect for any given period of time or that any rating will not be lowered, suspended, or withdrawn entirely by the applicable rating agency if, in its judgment, circumstances warrant.
Terms to Be Set Forth in Prospectus Supplement
The prospectus supplement relating to a particular series of debt securities being offered will include specific information regarding the terms of that series, including some or all of the following:
• the title and aggregate principal amount of the debt securities of the series;
• whether the debt securities of the series will be senior debt securities or subordinated debt securities;
• the maturity date or dates;
• the interest rate or rates (which may be fixed or floating) and the method of calculating any floating rate;
• the interest payment dates and the regular record dates for interest payments;
• any redemption, repurchase, or sinking fund provisions;
• the denominations in which the debt securities of the series will be issuable;
• the currency or currencies in which the debt securities of the series will be denominated and payable;
• the covenants, including any financial covenants, applicable to the debt securities of the series;
• the events of default and remedies applicable to the debt securities of the series;
• any subordination provisions applicable to the subordinated debt securities;
• any conversion or exchange provisions;
• the terms of any guarantee by Fairwater Real Estate Investment Trust;
• any defeasance provisions;
• the terms and conditions upon which the debt securities of the series may be declared due and payable prior to their stated maturity;
• any applicable original issue discount; and
• any other specific terms of the debt securities of the series.
Form, Exchange, and Transfer
The debt securities of each series may be issued in fully registered form, without coupons, and, unless otherwise provided in the applicable prospectus supplement, in denominations of $2,000 and integral multiples of $1,000 in excess thereof. Debt securities may also be issued in the form of one or more global securities registered in the name of The Depository Trust Company ("DTC") or its nominee, in which case beneficial interests in the global securities will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants. If debt securities are issued in global form, they will be exchangeable for certificated debt securities only in the limited circumstances described in the applicable indenture and prospectus supplement.
Transfers and exchanges of the debt securities will be subject to the terms and conditions set forth in the applicable indenture. No service charge will be imposed by us or the trustee for any registration of transfer or exchange of debt securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Ranking. The senior debt securities will be unsecured and unsubordinated obligations of the Operating Partnership and will rank equally in right of payment with all other existing and future unsecured and unsubordinated indebtedness of the Operating Partnership. The senior debt securities will be effectively subordinated to all existing and future secured indebtedness of the Operating Partnership to the extent of the value of the assets securing such indebtedness. In addition, the senior debt securities will be structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of the Operating Partnership's subsidiaries. As of March 31, 2025, the Operating Partnership's subsidiaries had approximately $480,000,000 of secured mortgage debt outstanding. The Operating Partnership's subsidiaries are separate legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the debt securities or to make any funds available therefor, whether by dividends, loans, or other payments.
Any subordinated debt securities that we may issue will be subordinated in right of payment to all existing and future "senior indebtedness" of the Operating Partnership, as defined in the applicable subordinated indenture. In the event of any distribution to creditors of the Operating Partnership in a bankruptcy, liquidation, or similar proceeding, holders of subordinated debt securities would receive payment only after holders of senior indebtedness have been paid in full. The applicable prospectus supplement will describe the specific subordination terms of any subordinated debt securities.
Covenants. The Base Indenture and any applicable supplemental indenture will contain certain covenants that, among other things, may limit the ability of the Operating Partnership to:
• incur total debt in excess of specified levels;
• incur secured debt in excess of specified levels;
• fail to maintain total unencumbered assets in an amount at least equal to a specified percentage of total unsecured debt;
• pay certain dividends and distributions in excess of specified limits;
• consummate certain mergers, consolidations, or sales of substantially all assets unless certain conditions are met; and
• fail to provide certain financial information to holders of debt securities and the trustee.
The specific covenants applicable to a particular series of debt securities will be described in the applicable prospectus supplement and the related supplemental indenture. We urge you to carefully read the applicable prospectus supplement and the related supplemental indenture for the specific covenants that will apply to the debt securities being offered.
Events of Default
Unless otherwise specified in the applicable prospectus supplement, the following will constitute events of default under the applicable indenture with respect to any series of debt securities:
• failure to pay any installment of interest on the debt securities of such series when due and payable, continued for a period of 30 days;
• failure to pay the principal of (or premium, if any, on) the debt securities of such series when due and payable, whether at maturity, upon redemption, upon acceleration, or otherwise;
• failure to comply with any other covenant or agreement contained in the indenture or the debt securities of such series, continued for a period of 60 days after written notice thereof is given to the Operating Partnership by the trustee or to the Operating Partnership and the trustee by the holders of at least 25% in aggregate principal amount of the outstanding debt securities of such series;
• certain events of bankruptcy, insolvency, or reorganization of the Operating Partnership or Fairwater REIT;
• a cross-default to other indebtedness of the Operating Partnership or Fairwater REIT in an aggregate principal amount in excess of a specified threshold; and
• such other events of default, if any, as may be specified in the applicable prospectus supplement.
If an event of default occurs and is continuing with respect to debt securities of any series (other than an event of default involving bankruptcy, insolvency, or reorganization), the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series may declare all unpaid principal of, and accrued and unpaid interest on, the debt securities of that series to be due and payable immediately. Upon an event of default involving bankruptcy, insolvency, or reorganization, all unpaid principal of, and accrued and unpaid interest on, all outstanding debt securities will automatically become immediately due and payable without any declaration or other act on the part of the trustee or any holder.
The holders of a majority in aggregate principal amount of the outstanding debt securities of the applicable series may, on behalf of all holders of debt securities of that series, waive any past default and its consequences under the applicable indenture, except a default in the payment of principal, premium, or interest or a default in respect of a covenant or provision of the indenture that cannot be modified or amended without the consent of the holder of each outstanding debt security of the series affected.
Guarantee. Fairwater Real Estate Investment Trust may guarantee the payment of principal, premium, if any, and interest on the debt securities issued by the Operating Partnership. The terms of any such guarantee will be set forth in the applicable prospectus supplement. If Fairwater REIT guarantees any series of debt securities, such guarantee will be an unsecured obligation of Fairwater REIT and will rank equally with all other unsecured and unsubordinated obligations of Fairwater REIT. The guarantee may be full and unconditional or may be subject to certain conditions as described in the applicable prospectus supplement.
Defeasance. Unless otherwise specified in the applicable prospectus supplement, the Operating Partnership may elect either (a) to defease and be discharged from any and all obligations with respect to the debt securities of any series (except for certain obligations to register the transfer or exchange of debt securities, to replace stolen, lost, or mutilated debt securities, to maintain paying agencies, and to hold moneys for payment in trust) ("legal defeasance") or (b) to be released from its obligations under certain covenants contained in the applicable indenture ("covenant defeasance"), in each case upon irrevocable deposit with the trustee of cash or certain U.S. government obligations, or a combination thereof, in an amount sufficient to pay all remaining principal, premium, if any, and interest on the debt securities of such series on the scheduled payment dates therefor and satisfaction of certain other conditions specified in the applicable indenture.