Refinancing will extend the debt maturity date to 2033 and reduce interest expenses.
- Propose medium-term leverage targets
San Francisco, October 15, 2026 / PRNewswire / -- The RealReal, Inc. (Nasdaq ticker: REAL, hereinafter referred to as the "Company") is the world's largest online platform for trading certified second-hand luxury goods. The Company announced today that it has signed a credit agreement providing $150 million in new senior secured term loans and $25 million in new senior secured revolving credit lines (collectively referred to as the "New Credit Arrangements"). The Company intends to use the proceeds from these term loans to redeem all of its outstanding PIK notes with a face value of $10 million, maturing in 2029, and carrying interest rates of 4.25%/8.75% (the "2029 Notes") at par. The disbursement of the term loans and the redemption of the 2029 Notes are expected to be completed around October 19, 2026.
Funds managed by Fortress Investment Group LLC (a related party of "Fortress") will provide financing for the new credit arrangement. The initial interest rate for this arrangement is SOFR plus 5.75%, and it is subject to a pricing mechanism based on the leverage level. All interest payments will be made in cash. The new credit arrangement will mature in October 2033. More information about the new credit arrangement will be included in the company's current 8-K report, which is intended to be filed with the U.S. Securities and Exchange Commission.
Chief Financial Officer Ajay Gopal stated: "This refinancing is a key milestone in our plan to strengthen our balance sheet. Over the past two years, we have successfully reduced our total debt by over $80 million. This transaction further reduces our overall interest costs and continues to extend our maturity profile."
He also stated, "We believe that with the adjusted EBITDA continuing to grow, coupled with an operation model that can convert the growth of the adjusted EBITDA into strong cash flows, we will be in a favorable position to continue deleveraging in the coming years."
Fortress Investment Group General Manager of Corporate Credit Mac Maynard stated: "We are very pleased to cooperate with The RealReal on this transaction. We believe that The RealReal has established a leading position in the luxury resale market with its differentiated business model, and the company's strong and continuously improving financial condition makes this an attractive opportunity for our investors."
In this transaction, Moelis and Company LLC act as the exclusive placement agents and arrangers, while Wachtell, Lipton, Rosen and Katz serve as the legal counsel for The RealReal.
Key Points of the Transaction
- Extension of expiration date:The new credit arrangement will expire in 2033, extending the maturity date of the company's secured debts by approximately four years and eliminating the early maturity provision that could have been triggered under the 2029 notes in December 2027. If the company's convertible preferred notes, which mature in 2031 with a coupon rate of 4.000%, still have an outstanding balance of over $25 million 91 days before their scheduled maturity date, then the new credit arrangement will be subject to an elastic maturity clause.
- Total interest expenses decreased and PIK was cancelled:The initial comprehensive interest rate for this fixed-term loan is SOFR +5.75%, which is more favorable compared to the comprehensive interest rate of 13.00% for the 2029 notes (8.75% cash interest plus 4.25% PIK). The company expects that this will reduce the annual total interest expenses by approximately 4 million US dollars in the first year.
- Increase liquidity:A revolving credit line of $25 million is not expected to be drawn upon at the time of settlement, providing additional liquidity and financial flexibility.
Key Points of the Balance Sheet
The company stated that today's transaction represents an important milestone in The RealReal's efforts over the years to simplify and strengthen its balance sheet. This transaction lays the foundation for the company to achieve its medium-term goal of reducing total leverage to $150 million. One potential path to achieving this goal is for the company to use cash on hand to repay the convertible notes maturing in 2028; at the same time, if the holders choose to convert them in accordance with the contractual terms, the convertible notes maturing in 2031 will be converted into the company's ordinary equity.
The company stated that it will continue to focus on revenue growth, aiming to raise the adjusted EBITDA profit margin to its mid-term target range of 15% to 20%, and to convert the resulting increased adjusted EBITDA into operating cash flow. This will enable the company to continue with its plans to deleverage and strengthen its balance sheet.
The company stated that, excluding one-time transaction costs, this refinancing is expected to increase earnings per share when calculated based on the operating rate, as a lower overall interest rate will reduce the company's total interest expenses.
The company stated that it looks forward to discussing in detail the financial results and business performance for the third quarter of 2026 during the next earnings conference, which is scheduled to be held on October 29, 2026.
Regarding The RealReal, Inc.
The RealReal is the world's largest online platform for certified second-hand luxury goods trading, trusted by a community of 45 million members. With its comprehensive consignment service covering fashion, high-end jewelry and watches, art, and home furnishings, customers can easily buy and sell luxury items no matter where they are. The company combines rigorous expert appraisals with AI and proprietary technologies to optimize operations and pricing, while simplifying the customer experience. Leveraging 15 years of proprietary data and over 50 million sold items, The RealReal has become the preferred platform for modern luxury resale, redefining the lifecycle of luxury goods.
About Fortress Investment Group LLC
Fortress Investment Group LLC is a leading and highly diversified global investment management firm that provides services to institutional clients and private investors worldwide. Fortress was established in 1998, and as of June 30, 2026, it managed assets totaling $55 billion. Its investment strategies cover credit and real estate, private equity, as well as permanent capital. The managed asset size includes the assets managed by Fortress, as well as the capital that Fortress is entitled to call upon from investors, or that investors are required to contribute based on their capital commitments to various funds or managed accounts.
Forward-looking statements
This press release contains forward-looking statements regarding the future performance and leverage situation of The RealReal. These statements are based on the company's current expectations, forecasts, and assumptions and are subject to risks and uncertainties. In some cases, forward-looking statements can be identified by words such as "may," "will," "should," "be able to," "expect," "plan," "anticipate," "target," "consider," "predict," "believe," "estimate," "intend," "potential," "continue," "sustain," or their negative forms and similar phrases.
These statements include, but are not limited to, information regarding new credit arrangements, future operating and financial results, including the company's strategies, plans, commitments, objectives, and purposes. This is particularly true in the context of recent geopolitical events, as well as uncertainties surrounding macroeconomic trends, financial guidance, expected growth for 2026, the anticipated impact of generative AI, and financial targets, indicators, and forecasts. Actual results may differ significantly from those predicted or implied, and the reported results should not be regarded as an indication of future performance.
Other factors that may lead to or contribute to such differences include, but are not limited to: the failure to complete the redemption of notes in 2029; the company's ability to generate sufficient cash flow upon the maturity of convertible notes due in 2028, or to obtain funds in other ways to repay or refinance such notes; whether convertible notes due in 2031 will be converted into equity by holders, which mainly depends on the level of the company's common stock trading price relative to the conversion price and the choices of the holders; inflation; macroeconomic uncertainties; geopolitical instability; the failure to establish a sufficient supply of consigned goods; discounts in the new product market leading to pricing pressure in the consignment market; the inability to operate commodity management and performance businesses efficiently and effectively; labor shortages; and other reasons.
For more information regarding factors that may affect the company's operating performance, please refer to the "Risk Factors" section and the "Management's Discussion and Analysis of Financial Conditions and Operating Results" section in the company's most recent 10-K annual report for the fiscal year ending December 31, 2025, as well as subsequent 10-Q quarterly reports. Relevant documents can be obtained through the company's investor relations website investor.therealreal.com or the U.S. Securities and Exchange Commission website sec.gov. The company notes that one should not rely excessively on the forward-looking statements contained in this press release, which are based on information available to the company as of the date of issuance of this press release. Except as required by law, the company assumes no obligation to update such statements.
1 Based on a one-month period up to September 30, 2026, the corresponding 1-year swap rate for SOFR is 4.432%.
