Real Estate Debt: Navigating the New Frontier

Real Estate Debt: Navigating the New Frontier

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William Pattison Michael Steinberg Jacob Kurosaki Kiel Deitrich
JUL 10, 2024

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Executive Summary

  • The Fed’s campaign against inflation, changes in bank regulations and stress in the office sector have collectively created an attractive investment environment for real estate debt investors, in our view.
  • Commercial mortgages are offering yields not seen since the Global Financial Crisis (GFC).
  • While capital market conditions are operating effectively for low-risk mortgages, they remain mostly dislocated for higher-risk mortgages, thereby presenting compelling investment opportunities.
  • Debt investors have historically overestimated investment risk in the years following commercial real estate price declines.