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NEW YORK CITY—Over the last few years debt funds have become anincreasingly important part of the commercial mortgage lendinglandscape. This year, these alternative lenders hit a milestone:for the first half of 2019 they represented a larger share of thecommercial mortgage markets than the life insurance companies,accordingto Real Capital Analytics.
This milestone is even more striking when it is put intohistoric context. Coming out of the Great Recession, RCA's JimCostello writes, life company lenders were the only source ofcapital available for many commercial property investors, asidefrom the agencies.
Too Much Risk?
Life insurance companies still represent a larger share oflending for core investment strategies than do debt funds, but thelevels are close, RCA notes: a 10% share for life companies vs. 9%for debt funds. It is in the riskier investment styles, however,where debt funds are more competitive, allowing them to capturemore market share than insurance company lenders this year.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
