Credit Funds Eye a CRE Distressed Market

With banks already under stress, nonbanks that have capital consider a profit opportunity.

Commercial real estate financing faces some intense pressure, and it looks like private credit funds are taking notice for potential profit.

In the May 2023 Financial Stability Report, the Federal Reserve noted that since the Global Financial Crisis, “private credit funds have experienced substantial growth, as the privately negotiated loans that they extend have become an increasingly important source of credit for some businesses, particularly middle-market companies.” The latter are businesses in roughly the $10 million to $1 billion range, an area where a lot of CRE businesses play. “As of 2021:Q4, their assets under management (AUM) stood at $1 trillion, and the estimated ‘dry powder’ (committed but uncalled capital) amounted to $228 billion.”

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Erik Sherman

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