Continuing on thoughts about the $300 billion said to be sitting on the sidelines, waiting to cushion the coming downslide in values, these fund sponsors who raised all this cash over the past few years must be struggling figuring out how to deliver the returns they promised investors. Their investment model was largely based on leveraging up performance in a sky’s-the-limit pricing frenzy, providing 20% plus returns. It worked splendidly for more than five years in an almost free-money lending environment that suddenly evaporated 12 months ago. But without the leverage, the investment model no longer works and the sponsors can no longer make the promotes which drives their business bottom lines.

Given the depths of the credit morass, free-flowing debt will not be coming back any time soon. When lenders finally sort out all their issues and regulators finish with implementing stricter guidelines, borrowers will pay more for less. We’re in a deleveraging environment for some time to come.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2023 ALM Global, LLC. All Rights Reserved.