Traditional lenders have scaled back CRE exposure, creating space for private capital to step in.
As traditional lenders pull back, private lending to commercial real estate is expanding rapidly.
Why private lending matters now:
- Traditional lenders have scaled back CRE exposure, creating space for private capital.
- Private CRE loans can offer attractive yields with secured, asset-backed structures.
Fortress’ approach:
- Senior secured lending focused on downside protection.
- Conservative loan-to-value ratios and active monitoring to preserve capital.
- Diversification across sectors and regions to reduce concentration risk.
Adam Bobker: For many years, investors have been allocating primarily to what's known as a 60/40 portfolio of stocks and bonds. Investing solely in public markets means you potentially miss out on a significant growth opportunity. Investments in private credit real estate, for example, can provide for current income. Additionally, you avoid the volatility of the public equity markets and from a risk standpoint, commercial real estate loans tend to be more defensive because they are made on a senior secured basis.
Tim Sloan: Investments in commercial real estate can be less volatile, meaning they're less tied to the equity markets. And, from a risk standpoint, they're generally lending on a senior secured basis. We've seen the growth of private credit as it relates to commercial real estate significantly increase over the last few years. We've got a number of banks that are simply not interested in extending credit to their existing real estate customers, and that's where private credit comes in. These are loans that would have normally been made by commercial banks in this country.
Adam Bobker: Fortress sees significant opportunities not only in real estate lending and private lending, but in net lease and other types of commercial real estate where we are able to take market share away from the commercial banking system.
