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Private debt drives opportunities for borrowers and investors
Ongoing inflation combined with repeated increases in the effective federal funds rate are continuing to exert downward pressure on real estate transactions and volume. Further, the growing disconnect between asset values and cost of capital keeps buyers and sellers on the sidelines — and they will likely remain there until buy-sell values settle into acceptable norms on both sides.
It is not only buyers and sellers that are sidelined. Traditional lenders — banks, credit unions and life insurance companies — are also taking a wait-and-see stance when issuing real estate loans (or not, in many cases). Amidst negative headlines surrounding the impact of commercial property debt following recent bank collapses, this is not anticipated to shift in the near future.
That said, debt and liquidity are still needed in today’s market. Deals are still being made. Furthermore, billions of dollars in low-interest loans are set to mature in 2023. Along those lines, investors