Over the past several decades, the U.S. commercial real estate credit market has undergone significant transformation. Beginning in the mid-1990s, lending activity began shifting away from bank-dominated balance sheets toward capital markets distribution. That migration accelerated after the global financial crisis, giving rise to a new era of private credit-led bridge lending, much of it financed through commercial real estate collateralized loan obligations (CRE CLOs).
Today, this structure remains relevant and resilient. Post-global financial crisis regulatory reforms and bank capital constraints, coupled with sustained investor demand for yield, have shaped a durable ecosystem in which nonbank lenders originate transitional, floating-rate loans. To achieve the required leveraged yields for investors, these loans are commonly financed through a combination of short-term bank warehouse lines or repurchase facilities and longer-term securitization vehicles through CRE CLOs.
