In 2022, when inflation proved to be less “transitory” than the experts would have had us believe, the Federal Reserve began raising interest rates at a pace not seen in decades. While most people working in finance were frustrated at the shift in policy after decades of record-low rates, one segment of real estate investors was content with a higher rate environment: debt teams. The basics of finance were coming back into play after 15 years of record-low rates. Stability and cash flow were becoming a top priority for institutional investors, and debt could fill that need. The “boring debt guys” were finally getting a longer look than their high-flying equity counterparts. Then a series of frustrating realities began to unfold.
First, there were the numerous new entrants to the space. For many long-time debt investors, what they observed was simply opportunists trying to fill a need, not necessarily true believers in the healing power of real estate debt. Second, man