Summary

After more than a decade of extraordinary growth, the resilience of private credit is now being tested, perhaps for the first time as a well-established sector of the capital markets. Recent events in the corporate lending space have raised questions about whether the industry’s rapid expansion has also introduced structural vulnerabilities. Against this backdrop, a central question for investors is whether the performance of real estate credit will be differentiated as market conditions unfold.

While all credit markets are inextricably linked, conflating CRE credit with corporate credit under a singular rubric of “private debt” may lead to lost opportunity. As described in this report, we examine the developments that have prompted renewed scrutiny of private credit and assess how they compare with the state of real estate lending. In our view, the impact of broad cyclical forces currently at work serves to increase the opportunity set for CRE credit in the near term, while paradigm shifts in the competitive structure of the market will further ensconce well-positioned non-bank lenders into the future.