PassivePockets: The Passive Real Estate Investing Show

Banks Are Pulling Back: Why Private Real Estate Debt Is Surging with Chris Carsley

Mar 4, 2025

Chris Carsley, a private real estate debt expert from Kirkland Capital Group, dives into the evolving landscape of non-bank lending. He discusses how traditional banks' retreat has allowed private lending to thrive, particularly through short-term bridge loans yielding attractive returns. Carsley emphasizes the importance of operational due diligence and understanding key risk factors like valuation and loan-to-value ratios. He shares insights into liquidity concerns and how private real estate debt can diversify an investment portfolio in today's volatile market.

39:50

Episode guests

Chris Carsley

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Episode notes

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Quick takeaways

The rise of private real estate debt since 2010 illustrates how regulatory changes have allowed non-bank lending to fill crucial financing gaps.

Investors must conduct thorough due diligence on private debt options, focusing on risks like loan-to-value ratios and fund liquidity management.

Deep dives

Understanding Private Debt

Private debt has gained traction as an essential component of investment portfolios due to regulatory changes following the 2009 Dodd-Frank ruling, which limited traditional bank lending. This shift enabled private individuals and entities to fill the lending gap across various sectors, including consumer loans, businesses, and real estate. Historical references indicate that private lending has existed for centuries, significantly increasing since 2010 as investors discovered the benefits of non-bank financing. Private debt presents the dual advantages of diversifying investment portfolios and enhancing returns, appealing to those seeking stability during economic fluctuations.

Intro

2min

The Rise of Private Debt Investment

6min

Navigating Private Debt in Real Estate

8min

Navigating Transparency in Private Real Estate

7min

Navigating the Private Debt Landscape

9min

Navigating Private Real Estate Debt and Investment Flexibility

5min

Exploring Opportunities in Private Real Estate Debt

4min

Paul Shannon hosts an in-depth chat with Chris Carsley of Kirkland Capital Group to explore the growing world of private real estate debt. Chris explains how private lending is filling financing gaps left by traditional banks, why short-term “bridge” loans for smaller commercial deals can yield competitive returns, and what operational due diligence steps every LP should take before investing. From the basics of senior debt to navigating leverage, liquidity, and redemptions, Chris shares real-world insights into the risks and rewards of building private credit into a balanced portfolio—especially amid today’s market volatility.

Today’s Episode Takeaways

Why Private Debt Exists: How regulatory changes and market gaps since 2010 have fueled the rise of non-bank lending.
Fixed-Income Diversification: How private real estate debt contrasts with traditional bonds—and the potential for uncorrelated cash flow.
Key Risk Factors: Why valuation, low loan-to-value, and conservative underwriting matter for principal protection.
Due Diligence 101: Questions to ask fund managers about leverage use, past defaults, and changes made after deals go wrong.
Liquidity vs. Illiquidity: Understanding fund “gates,” redemption structures, and how to fit private debt into an overall strategy.

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Disclaimer

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. Remember that past performance is not indicative of future results. This podcast may contain paid advertisements or other promotional materials for real estate investment advisers, investment funds, and investment opportunities, which should not be interpreted as a recommendation, endorsement, or testimonial by PassivePockets, LLC or any of its affiliates. Viewers must conduct their own due diligence and consider their own financial situations before engaging with any of the advertised offerings, products, or services. PassivePockets, LLC disclaims all liability for direct, indirect, consequential, or other damages arising out of reliance on information and advertisements presented in this podcast.

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