Private Equity Spotlight Exploring the private real estate debt fund ‘ecosystem’
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Mar 27, 2023 Warren DeHaan and Chris Tokarski, co-managing partners at ACORE Capital, delve into the booming realm of private credit in commercial real estate. They highlight the increasing institutional demand for stable, high-yield investments amid market uncertainty. The duo explains the challenges posed by rising interest rates and the importance of a robust credit culture. They also discuss the competitive landscape of debt fund managers, emphasizing the need for scale and solid borrower relationships to succeed in this evolving market.
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Safety and Yield in CRE Credit
- Commercial real estate credit offers safety and attractive double-digit yields in uncertain markets.
- Senior secured loans benefit from equity cushions and provide consistent cash returns.
Dynamic Loan Market and Distressed Sellers
- Commercial real estate loans have constant rollovers with maturities between 3 to 10 years.
- Distressed loan sellers add unique secondary market opportunities not usually present in stable markets.
Debt Fund Financing Strategies
- Debt funds vary based on financing sources like CLOs or internal term financing, affecting their market positioning.
- Larger, internally financed funds have advantages during difficult issuance environments.