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Holders of real estate debt shifts from last downturn

Rendering of 18 Sixth Avenue (Credit: Greenland Forest City)

Private-equity firms, hedge funds, and real-estate investment trusts took over the market for riskier commercial real-estate loans in recent years, filling a void left by banks after the 2008 global financial crisis. Less regulated than banks, these lenders issued billions of dollars in high-yield construction loans and other mortgages and also bought bonds backed by property debt, WSJ noted.

  • Be Smart: REITs held $105.5 billion in commercial and multifamily mortgages in the fourth quarter of 2019, an increase of 11.6% compared with a year earlier. Meanwhile, private real-estate debt funds had $181.2 billion in assets under management as of June 2019, up from $33.5 billion at the end of 2010. 
  • Macro perspective: Commercial mortgage debt has increased to nearly $3 trillion, up by 33% from its low eight years ago and well above its 2008 levels.
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