For other lenders in the commercial space, that’s driving fresh opportunity. “We continue to see certain cases where banks are trying to deleverage and reduce exposure to commercial real estate,” Greg Friedman (pictured top), managing principal and chief executive officer at Peachtree Group, told Mortgage Professional America.
“It’s creating an environment where banks, traditional lenders to commercial real estate, are unwilling to lend at the same levels that they once did. That continues to create a huge opportunity for us on the private credit side, where we’re doing a lot of direct lending beyond even buying loans from banks and things like that.”
Those opportunities include refinances where projects have recently completed construction or renovations, while recapitalizations and acquisition financing amid a wall of debt maturities are also on the rise.
Is ‘extend and pretend’ trend on the wane?
On the equity side, meanwhile, private credit lenders are moving in to provide structure where banks and other lenders are less willing to step up to the plate.
About $1 trillion worth of loans are set to mature over the next 12 months in the commercial space – and rising interest rates and a rocky environment have seen a growing trend of “extend and pretend” strategies, where lenders stretch out the loan maturity date to avoid having to recognize an immediate loss on a distressed property.