Today’s commercial real estate debt market may offer one of the most compelling entry points in decades
Timing matters in every investment cycle — and today’s commercial real estate debt market may offer one of the most compelling entry points in decades. In this video, Fortress's Spencer Garfield explains how market dislocation is shaping returns for private lenders.
A compelling entry point:
- A cycle of rapidly rising interest rates caused a reset in valuations across commercial real estate.
- Traditional lenders, especially regional banks, have reduced exposure and continue to pull back from CRE lending — opening the door for private credit providers like Fortress.
The Fortress perspective:
- Fortress leverages over two decades of CRE experience to identify lending opportunities.
- The firm’s disciplined underwriting, focus on fundamental and strong asset management capabilities help mitigate downside risk while potentially capturing attractive yields.
Benefits for advisors:
- Access to institutional-grade CRE lending strategies.
- Opportunities for stable, risk-adjusted returns during market dislocation.
Spencer Garfield: I've been investing in commercial real estate for over 32 years, and I've never been more excited about the opportunity set that I'm seeing today.
Starting in 2021, we saw a rapid rise in interest rates that caused a quick decline in valuation of commercial real estate.
The regional banks constituted about 45% of all commercial real estate lending, historically, and they are almost completely on the sidelines. In addition to the regional banks, other commercial real estate lenders who have legacy issues from prior to the rise in interest rates are also on the sidelines. It's created a void in the market for us to write loans similar to what the banks were writing but at a better entry point, because valuations are so far down.
So we believe at the timing to enter the commercial real estate core bridge lending business couldn't be any better. We think there is a four or five year window of opportunity where there's four plus trillion dollars of debt coming due. Values are depressed and competition is sidelined. That creates an opportunity set better than we've ever seen.
