Shadow Lenders to Bridge Real Estate Void Left by Banks, Bonds
- Carlyle, Castlelake, King Street, HighVista, Palladius eye CRE
- CMBS is down 82% as regional banks pull back from lending
Traditional banks and the bond market are increasingly backing away from commercial real estate.
Photographer: Jeenah Moon/BloombergThis article is for subscribers only.
Shadow lenders are circling commercial real estate, a large asset class that traditional banks and the bond market are increasingly backing away from, potentially forcing borrowers to start paying up for deals.
Regional banks make up about 70% of the commercial real estate loans made out by US banks. But the turmoil sparked by the US regional bank crisis combined with rising loan defaults on troubled properties has burned small banks, prompting them to scale back on commercial real estate lending as they reduce risk and shrink balance sheets.