View From the Top: Why Capital Structure Matters More Than Market Predictions
As refinancing pressure grows and rates remain elevated, commercial real estate investors are focusing on capital structure, credit, and risk management.
View From the Top: Why Capital Structure Matters More Than Market Predictions
View From the Top: Why Capital Structure Matters More Than Market Predictions
For commercial real estate investors, the central question in 2026 is no longer whether interest rates will fall, but how a higher-for-longer environment is reshaping the flow of capital across the market.
In a recent episode of Peachtree Group’s Peachtree Point of View, Greg Friedman, CEO of Peachtree Group, and CFO Jatin Desai shared their perspective on where the commercial real estate cycle stands today and how experienced investors are evaluating opportunities in a market defined by refinancing pressure, tighter lending standards, and shifting risk-reward dynamics.
What Is Driving Today's Commercial Real Estate Opportunity?
Commercial real estate spent more than a decade benefiting from historically low interest rates, which supported rising values and abundant liquidity. As rates began to move higher in 2022, many owners postponed difficult decisions by extending loans, restructuring financing, or simply waiting for conditions to improve. Those extensions are now approaching their limits, forcing assets to be refinanced into a very different rate and underwriting environment.
As a result, investors are seeing:
- Increased refinancing activity
- Higher capital requirements for borrowers
- Expanded cap rates
- Reduced bank lending activity
- Greater demand for alternative financing solutions
For investors with capital to deploy, particularly those focused on credit, these dynamics are creating a growing set of actionable opportunities.
Why Credit Is Gaining Attention
Credit investing means providing debt capital to a property rather than purchasing an ownership stake.
In today's environment, private credit can offer several advantages:
- Priority position in the capital stack
- Contractual income streams
- Enhanced downside protection
- Ability to benefit from capital scarcity
Friedman notes that the firm increasingly views credit as an attractive way to pursue strong risk-adjusted returns while maintaining a more protected position than traditional equity. This view mirrors a broader shift across commercial real estate, as financing markets recalibrate and more investors look to move up the capital stack in a higher-rate environment.
Why Higher Interest Rates Change Investment Strategy
A key theme from the discussion was that investors may need to reset expectations shaped during the ultra-low-rate environment of 2010 to 2022.
During that period:
- Financing costs remained exceptionally low
- Asset values benefited from cap rate compression
- Liquidity was widely available
Today's environment looks different.
Higher rates create additional pressure on asset values and increase the importance of operational execution.
As a result, investors may need to focus more heavily on:
- Value creation strategies
- Capital structure discipline
- Asset-level execution
- Risk-adjusted return analysis
Three Key Takeaways for Investors
1. The Refinancing Cycle Is Creating Opportunity
Many owners now face refinancing deadlines in a market defined by higher borrowing costs and tighter lending standards. Those same conditions are creating a growing opportunity set for well-capitalized lenders and credit-focused investors.
2. Capital Structure Matters More Than Market Timing
Rather than trying to predict the next move in interest rates, investors may be better served by focusing on where they sit in the capital stack and how much downside protection their position provides.
3. Platform Diversification Creates Information Advantages
Firms that operate across lending, development, ownership, and structured finance often gain a broader, real-time view of market conditions and emerging opportunities. This multi-platform perspective can help them spot dislocations earlier, price risk more effectively, and allocate capital to the most attractive parts of the capital stack.
Frequently Asked Questions
What is meant by "higher-for-longer" interest rates?
Higher-for-longer refers to the expectation that interest rates will remain elevated relative to the ultra-low-rate environment that existed between 2010 and 2022.
Why are refinancing challenges important in commercial real estate?
As loans mature, borrowers must refinance at current market rates. Higher rates can increase debt service costs and create capital gaps that require new financing solutions.
Why are private lenders gaining market share?
Many banks continue operating under tighter regulatory and capital requirements, creating opportunities for private lenders to provide financing where traditional lenders may be less active.
What is capital structure?
Capital structure refers to how an investment is financed through debt and equity. Different positions within the capital stack carry different levels of risk and return.
Listen to the Full Conversation
For a deeper discussion on market cycles, refinancing pressure, direct lending opportunities, and how experienced investors are evaluating risk in 2026, listen to the full episode of Peachtree Point of View featuring Greg Friedman and Jatin Desai.
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2026 Market Insights
Peachtree Group's leadership team is actively shaping the conversation across commercial real estate and private credit, providing perspective on a market defined by capital constraints, refinancing pressure and emerging opportunity.
What changes do you expect to see in the commercial real estate market in 2026?
Greg Friedman | Managing Principal & CEO
“It’s an inflection point… you’re going to start seeing assets trade… it’s not an issue with the fundamentals at the asset level, it’s more of an issue of broken balance sheets.”
What has been the key to the firm’s ability to succeed across different market cycles?
Jatin Desai | Managing Principal & CFO
“We’ve had to be very agile to pivot through all these various things… that’s what’s helped us find good opportunities by not being so set in being just a developer, operator or owner… and pivoting and finding the right partner really made a difference for us to do what we wanted to do, but also grow beyond that.”
How does Peachtree Group approach capital structuring for complex historic redevelopment projects?
Jared Schlosser | Head of Credit Originations and Commercial PACE
“Projects like this require thoughtful structuring given the complexity of historic redevelopment and construction completion… that complexity is exactly why sponsors seek lending partners with the experience and balance sheet to structure capital solutions and help move projects forward.”
How are deferred capital expenditures impacting the hotel sector today?
Michael Ritz | EVP Investments
“That capex doesn’t go away… brands need reinvestment to protect guest experience. But many owners simply can’t fund it.”
What does it take to successfully develop hotels in today’s market environment?
Will Woodworth | SVP, Investments
“Developing hotels in today’s environment requires both conviction and capability… our vertically integrated platform and access to capital allow us to partner with best-in-class brands to deliver properties on-time and on-budget that will elevate the markets in which we build.”
What are borrowers looking for in lending partners today?
Daniel Siegel | President and Principal CRE, Credit
“With banks pulling back and refinancing risk rising across the market, demand for experienced private lenders has accelerated… borrowers are not just looking for capital. They are looking for partners who understand assets, cash flow and downside risk.”
How is EB-5 financing supporting development projects?
Adam Greene | EVP, EB-5
“In this case and in many cases where Peachtree implements EB-5, having that funding source from these foreign investors allows us to give developers a slightly better deal than they might otherwise get from traditional sources… it’s a really worthy development tool.”
Grind to ’29: Opportunity in CRE’s Capital Reset
Over the last three years, commercial real estate has gone through the painful part of the cycle. Values reset, transactions slowed, lenders pulled back and many owners shifted from growth to defense. That was Survive to ’25. Now the market has moved into something different, or what we refer to as Grind to ’29.
This next phase will not be driven by falling rates. It will be an extended period in which outcomes are shaped by capital stack adjustments, underwriting discipline and the ability to move when others cannot.
The economic backdrop is stable but fragile. Headline data still appears durable, yet growth is increasingly uneven. A narrow set of AI-driven investments has carried much of the expansion, while broader private investment is slowing. At the same time, policy uncertainty has become a headwind in its own right.
For us, rates matter most at the long end of the curve. We are focused on the 10-year Treasury as the anchor for cap rates and permanent capital. Even in our current range-bound 10-year, while higher, it is still constructive, as it provides some stability. Even if the Fed eases modestly on the short end, underwriting will need to stand on fundamentals rather than multiple expansion.
That is why our strategy is centered on credit and special situations. At three-plus-trillion-dollar wall of maturities is colliding with a challenging refinancing market. Regional banks, historically a primary source of commercial real estate lending, are prioritizing their balance sheet over new originations.
The result is a meaningful gap in the capital markets. While lending spreads have compressed modestly in favored sectors such as multifamily and industrial, the gap between sectors remains wide, reinforcing the importance of selectivity and disciplined structure.
We are originating loans that banks would have written in prior cycles, but at a stronger basis following the valuation reset. At the same time, an increasing number of institutions are choosing to sell loans rather than extend them or push borrowers into refinancing. That shift is expanding activity in the secondary market as banks seek liquidity. The combination of selective originations and discounted loan purchases broadens our entry points rather than narrows them.
The prolonged period of “extend and pretend” did not resolve leverage risk. It deferred it. Today, there is a growing inventory of assets with capital structures that no longer reflect current rates or values. Many properties are operationally sound yet over-levered, and partnerships are feeling pressure as maturities approach without straight forward refinancing solutions.
We believe 2026 will be an inflection year for many commercial real estate owners. Decisions that were postponed must now be made. Owners will transact, contribute significant new equity, accept higher-cost capital through preferred equity or structured senior debt, or, in some cases, return assets to lenders.
The process is unlikely to be orderly. It is likely to be complex and uneven. For disciplined capital providers, that complexity creates attractive entry points. In this part of the cycle, it is less about broken real estate and more about broken capital stacks. That is where dislocation lives.
The common thread across everything we are doing is consistent. We prioritize basis, maintain disciplined structure and build in downside protection. The next leg of commercial real estate will reward patience, execution and the ability to provide solutions rather than predictions.
That is what Grind to ’29 means for us as we steadily build value while others wait.
Fresh Powder in a Dislocated Market
Fresh Powder in a Dislocated Market: Peachtree’s Equipment Finance Strategy
Equipment Finance Advisor | In the wake of the financial crisis, few corners of finance were untouched. Roger Johnson, Executive Vice President and Principal of Peachtree Group’s newly formed Equipment Finance division, remembers it vividly.
“I joined Keefe, Bruyette & Woods (KBW), where the focus was on publicly traded banks,” said Johnson. “The platform was bought and sold wholesale loans to help banks balance their portfolios. Then the 2008 financial crisis happened. So, we ended up becoming the ‘garbage truck’ for the FDIC and a number of other clients.”
Over a four-year period, Johnson and his colleagues sold roughly $10.5 billion of problem loans. It was during that time he became acquainted with Greg Friedman and Jatin Desai, who were just launching what would become one of the more dynamic alternative investment platforms in commercial real estate.
Today, Peachtree Group manages approximately $10 billion in assets and has evolved far beyond its hospitality roots. Now, it is placing a strategic bet on equipment finance as the next leg of growth.
Read Full Article on www.equipmentfa.com
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