Creating compelling opportunities for sophisticated investors who understand the dynamics at play. In a recent conversation on Peachtree Point of View, CEO Greg Friedman speaks with Christopher Marinac, Director of Research at Janney Montgomery Scott to explore how regulatory shifts, bank consolidation, and the rise of private credit are reshaping capital deployment in commercial real estate.
Regional and community banks are actively cleaning up their balance sheets, particularly around office exposure. Marinac notes that banks have already reserved for problem assets and are now focused on resolution. "Q3 coming up on reporting in October, as well as in the year end, fourth quarter, you're going to see a lot of losses taken at banks just to get rid of those office loans that are on the books."
This creates a dual opportunity: distressed asset acquisition for value investors and increased demand for alternative capital sources as banks reduce certain exposures.
Banks are increasingly recognizing that partnership models with private credit funds offer better risk-adjusted returns than direct lending in certain scenarios. "If a bank is willing to offer 50% or 55% leverage and a private credit fund is willing to do 70 or 65, that's a material difference," Marinac explains.
For borrowers, this means access to more flexible capital structures. For investors in private credit strategies, it signals growing institutional acceptance and deal flow.
After the turbulence of 2023 and early 2024, capital is flowing again. Marinac observes, "Liquidity is everywhere. Liquidity has actually stepped up another leg in the past 60 to 80 days." Banks need to deploy capital, but they are doing so selectively with improved underwriting standards and stronger debt service coverage requirements.
Smart investors should position themselves where capital scarcity still exists, particularly in transitional assets, value-add opportunities, and sectors where traditional bank lending remains constrained.
• Distressed Opportunities Are Materializing: Bank portfolio sales and charge-offs will accelerate through year end, creating acquisition opportunities for prepared capital.
• Private Credit Partnerships Are Essential: The relationship between banks and private lenders is evolving from competitive to collaborative, expanding financing options.
• Regulatory Environment Is Easing: The shift in administration is creating more favorable lending conditions, but banks remain disciplined after recent stress.
The next 12 to 18 months will define who capitalizes on this transition. Investors with dry powder, operational expertise, and strong lending relationships will find significant value creation opportunities as the market recalibrates.
Listen to the full conversation on the Peachtree Point of View podcast to hear more insights from Chris Marinac on bank consolidation trends, maturity wall strategies, and where lending appetite is strongest today.
