Commercial Observer: Trump Tariffs-Induced Volatility Widens CRE Opportunity for Private Credit

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Wall Street Journal | Credit shops frequently originate loans with higher financing levels than banks use, which translates to greater risk of default and loss, according to Moody’s. The sector is also lightly regulated and many private-credit firms have relatively short track records. Many didn’t exist when the 2007 subprime mortgage market meltdown triggered the global financial crisis that extended into 2009.

With fewer regulatory restrictions than banks, private-credit lenders can be more nimble in meeting market demands and borrowers’ needs, said Greg Friedman, the chief executive of Peachtree Group, an investment firm that makes commercial real-estate loans.

“Banks tend to be more reactive to historical performance, whereas private credit tends to be more proactive on the future outlook of the performance of the asset, and so risk can be viewed differently,” he added.

The typical loan-to-value ratio for the average bank loan backing a commercial property ranges from 50% to 65%, Friedman said. But the average ratio for private-credit loans runs from 60% to 75%, he said.

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“It’s a very narrow bandwidth of who these regional banks, community banks and national banks want to lend to right now. So, if private credit didn’t exist, I think we’d be in a much more challenging environment for commercial real estate,” said Greg Friedman, managing principal and CEO of nonbank lender Peachtree Group. “We’ve seen a pickup of more opportunities coming our way where banks are unwilling to finance projects, and the regional banks in particular are really pushing borrowers to pay them off, and that’s forcing the borrower to seek other sources of capital.”

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Interested in how private credit is stepping up amid market volatility and shifting CRE dynamics?
Read the full article here to see our CEO’s take on the evolving lending landscape and what it means for the future of real estate finance.

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AltsWire - Since January, volatility in Washington has added new layers of complexity to the investment landscape. Once buoyed by resilient consumer spending and AI-driven optimism, equity markets have stumbled as investors weighed the risk of disrupted supply chains, higher costs, and slower global growth.

Yet amid this turbulence, bonds have quietly returned to form, resuming their traditional role as portfolio ballast. U.S. Treasurys and high-grade corporates have attracted meaningful inflows amid signs of a cooling labor market and slowing economy, which had reignited rate cut expectations.

However, recent volatility in longer-term yields – despite expectations for the Federal Reserve to cut rates by up to 100 basis points this year – underscores the importance of active duration management. In this environment, with a backdrop of geopolitical tensions and unpredictable trade dynamics, traditional bonds alone may not offer sufficient protection or return.

Private credit – especially strategies focused on senior secured lending, real estate credit or asset-backed deals – is proving to be a powerful complement to traditional fixed income. These investments typically deliver high, consistent cash flow, often in the 8% to 12% range, allowing portfolios to generate meaningful income while materially shortening duration.

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