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CNBC: How Private Equity Fills the Lending Gap for Commercial Real Estate
Greg Friedman, CEO of Peachtree Group, joins CNBC’s ‘The Exchange’ to discuss how the lending slowdown is creating opportunity for private credit.
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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Peachtree CEO Talks CRE Turning to Private Credit
Greg Friedman, Peachtree CEO, joins ‘The Exchange’ to discuss a rising trend in commercial real estate private credit loans, and how private creditors can benefit from the pullback in direct bank lending to commercial real estate.
Greg Friedman, Peachtree CEO, joins ‘The Exchange’ to discuss a rising trend in commercial real estate private credit loans, and how private creditors can benefit from the pullback in direct bank lending to commercial real estate.