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DWS’ Alexander Oswatitsch, Head of European Real Estate Debt recently participated in the annual Alternatives Lenders roundtable facilitated by Real Estate Capital (REC). Alexander notes the principal driver of alternative lenders’ strategies is increased opportunity to provide senior debt in the form of whole loans. He favours a combination strategy with a main focus on whole loans together with a 20 or 25 percent mix of mezzanine to take advantage of that opportunity. Overall, roundtable participants say conditions in European real estate debt markets favour alternative lenders. But sluggish investment activity is picking up only slowly, and underwriting remains challenging. ➡️ Read the full published article featuring Alexander: http://dws.co/604447emY Alexander Oswatitsch, Tim Knapp, CFA, Jens Witzke, Nicolas Deyon For professional investors only. For wholesale and institutional investors.

CBRE Insignts: (Watch) Commercial Real Estate Debt Markets Today, and in the Future James Millon, U.S. President of Debt & Structured Finance, provides commentary on near-term transaction and lending activity in the face of volatility and elevated interest rates. In this conversation, James explores opportunities as we move through current challenges toward a more favorable commercial real estate environment. • What’s getting financed today. Deals with positive leverage or a positive debt-service coverage ratio. Think retail, hospitality, and occupied office. Also desirable: asset classes like multifamily and industrial, where strong rental rates can get to positive leverage in two to three years. • Lender sentiment and 2024 outlook. Lenders are cautious, writing conservative loans. They want to be paid their interest, get back the principal, then reallocate the capital. Nontraditional funding sources, opportunistic lenders, and equity investors are more active. They’re looking to realize outsized returns by buying distressed credit and providing gap funding in capital stacks. • Key considerations beyond 2024. Interest rate environment and debt service coverage ratio must be factored into underwriting. Looking at volatility, investors and lenders will need to manage their risk so their portfolios can withstand shocks as future macroeconomic events will continue to affect the market.

In the past, commercial real estate debt typically offered returns between 6% to 8%. However, the current market environment is set to yield returns of around 11% over the next 3-5 years. Investing in real estate debt not only grants exposure to the real estate market but also offers a significantly safer investment avenue compared to equity. Commercial real estate debt involves extending loans to businesses, developers, or funds for commercial projects, with varying levels of risk in first mortgages or subordinate debt. While traditionally handled by banks, affluent investors now access these opportunities through vehicles like debt funds and private credit, ushering in a new era of possibilities. (Source: PENTA)

Our latest European Real Estate Debt newsletter is out! 💡 The highlights of this edition are: ➟ High interest rates have caused a decline in valuation multiples against annual rental income. Consequently, at constant or lower LTVs, debt investors are provided with a higher risk buffer and debt service cover as assets’ rental income remains stable or even increases. ➟ Banks remain highly restrictive in new lending and focus primarily on restructurings to preserve value. Regulatory requirements for higher capital coverage of risk-weighted assets have led to a peak in credit risk premiums for commercial real estate loans. The current environment thus provides alternative financiers with the opportunity to select attractive/bankable transactions. ➟ Manage-to-green strategies offer attractive investment opportunities for alternative lenders as the transformation of properties into sustainable assets can increase debt yield and asset value. #realestatedebt #assetmanagement #opportunities

The Smith Manoeuvre is a strategic financial technique employed by Canadian homeowners to transform their non-deductible mortgage interest into tax-deductible debt. It essentially allows you to turn your home into a tax-efficient investment. Within The Smith Manoeuvre strategy, there are several accelerators that can improve the performance of the strategy. One of the most powerful accelerators is is the Cash Flow Dam process, which plays a pivotal role in its success. With the help and guidance of my accountant back in the early 2000s, I employed the Smith Manoeuvre and more importantly the Cash Flow Dam accelerator to expedite the conversion of my non-deductible debt to tax deductible debt. Since then, I haven’t looked back. But it is not something that should be done without proper guidance and implementation from knowledgeable professionals to avoid costly mistakes.

Some interesting statistics in the most recent CBRE UK research on the European real estate financing gap. Whether you read this piece, AEW or Green Street's research, the next few years are going to be fascinating as a real estate debt investor! #realestatedebt #financinggap

If you're an investor who needs access to debt capital, there's never been a better time to consult Joshua Sonshine and CBRE's Debt & Structured Finance group. Don't let high interest rates keep you out of the game. See how they can help: https://lnkd.in/ei3UM_Sj #Debt #Finance #InterestRates

Tishman Speyer Launches Commercial Real Estate Debt Platform Read the full article below..