Real estate partners Jack Creedon and Dan Stanco spoke with Law360 about the real estate private equity outlook for 2024.
On the topic of regional banks and lending, Dan noted that “the banks are reining back a lot in terms of their exposure to commercial real estate. They're less inclined to lend on a direct basis. They are, however, more inclined to let the private funds provide financing against the underlying real estate."
"But the banks are very willing to finance those private debt funds in the background, because their exposure to the real estate is a lot less, better regulatory capital treatment, better credit support, all those sorts of things," he said.
More private equity firms are providing preferred equity financing for development projects. Jack said that “in exchange for the preferred equity financing, the investor or firm acting as the lender would receive some downside protection. It gets priority return from cash flows and sale proceeds coming out of the asset.”
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