While traditional banks’ appetite for providing commercial real estate loans has declined, other lenders (including investment management firms such as LaSalle) have moved in to fill the funding gap. As a result, we have recently seen increasing interest from institutional investors in real estate debt.

But what is it about real estate debt that makes it a compelling investment? As the second largest of the “four quadrants” of real estate, it has a value in the US and Europe alone of approximately US $4.5 trillion, representing an enormous opportunity. Real estate debt historically has produced competitive risk-adjusted returns in addition to showing low correlation to other assets.

In our latest research, we examine the three-part case for investment, including:

• Real estate debt’s place in institutional portfolios,
• The role of non-bank lending, and
• The debt opportunity today, which takes advantage of a looming debt funding gap and attractive pricing.

Contributors:

Brian Klinksiek

Global Head of Research and Strategy

Dominic Silman , PhD

Europe Head of Debt and Value-add Capital Research and Strategy

Jen Wichmann

Senior Strategist, Research and Strategy

Hina Yamada

Senior Research Analyst, European Research and Strategy