LONDON - Some of the world's largest investors are making deeper inroads into lending to commercial property, as they snap up market share from retreating banks and bet on an end to the sharp drops in real estate prices.
LaSalle Investment Management, which manages $89 billion globally, said it was targeting growing its real estate debt investments by 40% to around $7.6 billion over two years, including in distribution, hospitality and student housing. "Historically through real estate cycles, you would find that generally loans made at the bottom of the cycle... tend to have the lowest delinquency rates and the highest spreads," said Jack Gay, global head of debt at Nuveen.Stricter capital rules for banks - including new international standards dubbed the 'Basel Endgame' - and U.S. regional bank failures have opened the market further, fund firms said.
In Britain, non-bank lenders accounted for 41% of real estate loans in 2023, more than doubling from 19% just nine years earlier, according to Bayes Business School data, which also showed that new commercial property lending in Britain reached a decade-low.The growing role of investment funds in lending - known as 'shadow banking' - is worrying regulators because of default and contagion risks.
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