The private credit market, or lending by institutions other than banks, has grown from an estimated $40 billion in 2000 to over $1.5 trillion at the end of 2023. This growing market emerged about 30 years ago as a financing source for companies that were too large or risky for commercial banks and too small to raise debt in public markets.
Private credit has increased rapidly in recent years largely due to tighter lending standards, increased bank regulation, inflation, and rising rates. Private lending was able to fill this void and move into a mainstream funding role, providing financing for real estate investors, developers, small businesses, and large companies.
Borrowers prefer private lending solutions for their flexibility, creativity, and speed of execution, allowing them faster access to capital to finance real estate and business projects. Unlike institutional loans, private lenders can craft a tailored capital solution to meet a borrower’s needs including loan size, type, and timing of transactions.
We work directly with borrowers to originate private mortgage loans that are not traded in public markets. Borrowers are willing to pay a premium for the certainty of execution, agility, and customization offered by private lenders.
We finance borrower transactions through our mortgage fund, which consists of a portfolio of private mortgages. Another vehicle is our direct mortgage investments in which an entire mortgage or a portion of one is funded by capital investors.
Growing Investment Opportunities for Private Debt Investors
Private mortgage debt investments are posting higher risk-adjusted returns versus other asset classes. These real estate debt investments typically offer higher yields than traditional bonds and other fixed-income investments. Many private debt securities are tied to floating rates, which enhance returns in the current rising-rate environment. Here are key reasons to invest in private mortgages:
Income Generation: Capital investors can receive regular income (monthly or quarterly) when borrowers make interest and fee payments. Build wealth with stable consistent returns.
Higher Yields: Capital investors have the potential to earn and solid annual returns in the 10% to 12% range that are backed by the security of real estate assets without the volatility of the stock market.
Avoid Market Volatility: Private credit is less correlated with the stock market, reducing volatility and improving risk-adjusted returns.
Diversification: Risk is minimized as loans are spread across multiple property types and geographies, creating more stability by balancing out risk and return and capitalizing on numerous growth opportunities.
Lower Loss Rates: Private credit has demonstrated historically lower default rates versus public credit that includes government bonds and treasury bills.
Take advantage of the current high-interest rate environment that is providing abundant investment opportunities in private mortgages.
Please feel free to contact us for a confidential suitability call.
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