Brookfield and other big-name funds pile into real estate debt as banks retreat

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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.) and QuadReal, Britain’s M&G, Schroders and Aviva, and France’s AXA all told Reuters they plan to increase their credit exposure to property.

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.

The fund management arms of major banks are also targeting the market. Goldman Sachs Asset Management said on Monday it had closed its largest real estate credit fund to date, with over $7 billion of lending capacity, including some of the firm’s own capital and leverage.

 

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