Fortress, Goldman Seek to Tap the Wealthy for New Debt REITs
REITs aim to meet rising demand for commercial-property debt
Firms look to individual investors as institutions pull back
Excerpt
Originally published September 18, 2024 at 6:30am EST
Fortress Investment Group is preparing to raise money from individual investors for a vehicle that finances commercial real estate debt, as money managers seek to meet an expected spike in demand for such loans.
Fortress — which has traditionally catered to large institutions — filed with regulators this month to set up a non traded, perpetual-life real estate investment trust. The Fortress Credit Realty Income Trust will finance loans for a range of real estate ventures, including multifamily, hospitality and industrial properties.
Goldman Sachs Group Inc. and Principal Financial Group Inc. each filed in July to make commercial real estate loans through the same type of REIT.
Wall Street anticipates a jump in requests for commercial real estate loans, driven by forecasts that the Federal Reserve will lower interest rates and that developers will refinance billions in property debt. Total commercial and multifamily mortgage borrowing and lending is expected to finish the year at $539 billion, a 26% increase from 2023, according to a report last month from the Mortgage Bankers Association.
The Fed was widely expected to make its first rate cut in four years on Wednesday. Still, Moody’s said in a note ahead of the Fed’s decision on rates that commercial real estate activities “hinge on the clarity of future interest rate trajectory.” […]