Discipline and creativity define the best risk-reward in real estate credit

Kayne Anderson argues that disciplined, flexible lending across public and private real estate credit offers the best risk-reward as refinancing pressure exposes over-leveraged borrowers.

• US loan origination reached approximately $850 billion in 2025, close to the 2021 peak and more than double the reported low point of $400 million, while refinancing accounted for much of the activity.
• Real estate credit remains liquid, with $250 billion-$300 billion of dry powder across equity and debt funds, active banks and insurers, and strong demand in CMBS and CLO markets.
• Loans originated from 2020 through the first half of 2022 are bifurcating: most can refinance conventionally, but office and multifamily assets are vulnerable because 2021-22 valuations have fallen, base rates are over 350 basis points higher, and expected 3-5 percent rental growth has slowed or turned negative.
• Approximately $300 billion of loans maturing through 2027 carries an LTV of at least 80 percent, including about $120 billion in multifamily; roughly one-third of these loans were provided by banks.
• Kayne Anderson seeks opportunities through bilateral loans, loan purchases and flexible structures with milestones, covenants and leasing thresholds, focusing on multifamily, student housing, seniors housing, medical office, industrial and self-storage.

Takeaway: Investors should favor downside-protected, equity-style underwriting and relative-value comparisons between bonds and loans rather than chase tighter spreads; the opportunity is greatest where flexible capital can solve over-leveraged situations without sacrificing basis or structure.