US Commercial Real Estate Debt Fund — Senior Loans

US Commercial Real Estate Debt Fund: Senior Mortgage Lending at Dislocation Pricing

The US commercial real estate debt market is experiencing one of its most significant dislocations in decades. Regional bank stress following the 2023 bank failures, tightening from large bank lenders, and the repricing of commercial property values have created a gap in institutional lending that private credit funds are exceptionally positioned to fill. Borrowers who previously accessed bank credit at 4–5% are now paying 8–11% to private lenders for equivalent senior secured financing — and lenders are originating at significantly lower loan-to-value ratios than at the previous peak.

This fund originates and holds senior secured first-mortgage loans on US commercial real estate, targeting a net return of 9–11% per annum to investors through quarterly distributions.

Market Context: Why US CRE Debt Now

Between 2021 and 2024, US commercial real estate values underwent material repricing. Higher interest rates reduced the capitalised value of income-producing properties; office properties additionally faced structural demand headwinds from hybrid working patterns. The result was a broad valuation correction across US commercial property sectors.

For debt investors, this repricing is advantageous rather than damaging. The fund originates loans today at values that reflect post-correction pricing — meaning that the loan-to-value ratios are calculated against conservative, current market values rather than peak 2021 levels. A loan at 60% LTV against today's values has a meaningful buffer compared to a loan originated in 2021 at the same LTV against inflated peak prices.

Asset Classes and Geography

Multifamily residential (apartments): US multifamily continues to benefit from structural demand — household formation, migration patterns, and affordability constraints in the for-sale market. The fund lends against stabilised multifamily assets in growing Sun Belt and gateway markets.

Industrial and logistics: E-commerce and supply chain restructuring have driven sustained demand for modern warehouse and distribution facilities. Industrial is among the most defensible property types for debt investors.

Office — selective: The fund takes a highly selective approach to office, focusing only on best-in-class assets in strongest-conviction markets (life sciences campuses, government-leased buildings). General suburban office is excluded from the investment mandate.

Retail — necessity-anchored only: Grocery-anchored retail and necessity-based shopping centres have demonstrated strong performance through the e-commerce disruption. Enclosed regional malls and discretionary retail are excluded.

Geographic diversification spans 10–15 US metropolitan markets, with concentration limits preventing any single market from exceeding 25% of the portfolio.

Loan Structure

The fund targets bridge and transitional loans — shorter duration (18–36 months) financing for properties undergoing stabilisation, lease-up, or light repositioning. These loans carry higher spreads than long-term permanent financing and are secured on properties where management or leasing activity will drive value creation.

Every loan in the portfolio has:

• First-mortgage security on the underlying real estate asset
• Loan-to-value ratios of 55–65% at origination (based on independent FIRREA-compliant appraisals)
• Personal or corporate guarantees from the sponsor
• Cash management controls including interest reserves
• Covenants providing early warning of property or sponsor deterioration

Risk Considerations

Property value risk: If commercial real estate values decline further from current levels, the collateral protecting senior loans diminishes. Loans at 60% LTV become under-secured if values fall more than 40% from origination. While origination at conservative post-correction values provides a buffer, further declines are possible.

Borrower default risk: If a borrower fails to service the loan, the fund must manage or sell the underlying property. Foreclosure and workout processes in US commercial real estate can take 12–36 months and involve significant professional costs.

Interest rate risk: The fund's loans are floating rate (SOFR-based), and income rises with interest rates. However, higher rates also increase stress on borrowers — there is an inherent tension between income enhancement and portfolio quality in a high-rate environment.

Liquidity: This is a closed-end, four-year fund. No early redemption is available. Investors should consider the full four-year period as unavailable capital.

Suitability

This fund suits sophisticated investors seeking high-income real estate exposure with senior secured protection, and who are comfortable with the illiquidity of private real estate debt. It is appropriate as part of an alternative investment allocation within a diversified portfolio. Not suitable for investors requiring capital preservation certainty or access to funds during the term.

How to Invest

Contact our investment team to receive the fund's private placement memorandum, track record documentation of the lending manager, and subscription process. Full suitability assessment conducted before any commitment. Minimum investment $150,000.

Important: Capital is at risk. Past performance is not a guarantee of future returns. This is for information purposes only and does not constitute a personal recommendation. Seek independent financial advice before investing. This fund illustrates the type of real estate debt opportunity Global Investments advises on — it is not a live investment offer.