At the annual PERE America Forum, Prashant Raj, President, Global Debt, joined journalist Samantha Rowen and fellow industry leaders to share insights on how to unlock opportunities in credit amid volatility.
The discussion focused on the current real estate lending environment, how the panelists are approaching the maturity wall, and where they are putting their focus for 2027. Below, Prashant shares QuadReal’s take on today’s industry questions.
High level, how do you describe your business?
QuadReal’s debt platform is a strategic pillar in the company’s overall investment strategy, designed to deliver stable income and protect capital. Since 2021, our debt platform has grown from $6B to $15.4B. We are primarily a direct lender, and our team is active across Canada, the US, the UK and parts of Europe.
What is the state of play for real estate lenders today and what does this mean for your strategy?
The way lenders are positioned today is driven primarily by the type of capital you represent and what that capital is seeking. At QuadReal, we are primarily pension plan capital and that means we apply a long-term, patient perspective to investment decisions. This mindset helps us excel in the credit space, and we are always looking for attractive risk adjusted opportunities with a bias towards senior debt and stretch-senior lending across pre-development, development, bridge and stabilized assets. Another factor that impacts positioning is the performance of your existing portfolio and we are very fortunate to have very few distractions in our portfolio.
What are borrowers asking for and how much of this is related to the maturity wall?
There has been a lot of discussion in the market around the maturity wall, given the significant number of loans made in the early 2020’s coming due in quick succession. But there is always a maturity wall. The question is, how much liquidity is going to be around?
From QuadReal’s standpoint, looking ahead to next year, we believe the market is going to be one of the better vintages to lend into. There is going to be a lot of refinancing activity, we may start to see some development deals pencil again, but overall borrowers are going to need to recapitalize their assets and refinancing their existing debt is going to be a big part of that.
What do you consider when structuring your loans?
QuadReal is a vertically integrated company, and we invest across debt and equity globally. This gives us a tremendous advantage, as we have boots on the ground, whether it’s investment, development or operations expertise in the markets and property sectors we are lending in. The question we ask ourselves at investment committee on every debt deal is: Would we be happy to own the underlying property at our loan basis? The answer must be yes. That being said, our strategy is not to make loans to own property, but we require a high level of conviction in an asset to lend on it.
How would you describe investor excitement around real estate credit?
Real estate credit is almost like the new core, a lot of investors in real estate are seeking income strategies and want to be less reliant on value strategies. Real estate credit is an attractive alternative as it’s structurally protected and provides an attractive risk adjusted, current-pay, income stream. We are seeing quite a bit of capital come to real estate credit and we are sitting on a lot of dry powder.
Is there any concern around the back leverage business?
Leverage is incredibly important. Real estate is a highly financeable asset class, but I think how much leverage you apply can limit operating flexibility, especially if you have an issue that needs to be addressed. At QuadReal, we don’t run a lot of leverage in our portfolio, we stay around 15%, there is room to add more but we try and avoid being heavily levered.
What sectors are you focused on?
In general, we are focused on the living sector which includes multifamily, student housing and manufactured housing. We are also focused on self storage, traditional logistics and shallow bay industrial, as well as medical office and data centres. These sectors are where we spend 90% of our time across our global portfolio.
What are you watching most closely going into 2027?
We are looking at 2027 as an incredible opportunity. As the capital stack resets, we are hoping to see better values and more upside, two factors that will allow us to take on greater risk. In terms of our lending strategy, we are very focused on the multifamily space. The key for us at QuadReal is going to be exercising discipline and patience and being prepped and ready for when the right opportunities arise.
