How high interest rates are reshaping private markets

Transcript

We're seeing traditional banks pull back, they're shoring up their balance sheets, they're being more selective with their loans. And so we're seeing private credit step into that void. And just given the the regional banks pulling back, these private lenders are able to charge essentially a higher spread and therefore higher coupon for this debt. So on the equity side, it's a headwind, you know, it's a higher cost of debt interest coverage is starting to be a concern if they can't raise rents or whatever the case may be. But on the debt side, you're able to kind of. Take advantage of that and the market dynamics and lend at a compelling risk return. And these are lending and a new valuation environment, right? So if they're 65 to 70% loan to value, that value is not a 2020 value. Whenever they took out the loan in the 1st place, it's a 2024 value. And so it should be more relevant. And you know, hopefully we're closer to the bottom than before. And so I think with that. Equity cushion of 30 to 35%. It's a compelling risk return.