The Bank Retreat Is Real
Commercial real estate borrowers face a maturity wall of up to $2 trillion through the end of 2026. At the same time, traditional banks are reducing their CRE exposure, tightening underwriting standards, and slowing originations. The result is a widening gap between the capital that borrowers need and what banks are willing to provide.
This is not a temporary blip. Regulatory pressure on bank CRE concentrations, elevated delinquency rates on CMBS and FHA-insured loans, and lingering concerns about office valuations have made banks structurally more conservative about commercial real estate lending.
Where Private Lenders Step In
Private bridge lenders do not rely on deposit models or face the same regulatory constraints as banks. They raise capital from institutional investors, family offices, and high-net-worth individuals, then deploy it into short-term commercial real estate loans secured by tangible collateral.
This structural difference gives private lenders three advantages that banks cannot match in the current environment.
Speed is the first advantage. Bridge lenders close in two to four weeks. Banks, even when they approve a deal, typically take 60 to 90 days. For borrowers competing in tight markets or facing maturity deadlines on existing debt, that timeline difference can make or break a deal.
Flexibility is the second advantage. Private lenders underwrite each deal individually. They can structure loans around complex situations like partnership buyouts, environmental remediation, lease-up periods, or construction completion that banks either cannot or will not touch.
The third advantage is certainty. When a private lender issues a term sheet, the borrower has high confidence the loan will close. Bank approvals pass through layers of committee review, and deals frequently fall apart late in the process when conditions change or the committee adds requirements.
The Investor Opportunity
For investors, the bank pullback creates a compelling opportunity on the capital side. The yields available in private CRE lending reflect the premium borrowers pay for speed and certainty. Bridge loans typically carry rates of 8.5% to 13%, with most deals pricing between 10% and 12%. After accounting for origination fees (1 to 3 points), the total return to lenders is attractive relative to other fixed-income alternatives.
The risk profile is also favorable in this environment. Bridge lenders are capping LTV at 60% to 65%, meaning there is 35% to 40% equity cushion protecting the capital. Loans are secured by real property, and the short duration (12 to 24 months) limits exposure to long-term market shifts.
Private credit broadly has outperformed public fixed income over the past five years, and CRE bridge lending specifically benefits from the structural supply and demand imbalance created by bank retreat.
What to Look for in a Private Lender
Not all private lenders are the same. If you are an investor evaluating the space, or a borrower choosing a lender, here is what separates the strong operators. Look for a track record through multiple market cycles, conservative underwriting with consistent LTV discipline, transparent reporting to investors, and a clear servicing capability for when loans do not perform as planned.
Lenders who chased yield in 2021 and 2022 with high-LTV, low-documentation loans are the ones experiencing losses now. The disciplined operators who maintained standards are the ones with capital to deploy today.
How Requity Fits
Requity Group operates on both sides of this market. Requity Lending originates bridge loans for commercial and residential investment properties, providing the speed and certainty borrowers need. On the capital side, our fund offers accredited investors access to a diversified portfolio of bridge loans secured by real estate. Contact us to learn more about either side of the equation.