Park Avenue South Tech Campus Spirals Toward Default After Meta's Early Exit

Borrowing from a debt fund can be risky business, but multifamily owners are starting to take the leap as refinancing options grow scarce.

Demand for alternative and niche funding sources is on the rise as the ongoing CRE credit crunch sidelines most banks. Cue private lenders like debt funds that have stepped into the void, offering short-term loans that allow investors to close a capital gap while they try to secure more permanent financing. 

As interest rates remain elevated, some owners with maturing debt are finding themselves in the same position they were when the loan originated. And how a debt fund reacts to a potential default will vary based on the health of the property and the borrower. 

Yet one thing has become increasingly clear: As banks recoil from their exposure to CRE debt, alternative lenders are seizing the moment to prove themselves a stronger partner.

“When you really look at it, a conventional bank lender is not really suitable for a lot of the real estate deals out there today,” said Daniel Lebensohn, co-CEO of BH3 Management, a firm that specializes in shoring up distressed debt in capital stacks. “Why wouldn’t…

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