Through ongoing dialogue with our lender partners, we have found that the challenge in today’s market is not a lack of capital, but rather stricter requirements for accessing it. Debt-service constraints, coupled with the higher cost of debt, make it challenging for commercial real estate investors to find capital partners that align with their objectives.
As a result, real estate investors seeking capital benefit from working with an experienced mortgage banking team — like the one we offer at Peakhill Capital — that can structure project-specific financing solutions based on current market conditions.
Outlook on Current Debt and Equity Markets
By the end of 2026, an estimated $1.15 trillion of U.S. commercial real estate debt is expected to mature, with maturities peaking in 2027 at a projected $1.26 trillion, according to S&P Global.
This growing cohort of sponsors looking to refinance is facing a new lending environment that is more challenging to navigate compared to when these projects were initially financed.
Borrowers looking to refinance are faced with today’s higher-rate environment in tandem with lower property values that have restricted lending terms. As a result, creative capital structuring has become an essential tool in bridging the gap between senior debt availability and client financing objectives.
How these structures are applied within the capital stack will determine their overall impact on a project’s financing terms, which requires expertise and experience to effectively align client objectives with economic realities.
The Debt Markets Perspective
Today’s capital stacks are built for resilience rather than maximizing leverage. With interest rates at their lowest level since 2022, borrowing costs have eased. What has not eased accordingly is underwriting discipline.
Lenders continue to apply conservative assumptions, including higher stress tests and elevated expense ratios, which have limited the amount of senior debt available for transactions. As a result, commercial property owners are relying more heavily on mortgage bankers to help navigate these constraints to identify viable debt solutions in an increasingly selective lending environment.
The Equity Markets Perspective
A well-connected advisor plays a critical role in sourcing the right partner in an environment where equity capital is limited. Today’s market requires a clear understanding of which equity structure best fits a given project, whether mezzanine, co-GP, or preferred equity.
In addition to up-to-date knowledge of each structure’s investment criteria. This process is both an art and a science. It involves aligning a project’s capital needs with the return expectations and hold periods of prospective equity partners. All while achieving the right cultural fit where the partner shares the client’s goals, values and long-term vision.
Peakhill’s Decades of Market Expertise
With decades of experience across debt and equity markets and longstanding relationships across hundreds of capital partners, Peakhill accurately understands what is feasible in today’s environment. This perspective allows us to advise clients with confidence, clarity and a grounded view on current market conditions and what lies ahead.
For more details on Peakhill U.S. Capital Markets, visit the company’s online home.
Erik Johnson and Jason Hardy are executive vice presidents for U.S. Capital Markets with Peakhill Capital. Kip Dunkelberger is president of U.S. Capital Markets with Peakhill.
