Davis Polk partner and practice head of Investment Management Leor Landa and partner and Real Estate practice co-head Brian Lichter discussed the slow recovery for private real estate fundraising with Law360.

“I would not say we’re in boom times for real estate fundraising,” Leor noted, but added that “it has been somewhat resistant to the real downturns we’ve seen elsewhere.”

Brian highlighted that he has seen an uptick in funds being used for providing preferred equity financing for commercial properties, including distressed real estate and newer apartment buildings.

“Even if you have a perfectly great asset, by virtue of interest rates being where they are, there’s some distress coming when a maturity date comes,” Brian explained. “For that situation, you need some additional — whether it’s equity or subordinate debt — to come in behind a new mortgage loan, to actually take out the existing loan.”

“Real Estate Fundraising Charts Slow Recovery,” Law360 (July 10, 2024) (subscription required) 

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