Real Estate Debt as a Proxy for Fixed Income Allocations

Posted by | | Mortgages

Financing real estate in Canada remains a challenging endeavor for many borrowers. The retrenchment of bank lending as a result of stricter lending requirements and the enactment of regulatory reforms has made financing unavailable to all but the most secure borrowers. Yet the market has simultaneously created new demand for non-traditional debt lenders to fill the gap. These real estate debt opportunities can provide investors with attractive returns while providing an adequate downside protection provided by equity cushions.

Today, private lenders have the ability to fill the void that traditional banks have stepped away from. In today’s environment, debt principally offers a safer part of capital structure which can be acquired at lower loan-to-values determined on a lower value base. Income can be secured through higher spreads available for both first and second mortgages.

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