Recent headlines have put private credit under a microscope, with reports from Goldman Sachs and the Wall Street Journal highlighting emerging cracks in the asset class and questioning the durability of its recent growth. Yet a new CBRE analysis draws a distinction between stress in certain private credit strategies and conditions in the commercial real estate market, where private lenders continue to play a major role.
Private credit broadly refers to lending outside of traditional public bond markets and banks. These lenders raise capital from investors seeking higher yields than those typically available from investment-grade bonds or public equities. CBRE categorizes the segment into three main buckets: corporate direct lending, asset-backed lending and commercial real estate loans.
Corporate direct lending involves senior secured term loans and subordinated debt to middle-market borrowers, often through Business Development Companies, or BDCs. Leverage for these borrowers can range from four to six times EBITDA. Asset-backed lending provides senior or subordinate exposure to pools of consumer and commercial loans, such as auto loans, credit cards, student loans or leases, with underwriting tied to historical loss performance.
Commercial real estate loans within private credit are typically senior or subordinate financings secured by CRE assets, with underwriting based on loan-to-value ratios, debt yield and debt service coverage ratios. CBRE notes that alternative lenders, including CRE private credit platforms and mortgage REITs, accounted for 40% of non-agency closings in Q4 2025, making them a key source of bridge, mezzanine and transitional capital in the capital stack.
The current stress is concentrated in BDCs with heavy software exposure rather than in real estate lending. Tech and software reportedly make up as much as 40% of some BDC loan books, and questions around how AI may affect long-term business models are pressuring credit views. In addition, BDC portfolios are inherently illiquid, and increased redemption requests over the past year have contributed to a potential feedback loop for listed vehicles, while unlisted BDCs face heightened risk in periods of elevated redemptions.
For commercial real estate, CBRE concludes that private credit stress is unlikely to become broadly contagious in the near term because BDCs are largely focused on corporate and middle-market borrowers, not property finance. CMBS markets remain accessible for higher-quality collateral, and lending backed by hard assets is characterized as relatively resilient.
Still, the report flags several second-order risks for real estate. These include the possibility of tighter bank credit lines to private credit funds, lower investor confidence in limited partnership structures that could weigh on CRE fundraising, and eventual pressure on illiquid holdings, potentially including real property. With a 2026 commercial real estate maturity wall exceeding $800 billion, the combination of reduced lending capacity and limited refinancing options could translate into loan distress or downward pressure on values if capital remains constrained.
