🚨Bruce Richards of Marathon Asset Management projects a “bonanza” in leveraged buyouts and commercial real estate debt once the Fed begins easing policy. He highlights cheaper financing, potential QE targeting long bonds, and a surge in private credit and CMBS activity as catalysts. Data centers alone may drive $1.5T of new debt demand, with ~$100B flowing into securitization. For CRE operators, lower cap rates and cheaper refinancing could unlock stalled transactions and boost valuations, reversing a two-year deal drought.
Global M&A volume: $3.20T in 2023, ▼15% YoY, lowest in a decade
U.S. commercial property values: Apartments ▼15%, Offices ▼20–40%, Industrial flat since 2022 peak
Private credit AUM: >$1.6T globally (2024) dry powder ready for deployment
Loan Performance. Lower rates and tighter spreads could lift DSCRs 20–30% across stabilized assets; value-add deals may tolerate higher leverage once refi windows open.
Demand Dynamics. Multifamily and industrial assets stand to re-attract capital first, with absorption beta boosted by cap rate compression. Office recovery remains muted despite cheaper debt.
Asset Strategies. Sponsors should model 50–100 bps exit cap rate compression in upside scenarios; repositioning plays can layer in quicker exits.
Capital Markets. Expect CMBS spreads to tighten as issuance revives; private credit fills banks’ void, with funds underwriting mezzanine and transitional deals aggressively.
Fed easing could reset deal flow across LBOs and CRE.
Multifamily/industrial favored; office lagging despite relief.
Refi optionality expands; sponsors can run tighter debt structures.
Spreads likely compress — but underwriting discipline essential.
🛠 Operator’s Lens
Refi. Prep for forward rate locks, lower debt service loads in 2025–26.
Value-Add. Use capex to position assets for higher valuation exits post-pivot.
Development. Dust off shelved projects as construction debt becomes affordable.
Lender POV. Private credit shops poised to compete on spread and structure; CMBS conduit appetite revives.
Markets expect 100–200 bps of Fed cuts into 2025. Distress deals may dominate early 2025 before liquidity rushes back. CMBS spreads and HY indices are key confirmation signals. Risk: inflation stickiness could delay or dilute the easing cycle.
Bloomberg — Marathon’s Richards Predicts Fed Easing “Bonanza” (Sept. 23, 2025). Bain & Co. — Global M&A Report (2024). Bisnow — Commercial Property Value Declines (2024). Deutsche Bank — Global Private Credit Outlook (2024).
